UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
November 9, 2010
Date of Report (Date of earliest event reported)
General Growth Properties, Inc. (f/k/a New GGP, Inc.)
GGP, Inc. (f/k/a General Growth Properties, Inc.)
(Exact name of registrant as specified in its charter)
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Delaware |
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1-34948 |
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27-2963337 |
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Delaware |
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1-11656 |
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42-1283895 |
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(State or other jurisdiction |
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(Commission |
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(IRS Employer |
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of incorporation) |
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File Number) |
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Identification No.) |
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110 N. Wacker Drive, Chicago, Illinois |
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60606 |
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(Address of principal executive offices) |
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(Zip Code) |
(312) 960-5000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
As previously disclosed, commencing on April 16, 2009, GGP, Inc. (f/k/a General Growth Properties, Inc.) (“Old GGP”) and certain of its domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (“Chapter 11”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). As of October 21, 2010, 126 Debtors, including Old GGP, remained subject to Chapter 11 proceedings (the “TopCo Debtors”).
On October 21, 2010, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the TopCo Debtors’ third amended joint plan of reorganization under Chapter 11, as modified and supplemented (the “Plan”).
On November 9, 2010 (the “Effective Date”), the Plan became effective and the TopCo Debtors consummated their reorganization under Chapter 11 (the “Reorganization”) through a series of transactions contemplated by the Plan and emerged from Chapter 11.
Pursuant to the Plan, on the Effective Date and as further described below, Old GGP transferred certain assets and liabilities of Old GGP to The Howard Hughes Corporation (“THHC”) and distributed shares of common stock of THHC to holders of shares of common stock of Old GGP and common and preferred units of GGP Limited Partnership (the “Separation”).
Pursuant to the Plan, on the Effective Date, Old GGP also changed its corporate name to “GGP, Inc.” and, as further described below, merged (the “Merger”) with and into GGP Merger Sub, Inc. (“Merger Sub”), an indirect wholly-owned subsidiary of a new company with the corporate name “General Growth Properties, Inc.” (f/k/a New GGP, Inc.) (“New GGP”), with Old GGP surviving the Merger as an indirect, wholly-owned subsidiary of New GGP. In connection with the Merger, existing shares of common stock of Old GGP were exchanged for shares of common stock of New GGP (“New GGP Common Stock”).
Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
As stated above, pursuant to the Plan, on the Effective Date, Old GGP, New GGP, Merger Sub, and GGP Real Estate Holding I, Inc., a wholly-owned subsidiary of New GGP and the parent of Merger Sub, entered into an Agreement and Plan of Merger (the “Merger Agreement”). A related Certificate of Merger (the “Certificate of Merger”) was subsequently filed with the Secretary of State of the State of Delaware and, pursuant to the Merger Agreement, the Certificate of Merger and the Plan, Old GGP merged with and into Merger Sub, with Old GGP continuing as the surviving corporation and an indirect, wholly-owned subsidiary of New GGP. In connection with the Merger, all shares of common stock of Old GGP issued and outstanding immediately prior to the Merger were cancelled and converted into the right to receive shares of New GGP Common Stock as provided in the Plan.
Investment Agreements
As previously disclosed, in connection with the Reorganization, Old GGP entered into investment agreements (the “Investment Agreements”) with (i) Brookfield Retail Holdings LLC (formerly REP Investments LLC) (“Brookfield Investor”), (ii) The Fairholme Fund and Fairholme Focused Income Fund, each a series of Fairholme Funds, Inc. (collectively, “Fairholme”), (iii) Pershing
Square Capital Management, L.P. on behalf of Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. (collectively, “Pershing Square” and, together with Brookfield Investor and Fairholme, the “Plan Sponsors”), and (iv) Teacher Retirement System of Texas (“TRS”). On the Effective Date, New GGP issued an aggregate of approximately 644 million shares of New GGP Common Stock to the Plan Sponsors, TRS and affiliates of Blackstone Real Estate Partners VI L.P (“Blackstone” and, together with the Plan Sponsors and TRS, the “Investors”), at a price of $10.00 per share for the Plan Sponsors and Blackstone and $10.25 per share for TRS. Pursuant to the Investment Agreements:
· For so long as a Plan Sponsor beneficially owns at least 5% of New GGP Common Stock on a fully-diluted basis, such Plan Sponsor will have a subscription right, in connection with certain offerings by New GGP of New GGP Common Stock, to purchase New GGP Common Stock as necessary to allow it to maintain its respective proportionate New GGP Common Stock ownership interest on a fully-diluted basis.
· The board of directors of New GGP (the “Board”) will have nine members. Three members of the Board may be designated by Brookfield Investor, whose right to designate three directors will continue so long as Brookfield Investor beneficially owns at least 20% of New GGP Common Stock on a fully-diluted basis, with such right reducing to two directors if Brookfield Investor beneficially owns between 15% and 20% of New GGP Common Stock on a fully-diluted basis and one director if Brookfield Investor beneficially owns between 10% and 15% of New GGP Common Stock on a fully-diluted basis. Brookfield Investor will have no right to designate a director if it beneficially owns less than 10% of New GGP Common Stock on a fully-diluted basis.
· New GGP will indemnify THHC from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses to which THHC and its subsidiaries become subject, in each case solely to the extent directly attributable to MPC Taxes (as defined in the Investment Agreements) in an amount up to the Indemnity Cap. The Indemnity Cap is calculated as the lesser of (a) $303,750,000 and (b) the Excess Surplus Amount. The Excess Surplus Amount is determined using a complex formula described in the Investment Agreements that includes varying percentages of any Reserve Surplus Amount, Net Debt Surplus Amount and Offering Premium (as defined in the Investment Agreements). The Excess Surplus Amount is designed to provide value to THHC in the form of the tax indemnity (up to a maximum amount of $303,750,000).
· New GGP has the right to repurchase within 45 days after the Effective Date up to approximately 135 million shares of New GGP Common Stock from Fairholme at $10.00 per share, up to approximately 20 million shares of New GGP Common Stock from Pershing Square at $10.00 per share and up to approximately 24.4 million shares of New GGP Common Stock from TRS at $10.25 per share, in each case, with the proceeds from a public offering of New GGP Common Stock (the “clawback rights”). In order to repurchase such shares, the price per share of New GGP Common Stock issued in such offering must be at least $10.50 per share (net of all underwriting and other discounts, fees and related consideration). On the Effective Date, New GGP paid an amount equal to $0.25 per reserved share to Fairholme and Pershing Square to preserve its clawback rights.
Warrant Agreement
On the Effective Date, New GGP entered into a Warrant Agreement with Mellon Investor Services LLC, as warrant agent (the “Warrant Agreement”), and issued warrants (the “Warrants”) to purchase, in the aggregate, up to 120,000,000 shares of New GGP Common Stock to the Plan Sponsors and Blackstone, as follows: (i) Warrants to purchase up to approximately 57.5 million shares of New GGP Common Stock with an initial exercise price of $10.75 per share to Brookfield Investor, (ii) Warrants to purchase up to approximately 41.07 million shares of New GGP Common Stock with an initial exercise price of $10.50 per share to Fairholme, (iii) Warrants to purchase up to approximately 16.43 million shares of New GGP Common Stock with an initial exercise price of $10.50 per share to Pershing Square and (iv) Warrants to purchase up to approximately 5.0 million shares of New GGP Common Stock with an initial exercise price of $10.50 per share with respect to one-half of the Warrants and $10.75 per share with respect to the remaining one-half of the Warrants to Blackstone. The Warrants are not subject to reduction even if the shares of New GGP Common Stock issued to Fairholme and Pershing Square are repurchased in accordance with the clawback rights under the Investment Agreements.
Each Warrant has a term of seven years from the Effective Date, expiring at the close of business on November 9, 2017. The Warrants held by each of Brookfield Investor and Blackstone are immediately exercisable, subject to any lockup restrictions, whereas the Warrants held by each of Fairholme and Pershing Square may only be exercised upon 90 days’ prior notice for the first 6.5 years after issuance but are exercisable without notice at any time thereafter. In addition, the Warrants held by Pershing Square do not vest and are not exercisable prior to the date that is 210 days after the Effective Date. The Warrants held by Pershing Square and Fairholme must be net share settled, meaning that the exercise price for the Warrants cannot be paid in cash and will instead be netted against the shares received upon exercise of the Warrants, resulting in fewer shares being issued.
The Warrants are subject to adjustment in a number of circumstances, including, but not limited to, upon certain rights offerings, certain tender and exchange offerings, and certain recapitalizations, reorganizations, reclassifications, mergers and sales of all or substantially all of New GGP’s assets. For instance, if New GGP (i) pays a dividend in cash or other property or makes a distribution on the New GGP Common Stock in shares of common stock, (ii) subdivides its outstanding shares of common stock into a greater number of shares or (iii) combines or reverse-splits its outstanding shares of New GGP Common Stock into a smaller number of shares, then the per share warrant price and the number of warrant shares will be proportionately decreased and increased, respectively, in the case of a subdivision, distribution or stock dividend, or proportionately increased and decreased, respectively, in the case of a combination or reverse stock split. In addition, in certain circumstances, upon the occurrence of a change of control other than a public stock merger or mixed consideration merger, each as defined in the Warrant
Agreement, holders of the Warrants have the right to require New GGP to redeem the Warrants at the fair value of such Warrants in cash as of the date of the change of control event as determined by an independent financial expert employing a valuation methodology provided for in the Warrant Agreement. Upon the occurrence of a public stock merger or a mixed consideration merger, New GGP may elect to redeem the Warrants at fair value or, to the extent of stock consideration, have the Warrants continue as warrants on the stock of the acquiring parent company as provided in the Warrant Agreement.
Standstill Agreements
On the Effective Date, the Plan Sponsors entered into agreements with New GGP (the “Standstill Agreements”) that set forth, among other things (a) the size of, the minimum number of independent directors on, and the composition of the nominating and governance committee of, the Board, (b) voting for directors and certain other matters, (c) required approvals for (1) certain change in control transactions and related-party transactions involving the applicable Plan Sponsor and (2) the applicable Plan Sponsor to increase its percentage ownership in New GGP above an agreed cap, and (d) transfers of shares of New GGP by the Plan Sponsor. Specifically, the Standstill Agreements contemplate the following:
· so long as a Plan Sponsor beneficially owns more than 10% of the outstanding New GGP Common Stock, such Plan Sponsor will support the following principles: the Board will have a majority of independent directors, the nominating committee will consist of a majority of members not affiliated with or nominated by the Plan Sponsors, and the Board will have nine members not to be increased or reduced, unless approved by 75% of the Board;
· with respect to voting,
· affiliate transactions require approval of a majority of disinterested directors;
· certain change of control transactions involving a stockholder that owns more than 10% of the New GGP Common Stock on a fully-diluted basis require approval of a majority of disinterested directors and a majority of voting power of the stockholders (other than such 10% or greater stockholder);
· for Brookfield Investor and Pershing Square in connection with a vote for the election of directors and for Fairholme, in connection with any vote, (a) Brookfield Investor may vote all of its shares as it wishes with respect to its designees and, with respect to other nominees, may vote 10% of the outstanding New GGP Common Stock as it wishes, but must vote the rest of its shares in proportion to the other stockholders, and (b) Fairholme and Pershing Square may each vote 10% of the outstanding New GGP Common Stock as it wishes, but each must vote the rest of its shares in proportion to the votes cast by the other stockholders;
· in connection with any stockholder vote, if the Board recommends that stockholders approve the matter, Brookfield Investor may vote against or in favor of such matter in its sole discretion, and, if the Board recommends that the stockholders not approve the matter, Brookfield Investor may vote (a) against the matter, or (b) in favor of the matter, provided that if Brookfield Investor owns more than 30% of the outstanding New GGP Common Stock, Brookfield Investor must vote its shares in excess of 30% in proportion to the votes cast by the other stockholders;
· subject to certain exceptions, the Plan Sponsors may not acquire beneficial ownership of or an economic interest in New GGP Common Stock that is greater than:
· in the case of Brookfield Investor, 45% of the outstanding New GGP Common Stock;
· in the case of Pershing Square, the lesser of (a) 25% of the outstanding New GGP Common Stock and (b) the sum of 5% and the percentage of the outstanding New GGP Common Stock owned by Pershing Square as of the Effective Date; and
· in the case of Fairholme, the lesser of (a) 30% of the outstanding New GGP Common Stock and (b) the sum of 5% and the percentage of the outstanding New GGP Common Stock owned by Fairholme as of the Effective Date; and
· unless approved by a majority of independent directors, none of the Plan Sponsors may sell or otherwise transfer New GGP Common Stock if the transferee would beneficially own more than 10% of New GGP Common Stock then outstanding, except for (a) transfers to affiliates or third parties that agree to ownership and voting restrictions, (b) registered offerings that are widely distributed, (c) Rule 144 sales, (d) mergers or other transactions approved by the Board and a majority of all stockholders and (e) tender offers in which all other stockholders are allowed to sell on the same terms.
A Standstill Agreement will terminate (a) upon mutual agreement, if approved by a majority of the disinterested directors, (b) if stockholders other than the Plan Sponsors own more than 70% of the shares of New GGP Common Stock then outstanding and the applicable Plan Sponsor owns less than 15% of the shares of New GGP Common Stock then outstanding, (c) if the applicable Plan Sponsor owns less than 10% of the shares of New GGP Common Stock then outstanding, (d) upon a change of control not involving the applicable Plan Sponsor, or (e) upon the sale of all or substantially all of the assets or voting securities of New GGP.
Registration Rights Agreements
On the Effective Date, New GGP entered into a Registration Rights Agreement with each of the Investors (collectively, the “Registration Rights Agreements”), granting such persons (and their permitted assignees) certain registration rights, including demand registration rights and “piggyback” registration rights. The registration rights granted in the Registration Rights Agreements are subject to customary indemnification and contribution provisions, as well as customary restrictions such as minimums, blackout periods and other limitations.
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The foregoing description of the agreements to which New GGP is a party does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements, which are exhibits hereto and are incorporated herein by reference. The forgoing descriptions of these documents and the copies of these documents included as exhibits hereto have been included to provide investors with information regarding the terms of these documents. These documents contain representations and warranties made by and to the parties thereto as of specific dates. The representations and warranties of each party set forth in each document have been made solely for the benefit of the other party to such document. In addition, such representations and warranties (1) may have been qualified by confidential disclosures made to the other party in connection with such document, (2) may be subject to a materiality standard which may differ from what may be viewed as material by investors, (3) were made only as of the date of such documents or such other date as is specified therein and (4) may have been included in such documents for the purpose of allocating risk between or among the parties thereto rather than establishing matters as facts. Accordingly, these documents are included herewith only to provide investors with information regarding the terms thereof, and not to provide investors with any other factual information regarding the parties or their respective businesses.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On the Effective Date, pursuant to the Plan, the Separation of THHC from Old GGP was completed. THHC is now an independent public company trading under the symbol “HHC” on the New York Stock Exchange. On November 9, 2010, shareholders of record of Old GGP as of November 1, 2010 (the “Record Date”) received 0.098344 shares of THHC common stock for each share of Old GGP common stock held as of the Record Date. No fractional shares of THHC common stock were issued in the Separation.
In connection with the Separation, GGP entered into certain agreements to govern the terms of the Separation and to define the ongoing relationship between GGP and the THHC following the Separation, allocating responsibility for obligations arising before and after the Separation, including obligations relating to taxes, employees, liabilities and certain transition services.
The Separation Agreement
On the Effective Date, GGP and THHC entered into a separation agreement (the ‘‘Separation Agreement’’). The Separation Agreement sets forth, among other things, GGP and THHC’s agreements regarding the principal transactions necessary to effect the Separation.
Transfer of Assets and Assumption of Liabilities
The Separation Agreement identifies assets to be transferred, liabilities to be assumed and contracts to be performed by each of GGP and THHC as part of the Separation, and it provides for when and how these transfers, assumptions and assignments occurred. In particular, the Separation Agreement provides, among other things, that, subject to the terms and conditions contained therein:
· certain assets (the ‘‘THHC Assets’’) were transferred by GGP to THHC;
· certain liabilities (whether accrued, contingent or otherwise) arising out of or resulting from the THHC Assets, and other liabilities related to THHC business and operations (the ‘‘THHC Liabilities’’) were transferred to THHC;
· all of the assets and liabilities (whether accrued, contingent or otherwise) other than the THHC Assets and the THHC Liabilities (such assets and liabilities, other than the THHC Assets and the THHC Liabilities, are referred to as the ‘‘Excluded Assets’’ and ‘‘Excluded Liabilities,’’ respectively) were retained by or transferred to GGP or one of its subsidiaries;
· except as otherwise provided in the Separation Agreement or any other transaction agreements, GGP is responsible for any costs or expenses incurred prior to the Effective Date in connection with the Separation and the costs and expenses relating to legal counsel, financial advisors and accounting advisory work related to the Separation, and such costs and expenses will be treated in accordance with the terms of the Plan; and
· except as otherwise provided in the Separation Agreement or other transaction agreements, the corporate costs and expenses incurred after the Effective Date relating to the Separation will be borne by the party incurring such expenses.
The THHC Assets and the THHC Liabilities were transferred as of the Effective Date without pro-ration and regardless of whether they related to the period before or after the Effective Date. Except as may expressly be set forth in the Separation Agreement or any other transaction agreements, all assets were transferred on an ‘‘as is,’’ ‘‘where is’’ basis and the respective transferees will bear the economic and legal risks associated with the use of such respective assets following the Separation, including, but not limited to, where any conveyance will prove to be insufficient to vest in the transferee good title, free and clear of any security interest, and any necessary notifications are not made, necessary approvals are not obtained or any requirements of laws or judgments are not complied with.
Claims
In general, each party to the Separation Agreement assumes liability for all pending, threatened and unasserted legal matters related to its own business or its assumed or retained liabilities and will indemnify the other party for any liability to the extent arising out of or resulting from such assumed or retained legal matters.
Releases
Except as otherwise provided in the Separation Agreement or any other transaction agreements, each party released and forever discharged the other party and its respective subsidiaries and any person who was at any time prior to the Effective Date a shareholder, director, officer, agent or
employee of a member of the other party or one of its subsidiaries from all liabilities existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Separation. The releases do not extend to (a) obligations or liabilities under any agreements between the parties that remain in effect following the Separation pursuant to the Separation Agreement or any ancillary agreement, which include, but are not limited to, the Separation Agreement, the Transition Services Agreement, the Tax Matters Agreement, certain commercial agreements and the transfer documents in connection with the Separation, (b) liabilities specifically set forth in the Plan, (c) liabilities retained or assumed by or transferred to a party pursuant to the Separation Agreement or any ancillary agreement, or (d) ordinary course trade payables and receivables.
Indemnification
The Separation Agreement provides for cross-indemnification principally designed to place financial responsibility for the obligations and liabilities of THHC’s business with THHC and financial responsibility for the obligations and liabilities of GGP’s business with GGP. Specifically, each party will, and will cause its subsidiaries to, indemnify, defend and hold harmless the other party and its subsidiaries and each of their respective officers, directors and employees for any losses arising out of or otherwise in connection with:
· the liabilities that each such party assumed or retained pursuant to the Separation Agreement (which, in the case of THHC, would include the THHC Liabilities and, in the case of GGP, would include the Excluded Liabilities) and the other transaction agreements;
· any liability (whether arising before or after the Effective Date) for a misstatement or omission or alleged misstatement or omission of a material fact contained in any registration statement filed with the SEC by such party or its subsidiaries as registrant and any related, prospectus, offering memorandum, offering circular or similar disclosure document; and
· any breach by such party of the Separation Agreement, the ancillary agreements or any agreements between the parties specifically contemplated by the Separation Agreement or any ancillary agreement to remain in effect following the Separation.
Transition Services Agreement
On the Effective Date, THHC and GGP entered into a transition services agreement in connection with the Separation (the ‘‘Transition Services Agreement’’) whereby GGP or its subsidiaries will provide to THHC, on a transitional basis, certain specified services on an interim basis for various terms not exceeding 24 months following the Separation. The services that GGP will provide to THHC include, among others, payroll, human resources and employee benefits, financial systems management, treasury and cash management, accounts payable services, telecommunications services, information technology services, property management services, legal and accounting services and various other corporate services. The charges for the transition services generally are intended to allow GGP to fully recover the costs directly associated with providing the services, plus a level of profit consistent with an arm’s length transaction together with all out-of-pocket costs and expenses. The charges of each of the transition services will generally be based on an hourly fee arrangement and pass-through out-of-pocket costs.
Tax Matters Agreement
On the Effective Date, GGP and THHC entered into a tax matters agreement that will govern the parties’ respective rights, responsibilities and obligations with respect to taxes, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and assistance and cooperation in respect of tax matters (the ‘‘Tax Matters Agreement’’). Taxes relating to or arising out of the failure of certain of the transactions described in the private letter ruling request to qualify as a tax-free transaction for U.S. federal income tax purposes will be borne by THHC and GGP based on certain percentages to be determined in accordance with the relative market capitalization of the two companies, except if such failure is attributable to THHC’s action or inaction or GGP’s action or inaction, as the case may be, or any event (or series of events) involving THHC assets or stock or the assets or stock of GGP, as the case may be, in which case the resulting liability will be borne in full by THHC or GGP, respectively. The Tax Matters Agreement will also restrict THHC’s ability (and the ability of any member of the THHC group) to take actions that could cause the Separation to fail to qualify as a tax-free reorganization for U.S. federal income tax purposes.
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The foregoing description of the agreements relating to the Separation does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements, which are exhibits hereto and are incorporated herein by reference. The forgoing descriptions of these documents and the copies of these documents included as exhibits hereto have been included to provide investors with information regarding the terms of these documents. These documents contain representations and warranties made by and to the parties thereto as of specific dates. The representations and warranties of each party set forth in each document have been made solely for the benefit of the other party to such document. In addition, such representations and warranties (1) may have been qualified by confidential disclosures made to the other party in connection with such document, (2) may be subject to a materiality standard which may differ from what may be viewed as material by investors, (3) were made only as of the date of such documents or such other date as is specified therein and (4) may have been included in such documents for the purpose of allocating risk between or among the parties thereto rather than establishing matters as facts. Accordingly, these documents are included herewith only to provide investors with information regarding the terms thereof, and not to provide investors with any other factual information regarding the parties or their respective businesses.
Item 3.02. Unregistered Sales of Equity Securities.
As described in Item 1.01, on the Effective Date, New GGP issued (i) approximately 318 million shares of New GGP Common Stock to holders of common stock of Old GGP and convertible equity interests of its affiliates; (ii) 643,780,488 shares of New GGP Common Stock to the Investors; and (iii) 120,000,000 Warrants to the Plan Sponsors and Blackstone. The information set forth in Item 1.01 under the heading “Investment Agreements” is incorporated in this Item 3.02 by reference.
The shares of New GGP Common Stock and Warrants described above were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to (i) Section 1145 of the Bankruptcy Code, which generally exempts from such registration requirements the issuance of securities under a plan of reorganization, and/or (ii) Section 4(2) of the Securities Act because the issuance did not involve any public offering.
Item 3.03. Material Modifications to Rights of Security Holders.
The information set forth in Item 1.01 and Item 5.03 is incorporated in this Item 3.03 by reference.
Item 5.02. Departure of Directors or Certain Officers, Election of Directors, Appointment of Certain Officers, Compensatory Arrangements of Certain Officers.
Board of Directors
Pursuant to the Plan, as of the Effective Date, the Board consists of: Richard B. Clark, Mary Lou Fiala, Bruce J. Flatt, John K. Haley, Cyrus Madon, Adam S. Metz, David J. Neithercut, Sheli Z. Rosenberg and John G. Schreiber. Mr. Flatt will serve as the Chairman of the Board. Messrs. Clark, Flatt, Madon and Schreiber were designated to the Board pursuant to the Investment Agreements.
Committees of the Board of Directors
The Committees of the Board consist of an Audit Committee, a Compensation Committee and a Nominating and Governance Committee.
The following directors have been appointed to serve as members of the Audit Committee of the Board: Mary Lou Fiala, John K. Haley (Chairperson) and David J. Neithercut.
The following directors have been appointed to serve as members of the Compensation Committee of the Board: Cyrus Madon, Sheli Z. Rosenberg and John G. Schreiber (Chairperson).
The following directors have been appointed to serve as members of the Nominating and Governance Committee of the Board: Richard B. Clark, John K. Haley and Sheli Z. Rosenberg (Chairperson).
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
In accordance with the Plan, New GGP’s certificate of incorporation and bylaws were amended and restated in their entirety. New GGP’s Amended and Restated Certificate of Incorporation (the “Charter”) and Amended and Restated Bylaws (the “Bylaws”) became effective on the Effective Date.
The following is a summary description of certain provisions of the Charter, the Bylaws, and certain other items. This summary does not purport to be complete and is qualified in its entirety by reference to the actual terms and provisions of the documents which are exhibits hereto, each of which is incorporated by reference herein.
Board of Directors.
Prior to the Emergence Date, Old GGP had a “classified” board of directors, meaning that the board of directors was divided into three classes of directors serving staggered three-year terms. New GGP does not have a classified board of directors. The Board as of the date of this Report on Form 8-K is constituted as contemplated by the Plan and as described in Item 5.02 above. Going forward, the Bylaws provide that, except as provided in the Bylaws with respect to the filling of vacancies on the Board and except as may otherwise be provided pursuant to the Charter, directors shall be elected by a majority of votes cast by the shares represented at a meeting of stockholders and entitled to vote thereon, a quorum being present at such meeting, unless the election is contested, in which case directors shall be elected by a plurality of votes cast by the shares represented at such meeting. A “majority of votes cast” means that the number of votes cast “for” the election of the nominee exceeds 50% of the total number of votes cast “for” and “against” the election of that nominee. Stockholders shall also be provided the opportunity to abstain from voting with respect to the election of a director. In voting on the election of directors, abstentions, votes designated to be withheld from the election of a director and shares present but not voted in respect of the election of a director shall not be considered as votes cast. An election shall be considered “contested” if the number of nominees for election is greater than the number of directors to be elected.
If a nominee for director who is an incumbent director is not elected and no successor has been elected at such meeting, the director shall promptly tender such director’s resignation to the Board. The Nominating and Governance Committee of the Board (“NGC”) shall make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board shall act on the tendered resignation, taking into account the NGC’s recommendation, and publicly disclose its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the election results. The NGC in making its recommendation, and the Board in making its decision, may each consider any factors or other information that it considers appropriate and relevant.
Subject to the rights of the holders of any series of preferred stock, if any outstanding, with respect to the election of directors under specified circumstances, any director may be removed from office, but only for cause and only by the affirmative vote of the holders of a majority of the voting power of the capital stock of New GGP entitled to vote generally in the election of directors, voting together as a single class; provided, that each director shall serve until such director’s successor is duly elected and qualified or until such director’s death, resignation or removal. No change in the number of directors constituting the Board shall shorten or increase the term of any incumbent director.
Pursuant to the Investment Agreements, the company has agreed to nominate as part of its slate of directors, and use reasonable best efforts to have elected to the board of directors, persons designated by the Brookfield Investor, as described under Item 1.01 - “Investment Agreements”.
Capital Stock.
New GGP is authorized to issue 11,000,000,000 shares of common stock, par value $0.01 per share, and 500,000,000 shares of preferred stock, par value $0.01 per share.
The Board is authorized to provide for the issuance of shares of preferred stock in one or more series and, by filing a certificate of designations pursuant to the applicable law of the State of Delaware, to establish from time to time for each such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the shares of each such series, and the qualifications, limitations and restrictions thereof.
Under the Charter, the holders of outstanding shares of New GGP Common Stock shall have the right to vote on all questions to the exclusion of all other stockholders, with each holder of record of New GGP Common Stock being entitled to one vote for each share of common stock standing in the name of the stockholder on the books of New GGP Common Stock, except as otherwise required by law, provided in the Charter (as it may be amended from time to time), or provided in a certificate of designations and any resolution adopted by the Board with respect to any series of capital stock subsequently established.
Subject to the rights of the holders of any series of preferred stock as set forth in a certificate of designations, any action required or permitted to be taken by the stockholders of New GGP must be effected at a duly called annual or special meeting of stockholders of New GGP may not be effected by any consent in writing of such stockholders.
Under the Charter and the Bylaws, the affirmative vote of at least 66 2/3% of the voting power of the then outstanding capital stock of New GGP entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, modify or repeal (or adopt any new or additional provision in a manner inconsistent with) certain provisions of the Charter and the Bylaws.
The Charter does not provide stockholders with preemptive rights in connection with issuances of stock. However, as described under Item 1.01 - “Investment Agreements”, pursuant to the Investment Agreements each of the Plan Sponsors has certain subscription rights in connection with certain stock offerings by New GGP, as necessary to allow such Plan Sponsor to maintain its proportional New GGP Common Stock ownership interest in New GGP on a fully-diluted basis.
Pursuant to the Investment Agreements, the Plan Sponsors and Blackstone were issued 7-year warrants to purchase up to 120,000,000 shares of common stock in the aggregate at an initial exercise price of $10.50 - $10.75 per share, subject to adjustment, as described under Item 1.01 - “Warrant Agreement”.
Certain holders of GGPLP common units may continue to have certain redemption, conversion or registration rights in respect of the common units. Any such exchange or conversion rights will be satisfied with the New GGP Common Stock rather than the common stock of Old GGP, and any such registration rights will apply to the New GGP Common Stock rather than to the common stock of Old GGP.
Certain Restrictions on Ownership and Transfer.
New GGP has agreed to elect to be treated as a real estate investment trust, or REIT, for U.S. federal income tax purposes in connection with the filing of its tax return for 2010, subject to satisfying the REIT qualification requirements at such time. Generally, for New GGP to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) for a taxable year, the following conditions (among others) must be satisfied: (1) not more than 50% in value of New GGP’s outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals, as defined in the Code to include certain entities, at any time during the last half of a taxable year; (2) New GGP’s capital stock must be beneficially owned, without regard to any rules of attribution of ownership, by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year; and (3) certain percentages of New GGP’s gross income and assets must be from particular activities and types of assets. Accordingly, the Charter contains provisions which limit the value of New GGP’s outstanding capital stock that may be owned by any stockholder. We refer to this limit as the “Ownership Limit.”
Subject to certain exceptions, the Ownership Limit provides that no stockholder may own, or be deemed to own by virtue of the applicable attribution provisions of the Code, more than the Ownership Limit. The Ownership Limit is set at 9.9% of the value of the outstanding capital stock. The Board may waive the 9.9% Ownership Limit in certain circumstances, including pursuant to the Investment Agreements, which provides that the Board may waive such restriction subject to the applicable Plan Sponsor making certain representations and covenants.
The Board may waive the Ownership Limit if presented with satisfactory evidence that such ownership will not jeopardize New GGP’s status as a REIT. As a condition of such waiver, the Board may require opinions of counsel satisfactory to it and/or an undertaking from the applicant with respect to preserving REIT status. The Ownership Limit will not apply if the Board and the holders of capital stock determine that it is no longer in New GGP’s best interests to attempt to qualify, or to continue to qualify, as a REIT. If shares of capital stock in excess of the Ownership Limit, or shares which would cause New GGP to be beneficially owned by fewer than 100 persons, are issued or transferred to any person, such issuance or transfer shall be null and void and the intended transferee will acquire no rights to such shares.
The Charter further provides that upon a transfer or other event that results in a person owning (either directly or by virtue of the applicable attribution rules) capital stock in excess of the applicable Ownership Limit (“Excess Shares”), such person (“Prohibited Owner”) will not acquire or retain any rights or beneficial economic interest in such Excess Shares. Rather, the
Excess Shares will be automatically transferred to a person or entity unaffiliated with and designated by New GGP to serve as trustee of a trust for the exclusive benefit of a charitable beneficiary to be designated by New GGP within five days after the discovery of the transaction which created the Excess Shares. The trustee shall have the exclusive right to designate a person who may acquire the Excess Shares without violating the applicable ownership restrictions (“Permitted Transferee”) to acquire any and all of the shares held by the trust. The Permitted Transferee must pay the trustee valuable consideration (whether in a public or private sale) for the Excess Shares. The trustee shall pay to the Prohibited Owner the lesser of (a) the value of the shares at the time they became Excess Shares and (b) the price received by the trustee from the sale of the Excess Shares to the Permitted Transferee. The beneficiary will receive the excess of (x) the sale proceeds from the transfer to the Permitted Transferee over (y) the amount paid to the Prohibited Owner, if any, in addition to any dividends paid with respect to the Excess Shares.
All shares of capital stock issued by New GGP will be subject to legends and stop-transfer restrictions as described above.
The Ownership Limit will not be automatically removed even if the REIT provisions of the Code are changed so as to no longer contain any ownership concentration limitation or if the ownership concentration limitation is increased. Except as otherwise described above, any change in the Ownership Limit would require an amendment to the Charter.
Indemnification.
The Charter and Bylaws provide for New GGP, to the fullest extent permitted by the General Corporation Law of the State of Delaware (the “DGCL”), as the same exists or may hereafter be amended, to indemnify and hold harmless officers and directors, and to advance to officers and directors related expenses (subject to reimbursement if it is ultimately determined that the individual is not entitled to be indemnified by New GGP). In addition, New GGP has entered into indemnification agreements with its directors.
Forum.
The Charter provides that the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of New GGP, (ii) any action asserting a claim of breach of fiduciary duty owed by any director or officer of New GGP to New GGP or its stockholders, (iii) any action asserting a claim against New GGP arising pursuant to any provision of the DGCL or the Charter or Bylaws or (iv) any action asserting a claim against New GGP governed by the internal affairs doctrine.
Advance Notice and Other Procedures for Stockholder Nominations and Other Business.
The advance notice and other provisions of the Bylaws set forth how and when a stockholder may nominate persons for election to the Board or propose other business to be considered by the stockholders. Among other things, these provisions set forth the following:
(a) (1) Nominations of persons for election to the Board and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only (A) pursuant to New GGP’s notice of meeting (or any supplement thereto), (B) by or at the direction of the Board, or (C) by any stockholder of New GGP who (i) was a stockholder of record of New GGP at the time the notice provided for pursuant to the Bylaws is delivered to the Secretary of New GGP and at the time of the annual meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the notice procedures set forth in the Bylaws as to such business or nomination. Clause (C) of the preceding sentence shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters or nominations properly brought under Rule 14a-8 or Rule 14a-11 under the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder, the “Exchange Act”) and included in New GGP’s proxy statement) at an annual meeting of stockholders.
(2) Without qualification or limitation of any other requirement, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to clause (C) of the preceding paragraph, the stockholder must have given timely notice thereof in writing to the Secretary of New GGP and any such proposed business other than the nominations of persons for election to the Board must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of New GGP not earlier than the close of business on the 120th day nor later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting ( provided, however , that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, not later than the 10th day following the day on which public announcement of the date of such meeting is first made by New GGP). In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(3) To be in proper form, a stockholder’s notice must set forth: (A) as to each person, if any, whom the stockholder proposes to nominate for election or reelection as a director (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in contested election, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Exchange Act, (ii) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected and (iii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material
relationships, between or among such stockholder and, if applicable, the beneficial owner of the shares held of record by such stockholder (the “Beneficial Owner”), if any, and their respective affiliates, or others acting in concert therewith, on the one hand, and each proposed nominee, and such persons’ respective affiliates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K if the stockholder making the nomination and any Beneficial Owner, if any, or any affiliate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; (B) if the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the Beneficial Owner, if any, on whose behalf the proposal is made, and a description of all agreements, arrangements and understandings between such stockholder and Beneficial Owner, if any, (including their names) in connection with the proposal of such business by such stockholder; and (C) as to the stockholder giving the notice and the Beneficial Owner, if any, (i) the name and address of such stockholder, as they appear on New GGP’s books, and of such Beneficial Owner, if any, (ii) (a) the class or series and number of shares of capital stock of New GGP which are, directly or indirectly, owned beneficially and of record by such stockholder and such Beneficial Owner, (b) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of New GGP, (c) any short interest in any security of New GGP (for purposes of the Bylaws a person shall be deemed have a short interest of such stockholders and Beneficial Owner, if any, in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (d) any rights to dividends on the shares of New GGP owned beneficially by such stockholder and Beneficial Owner, if any, that are separated or separable from the underlying shares of New GGP and (e) any proportionate interest in shares of New GGP held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, (iii) a description of any agreement, arrangement or understanding with respect to the nomination or proposal between or among such stockholder and such Beneficial Owner, if any, any of their respective affiliates, and any others acting in concert with any of the foregoing with respect to such nomination or proposal, (iv) a representation that the stockholder is a holder of record of stock of New GGP entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (v) a representation whether the stockholder or the Beneficial Owner, if any, intends to be or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of New GGP’s outstanding voting stock required to approve or adopt the proposal or elect the nominee or (b) otherwise to solicit proxies from stockholders in support of such proposal or nomination, and (vi) any other information relating to such stockholder and Beneficial Owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a
contested election pursuant to Section 14 of the Exchange Act. In addition, the stockholder’s notice with respect to the election of directors must include, with respect to each nominee for election or reelection to the Board, the completed and signed questionnaire, representation and agreement required by Section 9 of Article I of the Bylaws. New GGP may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of New GGP or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee. Notwithstanding the foregoing, the information required by clauses (C)(ii) and (C)(iii) of this paragraph shall be updated by such stockholder and Beneficial Owner, if any, not later than 10 days after the record date for the meeting to disclose such information as of the record date.
(4) Notwithstanding anything in the second sentence of paragraph (2) above to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting is increased and there is no public announcement by New GGP naming all of the nominees for director or specifying the size of the increased Board at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by the Bylaws shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of New GGP not later than the close of business on the 10th day following the day on which such public announcement is first made by New GGP.
(b) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to New GGP’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to New GGP’s notice of meeting (1) by or at the direction of the Board or a committee thereof, or (2) provided , that the Board, such committee or stockholder(s) pursuant to Section 1(b) of the Bylaws (which provides that a special meeting of the stockholders for any purpose or purposes may be called by the Board; and that a special meeting of stockholders shall be called by the Secretary promptly upon and in accordance with the written request, stating the purpose, date, time and place within or without the State of Delaware of the meeting, of stockholders of record who together hold 15% or more of the voting power of the issued and outstanding shares of the capital stock of New GGP entitled to vote generally in the election of directors) have determined that a purpose of the meeting is to elect directors, by any stockholder of New GGP who (i) is a stockholder of record of New GGP at the time the notice provided for above is delivered to the Secretary of New GGP and at the time of the special meeting, (ii) is entitled to vote at the meeting and upon such election, and (iii) complies with the notice procedures set forth above as to such nomination. In the event New GGP calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in New GGP’s notice of meeting, if the stockholder’s notice required by paragraph (a)(3) above with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by the Bylaws) shall be delivered to the Secretary at the principal executive offices of New GGP not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or, if the first
public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(c) Notwithstanding the foregoing, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of New GGP to present a nomination or other business, such nomination shall be disregarded and such proposed other business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by New GGP.
Item 8.01. Other Events.
Successor Issuer
Upon completion of the Reorganization, in accordance with Rule 12g-3(a) under the Exchange Act the common stock of New GGP, as successor issuer to Old GGP, is deemed to be registered under Section 12(b) of the Exchange Act.
Press Release
On November 9, 2010, New GGP announced that it had consummated the Plan. A copy of the press release is attached as an exhibit hereto and is incorporated herein by reference.
Pershing Square Bridge Note
On the Effective Date, Pershing Square paid $350 million to New GGP in exchange for an unsecured note issued by New GGP to an affiliate of Pershing Square, which note is payable 210 days after the Effective Date (the “Pershing Square Bridge Note”). The Pershing Square Bridge Note bears interest at a rate of 6% per annum and is prepayable by New GGP at any time without premium or penalty.
Credit Facility
On the Effective Date, a revolving credit facility, providing for revolving loans of up to $300 million, was entered into with Deutsche Bank Trust Company Americas, as administrative agent and collateral agent, various lenders, and Deutsche Bank Securities Inc., Wells Fargo Securities, LLC and RBC Capital Markets, LLC as Joint Lead Arrangers.
The revolving credit facility will mature three years from the Effective Date. The revolving credit facility is a senior secured obligation of New GGP, as a guarantor, and the two operating entities through which New GGP conducts substantially all of its business (GGPLP and GGPLP L.L.C.) and three holding company subsidiaries through which New GGP holds its interest in certain of its property-level subsidiaries (GGPLP Real Estate 2010 Loan Pledgor Holding, LLC,
GGPLPLLC 2010 Loan Pledgor Holding, LLC, and GGPLP 2010 Loan Pledgor Holding, LLC), as co-borrowers. In addition, the revolving credit facility is guaranteed by certain of New GGP’s subsidiaries and secured by (i) first-lien mortgages on certain properties, (ii) first-lien pledges of equity interests in certain of New GGP’s subsidiaries which directly or indirectly own properties that are encumbered by existing third-party mortgage debt and (iii) various additional collateral.
Borrowings under the revolving credit facility will bear interest at a floating rate, which can be either a Eurodollar rate plus an applicable margin or, at the borrower’s option, an alternative base rate (defined as the higher of (x) the Deutsche Bank Trust Company Americas prime rate and (y) the federal funds effective rate, plus one half percent (.50%) per annum. The interest rate payable in respect of any overdue principal and interest under the revolving credit facility will increase by 2.00% per annum during the continuance of any payment event of default with respect to such principal or interest.
For Eurodollar loans, New GGP may select interest periods of one, two, three, six months or, with the consent of all lenders, nine months. Interest will be payable at the end of the selected interest period, but no less frequently than every three months within the selected interest period.
The revolving credit facility also requires payment of a commitment fee on the difference between committed amounts and amounts actually borrowed under the revolving credit facility and customary letter of credit fees. Prior to the maturity date of the revolving credit facility, funds borrowed under the revolving credit facility may be borrowed, repaid and reborrowed, without premium or penalty.
Voluntary prepayments of principal amounts outstanding under the revolving credit facility will be permitted at any time; however, if a prepayment of principal is made with respect to a Eurodollar loan on a date other than the last day of the applicable interest period, the lenders will require compensation for any funding losses and expenses incurred as a result of the prepayment.
The revolving credit facility contains certain restrictive covenants applicable to New GGP and its subsidiaries which will, among other things, limit material changes in nature of business conducted, amalgamations, mergers, consolidations, dissolutions or liquidations, dispositions of assets, liens, incurrence of additional indebtedness, investments and acquisitions, dividends, amendments to organizational documents, hedging for speculative purposes, transactions with affiliates, prepayment of subordinated debt, negative pledges, changes in fiscal periods and limitations on subsidiary distributions. In addition, New GGP is required to maintain a maximum net debt to value ratio, a maximum leverage ratio and a minimum net cast interest coverage ratio.
The revolving credit facility contains customary events of default, including without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to certain other indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, judgment defaults in excess of specified amounts, failure of any material provision of any guaranty or security document supporting the revolving credit facility to be in full force and effect, failure to maintain REIT status and a change of control.
New Rouse Indenture
Overview . On the Effective Date, a subsidiary of New GGP, The Rouse Company LLC, formerly known as The Rouse Company LP (“Rouse”), issued $608,688,000 aggregate principal amount of
6.75% Senior Notes due 2015 (the “Senior Notes”) pursuant to an indenture (the “Indenture”) between Rouse and Wilmington Trust FSB, as trustee (the “Trustee”). The Senior Notes were issued to holders in exchange for $608,688,000 aggregate principal amount of certain notes previously issued by Rouse (the “Old Rouse Notes”) that elected to received Senior Notes in exchange for their claims related to the Old Rouse Notes pursuant to the Plan at an exchange rate of $1,000 in principal amounts of Senior Notes for each $1,000 principal amount of Old Rouse Notes. Rouse did not receive any proceeds from the issuance of the Senior Notes.
The Senior Notes will mature on November 9, 2015. Rouse will pay cash interest on the Senior Notes on May 1 and November 1 of each year, commencing May 1, 2011. Interest will accrue at a rate of 6.75% per annum.
Guarantees . The Senior Notes are not guaranteed.
Ranking . The Senior Notes are the senior unsecured obligations of Rouse and:
· are equal and ratable in right of payment to all of Rouse’s existing and future unsecured debt that is not, by its terms, expressly subordinated in right of payment to the Senior Notes;
· rank senior in right of payment to any future debt of Rouse that is, by its terms, expressly subordinated in right of payment to the Senior Notes;
· will be effectively subordinated to all existing and future secured debt of Rouse to the extent of the assets securing such debt; and
· will be effectively subordinated to all existing and future debt and other liabilities of any subsidiaries of Rouse.
Redemption . Rouse may redeem some or all of the Senior Notes at any time prior to May 1, 2013 at a price equal to 100% of the principal amount of the Senior Notes redeemed and the sum of the present value of the remaining scheduled payments of interest thereon (not including any portion of such payments of interest accrued as of the redemption date) discounted to the redemption date on a semi-annual basis at the rate per annum equal to the semi-annual yield to maturity of the comparable treasury issue on the redemption date plus 50 basis points. In addition, on or after May 1, 2013, Rouse may redeem the Senior Notes at a redemption price of 103.375% of the principal amount redeemed and on or after May 1, 2014 at a redemption price of 100% of the principal amount redeemed.
Covenants . The Indenture contains certain covenants limiting:
· the ability of Rouse and its subsidiaries to incur debt;
· the ability of Rouse and certain of its subsidiaries to enter into sale/leaseback transactions; and
· Rouse’s ability to consolidate or merge with, or to sell, convey or lease all or substantially all of its assets to any other entity.
Events of Defaults . Each of the following would be an event of default with respect to the Senior Notes:
· failure to pay principal of or premium, if any, on the notes when due;
· failure to pay any interest on the notes when due, continued for 30 days;
· failure to perform any other covenant in the respective indentures, continued for 60 days after written notice as provided in such indenture;
· certain events of bankruptcy, insolvency or reorganization; and
· defaults by Rouse (or a subsidiary of Rouse if Rouse is a guarantor under such debt) on any debt for borrowed money aggregating $10.0 million or more that results in acceleration.
No Registration Rights . Holders of the Senior Notes will not have the benefit of any exchange or registration rights.
*****
The foregoing description of certain agreements to which New GGP is a party does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements, which are exhibits hereto and are incorporated herein by reference. The forgoing descriptions of these documents and the copies of these documents included as exhibits hereto have been included to provide investors with information regarding the terms of these documents. These documents contain representations and warranties made by and to the parties thereto as of specific dates. The representations and warranties of each party set forth in each document have been made solely for the benefit of the other party to such document. In addition, such representations and warranties (1) may have been qualified by confidential disclosures made to the other party in connection with such document, (2) may be subject to a materiality standard which may differ from what may be viewed as material by investors, (3) were made only as of the date of such documents or such other date as is specified therein and (4) may have been included in such documents for the purpose of allocating risk between or among the parties thereto rather than establishing matters as facts. Accordingly, these documents are included herewith only to provide investors with information regarding the terms thereof, and not to provide investors with any other factual information regarding the parties or their respective businesses.
Item 9.01. Financial Statement and Exhibits.
(d) Exhibits.
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Exhibit No. |
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Description |
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3.1 |
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Amended and Restated Certificate of Incorporation of New GGP, Inc. (now called General Growth Properties, Inc.) |
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3.2 |
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Amended and Restated Bylaws of General Growth Properties, Inc. |
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4.1 |
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Warrant Agreement, dated as of November 9, 2010, between General Growth Properties, Inc. and Mellon Investor Services LLC |
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4.2 |
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The Rouse Company and Wilmington Trust FSB (Trustee) Indenture, dated November 9, 2010 |
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10.1 |
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Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010, between Brookfield Retail Holdings LLC (formerly REP Investments LLC) and General Growth Properties, Inc. |
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10.2 |
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Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, between The Fairholme Fund and Fairholme Focused Income Fund and General Growth Properties, Inc. |
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10.3 |
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Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, between Pershing Square Capital Management, L.P., on behalf of Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. and General Growth Properties, Inc. |
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10.4 |
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Standstill Agreement, dated as of November 9, 2010, between Brookfield Retail Holdings LLC, Brookfield Retail Holdings II LLC, Brookfield Retail Holdings III LLC, Brookfield Retail Holdings IV-A LLC, Brookfield Retail Holdings IV-B LLC, Brookfield Retail Holdings IV-C LLC, Brookfield Retail Holdings IV-D LLC and Brookfield Retail Holdings V LP and General Growth Properties, Inc. |
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10.5 |
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Standstill Agreement, dated as of November 9, 2010, between The Fairholme Fund and General Growth Properties, Inc. |
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10.6 |
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Standstill Agreement, dated as of November 9, 2010, between Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. and General Growth Properties, Inc. |
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10.7 |
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Registration Rights Agreement, dated as of November 9, 2010, between Brookfield Retail Holdings LLC, Brookfield Retail Holdings II LLC, Brookfield Retail Holdings III LLC, Brookfield Retail Holdings IV-A LLC, Brookfield Retail Holdings IV-B LLC, Brookfield Retail Holdings IV-C LLC, Brookfield Retail Holdings IV-D LLC, Brookfield Retail Holdings V LP and Brookfield US Retail Holdings LLC, and General Growth Properties, Inc. |
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10.8 |
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Registration Rights Agreement, dated as of November 9, 2010, between The Fairholme Fund, Fairholme Focused Income Fund and General Growth Properties, Inc. |
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10.9 |
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Registration Rights Agreement, dated as of November 9, 2010, between Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd., Pershing Square International V, Ltd., Blackstone Real Estate Partners VI L.P. and its permitted assigns and General Growth Properties, Inc. |
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10.10 |
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Registration Rights Agreement, dated as of November 9, 2010, between Teacher Retirement System of Texas and General Growth Properties, Inc. |
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10.11 |
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Agreement and Plan of Merger, dated as of November 9, 2010, by and among GGP, Inc., General Growth Properties, Inc., GGP Real Estate Holding I, Inc., and GGP Merger Sub, Inc. |
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99.1 |
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Press release, dated November 9, 2010, titled “General Growth Properties Completes Financial Restructuring and Emerges From Chapter 11” |
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99.2 |
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Separation Agreement, dated as of November 9, 2010, between The Howard Hughes Corporation and General Growth Properties, Inc. |
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99.3 |
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Transition Services Agreement, dated as of November 9, 2010, between The Howard Hughes Corporation and General Growth Properties, Inc. |
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99.4 |
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Tax Matters Agreement, dated as of November 9, 2010, between The Howard Hughes Corporation and General Growth Properties, Inc. |
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99.5 |
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Relationship Agreement, dated as of November 9, 2010, between Brookfield Asset Management, Inc. and General Growth Properties, Inc. |
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99.6 |
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Credit and Guaranty Agreement, dated as of November 9, 2010, among Deutsche Bank Trust Company Americas, as administrative agent and collateral agent, various lenders, and Deutsche Bank Securities Inc., Wells Fargo Securities, LLC and RBC Capital Markets, LLC as Joint Lead Arrangers and General Growth Properties, Inc. |
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99.7 |
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6% Promissory Note, dated November 9, 2010, issued by General Growth Properties, Inc. to PSRH, Inc. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GENERAL GROWTH PROPERTIES, INC. |
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/s/ Edmund Hoyt |
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Name: Edmund Hoyt |
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Title: Senior Vice President and Chief Accounting Officer |
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Date: November 12, 2010 |
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GGP, INC. |
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/s/ Edmund Hoyt |
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Name: Edmund Hoyt |
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Title: Senior Vice President and Chief Accounting Officer |
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Date: November 12, 2010 |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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3.1 |
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Amended and Restated Certificate of Incorporation of New GGP, Inc. (now called General Growth Properties, Inc.) |
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3.2 |
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Amended and Restated Bylaws of General Growth Properties, Inc. |
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4.1 |
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Warrant Agreement, dated as of November 9, 2010, between General Growth Properties, Inc. and Mellon Investor Services LLC |
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4.2 |
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The Rouse Company and Wilmington Trust FSB (Trustee) Indenture, dated November 9, 2010 |
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10.1 |
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Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010, between Brookfield Retail Holdings LLC (formerly REP Investments LLC) and General Growth Properties, Inc. |
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10.2 |
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Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, between the Fairholme Fund and Fairholme Focused Income Fund and General Growth Properties, Inc. |
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10.3 |
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Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, between Pershing Square Capital Management, L.P., on behalf of Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. and General Growth Properties, Inc. |
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10.4 |
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Standstill Agreement, dated as of November 9, 2010, between Brookfield Retail Holdings LLC, Brookfield Retail Holdings II LLC, Brookfield Retail Holdings III LLC, Brookfield Retail Holdings IV-A LLC, Brookfield Retail Holdings IV-B LLC, Brookfield Retail Holdings IV-C LLC, Brookfield Retail Holdings IV-D LLC and Brookfield Retail Holdings V LP and General Growth Properties, Inc. |
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10.5 |
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Standstill Agreement, dated as of November 9, 2010, between The Fairholme Fund and General Growth Properties, Inc. |
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10.6 |
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Standstill Agreement, dated as of November 9, 2010, between Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. and General Growth Properties, Inc. |
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10.7 |
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Registration Rights Agreement, dated as of November 9, 2010, between Brookfield Retail Holdings LLC, Brookfield Retail Holdings II LLC, Brookfield Retail Holdings III LLC, Brookfield Retail Holdings IV-A LLC, Brookfield Retail Holdings IV-B LLC, Brookfield Retail Holdings IV-C LLC, Brookfield Retail Holdings IV-D LLC, Brookfield Retail Holdings V LP and Brookfield US Retail Holdings LLC, and General Growth Properties, Inc. |
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10.8 |
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Registration Rights Agreement, dated as of November 9, 2010, between The Fairholme Fund, Fairholme Focused Income Fund and General Growth Properties, Inc. |
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10.9 |
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Registration Rights Agreement, dated as of November 9, 2010, between Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd., Pershing Square International V, Ltd., Blackstone Real Estate Partners VI L.P. and its permitted assigns and General Growth Properties, Inc. |
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10.10 |
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Registration Rights Agreement, dated as of November 9, 2010, between Teacher Retirement System of Texas and General Growth Properties, Inc. |
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10.11 |
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Agreement and Plan of Merger, dated as of November 9, 2010, by and among GGP, Inc., General Growth Properties, Inc., GGP Real Estate Holding I, Inc., and GGP Merger Sub, Inc. |
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99.1 |
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Press release, dated November 9, 2010, titled “General Growth Properties Completes Financial Restructuring and Emerges From Chapter 11” |
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99.2 |
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Separation Agreement, dated as of November 9, 2010, between The Howard Hughes Corporation and General Growth Properties, Inc. |
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99.3 |
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Transition Services Agreement, dated as of November 9, 2010, between The Howard Hughes Corporation and General Growth Properties, Inc. |
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99.4 |
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Tax Matters Agreement, dated as of November 9, 2010, between The Howard Hughes Corporation and General Growth Properties, Inc. |
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99.5 |
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Relationship Agreement, dated as of November 9, 2010, between Brookfield Asset Management, Inc. and General Growth Properties, Inc. |
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99.6 |
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Credit and Guaranty Agreement, dated as of November 9, 2010, among Deutsche Bank Trust Company Americas, as administrative agent and collateral agent, various lenders, and Deutsche Bank Securities Inc., Wells Fargo Securities, LLC and RBC Capital Markets, LLC as Joint Lead Arrangers and General Growth Properties, Inc. |
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99.7 |
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6% Promissory Note, dated November 9, 2010, issued by General Growth Properties, Inc. to PSRH, Inc. |
Exhibit 3.1
EXECUTION COPY
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NEW GGP, INC.
The present name of the corporation is New GGP, Inc. (the “ Corporation ”). The Corporation was incorporated under the name “New GGP, Inc.” by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on July 1, 2010, which Certificate of Incorporation was amended, in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware (the “ DGCL ”), by the filing of a Certificate of Amendment with the Secretary of State of the State of Delaware on October 27, 2010. In accordance with Sections 242 and 245 of the DGCL, the Certificate of Incorporation of the Corporation, as previously amended, is hereby amended and restated to read in its entirety as follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the “ Corporation ”) shall be General Growth Properties, Inc.
ARTICLE II
The address of the Corporation’s registered office in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, County of New Castle. The name of the Corporation’s registered agent at such address is Corporation Service Company. The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors of the Corporation (the “ Board of Directors ”) may designate or as the business of the Corporation may from time to time require.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE IV
A. Classes and Number of Shares . The total number of shares of all classes of capital stock that the Corporation shall have authority to issue is Eleven Billion Five Hundred Million (11,500,000,000) shares, consisting of (i) Five Hundred Million (500,000,000) shares of preferred stock, par value $0.01 per share (the “Preferred Stock”), and (ii) Eleven Billion (11,000,000,000) shares of common stock, par value $0.01 per share (the “Common Stock”).
B. Common Stock . The holders of outstanding shares of Common Stock shall have the right to vote on all questions to the exclusion of all other stockholders, each holder of record of Common Stock being entitled to one vote for each share of Common Stock standing in the
name of the stockholder on the books of the Corporation, except as may be provided in this Certificate of Incorporation, as it may be amended from time to time (the “ Certificate of Incorporation ”), in a Preferred Stock Designation (as hereinafter defined), or as required by law.
C. Preferred Stock . The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized to provide for the issuance of shares of Preferred Stock in series and, by filing a certificate of designations pursuant to the applicable law of the State of Delaware (hereinafter referred to as a “ Preferred Stock Designation ”), to establish from time to time for each such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the shares of each such series, and the qualifications, limitations and restrictions thereof. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following:
(1) The designation of the series, which may be by distinguishing number, letter or title.
(2) The number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding).
(3) Whether dividends, if any, shall be paid, and, if paid, the date or dates upon which, or other times at which, such dividends shall be payable, whether such dividends shall be cumulative or noncumulative, the rate of such dividends (which may be variable) and the relative preference in payment of dividends of such series.
(4) The redemption provisions and price or prices, if any, for shares of the series.
(5) The terms and amounts of any sinking fund or similar fund provided for the purchase or redemption of shares of the series.
(6) The amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
(7) Whether the shares of the series shall be convertible into shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series of such other security, the conversion price or prices, or rate or rates, any adjustments thereto, the date or dates on which such shares shall be convertible and all other terms and conditions upon which such conversion may be made.
(8) Restrictions on the issuance of shares of the same series or of any other class or series.
(9) The voting rights, if any, of the holders of shares of the series.
D. Issuance of Rights to Purchase Securities and Other Property . Subject to the express rights of the holders of any series of Preferred Stock, if any outstanding, but only to the extent expressly set forth in the Preferred Stock Designation with respect thereto, the Board of Directors is hereby authorized to create and to authorize and direct the issuance (on either a pro rata or a non-pro rata basis) by the Corporation of rights, options and warrants for the purchase of shares of capital stock of the Corporation or other securities of the Corporation, at such times, in such amounts, to such persons, for such consideration, with such form and content (including without limitation the consideration for which any shares of capital stock of the Corporation or other securities of the Corporation are to be issued) and upon such terms and conditions as it may, from time to time, determine upon, subject only to the restrictions, limitations, conditions and requirements imposed by the DGCL, other applicable laws and this Certificate of Incorporation.
ARTICLE V
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation; provided , however , that any amendment, alteration, modification or repeal of a Bylaw or adoption of a new provision in the Bylaws, in each case by the stockholders, may provide that it cannot be further amended, altered, modified or repealed by the Board of Directors, in which case the Board of Directors shall not be authorized to further amend, alter, modify or repeal such Bylaw amendment or such new Bylaw provision.
ARTICLE VI
A. Subject to the rights of the holders of any series of Preferred Stock, if any outstanding, as set forth in a Preferred Stock Designation to elect additional directors under specified circumstances, the number of directors of the Corporation shall be fixed by the Bylaws of the Corporation and may be increased or decreased from time to time in such a manner as may be prescribed by the Bylaws and the DGCL.
B. Unless and except to the extent that the Bylaws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.
C. Subject to the rights of the holders of any series of Preferred Stock, if any outstanding, with respect to the election of directors under specified circumstances, any director may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of a majority of the voting power of the capital stock of the Corporation entitled to vote generally in the election of directors (the “ Voting Stock ”), voting together as a single class.
D. Notwithstanding the foregoing provisions of this Article VI and any limitations contained in any Preferred Stock Designation, each director shall serve until such director’s successor is duly elected and qualified or until such director’s death, resignation or removal. No change in the number of directors constituting the Board of Directors shall shorten or increase the term of any incumbent director.
ARTICLE VII
The Corporation, to the fullest extent permitted by the DGCL, as the same exists or may hereafter be amended, shall indemnify and hold harmless any person (a “ Covered Person ”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative, regulatory, arbitral or investigative (a “ proceeding ”), by reason of the fact that he or she, or a person for whom he or she is a legal representative, is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, limited liability entity, joint venture, trust, other enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss (including judgments, fines and amounts paid in settlement) suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the foregoing sentence, the Corporation shall be required to indemnify a Covered Person in connection with a proceeding (or part thereof) commenced by such Covered Person (other than proceedings to enforce rights conferred by this Certificate of Incorporation or the Bylaws of the Corporation) only if the commencement of such proceeding was authorized in the specific case by the Board of Directors. To the fullest extent permitted by the DGCL, as the same exists or may hereafter be amended, expenses (including attorneys’ fees) incurred by a Covered Person in defending any proceeding shall be paid by the Corporation in advance of the final disposition of such proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized hereby. The Corporation may, by action of the Board of Directors, provide indemnification to employees and agents of the Corporation or its subsidiaries with the same (or lesser) scope and effect as the foregoing indemnification of directors and officers.
ARTICLE VIII
No director shall be personally liable either to the Corporation or to any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended. Any amendment, modification or repeal of any provision of this Certificate of Incorporation inconsistent with the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.
ARTICLE IX
The Corporation may purchase and maintain insurance, at its expense, on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was a director, officer, employee or agent of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability, expense or loss asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability, expense or loss under the provisions of the Bylaws of the Corporation or the DGCL. To the extent that the Corporation maintains any policy or policies providing such insurance, each such person shall be covered by
such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such person.
ARTICLE X
The Corporation reserves the right at any time and from time to time to amend, modify or repeal any provision contained in this Certificate of Incorporation or a Preferred Stock Designation, and any other provisions authorized by the laws of the State of Delaware in force at such time may be added or inserted in the manner now or hereafter prescribed herein or by applicable law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this Article X; provided , however , that any amendment, modification or repeal of Article VII or Article VIII of this Certificate of Incorporation shall not adversely affect any right or protection existing hereunder immediately prior to such amendment, modification or repeal.
ARTICLE XI
The Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director or officer of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine.
ARTICLE XII
Subject to the rights of the holders of any series of Preferred Stock as set forth in a Preferred Stock Designation, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing of such stockholders.
ARTICLE XIII
The Corporation shall not issue any class of non-voting equity securities unless and solely to the extent permitted by Section 1123(a)(6) of title 11 of the United States Code (the “ Bankruptcy Code ”) as in effect on the date of filing of this Certificate of Incorporation with the Secretary of State of the State of Delaware; provided , however , that this Article XIII (a) will have no further force and effect beyond that required under Section 1123(a)(6) of the Bankruptcy Code, (b) will have such force and effect, if any, only for so long as Section 1123(a)(6) of the Bankruptcy Code is in effect and applicable to the Corporation and (c) in all events may be amended or eliminated from time to time in accordance with applicable law.
ARTICLE XIV
For purposes of this Article XIV, the following terms shall have the following meaning:
“ Beneficial Ownership ” shall mean ownership of shares of Capital Stock by a Person, whether the interest in such shares is held directly or indirectly (including by a nominee), and shall include shares of Capital Stock that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms “ Beneficial Owner ,” “ Beneficially Owns ,” “ Beneficially Own ,” and “ Beneficially Owned ” shall have correlative meanings.
“ Beneficiary ” shall mean, with respect to any Trust, one or more organizations described in each of Section 501(c)(3), Section 170(b)(1)(A) (other than clauses (vii) or (viii) thereof) and Section 170(c)(2) of the Code that are named by the Corporation as the beneficiary or beneficiaries of such Trust, in accordance with the provisions of subsection G(1) of this Article XIV.
“ Code ” shall mean the Internal Revenue Code of 1986, as amended, or any successor statute.
“ Capital Stock ” shall mean the Common Stock and the Preferred Stock.
“ Constructive Ownership ” shall mean ownership of shares of Capital Stock by a Person whether the interest in such shares is held directly or indirectly (including through a nominee), and shall include shares of Capital Stock that would be treated as owned through the application of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. The terms “ Constructive Owner ,” “ Constructively Owns ,” “ Constructively Own ,” and “ Constructively Owned ” shall have correlative meanings.
“ Constructive Ownership Limit ” shall mean 9.9% of the number or value, whichever is more restrictive, of the outstanding shares of Capital Stock, as may be adjusted pursuant to subsection H of this Article XIV.
“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
“ Investment Agreements ” means (i) that certain Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010, by and between General Growth Properties, Inc. and REP Investments LLC, (ii) that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between General Growth Properties, Inc. and The Fairholme Fund and Fairholme Focused Income Fund and (iii) that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between General Growth Properties, Inc. and Pershing Square Capital Management, L.P., on behalf of Pershing Square L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd.; each as may be further amended or modified from time to time.
“ Market Price ” on any date shall mean the fair market value of the relevant Capital Stock, as determined in good faith by the Board of Directors.
“ Non-Transfer Event ” shall mean an event, other than a purported Transfer, that would cause any Person to Beneficially Own shares of Capital Stock in excess of the Stock Ownership Limit or Constructively Own shares of Capital Stock in excess of the Constructive Ownership
Limit. Non-Transfer Events include, but are not limited to, (i) the granting of any option or entering into any agreement for the sale, transfer, or other disposition of shares of Capital Stock, (ii) the sale, transfer, assignment, or other disposition of any securities or rights convertible into or exchangeable for shares of Capital Stock, (iii) a Person purchasing or otherwise acquiring an interest in a Person which Beneficially Owns shares of Capital Stock, or (iv) a redemption, repurchase, restructuring or similar transaction with respect to a person that Beneficially Owns shares of Capital Stock.
“ Permitted Transferee ” shall mean any Person designated as a Permitted Transferee in accordance with the provisions of subsection G(5) of this Article XIV.
“ Person ” shall mean an individual, corporation, partnership, limited liability company, estate, trust, a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock corporation, or other entity.
“ Prohibited Owner ” shall mean, with respect to any purported Transfer or Non-Transfer Event, any Person who, but for the provisions of subsection B of Article XIV hereof, would (i) Beneficially Own shares of Capital Stock in excess of the Stock Ownership Limit (but such Person will be considered a Prohibited Owner only with respect to those shares in excess of the applicable limit), (ii) Constructively Own shares of Capital Stock in excess of the Constructive Ownership Limit (but such Person will be considered a Prohibited Owner only with respect to those shares in excess of the applicable limit), (iii) cause the shares of Capital Stock to be beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code), (iv) cause the Corporation to be “closely held” within the meaning of Section 856(h) of the Code, or (v) cause the Corporation or any of its Subsidiaries to Constructively Own 9.9% or more of the ownership interests in a tenant of the Corporation’s or a Subsidiary’s real property, within the meaning of Section 856(d)(2)(B) of the Code, and if appropriate in the context, shall also mean any Person who would own record title to shares of Capital Stock that the Prohibited Owner would have so owned.
“ REIT ” shall mean a real estate investment trust under Sections 856 through 860 of the Code.
“ REIT Requirements ” shall mean the requirements contained in Sections 856 through 860 of the Code which must be satisfied in order for the Corporation to qualify as a REIT.
“ Restriction Termination Date ” shall mean the first day after the date on which the Board of Directors determines that it is no longer in the best interests of the Corporation to qualify as a REIT.
“ Shares-in-Trust ” shall mean any shares of Capital Stock designated Shares-in-Trust pursuant to subsection B of this Article XIV.
“ Stock Ownership Limit ” shall mean 9.9% of the number or value, whichever is more restrictive, of the outstanding shares of Capital Stock, as may be adjusted pursuant to subsection H of this Article XIV.
“ Subsidiary ” shall have the meaning set forth in subsection A(4) of this Article XIV.
“ Transfer ” (as a noun) shall mean any issuance, sale, transfer, gift, assignment, devise, or other disposition of shares of Capital Stock, whether voluntary or involuntary, whether of record, constructively or beneficially, and whether by operation of law or otherwise. “ Transfer ” (as a verb) shall have the correlative meaning.
“ Trust ” shall mean any separate trust created pursuant to subsection B of this Article XIV and administered in accordance with the terms of subsection G of this Article XIV, for the exclusive benefit of any Beneficiary.
“ Trustee ” shall mean any Person or entity that is not an affiliate of either the Corporation or any Prohibited Owner, such Trustee to be designated by the Corporation to act as trustee of any Trust, or any successor trustee thereof.
A. Restrictions on Transfers .
(1) Except as provided in subsection F of this Article XIV, from the date hereof and through and including the Restriction Termination Date,
(a) (A) no Person shall Beneficially Own outstanding shares of Capital Stock in excess of the Stock Ownership Limit, and (B) no Person shall Constructively Own outstanding shares of Capital Stock in excess of the Constructive Ownership Limit;
(b) any purported Transfer that, if effective, would result in any Person Beneficially Owning shares of Capital Stock in excess of the Stock Ownership Limit or Constructively Owning shares of Capital Stock in excess of the Constructive Ownership Limit shall be void ab initio as to the Transfer of that number of shares of Capital Stock which otherwise would be Beneficially Owned by such person in excess of the Stock Ownership Limit or Constructively Owned by such Person in excess of the Constructive Ownership Limit, and the intended transferee shall acquire no rights in such excess shares of Capital Stock; and
(2) From the date hereof and through and including the Restriction Termination Date, any Transfer that, if effective, would result in shares of Capital Stock being beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio as to the Transfer of that number of shares which would be otherwise beneficially owned (determined without reference to any rules of attribution) by the transferee, and the intended transferee shall acquire no rights in such shares of Capital Stock.
(3) From the date hereof and through and including the Restriction Termination Date, any Transfer of shares of Capital Stock that, if effective, would result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of the taxable year) shall be void ab initio as to the Transfer of that number of shares of Capital Stock which would cause the Corporation to be “closely held” within the meaning of
Section 856(h) of the Code, and the intended transferee shall acquire no rights in such shares of Capital Stock.
(4) From the date hereof and through and including the Restriction Termination Date, any Transfer of shares of Capital Stock that, if effective, would cause the Corporation or any of its Subsidiaries to Constructively Own 10% or more of the ownership interests in a tenant of the real property of (i) the Corporation or (ii) any direct or indirect subsidiary (including, without limitation, partnerships and limited liability companies) of the Corporation (a “ Subsidiary ”), within the meaning of Section 856(d)(2)(B) of the Code, shall be void ab initio as to the Transfer of that number of shares of Capital Stock which would cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation’s or a Subsidiary’s real property, within the meaning of Section 856(d)(2)(B) of the Code, and the intended transferee shall acquire no rights in such excess shares of Capital Stock.
B. Transfers to Trust .
(1) If, notwithstanding the other provisions contained in this Article XIV, at any time after the date hereof and through and including the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event such that, if effective, any Person would either (A) Beneficially Own shares of Capital Stock in excess of the Stock Ownership Limit or (B) Constructively Own shares of Capital Stock in excess of the Constructive Ownership Limit (x) except as otherwise provided in subsection F of this Article XIV, the purported transferee shall acquire no right or interest (or, in the case of a Non-Transfer Event, the Person holding record title to the shares of Capital Stock Beneficially Owned or Constructively Owned by such Beneficial Owner or Constructive Owner shall cease to own any right or interest) in such number of shares of Capital Stock which would cause such Person to Beneficially Own shares of Capital Stock in excess of the Stock Ownership Limit or Constructively Own shares of Capital Stock in excess of the Constructive Ownership Limit, as applicable, (y) such number of shares of Capital Stock in excess of the Stock Ownership Limit or the Constructive Ownership Limit, as applicable (rounded up to the nearest whole share), shall be designated Shares-in-Trust and, in accordance with the provisions of subsection G of this Article XIV, transferred automatically and by operation of law to the Trust to be held in accordance with subsection G of this Article XIV, and (z) the Prohibited Owner shall submit such number of shares of Capital Stock to the Corporation for registration in the name of the Trustee. Such transfer to the Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be.
(2) If, notwithstanding the other provisions contained in this Article XIV, at any time after the date hereof and through and including the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event that, if effective, would (i) result in the shares of Capital Stock being beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code), (ii) result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code, or (iii) cause the Corporation or any of its Subsidiaries to Constructively Own 10% or more
of the ownership interests in a tenant of the Corporation’s or a Subsidiary’s real property, within the meaning of Section 856(d)(2)(B) of the Code, then (x) the purported transferee shall not acquire any right or interest (or, in the case of a Non-Transfer Event, the Person holding record title of the shares of Capital Stock with respect to which such Non-Transfer Event occurred shall cease to own any right or interest) in such number of shares of Capital Stock, the ownership of which by such purported transferee or record holder would (A) result in the shares of Capital Stock being beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code), (B) result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code, or (C) cause the Corporation or any of its Subsidiaries to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation’s or a Subsidiary’s real property, within the meaning of Section 856(d)(2)(B) of the Code, (y) such number of shares of Capital Stock (rounded up to the nearest whole share) shall be designated Shares-in-Trust and, in accordance with the provisions of subsection G of this Article XIV, transmitted automatically and by operation of law to the Trust to be held in accordance with subsection G of this Article XIV, and (z) the Prohibited Owner shall submit such number of shares of Capital Stock to the Corporation for registration in the name of the Trustee. Such transfer to a Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be.
(3) The transfer of Capital Stock to the Trust shall be subject to the proviso in paragraph 10 of Exhibit D to the Investment Agreements.
C. Remedies For Breach . If the Corporation shall at any time determine, after requesting such information as the Corporation determines is relevant, subject to the provisions of subsection E of this Article XIV, that a Transfer has taken place in violation of subsection A of this Article XIV or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any shares of Capital Stock in violation of subsection A of this Article XIV, the Corporation shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or acquisition, including, but not limited to, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or acquisition.
D. Notice of Restricted Transfer . Any Person who acquires or attempts to acquire shares of Capital Stock in violation of subsection A of this Article XIV, or any Person who owned shares of Capital Stock that were transferred to the Trust pursuant to the provisions of subsection B of this Article XIV, shall as promptly as practicable give written notice to the Corporation of such event or, in the case of such a proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or Non-Transfer Event, as the case may be, on the Corporation’s status as a REIT.
E. Owner Required to Provide Information . From the date hereof and through and including the Restriction Termination Date, upon reasonable advance written notice by the Corporation by January 30th of each year, every Beneficial Owner or Constructive Owner of more than five percent (5%), or such lower percentages as required pursuant to regulations under
the Code (currently Treasury Regulation § 1.857-8(d)), of the outstanding shares of all classes of Capital Stock shall either (A) provide to the Corporation a written statement or affidavit stating the name and address of such Beneficial Owner or Constructive Owner, the number of shares of Capital Stock Beneficially Owned or Constructively Owned, and a description of how such shares are held, or (B) comply with Treasury Regulation § 1.857-9. Each such Beneficial Owner or Constructive Owner shall provide to the Corporation such information as the Corporation may reasonably request in order to determine the effect, if any, of such Beneficial Ownership or Constructive Ownership on the Corporation’s status as a REIT and to ensure compliance with the Stock Ownership Limit and the Constructive Ownership Limit.
F. Exception . The Board of Directors, in its sole and absolute discretion, may except a Person from the Stock Ownership Limit or the Constructive Ownership Limit if (i) such Person is not (A) an individual for purposes of Code Section 542(a)(2), as modified by Code Section 856(h), or (B) treated as the owner of such stock for purposes of Code Section 542(a)(2), as modified by Code Section 856(h), and the Board of Directors obtains such representations and undertakings from such Person as are necessary to ascertain that no Person’s Beneficial or Constructive Ownership of such shares of Capital Stock will violate subsection A(1), A(2), A(3) or A(4) of this Article XIV, (ii) such Person does not and represents that it will not Beneficially Own shares of Capital Stock to the extent that such Beneficial Ownership of Capital Stock would result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code, or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial or Constructive Ownership that would result in the Corporation or any of its Subsidiaries Constructively Owning an interest in a tenant of the Corporation (or a tenant of any entity owned or controlled by the Corporation) that would cause the Corporation or a Subsidiary to Constructively Own 10% or more of the ownership interests in such tenant with the result that the Corporation does not satisfy the REIT Requirements), and the Board of Directors obtains such representations and undertakings from such Person as are necessary to ascertain this fact, and (iii) such Person agrees that any violation or attempted violation of such representations or undertakings (or other action which is contrary to the restrictions contained in subsections A through E of this Article XIV) will result in such shares of Capital Stock that are in excess of the Stock Ownership Limit or the Constructive Ownership Limit, as applicable, being designated as Shares-in-Trust in accordance with the provisions of subsection B of this Article XIV. In exercising its discretion under this subsection F, the Board of Directors may, but is not required to, obtain a ruling from the Internal Revenue Service or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors, as it may deem necessary or desirable in order to maintain the Corporation’s status as a REIT, and, in addition, may obtain such representations and undertakings from a Beneficial Owner or Constructive Owner that it may deem necessary or desirable under the circumstances.
G. Shares-in-Trust .
(1) Trust . Any shares of Capital Stock transferred to a Trust and designated Shares-in-Trust pursuant to subsection B of this Article XIV shall be held for the exclusive benefit of the Beneficiary. The Corporation shall name a Beneficiary for each Trust within five (5) days after the date on which the Corporation is made aware of the existence of the Trust. Any transfer to a Trust, and subsequent designation of shares of Capital Stock as Shares-in-Trust, pursuant to subsection B of this Article XIV shall be
effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event that results in the transfer to the Trust. Shares-in-Trust shall remain issued and outstanding shares of Capital Stock of the Corporation and shall be entitled to the same rights and privileges on identical terms and conditions as are all other issued and outstanding shares of Capital Stock of the same class and series. When transferred to a Permitted Transferee in accordance with the provisions of subsection G(5) of this Article XIV, such Shares-in-Trust shall cease to be designated as Shares-in-Trust.
(2) Dividend Rights . The Trust, as record holder of Shares-in-Trust, shall be entitled to receive all dividends and distributions with respect to such shares of Capital Stock and shall hold such dividends or distributions in trust for the benefit of the Beneficiary. The Prohibited Owner with respect to Shares-in-Trust shall repay to the Trust the amount of any dividends or distributions received by it that are attributable to any shares of Capital Stock designated as Shares-in-Trust and the record date of which was on or after the date that such shares became Shares-in-Trust. The Corporation shall take all measures that it determines reasonably necessary to recover the amount of any such dividend or distribution paid to a Prohibited Owner, including, if necessary, (x) withholding any portion of future dividends or distributions payable on shares of Capital Stock Beneficially Owned or Constructively Owned by the Person who, but for the provisions of subsection B of this Article XIV, would Constructively Own or Beneficially Own the Shares-in-Trust, and (y) as soon as reasonably practicable following the Corporation’s receipt or withholding thereof paying over to the Trust for the benefit of the Beneficiary the dividends or distributions so received or withheld, as the case may be.
(3) Rights Upon Liquidation . In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of, or any distribution of the assets of, the Corporation, each holder of Shares-in-Trust shall be entitled to receive, ratably with each other holder of shares of Capital Stock of the same class or series, that portion of the assets of the Corporation which is available for distribution to the holders of such class or series of shares of Capital Stock. The Trust shall distribute to the Prohibited Owner the amounts received upon such liquidation, dissolution, winding-up, or distribution; provided , however , that the Prohibited Owner shall not be entitled to receive amounts pursuant to this subsection G(3) of this Article XIV in excess of, in the case of a purported Transfer in which the Prohibited Owner gave value for shares of Capital Stock and which Transfer resulted in the transfer of the shares to the Trust, the price per share, if any, such Prohibited Owner paid for the shares of Capital Stock and, in the case of a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (e.g., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer. Any remaining amount in such Trust shall be distributed to the Beneficiary.
(4) Voting Rights . The Trustee shall be entitled to vote all Shares-in-Trust. Any vote by a Prohibited Owner as a holder of shares of Capital Stock prior to the
discovery by the Corporation that the shares of Capital Stock are Shares-in-Trust shall, subject to applicable law, be rescinded and be void ab initio with respect to such Shares-in-Trust and be recast by the Trustee; provided , however , that if the Corporation has already taken irreversible corporation action, then the Trustee shall not have the authority to rescind and recast such vote. The Trustee shall vote all Shares-in-Trust in accordance with the recommendation of the Designated Proxy Firm and shall abstain if no such recommendation has been made. For the purposes of this subsection (4), the “ Designated Proxy Firm ” means Institutional Shareholder Services, Inc. or any successor thereto or a nationally recognized proxy advisory firm designated by the vote of a majority of the independent members of the Board of Directors in their discretion from time to time; provided , however , that the independent members of the Board of Directors shall not designate a Designated Proxy Firm after the date on which a meeting of stockholders has been called until after such meeting has been held; provided , further , however that if such meeting has been adjourned, no designation of a Designated Proxy Firm shall occur until after the date on which such adjourned meeting has been held. The Prohibited Owner shall be deemed to have given, as of the close of business on the business day prior to the date of the purported Transfer or Non-Transfer Event that results in the transfer to the Trust of shares of Capital Stock under subsection B of this Article XIV, an irrevocable proxy to the Trustee to vote the Shares-in-Trust in accordance with this subsection (4).
(5) Designation of Permitted Transferee . The Trustee shall have the exclusive and absolute right to designate a Permitted Transferee of any and all Shares-in-Trust in an orderly fashion so as not to materially adversely affect the Market Price of its Shares-in-Trust. The Trustee shall designate any Person as a Permitted Transferee, provided , however , that (i) the Permitted Transferee so designated purchases for valuable consideration (whether in a public or private sale) the Shares-in-Trust, and (ii) the Permitted Transferee so designated may acquire such Shares-in-Trust without such acquisition resulting in a transfer to a Trust and the redesignation of such shares of Capital Stock so acquired as Shares-in-Trust under subsection B of this Article XIV. Upon the designation by the Trustee of a Permitted Transferee in accordance with the provisions of this subsection G(5), the Trustee shall (i) cause to be transferred to the Permitted Transferee that number of Shares-in-Trust acquired by the Permitted Transferee, (ii) cause to be recorded on the books of the Corporation that the Permitted Transferee is the holder of record of such number of shares of Capital Stock, as applicable, (iii) cause the Shares-in-Trust to be cancelled, and (iv) distribute to the Beneficiary any and all amounts held with respect to the Shares-in-Trust after making the payment to the Prohibited Owner pursuant to subsection G(6) of this Article XIV.
(6) Compensation to Record Holder of Shares of Capital Stock that Become Shares-in-Trust . Any Prohibited Owner shall be entitled (following discovery of the Shares-in-Trust and subsequent designations of the Permitted Transferee in accordance with subsection G(5) of this Article XIV or following the acceptance of the offer to purchase such shares in accordance with subsection G(7) of this Article XIV) to receive from the Trustee following the sale or other disposition of such Shares-in-Trust the lesser of (i) in the case of (a) a purported Transfer in which the Prohibited Owner gave value for shares of Capital Stock and which Transfer resulted in the transfer of the shares to the
Trust, the price per share, if any, such Prohibited Owner paid for the shares of Capital Stock, or (b) a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (e.g., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer, and (ii) the price per share received by the Trustee from the sale or other disposition of such Shares-in-Trust. Any amounts received by the Trustee in respect of such Shares-in-Trust and in excess of such amounts to be paid to the Prohibited Owner pursuant to this subsection G(6) shall be distributed to the Beneficiary in accordance with the provisions of subsection G(5) of this Article XIV. Each Beneficiary and Prohibited Owner waives any and all claims that it may have against the Trustee and the Trust arising out of the disposition of Shares-in-Trust, except for claims arising out of the gross negligence or willful misconduct of, or any failure to make payments in accordance with this subsection G(6), by such Trustee or the Corporation.
(7) Purchase Right in Shares-in-Trust . Shares-in-Trust shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that created such Shares-in-Trust (or, in the case of devise, gift or Non-Transfer Event, the Market Price at the time of such devise, gift or Non-Transfer Event), and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. Subject to subsection G(6) of this Article XIV, the Corporation shall have the right to accept such offer for a period of ninety (90) days after the later of (i) the date of the Non-Transfer Event or purported Transfer which resulted in such Shares-in-Trust and (ii) the date the Corporation determines in good faith that a Transfer or Non-Transfer Event resulting in Shares-in-Trust has occurred, if the Corporation does not receive a notice of such Transfer or Non-Transfer Event pursuant to subsection D of this Article XIV.
H. Modification and Limitations on Changes of Limits .
(1) Increase or Decrease in Stock Ownership Limit or Constructive Ownership Limit . Subject to the limitations provided in subsection H(2) of this Article XIV, the Board may from time to time increase or decrease the Stock Ownership Limit or the Constructive Ownership Limit; provided , however , that (i) any decrease may only be made prospectively as to subsequent holders (other than a decrease as a result of a retroactive change in existing law that would require a decrease in order for the Corporation to retain REIT status, in which case such decrease shall be effective immediately) and (ii) any decrease may only be made if the Board reasonably determines that such decrease is advisable to help the Corporation protect its status as a REIT.
(2) Limitation on Changes in Stock Ownership Limit or Constructive Ownership Limit . Prior to the modification of any Stock Ownership Limit or Constructive Ownership Limit pursuant to subsection H(1) of this Article XIV, the Board may require such opinions of counsel, affidavits, undertakings, or agreements as it may deem necessary or advisable in order to determine or ensure the Corporation’s status as a REIT.
I. Remedies Not Limited . Nothing contained in this Article XIV shall limit the authority of the Corporation to take such other action as it deems necessary or advisable (i) to protect the Corporation and the interests of its stockholders by preservation of the Corporation’s status as a REIT, and (ii) to ensure compliance with the Stock Ownership Limit or the Constructive Ownership Limit, as applicable.
J. Ambiguity . In the case of an ambiguity in the application of any of the provisions of this Article XIV, including any defined term contained herein, the Board of Directors shall have the power to determine the application of the provisions of this Article XIV with respect to any situation based on the facts known to it. In the event that this Article XIV requires an action by the Board of Directors and this Certificate of Incorporation fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is in furtherance of the provisions of this Article XIV.
K. Severability . If any provision of this Article XIV or any application of any such provision is determined to be invalid by any Federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.
L. Legend . Each certificate for shares of Capital Stock shall bear substantially the following legend:
“The shares represented by this certificate are subject to restrictions on transfer for the purpose of the Corporation’s maintenance of its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the “ Code ”). No Person may (i) Beneficially Own shares of Capital Stock in excess of 9.9% of the number or value of outstanding shares of Capital Stock (whichever is more restrictive) or Constructively Own shares of Capital Stock in excess of 9.9% of the number or value of outstanding shares of Capital Stock (whichever is more restrictive); (ii) beneficially own shares of Capital Stock that would result in the shares of Capital Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution); (iii) Beneficially Own shares of Capital Stock that would result in the Corporation being “closely held” under Section 856(h) of the Code; or (iv) Constructively Own shares of Capital Stock that would cause the Corporation or any of its Subsidiaries to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation’s or a Subsidiary’s real property, within the meaning of Section 856(d)(2)(B) of the Code. Any Person who attempts to Beneficially Own or Constructively Own shares of Capital Stock in excess of the above limitations must notify the Corporation in writing as promptly as practicable. Any transfer in violation of the above limitations will be void ab initio . Notwithstanding the foregoing, if the restrictions above are violated, the shares of Capital Stock represented hereby will be transferred automatically and by operation of law to a Trust and shall be designated Shares-in-Trust. The foregoing summary does not purport to be complete and is qualified in its entirety by reference to, and all capitalized terms in this legend have the meanings defined in, the Corporation’s charter, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder who so requests.”
ARTICLE XV
In addition to any votes required by applicable law and subject to the express rights of the holders of any series of Preferred Stock, if any outstanding, and notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the then outstanding Voting Stock, voting together as a single class, shall be required to amend, modify or repeal any provision, or adopt any new or additional provision, in a manner inconsistent with Articles V, VI(C), VII, XII and this Article XV.
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by its Assistant Secretary this 9 th day of November, 2010.
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NEW GGP, INC. |
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/s/ Linda J. Wight |
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Name: Linda J. Wight |
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Its: Assistant Secretary |
SIGNATURE PAGE TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF NEW GGP, INC.
Exhibit 3.2
EXECUTION COPY
AMENDED AND RESTATED
BYLAWS
OF
GENERAL GROWTH PROPERTIES, INC.
November 9, 2010
AMENDED AND RESTATED
BYLAWS
OF
GENERAL GROWTH PROPERTIES, INC.
(Adopted November 9, 2010)
ARTICLE I
STOCKHOLDERS
SECTION 1. Stockholder Meetings .
(a) The annual meeting of stockholders of General Growth Properties, Inc. (the “Corporation”) for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held each year at such date, time and place, if any, within or without the State of Delaware, as the Board of Directors shall determine.
(b) A special meeting of the stockholders for any purpose or purposes may be called by the Board of Directors. A special meeting of stockholders shall be called by the Secretary promptly upon and in accordance with the written request, stating the purpose, date, time and place within or without the State of Delaware of the meeting, of stockholders of record who together hold fifteen percent (15%) or more of the voting power of the issued and outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (the “Voting Stock”).
SECTION 2. Notice of Meetings . Whenever stockholders are required or permitted to take any action at a meeting, a notice of the meeting shall be given that shall state the place, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present and vote at such meeting, the place at which the list of stockholders may be examined, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, and any other information required by law to be included in the notice. Unless otherwise provided by law, the Corporation’s Certificate of Incorporation, as it may be amended from time to time (the “Certificate of Incorporation”), or these amended and restated bylaws (the “Bylaws”), the notice of any meeting shall be mailed or otherwise delivered (including pursuant to electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware (the “DGCL”)) not less than ten (10) nor more than sixty (60) days prior to the date of the meeting to each stockholder of record entitled to vote at such meeting and shall otherwise comply with applicable law. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation. If notice is given by electronic transmission, such notice shall be deemed to be given at the times provided in the DGCL. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Corporation’s Certificate of Incorporation otherwise provides) any special meeting of the stockholders called by the Board of Directors may be cancelled, by resolution of the Board of Directors upon public announcement made prior to the date previously scheduled for such meeting of stockholders.
SECTION 3. Quorum and Adjournment . Except as otherwise provided by law or the Certificate of Incorporation, a quorum for the transaction of business at any meeting of stockholders shall consist of the holders of record of a majority of the voting power of the Voting Stock, present in person or by proxy, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The chairman of the meeting may (i) from time to time adjourn any meeting that is not a special meeting called by a stockholder(s) pursuant to Section 1(b), whether or not there is such a quorum and (ii) adjourn a special meeting called by a stockholder(s) pursuant to Section 1(b) only if there is not such a quorum; provided , that, in the case of clauses (i) and (ii), the date, time and place of the adjourned meeting is announced at the meeting such adjournment is taken; provided , however , that notice shall be provided if the meeting is adjourned for more than 30 days or otherwise required by law. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
SECTION 4. Organization . Meetings of stockholders shall be presided over by the Chairman of the Board of Directors (the “Chairman”), or if none or in the Chairman’s absence, the Presiding Director, or if none or in the Presiding Director’s absence, the Vice-Chairman, or if none or in the Vice-Chairman’s absence, the Chief Executive Officer, or in the Chief Executive Officer’s absence, a Vice-President, or, if none of the foregoing is present, by a chairman to be chosen by the stockholders entitled to vote who are present in person or by proxy at the meeting. The Secretary of the Corporation, or in the Secretary’s absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the chairman of the meeting shall appoint any person present to act as secretary of the meeting.
SECTION 5. Voting; Proxies; Required Vote .
(a) At each meeting of stockholders, every stockholder shall be entitled to vote in person or by proxy appointed by an instrument in writing, subscribed by such stockholder or by such stockholder’s duly authorized attorney in fact and otherwise complying with requirements of the DGCL and any stock exchange(s) upon which the Voting Stock is then listed (but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period), and, unless the Certificate of Incorporation provides otherwise, shall have one vote for each share of stock entitled to vote registered in the name of such stockholder on the books of the Corporation on the applicable record date fixed pursuant to these Bylaws. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, in all matters other than the election of directors, which shall be governed by Section 8 of this Article I, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders.
(b) When specified business is to be voted on by a class or series of stock voting as a class, the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class, unless otherwise provided in the Certificate of Incorporation.
SECTION 6. Inspectors . The Board of Directors, in advance of any meeting, may, but need not unless required by law, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not so appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of such inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of such inspector’s ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, and the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by such inspector or inspectors and execute a certificate of any fact found by such inspector or inspectors.
SECTION 7. Notice of Stockholder Nominations and Other Business .
(a) Annual Meetings of Stockholders .
(1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (B) by or at the direction of the Board of Directors, or (C) by any stockholder of the Corporation who (i) was a stockholder of record of the Corporation at the time the notice provided for in this Section 7 is delivered to the Secretary of the Corporation and at the time of the annual meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the notice procedures set forth in this Section 7 as to such business or nomination. Clause (C) of the preceding sentence shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters or nominations properly brought under Rule 14a-8 or Rule 14a-11 under the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder, the “Exchange Act”) and included in the Corporation’s proxy statement) at an annual meeting of stockholders.
(2) Without qualification or limitation of any other requirement, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to clause (C) of paragraph (a)(1) of this Section 7, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business other than the nominations of persons for election to the Board of Directors must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day nor later than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year’s annual meeting ( provided , however , that in the event that the date of the annual meeting is more than
thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or, if the first public announcement of the date of such annual meeting is less than one hundred (100) days prior to the date of such annual meeting, not later than the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation). In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(3) To be in proper form, a stockholder’s notice delivered pursuant to this Section 7 must set forth: (A) as to each person, if any, whom the stockholder proposes to nominate for election or reelection as a director (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in contested election, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Exchange Act, (ii) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected and (iii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and, if applicable, the beneficial owner of the shares held of record by such stockholder (the “Beneficial Owner”), if any, and their respective affiliates, or others acting in concert therewith, on the one hand, and each proposed nominee, and such persons’ respective affiliates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K if the stockholder making the nomination and any Beneficial Owner, if any, or any affiliate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; (B) if the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these Bylaws, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the Beneficial Owner, if any, on whose behalf the proposal is made, and a description of all agreements, arrangements and understandings between such stockholder and Beneficial Owner, if any, (including their names) in connection with the proposal of such business by such stockholder; and (C) as to the stockholder giving the notice and the Beneficial Owner, if any, (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such Beneficial Owner, if any, (ii) (a) the class or series and number of shares of capital stock of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such Beneficial Owner, (b) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Corporation, (c) any short interest in any security of the Corporation (for purposes of these Bylaws a person shall be deemed have a short interest of such stockholders and Beneficial Owner, if any, in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship
or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (d) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder and Beneficial Owner, if any, that are separated or separable from the underlying shares of the Corporation and (e) any proportionate interest in shares of the Corporation held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, (iii) a description of any agreement, arrangement or understanding with respect to the nomination or proposal between or among such stockholder and such Beneficial Owner, if any, any of their respective affiliates, and any others acting in concert with any of the foregoing with respect to such nomination or proposal, (iv) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (v) a representation whether the stockholder or the Beneficial Owner, if any, intends to be or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Corporation’s outstanding Voting Stock required to approve or adopt the proposal or elect the nominee or (b) otherwise to solicit proxies from stockholders in support of such proposal or nomination, and (vi) any other information relating to such stockholder and Beneficial Owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act. In addition, the stockholder’s notice with respect to the election of directors must include, with respect to each nominee for election or reelection to the Board of Directors, the completed and signed questionnaire, representation and agreement required by Section 9 of this Article I. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee. Notwithstanding the foregoing, the information required by clauses (a)(3)(C)(ii) and (a)(3)(C)(iii) of this Section 7 shall be updated by such stockholder and Beneficial Owner, if any, not later than ten (10) days after the record date for the meeting to disclose such information as of the record date.
(4) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 7 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 7 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(b) Special Meetings of Stockholders . Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or a committee thereof, or (2) provided , that the Board of Directors, such committee or stockholder(s) pursuant to Section 1(b) hereof have determined that a purpose of the meeting is to elect directors, by any stockholder of the Corporation who (i) is a stockholder of record of the Corporation at the time the notice provided for in this Section 7 is delivered to the Secretary of the Corporation and at the time of the special meeting, (ii) is entitled to vote at the meeting and upon such election, and (iii) complies with the notice procedures set forth in this Section 7 as to such nomination. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (a)(3) hereof with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by these Bylaws) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or, if the first public announcement of the date of such special meeting is less than one hundred (100) days prior to the date of such special meeting, the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(c) Conduct of Meetings . The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the person presiding over any meeting of stockholders shall have the right and authority to convene the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
(d) General .
(1) Only such persons who are nominated in accordance with the procedures set forth in this Section 7 and the Certificate of Incorporation shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such other business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 7. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the person presiding at the meeting of stockholders shall have the power and duty (a) to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 7 (including whether the stockholder or Beneficial Owner, if any, solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(3)(C)(v) of this Section 7) and (b) if the presiding person determines that any proposed nomination or other business was not made or proposed in compliance with this Section 7, to declare that such nomination shall be disregarded or that such proposed other business shall not be transacted. Notwithstanding the foregoing provisions of this Section 7, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or other business, such nomination shall be disregarded and such proposed other business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 7, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(2) For purposes of this Section 7, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding anything to the contrary in the foregoing provisions of this Section 7, a stockholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this Section 7; provided , however , that any references in these Bylaws to the Exchange Act are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 7 (including clause (a)(1)(C) and paragraph (b) hereof), and compliance with clause (a)(1)(C) and paragraph (b) of this Section 7 shall be the exclusive means for a stockholder to make nominations or submit other business, as applicable (other than matters or nominations brought properly under and in compliance with Rule 14a-8 or Rule 14a-11 of the Exchange Act). Nothing in this Section 7 shall be deemed to affect any rights (A) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 of the Exchange Act or (B) of the holders of any class or series of stock having a preference over the common stock of the Corporation as to dividends or upon liquidation
(“Preferred Stock”) to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.
SECTION 8. Required Vote for Election of Directors .
(a) Except as otherwise provided pursuant to the Certificate of Incorporation and except as provided by Section 12 of Article II with respect to the filling of vacancies, directors shall be elected by a majority of votes cast by the shares represented at a meeting of stockholders and entitled to vote thereon, a quorum being present at such meeting, unless the election is contested, in which case directors shall be elected by a plurality of votes cast by the shares represented at such meeting. A “majority of votes cast” means that the number of votes cast “for” the election of the nominee exceeds fifty percent (50%) of the total number of votes cast “for” and “against” the election of that nominee. Stockholders shall also be provided the opportunity to abstain from voting with respect to the election of a director. In voting on the election of directors, abstentions, votes designated to be withheld from the election of a director and shares present but not voted in respect of the election of a director shall not be considered as votes cast. An election shall be considered “contested” if the number of nominees for election is greater than the number of directors to be elected. For purposes hereof, the number of nominees shall be determined as of the later of (i) the tenth (10th) day preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders of the Corporation and (ii) the last date on which a stockholder in accordance with these Bylaws may give notice of the nomination of a person for election as a director in order for such nomination to be required to be presented for a vote of the stockholders of the Corporation. Each director, including a director elected to fill a vacancy, shall hold office until the next annual meeting of stockholders and until such director’s successor is duly elected and qualified or until such director’s earlier death, incapacity, resignation, retirement, disqualification or removal from office.
(b) If a nominee for director who is an incumbent director is not elected and no successor has been elected at such meeting, the director shall promptly tender such director’s resignation to the Board of Directors. The Nominating and Governance Committee shall make a recommendation to the Board of Directors as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board of Directors shall act on the tendered resignation, taking into account the Nominating and Governance Committee’s recommendation, and publicly disclose (by a press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within ninety (90) days from the date of the certification of the election results. The Nominating and Governance Committee in making its recommendation, and the Board of Directors in making its decision, may each consider any factors or other information that it considers appropriate and relevant. The director who tenders a resignation shall not participate in the recommendation of the Nominating and Governance Committee or the decision of the Board of Directors with respect to such resignation. If such incumbent director’s resignation is not accepted by the Board of Directors, such director shall continue to serve until the next annual meeting and until such director’s successor is duly elected, or such director’s earlier resignation or removal. If a director’s resignation is accepted by the Board of Directors pursuant to these Bylaws, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors, in its sole discretion, may fill any resulting
vacancy pursuant to the provisions of Article II, Section 12 of these Bylaws or may decrease the size of the Board of Directors pursuant to the provisions of Article II, Section 2 of these Bylaws.
SECTION 9. Submission of Questionnaire, Representation and Agreement . To be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Article I, Section 7 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) will abide by the requirements of Article I, Section 8 of these Bylaws, (B) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law as it presently exists or may hereafter be amended, (C) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (D) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.
SECTION 10. Removal of Director . Unless otherwise provided by law and subject to the provisions of the Certificate of Incorporation and subject to the rights of the holders of any series of Preferred Stock, if any outstanding, with respect to such series of Preferred Stock, the stockholders, acting at a duly called annual meeting or a duly called special meeting of the stockholders, at which there is a proper quorum and where notice has been provided in accordance with Section 2 of this Article I, may remove a director or directors of the Corporation, but only for cause.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers . The business, property and affairs of the Corporation shall be managed by, or under the direction of, the Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders.
SECTION 2. Qualification; Number; Term; Remuneration .
(a) Each director shall be at least 18 years of age. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The total number of directors that the Corporation would have if there were no vacancies (the “Whole Board”) shall be fixed from time to time exclusively by action of the Board of Directors, one of whom may be selected by the Board of Directors to be its Chairman.
(b) Directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal.
(c) Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and directors who are not employees of the Corporation may be paid a fixed sum for attendance at each meeting of the Board of Directors and each meeting of a committee of the Board of Directors on which such director serves or a stated salary as director or such other compensation scheme (which may include awards of stock, options, or other incentive awards) as the Compensation Committee of the Board of Directors determines from time to time. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for committee service.
SECTION 3. Quorum and Manner of Voting . Except as otherwise provided by law or in these Bylaws, a majority of the Whole Board shall constitute a quorum. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting from time to time to another time and place without notice. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.
SECTION 4. Places of Meetings . Meetings of the Board of Directors may be held at any place within or without the State of Delaware as may from time to time be fixed by resolution of the Board of Directors, or as may be specified in the notice of meeting.
SECTION 5. Regular Meetings . Regular meetings of the Board of Directors shall be held at such times and places as the Board of Directors shall from time to time by resolution determine. Notice need not be given of regular meetings of the Board of Directors held at times and places fixed by resolution of the Board of Directors.
SECTION 6. Special Meetings . Special meetings of the Board of Directors shall be held whenever called by the Chairman, Presiding Director, President, Chief Executive Officer or by any two (2) of the directors then in office.
SECTION 7. Notice of Meetings . A notice of the place, date and time and the purpose or purposes of each special meeting of the Board of Directors shall be given to each director by mail, personal delivery, electronic transmission or telephone at least twenty-four (24) hours before the day of the meeting; provided , however , if notice is sent by United States Mail, it shall
be deposited in the United States Mail at least five (5) days before the date of the meeting. Notice shall be deemed to be given at the time of mailing, but said twenty-four (24) hours’ notice need not be given to any director who consents in writing, whether before or after the meeting, or who attends the meeting without protesting prior thereto or at its commencement, the lack of notice to him.
SECTION 8. Chairman of the Board of Directors . Except as otherwise provided by law, the Certificate of Incorporation, or in Section 9 of this Article II, the Chairman of the Board of Directors, if there be one, shall preside at all meetings of the Board of Directors and shall have such other powers and duties as may from time to time be assigned by the Board of Directors.
SECTION 9. Presiding Director . If at any time the Chairman of the Board of Directors shall be an executive officer or former executive officer of the Corporation or for any reason shall not be an independent director, a Presiding Director shall be selected by the independent directors from among the directors who are not executive officers or former executive officers of the Corporation and are otherwise independent. If the Chairman of the Board of Directors is not present, the Presiding Director shall chair meetings of the Board of Directors. The Presiding Director shall chair any meeting of the independent directors and shall also perform such other duties as may be assigned to the Presiding Director by these Bylaws or the Board of Directors.
SECTION 10. Organization . At all meetings of the Board of Directors, the Chairman, or if none or in the Chairman’s absence or inability to act, the Presiding Director, or if none or in the Presiding Director’s absence or inability to act, the Chief Executive Officer, or in the Chief Executive Officer’s absence or inability to act, any Vice-President who is a member of the Board of Directors, or if none or in such Vice-President’s absence or inability to act, a chairman chosen by the directors shall preside. The Secretary of the Corporation shall act as secretary at all meetings of the Board of Directors when present, and, in the Secretary’s absence, the presiding officer may appoint any person to act as secretary.
SECTION 11. Resignation . Any director may resign at any time upon written notice to the Corporation and, except for a resignation tendered pursuant to Section 8(b) of Article I, such resignation shall take effect upon receipt thereof by the Chief Executive Officer or Secretary, unless otherwise specified in the resignation.
SECTION 12. Vacancies . Subject to applicable law and the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, if any outstanding, newly created directorships resulting from any increase in the authorized number of directors will be filled by a majority of the Board of Directors then in office, provided , that a majority of the Whole Board is present, unless the Board of Directors otherwise determines that such directorships should be filled by the affirmative vote of the stockholders of record of at least a majority of the Voting Stock, and any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause will be filled generally by the majority vote of the remaining directors in office, even if less than a quorum is present. No change in the number of authorized directors constituting the Whole Board shall shorten or increase the term of any incumbent director.
SECTION 13. Conference Telephone Meetings . Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.
SECTION 14. Action by Unanimous Written Consent . Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all the directors consent thereto in writing (which may be provided by electronic transmission), and such writing or writings are filed with the minutes of proceedings of the Board of Directors.
ARTICLE III
COMMITTEES
SECTION 1. Appointment . From time to time the Board of Directors, by a resolution adopted by a majority of the Whole Board, may appoint any committee or committees, each committee to consist of two (2) (or such other minimum number, if any, mandated by law and the applicable listing requirements of the New York Stock Exchange (or the principal stock exchange on which the Corporation’s common stock is listed), as in effect from time to time) or more directors of the Corporation for any purpose or purposes, to the extent lawful, which shall have powers as shall be determined and specified by the Board of Directors in the resolution of appointment, including the following committees:
(a) an Executive Committee, which shall have such authority as has been or shall be delegated by the Board of Directors and shall advise the Board of Directors from time to time with respect to such matters as the Board of Directors shall direct; and
(b) an Audit Committee, a Compensation Committee and a Nominating & Governance Committee, each of which shall have such authority (i) as has been or shall be set forth in the charter for such committee (as in effect from time to time and approved by the Board of Directors), which authority shall at all times be not less than that mandated by law and the applicable listing requirements of the New York Stock Exchange (or the principal stock exchange on which the Corporation’s common stock is listed), and (ii) as shall otherwise be delegated by the Board of Directors.
The Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee, provided , that each committee shall consist of at least such minimum number of directors, if any, mandated by law and the applicable listing requirements of the New York Stock Exchange (or the principal stock exchange on which the Corporation’s common stock is listed), as in effect from time to time. Nothing herein shall be deemed to prevent the Board of Directors from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided , however , that no such committee shall have or may exercise any authority of the Board of Directors.
SECTION 2. Procedures, Quorum and Manner of Acting . Each committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of
the Board of Directors. Except as otherwise provided by law, the presence of a majority of the then appointed members of a committee shall constitute a quorum for the transaction of business by that committee, and in every case where a quorum is present the affirmative vote of a majority of the members of the committee present shall be the act of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep minutes of its proceedings, and actions taken by a committee shall be reported to the Board of Directors.
SECTION 3. Action by Unanimous Written Consent . Any action required or permitted to be taken at any meeting of any committee of the Board of Directors may be taken without a meeting if all the members of the committee consent thereto in writing (which may be provided by electronic transmission), and such writing or writings are filed with the minutes of proceedings of the committee.
SECTION 4. Term; Termination . In the event any person shall cease to be a director of the Corporation, such person shall simultaneously therewith cease to be a member of any committee appointed by the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. Election and Qualifications . The Board of Directors shall elect the officers of the Corporation, which shall include a Chief Executive Officer and a Secretary, and may include, by election or appointment, one or more Vice-Presidents (any one or more of whom may be given an additional designation of rank or function), a Treasurer and such other officers as the Board of Directors may from time to time deem proper. Each officer shall have such powers and duties as may be prescribed by these Bylaws and as may be assigned by the Board of Directors or the Chief Executive Officer. Any two or more offices may be held by the same person; provided , however , no person shall simultaneously hold the offices of Chief Executive Officer and Secretary.
SECTION 2. Term of Office and Remuneration . The term of office of all officers shall be one year or until their respective successors have been elected and qualified, but any officer may be removed from office, either with or without cause, at any time by a vote of the Board of Directors. Any vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the Board of Directors. The remuneration of all officers of the Corporation may be fixed by the Board of Directors or in such manner as the Board of Directors shall provide.
SECTION 3. Resignation; Removal . Any officer may resign at any time upon written notice to the Corporation and such resignation shall take effect upon receipt thereof by the Chief Executive Officer or Secretary, unless otherwise specified in the resignation. Any officer shall be subject to removal, with or without cause, at any time by a vote of the Board of Directors.
SECTION 4. Chief Executive Officer . The Chief Executive Officer shall have such duties as customarily pertain to that office. The Chief Executive Officer shall have general management and supervision of the property, business and affairs of the Corporation and over its other officers and may appoint and remove assistant officers and other agents and employees other than officers referred to in Section 1 of this Article IV.
SECTION 5. Vice-President . A Vice-President shall have such other authority as from time to time may be assigned by the Board of Directors or the Chief Executive Officer.
SECTION 6. Treasurer . The Treasurer shall in general have all duties incident to the position of Treasurer and such other duties as may be assigned by the Board of Directors or the Chief Executive Officer.
SECTION 7. Secretary . The Secretary shall in general have all the duties incident to the office of Secretary and such other duties as may be assigned by the Board of Directors or the Chief Executive Officer.
SECTION 8. Assistant Officers . Any assistant officer shall have such powers and duties of the officer such assistant officer assists as such officer or the Board of Directors shall from time to time prescribe.
SECTION 9. Other Officers . The Board of Directors may elect other officers from time to time, and vest such officers with such powers and duties, as the Board of Directors may deem proper.
ARTICLE V
BOOKS AND RECORDS
SECTION 1. Location . The books and records of the Corporation may be kept at such place or places within or outside the State of Delaware as the Board of Directors or the respective officers in charge thereof may from time to time determine. The record books containing the names and addresses of all stockholders, the number and class of shares of stock held by each and the dates when they respectively became the owners of record thereof shall be kept by the Secretary and by such officer or agent as shall be designated by the Board of Directors.
SECTION 2. Addresses of Stockholders . Notices of meetings and all other corporate notices may be delivered (i) personally or mailed to each stockholder at the stockholder’s address as it appears on the records of the Corporation, or (ii) any other method permitted by applicable law and rules and regulations of the SEC as they presently exist or may hereafter be amended.
SECTION 3. Fixing Date for Determination of Stockholders of Record .
(a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date shall
not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
ARTICLE VI
STOCK
SECTION 1. Stock; Signatures . Shares of the Corporation’s stock may be evidenced by certificates for shares of stock or may be issued in uncertificated form in accordance with applicable law as it presently exists or may hereafter be amended. The Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution or the issuance of shares in uncertificated form shall not affect shares already represented by a certificate until such certificate is surrendered to the Corporation. Every holder of shares of stock in the Corporation that is represented by certificates shall be entitled to have a certificate certifying the number of shares owned by him in the Corporation and registered in certificated form. Stock certificates shall be signed by or in the name of the Corporation by the Chairman or Vice Chairman, if any, of the Board of Directors, or the Chief Executive Officer or Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, representing the number of shares registered in certificated form. Any and all signatures on any such certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. The name of the holder of record of the shares represented by certificated or uncertificated shares, with the number of such shares and the date of issue, shall be entered on the books of the Corporation.
SECTION 2. Transfers of Stock . Transfers of shares of stock of the Corporation shall be made on the books of the Corporation after receipt of a request with proper evidence of succession, assignation, or authority to transfer by the record holder of such stock, or by an
attorney lawfully constituted in writing, and in the case of stock represented by a certificate, upon surrender of the certificate. Subject to the foregoing, the Board of Directors may make such rules and regulations as it shall deem necessary or appropriate concerning the issue, transfer and registration of shares of stock of the Corporation, and to appoint and remove transfer agents and registrars of transfers.
SECTION 3. Fractional Shares . The Corporation may, but shall not be required to, issue certificates for fractions of a share where necessary to effect authorized transactions, or the Corporation may pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or it may issue scrip in registered or bearer form over the manual or facsimile signature of an officer of the Corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a stockholder except as therein provided.
SECTION 4. Lost, Stolen or Destroyed Certificates . The Corporation may issue a new certificate of stock or uncertificated shares in place of any certificate, theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Board of Directors may require the owner of any lost, stolen or destroyed certificate, or the legal representative thereof, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificated or uncertificated shares.
SECTION 5. Special Designation on Certificates . If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, designations, preferences, and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of any certificate that the Corporation shall issue to represent such class or series of stock; provided , however , that, except as otherwise provided in the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences, and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this Section 5 or otherwise required by law or with respect to this Section 5 a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences, and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
ARTICLE VII
DIVIDENDS
Except as otherwise provided by law or the Certificate of Incorporation (including the terms of any Preferred Stock provided for therein), the Board of Directors shall have full power to determine whether any, and, if any, what part of any, funds legally available for the payment of dividends shall be declared as dividends and paid to stockholders; the division of the whole or any part of such funds of the Corporation shall rest wholly within the lawful discretion of the Board of Directors, and it shall not be required at any time, against such discretion, to divide or pay any part of such funds among or to the stockholders as dividends or otherwise; and before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.
ARTICLE VIII
RATIFICATION
Any transaction, questioned in any lawsuit on the ground of lack of authority, defective or irregular execution, adverse interest of director, officer or stockholder, nondisclosure, miscomputation, or the application of improper principles or practices of accounting, may be ratified before or after judgment, by the Board of Directors or by the stockholders, and if so ratified shall have the same force and effect as if the questioned transaction had been originally duly authorized. Such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.
ARTICLE IX
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the Corporation and the year of its incorporation, and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine. The corporate seal may be used by printing, engraving, lithographing, stamping or otherwise making, placing or affixing, or causing to be printed, engraved, lithographed, stamped or otherwise made, placed or affixed, upon any paper or document, by any process whatsoever, an impression, facsimile or other reproduction of said corporate seal. Affixing the corporate seal shall not be required for the validity of any contract or agreement, deed, promissory note or other document executed and delivered by the Corporation, except as otherwise required by law.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors.
ARTICLE XI
WAIVER OF NOTICE
Whenever notice is required to be given by these Bylaws or by the Certificate of Incorporation or by law, the person or persons entitled to said notice may consent in writing, whether before or after the time stated therein, to waive such notice requirement. Notice shall also be deemed waived by any person who attends a meeting without protesting prior thereto or at its commencement, the lack of notice to him.
ARTICLE XII
BANK ACCOUNTS, DRAFTS, CONTRACTS, ETC.
SECTION 1. Bank Accounts and Drafts . In addition to such bank accounts as may be authorized by the Board of Directors, the chief financial officer, the Treasurer or any person designated by said chief financial officer or Treasurer, whether or not an employee of the Corporation, may authorize such bank accounts to be opened or maintained in the name and on behalf of the Corporation as such person may deem necessary or appropriate, payments from such bank accounts to be made upon and according to the check of the Corporation in accordance with the written instructions of said chief financial officer, or other person so designated by the Treasurer.
SECTION 2. Contracts . The Board of Directors may authorize any person or persons, in the name and on behalf of the Corporation, to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. Except as otherwise provided by the Board of Directors or the Chief Executive Officer, any officer of the Corporation may execute and deliver any deed, bond, mortgage, contract or other obligation or instrument on behalf of the Corporation.
SECTION 3. Proxies; Powers of Attorney; Other Instruments . The Chief Executive Officer, the Treasurer or any other person designated by either of them shall have the power and authority to execute and deliver proxies, powers of attorney and other instruments on behalf of the Corporation in connection with the rights and powers incident to the ownership of stock by the Corporation. The Chief Executive Officer, the Treasurer or any other person authorized by proxy or power of attorney executed and delivered by either of them on behalf of the Corporation may attend and vote at any meeting of stockholders of any company in which the Corporation may hold stock, and may exercise on behalf of the Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, or otherwise as specified in
the proxy or power of attorney so authorizing any such person. The Board of Directors, from time to time, may confer like powers upon any other person.
SECTION 4. Financial Reports . The Board of Directors may appoint the chief financial officer, the Treasurer or other fiscal officer or any other officer to cause to be prepared and furnished to stockholders entitled thereto any special financial notice and/or financial statement, as the case may be, which may be required by any provision of law.
ARTICLE XIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), any person (a “Covered Person”) who was or is a party or is threatened to be made a party to, or is otherwise involved in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature (a “proceeding”), by reason of the fact that such Covered Person, or a person for whom he or she is the legal representative, is or was, at any time during which these Bylaws are in effect or any time prior thereto (whether or not such Covered Person continues to serve in such capacity at the time any indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought), a director or officer of the Corporation (including, for the purposes of this Article XIII, any predecessor of the Corporation absorbed by the Corporation in a consolidation, merger or reorganization), or has or had agreed to become a director or officer of the Corporation, or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, limited liability company, partnership, joint venture, employee benefit plan, trust, nonprofit entity or other enterprise, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, against all liability and loss suffered (including, without limitation, any judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) and expenses (including attorneys’ fees and disbursements), actually and reasonably incurred by such Covered Person in connection with such proceeding to the fullest extent permitted by law, and such indemnification shall continue as to a person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of such person’s heirs, executors and administrators, and the Corporation may enter into agreements with any such person for the purpose of providing for such indemnification. For purposes of this Article XIII, a director or officer of the Corporation serving as a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent of a company of which the Corporation owns, directly or indirectly, a majority of the shares or other interests entitled to vote in the selection of its directors or the members of a comparable governing body or of an employee benefit plan of the Corporation or of any such company shall be deemed to have served in such capacity at the request of the Corporation and actions taken or omitted by a Covered Person on behalf of such an employee benefit plan of the Corporation or of any direct or indirect subsidiary of the Corporation, if done in good faith and in a manner that he
or she reasonably believed was in the best interests of the employee benefit plan or its participants or beneficiaries, shall be deemed to have been done in a manner not opposed to the best interests of the Corporation and actions taken or omitted on behalf of a direct or indirect subsidiary of the Corporation (even if not wholly owned by the Corporation), if done in good faith and in a manner that he or she reasonably believed to be in the best interests of the subsidiary or its owners, shall be deemed to have been done in a manner not opposed to the best interests of the Corporation. Except as otherwise provided in this Article XIII, and other than proceedings to enforce rights conferred by the Certificate of Incorporation or this Article XIII, the Corporation shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Article XIII shall include the right to be paid by the Corporation the expenses (including attorneys’ fees) incurred by a Covered Person in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within sixty (60) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time (and subject to filing a written request for indemnification pursuant to the following paragraph of Section 1 of this Article XIII); provided , however , that the payment of such expenses incurred by a director or officer (or a former director or officer) in such person’s capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon receipt of an undertaking by or on behalf of the Covered Person to repay all amounts advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that the Covered Person is not entitled to be indemnified by the Corporation for such expenses under this Article XIII or otherwise. The rights conferred upon Covered Persons in this Article XIII shall be contract rights that vest at the time of such person’s service to or at the request of the Corporation and such rights shall continue as to a Covered Person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.
To obtain advancement or indemnification under this Article XIII, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to advancement or indemnification. Upon written request by a claimant for indemnification pursuant to the immediately preceding sentence, a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (1) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (2) if no request is made by the claimant for a determination by Independent Counsel, (i) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (ii) by a committee of Disinterested Directors designated by a majority of such directors, even though less than a quorum, or (iii) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (iv) if a quorum of Disinterested Directors so directs, by the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the Board of Directors unless there shall have occurred within two (2) years prior to the date of the
commencement of the action, suit or proceeding for which indemnification is claimed a “Change of Control” (as defined below), in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board of Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within sixty (60) days after such determination. As used herein, “Change in Control” means the happening of any of the following events: (A) any Person (as hereinafter defined) acquires Beneficial Ownership (as hereinafter defined) of 50% or more of the combined voting power of the then outstanding Voting Stock; (B) consummation of a Business Combination (as hereinafter defined), unless, following such Business Combination, (x) all or substantially all of the individuals and entities that were the Beneficial Owners of the outstanding Voting Stock immediately prior to such Business Combination Beneficially Own, directly or indirectly, more than 50% of the combined voting power of the issued and outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of the entity resulting from such Business Combination (including, without limitation, a company that, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the voting power of the Voting Stock, and (y) no Person Beneficially Owns, directly or indirectly, 50% or more of the combined voting power of the issued and outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of such entity; (C) approval by the stockholders of the Corporation of a liquidation or dissolution of the Corporation; or (D) individuals who, as of November 9, 2010, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors ( provided , however , that any individual whose election or nomination for election by the Corporation’s shareholders was approved by a vote of at least a majority of the directors comprising the incumbent Board of Directors as of such election or nomination, shall be considered as though such individual were a member of the Incumbent Board). In this paragraph, the terms (I) “Beneficial Owner,” “Beneficially Own” and “Beneficial Ownership” are used as defined in Rules 13d-3 and 13d-5 of the Exchange Act (but without taking into account any contractual restrictions or limitations on voting or other rights), (II) “Business Combination” means (a) any merger, consolidation, share exchange or similar business combination transaction involving the Corporation with any Person or (b) the sale or other disposition by the Corporation of all or substantially all of its assets; and (III) “Person” means an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).
SECTION 2. If a claim for advancement or indemnification under this Article XIII is not paid in full within sixty (60) days after a written claim pursuant has been received by the Corporation, the claimant may at any time thereafter file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking has been tendered to the Corporation) that the claimant has not met the standard of conduct which makes it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board of Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
SECTION 3. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred on any Covered Person by this Article XIII (i) shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, provision of these Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise and (ii) cannot be terminated by the Corporation, the Board of Directors or the stockholders of the Corporation with respect to a Covered Person’s service occurring prior to the date of such termination. The Corporation may enter into agreements providing for indemnity of or advancement of expenses to a director or officer containing such provisions further to or alternative to the provisions of this Article XIII as the Board of Directors determines is in the best interests of the Corporation. However, notwithstanding the foregoing, the Corporation’s obligation to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, employee benefit plan, trust, enterprise or nonprofit entity shall be reduced by any amount such person has collected as indemnification from such other corporation, limited liability company, partnership, joint venture, employee benefit plan, trust, nonprofit entity, or other enterprise; and, in the event the Corporation has fully paid such expenses, the Covered Person shall return to the Corporation any amounts subsequently received from such other source of indemnification.
Any repeal, other termination, amendment, alteration or modification of the provisions of this Article XIII that in any way diminishes, limits, restricts, adversely affects or eliminates any right of an indemnitee or such person’s successors to indemnification, advancement of expenses or otherwise shall be prospective only and shall not in any way diminish, limit, restrict, adversely affect or eliminate any such right with respect to any actual or alleged act or omission occurring prior thereto while such a person was a director or officer of the Corporation or any actual or alleged state of facts, occurrence, action or omission then or previously existing, or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such actual or alleged state of facts, occurrence, action or omission.
SECTION 4. This Article XIII shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and advance expenses (on substantially similar terms and subject to the same obligations as those set forth in Sections 1 through 3 of this Article XIII) to persons other than Covered Persons when and as authorized by the Board of Directors. In addition, the Corporation may purchase and maintain insurance, at its expense, on behalf of any person who is or was a Covered Person and any employee or agent of the Corporation or its subsidiaries against any liability, expense or loss asserted against such person and incurred by such person in such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or obligation to indemnify such person against such liability, expense or loss.
SECTION 5. If any provision or provisions of this Article XIII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Article XIII (including, without limitation, each portion of any paragraph of this Article XIII containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Article XIII (including, without limitation, each such portion of any paragraph of this Article XIII containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
SECTION 6. For purposes of this Article XIII:
(1) “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.
(2) “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and indemnification issues and neither presently is, nor in the past five years has been, retained to represent: (i) the Corporation or the claimant in any matter material to either such party, or (ii) any other party to the proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Article XIII.
SECTION 7. Any notice, request or other communication required or permitted to be given to the Corporation under this Article XIII shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.
ARTICLE XIV
AMENDMENTS
The Board of Directors shall have power to amend, modify or repeal these Bylaws or adopt any new provision authorized by the laws of the State of Delaware in force at such time. The stockholders of the Corporation shall have the power to amend, modify or repeal these Bylaws, or adopt any new provision authorized by the laws of the State of Delaware in force at such time, at a duly called meeting of the stockholders; provided , that notice of the proposed adoption, amendment, modification or repeal was given in the notice of the meeting; provided , further , notwithstanding any other provisions of these Bylaws or any provision of law which might otherwise permit a lesser vote or no vote, the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the then outstanding Voting Stock, voting together as a single class, shall be required to amend, modify or repeal any provision, or adopt
any new or additional provision, in a manner inconsistent with Sections 7 and 8 of Article I, Sections 2(a) of Article II, Article XIII and this Article XIV of these Bylaws.
General Growth Properties, Inc.
a Delaware corporation
CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED BYLAWS
The undersigned hereby certifies that he or she is the duly elected, qualified, and acting Assistant Secretary of General Growth Properties, Inc., a Delaware corporation, and that the foregoing Amended and Restated Bylaws were adopted as the Corporation’s bylaws on November 9, 2010 by the Corporation’s Board of Directors.
IN WITNESS WHEREOF, the undersigned has hereunto set such person’s hand this 9 th day of November, 2010.
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By: |
/s/ Linda J. Wight |
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Name: Linda J. Wight |
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Title: Assistant Secretary |
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Exhibit 4.1
EXECUTION COPY
WARRANT AGREEMENT
BETWEEN
GENERAL GROWTH PROPERTIES, INC.
AND
MELLON INVESTOR SERVICES LLC,
as WARRANT AGENT
Dated as of November 9, 2010
TABLE OF CONTENTS
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Page |
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1. |
DEFINITIONS |
2 |
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2. |
ORIGINAL ISSUE OF WARRANTS |
9 |
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2.1. |
Form of Warrant Certificates |
9 |
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2.2. |
Execution and Delivery of Warrant Certificates; Vesting |
9 |
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3. |
EXERCISE PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS |
10 |
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3.1. |
Exercise Price |
10 |
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3.2. |
Exercise of Warrants |
10 |
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3.3. |
Expiration of Warrants |
10 |
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3.4. |
Method of Exercise; Settlement of Warrant |
10 |
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3.5. |
Transferability of Warrants and Common Stock |
12 |
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3.6. |
Compliance with Law |
12 |
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4. |
REGISTRATION RIGHTS |
14 |
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4.1. |
Rule 144 Reporting |
14 |
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4.2. |
Obtaining Exchange Listing |
15 |
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4.3. |
The Warrant Agent |
15 |
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5. |
ADJUSTMENTS AND OTHER RIGHTS |
15 |
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5.1. |
Stock Dividend; Subdivision or Combination of Common Stock |
15 |
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5.2. |
Other Dividends and Distributions |
16 |
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5.3. |
Rights Offerings |
16 |
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5.4. |
Issuer Tender or Exchange Offers |
17 |
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5.5. |
Reorganization, Reclassification, Consolidation, Merger or Sale |
17 |
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5.6. |
Other Adjustments |
18 |
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5.7. |
Notice of Adjustment |
18 |
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6. |
CHANGE OF CONTROL |
19 |
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6.1. |
Redemption in Connection with a Change of Control Event |
19 |
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6.2. |
Public Stock Merger |
20 |
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6.3. |
Mixed Consideration Merger |
20 |
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6.4. |
The Warrant Agent |
20 |
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WARRANT TRANSFER BOOKS |
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List of Exhibits
EXHIBIT A-1 — Form of Series A-1 Warrant Certificate
EXHIBIT A-2 — Form of Series A-2 Warrant Certificate
EXHIBIT B — Form of Assignment
EXHIBIT C — Option Pricing Assumptions / Methodology
SCHEDULE A — Allocations of Warrants to Initial Investors
SCHEDULE B — Warrant Agent Compensation
WARRANT AGREEMENT
WARRANT AGREEMENT , dated as of November 9, 2010 (together with the Warrants, this “ Agreement ”), by and between General Growth Properties, Inc., a Delaware corporation (the “ Company ”), and Mellon Investor Services LLC , a New Jersey limited liability company (together with its successors and assigns, the “ Warrant Agent ”).
WITNESSETH:
WHEREAS , the Company is issuing and delivering warrant certificates (the “ Warrant Certificates ”) evidencing Warrants to purchase up to an aggregate of 120,000,000 shares of its Common Stock, subject to adjustment, including (a) Series A-1 Warrants to purchase 57,500,000 shares of its Common Stock, subject to adjustment, in connection with that certain Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010, by and between Brookfield Retail Holdings (formerly known as REP Investments LLC) and the Company (as amended from time to time, the “ Investment Agreement ”), (b) Series A-2 Warrants to purchase 41,071,429 shares of its Common Stock, subject to adjustment, in connection with that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between each of The Fairholme Fund and The Fairholme Focused Income Fund (each a “ Fairholme Purchaser ”, and collectively, the “ Fairholme Purchasers ”) and the Company (as amended from time to time, the “ Fairholme Stock Purchase Agreement ”), (c) Series A-2 Warrants to purchase 16,428,571 shares of its Common Stock in connection with that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between each of Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. (each, a “ Pershing Square Purchaser ”, collectively, the “ Pershing Square Purchasers ”) and the Company (as amended from time to time, the “ Pershing Square Stock Purchase Agreement ” and, together with the Fairholme Stock Purchase Agreement, the “ Stock Purchase Agreement s ”) and (d) Series A-1 Warrants to purchase 5,000,000 shares of its Common Stock in connection with the Blackstone Purchase Agreements (as defined herein) and those certain designations, dated as of the date hereof, by and among the Company and each of Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), the Fairholme Purchasers and the Pershing Square Purchasers (the “ Blackstone Designations ”) pursuant to each of which each Purchaser (as defined herein) has agreed to make an equity investment in the Company upon the terms and subject to the conditions specified therein; and
WHEREAS , the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, transfer, exchange, replacement and exercise of the Warrant Certificates and other matters as provided herein;
NOW , THEREFORE , in consideration of the foregoing and for the purpose of defining the terms and provisions of the Warrants and the respective rights and obligations thereunder of the Company and the record holders of the Warrants, the Company and the Warrant Agent each hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following meanings:
Affiliate : of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, (i) “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise and (ii) none of the Initial Investors or their Affiliates shall be deemed to “control” the Company or any of the Company’s controlled Affiliates prior to such Initial Investor or Affiliate, as applicable, acquiring or becoming part of the acquiring group for purposes of clauses (i) or (ii) or combining with the Company for purposes of clause (iii) of the definition of Change of Control Event.
Announcement Date : the meaning set forth in Section 5.4 .
Blackstone B Warrant : means a Warrant (whether held by a Blackstone Investor or by any transferee or any other Person) that was initially issued to a Blackstone Investor pursuant to the Brookfield Purchase Agreement (and the corresponding Blackstone Designation) or its designees in accordance with the last sentence of Section 2.2(a) .
Blackstone Designations : the meaning set forth in the recitals hereto.
Blackstone F/P Warrant : means a Warrant (whether held by a Blackstone Investor or by any transferee or any other Person) that was initially issued to a Blackstone Investor pursuant to either the Fairholme Purchase Agreement or the Pershing Purchase Agreement (and the corresponding Blackstone Designations) or its designees in accordance with the last sentence of Section 2.2(a) .
Blackstone Investors : means all members, collectively, of the Blackstone Purchaser Group.
Blackstone Purchase Agreements : means, collectively, the Brookfield Purchase Agreement, the Fairholme Purchase Agreement and the Pershing Purchase Agreement.
Blackstone Purchaser : means Blackstone Real Estate Partners VI L.P.
Blackstone Purchaser Group : means the Blackstone Purchaser, Blackstone Real Estate Partners (AIV) VI L.P., Blackstone Real Estate Partners VI.F L.P., Blackstone Real Estate Partners VI.TE.1 L.P., Blackstone Real Estate Partners VI.TE.2 L.P., Blackstone Real Estate Holdings VI L.P. and Blackstone GGP Principal Transaction Partners L.P. and their respective investment managers and their respective “controlled Affiliates”. For such purpose, one or more investment funds under common investment management shall constitute “controlled Affiliates” of their investment manager.
Board : the board of directors of the Company.
Brookfield Consortium Member : as defined in the Investment Agreement.
Brookfield Investors : means, collectively, the Brookfield Consortium Members.
Brookfield Purchase Agreement : means that certain Purchase Agreement, dated as of August 2, 2010, by and between REP Investments LLC and the Blackstone Purchaser.
Brookfield Purchaser : the Purchaser defined in the Investment Agreement.
Brookfield Warrant : means a Warrant (whether held by Brookfield Purchaser or a Brookfield Consortium Member or by any transferee or any other Person) that was initially issued to Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), a Delaware limited liability company, pursuant to the Investment Agreement or its designees in accordance with the last sentence of Section 2.2(a) .
Business Day : any day that is not a Saturday, Sunday, or a day on which banks in the states of New York or New Jersey are required or permitted to be closed.
Cash Consideration Ratio : means, in connection with a Mixed Consideration Merger, a fraction, (i) the numerator of which shall be the aggregate Fair Market Value of cash and all other property (other than Public Stock) that holders of Common Stock will receive for each such share of Common Stock in connection with such Mixed Consideration Merger, and (ii) the denominator of which shall be the Fair Market Value of all of the consideration holders of Common Stock will receive for each such share of Common Stock in connection with such Mixed Consideration Merger; provided , that, if the holders of Common Stock have the opportunity to elect the consideration to be received in such Mixed Consideration Merger, the Cash Consideration Ratio shall be determined by reference to the weighted average of the types and amounts of consideration received in such transaction in respect of shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company.
Cash Redemption Value : the meaning set forth in Section 6.1 .
Certificate of Incorporation : the Company’s certificate of incorporation (or equivalent organizational document), as amended from time to time.
Change of Control Event : an event or series of events, by which (i) any Person or group of Persons shall have acquired beneficial ownership (within the meaning of Rule 13d-3(a) promulgated by the SEC under the Exchange Act), directly or indirectly, of fifty percent (50%) or more (by voting power) of the outstanding shares of Voting Securities, (ii) all or substantially all of the consolidated assets of the Company are sold, leased (other than leases to tenants in the ordinary course of business), exchanged or transferred to any Person or group of Persons, (iii) the Company is consolidated, merged, amalgamated, reorganized or otherwise enters into a similar transaction in which it is combined with another Person (in each case, other than pursuant to the Plan), unless shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company remain unchanged or are exchanged for, converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration Public Stock and the Persons who beneficially own the outstanding Voting Securities of the Company immediately before consummation of the transaction beneficially own a majority (by voting power) of the outstanding Voting Securities of the combined or surviving entity or new parent immediately
thereafter, (iv) the Company engages in a reclassification or similar transaction pursuant to which shares of Common Stock are converted into the right to receive anything other than Public Stock, or (v) the holders of capital stock of the Company have approved any plan or proposal for the liquidation or dissolution of the Company; provided that with respect to an election by any Holder pursuant to Section 6.1, no event or series of events shall constitute a Change of Control Event if (x) such event or series of events is not approved by a majority of the disinterested directors of the Company and (y) such Holder or any of its Affiliates is the acquiror or part of the acquiring group for purposes of clause (i) or (ii) above or is combined with the Company for purposes of clause (iii) above. For purposes of this definition, a “group” means a group of Persons within the meaning of Rule 13d-5 under the Exchange Act.
Closing Sale Price : as of any date, the last reported per share sales price of a share of Common Stock or the applicable security on such date (or, if no last reported sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices on such date) as reported on the New York Stock Exchange, or if the Common Stock or such other security is not listed on the New York Stock Exchange, as reported by the principal U.S. national or regional securities exchange or quotation system on which the Common Stock or such other security is then listed or quoted; provided , however, that in the absence of such listing or quotations, the Closing Sale Price shall be determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such Common Stock or securities are fully distributed and are to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.
Code : the U.S. Internal Revenue Code of 1986, as amended.
Common Stock : the common stock, par value $0.01, of the Company.
Company : the meaning set forth in the preamble to this Agreement and its successors and assigns.
Distribution : the meaning set forth in Section 5.2 .
Exchange Act : the U.S. Securities Exchange Act of 1934, as amended.
Exercise Date : the meaning set forth in Section 3.4 .
Exercise Price : means (i) for each Fairholme/Pershing Warrant, $10.50 per share, (ii) for each Brookfield Warrant, $10.75 per share, (iii) for each Blackstone F/P Warrant, $10.50 per share and (iv) for each Blackstone B Warrant, $10.75 per share, in each case subject to all adjustments made on or prior to the date of exercise thereof as herein provided.
Expiration Date : the meaning set forth in Section 3.3 .
Fairholme Investors : all members, collectively, of the Fairholme Purchaser Group.
Fairholme/Pershing Warrant : means a Warrant (whether held by a Fairholme Investor, Pershing Investor or by any transferee or any other Person) that was initially issued to a Fairholme Investor or Pershing Investor pursuant to one of the Stock Purchase Agreements or any of their designees in accordance with the last sentence of Section 2.2(a) .
Fairholme Purchase Agreement : means that certain Purchase Agreement, dated as of August 2, 2010, by and between the Fairholme Purchasers and the Blackstone Purchaser.
Fairholme Purchasers : the meaning set forth in the recitals hereto.
Fairholme Purchaser Group : the Purchaser Group defined in the Fairholme Stock Purchase Agreement.
Fairholme Stock Purchase Agreement : the meaning set forth in the recitals hereto.
Fair Market Value :
(i) in the case of shares or securities, the average of the daily volume weighted average prices per share of such shares or securities for the ten consecutive trading days immediately preceding the day as of which Fair Market Value is being determined, as reported on the New York Stock Exchange, or if such shares or securities are not listed on the New York Stock Exchange, as reported by the principal U.S. national or regional securities exchange or quotation system on which such shares or securities are then listed or quoted; provided , however , if (x) such shares or securities are not listed or quoted on the New York Stock Exchange or any U.S. national or regional securities exchange or quotations system or (y) a transaction impacting such shares or securities makes it unjust or inequitable to value such shares or securities in the manner provided above as reasonably determined in good faith by the Board, then the Fair Market Value of such securities shall be the fair market value per share or unit of such shares or securities as determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such shares or other securities are fully distributed and are to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.
(ii) in the case of cash, the amount thereof.
(iii) in the case of other property, the Fair Market Value of such property shall be the fair market value thereof as determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such property is to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.
Full Physical Settlement : the settlement method with respect to Series A-1 Warrants pursuant to which an exercising Holder shall be entitled to receive from the Company, for each Warrant exercised, a number of shares of Common Stock equal to the Full Physical Share Amount in exchange for payment by the Holder of the aggregate Exercise Price applicable to such Warrant.
Full Physical Share Amount : the meaning set forth in Section 3.4 .
Holders : from time to time, the holders of the Warrants and, unless otherwise provided or indicated herein, the holders of the Warrant Securities, solely in their capacity as such.
Independent Financial Expert : a nationally recognized financial advisory firm mutually agreed by the Company and the M ajority Holders. If the Company and the M ajority Holders are unable to agree on an Independent Financial Expert for a valuation contemplated herein, each of them shall choose promptly a separate Independent Financial Expert and these two Independent Financial Experts shall choose promptly a third Independent Financial Expert to conduct such valuation.
Initial Investor : means, as applicable, (i) the Fairholme Purchasers, (ii) Pershing Square Capital Management, L.P. and the Pershing Square Purchasers, (iii) the Brookfield Purchaser; provided that, solely for the purposes of this definition, in the event the Brookfield Purchaser is not in existence, the Brookfield Purchaser shall be Brookfield Asset Management Inc. or an Affiliate designated by Brookfield Asset Management Inc and (iv) the Blackstone Purchaser.
Investment Agreement : the meaning set forth in the recitals hereto.
Majority Holders : means at any time Holders of a majority in number of the outstanding Warrants not held by the Company or any of the Company’s Affiliates.
Mixed Consideration Merger : means an event described in clause (iii) of the definition of Change of Control Event pursuant to which all of the outstanding shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company are exchanged for, converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration a combination of (i) Public Stock and (ii) other securities, cash or other property.
Net Share Amount : the meaning set forth in Section 3.4 .
Net Share Settlement : the settlement method for Series A-1 Warrants, if elected in accordance with Section 3.4 , and for Series A-2 Warrants pursuant to which an exercising Holder shall be entitled to receive from the Company, for each Warrant exercised, a number of shares of Common Stock equal to the Net Share Amount without any payment therefor.
Organic Change : the meaning set forth in Section 5.5 .
Pershing Investors : all members, collectively, of the Pershing Purchaser Group.
Pershing Square Purchasers : the meaning set forth in the recitals hereto.
Pershing Purchase Agreement : means that certain Purchase Agreement, dated as of August 2, 2010, by and between the Pershing Purchasers and the Blackstone Purchaser.
Pershing Purchaser Group : the Purchaser Group defined in the Pershing Stock Purchase Agreement.
Pershing Square Stock Purchase Agreement : the meaning set forth in the recitals hereto.
Pershing Square Warrant Vesting Date : the meaning set forth in Section 2.2(b) .
Person : any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited liability partnership, trust, unincorporated organization or government or any agency or political subdivision thereof.
Plan : the plan of reorganization as contemplated by the Plan Term Sheet attached as Exhibit A to the Investment Agreement and Stock Purchase Agreements.
Preliminary Change of Control Event : with respect to the Company, the first public announcement that describes the economic terms of a transaction that results in a Change of Control Event.
Premium Per Post-Tender Share : the meaning set forth in Section 5.4 .
Public Stock : means common stock listed on a recognized U.S. national securities exchange with an aggregate market capitalization (held by non-Affiliates of the issuer) in excess of $1 billion in Fair Market Value.
Purchaser Group : (a) means with respect to Brookfield Purchaser, the Brookfield Consortium Members, (b) with respect to Fairholme Purchasers, the Fairholme Purchaser Group, (c) with respect to Pershing Square Purchasers, the Pershing Purchaser Group and (d) with respect to the Blackstone Purchaser, the Blackstone Purchaser Group.
Public Stock Merger : means an event described in clause (iii) of the definition of Change of Control Event pursuant to which all of the outstanding shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company are exchanged for, converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration Public Stock.
Purchaser : means each of the Blackstone Purchasers, the Brookfield Purchaser, the Fairholme Purchasers and the Pershing Square Purchasers.
Registration Rights Agreements : means those certain registration rights agreements, dated as of the date hereof, between the Company, and separately, each of (i) the Pershing Investors and Blackstone Real Estate Partners VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners (AIV) VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.F L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.1 L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.2 L.P., a Delaware limited partnership, Blackstone Real Estate Holdings VI L.P., a Delaware limited partnership, and Blackstone GGP Principal Transaction Partners L.P., a Delaware limited partnership, (ii) the Fairholme Investors and (iii) Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), a Delaware limited liability company, Brookfield Retail Holdings II LLC, a Delaware limited liability company, Brookfield Retail Holdings III LLC, a Delaware limited liability company, Brookfield Retail Holdings IV-A LLC, a Delaware limited
liability company, Brookfield Retail Holdings IV-D LLC, a Delaware limited liability company, Brookfield Retail Holdings V LP, a Delaware limited partnership, and Brookfield US Retail Holdings LLC, a Delaware limited liability company .
Rule 144 : means such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.
Sa le : the meaning set forth in Section 3.6(a) of this Agreement.
SEC : the U.S. Securities and Exchange Commission.
Securities Act : the U.S. Securities Act of 1933, as amended.
Securities Exchange Act : the U.S. Securities Exchange Act of 1934, as amended.
Sell : the meaning set forth in Section 3.6(a) of this Agreement.
Series A-1 Warrants : the Series A-1 Warrants issued by the Company from time to time pursuant to this Agreement.
Series A-2 Warrants : the Series A-2 Warrants issued by the Company from time to time pursuant to this Agreement.
Settlement Date : means, in respect of a Warrant that is exercised hereunder, a reasonable time, not to exceed three Business Days, immediately following the Exercise Date for such Warrant.
Stock Consideration Ratio : means, in connection with a Mixed Consideration Merger, 1 — the Cash Consideration Ratio for such Mixed Consideration Merger.
Stock Dividend : the meaning set forth in Section 5.1 .
Stock Purchase Agreement s : the meaning set forth in the recitals to this Agreement.
Supermajority Holders : means at any time Holders of two-thirds or greater in number of the outstanding Warrants not held by the Company or any of the Company’s Affiliates.
Underlying Common Stock : the shares of Common Stock issuable or issued upon the exercise of the Warrants.
Voting Securities : means any securities of the Company, surviving entity or parent, as applicable, having power generally to vote in the election of directors of the Company, surviving entity or parent, as applicable.
Warrant Agent : the meaning set forth in the preamble to this Agreement.
Warrant Certificates : the meaning set forth in the recitals to this Agreement.
Warrant Registrar : the meaning set forth in Article 7 .
Warrant Securities : the meaning set forth in Section 3.6(a) .
Warrants : the Series A-1 Warrants and the Series A-2 Warrants.
2. ORIGINAL ISSUE OF WARRANTS.
2.1 Form of Warrant Certificates . The Warrant Certificates shall be in registered form only and substantially in the form attached hereto as Exhibit A-1 , with respect to Series A-1 Warrants, and Exhibit A-2 , with respect to Series A-2 Warrants, with such appropriate instructions, omissions, substitutions and other variations as are required or permitted by this Agreement (but which do not affect the rights, duties or responsibilities of the Warrant Agent) shall be dated the date on which countersigned by the Warrant Agent and may have such legends and endorsements typed, stamped, printed, lithographed or engraved thereon as required by the Certificate of Incorporation or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed.
2.2 Execution and Delivery of Warrant Certificates; Vesting .
(a) Simultaneously with the execution of this Agreement, Warrant Certificates evidencing such total number of Warrants to be delivered to each Initial Investor as set forth on Schedule A shall be executed by the Company and delivered to the Warrant Agent for countersignature, by manual or facsimile signature, and the Warrant Agent shall thereupon countersign and deliver such Warrant Certificates to each Initial Investor (or their designee(s) in accordance with the last sentence of this Section 2.2(a) ). The Warrant Certificates shall be executed on behalf of the Company by its President or a Vice President, either manually or by facsimile signature printed thereon. Each Initial Investor, in its sole discretion, may designate that some or all of its Warrants and Warrant Certificates be issued in the name of, and delivered to, one or more of the members of its Purchaser Group.
(b) Solely with respect to the Warrants delivered pursuant to the Pershing Square Stock Purchase Agreement, such Warrants (i) shall not vest or be exercisable prior to the New Warrant Vesting Date (as defined in the Pershing Square Stock Purchase Agreement) (the “ Pershing Square Warrant Vesting Date ”) and (ii) shall expire and not vest if, after the date hereof but prior to the Pershing Square Warrant Vesting Date, all (but not less than all) of the outstanding shares of Common Stock shall have been acquired by any single Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act, and the rules and regulations promulgated thereunder) of Persons, other than the Company, any Initial Investor or any Affiliate of the Company or any Initial Investor, in a full cash tender offer or in a full cash merger transaction that, in each case, has been approved after the date hereof by the Board.
(c) From time to time, the Warrant Agent shall countersign and deliver Warrant Certificates in required denominations to Persons entitled thereto in connection with any transfer or exchange permitted under this Agreement. The Warrant Agent is hereby irrevocably (but subject to Article 9 ) authorized to countersign and deliver Warrant Certificates as required by Section 2.2 , Section 3.4 , Article 7 , and Section 12.4 or otherwise as provided herein. The Warrant Certificates shall be executed on behalf of the Company by its President or a Vice
President, either manually or by facsimile signature printed thereon. The Warrant Certificates shall be countersigned by the Warrant Agent, either manually or by facsimile signature, and shall not be valid for any purpose unless so countersigned. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent, either manually or by facsimile signature printed thereon, and issued and delivered with the same force and effect as though such Person had not ceased to be such officer of the Company
(d) No Warrant Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, and no Warrant evidenced thereby may be exercised, unless such Warrant Certificate has been countersigned by the manual or facsimile signature of the Warrant Agent. Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that such Warrant Certificate has been duly issued under the terms of this Agreement.
3. EXERCISE PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS.
3.1 Exercise Price . Each Warrant Certificate shall, when countersigned by the Warrant Agent, entitle the Holder thereof, subject to the provisions of this Agreement, to purchase, except as provided in Section 3.3 hereof, one share of Common Stock for each Warrant represented thereby, subject to all adjustments made on or prior to the date of exercise thereof, at the applicable Exercise Price.
3.2 Exercise of Warrants . The Warrants shall be exercisable in whole or in part from time to time on any Business Day beginning on the date hereof and ending on the Expiration Date, in the manner provided for herein; provided , that solely with respect to the exercise any time prior to the date that is 180 days prior to the Expiration Date of any Warrant held at the time of exercise by a Fairholme or Pershing Investor, such Fairholme or Pershing Investor must have delivered written notice of its intent to exercise such Warrant to the Company 90 days prior to the Exercise Date of such Warrant and no exercise of such Warrant shall be effective until such 90-day period has lapsed.
3.3 Expiration of Warrants . Any unexercised Warrants shall expire and the rights of the Holders of such Warrants to purchase Underlying Common Stock shall terminate at the close of business on November , 2017 (the “ Expiration Date ”).
3.4 Method of Exercise; Settlement of Warrant . In order to exercise a Warrant, the Holder thereof must (i) surrender the Warrant Certificate evidencing such Warrant to the Warrant Agent, with the form on the reverse of or attached to the Warrant Certificate properly completed and duly executed (the date of the surrender of such Warrant Certificate, the “ Exercise Date ”), and (ii) with respect to Series A-1 Warrants for which Net Share Settlement is not elected, deliver in full the aggregate Exercise Price then in effect for the shares of Underlying Common Stock as to which a Warrant Certificate is submitted for exercise, not later than the Settlement Date as more fully set forth herein. Full Physical Settlement shall apply to each Series A-1 Warrant unless the Holder elects for Net Share Settlement to apply upon exercise of
such Warrant. Only Net Share Settlement shall apply (and shall be automatically deemed to have been irrevocably elected) upon exercise of each Series A-2 Warrant . The election of Net Share Settlement shall be made in the form on the reverse of or attached to the Warrant Certificate for each Series A-1 Warrant .
(a) If Full Physical Settlement is applicable with respect to the exercise of a Warrant, then, for each Series A-1 Warrant exercised hereunder (i) prior to 11:00 a.m., New York City time, on the Settlement Date for such Warrant, the Holder shall pay the aggregate Exercise Price (determined as of such Exercise Date) for the number of shares of Common Stock obtainable upon exercise of such Warrant at such time by federal wire or other immediately available funds payable to the order of the Company to the account maintained by the Warrant Agent and notified to the Holder upon request of the Holder, and (ii) on the Settlement Date, following receipt by the Warrant Agent of such Exercise Price, the Company shall cause to be delivered to the Holder the number of shares of Common Stock obtainable upon exercise of each Series A-1 Warrant at such time (the “ Full Physical Share Amount ”), together with cash in respect of any fractional shares of Common Stock as provided in Section 3.4(f) .
(b) If Net Share Settlement is applicable with respect to the exercise of a Warrant, then, for each Warrant exercised hereunder, on the Settlement Date for such Warrant, the Company shall cause to be delivered to the Holder a number of shares of Common Stock (which in no event will be less than zero) (the “ Net Share Amount ”) equal to (i) the number of shares of Common Stock issuable upon exercise of such Warrant at such time, multiplied by (ii) the Closing Sale Price on the relevant Exercise Date, minus the Exercise Price (determined as of such Exercise Date), divided by (iii) such Closing Sale Price, together with cash in respect of any fractional shares of Common Stock as provided in Section 3.4(f) . The Warrant Agent shall not take any action under this Section unless and until the Company has provided it with written instructions containing the Net Share Amount. The Warrant Agent shall have no duty or obligation to investigate or confirm whether the Company’s determination of the number of the Net Share Amount is accurate or correct.
(c) Upon surrender of a Warrant Certificate to the Warrant Agent in conformity with the foregoing provisions and, in the event of Full Physical Settlement of a Series A-1 Warrant, receipt by the Warrant Agent of the Exercise Price therefor, the Warrant Agent shall thereupon promptly notify the Company, and the Company shall instruct its transfer agent to transfer to the Holder of such Warrant Certificate appropriate evidence of ownership of any shares of Underlying Common Stock or other securities or property to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, such name or names as may be directed in writing by the Holder, and shall deliver such evidence of ownership to the Person or Persons entitled to receive the same, together with cash in respect of any fractional shares of Common Stock as provided in Section 3.4(f) , provided that if the Holder shall direct that such securities be registered in a name other than that of the Holder, such direction shall be tendered in conjunction with a signature guarantee by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent, and any other reasonable evidence of authority that may be required by the Warrant Agent. Upon surrender of a Warrant Certificate to the Warrant Agent in conformity with subsection (a) above and, in the event of Full Physical Settlement of a Series A-1 Warrant, receipt by the Warrant Agent of the Exercise Price therefor, a Holder shall be deemed to own and have all of the rights associated
with any Underlying Common Stock or other securities or property to which such Holder is entitled pursuant to this Agreement upon the surrender of a Warrant Certificate in accordance with this Agreement.
(d) The Company acknowledges that the bank accounts maintained by the Warrant Agent in connection with its performance under this Agreement shall be in the Warrant Agent’s name and that the Warrant Agent may receive investment earnings in connection with the investment at the Warrant Agent’s risk and for its benefit of funds held in those accounts from time to time. The Warrant Agent shall remit any payments received in connection with the exercise of Warrants to the Company as soon as practicable and in any event within three Business Days by federal wire or other immediately available funds to an account selected by the Company and notified in writing to the Warrant Agent.
(e) If fewer than all the Warrants represented by a Warrant Certificate are surrendered, such Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants that were not surrendered shall promptly be executed and delivered to the Warrant Agent by the Company. The Warrant Agent shall promptly countersign, by either manual or facsimile signature, the new Warrant Certificate, register it in such name or names as may be directed in writing by the Holder and deliver the new Warrant Certificate to the Person or Persons entitled to receive the same.
(f) The Company shall not be required to issue any fraction of a share of Common Stock upon exercise of any Warrants; provided , that, if more than one Warrant shall be exercised hereunder at one time by the same Holder, the number of full shares of Common Stock which shall be issuable upon exercise thereof shall be computed on the basis of all Warrants so exercised, and shall include the aggregation of all fractional shares of Common Stock issuable upon exercise of such Warrants. If after giving effect to the aggregation of all shares of Common Stock (and fractions thereof) issuable upon exercise of Warrants by the same Holder at one time as set forth in the previous sentence, any fraction of a share of Common Stock would, except for the provisions of this Section 3.4(f) , be issuable on the exercise of any Warrant or Warrants, the Company shall pay the Holder cash in lieu of such fractional share valued at the Closing Sale Price on the Exercise Date.
3.5 Transferability of Warrants and Common Stock . Except as any Holder may otherwise agree in writing, a ny Warrants, all rights with respect thereto and any shares of Underlying Common Stock may be sold, transferred or disposed of, in whole or in part, without any requirement of obtaining the consent of the Company to so sell, transfer or dispose of, provided that any such sale, transfer or disposition shall be in accordance with the terms of this Agreement, including, without limitation, Article 7 hereof.
3.6 Compliance with Law . (a) To the extent the Warrants or Common Stock issued upon exercise of the Warrants are “Registrable Securities” under the Registration Rights Agreements (“ Warrant Securities ”), no Series A-1 Warrant may be exercised using Full Physical Settlement (and the Warrant Agent shall be under no obligation to process any such exercise) and no such Warrant Securities may be sold, transferred, hypothecated, pledged or otherwise disposed of (any such sale, transfer or other disposition, a “ S ale ”, and the action of making any
such sale, transfer or other disposition, to “ Sell ”), except in compliance with applicable Federal and state securities and other applicable laws and this Section 3.6 .
(b) A Holder may exercise its Warrants if it is an “accredited investor” or a “qualified institutional buyer”, as defined in Regulation D and Rule 144A under the Securities Act, respectively, and a Holder may S ell its Warrant Securities to a transferee that is an “accredited investor” or a “qualified institutional buyer”, as such terms are defined in Regulation D and Rule 144A under the Securities Act, respectively, provided that each of the following conditions is satisfied:
(i) such Holder or transferee, as the case may be, provides certification establishing to the reasonable satisfaction of the Company that it is an “accredited investor”;
(ii) such Holder or transferee represents to the Company in writing that it is acquiring the applicable Warrant Securities for its own account and that it is not acquiring such Warrant Securities with a view to, or for offer or S ale in connection with, any distribution thereof (within the meaning of the Securities Act) that would be in violation of the securities laws of the United States or any applicable state thereof, but subject, nevertheless, to the disposition of its property being at all times within its control;
(iii) such Holder or transferee agrees to be bound by the provisions of this Section 3.6 with respect to any exercise of the Warrants and any S ale of the Warrant Securities; and
(iv) such Holder or transferee represents and warrants in writing to the Company that the Holder or transferee has sufficient knowledge and experience in investment transactions of this type to evaluate the merits and risks of its exercise or purchases, as applicable.
(c) A Holder may exercise its Warrants and may S ell its Warrant Securities in accordance with Regulation S under the Securities Act.
(d) A Holder may exercise its Warrants and may S ell its Warrant Securities if:
(i) such Holder gives written notice to the Company of its intention to exercise or effect such S ale, which notice shall describe the manner and circumstances of the proposed transaction in reasonable detail;
(ii) such notice includes a customary opinion from internal or external counsel to the Holder to the effect that, in either case, such proposed exercise or S ale may be effected without registration under the Securities Act or under applicable b lue s ky laws; and
(iii) such Holder or transferee complies with Sections 3.6(b)(ii) , 3.6(b)(iii) , and 3.6(b)(iv) .
(e) subject to Section 12.5 , each certificate representing Warrant Securities shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF NOVEMBER , 2010 BETWEEN GENERAL GROWTH PROPERTIES, INC. (THE “ COMPANY ”), AND MELLON INVESTOR SERVICES LLC, AS WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.
(f) [Intentionally omitted.]
(g) the provisions of Section 3.6 shall not apply to , and any Holder may exercise its Warrants or may Sell its Warrant Securities :
(i) in a transaction that is registered under the Securities Act; and
(ii) in a transaction pursuant to Rule 144 of the Exchange Act; and
(iii) in a transaction following receipt of a legal opinion of counsel to a Holder that the applicable Warrant Securities are eligible for resale by the Holder without volume limitations or other limitations under Rule 144; and
(iv) with respect to an exercise of a Warrant, in an exercise using Net Share Settlement.
(h) The Warrant Agent shall not take any action with respect to a Sale of Warrant Securities under this Section 3.6 unless and until it has received appropriate instructions from the Company and a certification of compliance with these provisions from the Company .
4. REGISTRATION RIGHTS.
4.1 Rule 144 Reporting . With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Warrant Securities to the public without registration, the Company agrees, so long as it is subject to the periodic reporting requirements of the Securities Act, to use its reasonable best efforts to:
(a) make and keep public information available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of this Agreement;
(b) file with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and
(c) so long as the Holders own any Warrant Securities, furnish to such Holders forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act, and of the Exchange Act; and such other reports and documents as any Initial Investor or Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration.
4.2 Obtaining Exchange Listing . The Company will file a listing application for listing on the exchange on which the then outstanding Common Stock is listed with respect to the Underlying Common Stock as soon as practicable after the date hereof. The Company shall use reasonable best efforts to list the Warrants, and maintain such listing, on such exchange or, if not possible, another U.S. national securities exchange, in connection with any proposed underwritten distribution of the Warrants that meets the applicable listing criteria. A copy of any opinion of counsel accompanying a listing application by the Company with respect to the Underlying Common Stock or Warrants shall be furnished to the Warrant Agent, together with a letter to the effect that the Warrant Agent may rely on the statements made in such opinion.
4.3 The Warrant Agent . The Warrant Agent shall have no duties or obligations under the Registration Rights Agreement s and shall have no duty to monitor or enforce the Company’s compliance with this Article 4 or the Registration Rights Agreement s .
5. ADJUSTMENTS AND OTHER RIGHTS.
5.1 Stock Dividend; Subdivision or Combination of Common Stock . If the Company at any time issues to holders of the Common Stock a dividend payable solely in, or other distribution solely of, Common Stock (a “ Stock Dividend ”), the Exercise Price in effect at the close of business on the record date for such dividend or distribution shall be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the quotient of (x) the number of shares of Common Stock outstanding at the close of business on such record date divided by (y) the sum of such number of shares and the total number of shares constituting such dividend or other distribution. If the Company at any time subdivides or combines (by stock split, reverse stock split, recapitalization or otherwise) the outstanding Common Stock into a greater or smaller number of shares, the Exercise Price in effect immediately prior to the time of effectiveness of such subdivision or combination shall be adjusted at such time of effectiveness to the price determined by multiplying such Exercise Price by the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such time of effectiveness divided by (y) the number of shares of Common Stock outstanding at the time of effectiveness of and after giving effect to such subdivision or combination. In any such event referred to in this Section 5.1 , the number of shares of Common Stock issuable upon exercise of each Warrant as in effect immediately prior to the Exercise Price adjustment contemplated by the foregoing shall be adjusted immediately thereafter to the amount determined by multiplying such number by the quotient of (x) the Exercise Price in effect immediately prior to such Exercise Price adjustment divided by (y) the Exercise Price determined in accordance with such Exercise Price adjustment.
5.2 Other Dividends and Distributions . If at any time or from time to time prior to the exercise of any Warrant the Company shall fix a record date for the making of a dividend or other distribution (other than (i) as contemplated by Section 5.5 , (ii) a Stock Dividend covered by Section 5.1 or (iii) a distribution of rights or warrants covered by Section 5.3 ), to the holders of its Common Stock (collectively, a “ Distribution ”) of:
(A) any evidences of its indebtedness, any shares of its capital stock or any other securities or property of any nature whatsoever (including cash); or
(B) any options, warrants or other rights to subscribe for or purchase any of the following: any evidences of its indebtedness, any shares of its capital stock or any other securities or property of any nature whatsoever;
then, in each such case, the Exercise Price in effect immediately prior to the close of business on such record date shall be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the quotient of (x) the Fair Market Value of the Common Stock on the last trading day immediately preceding the first date on which the Common Stock trades regular way on the principal national securities exchange on which the Common Stock is listed or admitted to trading without the right to receive such Distribution, minus the amount of cash and/or the Fair Market Value of the securities, evidences of indebtedness, assets, rights or warrants to be so distributed in respect of one share of Common Stock divided by (y) the Fair Market Value of the Common Stock on the last trading day immediately preceding the first date on which the Common Stock trades regular way on the principal national securities exchange on which the Common Stock is listed or admitted to trading without the right to receive such Distribution; such adjustment shall be made successively whenever such a record date is fixed. In such event, the number of shares of Common Stock issuable upon the exercise of each Warrant as in effect immediately prior to the close of business on such record date shall be increased immediately thereafter to the amount determined by multiplying such number by the quotient of (x) the Exercise Price in effect immediately prior to the adjustment contemplated by the immediately preceding sentence divided by (y) the new Exercise Price determined in accordance with the immediately preceding sentence. If the Distribution includes Common Stock as well as other items of the sort referred to in Section 5.2(A) or (B) , then instead of adjusting for the entire Distribution under this Section 5.2 the Common Stock portion shall be treated as a Stock Dividend that triggers an adjustment to the Exercise Price and number of shares of Common Stock obtainable upon exercise of each Warrant under Section 5.1 and the other items in the Distribution shall trigger a further adjustment to such adjusted Exercise Price and number of shares under this Section 5.2 . In the event that such Distribution is not so made, the Exercise Price and the number of shares of Common Stock issuable upon exercise of each Warrant then in effect shall be readjusted, effective as of the date when the Board determines not to distribute such shares, evidences of indebtedness, assets, rights, cash or warrants, as the case may be, to the Exercise Price that would then be in effect and the number of Shares that would then be issuable upon exercise of this Warrant if such record date had not been fixed.
5.3 Rights Offerings . If at any time the Company shall distribute rights or warrants to all or substantially all holders of its Common Stock entitling them, for a period of not more than 45 days, to subscribe for or purchase shares of Common Stock at a price per share less than the Fair Market Value of the Common Stock on the last trading day preceding the date on which
the Board declares such d istribution of rights or warrants, the Exercise Price in effect immediately prior to the close of business on the record date for such distribution shall be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the quotient of (x) the number of shares of Common Stock outstanding at the close of business on such record date plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Fair Market Value divided by (y) the number of shares of Common Stock outstanding at the close of business on such record date plus the number of shares of Common Stock so offered for subscription or purchase. In such event, the number of shares of Common Stock issuable upon the exercise of each Warrant as in effect immediately prior to the close of business on such record date shall be increased immediately thereafter to the amount determined by multiplying such number by the quotient of (x) the Exercise Price in effect immediately prior to the adjustment contemplated by the immediately preceding sentence divided by (y) the new Exercise Price determined in accordance with the immediately preceding sentence. In case any rights or warrants referred to in this Section 5.3 in respect of which an adjustment shall have been made shall expire unexercised and any shares that would have been underlying such rights or warrants shall not have been allocated pursuant to any backstop commitment or any similar arrangement , the Exercise Price and the number of shares of Common Stock issuable upon exercise of each Warrant then in effect shall be readjusted at the time of such expiration to the Exercise Price that would then be in effect and the number of Shares that would then be issuable upon exercise of each Warrant if no adjustment had been made on account of such expired rights or warrants.
5.4 Issuer Tender or Exchange Offers . If the Company or any subsidiary of the Company shall consummate a tender or exchange offer for all or any portion of the Common Stock for a consideration per share with a Fair Market Value greater than the Fair Market Value of the Common Stock on the date such tender or exchange offer is first publicly announced (the “ Announcement Date ”), the Exercise Price in effect immediately prior to the expiration date for such tender or exchange offer shall be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the quotient of (x) the Fair Market Value of the Common Stock on the Announcement Date minus the Premium Per Post-Tender Share divided by (y) the Fair Market Value of the Common Stock on the Announcement Date. In such event, the number of shares of Common Stock issuable upon the exercise of each Warrant as in effect immediately prior to such expiration date shall be increased immediately thereafter to the amount determined by multiplying such number by the quotient of (x) the Exercise Price in effect immediately prior to the adjustment contemplated by the immediately preceding sentence divided by (y) the new Exercise Price determined in accordance with the immediately preceding sentence. As used in this Section 5.4 with respect to any tender or exchange offer, “ Premium Per Post-Tender Share ” means the quotient of (x) the amount by which the aggregate Fair Market Value of the consideration paid in such tender or exchange offer exceeds the aggregate Fair Market Value on the Announcement Date of the shares of Common Stock purchased therein divided by (y) the number of shares of Common Stock outstanding at the close of business on the expiration date for such tender or exchange offer (after giving pro forma effect to the purchase of shares being purchased in the tender or exchange offer).
5.5 Reorganization, Reclassification, Consolidation, Merger or Sale . Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially
all of the Company’s assets or other transaction, which in each case is effected in such a way that the shares of Common Stock are converted into the right to receive (either directly or upon subsequent liquidation) stock, securities, other equity interests or assets (including cash) with respect to or in exchange for shares of Common Stock is referred to herein as “ Organic Change .” Prior to the consummation of any Organic Change, the Company shall make appropriate provision to ensure that each of the Holders shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the Common Stock immediately theretofore acquirable and receivable upon the exercise of such Holder’s Warrants, (x) in the case of a Mixed Consideration Merger, the Public Stock issued in such Mixed Consideration Merger and (y) in the case of any other Organic Change, such stock, securities, other equity interests or assets, in each case as may be issued or payable in connection with the Organic Change with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon exercise of such Holder’s Warrants, for an aggregate Exercise Price per Warrant equal to (i) in the case of a Mixed Consideration Merger, the aggregate Exercise Price per Warrant as in effect immediately prior to such Mixed Consideration Merger times the Stock Consideration Ratio and (ii) in the case of any other Organic Change, the aggregate Exercise Price per Warrant as in effect immediately prior to such Organic Change. In any such case, the Company shall make appropriate provision to insure that all of the provisions of the Warrants shall thereafter be applicable to such stock, securities, other equity interests or assets. The Company shall not effect any such consolidation, merger or sale of all or substantially all of the Company’s assets where the Warrants will be assumed by the successor entity, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes by written instrument the obligation to deliver to each such Holder upon exercise of any Warrant, such stock, securities, equity interests or assets (including cash) as, in accordance with Article 5 , such Holder may be entitled to acquire. This Section 5.5 shall not apply to any Warrants or Common Stock redeemed or sold in connection with any Organic Change pursuant to Section 6.1 , Section 6.2(b) , Section 6.3(a)(i) and Section 6.3(b) , provided that, for the avoidance of doubt, the adjustments set forth in this Section 5.5 shall be applicable to any Warrants that remain outstanding pursuant to this Agreement in connection with a Public Stock Merger or Mixed Consideration Merger (including any adjustment applicable in connection with such Public Stock Merger or Mixed Consideration Merger).
5.6 Other Adjustments . The Board shall make appropriate adjustments to the amount of cash or number of shares of Common Stock, as the case may be, due upon exercise of the Warrants, as may be necessary or appropriate to effectuate the intent of this Article 5 and to avoid unjust or inequitable results as determined in its reasonable good faith judgment, in each case to account for any adjustment to the Exercise Price and the number of shares purchasable on exercise of Warrants for the relevant Warrant Certificate that becomes effective, or any event requiring an adjustment to the Exercise Price and the number of shares purchasable on exercise of Warrants for the relevant Warrant Certificate where the record date or effective date (in the case of a subdivision or combination of the Common Stock) of the event occurs, during the period beginning on, and including, the Exercise Date and ending on, and including, the related Settlement Date.
5.7 Notice of Adjustment . Whenever the number of shares of Common Stock issuable upon the exercise of each Warrant is adjusted, as herein provided, the Company shall
cause the Warrant Agent promptly to mail by first class mail, postage prepaid, to each Holder notice of such adjustment or adjustments and shall promptly deliver to the Warrant Agent a certificate of a firm of independent public accountants selected by the Board (who may be the regular accountants employed by the Company) setting forth the number of shares of Common Stock issuable upon the exercise of each Warrant after such adjustment, setting forth a brief statement in reasonable detail of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. The Warrant Agent shall be fully protected in relying on such certificate, and on any adjustment contained therein, and shall not be deemed to have any knowledge of such adjustment unless and until it shall have received such certificate, and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time, to any Holder desiring an inspection thereof during reasonable business hours. The Warrant Agent shall not at any time be under any duty or responsibility to any Holders to determine whether any facts exist that may require any adjustment of the number of shares of Common Stock or other stock or property issuable on exercise of the Warrants, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making such adjustment or the validity or value (or the kind or amount) of any shares of Common Stock or other stock or property which may be issuable on exercise of the Warrants, or to investigate or confirm whether the information contained in the above referenced certificate complies with the terms of this Agreement or any other document. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or security instruments or other securities or properties upon the exercise of any Warrant.
6. CHANGE OF CONTROL.
6.1 Redemption in Connection with a Change of Control Event . Upon the occurrence of a Change of Control Event (other than a Public Stock Merger or Mixed Consideration Merger), at the election of each Holder in its sole discretion by written notice to the Company or the successor to the Company on or prior to the Exercise Date, the Company shall pay to such Holder of outstanding Warrants as of the date of such Change of Control Event, an amount in immediately available funds equal to the Cash Redemption Value for such Warrants, not later than the date which is ten (10) Business Days after such Change of Control Event and the Warrants shall thereafter be extinguished. For purposes of this Section 6.1 , the Exercise Date shall mean (a) if the Company entered into a definitive agreement with respect to a Change of Control Event and has provided to the Holders notice of the date on which the Change in Control Event will become effective at least twenty (20) Business Days prior to the effectiveness of such event, the tenth (10th) Business Day prior to such event and (b) otherwise, the fifth (5th) Business Day following the effectiveness of the Change of Control Event. The “ Cash Redemption Value ” for any Warrant will equal the fair value of the Warrant as of the date of such Change of Control Event as determined by an Independent Financial Expert, by employing a valuation based on a computation of the option value of each Warrant using the calculation methods and making the assumptions set forth in Exhibit C . The Cash Redemption Value of the Warrants shall be due and payable within ten (10) Business Days after the date of the applicable Change of Control Event . If a Holder of Warrants does not elect to receive the Cash Redemption Value for such Holder’s Warrants as provided by this Section 6.1 , such Warrants will remain outstanding as adjusted pursuant to the provisions of Article 5 hereof.
6.2 Public Stock Merger . (a) In connection with a Public Stock Merger, the Company may by written notice to the Holders not less than ten (10) Business Days prior to the effective date of such Public Stock Merger elect to have all the unexercised Warrants remain outstanding after the Public Stock Merger, in which case the Warrants will remain outstanding as adjusted pursuant to Section 5.5 and the other provisions of Article 5 hereof.
(b) In the case of any Public Stock Merger with respect to which the Company does not make a timely election as contemplated by Section 6.2(a) above, the Company shall pay within five (5) Business Days after the effective date of such Public Stock Merger, to the Warrant Agent on behalf of each Holder of outstanding Warrants as of the effective date of such Public Stock Merger, an amount in cash in immediately available funds equal to the Cash Redemption Value for such Warrants determined in accordance with Section 6.1 and the Warrants shall be terminated and extinguished.
6.3 Mixed Consideration Merger . (a) In connection with a Mixed Consideration Merger, the Company may by written notice to the Holders not less than ten (10) Business Days prior to the effective date of such Mixed Consideration Merger elect the following treatment with respect to each outstanding Warrant: (i) pay to the Holder of such Warrant as of the date of such Mixed Consideration Merger the product of the Cash Consideration Ratio multiplied by the Cash Redemption Value for such Warrant, which amount shall be paid in immediately available funds, not later than the date which is ten (10) Business Days after such Mixed Consideration Merger and (ii) the Warrant shall remain outstanding after the Mixed Consideration Merger, as further adjusted pursuant to Section 5.5 and the other provisions of Article 5 . The portion of the Cash Redemption Value of the Warrants payable pursuant to clause (i) of this Section 6.3(a) shall be due and payable not later than the tenth (10th) Business Day after the date of the Mixed Consideration Merger .
(b) In the case of any Mixed Consideration Merger with respect to which the Company does not make a timely election as contemplated by Section 6.3(a) above, the Company shall pay, within ten (10) Business Days after the effective date of such Mixed Consideration Merger, to the Warrant Agent on behalf of each Holder of outstanding Warrants as of the effective date of such Mixed Consideration Merger, an amount in cash in immediately available funds equal to the Cash Redemption Value for such Warrants determined in accordance with Section 6.1 and the Warrants shall be terminated and extinguished.
6.4 The Warrant Agent . The Warrant Agent shall have no duty or obligation to make any of the payments required under this Article 6 unless and until it has been provided with available cash.
7. WARRANT TRANSFER BOOKS.
The Warrant Certificates shall be issued in registered form only. The Company shall cause to be kept at the office of the Warrant Agent designated for such purpose a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant Certificates as herein provided (the “ Warrant Register ”).
At the option of the Holder, Warrant Certificates may be exchanged at such office, and upon payment of the charges hereinafter provided. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent shall countersign, by manual or facsimile signature, and deliver, the Warrant Certificates that the Holder making the exchange is entitled to receive.
All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such registration of transfer or exchange.
Every Warrant Certificate surrendered for registration of transfer or exchange shall (if so required by the Company or the Warrant Agent) be duly endorsed, or be accompanied by a written instrument of transfer in the form attached hereto as Exhibit B or otherwise satisfactory to the Warrant Agent, properly completed and duly executed by the Holder thereof or his attorney duly authorized in writing. Until a Warrant Certificate is transferred in the Warrant Register, the Company and the Warrant Agent may treat the person in whose name the Warrant Certificate is registered as the absolute owner thereof and of the Warrants represented thereby for all purposes, notwithstanding any notice to the contrary. Neither the Company nor the Warrant Agent will be liable or responsible for any registration or transfer of any Warrants that are registered or to be registered in the name of a fiduciary or the nominee of a fiduciary.
No service charge shall be made to a Holder for any registration of transfer or exchange of Warrant Certificates. The Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates. The Warrant Agent shall have no duty under this Section or any Section of this Agreement requiring the payment of taxes and other governmental charges unless and until it is satisfied that all such taxes and/or governmental charges have been paid. The Warrant Agent shall be deemed satisfied if it receives a certificate from the Company stating that all required taxes and governmental charges have been paid.
8. WARRANT HOLDERS.
8.1 No Voting Rights . Prior to the exercise of Warrants and full payment of the Exercise Price thereof, or in the event of Net Share Settlement, prior to the election of a Holder for Net Share Settlement in accordance with the terms of this Agreement, no Holder of a Warrant Certificate, in respect of such Warrants, shall be entitled to any rights of a stockholder of the Company, including, without limitation, the right to vote, to consent, to exercise any preemptive right (except as otherwise agreed in writing by the Company, including the subscription rights set forth in the Investment Agreement and the Stock Purchase Agreements) , to receive any notice of meetings of stockholders for the election of directors of the Company or any other matter or to receive any notice of any proceedings of the Company.
8.2 Right of Action . All rights of action in respect of this Agreement are vested in the Holders of the Warrants, and any Holder of Warrants, without the consent of the Warrant Agent or the Holder of any other Warrant, may, on such Holder’s own behalf and for such Holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, such Holder’s right to exercise or exchange such Holder’s Warrants in the manner provided in this Agreement or any other obligation of the Company under this Agreement.
9. WARRANT AGENT
9.1 Nature of Duties and Responsibilities Assumed . The Company hereby appoints the Warrant Agent to act as agent of the Company as expressly set forth in this Agreement. The Warrant Agent hereby accepts such appointment as agent of the Company and agrees to perform that agency upon the express terms and conditions herein set forth (and no implied terms) , by all of which the Company and the Holders, by their acceptance thereof, shall be bound. The Warrant Agent shall not by countersigning Warrant Certificates or by any other act hereunder be deemed to make any representations as to validity or authorization of the Warrants or the Warrant Certificates (except as to its countersignature thereon) or of any securities or other property delivered upon exercise or tender of any Warrant, or as to the accuracy of the computation of the Exercise Price or the number or kind or amount of stock or other securities or other property deliverable upon exercise of any Warrant, the independence of any Independent Financial Expert or the correctness of the representations of the Company made in such certificates that the Warrant Agent receives. The Warrant Agent shall not have any duty to calculate or determine any adjustments with respect to the Exercise Price and the Warrant Agent shall have no duty or responsibility in determining the accuracy or correctness of such calculation. The Warrant Agent shall not (a) be liable for any recital or statement of fact contained herein or in the Warrant Certificates or for any action taken, suffered or omitted to be taken by it in good faith on the belief that any Warrant Certificate or any other documents or any signatures are genuine or properly authorized, (b) be responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this Agreement or in the Warrant Certificates, or (c) be liable for any act or omission in connection with this Agreement except for its own gross negligence or willful misconduct (as each is determined by a final, non-appealable judgment of a court of competent jurisdiction). The Warrant Agent is hereby authorized to accept instructions with respect to the performance of its duties hereunder from the President, any Vice President or the Secretary of the Company and to apply to any such officer for instructions (which instructions will be promptly given in writing when requested) and the Warrant Agent shall not be liable and shall be indemnified and held harmless for any action taken or suffered to be taken by it in accordance with the instructions of any such officer, but in its discretion the Warrant Agent may in lieu thereof accept other evidence of such or may require such further or additional evidence as it may deem reasonable.
The Warrant Agent may execute and exercise any of the rights and powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, provided reasonable care has been exercised in the selection and in the continued employment of any such attorney, agent or employee. The Warrant Agent shall not be under any obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect hereof, unless first indemnified to its satisfaction, but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without such indemnity. The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or proceeding instituted against it arising out of or in connection with this Agreement.
The Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Warrant Agent in order to enable it to carry out or perform its duties under this Agreement. The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken or thing suffered by it in reliance upon any notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties.
The Warrant Agent shall act solely as agent of the Company hereunder and does not assume any obligation or relationship of agency or trust with any of the owners or holders of the Warrants. The Warrant Agent shall not be liable except for the failure to perform such duties as are specifically set forth herein, and no implied covenants or obligations shall be read into this Agreement against the Warrant Agent, whose duties and obligations shall be determined solely by the express provisions hereof. Notwithstanding anything in this Agreement to the contrary, Warrant Agent’s aggregate liability under this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to Warrant Agent as fees and charges, but not including reimbursable expenses.
The Warrant Agent may consult with counsel satisfactory to it (which may be counsel to the Company).
Whenever in the performance of its duties under this Agreement the Warrant Agent deems it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter may be deemed to be conclusively proved and established by a certificate signed by any authorized officer of the Company and delivered to the Warrant Agent; and such certificate will be full authorization to the Warrant Agent for any action taken, suffered or omitted by it under the provisions of this Agreement in reliance upon such certificate. The Warrant Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the authorized officers of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it will not be liable for any action taken, suffered or omitted to be taken by it in good faith in accordance with instructions of any such officer.
The Warrant Agent will not be under any duty or responsibility to insure compliance with any applicable federal or state securities laws in connection with the issuance, transfer or exchange of Warrant Certificates.
The Warrant Agent shall have no duties, responsibilities or obligations as the Warrant Agent except those which are expressly set forth herein, and in any modification or amendment hereof to which the Warrant Agent has consented in writing, and no duties, responsibilities or obligations shall be implied or inferred. Without limiting the foregoing, unless otherwise expressly provided in this Agreement, the Warrant Agent shall not be subject to, nor be required to comply with, or determine if any person or entity has complied with, the Warrant Certificate or any other agreement between or among the parties hereto, even though reference thereto may be made in this Warrant Agreement, or to comply with any notice, instruction, direction, request
or other communication, paper or document other than as expressly set forth in this Warrant Agreement.
In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, the Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to the Company or any Holder or other person or entity for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of the Warrant Agent.
9.2 Compensation and Reimbursement . The Company agrees to pay to the Warrant Agent from time to time compensation for all services rendered by it hereunder in accordance with Schedule B hereto and as the Company and the Warrant Agent may agree from time to time, and to reimburse the Warrant Agent for reasonable expenses and disbursements actually incurred in connection with the preparation, delivery, negotiation, amendment, execution and administration of this Agreement (including the reasonable compensation and out of pocket expenses of its counsel), and further agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability, suit, action, proceeding, judgment, claim, settlement, cost or expense incurred without gross negligence, willful misconduct or bad faith on its part, (as each is determined by a final, non-appealable judgment of a court of competent jurisdiction), for any action taken, suffered or omitted to be taken by the Warrant Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, indirectly or directly. The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action which it believes would expose it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.
9.3 Warrant Agent May Hold Company Securities . The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or its Affiliates or become pecuniarily interested in transactions in which the Company or its Affiliates may be interested, or contract with or lend money to the Company or its Affiliates or otherwise act as fully and freely as though it were not the Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.
9.4 Resignation and Removal; Appointment of Successor . (a) No resignation or removal of the Warrant Agent and no appointment of a successor warrant agent shall become effective until the acceptance of appointment by the successor warrant agent as provided herein. The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent’s own gross negligence, willful misconduct or bad faith) after giving written notice to the Company at least thirty (30) days prior to the date such resignation will become effective. The Company shall, upon written request of Holders of a majority of the outstanding Warrants, remove the Warrant Agent upon written notice provided at least thirty (30) days prior to the date of such removal, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities
hereunder, except as aforesaid. The Warrant Agent shall, at the Company’s expense, cause to be mailed at the Company’s expense (by first-class mail, postage prepaid) to each Holder of a Warrant at his last address as shown on the register of the Company maintained by the Warrant Agent a copy of said notice of resignation or notice of removal, as the case may be. Upon such resignation or removal, the Person holding the greatest number of Warrants as of the date of such event shall appoint in writing a new warrant agent reasonably acceptable to the Company. If the Person holding the greatest number of Warrants as of the date of such event shall fail to make such appointment within a period of twenty (20) days after it has been notified in writing of such resignation by the resigning Warrant Agent or after such removal, then the Company shall appoint a new warrant agent. Any new warrant agent, whether appointed by a Holder or by the Company, shall be a reputable bank, trust company or transfer agent doing business under the laws of the United States or any state thereof, in good standing and having a combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such new warrant agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such warrant agent prior to its appointment, provided that such reports are published at least annually pursuant to law or to the requirements of a Federal or state supervising or examining authority. After acceptance in writing of such appointment by the new warrant agent, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall give notice thereof to the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section 9.4(a) , however, or any defect therein, shall not affect the legality or validity of the resignation of the Warrant Agent or the appointment of a new warrant agent, as the case may be.
(b) Any Person into which the Warrant Agent or any new warrant agent may be merged or any Person resulting from any consolidation to wh ich the Warrant Agent or any Person resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party or any Person to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent or any new warrant agent shall be a party, shall be a successor Warrant Agent under this Agreement without any further act, provided that such Person would be eligible for appointment as successor to the Warrant Agent under the provisions of Section 9.4(a) . Any such successor Warrant Agent shall promptly cause notice of succession as Warrant Agent to be mailed (by first-class mail, postage prepaid) to each Holder of a Warrant at such Holder’s last address as shown on the register of the Company maintained by the Warrant Agent.
9.5 Damages . No party to this Agreement shall be liable to any other party for any consequential, indirect, punitive, special or incidental damages under any provision of this Agreement or for any consequential, indirect, punitive , special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.
9.6 Force Majeure . In no event shall the Warrant Agent be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.
9.7 Survival . The provisions of this Article 9 shall survive the termination of this Warrant Agreement and the resignation or removal of the Warrant Agent
10. REPRESENTATIONS AND WARRANTIES.
10.1 Representations and Warranties of the Company. The Company hereby represents and warrants that the representations and warranties of the Company set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6 of the Investment Agreement and Stock Purchase Agreements and any other representations and warranties made by the Company in Article III of the Investment Agreement and Stock Purchase Agreements, in each case, to the extent relating to the authorization and issuance of the Warrants and the shares of Common Stock issuable upon exercise thereof, are true and accurate in all respects and not misleading in any respect.
11. COVENANTS.
11.1 Reservation of Common Stock for Issuance on Exercise of Warrants . The Company covenants that it will at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, solely for the purpose of issue upon exercise of Warrants as herein provided, such number of shares of Common Stock as shall then be issuable upon the exercise of all Warrants issuable hereunder plus such number of shares of Common Stock as shall then be issuable upon the exercise of other outstanding warrants, options and rights (whether or not vested), the settlement of any forward sale, swap or other derivative contract, and the conversion of all outstanding convertible securities or other instruments convertible into Common Stock or rights to acquire Common Stock. The Company covenants that all shares of Common Stock which shall be issuable shall, upon such issue, be duly and validly issued and fully paid and non-assessable.
11.2 Notice of Distributions . At any time when the Company declares any Distribution on its Common Stock, it shall give notice to the Holders of all the then outstanding Warrants of any such declaration not less than 15 days prior to the related record date for payment of the Distribution so declared.
12. MISCELLANEOUS.
12.1 Money and Other Property Deposited with the Warrant Agent . Any moneys, securities or other property which at any time shall be deposited by the Company or on its behalf with the Warrant Agent pursuant to this Agreement shall be and are hereby assigned, transferred and set over to the Warrant Agent in trust for the purpose for which such moneys, securities or other property shall have been deposited; but such moneys, securities or other property need not be segregated from other funds, securities or other property except to the extent required by law. The Warrant Agent shall distribute any money deposited with it for payment and distribution to a
Holder to an account designated by such Holder in such amount as is appropriate. Any money deposited with the Warrant Agent for payment and distribution to the Holders that remains unclaimed for two years after the date the money was deposited with the Warrant Agent shall be paid to the Company. The Warrant Agent shall not be under any liability for interest on any monies at any time received by it pursuant to any of the provisions of this Agreement.
12.2 Payment of Taxes . The Company shall pay all transfer, stamp and other similar taxes that may be imposed in respect of the issuance or delivery of the Warrants or in respect of the issuance or delivery by the Company of any securities upon exercise of the Warrants with respect thereto. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any Warrants, certificate for shares of Common Stock or other securities underlying the Warrants or payment of cash to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue any security or to pay any cash until such tax or charge has been paid or it has been established to the Warrant Agent’s and the Company’s satisfaction that no such tax or other charge is due. The Company and each Initial Investor agree that neither the issuance nor exercise of the Warrants is governed by Section 83(a) of the Code or otherwise a compensatory transaction, and the Company agrees that it will not deduct any amount as compensation in connection with such issuance or exercise for federal income tax purpose.
12.3 Surrender of Certificates . Any Warrant Certificate surrendered for exercise or purchase shall, if surrendered to the Company, be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by the Warrant Agent and shall not be reissued by the Company. The Warrant Agent shall destroy such cancelled Warrant Certificates.
12.4 Mutilated, Destroyed, Lost and Stolen Warrant Certificates . If (a) any mutilated Warrant Certificate is surrendered to the Warrant Agent or (b) the Company and the Warrant Agent receive evidence to their satisfaction of the destruction, loss or theft of any Warrant Certificate, and there is delivered to the Company and the Warrant Agent such appropriate affidavit of loss, applicable processing fee and a corporate bond of indemnity as may be required by them and satisfactory to them to save each of them harmless, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Warrant Agent shall countersign and deliver, in exchange for any such mutilated Warrant Certificate or in lieu of any such destroyed, lost or stolen Warrant Certificate, a new Warrant Certificate of like tenor and for a like aggregate number of Warrants.
Upon the issuance of any new Warrant Certificate under this Section 12.4 , the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and other expenses (including the reasonable fees and expenses of the Warrant Agent and of counsel to the Company) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this Section 12.4 in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall
be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates of like tenor properly completed and duly executed and delivered hereunder.
The provisions of this Section 12.4 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, destroyed lost or stolen Warrant Certificates.
12.5 Removal of Legends . Certificates evidencing the Warrants and shares of Common Stock issued upon exercise of the Warrants shall not be required to contain any legend referenced in Sections 2.1 or 3.6(e) (A) while a registration statement covering the resale of the Warrants or the shares of Common Stock is effective under the Securities Act, or (B) following any sale of any such Warrants or shares of Common Stock pursuant to Rule 144, or (C) following receipt of a legal opinion of counsel to Holder that the remaining Warrants or shares of Common Stock held by Holder are eligible for resale without volume limitations or limitations on manner of sale under Rule 144. In addition, the Company and the Warrant Agent will agree to the removal of all legends with respect to Warrants or shares of Common Stock deposited with DTC from time to time in anticipation of sale in accordance with the volume limitations and other limitations under Rule 144, subject to the Company’s approval of appropriate procedures, such approval not to be unreasonably withheld, conditioned or delayed.
Following the time at which any such legend is no longer required (as provided above) for certain Warrants or shares of Common Stock, the Company shall promptly, following the delivery by Holder to the Warrant Agent of a legended certificate representing such Warrants or shares of Common Stock, as applicable, deliver or cause to be delivered to the Holder a certificate representing such Warrants or shares of Common Stock that is free from such legend. In the event any of the legends referenced in Sections 2.1 or 3.6(e) are removed from any of the Warrants or shares of Common Stock, and thereafter the effectiveness of a registration statement covering such Warrants or shares of Common Stock is suspended or the Company determines that a supplement or amendment thereto is required by applicable securities Laws, then the Company may require that such legends, as applicable, be placed on any such applicable Warrants or shares of Common Stock that cannot then be sold pursuant to an effective registration statement or under Rule 144 and Holder shall cooperate in the replacement of such legend. Such legend shall thereafter be removed when such Warrants or shares of Common Stock may again be sold pursuant to an effective registration statement or under Rule 144.
12.6 Notices . (a) Any notice, demand or delivery authorized by this Agreement shall be sufficiently given or made when mailed if sent by first-class mail, postage prepaid, addressed to any Holder of a Warrant at such Holder’s address shown on the register of the Company maintained by the Warrant Agent and to the Company or the Warrant Agent as follows:
If to the Company, to:
General Growth Properties, Inc.
110 N. Wacker Drive
Chicago
IL 60606
Attention: Ronald L. Gern, Esq. (General Counsel)
Fax: 312-960-5485
with a copy to (which shall not constitute notice):
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New
York, NY 10153
Attention:
Frederick S.
Green, Esq.
Malcolm E. Landau, Esq.
Facsimile: (212) 310-8007
If to the Warrant Agent, to:
Mellon Investor Services LLC
200 W. Monroe Street, Suite 1590
Chicago, IL 60606
Attention: Relationship Manager
Facsimile: (312) 325-7610
with a copy to:
Mellon Investor Services LLC
Newport Office Center VII
480 Washington Blvd.
Jersey City, NJ 07310
Attention: General Counsel
Facsimile: 201-680-4610
or such other address as shall have been furnished to the party giving or making such notice, demand or delivery.
(b) Any notice required to be given by the Company to the Holders pursuant to this Agreement, shall be made by mailing by registered mail, return receipt requested, to the Holders at their respective addresses shown on the register of the Company maintained by the Warrant Agent. The Company hereby irrevocably authorizes the Warrant Agent, in the name and at the expense of the Company, to mail any such notice upon receipt thereof from the Company. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given when mailed, whether or not the Holder receives the notice.
12.7 Applicable Law; Jurisdiction . This Agreement and each Warrant issued hereunder and all rights arising hereunder shall be governed by the internal laws of the State of New York. In connection with any action, suit or proceeding arising out of or relating to this Agreement or the Warrants, the parties hereto and each Holder irrevocably submit to (i) the exclusive jurisdiction of the United States Bankruptcy Court for the Southern District of New York until the chapter 11 cases of General Growth Properties, Inc. and its Affiliates are closed,
and (ii) the nonexclusive jurisdiction of any federal or state court located within the County of New York, State of New York.
12.8 Persons Benefiting . This Agreement shall be binding upon and inure to the benefit of the Company and the Warrant Agent, and their respective successors, assigns, beneficiaries, executors and administrators, and the Holders from time to time of the Warrants. The Holders of the Warrants are express third party beneficiaries of this Agreement and each such Holder of Warrants is hereby conferred the benefits, rights and remedies under or by reason of the provisions of this Agreement as if a signatory hereto. Nothing in this Agreement is intended or shall be construed to confer upon any Person, other than the Company, the Warrant Agent and the Holders of the Warrants, any right, remedy or claim under or by reason of this Agreement or any part hereof.
12.9 Counterparts . This Agreement may be executed in any number of counterparts, each or which shall be deemed an original, but all of which together constitute one and the same instrument.
12.10 Amendments . (a) The Company and the Warrant Agent may from time to time supplement or amend this Agreement without the approval of any Holder in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any other provisions with regard to matters or questions arising hereunder which the Company and the Warrant Agent may deem necessary or desirable and, in each case, which shall not adversely affect the interests of any Holder.
(b) In addition to the foregoing, with the consent of the Superm ajority Holders, the Company and the Warrant Agent may modify this Agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Warrant Agreement or modifying in any manner the rights of the Holders hereunder; provided , however , that no modification effecting the terms upon which the Warrants are exercisable, redeemable or transferable, or reduction in the percentage required for consent to modification of this Agreement, may be made without the consent of each Holder affected thereby.
12.11 Headings . The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience and shall not control or affect the meaning or construction of any of the provisions hereof.
12.12 Entire Agreement . This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. In the event of any conflict, discrepancy, or ambiguity between the terms and conditions contained in this Agreement and any schedules or attachments hereto, the terms and conditions contained in this Agreement shall take precedence.
12.13 Specific Performance . T he parties shall be entitled to specific performance of the terms of this Agreement. Each of the parties hereto hereby waives (i) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate
and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.
[signature page follows]
IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written.
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GENERAL GROWTH PROPERTIES, INC. |
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/s/ Linda J. Wight |
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Linda J. Wight |
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Vice President and Assistant Secretary |
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MELLON INVESTOR SERVICES LLC, |
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as Warrant Agent |
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/s/ Thomas Blatchford |
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Thomas Blatchford |
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Vice President |
[SIGNATURE PAGE TO GGP WARRANT AGREEMENT]
EXHIBIT A-1
FORM OF FACE OF WARRANT CERTIFICATE
THESE WARRANTS AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THESE WARRANTS AND SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF NOVEMBER 9, 2010 BETWEEN GENERAL GROWTH PROPERTIES, INC. (THE “ COMPANY ”) AND MELLON INVESTOR SERVICES LLC, WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.
WARRANTS TO PURCHASE COMMON STOCK
OF GENERAL GROWTH PROPERTIES, INC.
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Certificate for Series A-1 Warrants |
This certifies that [HOLDER ], or registered assigns, is the registered holder of the number of Series A-1 Warrants set forth above. Each Series A-1 Warrant entitles the holder thereof (a “ Holder ”), subject to the provisions contained herein and in the Warrant Agreement referred to below, to purchase from GENERAL GROWTH PROPERTIES, INC. (the “ Company ”) a number of shares of the Company’s common stock, par value $0.01 (“ Common Stock ”), equal to [INSERT $10.75 FOR BROOKFIELD WARRANTS AND BLACKSTONE B WARRANTS][INSERT $10.50 FOR BLACKSTONE F/P WARRANTS] divided by the Exercise Price (as defined in the Warrant Agreement referred to below), for a price per share of Common Stock equal to the Exercise Price.
This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of November 9, 2010 (the “ Warrant Agreement ”), between the Company and Mellon Investor Services LLC, a New Jersey limited liability company, as warrant agent (the “ Warrant Agent ”, which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Warrant Agent and the Holders of the Warrants.
This Warrant Certificate shall terminate and be void as of the close of business on November 9, 2017 (the “ Expiration Date ”).
As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Series A-1 Warrants shall be exercisable from time to time on any Business Day and ending on the Expiration Date.
The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Series A-1 Warrant are subject to adjustment as provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of Series A-1 Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable.
In order to exercise a Series A-1 Warrant, the registered holder hereof must surrender this Warrant Certificate at the corporate trust office of the Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein specified, together with any required payment in full of the Exercise Price (unless the Holder shall have elected Net Share Settlement, as such term is defined in the Warrant Agreement) then in effect for the shares(s) of Underlying Common Stock as to which the Series A-1 Warrant(s) represented by this Warrant Certificate are submitted for exercise, all subject to the terms and conditions hereof and of the Warrant Agreement.
The Company shall pay all transfer, stamp and other similar taxes that may be imposed in respect of the issuance or delivery of the Series A-1 Warrants or in respect of the issuance or delivery by the Company of any securities upon exercise of the Series A-1 Warrants with respect thereto. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any Series A-1 Warrants, certificate for shares of Common Stock or other securities underlying the Series A-1 Warrants or payment of cash in each case to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Series A-1 Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue any security or to pay any cash until such tax or charge has been paid or it has been established to the Warrant Agent’s and the Company’s satisfaction that no such tax or other charge is due.
This Warrant Certificate and all rights hereunder are transferable by the registered holder hereof, subject to the terms of the Warrant Agreement, in whole or in part, on the register of the Company, upon surrender of this Warrant Certificate for registration of transfer at the office of the Warrant Agent maintained for such purpose in the City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent duly executed by, the Holder hereof or his attorney duly authorized in writing, with signature guaranteed as specified in the attached Form of Assignment. Upon any partial transfer, the Company will issue and deliver to such holder a new Warrant Certificate or Certificates with respect to any portion not so transferred.
No service charge shall be made to a Holder for any registration of transfer or exchange of the Warrant Certificates, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Subject to compliance with any restrictions on transfer under applicable law and this Warrant Agreement, each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that this Warrant Certificate when duly endorsed in blank shall be deemed negotiable and that when this Warrant Certificate shall have been so endorsed, the holder hereof may be treated by the Company, the Warrant Agent and all other Persons dealing
with this Warrant Certificate as the absolute owner hereof for any purpose and as the Person entitled to exercise the rights represented hereby, or to the transfer hereof on the register of the Company maintained by the Warrant Agent, any notice to the contrary notwithstanding, but until such transfer on such register, the Company and the Warrant Agent may treat the registered Holder hereof as the owner for all purposes.
This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate that are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement.
Copies of the Warrant Agreement are on file at the office of the Company and the Warrant Agent and may be obtained by writing to the Company or the Warrant Agent at the following address: Mellon Investor Services LLC, 200 W. Monroe Street, Suite 1590, Chicago, IL 60606.
This Warrant Certificate shall not be valid for any purpose until it shall have been countersigned by the Warrant Agent.
Dated: November 9, 2010
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EXHIBIT A
FORM OF REVERSE OF SERIES A-1 WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To:
The undersigned irrevocably exercises of the Series A-1 Warrants for the purchase of one share (subject to adjustment in accordance with the Warrant Agreement) of common stock, par value $0.01, of General Growth Properties, Inc. for each Series A-1 Warrant represented by the Warrant Certificate and herewith (i) elects for Net Share Settlement of such Series A-1 Warrants by marking X in the space that follows , or (ii) makes payment of $ (such payment being by means permitted by the Warrant Agreement and the within Warrant Certificate), in each case at the Exercise Price and on the terms and conditions specified in the within Warrant Certificate and the Warrant Agreement therein referred to, and herewith surrenders this Warrant Certificate and all right, title and interest therein to and directs that the shares of Common Stock deliverable upon the exercise of such Series A-1 Warrants be registered in the name and delivered at the address specified below.
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Signature Guaranteed by: |
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* The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.
Securities to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Series A-1 Warrants evidenced by the within Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
EXHIBIT A-2
FORM OF FACE OF WARRANT CERTIFICATE
THESE WARRANTS AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THESE WARRANTS AND SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF NOVEMBER 9, 2010 BETWEEN GENERAL GROWTH PROPERTIES, INC. (THE “ COMPANY ”) AND MELLON INVESTOR SERVICES LLC, WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.
WARRANTS TO PURCHASE COMMON STOCK
OF GENERAL GROWTH PROPERTIES, INC.
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No. |
Certificate for Series A-2 Warrants |
This certifies that [HOLDER ], or registered assigns, is the registered holder of the number of Series A-2 Warrants set forth above. Each Series A-2 Warrant entitles the holder thereof (a “ Holder ”), subject to the provisions contained herein and in the Warrant Agreement referred to below, to purchase from GENERAL GROWTH PROPERTIES, INC. (the “ Company ”) by means of Net Share Settlement (as defined in the Warrant Agreement defined below) a number of shares of the Company’s common stock, par value $0.01 (“ Common Stock ”), equal to $10.50 divided by the Exercise Price (as defined in the Warrant Agreement referred to below), for a price per share of Common Stock equal to the Exercise Price.
This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of November 9, 2010 (the “ Warrant Agreement ”), between the Company and Mellon Investor Services LLC, a New Jersey limited liability company, as warrant agent (the “ Warrant Agent ”, which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Warrant Agent and the Holders of the Warrants.
This Warrant Certificate shall terminate and be void as of the close of business on November 9, 2017 (the “ Expiration Date ”).
As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Series A-2 Warrants shall be exercisable from time to time on any Business Day and ending on the Expiration Date.
The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Series A-2 Warrant are subject to adjustment as provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of Series A-2 Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable.
In order to exercise a Series A-2 Warrant, the registered holder hereof must surrender this Warrant Certificate at the corporate trust office of the Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein specified, all subject to the terms and conditions hereof and of the Warrant Agreement.
The Company shall pay all transfer, stamp and other similar taxes that may be imposed in respect of the issuance or delivery of the Series A-2 Warrants or in respect of the issuance or delivery by the Company of any securities upon exercise of the Series A-2 Warrants with respect thereto. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any Series A-2 Warrants, certificate for shares of Common Stock or other securities underlying the Series A-2 Warrants or payment of cash in each case to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Series A-2 Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue any security or to pay any cash until such tax or charge has been paid or it has been established to the Warrant Agent’s and the Company’s satisfaction that no such tax or other charge is due.
This Warrant Certificate and all rights hereunder are transferable by the registered holder hereof, subject to the terms of the Warrant Agreement, in whole or in part, on the register of the Company, upon surrender of this Warrant Certificate for registration of transfer at the office of the Warrant Agent maintained for such purpose in the City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent duly executed by, the Holder hereof or his attorney duly authorized in writing, with signature guaranteed as specified in the attached Form of Assignment. Upon any partial transfer, the Company will issue and deliver to such holder a new Warrant Certificate or Certificates with respect to any portion not so transferred.
No service charge shall be made to a Holder for any registration of transfer or exchange of the Warrant Certificates, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Subject to compliance with any restrictions on transfer under applicable law and this Warrant Agreement, each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that this Warrant Certificate when duly endorsed in blank shall be deemed negotiable and that when this Warrant Certificate shall have been so endorsed, the holder hereof may be treated by the Company, the Warrant Agent and all other Persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the Person entitled to exercise the rights represented hereby, or to the transfer hereof on the register of the Company maintained by the Warrant Agent, any notice to the contrary notwithstanding, but until
such transfer on such register, the Company and the Warrant Agent may treat the registered Holder hereof as the owner for all purposes.
This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate that are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement.
Copies of the Warrant Agreement are on file at the office of the Company and the Warrant Agent and may be obtained by writing to the Company or the Warrant Agent at the following address: Mellon Investor Services LLC, 200 W. Monroe Street, Suite 1590, Chicago, IL 60606.
This Warrant Certificate shall not be valid for any purpose until it shall have been countersigned by the Warrant Agent.
Dated: November 9, 2010
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
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Name and Title: |
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By: |
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Name and Title: |
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Countersigned: |
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Mellon Investor Services LLC, as Warrant Agent |
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By: |
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Name: |
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Authorized Officer |
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EXHIBIT A
FORM OF REVERSE OF SERIES A-2 WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To:
The undersigned irrevocably exercises of the Series A-2 Warrants for the purchase of one share (subject to adjustment in accordance with the Warrant Agreement) of common stock, par value $0.01, of General Growth Properties, Inc. for each Series A-2 Warrant represented by the Warrant Certificate by means of Net Share Settlement of such Series A-2 Warrants, at the Exercise Price and on the terms and conditions specified in the within Warrant Certificate and the Warrant Agreement therein referred to, and herewith surrenders this Warrant Certificate and all right, title and interest therein to and directs that the shares of Common Stock deliverable upon the exercise of such Series A-2 Warrants be registered in the name and delivered at the address specified below.
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* |
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(Signature of Owner) |
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Signature Guaranteed by: |
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* The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.
Securities to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Series A-2 Warrants evidenced by the within Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
EXHIBIT B
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s) named below (including the undersigned with respect to any Warrants constituting a part of the Warrants evidenced by the within Warrant Certificate not being assigned hereby) all of the right of the undersigned under the within Warrant Certificate, with respect to the number of Warrants set forth below:
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Address |
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Social Security or
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Series and
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and does hereby irrevocably constitute and appoint the undersigned’s attorney to make such transfer on the books of maintained for that purpose, with full power of substitution in the premises.
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Signature Guaranteed by: |
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* The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.
EXHIBIT C
Option Pricing Assumptions / Methodology
For the purpose of this Exhibit C :
“ Acquiror ” means (A) the third party that has entered into definitive document for a transaction, or (B) the offeror in the event of a tender or exchange offer.
“ Reference Date ” means the date of consummation of a Change of Control Event.
The Cash Redemption Value of the Warrants shall be determined using the Black-Scholes Model as applied to third party options ( i.e. , options issued by a third party that is not affiliated with the issuer of the underlying stock). For purposes of the model, the following terms shall have the respective meanings set forth below:
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Underlying Security Price: |
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In the event of a merger or other acquisition, |
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(A) |
that is an “all cash” deal, the cash per share of Common Stock to be paid to the Company’s stockholders in the transaction; |
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(B) |
that is an “all Public Stock” deal, |
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(1) that is a “fixed exchange ratio” transaction, a “fixed value” transaction where as a result of a cap, floor, collar or similar mechanism the number of Acquiror’s shares to be paid per share of Common Stock to the Company’s stockholders in the transaction is greater or less than it would otherwise have been or a transaction that is not otherwise described in this clause (B)(1) or clause (B)(2) below, the product of (i) the Fair Market Value of the Acquiror’s common stock on the day preceding the date of the Preliminary Change of Control Event and (ii) the number of Acquiror’s shares per share of Common Stock to be paid to the Company’s stockholders in the transaction ( provided that the Independent Financial Expert shall make appropriate adjustments to the Fair Market Value of the Acquiror’s common stock referred to above as may be necessary or appropriate to effectuate the intent of this Exhibit C and to avoid unjust or inequitable results as determined in its reasonable good faith judgment, in each case to account for any event impacting the Acquiror’s common stock that is analogous to any of the events described in Article V of this Agreement if the record date, ex date or effective date of that event occurs during or after the 10 trading |
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day period over which such Fair Market Value is measured) and |
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(2) that is a “fixed value” transaction not covered by clause (B)(1) above, the value per share of Common Stock to be paid to the Company’s stockholders in the transaction; |
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(C) |
that is a transaction contemplating various forms of consideration for each share of Common Stock, |
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(1) the cash portion, if any, shall be valued as described in clause (A) above, |
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(2) the Public Stock portion shall be valued as described in clause (B) above and |
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(3) any other forms of consideration shall be valued by the Independent Financial Expert valuing the Warrants, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such consideration (if securities) is fully distributed and is to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors and without applying any discounts to such consideration. |
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In the event of all other Change of Control Event events, the Fair Market Value per share of the Common Stock on the last trading day preceding the date of the Change of Control Event . |
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Exercise Price: |
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The Exercise Price as adjusted and then in effect for the Warrant . |
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Dividend Rate: |
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Interest Rate: |
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The annual yield as of the Reference Date (expressed on a semi-annual basis in the manner in which U.S. treasury notes are ordinarily quoted) of the U.S. treasury note maturing approximately at the Expiration Date as selected by the Independent Financial Expert . |
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Put or Call: |
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Call |
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Time to Expiration |
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The number of days from the Expiration Date (as defined in Section 3.3) to the Reference Date divided by 365. |
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Settlement Date: |
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The scheduled date of payment of the Cash Redemption Value . |
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Volatility: |
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For calculation of Cash Redemption Value in connection with a Change of Control Event with respect to the Warrants, 20%; provided , however , that if the Warrants are adjusted as a result of a Change of Control Event, volatility for purposes of calculating Cash Redemption Value in connection with succeeding Change of Control Events with respect to such warrants (or their successors) shall be as determined by an Independent Financial Expert engaged to make the calculation, who shall be instructed to assume for purposes of the calculation that such succeeding Change of Control Event had not occurred. |
Such valuation of the Warrant shall not be discounted in any way.
For illustrative purposes only, an example Black-Scholes model calculation with respect to a hypothetical warrant appears on the following page.
Illustrative Example
Inputs :
S = Underlying Security Price
X = Exercise Price
PV(X) = Present value of the Exercise Price, discounted at a rate of R = X * (e^-(R * T))
V = Volatility
R = continuously compounded risk free rate = 2 * [ ln (1 + Interest Rate / 2)]
T = Time to Expiration
W = warrant value per underlying share
Z = number of shares underlying warrants
Value = total warrant value
Formulaic inputs :
D1 = [ ln [ S / X] + (R + (V^2 / 2)) * T)] ÷ (V * √T)
D2 = [ ln [ S / X] + (R - (V^2 / 2)) * T)] ÷ (V * √T)
Black-Scholes Formula
W = [N(D1) * S] — [N(D2) * PV(X)]
Where “N” is the cumulative normal probability function
Value = W * Z
(1) Note: Amounts calculated herein may not foot due to rounding error. For precise calculations, decimal points should not be rounded.
Example of a Hypothetical Warrant :(1)
Inputs :
Interest Rate = 4.00%
S = $50.00
X = $60.00
PV(X) = $55.43
V = 25%
R = 3.96%
T = 2
Z = 100
Formulaic inputs :
D1 = [ ln [ S / X] + (R + (V^2 / 2)) * T)] ÷ (V * √T)
= (-0.1149)
D2 = [ ln [ S / X] + (R - (V^2 / 2)) * T)] ÷ (V * √T)
= (-0.4684)
Black-Scholes Formula
W = [N(D1) * S] — [N(D2) * PV(E)]
= $4.99
Total Warrant Value
Value = W * Z
= $499
SCHEDULE A
ALLOCATIONS OF WARRANTS TO INITIAL INVESTORS
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Initial Investor |
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Total Number and Series of Warrants to be
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Blackstone Purchaser |
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5,000,000 Series A-1 Warrants |
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Brookfield Purchaser |
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57,500,000 Series A-1 Warrants |
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Fairholme Purchasers |
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41,071,429 Series A-2 Warrants |
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Pershing Square Purchasers |
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16,428,571 Series A-2 Warrants |
SCHEDULE B
WARRANT AGENT COMPENSATION
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Service Description |
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Fees |
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Warrant Agent |
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Initial Setup (one-time charge) |
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$ |
2,500.00 |
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Annual Administration |
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$ |
3,500.00 |
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Warrant Conversion Agent |
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Set Up and Administrative Fee |
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$ |
5,000.00 |
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Processing Accounts, each |
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$ |
50.00 |
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Conversions requiring additional handling (window items, deficient items, correspondence items, legal items, items not providing a taxpayer identification number, Transfer Requests, etc), additional each |
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$ |
15.00 |
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Requisitioning Funds, each requisition |
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$ |
25.00 |
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Expiration |
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$ |
1,000.00 |
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Special Services |
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Additional |
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Out of Pocket Expenses Including Postage, Printing, Stationery, Overtime, Transportation, Microfilming, Imprinting, Mailing, etc. |
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Additional |
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Exhibit 4.2
EXECUTION VERSION
THE ROUSE COMPANY, LLC
and
Wilmington Trust FSB,
as Trustee
6.75% SENIOR NOTES DUE 2015
INDENTURE
Dated as of November 9, 2010
This INDENTURE dated as of November 9, 2010, is by and between The Rouse Company, LLC, a limited liability company validly existing under the laws of the State of Delaware (the “ Company ”) and Wilmington Trust FSB, as trustee (the “ Trustee ”).
The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 6.75% Senior Notes due 2015 (the “ Notes ”) issued under this Indenture:
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions .
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
“ 144A Global Note ” means a Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee issued in a denomination equal to the outstanding principal amount of the Notes sold for initial resale in reliance on Rule 144A.
“ Additional Notes ” means any Notes (other than Initial Notes and Notes issued under Sections 2.06, 2.07, 2.10 and 3.06 hereof) issued under this Indenture in accordance with Sections 2.02 and 2.15 hereof, as part of the same series as the Initial Notes.
“ Adjusted Treasury Rate ” means, with respect to any Determination Date, the rate per annum equal to the semi-annual yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Determination Date, plus 50 basis points.
“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“ Agent ” means any Registrar, co-registrar, Paying Agent or additional paying agent.
“ Applicable Procedures ” means, with respect to any transfer, redemption or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer, redemption or exchange.
“ Asset ” means, with respect to one or more transactions occurring within any 12-month period, any asset or group of assets of the Company or its Subsidiaries (including, but not limited to, all balance sheet items and all intangible assets including management contracts, goodwill and trade secrets) with a fair market or book value, whichever is larger, greater than 5% of Consolidated Net Tangible Assets on the date of such transaction.
“ Assets Under Development ” means land and improvements owned by a member of the Consolidated Group or an Investment Affiliate being developed for retail, office, mixed-use or other rental-income producing purposes which meet all four of the following criteria: (a) such project (or phase) has not yet been substantially completed; (b) no rental income has yet been received; (c) no certificate of occupancy has yet been issued for such project (or phase); and (d) such project (or phase) is classified as construction in progress in accordance with GAAP.
“ Attributable Debt ” shall mean, as to any particular lease under which the Company or any Restricted Subsidiary is at the time liable, at any date as of which the amount thereof is to be determined, the lesser of (i) the fair value of the property subject to such lease (as certified in an Officer’s Certificate) or (ii) the total net amount of rent required to be paid by the Company under such lease during the remaining term thereof, discounted from the respective due dates thereof to such date at the rate of interest per annum equal to 8.5%, compounded semi-annually. The net amount of rent required to be paid under any such lease for any such period shall be the amount of the rent payable by the lessee with respect to such period, after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated.
“ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors, or the law of any other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of debtors.
“ Board of Directors ” means (1) in respect of a corporation, the board of directors of the corporation, or any duly authorized committee thereof; (2) with respect to a partnership, the board of directors, or other body serving a similar function, of the general partner of the partnership, or any duly authorized committee thereof; or (3) in respect of any other Person, the board or committee of that Person serving an equivalent function.
“ Board Resolution” of a Person means a copy of a resolution certified by the secretary or an assistant secretary (or individual performing comparable duties) of the applicable Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.
“ Business Day ” means any day other than a Legal Holiday.
“ Capital Lease Obligations ” of any Person means the obligations to pay rent or other amounts under a lease of (or other Debt arrangements conveying the right to use) real or personal property of such Person which are required to be classified and accounted for as a capital lease or a liability on the face of a balance sheet of such Person in accordance with GAAP, and the amount of such obligations shall be the capitalized amount thereof in accordance with GAAP and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.
“ Capital Stock ” means shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, equivalent ownership interests in a Person which is not a corporation, and warrants or options to purchase any of the foregoing.
“ Cash Equivalents ” means (a) short-term obligations of, or fully guaranteed by, the United States of America, (b) commercial paper rated A-1 or better by Standard & Poor’s Rating Services (or any successor) or P-1 or better by Moody’s Investors Service, Inc. (or any successor), or (c) certificates of deposit issued by, and time deposits with, commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000.
“ Clearstream ” means Clearstream Banking S.A. and any successor thereto.
“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.
“ Commission ” means the Securities and Exchange Commission.
“ Company ” means The Rouse Company, LLC and any successor thereto.
“ Comparable Treasury Issue ” means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Notes that would be
utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.
“ Comparable Treasury Price ” means, with respect to any Determination Date: (1) the average of the Reference Treasury Dealer Quotations for such date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (2) if fewer than three such Reference Treasury Dealer Quotations are obtained, the average of all such Reference Treasury Dealer Quotations.
“ Consolidated Coverage Ratio ” of any Person means for any period the ratio of (a) Total FFO for such period plus Total Interest Expense for the same period for such Person to (b) Total Interest Expense for the same period for such Person.
“ Consolidated Group ” means the Company and its Subsidiaries that are consolidated with the Company for financial reporting purposes under GAAP, and any other Person whose financial results are included using the proportionate share method under the Company’s segment accounting policies in the financial statements of the Consolidated Group.
“ Consolidated Group’s Pro Rata Share ” means, with respect to any Investment Affiliate, the percentage of the total ownership and financial interests held by the Consolidated Group, in the aggregate, in such Investment Affiliate as determined in accordance with the Company’s segment accounting policies in the financial statements of the Consolidated Group.
“ Consolidated Net Tangible Assets ” shall mean the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom: (i) all current liabilities (excluding any thereof which are by their terms extendible or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed and excluding current maturities of long-term indebtedness and Capital Lease Obligations); and (ii) all goodwill, all as shown in the consolidated balance sheet of the Company and its Subsidiaries as of the end of the latest fiscal quarter for which consolidated financial statements are available.
“ Corporate Trust Office of the Trustee ” shall be at the address of the Trustee specified in Section 11.02 hereof, or such other address as to which the Trustee may give notice to the Company.
“ Custodian ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03(c) as Custodian with respect to the Notes, and any and all successors thereto appointed as custodian hereunder and having become such pursuant to the applicable provisions of this Indenture.
“ Debt ” means (without duplication), with respect to any Person: (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses, but excluding any trade payments and other accrued current liabilities arising in the ordinary course of business; (iii) every currently due reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property, but excluding trade accounts payable and other accrued current liabilities arising in the ordinary course of business which are not overdue by more than 90 days or which are being contested in good faith; (v) every Capital Lease Obligation of such Person; (vi) the maximum fixed redemption or repurchase price of any equity security which may be converted into a debt security of such Person at any time or is mandatorily redeemable for cash within 20 years from its initial issuance; and (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or for which such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise.
“ Default ” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 or 2.10 hereof, in substantially the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03(b) hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provisions of this Indenture.
“ Determination Date ” means, with respect to the calculation of the Make-Whole Price in connection with any redemption of the Notes, the redemption date.
“ Distribution Compliance Period ” means the 40-day distribution compliance period as defined in Regulation S.
“ Euroclear ” means Euroclear Bank, S.A./N.V., as operator of the Euroclear systems, and any successor thereto.
“Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ GAAP ” means generally accepted accounting principles in the United States, consistent with the accounting principles utilized in preparing the financial statements of the Consolidated Group in accordance with this Indenture as in effect from time to time. All ratios and computations based on GAAP contained in this Indenture will be computed in conformity with GAAP.
“ Global Note Legend ” means the legend set forth in Section 2.06(f)(ii), which is required to be placed on all Global Notes issued under this Indenture.
“ Global Notes ” means the global Notes in the form of Exhibit A hereto issued in accordance with Article 2 hereof.
“ Gross Asset Value ” means, as of any determination date, the sum of the values of the following assets of the Consolidated Group, including the Consolidated Group’s Pro Rata Share of the values of such assets of Investment Affiliates, based on the valuation methods set forth below:
(a) with respect to all Retail Properties, the Net Operating Income attributable thereto for the most recent period of four full fiscal quarters for which financial results have been reported, divided by 0.0825;
(b) with respect to all office, mixed-use and other income-producing properties other than Retail Properties, the Net Operating Income attributable thereto for the most recent period of four full fiscal quarters for which financial results have been reported, divided by 0.09;
(c) with respect to any properties relating to master planned communities, 100% of the most recent current value thereof (without deduction for the value of the interests of the Hughes heirs therein under the Hughes Heirs Obligations) as set forth in appraisals prepared by a nationally recognized appraisal firm selected by the Company), provided that the Company will obtain updated appraisals thereof at least once during each fiscal year and also when, during any four consecutive full fiscal quarters, any such properties having an aggregate value in excess of 5% of Gross Asset Value as of the end of the last full fiscal quarter are sold or transferred;
(d) 100% of the GAAP book value of all other land, all Assets Under Development and other non-income-producing properties (less the portion of such value attributable to minority interest holders);
(e) 100% of the GAAP book value of cash and Cash Equivalents held by the Consolidated Group; and
(f) 100% of the GAAP book value of current accounts receivable, net held by the Consolidated Group.
Notwithstanding the preceding sentence, the contribution to the Gross Asset Value of those assets acquired in any acquisition will be calculated prior to the date ending on or after four full fiscal quarters subsequent to any such acquisition using the actual acquisition cost of such assets excluding actual transaction costs (without regard to any adjustments which may be made in determining book value under GAAP).
“ guarantee ” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Debt. The term “guarantee” used as a verb has a corresponding meaning.
“ Holder ” means a Person in whose name a Note is registered in the Security Register.
“ Hughes Heirs Obligations ” the obligations asserted against the Company, General Growth Properties, Inc., The Howard Hughes Corporation, Howard Hughes Properties Limited Partnership and Howard Hughes Properties, Inc., The Hughes Corporation and any of their affiliates pursuant to the Contingent Stock Agreement, effective as of January 1, 1996, as the same may be amended.
“ IAI Global Note ” means a Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors, if any, to the extent required by the Applicable Procedures.
“ Incur ” means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or other obligation on the balance sheet of any such Person (and “incurrence,” “incurred,” “incurrable” and “incurring” shall have meanings correlative to the foregoing); provided that a change in GAAP that results in an obligation of such Person that exists at such time becoming Debt shall not be deemed an incurrence of such Debt.
“ Indenture ” means this instrument, as originally executed or as it may from time to time be supplemented or amended in accordance with Article 9 hereof.
“ Independent Investment Banker ” means one of the Reference Treasury Dealers appointed by the Company and acceptable to the Trustee after consultation.
“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.
“ Initial Notes ” means $608,688,000 aggregate principal amount of Notes issued under this Indenture on the date hereof, which Notes shall be in the form of Unrestricted Global Notes or Unrestricted Definitive Notes, except to the extent otherwise required in order to comply with the Securities Act.
“ Institutional Accredited Investor ” means an institution that is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
“ Interest Payment Dates ” shall have the meaning set forth in paragraph 1 of each Note.
“ Investment Affiliate ” means any Person in which any member of the Consolidated Group, directly or indirectly, has an ownership interest, whose financial results are not included using the proportionate share method under the Company’s segment accounting policies with the financial results of the Consolidated Group in the financial statements of the Consolidated Group.
“ Issue Date ” means November 9, 2010.
“ Legal Holiday ” means a Saturday, a Sunday or a day on which banking institutions in the City of New York, the city in which the Corporate Trust Office of the Trustee is located or any other place of payment on the Notes are authorized by law, regulation or executive order to remain closed.
“ Lien ” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code on any property leased to any Person under a lease which is not in the nature of a conditional sale or title retention agreement, or any subordination agreement in favor of another Person).
“ Make-Whole Price ” means with respect to any Note as of any Determination Date, an amount equal to the greater of (x) 100% of the principal amount of the Note and (y) as determined by an Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the Determination Date) discounted to the Determination Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued and unpaid interest thereon to such Determination Date.
“ Net Operating Income ” means, with respect to any Property, for any period, earnings from rental operations (computed in accordance with GAAP, but without deduction for reserves) attributable to such Property, plus depreciation, amortization, interest expense and deferred taxes with respect to such Property for such period, and, if such period is less than four full fiscal quarters, adjusted by straight lining ordinary operating expenses which are payable less frequently than once during every such period ( e.g., real estate taxes and insurance). The amounts determined under the preceding sentence will be adjusted by adding back (a) the interests of the former Hughes owners pursuant to the Hughes Heirs Obligations that were excluded in determining such amounts and (b) dividends or other distributions accrued with respect to such period on any preferred stock or other preferred security issued by the Company to the extent that such dividends or other distributions are treated as an operating expense under GAAP. “Net Operating Income” shall be adjusted to include a pro forma amount thereof (as determined in good faith by the Company) for four full fiscal quarters for any Property placed in service during any quarter and to exclude any Net Operating Income for the prior four full fiscal quarters from any Property not owned as of the end of any quarter.
“ Obligations ” means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Debt.
“ Officer ” means the Chairman of the Board, Vice Chairman, Chief Executive Officer, Chief Operating Officer, President, Senior or Executive Vice Presidents, Vice President, Treasurer, Assistant Treasurer, Secretary or an Assistant Secretary of the Company.
“ Officer’s Certificate ” means a certificate signed by the Chairman of the Board, Vice Chairman, Chief Executive Officer, Chief Operating Officer, President, one of its Senior or Executive Vice Presidents, a Vice President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. The officer signing an Officer’s Certificate given pursuant to Section 4.04 shall be an Officer.
“ Opinion of Counsel ” means a written opinion, in form and substance reasonably satisfactory to the Trustee, from legal counsel who is acceptable to the Trustee and which meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company or the Trustee.
“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively, and, with respect to DTC, shall include Euroclear and Clearstream.
“ Person ” means any individual, corporation, any limited liability company, partnership, joint
venture, trust, unincorporated organization, or government or any agency or political subdivision thereof.
“ Predecessor Note ” of any particular Note means every previous Note evidencing all or a portion of the same Debt as that evidenced by such particular Note; and any Note authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same Debt as the lost, destroyed or stolen Note.
“ Principal Property ” shall mean any land, and any building, structure or other facility, together with the land upon which it is erected and fixtures comprising a part thereof, in each case the net book value of which on the date as of which the determination is being made exceeds 2% of Consolidated Net Tangible Assets at such date; provided, however, that Principal Property shall not include: (i) any building, structure or facility which, in the opinion of the Board of Directors of the Company as evidenced by a Board Resolution, is not of material importance to the total business conducted by the Company and its Subsidiaries as an entirety; or (ii) any portion of a particular building, structure or facility which, in the opinion of the Board of Directors of the Company as evidenced by a Board Resolution, is not of material importance to the use or operation of such building, structure or facility.
“ Private Placement Legend ” means the legend set forth in Section 2.06(f)(i) hereof to be placed on all Notes issued under this Indenture except as otherwise permitted by the provisions of this Indenture.
“ Property ” means each parcel of real property owned or operated by any member of the Consolidated Group or any Investment Affiliate.
“ QIB ” means a “qualified institutional buyer” as defined in Rule 144A.
“ Ratio Calculation ” means that, immediately after either the incurrence of Debt or the sale of or other disposal of an Asset, as the case may be, we, or our agent, shall calculate the Consolidated Coverage Ratio for the four full fiscal quarter period preceding the Incurrence, sale or disposal for which consolidated financial statements are available. In making such calculation, (a) the Total Interest Expense attributable to interest on any Debt to be Incurred bearing a floating interest rate shall be computed on a pro forma basis as if the rate in effect on the date of computation had been the applicable rate for the entire period and (b) with respect to any Debt which bears, at the option of the Company, a fixed or floating rate of interest, the Company shall apply the same rate for purposes of calculating the Consolidated Coverage Ratio as it chooses to apply to the Debt. In addition, such calculation shall be performed using the consolidated financial statements which shall be reformulated on a pro forma basis as if such Debt had been Incurred or such Asset had been sold or otherwise disposed of, as the case may be, at the beginning of such four fiscal quarter period. Such reformulation shall give effect, as if the relevant event had occurred at the beginning of such four fiscal quarter period, to any actual use of proceeds of such Debt being incurred or Asset being sold or disposed of and to any Incurrences or repayments of Debt and other sales, disposals or acquisitions of Assets occurring after the end of the last quarter for which there are consolidated financial statements available. If any portion of the proceeds has not been used, it shall be assumed that such portion of the proceeds was invested in one-year Treasury bills on the first day of such four fiscal quarter period.
“ Reference Treasury Dealer ” means a primary U.S. Government securities dealer in New York City appointed by the Company and acceptable to the Trustee after consultation.
“ Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any Determination Date, the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such Determination Date.
“ Regular Record Date ” for the interest payable on any Interest Payment Date means the applicable date specified as a “Record Date” on the face of the Note.
“ Regulation S ” means Regulation S promulgated under the Securities Act.
“ Regulation S Global Note ” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate.
“ Regulation S Permanent Global Note ” means a permanent Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Distribution Compliance Period.
“ Regulation S Temporary Global Note ” means a temporary Global Note in the form of Exhibit A hereto bearing the Global Note Legend, the Private Placement Legend and Regulation S Temporary Global Note Legend and deposited with and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold for initial resale in reliance on Rule 903 of Regulation S.
“ Regulation S Temporary Global Note Legend ” means the legend set forth in Section 2.06(f)(iii) hereof to be placed on all Regulation S Temporary Global Notes issued under this Indenture.
“ Responsible Officer ,” when used with respect to the Trustee, means any officer within the Corporate Trust Department of the Trustee (or any successor group of the Trustee) with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject.
“ Restricted Definitive Note ” means one or more Definitive Notes bearing the Private Placement Legend.
“ Restricted Global Notes ” means 144A Global Notes, IAI Global Notes and Regulation S Global Notes.
“ Restricted Subsidiary ” means any subsidiary of the Company which has a 50% or greater ownership interest in a Principal Property or Properties.
“ Retail Property ” means a shopping center or other retail development containing more than one retail tenant in which at least 90% of the Net Operating Income from such center or development is attributable to retail uses.
“ Rule 144 ” means Rule 144 promulgated under the Securities Act.
“ Rule 144A ” means Rule 144A promulgated under the Securities Act.
“ Rule 903 ” means Rule 903 promulgated under the Securities Act.
“ Rule 904 ” means Rule 904 promulgated under the Securities Act.
“ Sale/Leaseback Transaction ” has the meaning specified in Section 4.10.
“ Secured Debt ” means, as of any determination date, the sum of:
(a) the aggregate principal amount of all Debt of the Consolidated Group then outstanding (including only the Company’s proportionate interest in the Debt of any Person whose financial results are included using the proportionate share method under the Company’s segment accounting policies in the financial statements of the Consolidated Group) which is secured by a Lien on any asset (including any Capital Stock) of any member of the Consolidated Group, including, without limitation, loans secured by mortgages, stock or partnership interests; plus
(b) the Consolidated Group’s Pro Rata Share of any Debt of an Investment Affiliate then outstanding which is secured by a Lien on any asset (including any Capital Stock) of such Investment Affiliate, without duplication of any such items.
For purposes of the preceding sentence, “Debt” shall (1) include, with respect to any Person, any loans where such Person is liable as a general partner or co-venturer less, in each case, the proportionate share of any other general or limited partners or co-venturers and (2) exclude any Debt due from any member of the Consolidated Group or any Investment Affiliate solely to one or more members of the Consolidated Group.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Significant Subsidiary ” means any Subsidiary of the Company that holds assets that had a value, on a current value basis, in excess of 3% of the Company’s total partners’ capital, on a current value basis, as reported in the Company’s most recent annual financial statements.
“ Stated Maturity ” means, with respect to any installment of interest or principal on any series of Debt (including, without limitation, a scheduled repayment or a scheduled sinking fund payment), the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Debt, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment hereof.
“ Subsidiary, ” means a Person more than 50% of the (a) outstanding voting stock or interest in and/or (b) financial interest in which, is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, “voting stock” means stock which ordinarily has voting power for the election of directors or equivalent persons, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.
“ TIA ” means the Trust Indenture Act of 1939, as amended, and the rules and regulations thereunder.
“ Total Debt ” means, as of any determination date:
(a) all Debt of the Consolidated Group then outstanding (including only the Company’s proportionate interest in the Debt of any Person whose financial results are included using the proportionate share method under the Company’s segment accounting policies in the financial statements of the Consolidated Group); plus
(b) the Consolidated Group’s Pro Rata Share of all Debt of Investment Affiliates then outstanding, without duplication of any such items.
For purposes of the preceding sentence, “Debt” will (1) include, with respect to any Person, any loans where such Person is liable as a general partner or co-venturer less, in each case, the proportionate share of any other general or limited partners or co-venturers and (2) exclude any Debt due from any member of the Consolidated Group or any Investment Affiliate solely to one or more members of the Consolidated Group.
“ Total FFO ” means, for any period, net earnings, as reported by the Consolidated Group in accordance with GAAP, excluding cumulative effects of changes in accounting principles, extraordinary or unusual items, gains or losses from debt restructurings and sales of operating properties, and deferred income taxes, plus depreciation and amortization and after adjustments for minority interests, and treating unconsolidated partnerships and joint ventures on the same basis, plus payments made and other amounts treated as an expense of the Company under GAAP with respect to such period pursuant to the Hughes Heirs Obligations (provided that no item of income or expense shall be included more than once in such calculation even if it falls within more than one of the above categories).
“ Total Interest Expense ” means, for any period, the sum of
(a) all interest expense of the Consolidated Group (less the proportionate share of interest expense of any minority interest holders); plus
(b) the allocable portion (based on liability) of any interest expense on any obligation for which any member of the Consolidated Group is wholly or partially liable under repayment, interest carry or performance guarantees or other relevant liabilities; plus
(c) the Consolidated Group’s Pro Rata Share of any interest expense on any Debt of any Investment Affiliate, whether recourse or non-recourse,
(provided that no expense shall be included more than once in such calculation even if it falls within more than one of the foregoing categories, and provided, further, that no interest expense on Debt due from one member of the Consolidated Group solely to another member of the Consolidated Group shall be included in determining Total Interest Expense). For purposes of the preceding sentence, interest expense will be determined in accordance with GAAP and will exclude any amortization of debt issuance costs.
“ Trustee ” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Trustee.
“ Unrestricted Definitive Notes ” means one or more Definitive Notes that do not and are not required to bear the Private Placement Legend.
“ Unrestricted Global Notes ” means one or more Global Notes that do not and are not required to bear the Private Placement Legend and are deposited with and registered in the name of the Depositary or its nominee.
“U.S. Government Securities” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer’s option.
Section 1.02. Other Definitions .
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Defined in |
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Term |
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Section |
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“Authentication Order” |
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2.02 |
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“Covenant Defeasance” |
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8.03 |
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“defeasance trust” |
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8.04 |
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“DTC” |
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2.03 |
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“Event of Default” |
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6.01 |
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“Legal Defeasance” |
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8.02 |
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“losses” |
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7.07 |
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“Paying Agent” |
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2.03 |
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“Registrar” |
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2.03 |
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“Required Information” |
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4.03 |
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“Security Register” |
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2.03 |
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Section 1.03. Incorporation by Reference of Trust Indenture Act .
(a) Whenever this Indenture expressly incorporates a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.
(b) The TIA term “ obligor” upon the Notes means the Company and any successor obligor upon the Notes.
Section 1.04. Conflict with Trust Indenture Act .
If any provision hereof limits, qualifies or conflicts with a provision of the TIA that is required under the TIA to be a part of and govern this Indenture, the TIA provision shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the TIA provision shall be deemed
(a) to apply to this Indenture as so modified or
(b) to be excluded, as the case may be.
Section 1.05. Rules of Construction .
(a) Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined herein has the meaning assigned to it in accordance with GAAP;
(iii) “or” is not exclusive;
(iv) words in the singular include the plural, and in the plural include the singular;
(v) all references in this instrument to “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed;
(vi) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
(vii) “including” means “including without limitation”;
(viii) provisions apply to successive events and transactions; and
(ix) references to sections of or rules under the Securities Act, the Exchange Act or the TIA shall be deemed to include substitute, replacement or successor sections or rules adopted by the Commission from time to time thereunder.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating .
(a) General . The Notes and the Trustee’s certificate of authentication shall be substantially in the form included in Exhibit A hereto, which is hereby incorporated in and expressly made part of this Indenture. The Notes may have notations, legends or endorsements required by law, exchange rule or usage in addition to those set forth on Exhibit A. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. To the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Form of Notes . Notes shall be issued in global form and shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such aggregate principal amount of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions and transfers of interests therein. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes . Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Distribution Compliance Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Distribution Compliance Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a Global Note, bearing a Private Placement Legend, all as contemplated by Section 2.06(b) hereof), and (ii) an Officer’s Certificate from the Company. Following the termination of the Distribution Compliance Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in the Regulation S Permanent Global Note pursuant to the Applicable Procedures. Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interests as hereinafter provided.
(d) Book-Entry Provisions . This Section 2.01(d) shall apply only to Global Notes deposited with the Trustee, as custodian for the Depositary. Participants and Indirect Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants or Indirect Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.
(e) Euroclear and Clearstream Procedures Applicable . The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in Global Notes that are held by Participants through Euroclear or Clearstream.
(f) Certificated Securities . The Company shall exchange Global Notes for Definitive Notes if: (1) at any time the Depositary notifies the Company that it is unwilling or unable to continue to act as Depositary for the Global Notes or if at any time the Depositary shall no longer be eligible to act as such because it ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company shall not have appointed a successor Depositary within 120 days after the Company receives such notice or become aware of such ineligibility, (2) the Company, in its discretion and in accordance with the rules of the Depositary, determines not to require that all of the Notes be represented by a Global Note and the Company notify the Trustee of its decision or (3) upon
written request of the Trustee if an Event of Default shall have occurred and be continuing with respect to the Notes represented by a Global Note and the Trustee shall have received a written request from the Depositary to issue such Notes in certificated form.
Upon the occurrence of any of the events set forth in clauses (1), (2) or (3) above, the Company shall execute, and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver, Definitive Notes, in authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Notes in exchange for such Global Notes.
In no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act.
Upon the exchange of a Global Note for Definitive Notes, such Global Note shall be cancelled by the Trustee or an agent of the Company or the Trustee. Definitive Notes issued in exchange for a Global Note pursuant to this Section 2.01 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its Participants or its Applicable Procedures, shall instruct the Trustee or an agent of the Company or the Trustee in writing. The Trustee or such agent shall deliver such Definitive Notes to or as directed by the Persons in whose names such Definitive Notes are so registered or to the Depositary.
Section 2.02. Execution and Authentication .
(a) One Officer of the Company shall execute the Notes on behalf of the Company by manual or facsimile signature.
(b) If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated by the Trustee, the Note shall nevertheless be valid.
(c) A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.
(d) The Trustee shall, upon a written order of the Company signed by an Officer of the Company (an “ Authentication Order ”), authenticate Notes for issuance.
(e) The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as the Trustee to deal with Holders, the Company or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent .
(a) The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“ Registrar ”) and an office or agency where Notes may be presented for payment (“ Paying Agent ”). The Registrar shall keep a register (the “ Security Register ”) of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
(b) The Company initially appoints The Depository Trust Company (“ DTC ”) to act as Depositary with respect to the Global Notes.
(c) The Company initially appoints the Trustee to act as Registrar and Paying Agent and to act as Custodian with respect to the Global Notes, and the Trustee hereby agrees so to initially act.
Section 2.04. Paying Agent to Hold Money in Trust .
The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all funds held by it relating to the Notes to the Trustee. The Company at any time may require a Paying Agent to pay all funds held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for such funds. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all funds held by it as Paying Agent. Upon any Event of Default under Sections 6.01(e) and (f) hereof relating to the either of the Company, the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists .
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders. If the Trustee is not the Registrar, the Company shall furnish or cause to be furnished to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date or such shorter time as the Trustee may allow, as the Trustee may reasonably require of the names and addresses of the Holders.
Section 2.06. Transfer and Exchange .
(a) Transfer and Exchange of Global Notes . A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Upon the occurrence of any of the events set forth in Section 2.01(f) above, Definitive Notes shall be issued in denominations of $1,000 or integral multiples thereof and in such names as the Depositary shall instruct the Trustee in writing. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Except as provided above, every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), and beneficial interests in a Global Note may not be transferred and exchanged other than as provided in Section 2.06(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in Global Notes also shall require compliance with either clause (i) or (ii) below, as applicable, as well as one or more of the other following clauses, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend and any Applicable Procedures; provided , however , that prior to the expiration of the Distribution Compliance Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to or for the account or benefit of a “U.S. Person” (as defined in Rule 902(k) of Regulation S) (other than a “distributor” (as defined in Rule 902(d) of the Regulation S)). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. Except as may be required by any Applicable Procedures, no written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes . In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B)(1) if permitted under Section 2.06(a), a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (B)(1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.
(iii) Transfer of Beneficial Interests in a Restricted Global Note to Another Restricted Global Note . A holder of a beneficial interest in a Restricted Global Note may transfer such beneficial interest to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof or, if permitted by the Applicable Procedures, item (3) thereof;
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Permanent Global Note, as the case may be, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transferee is required by the Applicable Procedures to take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(iv) Transfer or Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer complies with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(v) Transfer or Exchange of Beneficial Interests in an Unrestricted Global Note for Beneficial Interests in a Restricted Global Note Prohibited . Beneficial interests in an Unrestricted Global Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, beneficial interests in a Restricted Global Note.
(c) Transfer and Exchange of Beneficial Interests in Global Notes for Definitive Notes .
(i) Transfer or Exchange of Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes . Subject to Section 2.06(a) hereof, if any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a “Non-U.S. Person” in an offshore transaction (as defined in Section 902(k) of Regulation S) in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in clauses (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3)(d) thereof, if applicable; or
(F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof,
the Trustee shall reduce or cause to be reduced in a corresponding amount pursuant to Section 2.06(g) hereof, the aggregate principal amount of the applicable Restricted Global Note, and the Company shall execute and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver a Restricted Definitive Note in the appropriate principal amount to the Person designated by the holder of such beneficial interest in the instructions delivered to the Registrar by the Depositary and the applicable Participant or Indirect Participant on behalf of such holder. Any Restricted Definitive Note issued in exchange for beneficial interests in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall designate in such instructions. The Trustee shall deliver such Restricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Transfer or Exchange of Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes . Subject to Section 2.06(a) hereof, a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer complies with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of any of the conditions of any of the clauses of this Section 2.06(c)(iii), the Company shall execute and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver an Unrestricted Definitive Note in the appropriate principal amount to the Person designated by the holder of such beneficial interest in instructions delivered to the Registrar by the Depositary and the applicable Participant or Indirect Participant on behalf of such holder, and the Trustee shall reduce or cause to be reduced in a corresponding amount pursuant to Section 2.06(g), the aggregate principal amount of the applicable Restricted Global Note.
(iv) Transfer or Exchange of Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes . Subject to Section 2.06(a) hereof, if any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive
Note, then, upon satisfaction of the applicable conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall reduce or cause to be reduced in a corresponding amount pursuant to Section 2.06(g) hereof, the aggregate principal amount of the applicable Unrestricted Global Note, and the Company shall execute, and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver an Unrestricted Definitive Note in the appropriate principal amount to the Person designated by the holder of such beneficial interest in instructions delivered to the Registrar by the Depositary and the applicable Participant or Indirect Participant on behalf of such holder. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall designate in such instructions. The Trustee shall deliver such Unrestricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests in the Global Notes .
(i) Transfer or Exchange of Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes . If any holder of a Restricted Definitive Note proposes to exchange such Restricted Definitive Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such Restricted Definitive Note proposes to exchange such Restricted Definitive Note for a beneficial interest in a Restricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a “non-U.S. Person” in an offshore transaction (as defined in Rule 902(k) of Regulation S) in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in clauses (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3)(d) thereof, if applicable; or
(F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) hereof, the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Note, in the case of clause (B) above, a 144A Global Note, in the case of clause (C) above, a Regulation S Global Note, and in all other cases, a IAI Global Note.
(ii) Transfer or Exchange of Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A holder of a Restricted Definitive Note may exchange such Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(A) if the holder of such Restricted Definitive Note proposes to exchange such Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(B) if the holder of such Restricted Definitive Note proposes to transfer such Restricted Definitive Note to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer shall be effected in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend shall no longer be required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the clauses in this Section 2.06(d)(ii), the Trustee shall cancel such Restricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) hereof, the aggregate principal amount of the Unrestricted Global Note.
(iii) Transfer or Exchange of Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A holder of an Unrestricted Definitive Note may exchange such Unrestricted Definitive Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) hereof the aggregate principal amount of one of the Unrestricted Global Notes.
(iv) Transfer or Exchange of Unrestricted Definitive Notes to Beneficial Interests in Restricted Global Notes Prohibited . An Unrestricted Definitive Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, beneficial interests in a Restricted Global Note.
(v) Issuance of Unrestricted Global Notes . If any such exchange or transfer of a Definitive Note for a beneficial interest in an Unrestricted Global Note is effected pursuant to clause (ii) or (iii) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes . Upon request by a holder of Definitive Notes and such holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such holder. In addition, the requesting holder shall
provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).
(i) Transfer of Restricted Definitive Notes to Restricted Definitive Notes . Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Transfer or Exchange of Restricted Definitive Notes to Unrestricted Definitive Notes . Any Restricted Definitive Note may be exchanged by the holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note only if the Registrar receives the following:
(A) if the holder of such Restricted Definitive Note proposes to exchange such Restricted Definitive Notes for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(B) if the holder of such Restricted Definitive Notes proposes to transfer such Restricted Definitive Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case, if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer complies with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the clauses of this Section 2.06(e)(ii), the Trustee shall cancel the prior Restricted Definitive Note and the Company shall execute, and upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver an Unrestricted Definitive Note in the appropriate aggregate principal amount to the Person designated by the holder of such prior Restricted Definitive Note in instructions delivered to the Registrar by such holder.
(iii) Transfer of Unrestricted Definitive Notes to Unrestricted Definitive Notes . A holder of Unrestricted Definitive Notes may transfer such Unrestricted Definitive Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the holder thereof.
(f) Legends . The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend .
(A) Except as permitted by clause (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT, IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES.”
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to clauses (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) to this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend . Each Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENTS FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”
(iii) Regulation S Temporary Global Note Legend . Each Regulation S Temporary Global Note shall bear a legend in substantially the following form:
“EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS REGULATION S TEMPORARY GLOBAL NOTE WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE REGULATION S PERMANENT GLOBAL NOTE OR ANY OTHER NOTE REPRESENTING AN INTEREST IN THE NOTES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAY DISTRIBUTION COMPLIANCE PERIOD” (WITHIN THE MEANING OF RULE 903(B)(2) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP IN THIS REGULATION S TEMPORARY GLOBAL NOTE MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED THROUGH EUROCLEAR SYSTEM OR CLEARSTREAM LUXEMBOURG, A SOCIETE ANONYME AND ONLY (1) TO THE COMPANY, (2) WITHIN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF THE CASES (1) THROUGH (4) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND OTHER JURISDICTIONS. HOLDERS OF INTERESTS IN THIS REGULATION S TEMPORARY GLOBAL NOTE WILL NOTIFY ANY PURCHASER OF THIS NOTE OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.
BENEFICIAL INTERESTS IN THIS REGULATION S TEMPORARY GLOBAL NOTE MAY BE EXCHANGED FOR INTERESTS IN A RESTRICTED GLOBAL NOTE ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE NOTES IN COMPLIANCE WITH RULE 144A, AND (2) THE TRANSFEROR OF THE REGULATION S TEMPORARY GLOBAL NOTE FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL NOTE IS BEING TRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A PERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
BENEFICIAL INTERESTS IN A GLOBAL TRANSFER RESTRICTED NOTE MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL NOTE, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT IF SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE) AND THAT, IF SUCH TRANSFER OCCURS PRIOR TO THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, THE INTEREST TRANSFERRED WILL BE HELD IMMEDIATELY THEREAFTER THROUGH EUROCLEAR SYSTEM OR CLEARSTREAM LUXEMBOURG, A SOCIETE ANONYME.”
(g) Cancellation and/or Adjustment of Global Notes . At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and
cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the aggregate principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, the aggregate principal amount of such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges .
(i) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06 and 9.05 hereof).
(ii) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
(iii) Neither the Registrar nor the Company shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the date of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date (including a Regular Record Date) and the next succeeding Interest Payment Date.
(iv) Prior to due presentment for the registration of transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of, premium, if any, and interest on such Note and for all other purposes, in each case regardless of any notice to the contrary.
(v) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.
(vi) The Trustee is hereby authorized and directed to enter into a letter of representation with the Depositary in the form provided by the Company and to act in accordance with such letter.
Section 2.07. Replacement Notes .
If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate a replacement Note. If required by the Trustee or the Company, the Holder of such Note shall provide an indemnity bond that is sufficient, in the judgment of the Trustee or the Company, to protect the Company as determined for itself, the Trustee as determined for itself, any Agent as determined for itself and any authenticating agent from any loss that any of them may suffer in connection with such replacement. If required by the Company, such Holder shall reimburse the Company for its reasonable expenses in connection with such replacement.
Every replacement Note issued in accordance with this Section 2.07 shall be the valid obligation of the Company, evidencing the same debt as the destroyed, lost or stolen Note, and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes .
(a) The Notes outstanding at any time shall be the entire principal amount of Notes represented by all of the Global Notes and Definitive Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those subject to reductions in beneficial interests effected by the Trustee in accordance with Section 2.06 hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note shall not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
(b) If a Note is replaced pursuant to Section 2.07 hereof, it shall cease to be outstanding unless the Trustee receives proof satisfactory to it that the replaced note is held by a bona fide purchaser.
(c) If the principal amount of any Note is considered paid under Section 4.01 hereof, it shall cease to be outstanding and interest on it shall cease to accrue.
(d) If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or a maturity date, funds sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes .
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Affiliate of the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes .
Until certificates representing Notes are ready for delivery, the Company may prepare and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Global Notes or Definitive Notes in exchange for temporary Notes, as applicable. After preparation of Definitive Notes, the Temporary Note will be exchangeable for Definitive Notes upon surrender of the Temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
Section 2.11. Cancellation .
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. Upon sole direction of the Company, the Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirements of the Exchange Act or other applicable laws). Certification of the destruction of all cancelled Notes shall be delivered to the Company from time to time upon request. The Company may not issue new Notes to replace Notes that they have paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Payment of Interest; Defaulted Interest .
If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related Interest Payment Date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related Interest Payment Date and the amount of such interest to be paid.
Section 2.13. CUSIP or ISIN Numbers .
The Company in issuing the Notes may use “CUSIP” and/or “ISIN” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” and/or “ISIN” numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in the “CUSIP” and/or “ISIN” numbers.
Section 2.14. Issuance of Additional Notes .
The Company shall be entitled, subject to its compliance with Section 4.09 hereof, to issue Additional Notes under this Indenture which shall have identical terms as the Initial Notes issued on the date hereof, other than with respect to the date of issuance and issue price. The Initial Notes issued on the date hereof and any Additional Notes shall be treated as a single class for all purposes under this Indenture, including directions, waivers, amendments, consents and redemptions.
With respect to any Additional Notes, the Company shall set forth in a Board Resolution and an Officer’s Certificate, a copy of each of which shall be delivered to the Trustee, the following information:
(a) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;
(b) the issue price, the issue date and the CUSIP and/or ISIN number of such Additional Notes; provided, however, that no Additional Notes may be issued at a price that would cause such Additional Notes to have “original issue discount” within the meaning of Section 1273 of the Code, other than a de minimis original issue discount within the meaning of Section 1273 of the Code; and
(c) whether such Additional Notes shall be subject to the restrictions on transfer set forth in Section 2.06 hereof relating to Restricted Global Notes and Restricted Definitive Notes.
Section 2.15. Record Date .
The record date for purposes of determining the identity of Holders of Notes entitled to vote or consent to any action by vote or consent or permitted under this Indenture shall be determined as provided for in TIA Section 316(c).
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee .
If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, the Company shall furnish to the Trustee, at least 35 days but not more than 60 days before a redemption date (or such shorter period as allowed by the Trustee), an Officer’s Certificate setting forth (a) the applicable section of this Indenture pursuant to which the redemption shall occur, (b) the redemption date, (c) the principal amount of Notes to be redeemed and (d) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed .
If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee deems fair and appropriate. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or integral multiples thereof; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not an integral multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption .
At least 30 days but not more than 60 days prior to a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at such Holder’s registered address appearing in the Security Register.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the appropriate method for calculation of the redemption price, but need not include the redemption price itself; the actual redemption price shall be set forth in an Officer’s Certificate delivered to the Trustee no later than two (2) Business Days prior to the redemption date;
(c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, if applicable, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;
(g) the applicable section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness of the CUSIP and/or ISIN numbers, if any, listed in such notice or printed on the Notes.
At the Company’s request, the Trustee shall give the notice of redemption in the Company’s names and at its expense; provided, however , that the Company shall have delivered to the Trustee, at least 45 days (or such shorter period allowed by the Trustee), prior to the redemption date, an Officer’s Certificate requesting that the Trustee give such notice (in the name and at the expense of the Company) and setting forth the information to be stated in such notice as provided in this Section 3.03.
Section 3.04. Effect of Notice of Redemption .
Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption shall become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption Price .
On or prior to 1:00 p.m. Eastern time on the Business Day prior to any redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and, if applicable, accrued and unpaid interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly, and in any event within two (2) Business Days after the redemption date, return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest, if any, on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption in accordance with Section 2.08(d) hereof, whether or not such Notes are presented for payment. If a Note is redeemed on or after a Regular Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest, if any, shall be paid to the Person in whose name such Note was registered at the close of business on such Regular Record Date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part .
Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption .
(a) At any time prior to May 1, 2013, the Company may redeem all or any portion of the Notes, at once or over time, after giving the notice required pursuant to Section 3.03 hereof, at a redemption price equal to the Make-Whole Price. Any notice to the Holders of Notes of a redemption pursuant to this Section 3.07(a) shall include the calculation of the redemption price, but need not include the redemption price itself. The actual redemption price, calculated as described above, shall be set forth in an Officer’s Certificate delivered to the Trustee no later than two Business Days prior to the redemption date.
(b) On or after May 1, 2013, the Company may redeem all or any portion of the Notes, at once or over time, after giving the notice required pursuant to Section 3.03 hereof, at the redemption prices set forth below. The Notes will be redeemable at the redemption prices (expressed as percentages of principal amount of the Notes to
be redeemed) plus accrued and unpaid interest thereon to the applicable redemption date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period beginning on the dates indicated below:
|
Year |
|
Percentage |
|
|
May 1, 2013 |
|
103.375 |
% |
|
May 1, 2014 |
|
100.000 |
% |
Any prepayment pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption .
The Company shall not be required to make mandatory redemption or sinking fund payments with respect to, or offer to purchase, the Notes.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Principal, Premium and Interest .
The Company covenants and agrees for the benefit of the Holders of the Notes that it will duly and punctually pay the principal of and any premium and interest on the Notes in accordance with the terms of the Notes and this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 1:00 p.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. Such Paying Agent shall return to the Company promptly, and in any event, no later than five (5) Business Days following the date of payment, any money (including accrued interest) that exceeds such amount of principal, premium, if any, and interest paid on the Notes. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period.
Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
Section 4.02. Maintenance of Office or Agency .
(a) The Company shall maintain in the United States, an office or agency (which may be an office or drop facility of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be presented or surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
(b) The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for the Notes for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
(c) The Company hereby designates the Corporate Trust Office of the Trustee, as one such office, drop facility or agency of the Company in accordance with Section 2.03 hereof.
Section 4.03. Reporting .
So long as the Notes are outstanding, the Company will provide:
(a) not later than 105 days after the end of each fiscal year of the Company, audited consolidated financial statements of the Company, including consolidated balance sheets as of the end of such year and the end of the preceding year and the related audited consolidated statements of income and of cash flows for each year in the three year period then ended, reported on by an independent registered public accounting firm of nationally recognized standing;
(b) not later than 60 days after the end of each of the first three quarterly periods of each fiscal year of the Company, unaudited consolidated financial statements of the Company, including a balance sheet as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year; and
(c) with each delivery of the financial statements specified in clauses (a) and (b), a corresponding discussion of the statements of income included therein and the Company’s cash position.
All such financial statements shall be prepared in accordance with GAAP; provided that the financial statements specified in clause (b) need not contain footnotes. The information specified in clauses (a), (b) and (c) is herein referred to as the “ Required Information .”
The Company may provide the Required Information by (1) filing or furnishing the Required Information with the Commission (submitted either by the Company or any direct or indirect parent of the Company) or (2) both (a) posting the Required Information on the website of the Company or any direct or indirect parent of the Company and (b) providing the Required Information to the Trustee.
In addition, for so long as any Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, during any period in which the Company in not subject to or in voluntary compliance with Section 13 or 15(d) of the Exchange Act, the Company will furnish to the holders of the notes and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.04. Compliance Certificate .
The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officer’s Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which it may have knowledge.
Section 4.05. Payment of Taxes and Other Claims .
The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (l) all taxes, assessments and governmental charges levied or imposed upon the Company or any Significant Subsidiary or upon the income, profits or property of the Company or any Significant Subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Significant Subsidiary; provided, however , that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.
Section 4.06. Existence .
Subject to Article 5, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however , that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders.
Section 4.07. Maintenance of Properties
The Company will cause all material properties used or useful in the conduct of its business or the business of any Significant Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from (i) discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Significant Subsidiary and not disadvantageous in any material respect to the Holders or (ii) selling any properties or taking any action in accordance with Article 5.
Section 4.08. Incurrence of Additional Debt and Issuance of Capital Stock .
(a) The Company and its consolidated Subsidiaries may not Incur any Debt if, after giving effect to the Incurrence of such Debt, the Ratio Calculation is less than 1.7 to 1.
(b) Notwithstanding paragraph (a) above, the Company and its consolidated Subsidiaries may Incur the following additional Debt without regard to paragraph (a) above (although the additional Debt so incurred will be included in the determination of the Consolidated Coverage Ratio thereafter):
(i) additional Debt securities, not to exceed an aggregate issue price of $150,000,000;
(ii) intercompany Debt (representing Debt to which the only parties are the Company and any of its consolidated Subsidiaries (but only so long as such Debt is held solely by any of the Company and its consolidated Subsidiaries));
(iii) any drawings or redrawings under any lines of credit, provided, however, that the maximum amount that may be drawn under all lines of credit pursuant to this clause (c) may not at any time exceed $200,000,000;
(iv) third party Debt of a Subsidiary, including Debt of a Subsidiary that carries a Company guarantee of repayment, directly relating to the development of projects or the expansion, renovation or improvement of existing properties;
(v) third party Debt of a Subsidiary directly relating to the acquisition of assets;
(vi) reimbursement obligations under letters of credit, bankers’ acceptances or similar facilities , provided that at the time of incurring any additional obligations pursuant to this clause (g) the amount of all such obligations, whether or not currently due, aggregate at any time less than 5% of Consolidated Net Tangible Assets at such date;
(vii) Debt that by its terms is subordinate in right of payment to the other Debt of the Company, provided, however , the aggregate issue price of such subordinated Debt may not at any time exceed $100,000,000;
(viii) Attributable Debt; and
(ix) in addition to Debt referred to in clauses (i) through (viii) above, Debt in the aggregate principal amount of $50,000,000 that is to be used only for working capital purposes.
(c) In addition to the limitations in paragraph (a) above, the Company will not, and will not permit any Subsidiary (as to which the Company owns, directly or indirectly, more than 50% of the voting stock therein) to, incur any Debt if, immediately after giving effect to the incurrence of such additional Debt, the aggregate principal amount of outstanding Total Debt would be greater than 65% of the sum of:
(i) the Gross Asset Value as of the end of the fiscal quarter prior to the incurrence of such additional Debt, plus
(ii) any increase in the Gross Asset Value resulting from any acquisition completed after the end of such quarter, including, without limitation, any pro forma increase from the application of the proceeds of such additional Debt, less
(iii) any decrease in the Gross Asset Value resulting from any disposition completed after the end of such quarter.
(d) In addition to the limitations in paragraphs (a) and (c) above, the Company will not, and will not permit any Subsidiary (as to which the Company owns, directly or indirectly, more than 50% of the voting stock therein) to, incur any Secured Debt if, immediately after giving effect to the incurrence of such additional Secured Debt, the aggregate principal amount of all outstanding Secured Debt would be greater than 50% of the sum of:
(i) the Gross Asset Value as of the end of the fiscal quarter prior to the incurrence of such additional Secured Debt, plus
(ii) any increase in the Gross Asset Value resulting from any acquisition completed after the end of such quarter, including, without limitation, any pro forma increase from the application of the proceeds of such additional Secured Debt, less
(iii) any decrease in the Gross Asset Value resulting from any disposition completed after the end of such quarter.
(e) Notwithstanding paragraphs (a), (c) or (d) above, the Company and its consolidated Subsidiaries may Incur additional Debt consisting of refinancings, renewals, refundings or extensions of any Debt, in any case in an amount not to exceed the principal amount of the Debt so refinanced plus any prepayment premium or accrued interest, provided that
(i) such refinancing Debt is either:
(A) Debt of the Company that ranks equally with or junior to the Debt being refinanced,
(B) Debt of a Subsidiary that the Company or another Subsidiary guarantees, or
(C) Debt of a Subsidiary; and
(ii) such refinancing Debt either has a weighted average life equal to or longer than the remaining weighted average life of the Debt being refinanced or has a minimum term of five years;
Section 4.09. Limitation on Sale/Leaseback Transactions .
The Company will not, nor will it permit any Restricted Subsidiary to, enter into any arrangement with any bank, insurance company or other lender or investor (not including the Company or any consolidated Subsidiary) or to which any such lender or investor is a party, providing for the leasing by the Company or any such Restricted Subsidiary for a period, including renewals, in excess of three years, of any Principal Property owned by the Company or such Restricted Subsidiary, which has been or is to be sold or transferred more than one year after either the acquisition thereof or the completion of construction and commencement of full operation thereof by the Company or any such Restricted Subsidiary, to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such Principal Property (herein referred to as a “ Sale/Leaseback Transaction ”) unless (A) the aggregate amount of Attributable Debt for the proposed and all existing Sale/Leaseback Transactions is less than 10% of Consolidated Net Tangible Assets and (B) if the Ratio Calculation is less than 1.7 to 1 after giving effect to the proposed Sale/Leaseback Transaction, the Company and its Subsidiaries, within 270 days after the sale or transfer shall have been made by the Company or by any such Restricted Subsidiary, must apply an amount equal to the net proceeds of the sale of the Principal Property sold and leased back pursuant to such arrangement to either (or a combination of) (x) the purchase of property, facilities or equipment (other than the property, facilities or equipment involved in such Sale/Leaseback Transaction) or (y) the retirement of Debt of the Company or a Restricted Subsidiary, including the notes, which either has an initial term of greater than 12 months or is a bona fide acquisition loan or a construction or bridge loan entered in connection with a construction project or other real estate development.
ARTICLE 5.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 5.01. Company May Consolidate, Etc. Only on Certain Terms .
The Company shall not consolidate with or merge into any other Person or sell, convey or lease all of substantially all of its Assets to any other Person, and the Company shall not permit any Person to consolidate with or merge into the Company, unless:
(a) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or which acquires or leases substantially all of the Assets of the Company, shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Notes and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed;
(b) immediately after giving effect to such consolidation or merger, or such sale, conveyance or lease, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing;
(c) the Company or such successor entity shall, immediately after giving effect to such consolidation or merger, or such sale, conveyance or lease, have a Ratio Calculation of 1.7 to 1 or more;
(d) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Company would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by this Indenture, the Company or such successor Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Notes equally and ratably with (or prior to) all indebtedness secured thereby; and
(e) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.
Section 5.02. Successor Substituted .
Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all of the Assets of the Company in accordance with Section 5.01, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Notes.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default .
“ Event of Default ,” wherever used herein with respect to the Notes, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of the principal of (or premium, if any, on) any Note when due; or
(b) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of such default for a period of 30 days; or
(c) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty default which is specifically dealt with) and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Notes a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
(d) a default under any bond, debenture, note, mortgage, indenture or other evidence of indebtedness for borrowed money of the Company (or by any Subsidiary, the repayment of which the Company has guaranteed or for which the Company is directly responsible or liable as obligor or guarantor) having an aggregate principal amount outstanding of at least $10,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall have resulted in such indebtedness being declared due and payable prior to the date on which it would otherwise have become due and payable, without such acceleration having been rescinded or annulled, within a period of 10 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Notes a written notice specifying such default and requiring the Company to cause such acceleration to be rescinded or annulled and stating that such notice is a “Notice of Default” hereunder; or
(e) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrateor or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or
(f) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by the Company to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by the Company of an assignment for the benefit of creditors, or the admission by the Company in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or
(g) any other Event of Default provided with respect to Notes.
Upon receipt by the Trustee of any Notice of Default pursuant to this Section 6.01 with respect to the Notes, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of outstanding Notes entitled to join in such Notice of Default, which record date shall be the close of business on the day the Trustee receives such Notice of Default. The Holders of outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such Notice of Default, whether or not such Holders remain Holders after such record date; provided that, unless such Notice of Default shall have become effective by virtue of Holders of the requisite principal amount of outstanding Notes on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such Notice of Default shall automatically and without any action by any Person be cancelled and of no further effect. Nothing in this paragraph shall prevent a Holder (or a duly appointed agent thereof) from giving, before or after the expiration of such 90-day period, a Notice of Default contrary to or different from, or, after the expiration of such period, identical to, a Notice of Default that has been cancelled pursuant to the proviso to the preceding sentence, in which event a new record date in respect thereof shall be set pursuant to this paragraph.
Section 6.02. Acceleration .
If an Event of Default with respect to Notes at the time outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the outstanding Notes may declare the principal amount of all of the Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the outstanding Notes, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum sufficient to pay:
(i) all overdue interest on all Notes,
(ii) the principal of (and premium, if any, on) any Notes which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Notes,
(iii) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Notes, and
(iv) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel;
and
(b) all Events of Default with respect to Notes, other than the non-payment of the principal of Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.13.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Upon receipt by the Trustee of any declaration of acceleration, or any rescission and annulment of any such declaration, pursuant to this Section 6.02, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of outstanding Notes entitled to join in such declaration, or rescission and annulment, as the case may be, which record date shall be the close of business on the day the Trustee receives such declaration, or rescission and annulment, as the case may be. The Holders of outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such declaration, or rescission and annulment, as the case may be, whether or not such Holders remain Holders after such record date; provided that, unless such declaration, or rescission and annulment, as the case may be, shall have become effective by virtue of Holders of the requisite principal amount of outstanding Notes on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such declaration, or rescission and annulment, as the case may be, shall automatically and without any action by any Person be cancelled and of no further effect. Nothing in this paragraph shall prevent a Holder (or a duly appointed agent thereof) from giving, before or after the expiration of such 90-day period, a declaration of acceleration, or a rescission and annulment of any such declaration, contrary to or different from, or, after the expiration of such period, identical to, a declaration, or rescission and annulment, as the case may be, that has been cancelled pursuant to the proviso to the preceding sentence, in which event a new record date in respect thereof shall be set pursuant to this paragraph.
Section 6.03. Collection of Indebtedness and Suits for Enforcement by Trustee .
The Company covenants that if:
(a) default is made in the payment of any interest on any Note when such interest becomes due and payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if any, on) any Note at the maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium and on any overdue interest, at the rate or rates prescribed therefor in such Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default with respect to Notes occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Notes by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.04. Trustee May File Proofs of Claim .
In case of any judicial proceeding relative to the Company (or any other obligor upon the Notes), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the TIA in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any
moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07.
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however , that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’ or other similar committee.
Section 6.05. Trustee May Enforce Claims Without Possession of Notes .
All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.
Section 6.06. Application of Money Collected .
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 7.07;
SECOND: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal and any premium and interest, respectively; and
THIRD: To the Company or as directed by a court of competent jurisdiction.
Section 6.07. Limitation on Suits .
No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Notes;
(b) the Holders of not less than 25% in principal amount of the outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Notes;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.
Section 6.08. Unconditional Right of Holders to Receive Principal, Premium and Interest .
Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Section 4.01) interest on such Note on the Stated Maturity expressed in such Note (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 6.09. Restoration of Rights and Remedies .
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
Section 6.10. Rights and Remedies Cumulative .
No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.11. Delay or Omission Not Waiver .
No delay or omission of the Trustee or of any Holder of any Notes to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 6.12. Control by Holders .
The Holders of a majority in principal amount of the outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Notes of such series, provided that:
(a) such direction shall not be in conflict with any rule of law or with this Indenture, and
(b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Upon receipt by the Trustee of any such direction with respect to Notes, a record date shall automatically and without any other action by any Person be set for determining the Holders of outstanding Notes
entitled to join in such direction, which record date shall be the close of business on the day the Trustee receives such direction. The Holders of outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such direction, whether or not such Holders remain Holders after such record date; provided that, unless such direction shall have become effective by virtue of Holders of the requisite principal amount of outstanding Notes on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such direction shall automatically and without any action by any Person be cancelled and of no further effect. Nothing in this paragraph shall prevent Holder (or a duly appointed agent thereof) from giving, before or after the expiration of such 90-day period, a direction contrary to or different from, or, after the expiration of such period, identical to, a direction that has been cancelled pursuant to the proviso to the preceding sentence, in which event a new record date in respect thereof shall be set pursuant to this paragraph.
Section 6.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the outstanding Notes may on behalf of the Holders of all the Notes of such series waive any past default hereunder with respect to such series and its consequences, except a default:
(a) in the payment of the principal of or any premium or interest on any Note, or
(b) in respect of a covenant or provision hereof which under Article 9 cannot be modified or amended without the consent of the Holder of each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 6.14. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the TIA; provided that neither this Section nor the TIA shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company.
Section 6.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that they may lawfully do so) that they will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that they may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenant that they will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own gross negligent action, its own gross negligent failure to act, or its own gross willful misconduct or bad faith, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.12 hereof.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
Section 7.02. Rights of Trustee .
Subject to TIA Section 315:
(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in any such document.
(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(d) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.
(e) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office of the Trustee from the Company or the Holders of 25% in aggregate principal amount of the outstanding Notes, and such notice references the specific Default or Event of Default, the Notes and this Indenture.
(f) The Trustee shall not be required to give any bond or surety in respect of the performance of its power and duties hereunder.
(g) The Trustee shall have no duty to inquire as to the performance of the Company’s covenants herein.
(h) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.
Section 7.03. Individual Rights of Trustee .
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as Trustee or resign. Any Agent may do the same with like rights and duties. The Trustee shall also be subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee’s Disclaimer .
The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults .
If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders a notice of the Default or Event of Default within 90 days after the Trustee has notice thereof. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders.
Section 7.06. Reports by Trustee to Holders .
Within 60 days after each May 15 beginning with May 15, 2011, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders a brief report dated as of such reporting date that complies with TIA §313(a) (but if no event described in TIA §313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA §313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA §313(c).
A copy of each report at the time of its mailing to the Holders shall be mailed to the Company and filed with the Commission and each stock exchange on which the Notes are listed in accordance with TIA §313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange and any delisting thereof.
Section 7.07. Compensation and Indemnity .
The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
The Company shall indemnify the Trustee (in its capacity as Trustee) or any predecessor Trustee (in its capacity as Trustee) against any and all losses, claims, damages, penalties, fines, liabilities or expenses, including incidental and out-of-pocket expenses and reasonable attorneys fees (for purposes of this Article, “ losses ”) incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent such losses may be attributable to its gross negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations under this Section 7.07, except to the extent the Company has been prejudiced thereby. The Company shall defend the claim, and the Trustee shall cooperate in the defense. The Trustee may have separate counsel if the Trustee has been advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the judgment of such counsel it is advisable for the Trustee to engage separate counsel, and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss incurred by the Trustee through the Trustee’s own willful misconduct, gross negligence or bad faith.
The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture, the resignation or removal of the Trustee and payment in full of the Notes through the expiration of the applicable statute of limitations.
To secure the Company’s payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal, premium, if any, and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(e) or (f) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee .
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time upon 30 days’ prior notice to the Company and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. Subject to the Lien provided for in Section 7.07 hereof, the retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; provided , however , that all sums owing to the Trustee hereunder shall have been paid. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
In the case of an appointment hereunder of a separate or successor Trustee with respect to the Notes, the Company, any retiring Trustee and each successor or separate Trustee with respect to the Notes shall execute and deliver an Indenture supplemental hereto (1) which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of any retiring Trustee with respect to the Notes as to which any such retiring Trustee is not retiring shall continue to be vested in such retiring Trustee and (2) that shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustee co-trustees of the same trust and that each such separate, retiring or successor Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any such other Trustee.
Section 7.09. Successor Trustee by Merger, etc .
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or banking association, the successor corporation or banking association without any further act shall, if such successor corporation or banking association is otherwise eligible hereunder, be the successor Trustee.
Section 7.10. Eligibility; Disqualification .
There shall at all times be a Trustee hereunder that is a Person organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50.0 million (or a wholly-owned subsidiary of a bank or trust company, or of a bank holding company, the principal subsidiary of which is a bank or trust company having a combined capital and surplus of at least $50.0 million) as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements of TIA §310(a)(1), (2) and (5). The Trustee is subject to TIA §310(b).
Section 7.11. Preferential Collection of Claims Against Company .
The Trustee is subject to TIA §311(a), excluding any creditor relationship listed in TIA §311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance .
The Company may, at its option and at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth in this Article 8.
Section 8.02. Legal Defeasance and Discharge .
Upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, “ Legal Defeasance ”). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Debt represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under the Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, or interest on such Notes when such payments are due, (b) the Company’s obligations with respect to such Notes under Article 2 and Sections 4.01 and 4.02, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company’s obligations in connection therewith and (d) this Article 8. If the Company exercises under Section 8.01 the option applicable to this Section 8.02, subject to the satisfaction of the conditions set forth in Section 8.04, payment of the Notes may not be accelerated because of an Event of Default. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03.
Section 8.03. Covenant Defeasance .
Upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04, be released from its obligations under the covenants contained in Sections 4.03, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 and 5.01 hereof and the occurrence of any event specified in clause (c) (with respect to Sections 4.03, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 and 5.01 hereof) or (d) of Section 6.01 shall be deemed not to be or result in an Event of Default, in each case with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, “ Covenant Defeasance ” ) and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby.
Section 8.04. Conditions to Legal or Covenant Defeasance .
The following shall be the conditions to the application of either Section 8.02 or 8.03 to the outstanding Notes.
The Legal Defeasance or Covenant Defeasance may be exercised only if:
(a) the Company irrevocably deposits with the Trustee, in trust (the “ defeasance trust ”), for the benefit of the Holders, cash in U.S. dollars, non-callable U.S. Government Securities, or a combination of cash in U.S. dollars and non-callable U.S. Government Securities, in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal, premium, if any, and interest on the outstanding Notes on the Stated Maturity or on the next redemption date, as the case may be, and the Company shall specify whether the Notes are being defeased to maturity or to such particular redemption date;
(b) in the case of Legal Defeasance, the Company shall deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) subsequent to the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Event of Default under Section 6.01(e) or (f) shall have occurred at any time in the period ending on the 91 st day after the cash and/or non-callable U.S. Government Securities have been deposited in the defeasance trust;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any Restricted Subsidiary is a party or by which the Company or any Restricted Subsidiary is bound;
(f) the Company shall deliver to the Trustee an Officer’s Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over other creditors of the Company with the intent of defeating, hindering, delaying or defrauding such other creditors; and
(g) the Company deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.
Section 8.05. Deposited Cash and U.S. Government Securities to be Held in Trust; Other Miscellaneous Provisions .
Subject to Section 8.06, all cash and non-callable U.S. Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the “ Trustee ”) pursuant to Section 8.04 in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of all sums due and to become due thereon in respect of principal, premium, if any, and interest but such cash and securities need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable U.S. Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any cash or non-callable U.S. Government Securities held by it as provided in Section 8.04 which, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee (which may be the certification delivered under Section 8.04(a)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to the Company .
The Trustee shall promptly, and in any event, no later than five (5) Business Days, pay to the Company after written request therefor, any excess money held with respect to the Notes at such time in excess of amounts required to pay any of the Company’ Obligations then owing with respect to the Notes.
Subject to any applicable abandoned property law, any cash or non-callable U.S. Government Securities deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal, premium, if any, or interest on any Note and remaining unclaimed for one year after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder shall thereafter, as an unsecured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such cash and securities, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such cash and securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such cash and securities then remaining shall be repaid to the Company.
Section 8.07. Reinstatement .
If the Trustee or Paying Agent is unable to apply any cash or non-callable U.S. Government Securities in accordance with Section 8.02 or 8.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the Trustee or Paying Agent is permitted to apply all such cash and securities in accordance with Section 8.02 or 8.03, as the case may be; provided, however , that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders to receive such payment from the cash and securities held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes .
Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder to:
(a) cure any ambiguity, manifest error, omission, defect or inconsistency;
(b) provide for the assumption by a surviving Person of the obligations of the Company under this Indenture;
(c) provide for uncertificated Notes in addition to or in place of certificated Notes ( provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);
(d) add guarantees with respect to the Notes;
(e) secure the Notes; or
(f) add to the covenants of the Company for the benefit of the Holders or to surrender any right or power conferred upon the Company.
Section 9.02. With Consent of Holders of Notes .
Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture and the Notes with the consent of the Holders of at least a majority in aggregate principal amount of the Notes, including Additional Notes, if any, then outstanding voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes), and, subject to Sections 6.08 and 6.13, any existing Default or Event of Default (except a continuing Default or Event of Default in (i) the payment of principal, premium, if any, or interest on the Notes and (ii) in respect of a covenant or provision which under this Indenture cannot be modified or amended without the consent of the Holder of each Note affected by such modification or amendment) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of at least a majority in aggregate principal amount of the Notes, including Additional Notes, if any, then outstanding voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes).
Without the consent of each Holder, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):
(a) change the stated maturity of the principal of, or any installment of principal of or interest on the Notes;
(b) reduce the amount of, or any premium or interest on, the Notes;
(c) change the place or currency of payment of principal of, or any premium or interest on, the Notes;
(d) impair the right to institute suit for the enforcement of any payment on or with respect to the Notes;
(e) reduce the percentage in principal amount of Notes, the consent of whose Holders is required for modification or amendment of this Indenture;
(f) reduce the percentage in principal amount of Notes necessary for waiver of certain defaults; or
(g) modify such provisions with respect to modification and waiver.
The Holders of a majority in principal amount of Notes may on behalf of the Holders of all Notes waive any past default under this Indenture, except a default in the payment of the principal of or premium, if any, or interest on the Notes or in respect of a provision which under this Indenture cannot be modified or amended without the consent of each Holder affected.
The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any supplemental indenture. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; provided that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 120 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail to the Holder of each Note affected thereby to such Holder’s address appearing in the Security Register a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.
Section 9.03. Revocation and Effect of Consents .
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion thereof that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to its Note or portion thereof if the Trustee receives written notice of revocation before the Trustee receives an Officer’s Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and theretofore not revoked such consent) to the amendment, supplement or waiver.
Section 9.04. Notation on or Exchange of Notes .
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
Section 9.05. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental indenture until its board of directors (or committee serving a similar function) approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon an Officer’s Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and that such amended or supplemental indenture is the legal, valid and
binding obligations of the Company enforceable against them in accordance with its terms, subject to customary exceptions and that such amended or supplemental indenture complies with the provisions hereof.
ARTICLE 10.
SATISFACTION AND DISCHARGE
Section 10.01. Satisfaction and Discharge .
This Indenture shall upon the Company’s request cease to be of further effect (except as to any surviving rights of transfer or exchange of Notes herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:
(a) either
(1) all Notes theretofore authenticated and delivered (other than (i) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.07 and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 2.04) have been delivered to the Trustee for cancellation; or
(2) all such Notes not theretofore delivered to the Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity within one year, or
(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (A), (B) or (C) above, have deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or redemption date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.07, the obligations of the Trustee to any authenticating agent under Section 2.02(e) and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 10.02 and Section 2.04 shall survive.
Section 10.02. Application of Trust Money .
Subject to provisions of Section 2.04, all money deposited with the Trustee pursuant to Section 10.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for whose payment such money has been deposited with the Trustee.
ARTICLE 11.
MISCELLANEOUS
Section 11.01. Table of Contents, Headings, etc .
The Table of Contents, Cross-Reference Table and Headings in this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
Section 11.02. Notices .
Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in person or mailed by first class mail (registered or certified, return receipt requested), facsimile transmission or overnight air courier guaranteeing next-day delivery, to the other’s address:
If to the Company:
The Rouse Company, LLC
110 N. Wacker Drive
Chicago, IL 60606
Attention: Chief Financial Officer
Telecopier No.: (312) 960-5485
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Ave.
New York, NY 10153
Attention: Matthew D. Bloch
Telecopier No.: (212) 310-8000
If to the Trustee:
Wilmington Trust, FSB
Corporate Capital Markets
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Rouse Company Administrator
Telecopier No.: (612) 217-5651
The Company or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to the Trustee or Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if sent by facsimile transmission; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next-day delivery. All notices and communications to the Trustee or Holders shall be deemed duly given and effective only upon receipt.
Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next-day delivery to its address shown on the Security Register. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, the Company shall mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes .
Holders may communicate pursuant to TIA §312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA §312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent .
Upon any request or application by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee:
(a) an Officer’s Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with.
Section 11.05. Statements Required in Certificate or Opinion .
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA §314(a)(4)) shall comply with the provisions of TIA §314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
With respect to matters of fact, an Opinion of Counsel may rely on an Officer’s Certificate, certificates of public officials or reports or opinions of experts.
Section 11.06. Rules by Trustee and Agents .
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders .
No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver and release may not be effective to waive or release liabilities under the federal securities laws.
Section 11.08. Governing Law .
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 11.09. No Adverse Interpretation of Other Agreements .
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 11.10. Successors .
All covenants and agreements of the Company in this Indenture and the Notes shall bind their successors. All covenants and agreements of the Trustee in this Indenture shall bind its successors.
Section 11.11. Severability .
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12. Counterpart Originals .
The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
[Signatures on following page]
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SIGNATURES |
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Dated as of |
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THE ROUSE COMPANY, LLC |
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By: |
/s/ Linda J. Wight |
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Name: |
Linda J. Wight |
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Title: |
Vice President and |
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Assistant Secretary |
SIGNATURE PAGE TO THE SENIOR NOTE INDENTURE
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TRUSTEE: |
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WILMINGTON TRUST FSB |
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By: |
/s/ Jane Schweiger |
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Name: Jane Schweiger |
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Title: Vice President |
SIGNATURE PAGE TO SENIOR NOTE INDENTURE
EXHIBIT A
(Face of Note)
6.75% SENIOR NOTES DUE 2015
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CUSIP |
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No. |
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$ |
THE ROUSE COMPANY, LLC
promises to pay to CEDE & CO., INC. or registered assigns, the principal sum of Dollars ($ )or such other amount as shall be set forth in the Schedule of Exchanges of interest in the Global Note attached hereto on November 9, 2015.
Interest Payment Dates: May 1 and November 1. .
Record Dates: April 15 and October 15.
Dated: [ ].
IN WITNESS WHEREOF, each of the Company has caused this Note to be signed manually or by facsimile by its duly authorized officer.
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THE ROUSE COMPANY, LLC |
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By: |
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Name: |
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Title: |
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
Wilmington Trust FSB,
as Trustee
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By: |
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Authorized Signatory |
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Dated: |
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(Back of Note)
6.75% SENIOR NOTES due 2015
[Insert the Global Note Legend, if applicable pursuant to the terms of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the terms of the Indenture]
[Insert the Regulation S Temporary Global Note Placement Legend, if applicable pursuant to the terms of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. Interest . The Rouse Company, LLC, a Delaware limited company (the “ Company ”), promises to pay interest on the principal amount of this Note at 6.75% per annum until maturity. The Company shall pay interest semi-annually on May 1 and November 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an “ Interest Payment Date ”). Interest shall accrue from the most recent date to which interest has been paid on the Notes (or one or more Predecessor Notes) or, if no interest has been paid, from the date of issuance of this Note; provided, however , that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided , further , that the first Interest Payment Date shall be May 1, 2011. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment . The Company shall pay interest on the Notes (except defaulted interest) to the Persons in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the April 15 or October 15 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes shall be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the Security Register; provided , however , that payment by wire transfer of immediately available funds shall be required with respect to principal of and interest and premium, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar . Initially, Wilmington Trust FSB, the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.
4. Indenture . The Company issued the Notes under an Indenture dated as of November 9, 2010 (“ Indenture ”) between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company unlimited in aggregate principal amount.
5. Optional Redemption .
(a) At any time prior to May 1, 2013, the Company may redeem all or any portion of the Notes, at once or over time, after giving the notice required pursuant to Section 3.03 of the Indenture, at a redemption price equal to the Make-Whole Price. Any notice to the Holders of Notes of a redemption pursuant to Section 3.07(a) of the Indenture shall include the calculation of the redemption price, but need not include the redemption price itself.
The actual redemption price, calculated as described above, shall be set forth in an Officer’s Certificate delivered to the Trustee no later than two Business Days prior to the redemption date.
(b) On or after May 1, 2013, the Company may redeem all or any portion of the Notes, at once or over time, after giving the notice required pursuant to Section 3.03 of the Indenture, at the redemption prices set forth below. The Notes will be redeemable at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) plus accrued and unpaid interest thereon to the applicable redemption date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period beginning on the dates indicated below:
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May 1, 2013 |
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103.375 |
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May 1, 2014 |
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100.000 |
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Any prepayment pursuant to this Section 5 shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.
6. Mandatory Redemption . The Company shall not be required to make mandatory redemption or sinking fund payments with respect to, or offer to purchase, the Notes.
7. Notice of Redemption . Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption.
8. Denominations, Transfer, Exchange . The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. This Note shall represent the aggregate principal amount of outstanding Notes from time to time endorsed hereon and the aggregate principal amount of Notes represented hereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.
9. Persons Deemed Owners . The registered Holder of a Note may be treated as its owner for all purposes.
10. Amendment, Supplement and Waiver . Subject to certain exceptions, the Company and the Trustee may amend or supplement the Indenture or the Notes with the consent of the Holders of a majority in principal amount of the then outstanding Notes, including Additional Notes, if any, voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes), and, subject to Sections 6.08 and 6.13 of the Indenture, any existing Default or Event of Default (except a continuing Default or Event of Default in the payment of principal, premium, if any, interest on the Notes) or compliance with any provision of the Indenture or the Notes (except for certain covenants and provisions of the Indenture which cannot be amended without the consent of each Holder) may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes, including Additional Notes, if any, then outstanding voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes). Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, manifest error, omission, defect or inconsistency, to provide for the assumption by a successor of the obligations of the Company under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to add guarantees with respect to the Notes, to secure the Notes, to add to the covenants of the Company for the benefit of the Holders of the Notes or to surrender any right or power conferred upon the Company.
11. Defaults and Remedies . If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency described in the Indenture, all outstanding Notes shall become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture.
12. Trustee Dealings with Company . Subject to certain limitations, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee.
13. No Recourse Against Others . No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Indenture, the Notes or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability.
14. Authentication . This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
15. Abbreviations . Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
16. CUSIP Numbers . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company have caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:
The
Rouse Company, LLC
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Chief Financial Officer
17. Governing Law . The law of the State of New York shall govern and be used to construe this Note without giving effect to applicable principals of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
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(Insert assignee’s social security or other tax I.D. no.) |
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(Print or type assignee’s name, address and zip code) |
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and irrevocably appoint |
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as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. |
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Date: |
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Your Signature: |
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(Sign exactly as your name appears on the face of this Note) |
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Signature Guarantee: |
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
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Amount of
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Amount of increase
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Principal Amount
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Signature of
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EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
The Rouse Company, LLC
110
North Wacker Drive
Chicago, Illinois 60606
Attention: Chief Financial Officer
Wilmington Trust, FSB
Corporate Capital Markets
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Rouse Company Administrator
Re: 6.75% Senior Notes due 2015
Reference is hereby made to the Indenture, dated as of November 9, 2010 (the “ Indenture ”), between The Rouse Company, LLC, as issuer (the “ Company ”) and Wilmington Trust FSB, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
, (the “ Transferor ”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $ in such Note[s] or interests (the “ Transfer ”), to (the “ Transferee ”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. o Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A . The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.
2. o Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Definitive Note pursuant to Regulation S . The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(a) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Distribution Compliance Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note, the Regulation S Temporary Global Note and/or the Definitive Note and in the Indenture and the Securities Act.
3. o Check and complete if Transferee will take delivery of a beneficial interest in the IAI Global Note or a Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S . The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b) o such Transfer is being effected to the Company or a subsidiary thereof;
or
(c) o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;
or
(d) o such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Definitive Notes and in the Indenture and the Securities Act.
4. o Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note .
(a) o Check if Transfer is pursuant to Rule 144 . (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) o Check if Transfer is Pursuant to Regulation S . (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) o Check if Transfer is Pursuant to Other Exemption . (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
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[Insert Name of Transferor] |
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By: |
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Dated: |
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ANNEX A TO CERTIFICATE OF TRANSFER
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The Transferor owns and proposes to transfer the following: |
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[CHECK ONE OF (a) OR (b)] |
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(a) |
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a beneficial interest in the: |
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(i) |
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144A Global Note (CUSIP ), or |
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(ii) |
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Regulation S Global Note (CUSIP ), or |
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(iii) |
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IAI Global Note (CUSIP ); or |
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(b) |
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a Restricted Definitive Note. |
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After the Transfer the Transferee will hold: |
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[CHECK ONE OF (a), (b) OR (c)] |
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(a) |
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a beneficial interest in the: |
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(i) |
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144A Global Note (CUSIP ), or |
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(ii) |
o |
Regulation S Global Note (CUSIP ), or |
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(iii) |
o |
IAI Global Note (CUSIP ); or |
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(iv) |
o |
Unrestricted Global Note (CUSIP ); or |
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(b) |
o |
a Restricted Definitive Note; or |
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(c) |
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an Unrestricted Definitive Note, |
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in accordance with the terms of the Indenture. |
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EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
The Rouse Company, LLC
110
North Wacker Drive
Chicago, Illinois 60606
Attention: Chief Financial Officer
Wilmington Trust, FSB
Corporate Capital Markets
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Rouse Company Administrator
Re: 6.75% Senior Notes due 2015
Reference is hereby made to the Indenture, dated as of November 9, 2010 (the “ Indenture ”), among The Rouse Company, LLC issuer (the “ Company ”) and Wilmington Trust FSB, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
, (the “ Owner ”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $ in such Note[s] or interests (the “ Exchange ”). In connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note
(a) o Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Note and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “ Securities Act ”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(b) o Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Note and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(c) o Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(d) o Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes
(a) o Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
(b) o Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note . In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CIRCLE ONE] 144A Global Note, Regulation S Global Note, IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Definitive Note and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
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EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
The Rouse Company, LLC
110
North Wacker Drive
Chicago, Illinois 60606
Attention: Chief Financial Officer
Wilmington Trust, FSB
Corporate Capital Markets
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Rouse Company Administrator
Re: 6.75% Senior Notes due 2015
Reference is hereby made to the Indenture, dated as of November 9, 2010 (the “ Indenture ”), among The Rouse Company, LLC, the issuer (the “ Company ”) and Wilmington Trust FSB, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $ aggregate principal amount of:
(a) o a beneficial interest in a Global Note, or
(b) o a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the “ Securities Act ”).
2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. We have had access to such financial and other information and have been afforded the opportunity to ask such questions of representatives of the Company and receive answers thereto, as we deem necessary in connection with our decision to purchase the Notes.
5. We are acquiring the Notes or a beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion and are not acquiring the Notes with a view to any distribution thereof in a transaction that would violate the Securities Act of the securities laws of any state of the United States or any other applicable jurisdiction.
You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. This letter shall be governed by, and construed in accordance with, the laws of the State of New York.
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TABLE OF CONTENTS
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Page |
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE |
1 |
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Section 1.01. |
Definitions |
1 |
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Section 1.02. |
Other Definitions |
10 |
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Section 1.03. |
Incorporation by Reference of Trust Indenture Act |
10 |
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Section 1.04. |
Conflict with Trust Indenture Act |
11 |
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Section 1.05. |
Rules of Construction |
11 |
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ARTICLE 2. THE NOTES |
11 |
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Section 2.01. |
Form and Dating |
11 |
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Section 2.02. |
Execution and Authentication |
13 |
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Section 2.03. |
Registrar and Paying Agent |
13 |
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Section 2.04. |
Paying Agent to Hold Money in Trust |
14 |
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Section 2.05. |
Holder Lists |
14 |
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Section 2.06. |
Transfer and Exchange |
14 |
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Section 2.07. |
Replacement Notes |
23 |
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Section 2.08. |
Outstanding Notes |
24 |
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Section 2.09. |
Treasury Notes |
24 |
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Section 2.10. |
Temporary Notes |
24 |
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Section 2.11. |
Cancellation |
24 |
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Section 2.12. |
Payment of Interest; Defaulted Interest |
25 |
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Section 2.13. |
CUSIP or ISIN Numbers |
25 |
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Section 2.14. |
Issuance of Additional Notes |
25 |
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Section 2.15. |
Record Date |
25 |
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ARTICLE 3. REDEMPTION AND PREPAYMENT |
26 |
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Section 3.01. |
Notices to Trustee |
26 |
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Section 3.02. |
Selection of Notes to Be Redeemed |
26 |
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Section 3.03. |
Notice of Redemption |
26 |
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Section 3.04. |
Effect of Notice of Redemption |
27 |
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Section 3.05. |
Deposit of Redemption Price |
27 |
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Section 3.06. |
Notes Redeemed in Part |
27 |
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Section 3.07. |
Optional Redemption |
27 |
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Section 3.08. |
Mandatory Redemption |
28 |
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ARTICLE 4. COVENANTS |
28 |
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Section 4.01. |
Payment of Principal, Premium and Interest |
28 |
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Section 4.02. |
Maintenance of Office or Agency |
28 |
TABLE OF CONTENTS
(continued)
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Page |
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Section 4.03. |
Reporting |
29 |
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Section 4.04. |
Compliance Certificate |
29 |
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Section 4.05. |
Payment of Taxes and Other Claims |
29 |
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Section 4.06. |
Existence |
30 |
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Section 4.07. |
Maintenance of Properties |
30 |
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Section 4.08. |
Incurrence of Additional Debt and Issuance of Capital Stock |
30 |
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Section 4.09. |
Limitation on Sale/Leaseback Transactions |
32 |
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ARTICLE 5. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE |
32 |
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Section 5.01. |
Company May Consolidate, Etc. Only on Certain Terms |
32 |
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Section 5.02. |
Successor Substituted |
33 |
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ARTICLE 6. DEFAULTS AND REMEDIES |
33 |
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Section 6.01. |
Events of Default |
33 |
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Section 6.02. |
Acceleration |
34 |
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Section 6.03. |
Collection of Indebtedness and Suits for Enforcement by Trustee |
35 |
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Section 6.04. |
Trustee May File Proofs of Claim |
35 |
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Section 6.05. |
Trustee May Enforce Claims Without Possession of Notes |
36 |
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Section 6.06. |
Application of Money Collected |
36 |
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Section 6.07. |
Limitation on Suits |
36 |
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Section 6.08. |
Unconditional Right of Holders to Receive Principal, Premium and Interest |
37 |
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Section 6.09. |
Restoration of Rights and Remedies |
37 |
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Section 6.10. |
Rights and Remedies Cumulative |
37 |
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Section 6.11. |
Delay or Omission Not Waiver |
37 |
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Section 6.12. |
Control by Holders |
37 |
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Section 6.13. |
Waiver of Past Defaults |
38 |
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Section 6.14. |
Undertaking for Costs |
38 |
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Section 6.15. |
Waiver of Usury, Stay or Extension Laws |
38 |
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ARTICLE 7. TRUSTEE |
38 |
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Section 7.01. |
Duties of Trustee |
38 |
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Section 7.02. |
Rights of Trustee |
39 |
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Section 7.03. |
Individual Rights of Trustee |
40 |
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Section 7.04. |
Trustee’s Disclaimer |
40 |
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Section 7.05. |
Notice of Defaults |
40 |
TABLE OF CONTENTS
(continued)
Exhibit 10.1
EXECUTION VERSION
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AMENDED AND RESTATED
CORNERSTONE INVESTMENT AGREEMENT
effective as of March 31, 2010
between
REP INVESTMENTS LLC
and
GENERAL GROWTH PROPERTIES, INC.
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TABLE OF CONTENTS
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Page |
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Article I |
PURCHASE OF NEW COMMON STOCK; CLOSING |
3 |
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Section 1.1 |
Purchase of New Common Stock |
3 |
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Section 1.2 |
Closing |
4 |
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Section 1.3 |
Company Rights Offering Election |
4 |
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Article II |
GGO SHARE DISTRIBUTION AND PURCHASE OF GGO COMMON STOCK |
4 |
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Section 2.1 |
GGO Share Distribution |
4 |
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Section 2.2 |
Purchase of GGO Common Stock |
6 |
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Article III |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
6 |
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Section 3.1 |
Organization and Qualification |
7 |
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Section 3.2 |
Corporate Power and Authority |
7 |
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Section 3.3 |
Execution and Delivery; Enforceability |
8 |
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Section 3.4 |
Authorized Capital Stock |
8 |
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Section 3.5 |
Issuance |
9 |
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Section 3.6 |
No Conflict |
10 |
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Section 3.7 |
Consents and Approvals |
11 |
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Section 3.8 |
Company Reports |
12 |
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Section 3.9 |
No Undisclosed Liabilities |
13 |
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Section 3.10 |
No Material Adverse Effect |
13 |
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Section 3.11 |
No Violation or Default: Licenses and Permits |
13 |
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Section 3.12 |
Legal Proceedings |
14 |
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Section 3.13 |
Investment Company Act |
14 |
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Section 3.14 |
Compliance With Environmental Laws |
14 |
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Section 3.15 |
Company Benefit Plans |
15 |
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Section 3.16 |
Labor and Employment Matters |
16 |
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Section 3.17 |
Insurance |
16 |
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Section 3.18 |
No Unlawful Payments |
16 |
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Section 3.19 |
No Broker’s Fees |
16 |
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Section 3.20 |
Real and Personal Property |
17 |
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Section 3.21 |
Tax Matters |
21 |
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TABLE OF CONTENTS
(continued)
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Page |
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Section 3.22 |
Material Contracts |
22 |
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Section 3.23 |
Certain Restrictions on Charter and Bylaws Provisions; State Takeover Laws |
23 |
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Section 3.24 |
No Other Representations or Warranties |
24 |
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Article IV |
REPRESENTATIONS AND WARRANTIES OF PURCHASER |
24 |
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Section 4.1 |
Organization |
24 |
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Section 4.2 |
Power and Authority |
24 |
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Section 4.3 |
Execution and Delivery |
24 |
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Section 4.4 |
No Conflict |
24 |
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Section 4.5 |
Consents and Approvals |
25 |
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Section 4.6 |
Compliance with Laws |
25 |
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Section 4.7 |
Legal Proceedings |
25 |
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Section 4.8 |
No Broker’s Fees |
25 |
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Section 4.9 |
Sophistication |
25 |
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Section 4.10 |
Purchaser Intent |
25 |
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Section 4.11 |
Reliance on Exemptions |
25 |
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Section 4.12 |
REIT Representations |
26 |
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Section 4.13 |
No Other Representations or Warranties |
26 |
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Section 4.14 |
Acknowledgement |
26 |
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Article V |
COVENANTS OF THE COMPANY AND PURCHASER |
26 |
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Section 5.1 |
Bankruptcy Court Motions and Orders |
26 |
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Section 5.2 |
Warrants, New Warrants and GGO Warrants |
27 |
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Section 5.3 |
Assistance with Capital Raising Activities |
27 |
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Section 5.4 |
Listing |
28 |
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Section 5.5 |
Use of Proceeds |
28 |
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Section 5.6 |
Access to Information |
28 |
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Section 5.7 |
Competing Transactions |
29 |
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Section 5.8 |
Reservation for Issuance |
29 |
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Section 5.9 |
Subscription Rights |
29 |
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Section 5.10 |
Company Board of Directors |
33 |
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TABLE OF CONTENTS
(continued)
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Page |
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Section 5.11 |
Notification of Certain Matters |
36 |
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Section 5.12 |
Further Assurances |
37 |
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Section 5.13 |
[Intentionally Omitted.] |
37 |
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Section 5.14 |
Rights Agreement; Reorganized Company Organizational Documents |
37 |
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Section 5.15 |
Stockholder Approval |
39 |
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Section 5.16 |
Registration Statements |
39 |
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Section 5.17 |
Closing Date Net Debt |
40 |
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Section 5.18 |
Determination of Domestically Controlled REIT Status |
43 |
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Article VI |
ADDITIONAL COVENANTS OF PURCHASER |
44 |
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Section 6.1 |
Information |
44 |
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Section 6.2 |
Purchaser Efforts |
44 |
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Section 6.3 |
Plan Support |
44 |
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Section 6.4 |
Transfer Restrictions |
45 |
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Section 6.5 |
Equity Commitments; Source of Funds |
47 |
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Section 6.6 |
REIT Representations and Covenants |
48 |
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Section 6.7 |
Non-Control Agreement |
48 |
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Section 6.8 |
Purchaser Formed Entities |
48 |
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Section 6.9 |
Additional Backstops |
48 |
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Article VII |
CONDITIONS TO THE OBLIGATIONS OF PURCHASER |
51 |
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Section 7.1 |
Conditions to the Obligations of Purchaser |
51 |
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Article VIII |
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY |
60 |
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Section 8.1 |
Conditions to the Obligations of the Company |
60 |
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Article IX |
INDEMNIFICATION |
62 |
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Section 9.1 |
Indemnification |
62 |
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Article X |
SURVIVAL OF REPRESENTATIONS AND WARRANTIES |
63 |
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Section 10.1 |
Survival of Representations and Warranties |
63 |
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Article XI |
TERMINATION |
64 |
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Section 11.1 |
Termination |
64 |
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Section 11.2 |
Effects of Termination |
67 |
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TABLE OF CONTENTS
(continued)
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Page |
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Article XII |
DEFINITIONS |
67 |
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Section 12.1 |
Defined Terms |
67 |
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Article XIII |
MISCELLANEOUS |
82 |
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Section 13.1 |
Notices |
82 |
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|
|
|
|
|
Section 13.2 |
Assignment; Third Party Beneficiaries |
83 |
|
|
|
|
|
|
|
Section 13.3 |
Prior Negotiations; Entire Agreement |
84 |
|
|
|
|
|
|
|
Section 13.4 |
Governing Law; Venue |
84 |
|
|
|
|
|
|
|
Section 13.5 |
Company Disclosure Letter |
85 |
|
|
|
|
|
|
|
Section 13.6 |
Counterparts |
85 |
|
|
|
|
|
|
|
Section 13.7 |
Expenses |
85 |
|
|
|
|
|
|
|
Section 13.8 |
Waivers and Amendments |
85 |
|
|
|
|
|
|
|
Section 13.9 |
Construction |
85 |
|
|
|
|
|
|
|
Section 13.10 |
Adjustment of Share Numbers and Prices |
86 |
|
|
|
|
|
|
|
Section 13.11 |
Certain Remedies |
86 |
|
|
|
|
|
|
|
Section 13.12 |
Bankruptcy Matters |
88 |
|
LIST OF EXHIBITS
|
Exhibit A: |
Plan Summary Term Sheet |
|
|
|
|
|
|
Exhibit B: |
Post-Bankruptcy GGP Corporate Structure |
|
|
|
|
|
|
Exhibit C-1: |
Fairholme Agreement |
|
|
|
|
|
|
Exhibit C-2: |
Pershing Agreement |
|
|
|
|
|
|
Exhibit D: |
REIT Representation Letter |
|
|
|
|
|
|
Exhibit E: |
GGO Assets |
|
|
|
|
|
|
Exhibit F: |
Form of Approval Order |
|
|
|
|
|
|
Exhibit G: |
Form of Warrant Agreement |
|
|
|
|
|
|
Exhibit H: |
[Intentionally Omitted] |
|
|
|
|
|
|
Exhibit I: |
[Intentionally Omitted] |
|
|
|
|
|
|
Exhibit J: |
Form of REIT Opinion |
|
|
|
|
|
|
Exhibit K: |
Form of Amended and Restated Brookfield Equity Commitment Letter |
|
|
|
|
|
|
Exhibit L: |
Form of Escrow Agreement |
|
|
|
|
|
|
Exhibit M: |
Form of Non-Control Agreement |
|
|
|
|
|
|
Exhibit N: |
Certain REIT Investors |
|
|
|
|
|
|
Exhibit O: |
Form of Tax Matters Agreement |
|
INDEX OF DEFINED TERMS
|
Defined Term |
|
Page |
|
|
|
|
|
2006 Bank Loan |
|
67 |
|
Acceptable LC |
|
66 |
|
Additional Financing |
|
56 |
|
Additional Sales Period |
|
67 |
|
Adequate Reserves |
|
21 |
|
Adjusted CDND |
|
42 |
|
Affiliate |
|
67 |
|
Agreement |
|
1 |
|
Amended and Restated Agreement |
|
1 |
|
Anticipated Debt Paydowns |
|
56 |
|
Approval Motion |
|
26 |
|
Approval Order |
|
26 |
|
Asset Sales |
|
56 |
|
Backstop Investors |
|
49 |
|
Bankruptcy Cases |
|
1 |
|
Bankruptcy Code |
|
1 |
|
Bankruptcy Court |
|
1 |
|
Blackstone |
|
83 |
|
Blackstone Assigned Securities |
|
83 |
|
Blackstone Assigned Shares |
|
83 |
|
Blackstone Assigned Warrants |
|
83 |
|
Blackstone Purchase Price |
|
83 |
|
Brazilian Entities |
|
67 |
|
Bridge Securities |
|
50 |
|
Brookfield Consortium Member |
|
68 |
|
Brookfield Equity Commitment Letter |
|
66 |
|
Business Day |
|
68 |
|
Calculation Date |
|
43 |
|
Capital Raising Activities |
|
28 |
|
Cash Equivalents |
|
68 |
|
Chapter 11 |
|
1 |
|
Claims |
|
68 |
|
Clawback Fee |
|
68 |
|
Closing |
|
4 |
|
Closing Date |
|
4 |
|
Closing Date Net Debt |
|
68 |
|
Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts |
|
69 |
|
Closing Funding Certification |
|
86 |
|
Closing Restraint |
|
65 |
|
CMPC |
|
6 |
|
CNDAS Dispute Notice |
|
40 |
|
CNDAS Disputed Items |
|
41 |
|
Code |
|
15 |
|
Commitment Amount |
|
48 |
|
Common Stock |
|
1 |
|
Company |
|
2 |
|
Company Benefit Plan |
|
69 |
|
Company Board |
|
70 |
|
Company Disclosure Letter |
|
7 |
|
Company Ground Lease Property |
|
19 |
|
Company Mortgage Loan |
|
20 |
|
Company Option Plans |
|
8 |
|
Company Properties |
|
17 |
|
Company Property |
|
17 |
|
Company Property Lease |
|
19 |
|
Company Rights Offering |
|
4 |
|
Company SEC Reports |
|
12 |
|
Competing Transaction |
|
70 |
|
Conclusive Net Debt Adjustment Statement |
|
70 |
|
Confidentiality Agreement |
|
28 |
|
Confirmation Order |
|
52 |
|
Confirmed Debtors |
|
78 |
|
Contingent and Disputed Debt Claims |
|
70 |
|
Contract |
|
70 |
|
Corporate Level Debt |
|
71 |
|
Dealer Manager |
|
49 |
|
Debt |
|
71 |
|
Debt Cap |
|
56 |
|
Debtors |
|
1 |
|
Designation Conditions |
|
4 |
|
DIP Loan |
|
71 |
|
Disclosure Statement |
|
71 |
|
Disclosure Statement Order |
|
53 |
|
Dispute Notice |
|
40 |
|
Disputed Items |
|
40 |
|
Domestically Controlled REIT |
|
43 |
|
Effective Date |
|
4 |
|
Encumbrances |
|
17 |
|
Environmental Laws |
|
14 |
|
Equity Exchange |
|
2 |
|
Equity Financing |
|
87 |
|
Equity Provider |
|
66 |
|
Equity Securities |
|
8 |
|
ERISA |
|
71 |
|
ERISA Affiliate |
|
15 |
|
Escrow Agreement |
|
66 |
|
Escrow Agreements |
|
66 |
|
Excess Surplus Amount |
|
71 |
|
Exchangeable Notes |
|
71 |
|
Excluded Claims |
|
71 |
|
Excluded Non-US Plans |
|
15 |
|
Fairholme Agreement |
|
2 |
|
Fairholme Investors |
|
2 |
|
Fairholme/Pershing Agreements |
|
2 |
|
Fairholme/Pershing Investors |
|
2 |
|
Foreign Plan |
|
15 |
|
Fully Diluted Basis |
|
73 |
|
Funding Document |
|
81 |
|
GAAP |
|
73 |
|
GGO |
|
2 |
|
GGO Agreement |
|
35 |
|
GGO Board |
|
35 |
|
GGO Common Share Amount |
|
73 |
|
GGO Common Stock |
|
5 |
|
GGO Note Amount |
|
73 |
|
GGO Per Share Purchase Price |
|
6 |
|
GGO Promissory Note |
|
74 |
|
GGO Purchase Price |
|
6 |
|
GGO Representative |
|
5 |
|
GGO Setup Costs |
|
74 |
|
GGO Share Distribution |
|
5 |
|
GGO Shares |
|
6 |
|
GGO Warrants |
|
27 |
|
GGP |
|
1 |
|
GGP Backstop Rights Offering |
|
48 |
|
GGP Backstop Rights Offering Amount |
|
48 |
|
Governmental Entity |
|
74 |
|
Hazardous Materials |
|
14 |
|
Hughes Agreement |
|
74 |
|
Hughes Amount |
|
73 |
|
Hughes Heirs Obligations |
|
74 |
|
Identified Assets |
|
5 |
|
Indebtedness |
|
74 |
|
Indemnified Person |
|
62 |
|
Initial Investors |
|
50 |
|
Joint Venture |
|
75 |
|
Knowledge |
|
75 |
|
Law |
|
75 |
|
Liquidity Equity Issuances |
|
75 |
|
Liquidity Target |
|
55 |
|
Material Adverse Effect |
|
75 |
|
Material Contract |
|
76 |
|
Material Lease |
|
19 |
|
Measurement Date |
|
8 |
|
Most Recent Statement |
|
17 |
|
MPC Assets |
|
76 |
|
MPC Taxes |
|
77 |
|
Net Debt Excess Amount |
|
77 |
|
Net Debt Surplus Amount |
|
77 |
|
New Common Stock |
|
1 |
|
New Debt |
|
55 |
|
New DIP Agreement |
|
52 |
|
New Warrants |
|
27 |
|
Non-Control Agreement |
|
77 |
|
Non-Controlling Properties |
|
77 |
|
NYSE |
|
28 |
|
Offering Premium |
|
77 |
|
Operating Partnership |
|
78 |
|
Original Agreement |
|
1 |
|
Other Sponsor |
|
81 |
|
PBGC |
|
15 |
|
Per Share Purchase Price |
|
3 |
|
Permitted Assign |
|
3 |
|
Permitted Claims |
|
78 |
|
Permitted Claims Amount |
|
78 |
|
Permitted Title Exceptions |
|
17 |
|
Pershing Agreement |
|
2 |
|
Pershing Investors |
|
2 |
|
Person |
|
78 |
|
Petition Date |
|
1 |
|
Plan |
|
1 |
|
Plan Debtors |
|
78 |
|
Plan Summary Term Sheet |
|
1 |
|
PMA Claims |
|
78 |
|
Preliminary Closing Date Net Debt Review Deadline |
|
78 |
|
Preliminary Closing Date Net Debt Review Period |
|
78 |
|
Preliminary Closing Date Net Debt Schedule |
|
40 |
|
Proceedings |
|
62 |
|
Proportionally Consolidated Debt |
|
79 |
|
Proportionally Consolidated Unrestricted Cash |
|
79 |
|
Proposed Approval Order |
|
26 |
|
Proposed Securities |
|
30 |
|
Purchase Price |
|
3 |
|
Purchaser |
|
1 |
|
Purchaser Board Designees |
|
33 |
|
Purchaser GGO Board Designee |
|
35 |
|
Refinance Cap |
|
58 |
|
Reinstated Amounts |
|
55 |
|
Reinstatement Adjustment Amount |
|
79 |
|
REIT |
|
21 |
|
REIT Subsidiary |
|
22 |
|
Release Date |
|
47 |
|
Reorganized Company |
|
1 |
|
Reorganized Company Organizational Documents |
|
38 |
|
Reserve |
|
78 |
|
Reserve Surplus Amount |
|
79 |
|
Resolution Period |
|
40 |
|
Rights Agreement |
|
79 |
|
Rights Offering Election |
|
4 |
|
Rouse Bonds |
|
79 |
|
Rule 144 |
|
46 |
|
Sales Cap |
|
57 |
|
SEC |
|
12 |
|
Securities Act |
|
12 |
|
Share Cap Number |
|
56 |
|
Share Equivalent |
|
80 |
|
Shares |
|
3 |
|
Significant Subsidiaries |
|
80 |
|
SOX |
|
44 |
|
Subscribing Entities |
|
29 |
|
Subscribing Entity |
|
29 |
|
Subscription Right |
|
30 |
|
Subsidiary |
|
80 |
|
Synthetic Lease Obligation |
|
75 |
|
Target Net Debt |
|
80 |
|
Tax Matters Agreement |
|
80 |
|
Tax Protection Agreements |
|
80 |
|
Tax Return |
|
21 |
|
Taxes |
|
21 |
|
Termination Date |
|
80 |
|
Termination Date Extension Notice |
|
80 |
|
Transactions |
|
81 |
|
Transfer |
|
46 |
|
TRUPS |
|
81 |
|
U.S. Persons |
|
43 |
|
Unrestricted Cash |
|
81 |
|
Unsecured Indebtedness |
|
82 |
|
UPREIT Units |
|
82 |
|
Warrant Agreement |
|
27 |
|
Warrants |
|
27 |
AMENDED AND RESTATED CORNERSTONE INVESTMENT AGREEMENT, effective as of March 31, 2010 (this “ Agreement ”), by and between General Growth Properties, Inc., a Delaware corporation (“ GGP ”), and REP Investments LLC, a Delaware limited liability company (together with its permitted assigns, “ Purchaser ”).
On March 31, 2010, GGP and Purchaser entered into the Cornerstone Investment Agreement (as subsequently amended on May 3, 2010 and May 7, 2010, the “ Original Agreement ”) to provide for the terms and conditions for the consummation of the transactions contemplated therein. On August 2, 2010, GGP and Purchaser entered into the Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010 (the “ Amended and Restated Agreement ”) which amended and restated the Original Agreement ab initio in its entirety as set forth therein. Pursuant to Section 13.8 of the Amended and Restated Agreement, the parties thereto wish to amend and restate the Amended and Restated Agreement ab initio in its entirety as set forth herein. References herein to “date of this Agreement” and “date hereof” shall refer to March 31, 2010.
RECITALS
WHEREAS, GGP is a debtor in possession in that certain bankruptcy case under chapter 11 (“ Chapter 11 ”) of Title 11 of the United States Code, 11 U.S.C. §§ 101 -1532 (as amended, the “ Bankruptcy Code ”) filed on April 16, 2009 (the “ Petition Date ”) in the United States Bankruptcy Court for the Southern District of New York (the “ Bankruptcy Court ”), Case No. 09-11977 (ALG).
WHEREAS, Purchaser desires to assist GGP in its plans to recapitalize and emerge from bankruptcy and has agreed to sponsor the implementation of a joint chapter 11 plan of reorganization based on the Plan Summary Term Sheet (as defined below) (together with all documents and agreements that form part of such plan or related plan supplement or are related thereto, and as it may be amended, modified or supplemented from time to time, in each case, to the extent it relates to the implementation and effectuation of the Plan Summary Term Sheet and this Agreement, the “ Plan ”), of GGP and its Subsidiaries and Affiliates who are debtors and debtors-in-possession (the “ Debtors ”) in the chapter 11 cases pending and jointly administered in the Bankruptcy Court (the “ Bankruptcy Cases ”).
WHEREAS, principal elements of the Plan (including a table setting forth the proposed treatment of allowed claims and equity interests in the Bankruptcy Cases) are set forth on Exhibit A hereto (the “ Plan Summary Term Sheet ”).
WHEREAS, the Plan shall provide, among other things, that (i) each holder of common stock, par value $0.01 per share, of GGP (the “ Common Stock ”) shall receive, in exchange for each share of Common Stock held by such holder, one share of new common stock (the “ New Common Stock ”) of a new company that succeeds to GGP in the manner contemplated by Exhibit B upon consummation of the Plan (the “ Reorganized Company ”) and (ii) any Equity Securities (other than Common Stock) of the Company (as defined below) or any of its Subsidiaries (as defined below) outstanding immediately after the Effective Date that were previously convertible into, or exercisable or exchangeable for, Common Stock shall thereafter be convertible into, or exercisable or exchangeable for, New Common Stock (based upon the
number of shares of Common Stock underlying such Equity Securities) (the transactions contemplated by clauses (i) and (ii) of this recital being referred to herein as the “ Equity Exchange ”). For purposes of this Agreement, the “ Company ” shall be deemed to refer, prior to consummation of the Plan, to GGP and, on and after consummation of the Plan, the Reorganized Company, as the context requires.
WHEREAS, Purchaser desires to make an investment in the Reorganized Company on the terms and subject to the conditions described herein in the form of the purchase of shares of New Common Stock as contemplated hereby.
WHEREAS, in addition to the Equity Exchange and the sale of the Shares (as defined below), the Plan shall provide for the incorporation by the Company of a new subsidiary (“ GGO ”), the contribution of certain assets (and/or equity interests related thereto) of the Company to GGO and the assumption by GGO of the liabilities associated with such assets, the distribution to the shareholders of the Company (prior to the issuance of the Shares and the issuance of other shares of New Common Stock contemplated by this Agreement other than pursuant to the Equity Exchange) on a pro rata basis and holders of UPREIT Units of all of the capital stock of GGO, and whereas Purchaser desires to make an investment in GGO on the terms and subject to the conditions described herein in the form of the purchase of shares of GGO Common Stock as contemplated hereby.
WHEREAS, the Company has requested that Purchaser commit to purchase the Shares and the GGO Shares at a fixed price for the term hereof.
WHEREAS , Purchaser has agreed to enter into this Agreement and commit to purchase the Shares and the GGO Shares only on the condition that the Company, as promptly as practicable following the date hereof (but no later than the date provided in Section 5.2 hereof), issue the Warrants contemplated herein and perform its other obligations hereunder.
WHEREAS , on and effective as of the date hereof, the Company entered into an agreement (in the form attached hereto as Exhibit C-1 together with any amendments thereto as have been approved by Purchaser, the “Fairholme Agreement”) with The Fairholme Fund and The Fairholme Focused Income Fund (the “Fairholme Investors”) pursuant to which the Fairholme Investors have agreed to make (i) an investment of up to $2,714,285,710 in the Reorganized Company in the form of the purchase of shares of New Common Stock and (ii) an investment of $62,500,000 in GGO in the form of the purchase of shares of GGO Common Stock.
WHEREAS, on and effective as of the date hereof, the Company entered into an agreement (in the form attached hereto as Exhibit C-2 together with any amendments thereto as have been approved by Purchaser, the “ Pershing Agreement ” and, together with the Fairholme Agreement, the “ Fairholme/Pershing Agreements ”) with Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. (the “ Pershing Investors ” and, together with the Fairholme Investors, the “ Fairholme/Pershing Investors ”) pursuant to which the Pershing Investors have agreed to make (i) an investment of up to $1,085,714,290 in the Reorganized Company in the form of the purchase of shares of New
Common Stock and (ii) an investment of $62,500,000 in GGO in the form of the purchase of shares of GGO Common Stock.
NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the parties agree as follows:
ARTICLE I
PURCHASE OF NEW COMMON STOCK; CLOSING
SECTION 1.1 Purchase of New Common Stock .
(a) On the terms and subject to the conditions set forth herein, at the Closing (as defined below), Purchaser shall purchase from the Company, and the Company shall sell to Purchaser, 250,000,000 shares of New Common Stock (the “ Shares ”), for a price per share equal to $10.00 (the “ Per Share Purchase Price ” and, in the aggregate, the “ Purchase Price ”). At the Closing, Purchaser shall cause the Purchase Price to be paid (i) first, to the extent that Purchaser elects by written notice to the Company not less than three Business Days prior to the Closing Date, by the application of any claims against the Debtors that are held by Purchaser (or any Person that Purchaser may designate pursuant to Section 1.1(c) (a “ Permitted Assign ”)) and outstanding as of the Effective Date in an amount equal to the allowed amount (inclusive of prepetition and postpetition interest accrued up to and on the Effective Date at the applicable rate provided in the Plan), with each $10.00 in such amount of allowed claims so applied being in satisfaction of the obligation to pay $10.00 of the Purchase Price and (ii) second, by wire transfer of immediately available U.S. Dollar funds. For the avoidance of doubt, Purchaser may elect which claims to apply in satisfaction of Purchaser’s obligation to pay the Purchase Price for purposes of clause (i), and the application of such claims against the Purchase Price in accordance with clause (i) shall represent complete satisfaction of the Debtors’ obligations in respect of such allowed claims so applied. For the avoidance of doubt and as provided in the Plan, any application by the Purchaser or the applicable Permitted Assign of allowed claims in satisfaction of a portion of the Purchase Price shall be effected by causing the Debtor liable for such claims to make payment for such claims in accordance with the Plan and by directing the amounts so payable to be paid to the Company and applied in satisfaction of a portion of the Purchase Price.
(b) All Shares shall be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by the Company to the extent required under the Confirmation Order or applicable Law.
(c) Purchaser, in its sole discretion, may designate that some or all of the Shares be issued in the name of, and delivered to, one or more Brookfield Consortium Members, subject to (i) such action not causing any delay in the obtaining of, or significantly increasing the risk of not obtaining, any material authorizations, consents, orders, declarations or approvals necessary to consummate the transactions contemplated by this Agreement or otherwise delaying the consummation of such transactions, (ii) such Person shall be an “accredited investor” (within the meaning of Rule 501 of Regulation D under the Securities Act) and shall have agreed in writing with and for the benefit of the Company to be bound by the terms of this Agreement applicable
to Purchaser set forth in Section 6.4 of this Agreement and the transfer restrictions set forth in the Plan, including the delivery of the letter certifying compliance with the representations and covenants set forth on Exhibit D to the extent applicable and (iii) Purchaser not being relieved of any of its obligations under this Agreement ((i), (ii) and (iii) collectively, the “ Designation Conditions ”).
SECTION 1.2 Closing . Subject to the satisfaction or waiver of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Closing, but subject to the satisfaction or waiver of those conditions as of the Closing) set forth in Article VII and Article VIII , the closing of the purchase of the Shares and the GGO Shares by Purchaser pursuant hereto (the “ Closing ”) shall occur at 9:30 a.m., New York time, on the effective date of the Plan (the “ Effective Date ”), at the offices of Weil, Gotshal & Manges LLP located at 767 Fifth Avenue, New York, NY 10153, or such other date, time or location as agreed by the parties. The date of the Closing is referred to as the “ Closing Date ”. Each of the Company and Purchaser hereby agree that in no event shall the Closing occur unless all of the Shares and the GGO Shares are sold to Purchaser (or to such other Brookfield Consortium Members as Purchaser may designate in accordance with and subject to the Designation Conditions) on the Closing Date.
SECTION 1.3 Company Rights Offering Election . The Company may at any time prior to the date of filing of the Disclosure Statement, upon written notice to Purchaser in accordance with the terms hereof (the “ Rights Offering Election ”), irrevocably elect to convert the obligation of Purchaser to purchase the Shares as contemplated by Section 1.1 hereof into an obligation of Purchaser to participate in a rights offering by the Company pursuant to which shareholders and/or creditors of the Company are offered rights to subscribe for shares of New Common Stock (a “ Company Rights Offering ”), subject to the execution and delivery of definitive documentation therefor and the satisfaction of the conditions described therein and other customary conditions for a public rights offering. To the extent the Company makes a Rights Offering Election, (i) Purchaser shall be entitled to a minimum allocation of shares of New Common Stock in the Company Rights Offering equal to the number of shares Purchaser would otherwise be required to purchase pursuant to Section 1.1 hereof had no such election been made, (ii) the purchase price per share payable by Purchaser shall be equal to the Per Share Purchase Price and Purchaser shall not be otherwise adversely affected as compared to the transactions contemplated hereby, (iii) the Company Rights Offering shall be effected in a manner substantially consistent with the procedures contemplated by Section 2.2 of the Original Agreement, provided that the Company Rights Offering shall be completed by the Effective Date, and (iv) the Company and Purchaser shall cooperate in good faith to develop and agree upon documentation that is reasonably acceptable to both the Company and Purchaser governing the further terms and conditions of the Company Rights Offering.
ARTICLE II
GGO SHARE DISTRIBUTION AND PURCHASE OF GGO COMMON STOCK
SECTION 2.1 GGO Share Distribution . On the terms and subject to the conditions (including Bankruptcy Court approval) set forth herein, the Plan shall provide for the following:
(a) On or prior to the Effective Date, the Company shall incorporate GGO with issued and outstanding capital stock consisting of at least the GGO Common Share Amount of shares of common stock (the “ GGO Common Stock ”), designate an employee of the Company familiar with the Identified Assets and reasonably acceptable to Purchaser to serve as a representative of GGO (the “ GGO Representative ”) and shall contribute to GGO (directly or indirectly) the assets (and/or equity interests related thereto) set forth in Exhibit E hereto and have GGO assume directly or indirectly the associated liabilities (the “ Identified Assets ”); provided , however , that to the extent the Company is prohibited by Law from contributing one or more of the Identified Assets to GGO or the contribution thereof would breach or give rise to a default under any Contract, agreement or instrument that would, in the good faith judgment of the Company in consultation with the GGO Representative, impair in any material respect the value of the relevant Identified Asset or give rise to additional liability (other than liability that would not, in the aggregate, be material) on the part of GGO or the Company or a Subsidiary of the Company, the Company shall (i) to the extent not prohibited by Law or would not give rise to such a default, take such action or cause to be taken such other actions in order to place GGO, insofar as reasonably possible, in the same economic position as if such Identified Asset had been transferred as contemplated hereby and so that, insofar as reasonably possible, substantially all the benefits and burdens (including all obligations thereunder but excluding any obligations that arise out of the transfer of the Identified Asset to the extent included in Permitted Claims) relating to such Identified Asset, including possession, use, risk of loss, potential for gain and control of such Identified Asset, are to inure from and after the Closing to GGO ( provided , that as soon as a consent for the contribution of an Identified Asset is obtained or the contractual impediment is removed or no longer applies, the applicable Identified Asset shall be promptly contributed to GGO), or (ii) to the extent the actions contemplated by clause (i) are not possible without resulting in a material and adverse effect on the Company and its Subsidiaries (as reasonably determined by the Company in consultation with the GGO Representative), contribute other assets, with the consent of Purchaser (which Purchaser shall not unreasonably withhold, condition or delay), having an economically equivalent value and related financial impact on the Company (in each case, as reasonably agreed by Purchaser and the Company in consultation with the GGO Representative) to the Identified Asset not so contributed. In no event shall the Company (or any subsidiary of the Company) pay more than $16,000,000 in the aggregate or make any other payment or provide any other economic consideration to reduce the principal amount of the mortgage related to 110 N. Wacker Drive, Chicago, Illinois.
(b) The GGO Common Share Amount of shares of GGO Common Stock, representing all of the outstanding capital stock of GGO (other than shares of GGO Common Stock to be issued (x) pursuant to Section 2.2 of this Agreement, (y) to the Fairholme/Pershing Investors pursuant to Section 2.2 of the Fairholme/Pershing Agreements and (z) upon exercise of the GGO Warrants and the warrants issued to the Fairholme/Pershing Investors pursuant to the Fairholme/Pershing Agreements), shall be distributed, on or prior to the Effective Date, to the shareholders of the Company (pre-issuance of the Shares) on a pro rata basis and holders of UPREIT Units (the “ GGO Share Distribution ”).
(c) It is agreed that neither the Company nor any of its Subsidiaries shall be required to pay or cause payment of any fees or make any financial accommodations to obtain any third-party consent, approval, waiver or other permission for the contribution contemplated by Section
2.1(a) , or to seek any such consent, approval, waiver or other permission that is inapplicable to the Company or any of its Debtor Subsidiaries pursuant to the Bankruptcy Code.
(d) The parties currently contemplate that the GGO Share Distribution will be structured as a “tax free spin-off” under the Code. To the extent that the Company and Purchaser jointly determine that it is desirable for the GGO Share Distribution to be structured as a taxable dividend, the parties will work together to structure the transaction to allow for such outcome.
(e) With respect to the Columbia Master Planned Community (the “ CMPC ”), it is the intention of the parties that office and mall assets currently producing any material amount of income at the CMPC (including any associated right of access to parking spaces) will be retained by the Company and the remaining non-income producing assets at the CMPC will be transferred to GGO (including rights to develop and/or redevelop (as appropriate) the remainder of the CMPC). On or prior to the Effective Date, the Company and GGO shall enter into a mutually satisfactory development and cooperation agreement with respect to the CMPC, which agreement shall provide, among other things, that GGO shall grant mutually satisfactory easements, to the extent not already granted, such that the office buildings retained by GGP (as provided above) continuously shall have access to parking spaces appropriate for such office buildings.
SECTION 2.2 Purchase of GGO Common Stock .
(a) On the terms and subject to the conditions set forth herein, the Plan shall provide that at the Closing, Purchaser shall purchase from GGO, and GGO shall sell to Purchaser, 2,625,000 shares of GGO Common Stock (the “ GGO Shares ”), for a price per share equal to $47.619048 (the “ GGO Per Share Purchase Price ” and such $125,000,000 aggregate purchase price, the “ GGO Purchase Price ”). At the Closing the Purchasers shall cause the GGO Purchase Price to be paid by wire transfer of immediately available U.S. Dollar funds to such account or accounts as the Company shall have designated in writing prior to the Closing.
(b) All GGO Shares shall be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by GGO to the extent required under the Confirmation Order or applicable Law.
(c) Purchaser, in its sole discretion, may designate that some or all of the GGO Shares be issued in the name of, and delivered to, one or more Brookfield Consortium Members in accordance with and subject to the Designation Conditions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser, as set forth below, except (i) as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (but not in documents filed as exhibits thereto or documents incorporated by reference therein) filed with the SEC on March 1, 2010 (other than in any “risk factor” disclosure or any other forward-looking disclosures contained in such reports under the headings “Risk Factors” or “Cautionary
Note” or any similar sections) or (ii) as set forth in the disclosure schedule delivered by the Company to Purchaser on the date of this Agreement (the “ Company Disclosure Letter ”):
SECTION 3.1 Organization and Qualification . The Company and each of its direct and indirect Significant Subsidiaries is duly organized and is validly existing as a corporation or other form of entity, where applicable, in good standing under the Laws of their respective jurisdictions of organization, with the requisite power and authority to own, operate or manage its properties and conduct its business as currently conducted, subject, as applicable, to the restrictions that result from any such entity’s status as a debtor-in-possession under Chapter 11, except to the extent the failure of such Significant Subsidiary to be in good standing (to the extent the concept of good standing is applicable in its jurisdiction of organization) would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company and each of its Significant Subsidiaries has been duly qualified as a foreign corporation or other form of entity for the transaction of business and, where applicable, is in good standing under the Laws of each other jurisdiction in which it owns, manages, operates or leases properties or conducts business so as to require such qualification, except to the extent the failure to be so qualified or, where applicable, be in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.2 Corporate Power and Authority .
(a) Subject to the authorization of the Bankruptcy Court, which shall be contained in the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, the Company has the requisite power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder (except with respect to (i) the issuance of the Warrants, (ii) the provisions of the Approval Order and (iii) Article IX hereof). The Company has taken all necessary corporate action required for the due authorization, execution, delivery and performance by it of this Agreement.
(b) Subject to the entry of the Approval Order, the Company has the requisite power and authority to (i) issue the Warrants (assuming the accuracy of the representations of Purchaser contained in Exhibit D ), (ii) perform its obligations pursuant to the provisions of the Approval Order and (iii) Article IX hereof. No approval by any securityholders of the Company or any Subsidiary of the Company is required in connection with the issuance of the Warrants or the issuance of the shares of Common Stock upon exercise of the Warrants.
(c) The Company has received written confirmation from the NYSE that the shares of New Common Stock or other Equity Securities issuable by the Company to Purchaser and each Subscribing Entity in connection with each Subscribing Entity’s exercise of its Subscription Rights contemplated by Section 5.9(a) hereof shall not require stockholder approval and shall be eligible for listing on the NYSE in the hands of Purchaser without any requirement for stockholder approval, in each case, during the five (5) year period following the Closing Date.
SECTION 3.3 Execution and Delivery; Enforceability .
(a) This Agreement has been duly and validly executed and delivered by the Company, and subject to the authorization of the Bankruptcy Court, which shall be contained in the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, shall constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at Law or in equity) (except with respect to (i) the issuance of the Warrants, (ii) the provisions of the Approval Order and (iii) Article IX hereof).
(b) Subject to the entry of the Approval Order, the provisions of this Agreement relating to (i) the issuance of the Warrants, (ii) the provisions of the Approval Order and (iii) Article IX hereof shall constitute the valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.
SECTION 3.4 Authorized Capital Stock . As of the date of this Agreement, the authorized capital stock of the Company consists of 875,000,000 shares of Common Stock and of 5,000,000 shares of preferred stock. The issued and outstanding capital stock of the Company and the shares of Common Stock available for grant pursuant to the Company’s 1993 Stock Incentive Plan, 1998 Stock Incentive Plan and 2003 Stock Incentive Plan (collectively, the “ Company Option Plans ”) or otherwise as of March 26, 2010 (the “ Measurement Date ”) is set forth on Section 3.4 of the Company Disclosure Letter. From the Measurement Date to the date of this Agreement, other than in connection with the issuance of shares of Common Stock pursuant to the exercise of options outstanding as of the Measurement Date, there has been no change in the number of outstanding shares of capital stock of the Company or the number of outstanding Equity Securities (as defined below). Except as set forth on Section 3.4 of the Company Disclosure Letter, on the Measurement Date, there was not outstanding, and there was not reserved for issuance, any (i) share of capital stock or other voting securities of the Company or its Significant Subsidiaries; (ii) security of the Company or its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or voting securities of the Company or its Significant Subsidiaries; (iii) option or other right to acquire from the Company or its Subsidiaries, or obligation of the Company or its Subsidiaries to issue, any shares of capital stock, voting securities or security convertible into or exercisable or exchangeable for shares of capital stock or voting securities of the Company or its Significant Subsidiaries, as the case may be; or (iv) equity equivalent interest in the ownership or earnings of the Company or its Significant Subsidiaries or other similar right, in each case to which the Company or a Significant Subsidiary is a party (the items in clauses (i) through (iv) collectively, “ Equity Securities ”). Other than as set forth on Section 3.4 of the Company Disclosure Letter or as contemplated by this Agreement, or pursuant to Contracts entered into by the Company after the date hereof and prior to the Closing that are otherwise not inconsistent with Purchaser’s rights hereunder and with respect to the transactions contemplated hereby, and do not confer on any other Person rights that are superior to those received by Purchaser hereunder or pursuant to the transactions contemplated hereby other than rights and terms that are customarily granted to holders of any such Equity Securities so issued and not customarily granted in transactions such as the transactions contemplated hereby, there is no outstanding obligation of the Company or its
Subsidiaries to repurchase, redeem or otherwise acquire any Equity Security. Other than as set forth on Section 3.4 of the Company Disclosure Letter or as contemplated by this Agreement, or pursuant to Contracts entered into by the Company in connection with the issuance of Equity Securities after the date hereof and prior to the Closing that are otherwise not inconsistent with Purchaser’s rights hereunder and with respect to the transactions contemplated hereby, and do not confer on any other Person rights that are superior to those received by Purchaser hereunder or pursuant to the transactions contemplated hereby other than rights and terms that are customarily granted to holders of any such Equity Securities so issued and not customarily granted in transactions such as the transactions contemplated hereby, there is no stockholder agreement, voting trust or other agreement or understanding to which the Company is a party or by which the Company is bound relating to the voting, purchase, transfer or registration of any shares of capital stock of the Company or preemptive rights with respect thereto. Section 3.4 of the Company Disclosure Letter sets forth a complete and accurate list of the outstanding Equity Securities of the Company as of the Measurement Date, including the applicable conversion rates and exercise prices (or, in the case of options to acquire Common Stock, the weighted average exercise price) relating to the conversion or exercise of such Equity Securities into or for Common Stock.
SECTION 3.5 Issuance .
(a) Subject to the authorization of the Bankruptcy Court, which shall be contained in entry of the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, the issuance of the Shares and the New Warrants has been duly and validly authorized. Subject to the entry of the Approval Order and assuming the accuracy of the representations of Purchaser contained in Exhibit D , the issuance of the Warrants is duly and validly authorized. When the Shares are issued and delivered in accordance with the terms of this Agreement against payment therefor, the Shares shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the Non-Control Agreement and applicable state and federal securities Laws. When the Warrants and the New Warrants are issued and delivered in accordance with the terms of this Agreement, the Warrants and New Warrants shall be duly and validly issued and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the terms of the Warrants and New Warrants and under applicable state and federal securities Laws. When the shares of Common Stock issuable upon the exercise of the Warrants and the shares of New Common Stock issuable upon the exercise of the New Warrants are issued and delivered against payment therefor, the shares of Common Stock and New Common Stock, as applicable, shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the Non-Control Agreement and applicable state and federal securities Laws.
(b) Subject to the authorization of the Bankruptcy Court, which shall be contained in the entry of the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, when the GGO Shares and the GGO Warrants are issued, the GGO Shares and GGO Warrants
shall be duly and validly authorized, duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement and under applicable state and federal securities Laws. When the shares of GGO Common Stock issuable upon the exercise of the GGO Warrants are issued and delivered against payment therefor, the shares of GGO Common Stock shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement and under applicable state and federal securities Laws.
SECTION 3.6 No Conflict .
(a) Subject to (i) the receipt of the consents set forth on Section 3.6 of the Company Disclosure Letter, (ii) such authorization as is required by the Bankruptcy Court or the Bankruptcy Code, which shall be contained in the entry of the Confirmation Order, and the expiration, or waiver by the Bankruptcy Court, of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, (iii) any provisions of the Bankruptcy Code that override, eliminate or abrogate such consents or as may be ordered by the Bankruptcy Court and (iv) the ability to employ the alternatives contemplated by Section 2.1 of the Agreement, the execution and delivery (or, with respect to the Plan, the filing) by the Company of this Agreement and the Plan, the performance by the Company of its respective obligations under this Agreement and compliance by the Company with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, (x) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any Contract to which the Company or any of the Company’s Subsidiaries is a party or by which any of their material assets are subject or encumbered, (y) shall not result in any violation or breach of any terms, conditions or provisions of the certificate of incorporation or bylaws of the Company, or the comparable organizational documents of the Company’s Subsidiaries, and (z) shall not conflict with or result in any violation or breach of, or any termination or impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, except, in the case of each of clauses (x) and (z) above, for any such conflict, breach, acceleration, lien, termination, impairment, failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order and (iii) Article IX hereof).
(b) Subject to the entry of the Approval Order, (i) the issuance of the Warrants (assuming the accuracy of the representations of Purchaser contained in Exhibit D ), (ii) the performance by the Company of its respective obligations under the Approval Order and compliance by the Company with all of the provisions thereof, and (iii) the performance by the Company of respective obligations under Article IX hereof (x) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any Contract, (y) shall not result in any violation or breach of any terms, conditions or provisions of the certificate of incorporation or bylaws of the Company, or the comparable
organizational documents of the Company’s Subsidiaries, and (z) shall not conflict with or result in any violation or breach of, or any termination or impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, except, in the case of each of clauses (x) and (z) above, for any such conflict, breach, acceleration, lien, termination, impairment, failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.
SECTION 3.7 Consents and Approvals .
(a) No consent, approval, authorization, order, registration or qualification of or with any Governmental Entity having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties is required for (i) (1) the issuance and delivery of the New Warrants, (2) the issuance, sale and delivery of Shares, (3) the issuance and delivery of the Warrants, (4) the issuance, sale and delivery of the GGO Shares, (5) the issuance and delivery of the GGO Warrants, (6) the issuance of New Common Stock upon exercise of the New Warrants, (7) the issuance of GGO Common Stock upon exercise of the GGO Warrants and (8) the issuance of Common Stock upon exercise of the Warrants and (ii) the execution and delivery by the Company of this Agreement or the Plan and performance of and compliance by the Company with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except (A) such authorization as is required by the Bankruptcy Court or the Bankruptcy Code, which shall be contained in the entry of the relevant Court Order, and the expiration, or waiver by the Bankruptcy Court, of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, as applicable (except with respect to (i) the issuance of the Warrants, (ii) the provisions of the Approval Order and (iii) Article IX hereof), (B) filings required under, and compliance with (other than shareholder approval requirements in respect of the issuance of the Warrants), the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, the Securities Act and the rules and regulations promulgated thereunder, and the rules of the New York Stock Exchange, and (C) such other consents, approvals, authorizations, orders, registrations or qualifications that, if not obtained, made or given, would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(b) No consent, approval, authorization, order, registration or qualification of or with any Governmental Entity having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties is required for (1) the issuance and delivery of the Warrants, (2) the performance of and compliance by the Company with all of the provisions of the Approval Order, and (3) the performance of and compliance by the Company with Article IX hereof, except (A) the entry of the Approval Order, (B) filings required under, and compliance with (other than shareholder approval requirements in respect of the issuance of the Warrants), the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, the Securities Act and the rules and regulations promulgated thereunder, and the rules of the New York Stock Exchange, and (C) such other consents, approvals, authorizations, orders, registrations or qualifications that, if not obtained, made or given, would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.8 Company Reports .
(a) The Company has filed with or otherwise furnished to the Securities and Exchange Commission (the “ SEC ”) all material forms, reports, schedules, statements and other documents required to be filed or furnished by it under the United States Securities Act of 1933, as amended (the “ Securities Act ”) or the Exchange Act since December 31, 2007 (such documents, as supplemented or amended since the time of filing, and together with all information incorporated by reference therein, the “ Company SEC Reports ”). No Subsidiary of the Company is required to file with the SEC any such forms, reports, schedules, statements or other documents pursuant to Section 13 or 15 of the Exchange Act. As of their respective effective dates (in the case of Company SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective filing dates (in the case of all other Company SEC Reports), except as and to the extent modified, amended, restated, corrected, updated or superseded by any subsequent Company SEC Report filed and publicly available prior to the date of this Agreement, the Company SEC Reports (i) complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Reports, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The Company maintains a system of “internal controls over financial reporting” (as defined in Rules 13a-15(f) and 15a-15(f) under the Exchange Act) that provides reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP and that includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
(c) The Company maintains a system of “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that is reasonably designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that information relating to the Company is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports.
(d) Since December 31, 2008, the Company has not received any oral or written notification of a “material weakness” in the Company’s internal controls over financial reporting.
The term “material weakness” shall have the meaning assigned to it in the Statements of Auditing Standards 112 and 115, as in effect on the date hereof.
(e) Except as and to the extent modified, amended, restated, corrected, updated or superseded by any subsequent Company SEC Report filed and publicly available prior to the date of this Agreement, the audited consolidated financial statements and the unaudited consolidated interim financial statements (including any related notes) included in the Company SEC Reports fairly present in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods set forth therein (subject, in the case of financial statements for quarterly periods, to normal year-end adjustments) and were prepared in conformity with GAAP consistently applied during the periods involved (except as otherwise disclosed in the notes thereto).
SECTION 3.9 No Undisclosed Liabilities . None of the Company or its Subsidiaries has any material liabilities (whether absolute, accrued, contingent or otherwise) required to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP, except for liabilities (i) reflected or reserved against or provided for in the Company’s consolidated balance sheet as of December 31, 2009 or disclosed in the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, (ii) incurred in the ordinary course of business consistent with past practice since the date of such balance sheet, (iii) for fees and expenses incurred in connection with the Bankruptcy Cases, which have been estimated and included in the Admin/Priority Claims identified in the Plan Summary Term Sheet; provided , however , that such amount is an estimate and actual results may be higher or lower, (iv) incurred in the ordinary course of performing this Agreement and certain other asset sales, transfers and other actions permitted under this Agreement and (v) other liabilities at Closing as contemplated by the Plan Summary Term Sheet.
SECTION 3.10 No Material Adverse Effect . Since December 31, 2009, there has not occurred any event, fact or circumstance that has had or would reasonably be expected to have, individually, or in the aggregate, a Material Adverse Effect.
SECTION 3.11 No Violation or Default: Licenses and Permits . The Company and its Subsidiaries (a) are in compliance with all Laws, statutes, ordinances, rules, regulations, orders, judgments and decrees of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties, and (b) has not received written notice of any alleged material violation of any of the foregoing except, in the case of each of clauses (a) and (b) above, for any such failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect or as may be the result of the Company’s or any of its Subsidiaries’ Chapter 11 filing or status as a debtor-in-possession under Chapter 11. Subject to the restrictions that result from the Company’s or any of its Subsidiaries’ status as a debtor-in-possession under Chapter 11 (including that in certain instances the Company’s or such Subsidiary’s conduct of its business requires Bankruptcy Court approval), each of the Company and its Subsidiaries holds all material licenses, franchises, permits, certificates of occupancy, consents, registrations, certificates and other governmental and regulatory permits, authorizations and approvals required for the operation of the business as currently conducted by it and for the ownership, lease or operation
of its material assets except, in each case, where the failure to possess or make the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.12 Legal Proceedings . There are no legal, governmental or regulatory investigations, actions, suits or proceedings pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries which, individually, if determined adversely to the Company or any of its Subsidiaries, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.13 Investment Company Act . The Company is not, and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof, shall not be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder. As of the Effective Date, GGO, after giving effect to the offering and sale of the GGO Shares and the application of the proceeds thereof, shall not be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.
SECTION 3.14 Compliance With Environmental Laws . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each of the Company and its Subsidiaries are and have been in compliance with and each of the Company Properties are and have been maintained in compliance with, any and all applicable federal, state, local and foreign Laws relating to the protection of the environment or natural resources, human health and safety as such relates to the environment, or the presence, handling, or release of Hazardous Materials (collectively, “ Environmental Laws ”), which compliance includes obtaining, maintaining and complying with all permits, licenses or other approvals required under Environmental Laws to conduct operations as presently conducted, and no action is pending or, to the Knowledge of the Company, threatened that seeks to repeal, modify, amend, revoke, limit, deny renewal of, or otherwise appeal or challenge any such permits, licenses or other approvals, (ii) none of the Company or its Subsidiaries have received any written notice of, and none of the Company Properties have been the subject of any written notice received by the Company or any of its Subsidiaries of, any actual or potential liability or violation for the presence, exposure to, investigation, remediation, arrangement for disposal, or release of any material classified, characterized or regulated as hazardous, toxic, pollutants, or contaminants under Environmental Laws, including petroleum products or byproducts, radioactive materials, asbestos-containing materials, radon, lead-containing materials, polychlorinated biphenyls, mold, and hazardous building materials (collectively, “ Hazardous Materials ”), (iii) none of the Company and its Subsidiaries are a party to or the subject of any pending, or, to the Knowledge of the Company, threatened, legal proceeding alleging any liability, responsibility, or violation under any Environmental Laws with respect to their past or present facilities or their respective operations, (iv) none of the Company and its Subsidiaries have released Hazardous Materials on any real property in a manner that would reasonably be expected to result in an environmental claim or liability against the Company or any of its Subsidiaries or Affiliates, (v) none of the Company Properties is the subject of any pending, or, to the Knowledge of the Company, threatened, legal proceeding alleging any liability, responsibility, or violation under any Environmental Laws, and (vi) to the Knowledge of the Company, there has been no release of
Hazardous Materials on, from, under, or at any of the Company Properties that would reasonably be expected to result in an environmental claim or liability against the Company or any of its Subsidiaries or Affiliates.
SECTION 3.15 Company Benefit Plans .
(a) Except as would not, individually or in the aggregate, have a Material Adverse Effect, each Company Benefit Plan is in compliance in design and operation in all material respects with all applicable provisions of ERISA and the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”) and each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service with respect to its qualified status under Section 401(a) of the Code and its related trust’s exempt status under Section 501(a) of the Code and the Company is not aware of any circumstances likely to result in the loss of the qualification of any such plan under Section 401(a) of the Code.
(b) Except as would not, individually or in the aggregate, have a Material Adverse Effect, with respect to each Company Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (A) no Company Benefit Plan has failed to satisfy the minimum funding standard (within the meaning of Sections 412 and 430 of the Code or Section 302 of ERISA) applicable to such Company Benefit Plan, whether or not waived and no application for a waiver of the minimum funding standard with respect to any Company Benefit Plan has been submitted; (B) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred (other than in connection with the Bankruptcy Cases); (C) no liability (other than for premiums to the Pension Benefit Guaranty Corporation (the “ PBGC ”)) under Title IV of ERISA has been or is expected to be incurred by the Company or any entity that is required to be aggregated with the Company pursuant to Section 414 of the Code (an “ ERISA Affiliate ”); (D) the PBGC has not instituted proceedings to terminate any such plan or made any inquiry which would reasonably be expected to lead to termination of any such plan, and, no condition exists that presents a risk that such proceedings will be instituted or which would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any such plan; and (E) no Company Benefit Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code).
(c) Except as would not, individually or in the aggregate, have a Material Adverse Effect, with respect to each Company Benefit Plan maintained primarily for the benefit of current or former employees, officers or directors employed, or otherwise engaged, outside the United States (each a “ Foreign Plan ”), excluding any Foreign Plans that are statutorily required, government sponsored or not otherwise sponsored, maintained or controlled by the Company or any of its Significant Subsidiaries (“ Excluded Non-US Plans ”): (A) (1) all employer and employee contributions required by Law or by the terms of the Foreign Plan have been made, and all liabilities of the Company and its Significant Subsidiaries have been satisfied, or, in each case accrued, by the Company and its Significant Subsidiaries in accordance with generally accepted accounting principles, and (2) the Company and its Significant Subsidiaries are in compliance with all requirements of applicable Law and the terms of such Foreign Plan; (B) as of the Effective Date, the fair market value of the assets of each funded Foreign Plan, or the book
reserve established for each Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such Foreign Plan determined on an ongoing basis (rather than on a plan termination basis) according to the actuarial assumptions and valuations used to account for such obligations as of the Effective Date in accordance with applicable generally accepted accounting principles; and (C) the Foreign Plan has been registered as required and has been maintained in good standing with applicable regulatory authorities.
SECTION 3.16 Labor and Employment Matters. (i) Neither the Company nor any of its Significant Subsidiaries is a party to or bound by any collective bargaining agreement or any labor union contract, nor are any employees of the Company or any of its Significant Subsidiaries represented by a works council or a labor organization (other than any industry-wide or statutorily mandated agreement in non-U.S. jurisdictions); (ii) to the Knowledge of the Company, as of the date hereof, there are no activities or proceedings by any labor union or labor organization to organize any employees of the Company or any of its Significant Subsidiaries or to compel the Company or any of its Significant Subsidiaries to bargain with any labor union or labor organization; and (iii), except as would not, individually or in the aggregate, have a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened material labor strike, lock-out, walkout, work stoppage, slowdown, demonstration, leafleting, picketing, boycott, work-to-rule campaign, sit-in, sick-out, or similar form of organized labor disruption.
SECTION 3.17 Insurance . The Company maintains for itself and its Subsidiaries insurance policies in those amounts and covering those risks, as in its judgment, are reasonable for the business and assets of the Company and its Subsidiaries.
SECTION 3.18 No Unlawful Payments . No action is pending or, to the Knowledge of the Company, is threatened against the Company or any of its Subsidiaries or Affiliates, or any of their respective directors, officers, or employees resulting from any (a) use of corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (b) direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (c) violations of any provision of the Foreign Corrupt Practices Act of 1977 or any other applicable local anti-bribery or anti-corruption Laws in any relevant jurisdictions or (d) other unlawful payment, except in any such case, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.19 No Broker’s Fees . Other than pursuant to agreements (including amendments thereto) by and between the Company and each of UBS Securities LLC and Miller Buckfire & Co., LLC, or otherwise disclosed to Purchaser prior to the date hereof and which fees and expenses would be included in the definition of “Permitted Claims”, none of the Company or any of its Subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against the Company or any of its Subsidiaries for an investment banking fee, finder’s fee or like payment in respect of the sale of the Shares contemplated by this Agreement. None of the Company or any of its Subsidiaries is a party to any contract, agreement or understanding with any Person that would give rise to a valid claim against Purchaser for a brokerage commission, finder’s fee, investment banking fee or like payment in connection with the transactions contemplated by this Agreement.
SECTION 3.20 Real and Personal Property .
(a) Section 3.20(a) of the Company Disclosure Letter sets forth a true, correct and complete list in all material respects of each material real property asset owned or leased (as lessee), directly or indirectly, in whole or in part, by the Company and/or any of its Subsidiaries (other than Identified Assets) (each such property that is not a Non-Controlling Property and has a fair market value (in the reasonable determination of the Company) in excess of $10,000,000 is individually referred to herein as “ Company Property ” and collectively referred to herein as the “ Company Properties ”). All Company Properties, Non-Controlling Properties and the Identified Assets are reflected in accordance with the applicable rules and regulations of the SEC in the Annual Report in Form 10-K as of, and for the year ended, December 31, 2009 (the “ Most Recent Statement ”).
(b) Except (i) for such breach of this Section 3.20(b) as may be caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries or (ii) as would not individually or in the aggregate be reasonably expected to have a Material Adverse Effect, the Company or one of its Subsidiaries owns good and valid fee simple title or valid and enforceable leasehold interests (except with respect to the Company’s right to reject any such ground lease as part of a Bankruptcy plan of reorganization for the remaining Debtor entities and subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at Law or in equity)), as applicable, to each of the Company Properties, in each case, free and clear of liens, mortgages or deeds of trust, claims against title, charges that are liens or other encumbrances on title, rights of way, restrictive covenants, declarations or reservations of an interest in title (collectively, “ Encumbrances ”), except for the following (collectively, the “ Permitted Title Exceptions ”): (i) Encumbrances relating to the DIP Loan and to debt obligations reflected in the Company’s financial statements and the notes thereto (including with respect to debt obligations which are not consolidated) or otherwise disclosed to Purchaser in Section 3.20(g)(i) of the Company Disclosure Letter, (ii) Encumbrances that result from any statutory or other liens for Taxes or assessments that are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings and for which a sufficient and appropriate reserve has been set aside for the full payment thereof, (iii) any contracts, or other occupancy agreements to third parties for the occupation or use of portions of the Company Properties by such third parties in the ordinary course of the business of the Company or its Subsidiaries, (iv) Encumbrances imposed or promulgated by Law or any Governmental Entity, including zoning, entitlement and other land use and environmental regulations, (v) Encumbrances disclosed on existing title policies and current title insurance commitments or surveys made available to Purchaser, (vi) Encumbrances on the landlord’s fee interest at any Company Property where the Company or its Subsidiary is the tenant under any ground lease, provided that, except as disclosed to Purchaser in Section 3.20(b)(ii) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries have received a notice indicating the intention of the landlord under such ground lease, or of any other Person, to (1) exercise a right to terminate such ground lease, evict the lessee or otherwise collect the sub-rents thereunder, or (2) take any other action that would be reasonably likely to result in a termination of such ground lease, (vii) any cashiers’, landlords’, workers’, mechanics’,
carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar liens (1) incurred in the ordinary course of business which (A) are being challenged in good faith by appropriate proceedings and for which a sufficient and appropriate reserve has been set aside for the full payment thereof or (B) have been otherwise fully bonded and discharged of record or for which a sufficient and appropriate reserve has been set aside for the full payment thereof or (2) disclosed on Section 3.20(b)(i) of the Company Disclosure Letter and (viii) any other easements, rights-of-way, restrictions (including zoning restrictions), covenants, encroachments, protrusions and other similar charges or encumbrances, and title limitations or title defects, if any, that (I) are customary for office, industrial, master planned communities and retail properties or (II) individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect. Other than as set forth on Section 3.20(b)(ii) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has received a written notice of a material default, beyond any applicable grace and cure periods, of or under any Permitted Title Exceptions, except (w) as may have been caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries (x) as a result of the filing of the Bankruptcy Cases, (y) where the Permitted Title Exceptions are in and of themselves evidence of default (such as mechanics’ liens and recorded notices of default) or (z) as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; provided, however, that where the Company has otherwise represented and warranted to Purchaser hereunder (including as set forth on the Company Disclosure Letter pursuant to such representations and warranties) with respect to the Company’s Knowledge of, the Company’s receipt of notice of or the existence of a default in connection with a particular category of Permitted Title Exceptions, such categories of Permitted Title Exceptions shall not be included in the representation set forth in this sentence (by way of illustration, but not exclusion, the representations set forth in Section 3.20(f) with respect to defaults under Material Leases shall be deemed to address the Company’s representations and warranties with respect to the entire category of Permitted Title Exceptions detailed in clause (iii) above).
(c) To the extent available, the Company and its Subsidiaries have made commercially reasonable efforts to make available or will use commercially reasonable efforts to make available upon request to Purchaser those policies of title insurance that the Company or its Subsidiaries have obtained in the last six months.
(d) With respect to each Company Ground Lease Property, except as set forth on Section 3.20(d) of the Company Disclosure Letter and except as may have been caused by, or disclosed in the filing of the Bankruptcy Cases, as of the date hereof, to the Company’s Knowledge, neither the Company nor any of its Subsidiaries has received notice of material defaults (including, without limitation, payment defaults, but limited to those circumstances where such default may grant the landlord under such ground lease the right to terminate such ground lease, evict the lessee or otherwise collect the sub-rents thereunder) at such Company Ground Lease Property beyond any applicable grace and cure periods, except (x) as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect, (y) as may be caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries and (z) with respect to any Company Ground Lease Property which is leased by a Subsidiary of the Company which has consummated a plan of reorganization in the Bankruptcy Cases, all such material defaults at such Company Ground Lease Property which existed prior to the effective date of such Person’s
plan of reorganization have been or will be cured in accordance with such plan. As used herein the term “ Company Ground Lease Property ” shall mean any Company Property having a fair market value (in the reasonable determination of the Company) in excess of $25,000,000 which is leased by a Subsidiary of the Company as tenant pursuant to a ground lease. With respect to the defaults referenced in clause (z) above, the Bankruptcy Court approved the Debtors’ assumption of the applicable ground leases and the fixed cure amounts for such defaults which predated assumption; provided however, nothing contained herein precludes any Person from raising issues in the future with respect to defaults that may have predated such assumption.
(e) Except as set forth on Section 3.20(e) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to any agreement relating to the property management (but not including any leasing, development, construction or brokerage agreements) of any of the Company Properties by a party other than Company or any wholly owned Company Subsidiaries, except (i) management agreements that may be terminated without cause or payment of a termination fee upon no more than 60 days notice or (ii) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(f) Except as set forth on Section 3.20(f) of the Company Disclosure Letter, to the Company’s Knowledge, as of February 15, 2010, (i) each Material Lease is in full force and effect, (ii) no tenant is in arrears in the payment of rent, additional rent or any other material charges due under any Material Lease, and no tenant is materially in default in the performance of any other obligations under any Material Lease, (iii) no bankruptcy or insolvency proceeding has been commenced (and is continuing) by or against any tenant under any Material Lease, and (iv) neither the Company nor any of its Subsidiaries has received a written notice from a current tenant under any Material Lease exercising a right to terminate or otherwise cancel its Material Lease (y) as a result of or in connection with the termination or cancellation of any other lease, sublease, license or occupancy agreement for space at any Company Property (each, a “ Company Property Lease ”), or (z) as a result of or in connection with any other tenant that occupies, or had previously occupied, another Company Property Lease, allowing, or having had allowed, all or any portion of the premises leased pursuant to such other Company Property Lease to “go dark” or otherwise be abandoned or vacated; except, (A) in the case of each of clauses (i), (ii) (iii) and (iv) above, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (B) as a result of the filing of the Bankruptcy Cases or in connection with any Bankruptcy Court approved process and (C) as may have been caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or its Subsidiaries. “ Material Lease ” means for any Company Property any lease in which the Company or its Subsidiaries is the landlord, and all amendments, modifications, supplements, renewals, exhibits, schedules, extensions and guarantees related thereto, (1) to an “anchor tenant” occupying at least 80,000 square feet with respect to such Company Property or (2) that is one of the five (5) largest leases, in terms of gross annual minimum rent, with respect to a Company Property that has an annual net operating income, as determined in accordance with GAAP (provided, however, that for purposes of such calculation, the following were reflected as expenses: (a) ground rent payments to a third party and (b) an assumed management fee equal to 3% of base minimum and percentage rent) with respect to the trailing twelve (12) calendar month period, equal to at least $7,500,000.00. For purposes of Section 7.1(c) , (y) the representations and warranties made in Section 3.20(f)(i) , (iii) and (iv) , disregarding all qualifications and exceptions contained therein relating to “materiality”
or “Material Adverse Effect”, shall be shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date, except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect and (z) the representation and warranties contained in Section 3.20(f)(ii) , disregarding all qualifications and exceptions contained therein relating to “materiality” or “Material Adverse Effect”, shall be true and correct (A) at and as of the last day of the calendar month that is two (2) calendar months prior to the calendar month in which the Closing Date occurs as if made at and as of such date, if the Closing Date occurs on or prior to the fifteenth (15th) day of a calendar month, or (B) at and as of the fifteenth (15th) day of the calendar month that is one (1) calendar month prior to the calendar month in which the Closing Date occurs as if made at and as of such date, if the Closing Date occurs on or after the sixteenth (16th) day of a calendar month, except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(g) With respect to each Company Property:
(i) As of the date listed thereunder, Section 3.20(g) of the Company Disclosure Letter sets forth a true, correct and complete list in all material respects of (i) all loans (other than the DIP Loan) and other indebtedness secured by a mortgage, deed of trust, deed to secure debt or indemnity deed of trust in such Company Property (each, a “ Company Mortgage Loan ”), (ii) the outstanding principal balance of each such Company Mortgage Loan, (iii) the rate of interest applicable to such Company Mortgage Loan and (iv) the maturity date of such Company Mortgage Loan;
(ii) Except as set forth in Section 3.20(g) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries have received a written notice of default (beyond any applicable grace or cure periods) in the (y) payment of interest, principal or other material amount due to the lender under any Company Mortgage Loan, whether as the primary obligor or as a guarantor thereof or (z) performance of any other material obligations under any Company Mortgage Loan, except (i) with respect to (y) and (z) above, as a result of the filing of the Bankruptcy Cases, or as is prohibited, stayed or otherwise suspended as a result of the Company’s or any Subsidiary’s Chapter 11 filing or status as a debtor-in-possession under Chapter 11, and (ii) with respect solely to (z) above, which would not individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; and
(iii) For purposes of Section 7.1(c) the representations and warranties made in Section 3.20(g)(i) , disregarding all qualifications and exceptions contained therein relating to “materiality” or “Material Adverse Effect”, shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date, except for (A) such inaccuracies caused by sales, purchases, transfers of assets, refinancing or other actions effected in accordance with, subject to the limitations contained in, and not otherwise prohibited by, the terms and conditions in this Agreement, including, without limitation, in Article VII , (B) amortization payments made pursuant to any applicable Company Mortgage Loans and (C) such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(h) To the Knowledge of the Company, (i) except as set forth on Section 3.20(h) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has received a written notice exercising an option, “buy-sell” right or other similar right to purchase a Company Property or any material portion thereof which has not previously closed, except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect with respect to such Company Property and (ii) no Company Property is subject to a purchase and sale agreement or any similar legally binding agreement to purchase such Company Property or any material portion thereof (other than (x) with respect to condominium purchase and sale agreements and purchase and sale and early occupancy agreements or other similar agreements for the sale of condominium units at the Natick Nouvelle, (y) with respect to builder lot purchase agreements and other similar agreements for the sale of vacant lots of land to builders at Bridgeland and (z) as set forth in (i) above) which has not previously closed.
(i) The Company has conducted due inquiry with respect to the representations and warranties made in Section 3.20(d) , Section 3.20(f) and Section 3.20(h) .
SECTION 3.21 Tax Matters . Except as disclosed on Section 3.21(a) of the Company Disclosure Letter:
(a) Except in cases where the failure of any of the following to be true would not result in a Material Adverse Effect: (i) the Company and each of its Significant Subsidiaries have filed all Tax Returns required to be filed by applicable Law prior to the date hereof; (ii) all such Tax Returns were true, complete and correct in all respects and filed on a timely basis (taking into account any applicable extensions); (iii) the Company and each of its Significant Subsidiaries have paid all amounts of Taxes that are due, claimed or assessed by any taxing authority to be due for the periods covered by such Tax Returns, other than any Taxes for which adequate reserves (“ Adequate Reserves ”) have been established in accordance with GAAP or a claim has been filed in the Bankruptcy Cases; and (iv) all adjustments of federal U.S. Tax liability of the Company and its Significant Subsidiaries resulting from completed audits or examinations have been reported to appropriate state and local taxing authorities and all resulting Taxes payable to state and local taxing authorities have been paid. “ Taxes ” means any U.S. federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. “ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, including, where permitted or required, combined or consolidated returns for any group of entities that include the Company or any of its Significant Subsidiaries.
(b) The Company and each of its REIT Subsidiaries (x) for all taxable years commencing with the taxable year ended December 31, 2005 through December 31, 2009, has been subject to taxation as a real estate investment trust within the meaning of Section 856 of the Code (a “ REIT ”) and has satisfied all requirements to qualify as a REIT for such years; (y) has operated since January 1, 2010 to the date hereof in a manner consistent with the requirements
for qualification and taxation as a REIT; and (z) intends to continue to operate in such a manner as to qualify as a REIT for the current taxable year. None of the transactions contemplated by this Agreement will prevent the Company or any of its REIT Subsidiaries from so qualifying. No Subsidiary of the Company other than a REIT Subsidiary is a corporation for U.S. federal income tax purposes, other than a corporation that qualifies as a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code. For the purposes of this Agreement, “ REIT Subsidiary ” means each of GGP Ivanhoe, Inc., GGP Holding, Inc., GGP Holding II, Inc., Victoria Ward, Limited, GGP -Natick Trust and GGP/Homart, Inc.
(c) Each Company Subsidiary other than its REIT Subsidiaries that is a partnership, joint venture, or limited liability company and which has not elected to be a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code has been since its formation treated for U.S. federal income tax purposes as a partnership or disregarded entity, as the case may be, and not as a corporation or an association taxable as a corporation, except where failure to do so would not have a Material Adverse Effect.
(d) Except where the failure to be true would not have a Material Adverse Effect, the Company and each of its Significant Subsidiaries have (i) complied in all respects with all applicable Laws, rules, and regulations relating to the payment and withholding of Taxes (including withholding and reporting requirements under sections 1441 through 1464, 3401 through 3406, 6041 and 6049 of the Code and similar provisions under any other Laws) and (ii) within the time and in the manner prescribed by Law, withheld from employee wages and paid to the proper Governmental Entities all amounts required to be withheld and paid over.
(e) Except where the failure to be true would not have a Material Adverse Effect, no audits or other administrative proceedings or court proceedings are presently pending or to the Knowledge of the Company threatened with regard to any Taxes or Tax Returns of the Company or any of its Significant Subsidiaries, other than any audit or administrative proceeding relating to Taxes for which a claim has been filed in a Debtor’s Chapter 11 case or any other audit or administrative or court proceeding that is not reasonably expected to result in a material Tax liability to the Company or any of its Significant Subsidiaries.
(f) The Company has made available to Purchaser complete and accurate copies of all material Tax Returns requested by Purchaser and filed by or on behalf of the Company or any of its Significant Subsidiaries for all taxable years ending on or prior to the Effective Date and for which the statute of limitations has not expired.
(g) There are no Tax Protection Agreements except for those the breach of which would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Significant Subsidiary has any liability for Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of any state, local or foreign Law), or as a transferee or successor (by contract or otherwise), other than (i) to a Subsidiary of the Company or (ii) where any such liability would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.22 Material Contracts . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Material Contract that shall survive the Bankruptcy Cases is valid and binding on the Company or any of its
Subsidiaries, as applicable, and, to the Knowledge of the Company, on each other Person party thereto, and is in full force and effect. Other than as a result of the commencement of the Bankruptcy Cases, each of the Company and its Subsidiaries has performed, in all material respects, all obligations required to be performed by it under each Material Contract that shall survive the Bankruptcy Cases, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Other than those caused as a result of the filing of the Bankruptcy Cases, neither the Company nor any of its Significant Subsidiaries is in breach or default of any Material Contract to which it is a party and which shall survive the Bankruptcy Cases, except, in each case, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has made available to Purchaser true, accurate and complete copies of the Material Contracts as of the date of this Agreement, except for those Material Contracts available to the public on the website maintained by the SEC. To the Knowledge of the Company, no party to any Material Contract that shall survive the Bankruptcy Cases has given written notice of any action to terminate, cancel, rescind or procure a judicial reformation of such Material Contract or any material provision thereof, which termination, cancellation, rescission or reformation would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. For the avoidance of doubt, Material Contracts do not include intercompany contracts.
SECTION 3.23 Certain Restrictions on Charter and Bylaws Provisions; State Takeover Laws .
(a) The Company and the Company Board have taken all appropriate and necessary actions to ensure that the ownership limitations set forth in Article IV of the Company’s certificate of incorporation shall not apply to (i) the acquisition of beneficial ownership by Purchaser and any Brookfield Consortium Member of the Warrants and the shares of Common Stock issuable upon exercise of the Warrants, (ii) any antidilution adjustments to those Warrants pursuant to the Warrant Agreement and (iii) any shares of Common Stock that Purchaser or any Brookfield Consortium Member may be deemed to own by no actions of its own and (iv) the acquisition of beneficial ownership of up to an additional 2.5% of the issued and outstanding shares of Common Stock by any Purchaser or any Brookfield Consortium Member; provided , however , that such exception to the ownership limitations are only effective as to Purchaser or any particular Brookfield Consortium Member only so long as (i) the Company has received executed copies of the representation certificate contained in Exhibit D from Purchaser or such Brookfield Consortium Member, it being understood that a Brookfield Consortium Member shall be required to provide such representations at such times and only at such times as such Brookfield Consortium Member beneficially owns Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Brookfield Consortium Member in a tenant of the Company would be treated as constructively owned by Purchaser and (ii) the representations so provided are true, correct and complete as of the date made and continue to be true, correct and complete.
(b) The Company Board has taken all action necessary to render inapplicable to Purchaser the restrictions on “business combinations” set forth in Section 203 of the Delaware General Corporation Law and, to the knowledge of the Company, any similar “moratorium,”
“control share,” “fair price,” “takeover” or “interested stockholder” law applicable to transactions between Purchaser and the Company.
SECTION 3.24 No Other Representations or Warranties . Except for the representations and warranties made by the Company in this Article III , neither the Company nor any other Person makes any representation or warranty with respect to the Company or its Subsidiaries or their respective business, operations, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to Purchaser or any of its Affiliates or representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company as set forth below:
SECTION 4.1 Organization . Purchaser is duly organized and is validly existing and, where applicable, in good standing under the Laws of its jurisdiction of organization, with the requisite limited liability company power and authority to undertake and effectuate the transactions contemplated by this Agreement. Purchaser has been duly qualified as a foreign corporation or other form of entity for the transaction of business and, where applicable, is in good standing under the Laws of each other jurisdiction in which it operates so as to require such qualification, except where the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, have or be reasonably expected to materially delay or prevent the consummation of the transactions contemplated by this Agreement.
SECTION 4.2 Power and Authority . Purchaser has the requisite power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder and has taken all necessary action required for the due authorization, execution, delivery and performance by it of this Agreement.
SECTION 4.3 Execution and Delivery . This Agreement has been duly and validly executed and delivered by Purchaser and constitutes its valid and binding obligation, enforceable against Purchaser in accordance with its terms.
SECTION 4.4 No Conflict . The execution and delivery of this Agreement and the performance by Purchaser of its obligations hereunder and compliance by Purchaser with all of the provisions hereof and the consummation of the transactions contemplated herein (i) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any material contract to which Purchaser is a party, (ii) shall not result in any violation or breach of any provisions of the organizational documents of Purchaser and (iii) shall not conflict with or result in any violation of, or any termination or material impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over Purchaser or Purchaser’s properties or assets, except with respect to each of (i), (ii) and (iii),
such conflicts, violations or defaults as would not be reasonably expected to have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated hereunder.
SECTION 4.5 Consents and Approvals . No consent, approval, order, authorization, registration or qualification of or with any Governmental Entity having jurisdiction over Purchaser is required in connection with the execution and delivery by Purchaser of this Agreement or the consummation of the transactions contemplated hereby, except such consents, approvals, orders, authorizations, registration or qualification as would not reasonably be expected to materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.6 Compliance with Laws . Since the date of its formation, Purchaser has been in compliance with all Laws applicable to Purchaser, except, in each case, for such non-compliance as would not reasonably be expected to materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.7 Legal Proceedings . There are no legal, governmental or regulatory investigations, actions, suits or proceedings pending or, to the knowledge of Purchaser, threatened against Purchaser which, individually or in the aggregate, if determined adversely to Purchaser, would materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.8 No Broker’s Fees . Purchaser is not party to any contract, agreement or understanding with any Person that would give rise to a valid claim against the Company for an investment banking fee, commission, finder’s fee or like payment in connection with the transactions contemplated by this Agreement.
SECTION 4.9 Sophistication . Purchaser is, as of the date hereof and shall be as of the Effective Date, an “accredited investor” within the meaning of Rule 501(a) under the Securities Act. Purchaser understands and is able to bear any economic risks associated with such investment (including, without limitation, the necessity of holding such Shares and GGO Shares for an indefinite period of time).
SECTION 4.10 Purchaser Intent . Purchaser is acquiring the Shares, the Warrants, the GGO Shares, the New Warrants and the GGO Warrants for investment purposes only and not with a view to or for distributing or reselling such Shares, Warrants, GGO Shares, New Warrants and GGO Warrants or any part thereof, without prejudice, however, to Purchaser’s right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Shares, Warrants, GGO Shares, New Warrants and GGO Warrants pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities Laws. Purchaser understands that Purchaser must bear the economic risk of its investment indefinitely.
SECTION 4.11 Reliance on Exemptions . Purchaser understands that the Shares and the GGO Shares are being offered and sold to Purchaser in reliance upon specific exemptions from the registration requirements of United States federal and state securities Laws.
SECTION 4.12 REIT Representations . The representations provided by Purchaser and, to the extent applicable, its Affiliates, members or Affiliates of members, set forth on Exhibit D are true, correct and complete as of the date hereof, and shall be true as of the date of the issuance of the Warrants and as of the Closing Date, it being understood that Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations only if such Person beneficially owns Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by Purchaser.
SECTION 4.13 No Other Representations or Warranties . Except for the representations and warranties made by Purchaser in this Article IV , neither Purchaser nor any other Person on behalf of Purchaser makes any representation or warranty with respect to Purchaser or its assets, liabilities, condition (financial or otherwise) or prospects.
SECTION 4.14 Acknowledgement . Purchaser acknowledges that (a) neither the Company nor any Person on behalf of the Company is making any representations or warranties whatsoever, express or implied, beyond those expressly given by the Company in Article III of this Agreement and (b) Purchaser has not been induced by, or relied upon, any representations, warranties or statements (written or oral), whether express or implied, made by any Person, that are not expressly set forth in Article III of this Agreement. Without limiting the generality of the foregoing, except with respect to the representations and warranties contained in Article III , Purchaser acknowledges that no representations or warranties are made with respect to any projections, forecasts, estimates, budgets, plans or prospect information that may have been made available to Purchaser or any of its representatives.
ARTICLE V
COVENANTS OF THE COMPANY AND PURCHASER
SECTION 5.1 Bankruptcy Court Motions and Orders .
(a) No later than the close of business on the date that is two (2) Business Days following the date of this Agreement, the Company shall file with the Bankruptcy Court a motion in form and substance satisfactory to Purchaser (the “ Approval Motion ”) seeking to obtain entry of an order in the form attached hereto as Exhibit F (the “ Proposed Approval Order ”), which order in the final form if approved by the Bankruptcy Court (the “ Approval Order ”) shall approve, among other things, the issuance of the Warrants to Purchaser and the performance by the Company of its obligations under the Warrant Agreement.
(b) The Approval Motion, including any exhibits thereto and any notices or other materials in connection therewith, and any modifications or amendments to the foregoing, must be in form and substance reasonably satisfactory to Purchaser.
(c) If the Approval Order shall be appealed by any Person (or a petition for certiorari or motion for reconsideration, amendment, clarification, modification, vacation, stay, rehearing or reargument shall be filed with respect to such order), the Company shall diligently defend
against any such appeal, petition or motion and shall use its reasonable best efforts to obtain an expedited resolution of any such appeal, petition or motion. The Company shall keep Purchaser reasonably informed and updated regarding the status of any such appeal, petition or motion.
(d) The Company shall provide draft copies of all motions, notices, statements, schedules, applications, reports and other papers the Company intends to file with the Bankruptcy Court in connection with the Approval Order to Purchaser within a reasonable period of time prior to the date the Company intends to file any of the foregoing, and shall consult in advance in good faith with Purchaser regarding the form and substance of any such proposed filing with the Bankruptcy Court.
SECTION 5.2 Warrants, New Warrants and GGO Warrants . Within one Business Day of the date of the entry of the Approval Order, the Company and the warrant agent shall execute and deliver the warrant agreement in the form attached hereto as Exhibit G (with only such changes thereto as may be reasonably requested by the warrant agent and reasonably approved by Purchaser) (the “ Warrant Agreement ”) pursuant to which there will be issued to Purchaser 60,000,000 warrants (the “ Warrants ”) each of which, when issued, delivered and vested in accordance with the terms of the Warrant Agreement, will entitle the holder to purchase one (1) share of Common Stock at an initial price of $15.00 per share subject to adjustment as provided in the Warrant Agreement. The Warrant Agreement shall provide that the Warrants shall vest in accordance with Section 2.2(b) and Schedule A of the Warrant Agreement. For the avoidance of doubt, Warrants that have not vested may not be exercised. The Plan shall provide that upon the Effective Date, the Warrants, regardless of whether or not vested, shall be cancelled for no consideration. The Plan shall also provide that there shall be issued to Purchaser (i) 60,000,000 fully vested warrants (the “ New Warrants ”) each of which entitles the holder to purchase one (1) share of New Common Stock at an initial purchase price of $10.75 per share subject to adjustment as provided in the underlying warrant agreement and (ii) 4,000,000 fully vested warrants (the “ GGO Warrants ”) each of which entitles the holder to purchase one (1) share of GGO Common Stock at a price of $50.00 per share subject to adjustment as provided in the underlying warrant agreement, each in accordance with the terms set forth in a warrant and registration rights agreement with terms substantially similar to the terms set forth in the Warrant Agreement, except that the expiration date for each New Warrant and GGO Warrant shall be the seventh year anniversary of the date on which such warrants are issued. Purchaser, in its sole discretion, may designate that some or all of the New Warrants or GGO Warrants be issued in the name of, and delivered to, one or more Brookfield Consortium Members in accordance with and subject to the Designation Conditions.
SECTION 5.3 Assistance with Capital Raising Activities . Until the earliest to occur of (i) the termination of this Agreement pursuant to its terms, (ii) the date that is sixty (60) days following the Closing and (iii) the date the Company or any Subsidiary of the Company makes a public announcement, enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its decision to support any Competing Transaction, or the Company or any Subsidiary of the Company enters into a Competing Transaction:
(a) Purchaser shall provide or shall use reasonable best efforts to cause an appropriate Affiliate to provide, all cooperation and assistance as may be reasonably requested by the Company in connection with the Company’s efforts to consummate equity and debt financings
for the Company, and sales of properties and other assets of the Company and its Subsidiaries for cash (collectively, the “ Capital Raising Activities ”), including to: (A) participate in a reasonable number of customary meetings (including lender meetings, if any), presentations, road shows, due diligence and drafting sessions and sessions with rating agencies, investors or underwriters; (B) assist with the preparation of materials for rating agency presentations, bank information memoranda, prospectuses and similar documents necessary in connection with the Capital Raising Activities; and (C) cooperate with the Company in connection with applications to obtain such consents, approvals or authorizations which may be reasonably necessary or desirable in connection with the Capital Raising Activities; provided , that Purchaser shall not be required to provide cooperation under this paragraph that: (w) unreasonably interferes with the business of Purchaser, its Affiliates, members or partners or the Affiliates of its members or partners; (x) causes any closing condition set forth in Article VII to fail to be satisfied or otherwise causes a breach of this Agreement; (y) violates applicable Law; or (z) requires Purchaser, its Affiliates, members or partners or the Affiliates of its members or partners, to pay any fees or incur any liabilities for which they are not reimbursed when such fees or liabilities are incurred or adequately indemnified or require Purchaser to expend any financial resources on behalf of the Company which they are not reimbursed or fully indemnified or guarantee or otherwise support the extension of credit to the Company; and
(b) the Company shall consult in good faith with Purchaser regarding the appropriate balance among Capital Raising Activities with a view toward employing the alternatives that generate the most value for the Company with the lowest cost of capital and to avoid unnecessary dilution, and the Company shall also consider in good faith structuring certain asset sales as sales of minority positions in the relevant assets, thereby enabling the Company to maintain majority ownership and management of those assets.
SECTION 5.4 Listing . The Company shall use its reasonable best efforts to cause the Shares and the New Warrants to be listed on the New York Stock Exchange (the “ NYSE ”). The Plan shall provide that the Company shall use its reasonable best efforts to cause GGO to use its reasonable best efforts to cause the GGO Shares and the GGO Warrants to be listed on a U.S. national securities exchange.
SECTION 5.5 Use of Proceeds . The Plan shall provide that the Company and its Subsidiaries, and GGO, shall apply the net proceeds from the sale of the Shares and the GGO Shares and the Capital Raising Activities, as applicable, as provided in the Plan Summary Term Sheet and the Plan.
SECTION 5.6 Access to Information . Subject to applicable Law and the existing confidentiality agreement between Brookfield Asset Management Inc., an Affiliate of Purchaser, and the Company, dated February 27, 2010 (the “ Confidentiality Agreement ”), upon reasonable notice, the Company shall afford Purchaser and its directors, officers, employees, investment bankers, attorneys, accountants and other advisors or representatives, reasonable access during normal business hours, throughout the period prior to the Effective Date, to its employees, books, contracts and records and, during such period, the Company shall (and shall cause its Subsidiaries to) furnish promptly to Purchaser such information concerning its business, properties and personnel as may reasonably be requested by Purchaser, including, copies of all monthly financial information provided to its lenders under its existing debtor-in possession
financing agreements; provided , that, notwithstanding anything to the contrary, the Company shall not be required to share confidential information relating to any Competing Transaction except as contemplated by Section 5.7 . Subject to the Confidentiality Agreement, the Company shall provide, and shall cause its Subsidiaries, and shall use all reasonable efforts to cause their respective representatives, including legal and accounting, to provide all cooperation reasonably requested by Purchaser in connection with the assistance contemplated to be provided by Purchaser in connection with the Capital Raising Activities contemplated by Section 5.3 .
SECTION 5.7 Competing Transactions . From the date of this Agreement until the earlier to occur of the Closing and the termination of this Agreement, the Company shall provide written notice to Purchaser not less than 48 hours prior to the Company or any Subsidiary of the Company (i) entering into a definitive agreement providing for a Competing Transaction or (ii) filing a motion with the Bankruptcy Court seeking to obtain bid procedures or bid protections for or in connection with a Competing Transaction.
SECTION 5.8 Reservation for Issuance . The Company shall reserve that number of shares of Common Stock sufficient for issuance upon exercise or conversion of the Warrants. In connection with the issuance of the New Warrants, the Plan shall provide that the Company shall reserve for issuance that number of shares of New Common Stock sufficient for issuance upon exercise of the New Warrants. The Plan shall provide that GGO shall reserve for issuance that number of shares of GGO Common Stock sufficient for issuance upon exercise of the GGO Warrants.
SECTION 5.9 Subscription Rights .
(a) Company Subscription Right .
(i) Sale of New Equity Securities . Following the Closing Date, Purchaser shall have the right, or shall at any time and from time to time thereafter have the right to appoint Brookfield Consortium Members in accordance with and subject to the Designation Conditions, to exercise the Subscription Right set forth in this Section 5.9 (Purchaser or one or more Brookfield Consortium Members, each a “ Subscribing Entity ” and collectively the “ Subscribing Entities ”). If the Company or any Subsidiary of the Company at any time or from time to time following the Closing Date makes any public or non-public offering of any shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) (other than (1) pursuant to the granting or exercise of employee stock options or other stock incentives pursuant to the Company’s stock incentive plans and employment arrangements as in effect from time to time or the issuance of stock pursuant to the Company’s employee stock purchase plan as in effect from time to time, (2) pursuant to or in consideration for the acquisition of another Person, business or assets by the Company or any of its Subsidiaries, whether by purchase of stock, merger, consolidation, purchase of all or substantially all of the assets of such Person or otherwise, (3) to strategic partners or joint venturers in connection with a commercial relationship with the Company or its Subsidiaries or to parties in connection with such Persons providing the Company or its Subsidiaries with loans, credit lines, cash price reductions or similar transactions, under arm’s-length arrangements, (4) pursuant to the
Equity Exchange or any conversion or exchange of debt or other claims into equity in connection with the Plan, (5) the sale of Backstop Shares (as defined in the Pershing Agreement) pursuant to the Pershing Agreement or (6) as set forth on Section 5.9(a) of the Company Disclosure Letter) (the “ Proposed Securities ”), the Subscribing Entities shall have the right to acquire from the Company (the “ Subscription Right ”) for the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) and on the same terms as such Proposed Securities are proposed to be offered to others, up to the amount of such Proposed Securities in the aggregate required to enable it to maintain its proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis determined in accordance with the following sentence, in each case, subject to such limitations as may be imposed by applicable Law or stock exchange rules. The amount of such Proposed Securities that the Subscribing Entities shall be entitled to purchase in the aggregate in any offering pursuant to the above shall (subject to such limitations as may be imposed by applicable Law or stock exchange rules) be determined by multiplying (x) the total number of such offered shares of Proposed Securities by (y) a fraction, the numerator of which is the number of shares of New Common Stock held by Purchaser and Brookfield Consortium Members on a Fully Diluted Basis as of the date of the Company’s notice pursuant to Section 5.9(a)(ii) in respect of the issuance of such Proposed Securities, and the denominator of which is the number of shares of New Common Stock then outstanding on a Fully Diluted Basis. For the avoidance of doubt, the actual amount of securities to be sold or offered to the Subscribing Entities pursuant to its exercise of the Subscription Right hereunder shall be proportionally reduced if the aggregate amount of Proposed Securities sold or offered is reduced. Any offers and sales pursuant to this Section 5.9 in the context of a registered public offering shall be conditioned upon reasonably acceptable representations and warranties of each Subscribing Entity regarding its status as the type of offeree to whom a private sale can be made concurrently with a registered public offering in compliance with applicable securities Laws.
(ii) Notice . In the event the Company proposes to offer Proposed Securities, it shall give Purchaser written notice of its intention, describing the estimated price (or range of prices), anticipated amount of securities, timing and other terms upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering), no later than ten Business Days after the commencement of marketing with respect to such offering or after the Company takes substantial steps to pursue any other offering. The Subscribing Entity shall have three Business Days from the date of receipt of such a notice to notify the Company in writing that it intends to exercise its Subscription Right and as to the amount of Proposed Securities the Subscribing Entity desires to purchase, up to the maximum amount calculated pursuant to Section 5.9(a)(i) . In connection with an underwritten public offering, such notice shall constitute a non-binding indication of interest to purchase Proposed Securities at such a range of prices as the Subscribing Entity may specify and, with respect to other offerings, such notice shall constitute a binding commitment of the Subscribing Entity to purchase the amount of Proposed Securities so specified at the price and other terms set forth in the Company’s notice to such Subscribing Entity. The failure
of the Subscribing Entity to so respond within such three Business Day period shall be deemed to be a waiver of the Subscription Right under this Section 5.9 only with respect to the offering described in the applicable notice. In connection with an underwritten public offering or a private placement, the Subscribing Entity shall further enter into an agreement (in form and substance customary for transactions of this type) to purchase the Proposed Securities to be acquired contemporaneously with the execution of any underwriting agreement or purchase agreement entered into with the Company, the underwriters or initial purchasers of such underwritten public offering or private placement, and the failure to enter into such an agreement at or prior to such time shall constitute a waiver of the Subscription Right in respect of such offering.
(iii) Purchase Mechanism . If the Subscribing Entity exercises its Subscription Right provided in this Section 5.9 , the closing of the purchase of the Proposed Securities with respect to which such right has been exercised shall take place concurrently with the sale to the other investors in the applicable offering, which period of time for the closing of the purchase of the Proposed Securities with respect to which such right has been exercised shall be extended for a maximum of 180 days in order to comply with applicable Laws (including receipt of any applicable regulatory or stockholder approvals). Each of the Company and the Subscribing Entity shall use its reasonable best efforts to secure any regulatory or stockholder approvals or other consents, and to comply with any Law necessary in connection with the offer, sale and purchase of, such Proposed Securities.
(iv) Failure of Purchase . In the event (A) the Subscribing Entity fails to exercise its Subscription Right provided in this Section 5.9 within said three Business Day period or, (B) if so exercised, the Subscribing Entity fails or is unable to consummate such purchase within the 180 day period specified in Section 5.9(a)(iii) , without prejudice to other remedies, the Company shall thereafter be entitled during the Additional Sale Period to sell the Proposed Securities not elected to be purchased pursuant to this Section 5.9 or which the Subscribing Entity fails to, or is unable to, purchase, at a price and upon terms no more favorable in any material respect to the purchasers of such securities than were specified in the Company’s notice to Purchaser. In the event the Company has not sold the Proposed Securities within the Additional Sale Period, the Company shall not thereafter offer, issue or sell such Proposed Securities without first offering such securities to Purchaser in the manner provided above.
(v) Non-Cash Consideration . In the case of the offering of securities for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as determined by the Company Board; provided , however , that such fair value as determined by the Company Board shall not exceed the aggregate market price of the securities being offered as of the date the Company Board authorizes the offering of such securities.
(vi) Cooperation . The Company and Purchaser shall cooperate in good faith to facilitate the exercise of the Subscribing Entity’s Subscription Right hereunder, including using reasonable efforts to secure any required approvals or consents.
(vii) General . Notwithstanding anything herein to the contrary, (A) if (1) the Subscribing Entity exercises its Subscription Right pursuant to this Section 5.9 and is unable to complete the purchase of the Proposed Securities concurrently with the sales to the other investors in the applicable offering as contemplated by Section 5.9(a)(iii) due to applicable regulatory or stockholder approvals and (2) the Company or the Company Board determines in good faith that any delay in completion of an offering in respect of which the Brookfield Consortium Members are entitled to Subscription Rights would materially impair the financing objective of such offering, the Company may proceed with such offering without the participation of Purchaser in such offering, in which event the Company and Purchaser shall promptly thereafter agree on a process otherwise consistent with this Section 5.9 as would allow Purchaser to purchase, at the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) as in such offering, up to the amount of shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) as shall be necessary to enable Purchaser to maintain its proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis, (B) if the Company or the Company Board determines in good faith that compliance with the notice provisions in Section 5.9(a)(ii) would materially impair the financing objective of an offering in respect of which the Brookfield Consortium Members are entitled to Subscription Rights, the Company shall be permitted by notice to the Subscribing Entity to reduce the notice period required under Section 5.9(a)(ii) (but not to less than one (1) Business Day) to the minimum extent required to meet the financing objective of such offering, and the Subscribing Entity shall have the right to either (x) exercise its Subscription Rights during the shortened notice periods specified in such notice or (y) require the Company to promptly thereafter agree on a process otherwise consistent with this Section 5.9 as would allow Purchaser to purchase, at the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) as in such offering, up to the amount of shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) as shall be necessary to enable Purchaser to maintain its proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis and (C) in the event the Company is unable to issue shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) to Purchaser as a result of a failure to receive regulatory or stockholder approval therefor, the Company shall take such action or cause to be taken such other action in order to place the Subscribing Entity, in so far as reasonably practicable (subject to any limitations that may be imposed by applicable Law or stock exchange rules), in the same position in all material respects as if the Subscribing Entity was able to effectively exercise its Subscription Rights hereunder, including, at the option of the Subscribing Entity, issuing to the Subscribing Entity another class of securities of the Company having terms to be agreed by the Company and Purchaser having a value at least equal to the value per share of New Common Stock, in each case, as shall be necessary to enable Purchaser to maintain its proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis.
(viii) Termination . This Section 5.9 shall terminate at such time as Purchaser together with the Brookfield Consortium Members collectively beneficially own less than 5% of the outstanding shares of New Common Stock on a Fully Diluted Basis.
(b) GGO Subscription Rights . The Plan shall provide that in connection with the consummation of the Plan, GGO shall enter into an agreement with Purchaser with substantially similar terms to those set forth in Section 5.9(a) above with respect to any issuance of GGO Common Stock (or securities that are convertible into or exchangeable or exercisable for, or otherwise linked to, GGO Common Stock) after the Effective Date.
SECTION 5.10 Company Board of Directors .
(a) Company Board of Directors .
(i) The Plan shall provide that as of the Effective Date, the Company Board shall have nine (9) members and three (3) of such members shall be persons designated by Purchaser (the “ Purchaser Board Designees ”), one to each class of directors of the Company Board (if the Company has a staggered board of directors); provided , that such designees shall be identified by name and in writing to the Company no later than 10 Business Days prior to the voting deadline established by the Bankruptcy Court. Subject to the rights provided under the Fairholme/Pershing Agreements, the remaining members of the Company Board on the Effective Date shall be chosen by the Company in consultation with Purchaser.
(ii) Following the Closing, the Company shall nominate as part of its slate of directors and use its reasonable best efforts to have elected to the Company Board (including through the solicitation of proxies for such person to the same extent as it does for any of its other nominees to the Company Board) (subject to applicable Law and stock exchange rules (provided that Purchaser Board Designees need not be “independent” under the applicable rules of the applicable stock exchange or the SEC)) (x) so long as Purchaser and the Brookfield Consortium Members beneficially own (directly or indirectly) in the aggregate at least 20% of the shares of New Common Stock on a Fully Diluted Basis, three (3) Purchaser Board Designees, (y) so long as Purchaser and the Brookfield Consortium Members beneficially own (directly or indirectly) in the aggregate at least 15%, but less than 20%, of the shares of New Common Stock on a Fully Diluted Basis, two (2) Purchaser Board Designees, and (z) so long as Purchaser and the Brookfield Consortium Members beneficially own (directly or indirectly) in the aggregate at least 10%, but less than 15%, of the shares of Common Stock on a Fully Diluted Basis, one (1) Purchaser Board Designee. For the avoidance of doubt, at and following such time as Purchaser and the Brookfield Consortium Members beneficially own (directly or indirectly) in the aggregate less than 10% of the shares of Common Stock on a Fully Diluted Basis, Purchaser and the Brookfield Consortium Members shall no longer have the right to designate directors for election to the Company Board. Following the Closing, and subject to applicable Law and stock exchange rules, there shall be proportional representation by Purchaser Board Designees on any committee of the Company Board, except for special committees established for potential conflict of interest situations involving any Brookfield Consortium Member or any Affiliate thereof,
and except that only Purchaser Board Designees who qualify under the applicable rules of the applicable stock exchange or the SEC may serve on committees where such qualification is required. If at any time the number of Purchaser Board Designees serving on the Company Board exceeds the number of Purchaser Board Designees that Purchaser is then otherwise entitled to designate as a result of a decrease in the percentage of shares of New Common Stock beneficially owned by Purchaser and the Brookfield Consortium Members, Purchaser shall, to the extent it is within Purchaser’s control, use its commercially reasonable efforts to cause any such additional Purchaser Board Designees to offer to resign such that the number of Purchaser Board Designees serving on the Company Board after giving effect to such resignation does not exceed the number of Purchaser Board Designees that Purchaser is entitled to designate for election to the Company Board.
(iii) Except with respect to the resignation of a Purchaser Board Designee pursuant to Section 5.10(a)(ii) , Purchaser shall have the power to designate a Purchaser Board Designee’s replacement upon the death, resignation, retirement, disqualification or removal from office of such Purchaser Board Designee. The Company Board shall promptly take all action reasonably required to fill any vacancy resulting therefrom with such replacement Purchaser Board Designee (including nominating such person, subject to applicable Law, as the Company’s nominee to serve on the Company Board and causing the Company to use all reasonable efforts to have such person elected as a director of the Company and solicit proxies for such person to the same extent as it does for any of the Company’s other nominees to the Company Board).
(iv) The Purchaser Board Designees shall be entitled to the same compensation and same indemnification in connection with his or her role as a director as the members of the Company Board, and each Purchaser Board Designee shall be entitled to reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the Company Board or any committees thereof, to the same extent as other members of the Company Board. The Company shall notify each Purchaser Board Designee of all regular and special meetings of the Company Board and shall notify each Purchaser Board Designee of all regular and special meetings of any committee of the Company Board of which such Purchaser Board Designee is a member. The Company shall provide each Purchaser Board Designee with copies of all notices, minutes, consents and other materials provided to all other members of the Company Board concurrently as such materials are provided to the other members (except, for the avoidance of doubt, as are provided to members of committees of which such Purchaser Board Designee is not a member).
(v) Purchaser Board Designees candidates shall be subject to such reasonable eligibility criteria as are applied in good faith by the nominating, corporate governance or similar committee of the Company Board to other candidates for the Company Board. Purchaser shall designate one of the Purchaser Board Designees to serve as the initial chairman of the Company Board as of the Effective Date.
(b) GGO Board of Directors .
(i) The Plan shall provide that as of the Effective Date, the board of directors of GGO (the “ GGO Board ”) shall have nine (9) members and one (1) of such members shall be persons designated by Purchaser (the “ Purchaser GGO Board Designee ”); provided , that such designee shall be identified by name and in writing to the Company no later than 10 Business Days prior to the voting deadline established by the Bankruptcy Court. Subject to the rights provided under the Fairholme/Pershing Agreements, the remaining members of the GGO Board on the Effective Date shall be chosen by the Company in consultation with Purchaser.
(ii) The Plan shall provide , i n connection with the consummation of the Plan, for GGO to enter into an agreement with Purchaser (the “ GGO Agreement ”) providing as follows:
(1) That f ollowing the Closing, GGO s hall nominate one (1) Purchaser GGO Board Designee as part of its slate of directors and use its reasonable best efforts to have him or her elected to the GGO Board (including through the solicitation of proxies for such person to the same extent as it does for any of its other nominees to the GGO Board) (subject to applicable Law and stock exchange rules (provided that the Purchaser GGO Board Designee need not be “independent” under the applicable rules of the applicable stock exchange or the SEC)) so long as Purchaser and the Brookfield Consortium Members beneficially own (directly or indirectly) in the aggregate at least 10% of the shares of GGO Common Stock on a Fully Diluted Basis. For the avoidance of doubt, at and following such time as Purchaser and the Brookfield Consortium Members beneficially own (directly or indirectly) in the aggregate less than 10% of the shares of GGO Common Stock on a Fully Diluted Basis, Purchaser and the Brookfield Consortium Members shall no longer have the right to designate any director for election to the GGO Board.
(2) That following the Closing, and subject to applicable Law and stock exchange rules, there shall be proportional representation by the Purchaser GGO Board Designee on any committee of the GGO Board, except for special committees established for potential conflict of interest situations involving any Brookfield Consortium Member or any Affiliate thereof, and except that the Purchaser GGO Board Designee may serve on committees where qualification under the applicable rules of the applicable stock exchange or the SEC are required only if the Purchaser GGO Board Designee so qualifies. If at any time Purchaser is no longer entitled to designate the Purchaser GGO Board Designee as a result of a decrease in the percentage of shares of GGO Common Stock beneficially owned by Purchaser and the Brookfield Consortium Members, Purchaser shall, to the extent it is within Purchaser’s control, use commercially reasonable efforts to cause any such Purchaser GGO Board Designee to offer to resign.
(3) That except with respect to the resignation of the Purchaser GGO Board Designee pursuant to Section 5.10(b)(ii)(2) , (A) Purchaser shall have the power to designate the Purchaser GGO Board Designee’s replacement upon the death, resignation, retirement, disqualification or removal from office of such Purchaser GGO Board Designee and (B) the GGO Board shall promptly take all action reasonably required to fill any vacancy resulting therefrom with such replacement Purchaser GGO Board Designee (including nominating such person, subject to applicable Law, as GGO’s nominee to serve on the GGO Board and causing GGO to use all reasonable efforts to have such person elected as a director of GGO and solicit proxies for such person to the same extent as it does for any of GGO’s other nominees to the GGO Board ).
(4) That (A) the Purchaser GGO Board Designee shall be entitled to the same compensation and same indemnification in connection with his or her role as a director as the members of the GGO Board , and the Purchaser GGO Board Designee shall be entitled to reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the GGO Board or any committees thereof, to the same extent as other members of the GGO Board, (B) GGO shall notify the Purchaser GGO Board Designee of all regular and special meetings of the GGO Board and shall notify the Purchaser GGO Board Designee of all regular and special meetings of any committee of the GGO Board of which the Purchaser GGO Board Designee is a member, and (C) GGO shall provide the Purchaser GGO Board Designee with copies of all notices, minutes, consents and other materials provided to all other members of the GGO Board concurrently as such materials are provided to the other members (except, for the avoidance of doubt, as are provided to members of committees of which the Purchaser GGO Board Designee is not a member).
(5) Purchaser GGO Board Designee candidates shall be subject to such reasonable eligibility criteria as applied in good faith by the nominating, corporate governance or similar committee of the GGO Board to other candidates for the GGO Board.
SECTION 5.11 Notification of Certain Matters .
(a) The Company shall (i) give prompt written notice to Purchaser of any written notice or other written communication from any Person alleging that the consent of such Person which is or may be required in connection with the transactions contemplated by this Agreement is not likely to be obtained prior to Closing, if the failure to obtain such consent would reasonably be expected to be adverse and material to the Company and its Subsidiaries taken as a whole or would materially impair the ability of the Company to consummate the transactions contemplated hereby or perform its obligations hereunder, and (ii) facilitate adding such individuals as designated by Purchaser to the electronic notification system such that the designated individuals will receive electronic notice of the entry of any Bankruptcy Court Order.
(b) To the extent permitted by applicable Law, (i) the Company shall give prompt notice to Purchaser of the commencement of any investigation, inquiry or review by any Governmental Entity with respect to the Company or its Subsidiaries which would reasonably be expected to be adverse and material to the Company and its Subsidiaries taken as a whole or would materially impair the ability of the Company to consummate the transactions contemplated hereby or perform its obligations hereunder, and (ii) the Company shall give prompt notice to Purchaser, and Purchaser shall give written prompt notice to the Company, of any event or circumstance that would result in any representation or warranty of the Company or Purchaser, as applicable, being untrue or any covenant or agreement of the Company or Purchaser, as applicable, not being performed or complied with such that, in each such case, the conditions set forth in Article VII or Article VIII , as applicable, would not be satisfied if such event or circumstance existed on the Closing Date.
(c) No information received by a party pursuant to this Section 5.11 nor any information received or learned by a party or any of its representatives pursuant to an investigation made under this Section 5.11 shall be deemed to (A) qualify, modify, amend or otherwise affect any representations, warranties, conditions, covenants or other agreements of the other party set forth in this Agreement, (B) amend or otherwise supplement the information set forth in the Company Disclosure Letter, (C) limit or restrict the remedies available to such party under this Agreement, applicable Law or otherwise arising out of a breach of this Agreement, or (D) limit or restrict the ability of such party to invoke or rely on, or effect the satisfaction of, the conditions to the obligations of such party to consummate the transactions contemplated by this Agreement set forth in Article VII or Article VIII , as applicable.
SECTION 5.12 Further Assurances . From and after the Closing, the Company shall (and shall cause each of its Subsidiaries to) execute and deliver, or cause to be executed and delivered, such further instruments or documents or take such other action and cause entities controlled by them to take such action as may be reasonably necessary (or as reasonably requested by Purchaser) to carry out the transactions contemplated by this Agreement.
SECTION 5.13 [Intentionally Omitted.]
SECTION 5.14 Rights Agreement; Reorganized Company Organizational Documents .
(a) Prior to the issuance of the Warrants, the Rights Agreement shall be amended to provide that (i) the Rights Agreement is inapplicable to (1) the acquisition by Purchaser of the Warrants and the underlying securities thereof, (2) any antidilution adjustments to those Warrants pursuant to the Warrant Agreement, (3) any shares of New Common Stock that Purchaser or any Brookfield Consortium Member may be deemed to own by no actions of its own and (4) up to an additional 2.5% of the issued and outstanding shares of Common Stock by Brookfield Consortium Members, (ii) neither Purchaser, nor any Brookfield Consortium Member, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement), (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights Agreement) shall not separate from the Common Stock, in each case under (ii), (iii) and (iv), as a result of the acquisition by Purchaser of the Warrants, the underlying securities
thereof and the acquisition of beneficial ownership of up to an additional 2.5% of the issued and outstanding shares of Common Stock by Brookfield Consortium Members.
(b) The certificate of incorporation and bylaws of the Reorganized Company (the “ Reorganized Company Organizational Documents ”) shall be in form mutually agreed to by the Company and Purchaser, provided, that in the event that the Company and Purchaser are not able to agree on such form prior to the Effective Date, the Reorganized Company Organizational Documents shall be substantially in the same form as the certificate of incorporation and bylaws of the Company as in existence on the date of this Agreement (except that the number of authorized shares of capital stock of the Reorganized Company shall be increased), provided, however, that (i) the restriction on Beneficial Ownership (as such term is defined in the certificate of incorporation of the Company) shall be set at 9.9% of the outstanding capital stock of the Reorganized Company, (ii) the restriction on Constructive Ownership (as such term is defined in the certificate of incorporation of the Company) shall be set at 9.9% of the outstanding capital stock of the Reorganized Company, (iii) there shall not be an exemption from the restrictions set forth in the foregoing clauses (i) and (ii) for the current Existing Holder (as such term is defined in the existing certificate of incorporation of the Company), (iv) the Reorganized Company shall provide a waiver from the restrictions set forth in the foregoing clauses (i) and (ii) to any Brookfield Consortium Member if such Brookfield Consortium Member provides the Reorganized Company with a certificate containing the representations and covenants set forth on Exhibit D and (v) the definition of “Person” shall be revised so that it does not include a “group” as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
(c) In the event the Reorganized Company adopts a rights plan analogous to the Rights Agreement on or prior to the Closing, the Plan shall provide that (i) the Reorganized Company’s Rights Agreement shall be inapplicable to this Agreement and the transactions contemplated hereby, (ii) neither Purchaser, nor any Brookfield Consortium Member, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement) whether in connection with the acquisition of Shares, New Warrants, shares issuable upon exercise of the New Warrants or otherwise, (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights Agreement) will not separate from the New Common Stock, in each case under (ii), (iii) and (iv), as a result of the execution, delivery or performance of this Agreement, the consummation of the transactions contemplated hereby including the acquisition of shares of New Common Stock by Purchaser and any Brookfield Consortium Member after the date hereof as otherwise permitted by this Agreement, the New Warrants or as otherwise contemplated by the Non-Control Agreement.
(d) In the event GGO adopts a rights plan analogous to the Rights Agreement on or prior to the Closing, the Plan shall provide that (i) GGO’s Rights Agreement shall be inapplicable to this Agreement and the transactions contemplated hereby, (ii) neither Purchaser, nor any Brookfield Consortium Member, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement) whether in connection with the acquisition of shares of GGO Common Stock or GGO Warrants or the shares issuable upon exercise of the GGO Warrants, (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights
Agreement) will not separate from the GGO Common Stock, in each case under (ii), (iii) and (iv), as a result of the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby including the acquisition of shares of GGO Common Stock by Purchaser and any Brookfield Consortium Member after the date hereof as otherwise permitted by this Agreement, or the GGO Warrants.
(e) Newco (as defined in Exhibit B ) will be formed by the Operating Partnership solely for the purpose of engaging in the transactions contemplated by this Agreement, including Exhibit B and Capital Raising Activities permitted pursuant to this Agreement. Prior to the Closing, Newco will not engage in any business activity, nor conduct its operations, other than as contemplated by this Agreement (which, for greater certainty, shall include Capital Raising Activities permitted pursuant to this Agreement).
SECTION 5.15 Stockholder Approval . For so long as Purchaser has Subscription Rights as contemplated by Section 5.9(a) , in connection with the expiration of the five (5) year period referenced in Section 3.2(c) , the Company shall put up for a stockholder vote at the immediately prior annual meeting of its stockholders, and include in its proxy statement distributed to such stockholders in connection with such annual meeting, approval of Purchaser’s Subscription Rights for the maximum period permitted by the NYSE. The Plan shall provide that GGO shall, for the benefit of Purchaser, to the extent required by any U.S. national securities exchange upon which shares of GGO Common Stock are listed, for so long as Purchaser has subscription rights as contemplated by Section 5.9(b) , put up for a stockholder vote at the annual meeting of its stockholders, and include in its proxy statement distributed to such stockholders in connection with such annual meeting, approval of Purchaser’s subscription rights for the maximum period permitted by the rules of such U.S. national securities exchange.
SECTION 5.16 Registration Statements .
(a) Prior to or promptly following the Effective Date, the Company shall file with the SEC a shelf registration statement on Form S-1 or Form S-11, as applicable, covering the resale by Purchaser of the Shares and the shares of New Common Stock issuable upon exercise of the New Warrants, containing a plan of distribution reasonably satisfactory to Purchaser, and the Company shall use its reasonable best efforts to cause such registration statement to be declared effective by the SEC no later than 180 days after the Effective Date. Notwithstanding the foregoing, in the event that the Company files a registration statement covering the resale of shares of New Common Stock for any Other Sponsor prior to such date, the Company shall include the Shares and shares of New Common Stock issuable upon exercise of the New Warrants for resale by Purchaser in such registration statement.
(b) The Plan shall provide that, prior to or promptly following the Effective Date, GGO shall file with the SEC a shelf registration statement on Form S-1 or Form S-11, as applicable, covering the resale by Purchaser of the GGO Shares and the shares of GGO Common Stock issuable upon exercise of the GGO Warrants, containing a plan of distribution reasonably satisfactory to Purchaser, and GGO shall use its reasonable best efforts to cause such registration statement to be declared effective by the SEC no later than 180 days after the Effective Date. Notwithstanding the foregoing, in the event that GGO files a registration statement covering the resale of shares of GGO Common Stock for any Other Sponsor prior to such date, GGO shall
include the GGO Shares and shares of GGO Common Stock issuable upon exercise of the GGO Warrants for resale by Purchaser in such registration statement.
SECTION 5.17 Closing Date Net Debt .
(a) The Company shall deliver to Purchaser a schedule (the “ Preliminary Closing Date Net Debt Schedule ”) on or before the first Business Day that is five calendar days following approval of the Disclosure Statement, that: (i) sets forth the Company’s good faith estimate for each of the three components of the Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts along with a reasonably detailed explanation and calculation of each such component and (ii) discloses the Company’s good faith estimate of the Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts and GGO Setup Costs.
(b) Purchaser shall review the Preliminary Closing Date Net Debt Schedule during the Preliminary Closing Date Net Debt Review Period, during which time the Company shall allow Purchaser reasonable access to all non-privileged and non-work product documents or records or personnel used in the preparation of the Preliminary Closing Date Net Debt Schedule. On or prior to the Preliminary Closing Date Net Debt Review Deadline, Purchaser may deliver to the Company a notice (the “ Dispute Notice ”) listing those items on the Preliminary Closing Date Net Debt Schedule to which Purchaser takes exception, which Dispute Notice shall (i) specifically identify such items, and provide a reasonably detailed explanation of the basis upon which Purchaser has delivered such list, (ii) set forth the amount of Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts that Purchaser has calculated based on the information contained in the Preliminary Closing Date Net Debt Schedule, and (iii) specifically identify Purchaser’s proposed adjustment(s). If Purchaser timely provides the Company with a Dispute Notice, then Purchaser and the Company shall, within ten (10) days following receipt of such Dispute Notice by the Company (the “ Resolution Period ”), attempt to resolve their differences with respect to the items specified in the Dispute Notice (the “ Disputed Items ”). If Purchaser and the Company do not resolve all Disputed Items by the end of the Resolution Period, then all Disputed Items remaining in dispute shall be submitted to the Bankruptcy Court for resolution at or concurrent with the Confirmation Hearing. The Bankruptcy Court shall consider only those Disputed Items that Purchaser, on the one hand, and the Company, on the other hand, were unable to resolve. All other matters shall be deemed to have been agreed upon by Purchaser and the Company. If Purchaser does not timely deliver a Dispute Notice, then Purchaser shall be deemed to have accepted and agreed to the Preliminary Closing Date Net Debt Schedule and to have waived any right to dispute the matters set forth therein.
(c) The Company shall deliver to Purchaser a draft of the Conclusive Net Debt Adjustment Statement no later than 15 calendar days prior to the Effective Date. Purchaser shall be afforded an opportunity to review the Conclusive Net Debt Adjustment Statement and reasonable access to all non-privileged and non-work product documents or records or personnel used in the preparation of such statement. On or prior to close of business on the 7th calendar day following receipt of the Conclusive Net Debt Adjustment Statement, Purchaser may deliver to the Company a notice (the “ CNDAS Dispute Notice ”) listing those items to which Purchaser takes exception, which CNDAS Dispute Notice shall (i) specifically identify such items, and provide a reasonably detailed explanation of the basis upon which Purchaser has delivered such
list, (ii) set forth the alternative amounts that Purchaser has calculated based on the information contained in the Conclusive Net Debt Adjustment Statement, and (iii) specifically identify Purchaser’s proposed adjustment(s). If Purchaser timely provides the Company with a CNDAS Dispute Notice, then Purchaser and the Company shall attempt to resolve the items specified in the CNDAS Dispute Notice (the “ CNDAS Disputed Items ”) consensually. If Purchaser and the Company do not resolve all CNDAS Disputed Items prior to the Effective Date, then for purposes of Closing and subject to subsequent adjustment consistent with the Bankruptcy Court’s ruling, the highest number shall be used for purposes of any calculations set forth on the Conclusive Net Debt Adjustment Statement. Within 10 days after Closing, the Company shall file a motion for resolution by the Bankruptcy Court. Purchaser and the Company agree to seek expedited consideration of any such dispute. The dispute submitted to the Bankruptcy Court shall be limited to only those CNDAS Disputed Items that Purchaser, on the one hand, and the Company, on the other hand, were unable to resolve. All other matters shall be deemed to have been agreed upon by Purchaser and the Company. If Purchaser does not timely deliver a CNDAS Dispute Notice, then Purchaser shall be deemed to have accepted and agreed to the Conclusive Net Debt Adjustment Statement and to have waived any right to dispute the matters set forth therein. To the extent that one or more CNDAS Disputed Items must be submitted to the Bankruptcy Court for adjudication, Purchaser and the Company agree that this should not delay the Effective Date or the Closing Date. Following adjudication of the dispute, appropriate adjustments shall be made to the Conclusive Net Debt Adjustment Statement, the GGO Promissory Note and the other applicable documentation to put all parties in the same economic position as if the corrected Conclusive Net Debt Adjustment Statement governed at Closing.
(d) It is the intention of the parties that any Reserve should not alter the intended allocation of value between GGO and the Company as Claims are resolved over time. Accordingly, the Plan shall provide that, if a GGO Promissory Note is required to be issued at Closing and there is a Reserve Surplus Amount as of the end of any fiscal quarter prior to the maturity of the GGO Promissory Note, then the principal amount of the GGO Promissory Note shall be reduced, but not below zero, by (i) if and to the extent that such Reserve Surplus Amount as of such date is less than or equal to the Net Debt Surplus Amount, 80% of the Reserve Surplus Amount, and otherwise (ii) 100% of an amount equal to the Reserve Surplus Amount; provided, however, that because this calculation may be undertaken on a periodic basis, for purposes of clauses (i) and (ii), no portion of the Reserve Surplus Amount shall be utilized to reduce the amount of the GGO Promissory Note if it has been previously utilized for such purpose. In the event that any party requests an equitable adjustment to this formula, the other parties shall consider the request in good faith.
(e) The Plan shall provide that, if there is an Offering Premium, the principal amount of the GGO Promissory Note shall be reduced (but not below zero) by 80% of the aggregate Offering Premium on the 30th day following the Effective Date and from time to time thereafter upon receipt of Offering Premium until the last to occur of (x) 45 days after the Effective Date, (y) the Settlement Date (as defined in the Pershing Agreement), if applicable, and (z) the Bridge Note Maturity Date (as defined in the Pershing Agreement), if applicable .
(f) T he Plan and the agreements relating to the GGO Share Distribution shall provide that the Company shall indemnify GGO and its Subsidiaries from and against losses, claims,
damages, liabilities and expenses attributable to MPC Taxes in accordance with the terms and conditions of the Tax Matters Agreement .
(g) Subject to the provisions of the Tax Matters Agreement, if GGO is obligated to pay in cash, after utilization of any available tax attributes, any MPC Taxes in the period commencing on the Effective Date and ending 36 months after the Effective Date, and the Company is not then obligated to indemnify GGO for its allocable share of such MPC Taxes as a consequence of the Indemnity Cap (as defined in the Tax Matters Agreement), then the Company shall loan to GGO the amount of such MPC Taxes not payable by the Company as a consequence of the Indemnity Cap and the principal amount of the GGO Promissory Note shall be increased by the amount of such loan and if at such time no GGO Promissory Note is outstanding, on the date of any such loan, GGO shall issue in favor of the Company a promissory note in the aggregate principal amount of such loan on the same terms as the GGO Promissory Note.
(h) The Debtors dispute each of the Contingent and Disputed Debt Claims and have sought or will seek disallowance of such Claims in their entirety. To the extent such claims have not been ruled on by the Bankruptcy Court or settled prior to the Effective Date, then the asserted amounts of such claims will be included in calculation of the Closing Date Net Debt. In the event that, on or after the Effective Date, one or more of the Contingent and Disputed Debt Claims are either reduced or disallowed by a ruling of the Bankruptcy Court or as a result of a settlement, then the Closing Date Net Debt amount shall be adjusted to reflect such ruling or settlement within ten (10) calendar days following any such ruling or settlement (such adjusted Closing Date Net Debt to be referred to as the “ Adjusted CDND ”) and the GGO Note Amount and Indemnity Cap (as defined in the Tax Matters Agreement) shall be re-calculated as if the Adjusted CDND was used in the calculations for the Effective Date. To the extent that a GGO Promissory Note was issued at Closing, then, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating the GGO Note Amount, the principal amount of such GGO Promissory Note will be reduced based on the new calculation using the Adjusted CDND and, to the extent applicable, any interest payments made by GGO to the Company on the GGO Promissory Note prior to such re-calculation shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reductions shall be eliminated. Similarly, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating the Indemnity Cap, the Indemnity Cap shall be re-calculated and adjusted to reflect determination of the Net Debt Surplus Amount or Net Debt Excess Amount using the Adjusted CDND. Additionally, to the extent any promissory note was issued by GGO in favor of the Company pursuant to Section 5.17(g) , then, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating such note, (i) the principal amount of such note will be reduced based on the new calculation using the Adjusted CDND and (ii) to the extent applicable, any interest payments made by GGO to the Company on such note prior to such re-calculation shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reductions shall be eliminated. Consistent with the foregoing, the Tax Matters Agreement shall be retroactively applied using the re-calculated Indemnity Cap and any resulting amounts payable thereunder shall be promptly paid.
In the event that a Bankruptcy Court order allowing, disallowing, or reducing and allowing any of the Contingent and Disputed Debt Claims is appealed, vacated or otherwise modified, then following entry of a final and nonappealable order by a court of competent jurisdiction determining the amount (if any) of the applicable Contingent and Disputed Debt Claim, the adjustment process set forth in the preceding paragraph shall be undertaken within ten (10) calendar days following such order becoming final and nonappealable.
(i) Solely for purposes of calculating whether a GGO Promissory Note is required to be issued at Closing pursuant to this Agreement, $1,000,000 shall be added to GGO Setup Costs. If a GGO Promissory Note is issued at Closing pursuant to this Agreement, then on the six-month anniversary of the Closing Date (the “ Calculation Date ”), (A) the then outstanding principal amount of the GGO Promissory Note shall be reduced (but not to a number less than zero) by an amount equal to the excess (if it is a positive number), if any, of $1,000,000 over the aggregate amount of cash costs and expenses, if any, incurred by the Company after the Closing Date and prior to the Calculation Date to transfer assets after Closing to GGO pursuant to Section 2.4(d) of the Separation Agreement to be entered into between the Company and GGO at or prior to Closing, and (B) if the principal amount of the GGO Promissory Note is reduced pursuant to clause (A), any interest payments made by GGO to the Company on the GGO Promissory Note prior to such reduction pursuant to clause (A) shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reduction shall be eliminated .
SECTION 5.18 Determination of Domestically Controlled REIT Status .
(a) The Reorganized Company shall use reasonable efforts to comply with treasury regulations, revenue procedures, notices or other guidance adopted after the date hereof by the Internal Revenue Service or United States Treasury governing the determination of its status as a “domestically controlled REIT” as defined in Section 897 of the Code and the treasury regulations promulgated thereunder (a “ Domestically Controlled REIT ”).
(b) The Reorganized Company shall inquire of Purchaser and Purchaser shall provide a written statement to the Reorganized Company setting forth the equity ownership percentage that “United States persons” as defined in Section 7701(a)(30) of the Code (“ U.S. Persons ”) hold in Purchaser. Such statement shall be based on the direct ownership in Purchaser, except to the extent that Purchaser has actual knowledge of indirect ownership or can provide a reasonable estimate of such indirect ownership. For the avoidance of doubt, if interests in Purchaser are held or registered in “street name”, such Purchaser shall not be required to determine the ultimate beneficial owner of such interests for the purposes of complying with this Section 5.18 .
(c) The Reorganized Company shall include in its shareholder demand letters a request that each shareholder identify whether it is a U.S. Person.
(d) The Reorganized Company shall at least annually request from Cede & Co. a list of holders of the Reorganized Company’s stock registered with Cede & Co. and, if granted access thereto, use reasonable efforts to review such list to determine whether any such holders are U.S. Persons.
(e) The Reorganized Company shall, at least annually, as part of its internal audit and Sarbanes-Oxley Act (“ SOX ”) procedures with respect to key controls, use reasonable efforts to make a determination of whether or not it believes that it qualifies as a Domestically Controlled REIT. Such determination shall be based on information reasonably available to the Reorganized Company under this Section 5.18 as well as through review of the information contained in any relevant Schedule 13D or Schedule 13G (or amendment thereto) filed with the SEC with respect to the Reorganized Company. A written summary of the steps taken, information obtained and analysis of results will be prepared. Each such annual determination (but not the written summary), subject to reasonable caveats and assumptions, shall be set forth in the Reorganized Company’s next Annual Report on Form 10-K filed with the SEC and shall be reported to the Board of Directors at least annually (or within fifteen days of discovering a change in status). The Reorganized Company shall use the Reorganized Company’s SOX policies and procedures to oversee such determination.
(f) The Company shall provide a copy of the written summary (and backup documentation) prepared in accordance with clause (e) to Purchaser upon the request of Purchaser. In addition, if reasonably requested by Purchaser, the Reorganized Company will, at Purchaser’s expense, make reasonable efforts to provide additional information to and otherwise cooperate with Purchaser, to enable Purchaser to respond to questions regarding Domestically Controlled REIT status by a taxing authority or person engaging in, or proposing to engage in, a transaction with Purchaser or an Affiliate thereof .
ARTICLE VI
ADDITIONAL COVENANTS OF PURCHASER
SECTION 6.1 Information . From and after the date of this Agreement until the earlier to occur of the Closing Date and the termination of this Agreement, Purchaser agrees to provide the Debtors with such information as the Debtors reasonably request regarding Purchaser for inclusion in the Disclosure Statement as necessary for the Disclosure Statement to contain adequate information for purposes of Section 1125 of the Bankruptcy Code.
SECTION 6.2 Purchaser Efforts . Purchaser shall use its reasonable best efforts to obtain all material permits, consents, orders, approvals, waivers, authorizations or other permissions or actions required for the consummation of the transactions contemplated by this Agreement from, and shall have given all necessary notices to, all Governmental Entities necessary to satisfy the condition in Section 8.1(b) ( provided , however , that Purchaser shall not be required to pay or cause payment of any fees or make any financial accommodations to obtain any such consent, approval, waiver or other permission, except filing fees as required), and provide to such Governmental Entities all such information as may be necessary or reasonably requested relating to the transactions contemplated hereby.
SECTION 6.3 Plan Support . From and after the date of this Agreement until the earliest to occur of (i) the Effective Date, (ii) the termination of this Agreement and (iii) the date the Company or any Subsidiary of the Company makes a public announcement, enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its intention to support any Competing Transaction, or the Company or any
Subsidiary of the Company enters into a Competing Transaction, Purchaser agrees (unless otherwise consented to by the Company) ( provided , that (x) the Company is not in material breach of this Agreement and (y) the terms of the Plan are and remain consistent with the Plan Summary Term Sheet and this Agreement, and are otherwise in form and substance satisfactory to Purchaser) to (and shall use reasonable best efforts to cause its Affiliates to):
(a) Not pursue, propose, support, vote to accept or encourage the pursuit, proposal or support of, any Chapter 11 plan, or other restructuring or reorganization for the Company, or any Subsidiary of the Company, that is not consistent with the Plan;
(b) Not, nor encourage any other Person to, interfere with, delay, impede, appeal or take any other negative action, directly or indirectly, in any respect regarding acceptance or implementation of the Plan; and
(c) Not commence any proceeding, or prosecute any objection to oppose or object to the Plan or to the Disclosure Statement and not to take any action that would delay approval or confirmation, as applicable, of the Disclosure Statement and the Plan, in each case (i) except as intended to ensure the consistency of the Disclosure Statement and the Plan with the terms of this Agreement and the rights and obligations of the parties thereto and (ii) without limiting any rights Purchaser may have to terminate this Agreement pursuant to Section 11.1(b) (including Section 11.1(b)(x) ) hereof.
SECTION 6.4 Transfer Restrictions . Purchaser covenants and agrees that the Shares and the GGO Shares (and shares issuable upon exercise of Warrants, New Warrants and GGO Warrants) shall be disposed of only pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities Laws. Purchaser agrees to the imprinting, so long as is required by this Section 6.4 , of the following legend on any certificate evidencing the Shares or GGO Shares (and shares issuable upon exercise of Warrants, New Warrants and GGO Warrants):
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE “ ACT ”) OR UNDER ANY STATE SECURITIES LAWS (“ BLUE SKY ”) OR THE SECURITIES LAWS OF ANY OTHER RELEVANT JURISDICTION. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE. THE SHARES MAY NOT BE SOLD, ASSIGNED, MORTGAGED, PLEDGED, ENCUMBERED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS EITHER (I) A REGISTRATION STATEMENT WITH RESPECT TO THE SHARES IS EFFECTIVE UNDER THE ACT AND APPLICABLE BLUE SKY LAWS AND THE SECURITIES LAWS OF ANY OTHER RELEVANT JURISDICTION ARE COMPLIED WITH OR (II) UNLESS WAIVED BY THE ISSUER, THE ISSUER RECEIVES AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE ISSUER THAT NO VIOLATION OF THE ACT OR OTHER APPLICABLE LAWS WILL BE INVOLVED IN SUCH TRANSACTION.
Certificates evidencing the Shares (and shares issuable upon exercise of Warrants and New Warrants) shall not be required to contain such legend (A) while a registration statement
covering the resale of the Shares is effective under the Securities Act, or (B) following any sale of any such Shares pursuant to Rule 144 of the Exchange Act (“ Rule 144 ”), or (C) following receipt of a legal opinion of counsel to Purchaser that the remaining Shares held by Purchaser are eligible for resale without volume limitations or other limitations under Rule 144. In addition, the Company will agree to the removal of all legends with respect to shares of New Common Stock deposited with DTC from time to time in anticipation of sale in accordance with the volume limitations and other limitations under Rule 144, subject to the Company’s approval of appropriate procedures, such approval not to be unreasonably withheld, conditioned or delayed.
Following the time at which such legend is no longer required (as provided above) for certain Shares, the Company shall promptly, following the delivery by Purchaser to the Company of a legended certificate representing such Shares, deliver or cause to be delivered to Purchaser a certificate representing such Shares that is free from such legend. In the event the above legend is removed from any of the Shares, and thereafter the effectiveness of a registration statement covering such Shares is suspended or the Company determines that a supplement or amendment thereto is required by applicable securities Laws, then the Company may require that the above legend be placed on any such Shares that cannot then be sold pursuant to an effective registration statement or under Rule 144 and Purchaser shall cooperate in the replacement of such legend. Such legend shall thereafter be removed when such Shares may again be sold pursuant to an effective registration statement or under Rule 144.
The Plan shall provide , i n connection with the consummation of the Plan, for GGO to enter into an agreement with Purchaser with respect to GGO Shares and GGO Warrants containing the same terms as provided above in this Section 6.4 but replacing references to (A) “the Company” with GGO, (B) “New Common Stock” with GGO Common Stock, (C) “Shares” with “GGO Shares” and (D) “Warrants” or “New Warrants” with GGO Warrants.
Purchaser shall further covenant and agree in an agreement to be entered into with GGO in connection with the Plan not to sell, transfer or dispose of (each, a “ Transfer ”) (x) GGO Shares, GGO Warrants, or shares issuable upon exercise of the GGO Warrants during the period from and after the Closing Date to the six (6) month anniversary of the Closing Date, (y) in excess of (A) 8.25% of the GGO Shares and (B) 8.25% of the GGO Warrants or the shares issuable upon exercise of the GGO Warrants, in the aggregate, during the period from and after the six (6) month anniversary of the Closing Date to the one (1) year anniversary of the Closing Date and (z) in excess of (A) 16.5% of the GGO Shares and (B) 16.5% of the GGO Warrants or the shares issuable upon exercise of the GGO Warrants, in the aggregate (and taken together with any Transfers effected under clause (y)), during the period from and after the six (6) month anniversary of the Closing Date to the eighteen (18) month anniversary of the Closing Date. For clarity, Purchaser shall not be restricted from Transferring any GGO Shares, GGO Warrants, or shares issuable upon exercise of the GGO Warrants from and after the eighteen (18) month anniversary of the Closing Date.
Prior to the Closing, Purchaser shall not Transfer the Warrants or the shares of Common Stock issuable upon exercise of the Warrants prior to the earlier of (i) termination of this Agreement or (ii) the date the Company or any Subsidiary of the Company (A) makes a public announcement, enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its decision to support any Competing Transaction, or the
Company or any Subsidiary of the Company enters into a definitive agreement providing for a Competing Transaction or (B) provides notice to Purchaser of its or any of its Subsidiaries decision to enter into, or entry into, a definitive agreement providing for a Competing Transaction.
Notwithstanding anything herein to the contrary (but subject to the Non-Control Agreement), Purchaser shall be permitted to Transfer any portion or all of its Shares, GGO Shares, the Warrants, the New Warrants, the GGO Warrants and the shares of Common Stock or New Common Stock issuable upon exercise of the Warrants, the New Warrants and the GGO Warrants at any time under the following circumstances ( provided , that none of Purchaser’s rights and benefits under this Agreement shall inure to the benefit of any transferee under clause (ii) or (iii) below):
(i) Transfers to any Affiliate of Purchaser, any member of Purchaser, any Brookfield Consortium Member and any member, partner or shareholder or any Affiliate of any Brookfield Consortium Member, in accordance with and subject to the Designation Conditions.
(ii) Transfers pursuant to a merger or tender offer or exchange offer involving the Company in which any Person acquires more than 50% of the outstanding Common Stock on a Fully Diluted Basis.
(iii) Any bona fide mortgage, encumbrance, pledge or hypothecation of capital stock to a financial institution in connection with any bona fide loan.
For the avoidance of doubt, Purchaser’s rights to designate for nomination the Purchaser Board Designees and Purchaser GGO Board Designees pursuant to Section 5.10 and Subscription Rights pursuant to Section 5.9 may not be Transferred to a Person that is not a Brookfield Consortium Member.
Purchaser agrees to the imprinting of a legend referencing the above transfer restrictions on any certificate evidencing the Shares or GGO Shares (and shares issuable upon exercise of Warrants, New Warrants and GGO Warrants). In connection with any transfer of the Shares or GGO Shares (and shares issuable upon exercise of Warrants, New Warrants and GGO Warrants), the Company shall remove such legends from such certificates to the extent the transferee thereof is not bound by such transfer restrictions.
SECTION 6.5 Equity Commitments; Source of Funds .
(a) Without the prior written consent of the Company, prior to the Release Date (as defined in the Escrow Agreements), except as contemplated by Section 6.5(b) below, Purchaser shall not (i) enter into any amendments or waive any provision of or terminate the Brookfield Equity Commitment Letter or the Escrow Agreements or any Acceptable LC or (ii) instruct the Escrow Agent to distribute any of the Escrow Amount to an Equity Provider pursuant to Section 4(a)(ii) of the Escrow Agreements.
(b) In the event that at any time following the execution of the Escrow Agreements, one or more Equity Providers secures and delivers to Purchaser an Acceptable LC in replacement
for its Commitment Amount (as defined in the applicable Escrow Agreement), Purchaser shall be entitled to amend or terminate the applicable Escrow Agreement replaced by an Acceptable LC without the consent of the Company. Without the consent of the Company, Purchaser shall not permit any amendments, waivers or terminations of any Acceptable LC.
(c) Prior to the earlier to occur of the Closing and the termination of this Agreement, Purchaser shall not dividend, distribute or otherwise transfer or dispose of any cash or other assets other than to pay the Purchase Price and the GGO Purchase Price and pursuant to Article II .
SECTION 6.6 REIT Representations and Covenants . At such times as shall be reasonably requested by the Company, for so long as Purchaser (or, to the extent applicable, its Affiliates, members or Affiliates of members) beneficially or constructively owns in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company of the outstanding Common Stock or New Common Stock, Purchaser shall (and, to the extent applicable, cause its Affiliates, members or Affiliates of members to) use reasonable best efforts to provide the Company with customary representations and covenants, in the form attached hereto as Exhibit D which shall, among other things, enable the Company to provide a waiver of the ownership limit set forth in the certificate of incorporation of the Company to Purchaser and ensure that the Company can appropriately monitor any “related party rent” issues raised by the Warrants and the purchase of the Shares by Purchaser, it being understood that Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations and covenants only if such Person beneficially owns Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by Purchaser.
SECTION 6.7 Non-Control Agreement . At or prior to the Closing, Purchaser shall enter into the Non-Control Agreement with the Company.
SECTION 6.8 Purchaser Formed Entities . Purchaser Formed Entities were formed by Purchaser solely for the purpose of engaging in the reorganization transactions contemplated by Exhibit B hereto. None of the Purchaser Formed Entities has engaged in any other business activities and has conducted and will conduct its operations prior to the Closing only as contemplated by this Agreement, including Exhibit B . Prior to the Closing, Purchaser shall cause the Purchaser Formed Entities not to (i) incur any liabilities (other than as contemplated by this Agreement) or (ii) take any action to cause any condition to the Closing hereunder not to be satisfied.
SECTION 6.9 Additional Backstops .
(a) The Company may, at its option, include in the Plan an offering (the “ GGP Backstop Rights Offering ”) to its then-existing holders of Common Stock of rights to purchase New Common Stock on the Effective Date in an amount sufficient to yield to the Company aggregate net proceeds on the Effective Date of up to $500,000,000 or such lesser amount as the Company may determine (the “ GGP Backstop Rights Offering Amount ”). In connection with the GGP Backstop Rights Offering:
(i) Purchaser and the Pershing Investors (together with the Purchaser, the “ Backstop Investors ”) and the Company shall appoint a mutually-acceptable and internationally-recognized investment bank to act as bookrunning dealer-manager for the GGP Backstop Rights Offering (the “ Dealer Manager ”) pursuant to such arrangements as they may mutually agree;
(ii) the Dealer Manager will, no later than the fifth business day in advance of the commencement of the solicitation of votes on the Plan and offering of rights in the GGP Backstop Rights Offering (which shall not be longer than 60 days), recommend in writing to the Backstop Investors and the Company the number of shares of New Common Stock that may be purchased for each share of Common Stock, the subscription price of such purchase and the other terms for the rights offering that the Dealer Manager determines are reasonably likely to yield committed proceeds to the Company at the Effective Date equal to the GGP Backstop Rights Offering Amount (it being understood that the Dealer Manager will have no liability if it is later determined that its good faith determination was erroneous);
(iii) the Backstop Investors agree, severally but not jointly and severally, to subscribe, or cause one or more designees to subscribe, for New Common Stock on a pro rata basis to the extent rights are declined by holders of Common Stock, subject to the subscription rights among the Backstop Investors set forth in clause (iv);
(iv) the Backstop Investors will have subscription rights in any such offering allowing them to maintain their respective proportionate pro forma New Common Stock -equivalent interests on a Fully Diluted Basis with the effect that the Backstop Investors will be assured of the ability to acquire such number of shares of New Common Stock as would have been available to them pursuant to Section 5.9 had the GGP Backstop Rights Offering been made after the Closing;
(v) the Backstop Investors will receive aggregate compensation in the form of New Common Stock (whether or not the backstop commitments are utilized) with a value equal to three percent (3%) of the GGP Backstop Rights Offering Amount; and
(vi) the amount of New Common Stock to be purchased pursuant to the GGP Backstop Rights Offering will be subject to reduction to the extent that either (A) the Company Board determines in its business judgment after consultation with the Backstop Investors that it has sufficient liquidity and working capital available to it in light of circumstances at the time and the costs and benefits to the Company of consummation of the GGP Backstop Rights Offering or (B) the Backstop Investors have agreed that they will provide to the Company, in lieu of the GGP Backstop Rights Offering, the Bridge Securities contemplated in clause (b) below.
(b) The Company shall give each Backstop Investor written notice of its estimate of the amount the Backstop Investors will be required to fund pursuant to Section 6.9(a) no later than six (6) Business Days prior to the Closing Date. If each Backstop Investor agrees, the Backstop Investors shall have two (2) Business Days from the date of receipt of such notice to notify the Company in writing that they intend to elect to purchase from the Company in lieu of
all or part of the proceeds to be provided by the GGP Backstop Rights Offering its pro rata portion of senior subordinated unsecured notes and/or preferred stock instruments (at the election of the Backstop Investors) on market terms except as provided below (the “ Bridge Securities ”). The Bridge Securities would have a final maturity date, in the case of a note, and a mandatory redemption date, in the case of preferred stock, on the 270th day after the Effective Date, would not require any mandatory interim cash distributions except as contemplated in (i) below, and would yield to the Company on the Closing Date cash proceeds (net of OID) of at least the proceeds from the GGP Backstop Rights Offering that such Bridge Securities are intended to replace. The Bridge Securities would be subordinated in right of payment to any New Debt, would have market coupon and fees, would allow for any interest due prior to maturity to be “paid in kind” (rather than paid in cash) at the election of the Company, would be prepayable, without any prepayment penalty or prepayment premium, on a pro rata basis at any time, and would otherwise be on market terms (determined such that fair value of the Bridge Securities as of the Effective Date is equal to par minus OID).
If the GGP Backstop Rights Offering is completed or the Bridge Securities are issued:
(i) unless the Backstop Investors otherwise agree, the Bridge Securities shall be subject to mandatory prepayment on a pro rata basis out of the proceeds of any equity or debt securities offered or sold by the Company at any time the Bridge Securities are outstanding (other than the New Common Stock sold to the Backstop Investors, any New Common Stock sold in the GGP Backstop Rights Offering and the New Debt); and
(ii) if the Bridge Securities are issued and not repaid on or before the date that is thirty (30) days following the Effective Date, the Company shall conduct a rights offering in an amount equal to the outstanding amount due with respect to the Bridge Securities and with a pro rata backstop by each applicable Backstop Investor on substantially the same procedure and terms provided in clause (a) above, with such rights offering to have a subscription period of not more than 30 days that ends no later than the 10th day prior to the final maturity date or mandatory redemption of the Bridge Securities.
(c) If the Company requests Purchaser and the Fairholme/Pershing Investors (collectively, the “ Initial Investors ”), in writing, at any time prior to fifteen (15) days before the commencement of solicitation of acceptances of the Plan, each Initial Investor agrees that it shall, severally but not jointly and severally, provide or cause a designee to provide its pro rata share of a backstop for new bonds, loans or preferred stock (as determined by the Initial Investor) in an aggregate amount equal to $1,500,000,000 less the Reinstated Amounts, at a market rate and market commitment fees, and otherwise on terms and conditions to be mutually agreed among the Initial Investors and the Company. Any such notice shall be revocable by the Company in its sole discretion. The new bonds, loans or preferred stock would require no mandatory interim cash principal payments prior to the third anniversary of issuance (unless funded from committed junior indebtedness or junior preferred stock), and would yield proceeds to the Company on the Closing Date net of OID of at least $1,500,000,000 less the Reinstated Amounts. Any Initial Investor may at any time designate in writing one or more financial institutions with a corporate investment grade credit rating (from S&P or Moody’s) to make a
substantially similar undertaking as that provided herein and, upon the receipt of such an undertaking by the Company in form and substance reasonably satisfactory to the Company, such Initial Investor shall be released from its obligations under this Agreement, the Fairholme Agreement or the Pershing Agreement, as applicable.
(d) For the purposes of Section 6.9(a) and Section 6.9(b) , the “pro rata share” or “pro rata basis” of each Backstop Investor shall be determined in accordance with the maximum number of shares of New Common Stock each Backstop Investor has committed to purchase at Closing pursuant to the Pershing Agreement or this Agreement, as applicable, as of the date hereof, in relation to the aggregate maximum number of shares of New Common Stock all Backstop Investors have committed to purchase at Closing pursuant to the Pershing Agreement or this Agreement, as applicable, as of the date hereof. For the purposes of Section 6.9(c) , the “pro rata share” or “pro rata basis” of each Initial Investor shall be determined in accordance with the maximum number of shares of New Common Stock each Initial Investor has committed to purchase at Closing pursuant to the Fairholme/Pershing Agreements or this Agreement, as applicable, as of the date hereof, but excluding any shares of New Common Stock the Backstop Investors have committed to purchase pursuant to this Section 6.9 .
(e) Section 6.9(a) and Section 6.9(b) shall terminate automatically without any action by any party upon entry of an order of the Bankruptcy Court approving the termination fee and expense reimbursement set forth in that certain Stock Purchase Agreement, dated as of July 8, 2010, by and between the Company and Teacher Retirement System of Texas, as to which order the time to appeal or petition for writ of certiorari shall have expired or if an appeal shall have been sought, such order shall have been affirmed by the highest court to which such order was appealed without modification of such order.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
SECTION 7.1 Conditions to the Obligations of Purchaser . The obligation of Purchaser to purchase the Shares and the GGO Shares pursuant to this Agreement on the Closing Date are subject to the satisfaction (or waiver (to the extent permitted by applicable Law) by Purchaser) of the following conditions as of the Closing Date:
(a) No Injunction . No judgment, injunction, decree or other legal restraint shall prohibit the consummation of the Plan or the transactions contemplated by this Agreement.
(b) Regulatory Approvals; Consents . All permits, consents, orders, approvals, waivers, authorizations or other permissions or actions of third parties and Governmental Entities required for the consummation of the transactions contemplated by this Agreement and the Plan shall have been made or received, as the case may be, and shall be in full force and effect, except for those permits, consents, orders, approvals, waivers, authorizations or other permissions or actions the failure of which to make or receive would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (it being agreed that any permit, consent, order, approval, waiver, authorization or other permission or action in respect of any Identified Asset for which any of the alternatives in Section 2.1(a) shall have been employed
shall be deemed hereunder to have been made or received, as the case may be, and in full force and effect).
(c) Representations and Warranties and Covenants . Except for changes permitted or contemplated by this Agreement or the Plan Summary Term Sheet, each of (i) the representations and warranties of the Company contained in Section 3.1 , Section 3.2 , Section 3.3 , Section 3.5 , Section 3.20(a) (except for such inaccuracies in Section 3.20(a) caused by sales, purchases or transfers of assets which have been effected in accordance with, subject to the limitations contained in, and not otherwise prohibited by, the terms and conditions in this Agreement, including, without limitation, this Article VII ) and Section 3.23 shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct only as of such specific date), (ii) the representations and warranties of the Company contained in Section 3.4 shall be true and correct (except for de minimis inaccuracies) at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct (except for de minimis inaccuracies) only as of such specific date) and (iii) the other representations and warranties of the Company contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to “materiality” or “Material Adverse Effect”, shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect (it being agreed that the condition in this subclause (iii) as it relates to undisclosed liabilities of the Company and its Subsidiaries comprised of Indebtedness shall be deemed to be satisfied if the condition in Section 7.1(p) is satisfied. In addition, for purposes of this Section 7.1(c) as it relates to Section 3.20(b) of this Agreement, the reference to “DIP Loan” in clause (i) of such Section 3.20(b) shall be deemed to refer to that certain Senior Secured Debtor in Possession Credit, Security and Guaranty Agreement, dated as of July 23, 2010, by and among the Company, GGP Limited Partnership, the lenders party thereto, Barclays Capital, as the Sole Arranger, Barclays Bank PLC, as the Administrative Agent and Collateral Agent, and the guarantors party thereto (the “ New DIP Agreement ”). The Company shall have complied in all material respects with all of its obligations under this Agreement, provided that with respect to its obligations under Section 5.14(a) , Section 5.14(b) (to the extent applicable) and Section 5.14(c) hereof, the Company shall have complied therewith in all respects. The Company shall have provided to Purchaser a certificate delivered by an executive officer of the Company, acting in his or her official capacity on behalf of the Company, to the effect that the conditions in this clause (c) and the immediately following clause (d) have been satisfied as of the Closing Date and Purchaser shall have received such other evidence of the conditions set forth in this Section 7.1 as it shall reasonably request.
(d) No Material Adverse Effect . Since the date of this Agreement, there shall not have occurred any event, fact or circumstance, that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(e) Plan and Confirmation Order . The Plan, in form and substance satisfactory to Purchaser, shall have been confirmed by the Bankruptcy Court by order in form and substance satisfactory to Purchaser (the “ Confirmation Order ”), which Confirmation Order shall be in full
force and effect (without waiver of the 14 day period set forth in Bankruptcy Rule 3020(e)) as of the Effective Date and shall not be subject to a stay of effectiveness.
(f) Disclosure Statement . The Disclosure Statement, in form and substance acceptable to Purchaser, shall have been approved by order of the Bankruptcy Court in form and substance satisfactory to Purchaser (the “ Disclosure Statement Order ”).
(g) Conditions to Confirmation . The conditions to confirmation and the conditions to the Effective Date of the Plan, including the consummation of the transactions contemplated by Exhibit B , shall have been satisfied or waived in accordance with the Plan and the Reorganized Company Organizational Documents as set forth in the Plan shall be in effect.
(h) GGO . The GGO Share Distribution and the issuance by GGO of the GGO Warrants shall have occurred in accordance with this Agreement. In connection with the implementation of the GGO Share Distribution, (i) the Company shall have provided Purchaser with reasonable access to all relevant information and consulted and cooperated in good faith with Purchaser and the GGO Representative with respect to the contribution of the Identified Assets to GGO in accordance with Section 2.1(a) , and (ii) all actions taken by the Company and its Subsidiaries related thereto and all documentation related to the formation and organization of GGO, the implementation of the GGO Share Distribution, to separate the business of the Company and GGO and other intercompany arrangements between the Company and GGO, in each case, shall be reasonably satisfactory to Purchaser and shall be in full force and effect.
(i) GGO Common Stock . GGO shall not have issued and outstanding on a Fully Diluted Basis immediately following the Closing more than the GGO Common Share Amount of shares of GGO Common Stock (plus (A) an aggregate 5,250,000 shares issuable to the Purchaser and the Fairholme/Pershing Investors pursuant to this Agreement and the Fairholme/Pershing Agreements, (B) such shares of GGO Common Stock issuable upon exercise of the GGO Warrants pursuant to Section 5.2 , (C) such shares of GGO Common Stock issuable upon the exercise of warrants that may be issued to the Fairholme/Pershing Investors pursuant to the Fairholme/Pershing Agreements).
(j) Valid Issuance . The Shares, Warrants, New Warrants and GGO Warrants and the GGO Shares shall be validly issued to Purchaser (against payment therefor in the case of the Shares and the GGO Shares). The Company and GGO shall have executed and delivered the warrant agreement for each of the New Warrants and the GGO Warrants, together with such other customary documentation as Purchaser may reasonably request in connection with such issuance; each warrant agreement shall be in full force and effect and neither the Company nor GGO shall be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(k) No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that prohibits the issuance or sale of, pursuant to this Agreement, the Shares, the issuance of Warrants, New Warrants, GGO Shares, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants; and no injunction or
order of any federal, state or foreign court shall have been issued that prohibits the issuance or sale, pursuant to this Agreement, of the Shares, the GGO Shares, the Warrants, New Warrants, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants.
(l) Registration Rights Agreements . Each of the Company and GGO shall have entered into a registration rights agreement with Purchaser with respect to all registrable securities issued to or held by Purchaser or any Brookfield Consortium Member from time to time in a manner that permits the registered offering of securities pursuant to such methods of sale as Purchaser may reasonably request from time to time. Each registration rights agreement shall provide for (i) an unlimited number of shelf registration demands on Form S-3 to the extent that the Company or GGO, as applicable, is then permitted to file a registration statement on Form S-3, (ii) if the Company or GGO, as applicable, is not eligible to use Form S-3, the filing by the Company or GGO, as applicable, of a registration statement on Form S-1 or Form S-11, as applicable, and the Company or GGO, as applicable, using its reasonable best efforts to keep such registration statement continuously effective; (iii) piggyback rights not less favorable than those provided in the Warrant Agreement; (iv) with respect to the Company, underwritten offerings during the term of the registration rights agreement, but not more than one (1) underwritten offering in any 12-month period during the three (3) year period following the Closing Date and not more than two (2) underwritten offerings in any 12-month period thereafter, provided that in no event shall the Company be required to effect more than three (3) underwritten offerings in the aggregate in any 12-month period at the request of Purchaser and the Other Sponsors and, with respect to GGO, at least three underwritten offerings during the term of the registration rights agreement, but not more than one in any 12-month period; (v) “black-out” periods not less favorable than those provided in the Warrant Agreement; (vi) “lock-up” agreements by the Company or GGO, as applicable, to the extent requested by the managing underwriter in any underwritten public offering requested by Purchaser consistent with those provided in the Warrant Agreement (it being understood that the registration rights agreement will include procedures, reasonably acceptable to Purchaser and the Company, designed to ensure that the total number of days that the Company or GGO, as applicable, may be subject to a lock-up shall not, in the aggregate after taking into account any applicable lock-up periods resulting from registration rights agreements between the Company or GGO, as applicable, and the Fairholme/Pershing Investors, exceed 120 days in any 365-day period); (vii) to the extent that Purchaser and any Brookfield Consortium Member in the aggregate hold in excess of 20% of the New Common Stock or GGO Common Stock, as applicable, on a fully diluted basis at the time of an underwritten public offering by the Company or GGO, as applicable, Purchaser and such Brookfield Consortium Member will agree to a 60-day customary lock up to the extent requested by the managing underwriter; and (viii) other terms and conditions reasonably acceptable to Purchaser. The registration rights agreement shall be in full force and effect and neither the Company nor GGO shall be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(m) Listing . The Shares shall be authorized for listing on the NYSE, subject to official notice of issuance, and the shares of New Common Stock issuable upon exercise of the New Warrants shall be eligible for listing on the NYSE. The GGO Shares shall be authorized for listing on a U.S. national securities exchange, subject to official notice of issuance, and the
shares of GGO Common Stock issuable upon exercise of the GGO Warrants shall be eligible for listing on a U.S. national securities exchange.
(n) Liquidity . The Company shall have, on the Effective Date and after giving effect to the use of proceeds from Capital Raising Activities permitted under this Agreement and the issuance of the Shares, and the payment and/or reserve for all allowed and disputed claims under the Plan, transaction fees and other amounts required to be paid in cash under the Plan as contemplated by the Plan Summary Term Sheet, an aggregate amount of not less than $350,000,000 of Proportionally Consolidated Unrestricted Cash (the “ Liquidity Target ”) plus the net proceeds of the Additional Financings and the aggregate principal amount of the Anticipated Debt Paydowns (or such higher number as may be agreed to by Purchaser and the Company) plus the excess, if any, of (A) the aggregate principal amount of New Debt and the Reinstated Amounts over (B) $1,500,000,000. For the avoidance of doubt, the reserve shall (i) include (a) the Contingent and Disputed Debt Claims, and (b) an estimate of the cash component of a potential dividend to be issued by the Company as a result of the spin-off of GGO, and (ii) exclude any amounts to be paid in Shares. In addition, to the extent that there is any availability under the Debt Cap, then such amount shall be included in Proportionally Consolidated Unrestricted Cash as if the Company had such amount in cash.
(o) Board of Directors . Three persons designated by Purchaser pursuant to Section 5.10(a) shall have been duly appointed to the Company Board and one person designated by Purchaser pursuant to Section 5.10(b) shall have been duly appointed to the GGO Board.
(p) Debt of the Company . Immediately following the Closing after giving effect to the Plan, the aggregate outstanding Proportionally Consolidated Debt shall not exceed $22,250,000,000 in the aggregate minus (i) the amount of Proportionally Consolidated Debt attributable to assets sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement through the Closing and minus (ii) the excess, if any, of $1,500,000,000 over the aggregate principal amount of new Unsecured Indebtedness incurred after the date of this Agreement and on or prior to the Closing Date for cash (“ New Debt ”) and the aggregate principal amount of any Debt under the Rouse Bonds or the Exchangeable Notes that is reinstated or issued under the Plan (such amounts reinstated or issued, the “ Reinstated Amounts ”) minus (iii) the amount of Proportionally Consolidated Debt attributable to Identified Assets contributed to GGO pursuant to Section 2.1(a) , minus (iv) the amount of Proportionally Consolidated Debt attributable to assets other than Identified Assets contributed to GGO pursuant to Section 2.1(a) minus (v) the principal and/or liquidation preference of the TRUPS and the UPREIT Units not reinstated, plus (vi) in the event the Closing occurs prior to September 30, 2010, the amount of scheduled amortization on Proportionally Consolidated Debt (other than Corporate Level Debt) from the Closing Date to September 30, 2010 that otherwise would have been paid by September 30, 2010, minus (vii) in the event the Closing occurs on or after September 30, 2010, the amount of actual amortization paid on Proportionally Consolidated Debt (other than Corporate Level Debt) from September 30, 2010 to the Closing Date, plus (viii) (A) the excess of the aggregate principal amount of new Debt incurred to refinance existing Debt in accordance with Section 7.1(r)(vii) hereof over the principal amount of the Debt so refinanced and (B) new Debt incurred to finance unencumbered Company Properties and Non-Controlling Properties after the date of this Agreement and on or prior to the Closing (such amounts contemplated by clauses (A) and (B) collectively, the
“ Additional Financing ”) plus (ix) the amount of other principal paydowns, writedowns and resulting impact on amortization (or payments in the anticipated amortization schedule with respect to Fashion Show Mall (Fashion Show Mall LLC), The Shoppes at the Palazzo and Oakwood Shopping Center (Gretna, LA)) currently anticipated to be made by the Company in connection with refinancings, or completion of negotiations in respect of its property level Debt which the Company determines in good faith are not actually required to be made prior to Closing (“ Anticipated Debt Paydowns ”) plus (x) the excess, if any, of (A) the aggregate principal amount of New Debt and the Reinstated Amounts over (B) $1,500,000,000 plus (xi) the aggregate amount of the Bridge Notes (as defined in the Pershing Agreement) issued pursuant to Section 1.4 of the Pershing Agreement (and the parties agree that such Bridge Notes shall not be included in the calculation of Closing Date Net Debt or Closing Date Net Debt W/O Reinstatement Adjustment) (the aggregate amount calculated pursuant to this Section 7.1(p) , the “ Debt Cap ”).
(q) Outstanding Common Stock . The number of issued and outstanding shares of New Common Stock on a Fully Diluted Basis (including the Shares) shall not exceed the Share Cap Number. The “ Share Cap Number ” means 1,104,683,256 plus the number of shares (if any) issued to settle or otherwise satisfy Hughes Heirs Obligations, plus up to 65,000,000 shares of New Common Stock issued in Liquidity Equity Issuances, plus the shares of New Common Stock issuable upon the exercise of the New Warrants, plus the shares of New Common Stock issuable upon the exercise of those certain warrants issued to the Fairholme/Pershing Investors pursuant to the Fairholme/Pershing Agreements, plus the number of shares of Common Stock issued as a result of the exercise of employee stock options to purchase Common Stock outstanding on the date hereof, plus 90,000 shares of Common Stock issued to directors of the Company, plus the number of shares into which any reinstated Exchangeable Notes can be converted, plus, in the event shares of New Common Stock are issued pursuant to Section 6.9 , the difference between (i) the number of shares of New Common Stock issued to existing holders of Common Stock and the Initial Investors, in each case, pursuant to Section 6.9 ) minus (ii) 50,000,000 shares of New Common Stock, minus the number of Put Shares (as defined in the Pershing Agreement) under the Pershing Agreement (which shall not be considered Share Equivalents for purposes of this calculation); provided , that if Indebtedness under the Rouse Bonds or the Exchangeable Notes is reinstated under the Plan, or the Company shall have incurred New Debt, or between the date of this Agreement and the Closing Date the Company shall have sold for cash real property assets outside of the ordinary course of business (“ Asset Sales ”), the Share Cap Number shall be reduced by the quotient (rounded up to the nearest whole number) obtained by dividing (x) the sum of (a) the lesser of (I) $1,500,000,000 and (II) the sum of Reinstated Amounts and the net cash proceeds to the Company from the issuance of New Debt, and (b) the net cash proceeds to the Company from Asset Sales in excess of $150,000,000 by (y) the Per Share Purchase Price.
(r) Conduct of Business . The following shall be true in all material respects as of the Closing Date:
Except as otherwise expressly provided or permitted, or contemplated, by this Agreement or the Plan Summary Term Sheet (including, without limitation, in connection with implementing the matters contemplated by Article II hereof) or any order of the Bankruptcy Court in effect on the
date of the Agreement, during the period from the date of this Agreement to the Closing, the following actions shall not have been taken without the prior written consent of Purchaser (which consent Purchaser agrees shall not be unreasonably withheld, conditioned or delayed):
(i) the Company shall not have (A) declared, set aside or paid any dividends on, or made any other distributions in respect of, any of the Company’s capital stock (other than dividends required to retain REIT status or to avoid the imposition of entity level taxes), (B) split, combined or reclassified any of its capital stock or issued or authorized the issuance of any other securities in respect of, in lieu of or in substitution for its capital stock, or (C) purchased, redeemed or otherwise acquired (other than as set forth on Section 7.1(r)(i) of the Company Disclosure Letter or pursuant to Company Benefit Plans) any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(ii) the Company shall not have amended the Company’s certificate of incorporation or bylaws other than to increase the authorized shares of capital stock;
(iii) neither the Company nor any of its Subsidiaries shall have acquired or agreed to acquire by merging or consolidating with, or by purchasing a substantial portion of the stock, or other ownership interests in, or substantial portion of assets of, or by any other manner, any business or any corporation, partnership, association, joint venture, limited liability company or other entity or division thereof except (A) in the ordinary course of business, (B) for transactions with respect to joint ventures existing on the date hereof valued at less than $10,000,000 or (C) for transactions valued at less than $10,000,000 in the aggregate;
(iv) none of the Company Properties, Non-Controlling Properties or Identified Assets shall have been sold or otherwise transferred, except, (A) in the ordinary course of business, (B) to a wholly owned Subsidiary of the Company (which Subsidiary shall be subject to the same restrictions under this subsection (iv)), and (C) for sales or other transfers, the net proceeds of which shall not exceed $1,000,000,000 in the aggregate, when taken together with all such sales and other transfers of Company Properties, Non-Controlling Properties and Identified Assets (the “ Sales Cap ”); provided that the Sales Cap shall not apply with respect to sales or transfers of Identified Assets to the extent the same shall have been consummated in accordance with the express terms and conditions set forth in Article II hereof;
(v) [Intentionally Omitted]
(vi) none of the Company or any of its Subsidiaries shall have issued, delivered, granted, sold or disposed of any Equity Securities (other than (A) issuances of shares of Common Stock issued pursuant to, and in accordance with, Section 7.1(u) , but subject to Section 7.1(q) , (B) pursuant to the Equity Exchange, (C) the issuance of shares pursuant to the exercise of employee stock options issued pursuant to the Company Option Plans, (D) as set forth on Section 7.1(u) of the Company Disclosure Letter), or (E) the issuance of shares to existing holders of Common Stock and the Backstop Investors, in each case, pursuant to Section 6.9 );
(vii) none of the Company Properties or Identified Assets shall have been mortgaged, or pledged, nor shall the owner or lessee thereof have granted a lien, mortgage, pledge, security interest, charge, claim or other Encumbrance relating to debt obligations of any kind or nature on, or otherwise encumbered, any Company Property or Identified Assets except in the ordinary course of business consistent with past practice, other than encumbrances of Company Properties or Identified Assets of Debtors in connection with (A) a restructuring of existing indebtedness for borrowed money related to any such Company Property or Identified Asset with the existing lender(s) thereof or (B) a refinancing of existing indebtedness for borrowed money related to any Company Property or Identified Asset in an amount not to exceed $300,000,000 (the “ Refinance Cap ”), provided that (x) the Refinance Cap shall not apply to a refinancing of the existing first lien indebtedness secured by the Fashion Show Mall, (y) in the event that a refinancing is secured by mortgages, deeds of trust, deeds to secure debt or indemnity deeds of trust encumbering multiple Company Properties and Identified Assets, the proceeds of such refinancing shall not exceed an amount equal to the Refinance Cap multiplied by the number of Company Properties and Identified Assets so encumbered, and (z) in connection with refinancing the indebtedness of a Company Property or Identified Asset owned by a Joint Venture, the Refinance Cap shall apply with respect to the aggregate share of such indebtedness which is allocable to, or guaranteed by (but without duplication), the Company and/or its Subsidiaries;
(viii) none of the Company or any of its Subsidiaries shall have undertaken any capital expenditure that is out of the ordinary course of business consistent with past practice and material to the Company and its Subsidiaries taken as a whole, except as contemplated in the Company’s business plan for fiscal year 2010 adopted by the board of directors of the Company prior to the date hereof; or
(ix) the Company shall not have changed any of its methods, principles or practices of financial accounting in effect, other than as required by GAAP or regulatory guidelines (and except to implement purchase accounting and/or “fresh start” accounting if the Company elects to do so).
(s) REIT Opinion . Purchaser shall have received an opinion of Arnold & Porter LLP, dated as of the Closing Date, substantially in the form attached hereto as Exhibit J , that the Company (x) for all taxable years commencing with the taxable year ended December 31, 2005 through December 31, 2009, has been subject to taxation as a REIT and (y) has operated since January 1, 2010 to the Closing Date in a manner consistent with the requirements for qualification and taxation as a REIT.
(t) Non-Control Agreement . The Company shall have entered into the Non-Control Agreement with Purchaser. The Non-Control Agreement shall be in full force and effect and the Company shall not be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(u) Issuance or Sale of Common Stock . Neither the Company nor any of its Subsidiaries shall have issued or sold any shares of Common Stock (or securities, warrants or options that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock) (other than (A) pursuant to the Equity Exchange, (B) the issuance of shares pursuant to the exercise of employee stock options issued pursuant to the Company Option Plans, (C) as set forth on Section 7.1(u) of the Company Disclosure Letter or (D) the issuance of shares to existing holders of Common Stock and the Backstop Investors, in each case, pursuant to Section 6.9 ), unless (1) the purchase price (or, in the case of securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock, the conversion, exchange or exercise price) shall not be less than $10.00 per share (net of all underwriting and other discounts, fees and any other compensation; provided , that for purposes hereof, payments to the Fairholme Investors or the Pershing Investors in accordance with Section 1.4 of the Fairholme Agreement or the Pershing Agreement, respectively, shall not be considered a discount, fee or other compensation), (2) following such issuance or sale, (x) no Person (other than (i) Purchaser, Brookfield Consortium Members, the Fairholme/Pershing Investors and their respective Affiliates and (ii) any institutional underwriter or initial purchaser acting in an underwriter capacity in an underwritten offering) shall, after giving effect to such issuance or sale, beneficially own more than 10% of the Common Stock of the Company on a Fully Diluted Basis, and (y) no four Persons (other than Purchaser, Brookfield Consortium Members, the Fairholme/Pershing Investors and their respective Affiliates) shall, after giving effect to such issuance or sale, beneficially own more than thirty percent (30%) of the Common Stock on a Fully Diluted Basis; provided , that this clause (2) shall not be applicable to any conversion or exchange of claims against the Debtors into New Common Stock pursuant to the Plan; provided , further , that subclause (y) of this clause (2) shall not be applicable with respect to any Person listed on Exhibit N and (3) Purchaser shall have been offered the right to purchase up to 15% of such shares of Common Stock (or securities, warrants or options that are convertible into or exchangeable or exercisable for Common Stock) on terms otherwise consistent with Section 5.9 (except the provisions of such Section 5.9 with respect to issuances contemplated by this Section 7.1(u) shall apply from the date of this Agreement) ( provided that the right described in this
clause (3) shall not be applicable to the issuance of shares or warrants contemplated by the Fairholme/Pershing Agreements, or any conversion or exchange of debt or other claims into equity in connection with the Plan).
(v) Hughes Heirs Obligations . The Hughes Heirs Obligations shall have been determined by order of the Bankruptcy Court entered on or prior to the Effective Date (which order may be the Confirmation Order or another order entered by the Bankruptcy Court) and satisfied in accordance with the terms of the Plan. For the avoidance of doubt, to the extent that holders of Hughes Heirs Obligations or other Claims against or interests in the Debtors arising under or related to the Hughes Agreement receive any consideration in respect of such obligations, Claims or interests under the Plan, there shall be no reduction in the number of shares of New Common Stock or GGO Common Stock otherwise to have been distributed on the Effective Date under the Plan in the Equity Exchange or the GGO Share Distribution, as applicable .
(w) GGO Promissory Note . The GGO Promissory Note, if any, shall have been issued by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
SECTION 8.1 Conditions to the Obligations of the Company . The obligation of the Company to issue the Shares and the obligation of GGO to issue the GGO Shares pursuant to this Agreement on the Closing Date are subject to the satisfaction (or waiver by the Company) of the following conditions as of the Closing Date:
(a) No Injunction . No judgment, injunction, decree or other legal restraint shall prohibit the consummation of the Plan or the transactions contemplated by this Agreement.
(b) Regulatory Approvals; Consents . All permits, consents, orders, approvals, waivers, authorizations or other permissions or actions of third parties and Governmental Entities required for the consummation of the transactions contemplated by this Agreement and the Plan shall have been made or received, as the case may be, and shall be in full force and effect, except for those permits, consents, orders, approvals, waivers, authorizations or other permissions or actions the failure of which to make or receive would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(c) Representations and Warranties and Covenants . Each of (i) the representations and warranties of Purchaser contained in Section 4.1 , Section 4.2 , Section 4.3 , and Section 4.12 in this Agreement shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct only as of such specific date), and (ii) the other representations and warranties of Purchaser contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to “materiality”, shall be true and correct at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of the Closing Date
(except for representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated by this Agreement. Purchaser shall have complied in all material respects with all of its obligations under this Agreement. Purchaser shall have provided to the Company a certificate delivered by an executive officer of the managing member of Purchaser, acting in his or her official capacity on behalf of Purchaser, to the effect that the conditions in this clause (c) have been satisfied as of the Closing Date.
(d) Plan and Confirmation Order . The Plan shall have been confirmed by the Bankruptcy Court by order, which order shall be in full force and effect and not subject to a stay of effectiveness.
(e) Conditions to Confirmation . The conditions to confirmation and the conditions to the Effective Date of the Plan shall have been satisfied or waived in accordance with the Plan.
(f) GGO . The GGO Share Distribution shall have occurred.
(g) No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that prohibits the issuance or sale of, pursuant to this Agreement, the Shares, the issuance of Warrants, New Warrants, GGO Shares, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants; and no injunction or order of any federal, state or foreign court shall have been issued that prohibits the issuance or sale, pursuant to this Agreement, of the Shares, the GGO Shares, the Warrants, the New Warrants, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants.
(h) Reorganization Opinion . The Company shall have received an opinion of Weil, Gotshal & Manges LLP, dated as of the Closing Date, in form and substance reasonably satisfactory to the Company, substantially to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion, the exchange of Common Stock for New Common Stock in the Equity Exchange should be treated as a reorganization within the meaning of Section 368(a) of the Code. In rendering such opinion, Weil, Gotshal & Manges LLP may require and rely upon representations and covenants made by the parties to this Agreement.
(i) IRS Ruling . The Company shall have obtained a favorable written ruling from the United States Internal Revenue Service confirming the qualification of the GGO Share Distribution and the prerequisite internal spin-offs each as a “tax free spin-off” under the Code.
(j) Funding . Purchaser shall have paid to the Company and GGO, as applicable, all amounts payable by Purchaser under Article I and Article II of this Agreement, by wire transfer of immediately available funds to such account or accounts as shall have been designated in writing by the Company at least three (3) Business Days prior to the Closing Date.
(k) REIT Matters . The representations and covenants set forth on Exhibit D in respect of Purchaser and, to the extent applicable, its Affiliates, members, Affiliates of members or designees, shall be true and correct in all material respects as of the Closing Date as if made at and as of the Closing Date, it being understood that Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations and covenants only if such Person beneficially owns Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by Purchaser.
(l) Non-Control Agreement . Purchaser shall have entered into the Non-Control Agreement with the Company. The Non-Control Agreement shall be in full force and effect and Purchaser shall not be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(m) GGO Promissory Note . The GGO Promissory Note, if any, shall have been issued by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnification .
(a) Subject to Section 9.1(b) , the Company shall indemnify and hold harmless Purchaser, its members and partners and their respective Affiliates, officers, directors, employees, agents, advisors and controlling persons (each an “ Indemnified Person ”), from and against any and all losses, claims, damages, liabilities and reasonable expenses to which any such Indemnified Person may become subject, in each case, to the extent arising solely and directly out of any claim, challenge, litigation, investigation or proceeding initiated by a third party with respect to cooperation and assistance provided by Purchaser to the Company pursuant to Section 5.3(a) of this Agreement (but, for the avoidance of doubt, not other transactions relating to the Plan), and to reimburse such Indemnified Persons for any reasonable legal or other out-of-pocket expenses as they incur in connection with investigating, responding to or defending any of the foregoing. Notwithstanding the foregoing or anything to the contrary, t he Company will not be responsible to indemnify or reimburse any Indemnified Person for anything resulting from willful misconduct or gross negligence of any Indemnified Person.
(b) Promptly after receipt by an Indemnified Person of notice of the commencement of any claim, litigation, investigation or proceeding for which indemnification is provided pursuant to this Agreement (“ Proceedings ”), Purchaser shall, if a claim is to be made hereunder against the Company in respect thereof, notify the Company in writing of the commencement thereof; provided that the omission so to notify the Company shall not relieve it from any liability that it may have hereunder except to the extent it has been materially prejudiced by such failure. In case any such Proceedings are brought against any Indemnified Person, the Company shall be entitled to participate therein, and, to the extent that it may elect by written notice
delivered to Purchaser, to assume the defense thereof, with counsel reasonably satisfactory to Purchaser, provided that if the defendants in any such Proceedings include both such Indemnified Person and the Company and such Indemnified Person shall have reasonably concluded based on the advice of outside counsel that there are legal defenses available to it that are different from or additional to those available to the Company such that representation by counsel for the Company would involve a material conflict of interest, such Indemnified Persons shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Proceedings on behalf of such Indemnified Person. The Company shall not be liable to any Indemnified Person for legal expenses incurred by such Indemnified Person in connection with the defense of any Proceeding unless (i) such Indemnified Person shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the Company shall not be liable under either this (i) or the following clause (ii) for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Proceedings) or (ii) the Company shall not have employed counsel reasonably satisfactory to Purchaser to represent such Indemnified Person within a reasonable time after notice of commencement of the Proceedings.
(c) The Company shall not be liable for any settlement of any Proceedings effected without its written consent (which consent shall not be unreasonably withheld). If any settlement of any Proceeding is consummated with the written consent of the Company or if there is a final judgment for the plaintiff in any such Proceedings, the Company agrees to indemnify and hold harmless each Indemnified Person from and against any and all losses, claims, damages, liabilities and expenses by reason of such settlement or judgment in accordance with, and subject to the limitations of, the provisions of this Article IX . The Company shall not, without the prior written consent of an Indemnified Person (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened Proceedings in respect of which indemnity is provided hereunder by such Indemnified Person unless such settlement (i) includes an unconditional release of such Indemnified Person from all liability on the claims that are (1) the subject matter of such Proceedings and (2) subject to indemnification under this Article IX and (ii) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 10.1 Survival of Representations and Warranties . The representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement but shall terminate and be of no further force and effect following the earlier of (i) the termination of this Agreement in accordance with Article XI and (ii) the Closing.
ARTICLE XI
TERMINATION
SECTION 11.1 Termination . This Agreement and the obligations of the parties hereunder shall terminate automatically without any action by any party if (i) the Company has not filed the Approval Motion within two Business Days following the date of this Agreement, (ii) the Approval Order, in form and substance satisfactory to Purchaser, approving, among other things, the issuance of the Warrants, is not entered by the Bankruptcy Court on or prior to the date that is 43 days after the date of this Agreement or (iii) if the Debtors withdraw the Approval Motion, in each of cases (i), (ii) and (iii) unless Purchaser and the Company otherwise agree in writing. In addition, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Purchaser and the Company;
(b) by Purchaser by written notice to the Company upon the occurrence of any of the following events (which notice shall specify the event upon which such termination is based):
(i) if the Effective Date and the purchase and sale contemplated by Article I have not occurred by the Termination Date; provided , however , that the right to terminate this Agreement under this Section 11.1(b)(i) shall not be available to Purchaser if it has breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused the Closing Date not to occur on or before the Termination Date;
(ii) if any Bankruptcy Cases of the Company or any Debtor which is a Significant Subsidiary shall have been dismissed or converted to cases under chapter 7 of the Bankruptcy Code or if an interim or permanent trustee or an examiner shall be appointed to oversee or operate any of the Debtors in their Bankruptcy Cases, in each case, except (x) as would not reasonably be expected to have a Material Adverse Effect or (y) with respect to the Bankruptcy Cases for Phase II Mall Subsidiary, LLC, Oakwood Shopping Center Limited Partnership and Rouse Oakwood Shopping Center, LLC;
(iii) if, from and after the issuance of the Warrants, the Approval Order shall without the prior written consent of each Purchaser, cease to be in full force and effect resulting in the cancellation of any Warrants or a modification of any Warrants, in each case, other than pursuant to their terms, that adversely affects any Purchaser;
(iv) if, without Purchaser’s consent, the Warrants have not been issued to Purchaser in accordance with Section 5.2 , or if after the Warrants are issued, any shares of Common Stock underlying the Warrants cease at any time to be authorized for issuance on a U.S. national securities exchange;
(v) if there has been a breach by the Company of any representation, warranty, covenant or agreement of the Company contained in this Agreement or the Company shall have taken any action which, in each case, (A) would result in a failure of a condition set forth in Article VII and (B) cannot be cured prior to the Termination Date,
after written notice to the Company of such breach and the intention to terminate this Agreement pursuant to this Section; provided , however , that the right to terminate this Agreement under this Section shall not be available to Purchaser if it has breached in any material respect its obligations under this Agreement;
(vi) if the Company consummates a Competing Transaction;
(vii) if the Company or any Subsidiary of the Company issues any shares of Common Stock or New Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock or New Common Stock) at a purchase price (or in the case of securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock or New Common Stock, the conversion, exchange, exercise or comparable price) of less than $10.00 per share (net of all underwriting and other discounts, fees and any other compensation and related expenses; provided , that for purposes hereof, payments to the Fairholme Investors or the Pershing Investors in accordance with Section 1.4 of the Fairholme Agreement or the Pershing Agreement, respectively, shall not be considered a discount, fee or other compensation) of Common Stock or New Common Stock or converts any claim against any of the Debtors into New Common Stock at a conversion price less than $10.00 per share of Common Stock or New Common Stock (in each case, other than pursuant to (A) the exercise, exchange or conversion of Share Equivalents of the Company existing on the date of this Agreement in accordance with the terms thereof as of the date of this Agreement, (B) the Equity Exchange, (C) the issuance of shares upon the exercise of employee stock options issued pursuant to the Company Option Plans, (D) the issuance of shares as set forth on Section 7.1(u) of the Company Disclosure Letter, or (E) the issuance of shares to existing holders of Common Stock and the Backstop Investors, in each case, pursuant to Section 6.9 ;
(viii) [Intentionally Omitted]
(ix) if the Bankruptcy Court shall have entered a final and non-appealable order denying confirmation of the Plan;
(x) if this Agreement, including the Plan Summary Term Sheet, or the Plan, is revised or modified (except as otherwise permitted pursuant to this Agreement) by the Company or an order of the Bankruptcy Court or other court of competent jurisdiction in a manner that is unacceptable to Purchaser or a plan of reorganization with respect to the Debtors involving the Transactions that is unacceptable to Purchaser is filed by the Debtors with the Bankruptcy Court or another court of competent jurisdiction;
(xi) if any Governmental Entity of competent jurisdiction shall have issued a final and nonappealable order permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement (the “ Closing Restraint ”);
(xii) prior to the issuance of the Warrants, if the Company (A) makes a public announcement, enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its decision to support any Competing
Transaction, or the Company or any Subsidiary of the Company enters into a definitive agreement providing for a Competing Transaction or (B) the Company provides notice to Purchaser of the Company’s or any of its Subsidiaries’ decision to enter into a definitive agreement providing for a Competing Transaction pursuant to Section 5.7 ; or
(c) by the Company upon the occurrence of any of the following events:
(i) if the Effective Date and the purchase and sale contemplated by Article I have not occurred by the Termination Date; provided , however , that the right to terminate this Agreement under this Section 11.1(c)(i) shall not be available to the Company to the extent that it has breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused the Closing Date not to occur on or before the Termination Date (it being agreed that this proviso shall not limit the Company’s ability to terminate this Agreement pursuant to Section 11.1(c)(ii) or any other clause of this Section 11.1(c) );
(ii) prior to the entry of the Confirmation Order, upon notice to Purchaser, for any reason or no reason, effective as of such time as shall be specified in such notice; provided, however, that prior to the entry of the Approval Order, the Company shall not have the right to terminate this Agreement under this Section 11.1(c)(ii) during the 48 hour notice period contemplated by Section 5.7 ;
(iii) if all conditions to the obligations of Purchaser to consummate the transactions contemplated by this Agreement set forth in Article VII shall have been satisfied (other than those conditions that are to be satisfied (and capable of being satisfied) by action taken at the Closing if Purchaser had complied with its obligations under this Agreement) and the transactions contemplated by this Agreement fail to be consummated as a result of the failure of Purchaser to have paid to the Company and GGO, as applicable, all amounts payable by Purchaser under Article I and Article II of this Agreement, by wire transfer of immediately available funds in accordance with the terms of this Agreement;
(iv) if as of the twentieth (20th) day (or if this twentieth (20 th ) day is not a Business Day the next Business Day following the date of this Agreement), Purchaser has not (i) received an executed equity commitment from Brookfield Asset Management Inc. (the “ Brookfield Equity Commitment Letter ”) in the form attached hereto as Exhibit K and (ii) either (A) entered into escrow agreements with members of Purchaser (each an “ Equity Provider ”) in the form attached hereto as Exhibit L (each an “ Escrow Agreement ”, and together, the “ Escrow Agreements ”) pursuant to which such members of Purchaser shall have deposited into an escrow account with Deutsche Bank National Trust Company such funds that when taken together with the commitment contemplated by the Brookfield Equity Commitment Letter shall be sufficient in the aggregate to pay the Purchase Price and the GGO Purchase Price, or (B) such members of Purchaser shall have established one or more Acceptable LCs (as defined in the Escrow Agreements) in lieu of one or more of the escrow accounts contemplated by the Escrow Agreements; or
(v) if a Closing Restraint is in effect.
SECTION 11.2 Effects of Termination .
(a) In the event of the termination of this Agreement pursuant to Article XI , this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any party hereto except after the entry of the Approval Order the covenants and agreements made by the parties herein under Section 5.1(c) , Section 5.14(a) , Article IX and in all circumstances Article XIII shall survive indefinitely in accordance with their terms. Except as otherwise expressly provided in the Warrants or paragraph (b) below, the Warrants when issued in accordance with Section 5.2 hereof and all obligations of the Company under the Warrant Agreement shall survive any termination of this Agreement.
(b) In the event of a termination of this Agreement by the Company pursuant to Section 11.1(c)(iii) , the Warrants shall automatically be canceled, shall no longer be outstanding or capable of exercise and shall cease to exist. The foregoing shall be a term of the Warrants.
ARTICLE XII
DEFINITIONS
SECTION 12.1 Defined Terms . For purposes of this Agreement, the following terms, when used in this Agreement with initial capital letters, shall have the respective meanings set forth in this Agreement:
(a) “ 2006 Bank Loan ” means that certain Second Amended and Restated Credit Agreement, dated as of February 24, 2006, by and among the Company, the Operating Partnership and GGPLP L.L.C., as borrowers, the lenders named therein, Banc of America Securities LLC, Eurohypo AG, New York Branch and Wachovia Capital Markets, LLC, as joint arrangers and joint bookrunners, Eurohypo AG, New York Branch, as administrative agent, Bank of America, N.A. and Wachovia Bank, National Association, as syndication agents, and Commerzbank AG and Lehman Commercial Paper, Inc., as co-documentation agents.
(b) “ Additional Sales Period ” means in the case of Section 5.9(a)(iv)(A) , the 120 day period following the date of the Company’s notice to Purchaser pursuant to Section 5.9(a)(ii), and in the case of Section 5.9(a)(iv)(B) , the 120 day period following (x) the expiration of the 180 day period specified in Section 5.9(a)(iii) or (y) if earlier, the date on which it is finally determined that Purchaser is unable to consummate such purchase contemplated by Section 5.9(a)(iii) within such 180 day period specified in Section 5.9(a)(iii) .
(c) “ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
(d) “ Brazilian Entities ” means those certain Persons in which the Company indirectly owns an interest which own real property assets or have operations located in Brazil.
(e) “ Brookfield Consortium Member ” means Brookfield Asset Management Inc. or any controlled Affiliate of Brookfield Asset Management Inc. or any Person of which Brookfield Asset Management Inc. or any Subsidiary or controlled Affiliate of Brookfield Asset Management Inc. is a general partner, managing member or equivalent thereof or a wholly owned subsidiary of the foregoing.
(f) “ Business Day ” means any day other than (a) a Saturday, (b) a Sunday, (c) any day on which commercial banks in New York, New York are required or authorized to close by Law or executive order.
(g) “ Cash Equivalents ” means as to any Person, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof ( provided , that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than 90 days from the date of acquisition by such Person, (b) time deposits and certificates of deposit of any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the Laws of the United States, any State thereof or the District of Columbia having capital, surplus and undivided profits aggregating in excess of $500,000,000, having maturities of not more than 90 days from the date of acquisition by such Person, (c) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in subsection (a) above entered into with any bank meeting the qualifications specified in subsection (b) above, (d) commercial paper issued by any issuer rated at least A-1 by S&P or at least P-1 by Moody’s or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and in each case maturing not more than one year after the date of acquisition by such Person or (e) investments in money market funds substantially all of whose assets are comprised of securities of the types described in subsections (a) through (d) above.
(h) “ Clawback Fee ” means the aggregate of the $0.25 per share fees paid by the Company to the Fairholme Investors and the Pershing Investors on the Effective Date in accordance with Section 1.4 of the Fairholme Agreement and the Pershing Agreement.
(i) “ Claims ” shall have the meaning set forth in section 101(5) of the Bankruptcy Code.
(j) “ Closing Date Net Debt ” means, as of the Effective Date but prior to giving effect to the Plan, the sum of, without duplication:
(i) the aggregate outstanding Proportionally Consolidated Debt plus any accrued and unpaid interest thereon (including the Contingent and Disputed Debt Claims) plus the amount of the New Debt,
(ii) less the Reinstatement Adjustment Amount,
(iii) plus the Permitted Claims Amount,
(iv) plus the amount of Proportionally Consolidated Debt attributable to assets of the Company, its Subsidiaries and other Persons in which the Company,
directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement and through the Closing, but excluding any deficiency, guaranty or other similar claims associated with the Special Consideration Properties (as such term is defined in the plan of reorganization for the applicable Confirmed Debtor),
(v) less Proportionally Consolidated Unrestricted Cash; provided, however, that the net proceeds attributable to sales of assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, or otherwise transferred during the period between the date of this Agreement and through the Closing shall be deducted prior to subtracting Proportionally Consolidated Unrestricted Cash.
(k) “ Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts ” means, as of the Effective Date but prior to giving effect to the Plan, the sum of, without duplication:
(i) the aggregate outstanding Proportionally Consolidated Debt plus any accrued and unpaid interest thereon plus the amount of the New Debt,
(ii) plus the amount of Proportionally Consolidated Debt attributable to assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement and through the Closing, but excluding any deficiency, guaranty or other similar claims associated with the Special Consideration Properties (as such term is defined in the plan of reorganization for the applicable Confirmed Debtor), and
(iii) less Proportionally Consolidated Unrestricted Cash; provided, however, that the net proceeds attributable to sales of assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, or otherwise transferred during the period between the date of this Agreement and through the Closing shall be deducted prior to subtracting Proportionally Consolidated Unrestricted Cash.
(l) “ Company Benefit Plan ” means each “employee benefit plan” within the meaning of Section 3(3) of ERISA and each other stock purchase, stock option, restricted stock, severance, retention, employment, consulting, change-of-control, collective bargaining, bonus, incentive, deferred compensation, employee loan, fringe benefit and other benefit plan, agreement, program, policy, commitment or other arrangement, whether or not subject to ERISA (including any related funding mechanism now in effect or required in the future), whether formal or informal, oral or written, in each case sponsored or maintained by the Company or any of its Significant Subsidiaries for the benefit of any past or present director, officer, employee,
consultant or independent contractor of the Company or any of its Significant Subsidiaries has any present or future right to benefits.
(m) “ Company Board ” means the board of directors of the Company.
(n) “ Competing Transaction ” means, other than the transactions contemplated by this Agreement or the Plan Summary Term Sheet, or by the Fairholme/Pershing Agreements, any offer or proposal relating to (i) a merger, consolidation, business combination, share exchange, tender offer, reorganization, recapitalization, liquidation, dissolution or similar transaction involving the Company or (ii) any direct or indirect purchase or other acquisition by a “person” or “group” of “beneficial ownership” (as used for purposes of Section 13(d) of the Exchange Act) of, or a series of transactions to purchase or acquire, assets representing 30% or more of the consolidated assets or revenues of the Company and its Subsidiaries taken as a whole or 30% or more of the Common Stock of the Company (or securities convertible into or exchangeable or exercisable for 30% or more of the Common Stock of the Company) or (iii) any recapitalization of the Company or the provision of financing to the Company that shall cause any condition in Section 7.1 not to be satisfied, in each case, other than the recapitalization and financing transactions contemplated by this Agreement and the Plan Summary Term Sheet (or the financing provided by the Fairholme/Pershing Investors pursuant to the Fairholme/Pershing Agreements) or that will be effected together with the transactions contemplated hereby.
(o) “ Conclusive Net Debt Adjustment Statement ” means a statement that: (i) sets forth each of the five components of the Closing Date Net Debt (for the avoidance of doubt, this shall include (x) the Permitted Claims Amount, which shall include the Reserve, (y) the Reinstatement Adjustment Amount, and (z) with respect to clauses (i), (iv) and (v) of the definition of Closing Date Net Debt, the Closing Date Net Debt Amount W/O Reinstatement Adjustment and Permitted Claims Amounts as determined through the process provided for in Sections 5.17(a) and 5.17(b) shall be used; provided , however , that such amounts shall be updated to reflect current information regarding cash, Claims, Debt and other similar information and any amendments to this Agreement agreed upon following completion of the process provided for in Sections 5.17(a) and 5.17(b) ), and (ii) sets forth the Net Debt Excess Amount or the Net Debt Surplus Amount, as applicable.
(p) “ Contingent and Disputed Debt Claims ” means contingent and disputed claims for default interest on (i) that certain promissory note, dated February 8, 2008, by GGP Limited Partnership in favor of The Comptroller of the State of New York, (ii) that certain promissory note, dated February 15, 2007, by GGP Limited Partnership in favor of Ivanhoe Capital LP, and (iii) the loan made to GGP, GGP Limited Partnership and GGPLP L.L.C., as borrowers, under that certain Second Amended and Restated Credit Agreement, dated as of February 24, 2006, under which Eurohypo AG, New York Branch is the Administrative Agent and any amendments, modifications or supplements thereto, in each case to the extent that any such claims have not been ruled on by the Bankruptcy Court or settled prior to the Effective Date.
(q) “ Contract ” means any agreement, lease, license, evidence of indebtedness, mortgage, indenture, security agreement or other contract.
(r) [ Intentionally Omitted .]
(s) “ Corporate Level Debt ” means the debt described in Sections II A, H through O, Q, R, S, W and X of the Plan Summary Term Sheet plus accrued and unpaid interest thereon.
(t) “ Debt ” means all obligations of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest (a) evidenced by (i) notes, bonds, debentures or other similar instruments (including, for avoidance of doubt, mezzanine debt), or (ii) trust preferred shares, trust preferred units and other preferred instruments, and/or (b) secured by a lien, mortgage or other encumbrance; provided , however , that Debt shall exclude (x) any form of municipal financing including, but not limited to, special improvement district bonds or tax increment financing, (y) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment), and (z) intercompany notes or preferred interests between and among the Company and its wholly owned Subsidiaries.
(u) “ DIP Loan ” means that certain Senior Secured Debtor in Possession Credit, Security and Guaranty Agreement, dated as of May 15, 2009, by and among the lenders named therein, UBS AG, Stamford Branch, as administrative agent for the lenders, the Company and the Operating Partnership, as borrowers, and the certain subsidiaries of the Company named therein, as guarantors.
(v) “ Disclosure Statement ” means the disclosure statement to accompany the Plan as amended, modified or supplemented.
(w) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
(x) “ Excess Surplus Amount ” means the sum of: (i) if, after giving effect to the application of the Reserve Surplus Amount to reduce the principal amount of the GGO Promissory Note pursuant to Section 5.17(d) , any Reserve Surplus Amount remains, (A) if and to the extent that such Reserve Surplus Amount is less than or equal to the Net Debt Surplus Amount, 80% of such remaining Reserve Surplus Amount, and otherwise (B) 100% of the remaining Reserve Surplus Amount; and (ii) (A) if a GGO Promissory Note is required to be issued at Closing, 80% of the aggregate Offering Premium, if any, less the amount of any reduction in the principal amount of the GGO Promissory Note pursuant to Section 5.17(e) hereof, or (B) if the GGO Promissory Note is not required to be issued at Closing, the sum of (x) 80% of the aggregate Offering Premium and (y) the excess, if any, of 80% of the Net Debt Surplus Amount over the Hughes Amount.
(y) “ Exchangeable Notes ” means the 3.98% Exchangeable Senior Notes Due 2027 issued pursuant to that certain Indenture, dated as of April 16, 2007, by and between the Operating Partnership, as issuer, and The Bank of New York Mellon Corporation, as trustee.
(z) “ Excluded Claims ” means:
(i) prepetition and postpetition Claims secured by cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar liens,
(ii) except with respect to Claims related to GGO or the assets or businesses contributed thereto, prepetition and postpetition Claims for all ordinary course trade payables for goods and services related to the operations of the Company and its Subsidiaries (including, without limitation, ordinary course obligations to tenants, anchors, vendors, customers, utility providers or forward contract counterparties related to utility services, employee payroll, commissions, bonuses and benefits (but excluding the Key Employee Incentive Plan approved by the Bankruptcy Court pursuant to an order entered on October 15, 2009 at docket no. 3126), insurance premiums, insurance deductibles, self insured amounts and other obligations that are accounted for, consistent with past practice prior to the Petition Date, as trade payables); provided, however, that Claims or expenses related to the administration and conduct of the Bankruptcy Cases (such as professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases and other expenses, fees and commissions related to the reorganization and recapitalization of the Company pursuant to the Plan, including related to this Agreement, the Pershing/Fairholme Agreements, the issuance of the New Debt, Liquidity Equity Issuances and any other equity issuances contemplated by this Agreement and the Plan) shall not be Excluded Claims,
(iii) except with respect to Claims related to GGO or the assets or businesses contributed thereto, Claims and liabilities arising from the litigation or potential litigation matters set forth in that certain Interim Litigation Report of the Company dated March 29, 2010 and the Company’s litigation audit response to Deloitte & Touche dated February 25, 2010, both have been made available to Purchaser prior to close of business on March 29, 2010 and other Claims and liabilities arising from ordinary course litigation or potential litigation that was not included in such schedule solely because the amount of estimated or asserted liabilities or Claims did not meet the threshold amount used for the preparation of such schedule, in each case, to the extent that such Claims and liabilities have not been paid and satisfied as of the Effective Date, are continuing following the Effective Date, excluding Claims against or interests in the Debtors arising under or related to the Hughes Agreement (for the avoidance of doubt, Permitted Claims shall include $10 million to be paid in cash with respect to attorneys fees and expenses in connection with the settlement related to the Hughes Heirs Obligations),
(iv) except with respect to Claims related to GGO or the assets or businesses contributed thereto, all tenant, anchor and vendor Claims required to be cured pursuant to section 365 of the Bankruptcy Code, in connection with the assumption of an executory contract or unexpired lease under the Plan,
(v) any deficiency, guaranty or other similar Claims associated with the Special Consideration Properties (as such term is defined in the plans of reorganization for the applicable Confirmed Debtors),
(vi) MPC Taxes,
(vii) surety bond Claims relating to Claims of the type identified in clauses (i) through (vi) of this definition,
(viii) GGO Setup Costs (other than professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases), and
(ix) any liabilities assumed by GGO and paid on the Effective Date by GGO or to be paid after the Effective Date by GGO (for avoidance of doubt, this includes any Claims that, absent assumption of the liability by GGO, would be a Permitted Claim).
(aa) “ Fully Diluted Basis ” means all outstanding shares of the Common Stock, New Common Stock or GGO Common Stock, as applicable, assuming the exercise of all outstanding Share Equivalents (other than (x) any options issued to an employee of the Company or its Subsidiaries pursuant to the terms of a Company Benefit Plan or to an employee of GGO or its Subsidiaries pursuant to the terms of an employee equity plan of GGO or (y) preferred UPREIT Units) without regard to any restrictions or conditions with respect to the exercisability of such Share Equivalents.
(bb) “ GAAP ” means generally accepted accounting principles in the United States.
(cc) “ GGO Common Share Amount ” means 32,468,326 plus a number (rounded up to the nearest whole number) equal to 0.1 multiplied by the number of shares of Common Stock issued on or after the Measurement Date and prior to the record date of the GGO Share Distribution as a result of the exercise, conversion or exchange of any Share Equivalents of the Company outstanding on the Measurement Date into Common Stock and employee stock options issued pursuant to the Company Option Plans.
(dd) “ GGO Note Amount ” means: (i) in the event there is a Net Debt Excess Amount, the sum of the Net Debt Excess Amount set forth on the Conclusive Net Debt Adjustment Statement and the Hughes Heirs Obligations to the extent satisfied with assets of the Company (including cash (but excluding any cash paid prior to the Effective Date in settlement or satisfaction of Hughes Heirs Obligations which had the effect of reducing Proportionally Consolidated Unrestricted Cash for purposes of calculating Closing Date Net Debt, Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts, and Net Debt Excess Amount/Net Debt Surplus Amount, as applicable) or shares of New Common Stock, but excluding Identified Assets) (such amount so satisfied, but excluding $10 million to be paid in cash with respect to attorneys fees and expenses, the “ Hughes Amount ”); and (ii) in the event there is a Net Debt Surplus Amount, the Hughes Amount less 80% of the Net Debt Surplus Amount, provided, that in no event shall the GGO Note Amount be less than zero.
(ee) “ GGO Promissory Note ” means an unsecured promissory note payable by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership in the aggregate principal amount of the GGO Note Amount, as adjusted pursuant to Section 5.17(d) , Section 5.17(e) and Section 5.17(g) , (i) bearing interest at a rate equal to the lower of (x) 7.5% per annum and (y) the weighted average effective rate of interest payable (after giving effect to the payment of any underwriting and all other discounts, fees and any other compensation) on each series of New Debt issued in connection with the Plan and (ii) maturing on the fifth anniversary of the Closing Date (or if such date is not a Business Day, the next immediately following Business Day), and (iii) including prohibitions on dividends and distributions, no financial covenants and such other customary terms and conditions as reasonably agreed to by Purchaser and the Company.
(ff) [ Intentionally Omitted .]
(gg) “ GGO Setup Costs ” means such cash liabilities, costs and expenses as may be incurred by the Company or its Subsidiaries in connection with the formation and organization of GGO and the implementation of the GGO Share Distribution, including any and all liabilities for any sales, use, stamp, documentary, filing, recording, transfer, gross receipts, registration, duty, securities transactions or similar fees or Taxes or governmental charges (together with any interest or penalty, addition to Tax or additional amount imposed) as levied by any taxing authority, in each case, determined as of the Effective Date and further including, to the extent the Company or any Subsidiary of the Company has made or will make a payment to reduce the principal amount of the mortgage related to 110 N. Wacker Drive, Chicago, Illinois, then 50% of any such payment or contractual obligation to make a payment.
(hh) [ Intentionally Omitted .]
(ii) “ Governmental Entity ” means any (a) nation, region, state, province, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, court or tribunal, or other entity), (d) multinational organization or body or (e) body entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature or any other self-regulatory organizations.
(jj) “ Hughes Agreement ” means that certain Contingent Stock Agreement, effective as of January 1, 1996, by The Rouse Company in favor of and for the benefit of the Holders (named in Schedule I thereto) and the Representatives (therein defined), as amended.
(kk) “ Hughes Heirs Obligations ” means claims or interests against the Debtors arising under or relating to sections 2.07 and 2.08 of the Hughes Agreement and pertaining to the delivery of contingent shares for business units to be valued as of December 31, 2009 and claims arising out of or related to the foregoing.
(ll) “ Indebtedness ” means, with respect to a Person without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property (other than trade payables and accrued expenses incurred in
the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, trust preferred shares, trust preferred units and other preference instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations in respect of capital leases under GAAP of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities, (g) the monetary obligations of a Person under (x) a so-called synthetic, off-balance sheet or tax retention lease, or (y) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment) (each, a “ Synthetic Lease Obligation ”) , (h) guaranties of such Person with respect to obligations of the type described clauses (a) through (g) above, (i) all obligations of other Persons of the kind referred to in clauses (a) through (h) above secured by any lien on property owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, (j) the net obligations of such Person in respect of hedge agreements and swaps and (k) any obligation that, in accordance with GAAP, would be required to be reflected as debt on the consolidated balance sheet of such Person .
(mm) “ Joint Venture ” means a Subsidiary of the Company which is owned partly by another Subsidiary of the Company and partly by a third party.
(nn) “ Knowledge ” of the Company means the actual knowledge, as of the date of this Agreement, of the individuals listed on Section 12.1(ll) of the Company Disclosure Letter.
(oo) “ Law ” means any statutes, laws (including common law), rules, ordinances, regulations, codes, orders, judgments, decisions, injunctions, writs, decrees, applicable to the Company or any of its Subsidiaries or Purchaser, as applicable, or their respective properties or assets.
(pp) “ Liquidity Equity Issuances ” means issuances of shares of New Common Stock in the Plan for cash in an aggregate amount of up to 65,000,000 shares of New Common Stock.
(qq) “ Material Adverse Effect ” means any change, event or occurrence which (x) has a material adverse effect on the results of operations or financial condition of the Company and its direct and indirect Subsidiaries taken as a whole, other than changes, events or occurrences (i) generally affecting (A) the retail mall industry in the United States or in a specific geographic area in which the Company operates, or (B) the economy, or financial or capital markets, in the United States or elsewhere in the world, including changes in interest or exchange rates or the availability of capital, or (ii) arising out of, resulting from or attributable to (A) changes in Law or regulation or in generally accepted accounting principles or in accounting standards, or changes in general legal, regulatory or political conditions, (B) the negotiation, execution, announcement or performance of any agreement between the Company and/or its Affiliates, on the one hand, and Purchaser and/or its Affiliates, on the other hand, or the consummation of the transactions contemplated hereby or operating performance or reputational issues arising out of or associated with the Bankruptcy Cases, including the impact thereof on relationships,
contractual or otherwise, with tenants, customers, suppliers, distributors, partners or employees, or any litigation or claims arising from allegations of breach of fiduciary duty or violation of Law or otherwise, related to the execution or performance of this Agreement or the transactions contemplated hereby, including, without limitation, any developments in the Bankruptcy Cases, (C) acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of the this Agreement, (D) earthquakes, hurricanes, tornadoes or other natural disasters, (E) any action taken by the Company or its Subsidiaries as contemplated or permitted by any agreement between the Company and/or its Affiliates, on the one hand, and Purchaser and/or its Affiliates, on the other hand, or with Purchaser’s consent, or any failure by the Company to take any action as a result of any restriction contained in any agreement between the Company and/or its Affiliates, on the one hand, and Purchaser and/or its Affiliates, on the other hand, or (F) in each case in and of itself, any decline in the market price, or change in trading volume, of the capital stock or debt securities of the Company or any direct or indirect subsidiary thereof, or any failure to meet publicly announced or internal revenue or earnings projections, forecasts, estimates or guidance for any period, whether relating to financial performance or business metrics, including, without limitation, revenues, net operating incomes, cash flows or cash positions, it being further understood that any event, change, development, effect or occurrence giving rise to such decline in the trading price or trading volume of the capital stock or debt securities of the Company or such failure to meet internal projections or forecasts as described in the preceding clause (F), as the case may be, may be the cause of a Material Adverse Effect; so long as, in the case of clauses (i)(A) and (i)(B), such changes or events do not have a materially disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, as compared to other entities that own and manage retail malls throughout the United States, or (y) materially impairs the ability of the Company to consummate the transactions contemplated by this Agreement or perform its obligations hereunder or under the other agreements executed in connection with the transactions contemplated hereby.
(rr) “ Material Contract ” means, with respect to the Company and its Subsidiaries, any:
(i) Contract that would be considered a material contract pursuant to Item 601(b)(10) of Regulation S-K promulgated by the SEC, had the Company been the registrant referred to in such regulation; or
(ii) Contract for capital expenditures, the future acquisition or construction of fixed assets or the future purchase of materials, supplies or equipment that provides for the payment by the Company or its Subsidiaries of more than $5,000,000 and is not terminable by the Company or any of its Subsidiaries by notice of not more than sixty (60) days for a cost of less than $1,000,000.
(ss) “ MPC Assets ” means residential and commercial lots in the “master planned communities” owned, for federal income tax purposes, by Howard Hughes Properties, Inc. or The Hughes Corporation or related to the Emerson Master Planned Community.
(tt) “ MPC Taxes ” means all liability for income Taxes in respect of sales of MPC Assets sold prior to the date of this Agreement.
(uu) [ Intentionally Omitted .]
(vv) “ Net Debt Excess Amount ” means, the amount, which shall in no event be less than $0, that is calculated by subtracting the Target Net Debt from the Closing Date Net Debt (as reflected on the Conclusive Net Debt Adjustment Statement).
(ww) “ Net Debt Surplus Amount ” means, the amount, which shall in no event be less than $0, that is calculated by subtracting Closing Date Net Debt (as reflected on the Conclusive Net Debt Adjustment Statement) from the Target Net Debt.
(xx) “ Non-Control Agreement ” means the Non-Control Agreement the form of which is attached hereto as Exhibit M .
(yy) “ Non-Controlling Properties ” means the Company Properties listed on Section 12.1(ww) of the Company Disclosure Letter. Each of the Non-Controlling Properties is owned by a Joint Venture in which neither the Company nor any of its Subsidiaries is a controlling entity. For purposes of this Section 12.1(yy) , the term “control” shall mean, possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise; provided, however, that the rights of any Person to exercise Major Decision Rights under a Joint Venture shall not constitute or be deemed to constitute “control” for the purposes hereof. “Controlling” and “controlled” shall have meanings correlative thereto. For purposes of this Section 12.1(yy) , the term “Major Decision Rights” shall mean, the right to, directly or indirectly, approve, consent to, veto or exercise a vote in connection with a Person’s voting or other decision-making authority in respect of the collective rights, options, elections or obligations of such Person under a Joint Venture.
(zz) “ Offering Premium ” means, with respect to any shares of New Common Stock issued for cash in conjunction with issuances of New Common Stock or Share Equivalents permitted by this Agreement (including any Liquidity Equity Issuance) and completed prior to the date that is the last to occur of (x) 45 days after the Effective Date, (y) the Settlement Date (as defined in the Pershing Agreement), if applicable, and (z) the Bridge Note Maturity Date (as defined in the Pershing Agreement), if applicable , the product of (i) (A) the per share offering price of the shares of New Common Stock (or offering price of Share Equivalents corresponding to one underlying share of New Common Stock) issued (net of all underwriting and other discounts, fees or other compensation, and related expenses; provided , that for purposes hereof, payments to the Fairholme Investors or the Pershing Investors in accordance with Section 1.4 of the Fairholme Agreement or the Pershing Agreement, respectively, shall not be considered a discount, fee or other compensation or related expense) less (B) the Per Share Purchase Price and (ii) the number of shares of New Common Stock sold pursuant thereto. For the purposes hereof, the issuance for cash of notes mandatorily convertible into New Common Stock on the Effective Date shall constitute an issuance of the underlying number of shares of New Common Stock for cash at a price per share offering equal to the offering price for the corresponding amount of notes. For the avoidance of doubt, the Clawback Fee will not be taken into account when calculating Offering Premium.
(aaa) “ Operating Partnership ” means GGP Limited Partnership, a Delaware limited partnership and a Subsidiary of the Company.
(bbb) “ Permitted Claims ” means, as of the Effective Date, other than Excluded Claims, (a) all Claims against the Debtors covered by the Plan (the “ Plan Debtors ”) that are classified in those certain classes of Claims described in Sections II B through E, G and P in the Plan Summary Term Sheet (the “ PMA Claims ”), (b) all Claims or other amounts required to be paid pursuant to the Plan to indenture trustees or similar servicing or administrative agents, with respect to administrative fees incurred by or reimbursement obligations owed to such indenture trustees or similar servicing or administrative agents in their capacity as such under the Corporate Level Debt documents, (c) any claims of a similar type as the PMA Claims that are or have been asserted against affiliates of the Plan Debtors that are or were debtors in the Bankruptcy Cases and for which a plan of reorganization has already been confirmed (the “ Confirmed Debtors ”), (d) Claims or interests against the Debtors arising under or related to the Hughes Agreement (other than Hughes Heirs Obligations) plus $10 million to be paid in cash with respect to attorneys fees and expenses in connection with the settlement related to the Hughes Heirs Obligations, (e) surety bond Claims relating to the types of Claims identified in clauses (a) through (d) of this definition, and (f) the Clawback Fee.
(ccc) “ Permitted Claims Amount ” means, as of the Effective Date, an amount equal to the sum of, without duplication, (a) the aggregate amount of accrued and unpaid Permitted Claims that have been allowed (by order of the Bankruptcy Court or pursuant to the terms of the Plan) as of the Effective Date, plus (b) the aggregate amount of the reserve to be estimated pursuant to the Plan with respect to accrued and unpaid Permitted Claims that have not been allowed or disallowed (in each case by order of the Bankruptcy Court or pursuant to the terms of the Plan) as of the Effective Date (the “ Reserve ”), plus (c) the aggregate amount of the GGO Setup Costs (other than professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases) as of the Effective Date; provided , however , that there shall be no duplication with any amounts otherwise included in Closing Date Net Debt.
(ddd) “ Person ” means an individual, a group (including a “group” under Section 13(d) of the Exchange Act), a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
(eee) “ Preliminary Closing Date Net Debt Review Deadline ” means the end of the Preliminary Closing Date Net Debt Review Period, which date shall be the first business day that is at least twenty (20) calendar days after delivery of the Preliminary Closing Date Net Debt Schedule, and which shall be the deadline by which Purchaser shall deliver to the Company a Dispute Notice.
(fff) “ Preliminary Closing Date Net Debt Review Period ” means the period between the Company’s delivery of the Preliminary Closing Date Net Debt Schedule and the Preliminary Closing Date Net Debt Review Deadline.
(ggg) “ Proportionally Consolidated Debt ” means consolidated Debt of the Company less (1) all Debt of Subsidiaries of the Company that are not wholly-owned and other Persons in which the Company, directly or indirectly, holds a minority interest, to the extent such Debt is included in consolidated Debt, plus (2) the Company’s share of Debt for each non-wholly owned Subsidiary of the Company and each other Persons in which the Company, directly or indirectly, holds a minority interest based on the company’s pro-rata economic interest in each such Subsidiary or Person or, to the extent to which the Company is directly or indirectly (through one or more Subsidiaries or Persons) liable for a percent of such Debt that is greater than such pro-rata economic interest in such Subsidiary or Person, such larger amount; provided, however, for purposes of calculating Proportionally Consolidated Debt, the Debt of the Brazilian Entities shall be deemed to be $110,437,781.
(hhh) “ Proportionally Consolidated Unrestricted Cash ” means the consolidated Unrestricted Cash of the Company less (1) all Unrestricted Cash of Subsidiaries of the Company that are not wholly-owned and Persons in which the Company, directly or indirectly, owns a minority interest, to the extent such Unrestricted Cash is included in consolidated Unrestricted Cash of the Company, plus (2) the Company’s share of Unrestricted Cash for each non-wholly owned Subsidiary of the Company and Persons in which the Company, directly or indirectly, owns a minority interest based on the Company’s pro-rata economic interest in each such Subsidiary or Person; provided , however , for purposes of calculating Proportionally Consolidated Unrestricted Cash, the Unrestricted Cash of the Brazilian Entities shall be deemed to be $82,000,000, provided , further , that any distributions of Unrestricted Cash made from the date of this Agreement to the Closing by Brazilian Entities to the Company or any of its Subsidiaries shall be disregarded for purposes of calculating Proportionally Consolidated Unrestricted Cash.
(iii) “ Reinstatement Adjustment Amount ” means $5,426,250,000.
(jjj) [ Intentionally Omitted .]
(kkk) “ Reserve Surplus Amount ” means, as of any date of determination, (x) the Reserve minus (y) the aggregate amount paid with respect to Permitted Claims through such date of determination to the extent such Permitted Claims were included in the calculation of the Reserve minus (z) any amount included in the Reserve with respect to Permitted Claims that the Company Board, based on the exercise of its business judgment and information available to the Company Board as of the date of determination, considers necessary to maintain as a reserve against Permitted Claims yet to be paid.
(lll) “ Rights Agreement ” means that certain Rights Agreement, dated as of November 18, 1998, by and between the Company and BNY Mellon Shareowner Services, as successor to Norwest Bank Minnesota, N.A., as amended on November 10, 1999, December 31, 2001 and November 18, 2008, and from time to time.
(mmm) “ Rouse Bonds ” means (i) the 6-3/4% Senior Notes Due 2013 issued pursuant to the Indenture, dated as of May 5, 2006, by and among The Rouse Company LP and TRC Co-Issuer, Inc., as co-issuers and The Bank of New York Mellon Corporation, as trustee, (ii) unsecured debentures issued pursuant to the Indenture, dated as of February 24, 1995, by and
between The Rouse Company, as issuer, and The Bank of New York Mellon Corporation, as trustee, and (iii) any notes to be issued pursuant to the Plan on the Effective Date by The Rouse Company LP to the holders of the Rouse Bonds specified in (i) and (ii) above who elect to receive such notes.
(nnn) “ Share Equivalent ” means any stock, warrants, rights, calls, options or other securities exchangeable or exercisable for, or convertible into, shares of Common Stock, New Common Stock or GGO Common Stock, as applicable.
(ooo) “ Significant Subsidiaries ” means the operating Subsidiaries of the Company that generated revenues in excess of $30,000,000 for the year ended December 31, 2009.
(ppp) “ Subsidiary ” means, with respect to a Person (including the Company), (a) a company a majority of whose capital stock with voting power, under ordinary circumstances, to elect a majority of the directors is at the time, directly or indirectly, owned by such Person, by a subsidiary of such Person, or by such Person and one or more subsidiaries of such Person, (b) a partnership in which such Person or a subsidiary of such Person is, at the date of determination, a general partner of such partnership, (c) a limited liability company of which such Person, or a Subsidiary of such Person, is a managing member or (d) any other Person (other than a company) in which such Person, a subsidiary of such Person or such Person and one or more subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
(qqq) “ Target Net Debt ” means $22,970,800,000.
(rrr) “ Tax Matters Agreement ” means that certain Tax Matters Agreement to be entered into by the Company and GGO in connection with the GGO Share Distribution, substantially in the form attached hereto as Exhibit O .
(sss) “ Tax Protection Agreements ” means any written agreement to which the Company, its Operating Partnership or any other Subsidiary is a party pursuant to which: (i) in connection with the deferral of income Taxes of a holder of interests in the Operating Partnership, the Company, the Operating Partnership or the other Subsidiaries have agreed to (A) maintain a minimum level of Indebtedness or continue any particular Indebtedness, (B) retain or not dispose of assets for a period of time that has not since expired, (C) make or refrain from making Tax elections, and/or (D) only dispose of assets in a particular manner; and/or (ii) limited partners of the Operating Partnership have guaranteed Indebtedness of the Operating Partnership.
(ttt) “ Termination Date ” means December 31, 2010; provided , that in the event the Company delivers a written notice (the “ Termination Date Extension Notice ”) identifying the applicable clause below pursuant to which the extension is being effected to Purchaser on or prior to December 31, 2010, the Company may elect to extend the Termination Date if:
(i) the Confirmation Order shall have been entered on or before December 15, 2010, to any date on or prior to January 31, 2011 (as specified in the Termination Date Extension Notice), provided that, during such extension, the Company shall use its reasonable best efforts to take all actions and to
do all things necessary, proper and advisable to consummate the transactions contemplated hereby and to cause the conditions to Closing to be satisfied in a timely manner; or
(ii) (A) all conditions to the obligations of Purchaser to consummate the Closing set forth in Article VII shall have been satisfied (other than those conditions that are to be satisfied (and capable of being satisfied) by action taken at the Closing if (1) Purchaser and each purchaser under the Fairholme/Pershing Agreements (each, an “ Other Sponsor ”) had complied with its obligations under this Agreement and the Fairholme/Pershing Agreements, as applicable, and (2) the Brookfield Equity Commitment Letter, the Escrow Agreements and any letter of credit contemplated thereby (each, a “ Funding Document ”) had been complied with) and (B) the transactions contemplated by this Agreement or the Fairholme/Pershing Agreements fail to be consummated as a result of a failure of any Funding Document to be complied with, the failure of Purchaser to fund the amounts it is required to fund pursuant to Article I or the failure of the Fairholme/Pershing Investors to fund the purchase price under the Fairholme/Pershing Agreements, to any date on or prior to (X) if either Fairholme/Pershing Agreement shall not have been terminated in accordance with its terms and any Other Sponsor fails to fund, March 31, 2011 (as specified in the Termination Date Extension Notice) in order to pursue remedies against the non-compliant Other Sponsors or (Y) if Purchaser fails to fund, the earlier of the one (1) year anniversary of the date of a Termination Date Extension Notice given pursuant to this clause (Y) and December 31, 2011 (as specified in the Termination Date Extension Notice) in order to pursue remedies against Purchaser, in each case, to seek to cause the Closing to be consummated, provided that, during such extensions specified in clause (X) or (Y) of this clause (ii), the Company shall use its reasonable best efforts to take all actions and to do all things necessary, proper and advisable to consummate the transactions contemplated hereby and to cause the conditions to Closing to be satisfied in a timely manner.
(uuu) “ Transactions ” means the purchase of the Shares and the GGO Shares and the other transactions contemplated by this Agreement.
(vvv) “ TRUPS ” means certain preferred securities issued by GGP Capital Trust I.
(www) “ Unrestricted Cash ” means all cash and Cash Equivalents of the Company and of the Subsidiaries of the Company, but excluding any cash or Cash Equivalents that are controlled by or subject to any lien, security interest or control agreement, other preferential arrangement in favor of any creditor or otherwise encumbered or restricted in any way; provided that cash and Cash Equivalents of the Company and of the Subsidiaries of the Company that are controlled by or subject to any lien, security interest, control agreement, preferential arrangement or other encumbrance or restriction pursuant to the New DIP Agreement shall not be excluded from “Unrestricted Cash.”
(xxx) “ Unsecured Indebtedness ” means all indebtedness of the Company for borrowed money or obligations of the Company evidenced by notes, bonds, debentures or other similar instruments that are not secured by a lien on any Company Property or other assets of the Company or any Subsidiary.
(yyy) “ UPREIT Units ” means preferred or common units of limited partnership interests of the Operating Partnership.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices . All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows: (x) on the date delivered, if personally delivered; (y) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; or (z) on the next Business Day after being sent by recognized overnight mail service specifying next business day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:
(a) If to Purchaser, to:
REP Investments LLC
c/o Brookfield
Asset
Management Inc.
Brookfield Place, Suite 300
181 Bay Street
P.O. Box 762
Toronto, Ontario M5J 2T3
Attention:
Facsimile: (416) 365-9642
with a copy (which shall not constitute notice) to:
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Gregory B. Astrachan, Esq.
Paul V. Shalhoub, Esq.
Facsimile: (212) 728-8111
(b) If to the Company, to:
General Growth Properties, Inc.
110 N. Wacker Drive
Chicago, IL 60606
Attention: Ronald L. Gern, Esq.
Facsimile: (312) 960-5485
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Frederick S. Green, Esq.
Gary T. Holtzer, Esq.
Malcolm E. Landau, Esq.
Facsimile:
(212) 310-8007
SECTION 13.2 Assignment; Third Party Beneficiaries . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party without the prior written consent of the other party. Notwithstanding the previous sentence, this Agreement, or Purchaser’s rights, interests or obligations hereunder, may be assigned or transferred, in whole or in part, by Purchaser to Brookfield Consortium Members; provided , that any such assignee assumes the obligations of Purchaser hereunder and agrees in writing to be bound by the terms of this Agreement in the same manner as Purchaser and the Designation Conditions are otherwise satisfied. Notwithstanding the foregoing or any other provisions herein, no such assignment shall relieve Purchaser of its obligations hereunder if such assignee fails to perform such obligations. The Company agrees that Purchaser may designate to Blackstone Real Estate Partners VI L.P., a Delaware limited partnership (together with its permitted assigns, “ Blackstone ”), (i) Purchaser’s right to purchase 19,083,970 of the Shares (the “ Blackstone Assigned Shares ”) and 200,382 of the GGO Shares (together with the Blackstone Assigned Shares, the “ Blackstone Assigned Securities ”), in each case, that Purchaser is entitled to purchase at Closing pursuant to this Agreement, (ii) Purchaser’s right to receive 2,500,000 of the New Warrants (the “ Blackstone Assigned Warrants ”) and 166,667 of the GGO Warrants, in each case, issuable to Purchaser pursuant to this Agreement, (iii) Purchaser’s right to receive 7.634% of Purchaser’s compensation in the form of New Common Stock with respect to the GGP Backstop Rights Offering and other rights of Purchaser set forth in Section 6.9(a) and Section 6.9(b) in the event Purchaser designates Blackstone as one of its designees to subscribe for New Common Stock in such GGP Backstop Rights Offering, and (iv) Purchaser’s right to receive 7.634% of the shares of Common Stock (and other Share Equivalents) which are offered to Purchaser pursuant to Purchaser’s pre-Closing subscription rights set forth in Section 7.1(u) in the event Purchaser elects to purchase the shares offered to it in such offering, provided that (1) the Company’s agreement as aforesaid is subject to Blackstone (A) paying to the Company and GGO, as applicable, by wire transfer of immediately available funds at the Closing the aggregate purchase price payable pursuant to this Agreement for the Blackstone Assigned Securities (the “ Blackstone Purchase Price ”) and the purchase price for shares received by Blackstone pursuant
to clauses (iii) and (iv) above, (B) agreeing in a writing reasonably satisfactory to, and for the benefit of, the Company that the Blackstone Assigned Securities shall be subject to such transfer restrictions/lock-ups as contemplated by Section 6.4 of the Pershing Agreement (and not the longer lock-ups applicable to shares sold to Purchaser), including being subject to a limited 120-day lock-up in connection with certain equity sales within 30 days of the Effective Date but excluding any restrictions imposed by the Non-Control Agreement, and (C) entering into joinder agreements reasonably acceptable to, and for the benefit of, the Company with respect to the provisions of clause (B) and the registration rights agreement referred to in the following sentence, and (2) in no event shall Purchaser be released from any of its obligations hereunder (including in respect of the Blackstone Assigned Securities) unless and until Blackstone shall have complied with clauses (A), (B) and (C) above. In the event of the closing of the purchase by Blackstone from the Company and GGO, as applicable, of the Blackstone Assigned Securities and the payment by Blackstone to the Company and GGO, as applicable, of the Blackstone Purchase Price at Closing as aforesaid, (x) Purchaser shall be released from the obligation to pay the Company the purchase price for the Blackstone Assigned Securities (but not from the obligation to pay the purchase price pursuant to this Agreement for any other Shares or GGO Shares or other obligations hereunder) and (y) the shelf registration statement contemplated by Section 7.1(l) of the Pershing Agreement shall cover the resale by Blackstone of the Blackstone Assigned Shares and the New Common Stock issuable upon exercise of the Blackstone Assigned Warrants and the registration rights agreement of the Company referenced in Section 7.1(l) of the Pershing Agreement shall include Blackstone and its securities to the same extent as it applies to the Pershing Investors and their securities (except that demand registration rights shall not be available to Blackstone). Blackstone may assign the foregoing rights, in whole or in part, to one or more Affiliates, provided that no such assignment shall release Blackstone Real Estate Partners VI L.P. from any obligations assigned by Purchaser to it. Except as provided in Article IX with respect to the Indemnified Persons, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement. Notwithstanding the foregoing or any other provisions herein to the contrary, Purchaser may not assign any of its rights, interests or obligations under this Agreement, to the extent such assignment would affect the securities Laws exemptions applicable to this transaction.
SECTION 13.3 Prior Negotiations; Entire Agreement . This Agreement (including the exhibits hereto and the documents and instruments referred to in this Agreement) constitutes the entire agreement of the parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, between the parties with respect to the subject matter of this Agreement, except that the parties hereto acknowledge that the Confidentiality Agreement shall continue in full force and effect in accordance with their terms and shall terminate no earlier than this Agreement.
SECTION 13.4 Governing Law; Venue . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. BOTH PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF, AND VENUE IN, THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND BOTH PARTIES WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS.
SECTION 13.5 Company Disclosure Letter . The Company Disclosure Letter shall be arranged to correspond to the Articles and Sections of this Agreement, and the disclosure in any portion of the Company Disclosure Letter shall qualify the corresponding provision in Article III and any other provision of Article III to which it is reasonably apparent on the face of the disclosure that such disclosure relates. No disclosure in the Company Disclosure Letter relating to any possible non-compliance, breach or violation of any Contract or Law shall be construed as an admission that any such non-compliance, breach or violation exists or has actually occurred. In the Company Disclosure Letter, (a) all capitalized terms used but not defined therein shall have the meanings assigned to them in this Agreement and (b) the Section numbers correspond to the Section numbers in this Agreement.
SECTION 13.6 Counterparts . This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties; and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.
SECTION 13.7 Expenses . Each party shall bear its own expenses incurred or to be incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
SECTION 13.8 Waivers and Amendments . This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance, and subject, to the extent required, to the approval of the Bankruptcy Court. No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.
SECTION 13.9 Construction .
(a) The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(b) Unless the context otherwise requires, as used in this Agreement: (i) an accounting term not otherwise defined in this Agreement has the meaning ascribed to it in accordance with GAAP; (ii) “or” is not exclusive; (iii) “including” and its variants mean “including, without limitation” and its variants; (iv) words defined in the singular have the parallel meaning in the plural and vice versa; (v) references to “written” or “in writing” include in visual electronic form; (vi) words of one gender shall be construed to apply to each gender; (vii) the terms “Article,” “Section,” and “Schedule” refer to the specified Article, Section, or
Schedule of or to this Agreement; and (viii) the term “beneficially own” shall have the meaning determined pursuant to Rule 13d-3 under the Exchange Act as in effect on the date hereof; provided, however, that a Person will be deemed to beneficially own (and have beneficial ownership of) all securities that such Person has the right to acquire, whether such right is exercisable immediately or with the passage of time or the satisfaction of conditions. The terms “beneficial ownership” and “beneficial owner” have correlative meanings.
(c) Notwithstanding anything to the contrary, and for all purposes of this Agreement, any public announcement or filing of factual information relating to the business, financial condition or results of the Company or its Subsidiaries, or a factually accurate (in all material respects) public statement or filing that describes the Company’s receipt of an offer or proposal for a Competing Transaction and the operation of this Agreement with respect thereto, or any entry into a confidentiality agreement, shall not be deemed to evidence the Company’s or any Subsidiary’s support, or intention to support, any Competing Transaction.
(d) In the event of a conflict between the terms and conditions of this Agreement and the Plan Summary Term Sheet, the terms and conditions of this Agreement shall govern.
SECTION 13.10 Adjustment of Share Numbers and Prices . The number of Shares to be purchased by Purchaser at the Closing pursuant to Article I , the Per Share Purchase Price, the GGO Per Share Purchase Price, the number of GGO Shares to be purchased by Purchaser pursuant to Article II and any other number or amount contained in this Agreement which is based upon the number or price of shares of GGP or GGO shall be proportionately adjusted for any subdivision or combination (by stock split, reverse stock split, dividend, reorganization, recapitalization or otherwise) of the Common Stock, New Common Stock or GGO Common Stock that occurs during the period between the date of this Agreement and the Closing. In addition, if at any time prior to the Closing, the Company or GGO shall declare or make a dividend or other distribution whether in cash or property (other than a dividend or distribution payable in common stock of the Company or GGO, as applicable, the GGO Share Distribution or a distribution of rights contemplated hereby), the Per Share Purchase Price or the GGO Per Share Purchase Price, as applicable, shall be proportionally adjusted thereafter by the Fair Market Value (as defined in the Warrant Agreement) per share of the dividend or distribution. If a transaction results in any adjustment to the exercise price for and number of Shares underlying the Warrants pursuant to Article 5 of the Warrant Agreement, the exercise price for and number of shares underlying each of the New Warrants and GGO Warrants described in Section 5.2 of this Agreement shall be adjusted for that transaction in the same manner.
SECTION 13.11 Certain Remedies .
(a) 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. It is accordingly agreed that, subject to clause (c) below, the parties shall be entitled to specific performance of the terms of this Agreement. This right shall include the right of the Company to (i) fully enforce, or require Purchaser to fully enforce, the terms of the Brookfield Equity Commitment Letter against the Equity Provider party thereto to the fullest extent possible pursuant to the Brookfield Equity Commitment Letter and applicable Law and (ii) require Purchaser to deliver a Closing Funding Certification (as defined in the Escrow Agreements) in
accordance with, and subject to, the applicable provisions of the Escrow Agreement, including Section 4(d) thereof (or the corollary provisions of any Acceptable LC) and upon concurrent funding pursuant to the Brookfield Equity Commitment Letter (the financing referred to in clauses (i) and (ii) of this Section 13.11(a) being referred to herein as the “ Equity Financing ”) and to cause Purchaser to pay the Purchase Price and the GGO Purchase Price and consummate the Transactions on the terms and subject to the provisions set forth in this Agreement. It is explicitly agreed that the Company shall be entitled to seek specific performance of Purchaser’s obligation to cause the Equity Financing to be funded to fund the Purchase Price and the GGO Purchase Price only in the event that (x) all conditions in Article VII have been satisfied (other than those conditions that are to be satisfied (and capable of being satisfied) by action taken at the Closing if Purchaser had complied with its obligations under this Agreement and the Financing Commitments had been complied with) at the time when the Closing would have occurred but for the failure of the Purchase Price and the GGO Purchase Price to be funded, and (y) the Company has irrevocably confirmed that if specific performance is granted and the Purchase Price and the GGO Purchase Price are funded, then the Closing will occur. Each of the parties hereto hereby waives (i) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief. Further, the parties agree that the Company’s right to demand specific performance of the purchase obligations contained herein shall be limited to complete performance, and not subject to partial performance or the sale of less than all of the Shares to be purchased by Purchaser hereunder and shall be further conditioned upon the concurrent funding pursuant to, and in accordance with, the Brookfield Equity Commitment Letter.
(b) THE COMPANY HEREBY AGREES THAT, PRIOR TO THE CLOSING, SPECIFIC PERFORMANCE (AND AN INJUNCTION OR INJUNCTIONS, WITHOUT NECESSITY OF PROVING DAMAGES OR POSTING A BOND OR OTHER SECURITY, TO PREVENT BREACHES OF THIS AGREEMENT) SHALL BE ITS SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO BREACHES BY PURCHASER IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THAT IT MAY NOT SEEK OR ACCEPT ANY OTHER FORM OF RELIEF THAT MAY BE AVAILABLE FOR BREACH UNDER THIS AGREEMENT, THE ESCROW AGREEMENTS, THE BROOKFIELD EQUITY COMMITMENT LETTER, ANY ACCEPTABLE LC OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING MONETARY DAMAGES).
(c) Prior to the entry of the Confirmation Order, other than with respect to (i) the indemnification obligations of the Company set forth in Article IX and (ii) the Company’s obligations under Section 5.1(c) , Purchaser’s right to receive the Warrants on the terms and subject to the conditions set forth in this Agreement shall constitute the sole and exclusive remedy of any nature whatsoever (whether for monetary damages, specific performance, injunctive relief, or otherwise) of Purchaser against the Company for any harm, damage or loss of any nature relating to or as a result of any breach of this Agreement by the Company or the failure of the Closing to occur for any reason; provided, that, following the entry of the Approval
Order, Purchaser shall be entitled to specific performance of the Company’s obligation to issue the Warrants as well as the Company’s obligations under Article IX and Section 5.1(c) hereof.
(d) Following entry of the Confirmation Order, Purchaser shall be entitled to specific performance of terms of this Agreement, in addition to any other applicable remedies at law.
(e) Following the Closing, each of the parties shall be entitled to an injunction or injunctions (without necessity of proving damages or posting a bond or other security) to prevent breaches of this Agreement, and to enforce specifically the terms and provisions of this Agreement, in addition to any other applicable remedies at law or equity.
(f) The Company, on behalf of itself and its respective heirs, successors, and assigns, hereby covenants and agrees never to institute or cause to be instituted or continue prosecution of any suit or other form of action or proceeding of any kind or nature whatsoever against any member of Purchaser by reason of or in connection with the Transaction, provided, however, that nothing shall prohibit the Company from instituting an action for specific performance against Purchaser in connection with this Agreement in accordance with the provisions of this Section 13.11 or from instituting an action against Escrow Agent for release of the Escrow Amounts.
SECTION 13.12 Bankruptcy Matters . For the avoidance of doubt, all obligations of the Company and its Subsidiaries in this Agreement are subject to and conditioned upon (a) with respect to the issuance of the Warrants and the other obligations contained in the Approval Order, including approval of the indemnification provisions of Article IX hereof, entry of the Approval Order, and (b) with respect to the remainder of the provisions hereof, entry of the Confirmation Order.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered by each of them or their respective officers thereunto duly authorized, all as of the date first written above.
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
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BROOKFIELD RETAIL HOLDINGS LLC |
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(formerly REP Investments LLC) |
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BY: |
Brookfield Asset Management Private
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By: |
Brookfield Private Funds Holdings Inc.,
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By |
/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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By: |
/s/ Moshe Mandelbaum |
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Name: Moshe Mandelbaum |
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Title: Vice President |
[SIGNATURE PAGE OF AMENDED AND RESTATED CORNERSTONE INVESTMENT AGREEMENT]
Exhibit 10.2
EXECUTION VERSION
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
effective as of March 31, 2010
between
THE PURCHASERS PARTY HERETO
and
GENERAL GROWTH PROPERTIES, INC.
TABLE OF CONTENTS
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Page |
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Article I |
PURCHASE OF NEW COMMON STOCK; CLOSING |
3 |
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Section 1.1 |
Purchase of New Common Stock |
3 |
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Section 1.2 |
Closing |
4 |
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Section 1.3 |
Company Rights Offering Election |
4 |
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Section 1.4 |
Company Election to Replace Certain Shares; Company Election to Reserve and Repurchase Certain Shares |
5 |
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Section 1.5 |
Pro Rata Reductions with Pershing Agreement |
6 |
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Article II |
GGO SHARE DISTRIBUTION AND PURCHASE OF GGO COMMON STOCK |
6 |
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Section 2.1 |
GGO Share Distribution |
6 |
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Section 2.2 |
Purchase of GGO Common Stock |
7 |
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Article III |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
8 |
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Section 3.1 |
Organization and Qualification |
8 |
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Section 3.2 |
Corporate Power and Authority |
9 |
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Section 3.3 |
Execution and Delivery; Enforceability |
9 |
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Section 3.4 |
Authorized Capital Stock |
9 |
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Section 3.5 |
Issuance |
11 |
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Section 3.6 |
No Conflict |
11 |
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Section 3.7 |
Consents and Approvals |
12 |
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Section 3.8 |
Company Reports |
13 |
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Section 3.9 |
No Undisclosed Liabilities |
14 |
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Section 3.10 |
No Material Adverse Effect |
15 |
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Section 3.11 |
No Violation or Default: Licenses and Permits |
15 |
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Section 3.12 |
Legal Proceedings |
15 |
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Section 3.13 |
Investment Company Act |
15 |
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Section 3.14 |
Compliance With Environmental Laws |
15 |
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Section 3.15 |
Company Benefit Plans |
16 |
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Section 3.16 |
Labor and Employment Matters |
17 |
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Section 3.17 |
Insurance |
18 |
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Section 3.18 |
No Unlawful Payments |
18 |
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TABLE OF CONTENTS
(continued)
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Page |
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Section 3.19 |
No Broker’s Fees |
18 |
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Section 3.20 |
Real and Personal Property |
18 |
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Section 3.21 |
Tax Matters |
23 |
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Section 3.22 |
Material Contracts |
24 |
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Section 3.23 |
Certain Restrictions on Charter and Bylaws Provisions; State Takeover Laws |
25 |
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Section 3.24 |
No Other Representations or Warranties |
25 |
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Article IV |
REPRESENTATIONS AND WARRANTIES OF PURCHASER |
26 |
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Section 4.1 |
Organization |
26 |
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Section 4.2 |
Power and Authority |
26 |
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Section 4.3 |
Execution and Delivery |
26 |
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Section 4.4 |
No Conflict |
26 |
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Section 4.5 |
Consents and Approvals |
26 |
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Section 4.6 |
Compliance with Laws |
27 |
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Section 4.7 |
Legal Proceedings |
27 |
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Section 4.8 |
No Broker’s Fees |
27 |
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Section 4.9 |
Sophistication |
27 |
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Section 4.10 |
Purchaser Intent |
27 |
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Section 4.11 |
Reliance on Exemptions |
27 |
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Section 4.12 |
REIT Representations |
27 |
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Section 4.13 |
Financial Capability |
28 |
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Section 4.14 |
No Other Representations or Warranties |
28 |
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Section 4.15 |
Acknowledgement |
28 |
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Article V |
COVENANTS OF THE COMPANY AND PURCHASER |
28 |
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Section 5.1 |
Bankruptcy Court Motions and Orders |
28 |
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Section 5.2 |
Warrants, New Warrants and GGO Warrants |
29 |
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Section 5.3 |
[Intentionally Omitted.] |
29 |
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Section 5.4 |
Listing |
29 |
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Section 5.5 |
Use of Proceeds |
30 |
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Section 5.6 |
Access to Information |
30 |
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TABLE OF CONTENTS
(continued)
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Page |
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Section 5.7 |
Competing Transactions |
30 |
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Section 5.8 |
Reservation for Issuance |
30 |
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Section 5.9 |
Subscription Rights |
30 |
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Section 5.10 |
[Intentionally Omitted.] |
35 |
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Section 5.11 |
Notification of Certain Matters |
35 |
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Section 5.12 |
Further Assurances |
35 |
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Section 5.13 |
[Intentionally Omitted.] |
36 |
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Section 5.14 |
Rights Agreement; Reorganized Company Organizational Documents |
36 |
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Section 5.15 |
Stockholder Approval |
37 |
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Section 5.16 |
Closing Date Net Debt |
38 |
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Section 5.17 |
Determination of Domestically Controlled REIT Status |
41 |
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Article VI |
ADDITIONAL COVENANTS OF PURCHASER |
42 |
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Section 6.1 |
Information |
42 |
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Section 6.2 |
Purchaser Efforts |
42 |
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Section 6.3 |
Plan Support |
42 |
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Section 6.4 |
Transfer Restrictions |
43 |
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Section 6.5 |
[Intentionally Omitted.] |
45 |
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Section 6.6 |
REIT Representations and Covenants |
45 |
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Section 6.7 |
Non-Control Agreement |
45 |
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Section 6.8 |
[Intentionally Omitted.] |
45 |
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Section 6.9 |
Additional Backstop |
45 |
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Article VII |
CONDITIONS TO THE OBLIGATIONS OF PURCHASER |
46 |
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Section 7.1 |
Conditions to the Obligations of Purchaser |
46 |
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Article VIII |
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY |
55 |
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Section 8.1 |
Conditions to the Obligations of the Company |
55 |
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Article IX |
[INTENTIONALLY OMITTED] |
57 |
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Article X |
SURVIVAL OF REPRESENTATIONS AND WARRANTIES |
57 |
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Section 10.1 |
Survival of Representations and Warranties |
57 |
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Article XI |
TERMINATION |
57 |
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TABLE OF CONTENTS
(continued)
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Page |
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Section 11.1 |
Termination |
57 |
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Section 11.2 |
Effects of Termination |
61 |
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Article XII |
DEFINITIONS |
61 |
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Section 12.1 |
Defined Terms |
61 |
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Article XIII |
MISCELLANEOUS |
76 |
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Section 13.1 |
Notices |
76 |
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Section 13.2 |
Assignment; Third Party Beneficiaries |
78 |
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Section 13.3 |
Prior Negotiations; Entire Agreement |
79 |
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Section 13.4 |
Governing Law; Venue |
79 |
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Section 13.5 |
Company Disclosure Letter |
79 |
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Section 13.6 |
Counterparts |
79 |
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Section 13.7 |
Expenses |
80 |
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Section 13.8 |
Waivers and Amendments |
80 |
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Section 13.9 |
Construction |
80 |
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Section 13.10 |
Adjustment of Share Numbers and Prices |
81 |
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Section 13.11 |
Certain Remedies |
81 |
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Section 13.12 |
Bankruptcy Matters |
82 |
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LIST OF EXHIBITS AND SCHEDULES |
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Exhibit A: |
Plan Summary Term Sheet |
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Exhibit B: |
Post-Bankruptcy GGP Corporate Structure |
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Exhibit C-1: |
Brookfield Agreement |
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Exhibit C-2: |
Pershing Agreement |
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Exhibit D: |
REIT Representation Letter |
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Exhibit E: |
GGO Assets |
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Exhibit F: |
Form of Approval Order |
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Exhibit G: |
Form of Warrant Agreement |
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Exhibit H: |
[Intentionally Omitted] |
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Exhibit I: |
[Intentionally Omitted] |
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Exhibit J: |
Form of REIT Opinion |
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Exhibit K: |
[Intentionally Omitted] |
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Exhibit L: |
[Intentionally Omitted] |
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Exhibit M: |
Form of Non-Control Agreement |
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Exhibit N: |
Certain REIT Investors |
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Exhibit O: |
Form of Tax Matters Agreement |
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Schedule I: |
GGO and GGP Pro Rata Shares |
INDEX OF DEFINED TERMS
|
Defined Term |
|
Page |
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2006 Bank Loan |
|
61 |
|
Additional Financing |
|
50 |
|
Additional Sales Period |
|
62 |
|
Adequate Reserves |
|
23 |
|
Adjusted CDND |
|
40 |
|
Affiliate |
|
62 |
|
Agreement |
|
1 |
|
Amended and Restated Agreement |
|
1 |
|
Anticipated Debt Paydowns |
|
50 |
|
Approval Motion |
|
28 |
|
Approval Order |
|
28 |
|
Asset Sales |
|
51 |
|
Bankruptcy Cases |
|
1 |
|
Bankruptcy Code |
|
1 |
|
Bankruptcy Court |
|
1 |
|
Blackstone |
|
78 |
|
Blackstone Assigned Securities |
|
78 |
|
Blackstone Assigned Shares |
|
78 |
|
Blackstone Assigned Warrants |
|
78 |
|
Blackstone Purchase Price |
|
78 |
|
Brazilian Entities |
|
62 |
|
Brookfield Agreement |
|
2 |
|
Brookfield Consortium Member |
|
62 |
|
Brookfield Investor |
|
2 |
|
Business Day |
|
62 |
|
Calculation Date |
|
41 |
|
Capital Raising Activities |
|
62 |
|
Cash Equivalents |
|
62 |
|
Change of Control |
|
63 |
|
Chapter 11 |
|
1 |
|
Claims |
|
63 |
|
Clawback Fee |
|
63 |
|
Clawback Percentage |
|
5 |
|
Clawback Shares |
|
6 |
|
Closing |
|
4 |
|
Closing Date |
|
4 |
|
Closing Date Net Debt |
|
63 |
|
Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts |
|
64 |
|
Closing Restraint |
|
60 |
|
CMPC |
|
7 |
|
CNDAS Dispute Notice |
|
38 |
|
CNDAS Disputed Items |
|
39 |
|
Code |
|
16 |
|
Common Stock |
|
1 |
|
Company |
|
2 |
|
Company Benefit Plan |
|
64 |
|
Company Board |
|
64 |
|
Company Disclosure Letter |
|
8 |
|
Company Ground Lease Property |
|
20 |
|
Company Mortgage Loan |
|
22 |
|
Company Option Plans |
|
10 |
|
Company Properties |
|
18 |
|
Company Property |
|
18 |
|
Company Property Lease |
|
21 |
|
Company Rights Offering |
|
4 |
|
Company SEC Reports |
|
13 |
|
Competing Transaction |
|
64 |
|
Conclusive Net Debt Adjustment Statement |
|
65 |
|
Confirmation Order |
|
47 |
|
Confirmed Debtors |
|
73 |
|
Contingent and Disputed Debt Claims |
|
65 |
|
Contract |
|
65 |
|
Corporate Level Debt |
|
65 |
|
Debt |
|
65 |
|
Debt Cap |
|
50 |
|
Debtors |
|
1 |
|
Designation Conditions |
|
4 |
|
DIP Loan |
|
66 |
|
Disclosure Statement |
|
66 |
|
Disclosure Statement Order |
|
47 |
|
Dispute Notice |
|
38 |
|
Disputed Items |
|
38 |
|
Domestically Controlled REIT |
|
41 |
|
Effective Date |
|
4 |
|
Encumbrances |
|
19 |
|
Environmental Laws |
|
16 |
|
Equity Exchange |
|
2 |
|
Equity Securities |
|
10 |
|
ERISA |
|
66 |
|
ERISA Affiliate |
|
17 |
|
Excess Surplus Amount |
|
66 |
|
Exchangeable Notes |
|
66 |
|
Excluded Claims |
|
66 |
|
Excluded Non-US Plans |
|
17 |
|
Fairholme |
|
68 |
|
Foreign Plan |
|
17 |
|
Fully Diluted Basis |
|
68 |
|
GAAP |
|
68 |
|
GGO |
|
2 |
|
GGO Common Share Amount |
|
68 |
|
GGO Common Stock |
|
6 |
|
GGO Note Amount |
|
68 |
|
GGO Per Share Purchase Price |
|
8 |
|
GGO Pro Rata Share |
|
69 |
|
GGO Promissory Note |
|
68 |
|
GGO Purchase Price |
|
8 |
|
GGO Representative |
|
6 |
|
GGO Setup Costs |
|
69 |
|
GGO Share Distribution |
|
7 |
|
GGO Shares |
|
8 |
|
GGO Warrants |
|
29 |
|
GGP |
|
1 |
|
GGP Pro Rata Shares |
|
69 |
|
Governmental Entity |
|
69 |
|
Hazardous Materials |
|
16 |
|
Hughes Agreement |
|
69 |
|
Hughes Amount |
|
68 |
|
Hughes Heirs Obligations |
|
69 |
|
Identified Assets |
|
6 |
|
Indebtedness |
|
69 |
|
Initial Investors |
|
2 |
|
Investment Agreements |
|
2 |
|
Joint Venture |
|
70 |
|
Knowledge |
|
70 |
|
Law |
|
70 |
|
Liquidity Equity Issuances |
|
70 |
|
Liquidity Target |
|
49 |
|
Material Adverse Effect |
|
70 |
|
Material Contract |
|
71 |
|
Material Lease |
|
21 |
|
Measurement Date |
|
10 |
|
Most Recent Statement |
|
18 |
|
MPC Assets |
|
71 |
|
MPC Taxes |
|
71 |
|
Net Debt Excess Amount |
|
72 |
|
Net Debt Surplus Amount |
|
72 |
|
New Common Stock |
|
1 |
|
New Debt |
|
50 |
|
New DIP Agreement |
|
47 |
|
New Warrants |
|
29 |
|
Non-Control Agreement |
|
72 |
|
Non-Controlling Properties |
|
72 |
|
NYSE |
|
29 |
|
Offering Premium |
|
72 |
|
Operating Partnership |
|
72 |
|
Original Agreement |
|
1 |
|
PBGC |
|
17 |
|
Per Share Purchase Price |
|
3 |
|
Permitted Claims |
|
73 |
|
Permitted Claims Amount |
|
73 |
|
Permitted Replacement Shares |
|
73 |
|
Permitted Title Exceptions |
|
19 |
|
Pershing Agreement |
|
2 |
|
Pershing Purchasers |
|
2 |
|
Person |
|
73 |
|
Petition Date |
|
1 |
|
Plan |
|
1 |
|
Plan Debtors |
|
73 |
|
Plan Summary Term Sheet |
|
1 |
|
PMA Claims |
|
73 |
|
Preliminary Closing Date Net Debt Review Deadline |
|
74 |
|
Preliminary Closing Date Net Debt Review Period |
|
74 |
|
Preliminary Closing Date Net Debt Schedule |
|
38 |
|
Proportionally Consolidated Debt |
|
74 |
|
Proportionally Consolidated Unrestricted Cash |
|
74 |
|
Proposed Approval Order |
|
28 |
|
Proposed Securities |
|
31 |
|
Purchase Price |
|
3 |
|
Purchaser |
|
1 |
|
Purchaser Group |
|
74 |
|
Refinance Cap |
|
53 |
|
Reinstated Amounts |
|
50 |
|
Reinstatement Adjustment Amount |
|
74 |
|
REIT |
|
23 |
|
REIT Subsidiary |
|
23 |
|
Reorganized Company |
|
1 |
|
Reorganized Company Organizational Documents |
|
36 |
|
Repurchase Notice |
|
5 |
|
Reserve |
|
73 |
|
Reserve Surplus Amount |
|
74 |
|
Reserved Shares |
|
5 |
|
Resolution Period |
|
38 |
|
Rights Agreement |
|
75 |
|
Rights Offering Election |
|
4 |
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Rouse Bonds |
|
75 |
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Rule 144 |
|
44 |
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Sales Cap |
|
52 |
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SEC |
|
13 |
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Securities Act |
|
13 |
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Share Cap Number |
|
51 |
|
Share Equivalent |
|
75 |
|
Shares |
|
3 |
|
Significant Subsidiaries |
|
75 |
|
SOX |
|
41 |
|
Specified Debt |
|
75 |
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Subscription Right |
|
31 |
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Subsidiary |
|
75 |
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Synthetic Lease Obligation |
|
70 |
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Target Net Debt |
|
75 |
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Tax Matters Agreement |
|
75 |
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Tax Protection Agreements |
|
76 |
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Tax Return |
|
23 |
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Taxes |
|
23 |
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Termination Date |
|
76 |
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Transactions |
|
76 |
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Transfer |
|
44 |
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TRUPS |
|
76 |
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U.S. Persons |
|
41 |
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Unrestricted Cash |
|
76 |
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Unrestricted Date |
|
42 |
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Unsecured Indebtedness |
|
76 |
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UPREIT Units |
|
76 |
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Warrant Agreement |
|
29 |
|
Warrants |
|
29 |
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT , effective as of March 31, 2010 (this “ Agreement ”), by and between General Growth Properties, Inc., a Delaware corporation (“ GGP ”), and The Fairholme Fund, a series of Fairholme Funds, Inc., a Maryland corporation (“ The Fairholme Fund ”) and Fairholme Focused Income Fund, a series of Fairholme Funds, Inc., a Maryland corporation, (each, together with its permitted nominees and assigns, a “ Purchaser ”).
On March 31, 2010, GGP and the Purchasers entered into the Stock Purchase Agreement (as subsequently amended on May 3, 2010 and May 7, 2010, the “ Original Agreement ”) to provide for the terms and conditions for the consummation of the transactions contemplated therein. On August 2, 2010, GGP and the Purchasers entered into the Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010 (as subsequently amended on September 17, 2010, the “ Amended and Restated Agreement ”) which amended and restated the Original Agreement ab initio in its entirety as set forth therein. Pursuant to Section 13.8 of the Amended and Restated Agreement, the parties thereto wish to amend and restate the Amended and Restated Agreement ab initio in its entirety as set forth herein. References herein to “date of this Agreement” and “date hereof” shall refer to March 31, 2010.
RECITALS
WHEREAS , GGP is a debtor in possession in that certain bankruptcy case under chapter 11 (“ Chapter 11 ”) of Title 11 of the United States Code, 11 U.S.C. §§ 101 -1532 (as amended, the “ Bankruptcy Code ”) filed on April 16, 2009 (the “ Petition Date ”) in the United States Bankruptcy Court for the Southern District of New York (the “ Bankruptcy Court ”), Case No. 09-11977 (ALG).
WHEREAS , each Purchaser, separately and not jointly, desires to assist GGP in its plans to recapitalize and emerge from bankruptcy and has agreed to sponsor the implementation of a joint chapter 11 plan of reorganization based on the Plan Summary Term Sheet (as defined below) (together with all documents and agreements that form part of such plan or related plan supplement or are related thereto, and as it may be amended, modified or supplemented from time to time, in each case, to the extent it relates to the implementation and effectuation of the Plan Summary Term Sheet and this Agreement, the “ Plan ”), of GGP and its Subsidiaries and Affiliates who are debtors and debtors-in-possession (the “ Debtors ”) in the chapter 11 cases pending and jointly administered in the Bankruptcy Court (the “ Bankruptcy Cases ”).
WHEREAS , principal elements of the Plan (including a table setting forth the proposed treatment of allowed claims and equity interests in the Bankruptcy Cases) are set forth on Exhibit A hereto (the “ Plan Summary Term Sheet ”).
WHEREAS , the Plan shall provide, among other things, that (i) each holder of common stock, par value $0.01 per share, of GGP (the “ Common Stock ”) shall receive, in exchange for each share of Common Stock held by such holder, one share of new common stock (the “ New Common Stock ”) of a new company that succeeds to GGP in the manner contemplated by Exhibit B upon consummation of the Plan (the “ Reorganized Company ”) and (ii) any Equity Securities (other than Common Stock) of the Company (as defined below) or any of its Subsidiaries (as defined below) outstanding immediately after the Effective Date that were
previously convertible into, or exercisable or exchangeable for, Common Stock shall thereafter be convertible into, or exercisable or exchangeable for, New Common Stock (based upon the number of shares of Common Stock underlying such Equity Securities) (the transactions contemplated by clauses (i) and (ii) of this recital being referred to herein as the “ Equity Exchange ”). For purposes of this Agreement, the “ Company ” shall be deemed to refer, prior to consummation of the Plan, to GGP and, on and after consummation of the Plan, the Reorganized Company, as the context requires.
WHEREAS , each Purchaser, separately and not jointly, desires to make an investment in the Reorganized Company on the terms and subject to the conditions described herein in the form of the purchase of shares of New Common Stock as contemplated hereby.
WHEREAS , in addition to the Equity Exchange and the sale of the Shares (as defined below), the Plan shall provide for the incorporation by the Company of a new subsidiary (“ GGO ”), the contribution of certain assets (and/or equity interests related thereto) of the Company to GGO and the assumption by GGO of the liabilities associated with such assets, the distribution to the shareholders of the Company (prior to the issuance of the Shares and the issuance of other shares of New Common Stock contemplated by this Agreement other than pursuant to the Equity Exchange) on a pro rata basis and holders of UPREIT Units of all of the capital stock of GGO, and whereas each Purchaser desires to make an investment in GGO on the terms and subject to the conditions described herein in the form of the purchase of shares of GGO Common Stock as contemplated hereby.
WHEREAS , the Company has requested that each Purchaser, separately and not jointly, commit to purchase the Shares and the GGO Shares at a fixed price for the term hereof.
WHEREAS , each Purchaser, separately and not jointly, has agreed to enter into this Agreement and commit to purchase the Shares and the GGO Shares only on the condition that the Company, as promptly as practicable following the date hereof (but no later than the date provided in Section 5.2 hereof), issue the Warrants contemplated herein and perform its other obligations hereunder.
WHEREAS , on and effective as of the date hereof, the Company entered into an agreement (in the form attached hereto as Exhibit C-1 together with any amendments thereto as have been approved by each Purchaser, the “ Brookfield Agreement ”) with REP Investments LLC (the “ Brookfield Investor ”) pursuant to which the Brookfield Investor has agreed to make (i) an investment of up to $2,500,000,000 in the Reorganized Company in the form of the purchase of shares of New Common Stock and (ii) an investment of $125,000,000 in GGO in the form of the purchase of shares of GGO Common Stock.
WHEREAS , on and effective as of the date hereof, the Company entered into an agreement (in the form attached hereto as Exhibit C-2 together with any amendments thereto as have been approved by each Purchaser, the “ Pershing Agreement ” and, together with this Agreement and the Brookfield Agreement, the “ Investment Agreements ”) with Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. (the “ Pershing Purchasers ” and, together with each Purchaser and the Brookfield Investor, the “ Initial Investors ”) pursuant to which the Pershing Purchasers have
agreed to make (i) an investment of up to $1,085,714,290 in the Reorganized Company in the form of the purchase of shares of New Common Stock and (ii) an investment of $62,500,000 in GGO in the form of the purchase of shares of GGO Common Stock.
NOW, THEREFORE , in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the parties agree as follows:
ARTICLE I
PURCHASE OF NEW COMMON STOCK; CLOSING
SECTION 1.1 Purchase of New Common Stock .
(a) On the terms and subject to the conditions set forth herein, at the Closing (as defined below), each Purchaser shall purchase from the Company, and the Company shall sell to such Purchaser, a number of shares of New Common Stock (the “ Shares ”) equal to its GGP Pro Rata Share of the Total Purchase Amount (as defined below) for a price per share equal to $10.00 (the “ Per Share Purchase Price ” and, in the aggregate, the “ Purchase Price ”); provided , that no Purchaser shall be obligated to purchase a number of Shares less than its GGP Pro Rata Share of 190,000,000, as determined pursuant to Section 1.4 . At the Closing, the Purchasers shall cause the Purchase Price to be paid (i) first, to the extent that the Purchasers elect by written notice to the Company not less than three Business Days prior to the Closing Date, by the application of any claims against the Debtors that are held by the Purchasers and outstanding as of the Effective Date in an amount equal to the allowed amount (inclusive of prepetition and postpetition interest accrued up to and on the Effective Date at the applicable rate provided in the Plan), with each $10.00 in such amount of allowed claims so applied being in satisfaction of the obligation to pay $10.00 of the Purchase Price and (ii) second, by wire transfer of immediately available U.S. Dollar funds. For the avoidance of doubt, the Purchasers may elect which claims to apply in satisfaction of the Purchasers’ obligation to pay the Purchase Price for purposes of clause (i), and the application of such claims against the Purchase Price in accordance with clause (i) shall represent complete satisfaction of the Debtors’ obligations in respect of such allowed claims so applied. For the avoidance of doubt and as provided in the Plan, any application by the Purchaser of allowed claims in satisfaction of a portion of the Purchase Price shall be effected by causing the Debtor liable for such claims to make payment for such claims in accordance with the Plan and by directing the amounts so payable to be paid to the Company and applied in satisfaction of a portion of the Purchase Price.
(b) The “ Total Purchase Amount ” will be 380,000,000, subject to reduction pursuant to Section 1.4 .
(c) All Shares shall be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by the Company to the extent required under the Confirmation Order or applicable Law.
(d) Each Purchaser, in its sole discretion, may assign its rights to receive Shares hereunder or designate that some or all of the Shares be issued in the name of, and delivered to, one or more of the other members of its Purchaser Group or any third party to whom the shares
could be transferred immediately after Closing in accordance with Section 6.4 , subject to (i) such action not causing any delay in the obtaining of, or significantly increasing the risk of not obtaining, any material authorizations, consents, orders, declarations or approvals necessary to consummate the transactions contemplated by this Agreement or otherwise delaying the consummation of such transactions, (ii) such Person shall be an “ accredited investor ” (within the meaning of Rule 501 of Regulation D under the Securities Act) and shall have agreed in writing with and for the benefit of the Company to be bound by the terms of this Agreement applicable to such Purchaser set forth in Section 6.4 and the applicable Non-Control Agreement, if any, including the delivery of the letter certifying compliance with the representations and covenants set forth on Exhibit D to the extent applicable to such assignee or designee and (iii) such initial Purchaser not being relieved of any of its obligations under this Agreement ((i), (ii) and (iii) collectively, the “ Designation Conditions ”). Notwithstanding anything to the contrary in this Agreement, no Purchaser may assign its rights to receive or designate Shares to any Person (other than members of its Purchaser Group) if such assignment or designation would cause a failure of the closing condition in Section 7.1(u) of the Brookfield Agreement.
SECTION 1.2 Closing . Subject to the satisfaction or waiver of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Closing, but subject to the satisfaction or waiver of those conditions as of the Closing) set forth in Article VII and Article VIII , the closing of the purchase of the Shares and the GGO Shares by each Purchaser pursuant hereto (the “ Closing ”) shall occur at 9:30 a.m., New York time, on the effective date of the Plan (the “ Effective Date ”), at the offices of Weil, Gotshal & Manges LLP located at 767 Fifth Avenue, New York, NY 10153, or such other date, time or location as agreed by the parties. The date of the Closing is referred to as the “ Closing Date ”. Each of the Company and each Purchaser hereby agrees that in no event shall the Closing occur unless all of the Shares and the GGO Shares are sold to each applicable Purchaser (or to such other Persons as each such applicable Purchaser may designate in accordance with and subject to the Designation Conditions so long as such designation would not cause a failure of the closing condition in Section 7.1(u) of the Brookfield Agreement) on the Closing Date.
SECTION 1.3 Company Rights Offering Election . The Company may at any time prior to the date of filing of the Disclosure Statement, upon written notice to each Purchaser in accordance with the terms hereof (the “ Rights Offering Election ”), irrevocably elect to convert the obligation of such Purchaser to purchase the Shares as contemplated by Section 1.1 hereof into an obligation of such Purchaser to participate in a rights offering by the Company pursuant to which shareholders and/or creditors of the Company are offered rights to subscribe for shares of New Common Stock (a “ Company Rights Offering ”), subject to the execution and delivery of definitive documentation therefor and the satisfaction of the conditions described therein and other customary conditions for a public rights offering. To the extent the Company makes a Rights Offering Election, (i) each Purchaser shall be entitled to a minimum allocation of shares of New Common Stock in the Company Rights Offering equal to the number of shares such Purchaser would otherwise be required to purchase pursuant to Section 1.1 hereof had no such election been made, (ii) the purchase price per share payable by such Purchaser shall be equal to the Per Share Purchase Price and such Purchaser shall not be otherwise adversely affected as compared to the transactions contemplated hereby, (iii) the Company Rights Offering shall be effected in a manner substantially consistent with the procedures contemplated by Section 2.2 of the Original Agreement; provided , that the Company Rights Offering shall be completed by the
Effective Date, and (iv) the Company and each Purchaser shall cooperate in good faith to develop and agree upon documentation that is reasonably acceptable to both the Company and each Purchaser governing the further terms and conditions of the Company Rights Offering.
SECTION 1.4 Company Election to Replace Certain Shares; Company Election to Reserve and Repurchase Certain Shares .
(a) In the event that the Company has sold, or has binding commitments to sell on or prior to the Effective Date, Permitted Replacement Shares, the Company may elect by written notice to each Purchaser to reduce the Total Purchase Amount by all or any portion of the number of such Permitted Replacement Shares as the Company may determine in its discretion; provided, that the Total Purchase Amount shall not be less than 190,000,000. No election by the Company under this Section 1.4(a) shall be effective unless received by each Purchaser on or prior to the date that is 15 days before the commencement of the hearing to consider confirmation of the Plan. Any election by the Company under this Section 1.4(a) shall be binding and irrevocable.
(b) If the Plan as presented for confirmation provides for the commencement on or within 45 days after the Effective Date of a broadly distributed public offering of New Common Stock , the Company may elect, by written notice to each Purchaser on or prior to October 11, 2010, to specify a number of Shares to be purchased by the Purchasers at Closing as Shares to be subject to repurchase after Closing pursuant to this Section 1.4(b) (the “ Reserved Shares ”); provided, that the excess of (i) its GGP Pro Rata Share of the Total Purchase Amount minus (ii) its Reserved Shares shall not be less than its GGP Pro Rata Share of 190,000,000. If the Company elects to designate any Reserved Shares , the Company shall pay to each Purchaser in cash on the Effective Date an amount equal to $0.25 per Reserved Share. Upon payment of such amount, the Company shall thereafter have the right to elect by written notice to each Purchaser (a “ Repurchase Notice ”) on or prior to the 40th day after the Effective Date (or, if not a Business Day, the next Business Day) to repurchase from each Purchaser a number of Shares equal to the lesser of such Purchaser’ s Clawback Percentage of (x) the aggregate number of Permitted Replacement Shares (other than any Permitted Replacement Shares applied to reduce the Total Purchase Amount pursuant to Section 1.4(a) ) sold by the Company prior to the 45th day after the Effective Date and (y) the sum of the initial number of Reserved Shares under this Agreement and the initial number of Repurchase Shares (as defined in the Pershing Agreement) under the Pershing Agreement . The purchase price for any Reserved Shares shall be $10.00 per Share, payable in cash in immediately available funds against delivery of the Reserved Shares on a settlement date determined by the Company and each Purchaser and not later than the date that is 45 days after the Effective Date. Any Repurchase Notice under this Section 1.4(b) shall, when taken together with this Agreement, constitute a binding offer and acceptance and be irrevocable.
For the purposes of this Section 1.4 , “ Clawback Percentage ” means, for each Purchaser under this Agreement and the Pershing Agreement, the quotient (expressed as a percentage) of (a) the number of Clawback Shares such Purchaser is purchasing at Closing divided by (b) all the Clawback Shares purchased at Closing under this Agreement and the Pershing Agreement. The aggregate Clawback Percentages shall at all times equal 100%.
For the purposes of this Section 1.4 , “ Clawback Shares ” means all Reserved Shares under this Agreement and all Repurchase Shares (but not Put Shares) under the Pershing Agreement.
SECTION 1.5 Pro Rata Reductions with Pershing Agreement . No election by the Company pursuant to Section 1.4(a) or specification of Reserved Shares pursuant to Section 1.4(b) shall be made without the consent of Purchasers unless the Company is making a similar election under the Pershing Agreement, such that each of the aggregate number of Shares required to be purchased at Closing is allocated as among each Purchaser and among each of the Pershing Purchasers under the Pershing Agreement in accordance with the applicable GGP Pro Rata Share ; provided , however that solely for the purposes of this Section 1.5 , the number of Put Shares (as defined in the Pershing Agreement) shall be included in the above calculation of the number of Shares required to be purchased at Closing .
ARTICLE II
GGO SHARE DISTRIBUTION AND PURCHASE OF GGO COMMON STOCK
SECTION 2.1 GGO Share Distribution . On the terms and subject to the conditions (including Bankruptcy Court approval) set forth herein, the Plan shall provide for the following:
(a) On or prior to the Effective Date, the Company shall incorporate GGO with issued and outstanding capital stock consisting of at least the GGO Common Share Amount of shares of common stock (the “ GGO Common Stock ”), designate an employee of the Company familiar with the Identified Assets and reasonably acceptable to the other Initial Investors to serve as a representative of GGO (the “ GGO Representative ”) and shall contribute to GGO (directly or indirectly) the assets (and/or equity interests related thereto) set forth in Exhibit E hereto and have GGO assume directly or indirectly the associated liabilities (the “ Identified Assets ”); provided , however , that to the extent the Company is prohibited by Law from contributing one or more of the Identified Assets to GGO or the contribution thereof would breach or give rise to a default under any Contract, agreement or instrument that would, in the good faith judgment of the Company in consultation with the GGO Representative, impair in any material respect the value of the relevant Identified Asset or give rise to additional liability (other than liability that would not, in the aggregate, be material) on the part of GGO or the Company or a Subsidiary of the Company, the Company shall (i) to the extent not prohibited by Law or would not give rise to such a default, take such action or cause to be taken such other actions in order to place GGO, insofar as reasonably possible, in the same economic position as if such Identified Asset had been transferred as contemplated hereby and so that, insofar as reasonably possible, substantially all the benefits and burdens (including all obligations thereunder but excluding any obligations that arise out of the transfer of the Identified Asset to the extent included in Permitted Claims) relating to such Identified Asset, including possession, use, risk of loss, potential for gain and control of such Identified Asset, are to inure from and after the Closing to GGO ( provided that as soon as a consent for the contribution of an Identified Asset is obtained or the contractual impediment is removed or no longer applies, the applicable Identified Asset shall be promptly contributed to GGO), or (ii) to the extent the actions contemplated by clause (i) are not possible without resulting in a material and adverse effect on the Company and
its Subsidiaries (as reasonably determined by the Company in consultation with the GGO Representative), contribute other assets, with the separate consent of each Purchaser (which such Purchaser shall not unreasonably withhold, condition or delay), having an economically equivalent value and related financial impact on the Company (in each case, as reasonably agreed by each Purchaser and the Company in consultation with the GGO Representative) to the Identified Asset not so contributed. In no event shall the Company (or any subsidiary of the Company) pay more than $16,000,000 in the aggregate or make any other payment or provide any other economic consideration to reduce the principal amount of the mortgage related to 110 N. Wacker Drive, Chicago, Illinois.
(b) The GGO Common Share Amount of shares of GGO Common Stock, representing all of the outstanding capital stock of GGO (other than shares of GGO Common Stock to be issued (x) pursuant to Section 2.2 of this Agreement, (y) to the other Initial Investors pursuant to Section 2.2 of their respective Investment Agreements, and (z) upon exercise of the GGO Warrants and the warrants issued to the other Initial Investors pursuant to their respective Investment Agreements), shall be distributed, on or prior to the Effective Date, to the shareholders of the Company (pre-issuance of the Shares) on a pro rata basis and holders of UPREIT Units (the “ GGO Share Distribution ”).
(c) It is agreed that neither the Company nor any of its Subsidiaries shall be required to pay or cause payment of any fees or make any financial accommodations to obtain any third-party consent, approval, waiver or other permission for the contribution contemplated by Section 2.1(a) , or to seek any such consent, approval, waiver or other permission that is inapplicable to the Company or any of its Debtor Subsidiaries pursuant to the Bankruptcy Code.
(d) The parties currently contemplate that the GGO Share Distribution will be structured as a “ tax free spin-off ” under the Code. To the extent that the Company and each Purchaser jointly determine that it is desirable for the GGO Share Distribution to be structured as a taxable dividend, the parties will work together to structure the transaction to allow for such outcome.
(e) With respect to the Columbia Master Planned Community (the “ CMPC ”), it is the intention of the parties that office and mall assets currently producing any material amount of income at the CMPC (including any associated right of access to parking spaces) will be retained by the Company and the remaining non-income producing assets at the CMPC will be transferred to GGO (including rights to develop and/or redevelop (as appropriate) the remainder of the CMPC). On or prior to the Effective Date, the Company and GGO shall enter into a mutually satisfactory development and cooperation agreement with respect to the CMPC, which agreement shall provide, among other things, that GGO shall grant mutually satisfactory easements, to the extent not already granted, such that the office buildings retained by GGP (as provided above) continuously shall have access to parking spaces appropriate for such office buildings.
SECTION 2.2 Purchase of GGO Common Stock .
(a) On the terms and subject to the conditions set forth herein, the Plan shall provide that at the Closing, each Purchaser shall purchase from GGO, and GGO shall sell to such
Purchaser, a number of shares of GGO Common Stock (the “ GGO Shares ”) equal to its GGO Pro Rata Share of 2,625,000 shares of GGO Common Stock, for a price per share equal to $47.619048 (the “ GGO Per Share Purchase Price ” and such $125,000,000 aggregate purchase price, the “ GGO Purchase Price ”). At the Closing the Purchasers shall cause the GGO Purchase Price to be paid by wire transfer of immediately available U.S. Dollar funds to such account or accounts as the Company shall have designated in writing prior to the Closing.
(b) All GGO Shares shall be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by GGO to the extent required under the Confirmation Order or applicable Law.
(c) Each Purchaser, in its sole discretion, may designate that some or all of the GGO Shares be issued in the name of, and delivered to, the other members of its Purchaser Group in accordance with and subject to the Designation Conditions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser, as set forth below, except (i) as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (but not in documents filed as exhibits thereto or documents incorporated by reference therein) filed with the SEC on March 1, 2010 (other than in any “ risk factor ” disclosure or any other forward-looking disclosures contained in such reports under the headings “ Risk Factors ” or “ Cautionary Note ” or any similar sections) or (ii) as set forth in the disclosure schedule delivered by the Company to each Purchaser on the date of this Agreement (the “ Company Disclosure Letter ”):
SECTION 3.1 Organization and Qualification . The Company and each of its direct and indirect Significant Subsidiaries is duly organized and is validly existing as a corporation or other form of entity, where applicable, in good standing under the Laws of their respective jurisdictions of organization, with the requisite power and authority to own, operate or manage its properties and conduct its business as currently conducted, subject, as applicable, to the restrictions that result from any such entity’s status as a debtor-in-possession under Chapter 11, except to the extent the failure of such Significant Subsidiary to be in good standing (to the extent the concept of good standing is applicable in its jurisdiction of organization) would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company and each of its Significant Subsidiaries has been duly qualified as a foreign corporation or other form of entity for the transaction of business and, where applicable, is in good standing under the Laws of each other jurisdiction in which it owns, manages, operates or leases properties or conducts business so as to require such qualification, except to the extent the failure to be so qualified or, where applicable, be in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.2 Corporate Power and Authority .
(a) Subject to the authorization of the Bankruptcy Court, which shall be contained in the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, the Company has the requisite power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order). The Company has taken all necessary corporate action required for the due authorization, execution, delivery and performance by it of this Agreement.
(b) Subject to the entry of the Approval Order, the Company has the requisite power and authority to (i) issue the Warrants (assuming the accuracy of the representations of each Purchaser contained in Exhibit D ) and (ii) perform its obligations pursuant to the provisions of the Approval Order hereof. No approval by any securityholders of the Company or any Subsidiary of the Company is required in connection with the issuance of the Warrants or the issuance of the shares of Common Stock upon exercise of the Warrants.
(c) The Company has received written confirmation from the NYSE that the shares of New Common Stock or other Equity Securities issuable by the Company to each Purchaser and the other members of the Purchaser Group in connection with each Purchaser’s exercise of its Subscription Rights contemplated by Section 5.9(a) hereof shall not require stockholder approval and shall be eligible for listing on the NYSE in the hands of such Purchaser or other members of the Purchaser Group without any requirement for stockholder approval, in each case, during the five (5) year period following the Closing Date.
SECTION 3.3 Execution and Delivery; Enforceability .
(a) This Agreement has been duly and validly executed and delivered by the Company, and subject to the authorization of the Bankruptcy Court, which shall be contained in the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, shall constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at Law or in equity) (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order).
(b) Subject to the entry of the Approval Order, the provisions of this Agreement relating to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order shall constitute the valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.
SECTION 3.4 Authorized Capital Stock . As of the date of this Agreement, the authorized capital stock of the Company consists of 875,000,000 shares of Common Stock and of 5,000,000 shares of preferred stock. The issued and outstanding capital stock of the Company and the shares of Common Stock available for grant pursuant to the Company’s 1993 Stock
Incentive Plan, 1998 Stock Incentive Plan and 2003 Stock Incentive Plan (collectively, the “ Company Option Plans ”) or otherwise as of March 26, 2010 (the “ Measurement Date ”) is set forth on Section 3.4 of the Company Disclosure Letter. From the Measurement Date to the date of this Agreement, other than in connection with the issuance of shares of Common Stock pursuant to the exercise of options outstanding as of the Measurement Date, there has been no change in the number of outstanding shares of capital stock of the Company or the number of outstanding Equity Securities (as defined below). Except as set forth on Section 3.4 of the Company Disclosure Letter, on the Measurement Date, there was not outstanding, and there was not reserved for issuance, any (i) share of capital stock or other voting securities of the Company or its Significant Subsidiaries; (ii) security of the Company or its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or voting securities of the Company or its Significant Subsidiaries; (iii) option or other right to acquire from the Company or its Subsidiaries, or obligation of the Company or its Subsidiaries to issue, any shares of capital stock, voting securities or security convertible into or exercisable or exchangeable for shares of capital stock or voting securities of the Company or its Significant Subsidiaries, as the case may be; or (iv) equity equivalent interest in the ownership or earnings of the Company or its Significant Subsidiaries or other similar right, in each case to which the Company or a Significant Subsidiary is a party (the items in clauses (i) through (iv) collectively, “ Equity Securities ”). Other than as set forth on Section 3.4 of the Company Disclosure Letter or as contemplated by this Agreement, or pursuant to Contracts entered into by the Company after the date hereof and prior to the Closing that are otherwise not inconsistent with any Purchaser’s rights hereunder and with respect to the transactions contemplated hereby, and do not confer on any other Person rights that are superior to those received by any Purchaser hereunder or pursuant to the transactions contemplated hereby other than rights and terms that are customarily granted to holders of any such Equity Securities so issued and not customarily granted in transactions such as the transactions contemplated hereby, there is no outstanding obligation of the Company or its Subsidiaries to repurchase, redeem or otherwise acquire any Equity Security. Other than as set forth on Section 3.4 of the Company Disclosure Letter or as contemplated by this Agreement, or pursuant to Contracts entered into by the Company in connection with the issuance of Equity Securities after the date hereof and prior to the Closing that are otherwise not inconsistent with any Purchaser’s rights hereunder and with respect to the transactions contemplated hereby, and do not confer on any other Person rights that are superior to those received by any Purchaser hereunder or pursuant to the transactions contemplated hereby other than rights and terms that are customarily granted to holders of any such Equity Securities so issued and not customarily granted in transactions such as the transactions contemplated hereby, there is no stockholder agreement, voting trust or other agreement or understanding to which the Company is a party or by which the Company is bound relating to the voting, purchase, transfer or registration of any shares of capital stock of the Company or preemptive rights with respect thereto. Section 3.4 of the Company Disclosure Letter sets forth a complete and accurate list of the outstanding Equity Securities of the Company as of the Measurement Date, including the applicable conversion rates and exercise prices (or, in the case of options to acquire Common Stock, the weighted average exercise price) relating to the conversion or exercise of such Equity Securities into or for Common Stock.
SECTION 3.5 Issuance .
(a) Subject to the authorization of the Bankruptcy Court, which shall be contained in entry of the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, the issuance of the Shares and the New Warrants has been duly and validly authorized. Subject to the entry of the Approval Order and assuming the accuracy of the representations of such Purchaser contained in Exhibit D , the issuance of the Warrants is duly and validly authorized. When the Shares are issued and delivered in accordance with the terms of this Agreement against payment therefor, the Shares shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the applicable Non-Control Agreement, if any, and applicable state and federal securities Laws. When the Warrants and the New Warrants are issued and delivered in accordance with the terms of this Agreement, the Warrants and New Warrants shall be duly and validly issued and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the terms of the Warrants and New Warrants and under applicable state and federal securities Laws. When the shares of Common Stock issuable upon the exercise of the Warrants and the shares of New Common Stock issuable upon the exercise of the New Warrants are issued and delivered against payment therefor, the shares of Common Stock and New Common Stock, as applicable, shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the applicable Non-Control Agreement, if any, and applicable state and federal securities Laws.
(b) Subject to the authorization of the Bankruptcy Court, which shall be contained in the entry of the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, when the GGO Shares and the GGO Warrants are issued, the GGO Shares and GGO Warrants shall be duly and validly authorized, duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement and under applicable state and federal securities Laws. When the shares of GGO Common Stock issuable upon the exercise of the GGO Warrants are issued and delivered against payment therefor, the shares of GGO Common Stock shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement and under applicable state and federal securities Laws.
SECTION 3.6 No Conflict .
(a) Subject to (i) the receipt of the consents set forth on Section 3.6 of the Company Disclosure Letter, (ii) such authorization as is required by the Bankruptcy Court or the Bankruptcy Code, which shall be contained in the entry of the Confirmation Order, and the expiration, or waiver by the Bankruptcy Court, of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, (iii) any provisions of the Bankruptcy Code that override, eliminate or abrogate such consents or as may be ordered by the Bankruptcy Court and (iv) the ability to employ the alternatives contemplated by Section 2.1 of the Agreement, the
execution and delivery (or, with respect to the Plan, the filing) by the Company of this Agreement and the Plan, the performance by the Company of its respective obligations under this Agreement and compliance by the Company with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, (x) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any Contract to which the Company or any of the Company’s Subsidiaries is a party or by which any of their material assets are subject or encumbered, (y) shall not result in any violation or breach of any terms, conditions or provisions of the certificate of incorporation or bylaws of the Company, or the comparable organizational documents of the Company’s Subsidiaries, and (z) shall not conflict with or result in any violation or breach of, or any termination or impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, except, in the case of each of clauses (x) and (z) above, for any such conflict, breach, acceleration, lien, termination, impairment, failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order).
(b) Subject to the entry of the Approval Order, (i) the issuance of the Warrants (assuming the accuracy of the representations of each Purchaser contained in Exhibit D ) and (ii) the performance by the Company of its respective obligations under the Approval Order and compliance by the Company with all of the provisions thereof (x) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any Contract, (y) shall not result in any violation or breach of any terms, conditions or provisions of the certificate of incorporation or bylaws of the Company, or the comparable organizational documents of the Company’s Subsidiaries, and (z) shall not conflict with or result in any violation or breach of, or any termination or impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, except, in the case of each of clauses (x) and (z) above, for any such conflict, breach, acceleration, lien, termination, impairment, failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.
SECTION 3.7 Consents and Approvals .
(a) No consent, approval, authorization, order, registration or qualification of or with any Governmental Entity having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties is required for (i) (1) the issuance and delivery of the New Warrants, (2) the issuance, sale and delivery of Shares, (3) the issuance and delivery of the Warrants, (4) the issuance, sale and delivery of the GGO Shares, (5) the issuance and delivery of the GGO Warrants, (6) the issuance of New Common Stock upon exercise of the New Warrants, (7) the issuance of GGO Common Stock upon exercise of the GGO Warrants and (8) the issuance of Common Stock upon exercise of the Warrants and (ii) the execution and delivery by
the Company of this Agreement or the Plan and performance of and compliance by the Company with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except (A) such authorization as is required by the Bankruptcy Court or the Bankruptcy Code, which shall be contained in the entry of the relevant Court Order, and the expiration, or waiver by the Bankruptcy Court, of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, as applicable (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order), (B) filings required under, and compliance with (other than shareholder approval requirements in respect of the issuance of the Warrants), the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, the Securities Act and the rules and regulations promulgated thereunder, and the rules of the New York Stock Exchange, and (C) such other consents, approvals, authorizations, orders, registrations or qualifications that, if not obtained, made or given, would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(b) No consent, approval, authorization, order, registration or qualification of or with any Governmental Entity having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties is required for (1) the issuance and delivery of the Warrants and (2) the performance of and compliance by the Company with all of the provisions of the Approval Order except (A) the entry of the Approval Order, (B) filings required under, and compliance with (other than shareholder approval requirements in respect of the issuance of the Warrants), the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, the Securities Act and the rules and regulations promulgated thereunder, and the rules of the New York Stock Exchange, and (C) such other consents, approvals, authorizations, orders, registrations or qualifications that, if not obtained, made or given, would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.8 Company Reports .
(a) The Company has filed with or otherwise furnished to the Securities and Exchange Commission (the “ SEC ”) all material forms, reports, schedules, statements and other documents required to be filed or furnished by it under the United States Securities Act of 1933, as amended (the “ Securities Act ”) or the Exchange Act since December 31, 2007 (such documents, as supplemented or amended since the time of filing, and together with all information incorporated by reference therein, the “ Company SEC Reports ”). No Subsidiary of the Company is required to file with the SEC any such forms, reports, schedules, statements or other documents pursuant to Section 13 or 15 of the Exchange Act. As of their respective effective dates (in the case of Company SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective filing dates (in the case of all other Company SEC Reports), except as and to the extent modified, amended, restated, corrected, updated or superseded by any subsequent Company SEC Report filed and publicly available prior to the date of this Agreement, the Company SEC Reports (i) complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Reports, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The Company maintains a system of “ internal controls over financial reporting ” (as defined in Rules 13a-15(f) and 15a-15(f) under the Exchange Act) that provides reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP and that includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
(c) The Company maintains a system of “ disclosure controls and procedures ” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that is reasonably designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that information relating to the Company is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports.
(d) Since December 31, 2008, the Company has not received any oral or written notification of a “ material weakness ” in the Company’s internal controls over financial reporting. The term “ material weakness ” shall have the meaning assigned to it in the Statements of Auditing Standards 112 and 115, as in effect on the date hereof.
(e) Except as and to the extent modified, amended, restated, corrected, updated or superseded by any subsequent Company SEC Report filed and publicly available prior to the date of this Agreement, the audited consolidated financial statements and the unaudited consolidated interim financial statements (including any related notes) included in the Company SEC Reports fairly present in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods set forth therein (subject, in the case of financial statements for quarterly periods, to normal year-end adjustments) and were prepared in conformity with GAAP consistently applied during the periods involved (except as otherwise disclosed in the notes thereto).
SECTION 3.9 No Undisclosed Liabilities . None of the Company or its Subsidiaries has any material liabilities (whether absolute, accrued, contingent or otherwise) required to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP, except for liabilities (i) reflected or reserved against or provided for in the Company’s consolidated balance sheet as of December 31, 2009 or disclosed in the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, (ii) incurred in the ordinary course of business consistent with past practice since the date of such balance sheet, (iii) for fees and expenses incurred in connection with the Bankruptcy
Cases, which have been estimated and included in the Admin/Priority Claims identified in the Plan Summary Term Sheet; provided , however , that such amount is an estimate and actual results may be higher or lower, (iv) incurred in the ordinary course of performing this Agreement and certain other asset sales, transfers and other actions permitted under this Agreement and (v) other liabilities at Closing as contemplated by the Plan Summary Term Sheet.
SECTION 3.10 No Material Adverse Effect . Since December 31, 2009, there has not occurred any event, fact or circumstance that has had or would reasonably be expected to have, individually, or in the aggregate, a Material Adverse Effect.
SECTION 3.11 No Violation or Default: Licenses and Permits . The Company and its Subsidiaries (a) are in compliance with all Laws, statutes, ordinances, rules, regulations, orders, judgments and decrees of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties, and (b) has not received written notice of any alleged material violation of any of the foregoing except, in the case of each of clauses (a) and (b) above, for any such failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect or as may be the result of the Company’s or any of its Subsidiaries’ Chapter 11 filing or status as a debtor-in-possession under Chapter 11. Subject to the restrictions that result from the Company’s or any of its Subsidiaries’ status as a debtor-in-possession under Chapter 11 (including that in certain instances the Company’s or such Subsidiary’s conduct of its business requires Bankruptcy Court approval), each of the Company and its Subsidiaries holds all material licenses, franchises, permits, certificates of occupancy, consents, registrations, certificates and other governmental and regulatory permits, authorizations and approvals required for the operation of the business as currently conducted by it and for the ownership, lease or operation of its material assets except, in each case, where the failure to possess or make the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.12 Legal Proceedings . There are no legal, governmental or regulatory investigations, actions, suits or proceedings pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries which, individually, if determined adversely to the Company or any of its Subsidiaries, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.13 Investment Company Act . The Company is not, and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof, shall not be required to register as an “ investment company ” or an entity “ controlled ” by an “ investment company ” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder. As of the Effective Date, GGO, after giving effect to the offering and sale of the GGO Shares and the application of the proceeds thereof, shall not be required to register as an “ investment company ” or an entity “ controlled ” by an “ investment company ” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.
SECTION 3.14 Compliance With Environmental Laws . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each of the Company and its Subsidiaries are and have been in compliance with and each of the
Company Properties are and have been maintained in compliance with, any and all applicable federal, state, local and foreign Laws relating to the protection of the environment or natural resources, human health and safety as such relates to the environment, or the presence, handling, or release of Hazardous Materials (collectively, “ Environmental Laws ”), which compliance includes obtaining, maintaining and complying with all permits, licenses or other approvals required under Environmental Laws to conduct operations as presently conducted, and no action is pending or, to the Knowledge of the Company, threatened that seeks to repeal, modify, amend, revoke, limit, deny renewal of, or otherwise appeal or challenge any such permits, licenses or other approvals, (ii) none of the Company or its Subsidiaries have received any written notice of, and none of the Company Properties have been the subject of any written notice received by the Company or any of its Subsidiaries of, any actual or potential liability or violation for the presence, exposure to, investigation, remediation, arrangement for disposal, or release of any material classified, characterized or regulated as hazardous, toxic, pollutants, or contaminants under Environmental Laws, including petroleum products or byproducts, radioactive materials, asbestos-containing materials, radon, lead-containing materials, polychlorinated biphenyls, mold, and hazardous building materials (collectively, “ Hazardous Materials ”), (iii) none of the Company and its Subsidiaries are a party to or the subject of any pending, or, to the Knowledge of the Company, threatened, legal proceeding alleging any liability, responsibility, or violation under any Environmental Laws with respect to their past or present facilities or their respective operations, (iv) none of the Company and its Subsidiaries have released Hazardous Materials on any real property in a manner that would reasonably be expected to result in an environmental claim or liability against the Company or any of its Subsidiaries or Affiliates, (v) none of the Company Properties is the subject of any pending, or, to the Knowledge of the Company, threatened, legal proceeding alleging any liability, responsibility, or violation under any Environmental Laws, and (vi) to the Knowledge of the Company, there has been no release of Hazardous Materials on, from, under, or at any of the Company Properties that would reasonably be expected to result in an environmental claim or liability against the Company or any of its Subsidiaries or Affiliates.
SECTION 3.15 Company Benefit Plans .
(a) Except as would not, individually or in the aggregate, have a Material Adverse Effect, each Company Benefit Plan is in compliance in design and operation in all material respects with all applicable provisions of ERISA and the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”) and each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service with respect to its qualified status under Section 401(a) of the Code and its related trust’s exempt status under Section 501(a) of the Code and the Company is not aware of any circumstances likely to result in the loss of the qualification of any such plan under Section 401(a) of the Code.
(b) Except as would not, individually or in the aggregate, have a Material Adverse Effect, with respect to each Company Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (A) no Company Benefit Plan has failed to satisfy the minimum funding standard (within the meaning of Sections 412 and 430 of the Code or Section 302 of ERISA) applicable to such Company Benefit Plan, whether or not waived and no application for a waiver of the minimum funding standard with respect to any Company Benefit
Plan has been submitted; (B) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred (other than in connection with the Bankruptcy Cases); (C) no liability (other than for premiums to the Pension Benefit Guaranty Corporation (the “ PBGC ”)) under Title IV of ERISA has been or is expected to be incurred by the Company or any entity that is required to be aggregated with the Company pursuant to Section 414 of the Code (an “ ERISA Affiliate ”); (D) the PBGC has not instituted proceedings to terminate any such plan or made any inquiry which would reasonably be expected to lead to termination of any such plan, and, no condition exists that presents a risk that such proceedings will be instituted or which would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any such plan; and (E) no Company Benefit Plan is, or is expected to be, in “ at-risk ” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code).
(c) Except as would not, individually or in the aggregate, have a Material Adverse Effect, with respect to each Company Benefit Plan maintained primarily for the benefit of current or former employees, officers or directors employed, or otherwise engaged, outside the United States (each a “ Foreign Plan ”), excluding any Foreign Plans that are statutorily required, government sponsored or not otherwise sponsored, maintained or controlled by the Company or any of its Significant Subsidiaries (“ Excluded Non-US Plans ”): (A) (1) all employer and employee contributions required by Law or by the terms of the Foreign Plan have been made, and all liabilities of the Company and its Significant Subsidiaries have been satisfied, or, in each case accrued, by the Company and its Significant Subsidiaries in accordance with generally accepted accounting principles, and (2) the Company and its Significant Subsidiaries are in compliance with all requirements of applicable Law and the terms of such Foreign Plan; (B) as of the Effective Date, the fair market value of the assets of each funded Foreign Plan, or the book reserve established for each Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such Foreign Plan determined on an ongoing basis (rather than on a plan termination basis) according to the actuarial assumptions and valuations used to account for such obligations as of the Effective Date in accordance with applicable generally accepted accounting principles; and (C) the Foreign Plan has been registered as required and has been maintained in good standing with applicable regulatory authorities.
SECTION 3.16 Labor and Employment Matters . (i) Neither the Company nor any of its Significant Subsidiaries is a party to or bound by any collective bargaining agreement or any labor union contract, nor are any employees of the Company or any of its Significant Subsidiaries represented by a works council or a labor organization (other than any industry-wide or statutorily mandated agreement in non-U.S. jurisdictions); (ii) to the Knowledge of the Company, as of the date hereof, there are no activities or proceedings by any labor union or labor organization to organize any employees of the Company or any of its Significant Subsidiaries or to compel the Company or any of its Significant Subsidiaries to bargain with any labor union or labor organization; and (iii), except as would not, individually or in the aggregate, have a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened material labor strike, lock-out, walkout, work stoppage, slowdown, demonstration, leafleting, picketing, boycott, work-to-rule campaign, sit-in, sick-out, or similar form of organized labor disruption.
SECTION 3.17 Insurance . The Company maintains for itself and its Subsidiaries insurance policies in those amounts and covering those risks, as in its judgment, are reasonable for the business and assets of the Company and its Subsidiaries.
SECTION 3.18 No Unlawful Payments . No action is pending or, to the Knowledge of the Company, is threatened against the Company or any of its Subsidiaries or Affiliates, or any of their respective directors, officers, or employees resulting from any (a) use of corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (b) direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (c) violations of any provision of the Foreign Corrupt Practices Act of 1977 or any other applicable local anti-bribery or anti-corruption Laws in any relevant jurisdictions or (d) other unlawful payment, except in any such case, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.19 No Broker’s Fees . Other than pursuant to agreements (including amendments thereto) by and between the Company and each of UBS Securities LLC and Miller Buckfire & Co., LLC, or otherwise disclosed to each Purchaser prior to the date hereof and which fees and expenses would be included in the definition of “ Permitted Claims ”, none of the Company or any of its Subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against the Company or any of its Subsidiaries for an investment banking fee, finder’s fee or like payment in respect of the sale of the Shares contemplated by this Agreement. None of the Company or any of its Subsidiaries is a party to any contract, agreement or understanding with any Person that would give rise to a valid claim against any Purchaser for a brokerage commission, finder’s fee, investment banking fee or like payment in connection with the transactions contemplated by this Agreement.
SECTION 3.20 Real and Personal Property .
(a) Section 3.20(a) of the Company Disclosure Letter sets forth a true, correct and complete list in all material respects of each material real property asset owned or leased (as lessee), directly or indirectly, in whole or in part, by the Company and/or any of its Subsidiaries (other than Identified Assets) (each such property that is not a Non-Controlling Property and has a fair market value (in the reasonable determination of the Company) in excess of $10,000,000 is individually referred to herein as “ Company Property ” and collectively referred to herein as the “ Company Properties ”). All Company Properties, Non-Controlling Properties and the Identified Assets are reflected in accordance with the applicable rules and regulations of the SEC in the Annual Report in Form 10-K as of, and for the year ended, December 31, 2009 (the “ Most Recent Statement ”).
(b) Except (i) for such breach of this Section 3.20(b) as may be caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries or (ii) as would not individually or in the aggregate be reasonably expected to have a Material Adverse Effect, the Company or one of its Subsidiaries owns good and valid fee simple title or valid and enforceable leasehold interests (except with respect to the Company’s right to reject any such ground lease as part of a Bankruptcy plan of reorganization for the remaining Debtor entities and subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at Law or in equity)), as applicable, to each of the Company Properties, in each case, free and clear of liens, mortgages or deeds of trust, claims against title, charges that are liens or other encumbrances on title, rights of way, restrictive covenants, declarations or reservations of an interest in title (collectively, “ Encumbrances ”), except for the following (collectively, the “ Permitted Title Exceptions ”): (i) Encumbrances relating to the DIP Loan and to debt obligations reflected in the Company’s financial statements and the notes thereto (including with respect to debt obligations which are not consolidated) or otherwise disclosed to each Purchaser in Section 3.20(g)(i) of the Company Disclosure Letter, (ii) Encumbrances that result from any statutory or other liens for Taxes or assessments that are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings and for which a sufficient and appropriate reserve has been set aside for the full payment thereof, (iii) any contracts, or other occupancy agreements to third parties for the occupation or use of portions of the Company Properties by such third parties in the ordinary course of the business of the Company or its Subsidiaries, (iv) Encumbrances imposed or promulgated by Law or any Governmental Entity, including zoning, entitlement and other land use and environmental regulations, (v) Encumbrances disclosed on existing title policies and current title insurance commitments or surveys made available to each Purchaser, (vi) Encumbrances on the landlord’s fee interest at any Company Property where the Company or its Subsidiary is the tenant under any ground lease, provided that, except as disclosed to each Purchaser in Section 3.20(b)(ii) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries have received a notice indicating the intention of the landlord under such ground lease, or of any other Person, to (1) exercise a right to terminate such ground lease, evict the lessee or otherwise collect the sub-rents thereunder, or (2) take any other action that would be reasonably likely to result in a termination of such ground lease, (vii) any cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar liens (1) incurred in the ordinary course of business which (A) are being challenged in good faith by appropriate proceedings and for which a sufficient and appropriate reserve has been set aside for the full payment thereof or (B) have been otherwise fully bonded and discharged of record or for which a sufficient and appropriate reserve has been set aside for the full payment thereof or (2) disclosed on Section 3.20(b)(i) of the Company Disclosure Letter and (viii) any other easements, rights-of-way, restrictions (including zoning restrictions), covenants, encroachments, protrusions and other similar charges or encumbrances, and title limitations or title defects, if any, that (I) are customary for office, industrial, master planned communities and retail properties or (II) individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect. Other than as set forth on Section 3.20(b)(ii) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has received a written notice of a material default, beyond any applicable grace and cure periods, of or under any Permitted Title Exceptions, except (w) as may have been caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries (x) as a result of the filing of the Bankruptcy Cases, (y) where the Permitted Title Exceptions are in and of themselves evidence of default (such as mechanics’ liens and recorded notices of default) or (z) as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; provided , however , that where the
Company has otherwise represented and warranted to each Purchaser hereunder (including as set forth on the Company Disclosure Letter pursuant to such representations and warranties) with respect to the Company’s Knowledge of, the Company’s receipt of notice of or the existence of a default in connection with a particular category of Permitted Title Exceptions, such categories of Permitted Title Exceptions shall not be included in the representation set forth in this sentence (by way of illustration, but not exclusion, the representations set forth in Section 3.20(f) with respect to defaults under Material Leases shall be deemed to address the Company’s representations and warranties with respect to the entire category of Permitted Title Exceptions detailed in clause (iii) above).
(c) To the extent available, the Company and its Subsidiaries have made commercially reasonable efforts to make available or will use commercially reasonable efforts to make available upon request to each Purchaser those policies of title insurance that the Company or its Subsidiaries have obtained in the last six months.
(d) With respect to each Company Ground Lease Property, except as set forth on Section 3.20(d) of the Company Disclosure Letter and except as may have been caused by, or disclosed in the filing of the Bankruptcy Cases, as of the date hereof, to the Company’s Knowledge, neither the Company nor any of its Subsidiaries has received notice of material defaults (including, without limitation, payment defaults, but limited to those circumstances where such default may grant the landlord under such ground lease the right to terminate such ground lease, evict the lessee or otherwise collect the sub-rents thereunder) at such Company Ground Lease Property beyond any applicable grace and cure periods, except (x) as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect, (y) as may be caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries and (z) with respect to any Company Ground Lease Property which is leased by a Subsidiary of the Company which has consummated a plan of reorganization in the Bankruptcy Cases, all such material defaults at such Company Ground Lease Property which existed prior to the effective date of such Person’s plan of reorganization have been or will be cured in accordance with such plan. As used herein the term “ Company Ground Lease Property ” shall mean any Company Property having a fair market value (in the reasonable determination of the Company) in excess of $25,000,000 which is leased by a Subsidiary of the Company as tenant pursuant to a ground lease. With respect to the defaults referenced in clause (z) above, the Bankruptcy Court approved the Debtors’ assumption of the applicable ground leases and the fixed cure amounts for such defaults which predated assumption; provided , however , nothing contained herein precludes any Person from raising issues in the future with respect to defaults that may have predated such assumption.
(e) Except as set forth on Section 3.20(e) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to any agreement relating to the property management (but not including any leasing, development, construction or brokerage agreements) of any of the Company Properties by a party other than Company or any wholly owned Company Subsidiaries, except (i) management agreements that may be terminated without cause or payment of a termination fee upon no more than 60 days notice or (ii) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(f) Except as set forth on Section 3.20(f) of the Company Disclosure Letter, to the Company’s Knowledge, as of February 15, 2010, (i) each Material Lease is in full force and effect, (ii) no tenant is in arrears in the payment of rent, additional rent or any other material charges due under any Material Lease, and no tenant is materially in default in the performance of any other obligations under any Material Lease, (iii) no bankruptcy or insolvency proceeding has been commenced (and is continuing) by or against any tenant under any Material Lease, and (iv) neither the Company nor any of its Subsidiaries has received a written notice from a current tenant under any Material Lease exercising a right to terminate or otherwise cancel its Material Lease (y) as a result of or in connection with the termination or cancellation of any other lease, sublease, license or occupancy agreement for space at any Company Property (each, a “ Company Property Lease ”), or (z) as a result of or in connection with any other tenant that occupies, or had previously occupied, another Company Property Lease, allowing, or having had allowed, all or any portion of the premises leased pursuant to such other Company Property Lease to “ go dark ” or otherwise be abandoned or vacated; except, (A) in the case of each of clauses (i), (ii) (iii) and (iv) above, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (B) as a result of the filing of the Bankruptcy Cases or in connection with any Bankruptcy Court approved process and (C) as may have been caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or its Subsidiaries. “ Material Lease ” means for any Company Property any lease in which the Company or its Subsidiaries is the landlord, and all amendments, modifications, supplements, renewals, exhibits, schedules, extensions and guarantees related thereto, (1) to an “ anchor tenant ” occupying at least 80,000 square feet with respect to such Company Property or (2) that is one of the five (5) largest leases, in terms of gross annual minimum rent, with respect to a Company Property that has an annual net operating income, as determined in accordance with GAAP ( provided , however , that for purposes of such calculation, the following were reflected as expenses: (a) ground rent payments to a third party and (b) an assumed management fee equal to 3% of base minimum and percentage rent) with respect to the trailing twelve (12) calendar month period, equal to at least $7,500,000.00. For purposes of Section 7.1(c) , (y) the representations and warranties made in Section 3.20(f)(i) , (iii) and (iv) , disregarding all qualifications and exceptions contained therein relating to “ materiality ” or “ Material Adverse Effect ”, shall be shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date, except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect and (z) the representation and warranties contained in Section 3.20(f)(ii) , disregarding all qualifications and exceptions contained therein relating to “ materiality ” or “ Material Adverse Effect ”, shall be true and correct (A) at and as of the last day of the calendar month that is two (2) calendar months prior to the calendar month in which the Closing Date occurs as if made at and as of such date, if the Closing Date occurs on or prior to the fifteenth (15th) day of a calendar month, or (B) at and as of the fifteenth (15th) day of the calendar month that is one (1) calendar month prior to the calendar month in which the Closing Date occurs as if made at and as of such date, if the Closing Date occurs on or after the sixteenth (16th) day of a calendar month, except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(g) With respect to each Company Property:
(i) As of the date listed thereunder, Section 3.20(g) of the Company Disclosure Letter sets forth a true, correct and complete list in all material respects of (i) all loans (other than the DIP Loan) and other indebtedness secured by a mortgage, deed of trust, deed to secure debt or indemnity deed of trust in such Company Property (each, a “ Company Mortgage Loan ”), (ii) the outstanding principal balance of each such Company Mortgage Loan, (iii) the rate of interest applicable to such Company Mortgage Loan and (iv) the maturity date of such Company Mortgage Loan;
(ii) Except as set forth in Section 3.20(g) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries have received a written notice of default (beyond any applicable grace or cure periods) in the (y) payment of interest, principal or other material amount due to the lender under any Company Mortgage Loan, whether as the primary obligor or as a guarantor thereof or (z) performance of any other material obligations under any Company Mortgage Loan, except (i) with respect to (y) and (z) above, as a result of the filing of the Bankruptcy Cases, or as is prohibited, stayed or otherwise suspended as a result of the Company’s or any Subsidiary’s Chapter 11 filing or status as a debtor-in-possession under Chapter 11, and (ii) with respect solely to (z) above, which would not individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; and
(iii) For purposes of Section 7.1(c) the representations and warranties made in Section 3.20(g)(i) , disregarding all qualifications and exceptions contained therein relating to “ materiality ” or “ Material Adverse Effect ”, shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date, except for (A) such inaccuracies caused by sales, purchases, transfers of assets, refinancing or other actions effected in accordance with, subject to the limitations contained in, and not otherwise prohibited by, the terms and conditions in this Agreement, including, without limitation, in Article VII , (B) amortization payments made pursuant to any applicable Company Mortgage Loans and (C) such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(h) To the Knowledge of the Company, (i) except as set forth on Section 3.20(h) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has received a written notice exercising an option, “ buy-sell ” right or other similar right to purchase a Company Property or any material portion thereof which has not previously closed, except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect with respect to such Company Property and (ii) no Company Property is subject to a purchase and sale agreement or any similar legally binding agreement to purchase such Company Property or any material portion thereof (other than (x) with respect to condominium purchase and sale
agreements and purchase and sale and early occupancy agreements or other similar agreements for the sale of condominium units at the Natick Nouvelle, (y) with respect to builder lot purchase agreements and other similar agreements for the sale of vacant lots of land to builders at Bridgeland and (z) as set forth in (i) above) which has not previously closed.
(i) The Company has conducted due inquiry with respect to the representations and warranties made in Section 3.20(d) , Section 3.20(f) and Section 3.20(h) .
SECTION 3.21 Tax Matters . Except as disclosed on Section 3.21(a) of the Company Disclosure Letter:
(a) Except in cases where the failure of any of the following to be true would not result in a Material Adverse Effect: (i) the Company and each of its Significant Subsidiaries have filed all Tax Returns required to be filed by applicable Law prior to the date hereof; (ii) all such Tax Returns were true, complete and correct in all respects and filed on a timely basis (taking into account any applicable extensions); (iii) the Company and each of its Significant Subsidiaries have paid all amounts of Taxes that are due, claimed or assessed by any taxing authority to be due for the periods covered by such Tax Returns, other than any Taxes for which adequate reserves (“ Adequate Reserves ”) have been established in accordance with GAAP or a claim has been filed in the Bankruptcy Cases; and (iv) all adjustments of federal U.S. Tax liability of the Company and its Significant Subsidiaries resulting from completed audits or examinations have been reported to appropriate state and local taxing authorities and all resulting Taxes payable to state and local taxing authorities have been paid. “ Taxes ” means any U.S. federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. “ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, including, where permitted or required, combined or consolidated returns for any group of entities that include the Company or any of its Significant Subsidiaries.
(b) The Company and each of its REIT Subsidiaries (x) for all taxable years commencing with the taxable year ended December 31, 2005 through December 31, 2009, has been subject to taxation as a real estate investment trust within the meaning of Section 856 of the Code (a “ REIT ”) and has satisfied all requirements to qualify as a REIT for such years; (y) has operated since January 1, 2010 to the date hereof in a manner consistent with the requirements for qualification and taxation as a REIT; and (z) intends to continue to operate in such a manner as to qualify as a REIT for the current taxable year. None of the transactions contemplated by this Agreement will prevent the Company or any of its REIT Subsidiaries from so qualifying. No Subsidiary of the Company other than a REIT Subsidiary is a corporation for U.S. federal income tax purposes, other than a corporation that qualifies as a “ taxable REIT subsidiary ” within the meaning of Section 856(l) of the Code. For the purposes of this Agreement, “ REIT Subsidiary ” means each of GGP Ivanhoe, Inc., GGP Holding, Inc., GGP Holding II, Inc., Victoria Ward, Limited, GGP-Natick Trust and GGP/Homart, Inc.
(c) Each Company Subsidiary other than its REIT Subsidiaries that is a partnership, joint venture, or limited liability company and which has not elected to be a “ taxable REIT subsidiary ” within the meaning of Section 856(l) of the Code has been since its formation treated for U.S. federal income tax purposes as a partnership or disregarded entity, as the case may be, and not as a corporation or an association taxable as a corporation, except where failure to do so would not have a Material Adverse Effect.
(d) Except where the failure to be true would not have a Material Adverse Effect, the Company and each of its Significant Subsidiaries have (i) complied in all respects with all applicable Laws, rules, and regulations relating to the payment and withholding of Taxes (including withholding and reporting requirements under sections 1441 through 1464, 3401 through 3406, 6041 and 6049 of the Code and similar provisions under any other Laws) and (ii) within the time and in the manner prescribed by Law, withheld from employee wages and paid to the proper Governmental Entities all amounts required to be withheld and paid over.
(e) Except where the failure to be true would not have a Material Adverse Effect, no audits or other administrative proceedings or court proceedings are presently pending or to the Knowledge of the Company threatened with regard to any Taxes or Tax Returns of the Company or any of its Significant Subsidiaries, other than any audit or administrative proceeding relating to Taxes for which a claim has been filed in a Debtor’s Chapter 11 case or any other audit or administrative or court proceeding that is not reasonably expected to result in a material Tax liability to the Company or any of its Significant Subsidiaries.
(f) The Company has made available to each Purchaser complete and accurate copies of all material Tax Returns requested by any Purchaser and filed by or on behalf of the Company or any of its Significant Subsidiaries for all taxable years ending on or prior to the Effective Date and for which the statute of limitations has not expired.
(g) There are no Tax Protection Agreements except for those the breach of which would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Significant Subsidiary has any liability for Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of any state, local or foreign Law), or as a transferee or successor (by contract or otherwise), other than (i) to a Subsidiary of the Company or (ii) where any such liability would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.22 Material Contracts . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Material Contract that shall survive the Bankruptcy Cases is valid and binding on the Company or any of its Subsidiaries, as applicable, and, to the Knowledge of the Company, on each other Person party thereto, and is in full force and effect. Other than as a result of the commencement of the Bankruptcy Cases, each of the Company and its Subsidiaries has performed, in all material respects, all obligations required to be performed by it under each Material Contract that shall survive the Bankruptcy Cases, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Other than those caused as a result of the filing of the Bankruptcy Cases, neither the Company nor any of its Significant Subsidiaries is in breach or default of any Material Contract to which it is a party and which shall survive the Bankruptcy Cases, except, in each case, as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Company has made available to each Purchaser true, accurate and complete copies of the Material Contracts as of the date of this Agreement, except for those Material Contracts available to the public on the website maintained by the SEC. To the Knowledge of the Company, no party to any Material Contract that shall survive the Bankruptcy Cases has given written notice of any action to terminate, cancel, rescind or procure a judicial reformation of such Material Contract or any material provision thereof, which termination, cancellation, rescission or reformation would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. For the avoidance of doubt, Material Contracts do not include intercompany contracts.
SECTION 3.23 Certain Restrictions on Charter and Bylaws Provisions; State Takeover Laws .
(a) The Company and the Company Board have taken all appropriate and necessary actions to ensure that the ownership limitations set forth in Article IV of the Company’s certificate of incorporation shall not apply to (i) the acquisition of beneficial ownership by any Purchaser and any other member of the Purchaser Group of the Warrants and the shares of Common Stock issuable upon exercise of the Warrants, (ii) any antidilution adjustments to those Warrants pursuant to the Warrant Agreement and (iii) any Common Stock that any Purchaser or any member of the Purchaser Group may be deemed to own by no actions of its own and the acquisition of beneficial ownership of up to an additional amount totaling 1.786% of the issued and outstanding shares of Common Stock, in the aggregate, by any Purchaser or any other member of the Purchaser Group; provided , however , that such exception to the ownership limitations are only effective as to any Purchaser or a member of the Purchaser Group so long as (i) the Company has received executed copies of the representation certificate contained in Exhibit D from such Purchaser or any such member of the Purchaser Group, it being understood that a member of the Purchaser Group (not otherwise a Purchaser hereunder) shall be required to provide such representations at such times and only at such times as such member of the Purchaser Group “ beneficially owns ” or “ constructively owns ” (as such terms are defined in the certificate of incorporation of the Company) Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such member of the Purchaser Group in a tenant of the Company would be treated as constructively owned by the Company and (ii) the representations so provided are true, correct and complete as of the date made and continue to be true, correct and complete.
(b) The Company Board has taken all action necessary to render inapplicable to each Purchaser the restrictions on “ business combinations ” set forth in Section 203 of the Delaware General Corporation Law and, to the knowledge of the Company, any similar “ moratorium, ” “ control share, ” “ fair price, ” “ takeover ” or “ interested stockholder ” law applicable to transactions between each Purchaser and the Company.
SECTION 3.24 No Other Representations or Warranties . Except for the representations and warranties made by the Company in this Article III , neither the Company nor any other Person makes any representation or warranty with respect to the Company or its Subsidiaries or their respective business, operations, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to each Purchaser or any other members of
the Purchaser Group or their respective representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Each Purchaser severally, and not jointly and severally, represents and warrants to the Company with respect to itself, and not with respect to any other Purchaser, as set forth below:
SECTION 4.1 Organization . Purchaser is duly established as a series of a corporation that is duly organized and is validly existing and in good standing under the Laws of its jurisdiction of organization, with the requisite corporate power and authority to undertake and effectuate the transactions contemplated by this Agreement. Purchaser is a series of a corporation that has been duly qualified as a foreign corporation or other form of entity for the transaction of business and, where applicable, is in good standing under the Laws of each other jurisdiction in which it operates so as to require such qualification, except where the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, have or be reasonably expected to materially delay or prevent the consummation of the transactions contemplated by this Agreement.
SECTION 4.2 Power and Authority . Purchaser has the requisite power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder and has taken all necessary action required for the due authorization, execution, delivery and performance by it of this Agreement.
SECTION 4.3 Execution and Delivery . This Agreement has been duly and validly executed and delivered by Purchaser and constitutes its valid and binding obligation, enforceable against Purchaser in accordance with its terms.
SECTION 4.4 No Conflict . The execution and delivery of this Agreement and the performance by Purchaser of its obligations hereunder and compliance by Purchaser with all of the provisions hereof and the consummation of the transactions contemplated herein (i) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any material contract to which Purchaser is a party, (ii) shall not result in any violation or breach of any provisions of the organizational documents of Purchaser and (iii) shall not conflict with or result in any violation of, or any termination or material impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over Purchaser or Purchaser’s properties or assets, except with respect to each of (i), (ii) and (iii), such conflicts, violations or defaults as would not be reasonably expected to have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated hereunder.
SECTION 4.5 Consents and Approvals . No consent, approval, order, authorization, registration or qualification of or with any Governmental Entity having jurisdiction over
Purchaser is required in connection with the execution and delivery by Purchaser of this Agreement or the consummation of the transactions contemplated hereby, except such consents, approvals, orders, authorizations, registration or qualification as would not reasonably be expected to materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.6 Compliance with Laws . Since the date of its formation, Purchaser has been in compliance with all Laws applicable to Purchaser, except, in each case, for such non-compliance as would not reasonably be expected to materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.7 Legal Proceedings . There are no legal, governmental or regulatory investigations, actions, suits or proceedings pending or, to the knowledge of Purchaser, threatened against Purchaser which, individually or in the aggregate, if determined adversely to Purchaser, would materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.8 No Broker’s Fees . Purchaser is not party to any contract, agreement or understanding with any Person that would give rise to a valid claim against the Company for an investment banking fee, commission, finder’s fee or like payment in connection with the transactions contemplated by this Agreement.
SECTION 4.9 Sophistication . Purchaser is, as of the date hereof and shall be as of the Effective Date, an “ accredited investor ” within the meaning of Rule 501(a) under the Securities Act. Purchaser understands and is able to bear any economic risks associated with such investment (including, without limitation, the necessity of holding such Shares and GGO Shares for an indefinite period of time).
SECTION 4.10 Purchaser Intent . Purchaser is acquiring the Shares, the Warrants, the GGO Shares, the New Warrants and the GGO Warrants for investment purposes only and not with a view to or for distributing or reselling such Shares, Warrants, GGO Shares, New Warrants and GGO Warrants or any part thereof, without prejudice, however, to Purchaser’s right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Shares, Warrants, GGO Shares, New Warrants and GGO Warrants pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities Laws. Purchaser understands that Purchaser must bear the economic risk of its investment indefinitely.
SECTION 4.11 Reliance on Exemptions . Purchaser understands that the Shares and the GGO Shares are being offered and sold to Purchaser in reliance upon specific exemptions from the registration requirements of United States federal and state securities Laws.
SECTION 4.12 REIT Representations . The representations provided by Purchaser and, to the extent applicable, its Affiliates, members or Affiliates of members, set forth on Exhibit D are true, correct and complete as of the date hereof, and shall be true as of the date of the issuance of the Warrants and as of the Closing Date, it being understood that Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations
only if such Person “ beneficially owns ” or “ constructively owns ” (as such terms are defined in the certificate of incorporation of the Company) Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by the Company.
SECTION 4.13 Financial Capability . Such Purchaser has sufficient binding capital commitments or available funds to satisfy its obligations under this Agreement, including without limitation the payment of the applicable Purchase Price and the GGO Purchase Price.
SECTION 4.14 No Other Representations or Warranties . Except for the representations and warranties made by Purchaser in this Article IV , neither Purchaser nor any other Person on behalf of Purchaser makes any representation or warranty with respect to Purchaser or its assets, liabilities, condition (financial or otherwise) or prospects.
SECTION 4.15 Acknowledgement . Purchaser acknowledges that (a) neither the Company nor any Person on behalf of the Company is making any representations or warranties whatsoever, express or implied, beyond those expressly given by the Company in Article III of this Agreement and (b) Purchaser has not been induced by, or relied upon, any representations, warranties or statements (written or oral), whether express or implied, made by any Person, that are not expressly set forth in Article III of this Agreement. Without limiting the generality of the foregoing, except with respect to the representations and warranties contained in Article III , Purchaser acknowledges that no representations or warranties are made with respect to any projections, forecasts, estimates, budgets, plans or prospect information that may have been made available to Purchaser or any of its representatives.
ARTICLE V
COVENANTS OF THE COMPANY AND PURCHASER
SECTION 5.1 Bankruptcy Court Motions and Orders .
(a) No later than the close of business on the date that is two (2) Business Days following the date of this Agreement, the Company shall file with the Bankruptcy Court a motion in form and substance satisfactory to each Purchaser (the “ Approval Motion ”) seeking to obtain entry of an order in the form attached hereto as Exhibit F (the “ Proposed Approval Order ”), which order in the final form if approved by the Bankruptcy Court (the “ Approval Order ”) shall approve, among other things, the issuance of the Warrants to each Purchaser and the warrants contemplated by each other Investment Agreement to be issued to the applicable Initial Investor, and the performance by the Company of its obligations under the Warrant Agreement.
(b) The Approval Motion, including any exhibits thereto and any notices or other materials in connection therewith, and any modifications or amendments to the foregoing, must be in form and substance reasonably satisfactory to each Purchaser.
(c) If the Approval Order shall be appealed by any Person (or a petition for certiorari or motion for reconsideration, amendment, clarification, modification, vacation, stay, rehearing
or reargument shall be filed with respect to such order), the Company shall diligently defend against any such appeal, petition or motion and shall use its reasonable best efforts to obtain an expedited resolution of any such appeal, petition or motion. The Company shall keep each Purchaser reasonably informed and updated regarding the status of any such appeal, petition or motion.
(d) The Company shall provide draft copies of all motions, notices, statements, schedules, applications, reports and other papers the Company intends to file with the Bankruptcy Court in connection with the Approval Order to each Purchaser within a reasonable period of time prior to the date the Company intends to file any of the foregoing, and shall consult in advance in good faith with each Purchaser regarding the form and substance of any such proposed filing with the Bankruptcy Court.
SECTION 5.2 Warrants, New Warrants and GGO Warrants . Within one Business Day of the date of the entry of the Approval Order, the Company and the warrant agent shall execute and deliver the warrant agreement in the form attached hereto as Exhibit G (with only such changes thereto as may be reasonably requested by the warrant agent and reasonably approved by each Purchaser) (the “ Warrant Agreement ”) pursuant to which there will be issued to each Purchaser its GGP Pro Rata Share of 60,000,000 warrants (the “ Warrants ”) each of which, when issued, delivered and vested in accordance with the terms of the Warrant Agreement, will entitle the holder to purchase one (1) share of Common Stock at an initial price of $15.00 per share subject to adjustment as provided in the Warrant Agreement. The Warrant Agreement shall provide that the Warrants shall vest in accordance with Section 2.2(b) and Schedule A of the Warrant Agreement. For the avoidance of doubt, Warrants that have not vested may not be exercised. The Plan shall provide that upon the Effective Date, the Warrants, regardless of whether or not vested, shall be cancelled for no consideration. The Plan shall also provide that there shall be issued to each Purchaser pro rata in accordance with the number of shares of New Common Stock or GGO Common Stock, as the case may be, purchased, an aggregate of (i) 42,857,143 fully vested warrants (the “ New Warrants ”) each of which entitles the holder to purchase one (1) share of New Common Stock at an initial purchase price of $10.50 per share subject to adjustment as provided in the underlying warrant agreement and (ii) 2,000,000 fully vested warrants (the “ GGO Warrants ”) each of which entitles the holder to purchase one (1) share of GGO Common Stock at a price of $50.00 per share subject to adjustment as provided in the underlying warrant agreement, each in accordance with the terms set forth in a warrant and registration rights agreement with terms substantially similar to the terms set forth in the Warrant Agreement, except that the expiration date for each New Warrant and GGO Warrant shall be the seventh year anniversary of the date on which such warrants are issued.
SECTION 5.3 [ Intentionally Omitted .]
SECTION 5.4 Listing . The Company shall use its reasonable best efforts to cause the Shares and the New Warrants to be listed on the New York Stock Exchange (the “ NYSE ”). The Plan shall provide that the Company shall use its reasonable best efforts to cause GGO to use its reasonable best efforts to cause the GGO Shares and the GGO Warrants to be listed on a U.S. national securities exchange.
SECTION 5.5 Use of Proceeds . The Plan shall provide that the Company and its Subsidiaries, and GGO, shall apply the net proceeds from the sale of the Shares and the GGO Shares and the Capital Raising Activities, as applicable, as provided in the Plan Summary Term Sheet and the Plan. The parties intend that the New Warrants, GGO Warrants, New Common Shares and GGO Shares will be offered and sold under the Plan, to the fullest extent permitted by law, in exchange for a claim against, an interest in, or a claim for an administrative expense in the Bankruptcy Case, or principally in such exchange and partly for other cash or property, for purposes of Section 1145, and the parties shall take all reasonable actions necessary consistent with applicable law to cause such securities to be so offered and sold, including without limitation, reflecting the foregoing in the initial filing of the Plan with the Bankruptcy Court.
SECTION 5.6 Access to Information . Subject to applicable Law and the Company’s receipt of customary assurances of confidentiality by each Purchaser, upon reasonable notice, the Company shall afford each Purchaser and its directors, officers, employees, investment bankers, attorneys, accountants and other advisors or representatives, reasonable access during normal business hours, throughout the period prior to the Effective Date, to its employees, books, contracts and records and, during such period, the Company shall (and shall cause its Subsidiaries to) furnish promptly to each Purchaser such information concerning its business, properties and personnel as may reasonably be requested by such Purchaser, including copies of all monthly financial information provided to its lenders under its existing debtor in possession financing agreements; provided , that, notwithstanding anything to the contrary, the Company shall not be required to share confidential information relating to any Competing Transaction except as contemplated by Section 5.7 .
SECTION 5.7 Competing Transactions . From the date of this Agreement until the earlier to occur of the Closing and the termination of this Agreement, the Company shall provide written notice to each Purchaser not less than 48 hours prior to the Company or any Subsidiary of the Company (i) entering into a definitive agreement providing for a Competing Transaction or (ii) filing a motion with the Bankruptcy Court seeking to obtain bid procedures or bid protections for or in connection with a Competing Transaction.
SECTION 5.8 Reservation for Issuance . The Company shall reserve that number of shares of Common Stock sufficient for issuance upon exercise or conversion of the Warrants. In connection with the issuance of the New Warrants, the Plan shall provide that the Company shall reserve for issuance that number of shares of New Common Stock sufficient for issuance upon exercise of the New Warrants. The Plan shall provide that GGO shall reserve for issuance that number of shares of GGO Common Stock sufficient for issuance upon exercise of the GGO Warrants.
SECTION 5.9 Subscription Rights .
(a) Company Subscription Right .
(i) Sale of New Equity Securities . If the Company or any Subsidiary of the Company at any time or from time to time following the Closing Date makes any public or non-public offering of any shares of New Common Stock (or securities that are convertible into or exchangeable or
exercisable for, or linked to the performance of, New Common Stock) (other than (1) pursuant to the granting or exercise of employee stock options or other stock incentives pursuant to the Company’s stock incentive plans and employment arrangements as in effect from time to time or the issuance of stock pursuant to the Company’s employee stock purchase plan as in effect from time to time, (2) pursuant to or in consideration for the acquisition of another Person, business or assets by the Company or any of its Subsidiaries, whether by purchase of stock, merger, consolidation, purchase of all or substantially all of the assets of such Person or otherwise, (3) to strategic partners or joint venturers in connection with a commercial relationship with the Company or its Subsidiaries or to parties in connection with them providing the Company or its Subsidiaries with loans, credit lines, cash price reductions or similar transactions, under arm’s-length arrangements, (4) pursuant to the Equity Exchange or any conversion or exchange of debt or other claims into equity in connection with the Plan, (5) the sale of Backstop Shares (as defined in the Pershing Agreement) pursuant to the Pershing Agreement or (6) as set forth on Section 5.9(a) of the Company Disclosure Letter) (the “ Proposed Securities ”), each Purchaser shall have the right to acquire from the Company (the “ Subscription Right ”) for the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) and on the same terms as such Proposed Securities are proposed to be offered to others, up to the amount of such Proposed Securities in the aggregate required to enable it to maintain its aggregate proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis determined in accordance with the following sentence, in each case, subject to such limitations as may be imposed by applicable Law or stock exchange rules. The amount of such Proposed Securities that each Purchaser shall be entitled to purchase in the aggregate in any offering pursuant to the above shall (subject to such limitations as may be imposed by applicable Law or stock exchange rules) be determined by multiplying (x) the total number of such offered shares of Proposed Securities by (y) a fraction, the numerator of which is the number of shares of New Common Stock held by such Purchaser on a Fully Diluted Basis as of the date of the Company’s notice pursuant to Section 5.9(a)(ii) in respect of the issuance of such Proposed Securities, and the denominator of which is the number of shares of New Common Stock then outstanding on a Fully Diluted Basis. For the avoidance of doubt, the actual amount of securities to be sold or offered to each Purchaser pursuant to its exercise of the Subscription Right hereunder shall be proportionally reduced if the aggregate amount of Proposed Securities sold or offered is reduced. Any offers and sales pursuant to this Section 5.9 in the context of a registered public offering shall be conditioned upon reasonably acceptable representations and warranties of the applicable Purchaser regarding its status as the type of offeree to whom a private sale
can be made concurrently with a registered public offering in compliance with applicable securities Laws.
(ii) Notice . In the event the Company proposes to offer Proposed Securities, it shall give each Purchaser written notice of its intention, describing the estimated price (or range of prices), anticipated amount of securities, timing and other terms upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering), no later than 10 Business Days after the commencement of marketing with respect to such offering or after the Company takes substantial steps to pursue any other offering. Each Purchaser shall have three (3) Business Days from the date of receipt of such a notice to notify the Company in writing that it intends to exercise its Subscription Right and as to the amount of Proposed Securities such Purchaser desires to purchase, up to the maximum amount calculated pursuant to Section 5.9(a)(i) . In connection with an underwritten public offering, such notice shall constitute a non-binding indication of interest to purchase Proposed Securities at such a range of prices as such Purchaser may specify and, with respect to other offerings, such notice shall constitute a binding commitment of such Purchaser to purchase the amount of Proposed Securities so specified at the price and other terms set forth in the Company’s notice to such Purchaser. The failure of such Purchaser to so respond within such three (3) Business Day period shall be deemed to be a waiver of the Subscription Right under this Section 5.9 only with respect to the offering described in the applicable notice. In connection with an underwritten public offering or a private placement, each Purchaser shall further enter into an agreement (in form and substance customary for transactions of this type) to purchase the Proposed Securities to be acquired by it contemporaneously with the execution of any underwriting agreement or purchase agreement entered into with the Company, the underwriters or initial purchasers of such underwritten public offering or private placement, and the failure of such Purchaser to enter into such an agreement at or prior to such time shall constitute a waiver of the right to purchase the applicable portion of the Proposed Securities in respect of such offering.
(iii) Purchase Mechanism . If a Purchaser exercises its Subscription Right provided in this Section 5.9 , the closing of the purchase of the Proposed Securities with respect to which such right has been exercised shall take place concurrently with the sale to the other investors in the applicable offering, which period of time for the closing of the purchase of the Proposed Securities with respect to which such right has been exercised shall be extended for a maximum of 180 days in order to comply with applicable Laws (including receipt of any applicable regulatory or stockholder approvals). The Company and each Purchaser shall use its reasonable best efforts to secure any regulatory or stockholder approvals
or other consents, and to comply with any Law necessary in connection with the offer, sale and purchase of, such Proposed Securities.
(iv) Failure of Purchase . In the event (A) a Purchaser fails to exercise its Subscription Right provided in this Section 5.9 within said three Business Day period, or (B) if so exercised, a Purchaser fails or is unable to consummate such purchase within the 180 day period specified in Section 5.9(a)(iii) , without prejudice to other remedies, the Company shall thereafter be entitled during the Additional Sale Period to sell the Proposed Securities not elected to be purchased pursuant to this Section 5.9 or which such Purchaser fails to or is unable to purchase, at a price and upon terms no more favorable in any material respect to the purchasers of such securities than were specified in the Company’s notice to such Purchaser. In the event the Company has not sold the Proposed Securities within the Additional Sale Period, the Company shall not thereafter offer, issue or sell such Proposed Securities without first offering such securities to the applicable Purchaser in the manner provided above.
(v) Non-Cash Consideration . In the case of the offering of securities for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as determined by the Company Board; provided , however , that such fair value as determined by the Company Board shall not exceed the aggregate market price of the securities being offered as of the date the Company Board authorizes the offering of such securities.
(vi) Cooperation . The Company and each Purchaser shall cooperate in good faith to facilitate the exercise of such Purchaser’s Subscription Right hereunder, including using reasonable efforts to secure any required approvals or consents.
(vii) [ Intentionally Omitted .]
(viii) General . Notwithstanding anything herein to the contrary, (A) if (1) a Purchaser exercises its Subscription Right pursuant to this Section 5.9 and is unable to complete the purchase of the Proposed Securities concurrently with the sales to the other investors in the applicable offering as contemplated by Section 5.9(a)(iii) due to applicable regulatory or stockholder approvals and (2) the Company or the Company Board determines in good faith that any delay in completion of an offering in respect of which such Purchaser is entitled to Subscription Rights would materially impair the financing objective of such offering, the Company may proceed with such offering without the participation of such Purchaser in such offering, in which event the Company and such Purchaser shall promptly thereafter agree on a process otherwise consistent with this Section 5.9 as would allow such Purchaser to
purchase, at the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) as in such offering, up to the amount of shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) as shall be necessary to enable such Purchaser to maintain its aggregate proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis, (B) if the Company or the Company Board determines in good faith that compliance with the notice provisions in Section 5.9(a)(ii) would materially impair the financing objective of an offering in respect of which a Purchaser is entitled to Subscription Rights, the Company shall be permitted by notice to such Purchaser to reduce the notice period required under Section 5.9(a)(ii) (but not to less than one (1) Business Day) to the minimum extent required to meet the financing objective of such offering and such Purchaser shall have the right to either (x) exercise its Subscription Rights during the shortened notice periods specified in such notice or (y) require the Company to promptly thereafter agree on a process otherwise consistent with this Section 5.9 as would allow such Purchaser to purchase, at the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) as in such offering, up to the amount of shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) as shall be necessary to enable such Purchaser to maintain its aggregate proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis and (C) in the event the Company is unable to issue shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) to a Purchaser as a result of a failure to receive regulatory or stockholder approval therefor, the Company shall take such action or cause to be taken such other action in order to place such Purchaser, insofar as reasonably practicable (subject to any limitations that may be imposed by applicable Law or stock exchange rules), in the same position in all material respects as if such Purchaser was able to effectively exercise its Subscription Rights hereunder, including, without limitation, at the option of such Purchaser, issuing to such Purchaser another class of securities of the Company having terms to be agreed by the Company and such Purchaser having a value at least equal to the value per share of New Common Stock, in each case, as shall be necessary to enable such Purchaser to maintain its proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis.
(ix) Termination . This Section 5.9 shall terminate at such time as the members of the Purchaser Group collectively beneficially own less than 5% of the outstanding shares of New Common Stock on a Fully Diluted Basis.
(b) GGO Subscription Rights . The Plan shall provide that in connection with the consummation of the Plan, GGO shall enter into an agreement with each Purchaser with substantially similar terms to those set forth in Section 5.9(a) above with respect to any issuance of GGO Common Stock (or securities that are convertible into or exchangeable or exercisable for, or otherwise linked to, GGO Common Stock) after the Effective Date.
SECTION 5.10 [ Intentionally Omitted .]
SECTION 5.11 Notification of Certain Matters .
(a) The Company shall (i) give prompt written notice to each Purchaser of any written notice or other written communication from any Person alleging that the consent of such Person which is or may be required in connection with the transactions contemplated by this Agreement is not likely to be obtained prior to Closing, if the failure to obtain such consent would reasonably be expected to be adverse and material to the Company and its Subsidiaries taken as a whole or would materially impair the ability of the Company to consummate the transactions contemplated hereby or perform its obligations hereunder, and (ii) facilitate adding such individuals as designated by each Purchaser to the electronic notification system such that the designated individuals will receive electronic notice of the entry of any Bankruptcy Court Order.
(b) To the extent permitted by applicable Law, (i) the Company shall give prompt notice to each Purchaser of the commencement of any investigation, inquiry or review by any Governmental Entity with respect to the Company or its Subsidiaries which would reasonably be expected to be adverse and material to the Company and its Subsidiaries taken as a whole or would materially impair the ability of the Company to consummate the transactions contemplated hereby or perform its obligations hereunder, and (ii) the Company shall give prompt notice to each Purchaser, and each Purchaser shall give written prompt notice to the Company, of any event or circumstance that would result in any representation or warranty of the Company or such Purchaser, as applicable, being untrue or any covenant or agreement of the Company or such Purchaser, as applicable, not being performed or complied with such that, in each such case, the conditions set forth in Article VII or Article VIII , as applicable, would not be satisfied if such event or circumstance existed on the Closing Date.
(c) No information received by a party pursuant to this Section 5.11 nor any information received or learned by a party or any of its representatives pursuant to an investigation made under this Section 5.11 shall be deemed to (A) qualify, modify, amend or otherwise affect any representations, warranties, conditions, covenants or other agreements of the other party set forth in this Agreement, (B) amend or otherwise supplement the information set forth in the Company Disclosure Letter, (C) limit or restrict the remedies available to such party under this Agreement, applicable Law or otherwise arising out of a breach of this Agreement, or (D) limit or restrict the ability of such party to invoke or rely on, or effect the satisfaction of, the conditions to the obligations of such party to consummate the transactions contemplated by this Agreement set forth in Article VII or Article VIII , as applicable.
SECTION 5.12 Further Assurances . From and after the Closing, the Company shall (and shall cause each of its Subsidiaries to) execute and deliver, or cause to be executed and
delivered, such further instruments or documents or take such other action and cause entities controlled by them to take such action as may be reasonably necessary (or as reasonably requested by any Purchaser) to carry out the transactions contemplated by this Agreement.
SECTION 5.13 [Intentionally Omitted.]
SECTION 5.14 Rights Agreement; Reorganized Company Organizational Documents .
(a) Prior to the issuance of the Warrants, the Rights Agreement shall be amended to provide that (i) the Rights Agreement is inapplicable to (1) the acquisition by members of the Purchaser Group of the Warrants and the underlying securities thereof, (2) any antidilution adjustments to those Warrants pursuant to the Warrant Agreement, (3) any shares of New Common Stock that a Purchaser or a member of its Purchaser Group may be deemed to own by no actions of its own and (4) up to an additional amount totaling 1.786% of the issued and outstanding shares of Common Stock in the aggregate by the Purchaser Group, (ii) no Purchaser, or any member of the Purchaser Group, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement), (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights Agreement) shall not separate from the Common Stock, in each case under (ii), (iii) and (iv), as a result of the acquisition by members of the Purchaser Group of the Warrants, the underlying securities thereof and the acquisition of beneficial ownership of up to an additional amount totaling 1.786% of the issued and outstanding shares of Common Stock in the aggregate by the Purchaser Group.
(b) The certificate of incorporation and bylaws of the Reorganized Company (the “ Reorganized Company Organizational Documents ”) shall be in form mutually agreed to by the Company and each Purchaser, provided , that in the event that the Company and such Purchaser are not able to agree on such form prior to the Effective Date, the Reorganized Company Organizational Documents shall be substantially in the same form as the certificate of incorporation and bylaws of the Company as in existence on the date of this Agreement (except that the number of authorized shares of capital stock of the Reorganized Company shall be increased), provided , however , that (i) the restriction on Beneficial Ownership (as such term is defined in the certificate of incorporation of the Company) shall be set at 9.9% of the outstanding capital stock of the Reorganized Company, (ii) the restriction on Constructive Ownership (as such term is defined in the certificate of incorporation of the Company) shall be set at 9.9% of the outstanding capital stock of the Reorganized Company, (iii) there shall not be an exemption from the restrictions set forth in the foregoing clauses (i) and (ii) for the current Existing Holder (as such term is defined in the existing certificate of incorporation of the Company), (iv) the Reorganized Company shall provide a waiver from the restrictions set forth in the foregoing clauses (i) and (ii) to any member of the Purchaser Group if such member provides the Reorganized Company with a certificate containing the representations and covenants set forth on Exhibit D and (v) the definition of “ Person ” shall be revised so that it does not include a “ group ” as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
(c) In the event the Reorganized Company adopts a rights plan analogous to the Rights Agreement on or prior to the Closing, the Plan shall provide that (i) the Reorganized
Company’s Rights Agreement shall be inapplicable to this Agreement and the transactions contemplated hereby, (ii) no Purchaser, nor any other member of its Purchaser Group, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement) whether in connection with the acquisition of Shares, New Warrants, shares issuable upon exercise of the New Warrants or otherwise, (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights Agreement) will not separate from the New Common Stock, in each case under (ii), (iii) and (iv), as a result of the execution, delivery or performance of this Agreement, the consummation of the transactions contemplated hereby including the acquisition of shares of New Common Stock by any Purchaser or other member of the Purchaser Group after the date hereof as otherwise permitted by this Agreement, the New Warrants or as otherwise contemplated by the applicable Non-Control Agreement, if any.
(d) In the event GGO adopts a rights plan analogous to the Rights Agreement on or prior to the Closing, the Plan shall provide that (i) GGO’s Rights Agreement shall be inapplicable to this Agreement and the transactions contemplated hereby, (ii) no Purchaser, nor any other member of its Purchaser Group, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement) whether in connection with the acquisition of shares of GGO Common Stock or GGO Warrants or the shares issuable upon exercise of the GGO Warrants, (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights Agreement) will not separate from the GGO Common Stock, in each case under (ii), (iii) and (iv), as a result of the execution, delivery or performance of this Agreement, or the consummation of the transactions contemplated hereby including the acquisition of shares of GGO Common Stock by any Purchaser or other member of the Purchaser Group after the date hereof as otherwise permitted by this Agreement or the GGO Warrants.
(e) Newco (as defined in Exhibit B ) will be formed by the Operating Partnership solely for the purpose of engaging in the transactions contemplated by this Agreement, including Exhibit B and Capital Raising Activities permitted pursuant to this Agreement. Prior to the Closing, Newco will not engage in any business activity, nor conduct its operations, other than as contemplated by this Agreement (which, for greater certainty, shall include Capital Raising Activities permitted pursuant to this Agreement).
SECTION 5.15 Stockholder Approval . For so long as any Purchaser has Subscription Rights as contemplated by Section 5.9(a) in connection with the expiration of the five (5) year period referenced in Section 3.2(c) , the Company shall put up for a stockholder vote at the immediately prior annual meeting of its stockholders, and include in its proxy statement distributed to such stockholders in connection with such annual meeting, approval of such Purchaser’s Subscription Rights for the maximum period permitted by the NYSE. The Plan shall provide that GGO shall, for the benefit of each Purchaser, to the extent required by any U.S. national securities exchange upon which shares of GGO Common Stock are listed, for so long as any Purchaser has subscription rights as contemplated by Section 5.9(b) , put up for a stockholder vote at the annual meeting of its stockholders, and include in its proxy statement distributed to such stockholders in connection with such annual meeting, approval of such Purchaser’s subscription rights for the maximum period permitted by the rules of such U.S. national securities exchange.
SECTION 5.16 Closing Date Net Debt .
(a) The Company shall deliver to each Purchaser a schedule (the “ Preliminary Closing Date Net Debt Schedule ”) on or before the first Business Day that is five calendar days following approval of the Disclosure Statement, that: (i) sets forth the Company’s good faith estimate for each of the three components of the Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts along with a reasonably detailed explanation and calculation of each such component and (ii) discloses the Company’s good faith estimate of the Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts and GGO Setup Costs.
(b) Each Purchaser shall review the Preliminary Closing Date Net Debt Schedule during the Preliminary Closing Date Net Debt Review Period, during which time the Company shall allow such Purchaser reasonable access to all non-privileged and non-work product documents or records or personnel used in the preparation of the Preliminary Closing Date Net Debt Schedule. On or prior to the Preliminary Closing Date Net Debt Review Deadline, any Purchaser may deliver to the Company a notice (the “ Dispute Notice ”) listing those items on the Preliminary Closing Date Net Debt Schedule to which such Purchaser takes exception, which Dispute Notice shall (i) specifically identify such items, and provide a reasonably detailed explanation of the basis upon which such Purchaser has delivered such list, (ii) set forth the amount of Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts that such Purchaser has calculated based on the information contained in the Preliminary Closing Date Net Debt Schedule, and (iii) specifically identify such Purchaser’s proposed adjustment(s). If a Purchaser timely provides the Company with a Dispute Notice, then such Purchaser and the Company shall, within ten (10) days following receipt of such Dispute Notice by the Company (the “ Resolution Period ”), attempt to resolve their differences with respect to the items specified in the Dispute Notice (the “ Disputed Items ”). If a Purchaser and the Company do not resolve all Disputed Items by the end of the Resolution Period, then all Disputed Items remaining in dispute shall be submitted to the Bankruptcy Court for resolution at or concurrent with the Confirmation Hearing. The Bankruptcy Court shall consider only those Disputed Items that such Purchaser, on the one hand, and the Company, on the other hand, were unable to resolve. All other matters shall be deemed to have been agreed upon by such Purchaser and the Company. If a Purchaser does not timely deliver a Dispute Notice, then such Purchaser shall be deemed to have accepted and agreed to the Preliminary Closing Date Net Debt Schedule and to have waived any right to dispute the matters set forth therein.
(c) The Company shall deliver to each Purchaser a draft of the Conclusive Net Debt Adjustment Statement no later than 15 calendar days prior to the Effective Date. Each Purchaser shall be afforded an opportunity to review the Conclusive Net Debt Adjustment Statement and reasonable access to all non-privileged and non-work product documents or records or personnel used in the preparation of such statement. On or prior to close of business on the 7th calendar day following receipt of the Conclusive Net Debt Adjustment Statement, any Purchaser may deliver to the Company a notice (the “ CNDAS Dispute Notice ”) listing those items to which such Purchaser takes exception, which CNDAS Dispute Notice shall (i) specifically identify such items, and provide a reasonably detailed explanation of the basis upon which such Purchaser has delivered such list, (ii) set forth the alternative amounts that such Purchaser has calculated based on the information contained in the Conclusive Net Debt Adjustment Statement, and (iii)
specifically identify such Purchaser’s proposed adjustment(s). If a Purchaser timely provides the Company with a CNDAS Dispute Notice, then such Purchaser and the Company shall attempt to resolve the items specified in the CNDAS Dispute Notice (the “ CNDAS Disputed Items ”) consensually. If such Purchaser and the Company do not resolve all CNDAS Disputed Items prior to the Effective Date, then for purposes of Closing and subject to subsequent adjustment consistent with the Bankruptcy Court’s ruling, the highest number shall be used for purposes of any calculations set forth on the Conclusive Net Debt Adjustment Statement. Within 10 days after Closing, the Company shall file a motion for resolution by the Bankruptcy Court. The Purchasers and the Company agree to seek expedited consideration of any such dispute. The dispute submitted to the Bankruptcy Court shall be limited to only those CNDAS Disputed Items that a Purchaser, on the one hand, and the Company, on the other hand, were unable to resolve. All other matters shall be deemed to have been agreed upon by the Purchasers and the Company. If a Purchaser does not timely deliver a CNDAS Dispute Notice, then such Purchaser shall be deemed to have accepted and agreed to the Conclusive Net Debt Adjustment Statement and to have waived any right to dispute the matters set forth therein. To the extent that one or more CNDAS Disputed Items must be submitted to the Bankruptcy Court for adjudication, the Purchasers and the Company agree that this should not delay the Effective Date or the Closing Date. Following adjudication of the dispute, appropriate adjustments shall be made to the Conclusive Net Debt Adjustment Statement, the GGO Promissory Note and the other applicable documentation to put all parties in the same economic position as if the corrected Conclusive Net Debt Adjustment Statement governed at Closing.
(d) It is the intention of the parties that any Reserve should not alter the intended allocation of value between GGO and the Company as Claims are resolved over time. Accordingly, the Plan shall provide that, if a GGO Promissory Note is required to be issued at Closing and there is a Reserve Surplus Amount as of the end of any fiscal quarter prior to the maturity of the GGO Promissory Note, then the principal amount of the GGO Promissory Note shall be reduced, but not below zero, by (i) if and to the extent that such Reserve Surplus Amount as of such date is less than or equal to the Net Debt Surplus Amount, 80% of the Reserve Surplus Amount, and otherwise (ii) 100% of an amount equal to the Reserve Surplus Amount; provided, however, that because this calculation may be undertaken on a periodic basis, for purposes of clauses (i) and (ii), no portion of the Reserve Surplus Amount shall be utilized to reduce the amount of the GGO Promissory Note if it has been previously utilized for such purpose. In the event that any party requests an equitable adjustment to this formula, the other parties shall consider the request in good faith.
(e) The Plan shall provide that, if there is an Offering Premium, the principal amount of the GGO Promissory Note shall be reduced (but not below zero) by 80% of the aggregate Offering Premium on the 30th day following the Effective Date and from time to time thereafter upon receipt of Offering Premium until the last to occur of (x) 45 days after the Effective Date, (y) the Settlement Date (as defined in the Pershing Agreement), if applicable, and (z) the Bridge Note Maturity Date (as defined in the Pershing Agreement), if applicable .
(f) T he Plan and the agreements relating to the GGO Share Distribution shall provide that the Company shall indemnify GGO and its Subsidiaries from and against losses, claims, damages, liabilities and expenses attributable to MPC Taxes in accordance with the terms and conditions of the Tax Matters Agreement .
(g) Subject to the provisions of the Tax Matters Agreement, if GGO is obligated to pay in cash, after utilization of any available tax attributes, any MPC Taxes in the period commencing on the Effective Date and ending 36 months after the Effective Date, and the Company is not then obligated to indemnify GGO for its allocable share of such MPC Taxes as a consequence of the Indemnity Cap (as defined in the Tax Matters Agreement), then the Company shall loan to GGO the amount of such MPC Taxes not payable by the Company as a consequence of the Indemnity Cap and the principal amount of the GGO Promissory Note shall be increased by the amount of such loan and if at such time no GGO Promissory Note is outstanding, on the date of any such loan, GGO shall issue in favor of the Company a promissory note in the aggregate principal amount of such loan on the same terms as the GGO Promissory Note.
(h) The Debtors dispute each of the Contingent and Disputed Debt Claims and have sought or will seek disallowance of such Claims in their entirety. To the extent such claims have not been ruled on by the Bankruptcy Court or settled prior to the Effective Date, then the asserted amounts of such claims will be included in calculation of the Closing Date Net Debt. In the event that, on or after the Effective Date, one or more of the Contingent and Disputed Debt Claims are either reduced or disallowed by a ruling of the Bankruptcy Court or as a result of a settlement, then the Closing Date Net Debt amount shall be adjusted to reflect such ruling or settlement within ten (10) calendar days following any such ruling or settlement (such adjusted Closing Date Net Debt to be referred to as the “ Adjusted CDND ”) and the GGO Note Amount and Indemnity Cap (as defined in the Tax Matters Agreement) shall be re-calculated as if the Adjusted CDND was used in the calculations for the Effective Date. To the extent that a GGO Promissory Note was issued at Closing, then, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating the GGO Note Amount, the principal amount of such GGO Promissory Note will be reduced based on the new calculation using the Adjusted CDND and, to the extent applicable, any interest payments made by GGO to the Company on the GGO Promissory Note prior to such re-calculation shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reductions shall be eliminated. Similarly, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating the Indemnity Cap, the Indemnity Cap shall be re-calculated and adjusted to reflect determination of the Net Debt Surplus Amount or Net Debt Excess Amount using the Adjusted CDND . Additionally, to the extent any promissory note was issued by GGO in favor of the Company pursuant to Section 5.16(g) , then, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating such note, (i) the principal amount of such note will be reduced based on the new calculation using the Adjusted CDND and (ii) to the extent applicable, any interest payments made by GGO to the Company on such note prior to such re-calculation shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reductions shall be eliminated. Consistent with the foregoing, the Tax Matters Agreement shall be retroactively applied using the re-calculated Indemnity Cap and any resulting amounts payable thereunder shall be promptly paid.
In the event that a Bankruptcy Court order allowing, disallowing, or reducing and allowing any of the Contingent and Disputed Debt Claims is appealed, vacated or otherwise
modified, then following entry of a final and nonappealable order by a court of competent jurisdiction determining the amount (if any) of the applicable Contingent and Disputed Debt Claim, the adjustment process set forth in the preceding paragraph shall be undertaken within ten (10) calendar days following such order becoming final and nonappealable.
(i) Solely for purposes of calculating whether a GGO Promissory Note is required to be issued at Closing pursuant to this Agreement, $1,000,000 shall be added to GGO Setup Costs. If a GGO Promissory Note is issued at Closing pursuant to this Agreement, then on the six-month anniversary of the Closing Date (the “ Calculation Date ”), (A) the then outstanding principal amount of the GGO Promissory Note shall be reduced (but not to a number less than zero) by an amount equal to the excess (if it is a positive number), if any, of $1,000,000 over the aggregate amount of cash costs and expenses, if any, incurred by the Company after the Closing Date and prior to the Calculation Date to transfer assets after Closing to GGO pursuant to Section 2.4(d) of the Separation Agreement to be entered into between the Company and GGO at or prior to Closing, and (B) if the principal amount of the GGO Promissory Note is reduced pursuant to clause (A), any interest payments made by GGO to the Company on the GGO Promissory Note prior to such reduction pursuant to clause (A) shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reduction shall be eliminated .
SECTION 5.17 Determination of Domestically Controlled REIT Status .
(a) The Reorganized Company shall use reasonable efforts to comply with treasury regulations, revenue procedures, notices or other guidance adopted after the date hereof by the Internal Revenue Service or United States Treasury governing the determination of its status as a “domestically controlled REIT” as defined in Section 897 of the Code and the treasury regulations promulgated thereunder (a “ Domestically Controlled REIT ”).
(b) The Reorganized Company shall inquire of each Purchaser and each Purchaser shall provide a written statement to the Reorganized Company setting forth the equity ownership percentage that “United States persons” as defined in Section 7701(a)(30) of the Code (“ U.S. Persons ”) hold in such Purchaser. Each such statement shall be based on the direct ownership in such Purchaser, except to the extent that such Purchaser has actual knowledge of indirect ownership or can provide a reasonable estimate of such indirect ownership. For the avoidance of doubt, if interests in a Purchaser are held or registered in “street name”, such Purchaser shall not be required to determine the ultimate beneficial owner of such interests for the purposes of complying with this Section 5.17 .
(c) The Reorganized Company shall include in its shareholder demand letters a request that each shareholder identify whether it is a U.S. Person.
(d) The Reorganized Company shall at least annually request from Cede & Co. a list of holders of the Reorganized Company’s stock registered with Cede & Co. and, if granted access thereto, use reasonable efforts to review such list to determine whether any such holders are U.S. Persons.
(e) The Reorganized Company shall, at least annually, as part of its internal audit and Sarbanes-Oxley Act (“ SOX ”) procedures with respect to key controls, use reasonable efforts to
make a determination of whether or not it believes that it qualifies as a Domestically Controlled REIT. Such determination shall be based on information reasonably available to the Reorganized Company under this Section 5.17 as well as through review of the information contained in any relevant Schedule 13D or Schedule 13G (or amendment thereto) filed with the SEC with respect to the Reorganized Company. A written summary of the steps taken, information obtained and analysis of results will be prepared. Each such annual determination (but not the written summary), subject to reasonable caveats and assumptions, shall be set forth in the Reorganized Company’s next Annual Report on Form 10-K filed with the SEC and shall be reported to the Board of Directors at least annually (or within fifteen days of discovering a change in status). The Reorganized Company shall use the Reorganized Company’s SOX policies and procedures to oversee such determination.
(f) The Company shall provide a copy of the written summary (and backup documentation) prepared in accordance with clause (e) to a Purchaser upon the request of such Purchaser. In addition, if reasonably requested by a Purchaser, the Reorganized Company will, at such Purchaser’s expense, make reasonable efforts to provide additional information to and otherwise cooperate with such Purchaser, to enable such Purchaser to respond to questions regarding Domestically Controlled REIT status by a taxing authority or person engaging in, or proposing to engage in, a transaction with such Purchaser or an Affiliate thereof.
ARTICLE VI
ADDITIONAL COVENANTS OF PURCHASER
SECTION 6.1 Information . From and after the date of this Agreement until the earlier to occur of the Closing Date and the termination of this Agreement, each Purchaser agrees to provide the Debtors with such information as the Debtors reasonably request regarding such Purchaser for inclusion in the Disclosure Statement as necessary for the Disclosure Statement to contain adequate information for purposes of Section 1125 of the Bankruptcy Code.
SECTION 6.2 Purchaser Efforts . Each Purchaser shall use its reasonable best efforts to obtain all material permits, consents, orders, approvals, waivers, authorizations or other permissions or actions required for the consummation of the transactions contemplated by this Agreement from, and shall have given all necessary notices to, all Governmental Entities necessary to satisfy the condition in Section 8.1(b) ( provided , however , that such Purchaser shall not be required to pay or cause payment of any fees or make any financial accommodations to obtain any such consent, approval, waiver or other permission, except filing fees as required), and provide to such Governmental Entities all such information as may be necessary or reasonably requested relating to the transactions contemplated hereby.
SECTION 6.3 Plan Support . From and after the date of the Approval Order until the earliest to occur of (i) the Effective Date, (ii) the termination of this Agreement and (iii) the date the Company or any Subsidiary of the Company makes a public announcement, enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its intention to support any Competing Transaction, or the Company or any Subsidiary of the Company enters into a Competing Transaction (such date, the “ Unrestricted Date ”), each Purchaser agrees (unless otherwise consented to by the Company) ( provided that (x)
the Company is not in material breach of this Agreement and (y) the terms of the Plan are and remain consistent with the Plan Summary Term Sheet and this Agreement, and are otherwise in form and substance satisfactory to each Purchaser) to (and shall use reasonable best efforts to cause its Affiliates to):
(a) Not pursue, propose, support, vote to accept or encourage the pursuit, proposal or support of, any Chapter 11 plan, or other restructuring or reorganization for the Company, or any Subsidiary of the Company, that is not consistent with the Plan;
(b) Not, nor encourage any other Person to, interfere with, delay, impede, appeal or take any other negative action, directly or indirectly, in any respect regarding acceptance or implementation of the Plan; and
(c) Not commence any proceeding, or prosecute any objection to oppose or object to the Plan or to the Disclosure Statement and not to take any action that would delay approval or confirmation, as applicable, of the Disclosure Statement and the Plan, in each case (i) except as intended to ensure the consistency of the Disclosure Statement and the Plan with the terms of this Agreement and the rights and obligations of the parties thereto and (ii) without limiting any rights any Purchaser may have to terminate this Agreement pursuant to Section 11.1(b) (including Section 11.1(b)(ix)) hereof.
SECTION 6.4 Transfer Restrictions . Each Purchaser covenants and agrees that the Shares and the GGO Shares (and shares issuable upon exercise of Warrants, New Warrants and GGO Warrants) shall be disposed of only pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities Laws. Each Purchaser agrees to the imprinting, so long as is required by this Section 6.4 , of the following legend on any certificate evidencing the Shares or GGO Shares (and shares issuable upon exercise of Warrants, New Warrants and GGO Warrants):
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE “ ACT ”) OR UNDER ANY STATE SECURITIES LAWS (“ BLUE SKY ”) OR THE SECURITIES LAWS OF ANY OTHER RELEVANT JURISDICTION. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE. THE SHARES MAY NOT BE SOLD, ASSIGNED, MORTGAGED, PLEDGED, ENCUMBERED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS EITHER (I) A REGISTRATION STATEMENT WITH RESPECT TO THE SHARES IS EFFECTIVE UNDER THE ACT AND APPLICABLE BLUE SKY LAWS AND THE SECURITIES LAWS OF ANY OTHER RELEVANT JURISDICTION ARE COMPLIED WITH OR (II) UNLESS WAIVED BY THE ISSUER, THE ISSUER RECEIVES AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE ISSUER THAT NO VIOLATION OF THE ACT OR OTHER APPLICABLE LAWS WILL BE INVOLVED IN SUCH TRANSACTION.
Certificates evidencing the Shares (and shares issuable upon exercise of Warrants and New Warrants) shall not be required to contain such legend (A) while a registration statement covering the resale of the Shares is effective under the Securities Act, or (B) following any sale
of any such Shares pursuant to Rule 144 of the Exchange Act (“ Rule 144 ”), or (C) following receipt of a legal opinion of counsel to the applicable Purchaser that the remaining Shares held by such Purchaser are eligible for resale without volume limitations or other limitations under Rule 144. In addition, the Company will agree to the removal of all legends with respect to shares of New Common Stock deposited with DTC from time to time in anticipation of sale in accordance with the volume limitations and other limitations under Rule 144, subject to the Company’s approval of appropriate procedures, such approval not to be unreasonably withheld, conditioned or delayed.
Following the time at which such legend is no longer required (as provided above) for certain Shares, the Company shall promptly, following the delivery by the applicable Purchaser to the Company of a legended certificate representing such Shares, deliver or cause to be delivered to such Purchaser a certificate representing such Shares that is free from such legend. In the event the above legend is removed from any of the Shares, and thereafter the effectiveness of a registration statement covering such Shares is suspended or the Company determines that a supplement or amendment thereto is required by applicable securities Laws, then the Company may require that the above legend be placed on any such Shares that cannot then be sold pursuant to an effective registration statement or under Rule 144 and such Purchaser shall cooperate in the replacement of such legend. Such legend shall thereafter be removed when such Shares may again be sold pursuant to an effective registration statement or under Rule 144.
The Plan shall provide, in connection with the consummation of the Plan, for GGO to enter into an agreement with each Purchaser with respect to GGO Shares and GGO Warrants containing the same terms as provided above in this Section 6.4 but replacing references to (A) “ the Company ” with GGO, (B) “ New Common Stock ” with GGO Common Stock, (C) “ Shares ” with “ GGO Shares ” and (D) “ Warrants ” or “ New Warrants ” with GGO Warrants.
The Fairholme Fund further covenants and agrees not to sell, transfer or dispose of (each, a “ Transfer ”) the Warrants or the shares of Common Stock issuable upon exercise of the Warrants (other than to a member of the Purchaser Group) prior to the Unrestricted Date or any Shares, New Common Stock or New Warrants in violation of the Non-Control Agreement.
For the avoidance of doubt, each Purchaser’s Subscription Rights pursuant to Section 5.9 may not be Transferred to a Person that is not a member of the Purchaser Group.
The Plan shall provide that in addition to the covenants provided in the Non-Control Agreement, at the time of an underwritten offering of equity or convertible securities by the Company on or prior to the 30th day after the Effective Date, to the extent reasonably requested in connection with such offering by UBS or any other managing underwriter selected by the Company, each Purchaser and the other members of the Purchaser Group will covenant and agree that it does not currently intend to, and will not, sell, transfer or dispose of (each, a “ Transfer ”) any Shares for a period of time not to exceed 120 days from the date of completion of the offering without the consent of the representatives of such underwriter; provided , however, that a Purchaser or member of its Purchaser Group may Transfer its Shares in such amounts, and at such times, as Fairholme, as such Purchaser’s or Purchaser Group members’ manager, determines after the Closing Date to be in such Purchaser’s or Purchaser Group members’ best interests in light of its then current circumstances and the laws and regulations
applicable to it as a management investment company registered under the Investment Company Act of 1940, as amended, with a policy of qualifying as a “ regulated investment company ” as defined in Subchapter M of the Internal Revenue Code of 1986, as amended.
SECTION 6.5 [ Intentionally Omitted .]
SECTION 6.6 REIT Representations and Covenants . At such times as shall be reasonably requested by the Company, for so long as any Purchaser (or, to the extent applicable, its Affiliates, members or Affiliates of members) “ beneficially owns ” or “ constructively owns ” (as such terms are defined in the certificate of incorporation of the Company) in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company of the outstanding Common Stock or New Common Stock, such Purchaser shall (and, to the extent applicable, cause its Affiliates, members or Affiliates of members to) use reasonable best efforts to provide the Company with customary representations and covenants, in the form attached hereto as Exhibit D which shall, among other things, enable the Company to waive Purchaser from the ownership limit set forth in the certificate of incorporation of the Company and ensure that the Company can appropriately monitor any “ related party rent ” issues raised by the Warrants and the purchase of the Shares by such Purchaser, it being understood that Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations and covenants only if such Person “ beneficially owns ” or “ constructively owns ” (as such terms are defined in the certificate of incorporation of the Company) Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by the Company.
SECTION 6.7 Non-Control Agreement . At or prior to the Closing, The Fairholme Fund shall enter into the Non-Control Agreement with the Company.
SECTION 6.8 [ Intentionally Omitted .]
SECTION 6.9 Additional Backstop .
(a) If the Company requests the Initial Investors, in writing, at any time prior to fifteen (15) days before the commencement of solicitation of acceptances of the Plan, each Initial Investor agrees that it shall, severally but not jointly and severally, provide or cause a designee to provide its pro rata share of a backstop for new bonds, loans or preferred stock (as determined by the Initial Investor) in an aggregate amount equal to $1,500,000,000 less the Reinstated Amounts, at a market rate and market commitment fees, and otherwise on terms and conditions to be mutually agreed among the Initial Investors and the Company. Any such notice shall be revocable by the Company in its sole discretion. The new bonds, loans or preferred stock would require no mandatory interim cash principal payments prior to the third anniversary of issuance (unless funded from committed junior indebtedness or junior preferred stock), and would yield proceeds to the Company on the Closing Date net of OID of at least $1,500,000,000 less the Reinstated Amounts. Any Initial Investor may at any time designate in writing one or more financial institutions with a corporate investment grade credit rating (from S&P or Moody’s) to make a substantially similar undertaking as that provided herein and, upon the receipt of such an undertaking by the Company in form and substance reasonably satisfactory to the Company,
such Initial Investor shall be released from its obligations under its applicable Investment Agreement.
(b) For the purposes of Section 6.9(a) , the “ pro rata share ” or “ pro rata basis ” of each Initial Investor shall be determined in accordance with the maximum number of shares of New Common Stock each Initial Investor has committed to purchase at Closing pursuant to its Investment Agreement as of the date hereof, but excluding any shares of New Common Stock the Brookfield Investor or the Pershing Purchasers have committed to purchase pursuant to Section 6.9 of the other Investment Agreements.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
SECTION 7.1 Conditions to the Obligations of Purchaser . The obligation of each Purchaser to purchase the Shares and the GGO Shares pursuant to this Agreement on the Closing Date is subject to the satisfaction (or waiver (to the extent permitted by applicable Law) by such Purchaser) of the following conditions as of the Closing Date:
(a) No Injunction . No judgment, injunction, decree or other legal restraint shall prohibit the consummation of the Plan or the transactions contemplated by this Agreement.
(b) Regulatory Approvals; Consents . All permits, consents, orders, approvals, waivers, authorizations or other permissions or actions of third parties and Governmental Entities required for the consummation of the transactions contemplated by this Agreement and the Plan shall have been made or received, as the case may be, and shall be in full force and effect, except for those permits, consents, orders, approvals, waivers, authorizations or other permissions or actions the failure of which to make or receive would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (it being agreed that any permit, consent, order, approval, waiver, authorization or other permission or action in respect of any Identified Asset for which any of the alternatives in Section 2.1(a) shall have been employed shall be deemed hereunder to have been made or received, as the case may be, and in full force and effect).
(c) Representations and Warranties and Covenants . Except for changes permitted or contemplated by this Agreement or the Plan Summary Term Sheet, each of (i) the representations and warranties of the Company contained in Section 3.1 , Section 3.2 , Section 3.3 , Section 3.5 , Section 3.20(a) (except for such inaccuracies in Section 3.20(a) caused by sales, purchases or transfers of assets which have been effected in accordance with, subject to the limitations contained in, and not otherwise prohibited by, the terms and conditions in this Agreement, including, without limitation, this Article VII ) and Section 3.23 shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct only as of such specific date), (ii) the representations and warranties of the Company contained in Section 3.4 shall be true and correct (except for de minimis inaccuracies) at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct (except for de minimis inaccuracies) only as of
such specific date) and (iii) the other representations and warranties of the Company contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to “ materiality ” or “ Material Adverse Effect ”, shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect (it being agreed that the condition in this subclause (iii) as it relates to undisclosed liabilities of the Company and its Subsidiaries comprised of Indebtedness shall be deemed to be satisfied if the condition in Section 7.1(p) is satisfied. In addition, for purposes of this Section 7.1(c) as it relates to Section 3.20(b) of this Agreement, the reference to “DIP Loan” in clause (i) of such Section 3.20(b) shall be deemed to refer to that certain Senior Secured Debtor in Possession Credit, Security and Guaranty Agreement, dated as of July 23, 2010, by and among the Company, GGP Limited Partnership, the lenders party thereto, Barclays Capital, as the Sole Arranger, Barclays Bank PLC, as the Administrative Agent and Collateral Agent, and the guarantors party thereto (the “ New DIP Agreement ”). The Company shall have complied in all material respects with all of its obligations under this Agreement, provided that with respect to its obligations under Section 5.14(a) , Section 5.14(b) (to the extent applicable) and Section 5.14(c) the Company shall have complied therewith in all respects. The Company shall have provided to each Purchaser a certificate delivered by an executive officer of the Company, acting in his or her official capacity on behalf of the Company, to the effect that the conditions in this clause (c) and the immediately following clause (d) have been satisfied as of the Closing Date and each Purchaser shall have received such other evidence of the conditions set forth in this Section 7.1 as it shall reasonably request.
(d) No Material Adverse Effect . Since the date of this Agreement, there shall not have occurred any event, fact or circumstance, that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(e) Plan and Confirmation Order . The Plan, in form and substance satisfactory to each Purchaser, shall have been confirmed by the Bankruptcy Court by order in form and substance satisfactory to each Purchaser (the “ Confirmation Order ”), which Confirmation Order shall be in full force and effect (without waiver of the 14-day period set forth in Bankruptcy Rule 3020(e)) as of the Effective Date and shall not be subject to a stay of effectiveness. Notwithstanding anything to the contrary in the Plan Term Sheet, the Plan shall have allowed the Specified Debt in an amount no less than par plus unpaid pre-petition and post-petition interest accrued at the stated non-default rate (or contract rate in the case of Class M).
(f) Disclosure Statement . The Disclosure Statement, in form and substance acceptable to each Purchaser, shall have been approved by order of the Bankruptcy Court in form and substance satisfactory to each Purchaser (the “ Disclosure Statement Order ”).
(g) Conditions to Confirmation . The conditions to confirmation and the conditions to the Effective Date of the Plan, including the consummation of the transactions contemplated by Exhibit B , shall have been satisfied or waived in accordance with the Plan and the Reorganized Company Organizational Documents as set forth in the Plan shall be in effect.
(h) GGO . The GGO Share Distribution and the issuance by GGO of the GGO Warrants shall have occurred in accordance with this Agreement. In connection with the implementation of the GGO Share Distribution, (i) the Company shall have provided each Purchaser with reasonable access to all relevant information and consulted and cooperated in good faith with each Purchaser and the GGO Representative with respect to the contribution of the Identified Assets to GGO in accordance with Section 2.1(a) , and (ii) all actions taken by the Company and its Subsidiaries related thereto and all documentation related to the formation and organization of GGO, the implementation of the GGO Share Distribution, to separate the business of the Company and GGO and other intercompany arrangements between the Company and GGO, in each case, shall be reasonably satisfactory to each Purchaser and shall be in full force and effect.
(i) GGO Common Stock . GGO shall not have issued and outstanding on a Fully Diluted Basis immediately following the Closing more than the GGO Common Share Amount of shares of GGO Common Stock (plus (A) an aggregate 5,250,000 shares issuable to the respective Initial Investors pursuant to the respective Investment Agreements, (B) 2,000,000 shares of GGO Common Stock issuable upon exercise of the GGO Warrants, (C) 6,000,000 shares of GGO Common Stock issuable upon the exercise of warrants that may be issued to the other Initial Investors pursuant to the other Investment Agreements).
(j) Valid Issuance . The Shares, Warrants, New Warrants and GGO Warrants and the GGO Shares shall be validly issued to each Purchaser (against payment therefor in the case of the Shares and the GGO Shares). The Company and GGO shall have executed and delivered the warrant agreement for each of the New Warrants and the GGO Warrants, together with such other customary documentation as each Purchaser may reasonably request in connection with such issuance; each warrant agreement shall be in full force and effect and neither the Company nor GGO shall be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(k) No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that prohibits the issuance or sale of, pursuant to this Agreement, the Shares, the issuance of Warrants, New Warrants, GGO Shares, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants; and no injunction or order of any federal, state or foreign court shall have been issued that prohibits the issuance or sale, pursuant to this Agreement, of the Shares, the GGO Shares, the Warrants, New Warrants, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants.
(l) Registration Rights . The Company shall have filed with the SEC and the SEC shall have declared effective, as of Closing, to the extent permitted by applicable SEC rules, a shelf registration statement on Form S-1 or Form S-11, as applicable, covering the resale by each Purchaser and member of the Purchaser Group of the Shares, any securities issued pursuant to Section 6.9(a) and the New Common Stock issuable upon exercise of the New Warrants, containing a plan of distribution reasonably satisfactory to each Purchaser. In addition, each of the Company and GGO shall have entered into registration rights agreements with each
Purchaser with respect to all registrable securities issued to or held by members of the Purchaser Group from time to time in a manner that permits the registered offering of securities pursuant to such methods of sale as a Purchaser may reasonably request from time to time. Each registration rights agreement shall provide for (i) an unlimited number of shelf registration demands on Form S-3 to the extent that the Company or GGO, as applicable, is then permitted to file a registration statement on Form S-3, (ii) if the Company or GGO, as applicable, is not eligible to use Form S-3, the filing by the Company or GGO, as applicable, of a registration statement on Form S-1 or Form S-11, as applicable, and the Company or GGO, as applicable, using its reasonable best efforts to keep such registration statement continuously effective; (iii) piggyback rights not less favorable than those provided in the Warrant Agreement; (iv) with respect to the Company, at least three underwritten offerings during the term of the registration rights agreement, but not more than one underwritten offering in any 12-month period and, with respect to GGO, at least three underwritten offerings during the term of the registration rights agreement, but not more than one in any 12-month period; (v) “ black-out ” periods not less favorable than those provided in the Warrant Agreement; (vi) “ lock-up ” agreements by the Company or GGO, as applicable, to the extent requested by the managing underwriter in any underwritten public offering requested by a Purchaser, consistent with those provided in the Warrant Agreement (it being understood that the registration rights agreement will include procedures reasonably acceptable to such Purchaser and the Company designed to ensure that the total number of days that the Company or GGO, as applicable, may be subject to a lock-up shall not, in the aggregate after taking into account any applicable lock-up periods resulting from registration rights agreements between the Company or GGO, as applicable, and the other Initial Investors exceed 120 days in any 365-day period; (vii) to the extent that the Purchasers and the members of the Purchaser Group are Affiliates of the Company or GGO, as applicable, at the time of an underwritten public offering by the Company or GGO, as applicable, each Purchaser and the other members of the Purchaser Group will agree to a 60-day customary lock up to the extent requested by the managing underwriter; and (viii) other terms and conditions reasonably acceptable to each Purchaser. The registration rights agreement shall be in full force and effect and neither the Company nor GGO shall be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(m) Listing . The Shares shall be authorized for listing on the NYSE, subject to official notice of issuance, and the shares of New Common Stock issuable upon exercise of the New Warrants shall be eligible for listing on the NYSE. The GGO Shares shall be authorized for listing on a U.S. national securities exchange, subject to official notice of issuance, and the shares of GGO Common Stock issuable upon exercise of the GGO Warrants shall be eligible for listing on a U.S. national securities exchange.
(n) Liquidity . The Company shall have, on the Effective Date and after giving effect to the use of proceeds from Capital Raising Activities permitted under this Agreement and the issuance of the Shares, and the payment and/or reserve for all allowed and disputed claims under the Plan, transaction fees and other amounts required to be paid in cash under the Plan as contemplated by the Plan Summary Term Sheet, an aggregate amount of not less than $350,000,000 of Proportionally Consolidated Unrestricted Cash (the “ Liquidity Target ”) plus the net proceeds of the Additional Financings and the aggregate principal amount of the Anticipated Debt Paydowns (or such higher number as may be agreed to by each Purchaser and the Company) plus the excess, if any, of (A) the aggregate principal amount of New Debt and the
Reinstated Amounts over (B) $1,500,000,000. For the avoidance of doubt, the reserve shall (i) include (a) the Contingent and Disputed Debt Claims, and (b) an estimate of the cash component of a potential dividend to be issued by the Company as a result of the spin-off of GGO, and (ii) exclude any amounts to be paid in Shares. In addition, to the extent that there is any availability under the Debt Cap, then such amount shall be included in Proportionally Consolidated Unrestricted Cash as if the Company had such amount in cash.
(o) [ Intentionally Omitted .]
(p) Debt of the Company . Immediately following the Closing after giving effect to the Plan, the aggregate outstanding Proportionally Consolidated Debt shall not exceed $22,250,000,000 in the aggregate minus (i) the amount of Proportionally Consolidated Debt attributable to assets sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement through the Closing and minus (ii) the excess, if any, of $1,500,000,000 over the aggregate principal amount of new Unsecured Indebtedness incurred after the date of this Agreement and on or prior to the Closing Date for cash (“ New Debt ”) and the aggregate principal amount of any Debt under the Rouse Bonds or the Exchangeable Notes that is reinstated or issued under the Plan (such amounts reinstated or issued, the “ Reinstated Amounts ”) minus (iii) the amount of Proportionally Consolidated Debt attributable to Identified Assets contributed to GGO pursuant to Section 2.1(a) , minus (iv) the amount of Proportionally Consolidated Debt attributable to assets other than Identified Assets contributed to GGO pursuant to Section 2.1(a) minus (v) the principal and/or liquidation preference of the TRUPS and the UPREIT Units not reinstated, plus (vi) in the event the Closing occurs prior to September 30, 2010, the amount of scheduled amortization on Proportionally Consolidated Debt (other than Corporate Level Debt) from the Closing Date to September 30, 2010 that otherwise would have been paid by September 30, 2010, minus (vii) in the event the Closing occurs on or after September 30, 2010, the amount of actual amortization paid on Proportionally Consolidated Debt (other than Corporate Level Debt) from September 30, 2010 to the Closing Date, plus (viii) (A) the excess of the aggregate principal amount of new Debt incurred to refinance existing Debt in accordance with Section 7.1(r)(vii) hereof over the principal amount of the Debt so refinanced and (B) new Debt incurred to finance unencumbered Company Properties and Non-Controlling Properties after the date of this Agreement and on or prior to the Closing (such amounts contemplated by clauses (A) and (B) collectively, the “ Additional Financing ”) plus (ix) the amount of other principal paydowns, writedowns and resulting impact on amortization (or payments in the anticipated amortization schedule with respect to Fashion Show Mall (Fashion Show Mall LLC), The Shoppes at the Palazzo and Oakwood Shopping Center (Gretna, LA)) currently anticipated to be made by the Company in connection with refinancings, or completion of negotiations in respect of its property level Debt which the Company determines in good faith are not actually required to be made prior to Closing (“ Anticipated Debt Paydowns ”) plus (x) the excess, if any, of (A) the aggregate principal amount of New Debt and the Reinstated Amounts over (B) $1,500,000,000 plus (xi) the aggregate amount of the Bridge Notes (as defined in the Pershing Agreement) issued pursuant to Section 1.4 of the Pershing Agreement (and the parties agree that such Bridge Notes shall not be included in the calculation of Closing Date Net Debt or Closing Date Net Debt W/O Reinstatement Adjustment) (the aggregate amount calculated pursuant to this Section 7.1(p) , the “ Debt Cap ”).
(q) Outstanding Common Stock . The number of issued and outstanding shares of New Common Stock on a Fully Diluted Basis (including the Shares) shall not exceed the Share Cap Number. The “ Share Cap Number ” means 1,104,683,256 plus the number of shares (if any) issued to settle or otherwise satisfy Hughes Heirs Obligations, plus up to 65,000,000 shares of New Common Stock issued in Liquidity Equity Issuances, plus 42,857,143 shares of New Common Stock issuable upon the exercise of the New Warrants, plus the shares of New Common Stock issuable upon the exercise of those certain warrants issued to the Brookfield Consortium Members pursuant to the Brookfield Agreement and to the Pershing Purchasers pursuant to the Pershing Agreement, plus the number of shares of Common Stock issued as a result of the exercise of employee stock options to purchase Common Stock outstanding on the date hereof, plus 90,000 shares of Common Stock issued to directors of the Company, plus the number of shares into which any reinstated Exchangeable Notes can be converted, plus, in the event shares of New Common Stock are issued pursuant to Section 6.9 of the other Investment Agreements, the difference between (i) the number of shares of New Common Stock issued to existing holders of Common Stock, the Brookfield Investor and the Pershing Purchasers, in each case, pursuant to Section 6.9 of the other Investment Agreements minus (ii) 50,000,000 shares of New Common Stock, minus the number of Put Shares (as defined in the Pershing Agreement) under the Pershing Agreement (which shall not be considered Share Equivalents for purposes of this calculation); provided , that if Indebtedness under the Rouse Bonds or the Exchangeable Notes is reinstated under the Plan, or the Company shall have incurred New Debt, or between the date of this Agreement and the Closing Date the Company shall have sold for cash real property assets outside of the ordinary course of business (“ Asset Sales ”), the Share Cap Number shall be reduced by the quotient (rounded up to the nearest whole number) obtained by dividing (x) the sum of (a) the lesser of (I) $1,500,000,000 and (II) the sum of Reinstated Amounts and the net cash proceeds to the Company from the issuance of New Debt, and (b) the net cash proceeds to the Company from Asset Sales in excess of $150,000,000 by (y) the Per Share Purchase Price.
(r) Conduct of Business . The following shall be true in all material respects as of the Closing Date:
Except as otherwise expressly provided or permitted, or contemplated, by this Agreement or the Plan Summary Term Sheet (including, without limitation, in connection with implementing the matters contemplated by Article II hereof) or any order of the Bankruptcy Court in effect on the date of the Agreement, during the period from the date of this Agreement to the Closing, the following actions shall not have been taken without the prior written consent of each Purchaser (which consent such Purchaser agrees shall not be unreasonably withheld, conditioned or delayed):
(i) the Company shall not have (A) declared, set aside or paid any dividends on, or made any other distributions in respect of, any of the Company’s capital stock (other than dividends required to retain REIT status or to avoid the imposition of entity level taxes, (B) split, combined or reclassified any of its capital stock or issued or authorized the issuance of any other securities in respect of, in lieu of or in substitution for its capital
stock, or (C) purchased, redeemed or otherwise acquired (other than as set forth on Section 7.1(r)(i) of the Company Disclosure Letter or pursuant to Company Benefit Plans) any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(ii) the Company shall not have amended the Company’s certificate of incorporation or bylaws other than to increase the authorized shares of capital stock;
(iii) neither the Company nor any of its Subsidiaries shall have acquired or agreed to acquire by merging or consolidating with, or by purchasing a substantial portion of the stock, or other ownership interests in, or substantial portion of assets of, or by any other manner, any business or any corporation, partnership, association, joint venture, limited liability company or other entity or division thereof except (A) in the ordinary course of business, (B) for transactions with respect to joint ventures existing on the date hereof valued at less than $10,000,000 or (C) for transactions valued at less than $10,000,000 in the aggregate;
(iv) none of the Company Properties, Non-Controlling Properties or Identified Assets shall have been sold or otherwise transferred, except, (A) in the ordinary course of business, (B) to a wholly owned Subsidiary of the Company (which Subsidiary shall be subject to the same restrictions under this subsection (iv)), and (C) for sales or other transfers, the net proceeds of which shall not exceed $1,000,000,000 in the aggregate, when taken together with all such sales and other transfers of Company Properties, Non-Controlling Properties and Identified Assets (the “ Sales Cap ”); provided that the Sales Cap shall not apply with respect to sales or transfers of Identified Assets to the extent the same shall have been consummated in accordance with the express terms and conditions set forth in Article II hereof;
(v) [Intentionally Omitted;]
(vi) (vi) none of the Company or any of its Subsidiaries shall have issued, delivered, granted, sold or disposed of any Equity Securities (other than (A) issuances of shares of Common Stock issued pursuant to, and in accordance with, Section 7.1(u) , but subject to Section 7.1(q) , (B) pursuant to the Equity Exchange, (C) the issuance of shares pursuant to the exercise of employee stock options issued pursuant to the Company Option Plans, (D) as set forth on Section 7.1(u) of the Company Disclosure Letter), or (E) the issuance of shares to existing holders of Common Stock, the Brookfield Investor and the Pershing Purchasers, in each case, pursuant to Section 6.9 of the other Investment Agreements);
(vii) none of the Company Properties or Identified Assets shall have been mortgaged, or pledged, nor shall the owner or lessee thereof have granted
a lien, mortgage, pledge, security interest, charge, claim or other Encumbrance relating to debt obligations of any kind or nature on, or otherwise encumbered, any Company Property or Identified Assets except in the ordinary course of business consistent with past practice, other than encumbrances of Company Properties or Identified Assets of Debtors in connection with (A) a restructuring of existing indebtedness for borrowed money related to any such Company Property or Identified Asset with the existing lender(s) thereof or (B) a refinancing of existing indebtedness for borrowed money related to any Company Property or Identified Asset in an amount not to exceed $300,000,000 (the “ Refinance Cap ”), provided that (x) the Refinance Cap shall not apply to a refinancing of the existing first lien indebtedness secured by the Fashion Show Mall, (y) in the event that a refinancing is secured by mortgages, deeds of trust, deeds to secure debt or indemnity deeds of trust encumbering multiple Company Properties and Identified Assets, the proceeds of such refinancing shall not exceed an amount equal to the Refinance Cap multiplied by the number of Company Properties and Identified Assets so encumbered, and (z) in connection with refinancing the indebtedness of a Company Property or Identified Asset owned by a Joint Venture, the Refinance Cap shall apply with respect to the aggregate share of such indebtedness which is allocable to, or guaranteed by (but without duplication), the Company and/or its Subsidiaries;
(viii) none of the Company or any of its Subsidiaries shall have undertaken any capital expenditure that is out of the ordinary course of business consistent with past practice and material to the Company and its Subsidiaries taken as a whole, except as contemplated in the Company’s business plan for fiscal year 2010 adopted by the board of directors of the Company prior to the date hereof; or
(ix) the Company shall not have changed any of its methods, principles or practices of financial accounting in effect, other than as required by GAAP or regulatory guidelines (and except to implement purchase accounting and/or “ fresh start ” accounting if the Company elects to do so).
(s) REIT Opinion . Each Purchaser shall have received an opinion of Arnold & Porter LLP, dated as of the Closing Date, substantially in the form attached hereto as Exhibit J , that the Company (x) for all taxable years commencing with the taxable year ended December 31, 2005 through December 31, 2009, has been subject to taxation as a REIT and (y) has operated since January 1, 2010 to the Closing Date in a manner consistent with the requirements for qualification and taxation as a REIT.
(t) Non-Control Agreements . The Company shall have entered into the Non-Control Agreement with The Fairholme Fund. The Non-Control Agreement shall be in full force and effect and the Company shall not be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(u) Issuance or Sale of Common Stock . Neither the Company nor any of its Subsidiaries shall have issued or sold any shares of Common Stock (or securities, warrants or options that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock) (other than (A) pursuant to the Equity Exchange, (B) the issuance of shares pursuant to the exercise of employee stock options issued pursuant to the Company Option Plans, (C) as set forth on Section 7.1(u) of the Company Disclosure Letter or (D) the issuance of shares to existing holders of Common Stock, the Brookfield Investor and the Pershing Purchasers, in each case, pursuant to Section 6.9 of the other Investment Agreements), unless (1) the purchase price (or, in the case of securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock, the conversion, exchange or exercise price) shall not be less than $10.00 per share (net of all underwriting and other discounts, fees and any other compensation; provided , that for purposes hereof, payments to the Purchasers or the Pershing Purchasers in accordance with Section 1.4 of this Agreement or the Pershing Agreement, respectively, shall not be considered a discount, fee or other compensation), (2) following such issuance or sale, (x) no Person (other than (i) an Initial Investor and their respective Affiliates pursuant to the Investment Agreements and (ii) any institutional underwriter or initial purchaser acting in an underwriter capacity in an underwritten offering) shall, after giving effect to such issuance or sale, beneficially own more than 10% of the Common Stock of the Company on a Fully Diluted Basis, and (y) no four Persons (other than the Purchasers, members of the Fairholme Purchaser Group, the members of the Pershing Purchaser Group, the Brookfield Consortium Members or the Brookfield Investor) shall, after giving effect to such issuance or sale, beneficially own more than thirty percent (30%) of the Common Stock on a Fully Diluted Basis; provided , that this clause (2) shall not be applicable to any conversion or exchange of claims against the Debtors into New Common Stock pursuant to the Plan; provided , further , that subclause (y) of this clause (2) shall not be applicable with respect to any Person listed on Exhibit N and (3) each Purchaser shall have been offered the right to purchase up to its GGP Pro Rata Share of 15% of such shares of Common Stock (or securities, warrants or options that are convertible into or exchangeable or exercisable for Common Stock) on terms otherwise consistent with Section 5.9 (except the provisions of such Section 5.9 with respect to issuances contemplated by this Section 7.1(u) shall apply from the date of this Agreement) ( provided that the right described in this clause (3) shall not be applicable to the issuance of shares or warrants contemplated by the other Investment Agreements, or any conversion or exchange of debt or other claims into equity in connection with the Plan).
(v) Hughes Heirs Obligations . The Hughes Heirs Obligations shall have been determined by order of the Bankruptcy Court entered on or prior to the Effective Date (which order may be the Confirmation Order or another order entered by the Bankruptcy Court) and satisfied in accordance with the terms of the Plan. For the avoidance of doubt, to the extent that holders of Hughes Heirs Obligations or other Claims against or interests in the Debtors arising under or related to the Hughes Agreement receive any consideration in respect of such obligations, Claims or interests under the Plan, there shall be no reduction in the number of shares of New Common Stock or GGO Common Stock otherwise to have been distributed on the Effective Date under the Plan in the Equity Exchange or the GGO Share Distribution, as applicable .
(w) GGO Promissory Note . The GGO Promissory Note, if any, shall have been issued by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership.
(x) Other Conditions . With respect to each other Initial Investor, either (A) its Investment Agreement shall be in full force and effect without amendments or modifications (other than those that are materially no less favorable to the Company than those provided in such Investment Agreement as in effect on the date hereof), the conditions to the consummation of the transactions under such Investment Agreement as in effect on the date hereof to be performed on the Closing Date shall have been satisfied or waived with the prior written consent of each Purchaser, acting separately and not jointly, and such Initial Investor shall have subscribed and paid for such shares of New Common Stock that such Initial Investor is obligated to purchase thereunder, (B) the funding to be provided by such Initial Investor under its Investment Agreement shall have been provided by one or more other investors or purchasers acceptable to each Purchaser on terms and conditions that such Purchaser has agreed are materially no less favorable to the Company than the terms and conditions of the applicable Investment Agreement as in effect on the date hereof or (C) in the case of an Initial Investor (other than a Brookfield Consortium Member), such Initial Investor has breached its obligation to fund at Closing when required to do so in accordance with the terms of its Investment Agreement (it being understood that the foregoing shall not limit the Company’s right to reduce the Total Purchase Amount under Section 1.4 hereof).
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
SECTION 8.1 Conditions to the Obligations of the Company . The obligation of the Company to issue the Shares and the obligation of GGO to issue the GGO Shares pursuant to this Agreement on the Closing Date are subject to the satisfaction (or waiver by the Company) of the following conditions as of the Closing Date:
(a) No Injunction . No judgment, injunction, decree or other legal restraint shall prohibit the consummation of the Plan or the transactions contemplated by this Agreement.
(b) Regulatory Approvals; Consents . All permits, consents, orders, approvals, waivers, authorizations or other permissions or actions of third parties and Governmental Entities required for the consummation of the transactions contemplated by this Agreement and the Plan shall have been made or received, as the case may be, and shall be in full force and effect, except for those permits, consents, orders, approvals, waivers, authorizations or other permissions or actions the failure of which to make or receive would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(c) Representations and Warranties and Covenants . Each of (i) the representations and warranties of each Purchaser contained in Section 4.1 , Section 4.2 , Section 4.3 , and Section 4.12 in this Agreement shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct only as of such specific date), and (ii) the other representations and
warranties of each Purchaser contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to “ materiality ”, shall be true and correct at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of such Purchaser to consummate the transactions contemplated by this Agreement. Each Purchaser shall have complied in all material respects with all of its obligations under this Agreement. Each Purchaser shall have provided to the Company a certificate delivered by an executive officer of the managing member of such Purchaser, acting in his or her official capacity on behalf of such Purchaser, to the effect that the conditions in this clause (c) have been satisfied as of the Closing Date.
(d) Plan and Confirmation Order . The Plan shall have been confirmed by the Bankruptcy Court by order, which order shall be in full force and effect and not subject to a stay of effectiveness.
(e) Conditions to Confirmation . The conditions to confirmation and the conditions to the Effective Date of the Plan shall have been satisfied or waived in accordance with the Plan.
(f) GGO . The GGO Share Distribution shall have occurred.
(g) No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that prohibits the issuance or sale of, pursuant to this Agreement, the Shares, the issuance of Warrants, New Warrants, GGO Shares, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants; and no injunction or order of any federal, state or foreign court shall have been issued that prohibits the issuance or sale, pursuant to this Agreement, of the Shares, the GGO Shares, the Warrants, the New Warrants, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants.
(h) Reorganization Opinion . The Company shall have received an opinion of Weil, Gotshal & Manges LLP, dated as of the Closing Date, in form and substance reasonably satisfactory to the Company, substantially to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion, the exchange of Common Stock for New Common Stock in the Equity Exchange should be treated as a reorganization within the meaning of Section 368(a) of the Code. In rendering such opinion, Weil, Gotshal & Manges LLP may require and rely upon representations and covenants made by the parties to this Agreement.
(i) IRS Ruling . The Company shall have obtained a favorable written ruling from the United States Internal Revenue Service confirming the qualification of each of the GGO Share Distribution and the prerequisite internal spin-offs each as a “ tax free spin-off ” under the Code.
(j) Funding . The applicable Purchaser shall have paid to the Company and GGO, as applicable, all amounts payable by such Purchaser under Article I and Article II of this Agreement, by wire transfer of immediately available funds to such account or accounts as shall have been designated in writing by the Company at least three (3) Business Days prior to the Closing Date.
(k) REIT Matters . The representations and covenants set forth on Exhibit D in respect of the applicable Purchaser and, to the extent applicable, its Affiliates, members, Affiliates of members or designees, shall be true and correct in all material respects as of the Closing Date as if made at and as of the Closing Date, it being understood that such Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations and covenants only if such Person “ beneficially owns ” or “ constructively owns ” (as such terms are defined in the certificate of incorporation of the Company) Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by the Company.
(l) Non-Control Agreements . The Fairholme Fund shall have entered into the Non-Control Agreement with the Company. The Non-Control Agreement shall be in full force and effect and The Fairholme Fund shall not be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(m) GGO Promissory Note . The GGO Promissory Note, if any, shall have been issued by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership.
ARTICLE IX
[INTENTIONALLY OMITTED]
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 10.1 Survival of Representations and Warranties . The representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement but shall terminate and be of no further force and effect following the earlier of (i) the termination of this Agreement in accordance with Article XI and (ii) the Closing.
ARTICLE XI
TERMINATION
SECTION 11.1 Termination . This Agreement and the obligations of the parties hereunder shall terminate automatically without any action by any party if (i) the Company has not filed the Approval Motion within two (2) Business Days following the date of this Agreement, (ii) the Approval Order, in form and substance satisfactory to each Purchaser,
approving, among other things, the issuance of the Warrants and the warrants contemplated by each other Investment Agreement, is not entered by the Bankruptcy Court on or prior to the date that is 43 days after the date of this Agreement, (iii) if the Debtors withdraw the Approval Motion, or (iv) the conditions to the obligations of any other Initial Investor pursuant to the other Investment Agreements to consummate the closings as set forth therein are amended or modified in any respect prior to the entry of the Approval Order, in each of cases (i), (ii), (iii) and (iv) unless each Purchaser and the Company otherwise agrees in writing. In addition, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of each Purchaser and the Company;
(b) by each Purchaser by written notice to the Company upon the occurrence of any of the following events (which notice shall specify the event upon which such termination is based):
(i) if the Effective Date and the purchase and sale contemplated by Article I have not occurred by the Termination Date; provided , however , that the right to terminate this Agreement under this Section 11.1(b)(i) shall not be available to any Purchaser if any Purchaser has breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused the Closing Date not to occur on or before the Termination Date;
(ii) if any Bankruptcy Cases of the Company or any Debtor which is a Significant Subsidiary shall have been dismissed or converted to cases under chapter 7 of the Bankruptcy Code or if an interim or permanent trustee or an examiner shall be appointed to oversee or operate any of the Debtors in their Bankruptcy Cases, in each case, except (x) as would not reasonably be expected to have a Material Adverse Effect or (y) with respect to the Bankruptcy Cases for Phase II Mall Subsidiary, LLC, Oakwood Shopping Center Limited Partnership and Rouse Oakwood Shopping Center, LLC;
(iii) if, from and after the issuance of the Warrants, the Approval Order shall without the prior written consent of each Purchaser, cease to be in full force and effect resulting in the cancellation of any Warrants or a modification of any Warrants, in each case, other than pursuant to their terms, that adversely affects any Purchaser;
(iv) if, without a Purchaser’s consent, the Warrants have not been issued to such Purchaser in accordance with Section 5.2 , or if after the Warrants are issued, any shares of Common Stock underlying the Warrants cease at any time to be authorized for issuance on a U.S. national securities exchange;
(v) if there has been a breach by the Company of any representation, warranty, covenant or agreement of the Company contained in this
Agreement or the Company shall have taken any action which, in each case, (A) would result in a failure of a condition set forth in Article VII and (B) cannot be cured prior to the Termination Date, after written notice to the Company of such breach and the intention to terminate this Agreement pursuant to this Section; provided , however , that the right to terminate this Agreement under this Section shall not be available to any Purchaser if any Purchaser has breached in any material respect its obligations under this Agreement;
(vi) following the issuance of the Warrants, if (a) the Company consummates a Competing Transaction, (b) on or after November 1, 2010, the Company enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its decision to support any Competing Transaction, or (c) the Company files notice of a hearing to confirm a plan of reorganization that contemplates a Change of Control without such Change of Control being subject to either (1) the written consent of the holders a majority in number of the outstanding shares of Common Stock or (2) soliciting the approval of the holders of a majority in number of the outstanding shares of Common Stock in accordance with the Bankruptcy Code (in either case, regardless of whether such approval is obtained) and providing for a period of at least 20 Business Days for acceptance or rejection by such holders in connection with such solicitation;
(vii) if the Company or any Subsidiary of the Company issues any shares of Common Stock or New Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock or New Common Stock) at a purchase price (or in the case of securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock or New Common Stock, the conversion, exchange, exercise or comparable price) of less than $10.00 per share (net of all underwriting and other discounts, fees and any other compensation and related expenses; provided , that for purposes hereof, payments to the Purchasers or the Pershing Purchasers in accordance with Section 1.4 of this Agreement or the Pershing Agreement, respectively, shall not be considered a discount, fee or other compensation) of Common Stock or New Common Stock or converts any claim against any of the Debtors into New Common Stock at a conversion price less than $10.00 per share of Common Stock or New Common Stock (in each case, other than pursuant to (A) the exercise, exchange or conversion of Share Equivalents of the Company existing on the date of this Agreement in accordance with the terms thereof as of the date of this Agreement, (B) the Equity Exchange, (C) the issuance of shares upon the exercise of employee stock options issued pursuant to the Company Option Plans, (D) the issuance of shares as set forth on Section 7.1(u) of the Company Disclosure Letter, or (E) the issuance of shares to existing holders of Common Stock, the Brookfield
Investor and the Pershing Purchasers, in each case, pursuant to Section 6.9 of the other Investment Agreements;
(viii) if the Bankruptcy Court shall have entered a final and non-appealable order denying confirmation of the Plan;
(ix) if this Agreement, including the Plan Summary Term Sheet, or the Plan, is revised or modified (except as otherwise permitted pursuant to this Agreement) by the Company or an order of the Bankruptcy Court or other court of competent jurisdiction in a manner that is unacceptable to any Purchaser or a plan of reorganization with respect to the Debtors involving the Transactions that is unacceptable to any Purchaser is filed by the Debtors with the Bankruptcy Court or another court of competent jurisdiction;
(x) if any Governmental Entity of competent jurisdiction shall have issued a final and nonappealable order permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement (the “ Closing Restraint ”);
(xi) prior to the issuance of the Warrants, if the Company (A) makes a public announcement, enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its decision to support any Competing Transaction, or (B) the Company or any Subsidiary of the Company enters into a definitive agreement providing for a Competing Transaction or the Company provides notice to any Purchaser of the Company’s or any of its Subsidiaries’ decision to enter into a definitive agreement providing for a Competing Transaction pursuant to Section 5.7 ; or
(c) by the Company upon the occurrence of any of the following events:
(i) if the Effective Date and the purchase and sale contemplated by Article I have not occurred by the Termination Date; provided , however , that the right to terminate this Agreement under this Section 11.1(c)(i) shall not be available to the Company to the extent that it has breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused the Closing Date not to occur on or before the Termination Date (it being agreed that this proviso shall not limit the Company’s ability to terminate this Agreement pursuant to Section 11.1(c)(ii) or any other clause of this Section 11.1(c) );
(ii) prior to the entry of the Confirmation Order, upon notice to each Purchaser, for any reason or no reason, effective as of such time as shall be specified in such notice; provided , however , that prior to the entry of the Approval Order, the Company shall not have the right to terminate this
Agreement under this Section 11.1(c)(ii) during the 48 hour notice period contemplated by Section 5.7 ;
(iii) if all conditions to the obligations of each Purchaser to consummate the transactions contemplated by this Agreement set forth in Article VII shall have been satisfied (other than those conditions that are to be satisfied (and capable of being satisfied) by action taken at the Closing if such Purchaser had complied with its obligations under this Agreement) and the transactions contemplated by this Agreement fail to be consummated as a result of the breach by any Purchaser of its obligation to pay to the Company and GGO, as applicable, all amounts payable by such Purchaser under Article I and Article II of this Agreement, by wire transfer of immediately available funds in accordance with the terms of this Agreement; or
(iv) if a Closing Restraint is in effect.
SECTION 11.2 Effects of Termination .
(a) In the event of the termination of this Agreement pursuant to Article XI , this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any party hereto except the covenants and agreements made by the parties herein under Article XIII shall survive indefinitely in accordance with their terms. Except as otherwise expressly provided in the Warrants or paragraph (b) below, the Warrants when issued in accordance with Section 5.2 hereof and all of the obligations of the Company under the Warrant Agreement shall survive any termination of this Agreement.
(b) In the event of a termination of this Agreement by the Company pursuant to Section 11.1(c)(iii) , the parties agree that the Warrants held by any member of the Purchaser Group at the time of such termination (but no Warrants held by any other Person if transferred as permitted hereunder) shall be deemed cancelled, null and void and of no further effect. The foregoing shall be a term of the Warrants.
ARTICLE XII
DEFINITIONS
SECTION 12.1 Defined Terms . For purposes of this Agreement, the following terms, when used in this Agreement with initial capital letters, shall have the respective meanings set forth in this Agreement:
(a) “ 2006 Bank Loan ” means that certain Second Amended and Restated Credit Agreement, dated as of February 24, 2006, by and among the Company, the Operating Partnership and GGPLP L.L.C., as borrowers, the lenders named therein, Banc of America Securities LLC, Eurohypo AG, New York Branch and Wachovia Capital Markets, LLC, as joint arrangers and joint bookrunners, Eurohypo AG, New York Branch, as administrative agent, Bank of America, N.A. and Wachovia Bank, National Association, as syndication agents, and Commerzbank AG and Lehman Commercial Paper, Inc., as co-documentation agents.
(b) “ Additional Sales Period ” means in the case of Section 5.9(a)(iv)(A) , the 120 day period following the date of the Company’s notice to Purchaser pursuant to Section 5.9(a)(ii) , and in the case of Section 5.9(a)(iv)(B) , the 120 day period following (x) the expiration of the 180 day period specified in Section 5.9(a)(iii) or (y) if earlier, the date on which it is finally determined that Purchaser is unable to consummate such purchase contemplated by Section5.9(a)(iii) within such 180 day period specified in Section 5.9(a)(iii) .
(c) “ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “ control ” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
(d) “ Brazilian Entities ” means those certain Persons in which the Company indirectly owns an interest which own real property assets or have operations located in Brazil.
(e) “ Brookfield Consortium Member ” means Brookfield Asset Management Inc. or any controlled Affiliate of Brookfield Asset Management Inc. or any Person of which Brookfield Asset Management Inc. or any Subsidiary or controlled Affiliate of Brookfield Asset Management Inc. is a general partner, managing member or equivalent thereof or a wholly owned subsidiary of the foregoing.
(f) “ Business Day ” means any day other than (a) a Saturday, (b) a Sunday, (c) any day on which commercial banks in New York, New York are required or authorized to close by Law or executive order.
(g) “ Capital Raising Activities ” means the Company’s efforts to consummate equity and debt financings for the Company, and sales of properties and other assets of the Company and its Subsidiaries for cash.
(h) “ Cash Equivalents ” means as to any Person, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof ( provided , that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than 90 days from the date of acquisition by such Person, (b) time deposits and certificates of deposit of any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the Laws of the United States, any State thereof or the District of Columbia having capital, surplus and undivided profits aggregating in excess of $500,000,000, having maturities of not more than 90 days from the date of acquisition by such Person, (c) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in subsection (a) above entered into with any bank meeting the qualifications specified in subsection (b) above, (d) commercial paper issued by any issuer rated at least A-1 by S&P or at least P-1 by Moody’s or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and in each case maturing not more than one year after the date of acquisition by such Person or (e) investments in money market funds substantially all of whose assets are comprised of securities of the types described in subsections (a) through (d) above.
(i) “ Change of Control ” means any transaction or series of related transactions, in which, after giving effect to such transaction or transactions, (i) any Person other than a member of a Purchaser Group of the Pershing Purchasers or Fairholme Purchasers acquires beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 promulgated under the Exchange Act), directly or indirectly, of more than fifty percent (50%) of either (A) the then-outstanding shares of capital stock of the Company or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors of the Company or (ii) there occurs a direct or indirect sale, lease, exchange or transfer or other disposition of all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis (including securities of the entity’s directly or indirectly owned Subsidiaries).
(j) “ Clawback Fee ” means the aggregate of the $0.25 per share fees paid by the Company to the Purchasers and the Pershing Purchasers on the Effective Date in accordance with Section 1.4 of this Agreement and the Pershing Agreement.
(k) “ Claims ” shall have the meaning set forth in section 101(5) of the Bankruptcy Code.
(l) “ Closing Date Net Debt ” means, as of the Effective Date but prior to giving effect to the Plan, the sum of, without duplication:
(i) the aggregate outstanding Proportionally Consolidated Debt plus any accrued and unpaid interest thereon (including the Contingent and Disputed Debt Claims) plus the amount of the New Debt,
(ii) less the Reinstatement Adjustment Amount,
(iii) plus the Permitted Claims Amount,
(iv) plus the amount of Proportionally Consolidated Debt attributable to assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement and through the Closing, but excluding any deficiency, guaranty or other similar claims associated with the Special Consideration Properties (as such term is defined in the plan of reorganization for the applicable Confirmed Debtor),
(v) less Proportionally Consolidated Unrestricted Cash; provided , however , that the net proceeds attributable to sales of assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, or otherwise transferred during the period between the date of this Agreement and through the Closing shall be deducted prior to subtracting Proportionally Consolidated Unrestricted Cash.
(m) “ Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts ” means, as of the Effective Date but prior to giving effect to the Plan, the sum of, without duplication:
(i) the aggregate outstanding Proportionally Consolidated Debt plus any accrued and unpaid interest thereon plus the amount of the New Debt,
(ii) plus the amount of Proportionally Consolidated Debt attributable to assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement and through the Closing, but excluding any deficiency, guaranty or other similar claims associated with the Special Consideration Properties (as such term is defined in the plan of reorganization for the applicable Confirmed Debtor), and
(iii) less Proportionally Consolidated Unrestricted Cash; provided , however , that the net proceeds attributable to sales of assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, or otherwise transferred during the period between the date of this Agreement and through the Closing shall be deducted prior to subtracting Proportionally Consolidated Unrestricted Cash.
(n) “ Company Benefit Plan ” means each “ employee benefit plan ” within the meaning of Section 3(3) of ERISA and each other stock purchase, stock option, restricted stock, severance, retention, employment, consulting, change-of-control, collective bargaining, bonus, incentive, deferred compensation, employee loan, fringe benefit and other benefit plan, agreement, program, policy, commitment or other arrangement, whether or not subject to ERISA (including any related funding mechanism now in effect or required in the future), whether formal or informal, oral or written, in each case sponsored or maintained by the Company or any of its Significant Subsidiaries for the benefit of any past or present director, officer, employee, consultant or independent contractor of the Company or any of its Significant Subsidiaries has any present or future right to benefits.
(o) “ Company Board ” means the board of directors of the Company.
(p) “ Competing Transaction ” means, other than the transactions contemplated by this Agreement or the Plan Summary Term Sheet, or by the other Investment Agreements, any offer or proposal relating to (i) a merger, consolidation, business combination, share exchange, tender offer, reorganization, recapitalization, liquidation, dissolution or similar transaction involving the Company or (ii) any direct or indirect purchase or other acquisition by a “person” or “group” of “beneficial ownership” (as used for purposes of Section 13(d) of the Exchange Act) of, or a series of transactions to purchase or acquire, assets representing 30% or more of the consolidated assets or revenues of the Company and its Subsidiaries taken as a whole or 30% or more of the Common Stock of the Company (or securities convertible into or exchangeable or exercisable for 30% or more of the Common Stock of the Company) or (iii) any recapitalization of the Company
or the provision of financing to the Company that shall cause any condition in Section 7.1 not to be satisfied, in each case, other than the recapitalization and financing transactions contemplated by this Agreement and the Plan Summary Term Sheet (or the financing provided by the Initial Investors) or that will be effected together with the transactions contemplated hereby.
(q) “ Conclusive Net Debt Adjustment Statement ” means a statement that: (i) sets forth each of the five components of the Closing Date Net Debt (for the avoidance of doubt, this shall include (x) the Permitted Claims Amount, which shall include the Reserve, (y) the Reinstatement Adjustment Amount, and (z) with respect to clauses (i), (iv) and (v) of the definition of Closing Date Net Debt, the Closing Date Net Debt Amount W/O Reinstatement Adjustment and Permitted Claims Amounts as determined through the process provided for in Sections 5.16(a) and 5.16(b) shall be used; provided , however , that such amounts shall be updated to reflect current information regarding cash, Claims, Debt and other similar information and any amendments to this Agreement agreed upon following completion of the process provided for in Sections 5.16(a) and 5.16(b) ), and (ii) sets forth the Net Debt Excess Amount or the Net Debt Surplus Amount, as applicable.
(r) “ Contingent and Disputed Debt Claims ” means contingent and disputed claims for default interest on (i) that certain promissory note, dated February 8, 2008, by GGP Limited Partnership in favor of The Comptroller of the State of New York, (ii) that certain promissory note, dated February 15, 2007, by GGP Limited Partnership in favor of Ivanhoe Capital LP, and (iii) the loan made to GGP, GGP Limited Partnership and GGPLP L.L.C., as borrowers, under that certain Second Amended and Restated Credit Agreement, dated as of February 24, 2006, under which Eurohypo AG, New York Branch is the Administrative Agent and any amendments, modifications or supplements thereto, in each case to the extent that any such claims have not been ruled on by the Bankruptcy Court or settled prior to the Effective Date.
(s) “ Contract ” means any agreement, lease, license, evidence of indebtedness, mortgage, indenture, security agreement or other contract.
(t) [ Intentionally Omitted .]
(u) “ Corporate Level Debt ” means the debt described in Sections II A, H through O, Q, R, S, W and X of the Plan Summary Term Sheet plus accrued and unpaid interest thereon.
(v) “ Debt ” means all obligations of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest (a) evidenced by (i) notes, bonds, debentures or other similar instruments (including, for avoidance of doubt, mezzanine debt), or (ii) trust preferred shares, trust preferred units and other preferred instruments, and/or (b) secured by a lien, mortgage or other encumbrance; provided , however , that Debt shall exclude (x) any form of municipal financing including, but not limited to, special improvement district bonds or tax increment financing, (y) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment), and (z) intercompany notes or preferred interests between and among the Company and its wholly owned Subsidiaries.
(w) “ DIP Loan ” means that certain Senior Secured Debtor in Possession Credit, Security and Guaranty Agreement, dated as of May 15, 2009, by and among the lenders named therein, UBS AG, Stamford Branch, as administrative agent for the lenders, the Company and the Operating Partnership, as borrowers, and the certain subsidiaries of the Company named therein, as guarantors.
(x) “ Disclosure Statement ” means the disclosure statement to accompany the Plan as amended, modified or supplemented.
(y) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
(z) [ Intentionally Omitted .]
(aa) “ Excess Surplus Amount ” means the sum of: (i) if, after giving effect to the application of the Reserve Surplus Amount to reduce the principal amount of the GGO Promissory Note pursuant to Section 5.16(d) , any Reserve Surplus Amount remains, (A) if and to the extent that such Reserve Surplus Amount is less than or equal to the Net Debt Surplus Amount, 80% of such remaining Reserve Surplus Amount, and otherwise (B) 100% of the remaining Reserve Surplus Amount; and (ii) (A) if a GGO Promissory Note is required to be issued at Closing, 80% of the aggregate Offering Premium, if any, less the amount of any reduction in the principal amount of the GGO Promissory Note pursuant to Section 5.16(e) hereof, or (B) if the GGO Promissory Note is not required to be issued at Closing, the sum of (x) 80% of the aggregate Offering Premium and (y) the excess, if any, of 80% of the Net Debt Surplus Amount over the Hughes Amount.
(bb) “ Exchangeable Notes ” means the 3.98% Exchangeable Senior Notes Due 2027 issued pursuant to that certain Indenture, dated as of April 16, 2007, by and between the Operating Partnership, as issuer, and The Bank of New York Mellon Corporation, as trustee.
(cc) “ Excluded Claims ” means:
(i) prepetition and postpetition Claims secured by cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar liens,
(ii) except with respect to Claims related to GGO or the assets or businesses contributed thereto, prepetition and postpetition Claims for all ordinary course trade payables for goods and services related to the operations of the Company and its Subsidiaries (including, without limitation, ordinary course obligations to tenants, anchors, vendors, customers, utility providers or forward contract counterparties related to utility services, employee payroll, commissions, bonuses and benefits (but excluding the Key Employee Incentive Plan approved by the Bankruptcy Court pursuant to an order entered on October 15, 2009 at docket no. 3126), insurance premiums, insurance deductibles, self insured amounts and other obligations that are accounted for, consistent with past practice prior to the Petition Date, as trade payables); provided , however , that Claims or
expenses related to the administration and conduct of the Bankruptcy Cases (such as professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases and other expenses, fees and commissions related to the reorganization and recapitalization of the Company pursuant to the Plan, including related to the Investment Agreements, the issuance of the New Debt, Liquidity Equity Issuances and any other equity issuances contemplated by this Agreement and the Plan) shall not be Excluded Claims,
(iii) except with respect to Claims related to GGO or the assets or businesses contributed thereto, Claims and liabilities arising from the litigation or potential litigation matters set forth in that certain Interim Litigation Report of the Company dated March 29, 2010 and the Company’s litigation audit response to Deloitte & Touche dated February 25, 2010, both have been made available to each Purchaser prior to close of business on March 29, 2010 and other Claims and liabilities arising from ordinary course litigation or potential litigation that was not included in such schedule solely because the amount of estimated or asserted liabilities or Claims did not meet the threshold amount used for the preparation of such schedule, in each case, to the extent that such Claims and liabilities have not been paid and satisfied as of the Effective Date, are continuing following the Effective Date, excluding Claims against or interests in the Debtors arising under or related to the Hughes Agreement (for the avoidance of doubt, Permitted Claims shall include $10 million to be paid in cash with respect to attorneys fees and expenses in connection with the settlement related to the Hughes Heirs Obligations),
(iv) except with respect to Claims related to GGO or the assets or businesses contributed thereto, all tenant, anchor and vendor Claims required to be cured pursuant to section 365 of the Bankruptcy Code, in connection with the assumption of an executory contract or unexpired lease under the Plan,
(v) any deficiency, guaranty or other similar Claims associated with the Special Consideration Properties (as such term is defined in the plans of reorganization for the applicable Confirmed Debtors),
(vi) MPC Taxes,
(vii) surety bond Claims relating to Claims of the type identified in clauses (i) through (vi) of this definition,
(viii) GGO Setup Costs (other than professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases), and
(ix) any liabilities assumed by GGO and paid on the Effective Date by GGO or to be paid after the Effective Date by GGO (for avoidance of doubt, this includes any Claims that, absent assumption of the liability by GGO, would be a Permitted Claim).
(dd) “ Fairholme ” means Fairholme Capital Management, LLC.
(ee) “ Fully Diluted Basis ” means all outstanding shares of the Common Stock, New Common Stock or GGO Common Stock, as applicable, assuming the exercise of all outstanding Share Equivalents (other than (x) any options issued to an employee of the Company or its Subsidiaries pursuant to the terms of a Company Benefit Plan or to an employee of GGO or its Subsidiaries pursuant to the terms of an employee equity plan of GGO or (y) preferred UPREIT Units) without regard to any restrictions or conditions with respect to the exercisability of such Share Equivalents.
(ff) “ GAAP ” means generally accepted accounting principles in the United States.
(gg) “ GGO Common Share Amount ” means 32,468,326 plus a number (rounded up to the nearest whole number) equal to 0.1 multiplied by the number of shares of Common Stock issued on or after the Measurement Date and prior to the record date of the GGO Share Distribution as a result of the exercise, conversion or exchange of any Share Equivalents of the Company outstanding on the Measurement Date into Common Stock and employee stock options issued pursuant to the Company Option Plans.
(hh) [ Intentionally Omitted .]
(ii) “ GGO Note Amount ” means: (i) in the event there is a Net Debt Excess Amount, the sum of the Net Debt Excess Amount set forth on the Conclusive Net Debt Adjustment Statement and the Hughes Heirs Obligations to the extent satisfied with assets of the Company (including cash (but excluding any cash paid prior to the Effective Date in settlement or satisfaction of Hughes Heirs Obligations which had the effect of reducing Proportionally Consolidated Unrestricted Cash for purposes of calculating Closing Date Net Debt, Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts, and Net Debt Excess Amount/Net Debt Surplus Amount, as applicable) or shares of New Common Stock, but excluding Identified Assets) (such amount so satisfied, but excluding $10 million to be paid in cash with respect to attorneys fees and expenses, the “ Hughes Amount ”); and (ii) in the event there is a Net Debt Surplus Amount, the Hughes Amount less 80% of the Net Debt Surplus Amount, provided, that in no event shall the GGO Note Amount be less than zero.
(jj) “ GGO Promissory Note ” means an unsecured promissory note payable by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership in the aggregate principal amount of the GGO Note Amount, as adjusted pursuant to Section 5.16(d) , Section 5.16(e) and Section 5.16(g) , (i) bearing interest at a rate equal to the lower of (x) 7.5% per annum and (y) the weighted average effective rate of interest payable (after giving effect to the payment of any underwriting and all other discounts, fees and any other compensation) on each series of New Debt issued in connection with the Plan and (ii) maturing on the fifth anniversary of the Closing Date (or if such date is not a Business
Day, the next immediately following Business Day), and (iii) including prohibitions on dividends and distributions, no financial covenants and such other customary terms and conditions as reasonably agreed to by each Purchaser and the Company.
(kk) “ GGO Pro Rata Share ” means, with respect to each Purchaser, the percentage set forth on Schedule I for such Purchaser.
(ll) [Intentionally Omitted.]
(mm) “ GGO Setup Costs ” means such cash liabilities, costs and expenses as may be incurred by the Company or its Subsidiaries in connection with the formation and organization of GGO and the implementation of the GGO Share Distribution, including any and all liabilities for any sales, use, stamp, documentary, filing, recording, transfer, gross receipts, registration, duty, securities transactions or similar fees or Taxes or governmental charges (together with any interest or penalty, addition to Tax or additional amount imposed) as levied by any taxing authority, in each case, determined as of the Effective Date and further including, to the extent the Company or any Subsidiary of the Company has made or will make a payment to reduce the principal amount of the mortgage related to 110 N. Wacker Drive, Chicago, Illinois, then 50% of any such payment or a contractual obligation to make a payment.
(nn) [Intentionally Omitted.]
(oo) “ GGP Pro Rata Share ” means, with respect to each Purchaser, the percentage set forth on Schedule I for such Purchaser.
(pp) “ Governmental Entity ” means any (a) nation, region, state, province, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, court or tribunal, or other entity), (d) multinational organization or body or (e) body entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature or any other self-regulatory organizations.
(qq) “ Hughes Agreement ” means that certain Contingent Stock Agreement, effective as of January 1, 1996, by The Rouse Company in favor of and for the benefit of the Holders (named in Schedule I thereto) and the Representatives (therein defined), as amended.
(rr) “ Hughes Heirs Obligations ” means claims or interests against the Debtors arising under or relating to sections 2.07 and 2.08 of the Hughes Agreement and pertaining to the delivery of contingent shares for business units to be valued as of December 31, 2009 and claims arising out of or related to the foregoing.
(ss) “ Indebtedness ” means, with respect to a Person without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property (other than trade payables and accrued expenses incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, trust preferred shares, trust preferred units and other preference instruments, (d) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations in respect of capital leases under GAAP of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities, (g) the monetary obligations of a Person under (x) a so-called synthetic, off-balance sheet or tax retention lease, or (y) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment) (each, a “ Synthetic Lease Obligation ”), (h) guaranties of such Person with respect to obligations of the type described in clauses (a) through (g) above, (i) all obligations of other Persons of the kind referred to in clauses (a) through (h) above secured by any lien on property owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, (j) the net obligations of such Person in respect of hedge agreements and swaps and (k) any obligation that, in accordance with GAAP, would be required to be reflected as debt on the consolidated balance sheet of such Person .
(tt) “ Joint Venture ” means a Subsidiary of the Company which is owned partly by another Subsidiary of the Company and partly by a third party.
(uu) “ Knowledge ” of the Company means the actual knowledge, as of the date of this Agreement, of the individuals listed on Section 12.1(ss) of the Company Disclosure Letter.
(vv) “ Law ” means any statutes, laws (including common law), rules, ordinances, regulations, codes, orders, judgments, decisions, injunctions, writs, decrees, applicable to the Company or any of its Subsidiaries or any Purchaser, as applicable, or their respective properties or assets.
(ww) “ Liquidity Equity Issuances ” means issuances of shares of New Common Stock in the Plan for cash in an aggregate amount of up to 65,000,000 shares of New Common Stock.
(xx) “ Material Adverse Effect ” means any change, event or occurrence which (x) has a material adverse effect on the results of operations or financial condition of the Company and its direct and indirect Subsidiaries taken as a whole, other than changes, events or occurrences (i) generally affecting (A) the retail mall industry in the United States or in a specific geographic area in which the Company operates, or (B) the economy, or financial or capital markets, in the United States or elsewhere in the world, including changes in interest or exchange rates or the availability of capital, or (ii) arising out of, resulting from or attributable to (A) changes in Law or regulation or in generally accepted accounting principles or in accounting standards, or changes in general legal, regulatory or political conditions, (B) the negotiation, execution, announcement or performance of any agreement between the Company and/or its Affiliates, on the one hand, and any Purchaser and/or its Purchaser Group (or members thereof), on the other hand, or the consummation of the transactions contemplated hereby or operating performance or reputational issues arising out of or associated with the Bankruptcy Cases, including the impact thereof on relationships, contractual or otherwise, with tenants, customers, suppliers, distributors, partners or employees, or any litigation or claims arising from allegations of breach of fiduciary
duty or violation of Law or otherwise, related to the execution or performance of this Agreement or the transactions contemplated hereby, including, without limitation, any developments in the Bankruptcy Cases, (C) acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of the this Agreement, (D) earthquakes, hurricanes, tornadoes or other natural disasters, (E) any action taken by the Company or its Subsidiaries as contemplated or permitted by any agreement between the Company and/or its Affiliates, on the one hand, and any Purchaser and/or Purchaser Group (or members thereof), on the other hand, or with each Purchaser’s consent, or any failure by the Company to take any action as a result of any restriction contained in any agreement between the Company and/or its Affiliates, on the one hand, and any Purchaser and/or its Purchaser Group (or any member thereof), on the other hand, or (F) in each case in and of itself, any decline in the market price, or change in trading volume, of the capital stock or debt securities of the Company or any direct or indirect subsidiary thereof, or any failure to meet publicly announced or internal revenue or earnings projections, forecasts, estimates or guidance for any period, whether relating to financial performance or business metrics, including, without limitation, revenues, net operating incomes, cash flows or cash positions, it being further understood that any event, change, development, effect or occurrence giving rise to such decline in the trading price or trading volume of the capital stock or debt securities of the Company or such failure to meet internal projections or forecasts as described in the preceding clause (F), as the case may be, may be the cause of a Material Adverse Effect; so long as, in the case of clauses (i)(A) and (i)(B), such changes or events do not have a materially disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, as compared to other entities that own and manage retail malls throughout the United States, or (y) materially impairs the ability of the Company to consummate the transactions contemplated by this Agreement or perform its obligations hereunder or under the other agreements executed in connection with the transactions contemplated hereby.
(yy) “ Material Contract ” means, with respect to the Company and its Subsidiaries, any:
(i) Contract that would be considered a material contract pursuant to Item 601(b)(10) of Regulation S-K promulgated by the SEC, had the Company been the registrant referred to in such regulation; or
(ii) Contract for capital expenditures, the future acquisition or construction of fixed assets or the future purchase of materials, supplies or equipment that provides for the payment by the Company or its Subsidiaries of more than $5,000,000 and is not terminable by the Company or any of its Subsidiaries by notice of not more than sixty (60) days for a cost of less than $1,000,000.
(zz) “ MPC Assets ” means residential and commercial lots in the “master planned communities” owned, for federal income tax purposes, by Howard Hughes Properties, Inc. or The Hughes Corporation or related to the Emerson Master Planned Community.
(aaa) “ MPC Taxes ” means all liability for income Taxes in respect of sales of MPC Assets sold prior to the date of this Agreement.
(bbb) [ Intentionally Omitted .]
(ccc) “ Net Debt Excess Amount ” means, the amount, which shall in no event be less than $0, that is calculated by subtracting the Target Net Debt from the Closing Date Net Debt (as reflected on the Conclusive Net Debt Adjustment Statement).
(ddd) “ Net Debt Surplus Amount ” means, the amount, which shall in no event be less than $0, that is calculated by subtracting Closing Date Net Debt (as reflected on the Conclusive Net Debt Adjustment Statement) from the Target Net Debt.
(eee) “ Non-Control Agreement ” means the Non-Control Agreement the form of which is attached hereto as Exhibit M .
(fff) “ Non-Controlling Properties ” means the Company Properties listed on Section 12.1(ddd) of the Company Disclosure Letter. Each of the Non-Controlling Properties is owned by a Joint Venture in which neither the Company nor any of its Subsidiaries is a controlling entity. For purposes of this Section 12.1(fff) , the term “ control ” shall mean, possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise; provided , however , that the rights of any Person to exercise Major Decision Rights under a Joint Venture shall not constitute or be deemed to constitute “ control ” for the purposes hereof. “ Controlling ” and “ controlled ” shall have meanings correlative thereto. For purposes of this Section 12.1(fff) , the term “ Major Decision Rights ” shall mean, the right to, directly or indirectly, approve, consent to, veto or exercise a vote in connection with a Person’s voting or other decision-making authority in respect of the collective rights, options, elections or obligations of such Person under a Joint Venture.
(ggg) “ Offering Premium ” means, with respect to any shares of New Common Stock issued for cash in conjunction with issuances of New Common Stock or Share Equivalents permitted by this Agreement (including any Liquidity Equity Issuance) and completed prior to the date that is the last to occur of (x) 45 days after the Effective Date, (y) the Settlement Date (as defined in the Pershing Agreement), if applicable, and (z) the Bridge Note Maturity Date (as defined in the Pershing Agreement), if applicable , the product of (i) (A) the per share offering price of the shares of New Common Stock (or offering price of Share Equivalents corresponding to one underlying share of New Common Stock) issued (net of all underwriting and other discounts, fees or other compensation, and related expenses; provided , that for purposes hereof, payments to the Purchasers or the Pershing Purchasers in accordance with Section 1.4 of this Agreement or the Pershing Agreement, respectively, shall not be considered a discount, fee or other compensation or related expense) less (B) the Per Share Purchase Price and (ii) the number of shares of New Common Stock sold pursuant thereto. For the purposes hereof, the issuance for cash of notes mandatorily convertible into New Common Stock on the Effective Date shall constitute an issuance of the underlying number of shares of New Common Stock for cash at a price per share offering equal to the offering price for the corresponding amount of notes. For the avoidance of doubt, the Clawback Fee will not be taken into account when calculating Offering Premium.
(hhh) “ Operating Partnership ” means GGP Limited Partnership, a Delaware limited partnership and a Subsidiary of the Company.
(iii) “ Permitted Claims ” means, as of the Effective Date, other than Excluded Claims, (a) all Claims against the Debtors covered by the Plan (the “ Plan Debtors ”) that are classified in those certain classes of Claims described in Sections II B through E, G and P in the Plan Summary Term Sheet (the “ PMA Claims ”), (b) all Claims or other amounts required to be paid pursuant to the Plan to indenture trustees or similar servicing or administrative agents, with respect to administrative fees incurred by or reimbursement obligations owed to such indenture trustees or similar servicing or administrative agents in their capacity as such under the Corporate Level Debt documents, (c) any claims of a similar type as the PMA Claims that are or have been asserted against affiliates of the Plan Debtors that are or were debtors in the Bankruptcy Cases and for which a plan of reorganization has already been confirmed (the “ Confirmed Debtors ”), (d) Claims or interests against the Debtors arising under or related to the Hughes Agreement (other than Hughes Heirs Obligations) plus $10 million to be paid in cash with respect to attorneys fees and expenses in connection with the settlement related to the Hughes Heirs Obligations, (e) surety bond Claims relating to the types of Claims identified in clauses (a) through (d) of this definition, and (f) the Clawback Fee.
(jjj) “ Permitted Claims Amount ” means, as of the Effective Date, an amount equal to the sum of, without duplication, (a) the aggregate amount of accrued and unpaid Permitted Claims that have been allowed (by order of the Bankruptcy Court or pursuant to the terms of the Plan) as of the Effective Date, plus (b) the aggregate amount of the reserve to be estimated pursuant to the Plan with respect to accrued and unpaid Permitted Claims that have not been allowed or disallowed (in each case by order of the Bankruptcy Court or pursuant to the terms of the Plan) as of the Effective Date (the “ Reserve ”), plus (c) the aggregate amount of the GGO Setup Costs (other than professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases) as of the Effective Date; provided , however , that there shall be no duplication with any amounts otherwise included in Closing Date Net Debt.
(kkk) “ Permitted Replacement Shares ” means shares of New Common Stock, or notes mandatorily convertible into or exchangeable for shares of New Common Stock, that are sold for cash proceeds immediately payable to the Company (net of all underwriting and other discounts, fees, and related consideration; provided , that for purposes hereof, payments to the Purchasers or the Pershing Purchasers in accordance with Section 1.4 of this Agreement or the Pershing Agreement, respectively, shall not be considered a discount, fee, related consideration or other compensation) of not less than $10.50 per share of New Common Stock (or in the case of notes, convertible or exchangeable at not less than $10.50 per share of New Common Stock); provided , that Permitted Replacement Shares shall not include any New Common Stock sold to any of the Initial Investors or their Affiliates, except pursuant to the exercise of Subscription Rights pursuant to this Agreement, the Brookfield Agreement or the Pershing Agreement (in each case, as defined herein or therein as applicable).
(lll) “ Person ” means an individual, a group (including a “ group ” under Section 13(d) of the Exchange Act), a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
(mmm) “ Preliminary Closing Date Net Debt Review Deadline ” means the end of the Preliminary Closing Date Net Debt Review Period, which date shall be the first business day that is at least twenty (20) calendar days after delivery of the Preliminary Closing Date Net Debt Schedule, and which shall be the deadline by which a Purchaser shall deliver to the Company a Dispute Notice.
(nnn) “ Preliminary Closing Date Net Debt Review Period ” means the period between the Company’s delivery of the Preliminary Closing Date Net Debt Schedule and the Preliminary Closing Date Net Debt Review Deadline.
(ooo) “ Proportionally Consolidated Debt ” means consolidated Debt of the Company less (1) all Debt of Subsidiaries of the Company that are not wholly-owned and other Persons in which the Company, directly or indirectly, holds a minority interest, to the extent such Debt is included in consolidated Debt, plus (2) the Company’s share of Debt for each non-wholly owned Subsidiary of the Company and each other Persons in which the Company, directly or indirectly, holds a minority interest based on the company’s pro-rata economic interest in each such Subsidiary or Person or, to the extent to which the Company is directly or indirectly (through one or more Subsidiaries or Persons) liable for a percent of such Debt that is greater than such pro-rata economic interest in such Subsidiary or Person, such larger amount; provided, however, for purposes of calculating Proportionally Consolidated Debt, the Debt of the Brazilian Entities shall be deemed to be $110,437,781.
(ppp) “ Proportionally Consolidated Unrestricted Cash ” means the consolidated Unrestricted Cash of the Company less (1) all Unrestricted Cash of Subsidiaries of the Company that are not wholly-owned and Persons in which the Company, directly or indirectly, owns a minority interest, to the extent such Unrestricted Cash is included in consolidated Unrestricted Cash of the Company, plus (2) the Company’s share of Unrestricted Cash for each non-wholly owned Subsidiary of the Company and Persons in which the Company, directly or indirectly, owns a minority interest based on the Company’s pro rata economic interest in each such Subsidiary or Person; provided , however , for purposes of calculating Proportionally Consolidated Unrestricted Cash, the Unrestricted Cash of the Brazilian Entities shall be deemed to be $82,000,000, provided , further , that any distributions of Unrestricted Cash made from the date of this Agreement to the Closing by Brazilian Entities to the Company or any of its Subsidiaries shall be disregarded for purposes of calculating Proportionally Consolidated Unrestricted Cash.
(qqq) “ Purchaser Group ” means, with respect to each Purchaser, such Purchaser, its investment manager and their respective “ controlled Affiliates ”. For such purpose, one or more investment funds under common investment management shall constitute “ controlled Affiliates ” of their investment manager.
(rrr) “ Reinstatement Adjustment Amount ” means $5,426,250,000.
(sss) [ Intentionally Omitted .]
(ttt) “ Reserve Surplus Amount ” means, as of any date of determination, (x) the Reserve minus (y) the aggregate amount paid with respect to Permitted Claims through such date
of determination to the extent such Permitted Claims were included in the calculation of the Reserve minus (z) any amount included in the Reserve with respect to Permitted Claims that the Company Board, based on the exercise of its business judgment and information available to the Company Board as of the date of determination, considers necessary to maintain as a reserve against Permitted Claims yet to be paid.
(uuu) “ Rights Agreement ” means that certain Rights Agreement, dated as of November 18, 1998, by and between the Company and BNY Mellon Shareowner Services, as successor to Norwest Bank Minnesota, N.A., as amended on November 10, 1999, December 31, 2001 and November 18, 2008, and from time to time.
(vvv) “ Rouse Bonds ” means (i) the 6-3/4% Senior Notes Due 2013 issued pursuant to the Indenture, dated as of May 5, 2006, by and among The Rouse Company LP and TRC Co-Issuer, Inc., as co-issuers and The Bank of New York Mellon Corporation, as trustee, (ii) unsecured debentures issued pursuant to the Indenture, dated as of February 24, 1995, by and between The Rouse Company, as issuer, and The Bank of New York Mellon Corporation, as trustee, and (iii) any notes to be issued pursuant to the Plan on the Effective Date by The Rouse Company LP to the holders of the Rouse Bonds specified in (i) and (ii) above who elect to receive such notes.
(www) “ Share Equivalent ” means any stock, warrants, rights, calls, options or other securities exchangeable or exercisable for, or convertible into, shares of Common Stock, New Common Stock or GGO Common Stock, as applicable.
(xxx) “ Significant Subsidiaries ” means the operating Subsidiaries of the Company that generated revenues in excess of $30,000,000 for the year ended December 31, 2009.
(yyy) “ Specified Debt ” means Claims in Classes H through N inclusive, in each case as provided on the Plan Summary Term Sheet.
(zzz) “ Subsidiary ” means, with respect to a Person (including the Company), (a) a company a majority of whose capital stock with voting power, under ordinary circumstances, to elect a majority of the directors is at the time, directly or indirectly, owned by such Person, by a subsidiary of such Person, or by such Person and one or more subsidiaries of such Person, (b) a partnership in which such Person or a subsidiary of such Person is, at the date of determination, a general partner of such partnership, (c) a limited liability company of which such Person, or a Subsidiary of such Person, is a managing member or (d) any other Person (other than a company) in which such Person, a subsidiary of such Person or such Person and one or more subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
(aaaa) “ Target Net Debt ” means $22,970,800,000.
(bbbb) “ Tax Matters Agreement ” means that certain Tax Matters Agreement to be entered into by the Company and GGO in connection with the GGO Share Distribution, substantially in the form attached hereto as Exhibit O .
(cccc) “ Tax Protection Agreements ” means any written agreement to which the Company, its Operating Partnership or any other Subsidiary is a party pursuant to which: (i) in connection with the deferral of income Taxes of a holder of interests in the Operating Partnership, the Company, the Operating Partnership or the other Subsidiaries have agreed to (A) maintain a minimum level of Indebtedness or continue any particular Indebtedness, (B) retain or not dispose of assets for a period of time that has not since expired, (C) make or refrain from making Tax elections, and/or (D) only dispose of assets in a particular manner; and/or (ii) limited partners of the Operating Partnership have guaranteed Indebtedness of the Operating Partnership.
(dddd) “ Termination Date ” means December 31, 2010; provided , that if the Confirmation Order shall have been entered on or prior to December 15, 2010 but the Company, despite its commercially reasonable efforts, is unable to consummate the Closing on or prior to December 31, 2010, the Company may extend the Termination Date for so long as Closing by January 31, 2011 is feasible and the Company continues to diligently pursue Closing; provided , further , that the Termination Date shall not be extended beyond January 31, 2011.
(eeee) “ Transactions ” means the purchase of the Shares and the GGO Shares and the other transactions contemplated by this Agreement.
(ffff) “ TRUPS ” means certain preferred securities issued by GGP Capital Trust I.
(gggg) “ Unrestricted Cash ” means all cash and Cash Equivalents of the Company and of the Subsidiaries of the Company, but excluding any cash or Cash Equivalents that are controlled by or subject to any lien, security interest or control agreement, other preferential arrangement in favor of any creditor or otherwise encumbered or restricted in any way; provided that cash and Cash Equivalents of the Company and of the Subsidiaries of the Company that are controlled by or subject to any lien, security interest, control agreement, preferential arrangement or other encumbrance or restriction pursuant to the New DIP Agreement shall not be excluded from “Unrestricted Cash.”.
(hhhh) “ Unsecured Indebtedness ” means all indebtedness of the Company for borrowed money or obligations of the Company evidenced by notes, bonds, debentures or other similar instruments that are not secured by a lien on any Company Property or other assets of the Company or any Subsidiary.
(iiii) “ UPREIT Units ” means preferred or common units of limited partnership interests of the Operating Partnership.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices . All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows: (x) on the date delivered, if personally delivered; (y) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; or (z) on the next Business Day after being sent by recognized overnight mail service specifying next
business day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:
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Frederick S. Green, Esq. |
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Gary T. Holtzer, Esq. |
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Malcolm E. Landau, Esq. |
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Facsimile : |
(212) 310-8007 |
SECTION 13.2 Assignment; Third Party Beneficiaries . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party without the prior written consent of the other party. Notwithstanding the previous sentence, this Agreement, or a Purchaser’s rights, interests or obligations hereunder (including, without limitation, the right to receive any securities pursuant to the Transactions), may be assigned or transferred, in whole or in part, by such Purchaser (a) to one or more members of its Purchaser Group; provided , that no such assignment shall release such Purchaser from its obligations hereunder to be performed by such Purchaser on or prior to the Closing Date or (b) with the prior written consent of the Company, not to be unreasonably withheld, conditioned or delayed, to one or more credit-worthy financial institutions who agree in writing to perform the applicable obligations of such Purchaser hereunder (any assignment under clause (b) to which the Company has so consented shall release such Purchaser from its obligations hereunder to the extent of the obligations assigned). Without prejudice to the foregoing, the Company agrees that Purchasers may designate to Blackstone Real Estate Partners VI L.P., a Delaware limited partnership (together with its permitted assigns, “ Blackstone ”), (i) the Purchasers’ right to purchase 20,719,738 of the Shares (the “ Blackstone Assigned Shares ”) and 100,191 of the GGO Shares (together with the Blackstone Assigned Shares, the “ Blackstone Assigned Securities ”), in each case, that the Purchasers are entitled to purchase at Closing pursuant to this Agreement, (ii) the Purchasers’ right to receive 1,785,714 of the New Warrants (the “ Blackstone Assigned Warrants ”) and 83,333 of the GGO Warrants, in each case, issuable to the Purchasers pursuant to this Agreement, and (iii) the Purchasers’ right to receive 7.634% of the shares of Common Stock (and other Share Equivalents) which are offered to the Purchasers pursuant to the Purchasers’ pre-Closing subscription rights set forth in Section 7.1(u) in the event the Purchasers elect to purchase the shares offered to them in such offering, provided that (1) the Company’s agreement as aforesaid is subject to Blackstone (A) paying to the Company and GGO, as applicable, by wire transfer of immediately available funds at the Closing the aggregate purchase price payable pursuant to this Agreement for the Blackstone Assigned Securities (the “ Blackstone Purchase Price ”) and the purchase price for shares received by Blackstone pursuant to clause (iii) above, (B) agreeing in a writing reasonably satisfactory to, and for the benefit of, the Company that the Blackstone Assigned Securities shall be subject to such transfer restrictions/lock-ups as contemplated by Section 6.4 of the Pershing Agreement (and not the longer lock-ups applicable to shares sold to the Brookfield Investor), including being subject to a limited 120-day lock-up in connection with certain equity sales within 30 days of the Effective Date but excluding any restrictions imposed by the Non-Control Agreement, and (C) entering into joinder agreements reasonably acceptable to, and for the benefit of, the Company with respect to the provisions of clause (B) and the registration rights agreement referred to in the following sentence, and (2) in no event shall any Purchaser be released from any of its obligations hereunder (including in respect of the Blackstone Assigned Securities) unless and until Blackstone shall have complied with clauses (A), (B) and (C) above. In the event of the closing of the purchase by Blackstone from the Company and GGO, as applicable, of the Blackstone Assigned Securities and the payment by Blackstone to the Company and GGO, as applicable, of the Blackstone Purchase
Price at Closing as aforesaid, (x) the Purchasers shall be released from the obligation to pay the Company the purchase price for the Blackstone Assigned Securities (but not from the obligation to pay the purchase price pursuant to this Agreement for any other Shares or GGO Shares or other obligations hereunder) and (y) the shelf registration statement contemplated by Section 7.1(l) of the Pershing Agreement shall cover the resale by Blackstone of the Blackstone Assigned Shares and the New Common Stock issuable upon exercise of the Blackstone Assigned Warrants and the registration rights agreement of the Company referenced in Section 7.1(l) of the Pershing Agreement shall include Blackstone and its securities to the same extent as it applies to the Pershing Purchasers and their securities (except that demand registration rights shall not be available to Blackstone). Blackstone may assign the foregoing rights, in whole or in part, to one or more Affiliates, provided that no such assignment shall release Blackstone Real Estate Partners VI L.P. from any obligations assigned by a Purchaser to it. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement. Notwithstanding the foregoing, or any other provisions herein to the contrary, no Purchaser may assign any of its rights, interests or obligations under this Agreement to the extent such assignment would preclude the applicable securities Laws exemptions from being available or such assignment would cause a failure of the closing condition in Section 7.1(u) of the Brookfield Agreement.
SECTION 13.3 Prior Negotiations; Entire Agreement . This Agreement (including the exhibits hereto and the documents and instruments referred to in this Agreement) constitutes the entire agreement of the parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, between the parties with respect to the subject matter of this Agreement.
SECTION 13.4 Governing Law; Venue . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF, AND VENUE IN, THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND EACH PARTY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
SECTION 13.5 Company Disclosure Letter . The Company Disclosure Letter shall be arranged to correspond to the Articles and Sections of this Agreement, and the disclosure in any portion of the Company Disclosure Letter shall qualify the corresponding provision in Article III and any other provision of Article III to which it is reasonably apparent on the face of the disclosure that such disclosure relates. No disclosure in the Company Disclosure Letter relating to any possible non-compliance, breach or violation of any Contract or Law shall be construed as an admission that any such non-compliance, breach or violation exists or has actually occurred. In the Company Disclosure Letter, (a) all capitalized terms used but not defined therein shall have the meanings assigned to them in this Agreement and (b) the Section numbers correspond to the Section numbers in this Agreement.
SECTION 13.6 Counterparts . This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties; and delivered to the other
party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.
SECTION 13.7 Expenses . Each party shall bear its own expenses incurred or to be incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
SECTION 13.8 Waivers and Amendments . This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance, and subject, to the extent required, to the approval of the Bankruptcy Court. No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.
SECTION 13.9 Construction .
(a) The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(b) Unless the context otherwise requires, as used in this Agreement: (i) an accounting term not otherwise defined in this Agreement has the meaning ascribed to it in accordance with GAAP; (ii) “ or ” is not exclusive; (iii) “ including ” and its variants mean “ including, without limitation ” and its variants; (iv) words defined in the singular have the parallel meaning in the plural and vice versa; (v) references to “ written ” or “ in writing ” include in visual electronic form; (vi) words of one gender shall be construed to apply to each gender; (vii) the terms “ Article, ” “ Section, ” and “ Schedule ” refer to the specified Article, Section, or Schedule of or to this Agreement; and (viii) the term “ beneficially own ” shall have the meaning determined pursuant to Rule 13d-3 under the Exchange Act as in effect on the date hereof; provided , however , that a Person will be deemed to beneficially own (and have beneficial ownership of) all securities that such Person has the right to acquire, whether such right is exercisable immediately or with the passage of time or the satisfaction of conditions. The terms “ beneficial ownership ” and “ beneficial owner ” have correlative meanings.
(c) Notwithstanding anything to the contrary, and for all purposes of this Agreement, any public announcement or filing of factual information relating to the business, financial condition or results of the Company or its Subsidiaries, or a factually accurate (in all material respects) public statement or filing that describes the Company’s receipt of an offer or proposal for a Competing Transaction and the operation of this Agreement with respect thereto, or any entry into a confidentiality agreement, shall not be deemed to evidence the Company’s or any Subsidiary’s intention to support any Competing Transaction.
(d) In the event of a conflict between the terms and conditions of this Agreement and the Plan Summary Term Sheet, the terms and conditions of this Agreement shall govern.
(e) Unless otherwise agreed in writing between the Company and each Purchaser, wherever this Agreement requires the action by, consent of or delivery to Purchaser, Purchasers, each Purchaser or similar parties, each Purchaser hereby appoints Fairholme as its attorney-in-fact to exercise all of the rights of such Purchaser hereunder (except for the assumption of any funding or related liabilities or obligations), and the Company may rely on any instructions or elections made by such Person; provided , that any such action by, consent of or delivery to Fairholme hereunder shall constitute the separate, and not joint, action by, consent of or delivery to each Purchaser.
SECTION 13.10 Adjustment of Share Numbers and Prices . The number of Shares to be purchased by each Purchaser at the Closing pursuant to Article I , the Per Share Purchase Price, the GGO Per Share Purchase Price, the number of GGO Shares to be purchased by such Purchaser pursuant to Article II and any other number or amount contained in this Agreement which is based upon the number or price of shares of GGP or GGO shall be proportionately adjusted for any subdivision or combination (by stock split, reverse stock split, dividend, reorganization, recapitalization or otherwise) of the Common Stock, New Common Stock or GGO Common Stock that occurs during the period between the date of this Agreement and the Closing. In addition, if at any time prior to the Closing or the consummation of the repurchase of Repurchase Shares (as defined in the Pershing Agreement) or the Put Option (as defined in the Pershing Agreement), as applicable , the Company or GGO shall declare or make a dividend or other distribution whether in cash or property (other than a dividend or distribution payable in common stock of the Company or GGO, as applicable, the GGO Share Distribution or a distribution of rights contemplated hereby), the Per Share Purchase Price or the GGO Per Share Purchase Price, or the applicable price for the definition of Permitted Replacement Shares , as applicable, shall be proportionally adjusted thereafter by the Fair Market Value (as defined in the Warrant Agreement) per share of the dividend or distribution. If a transaction results in any adjustment to the exercise price for and number of Shares underlying the Warrants pursuant to Article 5 of the Warrant Agreement, the exercise price for and number of shares underlying each of the New Warrants and GGO Warrants described in Section 5.2 of this Agreement shall be adjusted for that transaction in the same manner.
SECTION 13.11 Certain Remedies .
(a) The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement or of any other agreement between them with respect to the Transaction were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other applicable remedies at law or equity, the parties shall be entitled to an injunction or injunctions, without proof of damages, to prevent breaches of this Agreement or of any other agreement between them with respect to the Transaction and to enforce specifically the terms and provisions of this Agreement.
(b) To the fullest extent permitted by applicable law, the parties shall not assert, and hereby waive, any claim or any such damages, whether or not accrued and whether or not known or suspect to exist in its favor, against any other party and its respective Affiliates, members,
members’ affiliates, officers, directors, partners, trustees, employees, attorneys and agents on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, or as a result of, this Agreement or of any other agreement between them with respect to the Transaction or the transactions contemplated hereby or thereby.
(c) Prior to the entry of the Confirmation Order, other than with respect to the Company’s obligations under Section 5.1(c) , each Purchaser’s right to receive the Warrants on the terms and subject to the conditions set forth in this Agreement shall constitute the sole and exclusive remedy of any nature whatsoever (whether for monetary damages, specific performance, injunctive relief, or otherwise) of such Purchaser against the Company for any harm, damage or loss of any nature relating to or as a result of any breach of this Agreement by the Company or the failure of the Closing to occur for any reason; provided , that, following the entry of the Approval Order, each Purchaser shall be entitled to specific performance of the Company’s obligation to issue the Warrants as well as the Company’s obligations under Section 5.1(c) hereof.
(d) Following the entry of the Confirmation Order, each Purchaser shall be entitled to specific performance of the terms of this Agreement, in addition to any other applicable remedies at law
(e) The Company, on behalf of itself and its respective heirs, successors, and assigns, hereby covenants and agrees never to institute or cause to be instituted or continue prosecution of any suit or other form of action or proceeding of any kind or nature whatsoever against any member of any Purchaser or its Purchaser Group by reason of or in connection with the Transaction; provided , however , that nothing shall prohibit the Company from instituting an action against any Purchaser in connection with this Agreement in accordance with the provisions of this Section 13.11 .
(f) For the avoidance of doubt, the failure of any Purchaser under this Agreement to satisfy its obligations hereunder shall not relieve any other Purchaser from its obligations hereunder, including the obligation to consummate the transactions hereunder if all other conditions to such Purchaser’s obligations have been satisfied or waived.
SECTION 13.12 Bankruptcy Matters . For the avoidance of doubt, all obligations of the Company and its Subsidiaries in this Agreement are subject to and conditioned upon (a) with respect to the issuance of the Warrants and the other obligations contained in the Approval Order, entry of the Approval Order, and (b) with respect to the remainder of the provisions hereof, entry of the Confirmation Order.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered by each of them or their respective officers thereunto duly authorized, all as of the date first written above.
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FAIRHOLME FUNDS, INC., |
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on behalf of its series The Fairholme Fund |
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By: |
/s/ Bruce R. Berkowitz |
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Name: |
Bruce R. Berkowitz |
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Title: |
President |
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FAIRHOLME FUNDS, INC., |
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on behalf of its series Fairholme Focused Income Fund |
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By: |
/s/ Bruce R. Berkowitz |
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Name: |
Bruce R. Berkowitz |
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Title: |
President |
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Name: |
Thomas H. Nolan, Jr. |
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Title: |
President and Chief Operating Officer |
[SIGNATURE PAGE OF AMENDED AND RESTATED STOCK PURCHASE AGREEMENT]
Exhibit 10.3
EXECUTION VERSION
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
effective as of March 31, 2010
between
THE PURCHASERS PARTY HERETO
and
GENERAL GROWTH PROPERTIES, INC.
TABLE OF CONTENTS
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Page |
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ARTICLE I |
PURCHASE OF NEW COMMON STOCK; CLOSING |
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Section 1.1 |
Purchase of New Common Stock |
3 |
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Section 1.2 |
Closing |
5 |
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Section 1.3 |
Company Rights Offering Election |
5 |
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Section 1.4 |
Company Election to Replace Certain Shares; Company Election to Reserve and Repurchase Certain Shares |
5 |
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Section 1.5 |
Pro Rata Reductions with Fairholme Agreement |
11 |
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ARTICLE II |
GGO SHARE DISTRIBUTION AND PURCHASE OF GGO COMMON STOCK |
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Section 2.1 |
GGO Share Distribution |
11 |
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Section 2.2 |
Purchase of GGO Common Stock |
13 |
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ARTICLE III |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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Section 3.1 |
Organization and Qualification |
13 |
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Section 3.2 |
Corporate Power and Authority |
14 |
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Section 3.3 |
Execution and Delivery; Enforceability |
14 |
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Section 3.4 |
Authorized Capital Stock |
15 |
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Section 3.5 |
Issuance |
16 |
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Section 3.6 |
No Conflict |
17 |
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Section 3.7 |
Consents and Approvals |
18 |
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Section 3.8 |
Company Reports |
19 |
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Section 3.9 |
No Undisclosed Liabilities |
20 |
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Section 3.10 |
No Material Adverse Effect |
21 |
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Section 3.11 |
No Violation or Default: Licenses and Permits |
21 |
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Section 3.12 |
Legal Proceedings |
21 |
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Section 3.13 |
Investment Company Act |
21 |
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Section 3.14 |
Compliance With Environmental Laws |
21 |
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Section 3.15 |
Company Benefit Plans |
22 |
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Section 3.16 |
Labor and Employment Matters |
23 |
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Section 3.17 |
Insurance |
24 |
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Section 3.18 |
No Unlawful Payments |
24 |
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TABLE OF CONTENTS
(continued)
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Page |
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Section 3.19 |
No Broker’s Fees |
24 |
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Section 3.20 |
Real and Personal Property |
24 |
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Section 3.21 |
Tax Matters |
30 |
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Section 3.22 |
Material Contracts |
31 |
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Section 3.23 |
Certain Restrictions on Charter and Bylaws Provisions; State Takeover Laws |
32 |
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Section 3.24 |
No Other Representations or Warranties |
33 |
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ARTICLE IV |
REPRESENTATIONS AND WARRANTIES OF PURCHASER |
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Section 4.1 |
Organization |
33 |
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Section 4.2 |
Power and Authority |
33 |
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Section 4.3 |
Execution and Delivery |
33 |
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Section 4.4 |
No Conflict |
33 |
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Section 4.5 |
Consents and Approvals |
34 |
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Section 4.6 |
Compliance with Laws |
34 |
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Section 4.7 |
Legal Proceedings |
34 |
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Section 4.8 |
No Broker’s Fees |
34 |
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Section 4.9 |
Sophistication |
34 |
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Section 4.10 |
Purchaser Intent |
34 |
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Section 4.11 |
Reliance on Exemptions |
35 |
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Section 4.12 |
REIT Representations |
35 |
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Section 4.13 |
Financial Capability |
35 |
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Section 4.14 |
No Other Representations or Warranties |
35 |
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Section 4.15 |
Acknowledgement |
35 |
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ARTICLE V |
COVENANTS OF THE COMPANY AND PURCHASER |
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Section 5.1 |
Bankruptcy Court Motions and Orders |
36 |
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Section 5.2 |
Warrants, New Warrants and GGO Warrants |
36 |
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Section 5.3 |
[Intentionally Omitted.] |
37 |
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Section 5.4 |
Listing |
37 |
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Section 5.5 |
Use of Proceeds |
37 |
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Section 5.6 |
Access to Information |
38 |
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TABLE OF CONTENTS
(continued)
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Page |
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Section 5.7 |
Competing Transactions |
38 |
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Section 5.8 |
Reservation for Issuance |
38 |
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Section 5.9 |
Subscription Rights |
38 |
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Section 5.10 |
Company Board of Directors |
43 |
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Section 5.11 |
Notification of Certain Matters |
46 |
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Section 5.12 |
Further Assurances |
47 |
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Section 5.13 |
[Intentionally Omitted.] |
47 |
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Section 5.14 |
Rights Agreement; Reorganized Company Organizational Documents |
47 |
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Section 5.15 |
Stockholder Approval |
49 |
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Section 5.16 |
Closing Date Net Debt |
49 |
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Section 5.17 |
Determination of Domestically Controlled REIT Status |
53 |
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ARTICLE VI |
ADDITIONAL COVENANTS OF PURCHASER |
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Section 6.1 |
Information |
54 |
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Section 6.2 |
Purchaser Efforts |
54 |
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Section 6.3 |
Plan Support |
54 |
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Section 6.4 |
Transfer Restrictions |
55 |
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Section 6.5 |
[Intentionally Omitted.] |
57 |
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Section 6.6 |
REIT Representations and Covenants |
57 |
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Section 6.7 |
Non-Control Agreement |
57 |
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Section 6.8 |
[Intentionally Omitted.] |
57 |
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Section 6.9 |
Additional Backstops |
57 |
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ARTICLE VII |
CONDITIONS TO THE OBLIGATIONS OF PURCHASER |
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Section 7.1 |
Conditions to the Obligations of Purchaser |
61 |
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ARTICLE VIII |
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY |
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Section 8.1 |
Conditions to the Obligations of the Company |
72 |
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ARTICLE IX |
[INTENTIONALLY OMITTED] |
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ARTICLE X |
SURVIVAL OF REPRESENTATIONS AND WARRANTIES |
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Section 10.1 |
Survival of Representations and Warranties |
74 |
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ARTICLE XI |
TERMINATION |
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TABLE OF CONTENTS
(continued)
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Page |
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Section 11.1 |
Termination |
74 |
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Section 11.2 |
Effects of Termination |
79 |
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ARTICLE XII |
DEFINITIONS |
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Section 12.1 |
Defined Terms |
79 |
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ARTICLE XIII |
MISCELLANEOUS |
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Section 13.1 |
Notices |
97 |
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Section 13.2 |
Assignment; Third Party Beneficiaries |
98 |
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Section 13.3 |
Prior Negotiations; Entire Agreement |
99 |
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Section 13.4 |
Governing Law; Venue |
99 |
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Section 13.5 |
Company Disclosure Letter |
100 |
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Section 13.6 |
Counterparts |
100 |
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Section 13.7 |
Expenses |
100 |
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Section 13.8 |
Waivers and Amendments |
100 |
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Section 13.9 |
Construction |
100 |
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Section 13.10 |
Adjustment of Share Numbers and Prices |
101 |
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Section 13.11 |
Certain Remedies |
102 |
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Section 13.12 |
Bankruptcy Matters |
103 |
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LIST OF EXHIBITS AND SCHEDULES
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Exhibit A: |
Plan Summary Term Sheet |
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Exhibit B: |
Post-Bankruptcy GGP Corporate Structure |
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Exhibit C-1: |
Brookfield Agreement |
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Exhibit C-2: |
Fairholme Agreement |
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Exhibit D: |
REIT Representation Letter |
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Exhibit E: |
GGO Assets |
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Exhibit F: |
Form of Approval Order |
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Exhibit G: |
Form of Warrant Agreement |
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Exhibit H: |
[Intentionally Omitted] |
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Exhibit I: |
[Intentionally Omitted] |
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Exhibit J: |
Form of REIT Opinion |
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Exhibit K: |
[Intentionally Omitted] |
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Exhibit L: |
[Intentionally Omitted] |
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Exhibit M: |
Form of Non-Control Agreement |
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Exhibit N: |
Certain REIT Investors |
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Exhibit O: |
Form of Tax Matters Agreement |
INDEX OF DEFINED TERMS
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Defined Term |
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Page |
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2006 Bank Loan |
|
79 |
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Additional Financing |
|
66 |
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Additional Sales Period |
|
79 |
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Adequate Reserves |
|
30 |
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Adjusted CDND |
|
52 |
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Affiliate |
|
79 |
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Agreement |
|
1 |
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Amended and Restated Agreement |
|
1 |
|
Anticipated Debt Paydowns |
|
66 |
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Approval Motion |
|
36 |
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Approval Order |
|
36 |
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Asset Sales |
|
66 |
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Backstop Investors |
|
58 |
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Backstop Shares |
|
7 |
|
Bankruptcy Cases |
|
1 |
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Bankruptcy Code |
|
1 |
|
Bankruptcy Court |
|
1 |
|
Blackstone |
|
98 |
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Blackstone Assigned Securities |
|
98 |
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Blackstone Assigned Shares |
|
98 |
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Blackstone Assigned Warrants |
|
98 |
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Blackstone Purchase Price |
|
99 |
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Brazilian Entities |
|
80 |
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Bridge Note Amount |
|
9 |
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Bridge Note Interest Rate |
|
9 |
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Bridge Note Maturity Date |
|
9 |
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Bridge Notes |
|
9 |
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Bridge Securities |
|
59 |
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Brookfield Agreement |
|
2 |
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Brookfield Consortium Member |
|
80 |
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Brookfield Investor |
|
2 |
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Business Day |
|
80 |
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Calculation Date |
|
52 |
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Capital Raising Activities |
|
80 |
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Cash Equivalents |
|
80 |
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Change of Control |
|
80 |
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Chapter 11 |
|
1 |
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Claims |
|
81 |
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Clawback Fee |
|
81 |
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Clawback Percentage |
|
6 |
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Clawback Shares |
|
6 |
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Closing |
|
5 |
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Closing Date |
|
5 |
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Closing Date Net Debt |
|
81 |
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Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts |
|
82 |
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Closing Restraint |
|
77 |
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CMPC |
|
12 |
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CNDAS Dispute Notice |
|
50 |
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CNDAS Disputed Items |
|
50 |
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Code |
|
22 |
|
Common Stock |
|
1 |
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Company |
|
2 |
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Company Benefit Plan |
|
82 |
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Company Board |
|
82 |
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Company Disclosure Letter |
|
13 |
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Company Ground Lease Property |
|
27 |
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Company Mortgage Loan |
|
28 |
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Company Option Plans |
|
15 |
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Company Properties |
|
25 |
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Company Property |
|
25 |
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Company Property Lease |
|
27 |
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Company Rights Offering |
|
5 |
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Company SEC Reports |
|
19 |
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Competing Transaction |
|
82 |
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Conclusive Net Debt Adjustment Statement |
|
83 |
|
Confirmation Order |
|
62 |
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Confirmed Debtors |
|
92 |
|
Contingent and Disputed Debt Claims |
|
83 |
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Contract |
|
83 |
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control |
|
91 |
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Corporate Level Debt |
|
83 |
|
Dealer Manager |
|
58 |
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Debt |
|
84 |
|
Debt Cap |
|
66 |
|
Debtors |
|
1 |
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Designation Conditions |
|
4 |
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DIP Loan |
|
84 |
|
Disclosure Statement |
|
84 |
|
Disclosure Statement Order |
|
63 |
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Dispute Notice |
|
49 |
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Disputed Items |
|
50 |
|
Domestically Controlled REIT |
|
53 |
|
Effective Date |
|
5 |
|
Encumbrances |
|
25 |
|
Environmental Laws |
|
22 |
|
Equity Exchange |
|
2 |
|
Equity Securities |
|
15 |
|
ERISA |
|
84 |
|
ERISA Affiliate |
|
23 |
|
Excess Equity Capital Proceeds |
|
8 |
|
Excess Surplus Amount |
|
84 |
|
Exchangeable Notes |
|
84 |
|
Excluded Claims |
|
84 |
|
Excluded Non-US Plans |
|
23 |
|
Fairholme Agreement |
|
3 |
|
Fairholme Purchasers |
|
3 |
|
Foreign Plan |
|
23 |
|
Fully Diluted Basis |
|
86 |
|
Fully Diluted GGO Economic Interest |
|
87 |
|
GAAP |
|
87 |
|
GGO |
|
2 |
|
GGO Agreement |
|
43 |
|
GGO Board |
|
43 |
|
GGO Common Share Amount |
|
87 |
|
GGO Common Stock |
|
11 |
|
GGO Non-Control Agreement |
|
87 |
|
GGO Note Amount |
|
87 |
|
GGO Per Share Purchase Price |
|
13 |
|
GGO Pro Rata Share |
|
87 |
|
GGO Promissory Note |
|
88 |
|
GGO Purchase Price |
|
13 |
|
GGO Representative |
|
11 |
|
GGO Setup Costs |
|
88 |
|
GGO Share Distribution |
|
12 |
|
GGO Shares |
|
13 |
|
GGO Warrants |
|
37 |
|
GGP Backstop Rights Offering |
|
57 |
|
GGP Backstop Rights Offering Amount |
|
58 |
|
GGP Pro Rata Share |
|
88 |
|
Governmental Entity |
|
88 |
|
Hazardous Materials |
|
22 |
|
Hughes Agreement |
|
88 |
|
Hughes Amount |
|
87 |
|
Hughes Heirs Obligations |
|
89 |
|
Identified Assets |
|
11 |
|
Indebtedness |
|
89 |
|
Initial Investors |
|
3 |
|
Investment Agreements |
|
3 |
|
Joint Venture |
|
89 |
|
Knowledge |
|
89 |
|
Law |
|
89 |
|
Liquidity Equity Issuances |
|
89 |
|
Liquidity Target |
|
65 |
|
Material Adverse Effect |
|
90 |
|
Material Contract |
|
91 |
|
Material Lease |
|
28 |
|
Measurement Date |
|
15 |
|
Most Recent Statement |
|
25 |
|
MPC Assets |
|
91 |
|
MPC Taxes |
|
91 |
|
Net Debt Excess Amount |
|
91 |
|
Net Debt Surplus Amount |
|
91 |
|
New Common Stock |
|
2 |
|
New Debt |
|
65 |
|
New DIP Agreement |
|
62 |
|
New Warrant Vesting Date |
|
37 |
|
New Warrants |
|
37 |
|
Non-Control Agreement |
|
91 |
|
Non-Controlling Properties |
|
91 |
|
NYSE |
|
37 |
|
Offering Premium |
|
92 |
|
Operating Partnership |
|
92 |
|
Original Agreement |
|
1 |
|
PBGC |
|
23 |
|
Per Share Purchase Price |
|
3 |
|
Permitted Claims |
|
92 |
|
Permitted Claims Amount |
|
93 |
|
Permitted Replacement Shares |
|
93 |
|
Permitted Title Exceptions |
|
25 |
|
Person |
|
93 |
|
Petition Date |
|
1 |
|
Plan |
|
1 |
|
Plan Debtors |
|
92 |
|
Plan Summary Term Sheet |
|
1 |
|
PMA Claims |
|
92 |
|
Preliminary Closing Date Net Debt Review Deadline |
|
93 |
|
Preliminary Closing Date Net Debt Review Period |
|
93 |
|
Preliminary Closing Date Net Debt Schedule |
|
49 |
|
Proportionally Consolidated Debt |
|
93 |
|
Proportionally Consolidated Unrestricted Cash |
|
94 |
|
Proposed Approval Order |
|
36 |
|
Proposed Securities |
|
39 |
|
PSCM |
|
1 |
|
Purchase Price |
|
3 |
|
Purchaser |
|
1 |
|
Purchaser Board Designee |
|
43 |
|
Purchaser GGO Board Designees |
|
43 |
|
Purchaser Group |
|
94 |
|
Put Notice |
|
7 |
|
Put Option |
|
7 |
|
Put Shares |
|
6 |
|
Put Termination Notice |
|
8 |
|
Refinance Cap |
|
69 |
|
Reinstated Amounts |
|
65 |
|
Reinstatement Adjustment Amount |
|
94 |
|
REIT |
|
30 |
|
REIT Subsidiary |
|
30 |
|
Reorganized Company |
|
2 |
|
Reorganized Company Organizational Documents |
|
47 |
|
Repurchase Notice |
|
6 |
|
Repurchase Shares |
|
6 |
|
Reserve |
|
93 |
|
Reserve Surplus Amount |
|
94 |
|
Reserved Shares |
|
6 |
|
Resolution Period |
|
49 |
|
Rights Agreement |
|
94 |
|
Rights Offering Election |
|
5 |
|
Rouse Bonds |
|
95 |
|
Rule 144 |
|
56 |
|
Sales Cap |
|
68 |
|
SEC |
|
19 |
|
Securities Act |
|
19 |
|
Settlement Date |
|
7 |
|
Share Cap Number |
|
66 |
|
Share Equivalent |
|
95 |
|
Shares |
|
3 |
|
Significant Subsidiaries |
|
95 |
|
SOX |
|
53 |
|
Specified Debt |
|
95 |
|
Subscription Right |
|
39 |
|
Subsidiary |
|
95 |
|
Synthetic Lease Obligation |
|
89 |
|
Target Net Debt |
|
95 |
|
Tax Matters Agreement |
|
95 |
|
Tax Protection Agreements |
|
95 |
|
Tax Return |
|
30 |
|
Taxes |
|
30 |
|
Termination Date |
|
96 |
|
Total Purchase Amount |
|
4 |
|
Transactions |
|
96 |
|
Transfer |
|
56 |
|
TRUPS |
|
96 |
|
U.S. Persons |
|
53 |
|
Unrestricted Cash |
|
96 |
|
Unrestricted Date |
|
54 |
|
Unsecured Indebtedness |
|
96 |
|
UPREIT Units |
|
96 |
|
Warrant Agreement |
|
36 |
|
Warrants |
|
36 |
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT , effective as of March 31, 2010 (this “ Agreement ”), by and between General Growth Properties, Inc., a Delaware corporation (“ GGP ”), and Pershing Square Capital Management, L.P. (“ PSCM ”), on behalf of Pershing Square, L.P., a Delaware limited partnership, Pershing Square II, L.P., a Delaware limited partnership, Pershing Square International, Ltd. a Cayman Islands exempted company and Pershing Square International V, Ltd., a Cayman Islands exempted company, (each, except PSCM, together with its permitted nominees and assigns, a “ Purchaser ”).
On March 31, 2010, GGP and the Purchasers entered into the Stock Purchase Agreement (as subsequently amended on May 3, 2010 and May 7, 2010, the “ Original Agreement ”) to provide for the terms and conditions for the consummation of the transactions contemplated therein. On August 2, 2010, GGP and the Purchasers entered into the Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010 (as subsequently amended on September 17, 2010, the “ Amended and Restated Agreement ”) which amended and restated the Original Agreement ab initio in its entirety as set forth therein. Pursuant to Section 13.8 of the Amended and Restated Agreement, the parties thereto wish to amend and restate the Amended and Restated Agreement ab initio in its entirety as set forth herein. References herein to “date of this Agreement” and “date hereof” shall refer to March 31, 2010.
RECITALS
WHEREAS , GGP is a debtor in possession in that certain bankruptcy case under chapter 11 (“ Chapter 11 ”) of Title 11 of the United States Code, 11 U.S.C. §§ 101 -1532 (as amended, the “ Bankruptcy Code ”) filed on April 16, 2009 (the “ Petition Date ”) in the United States Bankruptcy Court for the Southern District of New York (the “ Bankruptcy Court ”), Case No. 09-11977 (ALG).
WHEREAS , each Purchaser desires to assist GGP in its plans to recapitalize and emerge from bankruptcy and has agreed to sponsor the implementation of a joint chapter 11 plan of reorganization based on the Plan Summary Term Sheet (as defined below) (together with all documents and agreements that form part of such plan or related plan supplement or are related thereto, and as it may be amended, modified or supplemented from time to time, in each case, to the extent it relates to the implementation and effectuation of the Plan Summary Term Sheet and this Agreement, the “ Plan ”), of GGP and its Subsidiaries and Affiliates who are debtors and debtors-in-possession (the “ Debtors ”) in the chapter 11 cases pending and jointly administered in the Bankruptcy Court (the “ Bankruptcy Cases ”).
WHEREAS , principal elements of the Plan (including a table setting forth the proposed treatment of allowed claims and equity interests in the Bankruptcy Cases) are set forth on Exhibit A hereto (the “ Plan Summary Term Sheet ”).
WHEREAS , the Plan shall provide, among other things, that (i) each holder of common stock, par value $0.01 per share, of GGP (the “ Common Stock ”) shall receive,
in exchange for each share of Common Stock held by such holder, one share of new common stock (the “ New Common Stock ”) of a new company that succeeds to GGP in the manner contemplated by Exhibit B upon consummation of the Plan (the “ Reorganized Company ”) and (ii) any Equity Securities (other than Common Stock) of the Company (as defined below) or any of its Subsidiaries (as defined below) outstanding immediately after the Effective Date that were previously convertible into, or exercisable or exchangeable for, Common Stock shall thereafter be convertible into, or exercisable or exchangeable for, New Common Stock (based upon the number of shares of Common Stock underlying such Equity Securities) (the transactions contemplated by clauses (i) and (ii) of this recital being referred to herein as the “ Equity Exchange ”). For purposes of this Agreement, the “ Company ” shall be deemed to refer, prior to consummation of the Plan, to GGP and, on and after consummation of the Plan, the Reorganized Company, as the context requires.
WHEREAS , each Purchaser desires to make an investment in the Reorganized Company on the terms and subject to the conditions described herein in the form of the purchase of shares of New Common Stock as contemplated hereby.
WHEREAS , in addition to the Equity Exchange and the sale of the Shares (as defined below), the Plan shall provide for the incorporation by the Company of a new subsidiary (“ GGO ”), the contribution of certain assets (and/or equity interests related thereto) of the Company to GGO and the assumption by GGO of the liabilities associated with such assets, the distribution to the shareholders of the Company (prior to the issuance of the Shares and the issuance of other shares of New Common Stock contemplated by this Agreement other than pursuant to the Equity Exchange) on a pro rata basis and holders of UPREIT Units of all of the capital stock of GGO, and whereas each Purchaser desires to make an investment in GGO on the terms and subject to the conditions described herein in the form of the purchase of shares of GGO Common Stock as contemplated hereby.
WHEREAS , the Company has requested that each Purchaser commit to purchase the Shares and the GGO Shares at a fixed price for the term hereof.
WHEREAS , each Purchaser has agreed to enter into this Agreement and commit to purchase the Shares and the GGO Shares only on the condition that the Company, as promptly as practicable following the date hereof (but no later than the date provided in Section 5.2 hereof), issue the Warrants contemplated herein and perform its other obligations hereunder.
WHEREAS , on and effective as of the date hereof, the Company entered into an agreement (in the form attached hereto as Exhibit C-1 together with any amendments thereto as have been approved by each Purchaser, the “ Brookfield Agreement ”) with REP Investments LLC (the “ Brookfield Investor ”) pursuant to which the Brookfield Investor has agreed to make (i) an investment of up to $2,500,000,000 in the Reorganized Company in the form of the purchase of shares of New Common Stock and (ii) an
investment of $125,000,000 in GGO in the form of the purchase of shares of GGO Common Stock.
WHEREAS , on and effective as of the date hereof, the Company entered into an agreement (in the form attached hereto as Exhibit C-2 together with any amendments thereto as have been approved by each Purchaser, the “ Fairholme Agreement ” and, together with this Agreement and the Brookfield Agreement, the “ Investment Agreements ”) with The Fairholme Fund, a series of Fairholme Funds, Inc. and Fairholme Focused Income Fund, a series of Fairholme Funds, Inc. (the “ Fairholme Purchasers ” and, together with each Purchaser and the Brookfield Investor, the “ Initial Investors ”) pursuant to which the Fairholme Purchasers have agreed to make (i) an investment of up to $2,714,285,710 in the Reorganized Company in the form of the purchase of shares of New Common Stock and (ii) an investment of $62,500,000 in GGO in the form of the purchase of shares of GGO Common Stock.
NOW, THEREFORE , in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the parties agree as follows:
ARTICLE I
PURCHASE OF NEW COMMON STOCK; CLOSING
SECTION 1.1 Purchase of New Common Stock .
(a) On the terms and subject to the conditions set forth herein, at the Closing (as defined below), each Purchaser shall purchase from the Company, and the Company shall sell to such Purchaser, a number of shares of New Common Stock (the “ Shares ”) equal to its GGP Pro Rata Share of the Total Purchase Amount (as defined below) for a price per share equal to $10.00 (the “ Per Share Purchase Price ” and, in the aggregate, the “ Purchase Price ”); provided , that no Purchaser shall be obligated to purchase a number of Shares less than its GGP Pro Rata Share of 190,000,000, as determined pursuant to Section 1.4 . At the Closing, the Purchasers shall cause the Purchase Price to be paid (i) first, to the extent that the Purchasers elect by written notice to the Company not less than three Business Days prior to the Closing Date, by the application of any claims against the Debtors that are held by the Purchasers and outstanding as of the Effective Date in an amount equal to the allowed amount (inclusive of prepetition and postpetition interest accrued up to and on the Effective Date at the applicable rate provided in the Plan), with each $10.00 in such amount of allowed claims so applied being in satisfaction of the obligation to pay $10.00 of the Purchase Price and (ii) second, by wire transfer of immediately available U.S. Dollar funds. For the avoidance of doubt, the Purchasers may elect which claims to apply in satisfaction of the Purchasers’ obligation to pay the Purchase Price for purposes of clause (i), and the application of such claims against the Purchase Price in accordance with clause (i) shall represent complete satisfaction of the Debtors’ obligations in respect of such allowed claims so applied. For the avoidance of doubt and as provided in the Plan, any
application by the Purchaser of allowed claims in satisfaction of a portion of the Purchase Price shall be effected by causing the Debtor liable for such claims to make payment for such claims in accordance with the Plan and by directing the amounts so payable to be paid to the Company and applied in satisfaction of a portion of the Purchase Price.
(b) The “ Total Purchase Amount ” will be 380,000,000, subject to reduction pursuant to Section 1.4 .
(c) All Shares shall be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by the Company to the extent required under the Confirmation Order or applicable Law.
(d) Each Purchaser, in its sole discretion, may assign its rights to receive Shares hereunder or designate that some or all of the Shares be issued in the name of, and delivered to, one or more of the other members of its Purchaser Group or any third party to whom the shares could be transferred immediately after Closing in accordance with Section 6.4 , subject to (i) such action not causing any delay in the obtaining of, or significantly increasing the risk of not obtaining, any material authorizations, consents, orders, declarations or approvals necessary to consummate the transactions contemplated by this Agreement or otherwise delaying the consummation of such transactions, (ii) such Person shall be an “accredited investor” (within the meaning of Rule 501 of Regulation D under the Securities Act) and shall have agreed in writing with and for the benefit of the Company to be bound by the terms of this Agreement applicable to such Purchaser set forth in Section 6.4 and the applicable Non-Control Agreement, including the delivery of the letter certifying compliance with the representations and covenants set forth on Exhibit D to the extent applicable to such assignee or designee and (iii) such initial Purchaser not being relieved of any of its obligations under this Agreement ((i), (ii) and (iii) collectively, the “ Designation Conditions ”). Notwithstanding anything to the contrary in this Agreement, no Purchaser may assign its rights to receive or designate Shares to any Person (other than members of its Purchaser Group) if such assignment or designation would cause a failure of the closing condition in Section 7.1(u) of the Brookfield Agreement.
(e) The obligations of each Purchaser hereunder shall be determined as follows: PSCM will deliver written notice to the Company on or before the 20th day following execution of this Agreement wherein PSCM will designate the “GGP Pro Rata Share” and the “GGO Pro Rata Share” for each Purchaser; provided that the aggregate GGP Pro Rata Share of the Purchasers shall equal the quotient of 1.0 divided by 3.5 and the aggregate GGO Pro Rata Share of the Purchasers shall equal 50%. If PSCM fails to make such allocations to Purchasers that are reasonably creditworthy in light of the allocation, each Purchaser (other than Pershing Square International, Ltd. and Pershing Square International V, Ltd.) will be bound jointly and severally hereby, and Pershing Square International Ltd. and Pershing Square International V, Ltd. shall unconditionally guarantee the performance hereunder of the other Purchasers.
SECTION 1.2 Closing . Subject to the satisfaction or waiver of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Closing, but subject to the satisfaction or waiver of those conditions as of the Closing) set forth in Article VII and Article VIII , the closing of the purchase of the Shares and the GGO Shares by each Purchaser pursuant hereto (the “ Closing ”) shall occur at 9:30 a.m., New York time, on the effective date of the Plan (the “ Effective Date ”), at the offices of Weil, Gotshal & Manges LLP located at 767 Fifth Avenue, New York, NY 10153, or such other date, time or location as agreed by the parties. The date of the Closing is referred to as the “ Closing Date ”. Each of the Company and each Purchaser hereby agrees that in no event shall the Closing occur unless all of the Shares and the GGO Shares are sold to each applicable Purchaser (or to such other Persons as each such applicable Purchaser may designate in accordance with and subject to the Designation Conditions so long as such designation would not cause a failure of the closing condition in Section 7.1(u) of the Brookfield Agreement) on the Closing Date.
SECTION 1.3 Company Rights Offering Election . The Company may at any time prior to the date of filing of the Disclosure Statement, upon written notice to each Purchaser in accordance with the terms hereof (the “ Rights Offering Election ”), irrevocably elect to convert the obligation of such Purchaser to purchase the Shares as contemplated by Section 1.1 hereof into an obligation of such Purchaser to participate in a rights offering by the Company pursuant to which shareholders and/or creditors of the Company are offered rights to subscribe for shares of New Common Stock (a “ Company Rights Offering ”), subject to the execution and delivery of definitive documentation therefor and the satisfaction of the conditions described therein and other customary conditions for a public rights offering. To the extent the Company makes a Rights Offering Election, (i) each Purchaser shall be entitled to a minimum allocation of shares of New Common Stock in the Company Rights Offering equal to the number of shares such Purchaser would otherwise be required to purchase pursuant to Section 1.1 hereof had no such election been made, (ii) the purchase price per share payable by such Purchaser shall be equal to the Per Share Purchase Price and such Purchaser shall not be otherwise adversely affected as compared to the transactions contemplated hereby, (iii) the Company Rights Offering shall be effected in a manner substantially consistent with the procedures contemplated by Section 2.2 of the Original Agreement; provided , that the Company Rights Offering shall be completed by the Effective Date, and (iv) the Company and each Purchaser shall cooperate in good faith to develop and agree upon documentation that is reasonably acceptable to both the Company and each Purchaser governing the further terms and conditions of the Company Rights Offering.
SECTION 1.4 Company Election to Replace Certain Shares; Company Election to Reserve and Repurchase Certain Shares .
(a) In the event that the Company has sold, or has binding commitments to sell on or prior to the Effective Date, Permitted Replacement Shares, the Company may elect by written notice to each Purchaser to reduce the Total Purchase Amount by all or any portion of the number of such Permitted Replacement Shares as the Company may determine in its discretion; provided, that the Total Purchase Amount shall
not be less than 190,000,000. No election by the Company under this Section 1.4(a) shall be effective unless received by each Purchaser on or prior to the date that is 15 days before the commencement of the hearing to consider confirmation of the Plan. Any election by the Company under this Section 1.4(a) shall be binding and irrevocable.
(b) If the Plan as presented for confirmation provides for the commencement on or within 45 days after the Effective Date of a broadly distributed public offering of New Common Stock , the Company may elect, by written notice to each Purchaser on or prior to October 11, 2010, to specify a number of Shares to be purchased by the Purchasers at Closing as Shares to be subject to repurchase after Closing and/or subject to a put option pursuant to this Section 1.4(b) and/or Section 1.4(c) , as applicable (the “ Reserved Shares ”); provided, that the excess of (i) its GGP Pro Rata Share of the Total Purchase Amount minus (ii) its Reserved Shares shall not be less than its GGP Pro Rata Share of 190,000,000. The first 35,000,000 of such Reserved Shares shall constitute “ Put Shares ” governed by Section 1.4(c) . Any Reserved Shares in excess of 35,000,000 Shares shall constitute “ Repurchase Shares ”. With respect to any Repurchase Shares , the Company shall pay to each Purchaser in cash on the Effective Date an amount equal to $0.25 per Repurchase Share. Upon payment of such amount, the Company shall thereafter have the right to elect by written notice to each Purchaser (a “ Repurchase Notice ”) on or prior to the 40th day after the Effective Date (or, if not a Business Day, the next Business Day) to repurchase from each Purchaser a number of Shares equal to the lesser of such Purchaser’ s Clawback Percentage of (x) the aggregate number of Permitted Replacement Shares (other than any Permitted Replacement Shares applied to reduce the Total Purchase Amount pursuant to Section 1.4(a) ) sold by the Company prior to the 45th day after the Effective Date and (y) the sum of the initial number of Repurchase Shares under this Agreement and the initial number of Reserved Shares (as defined in the Fairholme Agreement) under the Fairholme Agreement . The purchase price for any R epurchase Shares shall be $10.00 per Share, payable in cash in immediately available funds against delivery of the Repurchase Shares on a settlement date determined by the Company and each Purchaser and not later than the date that is 45 days after the Effective Date. Any Repurchase Notice under this Section 1.4(b) shall, when taken together with this Agreement, constitute a binding offer and acceptance and be irrevocable.
For the purposes of this Section 1.4 , “ Clawback Percentage ” means, for each Purchaser under this Agreement and the Fairholme Agreement, the quotient (expressed as a percentage) of (a) the number of Clawback Shares such Purchaser is purchasing at Closing divided by (b) all the Clawback Shares purchased at Closing under this Agreement and the Fairholme Agreement. The aggregate Clawback Percentages shall at all times equal 100%.
For the purposes of this Section 1.4 , “ Clawback Shares ” means all Reserved Shares under the Fairholme Agreement and all Repurchase Shares (but not Put Shares) under this Agreement.
(c) With respect to the Put Shares, the following provisions will apply:
(i) The Company shall not be obligated to sell, and no Purchaser shall be obligated to purchase, any Put Shares at Closing. Instead, the Company shall have the option (the “ Put Option ”) to sell to the Purchasers on the first Business Day occurring at least 210 days after the Effective Date (the “ Settlement Date ”) a number of Shares up to the Deficiency Amount (the “ Backstop Shares ”).
(ii) The Company may exercise its Put Option by irrevocable written notice (a “ Put Notice ”) delivered to each Purchaser on the third Business Day prior to the Settlement Date (it being agreed that the Company may at its election for convenience deliver the Put Notice prior to such date, but it shall be revocable until, and become effective only as of, the third Business Day prior to the Settlement Date), and the Put Option shall expire if the Put Notice is not so delivered. The Put Notice and this Agreement together shall constitute the binding agreement of the Company to sell to each Purchaser, and of each Purchaser to purchase from the Company, on the Settlement Date a number of Shares equal to such Purchaser’s pro rata share of the Backstop Shares for a purchase price per share equal to the Per Share Purchase Price (payable in cash in immediately available funds). Closing of the sale and purchase of the Backstop Shares shall occur at 9:30 a.m., New York time, on the Settlement Date at the offices of Weil, Gotshal & Manges LLP located at 767 Fifth Avenue, New York, NY 10153, or such other date, time or location as agreed by the parties. Backstop Shares shall constitute “Shares” for all purposes of this Agreement, including without limitation, the representations and warranties of the Company set forth in Article III . All conditions precedent to the obligation of the Company to issue and sell, and of each Purchaser to purchase, Backstop Shares shall be deemed satisfied on the Settlement Date, provided that (A) the obligations of the Company and each Purchaser on the Settlement Date shall be subject to the satisfaction (or waiver by each of them) of the condition precedent that no judgment, injunction, decree or other legal restraint shall prohibit settlement and (B) the obligation of each Purchaser on the Settlement Date shall be subject to the additional condition precedent that the representations and warranties of the Company in Section 3.5(a) as they relate to the Backstop Shares shall be true and correct at and as of the Settlement Date as if made at and as of the Settlement Date . Each Purchaser’s
obligation with respect to its pro rata share of the Backstop Shares will be independent of the payment or nonpayment of any amount by the Company with respect to any Bridge Note (as described below).
(iii) For purposes of the Company’s Put Option, the “ Deficiency Amount ” shall be the sum, if positive, of:
(A) the aggregate number of Put Shares under this Agreement ;
minus
(B ) the quotient of (x) Excess Equity Capital Proceeds divided by (y) the Per Share Purchase Price .
The Company shall notify the Purchasers at such time as the Deficiency Amount has been reduced to zero (the “ Put Termination Notice ”) and, upon such notice, the Put Option shall terminate and be without further force or effect. The Company also may terminate the Put Option voluntarily by written notice at any time. Commencing on the 90th day after the Effective Date, for each day the Deficiency Amount is outstanding, a fee shall accrue at a rate per annum equal to 2.0% of an amount equal to the product of (i) the outstanding Deficiency Amount from time to time and (ii) $10.00, with the accrued and unpaid amount payable in arrears on the earlier of the termination of the Put Option or the Settlement Date.
For the purposes of Section 1.4(c) , “ Excess Equity Capital Proceeds ” means the excess, if any, as of the Settlement Date of (a) cash proceeds to the Company (net of all underwriting or other discounts, fees or other compensation and related expenses) from the sale of Common Stock, New Common Stock and Share Equivalents after the date hereof and prior to the Settlement Date (other than (i) the sale of 250,000,000 shares of New Common Stock under the Brookfield Agreement and the sale of the first 190,000,000 shares of New Common Stock under this Agreement and the Fairholme Agreement (in each case including any such shares of New Common Stock purchased by assigns or designees), (ii) the issuance of New Common Stock to settle the Hughes Heirs Obligations and (iii) the issuance of New Common Stock to employees and directors of the Company) over (b) $2,050,000,000.
(iv) PSCM, in its sole discretion, may designate that some or all of the Backstop Shares be issued in the name of, and delivered (together with the payment obligations therewith) to, the other members of the Purchaser Group. Each Purchaser (other than Pershing Square International, Ltd. and Pershing Square International V, Ltd.) will be bound jointly and severally with respect to the obligations of all the Purchasers with respect to the Put Option.
(v) In addition, if it has designated any Put Shares, the Company shall issue to the Purchasers, and the Purchasers shall purchase from the Company, on the Effective Date one or more unsecured notes with terms consistent with this Section 1.4 and in form to be mutually agreed prior to the designation of Put Shares (the “ Bridge Notes ”) in an amount equal to the product of (A) the Put Shares multiplied by (B) the Per Share Purchase Price (the “ Bridge Note Amount ”). The Bridge Notes shall (1) have a final maturity date and be unconditionally payable on the first Business Day occurring at least 211 days after the Effective Date (the “ Bridge Note Maturity Date ”), (2) bear interest at a rate of 6. 0 0% per annum (the “ Bridge Note Interest Rate ”), with interest accruing and compounding quarterly, but payable only upon prepayment or payment of principal, (3) be unsecured general obligations of the Company without guarantee by any subsidiary, (4) have a successorship covenant customary for short term indebtedness of public companies, but no financial, operational restriction or similar covenants or any business representations or warranties and (5) have events of default limited to non-payment and customary bankruptcy matters, but for the avoidance of doubt, no cross-default, cross-acceleration or similar clauses. In return for the Bridge Notes, each Purchaser shall deliver to the Company on the Effective Date cash proceeds in the amount of such Purchaser’s pro rata share of the Bridge Note Amount. If the Company has not repaid Purchasers the full amount outstanding under the Bridge Notes on or before the Bridge Note Maturity Date, interest will accrue on the unpaid amount of the Bridge Notes, including due but unpaid interest, at a default rate equal to the Bridge Note Interest Rate plus 2.00%. The Bridge Notes may be prepaid at any time without premium or penalty . The Bridge Note shall be freely transferable by holders; provided that any transfer shall require the consent of the Company, not to be
unreasonably withheld, at any time that no event of default thereunder is continuing (and it being agreed that the Company shall not be obligated to register any Bridge Note under securities laws).
(vi) The Company and each Purchaser agree to work together in good faith with the aim to negotiate and agree on mutually acceptable definitive form of the Bridge Notes as promptly as practicable.
(vii) In the event that the Company pays or declares any dividend or distribution on New Common Shares with a record date after the Effective Date and prior to the Settlement Date, (A) the Per Share Purchase Price shall be decreased by the value of such dividend or distribution (with (1) dividends or distributions payable in New Common Shares valued at the Per Share Purchase Price (before giving effect to such adjustment), (2) dividends or distributions payable in cash valued at the amount of cash, and (3) dividends or distributions of other property valued at “Fair Market Value” as defined in the form of Warrant Agreement) and (B) the number of Shares subject to the Put Option shall be increased by multiplying such number by a fraction the numerator of which is the Per Share Purchase Price before giving effect to such adjustment and the denominator of which is the Per Share Purchase Price after giving effect to such adjustment.
(viii) At Closing, the Purchasers shall collaterally assign and post the Bridge Notes (or an amount of cash and freely marketable securities with a fair market value equal to the principal amount of the Bridge Notes) as collateral for performance of the Purchasers’ obligations under the Put Option pursuant to customary collateral arrangements reasonably acceptable to the parties. The amount of collateral to be posted shall be measured by the principal amount of the Bridge Note outstanding from time to time and there shall be no requirement to post additional collateral if the Bridge Note is voluntarily paid by the Company prior to its maturity.
(ix) For the purposes of this Section 1.4(c) , the “pro rata share” of each Purchaser means the percentage designated by PSCM by written notice to the Company on or prior to the Effective Date; provided that the sum of such pro rata shares shall be 100%.
(x) The Bridge Note Amount shall not be included in the calculation of Closing Date Net Debt or Closing Date Net Debt W/O Reinstatement Adjustment pursuant to Section 5.16 .
SECTION 1.5 Pro Rata Reductions with Fairholme Agreement . No election by the Company pursuant to Section 1.4(a) or specification of Reserved Shares pursuant to Section 1.4(b) shall be made without the consent of PSCM unless the Company is making a similar election under the Fairholme Agreement, such that each of the aggregate number of Shares required to be purchased at Closing is allocated as among each Purchaser and among each of the Fairholme Purchasers under the Fairholme Agreement in accordance with the applicable GGP Pro Rata Share ; provided , however that solely for the purposes of this Section 1.5 , the number of Put Shares shall be included in the above calculation of the number of Shares required to be purchased at Closing .
ARTICLE II
GGO SHARE DISTRIBUTION AND PURCHASE OF GGO COMMON STOCK
SECTION 2.1 GGO Share Distribution . On the terms and subject to the conditions (including Bankruptcy Court approval) set forth herein, the Plan shall provide for the following:
(a) On or prior to the Effective Date, the Company shall incorporate GGO with issued and outstanding capital stock consisting of at least the GGO Common Share Amount of shares of common stock (the “ GGO Common Stock ”), designate an employee of the Company familiar with the Identified Assets and reasonably acceptable to each Purchaser to serve as a representative of GGO (the “ GGO Representative ”) and shall contribute to GGO (directly or indirectly) the assets (and/or equity interests related thereto) set forth in Exhibit E hereto and have GGO assume directly or indirectly the associated liabilities (the “ Identified Assets ”); provided , however , that to the extent the Company is prohibited by Law from contributing one or more of the Identified Assets to GGO or the contribution thereof would breach or give rise to a default under any Contract, agreement or instrument that would, in the good faith judgment of the Company in consultation with the GGO Representative, impair in any material respect the value of the relevant Identified Asset or give rise to additional liability (other than liability that would not, in the aggregate, be material) on the part of GGO or the Company or a Subsidiary of the Company, the Company shall (i) to the extent not prohibited by Law or would not give rise to such a default, take such action or cause to be taken such other actions in order to place GGO, insofar as reasonably possible, in the same economic position as if such Identified Asset had been transferred as contemplated hereby and so that, insofar as reasonably possible, substantially all the benefits and burdens (including all obligations thereunder but excluding any obligations that arise out of the transfer of the Identified Asset to the extent included in Permitted Claims) relating to such Identified Asset, including possession, use, risk of loss, potential for gain and control of such Identified Asset, are to inure from and after the Closing to GGO
( provided that as soon as a consent for the contribution of an Identified Asset is obtained or the contractual impediment is removed or no longer applies, the applicable Identified Asset shall be promptly contributed to GGO), or (ii) to the extent the actions contemplated by clause (i) are not possible without resulting in a material and adverse effect on the Company and its Subsidiaries (as reasonably determined by the Company in consultation with the GGO Representative), contribute other assets, with the consent of each Purchaser (which such Purchaser shall not unreasonably withhold, condition or delay), having an economically equivalent value and related financial impact on the Company (in each case, as reasonably agreed by each Purchaser and the Company in consultation with the GGO Representative) to the Identified Asset not so contributed. In no event shall the Company (or any subsidiary of the Company) pay more than $16,000,000 in the aggregate or make any other payment or provide any other economic consideration to reduce the principal amount of the mortgage related to 110 N. Wacker Drive, Chicago, Illinois.
(b) The GGO Common Share Amount of shares of GGO Common Stock, representing all of the outstanding capital stock of GGO (other than shares of GGO Common Stock to be issued (x) pursuant to Section 2.2 of this Agreement, (y) to the other Initial Investors pursuant to Section 2.2 of their respective Investment Agreements, and (z) upon exercise of the GGO Warrants and the warrants issued to the other Initial Investors pursuant to their respective Investment Agreements), shall be distributed, on or prior to the Effective Date, to the shareholders of the Company (pre-issuance of the Shares) on a pro rata basis and holders of UPREIT Units (the “ GGO Share Distribution ”).
(c) It is agreed that neither the Company nor any of its Subsidiaries shall be required to pay or cause payment of any fees or make any financial accommodations to obtain any third-party consent, approval, waiver or other permission for the contribution contemplated by Section 2.1(a) , or to seek any such consent, approval, waiver or other permission that is inapplicable to the Company or any of its Debtor Subsidiaries pursuant to the Bankruptcy Code.
(d) The parties currently contemplate that the GGO Share Distribution will be structured as a “tax free spin-off” under the Code. To the extent that the Company and each Purchaser jointly determine that it is desirable for the GGO Share Distribution to be structured as a taxable dividend, the parties will work together to structure the transaction to allow for such outcome.
(e) With respect to the Columbia Master Planned Community (the “ CMPC ”), it is the intention of the parties that office and mall assets currently producing any material amount of income at the CMPC (including any associated right of access to parking spaces) will be retained by the Company and the remaining non-income producing assets at the CMPC will be transferred to GGO (including rights to develop and/or redevelop (as appropriate) the remainder of the CMPC). On or prior to the Effective Date, the Company and GGO shall enter into a mutually satisfactory development and cooperation agreement with respect to the CMPC, which agreement
shall provide, among other things, that GGO shall grant mutually satisfactory easements, to the extent not already granted, such that the office buildings retained by GGP (as provided above) continuously shall have access to parking spaces appropriate for such office buildings.
SECTION 2.2 Purchase of GGO Common Stock .
(a) On the terms and subject to the conditions set forth herein, the Plan shall provide that at the Closing, each Purchaser shall purchase from GGO, and GGO shall sell to such Purchaser, a number of shares of GGO Common Stock (the “ GGO Shares ”) equal to its GGO Pro Rata Share of 2,625,000 shares of GGO Common Stock, for a price per share equal to $47.619048 (the “ GGO Per Share Purchase Price ” and such $125,000,000 aggregate purchase price, the “ GGO Purchase Price ”). At the Closing the Purchasers shall cause the GGO Purchase Price to be paid by wire transfer of immediately available U.S. Dollar funds to such account or accounts as the Company shall have designated in writing prior to the Closing.
(b) All GGO Shares shall be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by GGO to the extent required under the Confirmation Order or applicable Law.
(c) Each Purchaser, in its sole discretion, may designate that some or all of the GGO Shares be issued in the name of, and delivered to, the other members of its Purchaser Group in accordance with and subject to the Designation Conditions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser, as set forth below, except (i) as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (but not in documents filed as exhibits thereto or documents incorporated by reference therein) filed with the SEC on March 1, 2010 (other than in any “risk factor” disclosure or any other forward-looking disclosures contained in such reports under the headings “Risk Factors” or “Cautionary Note” or any similar sections) or (ii) as set forth in the disclosure schedule delivered by the Company to each Purchaser on the date of this Agreement (the “ Company Disclosure Letter ”):
SECTION 3.1 Organization and Qualification . The Company and each of its direct and indirect Significant Subsidiaries is duly organized and is validly existing as a corporation or other form of entity, where applicable, in good standing under the Laws of their respective jurisdictions of organization, with the requisite power and authority to own, operate or manage its properties and conduct its business as currently conducted, subject, as applicable, to the restrictions that result from any such entity’s status as a debtor-in-possession under Chapter 11, except to the extent the failure of such Significant Subsidiary to be in good standing (to the extent the concept of good standing is
applicable in its jurisdiction of organization) would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company and each of its Significant Subsidiaries has been duly qualified as a foreign corporation or other form of entity for the transaction of business and, where applicable, is in good standing under the Laws of each other jurisdiction in which it owns, manages, operates or leases properties or conducts business so as to require such qualification, except to the extent the failure to be so qualified or, where applicable, be in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.2 Corporate Power and Authority .
(a) Subject to the authorization of the Bankruptcy Court, which shall be contained in the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, the Company has the requisite power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order). The Company has taken all necessary corporate action required for the due authorization, execution, delivery and performance by it of this Agreement.
(b) Subject to the entry of the Approval Order, the Company has the requisite power and authority to (i) issue the Warrants (assuming the accuracy of the representations of each Purchaser contained in Exhibit D ) and (ii) perform its obligations pursuant to the provisions of the Approval Order hereof. No approval by any securityholders of the Company or any Subsidiary of the Company is required in connection with the issuance of the Warrants or the issuance of the shares of Common Stock upon exercise of the Warrants.
(c) The Company has received written confirmation from the NYSE that the shares of New Common Stock or other Equity Securities issuable by the Company to each Purchaser and the other members of the Purchaser Group in connection with each Purchaser’s exercise of its Subscription Rights contemplated by Section 5.9(a) hereof shall not require stockholder approval and shall be eligible for listing on the NYSE in the hands of such Purchaser or other members of the Purchaser Group without any requirement for stockholder approval, in each case, during the five (5) year period following the Closing Date.
SECTION 3.3 Execution and Delivery; Enforceability .
(a) This Agreement has been duly and validly executed and delivered by the Company, and subject to the authorization of the Bankruptcy Court, which shall be contained in the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, shall constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to general principles of equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding at Law or in equity) (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order).
(b) Subject to the entry of the Approval Order, the provisions of this Agreement relating to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order shall constitute the valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.
SECTION 3.4 Authorized Capital Stock . As of the date of this Agreement, the authorized capital stock of the Company consists of 875,000,000 shares of Common Stock and of 5,000,000 shares of preferred stock. The issued and outstanding capital stock of the Company and the shares of Common Stock available for grant pursuant to the Company’s 1993 Stock Incentive Plan, 1998 Stock Incentive Plan and 2003 Stock Incentive Plan (collectively, the “ Company Option Plans ”) or otherwise as of March 26, 2010 (the “ Measurement Date ”) is set forth on Section 3.4 of the Company Disclosure Letter. From the Measurement Date to the date of this Agreement, other than in connection with the issuance of shares of Common Stock pursuant to the exercise of options outstanding as of the Measurement Date, there has been no change in the number of outstanding shares of capital stock of the Company or the number of outstanding Equity Securities (as defined below). Except as set forth on Section 3.4 of the Company Disclosure Letter, on the Measurement Date, there was not outstanding, and there was not reserved for issuance, any (i) share of capital stock or other voting securities of the Company or its Significant Subsidiaries; (ii) security of the Company or its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or voting securities of the Company or its Significant Subsidiaries; (iii) option or other right to acquire from the Company or its Subsidiaries, or obligation of the Company or its Subsidiaries to issue, any shares of capital stock, voting securities or security convertible into or exercisable or exchangeable for shares of capital stock or voting securities of the Company or its Significant Subsidiaries, as the case may be; or (iv) equity equivalent interest in the ownership or earnings of the Company or its Significant Subsidiaries or other similar right, in each case to which the Company or a Significant Subsidiary is a party (the items in clauses (i) through (iv) collectively, “ Equity Securities ”). Other than as set forth on Section 3.4 of the Company Disclosure Letter or as contemplated by this Agreement, or pursuant to Contracts entered into by the Company after the date hereof and prior to the Closing that are otherwise not inconsistent with any Purchaser’s rights hereunder and with respect to the transactions contemplated hereby, and do not confer on any other Person rights that are superior to those received by any Purchaser hereunder or pursuant to the transactions contemplated hereby other than rights and terms that are customarily granted to holders of any such Equity Securities so issued and not customarily granted in transactions such as the transactions contemplated hereby, there is no outstanding obligation of the Company or its Subsidiaries to repurchase, redeem or otherwise acquire any Equity Security. Other than as set forth on Section 3.4 of the Company Disclosure Letter or as contemplated by this Agreement, or pursuant to Contracts entered into by the Company in connection with the issuance of Equity
Securities after the date hereof and prior to the Closing that are otherwise not inconsistent with any Purchaser’s rights hereunder and with respect to the transactions contemplated hereby, and do not confer on any other Person rights that are superior to those received by any Purchaser hereunder or pursuant to the transactions contemplated hereby other than rights and terms that are customarily granted to holders of any such Equity Securities so issued and not customarily granted in transactions such as the transactions contemplated hereby, there is no stockholder agreement, voting trust or other agreement or understanding to which the Company is a party or by which the Company is bound relating to the voting, purchase, transfer or registration of any shares of capital stock of the Company or preemptive rights with respect thereto. Section 3.4 of the Company Disclosure Letter sets forth a complete and accurate list of the outstanding Equity Securities of the Company as of the Measurement Date, including the applicable conversion rates and exercise prices (or, in the case of options to acquire Common Stock, the weighted average exercise price) relating to the conversion or exercise of such Equity Securities into or for Common Stock.
SECTION 3.5 Issuance .
(a) Subject to the authorization of the Bankruptcy Court, which shall be contained in entry of the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14 day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, the issuance of the Shares and the New Warrants has been duly and validly authorized. Subject to the entry of the Approval Order and assuming the accuracy of the representations of such Purchaser contained in Exhibit D , the issuance of the Warrants is duly and validly authorized. When the Shares are issued and delivered in accordance with the terms of this Agreement against payment therefor, the Shares shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the Non-Control Agreement and applicable state and federal securities Laws. When the Warrants and the New Warrants are issued and delivered in accordance with the terms of this Agreement, the Warrants and New Warrants shall be duly and validly issued and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the terms of the Warrants and New Warrants and under applicable state and federal securities Laws. When the shares of Common Stock issuable upon the exercise of the Warrants and the shares of New Common Stock issuable upon the exercise of the New Warrants are issued and delivered against payment therefor, the shares of Common Stock and New Common Stock, as applicable, shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement, the Non-Control Agreement and applicable state and federal securities Laws.
(b) Subject to the authorization of the Bankruptcy Court, which shall be contained in the entry of the Confirmation Order, and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following
entry of the Confirmation Order, when the GGO Shares and the GGO Warrants are issued, the GGO Shares and GGO Warrants shall be duly and validly authorized, duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement and under applicable state and federal securities Laws. When the shares of GGO Common Stock issuable upon the exercise of the GGO Warrants are issued and delivered against payment therefor, the shares of GGO Common Stock shall be duly and validly issued, fully paid and non-assessable and free and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription rights, other than rights and restrictions under this Agreement and under applicable state and federal securities Laws.
SECTION 3.6 No Conflict .
(a) Subject to (i) the receipt of the consents set forth on Section 3.6 of the Company Disclosure Letter, (ii) such authorization as is required by the Bankruptcy Court or the Bankruptcy Code, which shall be contained in the entry of the Confirmation Order, and the expiration, or waiver by the Bankruptcy Court, of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, (iii) any provisions of the Bankruptcy Code that override, eliminate or abrogate such consents or as may be ordered by the Bankruptcy Court and (iv) the ability to employ the alternatives contemplated by Section 2.1 of the Agreement, the execution and delivery (or, with respect to the Plan, the filing) by the Company of this Agreement and the Plan, the performance by the Company of its respective obligations under this Agreement and compliance by the Company with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, (x) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any Contract to which the Company or any of the Company’s Subsidiaries is a party or by which any of their material assets are subject or encumbered, (y) shall not result in any violation or breach of any terms, conditions or provisions of the certificate of incorporation or bylaws of the Company, or the comparable organizational documents of the Company’s Subsidiaries, and (z) shall not conflict with or result in any violation or breach of, or any termination or impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, except, in the case of each of clauses (x) and (z) above, for any such conflict, breach, acceleration, lien, termination, impairment, failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order).
(b) Subject to the entry of the Approval Order, (i) the issuance of the Warrants (assuming the accuracy of the representations of each Purchaser contained in Exhibit D ) and (ii) the performance by the Company of its respective obligations under
the Approval Order and compliance by the Company with all of the provisions thereof (x) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any Contract, (y) shall not result in any violation or breach of any terms, conditions or provisions of the certificate of incorporation or bylaws of the Company, or the comparable organizational documents of the Company’s Subsidiaries, and (z) shall not conflict with or result in any violation or breach of, or any termination or impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, except, in the case of each of clauses (x) and (z) above, for any such conflict, breach, acceleration, lien, termination, impairment, failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.
SECTION 3.7 Consents and Approvals .
(a) No consent, approval, authorization, order, registration or qualification of or with any Governmental Entity having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties is required for (i) (1) the issuance and delivery of the New Warrants, (2) the issuance, sale and delivery of Shares, (3) the issuance and delivery of the Warrants, (4) the issuance, sale and delivery of the GGO Shares, (5) the issuance and delivery of the GGO Warrants, (6) the issuance of New Common Stock upon exercise of the New Warrants, (7) the issuance of GGO Common Stock upon exercise of the GGO Warrants and (8) the issuance of Common Stock upon exercise of the Warrants and (ii) the execution and delivery by the Company of this Agreement or the Plan and performance of and compliance by the Company with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except (A) such authorization as is required by the Bankruptcy Court or the Bankruptcy Code, which shall be contained in the entry of the relevant Court Order, and the expiration, or waiver by the Bankruptcy Court, of the 14-day period set forth in Bankruptcy Rule 3020(e) following entry of the Confirmation Order, as applicable (except with respect to (i) the issuance of the Warrants and (ii) the provisions of the Approval Order), (B) filings required under, and compliance with (other than shareholder approval requirements in respect of the issuance of the Warrants), the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, the Securities Act and the rules and regulations promulgated thereunder, and the rules of the New York Stock Exchange, and (C) such other consents, approvals, authorizations, orders, registrations or qualifications that, if not obtained, made or given, would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(b) No consent, approval, authorization, order, registration or qualification of or with any Governmental Entity having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties is required for (1) the issuance and delivery of the Warrants and (2) the performance of and compliance by the
Company with all of the provisions of the Approval Order except (A) the entry of the Approval Order, (B) filings required under, and compliance with (other than shareholder approval requirements in respect of the issuance of the Warrants), the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, the Securities Act and the rules and regulations promulgated thereunder, and the rules of the New York Stock Exchange, and (C) such other consents, approvals, authorizations, orders, registrations or qualifications that, if not obtained, made or given, would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.8 Company Reports .
(a) The Company has filed with or otherwise furnished to the Securities and Exchange Commission (the “ SEC ”) all material forms, reports, schedules, statements and other documents required to be filed or furnished by it under the United States Securities Act of 1933, as amended (the “ Securities Act ”) or the Exchange Act since December 31, 2007 (such documents, as supplemented or amended since the time of filing, and together with all information incorporated by reference therein, the “ Company SEC Reports ”). No Subsidiary of the Company is required to file with the SEC any such forms, reports, schedules, statements or other documents pursuant to Section 13 or 15 of the Exchange Act. As of their respective effective dates (in the case of Company SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective filing dates (in the case of all other Company SEC Reports), except as and to the extent modified, amended, restated, corrected, updated or superseded by any subsequent Company SEC Report filed and publicly available prior to the date of this Agreement, the Company SEC Reports (i) complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Reports, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The Company maintains a system of “internal controls over financial reporting” (as defined in Rules 13a-15(f) and 15a-15(f) under the Exchange Act) that provides reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP and that includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
(c) The Company maintains a system of “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that is reasonably designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that information relating to the Company is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports.
(d) Since December 31, 2008, the Company has not received any oral or written notification of a “material weakness” in the Company’s internal controls over financial reporting. The term “material weakness” shall have the meaning assigned to it in the Statements of Auditing Standards 112 and 115, as in effect on the date hereof.
(e) Except as and to the extent modified, amended, restated, corrected, updated or superseded by any subsequent Company SEC Report filed and publicly available prior to the date of this Agreement, the audited consolidated financial statements and the unaudited consolidated interim financial statements (including any related notes) included in the Company SEC Reports fairly present in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods set forth therein (subject, in the case of financial statements for quarterly periods, to normal year-end adjustments) and were prepared in conformity with GAAP consistently applied during the periods involved (except as otherwise disclosed in the notes thereto).
SECTION 3.9 No Undisclosed Liabilities . None of the Company or its Subsidiaries has any material liabilities (whether absolute, accrued, contingent or otherwise) required to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP, except for liabilities (i) reflected or reserved against or provided for in the Company’s consolidated balance sheet as of December 31, 2009 or disclosed in the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, (ii) incurred in the ordinary course of business consistent with past practice since the date of such balance sheet, (iii) for fees and expenses incurred in connection with the Bankruptcy Cases, which have been estimated and included in the Admin/Priority Claims identified in the Plan Summary Term Sheet; provided , however , that such amount is an estimate and actual results may be higher or lower, (iv) incurred in the ordinary course of performing this Agreement and certain other asset sales, transfers and other actions permitted under this Agreement and (v) other liabilities at Closing as contemplated by the Plan Summary Term Sheet.
SECTION 3.10 No Material Adverse Effect . Since December 31, 2009, there has not occurred any event, fact or circumstance that has had or would reasonably be expected to have, individually, or in the aggregate, a Material Adverse Effect.
SECTION 3.11 No Violation or Default: Licenses and Permits . The Company and its Subsidiaries (a) are in compliance with all Laws, statutes, ordinances, rules, regulations, orders, judgments and decrees of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties, and (b) has not received written notice of any alleged material violation of any of the foregoing except, in the case of each of clauses (a) and (b) above, for any such failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect or as may be the result of the Company’s or any of its Subsidiaries’ Chapter 11 filing or status as a debtor-in-possession under Chapter 11. Subject to the restrictions that result from the Company’s or any of its Subsidiaries’ status as a debtor-in-possession under Chapter 11 (including that in certain instances the Company’s or such Subsidiary’s conduct of its business requires Bankruptcy Court approval), each of the Company and its Subsidiaries holds all material licenses, franchises, permits, certificates of occupancy, consents, registrations, certificates and other governmental and regulatory permits, authorizations and approvals required for the operation of the business as currently conducted by it and for the ownership, lease or operation of its material assets except, in each case, where the failure to possess or make the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.12 Legal Proceedings . There are no legal, governmental or regulatory investigations, actions, suits or proceedings pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries which, individually, if determined adversely to the Company or any of its Subsidiaries, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.13 Investment Company Act . The Company is not, and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof, shall not be required to register as an “ i nvestment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder. As of the Effective Date, GGO, after giving effect to the offering and sale of the GGO Shares and the application of the proceeds thereof, shall not be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.
SECTION 3.14 Compliance With Environmental Laws . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each of the Company and its Subsidiaries are and have been in compliance with and each of the Company Properties are and have been maintained in compliance with, any and all applicable federal, state, local and foreign Laws relating to the
protection of the environment or natural resources, human health and safety as such relates to the environment, or the presence, handling, or release of Hazardous Materials (collectively, “ Environmental Laws ”), which compliance includes obtaining, maintaining and complying with all permits, licenses or other approvals required under Environmental Laws to conduct operations as presently conducted, and no action is pending or, to the Knowledge of the Company, threatened that seeks to repeal, modify, amend, revoke, limit, deny renewal of, or otherwise appeal or challenge any such permits, licenses or other approvals, (ii) none of the Company or its Subsidiaries have received any written notice of, and none of the Company Properties have been the subject of any written notice received by the Company or any of its Subsidiaries of, any actual or potential liability or violation for the presence, exposure to, investigation, remediation, arrangement for disposal, or release of any material classified, characterized or regulated as hazardous, toxic, pollutants, or contaminants under Environmental Laws, including petroleum products or byproducts, radioactive materials, asbestos-containing materials, radon, lead-containing materials, polychlorinated biphenyls, mold, and hazardous building materials (collectively, “ Hazardous Materials ”), (iii) none of the Company and its Subsidiaries are a party to or the subject of any pending, or, to the Knowledge of the Company, threatened, legal proceeding alleging any liability, responsibility, or violation under any Environmental Laws with respect to their past or present facilities or their respective operations, (iv) none of the Company and its Subsidiaries have released Hazardous Materials on any real property in a manner that would reasonably be expected to result in an environmental claim or liability against the Company or any of its Subsidiaries or Affiliates, (v) none of the Company Properties is the subject of any pending, or, to the Knowledge of the Company, threatened, legal proceeding alleging any liability, responsibility, or violation under any Environmental Laws, and (vi) to the Knowledge of the Company, there has been no release of Hazardous Materials on, from, under, or at any of the Company Properties that would reasonably be expected to result in an environmental claim or liability against the Company or any of its Subsidiaries or Affiliates.
SECTION 3.15 Company Benefit Plans .
(a) Except as would not, individually or in the aggregate, have a Material Adverse Effect, each Company Benefit Plan is in compliance in design and operation in all material respects with all applicable provisions of ERISA and the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”) and each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service with respect to its qualified status under Section 401(a) of the Code and its related trust’s exempt status under Section 501(a) of the Code and the Company is not aware of any circumstances likely to result in the loss of the qualification of any such plan under Section 401(a) of the Code.
(b) Except as would not, individually or in the aggregate, have a Material Adverse Effect, with respect to each Company Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (A) no Company
Benefit Plan has failed to satisfy the minimum funding standard (within the meaning of Sections 412 and 430 of the Code or Section 302 of ERISA) applicable to such Company Benefit Plan, whether or not waived and no application for a waiver of the minimum funding standard with respect to any Company Benefit Plan has been submitted; (B) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred (other than in connection with the Bankruptcy Cases); (C) no liability (other than for premiums to the Pension Benefit Guaranty Corporation (the “ PBGC ”)) under Title IV of ERISA has been or is expected to be incurred by the Company or any entity that is required to be aggregated with the Company pursuant to Section 414 of the Code (an “ ERISA Affiliate ”); (D) the PBGC has not instituted proceedings to terminate any such plan or made any inquiry which would reasonably be expected to lead to termination of any such plan, and, no condition exists that presents a risk that such proceedings will be instituted or which would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any such plan; and (E) no Company Benefit Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code).
(c) Except as would not, individually or in the aggregate, have a Material Adverse Effect, with respect to each Company Benefit Plan maintained primarily for the benefit of current or former employees, officers or directors employed, or otherwise engaged, outside the United States (each a “ Foreign Plan ”), excluding any Foreign Plans that are statutorily required, government sponsored or not otherwise sponsored, maintained or controlled by the Company or any of its Significant Subsidiaries (“ Excluded Non-US Plans ”): (A) (1) all employer and employee contributions required by Law or by the terms of the Foreign Plan have been made, and all liabilities of the Company and its Significant Subsidiaries have been satisfied, or, in each case accrued, by the Company and its Significant Subsidiaries in accordance with generally accepted accounting principles, and (2) the Company and its Significant Subsidiaries are in compliance with all requirements of applicable Law and the terms of such Foreign Plan; (B) as of the Effective Date, the fair market value of the assets of each funded Foreign Plan, or the book reserve established for each Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such Foreign Plan determined on an ongoing basis (rather than on a plan termination basis) according to the actuarial assumptions and valuations used to account for such obligations as of the Effective Date in accordance with applicable generally accepted accounting principles; and (C) the Foreign Plan has been registered as required and has been maintained in good standing with applicable regulatory authorities.
SECTION 3.16 Labor and Employment Matters . (i) Neither the Company nor any of its Significant Subsidiaries is a party to or bound by any collective bargaining agreement or any labor union contract, nor are any employees of the Company or any of its Significant Subsidiaries represented by a works council or a labor organization (other than any industry-wide or statutorily mandated agreement in non-U.S. jurisdictions);
(ii) to the Knowledge of the Company, as of the date hereof, there are no activities or proceedings by any labor union or labor organization to organize any employees of the Company or any of its Significant Subsidiaries or to compel the Company or any of its Significant Subsidiaries to bargain with any labor union or labor organization; and (iii), except as would not, individually or in the aggregate, have a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened material labor strike, lock-out, walkout, work stoppage, slowdown, demonstration, leafleting, picketing, boycott, work-to-rule campaign, sit-in, sick-out, or similar form of organized labor disruption.
SECTION 3.17 Insurance . The Company maintains for itself and its Subsidiaries insurance policies in those amounts and covering those risks, as in its judgment, are reasonable for the business and assets of the Company and its Subsidiaries.
SECTION 3.18 No Unlawful Payments . No action is pending or, to the Knowledge of the Company, is threatened against the Company or any of its Subsidiaries or Affiliates, or any of their respective directors, officers, or employees resulting from any (a) use of corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (b) direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (c) violations of any provision of the Foreign Corrupt Practices Act of 1977 or any other applicable local anti-bribery or anti-corruption Laws in any relevant jurisdictions or (d) other unlawful payment, except in any such case, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.19 No Broker’s Fees . Other than pursuant to agreements (including amendments thereto) by and between the Company and each of UBS Securities LLC and Miller Buckfire & Co., LLC, or otherwise disclosed to each Purchaser prior to the date hereof and which fees and expenses would be included in the definition of “Permitted Claims”, none of the Company or any of its Subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against the Company or any of its Subsidiaries for an investment banking fee, finder’s fee or like payment in respect of the sale of the Shares contemplated by this Agreement. None of the Company or any of its Subsidiaries is a party to any contract, agreement or understanding with any Person that would give rise to a valid claim against any Purchaser for a brokerage commission, finder’s fee, investment banking fee or like payment in connection with the transactions contemplated by this Agreement.
SECTION 3.20 Real and Personal Property .
(a) Section 3.20(a) of the Company Disclosure Letter sets forth a true, correct and complete list in all material respects of each material real property asset owned or leased (as lessee), directly or indirectly, in whole or in part, by the Company and/or any of its Subsidiaries (other than Identified Assets) (each such property that is not a Non-Controlling Property and has a fair market value (in the reasonable determination
of the Company) in excess of $10,000,000 is individually referred to herein as “ Company Property ” and collectively referred to herein as the “ Company Properties ”). All Company Properties, Non-Controlling Properties and the Identified Assets are reflected in accordance with the applicable rules and regulations of the SEC in the Annual Report in Form 10-K as of, and for the year ended, December 31, 2009 (the “ Most Recent Statement ”).
(b) Except (i) for such breach of this Section 3.20(b) as may be caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries or (ii) as would not individually or in the aggregate be reasonably expected to have a Material Adverse Effect, the Company or one of its Subsidiaries owns good and valid fee simple title or valid and enforceable leasehold interests (except with respect to the Company’s right to reject any such ground lease as part of a Bankruptcy plan of reorganization for the remaining Debtor entities and subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at Law or in equity)), as applicable, to each of the Company Properties, in each case, free and clear of liens, mortgages or deeds of trust, claims against title, charges that are liens or other encumbrances on title, rights of way, restrictive covenants, declarations or reservations of an interest in title (collectively, “ Encumbrances ”), except for the following (collectively, the “ Permitted Title Exceptions ”): (i) Encumbrances relating to the DIP Loan and to debt obligations reflected in the Company’s financial statements and the notes thereto (including with respect to debt obligations which are not consolidated) or otherwise disclosed to each Purchaser in Section 3.20(g)(i) of the Company Disclosure Letter, (ii) Encumbrances that result from any statutory or other liens for Taxes or assessments that are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings and for which a sufficient and appropriate reserve has been set aside for the full payment thereof, (iii) any contracts, or other occupancy agreements to third parties for the occupation or use of portions of the Company Properties by such third parties in the ordinary course of the business of the Company or its Subsidiaries, (iv) Encumbrances imposed or promulgated by Law or any Governmental Entity, including zoning, entitlement and other land use and environmental regulations, (v) Encumbrances disclosed on existing title policies and current title insurance commitments or surveys made available to each Purchaser, (vi) Encumbrances on the landlord’s fee interest at any Company Property where the Company or its Subsidiary is the tenant under any ground lease, provided that, except as disclosed to each Purchaser in Section 3.20(b)(ii) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries have received a notice indicating the intention of the landlord under such ground lease, or of any other Person, to (1) exercise a right to terminate such ground lease, evict the lessee or otherwise collect the sub-rents thereunder, or (2) take any other action that would be reasonably likely to result in a termination of such ground lease, (vii) any cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s
and materialmen’s liens and other similar liens (1) incurred in the ordinary course of business which (A) are being challenged in good faith by appropriate proceedings and for which a sufficient and appropriate reserve has been set aside for the full payment thereof or (B) have been otherwise fully bonded and discharged of record or for which a sufficient and appropriate reserve has been set aside for the full payment thereof or (2) disclosed on Section 3.20(b)(i) of the Company Disclosure Letter and (viii) any other easements, rights-of-way, restrictions (including zoning restrictions), covenants, encroachments, protrusions and other similar charges or encumbrances, and title limitations or title defects, if any, that (I) are customary for office, industrial, master planned communities and retail properties or (II) individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect. Other than as set forth on Section 3.20(b)(ii) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has received a written notice of a material default, beyond any applicable grace and cure periods, of or under any Permitted Title Exceptions, except (w) as may have been caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries (x) as a result of the filing of the Bankruptcy Cases, (y) where the Permitted Title Exceptions are in and of themselves evidence of default (such as mechanics’ liens and recorded notices of default) or (z) as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; provided , however , that where the Company has otherwise represented and warranted to each Purchaser hereunder (including as set forth on the Company Disclosure Letter pursuant to such representations and warranties) with respect to the Company’s Knowledge of, the Company’s receipt of notice of or the existence of a default in connection with a particular category of Permitted Title Exceptions, such categories of Permitted Title Exceptions shall not be included in the representation set forth in this sentence (by way of illustration, but not exclusion, the representations set forth in Section 3.20(f) with respect to defaults under Material Leases shall be deemed to address the Company’s representations and warranties with respect to the entire category of Permitted Title Exceptions detailed in clause (iii) above).
(c) To the extent available, the Company and its Subsidiaries have made commercially reasonable efforts to make available or will use commercially reasonable efforts to make available upon request to each Purchaser those policies of title insurance that the Company or its Subsidiaries have obtained in the last six months.
(d) With respect to each Company Ground Lease Property, except as set forth on Section 3.20(d) of the Company Disclosure Letter and except as may have been caused by, or disclosed in the filing of the Bankruptcy Cases, as of the date hereof, to the Company’s Knowledge, neither the Company nor any of its Subsidiaries has received notice of material defaults (including, without limitation, payment defaults, but limited to those circumstances where such default may grant the landlord under such ground lease the right to terminate such ground lease, evict the lessee or otherwise collect the sub-rents thereunder) at such Company Ground Lease Property beyond any applicable grace and cure periods, except (x) as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect, (y) as may be caused fully or substantially by the third party member or partner in any Joint Venture, without the Knowledge or consent of the Company or any of its Subsidiaries and (z) with respect to any Company Ground Lease Property which is leased by a Subsidiary of the Company which has consummated a plan of reorganization in the Bankruptcy Cases, all such material defaults at such Company Ground Lease Property which existed prior to the effective date of such Person’s plan of reorganization have been or will be cured in accordance with such plan. As used herein the term “ Company Ground Lease Property ” shall mean any Company Property having a fair market value (in the reasonable determination of the Company) in excess of $25,000,000 which is leased by a Subsidiary of the Company as tenant pursuant to a ground lease. With respect to the defaults referenced in clause (z) above, the Bankruptcy Court approved the Debtors’ assumption of the applicable ground leases and the fixed cure amounts for such defaults which predated assumption; provided , however , nothing contained herein precludes any Person from raising issues in the future with respect to defaults that may have predated such assumption.
(e) Except as set forth on Section 3.20(e) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to any agreement relating to the property management (but not including any leasing, development, construction or brokerage agreements) of any of the Company Properties by a party other than Company or any wholly owned Company Subsidiaries, except (i) management agreements that may be terminated without cause or payment of a termination fee upon no more than 60 days notice or (ii) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(f) Except as set forth on Section 3.20(f) of the Company Disclosure Letter, to the Company’s Knowledge, as of February 15, 2010, (i) each Material Lease is in full force and effect, (ii) no tenant is in arrears in the payment of rent, additional rent or any other material charges due under any Material Lease, and no tenant is materially in default in the performance of any other obligations under any Material Lease, (iii) no bankruptcy or insolvency proceeding has been commenced (and is continuing) by or against any tenant under any Material Lease, and (iv) neither the Company nor any of its Subsidiaries has received a written notice from a current tenant under any Material Lease exercising a right to terminate or otherwise cancel its Material Lease (y) as a result of or in connection with the termination or cancellation of any other lease, sublease, license or occupancy agreement for space at any Company Property (each, a “ Company Property Lease ”), or (z) as a result of or in connection with any other tenant that occupies, or had previously occupied, another Company Property Lease, allowing, or having had allowed, all or any portion of the premises leased pursuant to such other Company Property Lease to “go dark” or otherwise be abandoned or vacated; except, (A) in the case of each of clauses (i), (ii) (iii) and (iv) above, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (B) as a result of the filing of the Bankruptcy Cases or in connection with any Bankruptcy Court approved process and (C) as may have been caused fully or substantially by the third party member or partner
in any Joint Venture, without the Knowledge or consent of the Company or its Subsidiaries. “ Material Lease ” means for any Company Property any lease in which the Company or its Subsidiaries is the landlord, and all amendments, modifications, supplements, renewals, exhibits, schedules, extensions and guarantees related thereto, (1) to an “anchor tenant” occupying at least 80,000 square feet with respect to such Company Property or (2) that is one of the five (5) largest leases, in terms of gross annual minimum rent, with respect to a Company Property that has an annual net operating income, as determined in accordance with GAAP ( provided , however , that for purposes of such calculation, the following were reflected as expenses: (a) ground rent payments to a third party and (b) an assumed management fee equal to 3% of base minimum and percentage rent) with respect to the trailing twelve (12) calendar month period, equal to at least $7,500,000.00. For purposes of Section 7.1(c) , (y) the representations and warranties made in Section 3.20(f)(i) , (iii) and (iv) , disregarding all qualifications and exceptions contained therein relating to “materiality” or “Material Adverse Effect”, shall be shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date, except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect and (z) the representation and warranties contained in Section 3.20(f)(ii) , disregarding all qualifications and exceptions contained therein relating to “materiality” or “Material Adverse Effect”, shall be true and correct (A) at and as of the last day of the calendar month that is two (2) calendar months prior to the calendar month in which the Closing Date occurs as if made at and as of such date, if the Closing Date occurs on or prior to the fifteenth (15th) day of a calendar month, or (B) at and as of the fifteenth (15th) day of the calendar month that is one (1) calendar month prior to the calendar month in which the Closing Date occurs as if made at and as of such date, if the Closing Date occurs on or after the sixteenth (16th) day of a calendar month, except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(g) With respect to each Company Property:
(i) As of the date listed thereunder, Section 3.20(g) of the Company Disclosure Letter sets forth a true, correct and complete list in all material respects of (i) all loans (other than the DIP Loan) and other indebtedness secured by a mortgage, deed of trust, deed to secure debt or indemnity deed of trust in such Company Property (each, a “ Company Mortgage Loan ”), (ii) the outstanding principal balance of each such Company Mortgage Loan, (iii) the rate of interest applicable to such Company Mortgage Loan and (iv) the maturity date of such Company Mortgage Loan;
(ii) Except as set forth in Section 3.20(g) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries have received a written notice of default (beyond any applicable grace or cure periods) in the
(y) payment of interest, principal or other material amount due to the lender under any Company Mortgage Loan, whether as the primary obligor or as a guarantor thereof or (z) performance of any other material obligations under any Company Mortgage Loan, except (i) with respect to (y) and (z) above, as a result of the filing of the Bankruptcy Cases, or as is prohibited, stayed or otherwise suspended as a result of the Company’s or any Subsidiary’s Chapter 11 filing or status as a debtor-in-possession under Chapter 11, and (ii) with respect solely to (z) above, which would not individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; and
(iii) For purposes of Section 7.1(c) the representations and warranties made in Section 3.20(g)(i) , disregarding all qualifications and exceptions contained therein relating to “materiality” or “Material Adverse Effect”, shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date, except for (A) such inaccuracies caused by sales, purchases, transfers of assets, refinancing or other actions effected in accordance with, subject to the limitations contained in, and not otherwise prohibited by, the terms and conditions in this Agreement, including, without limitation, in Article VII , (B) amortization payments made pursuant to any applicable Company Mortgage Loans and (C) such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(h) To the Knowledge of the Company, (i) except as set forth on Section 3.20(h) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has received a written notice exercising an option, “buy-sell” right or other similar right to purchase a Company Property or any material portion thereof which has not previously closed, except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect with respect to such Company Property and (ii) no Company Property is subject to a purchase and sale agreement or any similar legally binding agreement to purchase such Company Property or any material portion thereof (other than (x) with respect to condominium purchase and sale agreements and purchase and sale and early occupancy agreements or other similar agreements for the sale of condominium units at the Natick Nouvelle, (y) with respect to builder lot purchase agreements and other similar agreements for the sale of vacant lots of land to builders at Bridgeland and (z) as set forth in (i) above) which has not previously closed.
(i) The Company has conducted due inquiry with respect to the representations and warranties made in Section 3.20(d) , Section 3.20(f) , and Section 3.20(h) .
SECTION 3.21 Tax Matters . Except as disclosed on Section 3.21(a) of the Company Disclosure Letter:
(a) Except in cases where the failure of any of the following to be true would not result in a Material Adverse Effect: (i) the Company and each of its Significant Subsidiaries have filed all Tax Returns required to be filed by applicable Law prior to the date hereof; (ii) all such Tax Returns were true, complete and correct in all respects and filed on a timely basis (taking into account any applicable extensions); (iii) the Company and each of its Significant Subsidiaries have paid all amounts of Taxes that are due, claimed or assessed by any taxing authority to be due for the periods covered by such Tax Returns, other than any Taxes for which adequate reserves (“ Adequate Reserves ”) have been established in accordance with GAAP or a claim has been filed in the Bankruptcy Cases; and (iv) all adjustments of federal U.S. Tax liability of the Company and its Significant Subsidiaries resulting from completed audits or examinations have been reported to appropriate state and local taxing authorities and all resulting Taxes payable to state and local taxing authorities have been paid. “Taxes” means any U.S. federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. “ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, including, where permitted or required, combined or consolidated returns for any group of entities that include the Company or any of its Significant Subsidiaries.
(b) The Company and each of its REIT Subsidiaries (x) for all taxable years commencing with the taxable year ended December 31, 2005 through December 31, 2009, has been subject to taxation as a real estate investment trust within the meaning of Section 856 of the Code (a “ REIT ” ) and has satisfied all requirements to qualify as a REIT for such years; (y) has operated since January 1, 2010 to the date hereof in a manner consistent with the requirements for qualification and taxation as a REIT; and (z) intends to continue to operate in such a manner as to qualify as a REIT for the current taxable year. None of the transactions contemplated by this Agreement will prevent the Company or any of its REIT Subsidiaries from so qualifying. No Subsidiary of the Company other than a REIT Subsidiary is a corporation for U.S. federal income tax purposes, other than a corporation that qualifies as a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code. For the purposes of this Agreement, “ REIT Subsidiary ” means each of GGP Ivanhoe, Inc., GGP Holding, Inc., GGP Holding II, Inc., Victoria Ward, Limited, GGP-Natick Trust and GGP/Homart, Inc.
(c) Each Company Subsidiary other than its REIT Subsidiaries that is a partnership, joint venture, or limited liability company and which has not elected to be a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code has been
since its formation treated for U.S. federal income tax purposes as a partnership or disregarded entity, as the case may be, and not as a corporation or an association taxable as a corporation, except where failure to do so would not have a Material Adverse Effect.
(d) Except where the failure to be true would not have a Material Adverse Effect, the Company and each of its Significant Subsidiaries have (i) complied in all respects with all applicable Laws, rules, and regulations relating to the payment and withholding of Taxes (including withholding and reporting requirements under sections 1441 through 1464, 3401 through 3406, 6041 and 6049 of the Code and similar provisions under any other Laws) and (ii) within the time and in the manner prescribed by Law, withheld from employee wages and paid to the proper Governmental Entities all amounts required to be withheld and paid over.
(e) Except where the failure to be true would not have a Material Adverse Effect, no audits or other administrative proceedings or court proceedings are presently pending or to the Knowledge of the Company threatened with regard to any Taxes or Tax Returns of the Company or any of its Significant Subsidiaries, other than any audit or administrative proceeding relating to Taxes for which a claim has been filed in a Debtor’s Chapter 11 case or any other audit or administrative or court proceeding that is not reasonably expected to result in a material Tax liability to the Company or any of its Significant Subsidiaries.
(f) The Company has made available to each Purchaser complete and accurate copies of all material Tax Returns requested by any Purchaser and filed by or on behalf of the Company or any of its Significant Subsidiaries for all taxable years ending on or prior to the Effective Date and for which the statute of limitations has not expired.
(g) There are no Tax Protection Agreements except for those the breach of which would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Significant Subsidiary has any liability for Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of any state, local or foreign Law), or as a transferee or successor (by contract or otherwise), other than (i) to a Subsidiary of the Company or (ii) where any such liability would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.22 Material Contracts . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Material Contract that shall survive the Bankruptcy Cases is valid and binding on the Company or any of its Subsidiaries, as applicable, and, to the Knowledge of the Company, on each other Person party thereto, and is in full force and effect. Other than as a result of the commencement of the Bankruptcy Cases, each of the Company and its Subsidiaries has performed, in all material respects, all obligations required to be performed by it under each Material Contract that shall survive the Bankruptcy Cases, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Other than those caused as a result of the filing of the Bankruptcy Cases, neither the Company nor any of its Significant Subsidiaries is in breach or default of any
Material Contract to which it is a party and which shall survive the Bankruptcy Cases, except, in each case, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has made available to each Purchaser true, accurate and complete copies of the Material Contracts as of the date of this Agreement, except for those Material Contracts available to the public on the website maintained by the SEC. To the Knowledge of the Company, no party to any Material Contract that shall survive the Bankruptcy Cases has given written notice of any action to terminate, cancel, rescind or procure a judicial reformation of such Material Contract or any material provision thereof, which termination, cancellation, rescission or reformation would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. For the avoidance of doubt, Material Contracts do not include intercompany contracts.
SECTION 3.23 Certain Restrictions on Charter and Bylaws Provisions; State Takeover Laws .
(a) The Company and the Company Board have taken all appropriate and necessary actions to ensure that the ownership limitations set forth in Article IV of the Company’s certificate of incorporation shall not apply to (i) the acquisition of beneficial ownership by any Purchaser and any other member of the Purchaser Group of the Warrants and the shares of Common Stock issuable upon exercise of the Warrants, (ii) any antidilution adjustments to those Warrants pursuant to the Warrant Agreement and (iii) any Common Stock that any Purchaser or any member of the Purchaser Group may be deemed to own by no actions of its own and the acquisition of beneficial ownership of up to an additional amount totaling 0.714% of the issued and outstanding shares of Common Stock, in the aggregate, by any Purchaser or any other member of the Purchaser Group; provided , however , that such exception to the ownership limitations are only effective as to any Purchaser or a member of the Purchaser Group so long as (i) the Company has received executed copies of the representation certificate contained in Exhibit D from such Purchaser or such member of the Purchaser Group, it being understood that a member of the Purchaser Group shall be required to provide such representations at such times and only at such times as such member of the Purchaser Group “beneficially owns” or “constructively owns” (as such terms are defined in the certificate of incorporation of the Company) Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such member of the Purchaser Group in a tenant of the Company would be treated as constructively owned by the Company and (ii) the representations so provided are true, correct and complete as of the date made and continue to be true, correct and complete.
(b) The Company Board has taken all action necessary to render inapplicable to each Purchaser the restrictions on “business combinations” set forth in Section 203 of the Delaware General Corporation Law and, to the knowledge of the Company, any similar “moratorium,” “control share,” “fair price,” “takeover” or “interested stockholder” law applicable to transactions between each Purchaser and the Company.
SECTION 3.24 No Other Representations or Warranties . Except for the representations and warranties made by the Company in this Article III , neither the Company nor any other Person makes any representation or warranty with respect to the Company or its Subsidiaries or their respective business, operations, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to each Purchaser or any other members of the Purchaser Group or their respective representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Each Purchaser severally, and not jointly and severally, represents and warrants to the Company with respect to itself, and not with respect to any other Purchaser, as set forth below:
SECTION 4.1 Organization . Purchaser is duly organized and is validly existing and, where applicable, in good standing under the Laws of its jurisdiction of organization, with the requisite limited liability company power and authority to undertake and effectuate the transactions contemplated by this Agreement. Purchaser has been duly qualified as a foreign corporation or other form of entity for the transaction of business and, where applicable, is in good standing under the Laws of each other jurisdiction in which it operates so as to require such qualification, except where the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, have or be reasonably expected to materially delay or prevent the consummation of the transactions contemplated by this Agreement.
SECTION 4.2 Power and Authority . Purchaser has the requisite power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder and has taken all necessary action required for the due authorization, execution, delivery and performance by it of this Agreement.
SECTION 4.3 Execution and Delivery . This Agreement has been duly and validly executed and delivered by Purchaser and constitutes its valid and binding obligation, enforceable against Purchaser in accordance with its terms.
SECTION 4.4 No Conflict . The execution and delivery of this Agreement and the performance by Purchaser of its obligations hereunder and compliance by Purchaser with all of the provisions hereof and the consummation of the transactions contemplated herein (i) shall not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, or give rise to any termination right under, any material contract to which Purchaser is a party, (ii) shall not result in any violation or breach of any provisions of the organizational documents of Purchaser and (iii) shall not conflict with or result in any violation of, or any termination or material impairment of any rights
under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over Purchaser or Purchaser’s properties or assets, except with respect to each of (i), (ii) and (iii), such conflicts, violations or defaults as would not be reasonably expected to have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated hereunder.
SECTION 4.5 Consents and Approvals . No consent, approval, order, authorization, registration or qualification of or with any Governmental Entity having jurisdiction over Purchaser is required in connection with the execution and delivery by Purchaser of this Agreement or the consummation of the transactions contemplated hereby, except such consents, approvals, orders, authorizations, registration or qualification as would not reasonably be expected to materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.6 Compliance with Laws . Since the date of its formation, Purchaser has been in compliance with all Laws applicable to Purchaser, except, in each case, for such non-compliance as would not reasonably be expected to materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.7 Legal Proceedings . There are no legal, governmental or regulatory investigations, actions, suits or proceedings pending or, to the knowledge of Purchaser, threatened against Purchaser which, individually or in the aggregate, if determined adversely to Purchaser, would materially and adversely affect the ability of Purchaser to perform its obligations under this Agreement.
SECTION 4.8 No Broker’s Fees . Purchaser is not party to any contract, agreement or understanding with any Person that would give rise to a valid claim against the Company for an investment banking fee, commission, finder’s fee or like payment in connection with the transactions contemplated by this Agreement.
SECTION 4.9 Sophistication . Purchaser is, as of the date hereof and shall be as of the Effective Date, an “accredited investor” within the meaning of Rule 501(a) under the Securities Act. Purchaser understands and is able to bear any economic risks associated with such investment (including, without limitation, the necessity of holding such Shares and GGO Shares for an indefinite period of time).
SECTION 4.10 Purchaser Intent . Purchaser is acquiring the Shares, the Warrants, the GGO Shares, the New Warrants and the GGO Warrants for investment purposes only and not with a view to or for distributing or reselling such Shares, Warrants, GGO Shares, New Warrants and GGO Warrants or any part thereof, without prejudice, however, to Purchaser’s right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Shares, Warrants, GGO Shares, New Warrants and GGO Warrants pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities Laws. Purchaser understands that Purchaser must bear the economic risk of its investment indefinitely.
SECTION 4.11 Reliance on Exemptions . Purchaser understands that the Shares and the GGO Shares are being offered and sold to Purchaser in reliance upon specific exemptions from the registration requirements of United States federal and state securities Laws.
SECTION 4.12 REIT Representations . The representations provided by Purchaser and, to the extent applicable, its Affiliates, members or Affiliates of members, set forth on Exhibit D are true, correct and complete as of the date hereof, and shall be true as of the date of the issuance of the Warrants and as of the Closing Date, it being understood that Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations only if such Person “beneficially owns” or “constructively owns” (as such terms are defined in the certificate of incorporation of the Company) Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by the Company.
SECTION 4.13 Financial Capability . Such Purchaser has sufficient binding capital commitments or available funds to satisfy its obligations under this Agreement, including without limitation the payment of the applicable Purchase Price and the GGO Purchase Price.
SECTION 4.14 No Other Representations or Warranties . Except for the representations and warranties made by Purchaser in this Article IV , neither Purchaser nor any other Person on behalf of Purchaser makes any representation or warranty with respect to Purchaser or its assets, liabilities, condition (financial or otherwise) or prospects.
SECTION 4.15 Acknowledgement . Purchaser acknowledges that (a) neither the Company nor any Person on behalf of the Company is making any representations or warranties whatsoever, express or implied, beyond those expressly given by the Company in Article III of this Agreement and (b) Purchaser has not been induced by, or relied upon, any representations, warranties or statements (written or oral), whether express or implied, made by any Person, that are not expressly set forth in Article III of this Agreement. Without limiting the generality of the foregoing, except with respect to the representations and warranties contained in Article III , Purchaser acknowledges that no representations or warranties are made with respect to any projections, forecasts, estimates, budgets, plans or prospect information that may have been made available to Purchaser or any of its representatives.
ARTICLE V
COVENANTS OF THE COMPANY AND PURCHASER
SECTION 5.1 Bankruptcy Court Motions and Orders .
(a) No later than the close of business on the date that is two (2) Business Days following the date of this Agreement, the Company shall file with the Bankruptcy Court a motion in form and substance satisfactory to each Purchaser (the “ Approval Motion ”) seeking to obtain entry of an order in the form attached hereto as Exhibit F (the “ Proposed Approval Order ”), which order in the final form if approved by the Bankruptcy Court (the “ Approval Order ”) shall approve, among other things, the issuance of the Warrants to each Purchaser and the warrants contemplated by each other Investment Agreement to be issued to the applicable Initial Investor, and the performance by the Company of its obligations under the Warrant Agreement.
(b) The Approval Motion, including any exhibits thereto and any notices or other materials in connection therewith, and any modifications or amendments to the foregoing, must be in form and substance reasonably satisfactory to each Purchaser.
(c) If the Approval Order shall be appealed by any Person (or a petition for certiorari or motion for reconsideration, amendment, clarification, modification, vacation, stay, rehearing or reargument shall be filed with respect to such order), the Company shall diligently defend against any such appeal, petition or motion and shall use its reasonable best efforts to obtain an expedited resolution of any such appeal, petition or motion. The Company shall keep each Purchaser reasonably informed and updated regarding the status of any such appeal, petition or motion.
(d) The Company shall provide draft copies of all motions, notices, statements, schedules, applications, reports and other papers the Company intends to file with the Bankruptcy Court in connection with the Approval Order to each Purchaser within a reasonable period of time prior to the date the Company intends to file any of the foregoing, and shall consult in advance in good faith with each Purchaser regarding the form and substance of any such proposed filing with the Bankruptcy Court.
SECTION 5.2 Warrants, New Warrants and GGO Warrants . Within one Business Day of the date of the entry of the Approval Order, the Company and the warrant agent shall execute and deliver the warrant agreement in the form attached hereto as Exhibit G (with only such changes thereto as may be reasonably requested by the warrant agent and reasonably approved by each Purchaser) (the “ Warrant Agreement ”) pursuant to which there will be issued to PSCM 17,142,857 warrants (the “ Warrants ”) each of which, when issued, delivered and vested in accordance with the terms of the Warrant Agreement, will entitle the holder to purchase one (1) share of Common Stock at an initial price of $15.00 per share subject to adjustment as provided in the Warrant Agreement. The Warrant Agreement shall provide that the Warrants shall vest in
accordance with Section 2.2(b) and Schedule A of the Warrant Agreement. For the avoidance of doubt, Warrants that have not vested may not be exercised. The Plan shall provide that upon the Effective Date, the Warrants, regardless of whether or not vested, shall be cancelled for no consideration. The Plan shall also provide that there shall be issued to each Purchaser pro rata in accordance with the number of shares of New Common Stock or GGO Common Stock, as the case may be, purchased, an aggregate of (i) 17,142,857 warrants (the “ New Warrants ”) each of which entitles the holder to purchase one (1) share of New Common Stock at an initial purchase price of $10.50 per share subject to adjustment as provided in the underlying warrant agreement and (ii) 2,000,000 fully vested warrants (the “ GGO Warrants ”) each of which entitles the holder to purchase one (1) share of GGO Common Stock at a price of $50.00 per share subject to adjustment as provided in the underlying warrant agreement, each in accordance with the terms set forth in a warrant and registration rights agreement with terms substantially similar to the terms set forth in the Warrant Agreement, except that the expiration date for each New Warrant and GGO Warrant shall be the seventh year anniversary of the date on which such warrants are issued. The New Warrants (i) shall not vest or be exercisable upon issuance but, subject to clause (ii) of this sentence, shall vest and become exercisable on the date (the “ New Warrant Vesting Date ”) that is the earlier of (x) the first Business Day occurring at least 211 days after the Effective Date, if the Put Option has expired or terminated (in each case without exercise) or been settled, and (y) the first day when both (1) at least 10,000,000 Repurchase Shares have been repurchased pursuant to Section 1.4(b) and (2) the Put Option has terminated without exercise, and (ii) shall expire and not vest if, after the Effective Date but prior to the New Warrant Vesting Date, all (but not less than all) of the outstanding shares of New Common Stock shall have been acquired by any single Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act, and the rules and regulations promulgated thereunder) of Persons, other than the Company, any Initial Investor or any Affiliate of the Company or any Initial Investor, in a full cash tender offer or in a full cash merger transaction that, in each case, has been approved after the Effective Date by the Company Board. PSCM, in its sole discretion, may designate that some or all of the New Warrants or GGO Warrants be issued in the name of, and delivered to, any member of the Purchaser Group in accordance with and subject to the Designation Conditions.
SECTION 5.3 [ Intentionally Omitted .]
SECTION 5.4 Listing . The Company shall use its reasonable best efforts to cause the Shares and the New Warrants to be listed on the New York Stock Exchange (the “ NYSE ”). The Plan shall provide that the Company shall use its reasonable best efforts to cause GGO to use its reasonable best efforts to cause the GGO Shares and the GGO Warrants to be listed on a U.S. national securities exchange.
SECTION 5.5 Use of Proceeds . The Plan shall provide that the Company and its Subsidiaries, and GGO, shall apply the net proceeds from the sale of the Shares and the GGO Shares and the Capital Raising Activities, as applicable, as provided in the Plan Summary Term Sheet and the Plan. The parties intend that the New Warrants, GGO Warrants, New Common Shares and GGO Shares will be offered and sold under the Plan,
to the fullest extent permitted by law, in exchange for a claim against, an interest in, or a claim for an administrative expense in the Bankruptcy Case, or principally in such exchange and partly for other cash or property, for purposes of Section 1145, and the parties shall take all reasonable actions necessary consistent with applicable law to cause such securities to be so offered and sold, including without limitation, reflecting the foregoing in the initial filing of the Plan with the Bankruptcy Court.
SECTION 5.6 Access to Information . Subject to applicable Law and the Company’s receipt of customary assurances of confidentiality by each Purchaser, upon reasonable notice, the Company shall afford each Purchaser and its directors, officers, employees, investment bankers, attorneys, accountants and other advisors or representatives, reasonable access during normal business hours, throughout the period prior to the Effective Date, to its employees, books, contracts and records and, during such period, the Company shall (and shall cause its Subsidiaries to) furnish promptly to each Purchaser such information concerning its business, properties and personnel as may reasonably be requested by such Purchaser, including copies of all monthly financial information provided to its lenders under its existing debtor in possession financing agreements; provided , that, notwithstanding anything to the contrary, the Company shall not be required to share confidential information relating to any Competing Transaction except as contemplated by Section 5.7 .
SECTION 5.7 Competing Transactions . From the date of this Agreement until the earlier to occur of the Closing and the termination of this Agreement, the Company shall provide written notice to each Purchaser not less than 48 hours prior to the Company or any Subsidiary of the Company (i) entering into a definitive agreement providing for a Competing Transaction or (ii) filing a motion with the Bankruptcy Court seeking to obtain bid procedures or bid protections for or in connection with a Competing Transaction.
SECTION 5.8 Reservation for Issuance . The Company shall reserve that number of shares of Common Stock sufficient for issuance upon exercise or conversion of the Warrants. In connection with the issuance of the New Warrants, the Plan shall provide that the Company shall reserve for issuance that number of shares of New Common Stock sufficient for issuance upon exercise of the New Warrants. The Plan shall provide that GGO shall reserve for issuance that number of shares of GGO Common Stock sufficient for issuance upon exercise of the GGO Warrants.
SECTION 5.9 Subscription Rights .
(a) Company Subscription Right .
(i) Sale of New Equity Securities . If the Company or any Subsidiary of the Company at any time or from time to time following the Closing Date makes any public or non-public offering of any shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) (other than (1) pursuant to the
granting or exercise of employee stock options or other stock incentives pursuant to the Company’s stock incentive plans and employment arrangements as in effect from time to time or the issuance of stock pursuant to the Company’s employee stock purchase plan as in effect from time to time, (2) pursuant to or in consideration for the acquisition of another Person, business or assets by the Company or any of its Subsidiaries, whether by purchase of stock, merger, consolidation, purchase of all or substantially all of the assets of such Person or otherwise, (3) to strategic partners or joint venturers in connection with a commercial relationship with the Company or its Subsidiaries or to parties in connection with them providing the Company or its Subsidiaries with loans, credit lines, cash price reductions or similar transactions, under arm’s-length arrangements, (4) pursuant to the Equity Exchange or any conversion or exchange of debt or other claims into equity in connection with the Plan, (5) the sale of Backstop Shares or (6) as set forth on Section 5.9(a) of the Company Disclosure Letter) (the “ Proposed Securities ”), the members of the Purchaser Group shall have the right to acquire from the Company (the “ Subscription Right ”) for the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) and on the same terms as such Proposed Securities are proposed to be offered to others, up to the amount of such Proposed Securities in the aggregate required to enable it to maintain its aggregate proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis determined in accordance with the following sentence, in each case, subject to such limitations as may be imposed by applicable Law or stock exchange rules. The aggregate amount of such Proposed Securities that the members of the Purchaser Group shall be entitled to purchase in the aggregate in any offering pursuant to the above shall (subject to such limitations as may be imposed by applicable Law or stock exchange rules) be determined by multiplying (x) the total number of such offered shares of Proposed Securities by (y) a fraction, the numerator of which is the aggregate number of shares of New Common Stock held by the Purchaser Group on a Fully Diluted Basis as of the date of the Company’s notice pursuant to Section 5.9(a)(ii) in respect of the issuance of such Proposed Securities, and the denominator of which is the number of shares of New Common Stock then outstanding on a Fully Diluted Basis. For the avoidance of doubt, the actual amount of securities to be sold or offered to the members of the Purchaser Group pursuant to their exercise of the Subscription Right hereunder shall be proportionally reduced if the aggregate amount of Proposed Securities sold or offered is reduced. Any offers and sales pursuant to this Section 5.9 in the context of a registered public offering shall be conditioned upon reasonably acceptable representations and warranties of each applicable member of the Purchaser Group designated pursuant to Section 5.9(a)(vi) regarding its status as the type of offeree to whom a private sale can be made concurrently with a registered public offering in compliance with applicable securities Laws.
(ii) Notice . In the event the Company proposes to offer Proposed Securities, it shall give each Purchaser written notice of its intention, describing the estimated price (or range of prices), anticipated amount of securities, timing and other terms upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering), no later than 10 Business Days after the commencement of marketing with respect to such offering or after the Company takes substantial steps to pursue any other offering. The applicable members of the Purchaser Group shall have three (3) Business Days from the date of receipt of such a notice to notify the Company in writing that it intends to exercise the applicable Subscription Right and as to the amount of Proposed Securities such member of the Purchaser Group desires to purchase, up to the maximum amount calculated pursuant to Section 5.9(a)(i) . In connection with an underwritten public offering, such notice shall constitute a non-binding indication of interest to purchase Proposed Securities at such a range of prices as the such member of the Purchaser Group may specify and, with respect to other offerings, such notice shall constitute a binding commitment of the applicable member of such Purchaser Group to purchase the amount of Proposed Securities so specified at the price and other terms set forth in the Company’s notice to each Purchaser. The failure of such member of the Purchaser Group to so respond within such three (3) Business Day period shall be deemed to be a waiver of the applicable Subscription Right under this Section 5.9 only with respect to the offering described in the applicable notice. In connection with an underwritten public offering or a private placement, the applicable member of the Purchaser Group shall further enter into an agreement (in form and substance customary for transactions of this type) to purchase the Proposed Securities to be acquired contemporaneously with the execution of any underwriting agreement or purchase agreement entered into with the Company, the underwriters or initial purchasers of such underwritten public offering or private placement, and the failure of such member of the Purchaser Group to enter into such an agreement at or prior to such time shall constitute a waiver of the right to purchase the applicable portion of the Proposed Securities in respect of such offering.
(iii) Purchase Mechanism . If a member of the Purchaser Group exercises its Subscription Right provided in this Section 5.9 , the closing of the purchase of the Proposed Securities with respect to which such right has been exercised shall take place concurrently with the sale to the other investors in the applicable offering, which period of time for the closing of the purchase of the Proposed Securities with respect to which such right has been exercised shall be extended for a maximum of 180 days in order to comply with applicable Laws (including receipt of any applicable regulatory or stockholder approvals). Each of the Company and the applicable members of the Purchaser Group shall use its reasonable best efforts to secure any regulatory or stockholder approvals or other
consents, and to comply with any Law necessary in connection with the offer, sale and purchase of, such Proposed Securities.
(iv) Failure of Purchase . In the event (A) the applicable member of the Purchaser Group fails to exercise its Subscription Right provided in this Section 5.9 within said three Business Day period, or (B) if so exercised, such member of the Purchaser Group fails or is unable to consummate such purchase within the 180 day period specified in Section 5.9(a)(iii) , without prejudice to other remedies, the Company shall thereafter be entitled during the Additional Sale Period to sell the Proposed Securities not elected to be purchased pursuant to this Section 5.9 or which the applicable member of the Purchaser Group fails to or is unable to purchase, at a price and upon terms no more favorable in any material respect to the purchasers of such securities than were specified in the Company’s notice to each Purchaser. In the event the Company has not sold the Proposed Securities within the Additional Sale Period, the Company shall not thereafter offer, issue or sell such Proposed Securities without first offering such securities to the members of the Purchaser Group in the manner provided above.
(v) Non-Cash Consideration . In the case of the offering of securities for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as determined by the Company Board; provided , however , that such fair value as determined by the Company Board shall not exceed the aggregate market price of the securities being offered as of the date the Company Board authorizes the offering of such securities.
(vi) Cooperation . The Company and each applicable member of the Purchaser Group shall cooperate in good faith to facilitate the exercise of such member of the Purchaser Group’s Subscription Right hereunder, including using reasonable efforts to secure any required approvals or consents.
(vii) Allocation Among Purchaser Group . PSCM shall have the right as attorney-in-fact of each member of the Purchaser Group to exercise all of the rights of the members of the Purchaser Group hereunder and designate the members of such Purchaser Group to receive any securities to be issued and the Company may rely on any designations made by PSCM. As a condition to the Company’s obligations with respect to the exercise of a Subscription Right by a member of the Purchaser Group not a party to this Agreement, such member will agree to perform each obligation applicable to it under this Section 5.9 .
(viii) General . Notwithstanding anything herein to the contrary, (A) if (1) a member of the Purchaser Group exercises its Subscription Right pursuant to this Section 5.9 and is unable to complete the purchase of the Proposed Securities concurrently with the sales to the other investors in the
applicable offering as contemplated by Section 5.9(a)(iii) due to applicable regulatory or stockholder approvals and (2) the Company or the Company Board determines in good faith that any delay in completion of an offering in respect of which such member of the Purchaser Group is entitled to Subscription Rights would materially impair the financing objective of such offering, the Company may proceed with such offering without the participation of such member of the Purchaser Group in such offering, in which event the Company and such member of the Purchaser Group shall promptly thereafter agree on a process otherwise consistent with this Section 5.9 as would allow such member of the Purchaser Group to purchase, at the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) as in such offering, up to the amount of shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) as shall be necessary to enable the Purchaser Group to maintain its aggregate proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis, (B) if the Company or the Company Board determines in good faith that compliance with the notice provisions in Section 5.9(a)(iii) would materially impair the financing objective of an offering in respect of which the members of the Purchaser Group are entitled to Subscription Rights, the Company shall be permitted by notice to each Purchaser to reduce the notice period required under Section 5.9(a)(iii) (but not to less than one (1) Business Day) to the minimum extent required to meet the financing objective of such offering and the members of the Purchaser Group shall have the right to either (x) exercise their Subscription Rights during the shortened notice periods specified in such notice or (y) require the Company to promptly thereafter agree on a process otherwise consistent with this Section 5.9 as would allow the applicable members of the Purchaser Group to purchase, at the same price (net of any underwriting discounts or sales commissions or any other discounts or fees if not purchasing from or through an underwriter, placement agent or broker) as in such offering, up to the amount of shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) as shall be necessary to enable the Purchaser Group to maintain its aggregate proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis and (C) in the event the Company is unable to issue shares of New Common Stock (or securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, New Common Stock) to the applicable members of the Purchaser Group as a result of a failure to receive regulatory or stockholder approval therefor, the Company shall take such action or cause to be taken such other action in order to place the Purchaser Group, insofar as reasonably practicable (subject to any limitations that may be imposed by applicable Law or stock exchange rules), in the same position in all material respects as if the applicable member of the Purchaser Group was able to effectively exercise its Subscription Rights hereunder, including, without limitation, at the option of such member,
issuing to such member of the Purchaser Group another class of securities of the Company having terms to be agreed by the Company and such member having a value at least equal to the value per share of New Common Stock, in each case, as shall be necessary to enable the Purchaser Group to maintain its aggregate proportionate New Common Stock-equivalent interest in the Company on a Fully Diluted Basis.
(ix) Termination . This Section 5.9 shall terminate at such time as the members of the Purchaser Group collectively beneficially own less than 5% of the outstanding shares of New Common Stock on a Fully Diluted Basis.
(b) GGO Subscription Rights . The Plan shall provide that in connection with the consummation of the Plan, GGO shall enter into an agreement with each Purchaser with substantially similar terms to those set forth in Section 5.9(a) above with respect to any issuance of GGO Common Stock (or securities that are convertible into or exchangeable or exercisable for, or otherwise linked to, GGO Common Stock) after the Effective Date.
SECTION 5.10 Company Board of Directors .
(a) Company Board of Directors . The Plan shall provide that as of the Effective Date, the Company Board shall have nine (9) members and one (1) of such members shall be a person designated by PSCM (the “ Purchaser Board Designee ”); provided , that such designee shall be identified by name and in writing to the Company no later than 10 Business Days prior to the voting deadline established by the Bankruptcy Court. Subject to the rights provided under the other Investment Agreements, the remaining members of the Company Board on the Effective Date shall be chosen by the Company in consultation with each Purchaser.
(b) GGO Board of Directors .
(i) The Plan shall provide that as of the Effective Date, the board of directors of GGO (the “ GGO Board ”) shall have nine (9) members and three (3) of such members shall be persons designated by PSCM (the “ Purchaser GGO Board Designees ”), to separate classes of directors of the GGO Board (if GGO has a staggered board of directors); provided , that such designees shall be identified by name and in writing to the Company no later than 10 Business Days prior to the voting deadline established by the Bankruptcy Court. Subject to the rights provided under the other Investment Agreements, the remaining members of the GGO Board on the Effective Date shall be chosen by the Company in consultation with each Purchaser.
(ii) Unless each Purchaser has otherwise agreed, the Plan shall provide, in connection with the consummation of the Plan, for GGO to enter into an agreement with each Purchaser (the “ GGO Agreement ”) providing as follows:
(1) That following the Closing, GGO shall nominate as part of its slate of directors and use its reasonable best efforts to have them elected to the GGO Board (including through the solicitation of proxies for such person to the same extent as it does for any of its other nominees to the GGO Board) (subject to applicable Law and stock exchange rules (provided that the Purchaser GGO Board Designees need not be “independent” under the applicable rules of the applicable stock exchange or the SEC)) (x) so long as the Purchaser Group has at least a 17.5% Fully Diluted GGO Economic Interest, three (3) Purchaser Board Designees, and (y) otherwise, so long as the Purchaser Group beneficially owns (directly or indirectly) in the aggregate at least 10% of the shares of GGO Common Stock on a Fully Diluted Basis, two (2) Purchaser Board Designees. For the avoidance of doubt, at and following such time as the Purchaser Group beneficially owns (directly or indirectly) in the aggregate less than 10% of the shares of GGO Common Stock on a Fully Diluted Basis, PSCM shall no longer have the right to designate directors for election to the GGO Board.
(2) That following the Closing, and subject to applicable Law and stock exchange rules, there shall be proportional representation by Purchaser GGO Board Designees on any committee of the GGO Board, except for special committees established for potential conflict of interest situations, and except that only Purchaser GGO Board Designees who qualify under the applicable rules of the applicable stock exchange or the SEC may serve on committees where such qualification is required. If at any time the number of Purchaser GGO Board Designees serving on the GGO Board exceeds the number of Purchaser GGO Board Designees that PSCM is then otherwise entitled to designate as a result of a decrease in the percentage of shares of GGO Common Stock beneficially owned by the Purchaser Group, such Purchaser Group shall, to the extent it is within such Purchaser Group’s control, use commercially reasonable efforts to cause any such additional Purchaser GGO
Board Designees to offer to resign such that the number of Purchaser GGO Board Designees serving on the GGO Board after giving effect to such resignation does not exceed the number of Purchaser GGO Board Designees that PSCM is entitled to designate for election to the GGO Board.
(3) That except with respect to the resignation of a Purchaser GGO Board Designee pursuant to Section 5.10(b)(ii)(2) , (A) PSCM shall have the power to designate a Purchaser GGO Board Designee’s replacement upon the death, resignation, retirement, disqualification or removal from office of such Purchaser GGO Board Designee and (B) the GGO Board shall promptly take all action reasonably required to fill any vacancy resulting therefrom with such replacement Purchaser GGO Board Designee (including nominating such person, subject to applicable Law, as GGO’s nominee to serve on the GGO Board and causing GGO to use all reasonable efforts to have such person elected as a director of GGO and solicit proxies for such person to the same extent as it does for any of GGO’s other nominees to the GGO Board).
(4) That (A) each Purchaser GGO Board Designee shall be entitled to the same compensation and same indemnification in connection with his or her role as a director as the members of the GGO Board, and each Purchaser GGO Board Designee shall be entitled to reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the GGO Board or any committees thereof, to the same extent as other members of the GGO Board, (B) GGO shall notify each Purchaser GGO Board Designee of all regular and special meetings of the GGO Board and shall notify the Purchaser GGO Board Designee of all regular and special meetings of any committee of the GGO Board of which such Purchaser GGO Board Designee is a member, and (C) GGO shall provide each Purchaser GGO Board Designee with copies of all notices, minutes, consents and other materials provided to all other members of the GGO Board concurrently as such materials are provided
to the other members (except, for the avoidance of doubt, as are provided to members of committees of which such Purchaser GGO Board Designee is not a member).
(5) Purchaser GGO Board Designee candidates shall be subject to such reasonable eligibility criteria as applied in good faith by the nominating, corporate governance or similar committee of the GGO Board to other candidates for the GGO Board.
SECTION 5.11 Notification of Certain Matters .
(a) The Company shall (i) give prompt written notice to each Purchaser of any written notice or other written communication from any Person alleging that the consent of such Person which is or may be required in connection with the transactions contemplated by this Agreement is not likely to be obtained prior to Closing, if the failure to obtain such consent would reasonably be expected to be adverse and material to the Company and its Subsidiaries taken as a whole or would materially impair the ability of the Company to consummate the transactions contemplated hereby or perform its obligations hereunder, and (ii) facilitate adding such individuals as designated by each Purchaser to the electronic notification system such that the designated individuals will receive electronic notice of the entry of any Bankruptcy Court Order.
(b) To the extent permitted by applicable Law, (i) the Company shall give prompt notice to each Purchaser of the commencement of any investigation, inquiry or review by any Governmental Entity with respect to the Company or its Subsidiaries which would reasonably be expected to be adverse and material to the Company and its Subsidiaries taken as a whole or would materially impair the ability of the Company to consummate the transactions contemplated hereby or perform its obligations hereunder, and (ii) the Company shall give prompt notice to each Purchaser, and each Purchaser shall give written prompt notice to the Company, of any event or circumstance that would result in any representation or warranty of the Company or such Purchaser, as applicable, being untrue or any covenant or agreement of the Company or such Purchaser, as applicable, not being performed or complied with such that, in each such case, the conditions set forth in Article VII or Article VIII , as applicable, would not be satisfied if such event or circumstance existed on the Closing Date.
(c) No information received by a party pursuant to this Section 5.11 nor any information received or learned by a party or any of its representatives pursuant to an investigation made under this Section 5.11 shall be deemed to (A) qualify, modify, amend or otherwise affect any representations, warranties, conditions, covenants or other agreements of the other party set forth in this Agreement, (B) amend or otherwise supplement the information set forth in the Company Disclosure Letter, (C) limit or restrict the remedies available to such party under this Agreement, applicable Law or otherwise arising out of a breach of this Agreement, or (D) limit or restrict the ability of
such party to invoke or rely on, or effect the satisfaction of, the conditions to the obligations of such party to consummate the transactions contemplated by this Agreement set forth in Article VII or Article VIII , as applicable.
SECTION 5.12 Further Assurances . From and after the Closing, the Company shall (and shall cause each of its Subsidiaries to) execute and deliver, or cause to be executed and delivered, such further instruments or documents or take such other action and cause entities controlled by them to take such action as may be reasonably necessary (or as reasonably requested by any Purchaser) to carry out the transactions contemplated by this Agreement.
SECTION 5.13 [Intentionally Omitted.]
SECTION 5.14 Rights Agreement; Reorganized Company Organizational Documents .
(a) Prior to the issuance of the Warrants, the Rights Agreement shall be amended to provide that (i) the Rights Agreement is inapplicable to (1) the acquisition by members of the Purchaser Group of the Warrants and the underlying securities thereof, (2) any antidilution adjustments to those Warrants pursuant to the Warrant Agreement, (3) any shares of New Common Stock that a Purchaser or a member of its Purchaser Group may be deemed to own by no actions of its own and (4) up to an additional amount totaling 0.714% of the issued and outstanding shares of Common Stock in the aggregate by the Purchaser Group, (ii) no Purchaser, or any member of the Purchaser Group, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement), (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights Agreement) shall not separate from the Common Stock, in each case under (ii), (iii) and (iv), as a result of the acquisition by members of the Purchaser Group of the Warrants, the underlying securities thereof and the acquisition of beneficial ownership of up to an additional amount totaling 0.714% of the issued and outstanding shares of Common Stock in the aggregate by the Purchaser Group.
(b) The certificate of incorporation and bylaws of the Reorganized Company (the “ Reorganized Company Organizational Documents ”) shall be in form mutually agreed to by the Company and each Purchaser, provided , that in the event that the Company and such Purchaser are not able to agree on such form prior to the Effective Date, the Reorganized Company Organizational Documents shall be substantially in the same form as the certificate of incorporation and bylaws of the Company as in existence on the date of this Agreement (except that the number of authorized shares of capital stock of the Reorganized Company shall be increased), provided , however , that (i) the restriction on Beneficial Ownership (as such term is defined in the certificate of incorporation of the Company) shall be set at 9.9% of the outstanding capital stock of the Reorganized Company, (ii) the restriction on Constructive Ownership (as such term is defined in the certificate of incorporation of the Company) shall be set at 9.9% of the
outstanding capital stock of the Reorganized Company, (iii) there shall not be an exemption from the restrictions set forth in the foregoing clauses (i) and (ii) for the current Existing Holder (as such term is defined in the existing certificate of incorporation of the Company), (iv) the Reorganized Company shall provide a waiver from the restrictions set forth in the foregoing clauses (i) and (ii) to any member of the Purchaser Group if such member provides the Reorganized Company with a certificate containing the representations and covenants set forth on Exhibit D and (v) the definition of “Person” shall be revised so that it does not include a “group” as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
(c) In the event the Reorganized Company adopts a rights plan analogous to the Rights Agreement on or prior to the Closing, the Plan shall provide that (i) the Reorganized Company’s Rights Agreement shall be inapplicable to this Agreement and the transactions contemplated hereby, (ii) no Purchaser, nor any other member of its Purchaser Group, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement) whether in connection with the acquisition of Shares, New Warrants, shares issuable upon exercise of the New Warrants or otherwise, (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights Agreement) will not separate from the New Common Stock, in each case under (ii), (iii) and (iv), as a result of the execution, delivery or performance of this Agreement, the consummation of the transactions contemplated hereby including the acquisition of shares of New Common Stock by any Purchaser or other member of the Purchaser Group after the date hereof as otherwise permitted by this Agreement, the New Warrants or as otherwise contemplated by the Non-Control Agreement.
(d) In the event GGO adopts a rights plan analogous to the Rights Agreement on or prior to the Closing, the Plan shall provide that (i) GGO’s Rights Agreement shall be inapplicable to this Agreement and the transactions contemplated hereby, (ii) no Purchaser, nor any other member of its Purchaser Group, shall be deemed to be an Acquiring Person (as defined in the Rights Agreement) whether in connection with the acquisition of shares of GGO Common Stock or GGO Warrants or the shares issuable upon exercise of the GGO Warrants, (iii) neither a Shares Acquisition Date (as defined in the Rights Agreement) nor a Distribution Date (as defined in the Rights Agreement) shall be deemed to occur and (iv) the Rights (as defined in the Rights Agreement) will not separate from the GGO Common Stock, in each case under (ii), (iii) and (iv), as a result of the execution, delivery or performance of this Agreement, or the consummation of the transactions contemplated hereby including the acquisition of shares of GGO Common Stock by any Purchaser or other member of the Purchaser Group after the date hereof as otherwise permitted by this Agreement, the GGO Warrants or as otherwise contemplated by the GGO Non-Control Agreement.
(e) Newco (as defined in Exhibit B ) will be formed by the Operating Partnership solely for the purpose of engaging in the transactions contemplated by this Agreement, including Exhibit B and Capital Raising Activities permitted pursuant to this Agreement. Prior to the Closing, Newco will not engage in any business activity, nor
conduct its operations, other than as contemplated by this Agreement (which, for greater certainty, shall include Capital Raising Activities permitted pursuant to this Agreement).
SECTION 5.15 Stockholder Approval . For so long as any Purchaser has Subscription Rights as contemplated by Section 5.9(a) in connection with the expiration of the five (5) year period referenced in Section 3.2(c) , the Company shall put up for a stockholder vote at the immediately prior annual meeting of its stockholders, and include in its proxy statement distributed to such stockholders in connection with such annual meeting, approval of such Purchaser’s Subscription Rights for the maximum period permitted by the NYSE. The Plan shall provide that GGO shall, for the benefit of each Purchaser, to the extent required by any U.S. national securities exchange upon which shares of GGO Common Stock are listed, for so long as any Purchaser has subscription rights as contemplated by Section 5.9(b) , put up for a stockholder vote at the annual meeting of its stockholders, and include in its proxy statement distributed to such stockholders in connection with such annual meeting, approval of such Purchaser’s subscription rights for the maximum period permitted by the rules of such U.S. national securities exchange.
SECTION 5.16 Closing Date Net Debt .
(a) The Company shall deliver to each Purchaser a schedule (the “ Preliminary Closing Date Net Debt Schedule ”) on or before the first Business Day that is five calendar days following approval of the Disclosure Statement, that: (i) sets forth the Company’s good faith estimate for each of the three components of the Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts along with a reasonably detailed explanation and calculation of each such component and (ii) discloses the Company’s good faith estimate of the Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts and GGO Setup Costs.
(b) Each Purchaser shall review the Preliminary Closing Date Net Debt Schedule during the Preliminary Closing Date Net Debt Review Period, during which time the Company shall allow such Purchaser reasonable access to all non-privileged and non-work product documents or records or personnel used in the preparation of the Preliminary Closing Date Net Debt Schedule. On or prior to the Preliminary Closing Date Net Debt Review Deadline, any Purchaser may deliver to the Company a notice (the “ Dispute Notice ”) listing those items on the Preliminary Closing Date Net Debt Schedule to which such Purchaser takes exception, which Dispute Notice shall (i) specifically identify such items, and provide a reasonably detailed explanation of the basis upon which such Purchaser has delivered such list, (ii) set forth the amount of Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts that such Purchaser has calculated based on the information contained in the Preliminary Closing Date Net Debt Schedule, and (iii) specifically identify such Purchaser’s proposed adjustment(s). If a Purchaser timely provides the Company with a Dispute Notice, then such Purchaser and the Company shall, within ten (10) days following receipt of such Dispute Notice by the Company (the “ Resolution Period ”), attempt to resolve their differences with respect to the items specified in the Dispute Notice (the “ Disputed
Items ”). If a Purchaser and the Company do not resolve all Disputed Items by the end of the Resolution Period, then all Disputed Items remaining in dispute shall be submitted to the Bankruptcy Court for resolution at or concurrent with the Confirmation Hearing. The Bankruptcy Court shall consider only those Disputed Items that such Purchaser, on the one hand, and the Company, on the other hand, were unable to resolve. All other matters shall be deemed to have been agreed upon by such Purchaser and the Company. If a Purchaser does not timely deliver a Dispute Notice, then such Purchaser shall be deemed to have accepted and agreed to the Preliminary Closing Date Net Debt Schedule and to have waived any right to dispute the matters set forth therein.
(c) The Company shall deliver to each Purchaser a draft of the Conclusive Net Debt Adjustment Statement no later than 15 calendar days prior to the Effective Date. Each Purchaser shall be afforded an opportunity to review the Conclusive Net Debt Adjustment Statement and reasonable access to all non-privileged and non-work product documents or records or personnel used in the preparation of such statement. On or prior to close of business on the 7th calendar day following receipt of the Conclusive Net Debt Adjustment Statement, any Purchaser may deliver to the Company a notice (the “ CNDAS Dispute Notice ”) listing those items to which such Purchaser takes exception, which CNDAS Dispute Notice shall (i) specifically identify such items, and provide a reasonably detailed explanation of the basis upon which such Purchaser has delivered such list, (ii) set forth the alternative amounts that such Purchaser has calculated based on the information contained in the Conclusive Net Debt Adjustment Statement, and (iii) specifically identify such Purchaser’s proposed adjustment(s). If a Purchaser timely provides the Company with a CNDAS Dispute Notice, then such Purchaser and the Company shall attempt to resolve the items specified in the CNDAS Dispute Notice (the “ CNDAS Disputed Items ”) consensually. If such Purchaser and the Company do not resolve all CNDAS Disputed Items prior to the Effective Date, then for purposes of Closing and subject to subsequent adjustment consistent with the Bankruptcy Court’s ruling, the highest number shall be used for purposes of any calculations set forth on the Conclusive Net Debt Adjustment Statement. Within 10 days after Closing, the Company shall file a motion for resolution by the Bankruptcy Court. The Purchasers and the Company agree to seek expedited consideration of any such dispute. The dispute submitted to the Bankruptcy Court shall be limited to only those CNDAS Disputed Items that a Purchaser, on the one hand, and the Company, on the other hand, were unable to resolve. All other matters shall be deemed to have been agreed upon by the Purchasers and the Company. If a Purchaser does not timely deliver a CNDAS Dispute Notice, then such Purchaser shall be deemed to have accepted and agreed to the Conclusive Net Debt Adjustment Statement and to have waived any right to dispute the matters set forth therein. To the extent that one or more CNDAS Disputed Items must be submitted to the Bankruptcy Court for adjudication, the Purchasers and the Company agree that this should not delay the Effective Date or the Closing Date. Following adjudication of the dispute, appropriate adjustments shall be made to the Conclusive Net Debt Adjustment Statement, the GGO Promissory Note and the other applicable documentation to put all parties in the same
economic position as if the corrected Conclusive Net Debt Adjustment Statement governed at Closing.
(d) It is the intention of the parties that any Reserve should not alter the intended allocation of value between GGO and the Company as Claims are resolved over time. Accordingly, the Plan shall provide that, if a GGO Promissory Note is required to be issued at Closing and there is a Reserve Surplus Amount as of the end of any fiscal quarter prior to the maturity of the GGO Promissory Note, then the principal amount of the GGO Promissory Note shall be reduced, but not below zero, by (i) if and to the extent that such Reserve Surplus Amount as of such date is less than or equal to the Net Debt Surplus Amount, 80% of the Reserve Surplus Amount, and otherwise (ii) 100% of an amount equal to the Reserve Surplus Amount; provided, however, that because this calculation may be undertaken on a periodic basis, for purposes of clauses (i) and (ii), no portion of the Reserve Surplus Amount shall be utilized to reduce the amount of the GGO Promissory Note if it has been previously utilized for such purpose. In the event that any party requests an equitable adjustment to this formula, the other parties shall consider the request in good faith.
(e) The Plan shall provide that, if there is an Offering Premium, the principal amount of the GGO Promissory Note shall be reduced (but not below zero) by 80% of the aggregate Offering Premium on the 30th day following the Effective Date and from time to time thereafter upon receipt of Offering Premium until the last to occur of (x) 45 days after the Effective Date, (y) the Settlement Date, if applicable, and (z) the Bridge Note Maturity Date, if applicable.
(f) T he Plan and the agreements relating to the GGO Share Distribution shall provide that the Company shall indemnify GGO and its Subsidiaries from and against losses, claims, damages, liabilities and expenses attributable to MPC Taxes in accordance with the terms and conditions of the Tax Matters Agreement .
(g) Subject to the provisions of the Tax Matters Agreement, if GGO is obligated to pay in cash, after utilization of any available tax attributes, any MPC Taxes in the period commencing on the Effective Date and ending 36 months after the Effective Date, and the Company is not then obligated to indemnify GGO for its allocable share of such MPC Taxes as a consequence of the Indemnity Cap (as defined in the Tax Matters Agreement), then the Company shall loan to GGO the amount of such MPC Taxes not payable by the Company as a consequence of the Indemnity Cap and the principal amount of the GGO Promissory Note shall be increased by the amount of such loan and if at such time no GGO Promissory Note is outstanding, on the date of any such loan, GGO shall issue in favor of the Company a promissory note in the aggregate principal amount of such loan on the same terms as the GGO Promissory Note.
(h) The Debtors dispute each of the Contingent and Disputed Debt Claims and have sought or will seek disallowance of such Claims in their entirety. To the extent such claims have not been ruled on by the Bankruptcy Court or settled prior to the Effective Date, then the asserted amounts of such claims will be included in calculation
of the Closing Date Net Debt. In the event that, on or after the Effective Date, one or more of the Contingent and Disputed Debt Claims are either reduced or disallowed by a ruling of the Bankruptcy Court or as a result of a settlement, then the Closing Date Net Debt amount shall be adjusted to reflect such ruling or settlement within ten (10) calendar days following any such ruling or settlement (such adjusted Closing Date Net Debt to be referred to as the “ Adjusted CDND ”) and the GGO Note Amount and Indemnity Cap (as defined in the Tax Matters Agreement) shall be re-calculated as if the Adjusted CDND was used in the calculations for the Effective Date. To the extent that a GGO Promissory Note was issued at Closing, then, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating the GGO Note Amount, the principal amount of such GGO Promissory Note will be reduced based on the new calculation using the Adjusted CDND and, to the extent applicable, any interest payments made by GGO to the Company on the GGO Promissory Note prior to such re-calculation shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reductions shall be eliminated. Similarly, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating the Indemnity Cap, the Indemnity Cap shall be re-calculated and adjusted to reflect determination of the Net Debt Surplus Amount or Net Debt Excess Amount using the Adjusted CDND . Additionally, to the extent any promissory note was issued by GGO in favor of the Company pursuant to Section 5.16(g) , then, in order to place GGO and the Company in the same economic position as they would have been had the actual amount of such settlement and/or allowance been used for purposes of calculating such note, (i) the principal amount of such note will be reduced based on the new calculation using the Adjusted CDND and (ii) to the extent applicable, any interest payments made by GGO to the Company on such note prior to such re-calculation shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reductions shall be eliminated. Consistent with the foregoing, the Tax Matters Agreement shall be retroactively applied using the re-calculated Indemnity Cap and any resulting amounts payable thereunder shall be promptly paid.
In the event that a Bankruptcy Court order allowing, disallowing, or reducing and allowing any of the Contingent and Disputed Debt Claims is appealed, vacated or otherwise modified, then following entry of a final and nonappealable order by a court of competent jurisdiction determining the amount (if any) of the applicable Contingent and Disputed Debt Claim, the adjustment process set forth in the preceding paragraph shall be undertaken within ten (10) calendar days following such order becoming final and nonappealable.
(i) Solely for purposes of calculating whether a GGO Promissory Note is required to be issued at Closing pursuant to this Agreement, $1,000,000 shall be added to GGO Setup Costs. If a GGO Promissory Note is issued at Closing pursuant to this Agreement, then on the six-month anniversary of the Closing Date (the “ Calculation Date ”), (A) the then outstanding principal amount of the GGO Promissory Note shall be
reduced (but not to a number less than zero) by an amount equal to the excess (if it is a positive number), if any, of $1,000,000 over the aggregate amount of cash costs and expenses, if any, incurred by the Company after the Closing Date and prior to the Calculation Date to transfer assets after Closing to GGO pursuant to Section 2.4(d) of the Separation Agreement to be entered into between the Company and GGO at or prior to Closing, and (B) if the principal amount of the GGO Promissory Note is reduced pursuant to clause (A), any interest payments made by GGO to the Company on the GGO Promissory Note prior to such reduction pursuant to clause (A) shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reduction shall be eliminated.
SECTION 5.17 Determination of Domestically Controlled REIT Status .
(a) The Reorganized Company shall use reasonable efforts to comply with treasury regulations, revenue procedures, notices or other guidance adopted after the date hereof by the Internal Revenue Service or United States Treasury governing the determination of its status as a “domestically controlled REIT” as defined in Section 897 of the Code and the treasury regulations promulgated thereunder (a “ Domestically Controlled REIT ”).
(b) The Reorganized Company shall inquire of each Purchaser and each Purchaser shall provide a written statement to the Reorganized Company setting forth the equity ownership percentage that “United States persons” as defined in Section 7701(a)(30) of the Code (“ U.S. Persons ”) hold in such Purchaser. Each such statement shall be based on the direct ownership in such Purchaser, except to the extent that such Purchaser has actual knowledge of indirect ownership or can provide a reasonable estimate of such indirect ownership. For the avoidance of doubt, if interests in a Purchaser are held or registered in “street name”, such Purchaser shall not be required to determine the ultimate beneficial owner of such interests for the purposes of complying with this Section 5.17 .
(c) The Reorganized Company shall include in its shareholder demand letters a request that each shareholder identify whether it is a U.S. Person.
(d) The Reorganized Company shall at least annually request from Cede & Co. a list of holders of the Reorganized Company’s stock registered with Cede & Co. and, if granted access thereto, use reasonable efforts to review such list to determine whether any such holders are U.S. Persons.
(e) The Reorganized Company shall, at least annually, as part of its internal audit and Sarbanes-Oxley Act (“ SOX ”) procedures with respect to key controls, use reasonable efforts to make a determination of whether or not it believes that it qualifies as a Domestically Controlled REIT. Such determination shall be based on information reasonably available to the Reorganized Company under this Section 5.17 as well as through review of the information contained in any relevant Schedule 13D or Schedule 13G (or amendment thereto) filed with the SEC with respect to the Reorganized
Company. A written summary of the steps taken, information obtained and analysis of results will be prepared. Each such annual determination (but not the written summary), subject to reasonable caveats and assumptions, shall be set forth in the Reorganized Company’s next Annual Report on Form 10-K filed with the SEC and shall be reported to the Board of Directors at least annually (or within fifteen days of discovering a change in status). The Reorganized Company shall use the Reorganized Company’s SOX policies and procedures to oversee such determination.
(f) The Company shall provide a copy of the written summary (and backup documentation) prepared in accordance with clause (e) to a Purchaser upon the request of such Purchaser. In addition, if reasonably requested by a Purchaser, the Reorganized Company will, at such Purchaser’s expense, make reasonable efforts to provide additional information to and otherwise cooperate with such Purchaser, to enable such Purchaser to respond to questions regarding Domestically Controlled REIT status by a taxing authority or person engaging in, or proposing to engage in, a transaction with such Purchaser or an Affiliate thereof.
ARTICLE VI
ADDITIONAL COVENANTS OF PURCHASER
SECTION 6.1 Information . From and after the date of this Agreement until the earlier to occur of the Closing Date and the termination of this Agreement, each Purchaser agrees to provide the Debtors with such information as the Debtors reasonably request regarding such Purchaser for inclusion in the Disclosure Statement as necessary for the Disclosure Statement to contain adequate information for purposes of Section 1125 of the Bankruptcy Code.
SECTION 6.2 Purchaser Efforts . Each Purchaser shall use its reasonable best efforts to obtain all material permits, consents, orders, approvals, waivers, authorizations or other permissions or actions required for the consummation of the transactions contemplated by this Agreement from, and shall have given all necessary notices to, all Governmental Entities necessary to satisfy the condition in Section 8.1(b) ( provided , however , that such Purchaser shall not be required to pay or cause payment of any fees or make any financial accommodations to obtain any such consent, approval, waiver or other permission, except filing fees as required), and provide to such Governmental Entities all such information as may be necessary or reasonably requested relating to the transactions contemplated hereby.
SECTION 6.3 Plan Support . From and after the date of the Approval Order until the earliest to occur of (i) the Effective Date, (ii) the termination of this Agreement and (iii) the date the Company or any Subsidiary of the Company makes a public announcement, enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its intention to support any Competing Transaction, or the Company or any Subsidiary of the Company enters into a Competing Transaction (such date, the “ Unrestricted Date ”), each Purchaser agrees (unless otherwise
consented to by the Company) ( provided that (x) the Company is not in material breach of this Agreement and (y) the terms of the Plan are and remain consistent with the Plan Summary Term Sheet and this Agreement, and are otherwise in form and substance satisfactory to each Purchaser) to (and shall use reasonable best efforts to cause its Affiliates to):
(a) Not pursue, propose, support, vote to accept or encourage the pursuit, proposal or support of, any Chapter 11 plan, or other restructuring or reorganization for the Company, or any Subsidiary of the Company, that is not consistent with the Plan;
(b) Not, nor encourage any other Person to, interfere with, delay, impede, appeal or take any other negative action, directly or indirectly, in any respect regarding acceptance or implementation of the Plan; and
(c) Not commence any proceeding, or prosecute any objection to oppose or object to the Plan or to the Disclosure Statement and not to take any action that would delay approval or confirmation, as applicable, of the Disclosure Statement and the Plan, in each case (i) except as intended to ensure the consistency of the Disclosure Statement and the Plan with the terms of this Agreement and the rights and obligations of the parties thereto and (ii) without limiting any rights any Purchaser may have to terminate this Agreement pursuant to Section 11.1(b) (including Section 11.1(b)(ix) ) hereof.
SECTION 6.4 Transfer Restrictions . Each Purchaser covenants and agrees that the Shares and the GGO Shares (and shares issuable upon exercise of Warrants, New Warrants and GGO Warrants) shall be disposed of only pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities Laws. Each Purchaser agrees to the imprinting, so long as is required by this Section 6.4 , of the following legend on any certificate evidencing the Shares or GGO Shares (and shares issuable upon exercise of Warrants, New Warrants and GGO Warrants):
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE “ ACT ”) OR UNDER ANY STATE SECURITIES LAWS (“ BLUE SKY ”) OR THE SECURITIES LAWS OF ANY OTHER RELEVANT JURISDICTION. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE. THE SHARES MAY NOT BE SOLD, ASSIGNED, MORTGAGED, PLEDGED, ENCUMBERED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS EITHER (I) A REGISTRATION STATEMENT WITH RESPECT TO THE SHARES IS EFFECTIVE UNDER THE ACT AND APPLICABLE BLUE SKY LAWS AND THE SECURITIES LAWS OF ANY OTHER RELEVANT JURISDICTION ARE COMPLIED WITH OR (II) UNLESS WAIVED BY THE ISSUER, THE ISSUER RECEIVES AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE ISSUER
THAT NO VIOLATION OF THE ACT OR OTHER APPLICABLE LAWS WILL BE INVOLVED IN SUCH TRANSACTION.
Certificates evidencing the Shares (and shares issuable upon exercise of Warrants and New Warrants) shall not be required to contain such legend (A) while a registration statement covering the resale of the Shares is effective under the Securities Act, or (B) following any sale of any such Shares pursuant to Rule 144 of the Exchange Act (“ Rule 144 ”), or (C) following receipt of a legal opinion of counsel to the applicable Purchaser that the remaining Shares held by such Purchaser are eligible for resale without volume limitations or other limitations under Rule 144. In addition, the Company will agree to the removal of all legends with respect to shares of New Common Stock deposited with DTC from time to time in anticipation of sale in accordance with the volume limitations and other limitations under Rule 144, subject to the Company’s approval of appropriate procedures, such approval not to be unreasonably withheld, conditioned or delayed.
Following the time at which such legend is no longer required (as provided above) for certain Shares, the Company shall promptly, following the delivery by the applicable Purchaser to the Company of a legended certificate representing such Shares, deliver or cause to be delivered to such Purchaser a certificate representing such Shares that is free from such legend. In the event the above legend is removed from any of the Shares, and thereafter the effectiveness of a registration statement covering such Shares is suspended or the Company determines that a supplement or amendment thereto is required by applicable securities Laws, then the Company may require that the above legend be placed on any such Shares that cannot then be sold pursuant to an effective registration statement or under Rule 144 and such Purchaser shall cooperate in the replacement of such legend. Such legend shall thereafter be removed when such Shares may again be sold pursuant to an effective registration statement or under Rule 144.
The Plan shall provide, in connection with the consummation of the Plan, for GGO to enter into an agreement with each Purchaser with respect to GGO Shares and GGO Warrants containing the same terms as provided above in this Section 6.4 but replacing references to (A) “the Company” with GGO, (B) “New Common Stock” with GGO Common Stock, (C) “Shares” with “GGO Shares” and (D) “Warrants” or “New Warrants” with GGO Warrants.
Each Purchaser further covenants and agrees not to sell, transfer or dispose of (each, a “ Transfer ”) the Warrants or the shares of Common Stock issuable upon exercise of the Warrants (other than to a member of the Purchaser Group) prior to the Unrestricted Date, any Shares, New Common Stock or New Warrants in violation of the Non-Control Agreement or GGO Shares or GGO Warrants in violation of the GGO Non-Control Agreement.
For the avoidance of doubt, the Purchaser Group’s rights to designate for nomination the Purchaser Board Designee and Purchaser GGO Board Designees pursuant
to Section 5.10 and Subscription Rights pursuant to Section 5.9 may not be Transferred to a Person that is not a member of the Purchaser Group.
The Plan shall provide that in addition to the covenants provided in the Non-Control Agreement, at the time of an underwritten offering of equity or convertible securities by the Company on or prior to the 30th day after the Effective Date, each Purchaser and the other members of the Purchaser Group will enter into a customary ‘lock-up’ agreement with respect to third-party sales of New Common Stock for a period of time not to exceed 120 days to the extent reasonably requested by the managing underwriter in connection with such offering.
SECTION 6.5 [ Intentionally Omitted .]
SECTION 6.6 REIT Representations and Covenants . At such times as shall be reasonably requested by the Company, for so long as any Purchaser (or, to the extent applicable, its Affiliates, members or Affiliates of members) “beneficially owns” or “constructively owns” (as such terms are defined in the certificate of incorporation of the Company) in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company of the outstanding Common Stock or New Common Stock, such Purchaser shall (and, to the extent applicable, cause its Affiliates, members or Affiliates of members to) use reasonable best efforts to provide the Company with customary representations and covenants, in the form attached hereto as Exhibit D which shall, among other things, enable the Company to waive Purchaser from the ownership limit set forth in the certificate of incorporation of the Company and ensure that the Company can appropriately monitor any “related party rent” issues raised by the Warrants and the purchase of the Shares by such Purchaser, it being understood that Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations and covenants only if such Person “beneficially owns” or “constructively owns” (as such terms are defined in the certificate of incorporation of the Company) Common Stock or New Common Stock in excess of the relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by the Company.
SECTION 6.7 Non-Control Agreement . At or prior to the Closing, each Purchaser shall enter into (1) the Non-Control Agreement with the Company and (2) the GGO Non-Control Agreement with GGO.
SECTION 6.8 [ Intentionally Omitted .]
SECTION 6.9 Additional Backstops .
(a) The Company may, at its option, include in the Plan an offering (the “ GGP Backstop Rights Offering ”) to its then-existing holders of Common Stock of rights to purchase New Common Stock on the Effective Date in an amount sufficient to yield to the Company aggregate net proceeds on the Effective Date of up to $500,000,000
or such lesser amount as the Company may determine (the “ GGP Backstop Rights Offering Amount ”). In connection with the GGP Backstop Rights Offering:
(i) Each Purchaser and the Brookfield Investor (together with the Purchaser, the “ Backstop Investors ”) and the Company shall appoint a mutually-acceptable and internationally-recognized investment bank to act as bookrunning dealer-manager for the GGP Backstop Rights Offering (the “ Dealer Manager ”) pursuant to such arrangements as they may mutually agree;
(ii) the Dealer Manager will, no later than the fifth business day in advance of the commencement of the solicitation of votes on the Plan and offering of rights in the GGP Backstop Rights Offering (which shall not be longer than 60 days), recommend in writing to the Backstop Investors and the Company the number of shares of New Common Stock that may be purchased for each share of Common Stock , the subscription price of such purchase and the other terms for the rights offering that the Dealer Manager determines are reasonably likely to yield committed proceeds to the Company at the Effective Date equal to the GGP Backstop Rights Offering Amount (it being understood that the Dealer Manager will have no liability if it is later determined that its good faith determination was erroneous);
(iii) the Backstop Investors agree, severally but not jointly and severally, to subscribe, or cause one or more designees to subscribe, for New Common Stock on a pro rata basis to the extent rights are declined by holders of Common Stock, subject to the subscription rights among the Backstop Investors set forth in clause (iv);
(iv) the Backstop Investors will have subscription rights in any such offering allowing them to maintain their respective proportionate pro forma New Common Stock-equivalent interests on a Fully Diluted Basis with the effect that the Backstop Investors will be assured of the ability to acquire such number of shares of New Common Stock as would have been available to them pursuant to Section 5.9 had the GGP Backstop Rights Offering been made after the Closing;
(v) the Backstop Investors will receive aggregate compensation in the form of New Common Stock (whether or not the
backstop commitments are utilized) with a value equal to three percent (3%) of the GGP Backstop Rights Offering Amount; and
(vi) the amount of New Common Stock to be purchased pursuant to the GGP Backstop Rights Offering will be subject to reduction to the extent that either (A) the Company Board determines in its business judgment after consultation with the Backstop Investors that it has sufficient liquidity and working capital available to it in light of circumstances at the time and the costs and benefits to the Company of consummation of the GGP Backstop Rights Offering or (B) the Backstop Investors have agreed that they will provide to the Company, in lieu of the GGP Backstop Rights Offering the Bridge Securities contemplated in clause (b) below.
(b) The Company shall give each Backstop Investor written notice of its estimate of the amount the Backstop Investors will be required to fund pursuant to Section 6.9(a) no later than six (6) Business Days prior to the Closing Date. If each Backstop Investor agrees, the Backstop Investors shall have two (2) Business Days from the date of receipt of such notice to notify the Company in writing that they intend to elect to purchase from the Company in lieu of all or part of the proceeds to be provided by the GGP Backstop Rights Offering its pro rata portion of senior subordinated unsecured notes and/or preferred stock instruments (at the election of the Backstop Investors) on market terms except as provided below (the “ Bridge Securities ”). The Bridge Securities would have a final maturity date, in the case of a note, and a mandatory redemption date, in the case of preferred stock, on the 270th day after the Effective Date, would not require any mandatory interim cash distributions except as contemplated in (i) below, and would yield to the Company on the Closing Date cash proceeds (net of OID) of at least the proceeds from the GGP Backstop Rights Offering that such Bridge Securities are intended to replace. The Bridge Securities would be subordinated in right of payment to any New Debt, would have market coupon and fees, would allow for any interest due prior to maturity to be “paid in kind” (rather than paid in cash) at the election of the Company, would be prepayable, without any prepayment penalty or prepayment premium, on a pro rata basis at any time, and would otherwise be on market terms (determined such that fair value of the Bridge Securities as of the Effective Date is equal to par minus OID).
If the GGP Backstop Rights Offering is completed or the Bridge Securities are issued:
(i) unless the Backstop Investors otherwise agree, the Bridge Securities shall be subject to mandatory prepayment on a pro rata basis out of the proceeds of any equity or debt securities offered or sold by the Company at any time the Bridge Securities are outstanding (other than the New Common Stock
sold to the Backstop Investors, any New Common Stock sold in the GGP Backstop Rights Offering and the New Debt); and
(ii) if the Bridge Securities are issued and not repaid on or before the date that is thirty (30) days following the Effective Date, the Company shall conduct a rights offering in an amount equal to the outstanding amount due with respect to the Bridge Securities and with a pro rata backstop by each applicable Backstop Investor on substantially the same procedure and terms provided in clause (a) above, with such rights offering to have a subscription period of not more than 30 days that ends no later than the 10th day prior to the final maturity date or mandatory redemption of the Bridge Securities.
(c) If the Company requests the Initial Investors, in writing, at any time prior to fifteen (15) days before the commencement of solicitation of acceptances of the Plan, each Initial Investor agrees that it shall, severally but not jointly and severally, provide or cause a designee to provide its pro rata share of a backstop for new bonds, loans or preferred stock (as determined by the Initial Investor) in an aggregate amount equal to $1,500,000,000 less the Reinstated Amounts, at a market rate and market commitment fees, and otherwise on terms and conditions to be mutually agreed among the Initial Investors and the Company. Any such notice shall be revocable by the Company in its sole discretion. The new bonds, loans or preferred stock would require no mandatory interim cash principal payments prior to the third anniversary of issuance (unless funded from committed junior indebtedness or junior preferred stock), and would yield proceeds to the Company on the Closing Date net of OID of at least $1,500,000,000 less the Reinstated Amounts. Any Initial Investor may at any time designate in writing one or more financial institutions with a corporate investment grade credit rating (from S&P or Moody’s) to make a substantially similar undertaking as that provided herein and, upon the receipt of such an undertaking by the Company in form and substance reasonably satisfactory to the Company, such Initial Investor shall be released from its obligations under its applicable Investment Agreement.
(d) For the purposes of Section 6.9(a) and Section 6.9(b) , the “pro rata share” or “pro rata basis” of each Backstop Investor shall be determined in accordance with the maximum number of shares of New Common Stock each Backstop Investor has committed to purchase at Closing pursuant to the Brookfield Agreement or this Agreement, as applicable, as of the date hereof, in relation to the aggregate maximum number of shares of New Common Stock all Backstop Investors have committed to purchase at Closing pursuant to the Brookfield Agreement or this Agreement, as applicable, as of the date hereof. For the purposes of Section 6.9(c) , the “pro rata share” or “pro rata basis” of each Initial Investor shall be determined in accordance with the maximum number of shares of New Common Stock each Initial Investor has committed to purchase at Closing pursuant to its Investment Agreement as of the date hereof, but excluding any shares of New Common Stock the Backstop Investors have committed to purchase pursuant to this Section 6.9 .
(e) Section 6.9(a) and Section 6.9(b) shall terminate automatically without any action by any party upon entry of an order of the Bankruptcy Court approving the termination fee and expense reimbursement set forth in that certain Stock Purchase Agreement, dated as of July 8, 2010, by and between the Company and Teacher Retirement System of Texas, as to which order the time to appeal or petition for writ of certiorari shall have expired or if an appeal shall have been sought, such order shall have been affirmed by the highest court to which such order was appealed without modification of such order.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
SECTION 7.1 Conditions to the Obligations of Purchaser . The obligation of each Purchaser to purchase the Shares and the GGO Shares pursuant to this Agreement on the Closing Date is subject to the satisfaction (or waiver (to the extent permitted by applicable Law) by such Purchaser) of the following conditions as of the Closing Date:
(a) No Injunction . No judgment, injunction, decree or other legal restraint shall prohibit the consummation of the Plan or the transactions contemplated by this Agreement.
(b) Regulatory Approvals; Consents . All permits, consents, orders, approvals, waivers, authorizations or other permissions or actions of third parties and Governmental Entities required for the consummation of the transactions contemplated by this Agreement and the Plan shall have been made or received, as the case may be, and shall be in full force and effect, except for those permits, consents, orders, approvals, waivers, authorizations or other permissions or actions the failure of which to make or receive would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (it being agreed that any permit, consent, order, approval, waiver, authorization or other permission or action in respect of any Identified Asset for which any of the alternatives in Section 2.1(a) shall have been employed shall be deemed hereunder to have been made or received, as the case may be, and in full force and effect).
(c) Representations and Warranties and Covenants . Except for changes permitted or contemplated by this Agreement or the Plan Summary Term Sheet, each of (i) the representations and warranties of the Company contained in Section 3.1 , Section 3.2 , Section 3.3 , Section 3.5 , Section 3.20(a) (except for such inaccuracies in Section 3.20(a) caused by sales, purchases or transfers of assets which have been effected in accordance with, subject to the limitations contained in, and not otherwise prohibited by, the terms and conditions in this Agreement, including, without limitation, this Article VII ) and Section 3.23 shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct only as of such specific date), (ii) the representations and warranties of the Company contained in Section 3.4 shall be true and
correct (except for de minimis inaccuracies) at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct (except for de minimis inaccuracies) only as of such specific date) and (iii) the other representations and warranties of the Company contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to “materiality” or “Material Adverse Effect”, shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect (it being agreed that the condition in this subclause (iii) as it relates to undisclosed liabilities of the Company and its Subsidiaries comprised of Indebtedness shall be deemed to be satisfied if the condition in Section 7.1(p) is satisfied. In addition, for purposes of this Section 7.1(c) as it relates to Section 3.20(b) of this Agreement, the reference to “DIP Loan” in clause (i) of such Section 3.20(b) shall be deemed to refer to that certain Senior Secured Debtor in Possession Credit, Security and Guaranty Agreement, dated as of July 23, 2010, by and among the Company, GGP Limited Partnership, the lenders party thereto, Barclays Capital, as the Sole Arranger, Barclays Bank PLC, as the Administrative Agent and Collateral Agent, and the guarantors party thereto (the “ New DIP Agreement ”). The Company shall have complied in all material respects with all of its obligations under this Agreement, provided that with respect to its obligations under Section 5.4 , Section 5.14(b) (to the extent applicable) and Section 5.14(c) the Company shall have complied therewith in all respects. The Company shall have provided to each Purchaser a certificate delivered by an executive officer of the Company, acting in his or her official capacity on behalf of the Company, to the effect that the conditions in this clause (c) and the immediately following clause (d) have been satisfied as of the Closing Date and each Purchaser shall have received such other evidence of the conditions set forth in this Section 7.1 as it shall reasonably request.
(d) No Material Adverse Effect . Since the date of this Agreement, there shall not have occurred any event, fact or circumstance, that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(e) Plan and Confirmation Order . The Plan, in form and substance satisfactory to each Purchaser, shall have been confirmed by the Bankruptcy Court by order in form and substance satisfactory to each Purchaser (the “ Confirmation Order ”), which Confirmation Order shall be in full force and effect (without waiver of the 14-day period set forth in Bankruptcy Rule 3020(e)) as of the Effective Date and shall not be subject to a stay of effectiveness. Notwithstanding anything to the contrary in the Plan Term Sheet, the Plan shall have allowed the Specified Debt in an amount no less than par plus unpaid pre-petition and post-petition interest accrued at the stated non-default rate (or contract rate in the case of Class M).
(f) Disclosure Statement . The Disclosure Statement, in form and substance acceptable to each Purchaser, shall have been approved by order of the
Bankruptcy Court in form and substance satisfactory to each Purchaser (the “ Disclosure Statement Order ”).
(g) Conditions to Confirmation . The conditions to confirmation and the conditions to the Effective Date of the Plan, including the consummation of the transactions contemplated by Exhibit B , shall have been satisfied or waived in accordance with the Plan and the Reorganized Company Organizational Documents as set forth in the Plan shall be in effect.
(h) GGO . The GGO Share Distribution and the issuance by GGO of the GGO Warrants shall have occurred in accordance with this Agreement. In connection with the implementation of the GGO Share Distribution, (i) the Company shall have provided each Purchaser with reasonable access to all relevant information and consulted and cooperated in good faith with each Purchaser and the GGO Representative with respect to the contribution of the Identified Assets to GGO in accordance with Section 2.1(a) , and (ii) all actions taken by the Company and its Subsidiaries related thereto and all documentation related to the formation and organization of GGO, the implementation of the GGO Share Distribution, to separate the business of the Company and GGO and other intercompany arrangements between the Company and GGO, in each case, shall be reasonably satisfactory to each Purchaser and shall be in full force and effect.
(i) GGO Common Stock . GGO shall not have issued and outstanding on a Fully Diluted Basis immediately following the Closing more than the GGO Common Share Amount of shares of GGO Common Stock (plus (A) an aggregate 5,250,000 shares issuable to the respective Initial Investors pursuant to the respective Investment Agreements, (B) 2,000,000 shares of GGO Common Stock issuable upon exercise of the GGO Warrants, (C) 6,000,000 shares of GGO Common Stock issuable upon the exercise of warrants that may be issued to the other Initial Investors pursuant to the other Investment Agreements).
(j) Valid Issuance . The Shares, Warrants, New Warrants and GGO Warrants and the GGO Shares shall be validly issued to each Purchaser (against payment therefor in the case of the Shares and the GGO Shares). The Company and GGO shall have executed and delivered the warrant agreement for each of the New Warrants and the GGO Warrants, together with such other customary documentation as each Purchaser may reasonably request in connection with such issuance; each warrant agreement shall be in full force and effect and neither the Company nor GGO shall be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(k) No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that prohibits the issuance or sale of, pursuant to this Agreement, the Shares, the issuance of Warrants, New Warrants, GGO Shares, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants; and no injunction or order of any federal, state or foreign court shall
have been issued that prohibits the issuance or sale, pursuant to this Agreement, of the Shares, the GGO Shares, the Warrants, New Warrants, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants.
(l) Registration Rights . The Company shall have filed with the SEC and the SEC shall have declared effective, as of Closing, to the extent permitted by applicable SEC rules, a shelf registration statement on Form S-1 or Form S-11, as applicable, covering the resale by each Purchaser and member of the Purchaser Group of the Shares, any securities issued pursuant to Section 6.9(c) and the New Common Stock issuable upon exercise of the New Warrants, containing a plan of distribution reasonably satisfactory to each Purchaser. In addition, each of the Company and GGO shall have entered into registration rights agreements with each Purchaser with respect to all registrable securities issued to or held by members of the Purchaser Group from time to time in a manner that permits the registered offering of securities pursuant to such methods of sale as a Purchaser may reasonably request from time to time. Each registration rights agreement shall provide for (i) an unlimited number of shelf registration demands on Form S-3 to the extent that the Company or GGO, as applicable, is then permitted to file a registration statement on Form S-3, (ii) if the Company or GGO, as applicable, is not eligible to use Form S-3, the filing by the Company or GGO, as applicable, of a registration statement on Form S-1 or Form S-11, as applicable, and the Company or GGO, as applicable, using its reasonable best efforts to keep such registration statement continuously effective; (iii) piggyback rights not less favorable than those provided in the Warrant Agreement; (iv) with respect to the Company, at least three underwritten offerings during the term of the registration rights agreement, but not more than one underwritten offering in any 12-month period and, with respect to GGO, at least three underwritten offerings during the term of the registration rights agreement, but not more than one in any 12-month period; (v) “black-out” periods not less favorable than those provided in the Warrant Agreement; (vi) “lock-up” agreements by the Company or GGO, as applicable, to the extent requested by the managing underwriter in any underwritten public offering requested by a Purchaser, consistent with those provided in the Warrant Agreement (it being understood that the registration rights agreement will include procedures reasonably acceptable to such Purchaser and the Company designed to ensure that the total number of days that the Company or GGO, as applicable, may be subject to a lock-up shall not, in the aggregate after taking into account any applicable lock-up periods resulting from registration rights agreements between the Company or GGO, as applicable, and the other Initial Investors exceed 120 days in any 365-day period; (vii) to the extent that the Purchasers and the members of the Purchaser Group are Affiliates of the Company or GGO, as applicable, at the time of an underwritten public offering by the Company or GGO, as applicable, each Purchaser and the other members of the Purchaser Group will agree to a 60-day customary lock up to the extent requested by the managing underwriter; and (viii) other terms and conditions reasonably acceptable to each Purchaser. The registration rights agreement shall be in full force and effect and neither the Company nor GGO shall be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(m) Listing . The Shares shall be authorized for listing on the NYSE, subject to official notice of issuance, and the shares of New Common Stock issuable upon exercise of the New Warrants shall be eligible for listing on the NYSE. The GGO Shares shall be authorized for listing on a U.S. national securities exchange, subject to official notice of issuance, and the shares of GGO Common Stock issuable upon exercise of the GGO Warrants shall be eligible for listing on a U.S. national securities exchange.
(n) Liquidity . The Company shall have, on the Effective Date and after giving effect to the use of proceeds from Capital Raising Activities permitted under this Agreement and the issuance of the Shares, and the payment and/or reserve for all allowed and disputed claims under the Plan, transaction fees and other amounts required to be paid in cash under the Plan as contemplated by the Plan Summary Term Sheet, an aggregate amount of not less than $350,000,000 of Proportionally Consolidated Unrestricted Cash (the “ Liquidity Target ”) plus the net proceeds of the Additional Financings and the aggregate principal amount of the Anticipated Debt Paydowns (or such higher number as may be agreed to by each Purchaser and the Company) plus the excess, if any, of (A) the aggregate principal amount of New Debt and the Reinstated Amounts over (B) $1,500,000,000. For the avoidance of doubt, the reserve shall (i) include (a) the Contingent and Disputed Debt Claims, and (b) an estimate of the cash component of a potential dividend to be issued by the Company as a result of the spin-off of GGO, and (ii) exclude any amounts to be paid in Shares. In addition, to the extent that there is any availability under the Debt Cap, then such amount shall be included in Proportionally Consolidated Unrestricted Cash as if the Company had such amount in cash.
(o) Board of Directors . Each of the persons designated by PSCM pursuant to Section 5.10 shall have been duly appointed to each of the Company Board and the GGO Board.
(p) Debt of the Company . Immediately following the Closing after giving effect to the Plan, the aggregate outstanding Proportionally Consolidated Debt shall not exceed $22,250,000,000 in the aggregate minus (i) the amount of Proportionally Consolidated Debt attributable to assets sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement through the Closing and minus (ii) the excess, if any, of $1,500,000,000 over the aggregate principal amount of new Unsecured Indebtedness incurred after the date of this Agreement and on or prior to the Closing Date for cash (“ New Debt ”) and the aggregate principal amount of any Debt under the Rouse Bonds or the Exchangeable Notes that is reinstated or issued under the Plan (such amounts reinstated or issued, the “ Reinstated Amounts ”) minus (iii) the amount of Proportionally Consolidated Debt attributable to Identified Assets contributed to GGO pursuant to Section 2.1(a) , minus (iv) the amount of Proportionally Consolidated Debt attributable to assets other than Identified Assets contributed to GGO pursuant to Section 2.1(a) minus (v) the principal and/or liquidation preference of the TRUPS and the UPREIT Units not reinstated, plus (vi) in the event the Closing occurs prior to September 30, 2010, the amount of scheduled amortization on Proportionally Consolidated Debt (other than Corporate Level Debt)
from the Closing Date to September 30, 2010 that otherwise would have been paid by September 30, 2010, minus (vii) in the event the Closing occurs on or after September 30, 2010, the amount of actual amortization paid on Proportionally Consolidated Debt (other than Corporate Level Debt) from September 30, 2010 to the Closing Date, plus (viii) (A) the excess of the aggregate principal amount of new Debt incurred to refinance existing Debt in accordance with Section 7.1(r)(vii) hereof over the principal amount of the Debt so refinanced and (B) new Debt incurred to finance unencumbered Company Properties and Non-Controlling Properties after the date of this Agreement and on or prior to the Closing (such amounts contemplated by clauses (A) and (B) collectively, the “ Additional Financing ”) plus (ix) the amount of other principal paydowns, writedowns and resulting impact on amortization (or payments in the anticipated amortization schedule with respect to Fashion Show Mall (Fashion Show Mall LLC), The Shoppes at the Palazzo and Oakwood Shopping Center (Gretna, LA)) currently anticipated to be made by the Company in connection with refinancings, or completion of negotiations in respect of its property level Debt which the Company determines in good faith are not actually required to be made prior to Closing (“ Anticipated Debt Paydowns ”) plus (x) the excess, if any, of (A) the aggregate principal amount of New Debt and the Reinstated Amounts over (B) $1,500,000,000 plus (xi) the aggregate amount of the Bridge Notes issued pursuant to Section 1.4 (and the parties agree that such Bridge Notes shall not be included in the calculation of Closing Date Net Debt or Closing Date Net Debt W/O Reinstatement Adjustment) (the aggregate amount calculated pursuant to this Section 7.1(p) , the “ Debt Cap ”).
(q) Outstanding Common Stock . The number of issued and outstanding shares of New Common Stock on a Fully Diluted Basis (including the Shares) shall not exceed the Share Cap Number. The “ Share Cap Number ” means 1,104,683,256 plus the number of shares (if any) issued to settle or otherwise satisfy Hughes Heirs Obligations, plus up to 65,000,000 shares of New Common Stock issued in Liquidity Equity Issuances, plus 17,142,857 shares of New Common Stock issuable upon the exercise of the New Warrants, plus the shares of New Common Stock issuable upon the exercise of those certain warrants issued to the Brookfield Consortium Members pursuant to the Brookfield Agreement and to the Fairholme Purchasers pursuant to the Fairholme Agreement, plus the number of shares of Common Stock issued as a result of the exercise of employee stock options to purchase Common Stock outstanding on the date hereof, plus 90,000 shares of Common Stock issued to directors of the Company, plus the number of shares into which any reinstated Exchangeable Notes can be converted, plus, in the event shares of New Common Stock are issued pursuant to Section 6.9 , the difference between (i) the number of shares of New Common Stock issued to existing holders of Common Stock and the Backstop Investors, in each case, pursuant to Section 6.9 minus (ii) 50,000,000 shares of New Common Stock, minus the number of Put Shares (which shall not be considered Share Equivalents for purposes of this calculation); provided , that if Indebtedness under the Rouse Bonds or the Exchangeable Notes is reinstated under the Plan, or the Company shall have incurred New Debt, or between the date of this Agreement and the Closing Date the Company shall have sold for cash real property assets outside of the ordinary course of business (“ Asset Sales ”),
the Share Cap Number shall be reduced by the quotient (rounded up to the nearest whole number) obtained by dividing (x) the sum of (a) the lesser of (I) $1,500,000,000 and (II) the sum of Reinstated Amounts and the net cash proceeds to the Company from the issuance of New Debt, and (b) the net cash proceeds to the Company from Asset Sales in excess of $150,000,000 by (y) the Per Share Purchase Price.
(r) Conduct of Business . The following shall be true in all material respects as of the Closing Date:
Except as otherwise expressly provided or permitted, or contemplated, by this Agreement or the Plan Summary Term Sheet (including, without limitation, in connection with implementing the matters contemplated by Article II hereof) or any order of the Bankruptcy Court in effect on the date of the Agreement, during the period from the date of this Agreement to the Closing, the following actions shall not have been taken without the prior written consent of each Purchaser (which consent such Purchaser agrees shall not be unreasonably withheld, conditioned or delayed):
(i) the Company shall not have (A) declared, set aside or paid any dividends on, or made any other distributions in respect of, any of the Company’s capital stock (other than dividends required to retain REIT status or to avoid the imposition of entity level taxes, (B) split, combined or reclassified any of its capital stock or issued or authorized the issuance of any other securities in respect of, in lieu of or in substitution for its capital stock, or (C) purchased, redeemed or otherwise acquired (other than as set forth on Section 7.1(r)(i) of the Company Disclosure Letter or pursuant to Company Benefit Plans) any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(ii) the Company shall not have amended the Company’s certificate of incorporation or bylaws other than to increase the authorized shares of capital stock;
(iii) neither the Company nor any of its Subsidiaries shall have acquired or agreed to acquire by merging or consolidating with, or by purchasing a substantial portion of the stock, or other ownership interests in, or substantial portion of assets of, or by any other manner, any business or any corporation, partnership, association, joint venture, limited liability company or other entity or division thereof except (A) in the ordinary course of business, (B) for transactions
with respect to joint ventures existing on the date hereof valued at less than $10,000,000 or (C) for transactions valued at less than $10,000,000 in the aggregate;
(iv) none of the Company Properties, Non-Controlling Properties or Identified Assets shall have been sold or otherwise transferred, except, (A) in the ordinary course of business, (B) to a wholly owned Subsidiary of the Company (which Subsidiary shall be subject to the same restrictions under this subsection (iv)), and (C) for sales or other transfers, the net proceeds of which shall not exceed $1,000,000,000 in the aggregate, when taken together with all such sales and other transfers of Company Properties, Non-Controlling Properties and Identified Assets (the “ Sales Cap ”); provided that the Sales Cap shall not apply with respect to sales or transfers of Identified Assets to the extent the same shall have been consummated in accordance with the express terms and conditions set forth in Article II hereof;
(v) [Intentionally Omitted;]
(vi) (vi) none of the Company or any of its Subsidiaries shall have issued, delivered, granted, sold or disposed of any Equity Securities (other than (A) issuances of shares of Common Stock issued pursuant to, and in accordance with, Section 7.1(u) , but subject to Section 7.1(q) , (B) pursuant to the Equity Exchange, (C) the issuance of shares pursuant to the exercise of employee stock options issued pursuant to the Company Option Plans, (D) as set forth on Section 7.1(u) of the Company Disclosure Letter), or (E) the issuance of shares to existing holders of Common Stock and the Backstop Investors, in each case, pursuant to Section 6.9 );
(vii) none of the Company Properties or Identified Assets shall have been mortgaged, or pledged, nor shall the owner or lessee thereof have granted a lien, mortgage, pledge, security interest, charge, claim or other Encumbrance relating to debt obligations of any kind or nature on, or otherwise encumbered, any Company Property or Identified Assets except in the ordinary course of business consistent with past practice, other than encumbrances of Company Properties or Identified Assets of Debtors in connection with (A) a restructuring of existing indebtedness for borrowed money related to any such
Company Property or Identified Asset with the existing lender(s) thereof or (B) a refinancing of existing indebtedness for borrowed money related to any Company Property or Identified Asset in an amount not to exceed $300,000,000 (the “ Refinance Cap ”), provided that (x) the Refinance Cap shall not apply to a refinancing of the existing first lien indebtedness secured by the Fashion Show Mall, (y) in the event that a refinancing is secured by mortgages, deeds of trust, deeds to secure debt or indemnity deeds of trust encumbering multiple Company Properties and Identified Assets, the proceeds of such refinancing shall not exceed an amount equal to the Refinance Cap multiplied by the number of Company Properties and Identified Assets so encumbered, and (z) in connection with refinancing the indebtedness of a Company Property or Identified Asset owned by a Joint Venture, the Refinance Cap shall apply with respect to the aggregate share of such indebtedness which is allocable to, or guaranteed by (but without duplication), the Company and/or its Subsidiaries;
(viii) none of the Company or any of its Subsidiaries shall have undertaken any capital expenditure that is out of the ordinary course of business consistent with past practice and material to the Company and its Subsidiaries taken as a whole, except as contemplated in the Company’s business plan for fiscal year 2010 adopted by the board of directors of the Company prior to the date hereof; or
(ix) the Company shall not have changed any of its methods, principles or practices of financial accounting in effect, other than as required by GAAP or regulatory guidelines (and except to implement purchase accounting and/or “fresh start” accounting if the Company elects to do so).
(s) REIT Opinion . Each Purchaser shall have received an opinion of Arnold & Porter LLP, dated as of the Closing Date, substantially in the form attached hereto as Exhibit J , that the Company (x) for all taxable years commencing with the taxable year ended December 31, 2005 through December 31, 2009, has been subject to taxation as a REIT and (y) has operated since January 1, 2010 to the Closing Date in a manner consistent with the requirements for qualification and taxation as a REIT.
(t) Non-Control Agreements .
(i) The Company shall have entered into the Non-Control Agreement with each Purchaser. The Non-Control
Agreement shall be in full force and effect and the Company shall not be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(ii) GGO shall have entered into the GGO Non-Control Agreement with each Purchaser. The GGO Non-Control Agreement shall be in full force and effect and GGO shall not be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(u) Issuance or Sale of Common Stock . Neither the Company nor any of its Subsidiaries shall have issued or sold any shares of Common Stock (or securities, warrants or options that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock) (other than (A) pursuant to the Equity Exchange, (B) the issuance of shares pursuant to the exercise of employee stock options issued pursuant to the Company Option Plans, (C) as set forth on Section 7.1(u) of the Company Disclosure Letter or (D) the issuance of shares to existing holders of Common Stock and the Backstop Investors, in each case, pursuant to Section 6.9 ), unless (1) the purchase price (or, in the case of securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock, the conversion, exchange or exercise price) shall not be less than $10.00 per share (net of all underwriting and other discounts, fees and any other compensation; provided , that for purposes hereof, payments to the Purchasers or the Fairholme Purchasers in accordance with Section 1.4 of this Agreement or the Fairholme Agreement, respectively, shall not be considered a discount, fee or other compensation), (2) following such issuance or sale, (x) no Person (other than (i) an Initial Investor and their respective Affiliates pursuant to the Investment Agreements and (ii) any institutional underwriter or initial purchaser acting in an underwriter capacity in an underwritten offering) shall, after giving effect to such issuance or sale, beneficially own more than 10% of the Common Stock of the Company on a Fully Diluted Basis, and (y) no four Persons (other than the Purchasers, members of the Pershing Purchaser Group, the members of the Fairholme Purchaser Group, the Brookfield Consortium Members or the Brookfield Investor) shall, after giving effect to such issuance or sale, beneficially own more than thirty percent (30%) of the Common Stock on a Fully Diluted Basis; provided , that this clause (2) shall not be applicable to any conversion or exchange of claims against the Debtors into New Common Stock pursuant to the Plan; provided , further , that subclause (y) of this clause (2) shall not be applicable with respect to any Person listed on Exhibit N and (3) each Purchaser shall have been offered the right to purchase up to its GGP Pro Rata Share of 15% of such shares of Common Stock (or securities, warrants or options that are convertible into or exchangeable or exercisable for Common Stock) on terms otherwise consistent with Section 5.9 (except the provisions of such Section 5.9 with respect to issuances contemplated by this Section 7.1(u) shall apply from the date of this Agreement) ( provided that the right described in this clause (3) shall not be applicable to the issuance
of shares or warrants contemplated by the other Investment Agreements, or any conversion or exchange of debt or other claims into equity in connection with the Plan).
(v) Hughes Heirs Obligations . The Hughes Heirs Obligations shall have been determined by order of the Bankruptcy Court entered on or prior to the Effective Date (which order may be the Confirmation Order or another order entered by the Bankruptcy Court) and satisfied in accordance with the terms of the Plan. For the avoidance of doubt, to the extent that holders of Hughes Heirs Obligations or other Claims against or interests in the Debtors arising under or related to the Hughes Agreement receive any consideration in respect of such obligations, Claims or interests under the Plan, there shall be no reduction in the number of shares of New Common Stock or GGO Common Stock otherwise to have been distributed on the Effective Date under the Plan in the Equity Exchange or the GGO Share Distribution, as applicable .
(w) GGO Promissory Note . The GGO Promissory Note, if any, shall have been issued by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership.
(x) Other Conditions . With respect to each other Initial Investor, either (A) its Investment Agreement shall be in full force and effect without amendments or modifications (other than those that are materially no less favorable to the Company than those provided in such Investment Agreement as in effect on the date hereof), the conditions to the consummation of the transactions under such Investment Agreement as in effect on the date hereof to be performed on the Closing Date shall have been satisfied or waived with the prior written consent of each Purchaser, and such Initial Investor shall have subscribed and paid for such shares of New Common Stock that such Initial Investor is obligated to purchase thereunder, (B) the funding to be provided by such Initial Investor under its Investment Agreement shall have been provided by one or more other investors or purchasers acceptable to each Purchaser on terms and conditions that such Purchaser has agreed are materially no less favorable to the Company than the terms and conditions of the applicable Investment Agreement as in effect on the date hereof or (C) in the case of an Initial Investor (other than a Brookfield Consortium Member), such Initial Investor has breached its obligation to fund at Closing when required to do so in accordance with the terms of its Investment Agreement (it being understood that the foregoing shall not limit the Company’s right to reduce the Total Purchase Amount under Section 1.4 hereof).
(y) Put Shares . Subject to Section 1.4(c) , if the Company has elected to designate Put Shares pursuant to Section 1.4(b) , the Company and each of the Purchasers shall have entered into the Bridge Notes on terms mutually satisfactory to each party, effective as of the Effective Date, and approved by the Bankruptcy Court pursuant to its Confirmation Order.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
SECTION 8.1 Conditions to the Obligations of the Company . The obligation of the Company to issue the Shares and the obligation of GGO to issue the GGO Shares pursuant to this Agreement on the Closing Date are subject to the satisfaction (or waiver by the Company) of the following conditions as of the Closing Date:
(a) No Injunction . No judgment, injunction, decree or other legal restraint shall prohibit the consummation of the Plan or the transactions contemplated by this Agreement.
(b) Regulatory Approvals; Consents . All permits, consents, orders, approvals, waivers, authorizations or other permissions or actions of third parties and Governmental Entities required for the consummation of the transactions contemplated by this Agreement and the Plan shall have been made or received, as the case may be, and shall be in full force and effect, except for those permits, consents, orders, approvals, waivers, authorizations or other permissions or actions the failure of which to make or receive would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(c) Representations and Warranties and Covenants . Each of (i) the representations and warranties of each Purchaser contained in Section 4.1 , Section 4.2 , Section 4.3 , and Section 4.12 in this Agreement shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct only as of such specific date), and (ii) the other representations and warranties of each Purchaser contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to “materiality”, shall be true and correct at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of the Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except for such failures to be true and correct that, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of such Purchaser to consummate the transactions contemplated by this Agreement. Each Purchaser shall have complied in all material respects with all of its obligations under this Agreement. Each Purchaser shall have provided to the Company a certificate delivered by an executive officer of the managing member of such Purchaser, acting in his or her official capacity on behalf of such Purchaser, to the effect that the conditions in this clause (c) have been satisfied as of the Closing Date.
(d) Plan and Confirmation Order . The Plan shall have been confirmed by the Bankruptcy Court by order, which order shall be in full force and effect and not subject to a stay of effectiveness.
(e) Conditions to Confirmation . The conditions to confirmation and the conditions to the Effective Date of the Plan shall have been satisfied or waived in accordance with the Plan.
(f) GGO . The GGO Share Distribution shall have occurred.
(g) No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that prohibits the issuance or sale of, pursuant to this Agreement, the Shares, the issuance of Warrants, New Warrants, GGO Shares, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants; and no injunction or order of any federal, state or foreign court shall have been issued that prohibits the issuance or sale, pursuant to this Agreement, of the Shares, the GGO Shares, the Warrants, the New Warrants, GGO Warrants, the issuance of New Common Stock upon exercise of the New Warrants or the issuance of GGO Common Stock upon exercise of the GGO Warrants.
(h) Reorganization Opinion . The Company shall have received an opinion of Weil, Gotshal & Manges LLP, dated as of the Closing Date, in form and substance reasonably satisfactory to the Company, substantially to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion, the exchange of Common Stock for New Common Stock in the Equity Exchange should be treated as a reorganization within the meaning of Section 368(a) of the Code. In rendering such opinion, Weil, Gotshal & Manges LLP may require and rely upon representations and covenants made by the parties to this Agreement.
(i) IRS Ruling . The Company shall have obtained a favorable written ruling from the United States Internal Revenue Service confirming the qualification of each of the GGO Share Distribution and the prerequisite internal spin-offs each as a “tax free spin-off” under the Code.
(j) Funding . The applicable Purchaser shall have paid to the Company and GGO, as applicable, all amounts payable by such Purchaser under Article I and Article II of this Agreement, by wire transfer of immediately available funds to such account or accounts as shall have been designated in writing by the Company at least three (3) Business Days prior to the Closing Date.
(k) REIT Matters . The representations and covenants set forth on Exhibit D in respect of the applicable Purchaser and, to the extent applicable, its Affiliates, members, Affiliates of members or designees, shall be true and correct in all material respects as of the Closing Date as if made at and as of the Closing Date, it being understood that such Purchaser’s Affiliates, members or Affiliates of members shall be required to provide such representations and covenants only if such Person “beneficially owns” or “constructively owns” (as such terms are defined in the certificate of incorporation of the Company) Common Stock or New Common Stock in excess of the
relevant ownership limit set forth in the certificate of incorporation of the Company or any stock or other equity interest owned by such Person in a tenant of the Company would be treated as constructively owned by the Company.
(l) Non-Control Agreements . Each Purchaser shall have entered into (i) the Non-Control Agreement with the Company and (ii) the GGO Non-Control Agreement with GGO. Each of the Non-Control Agreement and the GGO Non-Control Agreement shall be in full force and effect and such Purchaser shall not be in breach of any representation, warranty, covenant or agreement thereunder in any material respect.
(m) GGO Promissory Note . The GGO Promissory Note, if any, shall have been issued by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership.
(n) Collateral . If the Company has elected to designate Put Shares pursuant to Section 1.4(b) , collateral arrangements pursuant to Section 1.4(c)(viii) shall have been entered into on terms satisfactory to the Company and approved by the Bankruptcy Court.
ARTICLE IX
[INTENTIONALLY OMITTED]
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 10.1 Survival of Representations and Warranties . The representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement but shall terminate and be of no further force and effect following the earlier of (i) the termination of this Agreement in accordance with Article XI and (ii) the Closing.
ARTICLE XI
TERMINATION
SECTION 11.1 Termination . This Agreement and the obligations of the parties hereunder shall terminate automatically without any action by any party if (i) the Company has not filed the Approval Motion within two (2) Business Days following the date of this Agreement, (ii) the Approval Order, in form and substance satisfactory to each Purchaser, approving, among other things, the issuance of the Warrants and the warrants contemplated by each other Investment Agreement, is not entered by the Bankruptcy Court on or prior to the date that is 43 days after the date of this Agreement, (iii) if the Debtors withdraw the Approval Motion, or (iv) the conditions to the obligations of any other Initial Investor pursuant to the other Investment Agreements to
consummate the closings as set forth therein are amended or modified in any respect prior to the entry of the Approval Order, in each of cases (i), (ii), (iii) and (iv) unless each Purchaser and the Company otherwise agrees in writing. In addition, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of each Purchaser and the Company;
(b) by each Purchaser by written notice to the Company upon the occurrence of any of the following events (which notice shall specify the event upon which such termination is based):
(i) if the Effective Date and the purchase and sale contemplated by Article I have not occurred by the Termination Date; provided , however , that the right to terminate this Agreement under this Section 11.1(b)(i) shall not be available to any Purchaser if any Purchaser has breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused the Closing Date not to occur on or before the Termination Date;
(ii) if any Bankruptcy Cases of the Company or any Debtor which is a Significant Subsidiary shall have been dismissed or converted to cases under chapter 7 of the Bankruptcy Code or if an interim or permanent trustee or an examiner shall be appointed to oversee or operate any of the Debtors in their Bankruptcy Cases, in each case, except (x) as would not reasonably be expected to have a Material Adverse Effect or (y) with respect to the Bankruptcy Cases for Phase II Mall Subsidiary, LLC, Oakwood Shopping Center Limited Partnership and Rouse Oakwood Shopping Center, LLC;
(iii) if, from and after the issuance of the Warrants, the Approval Order shall without the prior written consent of each Purchaser, cease to be in full force and effect resulting in the cancellation of any Warrants or a modification of any Warrants, in each case, other than pursuant to their terms, that adversely affects any Purchaser;
(iv) if, without a Purchaser’s consent, the Warrants have not been issued to such Purchaser in accordance with Section 5.2 , or if after the Warrants are issued, any shares of Common Stock underlying the Warrants cease at any time
to be authorized for issuance on a U.S. national securities exchange;
(v) if there has been a breach by the Company of any representation, warranty, covenant or agreement of the Company contained in this Agreement or the Company shall have taken any action which, in each case, (A) would result in a failure of a condition set forth in Article VII and (B) cannot be cured prior to the Termination Date, after written notice to the Company of such breach and the intention to terminate this Agreement pursuant to this Section; provided , however , that the right to terminate this Agreement under this Section shall not be available to any Purchaser if any Purchaser has breached in any material respect its obligations under this Agreement;
(vi) following the issuance of the Warrants, if (a) the Company consummates a Competing Transaction, (b) on or after November 1, 2010, the Company enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its decision to support any Competing Transaction, or (c) the Company files notice of a hearing to confirm a plan of reorganization that contemplates a Change of Control without such Change of Control being subject to either (1) the written consent of the holders a majority in number of the outstanding shares of Common Stock or (2) soliciting the approval of the holders of a majority in number of the outstanding shares of Common Stock in accordance with the Bankruptcy Code (in each case, regardless of whether such approval is obtained) and providing for a period of at least 20 Business Days for acceptance or rejection by such holders in connection with such solicitation;
(vii) if the Company or any Subsidiary of the Company issues any shares of Common Stock or New Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock or New Common Stock) at a purchase price (or in the case of securities that are convertible into or exchangeable or exercisable for, or linked to the performance of, Common Stock or New Common Stock, the conversion, exchange, exercise or comparable price) of less than $10.00 per share (net of all underwriting and other discounts, fees and any other compensation and related expenses; provided , that for purposes hereof, payments to the Purchasers or the Fairholme Purchasers in accordance
with Section 1.4 of this Agreement or the Fairholme Agreement, respectively, shall not be considered a discount, fee or other compensation) of Common Stock or New Common Stock or converts any claim against any of the Debtors into New Common Stock at a conversion price less than $10.00 per share of Common Stock or New Common Stock (in each case, other than pursuant to (A) the exercise, exchange or conversion of Share Equivalents of the Company existing on the date of this Agreement in accordance with the terms thereof as of the date of this Agreement, (B) the Equity Exchange, (C) the issuance of shares upon the exercise of employee stock options issued pursuant to the Company Option Plans, (D) the issuance of shares as set forth on Section 7.1(u) of the Company Disclosure Letter, or (E) the issuance of shares to existing holders of Common Stock and the Backstop Investors, in each case, pursuant to Section 6.9 ;
(viii) if the Bankruptcy Court shall have entered a final and non-appealable order denying confirmation of the Plan;
(ix) if this Agreement, including the Plan Summary Term Sheet, or the Plan, is revised or modified (except as otherwise permitted pursuant to this Agreement) by the Company or an order of the Bankruptcy Court or other court of competent jurisdiction in a manner that is unacceptable to any Purchaser or a plan of reorganization with respect to the Debtors involving the Transactions that is unacceptable to any Purchaser is filed by the Debtors with the Bankruptcy Court or another court of competent jurisdiction;
(x) if any Governmental Entity of competent jurisdiction shall have issued a final and nonappealable order permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement (the “ Closing Restraint ”);
(xi) prior to the issuance of the Warrants, if the Company (A) makes a public announcement, enters into an agreement or files any pleading or document with the Bankruptcy Court, in each case, evidencing its decision to support any Competing Transaction, or (B) the Company or any Subsidiary of the Company enters into a definitive agreement providing for a Competing Transaction or the Company provides notice to any Purchaser of the
Company’s or any of its Subsidiaries’ decision to enter into a definitive agreement providing for a Competing Transaction pursuant to Section 5.7 ; or
(c) by the Company upon the occurrence of any of the following events:
(i) if the Effective Date and the purchase and sale contemplated by Article I have not occurred by the Termination Date; provided , however , that the right to terminate this Agreement under this Section 11.1(c)(i) shall not be available to the Company to the extent that it has breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused the Closing Date not to occur on or before the Termination Date (it being agreed that this proviso shall not limit the Company’s ability to terminate this Agreement pursuant to Section 11.1(c)(ii) or any other clause of this Section 11.1(c) );
(ii) prior to the entry of the Confirmation Order, upon notice to each Purchaser, for any reason or no reason, effective as of such time as shall be specified in such notice; provided , however , that prior to the entry of the Approval Order, the Company shall not have the right to terminate this Agreement under this Section 11.1(c)(ii) during the 48 hour notice period contemplated by Section 5.7 ;
(iii) if all conditions to the obligations of each Purchaser to consummate the transactions contemplated by this Agreement set forth in Article VII shall have been satisfied (other than those conditions that are to be satisfied (and capable of being satisfied) by action taken at the Closing if such Purchaser had complied with its obligations under this Agreement) and the transactions contemplated by this Agreement fail to be consummated as a result of the breach by any Purchaser of its obligation to pay to the Company and GGO, as applicable, all amounts payable by such Purchaser under Article I and Article II of this Agreement, by wire transfer of immediately available funds in accordance with the terms of this Agreement; or
(iv) if a Closing Restraint is in effect.
SECTION 11.2 Effects of Termination .
(a) In the event of the termination of this Agreement pursuant to Article XI , this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any party hereto except the covenants and agreements made by the parties herein under Article XIII shall survive indefinitely in accordance with their terms. Except as otherwise expressly provided in the Warrants or paragraph (b) below, the Warrants when issued in accordance with Section 5.2 hereof and all of the obligations of the Company under the Warrant Agreement shall survive any termination of this Agreement.
(b) In the event of a termination of this Agreement by the Company pursuant to Section 11.1(c)(iii) , the parties agree that the Warrants held by any member of the Purchaser Group at the time of such termination (but no Warrants held by any other Person if transferred as permitted hereunder) shall be deemed cancelled, null and void and of no further effect. The foregoing shall be a term of the Warrants.
ARTICLE XII
DEFINITIONS
SECTION 12.1 Defined Terms . For purposes of this Agreement, the following terms, when used in this Agreement with initial capital letters, shall have the respective meanings set forth in this Agreement:
(a) “ 2006 Bank Loan ” means that certain Second Amended and Restated Credit Agreement, dated as of February 24, 2006, by and among the Company, the Operating Partnership and GGPLP L.L.C., as borrowers, the lenders named therein, Banc of America Securities LLC, Eurohypo AG, New York Branch and Wachovia Capital Markets, LLC, as joint arrangers and joint bookrunners, Eurohypo AG, New York Branch, as administrative agent, Bank of America, N.A. and Wachovia Bank, National Association, as syndication agents, and Commerzbank AG and Lehman Commercial Paper, Inc., as co-documentation agents.
(b) “ Additional Sales Period ” means in the case of Section 5.9(a)(iv)(A) , the 120 day period following the date of the Company’s notice to Purchaser pursuant to Section 5.9(a)(ii) , and in the case of Section 5.9(a)(iv)(B) , the 120 day period following (x) the expiration of the 180 day period specified in Section 5.9(a)(iii) or (y) if earlier, the date on which it is finally determined that Purchaser is unable to consummate such purchase contemplated by Section 5.9(a)(iii) within such 180 day period specified in Section 5.9(a)(iii) .
(c) “ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “control” means the possession, directly or indirectly, of the
power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
(d) “ Brazilian Entities ” means those certain Persons in which the Company indirectly owns an interest which own real property assets or have operations located in Brazil.
(e) “ Brookfield Consortium Member ” means Brookfield Asset Management Inc. or any controlled Affiliate of Brookfield Asset Management Inc. or any Person of which Brookfield Asset Management Inc. or any Subsidiary or controlled Affiliate of Brookfield Asset Management Inc. is a general partner, managing member or equivalent thereof or a wholly owned subsidiary of the foregoing.
(f) “ Business Day ” means any day other than (a) a Saturday, (b) a Sunday, (c) any day on which commercial banks in New York, New York are required or authorized to close by Law or executive order.
(g) “ Capital Raising Activities ” means the Company’s efforts to consummate equity and debt financings for the Company, and sales of properties and other assets of the Company and its Subsidiaries for cash.
(h) “ Cash Equivalents ” means as to any Person, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof ( provided , that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than 90 days from the date of acquisition by such Person, (b) time deposits and certificates of deposit of any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the Laws of the United States, any State thereof or the District of Columbia having capital, surplus and undivided profits aggregating in excess of $500,000,000, having maturities of not more than 90 days from the date of acquisition by such Person, (c) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in subsection (a) above entered into with any bank meeting the qualifications specified in subsection (b) above, (d) commercial paper issued by any issuer rated at least A-1 by S&P or at least P-1 by Moody’s or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and in each case maturing not more than one year after the date of acquisition by such Person or (e) investments in money market funds substantially all of whose assets are comprised of securities of the types described in subsections (a) through (d) above.
(i) “ Change of Control ” means any transaction or series of related transactions, in which, after giving effect to such transaction or transactions, (i) any Person other than a member of a Purchaser Group of the Pershing Purchasers or Fairholme Purchasers acquires beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 promulgated under the Exchange Act), directly or indirectly, of more than fifty percent (50%) of either (A) the then-outstanding shares of capital stock of the Company
or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors of the Company or (ii) there occurs a direct or indirect sale, lease, exchange or transfer or other disposition of all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis (including securities of the entity’s directly or indirectly owned Subsidiaries).
(j) “ Clawback Fee ” means the aggregate of the $0.25 per share fees paid by the Company to the Purchasers and the Fairholme Purchasers on the Effective Date in accordance with Section 1.4 of this Agreement and the Fairholme Agreement.
(k) “ Claims ” shall have the meaning set forth in section 101(5) of the Bankruptcy Code.
(l) “ Closing Date Net Debt ” means, as of the Effective Date but prior to giving effect to the Plan, the sum of, without duplication:
(i) the aggregate outstanding Proportionally Consolidated Debt plus any accrued and unpaid interest thereon (including the Contingent and Disputed Debt Claims) plus the amount of the New Debt,
(ii) less the Reinstatement Adjustment Amount,
(iii) plus the Permitted Claims Amount,
(iv) plus the amount of Proportionally Consolidated Debt attributable to assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement and through the Closing, but excluding any deficiency, guaranty or other similar claims associated with the Special Consideration Properties (as such term is defined in the plan of reorganization for the applicable Confirmed Debtor),
(v) less Proportionally Consolidated Unrestricted Cash; provided , however , that the net proceeds attributable to sales of assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, or otherwise transferred during the period between the date of this Agreement and through the Closing shall be deducted prior to subtracting Proportionally Consolidated Unrestricted Cash.
(m) “ Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts ” means, as of the Effective Date but prior to giving effect to the Plan, the sum of, without duplication:
(i) the aggregate outstanding Proportionally Consolidated Debt plus any accrued and unpaid interest thereon plus the amount of the New Debt,
(ii) plus the amount of Proportionally Consolidated Debt attributable to assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, transferred or otherwise divested during the period between the date of this Agreement and through the Closing, but excluding any deficiency, guaranty or other similar claims associated with the Special Consideration Properties (as such term is defined in the plan of reorganization for the applicable Confirmed Debtor), and
(iii) less Proportionally Consolidated Unrestricted Cash; provided , however , that the net proceeds attributable to sales of assets of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest sold, returned, abandoned, conveyed, or otherwise transferred during the period between the date of this Agreement and through the Closing shall be deducted prior to subtracting Proportionally Consolidated Unrestricted Cash.
(n) “ Company Benefit Plan ” means each “employee benefit plan” within the meaning of Section 3(3) of ERISA and each other stock purchase, stock option, restricted stock, severance, retention, employment, consulting, change-of-control, collective bargaining, bonus, incentive, deferred compensation, employee loan, fringe benefit and other benefit plan, agreement, program, policy, commitment or other arrangement, whether or not subject to ERISA (including any related funding mechanism now in effect or required in the future), whether formal or informal, oral or written, in each case sponsored or maintained by the Company or any of its Significant Subsidiaries for the benefit of any past or present director, officer, employee, consultant or independent contractor of the Company or any of its Significant Subsidiaries has any present or future right to benefits.
(o) “ Company Board ” means the board of directors of the Company.
(p) “ Competing Transaction ” means, other than the transactions contemplated by this Agreement or the Plan Summary Term Sheet, or by the other Investment Agreements, any offer or proposal relating to (i) a merger, consolidation,
business combination, share exchange, tender offer, reorganization, recapitalization, liquidation, dissolution or similar transaction involving the Company or (ii) any direct or indirect purchase or other acquisition by a “person” or “group” of “beneficial ownership” (as used for purposes of Section 13(d) of the Exchange Act) of, or a series of transactions to purchase or acquire, assets representing 30% or more of the consolidated assets or revenues of the Company and its Subsidiaries taken as a whole or 30% or more of the Common Stock of the Company (or securities convertible into or exchangeable or exercisable for 30% or more of the Common Stock of the Company) or (iii) any recapitalization of the Company or the provision of financing to the Company that shall cause any condition in Section 7.1 not to be satisfied, in each case, other than the recapitalization and financing transactions contemplated by this Agreement and the Plan Summary Term Sheet (or the financing provided by the Initial Investors) or that will be effected together with the transactions contemplated hereby.
(q) “ Conclusive Net Debt Adjustment Statement ” means a statement that: (i) sets forth each of the five components of the Closing Date Net Debt (for the avoidance of doubt, this shall include (x) the Permitted Claims Amount, which shall include the Reserve, (y) the Reinstatement Adjustment Amount, and (z) with respect to clauses (i), (iv) and (v) of the definition of Closing Date Net Debt, the Closing Date Net Debt Amount W/O Reinstatement Adjustment and Permitted Claims Amounts as determined through the process provided for in Sections 5.16(a) and 5.16(b) shall be used; provided , however , that such amounts shall be updated to reflect current information regarding cash, Claims, Debt and other similar information and any amendments to this Agreement agreed upon following completion of the process provided for in Sections 5.16(a) and 5.16(b) ), and (ii) sets forth the Net Debt Excess Amount or the Net Debt Surplus Amount, as applicable.
(r) “ Contingent and Disputed Debt Claims ” means contingent and disputed claims for default interest on (i) that certain promissory note, dated February 8, 2008, by GGP Limited Partnership in favor of The Comptroller of the State of New York, (ii) that certain promissory note, dated February 15, 2007, by GGP Limited Partnership in favor of Ivanhoe Capital LP, and (iii) the loan made to GGP, GGP Limited Partnership and GGPLP L.L.C., as borrowers, under that certain Second Amended and Restated Credit Agreement, dated as of February 24, 2006, under which Eurohypo AG, New York Branch is the Administrative Agent and any amendments, modifications or supplements thereto, in each case to the extent that any such claims have not been ruled on by the Bankruptcy Court or settled prior to the Effective Date.
(s) “ Contract ” means any agreement, lease, license, evidence of indebtedness, mortgage, indenture, security agreement or other contract.
(t) [ Intentionally Omitted .]
(u) “ Corporate Level Debt ” means the debt described in Sections II A, H through O, Q, R, S, W and X of the Plan Summary Term Sheet plus accrued and unpaid interest thereon.
(v) “ Debt ” means all obligations of the Company, its Subsidiaries and other Persons in which the Company, directly or indirectly, holds a minority interest (a) evidenced by (i) notes, bonds, debentures or other similar instruments (including, for avoidance of doubt, mezzanine debt), or (ii) trust preferred shares, trust preferred units and other preferred instruments, and/or (b) secured by a lien, mortgage or other encumbrance; provided , however , that Debt shall exclude (x) any form of municipal financing including, but not limited to, special improvement district bonds or tax increment financing, (y) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment), and (z) intercompany notes or preferred interests between and among the Company and its wholly owned Subsidiaries.
(w) “ DIP Loan ” means that certain Senior Secured Debtor in Possession Credit, Security and Guaranty Agreement, dated as of May 15, 2009, by and among the lenders named therein, UBS AG, Stamford Branch, as administrative agent for the lenders, the Company and the Operating Partnership, as borrowers, and the certain subsidiaries of the Company named therein, as guarantors.
(x) “ Disclosure Statement ” means the disclosure statement to accompany the Plan as amended, modified or supplemented.
(y) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
(z) [ Intentionally Omitted .]
(aa) “ Excess Surplus Amount ” means the sum of: (i) if, after giving effect to the application of the Reserve Surplus Amount to reduce the principal amount of the GGO Promissory Note pursuant to Section 5.16(d) , any Reserve Surplus Amount remains, (A) if and to the extent that such Reserve Surplus Amount is less than or equal to the Net Debt Surplus Amount, 80% of such remaining Reserve Surplus Amount, and otherwise (B) 100% of the remaining Reserve Surplus Amount; and (ii) (A) if a GGO Promissory Note is required to be issued at Closing, 80% of the aggregate Offering Premium, if any, less the amount of any reduction in the principal amount of the GGO Promissory Note pursuant to Section 5.16(e) hereof, or (B) if the GGO Promissory Note is not required to be issued at Closing, the sum of (x) 80% of the aggregate Offering Premium and (y) the excess, if any, of 80% of the Net Debt Surplus Amount over the Hughes Amount.
(bb) “ Exchangeable Notes ” means the 3.98% Exchangeable Senior Notes Due 2027 issued pursuant to that certain Indenture, dated as of April 16, 2007, by and between the Operating Partnership, as issuer, and The Bank of New York Mellon Corporation, as trustee.
(cc) “ Excluded Claims ” means:
(i) prepetition and postpetition Claims secured by cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar liens,
(ii) except with respect to Claims related to GGO or the assets or businesses contributed thereto, prepetition and postpetition Claims for all ordinary course trade payables for goods and services related to the operations of the Company and its Subsidiaries (including, without limitation, ordinary course obligations to tenants, anchors, vendors, customers, utility providers or forward contract counterparties related to utility services, employee payroll, commissions, bonuses and benefits (but excluding the Key Employee Incentive Plan approved by the Bankruptcy Court pursuant to an order entered on October 15, 2009 at docket no. 3126), insurance premiums, insurance deductibles, self insured amounts and other obligations that are accounted for, consistent with past practice prior to the Petition Date, as trade payables); provided , however , that Claims or expenses related to the administration and conduct of the Bankruptcy Cases (such as professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases and other expenses, fees and commissions related to the reorganization and recapitalization of the Company pursuant to the Plan, including related to the Investment Agreements, the issuance of the New Debt, Liquidity Equity Issuances and any other equity issuances contemplated by this Agreement and the Plan) shall not be Excluded Claims,
(iii) except with respect to Claims related to GGO or the assets or businesses contributed thereto, Claims and liabilities arising from the litigation or potential litigation matters set forth in that certain Interim Litigation Report of the Company dated March 29, 2010 and the Company’s litigation audit response to Deloitte & Touche dated February 25, 2010, both have been made available to each Purchaser prior to close of business on March 29, 2010 and other Claims and liabilities arising from ordinary course litigation or potential litigation that was not included in such schedule solely because the amount of estimated or asserted liabilities or Claims did not meet the threshold amount used for the preparation of such schedule, in each
case, to the extent that such Claims and liabilities have not been paid and satisfied as of the Effective Date, are continuing following the Effective Date, excluding Claims against or interests in the Debtors arising under or related to the Hughes Agreement (for the avoidance of doubt, Permitted Claims shall include $10 million to be paid in cash with respect to attorneys fees and expenses in connection with the settlement related to the Hughes Heirs Obligations),
(iv) except with respect to Claims related to GGO or the assets or businesses contributed thereto, all tenant, anchor and vendor Claims required to be cured pursuant to section 365 of the Bankruptcy Code, in connection with the assumption of an executory contract or unexpired lease under the Plan,
(v) any deficiency, guaranty or other similar Claims associated with the Special Consideration Properties (as such term is defined in the plans of reorganization for the applicable Confirmed Debtors),
(vi) MPC Taxes,
(vii) surety bond Claims relating to Claims of the type identified in clauses (i) through (vi) of this definition,
(viii) GGO Setup Costs (other than professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases), and
(ix) any liabilities assumed by GGO and paid on the Effective Date by GGO or to be paid after the Effective Date by GGO (for avoidance of doubt, this includes any Claims that, absent assumption of the liability by GGO, would be a Permitted Claim).
(dd) [ Intentionally Omitted .]
(ee) “ Fully Diluted Basis ” means all outstanding shares of the Common Stock, New Common Stock or GGO Common Stock, as applicable, assuming the exercise of all outstanding Share Equivalents (other than (x) any options issued to an employee of the Company or its Subsidiaries pursuant to the terms of a Company Benefit Plan or to an employee of GGO or its Subsidiaries pursuant to the terms of an employee
equity plan of GGO or (y) preferred UPREIT Units) without regard to any restrictions or conditions with respect to the exercisability of such Share Equivalents.
(ff) “ Fully Diluted GGO Economic Interest ” means, for the Purchaser Group with respect to GGO Common Stock at any time, a percentage equal to the quotient of (i) the aggregate number of shares of GGO Common Stock held in the aggregate by the Purchaser Group, assuming the exercise of all outstanding Share Equivalents held by them (without regard to any restrictions or conditions with respect to the exercisability of such Share Equivalents), and the aggregate notional number of shares of GGO Common Stock referenced in any physically-settled or financially-settled equity derivative that the Purchaser Group counterparty has certified to the Company provides the Purchaser Group with the benefit of substantially similar cash flows as would direct ownership, divided by (ii) the aggregate outstanding number of shares of GGO Common Stock on a Fully Diluted Basis.
(gg) “ GAAP ” means generally accepted accounting principles in the United States.
(hh) “ GGO Common Share Amount ” means 32,468,326 plus a number (rounded up to the nearest whole number) equal to 0.1 multiplied by the number of shares of Common Stock issued on or after the Measurement Date and prior to the record date of the GGO Share Distribution as a result of the exercise, conversion or exchange of any Share Equivalents of the Company outstanding on the Measurement Date into Common Stock and employee stock options issued pursuant to the Company Option Plans.
(ii) “ GGO Non-Control Agreement ” means an agreement with respect to GGO as attached hereto as Exhibit M .
(jj) “ GGO Note Amount ” means: (i) in the event there is a Net Debt Excess Amount, the sum of the Net Debt Excess Amount set forth on the Conclusive Net Debt Adjustment Statement and the Hughes Heirs Obligations to the extent satisfied with assets of the Company (including cash (but excluding any cash paid prior to the Effective Date in settlement or satisfaction of Hughes Heirs Obligations which had the effect of reducing Proportionally Consolidated Unrestricted Cash for purposes of calculating Closing Date Net Debt, Closing Date Net Debt W/O Reinstatement Adjustment and Permitted Claims Amounts, and Net Debt Excess Amount/Net Debt Surplus Amount, as applicable) or shares of New Common Stock, but excluding Identified Assets) (such amount so satisfied, but excluding $10 million to be paid in cash with respect to attorneys fees and expenses, the “ Hughes Amount ”); and (ii) in the event there is a Net Debt Surplus Amount, the Hughes Amount less 80% of the Net Debt Surplus Amount, provided, that in no event shall the GGO Note Amount be less than zero.
(kk) “ GGO Pro Rata Share ” means, with respect to each Purchaser, the percentage designated by PSCM by written notice to the Company pursuant to Section 1.1(e) .
(ll) “ GGO Promissory Note ” means an unsecured promissory note payable by GGO (or one of its Subsidiaries, provided that the GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership in the aggregate principal amount of the GGO Note Amount, as adjusted pursuant to Section 5.16(d) , Section 5.16(e) and Section 5.16(g) , (i) bearing interest at a rate equal to the lower of (x) 7.5% per annum and (y) the weighted average effective rate of interest payable (after giving effect to the payment of any underwriting and all other discounts, fees and any other compensation) on each series of New Debt issued in connection with the Plan and (ii) maturing on the fifth anniversary of the Closing Date (or if such date is not a Business Day, the next immediately following Business Day), and (iii) including prohibitions on dividends and distributions, no financial covenants and such other customary terms and conditions as reasonably agreed to by each Purchaser and the Company.
(mm) [Intentionally Omitted.]
(nn) “ GGO Setup Costs ” means such cash liabilities, costs and expenses as may be incurred by the Company or its Subsidiaries in connection with the formation and organization of GGO and the implementation of the GGO Share Distribution, including any and all liabilities for any sales, use, stamp, documentary, filing, recording, transfer, gross receipts, registration, duty, securities transactions or similar fees or Taxes or governmental charges (together with any interest or penalty, addition to Tax or additional amount imposed) as levied by any taxing authority, in each case, determined as of the Effective Date and further including, to the extent the Company or any Subsidiary of the Company has made or will make a payment to reduce the principal amount of the mortgage related to 110 N. Wacker Drive, Chicago, Illinois, then 50% of any such payment or contractual obligation to make a payment.
(oo) [Intentionally Omitted.]
(pp) “ GGP Pro Rata Share ” means, with respect to each Purchaser, the percentage designated by PSCM by written notice to the Company pursuant to Section 1.1(e) .
(qq) “ Governmental Entity ” means any (a) nation, region, state, province, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, court or tribunal, or other entity), (d) multinational organization or body or (e) body entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature or any other self-regulatory organizations.
(rr) “ Hughes Agreement ” means that certain Contingent Stock Agreement, effective as of January 1, 1996, by The Rouse Company in favor of and for the benefit of the Holders (named in Schedule I thereto) and the Representatives (therein defined), as amended.
(ss) “ Hughes Heirs Obligations ” means claims or interests against the Debtors arising under or relating to sections 2.07 and 2.08 of the Hughes Agreement and pertaining to the delivery of contingent shares for business units to be valued as of December 31, 2009 and claims arising out of or related to the foregoing.
(tt) “ Indebtedness ” means, with respect to a Person without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property (other than trade payables and accrued expenses incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, trust preferred shares, trust preferred units and other preference instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations in respect of capital leases under GAAP of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities, (g) the monetary obligations of a Person under (x) a so-called synthetic, off-balance sheet or tax retention lease, or (y) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment) (each, a “ Synthetic Lease Obligation ”), (h) guaranties of such Person with respect to obligations of the type described in clauses (a) through (g) above, (i) all obligations of other Persons of the kind referred to in clauses (a) through (h) above secured by any lien on property owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, (j) the net obligations of such Person in respect of hedge agreements and swaps and (k) any obligation that, in accordance with GAAP, would be required to be reflected as debt on the consolidated balance sheet of such Person.
(uu) “ Joint Venture ” means a Subsidiary of the Company which is owned partly by another Subsidiary of the Company and partly by a third party.
(vv) “ Knowledge ” of the Company means the actual knowledge, as of the date of this Agreement, of the individuals listed on Section 12.1(ss) of the Company Disclosure Letter.
(ww) “ Law ” means any statutes, laws (including common law), rules, ordinances, regulations, codes, orders, judgments, decisions, injunctions, writs, decrees, applicable to the Company or any of its Subsidiaries or any Purchaser, as applicable, or their respective properties or assets.
(xx) “ Liquidity Equity Issuances ” means issuances of shares of New Common Stock in the Plan for cash in an aggregate amount of up to 65,000,000 shares of New Common Stock.
(yy) “ Material Adverse Effect ” means any change, event or occurrence which (x) has a material adverse effect on the results of operations or financial condition of the Company and its direct and indirect Subsidiaries taken as a whole, other than changes, events or occurrences (i) generally affecting (A) the retail mall industry in the United States or in a specific geographic area in which the Company operates, or (B) the economy, or financial or capital markets, in the United States or elsewhere in the world, including changes in interest or exchange rates or the availability of capital, or (ii) arising out of, resulting from or attributable to (A) changes in Law or regulation or in generally accepted accounting principles or in accounting standards, or changes in general legal, regulatory or political conditions, (B) the negotiation, execution, announcement or performance of any agreement between the Company and/or its Affiliates, on the one hand, and any Purchaser and/or its Purchaser Group (or members thereof), on the other hand, or the consummation of the transactions contemplated hereby or operating performance or reputational issues arising out of or associated with the Bankruptcy Cases, including the impact thereof on relationships, contractual or otherwise, with tenants, customers, suppliers, distributors, partners or employees, or any litigation or claims arising from allegations of breach of fiduciary duty or violation of Law or otherwise, related to the execution or performance of this Agreement or the transactions contemplated hereby, including, without limitation, any developments in the Bankruptcy Cases, (C) acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of the this Agreement, (D) earthquakes, hurricanes, tornadoes or other natural disasters, (E) any action taken by the Company or its Subsidiaries as contemplated or permitted by any agreement between the Company and/or its Affiliates, on the one hand, and any Purchaser and/or Purchaser Group (or members thereof), on the other hand, or with each Purchaser’s consent, or any failure by the Company to take any action as a result of any restriction contained in any agreement between the Company and/or its Affiliates, on the one hand, and any Purchaser and/or its Purchaser Group (or any member thereof), on the other hand, or (F) in each case in and of itself, any decline in the market price, or change in trading volume, of the capital stock or debt securities of the Company or any direct or indirect subsidiary thereof, or any failure to meet publicly announced or internal revenue or earnings projections, forecasts, estimates or guidance for any period, whether relating to financial performance or business metrics, including, without limitation, revenues, net operating incomes, cash flows or cash positions, it being further understood that any event, change, development, effect or occurrence giving rise to such decline in the trading price or trading volume of the capital stock or debt securities of the Company or such failure to meet internal projections or forecasts as described in the preceding clause (F), as the case may be, may be the cause of a Material Adverse Effect; so long as, in the case of clauses (i)(A) and (i)(B), such changes or events do not have a materially disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, as compared to other entities that own and manage retail malls throughout the United States, or (y) materially impairs the ability of the Company to consummate the transactions contemplated by this Agreement or perform its obligations hereunder or under the other agreements executed in connection with the transactions contemplated hereby.
(zz) “ Material Contract ” means, with respect to the Company and its Subsidiaries, any:
(i) Contract that would be considered a material contract pursuant to Item 601(b)(10) of Regulation S-K promulgated by the SEC, had the Company been the registrant referred to in such regulation; or
(ii) Contract for capital expenditures, the future acquisition or construction of fixed assets or the future purchase of materials, supplies or equipment that provides for the payment by the Company or its Subsidiaries of more than $5,000,000 and is not terminable by the Company or any of its Subsidiaries by notice of not more than sixty (60) days for a cost of less than $1,000,000.
(aaa) “ MPC Assets ” means residential and commercial lots in the “master planned communities” owned, for federal income tax purposes, by Howard Hughes Properties, Inc. or The Hughes Corporation or related to the Emerson Master Planned Community.
(bbb) “ MPC Taxes ” means all liability for income Taxes in respect of sales of MPC Assets sold prior to the date of this Agreement.
(ccc) [ Intentionally Omitted .]
(ddd) “ Net Debt Excess Amount ” means, the amount, which shall in no event be less than $0, that is calculated by subtracting the Target Net Debt from the Closing Date Net Debt (as reflected on the Conclusive Net Debt Adjustment Statement).
(eee) “ Net Debt Surplus Amount ” means, the amount, which shall in no event be less than $0, that is calculated by subtracting Closing Date Net Debt (as reflected on the Conclusive Net Debt Adjustment Statement) from the Target Net Debt.
(fff) “ Non-Control Agreement ” means the Non-Control Agreement the form of which is attached hereto as Exhibit M .
(ggg) “ Non-Controlling Properties ” means the Company Properties listed on Section 12.1(ddd) of the Company Disclosure Letter. Each of the Non-Controlling Properties is owned by a Joint Venture in which neither the Company nor any of its Subsidiaries is a controlling entity. For purposes of this Section 12.1(ggg) , the term “ control ” shall mean, possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise; provided , however , that the rights of any Person to exercise Major Decision Rights under a Joint Venture shall not constitute or be deemed to constitute “control” for the purposes hereof. “Controlling” and “controlled” shall have meanings
correlative thereto. For purposes of this Section 12.1(ggg) , the term “Major Decision Rights” shall mean, the right to, directly or indirectly, approve, consent to, veto or exercise a vote in connection with a Person’s voting or other decision-making authority in respect of the collective rights, options, elections or obligations of such Person under a Joint Venture.
(hhh) “ Offering Premium ” means, with respect to any shares of New Common Stock issued for cash in conjunction with issuances of New Common Stock or Share Equivalents permitted by this Agreement (including any Liquidity Equity Issuance) and completed prior to the date that is the last to occur of (x) 45 days after the Effective Date, (y) the Settlement Date, if applicable, and (z) the Bridge Note Maturity Date, if applicable, the product of (i) (A) the per share offering price of the shares of New Common Stock (or offering price of Share Equivalents corresponding to one underlying share of New Common Stock) issued (net of all underwriting and other discounts, fees or other compensation, and related expenses; provided , that for purposes hereof, payments to the Purchasers or the Fairholme Purchasers in accordance with Section 1.4 of this Agreement or the Fairholme Agreement, respectively, shall not be considered a discount, fee or other compensation or related expense) less (B) the Per Share Purchase Price and (ii) the number of shares of New Common Stock sold pursuant thereto. For the purposes hereof, the issuance for cash of notes mandatorily convertible into New Common Stock on the Effective Date shall constitute an issuance of the underlying number of shares of New Common Stock for cash at a price per share offering equal to the offering price for the corresponding amount of notes. For the avoidance of doubt, the Clawback Fee will not be taken into account when calculating Offering Premium.
(iii) “ Operating Partnership ” means GGP Limited Partnership, a Delaware limited partnership and a Subsidiary of the Company.
(jjj) “ Permitted Claims ” means, as of the Effective Date, other than Excluded Claims, (a) all Claims against the Debtors covered by the Plan (the “ Plan Debtors ”) that are classified in those certain classes of Claims described in Sections II B through E, G and P in the Plan Summary Term Sheet (the “ PMA Claims ”), (b) all Claims or other amounts required to be paid pursuant to the Plan to indenture trustees or similar servicing or administrative agents, with respect to administrative fees incurred by or reimbursement obligations owed to such indenture trustees or similar servicing or administrative agents in their capacity as such under the Corporate Level Debt documents, (c) any claims of a similar type as the PMA Claims that are or have been asserted against affiliates of the Plan Debtors that are or were debtors in the Bankruptcy Cases and for which a plan of reorganization has already been confirmed (the “ Confirmed Debtors ”), (d) Claims or interests against the Debtors arising under or related to the Hughes Agreement (other than Hughes Heirs Obligations) plus $10 million to be paid in cash with respect to attorneys fees and expenses in connection with the settlement related to the Hughes Heirs Obligations, (e) surety bond Claims relating to the types of Claims identified in clauses (a) through (d) of this definition, and (f) the Clawback Fee.
(kkk) “ Permitted Claims Amount ” means, as of the Effective Date, an amount equal to the sum of, without duplication, (a) the aggregate amount of accrued and unpaid Permitted Claims that have been allowed (by order of the Bankruptcy Court or pursuant to the terms of the Plan) as of the Effective Date, plus (b) the aggregate amount of the reserve to be estimated pursuant to the Plan with respect to accrued and unpaid Permitted Claims that have not been allowed or disallowed (in each case by order of the Bankruptcy Court or pursuant to the terms of the Plan) as of the Effective Date (the “ Reserve ”), plus (c) the aggregate amount of the GGO Setup Costs (other than professional fees and disbursements of financial, legal and other advisers and consultants retained in connection with the administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy Cases) as of the Effective Date; provided , however , that there shall be no duplication with any amounts otherwise included in Closing Date Net Debt.
(lll) “ Permitted Replacement Shares ” means shares of New Common Stock, or notes mandatorily convertible into or exchangeable for shares of New Common Stock, that are sold for cash proceeds immediately payable to the Company (net of all underwriting and other discounts, fees, and related consideration; provided , that for purposes hereof, payments to the Purchasers or the Fairholme Purchasers in accordance with Section 1.4 of this Agreement or the Fairholme Agreement, respectively, shall not be considered a discount, fee, related consideration or other compensation) of not less than $10.50 per share of New Common Stock (or in the case of notes, convertible or exchangeable at not less than $10.50 per share of New Common Stock); provided , that Permitted Replacement Shares shall not include any New Common Stock sold to any of the Initial Investors or their Affiliates, except pursuant to the exercise of Subscription Rights pursuant to this Agreement, the Brookfield Agreement or the Fairholme Agreement (in each case, as defined herein or therein as applicable).
(mmm) “ Person ” means an individual, a group (including a “ group ” under Section 13(d) of the Exchange Act), a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
(nnn) “ Preliminary Closing Date Net Debt Review Deadline ” means the end of the Preliminary Closing Date Net Debt Review Period, which date shall be the first business day that is at least twenty (20) calendar days after delivery of the Preliminary Closing Date Net Debt Schedule, and which shall be the deadline by which a Purchaser shall deliver to the Company a Dispute Notice.
(ooo) “ Preliminary Closing Date Net Debt Review Period ” means the period between the Company’s delivery of the Preliminary Closing Date Net Debt Schedule and the Preliminary Closing Date Net Debt Review Deadline.
(ppp) “ Proportionally Consolidated Debt ” means consolidated Debt of the Company less (1) all Debt of Subsidiaries of the Company that are not wholly-owned and other Persons in which the Company, directly or indirectly, holds a minority interest,
to the extent such Debt is included in consolidated Debt, plus (2) the Company’s share of Debt for each non-wholly owned Subsidiary of the Company and each other Persons in which the Company, directly or indirectly, holds a minority interest based on the company’s pro-rata economic interest in each such Subsidiary or Person or, to the extent to which the Company is directly or indirectly (through one or more Subsidiaries or Persons) liable for a percent of such Debt that is greater than such pro-rata economic interest in such Subsidiary or Person, such larger amount; provided, however, for purposes of calculating Proportionally Consolidated Debt, the Debt of the Brazilian Entities shall be deemed to be $110,437,781.
(qqq) “ Proportionally Consolidated Unrestricted Cash ” means the consolidated Unrestricted Cash of the Company less (1) all Unrestricted Cash of Subsidiaries of the Company that are not wholly-owned and Persons in which the Company, directly or indirectly, owns a minority interest, to the extent such Unrestricted Cash is included in consolidated Unrestricted Cash of the Company, plus (2) the Company’s share of Unrestricted Cash for each non-wholly owned Subsidiary of the Company and Persons in which the Company, directly or indirectly, owns a minority interest based on the Company’s pro rata economic interest in each such Subsidiary or Person; provided , however , for purposes of calculating Proportionally Consolidated Unrestricted Cash, the Unrestricted Cash of the Brazilian Entities shall be deemed to be $82,000,000, provided , further , that any distributions of Unrestricted Cash made from the date of this Agreement to the Closing by Brazilian Entities to the Company or any of its Subsidiaries shall be disregarded for purposes of calculating Proportionally Consolidated Unrestricted Cash.
(rrr) “ Purchaser Group ” means, with respect to each Purchaser, such Purchaser, its investment manager and their respective “controlled Affiliates”. For such purpose, one or more investment funds under common investment management shall constitute “controlled Affiliates” of their investment manager.
(sss) “ Reinstatement Adjustment Amount ” means $5,426,250,000.
(ttt) [ Intentionally Omitted .]
(uuu) “ Reserve Surplus Amount ” means, as of any date of determination, (x) the Reserve minus (y) the aggregate amount paid with respect to Permitted Claims through such date of determination to the extent such Permitted Claims were included in the calculation of the Reserve minus (z) any amount included in the Reserve with respect to Permitted Claims that the Company Board, based on the exercise of its business judgment and information available to the Company Board as of the date of determination, considers necessary to maintain as a reserve against Permitted Claims yet to be paid.
(vvv) “ Rights Agreement ” means that certain Rights Agreement, dated as of November 18, 1998, by and between the Company and BNY Mellon Shareowner
Services, as successor to Norwest Bank Minnesota, N.A., as amended on November 10, 1999, December 31, 2001 and November 18, 2008, and from time to time.
(www) “ Rouse Bonds ” means (i) the 6-3/4% Senior Notes Due 2013 issued pursuant to the Indenture, dated as of May 5, 2006, by and among The Rouse Company LP and TRC Co-Issuer, Inc., as co-issuers and The Bank of New York Mellon Corporation, as trustee, (ii) unsecured debentures issued pursuant to the Indenture, dated as of February 24, 1995, by and between The Rouse Company, as issuer, and The Bank of New York Mellon Corporation, as trustee, and (iii) any notes to be issued pursuant to the Plan on the Effective Date by The Rouse Company LP to the holders of the Rouse Bonds specified in (i) and (ii) above who elect to receive such notes.
(xxx) “ Share Equivalent ” means any stock, warrants, rights, calls, options or other securities exchangeable or exercisable for, or convertible into, shares of Common Stock, New Common Stock or GGO Common Stock, as applicable.
(yyy) “ Significant Subsidiaries ” means the operating Subsidiaries of the Company that generated revenues in excess of $30,000,000 for the year ended December 31, 2009.
(zzz) “ Specified Debt ” means Claims in Classes H through N inclusive, in each case as provided on the Plan Summary Term Sheet.
(aaaa) “ Subsidiary ” means, with respect to a Person (including the Company), (a) a company a majority of whose capital stock with voting power, under ordinary circumstances, to elect a majority of the directors is at the time, directly or indirectly, owned by such Person, by a subsidiary of such Person, or by such Person and one or more subsidiaries of such Person, (b) a partnership in which such Person or a subsidiary of such Person is, at the date of determination, a general partner of such partnership, (c) a limited liability company of which such Person, or a Subsidiary of such Person, is a managing member or (d) any other Person (other than a company) in which such Person, a subsidiary of such Person or such Person and one or more subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
(bbbb) “ Target Net Debt ” means $22,970,800,000.
(cccc) “ Tax Matters Agreement ” means that certain Tax Matters Agreement to be entered into by the Company and GGO in connection with the GGO Share Distribution, substantially in the form attached hereto as Exhibit O .
(dddd) “ Tax Protection Agreements ” means any written agreement to which the Company, its Operating Partnership or any other Subsidiary is a party pursuant to which: (i) in connection with the deferral of income Taxes of a holder of interests in the Operating Partnership, the Company, the Operating Partnership or the other
Subsidiaries have agreed to (A) maintain a minimum level of Indebtedness or continue any particular Indebtedness, (B) retain or not dispose of assets for a period of time that has not since expired, (C) make or refrain from making Tax elections, and/or (D) only dispose of assets in a particular manner; and/or (ii) limited partners of the Operating Partnership have guaranteed Indebtedness of the Operating Partnership.
(eeee) “ Termination Date ” means December 31, 2010; provided , that if the Confirmation Order shall have been entered on or prior to December 15, 2010 but the Company, despite its commercially reasonable efforts, is unable to consummate the Closing on or prior to December 31, 2010, the Company may extend the Termination Date for so long as Closing by January 31, 2011 is feasible and the Company continues to diligently pursue Closing; provided , further , that the Termination Date shall not be extended beyond January 31, 2011.
(ffff) “ Transactions ” means the purchase of the Shares and the GGO Shares and the other transactions contemplated by this Agreement.
(gggg) “ TRUPS ” means certain preferred securities issued by GGP Capital Trust I.
(hhhh) “ Unrestricted Cash ” means all cash and Cash Equivalents of the Company and of the Subsidiaries of the Company, but excluding any cash or Cash Equivalents that are controlled by or subject to any lien, security interest or control agreement, other preferential arrangement in favor of any creditor or otherwise encumbered or restricted in any way; provided that cash and Cash Equivalents of the Company and of the Subsidiaries of the Company that are controlled by or subject to any lien, security interest, control agreement, preferential arrangement or other encumbrance or restriction pursuant to the New DIP Agreement shall not be excluded from “Unrestricted Cash.”.
(iiii) “ Unsecured Indebtedness ” means all indebtedness of the Company for borrowed money or obligations of the Company evidenced by notes, bonds, debentures or other similar instruments that are not secured by a lien on any Company Property or other assets of the Company or any Subsidiary.
(jjjj) “ UPREIT Units ” means preferred or common units of limited partnership interests of the Operating Partnership.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices . All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows: (x) on the date delivered, if personally delivered; (y) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; or (z) on the next Business Day after being sent by recognized overnight mail service specifying next business day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:
SECTION 13.2 Assignment; Third Party Beneficiaries . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party without the prior written consent of the other party. Notwithstanding the previous sentence, this Agreement, or a Purchaser’s rights, interests or obligations hereunder (including, without limitation, the right to receive any securities pursuant to the Transactions), may be assigned or transferred, in whole or in part, by such Purchaser (a) to one or more members of its Purchaser Group; provided , that no such assignment shall release such Purchaser from its obligations hereunder to be performed by such Purchaser on or prior to the Closing Date or (b) with the prior written consent of the Company, not to be unreasonably withheld, conditioned or delayed, to one or more credit-worthy financial institutions who agree in writing to perform the applicable obligations of such Purchaser hereunder (any assignment under clause (b) to which the Company has so consented shall release such Purchaser from its obligations hereunder to the extent of the obligations assigned). Without prejudice to the foregoing, the Company agrees that Purchasers may designate to Blackstone Real Estate Partners VI L.P., a Delaware limited partnership (together with its permitted assigns, “ Blackstone ”), (i) the Purchasers’ right to purchase 8,287,895 of the Shares (the “ Blackstone Assigned Shares ”) and 100,191 of the GGO Shares (together with the Blackstone Assigned Shares, the “ Blackstone Assigned Securities ”), in each case, that the Purchasers are entitled to purchase at Closing pursuant to this Agreement, (ii) the Purchasers’ right to receive 714,286 of the New Warrants (the “ Blackstone Assigned Warrants ”) and 83,333 of the GGO Warrants, in each case, issuable to the Purchasers pursuant to this Agreement, (iii) the Purchasers’ right to receive 7.634% of the Purchasers’ compensation in the form of New Common Stock with respect to the GGP Backstop Rights Offering and other rights of the Purchasers’ set forth in Section 6.9(a) and Section 6.9(b) in the event the Purchasers designate Blackstone as one of their designees to subscribe for New Common Stock in such GGP Backstop Rights Offering, and (iv) the Purchasers’ right to receive 7.634% of the shares of Common Stock (and other Share Equivalents) which are offered to the Purchasers pursuant to the Purchasers’ pre-Closing subscription rights set forth in Section 7.1(u) in the event the Purchasers elect to purchase the shares offered to them in such offering, provided that (1) the Company’s agreement as aforesaid is subject to Blackstone (A) paying to the Company and GGO, as applicable, by wire transfer of immediately available funds at the Closing the aggregate purchase price payable pursuant to this Agreement for the Blackstone Assigned Securities (the “ Blackstone Purchase
Price ”) and the purchase price for shares received by Blackstone pursuant to clauses (iii) and (iv) above, (B) agreeing in a writing reasonably satisfactory to, and for the benefit of, the Company that the Blackstone Assigned Securities shall be subject to such transfer restrictions/lock-ups as contemplated by Section 6.4 of this Agreement (and not the longer lock-ups applicable to shares sold to the Brookfield Investor), including being subject to a limited 120-day lock-up in connection with certain equity sales within 30 days of the Effective Date but excluding any restrictions imposed by the Non-Control Agreement, and (C) entering into joinder agreements reasonably acceptable to, and for the benefit of, the Company with respect to the provisions of clause (B) and the registration rights agreement referred to in the following sentence, and (2) in no event shall any Purchaser be released from any of its obligations hereunder (including in respect of the Blackstone Assigned Securities) unless and until Blackstone shall have complied with clauses (A), (B) and (C) above. In the event of the closing of the purchase by Blackstone from the Company and GGO, as applicable, of the Blackstone Assigned Securities and the payment by Blackstone to the Company and GGO, as applicable, of the Blackstone Purchase Price at Closing as aforesaid, (x) the Purchasers shall be released from the obligation to pay the Company the purchase price for the Blackstone Assigned Securities (but not from the obligation to pay the purchase price pursuant to this Agreement for any other Shares or GGO Shares or other obligations hereunder) and (y) the shelf registration statement contemplated by Section 7.1(l) shall cover the resale by Blackstone of the Blackstone Assigned Shares and the New Common Stock issuable upon exercise of the Blackstone Assigned Warrants and the registration rights agreement of the Company referenced in Section 7.1(l) shall include Blackstone and its securities to the same extent as it applies to the Purchasers and their securities (except that demand registration rights shall not be available to Blackstone). Blackstone may assign the foregoing rights, in whole or in part, to one or more Affiliates, provided that no such assignment shall release Blackstone Real Estate Partners VI L.P. from any obligations assigned by a Purchaser to it. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement. Notwithstanding the foregoing, or any other provisions herein to the contrary, no Purchaser may assign any of its rights, interests or obligations under this Agreement to the extent such assignment would preclude the applicable securities Laws exemptions from being available or such assignment would cause a failure of the closing condition in Section 7.1(u) of the Brookfield Agreement.
SECTION 13.3 Prior Negotiations; Entire Agreement . This Agreement (including the exhibits hereto and the documents and instruments referred to in this Agreement) constitutes the entire agreement of the parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, between the parties with respect to the subject matter of this Agreement.
SECTION 13.4 Governing Law; Venue . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF, AND VENUE IN, THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND EACH PARTY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
SECTION 13.5 Company Disclosure Letter . The Company Disclosure Letter shall be arranged to correspond to the Articles and Sections of this Agreement, and the disclosure in any portion of the Company Disclosure Letter shall qualify the corresponding provision in Article III and any other provision of Article III to which it is reasonably apparent on the face of the disclosure that such disclosure relates. No disclosure in the Company Disclosure Letter relating to any possible non-compliance, breach or violation of any Contract or Law shall be construed as an admission that any such non-compliance, breach or violation exists or has actually occurred. In the Company Disclosure Letter, (a) all capitalized terms used but not defined therein shall have the meanings assigned to them in this Agreement and (b) the Section numbers correspond to the Section numbers in this Agreement.
SECTION 13.6 Counterparts . This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties; and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.
SECTION 13.7 Expenses . Each party shall bear its own expenses incurred or to be incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
SECTION 13.8 Waivers and Amendments . This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance, and subject, to the extent required, to the approval of the Bankruptcy Court. No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.
SECTION 13.9 Construction .
(a) The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(b) Unless the context otherwise requires, as used in this Agreement: (i) an accounting term not otherwise defined in this Agreement has the meaning ascribed to it in accordance with GAAP; (ii) “ or ” is not exclusive; (iii) “including” and its variants mean “including, without limitation” and its variants; (iv) words defined in the singular have the parallel meaning in the plural and vice versa; (v) references to “written” or “in writing” include in visual electronic form; (vi) words of one gender shall be construed to apply to each gender; (vii) the terms “Article,” “Section,” and “Schedule” refer to the specified Article, Section, or Schedule of or to this Agreement; and (viii) the term “beneficially own” shall have the meaning determined pursuant to Rule 13d-3 under the Exchange Act as in effect on the date hereof; provided, however, that a Person will be deemed to beneficially own (and have beneficial ownership of) all securities that such Person has the right to acquire, whether such right is exercisable immediately or with the passage of time or the satisfaction of conditions. The terms “beneficial ownership” and “beneficial owner” have correlative meanings.
(c) Notwithstanding anything to the contrary, and for all purposes of this Agreement, any public announcement or filing of factual information relating to the business, financial condition or results of the Company or its Subsidiaries, or a factually accurate (in all material respects) public statement or filing that describes the Company’s receipt of an offer or proposal for a Competing Transaction and the operation of this Agreement with respect thereto, or any entry into a confidentiality agreement, shall not be deemed to evidence the Company’s or any Subsidiary’s intention to support any Competing Transaction.
(d) In the event of a conflict between the terms and conditions of this Agreement and the Plan Summary Term Sheet, the terms and conditions of this Agreement shall govern.
(e) Unless otherwise agreed in writing between the Company and each Purchaser, wherever this Agreement requires the action by, consent of or delivery to Purchaser, Purchasers, each Purchaser or similar parties, each Purchaser hereby appoints PSCM as its attorney-in-fact to exercise all of the rights of such Purchaser hereunder (except for the assumption of any funding or related liabilities or obligations), and the Company may rely on any instructions or elections made by such Person.
SECTION 13.10 Adjustment of Share Numbers and Prices . The number of Shares to be purchased by each Purchaser at the Closing pursuant to Article I , the Per Share Purchase Price, the GGO Per Share Purchase Price, the number of GGO Shares to be purchased by such Purchaser pursuant to Article II and any other number or amount contained in this Agreement which is based upon the number or price of shares of GGP or GGO shall be proportionately adjusted for any subdivision or combination (by stock split, reverse stock split, dividend, reorganization, recapitalization or otherwise) of the Common Stock, New Common Stock or GGO Common Stock that occurs during the period between the date of this Agreement and the Closing. In addition, if at any time prior to the Closing or the consummation of the repurchase of Repurchase Shares or the Put Option, as applicable , the Company or GGO shall declare or make a dividend or
other distribution whether in cash or property (other than a dividend or distribution payable in common stock of the Company or GGO, as applicable, the GGO Share Distribution or a distribution of rights contemplated hereby), the Per Share Purchase Price or the GGO Per Share Purchase Price or the applicable price for the definition of Permitted Replacement Shares , as applicable, shall be proportionally adjusted thereafter by the Fair Market Value (as defined in the Warrant Agreement) per share of the dividend or distribution. If a transaction results in any adjustment to the exercise price for and number of Shares underlying the warrants issued to the other Initial Investors pursuant to Article 5 of the Warrant Agreement, the exercise price for and number of shares underlying each of the New Warrants and GGO Warrants described in Section 5.2 of this Agreement shall be adjusted for that transaction in the same manner.
SECTION 13.11 Certain Remedies .
(a) The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement or of any other agreement between them with respect to the Transaction were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other applicable remedies at law or equity, the parties shall be entitled to an injunction or injunctions, without proof of damages, to prevent breaches of this Agreement or of any other agreement between them with respect to the Transaction and to enforce specifically the terms and provisions of this Agreement.
(b) To the fullest extent permitted by applicable law, the parties shall not assert, and hereby waive, any claim or any such damages, whether or not accrued and whether or not known or suspect to exist in its favor, against any other party and its respective Affiliates, members, members’ affiliates, officers, directors, partners, trustees, employees, attorneys and agents on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, or as a result of, this Agreement or of any other agreement between them with respect to the Transaction or the transactions contemplated hereby or thereby.
(c) Prior to the entry of the Confirmation Order, other than with respect to the Company’s obligations under Section 5.1(c) , each Purchaser’s right to receive the Warrants on the terms and subject to the conditions set forth in this Agreement shall constitute the sole and exclusive remedy of any nature whatsoever (whether for monetary damages, specific performance, injunctive relief, or otherwise) of such Purchaser against the Company for any harm, damage or loss of any nature relating to or as a result of any breach of this Agreement by the Company or the failure of the Closing to occur for any reason; provided , that, following the entry of the Approval Order, each Purchaser shall be entitled to specific performance of the Company’s obligation to issue the Warrants as well as the Company’s obligations under Section 5.1(c) hereof.
(d) Following the entry of the Confirmation Order, each Purchaser shall be entitled to specific performance of the terms of this Agreement, in addition to any other applicable remedies at law.
(e) The Company, on behalf of itself and its respective heirs, successors, and assigns, hereby covenants and agrees never to institute or cause to be instituted or continue prosecution of any suit or other form of action or proceeding of any kind or nature whatsoever against any member of any Purchaser or its Purchaser Group by reason of or in connection with the Transaction; provided , however , that nothing shall prohibit the Company from instituting an action against any Purchaser in connection with this Agreement in accordance with the provisions of this Section 13.11 .
(f) For the avoidance of doubt, the failure of any Purchaser under this Agreement to satisfy its obligations hereunder shall not relieve any other Purchaser from its obligations hereunder, including the obligation to consummate the transactions hereunder if all other conditions to such Purchaser’s obligations have been satisfied or waived.
SECTION 13.12 Bankruptcy Matters . For the avoidance of doubt, all obligations of the Company and its Subsidiaries in this Agreement are subject to and conditioned upon (a) with respect to the issuance of the Warrants and the other obligations contained in the Approval Order, entry of the Approval Order, and (b) with respect to the remainder of the provisions hereof, entry of the Confirmation Order.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered by each of them or their respective officers thereunto duly authorized, all as of the date first written above.
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PERSHING SQUARE CAPITAL MANAGEMENT, L.P. |
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On behalf of each of the Purchasers |
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By: PS Management GP, LLC |
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Its: General Partner |
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By: |
/s/ William A. Ackman |
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William A. Ackman |
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Managing Member |
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Thomas H. Nolan, Jr. |
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Title: |
President and Chief Operating Officer |
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[SIGNATURE PAGE OF AMENDED AND RESTATED STOCK PURCHASE AGREEMENT]
Exhibit 10.4
EXECUTION VERSION
STANDSTILL AGREEMENT
This Standstill Agreement (this “ Agreement ”) is dated as of November 9, 2010 ( the “ Effective Date ”), by and between General Growth Properties, Inc., a Delaware corporation (the “ Company ”), Brookfield Retail Holdings LLC, Brookfield Retail Holdings II LLC, Brookfield Retail Holdings III LLC, Brookfield Retail Holdings IV-A LLC, Brookfield Retail Holdings IV-B LLC, Brookfield Retail Holdings IV-C LLC, Brookfield Retail Holdings IV-D LLC and Brookfield Retail Holdings V LP (collectively, “ Investor ”) and any Brookfield Consortium Member who signs a counterpart signature hereto.
WHEREAS, Brookfield Retail Holdings LLC has entered into that certain Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010 (the “ Investment Agreement ”), that contemplates, among other things, the purchase by Investor and other Brookfield Consortium Members of shares of Common Stock subject to the terms and conditions contained therein;
WHEREAS, the transactions contemplated by the Investment Agreement are intended to assist the Company in its plans to recapitalize and emerge from bankruptcy and is not intended to constitute a change of control of the Company or otherwise give Investor the power to control the business and affairs of the Company;
WHEREAS, as a material condition to the Company’s and Brookfield Retail Holdings LLC’s obligations to consummate the transactions contemplated by the Investment Agreement, the Company and Investor have agreed to execute this Agreement; and
WHEREAS, certain terms used in this Agreement are defined in Section 4.1 .
NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
COMPANY RELATED PRINCIPLES
SECTION 1.1 Board of Directors . So long as Investor and the Investor Parties, collectively, shall Constructively Own more than ten percent (10%) of the outstanding shares of Common Stock, none of Investor or the Investor Parties shall take any action that is inconsistent with its support for the following corporate governance principles :
(a) A majority of the members of the Board shall be Independent Directors, where “ Independent Director ” means a director who satisfies all standards for independence promulgated by the New York Stock Exchange (or the applicable exchange where shares of Common Stock are then listed);
(b) the Board shall have a nominating committee, a majority of which shall be Disinterested Directors;
(c) except as regards voting to elect the Purchaser Board Designees (as such term is defined in the Investment Agreement), in connection with any stockholder meeting or consent solicitation relating to the election of members of the Board, if Investor and the Investor Parties, collectively, Beneficially Own a number of shares of Common Stock greater than 10% of the shares of Common Stock outstanding as of the applicable record date, then Investor shall, and shall cause the other Investor Parties to, vote in such election of members of the Board all shares of Common Stock that are Beneficially Owned by the Investor and the Investor Parties in excess of such number of shares of Common Stock in proportion to the Votes Cast ;
(d) the Board shall consist of nine (9) members and not be increased or reduced, unless approved by seventy-five percent (75%) of the Board;
(e) any Change in Control (other than a transaction contemplated by Section 2.1(b)(ii) ) in which a Large Stockholder or its controlled Affiliate is the acquiror or part of the acquiror group or is proposed to be directly or indirectly combined with the Company must be approved by a majority of the Disinterested Directors as if it were a Company Transaction involving such Large Stockholder and by a majority of the voting power of the stockholders (other than such Large Stockholder or its controlled Affiliates); and
(f) any Change in Control (other than a transaction contemplated by Section 2.2(b)(v) ) in which any Large Stockholder or its controlled Affiliate receives per share consideration in its capacity as a stockholder of the Company in excess of that to be received by other stockholders, must be approved by a majority of the Disinterested Directors as if it were a Company Transaction involving such Large Stockholder and by a majority of the voting power of the stockholders (other than such Large Stockholder or its controlled Affiliates).
The Company shall not waive any provisions similar to Sections 1.1(c), (e) or (f) above for any Large Stockholder under any other agreement unless the Company grants a similar waiver under this Agreement.
SECTION 1.2 Voting .
(a) Subject to Sections 1.1(c) , (e) and ( f) , in connection with any matter being voted on at a stockholder meeting or in a consent solicitation that the Board has recommended that the stockholders of the Company approve, Investor and the other Investor Parties may vote the shares of Common Stock that they Beneficially Own against or in favor of such matter, in their sole and absolute discretion.
(b) Subject to Sections 1.1(c) , (e) and (f) , in connection with any matter being voted on at a stockholder meeting or in a consent solicitation that the Board has recommended that the stockholders of the Company not approve, Investor and the other Investor Parties may vote the shares of Common Stock that they Beneficially Own:
(i) against such matter; or
(ii) in favor of such matter; provided , however , that if Investor and the other Investor Parties (taken as a whole) Beneficially Own shares of Common Stock that represent more than the Voting Cap of the then-outstanding Common Stock, then, with
respect to the shares that account for the excess over the Voting Cap, Investor shall, and shall cause the other Investor Parties to, vote in proportion to the V ot es Cast .
(c) For purposes of Section 1.2(b)(ii) , the number of shares of Common Stock that are Beneficially Owned by Investor and the Brookfield Consortium Members shall not include any Common Stock held by any independently operated business unit of Brookfield Asset Management Inc. or any Affiliate thereof (each such independently operated business unit, a “ Brookfield Investment Advisor ”) (i) in trust for the benefit of persons other than Investor or any Brookfield Consortium Member, (ii) in mutual funds, open- or closed-end investment funds or other pooled investment vehicles sponsored, managed or advised or subadvised by such Brookfield Investment Advisor, (iii) as agent and not principal, or (iv) in any other case where such Brookfield Investment Advisor is disaggregated from Brookfield Asset Management Inc. for the purposes of Section 13(d) of the Exchange Act; provided , however , that (A) in each case, such shares of Common Stock were acquired in the ordinary course of business of the Brookfield Investment Advisor’s respective investment management or securities business and not with the intent or purpose on the part of Investor or the Brookfield Consortium Members of influencing control of the Company or avoiding the provisions of this Agreement and (B) where appropriate, “Chinese walls” or other informational barriers and other procedures have been established.
SECTION 1.3 Related Party Transactions .
(a) Without the approval of a majority of the Disinterested Directors, Investor shall not, and shall not permit any of the Investor Parties to (and use all reasonable efforts to cause any Affiliate of any Investor Party not to), engage in any Company Transaction. “ Company Transaction ” means (i) any transaction or series of related transactions, directly or indirectly, between the Company or any Subsidiary of the Company, on the one hand, and any of the Investor Parties, on the other hand, or (ii) without limiting the Company’s obligation to comply with Sections 1.5 and 1.6 hereof, with respect to the purchase or sale of Common Stock by any of the Investor Parties, any waiver of any limitation or restriction with respect to such purchase or sale in the Charter or the Transaction Documents, including any exemption from the Ownership Limit (as defined in the Charter); provided , however , that none of the following shall constitute a Company Transaction:
(i) transactions expressly contemplated in the Transaction Documents;
(ii) customary compensation arrangements (whether in the form of cash or equity awards), expense reimbursement, director insurance coverage and/or indemnification arrangements (and related advancement of expenses) in each case for Board designees, or any use by such persons, for Company business purposes, of aircraft, vehicles, property, equipment or other assets owned or customarily provided to members of the Board by the Company or any of its Subsidiaries;
(iii) any transaction or series of transactions if the same is in the Ordinary Course of Business and does not involve payments by the Company in excess of $5,000,000 in the aggregate for such transaction or series of transactions; and
(iv) any transaction among the Company and/or its Subsidiaries and The Howard Hughes Corporation and/or its Subsidiaries.
(b) Following the Closing (as such term is defined in the Investment Agreement), any decisions by the Company regarding material amendments or modifications of the Plan (as such term is defined in the Investment Agreement) or waivers of the Company’s material rights under the Plan, shall require the approval of the majority of Disinterested Directors to the extent such amendment, modification or waiver relates to any Brookfield Consortium Member’s rights or obligations.
SECTION 1.4 No Other Voting Restrictions . For the avoidance of doubt, except as restricted herein or in any Transferee Agreement or by applicable Law, Investor and the other Investor Parties may vote the Common Stock that they Beneficially Own in their sole and absolute discretion.
SECTION 1.5 Amendment of the Charter . The Company hereby agrees that following the Closing Date, without the consent of Investor, the Company shall not amend (or propose to amend) the provisions of the Charter in a manner or take any other action that would: (a) change the restriction on Beneficial Ownership (as such term is defined in the Charter) of the outstanding capital stock of the Company to a level other than 9.9%; (b) change the restriction on Constructive Ownership (as such term is defined in the Charter) of the outstanding capital stock of the Company to a level other than 9.9%; or (c) change any waiver from the restrictions set forth in the foregoing clauses (a) and (b) granted to any Brookfield Consortium Member in any manner adverse to any Brookfield Consortium Member. For the avoidance of doubt, nothing in this Section 1.5 shall affect the Board’s discretion to grant to third parties any waivers from the restrictions on Beneficial Ownership or Constructive Ownership (as each term is defined in the Charter) in accordance with the terms of the Charter.
SECTION 1.6 Waiver of Ownership Limited in the Charter . The Company and the Board shall take all appropriate and necessary action to ensure that the ownership limitations set forth in the Charter shall be waived with respect to Investor, the Brookfield Consortium Members, any Brookfield Investment Advisor and any Person (other than a transferee under Section 2.2(b)(vi) unless such transferee executes a Transferee Agreement) to whom Investor, any Brookfield Consortium Member or any Brookfield Investment Advisor has transferred any of the Common Stock or Warrants in accordance with the terms of this Agreement and the Investment Agreement, provided , insofar as the waiver relates to Investor, a Brookfield Consortium Member, a Brookfield Investment Advisor or any transferee, as the case may be, who Beneficially Owns or Constructively Owns (as each term is defined in the Charter) (or would, following such transfer, Beneficially Own or Constructively Own (as each term is defined in the Charter)) interests in excess of the Stock Ownership Limit or the Constructive Ownership Limit (as each term is defined in the Charter), that the Company has been provided with a certificate containing the representations and covenants set forth on Exhibit D to the Investment Agreement (or, to the extent necessitated by the organizational structure of the party providing such certificate, a certificate substantially similar to such Exhibit D ) from such Investor, Brookfield Consortium Member, Brookfield Investment Advisor or transferee, or in the case of a transferee, a certificate containing the representations and covenants set forth on Exhibit D to the Investment Agreement (or, to the extent necessitated by the organizational
structure of the party providing such certificate, a certificate substantially similar to Exhibit D ) as modified to allow such transferee to own stock or other equity interests in a tenant of the Company or its Subsidiaries to the extent such ownership would not result in (i) the Company or any of its REIT Subsidiaries other than GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $1 million of “related party rent” in any year or (ii) GGP Natick Trust or GGP Ivanhoe, Inc. recognizing more than $100,000 of “related party rent” in any year. The parties hereto agree that the Company may, in the discretion of the Board, grant to third parties any other waivers from restrictions set forth in the Charter.
ARTICLE II
INVESTOR RELATED COVENANTS
SECTION 2.1 Ownership Limitations .
(a) Except as provided in Section 2.1(b) , Investor agrees that it (together with the other Investor Parties) shall not acquire Economic Ownership of shares of Common Stock that would result in the Investor Parties in the aggregate Economically Owning a percentage of the then-outstanding Common Stock on a Fully Diluted Basis that is greater than the Ownership Cap. For the avoidance of doubt, no Person shall be in violation of this Section 2.1 as a result of (i) any acquisition by the Company of any Common Stock; (ii) any change in the percentage of the Investor Parties’ Economic Ownership of Common Stock that results from a change in the aggregate number of shares of Common Stock outstanding; or (iii) any change in the number of shares of Common Stock Economically Owned by the Investor Parties as a result of any anti-dilution adjustments to any Equity Securities (as defined in the Investment Agreement) Economically Owned by any Investor Party.
(b) Notwithstanding Section 2.1(a) , any of the Investor Parties may acquire Economic Ownership of shares of Common Stock that would result in the Investor Parties (taken as a whole) having Economic Ownership of a percentage of the then-outstanding Common Stock on a Fully Diluted Basis that is greater than the Ownership Cap under any of the following circumstances:
(i) acquisitions of shares pursuant to any pro-rata stock dividend or stock distribution effected by the Company and approved by a majority of the Independent Directors; or
(ii) if such acquisition is pursuant to a tender offer or exchange offer, in each case that includes an offer for all outstanding shares of Common Stock owned by the Target Stockholders, or a merger, consolidation, binding share exchange or similar transaction pursuant to an agreement with the Company, so long as in each case (A) such offer, merger, consolidation, binding share exchange or similar transaction is approved by a majority of the Disinterested Directors or by a special committee comprised of Disinterested Directors (such tender offer or exchange offer, an “ Approved Offer ”, and such merger, consolidation, binding share exchange or similar transaction, an “ Approved Merger ”), and (B) in any such Approved Offer, a majority of the Target Shares are tendered into such Approved Offer and not withdrawn prior to the final expiration of such Approved Offer, or in such Approved Merger, a majority of the Target Shares that are
voted (in person or by proxy) on the related transaction proposal are voted in favor of such proposal. As used in this Section 2.1(b)(ii) : “ Target Shares ” means the then-outstanding shares of Common Stock not owned by the Investor Parties; and “ Target Stockholders ” means the stockholders of the Company other than the Investor Parties.
(c) The limitation set forth in Section 2.1(a) may only be waived by the Company if a majority of the Disinterested Directors consent thereto.
SECTION 2.2 Transfer Restrictions .
(a) Subject to Section 2.2(b) , unless approved by a majority of the Independent Directors, Investor shall not, and shall not permit any of the Investor Parties to sell or otherwise transfer or agree to transfer (each of the foregoing, a “ Transfer ”), directly or indirectly, any shares of Common Stock that are held directly or indirectly by Investor or any of the other Investor Parties if, immediately after giving effect to such Transfer, the Person that acquires such Common Stock (other than any underwriter acting in such capacity in an underwritten public offering of such shares) would, together with its Affiliates, to the actual knowledge (“ Knowledge ”) of the transferor Beneficially Own more than ten percent (10%) of the then-outstanding Common Stock. A transferor shall be deemed to have Knowledge of any transferee’s Beneficial Ownership of Common Stock if the transferor has actual knowledge of the identity of the transferee and such Beneficial Ownership has been, at the time of the agreement to transfer, publicly disclosed in accordance with Section 13 of the Exchange Act.
(b) The limitations in Section 2.2(a) shall not apply, and any Investor Party may Transfer freely:
(i) to any Person (including any Affiliate of Investor) if such Person (A) has executed and delivered to the Company a Transferee Agreement (as defined below), and (B) has provided the Company with a certificate containing the representations set forth on Exhibit D of the Investment Agreement (or, to the extent necessitated by the organizational structure of the party providing such certificate, a certificate substantially similar to such Exhibit D ) as modified to allow such Transferee to own stock or other equity interests in a tenant of the Company or its Subsidiaries to the extent such ownership would not result in (i) the Company or any of its REIT Subsidiaries other than GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $1 million of “related party rent” each year or (ii) GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $100,000 of “related party rent” each year;
(ii) to one or more underwriters or initial purchasers acting in their capacity as such in a manner not intended to circumvent the restrictions contained in Section 2.2(a) ;
(iii) in a sale in the public market, in accordance with Rule 144, including the volume and manner of sale limitations set forth therein;
(iv) in any Merger Transaction (other than a transaction contemplated by Section 2.2(b)(v) below) or transaction contemplated by clause (iii) of the definition of Change of Control (A) in which (in either case) no Investor Party or Affiliate thererof is
the acquiror or part of the acquiring group or is proposed to be combined with the Company and (B) that has been approved by the Board and a majority of the stockholders (it being understood that this clause (iv) does not affect the agreement of the parties under Sections 1.1(e) or 1.1(f) );
(v) in connection with a tender or exchange offer that (A) is not solicited by any Investor Party or its Affiliate (unless such transaction was approved in accordance with Section 2.1(b)(ii) ) and in which all holders of Common Stock are offered the opportunity to sell shares of Common Stock and (B) complies with applicable securities laws, including Rule 14d-10 promulgated under the Exchange Act; and
(vi) in connection with any bona fide mortgage, encumbrance, pledge or hypothecation of capital stock to a financial institution in connection with any bona fide loan.
(c) No Transfer under Sections 2.2(b)(i) shall be valid unless and until the Transferee Agreement has been executed by the Transferee and delivered to the Company. For the purpose of this Agreement a “ Transferee Agreement ” means a new agreement executed between the Company and the Transferee (to which the Investor is not a party) substantially in the form of this Agreement or in such other form as is reasonably satisfactory to the Company except that:
(i) notwithstanding Section 1.1(c) , in connection with any stockholder meeting or consent solicitation relating to the election of members of the Board, any member of a Transferee Group that has executed a Transferee Agreement may vote the shares of Common Stock that it Beneficially Owns in favor of one director candidate in its sole and absolute discretion and regarding any other director candidates in such election, the Transferee must vote in proportion to the Votes Cast ; provided that, for the avoidance of doubt, this Section 2.2(c)(i) shall not apply to Brookfield Consortium Members, who shall vote in accordance with Section 1.1(c) ;
(ii) references herein to “Investor” shall be deemed to apply to Transferees and references herein to “Brookfield Consortium Members” or “Investor Parties” shall be deemed to apply to the Transferee’s respective Transferee Groups as the context requires (other than in Sections 1.2(c) , 1.5 and 3.1 ); and
(iii) any obligation on the part of Investor hereunder to cause the Investor Parties to take any action or refrain from taking any action shall only apply to the Investor Parties controlled by the Transferee and the Transferee Agreement shall provide that the Transferee shall use all reasonable efforts to cause Affiliates that the Transferee does not control to take or refrain from taking the action that it is otherwise required to cause under this Agreement.
SECTION 2.3 Purchaser Board Designees .
(a) Notwithstanding anything contained herein to the contrary, the provisions in Article I (collectively, the “ Stockholder Protection Provisions ”) shall be suspended and shall not apply in the event that the Purchaser Board Designees that Investor is entitled to designate
under the terms of Section 5.10 of the Investment Agreement are not elected at a stockholders’ meeting at which the stockholders voted on the election of such Purchaser Board Designees (any such period, a “ Suspension Period ”); provided , however , that this Section 2.3(a) shall apply only if Investor has complied with its obligations under Section 5.10 of the Investment Agreement, including Investor’s timely designation of Purchaser Board Designees. No Suspension Period shall be deemed to occur during any reasonable period of time during which a Purchaser Board Designee is being replaced upon the death, resignation, retirement, disqualification or removal from office of such Purchaser Board Designee. Any Suspension Period shall end upon the election of the Purchaser Board Designees that Investor is entitled to designate under the terms of Section 5.10 of the Investment Agreement. At all times other than during a Suspension Period, the Stockholder Protection Provisions shall apply in full force and effect.
(b) Notwithstanding anything contained herein or in the Investment Agreement, no Person that acquires Common Stock from the Investor Parties or from any other Person shall have any rights of Investor under Section 5.10 of the Investment Agreement with respect to the designation of members of the Board.
ARTICLE III
TERMINATION
SECTION 3.1 Termination of Agreement . This Agreement may be terminated as follows (the date of such termination, the “ Termination Date ”):
(a) as to Investor or any Transferee, if such Person and the Company mutually agree to terminate this Agreement, but only if the Disinterested Directors have approved such termination;
(b) upon five (5) days notice by the Investor, at any time after (i) the Unaffiliated Stockholders Constructively Own more than seventy percent ( 70% ) of the then-outstanding Common Stock and (ii) the Investor Parties Constructively Own less than fifteen percent ( 15% ) of the then-outstanding Common Stock on a Fully Diluted Basis;
(c) without any further action by the parties hereto, as to Investor and the Investor Parties, if the Brookfield Consortium Members Constructively Own less than ten percent ( 10% ) of the then-outstanding Common Stock on a Fully Diluted Basis;
(d) as to any Transferee, if the Transferee Group Beneficially Owns less than 10% of the then-outstanding Common Stock on a Fully Diluted Basis;
(e) without any other action by the parties hereto, upon the consummation of a Change of Control not involving Investor or an Investor Party as a purchaser of any direct or indirect interest in the Company or any of its assets or properties; provided that the Investor Parties shall not have violated this Agreement in connection with any transaction under this clause; and
(f) without any other action by the parties hereto, upon the consummation of: (i) a sale of all or substantially all of the assets the Company and its Subsidiaries (determined on
a consolidated basis), in one transaction or series of related transactions; or (ii) the acquisition (by purchase, merger or otherwise) by any Person or Group of Beneficial Ownership of voting securities of the Company entitling such Person or Group to exercise ninety percent ( 90% ) or more of the total voting power of all outstanding securities entitled to vote generally in elections of directors of the Company; provided that the Investor Parties shall not have violated this Agreement in connection with any transaction under the preceding clauses (i) and (ii).
SECTION 3.2 Procedure upon Termination . In the event of termination pursuant to Section 3.1 , this Agreement shall terminate on the Termination Date without further action by Investor and the Company.
SECTION 3.3 Effect of Termination . In the event that this Agreement is validly terminated as provided in this Article III , then each of the parties hereto shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to the other party; provided , however , that Article V shall survive any such termination and shall be enforceable hereunder; provided further , however , that nothing in this Section 3.3 shall relieve any party hereto of any liability for a breach of a representation, warranty or covenant in this Agreement prior to the Termination Date.
ARTICLE IV
DEFINITIONS
SECTION 4.1 Defined Terms . For purposes of this Agreement, the following terms, when used in this Agreement with initial capital letters, shall have the respective meanings set forth in this Agreement:
(a) “ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this Agreement, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
(b) “ Beneficial Ownership ” by a Person of any securities means “beneficial ownership” as used for purposes of Rule 13d-3 adopted by the SEC under the Exchange Act; provided , however , to the extent the term “Beneficial Ownership” is used in connection with any obligation on the part of an Investor Party to vote, or direct the vote, of shares of Common Stock, “Beneficial Ownership” by a Person of any securities shall be deemed to refer solely to those securities with respect to which such Person possesses the power to vote or direct the vote. The term “ Beneficially Own ” shall have a correlative meaning.
(c) “ Board ” means the Board of Directors of the Company.
(d) “ Brookfield Consortium Member ” shall have the meaning ascribed thereto in the Investment Agreement.
(e) “ Business Day ” means any day other than (i) a Saturday, (ii) a Sunday, or (iii) any day on which commercial banks in New York, New York are required or authorized to close by law or executive order.
(f) “ Change of Control ” means any transaction involving (i) a Merger Transaction, (ii) a sale of all or substantially all of the assets the Company and its Subsidiaries (determined on a consolidated basis), in one transaction or series of related transactions, or (iii) the consolidation, merger, amalgamation, reorganization (other than pursuant to the Plan contemplated by the Investment Agreement) of the Company or a similar transaction in which the Company is combined with another Person, unless shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company remain unchanged or are exchanged for, converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration Public Stock and the Persons or Group who beneficially own the outstanding Common Stock of the Company immediately before consummation of the transaction beneficially own more than 50% (by voting power) of the outstanding voting stock of the combined or surviving entity or new parent immediately thereafter.
(g) “ Charter ” means the Amended and Restated Certificate of Incorporation of the Company effective as of the date hereof.
(h) “ Common Stock ” means the common stock, par value $0.01 per share, of the Company, as authorized by the Charter as of the Effective Date, and any successor security as provided by Section 5.11 .
(i) “ Constructive Ownership ” of securities by a Person on any date means (A) with respect to Common Stock issuable upon exercise of a Warrant, an interest that would constitute Beneficial Ownership of such Common Stock had the holder of such Warrant delivered the notice contemplated by Section 3.2 of the Warrant Agreement (if applicable) at least 90 days prior to, and had such Warrant been validly exercised on, such date and (B) with respect to any other securities, including Common Stock (other than Common Stock issuable upon exercise of the Warrants), Beneficial Ownership of such securities. The term “ Constructively Own ” shall have a correlative meaning.
(j) “ Disinterested Director ” means (i) with respect to a Company Transaction or potential Company Transaction, a director who (A) is not Affiliated with, and was not nominated by, any Investor Party or Affiliate of an Investor Party that is a participant in such transaction or potential transaction and (B) who has no personal financial interest in the transaction (other than the same interest, if a stockholder of the Company, as the other stockholders of the Company) and (ii) with respect to any matter other than a Company Transaction , a director who is not Affiliated with, and was not nominated by, any Investor Party.
(k) “ Economic Ownership ” by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has (i) Constructive Ownership or (ii) economic
interest in such security as a result of any cash-settled total return swap transaction or any other swap, other derivative or “synthetic” ownership arrangement (in which case the number of securities with respect to which such Person has Economic Ownership shall be determined by the Company in it reasonable judgment based on such Person’s equivalent net long position); provided , however , that for purposes of determining Economic Ownership, a Person shall be deemed to be the Economic Owner of any securities which may be acquired by such Person pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether the right to acquire such securities is exercisable immediately or only after the giving of notice or the passage of time, including the giving of notice or the passage of time in excess of sixty (60) days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing), in each case, without duplication of any securities included pursuant to sub-clauses (i) or (ii) above. For purposes of this Agreement, a Person shall be deemed to be the Economic Owner of any securities Economically Owned by any Group of which such Person is or becomes a member. The term “ Economically Own ” shall have a correlative meaning.
(l) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder, all as the same may be amended and shall be in effect from time to time.
(m) “ Fair Market Value ” means, with respect to each share of Public Stock, the average of the daily volume weighted average prices per share of such Public Stock for the ten consecutive trading days immediately preceding the day as of which Fair Market Value is being determined, as reported on the New York Stock Exchange, or if such shares are not listed on the New York Stock Exchange, as reported by the principal U.S. national or regional securities exchange or quotation system on which such shares are then listed or quoted; provided , however , that in the absence of such listing or quotations, the Fair Market Value of such shares shall be the fair market value per share as determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such shares are fully distributed and are to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.
(n) “ Fairholme Standstill Agreement ” means the Standstill Agreement, dated as of the date hereof, by and between the Company and The Fairholme Fund.
(o) “ Fully Diluted Basis ” means all outstanding shares of the Common Stock assuming the exercise of all outstanding Share Equivalents, without regard to any restrictions or conditions with respect to the exercisability of such Share Equivalents.
(p) “ Governmental Entity ” means any (i) nation, region, state, province, county, city, town, village, district or other jurisdiction, (ii) federal, state, local, municipal, foreign or other government, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, court or tribunal, or other
entity), (iv) multinational organization or body or (v) body entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature or any other self-regulatory organizations.
(q) “ Group ” has the meaning assigned to it in Section 13(d)(3) of the Exchange Act and Rule 13d-5 thereunder.
(r) “ Independent Financial Expert ” means a nationally recognized financial advisory firm approved by a majority of the Disinterested Directors.
(s) “ Investor Parties ” means (i) with respect to any Brookfield Consortium Member that is a party to this Agreement or has executed a Transferee Agreement, the Brookfield Consortium Members and (ii) with respect to each Transferee that has executed a Transferee Agreement, the applicable Transferee Group; provided , however , that none of the Company, any Subsidiary of the Company or any Brookfield Investment Advisor shall be deemed to be an Investor Party.
(t) “ Large Stockholder ” means a Person that is the Beneficial Owner of more than ten percent (10%) of the outstanding shares of Common Stock on a Fully Diluted Basis.
(u) “ Law ” means any statutes, laws (including common law), rules, ordinances, regulations, codes, orders, judgments, decisions, injunctions, writs, decrees, applicable to the Company, Common Stock or Investor Parties.
(v) “ Merger Transaction ” means any transaction involving the acquisition (by purchase, merger or otherwise) by any Person or Group of Beneficial Ownership of voting securities of the Company entitling such Person or Group to exercise a majority of the total voting power of all outstanding securities entitled to vote generally in elections of directors of the Company.
(w) “ Ordinary Course of Business ” means the ordinary and usual course of day-to-day operations of the business of the Company consistent with past practice.
(x) “ Ownership Cap ” means (i) with respect to the Brookfield Consortium Members, forty-five percent ( 45% ) and (ii) with respect to each Transferee, the lower of (x) forty-five ( 45% ) of the then-outstanding Common Stock on a Fully Diluted Basis and (y) the sum of five percent ( 5% ) and the percentage of the outstanding Common Stock on a Fully Diluted Basis that the Transferee Economically Owns as of (and after giving effect to) such Transfer.
(y) “ Pershing Standstill Agreement ” means the Standstill Agreement, dated as of the date hereof, by and between the Company and Pershing Square Capital Management, L.P., on behalf of Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd., and Pershing Square International V, Ltd.
(z) “ Person ” means an individual, a group (including a “group” under Section 13(d) of the Exchange Act), a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
(aa) “ Public Stock ” means common stock listed on a recognized U.S. national securities exchange with an aggregate market capitalization (held by non-Affiliates of the issuer) in excess of $1 billion in Fair Market Value.
(bb) “ Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act, or any successor rule or regulation hereafter adopted by the SEC, as the same may be amended and shall be in effect from time to time.
(cc) “ SEC ” means the Securities and Exchange Commission or any other federal agency then administering the Exchange Act, the Securities Act and other federal securities laws.
(dd) “ Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder, all as the same may be amended and shall be in effect from time to time.
(ee) “ Share Equivalent ” means any stock, warrants, rights, calls, options or other securities exchangeable or exercisable for, or convertible into, shares of Common Stock.
(ff) “ Subsidiary ” means, with respect to a Person, any corporation, limited liability company, partnership, trust or other entity of which such Person owns (either alone, directly, or indirectly through, or together with, one or more of its Subsidiaries) 50% or more of the equity interests the holder of which is generally entitled to vote for the election of the board of directors or governing body of such corporation, limited liability company, partnership, trust or other entity.
(gg) “ Transaction Documents ” means, individually or collectively, the Investment Agreement or the Warrant.
(hh) “ Transferee ” means, any proposed transferee of securities pursuant to Sections 2.2(b)(i) or 2.2(b)(vi) .
(ii) “ Transferee Group ” means, with respect to (i) any Transferee that is a Brookfield Consortium Member, any Brookfield Consortium Member or (ii) any other Transferee (other than Transferees that are Brookfield Consortium Members), such Transferee, its Affiliates and any Person of which such Transferee is a general partner, managing member or equivalent thereof.
(jj) “ Unaffiliated Stockholders ” means, as of the date of the action in question, any Person not Affiliated with Brookfield Asset Management, Inc., Fairholme Capital Management LLC, Pershing Capital Management L.P., any transferee who is a party to a Transferee Agreement, any transferee who is a party to any transferee agreement
under the Fairholme Standstill Agreement or Pershing Standstill Agreement or any of their respective Affiliates.
(kk) “ Votes Cast ” means the aggregate number of shares of Common Stock that are properly voted for or against any action to be taken by stockholders, excluding any shares if the holder of such shares is contractually required to vote in proportion of the total number of votes cast pursuant to this Agreement, the Fairholme Standstill Agreement, the Pershing Standstill Agreement or any transferee agreement executed hereunder or thereunder.
(ll) “ Voting Cap ” means (i) with respect to the Brookfield Consortium Members, 30% and (ii) with respect to any Transferee Group, the lower of (x) 30% of the then-outstanding Common Stock on a Fully Diluted Basis and (y) the sum of 5% and the percentage of the outstanding Common Stock on a Fully Diluted Basis that the Transferee Beneficially Owns as of (and after giving Effect to) such Transfer.
(mm) “ Warrant Agreement ” means that certain Warrant Agreement, dated as of the date hereof, by and between the Company and Mellon Investor Services LLC.
(nn) “ Warrants ” means the New Warrants (as defined in the Investment Agreement).
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Notices . All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows: (a) on the date delivered, if personally delivered; (b) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; or (c) on the next Business Day after being sent by recognized overnight mail service specifying next business day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:
If to Investor, to:
Brookfield Retail Holdings LLC
c/o Brookfield Asset Management Inc.
Brookfield Place, Suite 300
181 Bay Street
P.O. Box 762
Toronto, Ontario M5J 2T3
Canada
Attention: Joseph Freedman
Facsimile: (416) 365-9642
with a copy (which shall not constitute notice) to:
Willkie Farr &
Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Attention: Marc Abrams, Esq.
Gregory B. Astrachan, Esq.
Paul V. Shalhoub, Esq.
Facsimile: (212) 728-8111
If to Company, to:
General Growth Properties, Inc.
110 N. Wacker Drive
Chicago, IL 60606
Attention: General Counsel
Facsimile: (312) 960-5485
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Frederick S. Green, Esq.
Malcolm E. Landau, Esq.
Facsimile: (212) 310-8007
SECTION 5.2 Assignment; No Third Party Beneficiaries . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party without the prior written consent of the other party. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement.
SECTION 5.3 Prior Negotiations; Entire Agreement . This Agreement (including the exhibits hereto and the documents and instruments referred to in this Agreement) constitutes the entire agreement of the parties hereto and supersedes all prior agreements, arrangements or understandings, whether written or oral, between the parties hereto with respect to the subject matter of this Agreement.
SECTION 5.4 Governing Law; Venue . THIS AGREEMENT, AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE. BOTH PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF, AND VENUE IN, DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
SECTION 5.5 Counterparts . This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto, and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.
SECTION 5.6 Expenses . Except as otherwise provided in this Agreement, Investor and the Company shall each bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
SECTION 5.7 Waivers and Amendments . Subject to Section 5.2 , this Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by Investor and the Company (with the approval of a majority of the Disinterested Directors) or, in the case of a waiver, by the party waiving compliance, and subject, to the extent required, to the approval of the Bankruptcy Court. No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.
SECTION 5.8 Construction .
(a) The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(b) Unless the context otherwise requires, as used in this Agreement: (i) “or” shall mean “and/or”; (ii) “including” and its variants mean “including, without limitation” and its variants; (iii) words defined in the singular have the parallel meaning in the plural and vice versa; (iv) references to “written” or “in writing” include in visual electronic form; (v) words of one gender shall be construed to apply to each gender; and (vi) the terms “Article” and “Section” refer to the specified Article or Section of this Agreement.
SECTION 5.9 Severability . If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as
closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
SECTION 5.10 Equitable Relief . It is hereby acknowledged that irreparable harm would occur in the event that any of the provisions of this Agreement were not performed fully by the parties hereto in accordance with the terms specified herein, and that monetary damages are an inadequate remedy for breach of this Agreement because of the difficulty of ascertaining and quantifying the amount of damage that will be suffered by the parties hereto relying hereon in the event that the undertakings and provisions contained in this Agreement were breached or violated. Accordingly, each party hereto hereby agrees that each other party hereto shall be entitled to an injunction or injunctions to restrain, enjoin and prevent breaches of the undertakings and provisions hereof and to enforce specifically the undertakings and provisions hereof in any court of the United States or any state having jurisdiction over the matter; it being understood that such remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.
SECTION 5.11 Successor Securities . The provisions of this Agreement pertaining to shares of Common Stock shall apply to all shares of Common Stock Beneficially Owned by any Investor Party and any voting equity securities of the Company, regardless of class, series, designation or par value, that are issued as a dividend on or in any other distribution in respect of, or as a result of a reclassification (including a change in par value) in respect of, shares of Common Stock or other shares of the Company which, as provided by this section, are considered as shares of Common Stock for purposes of this Agreement and shall also apply to any voting equity security issued by any company that succeeds, by merger, consolidation, a share exchange, a reorganization of the Company or any similar transaction, to all or substantially all the business of the Company, or to the ownership thereof, if such security was issued in exchange for or otherwise as consideration for or in respect of shares of Common Stock (or other shares considered as shares of Common Stock, as provided by this definition) in connection with such succession transaction.
SECTION 5.12 Voting Procedures . If, in connection with any stockholder meeting or consent solicitation, Investor or the Brookfield Consortium Members are required under the terms of this Agreement to vote in proportion to Votes Cast, then the parties shall cooperate to determine appropriate procedures and mechanics to facilitate such proportionate voting.
** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered by each of them or their respective officers thereunto duly authorized, all as of the date first written above .
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GENERAL GROWTH PROPERTIES, INC. |
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/s/ Thomas H. Nolan, Jr. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
[Signature Page to BRH Standstill Agreement]
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BROOKFIELD RETAIL HOLDINGS LLC |
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Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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Brookfield Private Funds Holdings Inc., |
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its general partner |
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/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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Name: Moshe Mandelbaum |
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Title:Vice President |
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[Signature Page to BRH Standstill Agreement]
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BROOKFIELD RETAIL HOLDINGS II LLC |
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Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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[Signature Page to BRH Standstill Agreement]
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BROOKFIELD RETAIL HOLDINGS III LLC |
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Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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Name: Moshe Mandelbaum |
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Title:Vice President |
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[Signature Page to BRH Standstill Agreement]
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BROOKFIELD RETAIL HOLDINGS IV-A LLC |
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Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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Name: Karen Ayre |
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Title: Vice President |
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[Signature Page to BRH Standstill Agreement]
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BROOKFIELD RETAIL HOLDINGS IV-B LLC |
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Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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[Signature Page to BRH Standstill Agreement]
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BROOKFIELD RETAIL HOLDINGS IV-C LLC |
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Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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[Signature Page to BRH Standstill Agreement]
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BROOKFIELD RETAIL HOLDINGS IV-D LLC |
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Brookfield Asset Management Private Institutional |
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[Signature Page to BRH Standstill Agreement]
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BROOKFIELD RETAIL HOLDINGS V LP |
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Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its General Partner |
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[Signature Page to BRH Standstill Agreement]
Exhibit 10.5
EXECUTION VERSION
STANDSTILL AGREEMENT
This Standstill Agreement (this “ Agreement ”) is dated as of November 9, 2010 ( the “ Effective Date ”), by and between General Growth Properties, Inc., a Delaware corporation (the “ Company ”), and The Fairholme Fund, a series of Fairholme Funds, Inc., a Maryland corporation (“ Investor ”).
WHEREAS, Investor has entered into that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010 (the “ Investment Agreement ”), that contemplates, among other things, the purchase by Investor of shares of Common Stock subject to the terms and conditions contained therein;
WHEREAS, the transactions contemplated by the Investment Agreement are intended to assist the Company in its plans to recapitalize and emerge from bankruptcy and is not intended to constitute a change of control of the Company or otherwise give Investor the power to control the business and affairs of the Company;
WHEREAS, as a material condition to the Company’s and Investor’s obligations to consummate the transactions contemplated by the Investment Agreement, the Company and Investor have agreed to execute this Agreement; and
WHEREAS, certain terms used in this Agreement are defined in Section 4.1 .
NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
COMPANY RELATED PRINCIPLES
SECTION 1.1 Board of Directors . So long as Investor, the Investor Parties and the Subject Persons, collectively, shall Constructively Own more than ten percent (10%) of the outstanding shares of Common Stock, none of Investor or the Investor Parties shall take any action that is inconsistent with its support for the following corporate governance principles :
(a) A majority of the members of the Board shall be Independent Directors, where “ Independent Director ” means a director who satisfies all standards for independence promulgated by the New York Stock Exchange (or the applicable exchange where shares of Common Stock are then listed);
(b) the Board shall have a nominating committee, a majority of which shall be Disinterested Directors;
(c) in connection with any stockholder meeting or consent solicitation, if Investor, the Investor Parties and the Subject Persons collectively have voting control over a number of shares of Common Stock in excess of 10% of the number of shares of Common Stock
outstanding as of the applicable record date, then Investor shall, and shall cause the other Investor Parties to, vote all shares of Common Stock over which Investor and the other Investor Parties have voting control in excess of such percentage in proportion to the Votes Cast; provided , however , that the number of shares of Common Stock which shall be voted by the Investor and the other Investor Parties in proportion to the Votes Cast shall be increased by the number of shares of Common Stock that may be voted by the Subject Persons (up to the number of shares of Common Stock over which the Investor and the Investor Parties have voting control);
(d) the Board shall consist of nine (9) members and not be increased or reduced, unless approved by seventy-five percent (75%) of the Board;
(e) any Change in Control (other than a transaction contemplated by Section 2.1(b)(ii)) in which a Large Stockholder or its controlled Affiliate is the acquiror or part of the acquiror group or is proposed to be directly or indirectly combined with the Company must be approved by a majority of the Disinterested Directors as if it were a Company Transaction involving such Large Stockholder and by a majority of the voting power of the stockholders (other than such Large Stockholder or its controlled Affiliates); and
(f) any Change in Control (other than a transaction contemplated by Section 2.2(b)(v)) in which any Large Stockholder or its controlled Affiliate receives per share consideration in its capacity as a stockholder of the Company in excess of that to be received by other stockholders, must be approved by a majority of the Disinterested Directors as if it were a Company Transaction involving such Large Stockholder and by a majority of the voting power of the stockholders (other than such Large Stockholder or its controlled Affiliates).
The Company shall not waive any provisions similar to Sections 1.1(c), (e) or (f) above for any Large Stockholder under any other agreement unless the Company grants a similar waiver under this Agreement.
SECTION 1.2 Related Party Transactions .
(a) Without the approval of a majority of the Disinterested Directors, Investor shall not, and shall not permit any of the Investor Parties to, engage in any Company Transaction. “ Company Transaction ” means (i) any transaction or series of related transactions, directly or indirectly, between the Company or any Subsidiary of the Company, on the one hand, and any of the Investor Parties, on the other hand, or (ii) without limiting the Company’s obligation to comply with Sections 1.4 and 1.5 hereof, with respect to the purchase or sale of Common Stock by any of the Investor Parties, any waiver of any limitation or restriction with respect to such purchase or sale in the Charter or the Transaction Documents, including any exemption from the Ownership Limit (as defined in the Charter); provided , however , that none of the following shall constitute a Company Transaction:
(i) transactions expressly contemplated in the Transaction Documents;
(ii) customary compensation arrangements (whether in the form of cash or equity awards), expense reimbursement, director insurance coverage and/or indemnification arrangements (and related advancement of expenses) in each case for
Board designees, or any use by such persons, for Company business purposes, of aircraft, vehicles, property, equipment or other assets owned or customarily provided to members of the Board by the Company or any of its Subsidiaries;
(iii) any transaction or series of transactions if the same is in the Ordinary Course of Business and does not involve payments by the Company in excess of $5,000,000 in the aggregate for such transaction or series of transactions; and
(iv) any transaction among the Company and/or its Subsidiaries and The Howard Hughes Corporation and/or its Subsidiaries.
(b) Following the Closing (as such term is defined in the Investment Agreement), any decisions by the Company regarding material amendments or modifications of the Plan (as such term is defined in the Investment Agreement) or waivers of the Company’s material rights under the Plan, shall require the approval of the majority of Disinterested Directors to the extent such amendment, modification or waiver relates to any Investor Party’s rights or obligations.
SECTION 1.3 No Other Voting Restrictions . For the avoidance of doubt, except as restricted herein or by applicable Law, Investor and the o ther Investor Parties and the Subject Persons may vote the Common Stock that they Beneficially Own in their sole and absolute discretion.
SECTION 1.4 Amendment of the Charter . The Company hereby agrees that following the Closing Date, without the consent of Investor, the Company shall not amend (or propose to amend) the provisions of the Charter in a manner or take any other action that would: (a) change the restriction on Beneficial Ownership (as such term is defined in the Charter) of the outstanding capital stock of the Company to a level other than 9.9%; (b) change the restriction on Constructive Ownership (as such term is defined in the Charter) of the outstanding capital stock of the Company to a level other than 9.9%; or (c) change any waiver from the restrictions set forth in the foregoing clauses (a) and (b) granted to Investor or any Investor Party or Subject Person in any manner adverse to Investor or any Investor Party or any Subject Person. For the avoidance of doubt, nothing in this Section 1.4 shall affect the Board’s discretion to grant to third parties any waivers from the restrictions on Beneficial Ownership or Constructive Ownership (as each term is defined in the Charter) in accordance with the terms of the Charter.
SECTION 1.5 Waiver of Ownership Limited in the Charter . The Company and the Board shall take all appropriate and necessary action to ensure that the ownership limitations set forth in the Charter shall be waived with respect to Investor, the Investor Parties, any Subject Person any Investor Investment Advisor and any Person (other than a transferee under Section 2.2(b)(vi) unless such transferee executes a Transferee Agreement) to whom Investor, any Investor Party, any Subject Person or any Investor Investment Advisor has transferred any of the Common Stock or Warrants in accordance with the terms of this Agreement and the Investment Agreement, provided , insofar as the waiver relates to Investor, an Investor Party, a Subject Person, an Investor Investment Advisor or a transferee , as the case may be, who Beneficially Owns or Constructively Owns (as each term is defined in the Charter) (or would, following such transfer, Beneficially Own or Constructively Own (as each term is defined in the Charter))
interests in excess of the Stock Ownership Limit or the Constructive Ownership Limit (as each term is defined in the Charter), that the Company has been provided with a certificate containing the representations and covenants set forth on Exhibit D to the Investment Agreement (or, to the extent necessitated by the organizational structure of the party providing such certificate, a certificate substantially similar to such Exhibit D ) from such Investor, Investor Party, Subject Person, Investor Investment Advisor or transferee, or in the case of a transferee, a certificate containing the representations and covenants set forth on Exhibit D to the Investment Agreement (or, to the extent necessitated by the organizational structure of the party providing such certificate, a certificate substantially similar to Exhibit D ) as modified to allow such transferee to own stock or other equity interests in a tenant of the Company or its Subsidiaries to the extent such ownership would not result in (i) the Company or any of its REIT Subsidiaries other than GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $1 million of “related party rent” in any year or (ii) GGP Natick Trust or GGP Ivanhoe, Inc. recognizing more than $100,000 of “related party rent” in any year. The parties hereto agree that the Company may, in the discretion of the Board, grant to third parties any other waivers from restrictions set forth in the Charter.
ARTICLE II
INVESTOR RELATED COVENANTS
SECTION 2.1 Ownership Limitations .
(a) Except as provided in Section 2.1(b) , Investor agrees that it (together with the other Investor Parties) shall not acquire Economic Ownership of shares of Common Stock that would result in the Investor Parties and the Subject Persons in the aggregate Economically Owning a percentage of the then-outstanding Common Stock on a Fully Diluted Basis that is greater than the Ownership Cap. In furtherance of the foregoing, if the Subject Persons acquire Economic Ownership of Common Stock such that the Investor Parties and the Subject Persons in the aggregate Economically Own a percentage of the then-outstanding Common Stock on a Fully Diluted Basis that is greater than the Ownership Cap, Investor shall, and shall cause the Investor Parties to, promptly dispose of Common Stock in an orderly fashion in a manner designed so as to not materially adversely affect the trading market for Common Stock such that, following such disposition, the Investor Parties and the Subject Persons in the aggregate no longer Economically Own a percentage of the then-outstanding Common Stock on a Fully Diluted Basis that is greater than the Ownership Cap. For the avoidance of doubt, no Person shall be in violation of this Section 2.1 as a result of (i) any acquisition by the Company of any Common Stock; (ii) any change in the percentage of the Investor Parties’ or Subject Persons’ Economic Ownership of Common Stock that results from a change in the aggregate number of shares of Common Stock outstanding; or (iii) any change in the number of shares of Common Stock Economically Owned by the Investor Parties or Subject Persons as a result of any anti-dilution adjustments to any Equity Securities (as defined in the Investment Agreement) Economically Owned by any Investor Party or any Subject Person.
(b) Notwithstanding Section 2.1(a) , any of the Investor Parties may acquire Economic Ownership of shares of Common Stock that would result in the Investor Parties and the Subject Persons (taken as a whole) having Economic Ownership of a percentage of the then-
outstanding Common Stock on a Fully Diluted Basis that is greater than the Ownership Cap under any of the following circumstances:
(i) acquisitions of shares pursuant to any pro rata stock dividend or stock distribution effected by the Company and approved by a majority of the Independent Directors; or
(ii) if such acquisition is pursuant to a tender offer or exchange offer, in each case that includes an offer for all outstanding shares of Common Stock owned by the Target Stockholders, or a merger, consolidation, binding share exchange or similar transaction pursuant to an agreement with the Company, so long as in each case (A) such offer, merger, consolidation, binding share exchange or similar transaction is approved by a majority of the Disinterested Directors or by a special committee comprised of Disinterested Directors (such tender offer or exchange offer, an “ Approved Offer ”, and such merger, consolidation, binding share exchange or similar transaction, an “ Approved Merger ”), and (B) in any such Approved Offer, a majority of the Target Shares are tendered into such Approved Offer and not withdrawn prior to the final expiration of such Approved Offer, or in such Approved Merger, a majority of the Target Shares that are voted (in person or by proxy) on the related transaction proposal are voted in favor of such proposal. As used in this Section 2.1(b)(ii) : “ Target Shares ” means the then-outstanding shares of Common Stock not owned by the Investor Parties and the Subject Persons; and “ Target Stockholders ” means the stockholders of the Company other than the Investor Parties and the Subject Persons.
(c) The limitation set forth in Section 2.1(a) may only be waived by the Company if a majority of the Disinterested Directors consent thereto.
SECTION 2.2 Transfer Restrictions .
(a) Subject to Section 2.2(b) , unless approved by a majority of the Independent Directors, Investor shall not, and shall not permit any of the Investor Parties to, sell or otherwise transfer or agree to transfer (each of the foregoing, a “ Transfer ”), directly or indirectly, any shares of Common Stock that are held directly or indirectly by Investor or any of the other Investor Parties if, immediately after giving effect to such Transfer, the Person that acquires such Common Stock (other than any underwriter acting in such capacity in an underwritten public offering of such shares) would, together with its Affiliates, to the actual knowledge (“ Knowledge ”) of the transferor Beneficially Own more than ten percent (10%) of the then-outstanding Common Stock. A transferor shall be deemed to have Knowledge of any transferee’s Beneficial Ownership of Common Stock if the transferor has actual knowledge of the identity of the transferee and such Beneficial Ownership has been, at the time of the agreement to transfer, publicly disclosed in accordance with Section 13 of the Exchange Act.
(b) The limitations in Section 2.2(a) shall not apply, and any Investor Party may Transfer freely:
(i) to any Person (including any Affiliate of Investor) if such Person (A) has executed and delivered to the Company a Transferee Agreement (as defined below),
and (B) has provided the Company with a certificate containing the representations set forth on Exhibit D of the Investment Agreement (or, to the extent necessitated by the organizational structure of the party providing such certificate, a certificate substantially similar to such Exhibit D ) as modified to allow such Transferee to own stock or other equity interests in a tenant of the Company or its Subsidiaries to the extent such ownership would not result in (i) the Company or any of its REIT Subsidiaries other than GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $1 million of “related party rent” each year or (ii) GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $100,000 of “related party rent” each year;
(ii) to one or more underwriters or initial purchasers acting in their capacity as such in a manner not intended to circumvent the restrictions contained in 2.2(a);
(iii) in a sale in the public market, in accordance with Rule 144, including the volume and manner of sale limitations set forth therein;
(iv) in any Merger Transaction (other than a transaction contemplated by Section 2.2(b)(v) below) or transaction contemplated by clause (iii) of the definition of Change of Control (A) in which (in either case) no Investor Party or Subject Person is the acquiror or part of the acquiring group or is proposed to be combined with the Company and (B) that has been approved by the Board and a majority of the stockholders (it being understood that this clause (iv) does not affect the agreement of the parties under Sections 1.1(e) and (f));
(v) in connection with a tender or exchange offer that (A) is not solicited by any Investor Party (unless such transaction was approved in accordance with Section 2.1(b)(ii) ) or Subject Person and in which all holders of Common Stock are offered the opportunity to sell shares of Common Stock and (B) complies with applicable securities laws, including Rule 14d-10 promulgated under the Exchange Act; and
(vi) in connection with any bona fide mortgage, encumbrance, pledge or hypothecation of capital stock to a financial institution in connection with any bona fide loan.
(c) No Transfer under Section 2.2(b)(i) shall be valid unless and until a Transferee Agreement has been executed by the Transferee and delivered to the Company. For the purpose of this Agreement a “Transferee Agreement” executed by a Transferee means an agreement substantially in the form of this Agreement or in such other form as is reasonably satisfactory to the Company except that:
(i) notwithstanding Section 1.1(c) , in connection with any stockholder meeting or consent solicitation relating to (A) the election of members of the Board, such Transferee may vote the shares of Common Stock that it Beneficially Owns in favor of one director candidate in its sole and absolute discretion and regarding any other director candidates in such election must vote in proportion to Votes Cast, and (B) any other
matter, such Transferee may vote the shares of Common Stock that it Beneficially Owns in its sole and absolute discretion;
(ii) “Investor” shall be defined to mean such Transferee; and
(iii) any obligation on the part of Investor hereunder to cause the Investor Parties to take any action or refrain from taking any action shall only apply to the Investor Parties controlled by the Transferee and the Transferee Agreement shall provide that the Transferee shall use all reasonable efforts to cause Affiliates that the Transferee does not control to take or refrain from taking the action that it is otherwise required to cause under this Agreement.
ARTICLE III
TERMINATION
SECTION 3.1 Termination of Agreement . This Agreement may be terminated as follows (the date of such termination, the “ Termination Date ”)
(a) if Investor and the Company mutually agree to terminate this Agreement, but only if the Disinterested Directors have approved such termination;
(b) upon five (5) days notice by the Investor, at any time after (i) the Other Stockholders Constructively Own more than seventy percent ( 70% ) of the then-outstanding Common Stock and (ii) the Investor Parties and the Subject Persons in the aggregate Constructively Own less than fifteen percent ( 15% ) of the then-outstanding Common Stock on a Fully Diluted Basis;
(c) without any further action by the parties hereto, if Investor and the Investor Parties and the Subject Persons in the aggregate Constructively Own less than ten percent ( 10% ) of the then-outstanding Common Stock on a Fully Diluted Basis;
(d) without any other action by the parties hereto, upon the consummation of a Change of Control not involving Investor, any Investor Party or any Subject Person as a purchaser of any direct or indirect interest in the Company or any of its assets or properties; provided that the Investor Parties shall not have violated this Agreement in connection with any transaction under this clause; and
(e) without any other action by the parties hereto, upon the consummation of: (i) a sale of all or substantially all of the assets the Company and its Subsidiaries (determined on a consolidated basis), in one transaction or series of related transactions; or (ii) the acquisition (by purchase, merger or otherwise) by any Person or Group of Beneficial Ownership of voting securities of the Company entitling such Person or Group to exercise ninety percent ( 90% ) or more of the total voting power of all outstanding securities entitled to vote generally in elections of directors of the Company; provided that the Investor Parties shall not have violated this Agreement in connection with any transaction under the preceding clauses (i) and (ii).
SECTION 3.2 Procedure upon Termination . In the event of termination pursuant to Section 3.1 , this Agreement shall terminate on the Termination Date without further action by Investor and the Company.
SECTION 3.3 Effect of Termination . In the event that this Agreement is validly terminated as provided in this Article III , then each of the parties hereto shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to the other party; provided , however , that Article V shall survive any such termination and shall be enforceable hereunder; provided further , however , that nothing in this Section 3.3 shall relieve any party hereto of any liability for a breach of a representation, warranty or covenant in this Agreement prior to the Termination Date.
ARTICLE IV
DEFINITIONS
SECTION 4.1 Defined Terms . For purposes of this Agreement, the following terms, when used in this Agreement with initial capital letters, shall have the respective meanings set forth in this Agreement:
(a) “ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this Agreement, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
(b) “ Beneficial Ownership ” by a Person of any securities means “beneficial ownership” as used for purposes of Rule 13d-3 adopted by the SEC under the Exchange Act; provided , however , to the extent the term “Beneficial Ownership” is used in connection with any obligation on the part of an Investor Party to vote, or direct the vote, of shares of Common Stock, “Beneficial Ownership” by a Person of any securities shall be deemed to refer solely to those securities with respect to which such Person possesses the power to vote or direct the vote. The term “ Beneficially Own ” shall have a correlative meaning.
(c) “ Board ” means the Board of Directors of the Company.
(d) “ Brookfield Standstill Agreement ” means the Standstill Agreement, dated as of the date hereof, by and between the Company, REP Investments LLC and the other parties named therein.
(e) “ Business Day ” means any day other than (i) a Saturday, (ii) a Sunday, or (iii) any day on which commercial banks in New York, New York are required or authorized to close by law or executive order.
(f) “ Change of Control ” means any transaction involving (i) a Merger Transaction, (ii) a sale of all or substantially all of the assets the Company and its Subsidiaries (determined on a consolidated basis), in one transaction or series of related
transactions, or (iii) the consolidation, merger, amalgamation, reorganization (other than pursuant to the Plan contemplated by the Investment Agreement) of the Company or a similar transaction in which the Company is combined with another Person, unless shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company remain unchanged or are exchanged for, converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration Public Stock and the Persons or Group who beneficially own the outstanding Common Stock of the Company immediately before consummation of the transaction beneficially own more than 50% (by voting power) of the outstanding voting stock of the combined or surviving entity or new parent immediately thereafter.
(g) “ Charter ” means the Amended and Restated Certificate of Incorporation of the Company effective as of the date hereof.
(h) “ Common Stock ” means the common stock, par value $0.01 per share, of the Company, as authorized by the Charter as of the Effective Date, and any successor security as provided by Section 5.11 .
(i) “ Constructive Ownership ” of securities by a Person on any date means (A) with respect to Common Stock issuable upon exercise of a Warrant, an interest that would constitute Beneficial Ownership of such Common Stock had the holder of such Warrant delivered the notice contemplated by Section 3.2 of the Warrant Agreement (if applicable) at least 90 days prior to, and had such Warrant been validly exercised on, such date and (B) with respect to any other securities, including Common Stock (other than Common Stock issuable upon exercise of the Warrants), Beneficial Ownership of such securities. The term “ Constructively Own ” shall have a correlative meaning.
(j) “ Disinterested Director ” means (i) with respect to a Company Transaction or potential Company Transaction, a director who (A) is not Affiliated with, and was not nominated by, any Investor Party or any Subject Person that is a participant in such transaction or potential transaction and (B) who has no personal financial interest in the transaction (other than the same interest, if a stockholder of the Company, as the other stockholders of the Company) and (ii) with respect to any matter other than a Company Transaction, a director who is not Affiliated with, and was not nominated by, any Investor Party or any Subject Person.
(k) “ Economic Ownership ” by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has (i) Constructive Ownership or (ii) economic interest in such security as a result of any cash-settled total return swap transaction or any other swap, other derivative or “synthetic” ownership arrangement (in which case the number of securities with respect to which such Person has Economic Ownership shall be determined by the Company in it reasonable judgment based on such Person’s equivalent net long position); provided , however , that for purposes of determining Economic Ownership, a Person shall be deemed to be the Economic Owner of any securities which may be acquired by such Person pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether the right to acquire such securities is exercisable immediately or only after the giving of notice or the passage of time, including the giving of notice or the passage of time in excess of sixty (60) days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing), in each case, without duplication of any securities included pursuant to sub-clauses (i) or (ii) above. For purposes of this Agreement, a Person shall be deemed to be the Economic Owner of any securities Economically Owned by any Group of which such Person is or becomes a member. The term “ Economically Own ” shall have a correlative meaning.
(l) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder, all as the same may be amended and shall be in effect from time to time.
(m) “ Fair Market Value ” means, with respect to each share of Public Stock, the average of the daily volume weighted average prices per share of such Public Stock for the ten consecutive trading days immediately preceding the day as of which Fair Market Value is being determined, as reported on the New York Stock Exchange, or if such shares are not listed on the New York Stock Exchange, as reported by the principal U.S. national or regional securities exchange or quotation system on which such shares are then listed or quoted; provided , however , that in the absence of such listing or quotations, the Fair Market Value of such shares shall be the fair market value per share as determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such shares are fully distributed and are to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.
(n) “ Fully Diluted Basis ” means all outstanding shares of the Common Stock assuming the exercise of all outstanding Share Equivalents, without regard to any restrictions or conditions with respect to the exercisability of such Share Equivalents.
(o) “ Governmental Entity ” means any (i) nation, region, state, province, county, city, town, village, district or other jurisdiction, (ii) federal, state, local, municipal, foreign or other government, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, court or tribunal, or other entity), (iv) multinational organization or body or (v) body entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature or any other self-regulatory organizations.
(p) “ Group ” has the meaning assigned to it in Section 13(d)(3) of the Exchange Act and Rule 13d-5 thereunder.
(q) “ Independent Financial Expert ” means a nationally recognized financial advisory firm approved by a majority of the Disinterested Directors.
(r) “ Investor Investment Advisor ” means any independently operated business unit of any Affiliate of Investor that holds shares of Common Stock (i) in trust for the benefit of persons other than any Investor Party or Subject Person, (ii) in mutual funds, open- or closed-end investment funds or other pooled investment vehicles sponsored, managed or advised or subadvised by such Investor Investment Advisor, (iii) as agent and not principal, or (iv) in any other case where such Investor Investment Advisor is disaggregated from Investor for the purposes of Section 13(d) of the Exchange Act; provided , however , that (A) in each case, such shares of Common Stock were acquired in the ordinary course of business of the Investor Investment Advisor’s respective investment management or securities business and not with the intent or purpose on the part of Investor or the Investor Parties or the Subject Persons of influencing control of the Company or avoiding the provisions of this Agreement and (B) where appropriate, “Chinese walls” or other informational barriers and other procedures have been established. For avoidance of doubt, for purposes of this Agreement shares of Common Stock or other securities of the Company held by an Investor Investment Advisor shall not be deemed to be Beneficially Owned or Constructively Owned by Investor or the Investor Parties or the Subject Persons.
(s) “ Investor Parties ” means Investor and its controlled Affiliates; provided , however , that none of the Company, or any Subsidiary of the Company shall be deemed to be an Investor Party.
(t) “ Large Stockholder ” means a Person that is the Beneficial Owner of more than ten percent (10%) of the outstanding shares of Common Stock on a Fully Diluted Basis.
(u) “ Law ” means any statutes, laws (including common law), rules, ordinances, regulations, codes, orders, judgments, decisions, injunctions, writs, decrees, applicable to the Company, Common Stock or Investor Parties.
(v) “ Merger Transaction ” means any transaction involving the acquisition (by purchase, merger or otherwise) by any Person or Group of Beneficial Ownership of voting securities of the Company entitling such Person or Group to exercise a majority of the total voting power of all outstanding securities entitled to vote generally in elections of directors of the Company.
(w) “ Ordinary Course of Business ” means the ordinary and usual course of day-to-day operations of the business of the Company consistent with past practice.
(x) “ Other Stockholder ” means, as of the date of the action in question, any Person not Affiliated with Brookfield Asset Management, Inc., Fairholme Capital Management LLC, Pershing Capital Management L.P., any transferee who is a party to a transferee agreement under the Brookfield Standstill Agreement, the Pershing Square Standstill Agreement or this Agreement or any of their respective Affiliates.
(y) “ Ownership Cap ” means the lower of (i) thirty percent (30 % ) of the then-outstanding Common Stock on a Fully Diluted Basis and (ii) the sum of five percent
( 5% ) and the percentage of the outstanding Common Stock on a Fully Diluted Basis that the Investor Parties and the Subject Persons collectively Economically Own as of the Effective Date.
(z) “ Pershing Square Standstill Agreement ” means the Standstill Agreement, dated as of the date hereof, among the Company and Pershing Square Capital Management, L.P., on behalf of Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd., and Pershing Square International V, Ltd.
(aa) “ Person ” means an individual, a group (including a “group” under Section 13(d) of the Exchange Act), a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
(bb) “ Public Stock ” means common stock listed on a recognized U.S. national securities exchange with an aggregate market capitalization (held by non-Affiliates of the issuer) in excess of $1 billion in Fair Market Value.
(cc) “ Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act, or any successor rule or regulation hereafter adopted by the SEC, as the same may be amended and shall be in effect from time to time.
(dd) “ SEC ” means the Securities and Exchange Commission or any other federal agency then administering the Exchange Act, the Securities Act and other federal securities laws.
(ee) “ Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder, all as the same may be amended and shall be in effect from time to time.
(ff) “ Share Equivalent ” means any stock, warrants, rights, calls, options or other securities exchangeable or exercisable for, or convertible into, shares of Common Stock.
(gg) “ Subject Persons ” means, collectively, non-controlled Affiliates of the Investor, including, for the avoidance of doubt, Fairholme Focused Income Fund and any other mutual fund registered under the Investment Company Act of 1940, as amended, managed by Fairholme Capital Management L.L.C. other than the Investor, but not any Investor Investment Advisor.
(hh) “ Subsidiary ” means, with respect to a Person, any corporation, limited liability company, partnership, trust or other entity of which such Person owns (either alone, directly, or indirectly through, or together with, one or more of its Subsidiaries) 50% or more of the equity interests the holder of which is generally entitled to vote for the election of the board of directors or governing body of such corporation, limited liability company, partnership, trust or other entity.
(ii) “ Transaction Documents ” means, individually or collectively, the Investment Agreement or the Warrant.
(jj) “ Transferee ” means any proposed transferee of securities pursuant to Sections 2.2(b)(i) or 2.2(b)(vi) .
(kk) “ Votes Cast ” means the aggregate number of shares of Common Stock that are properly voted for or against any action to be taken by stockholders, excluding any shares if the holder of such shares is contractually required to vote in proportion of the total number of votes cast pursuant to this Agreement, the Brookfield Standstill Agreement, the Pershing Square Standstill Agreement or any transferee agreement executed hereunder or thereunder.
(ll) “ Warrant Agreement ” means that certain Warrant Agreement, dated as of the date hereof, by and between the Company and Mellon Investor Services LLC.
(mm) “ Warrants ” means the New Warrants (as defined in the Investment Agreement).
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Notices . All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows: (a) on the date delivered, if personally delivered; (b) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; or (c) on the next Business Day after being sent by recognized overnight mail service specifying next business day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:
SECTION 5.2 Assignment; No Third Party Beneficiaries . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party without the prior written consent of the other party. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement.
SECTION 5.3 Prior Negotiations; Entire Agreement . This Agreement (including the exhibits hereto and the documents and instruments referred to in this Agreement) constitutes the entire agreement of the parties hereto and supersedes all prior agreements, arrangements or understandings, whether written or oral, between the parties hereto with respect to the subject matter of this Agreement.
SECTION 5.4 Governing Law; Venue . THIS AGREEMENT, AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE. BOTH PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF, AND VENUE IN, DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
SECTION 5.5 Counterparts . This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto, and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.
SECTION 5.6 Expenses . Except as otherwise provided in this Agreement, Investor and the Company shall each bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
SECTION 5.7 Waivers and Amendments . Subject to Section 5.2 , this Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by Investor and the Company (with the approval of a majority of the Disinterested Directors) or, in the case of a waiver, by the party waiving compliance, and subject, to the extent required, to the approval of the Bankruptcy Court. No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.
SECTION 5.8 Construction .
(a) The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(b) Unless the context otherwise requires, as used in this Agreement: (i) “or” shall mean “and/or”; (ii) “including” and its variants mean “including, without limitation” and its variants; (iii) words defined in the singular have the parallel meaning in the plural and vice versa; (iv) references to “written” or “in writing” include in visual electronic form; (v) words of one gender shall be construed to apply to each gender; and (vi) the terms “Article” and “Section” refer to the specified Article or Section of this Agreement.
SECTION 5.9 Severability . If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
SECTION 5.10 Equitable Relief . It is hereby acknowledged that irreparable harm would occur in the event that any of the provisions of this Agreement were not performed fully by the parties hereto in accordance with the terms specified herein, and that monetary damages are an inadequate remedy for breach of this Agreement because of the difficulty of ascertaining and quantifying the amount of damage that will be suffered by the parties hereto relying hereon in the event that the undertakings and provisions contained in this Agreement were breached or violated. Accordingly, each party hereto hereby agrees that each other party hereto shall be entitled to an injunction or injunctions to restrain, enjoin and prevent breaches of the undertakings and provisions hereof and to enforce specifically the undertakings and provisions hereof in any court of the United States or any state having jurisdiction over the matter; it being understood that such remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.
SECTION 5.11 Successor Securities . The provisions of this Agreement pertaining to shares of Common Stock shall apply to all shares of Common Stock Beneficially Owned by any Investor Party and any voting equity securities of the Company, regardless of class, series, designation or par value, that are issued as a dividend on or in any other distribution in respect of, or as a result of a reclassification (including a change in par value) in respect of, shares of Common Stock or other shares of the Company which, as provided by this section, are considered as shares of Common Stock for purposes of this Agreement and shall also apply to any voting equity security issued by any company that succeeds, by merger, consolidation, a share exchange, a reorganization of the Company or any similar transaction, to all or substantially all the business of the Company, or to the ownership thereof, if such security was issued in exchange for or otherwise as consideration for or in respect of shares of Common Stock (or other shares considered as shares of Common Stock, as provided by this definition) in connection with such succession transaction.
SECTION 5.12 Voting Procedures . If, in connection with any stockholder meeting or consent solicitation, Investor or the Investor Parties are required under the terms of this Agreement to vote in proportion to Votes Cast, then the parties shall cooperate to determine appropriate procedures and mechanics to facilitate such proportionate voting.
** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered by each of them or their respective officers thereunto duly authorized, all as of the date first written above .
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
[Signature Page to Fairholme Standstill Agreement]
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FAIRHOLME FUNDS, INC. |
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On behalf of its series The Fairholme Fund |
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By: |
/s/ Bruce R. Berkowitz |
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Name: |
Bruce R. Berkowitz |
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Title: |
President |
[Signature Page to Fairholme Standstill Agreement]
Exhibit 10.6
EXECUTION VERSION
STANDSTILL AGREEMENT
This Standstill Agreement (this “ Agreement ”) is dated as of November 9, 2010 ( the “ Effective Date ”), by and between General Growth Properties, Inc., a Delaware corporation (the “ Company ”), and Pershing Square Capital Management, L.P. (“ PSCM ”), on behalf of Pershing Square, L.P., a Delaware limited partnership, Pershing Square II, L.P., a Delaware limited partnership, and PSRH, Inc., a Cayman Islands corporation (collectively, except PSCM, “ Investor ”).
WHEREAS, Investor has entered into that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010 (the “ Investment Agreement ”), that contemplates, among other things, the purchase by Investor of shares of Common Stock subject to the terms and conditions contained therein;
WHEREAS, the transactions contemplated by the Investment Agreement are intended to assist the Company in its plans to recapitalize and emerge from bankruptcy and is not intended to constitute a change of control of the Company or otherwise give Investor the power to control the business and affairs of the Company;
WHEREAS, as a material condition to the Company’s and Investor’s obligations to consummate the transactions contemplated by the Investment Agreement, the Company and Investor have agreed to execute this Agreement; and
WHEREAS, certain terms used in this Agreement are defined in Section 4.1 .
NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
COMPANY RELATED PRINCIPLES
SECTION 1.1 Board of Directors . So long as Investor and the Investor Parties, collectively, shall Constructively Own more than ten percent (10%) of the outstanding shares of Common Stock, none of Investor or the Investor Parties shall take any action that is inconsistent with its support for the following corporate governance principles :
(a) A majority of the members of the Board shall be Independent Directors, where “ Independent Director ” means a director who satisfies all standards for independence promulgated by the New York Stock Exchange (or the applicable exchange where shares of Common Stock are then listed);
(b) the Board shall have a nominating committee, a majority of which shall be Disinterested Directors;
(c) in connection with any stockholder meeting or consent solicitation relating to the election of members of the Board, if Investor and the Investor Parties, collectively, Beneficially Own a number of shares of Common Stock greater than 10% of the shares of Common Stock outstanding as of the applicable record date (or, if larger, the largest number of shares that any Large Stockholder would be permitted to vote in such election, ignoring for this purpose the right of any Large Stockholder that is a party to the Brookfield Standstill Agreement to cast votes for Purchaser Board Designees and the right of any Large Stockholder that is a party to a transferee agreement in the form required by this Agreement or the Brookfield Standstill Agreement to vote for one director in its sole discretion), then Investor shall, and shall cause the other Investor Parties to, vote in such election of members of the Board all shares of Common Stock that are Beneficially Owned by the Investor and Investor Parties in excess of such number of shares of Common Stock in proportion to the Votes Cast ;
(d) the Board shall consist of nine (9) members and not be increased or reduced, unless approved by seventy-five percent (75%) of the Board;
(e) any Change in Control (other than a transaction contemplated by Section 2.1(b)(ii)) in which a Large Stockholder or its controlled Affiliate is the acquiror or part of the acquiror group or is proposed to be directly or indirectly combined with the Company must be approved by a majority of the Disinterested Directors as if it were a Company Transaction involving such Large Stockholder and by a majority of the voting power of the stockholders (other than such Large Stockholder or its controlled Affiliates); and
(f) any Change in Control (other than a transaction contemplated by Section 2.2(b)(v)) in which any Large Stockholder or its controlled Affiliate receives per share consideration in its capacity as a stockholder of the Company in excess of that to be received by other stockholders, must be approved by a majority of the Disinterested Directors as if it were a Company Transaction involving such Large Stockholder and by a majority of the voting power of the stockholders (other than such Large Stockholder or its controlled Affiliates).
The Company shall not waive any provisions similar to Sections 1.1(c), (e) or (f) above for any Large Stockholder under any other agreement unless the Company grants a similar waiver under this Agreement.
SECTION 1.2 Related Party Transactions .
(a) Without the approval of a majority of the Disinterested Directors, Investor shall not, and shall not permit any of the Investor Parties to, engage in any Company Transaction. “ Company Transaction ” means (i) any transaction or series of related transactions, directly or indirectly, between the Company or any Subsidiary of the Company, on the one hand, and any of the Investor Parties, on the other hand, or (ii) without limiting the Company’s obligation to comply with Sections 1.4 and 1.5 hereof, with respect to the purchase or sale of Common Stock by any of the Investor Parties, any waiver of any limitation or restriction with respect to such purchase or sale in the Charter or the Transaction Documents, including any exemption from the Ownership Limit (as defined in the Charter); provided , however , that none of the following shall constitute a Company Transaction:
(i) transactions expressly contemplated in the Transaction Documents;
(ii) customary compensation arrangements (whether in the form of cash or equity awards), expense reimbursement, director insurance coverage and/or indemnification arrangements (and related advancement of expenses) in each case for Board designees, or any use by such persons, for Company business purposes, of aircraft, vehicles, property, equipment or other assets owned or customarily provided to members of the Board by the Company or any of its Subsidiaries;
(iii) any transaction or series of transactions if the same is in the Ordinary Course of Business and does not involve payments by the Company in excess of $5,000,000 in the aggregate for such transaction or series of transactions; and
(iv) any transaction among the Company and/or its Subsidiaries and The Howard Hughes Corporation and/or its Subsidiaries.
(b) Following the Closing (as such term is defined in the Investment Agreement), any decisions by the Company regarding material amendments or modifications of the Plan (as such term is defined in the Investment Agreement) or waivers of the Company’s material rights under the Plan, shall require the approval of the majority of Disinterested Directors to the extent such amendment, modification or waiver relates to any Investor Party’s rights or obligations.
SECTION 1.3 No Other Voting Restrictions . For the avoidance of doubt, except as restricted herein or by applicable Law, Investor and the o ther Investor Parties may vote the Common Stock that they Beneficially Own in their sole and absolute discretion.
SECTION 1.4 Amendment of the Charter . The Company hereby agrees that following the Closing Date, without the consent of Investor, the Company shall not amend (or propose to amend) the provisions of the Charter in a manner or take any other action that would: (a) change the restriction on Beneficial Ownership (as such term is defined in the Charter) of the outstanding capital stock of the Company to a level other than 9.9%; (b) change the restriction on Constructive Ownership (as such term is defined in the Charter) of the outstanding capital stock of the Company to a level other than 9.9%; or (c) change any waiver from the restrictions set forth in the foregoing clauses (a) and (b) granted to Investor or any Investor Party in any manner adverse to Investor or any Investor Party. For the avoidance of doubt, nothing in this Section 1.4 shall affect the Board’s discretion to grant to third parties any waivers from the restrictions on Beneficial Ownership or Constructive Ownership (as each term is defined in the Charter) in accordance with the terms of the Charter.
SECTION 1.5 Waiver of Ownership Limited in the Charter . The Company and the Board shall take all appropriate and necessary action to ensure that the ownership limitations set forth in the Charter shall be waived with respect to Investor, the Investor Parties, any Investor Investment Advisor and any Person (other than a transferee under Section 2.2(b)(vi) unless such transferee executes a Transferee Agreement) to whom Investor, any Investor Party or any Investor Investment Advisor has transferred any of the Common Stock or Warrants in accordance with the terms of this Agreement and the Investment Agreement, provided , insofar as
the waiver relates to Investor, an Investor Party, an Investor Investment Advisor or a transferee , as the case may be, who Beneficially Owns or Constructively Owns (as each term is defined in the Charter) (or would, following such transfer, Beneficially Own or Constructively Own (as each term is defined in the Charter)) interests in excess of the Stock Ownership Limit or the Constructive Ownership Limit (as each term is defined in the Charter), that the Company has been provided with a certificate containing the representations and covenants set forth on Exhibit D to the Investment Agreement (or, to the extent necessitated by the organizational structure of the party providing such certificate, a certificate substantially similar to such Exhibit D ) from such Investor, Investor Party, Investor Investment Advisor or transferee, or in the case of a transferee, a certificate containing the representations and covenants set forth on Exhibit D to the Investment Agreement (or, to the extent necessitated by the organizational structure of the party providing such certificate, a certificate substantially similar to Exhibit D ) as modified to allow such transferee to own stock or other equity interests in a tenant of the Company or its Subsidiaries to the extent such ownership would not result in (i) the Company or any of its REIT Subsidiaries other than GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $1 million of “related party rent” in any year or (ii) GGP Natick Trust or GGP Ivanhoe, Inc. recognizing more than $100,000 of “related party rent” in any year. The parties hereto agree that the Company may, in the discretion of the Board, grant to third parties any other waivers from restrictions set forth in the Charter.
ARTICLE II
INVESTOR RELATED COVENANTS
SECTION 2.1 Ownership Limitations .
(a) Except as provided in Section 2.1(b) , Investor agrees that it (together with the other Investor Parties) shall not acquire Economic Ownership of shares of Common Stock that would result in the Investor Parties in the aggregate Economically Owning a percentage of the then-outstanding Common Stock on a Fully Diluted Basis that is greater than the Ownership Cap. For the avoidance of doubt, no Person shall be in violation of this Section 2.1 as a result of (i) any acquisition by the Company of any Common Stock; (ii) any change in the percentage of the Investor Parties’ Economic Ownership of Common Stock that results from a change in the aggregate number of shares of Common Stock outstanding; or (iii) any change in the number of shares of Common Stock Economically Owned by the Investor Parties as a result of any anti-dilution adjustments to any Equity Securities (as defined in the Investment Agreement) Economically Owned by any Investor Party.
(b) Notwithstanding Section 2.1(a) , any of the Investor Parties may acquire Economic Ownership of shares of Common Stock that would result in the Investor Parties (taken as a whole) having Economic Ownership of a percentage of the then-outstanding Common Stock on a Fully Diluted Basis that is greater than the Ownership Cap under any of the following circumstances:
(i) acquisitions of shares pursuant to any pro rata stock dividend or stock distribution effected by the Company and approved by a majority of the Independent Directors; or
(ii) if such acquisition is pursuant to a tender offer or exchange offer, in each case that includes an offer for all outstanding shares of Common Stock owned by the Target Stockholders, or a merger, consolidation, binding share exchange or similar transaction pursuant to an agreement with the Company, so long as in each case (A) such offer, merger, consolidation, binding share exchange or similar transaction is approved by a majority of the Disinterested Directors or by a special committee comprised of Disinterested Directors (such tender offer or exchange offer, an “ Approved Offer ”, and such merger, consolidation, binding share exchange or similar transaction, an “ Approved Merger ”), and (B) in any such Approved Offer, a majority of the Target Shares are tendered into such Approved Offer and not withdrawn prior to the final expiration of such Approved Offer, or in such Approved Merger, a majority of the Target Shares that are voted (in person or by proxy) on the related transaction proposal are voted in favor of such proposal. As used in this Section 2.1(b)(ii) : “ Target Shares ” means the then-outstanding shares of Common Stock not owned by the Investor Parties; and “ Target Stockholders ” means the stockholders of the Company other than the Investor Parties.
(c) The limitation set forth in Section 2.1(a) may only be waived by the Company if a majority of the Disinterested Directors consent thereto.
SECTION 2.2 Transfer Restrictions .
(a) Subject to Section 2.2(b) , unless approved by a majority of the Independent Directors, Investor shall not, and shall not permit any of the Investor Parties to, sell or otherwise transfer or agree to transfer (each of the foregoing, a “ Transfer ”), directly or indirectly, any shares of Common Stock that are held directly or indirectly by Investor or any of the other Investor Parties if, immediately after giving effect to such Transfer, the Person that acquires such Common Stock (other than any underwriter acting in such capacity in an underwritten public offering of such shares) would, together with its Affiliates, to the actual knowledge (“ Knowledge ”) of the transferor Beneficially Own more than ten percent (10%) of the then-outstanding Common Stock. A transferor shall be deemed to have Knowledge of any transferee’s Beneficial Ownership of Common Stock if the transferor has actual knowledge of the identity of the transferee and such Beneficial Ownership has been, at the time of the agreement to transfer, publicly disclosed in accordance with Section 13 of the Exchange Act.
(b) The limitations in Section 2.2(a) shall not apply, and any Investor Party may Transfer freely:
(i) to any Person (including any Affiliate of Investor) if such Person (A) has executed and delivered to the Company a Transferee Agreement (as defined below), and (B) has provided the Company with a certificate containing the representations set forth on Exhibit D of the Investment Agreement (or, to the extent necessitated by the organizational structure of the party providing such certificate, a certificate substantially similar to such Exhibit D ) as modified to allow such Transferee to own stock or other equity interests in a tenant of the Company or its Subsidiaries to the extent such ownership would not result in (i) the Company or any of its REIT Subsidiaries other than GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $1 million of “related
party rent” each year or (ii) GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than $100,000 of “related party rent” each year;
(ii) to one or more underwriters or initial purchasers acting in their capacity as such in a manner not intended to circumvent the restrictions contained in 2.2(a);
(iii) in a sale in the public market, in accordance with Rule 144, including the volume and manner of sale limitations set forth therein;
(iv) in any Merger Transaction (other than a transaction contemplated by Section 2.2(b)(v) below) or transaction contemplated by clause (iii) of the definition of Change of Control (A) in which (in either case) no Investor Party is the acquiror or part of the acquiring group or is proposed to be combined with the Company and (B) that has been approved by the Board and a majority of the stockholders (it being understood that this clause (iv) does not affect the agreement of the parties under Sections 1.1(e) and (f));
(v) in connection with a tender or exchange offer that (A) is not solicited by any Investor Party (unless such transaction was approved in accordance with Section 2.1(b)(ii) ) and in which all holders of Common Stock are offered the opportunity to sell shares of Common Stock and (B) complies with applicable securities laws, including Rule 14d-10 promulgated under the Exchange Act; and
(vi) in connection with any bona fide mortgage, encumbrance, pledge or hypothecation of capital stock to a financial institution in connection with any bona fide loan.
(c) No Transfer under Section 2.2(b)(i) shall be valid unless and until a Transferee Agreement has been executed by the Transferee and delivered to the Company. For the purpose of this Agreement a “Transferee Agreement” executed by a Transferee means an agreement substantially in the form of this Agreement or in such other form as is reasonably satisfactory to the Company except that:
(i) notwithstanding Section 1.1(c) , in connection with any stockholder meeting or consent solicitation relating to the election of members of the Board, such Transferee may vote the shares of Common Stock that it Beneficially Owns in favor of one director candidate in its sole and absolute discretion and regarding any other director candidates in such election must vote in proportion to Votes Cast;
(ii) “Investor” shall be defined to mean such Transferee; and
(iii) any obligation on the part of Investor hereunder to cause the Investor Parties to take any action or refrain from taking any action shall only apply to the Investor Parties controlled by the Transferee and the Transferee Agreement shall provide that the Transferee shall use all reasonable efforts to cause Affiliates that the Transferee does not control to take or refrain from taking the action that it is otherwise required to cause under this Agreement.
ARTICLE III
TERMINATION
SECTION 3.1 Termination of Agreement . This Agreement may be terminated as follows (the date of such termination, the “ Termination Date ”)
(a) if Investor and the Company mutually agree to terminate this Agreement, but only if the Disinterested Directors have approved such termination;
(b) upon five (5) days notice by the Investor, at any time after (i) the Other Stockholders Constructively Own more than seventy percent ( 70% ) of the then-outstanding Common Stock and (ii) the Investor Parties Constructively Own less than fifteen percent ( 15% ) of the then-outstanding Common Stock on a Fully Diluted Basis;
(c) without any further action by the parties hereto, if Investor and the Investor Parties Constructively Own less than ten percent ( 10% ) of the then-outstanding Common Stock on a Fully Diluted Basis;
(d) without any other action by the parties hereto, upon the consummation of a Change of Control not involving Investor or any Investor Party as a purchaser of any direct or indirect interest in the Company or any of its assets or properties; provided that the Investor Parties shall not have violated this Agreement in connection with any transaction under this clause; and
(e) without any other action by the parties hereto, upon the consummation of: (i) a sale of all or substantially all of the assets the Company and its Subsidiaries (determined on a consolidated basis), in one transaction or series of related transactions; or (ii) the acquisition (by purchase, merger or otherwise) by any Person or Group of Beneficial Ownership of voting securities of the Company entitling such Person or Group to exercise ninety percent ( 90% ) or more of the total voting power of all outstanding securities entitled to vote generally in elections of directors of the Company; provided that the Investor Parties shall not have violated this Agreement in connection with any transaction under the preceding clauses (i) and (ii).
SECTION 3.2 Procedure upon Termination . In the event of termination pursuant to Section 3.1 , this Agreement shall terminate on the Termination Date without further action by Investor and the Company.
SECTION 3.3 Effect of Termination . In the event that this Agreement is validly terminated as provided in this Article III , then each of the parties hereto shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to the other party; provided , however , that Article V shall survive any such termination and shall be enforceable hereunder; provided further , however , that nothing in this Section 3.3 shall relieve any party hereto of any liability for a breach of a representation, warranty or covenant in this Agreement prior to the Termination Date.
ARTICLE IV
DEFINITIONS
SECTION 4.1 Defined Terms . For purposes of this Agreement, the following terms, when used in this Agreement with initial capital letters, shall have the respective meanings set forth in this Agreement:
(a) “ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this Agreement, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
(b) “ Beneficial Ownership ” by a Person of any securities means “beneficial ownership” as used for purposes of Rule 13d-3 adopted by the SEC under the Exchange Act; provided , however , to the extent the term “Beneficial Ownership” is used in connection with any obligation on the part of an Investor Party to vote, or direct the vote, of shares of Common Stock, “Beneficial Ownership” by a Person of any securities shall be deemed to refer solely to those securities with respect to which such Person possesses the power to vote or direct the vote. The term “ Beneficially Own ” shall have a correlative meaning.
(c) “ Board ” means the Board of Directors of the Company.
(d) “ Brookfield Standstill Agreement ” means the Standstill Agreement, dated as of the date hereof, by and between the Company, REP Investments LLC and the other parties named therein.
(e) “ Business Day ” means any day other than (i) a Saturday, (ii) a Sunday, or (iii) any day on which commercial banks in New York, New York are required or authorized to close by law or executive order.
(f) “ Change of Control ” means any transaction involving (i) a Merger Transaction, (ii) a sale of all or substantially all of the assets the Company and its Subsidiaries (determined on a consolidated basis), in one transaction or series of related transactions, or (iii) the consolidation, merger, amalgamation, reorganization (other than pursuant to the Plan contemplated by the Investment Agreement) of the Company or a similar transaction in which the Company is combined with another Person, unless shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company remain unchanged or are exchanged for, converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration Public Stock and the Persons or Group who beneficially own the outstanding Common Stock of the Company immediately before consummation of the transaction beneficially own more than 50% (by voting power) of the outstanding voting stock of the combined or surviving entity or new parent immediately thereafter.
(g) “ Charter ” means the Amended and Restated Certificate of Incorporation of the Company effective as of the date hereof.
(h) “ Common Stock ” means the common stock, par value $0.01 per share, of the Company, as authorized by the Charter as of the Effective Date, and any successor security as provided by Section 5.11 .
(i) “ Constructive Ownership ” of securities by a Person on any date means (A) with respect to Common Stock issuable upon exercise of a Warrant, an interest that would constitute Beneficial Ownership of such Common Stock had the holder of such Warrant delivered the notice contemplated by Section 3.2 of the Warrant Agreement (if applicable) at least 90 days prior to, and had such Warrant been validly exercised on, such date and (B) with respect to any other securities, including Common Stock (other than Common Stock issuable upon exercise of the Warrants), Beneficial Ownership of such securities. The term “ Constructively Own ” shall have a correlative meaning.
(j) “ Disinterested Director ” means (i) with respect to a Company Transaction or potential Company Transaction, a director who (A) is not Affiliated with, and was not nominated by, any Investor Party that is a participant in such transaction or potential transaction and (B) who has no personal financial interest in the transaction (other than the same interest, if a stockholder of the Company, as the other stockholders of the Company) and (ii) with respect to any matter other than a Company Transaction, a director who is not Affiliated with, and was not nominated by, any Investor Party.
(k) “ Economic Ownership ” by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has (i) Constructive Ownership or (ii) economic interest in such security as a result of any cash-settled total return swap transaction or any other swap, other derivative or “synthetic” ownership arrangement (in which case the number of securities with respect to which such Person has Economic Ownership shall be determined by the Company in it reasonable judgment based on such Person’s equivalent net long position); provided , however , that for purposes of determining Economic Ownership, a Person shall be deemed to be the Economic Owner of any securities which may be acquired by such Person pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether the right to acquire such securities is exercisable immediately or only after the giving of notice or the passage of time, including the giving of notice or the passage of time in excess of sixty (60) days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing), in each case, without duplication of any securities included pursuant to sub-clauses (i) or (ii) above. For purposes of this Agreement, a Person shall be deemed to be the Economic Owner of any securities Economically Owned by any Group of which such Person is or becomes a member. The term “ Economically Own ” shall have a correlative meaning.
(l) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the SEC
promulgated thereunder, all as the same may be amended and shall be in effect from time to time.
(m) “ Fair Market Value ” means, with respect to each share of Public Stock, the average of the daily volume weighted average prices per share of such Public Stock for the ten consecutive trading days immediately preceding the day as of which Fair Market Value is being determined, as reported on the New York Stock Exchange, or if such shares are not listed on the New York Stock Exchange, as reported by the principal U.S. national or regional securities exchange or quotation system on which such shares are then listed or quoted; provided , however , that in the absence of such listing or quotations, the Fair Market Value of such shares shall be the fair market value per share as determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such shares are fully distributed and are to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.
(n) “ Fairholme Standstill Agreement ” means the Standstill Agreement, dated as of the date hereof, by and between the Company and The Fairholme Fund .
(o) “ Fully Diluted Basis ” means all outstanding shares of the Common Stock assuming the exercise of all outstanding Share Equivalents, without regard to any restrictions or conditions with respect to the exercisability of such Share Equivalents.
(p) “ Governmental Entity ” means any (i) nation, region, state, province, county, city, town, village, district or other jurisdiction, (ii) federal, state, local, municipal, foreign or other government, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, court or tribunal, or other entity), (iv) multinational organization or body or (v) body entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature or any other self-regulatory organizations.
(q) “ Group ” has the meaning assigned to it in Section 13(d)(3) of the Exchange Act and Rule 13d-5 thereunder.
(r) “ Independent Financial Expert ” means a nationally recognized financial advisory firm approved by a majority of the Disinterested Directors.
(s) “ Investor Investment Advisor ” means any independently operated business unit of any Affiliate of Investor that holds shares of Common Stock (i) in trust for the benefit of persons other than any Investor Party, (ii) in mutual funds, open- or closed-end investment funds or other pooled investment vehicles sponsored, managed or advised or subadvised by such Investor Investment Advisor, (iii) as agent and not principal, or (iv) in any other case where such Investor Investment Advisor is disaggregated from Investor for the purposes of Section 13(d) of the Exchange Act; provided , however , that (A) in each case, such shares of Common Stock were acquired in the ordinary course of business of the Investor Investment Advisor’s respective investment management or securities
business and not with the intent or purpose on the part of Investor or the Investor Parties of influencing control of the Company or avoiding the provisions of this Agreement and (B) where appropriate, “Chinese walls” or other informational barriers and other procedures have been established. For avoidance of doubt, for purposes of this Agreement shares of Common Stock or other securities of the Company held by an Investor Investment Advisor shall not be deemed to be Beneficially Owned or Constructively Owned by Investor or the Investor Parties.
(t) “ Investor Parties ” means Investor and its Affiliates; provided , however , that none of the Company, or any Subsidiary of the Company or any Investor Investment Advisor shall be deemed to be an Investor Party.
(u) “ Large Stockholder ” means a Person that is the Beneficial Owner of more than ten percent (10%) of the outstanding shares of Common Stock on a Fully Diluted Basis.
(v) “ Law ” means any statutes, laws (including common law), rules, ordinances, regulations, codes, orders, judgments, decisions, injunctions, writs, decrees, applicable to the Company, Common Stock or Investor Parties.
(w) “ Merger Transaction ” means any transaction involving the acquisition (by purchase, merger or otherwise) by any Person or Group of Beneficial Ownership of voting securities of the Company entitling such Person or Group to exercise a majority of the total voting power of all outstanding securities entitled to vote generally in elections of directors of the Company.
(x) “ Ordinary Course of Business ” means the ordinary and usual course of day-to-day operations of the business of the Company consistent with past practice.
(y) “ Other Stockholder ” means, as of the date of the action in question, any Person not Affiliated with Brookfield Asset Management, Inc., Fairholme Capital Management LLC, Pershing Capital Management L.P., any transferee who is a party to a transferee agreement under the Brookfield Standstill Agreement, the Fairholme Standstill Agreement or this Agreement or any of their respective Affiliates.
(z) “ Ownership Cap ” means the lower of (i) twenty-five percent (25%) of the then-outstanding Common Stock on a Fully Diluted Basis and (ii) the sum of five percent ( 5% ) and the percentage of the outstanding Common Stock on a Fully Diluted Basis that the Investor Parties Economically Own as of the Effective Date.
(aa) “ Person ” means an individual, a group (including a “group” under Section 13(d) of the Exchange Act), a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
(bb) “ Public Stock ” means common stock listed on a recognized U.S. national securities exchange with an aggregate market capitalization (held by non-Affiliates of the issuer) in excess of $1 billion in Fair Market Value.
(cc) “ Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act, or any successor rule or regulation hereafter adopted by the SEC, as the same may be amended and shall be in effect from time to time.
(dd) “ SEC ” means the Securities and Exchange Commission or any other federal agency then administering the Exchange Act, the Securities Act and other federal securities laws.
(ee) “ Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder, all as the same may be amended and shall be in effect from time to time.
(ff) “ Share Equivalent ” means any stock, warrants, rights, calls, options or other securities exchangeable or exercisable for, or convertible into, shares of Common Stock.
(gg) “ Subsidiary ” means, with respect to a Person, any corporation, limited liability company, partnership, trust or other entity of which such Person owns (either alone, directly, or indirectly through, or together with, one or more of its Subsidiaries) 50% or more of the equity interests the holder of which is generally entitled to vote for the election of the board of directors or governing body of such corporation, limited liability company, partnership, trust or other entity.
(hh) “ Transaction Documents ” means, individually or collectively, the Investment Agreement or the Warrant.
(ii) “ Transferee ” means any proposed transferee of securities pursuant to Sections 2.2(b)(i) or 2.2(b)(vi) .
(jj) “ Votes Cast ” means the aggregate number of shares of Common Stock that are properly voted for or against any action to be taken by stockholders, excluding any shares if the holder of such shares is contractually required to vote in proportion of the total number of votes cast pursuant to this Agreement, the Brookfield Standstill Agreement, the Fairholme Standstill Agreement or any transferee agreement executed hereunder or thereunder.
(kk) “ Warrant Agreement ” means that certain Warrant Agreement, dated as of the date hereof, by and between the Company and Mellon Investor Services LLC.
(ll) “ Warrants ” means the New Warrants (as defined in the Investment Agreement).
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Notices . All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows: (a) on the date delivered, if personally delivered; (b) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; or (c) on the next Business Day after being sent by recognized overnight mail service specifying next business day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:
SECTION 5.2 Assignment; No Third Party Beneficiaries . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party without the prior written consent of the other party. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement.
SECTION 5.3 Prior Negotiations; Entire Agreement . This Agreement (including the exhibits hereto and the documents and instruments referred to in this Agreement) constitutes the entire agreement of the parties hereto and supersedes all prior agreements, arrangements or understandings, whether written or oral, between the parties hereto with respect to the subject matter of this Agreement.
SECTION 5.4 Governing Law; Venue . THIS AGREEMENT, AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE. BOTH PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF, AND VENUE IN, DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
SECTION 5.5 Counterparts . This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto, and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.
SECTION 5.6 Expenses . Except as otherwise provided in this Agreement, Investor and the Company shall each bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
SECTION 5.7 Waivers and Amendments . Subject to Section 5.2 , this Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by Investor and the Company (with the approval of a majority of the Disinterested Directors) or, in the case of a waiver, by the party waiving compliance, and subject, to the extent required, to the approval of the Bankruptcy Court. No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this
Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.
SECTION 5.8 Construction .
(a) The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(b) Unless the context otherwise requires, as used in this Agreement: (i) “or” shall mean “and/or”; (ii) “including” and its variants mean “including, without limitation” and its variants; (iii) words defined in the singular have the parallel meaning in the plural and vice versa; (iv) references to “written” or “in writing” include in visual electronic form; (v) words of one gender shall be construed to apply to each gender; and (vi) the terms “Article” and “Section” refer to the specified Article or Section of this Agreement.
SECTION 5.9 Severability . If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
SECTION 5.10 Equitable Relief . It is hereby acknowledged that irreparable harm would occur in the event that any of the provisions of this Agreement were not performed fully by the parties hereto in accordance with the terms specified herein, and that monetary damages are an inadequate remedy for breach of this Agreement because of the difficulty of ascertaining and quantifying the amount of damage that will be suffered by the parties hereto relying hereon in the event that the undertakings and provisions contained in this Agreement were breached or violated. Accordingly, each party hereto hereby agrees that each other party hereto shall be entitled to an injunction or injunctions to restrain, enjoin and prevent breaches of the undertakings and provisions hereof and to enforce specifically the undertakings and provisions hereof in any court of the United States or any state having jurisdiction over the matter; it being understood that such remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.
SECTION 5.11 Successor Securities . The provisions of this Agreement pertaining to shares of Common Stock shall apply to all shares of Common Stock Beneficially Owned by any Investor Party and any voting equity securities of the Company, regardless of class, series, designation or par value, that are issued as a dividend on or in any other distribution in respect of, or as a result of a reclassification (including a change in par value) in respect of, shares of Common Stock or other shares of the Company which, as provided by this section, are considered as shares of Common Stock for purposes of this Agreement and shall also apply to any voting equity security issued by any company that succeeds, by merger, consolidation, a
share exchange, a reorganization of the Company or any similar transaction, to all or substantially all the business of the Company, or to the ownership thereof, if such security was issued in exchange for or otherwise as consideration for or in respect of shares of Common Stock (or other shares considered as shares of Common Stock, as provided by this definition) in connection with such succession transaction.
SECTION 5.12 Voting Procedures . If, in connection with any stockholder meeting or consent solicitation, Investor or the Investor Parties are required under the terms of this Agreement to vote in proportion to Votes Cast, then the parties shall cooperate to determine appropriate procedures and mechanics to facilitate such proportionate voting.
** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered by each of them or their respective officers thereunto duly authorized, all as of the date first written above .
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GENERAL GROWTH PROPERTIES, INC. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
[Signature Page to Pershing Standstill Agreement]
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PERSHING SQUARE CAPITAL |
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MANAGEMENT, L.P. |
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PS Management GP, LLC |
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General Partner |
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William A. Ackman |
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Managing Member |
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[Signature Page to Pershing Standstill Agreement]
Exhibit 10.7
EXECUTION COPY
GENERAL GROWTH PROPERTIES, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 9, 2010 (this “ Agreement ”), by and between the purchasers listed on Schedule I hereto (the “ Purchasers ”) and General Growth Properties, Inc., a Delaware corporation (the “ Company ”).
R E C I T A L S
WHEREAS, Purchasers have, pursuant to the terms of that certain Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010, by and between the Company and REP Investments LLC (as the same may be amended from time to time, the “ Cornerstone Investment Agreement ”) agreed, among other things, to purchase 250,000,000 shares of common stock, par value $0.01, of the Company (the “ Common Stock ”); and
WHEREAS, in case any securities held by a Purchaser or its transferees are at any time not freely transferable by the holder in accordance with applicable laws, the Company and the Purchasers desire to define certain registration rights with respect to the Common Stock, certain warrants and certain other securities on the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms have the respective meanings set forth below:
Affiliate : shall mean as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, the first Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise;
Agreement : shall have the meaning set forth in the Preamble hereto;
Blackstone : shall mean Blackstone Real Estate Partners VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners (AIV) VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.F L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.1 L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.2 L.P., a Delaware limited partnership, Blackstone Real Estate Holdings VI L.P., a Delaware limited partnership, and Blackstone GGP Principal Transaction Partners L.P., a Delaware limited partnership;
Brookfield Consortium Member : shall have the meaning ascribed thereto in the Cornerstone Investment Agreement;
Closing Date : shall have the meaning ascribed thereto in the Cornerstone Investment Agreement;
Commission : shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act;
Common Stock : shall have the meaning set forth in the Recitals hereto;
Company : shall have the meaning set forth in the Preamble hereto;
Cornerstone Investment Agreement : shall have the meaning set forth in the Recitals hereto;
Demand Notice : shall have the meaning set forth in Section 2(a)(i) hereof;
Exchange Act : shall mean the Securities Exchange Act of 1934, as amended (or any successor act), and the rules and regulations promulgated thereunder;
Fairholme Holders : shall mean the “Holders” defined in that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and The Fairholme Fund, a series of Fairholme Funds, Inc. a Maryland corporation, and Fairholme Focused Income Fund, a series of Fairholme Funds, Inc., a Maryland corporation, as amended from time to time;
Fairholme Stock Purchase Agreement : shall mean that certain Amended and Restated Stock Purchase Agreement , effective as of March 31, 2010, by and between the Company and the Fairholme Holders, as amended from time to time;
Fairholme/Pershing Holders : shall mean, collectively, the Fairholme Holders and Pershing Holders, and a Fairholme/Pershing Holder shall mean any Fairholme Holder or Pershing Holder;
FINRA : shall mean the Financial Industry Regulatory Authority;
Holder : shall mean any holder of Registrable Securities subject to this Agreement, solely in their capacity as such, including Permitted Assignees;
Indemnified Party : shall have the meaning set forth in Section 2(f)(iii) hereof;
Indemnifying Party : shall have the meaning set forth in Section 2(f)(iii) hereof;
Initial Investors : shall mean (i) the Purchasers, (ii) any Brookfield Consortium Members, (iii) Blackstone and (iv) any Permitted Assignees under clauses (i) and (ii) of Section 3(e) hereof;
Initiating Holder(s) : shall mean any Holder or any group of Holders, other than Blackstone, with respect to the Registrable Securities it is designated to receive pursuant to the Investment Agreements;
Investment Agreements : shall mean, collectively, the Cornerstone Investment Agreement, the Fairholme Stock Purchase Agreement and the Pershing Stock Purchase Agreement;
Investors : shall mean (i) any Initial Investors and (ii) any Permitted Assignees under clause (iii) of Section 3(e) hereof;
Issuer Free Writing Prospectus : shall mean an “Issuer Free Writing Prospectus,” as defined in Rule 433 under the Securities Act, relating to an offer of Registrable Securities;
Losses : shall have the meaning set forth in Section 2(f)(i) hereof;
Other Stockholders : shall have the meaning set forth in Section 2(a)(iii) hereof;
Participating Holders : shall mean Holders participating in the Registration relating to the Registrable Securities;
Permitted Assignees : shall have the meaning set forth in Section 3(e) hereto;
Pershing Holders : shall mean the “Holders” defined in that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company, Pershing Square Capital Management, L.P., on behalf of Pershing Square, L.P., a Delaware limited partnership, Pershing Square II, L.P., a Delaware limited partnership, Pershing Square International, Ltd., a Cayman Islands exempted company, and Pershing Square International V, Ltd., a Cayman Islands exempted company, and Blackstone, as amended from time to time;
Pershing Stock Purchase Agreement : shall mean that certain Amended and Restated Stock Purchase Agreement , effective as of March 31, 2010, by and between the Company and the Pershing Holders, as amended from time to time;
Person : shall mean an individual, partnership, joint-stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof;
Prospectus : shall mean the prospectus (including any preliminary, final or summary prospectus) included in any Registration Statement, all amendments and supplements to such prospectus and all other material incorporated by reference in such prospectus;
Purchasers : shall have the meaning set forth in the Preamble hereto;
Qualifying Employee Stock : shall mean (i) rights and options issued in the ordinary course of business under employee benefits plans of the Company or any predecessor or
otherwise to executives in compensation arrangements approved by the Board of Directors of the Company or any predecessor and any securities issued after the date hereof upon exercise of such rights and options and options issued to employees of the Company or any predecessor as a result of adjustments to options in connection with the reorganization of the Company or any predecessor and (ii) restricted stock and restricted stock units issued after the date hereof in the ordinary course of business under employee benefit plans and securities issued after the date hereof in settlement of any such restricted stock units;
Register , Registered and Registration : shall mean a registration effected by preparing and (a) filing a Registration Statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such Registration Statement, or (b) filing a Prospectus and/or prospectus supplement in respect of an appropriate effective Registration Statement;
Registrable Securities : shall mean (A) any shares of Common Stock acquired or held by an Initial Investor on or after the date hereof (whether or not acquired pursuant to the Cornerstone Investment Agreement), including without limitation shares of Common Stock acquired in connection with the exercise of any Warrants and shares of Common Stock which at any time an Initial Investor has a right or obligation to purchase under the Cornerstone Investment Agreement, (B) (i) any securities of the Company or its Affiliates issued as a dividend or other distribution with respect to, or in exchange for or in conversion, exercise or replacement of, any Registrable Securities described in (A) or (C) (the “ Initial Securities ”) or securities that may become Registrable Securities by virtue of clause (B)(iii) or (ii) any securities of the Company or its Affiliates offered wholly or partly in consideration of the Initial Securities or securities that may become Registrable Securities by virtue of clause (B)(iii) in any tender or exchange offer or (iii) any securities of the Company or its Affiliates issued as a dividend or other distribution with respect to, or in exchange for or in conversion, exercise or replacement of or offered wholly or partly in any tender or exchange offer in consideration of any Registrable Securities described in (B)(i) or (B)(ii), (C) Warrants acquired or held by an Initial Investor on or after the date hereof and (D) any Registrable Securities described in (A) , (B) or (C) above acquired or held by a Person, for which rights and obligations have been assigned pursuant to clause (iii) of Section 3(e) and in accordance with the terms of Section 3(e) hereof; provided , that as to any particular Registrable Securities, such securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such securities has been declared effective under the Securities Act and such securities have been disposed of pursuant to such Registration Statement, (ii) after such securities have been sold in accordance with Rule 144 (but not Rule 144A), (iii) after such securities shall have otherwise been transferred and new securities not subject to transfer restrictions under any federal securities laws and not bearing any legend restricting further transfer shall have been delivered by the Company, all applicable holding periods shall have expired, and no other applicable and legally binding restriction on transfer by the holder thereof shall exist, (iv) when such securities are eligible for sale pursuant to Rule 144 under the Securities Act without limitation thereunder on volume or manner of sale, or (v) when such securities cease to be outstanding;
Registration Expenses : shall mean (a) any and all expenses incurred by the Company and its Subsidiaries in effecting any Registration pursuant to this Agreement, including, without limitation, all (i) Registration and filing fees, and all other fees and expenses
payable in connection with the listing of securities on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of compliance with any securities or “blue sky” laws (including fees and disbursements of counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any Registration Statements, Prospectuses, Issuer Free Writing Prospectus and other documents in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses, (v) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (vi) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses associated with the delivery by independent certified public accountants of any comfort letters requested pursuant to the terms hereof), (vii) fees and expenses of any special experts retained by the Company in connection with such Registration, (viii) fees and expenses in connection with any review by FINRA of any underwriting arrangements or other terms of the offering, and all reasonable fees and expenses of any “qualified independent underwriter”, (ix) reasonable fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding any underwriting fees, discounts and commissions attributable to the sale of Registrable Securities and fees and expenses of counsel, (x) costs of printing and producing any agreements among underwriters, underwriting agreements, any “blue sky” or legal investment memoranda and any selling agreements and other documents in connection with the offering, sale or delivery of the Registrable Securities, (xi) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering and (xii) expenses relating to any analyst or investor presentations or any “road shows” undertaken in connection with the Registration, marketing or selling of the Registrable Securities and (b) reasonable and documented fees and expenses of one counsel for all of the Participating Holders, which counsel shall be selected by the Participating Holder holding the largest number of the Registrable Securities to be sold in the applicable Registration. Registration Expenses shall not include any out-of-pocket expenses of the Participating Holders;
Registration Statement : shall mean any registration statement of the Company that covers Registrable Securities pursuant to the provisions of this Agreement filed with, or to be filed with, the Commission under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits, financial information and all material incorporated by reference in such registration statement;
Required Shelf Registration Statement : shall have the meaning set forth in Section 2(c);
Rule 144; Rule 144A : shall mean Rule 144 and Rule 144A, respectively, under the Securities Act (or any successor provisions then in force);
S-1 Registration Statement : shall mean a registration statement of the Company on Form S-1 (or any comparable or successor form) filed with the Commission registering any Registrable Securities;
Scheduled Black-Out Period : shall mean the period from and including the last day of a fiscal quarter of the Company to and including the earliest of (i) the Business Day after the day on which the Company publicly releases its earnings information for such quarter or annual earnings information, as applicable, and (ii) the day on which the executive officers and directors of the Company are no longer prohibited by Company policies applicable with respect to such quarterly earnings period from buying or selling equity securities of the Company;
security, securities : shall have the meaning set forth in Section 2(a)(1) of the Securities Act;
Securities Act : shall mean the Securities Act of 1933, as amended (or any successor statute thereto), and the rules and regulations promulgated thereunder;
Selling Expenses : shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and all fees and disbursements of counsel for each of the Holders, other than the fees and expenses of one counsel for all of the Holders, which shall be paid for by the Company in accordance with the terms set forth in clause (b) of the definition of “Registration Expenses” set forth herein;
Shelf Registration Statement : shall mean a “shelf” registration statement of the Company that covers all the Registrable Securities (and may cover other securities of the Company) on Form S-3 and under Rule 415 or, if the Company is not then eligible to file on Form S-3, on Form S-1 under the Securities Act, or any successor rule that may be adopted by the Commission, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein; and
Warrants : shall mean the warrants issued by the Company from time to time pursuant to that certain Warrant Agreement, dated as of November , 2010, by and between the Company and Mellon Investor Services LLC.
SECTION 2. REGISTRATION RIGHTS
(a) Demand Registration .
(i) Request for Registration . Subject to the limitations and conditions of Section 2(a)(ii), if the Company shall receive from an Initiating Holder(s) a written demand (the “ Demand Notice ”) that the Company effect any Registration with respect to all or a part of the Registrable Securities owned by such Initiating Holder(s) having an estimated aggregate fair market value of at least $75 million, the Company shall:
(1) promptly give written notice of the proposed Registration to all other Holders in accordance with the terms of Section 2(b);
(2) use its reasonable best efforts to file a Registration Statement with the Commission in accordance with the request of the Initiating Holder(s), including without
limitation the method of disposition specified therein and covering resales of the Registrable Securities requested to be registered , as promptly as reasonably practicable but no later than (x) in the case of a Registration Statement other than an S-1 Registration Statement, within 30 days of receipt of the Demand Notice or (y) in the case of an S-1 Registration Statement, within 60 days of receipt of the Demand Notice;
(3) use reasonable best efforts to cause such Registration Statement to be declared or become effective as promptly as practicable, but in no event later than 60 days after the date of initial filing of a Registration Statement pursuant to Section 2(a)(i)(2); and
(4) use reasonable best efforts to keep such Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities for the period as requested in writing by the Initiating Holder(s) or such longer period as may be requested in writing by any Holder participating in such registration (which periods shall be extended to the extent of any suspensions of sales pursuant to Sections 2(a)(ii)(3) or (4));
provided , however , that the Company shall be permitted, with the consent of the Initiating Holder(s) not to be unreasonably withheld, to file a post-effective amendment or prospectus supplement to any currently effective Shelf Registration Statement (including, without limitation, any resale registration statement filed pursuant to the terms of the Cornerstone Investment Agreement) in lieu of an additional registration statement pursuant to Section 2(a)(i) to the extent the Company reasonably determines that the Registrable Securities of the Initiating Holder(s) may be sold thereunder by such Initiating Holder(s) pursuant to their intended plan of distribution (in which case such post-effective amendment or prospectus supplement shall not be counted against the limited number of demand registrations). It shall not be unreasonable if, following the recommendation of an underwriter, the Initiating Holder(s) do not consent to the Company filing a post-effective amendment or prospectus supplement to a Shelf Registration Statement in lieu of an additional registration statement requested by the Initiating Holder(s).
(ii) Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to effect, or take any action to effect, any such Registration pursuant to this Section 2(a):
(1) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process or qualify to do business in effecting such Registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder;
(2) With respect to securities that are not Registrable Securities;
(3) If the Company has notified the Holders that in the good faith judgment of the Company, it would be materially detrimental to the Company or its security holders for such registration to be effected at such time, in which event the Company shall have the right to defer such registration for a period of not more than 60 days; provided , that such right to delay a registration pursuant to clause (3) shall be exercised by the
Company only if the Company has generally exercised (or is concurrently exercising) similar black-out rights against holders of similar securities that have registration rights, if any; or
(4) Solely with respect to any Affiliate of the Company, d uring any Scheduled Black-Out Period;
provided , that the total number of days that any such suspension, deferral or delay in registration pursuant to clauses (3) and (4) in the aggregate may be in effect in any 180 day period shall not exceed 60 days. The Company agrees to use its reasonable best efforts to issue earnings releases as promptly as practicable following the end of quarterly reporting periods and to otherwise minimize the duration of Scheduled Black-Out Periods.
(iii) The Registration Statement filed pursuant to the request of the Initiating Holder may, subject to the provisions of Section 2(a)(iv) below, include shares of Common Stock which are held by Holders and Persons who, by virtue of agreements with the Company (other than this Agreement), are entitled to include their securities in any such Registration (such Persons, other than Holders, “ Other Stockholders ”). In the event the Initiating Holder(s) request a Registration pursuant to this Section 2(a) in connection with a distribution of Registrable Securities to its partners or members or any other Holder elects to participate in such Registration pursuant to Section 2(b) hereof in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for the resale by such partners or members, if requested by such Holder.
(iv) Underwriting . If the Initiating Holder(s) intend to distribute the Registrable Securities covered by their request by means of an underwriting, it shall so advise the Company as a part of the request made pursuant to Section 2(a). If Other Stockholders or Holders, to the extent they have any registration rights under Section 2(b), request inclusion of their shares of Common Stock in the underwriting, the Initiating Holder(s) shall offer to include the shares of Common Stock of such Holders and Other Stockholders in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Section 2. The Holders whose Registrable Securities are to be included in such Registration and the Company shall (together with all Other Stockholders proposing to distribute their shares of Common Stock through such underwriting) enter into an underwriting agreement in customary form for secondary public offerings with the managing underwriter or underwriters selected for such underwriting by a majority-in-interest of the Holders whose Registrable Securities are to be included in such Registration subject to approval by the Company not to be unreasonably withheld (which underwriters may also include a non-bookrunning co-manager selected by the Company subject to approval by a majority-in-interest of the Holders whose Registrable Securities are to be included in such Registration); provided , however , that such underwriting agreement shall not provide for indemnification or contribution obligations on the part of any Holder or Other Stockholder greater than the obligations of the Holders under Section (2)(f)(ii) or Section 2(f)(iv). Notwithstanding any other provision of this Section 2(a), if the managing underwriter or underwriters advises the Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, some or all of the securities of the Company held by the Other Stockholders (other than the Fairholme/Pershing Holders) shall be excluded from such Registration to the extent so required by such limitation. If, after the
exclusion of such shares held by such Other Stockholders (other than the Fairholme/Pershing Holders), further reductions are still required due to the marketing limitation, the number of Registrable Securities included in the Registration by each Holder (including the Initiating Holder(s)) and the Fairholme/Pershing Holders shall be reduced on a pro rata basis (based on the number of Registrable Securities requested to be included in such registration by such Holders and the Fairholme/Pershing Holders, as applicable), by such minimum number of shares as is necessary to comply with such request. No Registrable Securities or any other securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such Registration. If any Holder or Other Stockholder who has requested inclusion in such Registration as provided above disapproves of the terms of the underwriting, such Person may elect to withdraw therefrom by providing written notice to the Company, the underwriter and the Initiating Holder(s). The securities so withdrawn shall also be withdrawn from Registration. If the underwriter has not limited the number of Registrable Securities or other securities to be underwritten, the Company and executive officers and directors of the Company (whether or not such Persons have registration rights pursuant to Section 2(b) hereof) may include its or their securities for its or their own account in such Registration if the managing underwriter or underwriters and the Company so agree and if the number of Registrable Securities and other securities which would otherwise have been included in such Registration and underwriting will not thereby be limited.
(v) The number of demand registrations that the Holders shall be entitled to request, and that the Company shall be obligated to undertake, pursuant to this Section 2(a) shall be unlimited; provided , that the Company shall not be obligated to undertake more than one underwritten offering pursuant to this Section 2 in any twelve-month period during the three year period following the Closing Date, and more than two underwritten offerings in any twelve-month period thereafter, provided , further that in no event shall the Company be required to effect more than three underwritten offerings in the aggregate in any twelve-month period at the request of the Holders and Fairholme/Pershing Holders .
(vi) In the case of an underwritten offering under this Section 2(a), the price, underwriting discount and other financial terms for the Registrable Securities shall be determined by the Initiating Holder(s).
(b) Piggyback Registration .
(i) If the Company shall determine to register any of its capital stock (including any warrants) either (x) for its own account, (y) for the account of the Holders listed in Section 2(a) pursuant to the terms thereof, or (z) for the account of Other Stockholders (other than (A) a Registration relating solely to Qualifying Employee Stock, (B) a Registration relating solely to a Rule 145 transaction under the Securities Act or (C) a Registration on any Registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a Registration Statement), the Company will, subject to the conditions set forth in this Section 2(b):
(1) promptly give to each of the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and
(2) subject to Section 2(b)(ii) below and any transfer restrictions any Holder may be a party to, include in such Registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by the Holders. Such written request may specify all or a part of the Holders’ Registrable Securities and shall be received by the Company within ten (10) days after written notice from the Company is given under Section 2(b)(i)(1) above. In the event any Holder requests inclusion in a Registration pursuant to this Section 2(b) in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for the resale by such partners or members, if requested by such Holder.
(ii) Underwriting . If the Registration of which the Company gives notice is for a Registered public offering involving an underwriting, the Company shall so advise each of the Holders as a part of the written notice given pursuant to Section 2(b)(i)(1) above. In such event, the right of each of the Holders to Registration pursuant to this Section 2(b) shall be conditioned upon such Holders’ participation in such underwriting and the inclusion of such Holders’ Registrable Securities in the underwriting to the extent provided herein. The Holders whose Registrable Securities are to be included in such Registration shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form for secondary public offerings with the managing underwriter or underwriters selected for underwriting by the Company (and if the Registration was initiated by a Holder pursuant to Section 2(a), such underwriters must be selected by the Initiating Holder(s) and reasonably acceptable to the Company); provided , however , that such underwriting agreement shall not provide for indemnification or contribution obligations on the part of any Holder or Other Stockholder greater than the obligations of the Holders under Section 2(f)(ii) or Section 2(f)(iv). Notwithstanding any other provision of this Section 2(b), if any Registration in respect of which any Holder is exercising its rights under this Section 2(b) involves an underwritten public offering (other than a demand Registration pursuant to Section 2(a), in which case the provisions with respect to priority of inclusion in such Registration set forth in Section 2(a) shall apply) and the managing underwriter or underwriters advises the Company that in its view marketing factors require a limitation on the number of securities to be underwritten, then there shall be included in such underwritten offering the number or dollar amount of securities of the Company that in the opinion of the managing underwriter or underwriters can be sold without adversely affecting such offering, and such number of securities of the Company shall be allocated for inclusion as follows: (1) first all securities of the Company being sold by the Company for its own account or by any Person (other than a Holder, a Fairholme/Pershing Holder) exercising a contractual right to demand registration; (2) second, all Registrable Securities requested to be included by the Holders, all Registrable Securities to be included by the Fairholme/Pershing Holders and securities of the Company being sold by any Person (other than a Holder or a Fairholme/Pershing Holder) with similar piggyback registration rights, pro rata, based on the number of shares requested to be included in such registration by such Holders, Fairholme/Pershing Holders and such Persons;
and (3) third, among any other holders of securities of the Company requesting such registration, pro rata, based on the number of securities requested to be included in such registration by each such holder. For the avoidance of doubt, in the event any Fairholme/Pershing Holder exercises demand registration rights, such registration is an underwritten public offering and the managing underwriter advises that marketing factors require a limitation on the number of securities to be so underwritten, Registrable Securities of any Holders exercising piggyback rights under this Section 2(b) in connection with such offering and any securities to be included in such offering by the Fairholme/Pershing Holders shall be included in such offering in the same priority and allocated on a pro rata basis, as set forth in clause (2) above. If any of the Holders or any officer, director or Other Stockholder disapproves of the terms of any such underwriting, he, she or it may elect to withdraw therefrom by providing written notice to the Company, the underwriter and the Initiating Holder(s). Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such Registration.
(c) Required Shelf Registration Statement . From and after the declaration of effectiveness by the Commission of the Shelf Registration Statement contemplated by Section 5.16(a) of the Cornerstone Investment Agreement (the “ Required Shelf Registration Statement ”), the Company shall use reasonable best efforts to cause such Required Shelf Registration Statement to be continuously effective so long as there are any Registrable Securities outstanding. In connection with the Required Shelf Registration Statement, the Company will, subject to the terms and limitations of this Section 2, as promptly as reasonably practicable upon notice from any Holder requesting Registration in accordance with the terms of this Section 2(c), cooperate in any shelf take-down by amending or supplementing the Prospectus related to such Registration as may be reasonably requested by such Holder or as otherwise required to reflect the number of Registrable Securities to be sold thereunder.
(d) Expenses of Registration . All Registration Expenses incurred in connection with any Registration, qualification or compliance pursuant to this Section 2 shall be borne by the Company, and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered (or, in the case of fees and disbursements of counsel and advisors to any Holders that do not constitute Registration Expenses, by the Holders as incurred).
(e) Registration Procedures . In the case of each Registration effected by the Company pursuant to this Section 2, the Company will keep the Participating Holders advised in writing as to the initiation of each Registration and as to the completion thereof. At its expense, the Company will:
(i) as promptly as practicable, prepare and file with the Commission such pre- and post-effective amendments to such Registration Statement, supplements to the Prospectus and such amendments or supplements to any Issuer Free Writing Prospectus as may be (1) reasonably requested by the Initiating Holder(s) (if any), (2) reasonably requested by any other Participating Holder (to the extent such request relates to information relating to such Participating Holder), or (3) necessary to keep such Registration effective for the period of time required by this Agreement, and comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement
during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;
(ii) notify the Participating Holders and the managing underwriter or underwriters, if any, and (if requested) confirm such advice in writing and provide copies of the relevant documents, as promptly as practicable after notice thereof is received by the Company (1) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus or Issuer Free Writing Prospectus or any amendment or supplement thereto has been filed, (2) to the extent any of the following relates to the Participating Holders or information supplied by the Participating Holders, of any written comments by the Commission or any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement, Prospectus or Issuer Free Writing Prospectus or for additional information, (3) of the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement or any order by the Commission or any other regulatory authority preventing or suspending the use of any Prospectus or any Issuer Free Writing Prospectus or the initiation or threatening of any proceedings for such purposes, (4) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects, and (5) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(iii) promptly notify the Participating Holders and the managing underwriter or underwriters, if any, when the Company becomes aware of the happening of any event as a result of which the applicable Registration Statement, the Prospectus included in such Registration Statement (as then in effect) or any Issuer Free Writing Prospectus contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of such Prospectus or any Issuer Free Writing Prospectus, in light of the circumstances under which they were made) not misleading, and when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the Registration Statement, or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement, Prospectus or Issuer Free Writing Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission, and furnish without charge to the Participating Holders and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement, Prospectus or Issuer Free Writing Prospectus which shall correct such misstatement or omission or effect such compliance;
(iv) use its reasonable best efforts to prevent, or obtain the withdrawal of, any stop order or other order suspending the use of any Prospectus or any Issuer Free Writing Prospectus;
(v) deliver to each Participating Holder and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus), any Issuer Free Writing Prospectus and any amendment or supplement thereto as such Participating Holder or underwriter may reasonably request (it being understood that the Company consents to the use of such Prospectus, any Issuer Free Writing Prospectus and any amendment or
supplement thereto by such Holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities thereby) and such other documents as such Participating Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by such Participating Holder or underwriter;
(vi) subject to the terms set forth in Section 2(a)(ii)(1) and Section 2(c) hereof, on or prior to the date on which the applicable Registration Statement is declared effective, use its reasonable best efforts to register or qualify the Registrable Securities covered by such Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Participating Holder reasonably (in light of such Participating Holder’s intended plan of distribution) requests and do any and all other acts and things that may be reasonably necessary or advisable to enable such Participating Holder to consummate the disposition of the Registrable Securities owned by such Participating Holder pursuant to such Registration Statement;
(vii) make such representations and warranties to the Participating Holders and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in underwritten public offerings;
(viii) enter into such customary agreements (including underwriting and indemnification agreements) and take such other actions as the Initiating Holder(s) or the managing underwriter, if any, reasonably requests in order to expedite or facilitate the Registration and disposition of such Registrable Securities;
(ix) use its reasonable best efforts to obtain for delivery to the managing underwriter, if any, an opinion or opinions from counsel for the Company dated the effective date of the Registration Statement or, in the event of an underwritten offering, the date of the closing under the underwriting agreement, in form and substance as is customarily given to underwriters in an underwritten secondary public offering;
(x) in the case of an underwritten offering, use reasonable best efforts to obtain for delivery to the Company and the managing underwriter, if any, a “ comfort” letter from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants in an underwritten secondary public offering;
(xi) cooperate with each Participating Holder and the underwriters, if any, of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;
(xii) use its reasonable best efforts to cause all Registrable Securities covered by the applicable Registration Statement to be listed or quoted on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;
(xiii) cooperate with the Participating Holders and the underwriters, if any, to facilitate the timely preparation and delivery of certificates, with requisite CUSIP numbers, representing Registrable Securities to be sold and not bearing any restrictive legends;
(xiv) in the case of an underwritten offering, make reasonably available the senior executive officers of the Company to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter in any such underwritten offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;
(xv) use its reasonable best efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical security instruments into book-entry form in accordance with any procedures reasonably requested by the Holders or any managing underwriter(s);
(xvi) use its reasonable best efforts to take such actions as are under its control to become or remain a well-known seasoned issuer (as such term in defined in Rule 405 under the Securities Act) and not become an illegible issuer (as such term is defined in Rule 405 under the Securities Act) during the period when such Registration Statement remains in effect; and
(xvii) make available for inspection by a representative of Participating Holders that are selling at least five percent (5%) of the Registrable Securities included in such Registration (and who is named in the applicable prospectus supplement as a Person who may be deemed to be an underwriter with respect to an offering and sale of Registrable Securities), the managing underwriter(s), if any, and any attorneys or accountants retained by such Holders or the managing underwriters(s), at the offices where normally kept, during reasonable business hours, financial and other records and pertinent corporate documents of the Company, and cause the officers, directors and employees of the Company to supply all information in each case reasonably requested by any such representative, managing underwriter, attorney or accountant in connection with such Registration Statement; provided , that if any such information is identified by the Company as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information and shall sign customary confidentiality agreements reasonably requested by the Company prior to the receipt of such information.
(f) Indemnification .
(i) Indemnification by the Company . With respect to each Registration which has been effected pursuant to this Section 2, the Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, (1) each of the Participating Holders and each of its officers, directors, limited or general partners and members thereof, (2) each member, limited or general partner of each such member, limited or general partner, (3) each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each underwriter, if any, and each person who controls (within the meaning of the Securities Act or the Exchange Act) any underwriter, against any and all claims, losses, damages, penalties, judgments, suits, costs, liabilities and expenses (or actions in respect thereof) (collectively, the “ Losses ”) arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement (including any Prospectus or Issuer Free Writing Prospectus) or any other document incident to any such Registration, qualification or compliance, (B) 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 (in the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made not misleading), or (C) any violation by the Company of the Securities Act or the Exchange Act applicable to the Company and relating to action or inaction required of the Company in connection with any such Registration, qualification or compliance, and will reimburse each of the Persons listed above, for any reasonable and documented legal and any other expenses reasonably incurred in connection with investigating and defending any such Losses, provided , that the Company will not be liable in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission based upon written information furnished to the Company by the Participating Holders or underwriter and stated to be specifically for use therein.
(ii) Indemnification by the Participating Holders . Each of the Participating Holders agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers and each underwriter, if any, of the Company’s securities covered by such a Registration Statement, each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) or such underwriter, each other Participating Holder and each of their respective officers, directors, partners and members, and each Person controlling such Participating Holder (within the meaning of the Securities Act or the Exchange Act) against any and all Losses arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement (including any Prospectus or Issuer Free Writing Prospectus) or any other document incident to any such Registration, qualification or compliance (including any notification or the like) made by such Participating Holder in writing or (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements by such Participating Holder therein not misleading (in the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made not misleading) and will reimburse the Persons listed above for any reasonable and documented legal or any other expenses reasonably incurred in connection with investigating or defending any such Losses, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in reliance upon and in conformity with written information furnished to the Company by such Participating Holder and stated to be specifically for use therein; provided , however , that the obligations of each of the Participating Holders hereunder shall be limited to an amount equal to the net proceeds (after giving effect to any underwriters discounts and commissions) such Participating Holder receives in such Registration.
(iii) Conduct of the Indemnification Proceedings . Each party entitled to indemnification under this Section 2(f) (the “ Indemnified Party ”) shall give notice to the party required to provide indemnification (the “ Indemnifying Party ”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided , that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld) and the Indemnified Party may participate in such defense at such party’s expense (unless the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in such action, in which case the fees and expenses of counsel shall be at the expense of the Indemnifying Party), and provided , further , that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2(f) unless the Indemnifying Party is prejudiced thereby. It is understood and agreed that the Indemnifying Party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate legal counsel for all Indemnified Parties; provided , however , that where the failure to be provided separate legal counsel could potentially result in a conflict of interest on the part of such legal counsel for all Indemnified Parties, separate counsel shall be appointed for Indemnified Parties to the extent needed to alleviate such potential conflict of interest. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the prior written consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 2(f) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions (or alleged statements or omissions) which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided , however , that the obligations of each of the Participating Holders hereunder shall be several and not joint and shall be limited to an amount equal to the net proceeds (after giving effect to any underwriters discounts and commissions) such Participating Holder receives in such Registration and, provided , further , that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 2(f)(iv), each Person, if any, who controls an underwriter or agent within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such underwriter or agent and each director of the Company, each officer of the Company who signed a Registration Statement, and each Person, if any, who controls the Company or a selling Holder within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Company or such selling Holder, as the case may be.
(v) Subject to the limitations on the Holders’ liability set forth in Section 2(f)(ii) and Section 2(f)(iv), the remedies provided for in this Section 2(f) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Party at law or equity. The remedies shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and survive the transfer of such securities by such Holder.
(vi) The obligations of the Company and of the Participating Holders hereunder to indemnify any underwriter or agent who participates in an offering (or any Person, if any controlling such underwriter or agent within the meaning of Section 15 of the Securities Act) shall be conditioned upon the underwriting or agency agreement with such underwriter or agent containing an agreement by such underwriter or agent to indemnify and hold harmless the Company, each of its directors and officers, each other Participating Holder, and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) or such Participating Holder against all Losses, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such underwriter or agent expressly for use in such filings described in this sentence.
(g) Participating Holders .
(i) Each of the Participating Holders shall furnish to the Company such information regarding such Participating Holder and its partners and members, and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably requested in connection with any Registration, qualification or compliance referred to in this Section 2.
(ii) In the event that, either immediately prior to or subsequent to the effectiveness of any Registration Statement, any Participating Holder shall distribute Registrable Securities to its partners or members, such Participating Holder shall so advise the Company and provide such information as shall be necessary to permit an amendment to such Registration Statement to provide information with respect to such partners or members, as selling security holders. As soon as is reasonably practicable following receipt of such information, the Company shall file an appropriate amendment to such Registration Statement reflecting the information so provided. Any incremental expense to the Company resulting from such amendment shall be borne by such Participating Holder.
(iii) Each Holder agrees that at the time that such Holder is a Participating Holder, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2(e)(iii), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of a supplemented or amended Prospectus or Issuer Free Writing Prospectus or until such Holder is advised in writing by the Company that the use of the Prospectus or Issuer Free Writing Prospectus, as the case may be, may be resumed, and, if so
directed by the Company, such Holder shall deliver to the Company all copies, other than any permanent file copies then in such Holder’s possession, of the most recent Prospectus or any Issuer Free Writing Prospectus covering such Registrable Securities at the time of receipt of such notice. If the Company shall give such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective by the number of days during the period from and including the date of the giving of notice pursuant to Section 2(e)(iii) to the date when the Company shall make available to such Holder a copy of the supplement or amended Prospectus or Issuer Free Writing Prospectus or is advised in writing that the use of the Prospectus or Issuer Free Writing Prospectus may be resumed.
(h) Rule 144 . With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of restricted securities to the public without Registration, the Company agrees to use its reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements (or, if the Company is not required to file such reports, it will, upon the reasonable request of the Holders holding a majority of the then outstanding Registrable Securities, make publicly available such necessary information for so long as necessary to permit sales pursuant to Rules 144 under the Securities Act).
(i) Termination . The registration rights set forth in this Section 2 shall terminate and cease to be available as to any securities held by an Investor at such time as such Investor (after owning) first ceases to own any Registrable Securities.
(j) Lock-Up Agreements .
(i) The Company agrees that, if requested by the managing underwriter in any underwritten public offering contemplated by this Agreement, it will enter into a customary “lock-up” agreement providing that it will not, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of any Common Stock or securities convertible into or exchangeable or exercisable for Common Stock (subject to customary exceptions), other than any such sale or distribution of Common Stock upon exercise of the Company’s Warrants, for a period of 60 days from the effective date of the Registration Statement pertaining to such Common Stock; provided , however , that any such lock-up agreement shall not prohibit the Company from directly or indirectly (i) selling, offering to sell, granting any option for the sale of, or otherwise disposing of any Qualifying Employee Stock (or otherwise maintaining its employee benefits plans in the ordinary course of business) or (ii) issuing Common Stock or securities convertible into or exchangeable for Common Stock upon exercise or conversion of any warrant (including any other Warrant), option, right or convertible or exchangeable security issued in connection with the plan of reorganization. Each Holder shall coordinate with other Holders and the Fairholme Holders and the Pershing Holders such that the total number of days that the Company will be subject to such restrictions (including similar restrictions pursuant to any registration rights agreements with the Fairholme Holders and the Pershing Holders) as may be in effect in any 365-day period shall not exceed 120 days.
(ii) To the extent Purchasers and any Brookfield Consortium Members in the aggregate hold in excess of 20% of the then outstanding Common Stock on a fully diluted basis,
if requested by the managing underwriter in any underwritten public offering permitted by this Agreement, Purchasers and such Brookfield Consortium Members will enter into a customary “lock-up” agreement providing that it will not sell, grant any option for the sale of, or otherwise dispose of any Common Stock outside of such public offering (subject to customary exceptions) for a period of 60 days from the effective date of the Registration Statement pertaining to such Common Stock.
(k) Notwithstanding any provision of this Agreement to the contrary, in order for a Registration to be included as a Registration for purposes of this Section 2, the Registration Statement in connection therewith shall have been continually effective in compliance with the Securities Act and usable for resale for the full period established with respect to such Registration (except in the case of any suspension of sales pursuant to (A) a Scheduled Black-Out Period, or (B) Section 2(e)(iii) hereof, in which case such period shall be extended to the extent of such suspension).
(l) Notwithstanding any provision of this Agreement to the contrary, if the Company is required to file a post-effective amendment to a Registration Statement to incorporate the Company’s quarterly and annual reports and related financial statements on Form 10-Q and Form 10-K, the Company shall use its reasonable best efforts to promptly file such post-effective amendment and may postpone or suspend effectiveness of such Registration Statement for a period not to exceed thirty (30) consecutive days to the extent the Company determines necessary to comply with applicable securities laws; provided , that the period by which the Company postpones or suspends the effectiveness of a shelf Registration Statement pursuant to this Section 2(l) plus any suspension, deferral or delay pursuant to Section 2(e)(iii) shall not exceed 60 days in the aggregate in any twelve-month period.
SECTION 3. MISCELLANEOUS
(a) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State without regard to conflicts of law principles.
(b) Section Headings . The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof.
(c) Notices .
(i) All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier:
(1) if to the Company, to:
General Growth Properties, Inc.
110 N. Wacker Drive
Chicago IL 60606
Attention: Ronald L. Gern, Esq., General Counsel
Fax: (312) 960-5485
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Malcolm E. Landau, Esq.
Matthew D. Bloch, Esq.
Facsimile: (212) 310-8007
(2) if to the Holders, at the address or facsimile number listed on Schedule I hereto, or at such other address or facsimile number as may have been furnished to the Company in writing.
(ii) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; and if mailed by overnight courier, on the first business day following the date of such mailing.
(d) Reproduction of Documents . This Agreement and all documents relating thereto, including, without limitation, any consents, waivers and modifications which may hereafter be executed may be reproduced by the Holders by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the Holders may destroy any original document so reproduced. The parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Holders in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
(e) Successors and Assigns . Neither this Agreement nor any right or obligation hereunder may be assigned in whole or in part by any party without the prior written consent of the other parties hereto and any purported assignment in violation of this provision shall be void; provided , however , that the rights and obligations hereunder of any Investor may be assigned, in whole or in part, to any Person who acquires such Registrable Securities that (i) is a Brookfield Consortium Member, (ii) is an Affiliate of any Initial Investor or (iii) is unable to immediately sell, without limitations (including, but not limited to, any limitation on volume or manner of sale) or restrictions under Rule 144, all Registrable Securities and other shares of Common Stock held by such Person ( provided , that for this clause (iii), any such rights and obligations may be assigned solely with respect to such Registrable Securities) (each such Person described in clauses (i), (ii) or (iii), a “ Permitted Assignee ”). Any assignment pursuant to this Section 3(e) shall be effective and any Person shall become a Permitted Assignee only upon receipt by the Company of (1) a written notice from the transferring Holder stating the name and address of the transferee and identifying the number of shares of Registrable Securities with respect to which the rights under this Agreement are being transferred and, if fewer than all of the rights attributable to a Holder hereunder are to be so transferred, the nature of the rights so transferred and (2) a written instrument by which the transferee agrees to be bound by all of the
terms and conditions applicable to a Holder of such Registrable Securities. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties.
(f) Several Nature of Commitments . The obligations of each Holder hereunder are several and not joint and several, and relate only to the Registrable Securities held by such Holder from time to time. No Holder shall bear responsibility to the Company for breach of this Agreement or any information provided by any other Holder.
(g) Additional Investors . The parties hereto acknowledge that certain Persons may become stockholders of the Company and the Company may wish to grant such Persons registration rights with respect to the shares of Common Stock issued to such Persons. The Company may do so in its discretion so long as such registration rights are not inconsistent with the registration rights granted to the Holders hereunder and, if any registrations rights granted are more favorable than those provided to Holders of Common Stock hereunder, conforming changes reasonably acceptable to the Purchasers are made to this Agreement to provide Holders hereunder with substantially similar rights.
(h) Entire Agreement; Amendment and Waiver . This Agreement constitutes the entire understanding of the parties hereto relating to the subject matter hereof and supersedes all prior understandings among such parties. This Agreement may be amended with (and only with) the written consent of the Company and the Holders holding a majority of the then outstanding Registrable Securities and any such amendment shall apply to all Holders and all of their Registrable Securities; provided , that, notwithstanding the foregoing, additional Holders may become party hereto upon an assignment of rights and obligations hereunder pursuant to Section 3(e); provided further , however , that other than as set forth in Section 3(e), the Company may not add additional parties hereto without the consent of Holders holding a majority of the then outstanding Registrable Securities. The observance of any term of this Agreement may be waived by the party or parties waiving any rights hereunder; provided , that any such waiver shall apply to all Holders and all of their Registrable Securities only if made by Holders holding a majority of then-outstanding Registrable Securities.
(i) Injunctive Relief . It is hereby agreed and acknowledged that it will be impossible to measure in money the damage that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
(j) WAIVER OF JURY TRIAL . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTIONS, SUITS, DEMAND LETTERS, JUDICIAL, ADMINISTRATIVE OR REGULATORY PROCEEDINGS, OR HEARINGS, NOTICES OF VIOLATION OR INVESTIGATIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER AND (B) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY.
(k) No Inconsistent Agreements . The Company is not currently a party to any agreement which is, or could be inconsistent with, the rights granted to the Holders by this Agreement.
(l) Severability . In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect.
(m) Counterparts . This Agreement may be executed in two or more counterparts (including by email or facsimile signature), each of which shall be deemed an original and all of which together shall be considered one and the same agreement.
(n) Interpretation of this Agreement . Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Registration Rights Agreement as of the date first set forth above.
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
[signature page to GGP-BRH LLC Registration Rights Agreement]
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BROOKFIELD RETAIL HOLDINGS LLC |
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By: |
Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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By: |
Brookfield Private Funds Holdings Inc., |
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its general partner |
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By: |
/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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By: |
/s/ Moshe Mandelbaum |
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Name: Moshe Mandelbaum |
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Title: Vice President |
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[signature page to GGP-BRH LLC Registration Rights Agreement]
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BROOKFIELD RETAIL HOLDINGS II LLC |
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By: |
Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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By: |
Brookfield Private Funds Holdings Inc., |
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its general partner |
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By: |
/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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By: |
/s/ Moshe Mandelbaum |
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Name: Moshe Mandelbaum |
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Title: Vice President |
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[signature page to GGP-BRH LLC Registration Rights Agreement]
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BROOKFIELD RETAIL HOLDINGS III LLC |
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By: |
Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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By: |
Brookfield Private Funds Holdings Inc., |
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its general partner |
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By: |
/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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By: |
/s/ Moshe Mandelbaum |
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Name: Moshe Mandelbaum |
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Title: Vice President |
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[signature page to GGP-BRH LLC Registration Rights Agreement]
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BROOKFIELD RETAIL HOLDINGS IV-A LLC |
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By: |
Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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By: |
Brookfield Private Funds Holdings Inc., |
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its general partner |
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By: |
/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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[signature page to GGP-BRH LLC Registration Rights Agreement]
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BROOKFIELD RETAIL HOLDINGS IV-D LLC |
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By: |
Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its Managing Member |
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By: |
Brookfield Private Funds Holdings Inc., |
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its general partner |
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By: |
/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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[signature page to GGP-BRH LLC Registration Rights Agreement]
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BROOKFIELD RETAIL HOLDINGS V LP |
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By: |
Brookfield Asset Management Private Institutional |
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Capital Adviser (Canada), L.P., its General Partner |
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By: |
Brookfield Private Funds Holdings Inc., |
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its general partner |
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By: |
/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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[signature page to GGP-BRH LLC Registration Rights Agreement]
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BROOKFIELD US RETAIL HOLDINGS LLC |
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By: |
Brookfield US Corporation, its Managing Member |
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By: |
/s/ Karen Ayre |
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Name: Karen Ayre |
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Title: Vice President |
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[signature page to GGP-BRH LLC Registration Rights Agreement]
Schedule I
Brookfield Retail Holdings LLC, a Delaware limited liability company
Brookfield Retail Holdings II LLC, a Delaware limited liability company
Brookfield Retail Holdings III LLC, a Delaware limited liability company
Brookfield Retail Holdings IV-A LLC, a Delaware limited liability company
Brookfield Retail Holdings IV-D LLC, a Delaware limited liability company
Brookfield Retail Holdings V LP, a Delaware limited partnership
Brookfield US Retail Holdings LLC, a Delaware limited liability company
c/o Brookfield Asset Management Inc.
Brookfield Place, Suite 300
181 Bay Street
P.O. Box 762
Toronto, Ontario M5J 2T3
Canada
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Attention: |
Joseph Freedman |
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Facsimile: |
(416) 365-9642 |
With a copy to (which shall not constitute notice):
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
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Attention: |
Marc Abrams, Esq. |
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Gregory B. Astrachan, Esq. |
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Paul V. Shalhoub, Esq. |
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Facsimile: |
(212) 728-8111 |
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Exhibit 10.8
EXECUTION COPY
GENERAL GROWTH PROPERTIES, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 9, 2010 (this “ Agreement ”), by and between the purchasers listed on Schedule I hereto (the “ Purchasers ”) and General Growth Properties, Inc., a Delaware corporation (the “ Company ”).
R E C I T A L S
WHEREAS, the Purchasers have, pursuant to the terms of that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between the Company and the Purchasers (as the same may be amended from time to time, the “ Stock Purchase Agreement ”) agreed, among other things, to purchase 271,428,571 shares of common stock, par value $0.01, of the Company (the “ Common Stock ”); and
WHEREAS, in case any securities held by a Purchaser or its transferees are at any time not freely transferable by the holder in accordance with applicable laws, the Company and the Purchasers desire to define certain registration rights with respect to the Common Stock, certain warrants and certain other securities on the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms have the respective meanings set forth below:
Affiliate : shall mean as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, the first Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise;
Agreement : shall have the meaning set forth in the Preamble hereto;
Blackstone : shall mean Blackstone Real Estate Partners VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners (AIV) VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.F L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.1 L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.2 L.P., a Delaware limited partnership, Blackstone Real Estate Holdings VI L.P., a Delaware limited partnership, and Blackstone GGP Principal Transaction Partners L.P., a Delaware limited partnership;
Brookfield Holders : shall mean the “Holders” defined in that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and Brookfield
Retail Holdings LLC (formerly known as REP Investments LLC), a Delaware limited liability company, Brookfield Retail Holdings II LLC, a Delaware limited liability company, Brookfield Retail Holdings III LLC, a Delaware limited liability company, Brookfield Retail Holdings IV-A LLC, a Delaware limited liability company, Brookfield Retail Holdings IV-D LLC, a Delaware limited liability company, Brookfield Retail Holdings V LP, a Delaware limited partnership, and Brookfield US Retail Holdings LLC, a Delaware limited liability company, as amended from time to time;
Brookfield/Pershing Holders : shall mean, collectively, the Brookfield Holders and Pershing Holders, and a Brookfield/Pershing Holder shall mean any Brookfield Holder or Pershing Holder;
Closing Date : shall have the meaning ascribed thereto in the Stock Purchase Agreement;
Commission : shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act;
Common Stock : shall have the meaning set forth in the Recitals hereto;
Company : shall have the meaning set forth in the Preamble hereto;
Cornerstone Investment Agreement : shall mean that certain Amended and Cornerstone Investment Agreement , effective as of March 31, 2010, by and between the Company and REP Investments LLC, a Delaware limited liability company, as amended from time to time;
Demand Notice : shall have the meaning set forth in Section 2(a)(i) hereof;
Exchange Act : shall mean the Securities Exchange Act of 1934, as amended (or any successor act), and the rules and regulations promulgated thereunder;
FINRA : shall mean the Financial Industry Regulatory Authority;
Holder : shall mean any holder of Registrable Securities subject to this Agreement, solely in their capacity as such, including Permitted Assignees;
Indemnified Party : shall have the meaning set forth in Section 2(f)(iii) hereof;
Indemnifying Party : shall have the meaning set forth in Section 2(f)(iii) hereof;
Initial Investors : shall mean (i) the Purchasers, (ii) any member of the Purchaser Group, (iii) Blackstone and (iv) any Permitted Assignees under clauses (i) and (ii) of Section 3(e) hereof;
Initiating Holder(s) : shall mean any Holder or any group of Holders, other than Blackstone, with respect to the Registrable Securities it is designated to receive pursuant to the Investment Agreements;
Investment Agreements : shall mean, collectively, the Cornerstone Investment Agreement, the Pershing Stock Purchase Agreement and the Stock Purchase Agreement;
Investors : shall mean (i) any Initial Investors and (ii) any Permitted Assignees under clause (iii) of Section 3(e) hereof;
Issuer Free Writing Prospectus : shall mean an “Issuer Free Writing Prospectus,” as defined in Rule 433 under the Securities Act, relating to an offer of Registrable Securities;
Losses : shall have the meaning set forth in Section 2(f)(i) hereof;
Other Stockholders : shall have the meaning set forth in Section 2(a)(iii) hereof;
Participating Holders : shall mean Holders participating in the Registration relating to the Registrable Securities;
Permitted Assignees : shall have the meaning set forth in Section 3(e) hereto;
Pershing Holders : shall mean the “Holders” defined in that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company, Pershing Square Capital Management, L.P., on behalf of Pershing Square, L.P., a Delaware limited partnership, Pershing Square II, L.P., a Delaware limited partnership, Pershing Square International, Ltd., a Cayman Islands exempted company, and Pershing Square International V, Ltd., a Cayman Islands exempted company, and Blackstone, as amended from time to time;
Pershing Stock Purchase Agreement : shall mean that certain Amended and Restated Stock Purchase Agreement , effective as of March 31, 2010, by and between the Company and the Pershing Holders, as amended from time to time;
Person : shall mean an individual, partnership, joint-stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof;
Prospectus : shall mean the prospectus (including any preliminary, final or summary prospectus) included in any Registration Statement, all amendments and supplements to such prospectus and all other material incorporated by reference in such prospectus;
Purchaser Group : shall have the meaning ascribed thereto in the Stock Purchase Agreement;
Purchasers : shall have the meaning set forth in the Preamble hereto;
Qualifying Employee Stock : shall mean (i) rights and options issued in the ordinary course of business under employee benefits plans of the Company or any predecessor or otherwise to executives in compensation arrangements approved by the Board of Directors of the Company or any predecessor and any securities issued after the date hereof upon exercise of such rights and options and options issued to employees of the Company or any predecessor as a result of adjustments to options in connection with the reorganization of the Company or any predecessor and (ii) restricted stock and restricted stock units issued after the date hereof in the ordinary course of business under employee benefit plans and securities issued after the date hereof in settlement of any such restricted stock units;
Register , Registered and Registration : shall mean a registration effected by preparing and (a) filing a Registration Statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such Registration Statement, or (b) filing a Prospectus and/or prospectus supplement in respect of an appropriate effective Registration Statement;
Registrable Securities : shall mean (A) any shares of Common Stock acquired or held by an Initial Investor on or after the date hereof (whether or not acquired pursuant to the Stock Purchase Agreement), including without limitation shares of Common Stock acquired in connection with the exercise of any Warrants and shares of Common Stock which at any time an Initial Investor has a right or obligation to purchase under the Stock Purchase Agreement, (B) (i) any securities of the Company or its Affiliates issued as a dividend or other distribution with respect to, or in exchange for or in conversion, exercise or replacement of, any Registrable Securities described in (A) or (C) (the “ Initial Securities ”) or securities that may become Registrable Securities by virtue of clause (B)(iii) or (ii) any securities of the Company or its Affiliates offered wholly or partly in consideration of the Initial Securities or securities that may become Registrable Securities by virtue of clause (B)(iii) in any tender or exchange offer or (iii) any securities of the Company or its Affiliates issued as a dividend or other distribution with respect to, or in exchange for or in conversion, exercise or replacement of or offered wholly or partly in any tender or exchange offer in consideration of any Registrable Securities described in (B)(i) or (B)(ii), (C) Warrants acquired or held by an Initial Investor on or after the date hereof and (D) any Registrable Securities described in (A) , (B) or (C) above acquired or held by a Person, for which rights and obligations have been assigned pursuant to clause (iii) of Section 3(e) and in accordance with the terms of Section 3(e) hereof; provided , that as to any particular Registrable Securities, such securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such securities has been declared effective under the Securities Act and such securities have been disposed of pursuant to such Registration Statement, (ii) after such securities have been sold in accordance with Rule 144 (but not Rule 144A), (iii) after such securities shall have otherwise been transferred and new securities not subject to transfer restrictions under any federal securities laws and not bearing any legend restricting further transfer shall have been delivered by the Company, all applicable holding periods shall have expired, and no other applicable and legally binding restriction on transfer by the holder thereof shall exist, (iv) when such securities are eligible for sale pursuant to Rule 144 under the Securities Act without limitation thereunder on volume or manner of sale, or (v) when such securities cease to be outstanding;
Registration Expenses : shall mean (a) any and all expenses incurred by the Company and its Subsidiaries in effecting any Registration pursuant to this Agreement, including, without limitation, all (i) Registration and filing fees, and all other fees and expenses payable in connection with the listing of securities on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of compliance with any securities or “blue sky” laws (including fees and disbursements of counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any Registration Statements, Prospectuses, Issuer Free Writing Prospectus and other documents in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses, (v) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (vi) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses associated with the delivery by independent certified public accountants of any comfort letters requested pursuant to the terms hereof), (vii) fees and expenses of any special experts retained by the Company in connection with such Registration, (viii) fees and expenses in connection with any review by FINRA of any underwriting arrangements or other terms of the offering, and all reasonable fees and expenses of any “qualified independent underwriter”, (ix) reasonable fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding any underwriting fees, discounts and commissions attributable to the sale of Registrable Securities and fees and expenses of counsel, (x) costs of printing and producing any agreements among underwriters, underwriting agreements, any “blue sky” or legal investment memoranda and any selling agreements and other documents in connection with the offering, sale or delivery of the Registrable Securities, (xi) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering and (xii) expenses relating to any analyst or investor presentations or any “road shows” undertaken in connection with the Registration, marketing or selling of the Registrable Securities and (b) reasonable and documented fees and expenses of one counsel for all of the Participating Holders, which counsel shall be selected by the Participating Holder holding the largest number of the Registrable Securities to be sold in the applicable Registration. Registration Expenses shall not include any out-of-pocket expenses of the Participating Holders;
Registration Statement : shall mean any registration statement of the Company that covers Registrable Securities pursuant to the provisions of this Agreement filed with, or to be filed with, the Commission under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits, financial information and all material incorporated by reference in such registration statement;
Required Shelf Registration Statement : shall have the meaning set forth in Section 2(c);
Rule 144; Rule 144A : shall mean Rule 144 and Rule 144A, respectively, under the Securities Act (or any successor provisions then in force);
S-1 Registration Statement : shall mean a registration statement of the Company on Form S-1 (or any comparable or successor form) filed with the Commission registering any Registrable Securities;
Scheduled Black-Out Period : shall mean the period from and including the last day of a fiscal quarter of the Company to and including the earliest of (i) the Business Day after the day on which the Company publicly releases its earnings information for such quarter or annual earnings information, as applicable, and (ii) the day on which the executive officers and directors of the Company are no longer prohibited by Company policies applicable with respect to such quarterly earnings period from buying or selling equity securities of the Company;
security, securities : shall have the meaning set forth in Section 2(a)(1) of the Securities Act;
Securities Act : shall mean the Securities Act of 1933, as amended (or any successor statute thereto), and the rules and regulations promulgated thereunder;
Selling Expenses : shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and all fees and disbursements of counsel for each of the Holders, other than the fees and expenses of one counsel for all of the Holders, which shall be paid for by the Company in accordance with the terms set forth in clause (b) of the definition of “Registration Expenses” set forth herein;
Shelf Registration Statement : shall mean a “shelf” registration statement of the Company that covers all the Registrable Securities (and may cover other securities of the Company) on Form S-3 and under Rule 415 or, if the Company is not then eligible to file on Form S-3, on Form S-1 under the Securities Act, or any successor rule that may be adopted by the Commission, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein;
Stock Purchase Agreement : shall have the meaning set forth in the Recitals hereto;
Transfer : shall have the meaning set forth in Section 2(j)(ii) hereof; and
Warrants : shall mean the warrants issued by the Company from time to time pursuant to that certain Warrant Agreement, dated as of November 9, 2010, by and between the Company and Mellon Investor Services LLC.
SECTION 2. REGISTRATION RIGHTS
(a) Demand Registration .
(i) Request for Registration . Subject to the limitations and conditions of Section 2(a)(ii), if the Company shall receive from an Initiating Holder(s) a written demand (the “ Demand Notice ”) that the Company effect any Registration with respect to all or a part of the
Registrable Securities owned by such Initiating Holder(s) having an estimated aggregate fair market value of at least $75 million, the Company shall:
(1) promptly give written notice of the proposed Registration to all other Holders in accordance with the terms of Section 2(b);
(2) use its reasonable best efforts to file a Registration Statement with the Commission in accordance with the request of the Initiating Holder(s), including without limitation the method of disposition specified therein and covering resales of the Registrable Securities requested to be registered , as promptly as reasonably practicable but no later than (x) in the case of a Registration Statement other than an S-1 Registration Statement, within 30 days of receipt of the Demand Notice or (y) in the case of an S-1 Registration Statement, within 60 days of receipt of the Demand Notice;
(3) use reasonable best efforts to cause such Registration Statement to be declared or become effective as promptly as practicable, but in no event later than 60 days after the date of initial filing of a Registration Statement pursuant to Section 2(a)(i)(2); and
(4) use reasonable best efforts to keep such Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities for the period as requested in writing by the Initiating Holder(s) or such longer period as may be requested in writing by any Holder participating in such registration (which periods shall be extended to the extent of any suspensions of sales pursuant to Sections 2(a)(ii)(3) or (4));
provided , however , that the Company shall be permitted, with the consent of the Initiating Holder(s) not to be unreasonably withheld, to file a post-effective amendment or prospectus supplement to any currently effective Shelf Registration Statement (including, without limitation, any resale registration statement filed pursuant to the terms of the Stock Purchase Agreement) in lieu of an additional registration statement pursuant to Section 2(a)(i) to the extent the Company reasonably determines that the Registrable Securities of the Initiating Holder(s) may be sold thereunder by such Initiating Holder(s) pursuant to their intended plan of distribution (in which case such post-effective amendment or prospectus supplement shall not be counted against the limited number of demand registrations). It shall not be unreasonable if, following the recommendation of an underwriter, the Initiating Holder(s) do not consent to the Company filing a post-effective amendment or prospectus supplement to a Shelf Registration Statement in lieu of an additional registration statement requested by the Initiating Holder(s).
(ii) Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to effect, or take any action to effect, any such Registration pursuant to this Section 2(a):
(1) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process or qualify to do business in effecting such Registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder;
(2) With respect to securities that are not Registrable Securities;
(3) If the Company has notified the Holders that in the good faith judgment of the Company, it would be materially detrimental to the Company or its security holders for such registration to be effected at such time, in which event the Company shall have the right to defer such registration for a period of not more than 60 days; provided , that such right to delay a registration pursuant to clause (3) shall be exercised by the Company only if the Company has generally exercised (or is concurrently exercising) similar black-out rights against holders of similar securities that have registration rights, if any; or
(4) Solely with respect to any Affiliate of the Company, d uring any Scheduled Black-Out Period;
provided , that the total number of days that any such suspension, deferral or delay in registration pursuant to clauses (3) and (4) in the aggregate may be in effect in any 180 day period shall not exceed 60 days. The Company agrees to use its reasonable best efforts to issue earnings releases as promptly as practicable following the end of quarterly reporting periods and to otherwise minimize the duration of Scheduled Black-Out Periods.
(iii) The Registration Statement filed pursuant to the request of the Initiating Holder may, subject to the provisions of Section 2(a)(iv) below, include shares of Common Stock which are held by Holders and Persons who, by virtue of agreements with the Company (other than this Agreement), are entitled to include their securities in any such Registration (such Persons, other than Holders, “ Other Stockholders ”). In the event the Initiating Holder(s) request a Registration pursuant to this Section 2(a) in connection with a distribution of Registrable Securities to its partners or members or any other Holder elects to participate in such Registration pursuant to Section 2(b) hereof in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for the resale by such partners or members, if requested by such Holder.
(iv) Underwriting . If the Initiating Holder(s) intend to distribute the Registrable Securities covered by their request by means of an underwriting, it shall so advise the Company as a part of the request made pursuant to Section 2(a). If Other Stockholders or Holders, to the extent they have any registration rights under Section 2(b), request inclusion of their shares of Common Stock in the underwriting, the Initiating Holder(s) shall offer to include the shares of Common Stock of such Holders and Other Stockholders in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Section 2. The Holders whose Registrable Securities are to be included in such Registration and the Company shall (together with all Other Stockholders proposing to distribute their shares of Common Stock through such underwriting) enter into an underwriting agreement in customary form for secondary public offerings with the managing underwriter or underwriters selected for such underwriting by a majority-in-interest of the Holders whose Registrable Securities are to be included in such Registration subject to approval by the Company not to be unreasonably withheld (which underwriters may also include a non-bookrunning co-manager selected by the Company subject to approval by a majority-in-interest of the Holders whose Registrable Securities are to be included in such Registration); provided , however , that such underwriting
agreement shall not provide for indemnification or contribution obligations on the part of any Holder or Other Stockholder greater than the obligations of the Holders under Section (2)(f)(ii) or Section 2(f)(iv). Notwithstanding any other provision of this Section 2(a), if the managing underwriter or underwriters advises the Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, some or all of the securities of the Company held by the Other Stockholders (other than the Brookfield/Pershing Holders) shall be excluded from such Registration to the extent so required by such limitation. If, after the exclusion of such shares held by such Other Stockholders (other than the Brookfield/Pershing Holders), further reductions are still required due to the marketing limitation, the number of Registrable Securities included in the Registration by each Holder (including the Initiating Holder(s)) and the Brookfield/Pershing Holders shall be reduced on a pro rata basis (based on the number of Registrable Securities requested to be included in such registration by such Holders and the Brookfield/Pershing Holders, as applicable), by such minimum number of shares as is necessary to comply with such request. No Registrable Securities or any other securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such Registration. If any Holder or Other Stockholder who has requested inclusion in such Registration as provided above disapproves of the terms of the underwriting, such Person may elect to withdraw therefrom by providing written notice to the Company, the underwriter and the Initiating Holder(s). The securities so withdrawn shall also be withdrawn from Registration. If the underwriter has not limited the number of Registrable Securities or other securities to be underwritten, the Company and executive officers and directors of the Company (whether or not such Persons have registration rights pursuant to Section 2(b) hereof) may include its or their securities for its or their own account in such Registration if the managing underwriter or underwriters and the Company so agree and if the number of Registrable Securities and other securities which would otherwise have been included in such Registration and underwriting will not thereby be limited.
(v) The number of demand registrations that the Holders shall be entitled to request, and that the Company shall be obligated to undertake, pursuant to this Section 2(a) shall be unlimited; provided , that the Company shall not be obligated to undertake more than three underwritten offerings pursuant to this Section 2 during the term of this Agreement, provided , further that in no event shall the Company be required to effect more than one underwritten offering in any twelve-month period pursuant to this Section 2.
(vi) In the case of an underwritten offering under this Section 2(a), the price, underwriting discount and other financial terms for the Registrable Securities shall be determined by the Initiating Holder(s).
(b) Piggyback Registration .
(i) If the Company shall determine to register any of its capital stock (including any warrants) either (x) for its own account, (y) for the account of the Holders listed in Section 2(a) pursuant to the terms thereof, or (z) for the account of Other Stockholders (other than (A) a Registration relating solely to Qualifying Employee Stock, (B) a Registration relating solely to a Rule 145 transaction under the Securities Act or (C) a Registration on any Registration form which does not permit secondary sales or does not include substantially the
same information as would be required to be included in a Registration Statement), the Company will, subject to the conditions set forth in this Section 2(b):
(1) promptly give to each of the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and
(2) subject to Section 2(b)(ii) below and any transfer restrictions any Holder may be a party to, include in such Registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by the Holders. Such written request may specify all or a part of the Holders’ Registrable Securities and shall be received by the Company within ten (10) days after written notice from the Company is given under Section 2(b)(i)(1) above. In the event any Holder requests inclusion in a Registration pursuant to this Section 2(b) in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for the resale by such partners or members, if requested by such Holder.
(ii) Underwriting . If the Registration of which the Company gives notice is for a Registered public offering involving an underwriting, the Company shall so advise each of the Holders as a part of the written notice given pursuant to Section 2(b)(i)(1) above. In such event, the right of each of the Holders to Registration pursuant to this Section 2(b) shall be conditioned upon such Holders’ participation in such underwriting and the inclusion of such Holders’ Registrable Securities in the underwriting to the extent provided herein. The Holders whose Registrable Securities are to be included in such Registration shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form for secondary public offerings with the managing underwriter or underwriters selected for underwriting by the Company (and if the Registration was initiated by a Holder pursuant to Section 2(a), such underwriters must be selected by the Initiating Holder(s) and reasonably acceptable to the Company); provided , however , that such underwriting agreement shall not provide for indemnification or contribution obligations on the part of any Holder or Other Stockholder greater than the obligations of the Holders under Section 2(f)(ii) or Section 2(f)(iv). Notwithstanding any other provision of this Section 2(b), if any Registration in respect of which any Holder is exercising its rights under this Section 2(b) involves an underwritten public offering (other than a demand Registration pursuant to Section 2(a), in which case the provisions with respect to priority of inclusion in such Registration set forth in Section 2(a) shall apply) and the managing underwriter or underwriters advises the Company that in its view marketing factors require a limitation on the number of securities to be underwritten, then there shall be included in such underwritten offering the number or dollar amount of securities of the Company that in the opinion of the managing underwriter or underwriters can be sold without adversely affecting such offering, and such number of securities of the Company shall be allocated for inclusion as follows: (1) first all securities of the Company being sold by the Company for its own account or by any Person (other than a Holder or a Brookfield/Pershing Holder) exercising a contractual right to demand registration; (2) second, all Registrable Securities requested to be included by the Holders, all Registrable Securities to be included by the Brookfield/ Pershing Holders and securities of the
Company being sold by any Person (other than a Holder or a Brookfield/ Pershing Holder) with similar piggyback registration rights, pro rata, based on the number of shares requested to be included in such registration by such Holders, the Brookfield/ Pershing Holders and such Persons; and (3) third, among any other holders of securities of the Company requesting such registration, pro rata, based on the number of securities requested to be included in such registration by each such holder. For the avoidance of doubt, in the event any Brookfield/Pershing Holder exercises demand registration rights, such registration is an underwritten public offering and the managing underwriter advises that marketing factors require a limitation on the number of securities to be so underwritten, Registrable Securities of any Holders exercising piggyback rights under this Section 2(b) in connection with such offering and any securities to be included in such offering by the Brookfield/Pershing Holders shall be included in such offering in the same priority and allocated on a pro rata basis, as set forth in clause (2) above. If any of the Holders or any officer, director or Other Stockholder disapproves of the terms of any such underwriting, he, she or it may elect to withdraw therefrom by providing written notice to the Company, the underwriter and the Initiating Holder(s). Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such Registration.
(c) Required Shelf Registration Statement . From and after the declaration of effectiveness by the Commission of the Shelf Registration Statement contemplated by Section 7.1(l) of the Stock Purchase Agreement (the “ Required Shelf Registration Statement ”), the Company shall use reasonable best efforts to cause such Required Shelf Registration Statement to be continuously effective so long as there are any Registrable Securities outstanding. In connection with the Required Shelf Registration Statement, the Company will, subject to the terms and limitations of this Section 2, as promptly as reasonably practicable upon notice from any Holder requesting Registration in accordance with the terms of this Section 2(c), cooperate in any shelf take-down by amending or supplementing the Prospectus related to such Registration as may be reasonably requested by such Holder or as otherwise required to reflect the number of Registrable Securities to be sold thereunder.
(d) Expenses of Registration . All Registration Expenses incurred in connection with any Registration, qualification or compliance pursuant to this Section 2 shall be borne by the Company, and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered (or, in the case of fees and disbursements of counsel and advisors to any Holders that do not constitute Registration Expenses, by the Holders as incurred).
(e) Registration Procedures . In the case of each Registration effected by the Company pursuant to this Section 2, the Company will keep the Participating Holders advised in writing as to the initiation of each Registration and as to the completion thereof. At its expense, the Company will:
(i) as promptly as practicable, prepare and file with the Commission such pre- and post-effective amendments to such Registration Statement, supplements to the Prospectus and such amendments or supplements to any Issuer Free Writing Prospectus as may be (1) reasonably requested by the Initiating Holder(s) (if any), (2) reasonably requested by any other Participating Holder (to the extent such request relates to information relating to such
Participating Holder), or (3) necessary to keep such Registration effective for the period of time required by this Agreement, and comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;
(ii) notify the Participating Holders and the managing underwriter or underwriters, if any, and (if requested) confirm such advice in writing and provide copies of the relevant documents, as promptly as practicable after notice thereof is received by the Company (1) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus or Issuer Free Writing Prospectus or any amendment or supplement thereto has been filed, (2) to the extent any of the following relates to the Participating Holders or information supplied by the Participating Holders, of any written comments by the Commission or any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement, Prospectus or Issuer Free Writing Prospectus or for additional information, (3) of the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement or any order by the Commission or any other regulatory authority preventing or suspending the use of any Prospectus or any Issuer Free Writing Prospectus or the initiation or threatening of any proceedings for such purposes, (4) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects, and (5) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(iii) promptly notify the Participating Holders and the managing underwriter or underwriters, if any, when the Company becomes aware of the happening of any event as a result of which the applicable Registration Statement, the Prospectus included in such Registration Statement (as then in effect) or any Issuer Free Writing Prospectus contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of such Prospectus or any Issuer Free Writing Prospectus, in light of the circumstances under which they were made) not misleading, and when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the Registration Statement, or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement, Prospectus or Issuer Free Writing Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission, and furnish without charge to the Participating Holders and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement, Prospectus or Issuer Free Writing Prospectus which shall correct such misstatement or omission or effect such compliance;
(iv) use its reasonable best efforts to prevent, or obtain the withdrawal of, any stop order or other order suspending the use of any Prospectus or any Issuer Free Writing Prospectus;
(v) deliver to each Participating Holder and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus), any
Issuer Free Writing Prospectus and any amendment or supplement thereto as such Participating Holder or underwriter may reasonably request (it being understood that the Company consents to the use of such Prospectus, any Issuer Free Writing Prospectus and any amendment or supplement thereto by such Holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities thereby) and such other documents as such Participating Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by such Participating Holder or underwriter;
(vi) subject to the terms set forth in Section 2(a)(ii)(1) and Section 2(c) hereof, on or prior to the date on which the applicable Registration Statement is declared effective, use its reasonable best efforts to register or qualify the Registrable Securities covered by such Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Participating Holder reasonably (in light of such Participating Holder’s intended plan of distribution) requests and do any and all other acts and things that may be reasonably necessary or advisable to enable such Participating Holder to consummate the disposition of the Registrable Securities owned by such Participating Holder pursuant to such Registration Statement;
(vii) make such representations and warranties to the Participating Holders and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in underwritten public offerings;
(viii) enter into such customary agreements (including underwriting and indemnification agreements) and take such other actions as the Initiating Holder(s) or the managing underwriter, if any, reasonably requests in order to expedite or facilitate the Registration and disposition of such Registrable Securities;
(ix) use its reasonable best efforts to obtain for delivery to the managing underwriter, if any, an opinion or opinions from counsel for the Company dated the effective date of the Registration Statement or, in the event of an underwritten offering, the date of the closing under the underwriting agreement, in form and substance as is customarily given to underwriters in an underwritten secondary public offering;
(x) in the case of an underwritten offering, use reasonable best efforts to obtain for delivery to the Company and the managing underwriter, if any, a “ comfort” letter from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants in an underwritten secondary public offering;
(xi) cooperate with each Participating Holder and the underwriters, if any, of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;
(xii) use its reasonable best efforts to cause all Registrable Securities covered by the applicable Registration Statement to be listed or quoted on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;
(xiii) cooperate with the Participating Holders and the underwriters, if any, to facilitate the timely preparation and delivery of certificates, with requisite CUSIP numbers, representing Registrable Securities to be sold and not bearing any restrictive legends;
(xiv) in the case of an underwritten offering, make reasonably available the senior executive officers of the Company to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter in any such underwritten offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;
(xv) use its reasonable best efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical security instruments into book-entry form in accordance with any procedures reasonably requested by the Holders or any managing underwriter(s);
(xvi) use its reasonable best efforts to take such actions as are under its control to become or remain a well-known seasoned issuer (as such term in defined in Rule 405 under the Securities Act) and not become an illegible issuer (as such term is defined in Rule 405 under the Securities Act) during the period when such Registration Statement remains in effect; and
(xvii) make available for inspection by a representative of Participating Holders that are selling at least five percent (5%) of the Registrable Securities included in such Registration (and who is named in the applicable prospectus supplement as a Person who may be deemed to be an underwriter with respect to an offering and sale of Registrable Securities), the managing underwriter(s), if any, and any attorneys or accountants retained by such Holders or the managing underwriters(s), at the offices where normally kept, during reasonable business hours, financial and other records and pertinent corporate documents of the Company, and cause the officers, directors and employees of the Company to supply all information in each case reasonably requested by any such representative, managing underwriter, attorney or accountant in connection with such Registration Statement; provided , that if any such information is identified by the Company as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information and shall sign customary confidentiality agreements reasonably requested by the Company prior to the receipt of such information.
(f) Indemnification .
(i) Indemnification by the Company . With respect to each Registration which has been effected pursuant to this Section 2, the Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, (1) each of the Participating Holders and each of its officers, directors, limited or general partners and members thereof, (2) each member, limited or general partner of each such member, limited or general partner, (3) each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each underwriter, if any, and each person who controls (within the meaning of the Securities Act or the Exchange Act) any underwriter, against any and all claims, losses, damages, penalties, judgments, suits, costs, liabilities and expenses (or actions in respect thereof) (collectively, the
“ Losses ”) arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement (including any Prospectus or Issuer Free Writing Prospectus) or any other document incident to any such Registration, qualification or compliance, (B) 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 (in the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made not misleading), or (C) any violation by the Company of the Securities Act or the Exchange Act applicable to the Company and relating to action or inaction required of the Company in connection with any such Registration, qualification or compliance, and will reimburse each of the Persons listed above, for any reasonable and documented legal and any other expenses reasonably incurred in connection with investigating and defending any such Losses, provided , that the Company will not be liable in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission based upon written information furnished to the Company by the Participating Holders or underwriter and stated to be specifically for use therein.
(ii) Indemnification by the Participating Holders . Each of the Participating Holders agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers and each underwriter, if any, of the Company’s securities covered by such a Registration Statement, each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) or such underwriter, each other Participating Holder and each of their respective officers, directors, partners and members, and each Person controlling such Participating Holder (within the meaning of the Securities Act or the Exchange Act) against any and all Losses arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement (including any Prospectus or Issuer Free Writing Prospectus) or any other document incident to any such Registration, qualification or compliance (including any notification or the like) made by such Participating Holder in writing or (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements by such Participating Holder therein not misleading (in the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made not misleading) and will reimburse the Persons listed above for any reasonable and documented legal or any other expenses reasonably incurred in connection with investigating or defending any such Losses, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in reliance upon and in conformity with written information furnished to the Company by such Participating Holder and stated to be specifically for use therein; provided , however , that the obligations of each of the Participating Holders hereunder shall be limited to an amount equal to the net proceeds (after giving effect to any underwriters discounts and commissions) such Participating Holder receives in such Registration.
(iii) Conduct of the Indemnification Proceedings . Each party entitled to indemnification under this Section 2(f) (the “ Indemnified Party ”) shall give notice to the party required to provide indemnification (the “ Indemnifying Party ”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting
therefrom; provided , that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld) and the Indemnified Party may participate in such defense at such party’s expense (unless the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in such action, in which case the fees and expenses of counsel shall be at the expense of the Indemnifying Party), and provided , further , that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2(f) unless the Indemnifying Party is prejudiced thereby. It is understood and agreed that the Indemnifying Party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate legal counsel for all Indemnified Parties; provided , however , that where the failure to be provided separate legal counsel could potentially result in a conflict of interest on the part of such legal counsel for all Indemnified Parties, separate counsel shall be appointed for Indemnified Parties to the extent needed to alleviate such potential conflict of interest. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the prior written consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 2(f) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions (or alleged statements or omissions) which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided , however , that the obligations of each of the Participating Holders hereunder shall be several and not joint and shall be limited to an amount equal to the net proceeds (after giving effect to any underwriters discounts and commissions) such Participating Holder receives in such Registration and, provided , further , that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 2(f)(iv), each Person, if any, who controls an underwriter or agent within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such underwriter or agent and each director of the Company, each officer of the Company who signed a Registration Statement, and each Person, if any, who controls the Company or a selling Holder within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company or such selling Holder, as the case may be.
(v) Subject to the limitations on the Holders’ liability set forth in Section 2(f)(ii) and Section 2(f)(iv), the remedies provided for in this Section 2(f) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Party at law or equity. The remedies shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and survive the transfer of such securities by such Holder.
(vi) The obligations of the Company and of the Participating Holders hereunder to indemnify any underwriter or agent who participates in an offering (or any Person, if any controlling such underwriter or agent within the meaning of Section 15 of the Securities Act) shall be conditioned upon the underwriting or agency agreement with such underwriter or agent containing an agreement by such underwriter or agent to indemnify and hold harmless the Company, each of its directors and officers, each other Participating Holder, and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) or such Participating Holder against all Losses, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such underwriter or agent expressly for use in such filings described in this sentence.
(g) Participating Holders .
(i) Each of the Participating Holders shall furnish to the Company such information regarding such Participating Holder and its partners and members, and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably requested in connection with any Registration, qualification or compliance referred to in this Section 2.
(ii) In the event that, either immediately prior to or subsequent to the effectiveness of any Registration Statement, any Participating Holder shall distribute Registrable Securities to its partners or members, such Participating Holder shall so advise the Company and provide such information as shall be necessary to permit an amendment to such Registration Statement to provide information with respect to such partners or members, as selling security holders. As soon as is reasonably practicable following receipt of such information, the Company shall file an appropriate amendment to such Registration Statement reflecting the information so provided. Any incremental expense to the Company resulting from such amendment shall be borne by such Participating Holder.
(iii) Each Holder agrees that at the time that such Holder is a Participating Holder, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2(e)(iii), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such
Holder’s receipt of the copies of a supplemented or amended Prospectus or Issuer Free Writing Prospectus or until such Holder is advised in writing by the Company that the use of the Prospectus or Issuer Free Writing Prospectus, as the case may be, may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company all copies, other than any permanent file copies then in such Holder’s possession, of the most recent Prospectus or any Issuer Free Writing Prospectus covering such Registrable Securities at the time of receipt of such notice. If the Company shall give such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective by the number of days during the period from and including the date of the giving of notice pursuant to Section 2(e)(iii) to the date when the Company shall make available to such Holder a copy of the supplement or amended Prospectus or Issuer Free Writing Prospectus or is advised in writing that the use of the Prospectus or Issuer Free Writing Prospectus may be resumed.
(h) Rule 144 . With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of restricted securities to the public without Registration, the Company agrees to use its reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements (or, if the Company is not required to file such reports, it will, upon the reasonable request of the Holders holding a majority of the then outstanding Registrable Securities, make publicly available such necessary information for so long as necessary to permit sales pursuant to Rules 144 under the Securities Act).
(i) Termination . The registration rights set forth in this Section 2 shall terminate and cease to be available as to any securities held by an Investor at such time as such Investor (after owning) first ceases to own any Registrable Securities.
(j) Lock-Up Agreements .
(i) The Company agrees that, if requested by the managing underwriter in any underwritten public offering contemplated by this Agreement, it will enter into a customary “lock-up” agreement providing that it will not, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of any Common Stock or securities convertible into or exchangeable or exercisable for Common Stock (subject to customary exceptions), other than any such sale or distribution of Common Stock upon exercise of the Company’s Warrants, for a period of 60 days from the effective date of the Registration Statement pertaining to such Common Stock; provided , however , that any such lock-up agreement shall not prohibit the Company from directly or indirectly (i) selling, offering to sell, granting any option for the sale of, or otherwise disposing of any Qualifying Employee Stock (or otherwise maintaining its employee benefits plans in the ordinary course of business) or (ii) issuing Common Stock or securities convertible into or exchangeable for Common Stock upon exercise or conversion of any warrant (including any other Warrant), option, right or convertible or exchangeable security issued in connection with the plan of reorganization. Each Holder shall coordinate with other Holders and the Brookfield Holders and the Pershing Holders such that the total number of days that the Company will be subject to such restrictions (including similar restrictions pursuant to
any registration rights agreements with the Brookfield Holders and the Pershing Holders) as may be in effect in any 365-day period shall not exceed 120 days.
(ii) In the event that any Holder is an Affiliate of the Company, if requested by the managing underwriter in any underwritten public offering permitted by this Agreement, such Holder will enter into a customary “lock-up” agreement providing that it will not sell, grant any option for the sale of, or otherwise dispose (each, “ Transfer ”) of any Common Stock outside of such public offering (subject to customary exceptions) for a period of 60 days from the effective date of the Registration Statement pertaining to such Common Stock; provided , however, that a Purchaser or member of its Purchaser Group may Transfer such Common Stock in such amounts, and at such times, as Fairholme Capital Management, LLC, such Purchaser or such member of its Purchaser Group determines to be in such Purchaser’s or such member of its Purchaser Group’s best interests in light of its then current circumstances and the laws and regulations applicable to it as a management investment company registered under the Investment Company Act of 1940, as amended, with a policy of qualifying as a “ regulated investment company ” as defined in Subchapter M of the Internal Revenue Code of 1986, as amended.
(k) Notwithstanding any provision of this Agreement to the contrary, in order for a Registration to be included as a Registration for purposes of this Section 2, the Registration Statement in connection therewith shall have been continually effective in compliance with the Securities Act and usable for resale for the full period established with respect to such Registration (except in the case of any suspension of sales pursuant to (A) a Scheduled Black-Out Period, or (B) Section 2(e)(iii) hereof, in which case such period shall be extended to the extent of such suspension).
(l) Notwithstanding any provision of this Agreement to the contrary, if the Company is required to file a post-effective amendment to a Registration Statement to incorporate the Company’s quarterly and annual reports and related financial statements on Form 10-Q and Form 10-K, the Company shall use its reasonable best efforts to promptly file such post-effective amendment and may postpone or suspend effectiveness of such Registration Statement for a period not to exceed thirty (30) consecutive days to the extent the Company determines necessary to comply with applicable securities laws; provided , that the period by which the Company postpones or suspends the effectiveness of a shelf Registration Statement pursuant to this Section 2(l) plus any suspension, deferral or delay pursuant to Section 2(e)(iii) shall not exceed 60 days in the aggregate in any twelve-month period.
SECTION 3. MISCELLANEOUS
(a) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State without regard to conflicts of law principles.
(b) Section Headings . The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof.
(c) Notices .
(i) All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier:
(1) if to the Company, to:
General Growth Properties, Inc.
110 N. Wacker Drive
Chicago IL 60606
Attention: Ronald L. Gern, Esq., General Counsel
Fax: (312) 960-5485
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Malcolm E. Landau, Esq.
Matthew D. Bloch, Esq.
Facsimile: (212) 310-8007
(2) if to the Holders, at the address or facsimile number listed on Schedule I hereto, or at such other address or facsimile number as may have been furnished to the Company in writing.
(ii) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; and if mailed by overnight courier, on the first business day following the date of such mailing.
(d) Reproduction of Documents . This Agreement and all documents relating thereto, including, without limitation, any consents, waivers and modifications which may hereafter be executed may be reproduced by the Holders by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the Holders may destroy any original document so reproduced. The parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Holders in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
(e) Successors and Assigns . Neither this Agreement nor any right or obligation hereunder may be assigned in whole or in part by any party without the prior written consent of the other parties hereto and any purported assignment in violation of this provision shall be void; provided , however , that the rights and obligations hereunder of any Investor may be assigned, in whole or in part, to any Person who acquires such Registrable Securities that (i) is
a member of the Purchaser Group, (ii) is an Affiliate of any Initial Investor or (iii) is unable to immediately sell, without limitations (including, but not limited to, any limitation on volume or manner of sale) or restrictions under Rule 144, all Registrable Securities and other shares of Common Stock held by such Person ( provided , that for this clause (iii), any such rights and obligations may be assigned solely with respect to such Registrable Securities) (each such Person described in clauses (i), (ii) or (iii), a “ Permitted Assignee ”). Any assignment pursuant to this Section 3(e) shall be effective and any Person shall become a Permitted Assignee only upon receipt by the Company of (1) a written notice from the transferring Holder stating the name and address of the transferee and identifying the number of shares of Registrable Securities with respect to which the rights under this Agreement are being transferred and, if fewer than all of the rights attributable to a Holder hereunder are to be so transferred, the nature of the rights so transferred and (2) a written instrument by which the transferee agrees to be bound by all of the terms and conditions applicable to a Holder of such Registrable Securities. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties.
(f) Several Nature of Commitments . The obligations of each Holder hereunder are several and not joint and several, and relate only to the Registrable Securities held by such Holder from time to time. No Holder shall bear responsibility to the Company for breach of this Agreement or any information provided by any other Holder.
(g) Additional Investors . The parties hereto acknowledge that certain Persons may become stockholders of the Company and the Company may wish to grant such Persons registration rights with respect to the shares of Common Stock issued to such Persons. The Company may do so in its discretion so long as such registration rights are not inconsistent with the registration rights granted to the Holders hereunder and, if any registrations rights granted are more favorable than those provided to Holders of Common Stock hereunder, conforming changes reasonably acceptable to the Purchasers are made to this Agreement to provide Holders hereunder with substantially similar rights.
(h) Entire Agreement; Amendment and Waiver . This Agreement constitutes the entire understanding of the parties hereto relating to the subject matter hereof and supersedes all prior understandings among such parties. This Agreement may be amended with (and only with) the written consent of the Company and the Holders holding a majority of the then outstanding Registrable Securities and any such amendment shall apply to all Holders and all of their Registrable Securities; provided , that, notwithstanding the foregoing, additional Holders may become party hereto upon an assignment of rights and obligations hereunder pursuant to Section 3(e); provided further , however , that other than as set forth in Section 3(e), the Company may not add additional parties hereto without the consent of Holders holding a majority of the then outstanding Registrable Securities. The observance of any term of this Agreement may be waived by the party or parties waiving any rights hereunder; provided , that any such waiver shall apply to all Holders and all of their Registrable Securities only if made by Holders holding a majority of then-outstanding Registrable Securities.
(i) Injunctive Relief . It is hereby agreed and acknowledged that it will be impossible to measure in money the damage that would be suffered if the parties fail to comply
with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
(j) WAIVER OF JURY TRIAL . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTIONS, SUITS, DEMAND LETTERS, JUDICIAL, ADMINISTRATIVE OR REGULATORY PROCEEDINGS, OR HEARINGS, NOTICES OF VIOLATION OR INVESTIGATIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER AND (B) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY.
(k) No Inconsistent Agreements . The Company is not currently a party to any agreement which is, or could be inconsistent with, the rights granted to the Holders by this Agreement.
(l) Severability . In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect.
(m) Counterparts . This Agreement may be executed in two or more counterparts (including by email or facsimile signature), each of which shall be deemed an original and all of which together shall be considered one and the same agreement.
(n) Interpretation of this Agreement . Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Registration Rights Agreement as of the date first set forth above.
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
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FAIRHOLME FUNDS, INC. |
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On behalf of its series The Fairholme Fund |
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By: |
/s/ Bruce R. Berkowitz |
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Name: |
Bruce R. Berkowitz |
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Title: |
President |
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FAIRHOLME FUNDS, INC. |
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On behalf of its series Fairholme Focused Income Fund |
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By: |
/s/ Bruce R. Berkowitz |
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Name: |
Bruce R. Berkowitz |
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Title: |
President |
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[signature page to Fairholme Registration Rights Agreement]
Schedule I
The Fairholme Fund, a series of Fairholme Funds, Inc.
Fairholme Focused Income Fund, a series of Fairholme Funds, Inc.
Notice to any Purchaser set forth above (which shall constitute notice to each Purchaser set forth above) shall be made to:
Fairholme Capital Management, LLC
4400 Biscayne Boulevard, 9th Floor
Miami, Florida 33137
Attention: Charles M. Fernandez
Facsimile: (305) 358-8002
Exhibit 10.9
EXECUTION COPY
GENERAL GROWTH PROPERTIES, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 9, 2010 (this “ Agreement ”), by and between the purchasers listed on Schedule I hereto (the “ Purchasers ”), Blackstone Real Estate Partners VI L.P., a Delaware limited partnership (“ BREP VI ”) and the purchasers, listed on Schedule II hereto (collectively with BREP VI, “ Blackstone ”), and General Growth Properties, Inc., a Delaware corporation (the “ Company ”).
R E C I T A L S
WHEREAS, the Purchasers have, pursuant to the terms of that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between the Company and the Purchasers (as the same may be amended from time to time, the “ Stock Purchase Agreement ”) agreed, among other things, to purchase 108,571,429 shares of common stock, par value $0.01, of the Company (the “ Common Stock ”);
WHEREAS, (a) the Purchasers have, pursuant to the terms of that certain Purchase Agreement, dated as of August 2, 2010, by and among the Purchasers and BREP VI agreed, among other things, that Blackstone shall purchase in the Purchasers’ place 8,287,895 shares of Common Stock under the Stock Purchase Agreement, (b) REP Investments LLC (“ REP ”) has, pursuant to the terms of that certain Purchase Agreement, dated as of August 2, 2010, by and between REP and BREP VI agreed, among other things, that Blackstone shall purchase in REP’s place 19,083,970 shares of Common Stock under the Cornerstone Investment Agreement (as defined below) and (c) The Fairholme Fund, a series of Fairholme Funds, Inc. and Fairholme Focused Income Fund, a series of Fairholme Funds, Inc. have, pursuant to the terms of that certain Purchase Agreement, dated as of August 2, 2010, by and among such entities and BREP VI agreed, among other things, that Blackstone shall purchase in their place 20,719,738 shares of Common Stock under the Fairholme Stock Purchase Agreement (as defined below); and
WHEREAS, in case any securities held by a Purchaser or Blackstone or any of their respective transferees are at any time not freely transferable by the holder in accordance with applicable laws, the Company, Blackstone and the Purchasers desire to define certain registration rights with respect to the Common Stock, certain warrants and certain other securities on the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms have the respective meanings set forth below:
Affiliate : shall mean as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, the first Person. A
Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise;
Agreement : shall have the meaning set forth in the Preamble hereto;
Blackstone : shall have the meaning set forth in the Preamble hereto;
Brookfield Holders : shall mean the “Holders” defined in that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), a Delaware limited liability company, Brookfield Retail Holdings II LLC, a Delaware limited liability company, Brookfield Retail Holdings III LLC, a Delaware limited liability company, Brookfield Retail Holdings IV-A LLC, a Delaware limited liability company, Brookfield Retail Holdings IV-D LLC, a Delaware limited liability company, Brookfield Retail Holdings V LP, a Delaware limited partnership, and Brookfield US Retail Holdings LLC, a Delaware limited liability company, as amended from time to time;
Brookfield/Fairholme Holders : shall mean, collectively, the Brookfield Holders and Fairholme Holders, and a Brookfield/Fairholme Holder shall mean any Brookfield Holder or Fairholme Holder;
Closing Date : shall have the meaning ascribed thereto in the Stock Purchase Agreement;
Commission : shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act;
Common Stock : shall have the meaning set forth in the Recitals hereto;
Company : shall have the meaning set forth in the Preamble hereto;
Cornerstone Investment Agreement : shall mean that certain Amended and Cornerstone Investment Agreement , effective as of March 31, 2010, by and between the Company and REP Investments LLC, a Delaware limited liability company, as amended from time to time;
Demand Notice : shall have the meaning set forth in Section 2(a)(i) hereof;
Exchange Act : shall mean the Securities Exchange Act of 1934, as amended (or any successor act), and the rules and regulations promulgated thereunder;
Fairholme Holders : shall mean the “Holders” defined in that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and The Fairholme Fund, a series of Fairholme Funds, Inc. a Maryland corporation, and Fairholme Focused Income Fund, a series of Fairholme Funds, Inc., a Maryland corporation, as amended from time to time;
Fairholme Stock Purchase Agreement : shall mean that certain Amended and Restated Stock Purchase Agreement , effective as of March 31, 2010, by and between the Company and the Fairholme Holders, as amended from time to time;
FINRA : shall mean the Financial Industry Regulatory Authority;
Holder : shall mean any holder of Registrable Securities subject to this Agreement, solely in their capacity as such, including Permitted Assignees;
Indemnified Party : shall have the meaning set forth in Section 2(f)(iii) hereof;
Indemnifying Party : shall have the meaning set forth in Section 2(f)(iii) hereof;
Initial Investors : shall mean (i) the Purchasers, (ii) any member of the Purchaser Group, (iii) Blackstone and (iv) any Permitted Assignees under clauses (i) and (ii) of Section 3(e) hereof;
Initiating Holder(s) : shall mean any Holder or any group of Holders, other than Blackstone, with respect to the Registrable Securities it is designated to receive pursuant to the Investment Agreements;
Investment Agreements : shall mean, collectively, the Cornerstone Investment Agreement, the Fairholme Stock Purchase Agreement and the Stock Purchase Agreement;
Investors : shall mean (i) any Initial Investors and (ii) any Permitted Assignees under clause (iii) of Section 3(e) hereof;
Issuer Free Writing Prospectus : shall mean an “Issuer Free Writing Prospectus,” as defined in Rule 433 under the Securities Act, relating to an offer of Registrable Securities;
Losses : shall have the meaning set forth in Section 2(f)(i) hereof;
Other Stockholders : shall have the meaning set forth in Section 2(a)(iii) hereof;
Participating Holders : shall mean Holders participating in the Registration relating to the Registrable Securities;
Permitted Assignees : shall have the meaning set forth in Section 3(e) hereto;
Person : shall mean an individual, partnership, joint-stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof;
Prospectus : shall mean the prospectus (including any preliminary, final or summary prospectus) included in any Registration Statement, all amendments and supplements to such prospectus and all other material incorporated by reference in such prospectus;
Purchaser Group : shall have the meaning ascribed thereto in the Stock Purchase Agreement;
Purchasers : shall have the meaning set forth in the Preamble hereto;
Qualifying Employee Stock : shall mean (i) rights and options issued in the ordinary course of business under employee benefits plans of the Company or any predecessor or otherwise to executives in compensation arrangements approved by the Board of Directors of the Company or any predecessor and any securities issued after the date hereof upon exercise of such rights and options and options issued to employees of the Company or any predecessor as a result of adjustments to options in connection with the reorganization of the Company or any predecessor and (ii) restricted stock and restricted stock units issued after the date hereof in the ordinary course of business under employee benefit plans and securities issued after the date hereof in settlement of any such restricted stock units;
Register , Registered and Registration : shall mean a registration effected by preparing and (a) filing a Registration Statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such Registration Statement, or (b) filing a Prospectus and/or prospectus supplement in respect of an appropriate effective Registration Statement;
Registrable Securities : shall mean (A) any shares of Common Stock acquired or held by an Initial Investor on or after the date hereof (whether or not acquired pursuant to the Stock Purchase Agreement), including without limitation shares of Common Stock acquired in connection with the exercise of any Warrants and shares of Common Stock which at any time an Initial Investor has a right or obligation to purchase under the Stock Purchase Agreement, (B) (i) any securities of the Company or its Affiliates issued as a dividend or other distribution with respect to, or in exchange for or in conversion, exercise or replacement of, any Registrable Securities described in (A) or (C) (the “ Initial Securities ”) or securities that may become Registrable Securities by virtue of clause (B)(iii) or (ii) any securities of the Company or its Affiliates offered wholly or partly in consideration of the Initial Securities or securities that may become Registrable Securities by virtue of clause (B)(iii) in any tender or exchange offer or (iii) any securities of the Company or its Affiliates issued as a dividend or other distribution with respect to, or in exchange for or in conversion, exercise or replacement of or offered wholly or partly in any tender or exchange offer in consideration of any Registrable Securities described in (B)(i) or (B)(ii), (C) Warrants acquired or held by an Initial Investor on or after the date hereof and (D) any Registrable Securities described in (A) , (B) or (C) above acquired or held by a Person, for which rights and obligations have been assigned pursuant to clause (iii) of Section 3(e) and in accordance with the terms of Section 3(e) hereof; provided , that as to any particular Registrable Securities, such securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such securities has been declared effective under the Securities Act and such securities have been disposed of pursuant to such Registration Statement,
(ii) after such securities have been sold in accordance with Rule 144 (but not Rule 144A), (iii) after such securities shall have otherwise been transferred and new securities not subject to transfer restrictions under any federal securities laws and not bearing any legend restricting further transfer shall have been delivered by the Company, all applicable holding periods shall have expired, and no other applicable and legally binding restriction on transfer by the holder thereof shall exist, (iv) when such securities are eligible for sale pursuant to Rule 144 under the Securities Act without limitation thereunder on volume or manner of sale, or (v) when such securities cease to be outstanding;
Registration Expenses : shall mean (a) any and all expenses incurred by the Company and its Subsidiaries in effecting any Registration pursuant to this Agreement, including, without limitation, all (i) Registration and filing fees, and all other fees and expenses payable in connection with the listing of securities on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of compliance with any securities or “blue sky” laws (including fees and disbursements of counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any Registration Statements, Prospectuses, Issuer Free Writing Prospectus and other documents in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses, (v) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (vi) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses associated with the delivery by independent certified public accountants of any comfort letters requested pursuant to the terms hereof), (vii) fees and expenses of any special experts retained by the Company in connection with such Registration, (viii) fees and expenses in connection with any review by FINRA of any underwriting arrangements or other terms of the offering, and all reasonable fees and expenses of any “qualified independent underwriter”, (ix) reasonable fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding any underwriting fees, discounts and commissions attributable to the sale of Registrable Securities and fees and expenses of counsel, (x) costs of printing and producing any agreements among underwriters, underwriting agreements, any “blue sky” or legal investment memoranda and any selling agreements and other documents in connection with the offering, sale or delivery of the Registrable Securities, (xi) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering and (xii) expenses relating to any analyst or investor presentations or any “road shows” undertaken in connection with the Registration, marketing or selling of the Registrable Securities and (b) reasonable and documented fees and expenses of one counsel for all of the Participating Holders, which counsel shall be selected by the Participating Holder holding the largest number of the Registrable Securities to be sold in the applicable Registration. Registration Expenses shall not include any out-of-pocket expenses of the Participating Holders;
Registration Statement : shall mean any registration statement of the Company that covers Registrable Securities pursuant to the provisions of this Agreement filed with, or to be filed with, the Commission under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits, financial information and all material incorporated by reference in such registration statement;
Required Shelf Registration Statement : shall have the meaning set forth in Section 2(c);
Rule 144; Rule 144A : shall mean Rule 144 and Rule 144A, respectively, under the Securities Act (or any successor provisions then in force);
S-1 Registration Statement : shall mean a registration statement of the Company on Form S-1 (or any comparable or successor form) filed with the Commission registering any Registrable Securities;
Scheduled Black-Out Period : shall mean the period from and including the last day of a fiscal quarter of the Company to and including the earliest of (i) the Business Day after the day on which the Company publicly releases its earnings information for such quarter or annual earnings information, as applicable, and (ii) the day on which the executive officers and directors of the Company are no longer prohibited by Company policies applicable with respect to such quarterly earnings period from buying or selling equity securities of the Company;
security, securities : shall have the meaning set forth in Section 2(a)(1) of the Securities Act;
Securities Act : shall mean the Securities Act of 1933, as amended (or any successor statute thereto), and the rules and regulations promulgated thereunder;
Selling Expenses : shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and all fees and disbursements of counsel for each of the Holders, other than the fees and expenses of one counsel for all of the Holders, which shall be paid for by the Company in accordance with the terms set forth in clause (b) of the definition of “Registration Expenses” set forth herein;
Shelf Registration Statement : shall mean a “shelf” registration statement of the Company that covers all the Registrable Securities (and may cover other securities of the Company) on Form S-3 and under Rule 415 or, if the Company is not then eligible to file on Form S-3, on Form S-1 under the Securities Act, or any successor rule that may be adopted by the Commission, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein;
Stock Purchase Agreement : shall have the meaning set forth in the Recitals hereto; and
Warrants : shall mean the warrants issued by the Company from time to time pursuant to that certain Warrant Agreement, dated as of November 9, 2010, by and between the Company and Mellon Investor Services LLC.
SECTION 2. REGISTRATION RIGHTS
(a) Demand Registration .
(i) Request for Registration . Subject to the limitations and conditions of Section 2(a)(ii), if the Company shall receive from an Initiating Holder(s) a written demand (the “ Demand Notice ”) that the Company effect any Registration with respect to all or a part of the Registrable Securities owned by such Initiating Holder(s) having an estimated aggregate fair market value of at least $75 million, the Company shall:
(1) promptly give written notice of the proposed Registration to all other Holders in accordance with the terms of Section 2(b);
(2) use its reasonable best efforts to file a Registration Statement with the Commission in accordance with the request of the Initiating Holder(s), including without limitation the method of disposition specified therein and covering resales of the Registrable Securities requested to be registered , as promptly as reasonably practicable but no later than (x) in the case of a Registration Statement other than an S-1 Registration Statement, within 30 days of receipt of the Demand Notice or (y) in the case of an S-1 Registration Statement, within 60 days of receipt of the Demand Notice;
(3) use reasonable best efforts to cause such Registration Statement to be declared or become effective as promptly as practicable, but in no event later than 60 days after the date of initial filing of a Registration Statement pursuant to Section 2(a)(i)(2); and
(4) use reasonable best efforts to keep such Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities for the period as requested in writing by the Initiating Holder(s) or such longer period as may be requested in writing by any Holder participating in such registration (which periods shall be extended to the extent of any suspensions of sales pursuant to Sections 2(a)(ii)(3) or (4));
provided , however , that the Company shall be permitted, with the consent of the Initiating Holder(s) not to be unreasonably withheld, to file a post-effective amendment or prospectus supplement to any currently effective Shelf Registration Statement (including, without limitation, any resale registration statement filed pursuant to the terms of the Stock Purchase Agreement) in lieu of an additional registration statement pursuant to Section 2(a)(i) to the extent the Company reasonably determines that the Registrable Securities of the Initiating Holder(s) may be sold thereunder by such Initiating Holder(s) pursuant to their intended plan of distribution (in which case such post-effective amendment or prospectus supplement shall not be counted against the limited number of demand registrations). It shall not be unreasonable if, following the recommendation of an underwriter, the Initiating Holder(s) do not consent to the Company filing a post-effective amendment or prospectus supplement to a Shelf Registration Statement in lieu of an additional registration statement requested by the Initiating Holder(s).
(ii) Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to effect, or take any action to effect, any such Registration pursuant to this Section 2(a):
(1) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process or qualify to do business in effecting such Registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder;
(2) With respect to securities that are not Registrable Securities;
(3) If the Company has notified the Holders that in the good faith judgment of the Company, it would be materially detrimental to the Company or its security holders for such registration to be effected at such time, in which event the Company shall have the right to defer such registration for a period of not more than 60 days; provided , that such right to delay a registration pursuant to clause (3) shall be exercised by the Company only if the Company has generally exercised (or is concurrently exercising) similar black-out rights against holders of similar securities that have registration rights, if any; or
(4) Solely with respect to any Affiliate of the Company, d uring any Scheduled Black-Out Period;
provided , that the total number of days that any such suspension, deferral or delay in registration pursuant to clauses (3) and (4) in the aggregate may be in effect in any 180 day period shall not exceed 60 days. The Company agrees to use its reasonable best efforts to issue earnings releases as promptly as practicable following the end of quarterly reporting periods and to otherwise minimize the duration of Scheduled Black-Out Periods.
(iii) The Registration Statement filed pursuant to the request of the Initiating Holder may, subject to the provisions of Section 2(a)(iv) below, include shares of Common Stock which are held by Holders and Persons who, by virtue of agreements with the Company (other than this Agreement), are entitled to include their securities in any such Registration (such Persons, other than Holders, “ Other Stockholders ”). In the event the Initiating Holder(s) request a Registration pursuant to this Section 2(a) in connection with a distribution of Registrable Securities to its partners or members or any other Holder elects to participate in such Registration pursuant to Section 2(b) hereof in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for the resale by such partners or members, if requested by such Holder.
(iv) Underwriting . If the Initiating Holder(s) intend to distribute the Registrable Securities covered by their request by means of an underwriting, it shall so advise the Company as a part of the request made pursuant to Section 2(a). If Other Stockholders or Holders, to the extent they have any registration rights under Section 2(b), request inclusion of their shares of Common Stock in the underwriting, the Initiating Holder(s) shall offer to include the shares of Common Stock of such Holders and Other Stockholders in the underwriting and
may condition such offer on their acceptance of the further applicable provisions of this Section 2. The Holders whose Registrable Securities are to be included in such Registration and the Company shall (together with all Other Stockholders proposing to distribute their shares of Common Stock through such underwriting) enter into an underwriting agreement in customary form for secondary public offerings with the managing underwriter or underwriters selected for such underwriting by a majority-in-interest of the Holders whose Registrable Securities are to be included in such Registration subject to approval by the Company not to be unreasonably withheld (which underwriters may also include a non-bookrunning co-manager selected by the Company subject to approval by a majority-in-interest of the Holders whose Registrable Securities are to be included in such Registration); provided , however , that such underwriting agreement shall not provide for indemnification or contribution obligations on the part of any Holder or Other Stockholder greater than the obligations of the Holders under Section (2)(f)(ii) or Section 2(f)(iv). Notwithstanding any other provision of this Section 2(a), if the managing underwriter or underwriters advises the Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, some or all of the securities of the Company held by the Other Stockholders (other than the Brookfield/Fairholme Holders) shall be excluded from such Registration to the extent so required by such limitation. If, after the exclusion of such shares held by such Other Stockholders (other than the Brookfield/Fairholme Holders), further reductions are still required due to the marketing limitation, the number of Registrable Securities included in the Registration by each Holder (including the Initiating Holder(s)) and the Brookfield/Fairholme Holders shall be reduced on a pro rata basis (based on the number of Registrable Securities requested to be included in such registration by such Holders and the Brookfield/Fairholme Holders, as applicable), by such minimum number of shares as is necessary to comply with such request. No Registrable Securities or any other securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such Registration. If any Holder or Other Stockholder who has requested inclusion in such Registration as provided above disapproves of the terms of the underwriting, such Person may elect to withdraw therefrom by providing written notice to the Company, the underwriter and the Initiating Holder(s). The securities so withdrawn shall also be withdrawn from Registration. If the underwriter has not limited the number of Registrable Securities or other securities to be underwritten, the Company and executive officers and directors of the Company (whether or not such Persons have registration rights pursuant to Section 2(b) hereof) may include its or their securities for its or their own account in such Registration if the managing underwriter or underwriters and the Company so agree and if the number of Registrable Securities and other securities which would otherwise have been included in such Registration and underwriting will not thereby be limited.
(v) The number of demand registrations that the Holders shall be entitled to request, and that the Company shall be obligated to undertake, pursuant to this Section 2(a) shall be unlimited; provided , that the Company shall not be obligated to undertake more than three underwritten offerings pursuant to this Section 2 during the term of this Agreement, provided , further that in no event shall the Company be required to effect more than one underwritten offering in any twelve-month period pursuant to this Section 2.
(vi) In the case of an underwritten offering under this Section 2(a), the price, underwriting discount and other financial terms for the Registrable Securities shall be determined by the Initiating Holder(s).
(b) Piggyback Registration .
(i) If the Company shall determine to register any of its capital stock (including any warrants) either (x) for its own account, (y) for the account of the Holders listed in Section 2(a) pursuant to the terms thereof, or (z) for the account of Other Stockholders (other than (A) a Registration relating solely to Qualifying Employee Stock, (B) a Registration relating solely to a Rule 145 transaction under the Securities Act or (C) a Registration on any Registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a Registration Statement), the Company will, subject to the conditions set forth in this Section 2(b):
(1) promptly give to each of the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and
(2) subject to Section 2(b)(ii) below and any transfer restrictions any Holder may be a party to, include in such Registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by the Holders. Such written request may specify all or a part of the Holders’ Registrable Securities and shall be received by the Company within ten (10) days after written notice from the Company is given under Section 2(b)(i)(1) above. In the event any Holder requests inclusion in a Registration pursuant to this Section 2(b) in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for the resale by such partners or members, if requested by such Holder.
(ii) Underwriting . If the Registration of which the Company gives notice is for a Registered public offering involving an underwriting, the Company shall so advise each of the Holders as a part of the written notice given pursuant to Section 2(b)(i)(1) above. In such event, the right of each of the Holders to Registration pursuant to this Section 2(b) shall be conditioned upon such Holders’ participation in such underwriting and the inclusion of such Holders’ Registrable Securities in the underwriting to the extent provided herein. The Holders whose Registrable Securities are to be included in such Registration shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form for secondary public offerings with the managing underwriter or underwriters selected for underwriting by the Company (and if the Registration was initiated by a Holder pursuant to Section 2(a), such underwriters must be selected by the Initiating Holder(s) and reasonably acceptable to the Company); provided , however , that such underwriting agreement shall not provide for indemnification or contribution obligations on the part of any Holder or Other Stockholder greater than the obligations of the Holders under Section 2(f)(ii) or Section 2(f)(iv). Notwithstanding any other provision of this Section 2(b), if any Registration in respect of which any Holder is exercising its rights under this Section 2(b) involves an underwritten public offering (other than a demand Registration pursuant to Section 2(a), in which case the provisions with respect to priority of inclusion in such Registration set forth in Section 2(a) shall apply) and the managing underwriter or underwriters
advises the Company that in its view marketing factors require a limitation on the number of securities to be underwritten, then there shall be included in such underwritten offering the number or dollar amount of securities of the Company that in the opinion of the managing underwriter or underwriters can be sold without adversely affecting such offering, and such number of securities of the Company shall be allocated for inclusion as follows: (1) first all securities of the Company being sold by the Company for its own account or by any Person (other than a Holder or a Brookfield/Fairholme Holder) exercising a contractual right to demand registration; (2) second, all Registrable Securities requested to be included by the Holders, all Registrable Securities to be included by the Brookfield/Fairholme Holders and securities of the Company being sold by any Person (other than a Holder or a Brookfield/Fairholme Holder) with similar piggyback registration rights, pro rata, based on the number of shares requested to be included in such registration by such Holders, the Brookfield/Fairholme Holders and such Persons; and (3) third, among any other holders of securities of the Company requesting such registration, pro rata, based on the number of securities requested to be included in such registration by each such holder. For the avoidance of doubt, in the event any Brookfield/Fairholme Holder exercises demand registration rights, such registration is an underwritten public offering and the managing underwriter advises that marketing factors require a limitation on the number of securities to be so underwritten, Registrable Securities of any Holders exercising piggyback rights under this Section 2(b) in connection with such offering and any securities to be included in such offering by the Brookfield/Fairholme Holders shall be included in such offering in the same priority and allocated on a pro rata basis, as set forth in clause (2) above. If any of the Holders or any officer, director or Other Stockholder disapproves of the terms of any such underwriting, he, she or it may elect to withdraw therefrom by providing written notice to the Company, the underwriter and the Initiating Holder(s). Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such Registration.
(c) Required Shelf Registration Statement . From and after the declaration of effectiveness by the Commission of the Shelf Registration Statement contemplated by Section 7.1(l) of the Stock Purchase Agreement (the “ Required Shelf Registration Statement ”), the Company shall use reasonable best efforts to cause such Required Shelf Registration Statement to be continuously effective so long as there are any Registrable Securities outstanding. In connection with the Required Shelf Registration Statement, the Company will, subject to the terms and limitations of this Section 2, as promptly as reasonably practicable upon notice from any Holder requesting Registration in accordance with the terms of this Section 2(c), cooperate in any shelf take-down by amending or supplementing the Prospectus related to such Registration as may be reasonably requested by such Holder or as otherwise required to reflect the number of Registrable Securities to be sold thereunder.
(d) Expenses of Registration . All Registration Expenses incurred in connection with any Registration, qualification or compliance pursuant to this Section 2 shall be borne by the Company, and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered (or, in the case of fees and disbursements of counsel and advisors to any Holders that do not constitute Registration Expenses, by the Holders as incurred).
(e) Registration Procedures . In the case of each Registration effected by the Company pursuant to this Section 2, the Company will keep the Participating Holders advised in writing as to the initiation of each Registration and as to the completion thereof. At its expense, the Company will:
(i) as promptly as practicable, prepare and file with the Commission such pre- and post-effective amendments to such Registration Statement, supplements to the Prospectus and such amendments or supplements to any Issuer Free Writing Prospectus as may be (1) reasonably requested by the Initiating Holder(s) (if any), (2) reasonably requested by any other Participating Holder (to the extent such request relates to information relating to such Participating Holder), or (3) necessary to keep such Registration effective for the period of time required by this Agreement, and comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;
(ii) notify the Participating Holders and the managing underwriter or underwriters, if any, and (if requested) confirm such advice in writing and provide copies of the relevant documents, as promptly as practicable after notice thereof is received by the Company (1) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus or Issuer Free Writing Prospectus or any amendment or supplement thereto has been filed, (2) to the extent any of the following relates to the Participating Holders or information supplied by the Participating Holders, of any written comments by the Commission or any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement, Prospectus or Issuer Free Writing Prospectus or for additional information, (3) of the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement or any order by the Commission or any other regulatory authority preventing or suspending the use of any Prospectus or any Issuer Free Writing Prospectus or the initiation or threatening of any proceedings for such purposes, (4) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects, and (5) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(iii) promptly notify the Participating Holders and the managing underwriter or underwriters, if any, when the Company becomes aware of the happening of any event as a result of which the applicable Registration Statement, the Prospectus included in such Registration Statement (as then in effect) or any Issuer Free Writing Prospectus contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of such Prospectus or any Issuer Free Writing Prospectus, in light of the circumstances under which they were made) not misleading, and when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the Registration Statement, or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement, Prospectus or Issuer Free Writing Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission, and furnish without
charge to the Participating Holders and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement, Prospectus or Issuer Free Writing Prospectus which shall correct such misstatement or omission or effect such compliance;
(iv) use its reasonable best efforts to prevent, or obtain the withdrawal of, any stop order or other order suspending the use of any Prospectus or any Issuer Free Writing Prospectus;
(v) deliver to each Participating Holder and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus), any Issuer Free Writing Prospectus and any amendment or supplement thereto as such Participating Holder or underwriter may reasonably request (it being understood that the Company consents to the use of such Prospectus, any Issuer Free Writing Prospectus and any amendment or supplement thereto by such Holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities thereby) and such other documents as such Participating Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by such Participating Holder or underwriter;
(vi) subject to the terms set forth in Section 2(a)(ii)(1) and Section 2(c) hereof, on or prior to the date on which the applicable Registration Statement is declared effective, use its reasonable best efforts to register or qualify the Registrable Securities covered by such Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Participating Holder reasonably (in light of such Participating Holder’s intended plan of distribution) requests and do any and all other acts and things that may be reasonably necessary or advisable to enable such Participating Holder to consummate the disposition of the Registrable Securities owned by such Participating Holder pursuant to such Registration Statement;
(vii) make such representations and warranties to the Participating Holders and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in underwritten public offerings;
(viii) enter into such customary agreements (including underwriting and indemnification agreements) and take such other actions as the Initiating Holder(s) or the managing underwriter, if any, reasonably requests in order to expedite or facilitate the Registration and disposition of such Registrable Securities;
(ix) use its reasonable best efforts to obtain for delivery to the managing underwriter, if any, an opinion or opinions from counsel for the Company dated the effective date of the Registration Statement or, in the event of an underwritten offering, the date of the closing under the underwriting agreement, in form and substance as is customarily given to underwriters in an underwritten secondary public offering;
(x) in the case of an underwritten offering, use reasonable best efforts to obtain for delivery to the Company and the managing underwriter, if any, a “ comfort” letter from the Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants in an underwritten secondary public offering;
(xi) cooperate with each Participating Holder and the underwriters, if any, of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;
(xii) use its reasonable best efforts to cause all Registrable Securities covered by the applicable Registration Statement to be listed or quoted on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;
(xiii) cooperate with the Participating Holders and the underwriters, if any, to facilitate the timely preparation and delivery of certificates, with requisite CUSIP numbers, representing Registrable Securities to be sold and not bearing any restrictive legends;
(xiv) in the case of an underwritten offering, make reasonably available the senior executive officers of the Company to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter in any such underwritten offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;
(xv) use its reasonable best efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical security instruments into book-entry form in accordance with any procedures reasonably requested by the Holders or any managing underwriter(s);
(xvi) use its reasonable best efforts to take such actions as are under its control to become or remain a well-known seasoned issuer (as such term in defined in Rule 405 under the Securities Act) and not become an illegible issuer (as such term is defined in Rule 405 under the Securities Act) during the period when such Registration Statement remains in effect; and
(xvii) make available for inspection by a representative of Participating Holders that are selling at least five percent (5%) of the Registrable Securities included in such Registration (and who is named in the applicable prospectus supplement as a Person who may be deemed to be an underwriter with respect to an offering and sale of Registrable Securities), the managing underwriter(s), if any, and any attorneys or accountants retained by such Holders or the managing underwriters(s), at the offices where normally kept, during reasonable business hours, financial and other records and pertinent corporate documents of the Company, and cause the officers, directors and employees of the Company to supply all information in each case reasonably requested by any such representative, managing underwriter, attorney or accountant in connection with such Registration Statement; provided , that if any such information is identified by the Company as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information and shall sign customary confidentiality agreements reasonably requested by the Company prior to the receipt of such information.
(f) Indemnification .
(i) Indemnification by the Company . With respect to each Registration which has been effected pursuant to this Section 2, the Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, (1) each of the Participating Holders and each of its officers, directors, limited or general partners and members thereof, (2) each member, limited or general partner of each such member, limited or general partner, (3) each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each underwriter, if any, and each person who controls (within the meaning of the Securities Act or the Exchange Act) any underwriter, against any and all claims, losses, damages, penalties, judgments, suits, costs, liabilities and expenses (or actions in respect thereof) (collectively, the “ Losses ”) arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement (including any Prospectus or Issuer Free Writing Prospectus) or any other document incident to any such Registration, qualification or compliance, (B) 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 (in the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made not misleading), or (C) any violation by the Company of the Securities Act or the Exchange Act applicable to the Company and relating to action or inaction required of the Company in connection with any such Registration, qualification or compliance, and will reimburse each of the Persons listed above, for any reasonable and documented legal and any other expenses reasonably incurred in connection with investigating and defending any such Losses, provided , that the Company will not be liable in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission based upon written information furnished to the Company by the Participating Holders or underwriter and stated to be specifically for use therein.
(ii) Indemnification by the Participating Holders . Each of the Participating Holders agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers and each underwriter, if any, of the Company’s securities covered by such a Registration Statement, each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) or such underwriter, each other Participating Holder and each of their respective officers, directors, partners and members, and each Person controlling such Participating Holder (within the meaning of the Securities Act or the Exchange Act) against any and all Losses arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement (including any Prospectus or Issuer Free Writing Prospectus) or any other document incident to any such Registration, qualification or compliance (including any notification or the like) made by such Participating Holder in writing or (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements by such Participating Holder therein not misleading (in the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made not misleading) and will reimburse the Persons listed above for any reasonable and documented legal or any other expenses reasonably incurred in connection with investigating or defending any such Losses, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in reliance
upon and in conformity with written information furnished to the Company by such Participating Holder and stated to be specifically for use therein; provided , however , that the obligations of each of the Participating Holders hereunder shall be limited to an amount equal to the net proceeds (after giving effect to any underwriters discounts and commissions) such Participating Holder receives in such Registration.
(iii) Conduct of the Indemnification Proceedings . Each party entitled to indemnification under this Section 2(f) (the “ Indemnified Party ”) shall give notice to the party required to provide indemnification (the “ Indemnifying Party ”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided , that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld) and the Indemnified Party may participate in such defense at such party’s expense (unless the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in such action, in which case the fees and expenses of counsel shall be at the expense of the Indemnifying Party), and provided , further , that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2(f) unless the Indemnifying Party is prejudiced thereby. It is understood and agreed that the Indemnifying Party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate legal counsel for all Indemnified Parties; provided , however , that where the failure to be provided separate legal counsel could potentially result in a conflict of interest on the part of such legal counsel for all Indemnified Parties, separate counsel shall be appointed for Indemnified Parties to the extent needed to alleviate such potential conflict of interest. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the prior written consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 2(f) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions (or alleged statements or omissions) which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided , however , that the obligations of each of the Participating Holders hereunder shall be several and not joint and shall be limited to an amount equal to the net proceeds (after giving effect to any underwriters discounts and commissions) such Participating Holder receives in such Registration and, provided , further , that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 2(f)(iv), each Person, if any, who controls an underwriter or agent within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such underwriter or agent and each director of the Company, each officer of the Company who signed a Registration Statement, and each Person, if any, who controls the Company or a selling Holder within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Company or such selling Holder, as the case may be.
(v) Subject to the limitations on the Holders’ liability set forth in Section 2(f)(ii) and Section 2(f)(iv), the remedies provided for in this Section 2(f) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Party at law or equity. The remedies shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and survive the transfer of such securities by such Holder.
(vi) The obligations of the Company and of the Participating Holders hereunder to indemnify any underwriter or agent who participates in an offering (or any Person, if any controlling such underwriter or agent within the meaning of Section 15 of the Securities Act) shall be conditioned upon the underwriting or agency agreement with such underwriter or agent containing an agreement by such underwriter or agent to indemnify and hold harmless the Company, each of its directors and officers, each other Participating Holder, and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) or such Participating Holder against all Losses, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such underwriter or agent expressly for use in such filings described in this sentence.
(g) Participating Holders .
(i) Each of the Participating Holders shall furnish to the Company such information regarding such Participating Holder and its partners and members, and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably requested in connection with any Registration, qualification or compliance referred to in this Section 2.
(ii) In the event that, either immediately prior to or subsequent to the effectiveness of any Registration Statement, any Participating Holder shall distribute Registrable Securities to its partners or members, such Participating Holder shall so advise the Company and
provide such information as shall be necessary to permit an amendment to such Registration Statement to provide information with respect to such partners or members, as selling security holders. As soon as is reasonably practicable following receipt of such information, the Company shall file an appropriate amendment to such Registration Statement reflecting the information so provided. Any incremental expense to the Company resulting from such amendment shall be borne by such Participating Holder.
(iii) Each Holder agrees that at the time that such Holder is a Participating Holder, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2(e)(iii), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of a supplemented or amended Prospectus or Issuer Free Writing Prospectus or until such Holder is advised in writing by the Company that the use of the Prospectus or Issuer Free Writing Prospectus, as the case may be, may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company all copies, other than any permanent file copies then in such Holder’s possession, of the most recent Prospectus or any Issuer Free Writing Prospectus covering such Registrable Securities at the time of receipt of such notice. If the Company shall give such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective by the number of days during the period from and including the date of the giving of notice pursuant to Section 2(e)(iii) to the date when the Company shall make available to such Holder a copy of the supplement or amended Prospectus or Issuer Free Writing Prospectus or is advised in writing that the use of the Prospectus or Issuer Free Writing Prospectus may be resumed.
(h) Rule 144 . With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of restricted securities to the public without Registration, the Company agrees to use its reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements (or, if the Company is not required to file such reports, it will, upon the reasonable request of the Holders holding a majority of the then outstanding Registrable Securities, make publicly available such necessary information for so long as necessary to permit sales pursuant to Rules 144 under the Securities Act).
(i) Termination . The registration rights set forth in this Section 2 shall terminate and cease to be available as to any securities held by an Investor at such time as such Investor (after owning) first ceases to own any Registrable Securities.
(j) Lock-Up Agreements .
(i) The Company agrees that, if requested by the managing underwriter in any underwritten public offering contemplated by this Agreement, it will enter into a customary “lock-up” agreement providing that it will not, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of any Common Stock or securities convertible into or exchangeable or exercisable for Common Stock (subject to customary exceptions), other than any such sale or distribution of Common Stock upon exercise of the Company’s Warrants, for a
period of 60 days from the effective date of the Registration Statement pertaining to such Common Stock; provided , however , that any such lock-up agreement shall not prohibit the Company from directly or indirectly (i) selling, offering to sell, granting any option for the sale of, or otherwise disposing of any Qualifying Employee Stock (or otherwise maintaining its employee benefits plans in the ordinary course of business) or (ii) issuing Common Stock or securities convertible into or exchangeable for Common Stock upon exercise or conversion of any warrant (including any other Warrant), option, right or convertible or exchangeable security issued in connection with the plan of reorganization. Each Holder shall coordinate with other Holders and the Brookfield Holders and the Fairholme Holders such that the total number of days that the Company will be subject to such restrictions (including similar restrictions pursuant to any registration rights agreements with the Brookfield Holders and the Fairholme Holders) as may be in effect in any 365-day period shall not exceed 120 days.
(ii) In the event that any Holder is an Affiliate of the Company, if requested by the managing underwriter in any underwritten public offering permitted by this Agreement, such Holder will enter into a customary “lock-up” agreement providing that it will not sell, grant any option for the sale of, or otherwise dispose of any Common Stock outside of such public offering (subject to customary exceptions) for a period of 60 days from the effective date of the Registration Statement pertaining to such Common Stock.
(k) Notwithstanding any provision of this Agreement to the contrary, in order for a Registration to be included as a Registration for purposes of this Section 2, the Registration Statement in connection therewith shall have been continually effective in compliance with the Securities Act and usable for resale for the full period established with respect to such Registration (except in the case of any suspension of sales pursuant to (A) a Scheduled Black-Out Period, or (B) Section 2(e)(iii) hereof, in which case such period shall be extended to the extent of such suspension).
(l) Notwithstanding any provision of this Agreement to the contrary, if the Company is required to file a post-effective amendment to a Registration Statement to incorporate the Company’s quarterly and annual reports and related financial statements on Form 10-Q and Form 10-K, the Company shall use its reasonable best efforts to promptly file such post-effective amendment and may postpone or suspend effectiveness of such Registration Statement for a period not to exceed thirty (30) consecutive days to the extent the Company determines necessary to comply with applicable securities laws; provided , that the period by which the Company postpones or suspends the effectiveness of a shelf Registration Statement pursuant to this Section 2(l) plus any suspension, deferral or delay pursuant to Section 2(e)(iii) shall not exceed 60 days in the aggregate in any twelve-month period.
SECTION 3. MISCELLANEOUS
(a) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State without regard to conflicts of law principles.
(b) Section Headings . The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof.
(c) Notices .
(i) All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier:
(1) if to the Company, to:
General Growth Properties, Inc.
110 N. Wacker Drive
Chicago IL 60606
Attention: Ronald L. Gern, Esq., General Counsel
Fax: (312) 960-5485
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Malcolm E. Landau, Esq.
Matthew D. Bloch, Esq.
Facsimile: (212) 310-8007
(2) if to the Holders, at the address or facsimile number listed on Schedule I hereto, or at such other address or facsimile number as may have been furnished to the Company in writing.
(ii) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; and if mailed by overnight courier, on the first business day following the date of such mailing.
(d) Reproduction of Documents . This Agreement and all documents relating thereto, including, without limitation, any consents, waivers and modifications which may hereafter be executed may be reproduced by the Holders by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the Holders may destroy any original document so reproduced. The parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Holders in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
(e) Successors and Assigns . Neither this Agreement nor any right or obligation hereunder may be assigned in whole or in part by any party without the prior written consent of the other parties hereto and any purported assignment in violation of this provision shall be void; provided , however , that the rights and obligations hereunder of any Investor may
be assigned, in whole or in part, to any Person who acquires such Registrable Securities that (i) is a member of the Purchaser Group, (ii) is an Affiliate of any Initial Investor or (iii) is unable to immediately sell, without limitations (including, but not limited to, any limitation on volume or manner of sale) or restrictions under Rule 144, all Registrable Securities and other shares of Common Stock held by such Person ( provided , that for this clause (iii), any such rights and obligations may be assigned solely with respect to such Registrable Securities) (each such Person described in clauses (i), (ii) or (iii), a “ Permitted Assignee ”). Any assignment pursuant to this Section 3(e) shall be effective and any Person shall become a Permitted Assignee only upon receipt by the Company of (1) a written notice from the transferring Holder stating the name and address of the transferee and identifying the number of shares of Registrable Securities with respect to which the rights under this Agreement are being transferred and, if fewer than all of the rights attributable to a Holder hereunder are to be so transferred, the nature of the rights so transferred and (2) a written instrument by which the transferee agrees to be bound by all of the terms and conditions applicable to a Holder of such Registrable Securities. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties.
(f) Several Nature of Commitments . The obligations of each Holder hereunder are several and not joint and several, and relate only to the Registrable Securities held by such Holder from time to time. No Holder shall bear responsibility to the Company for breach of this Agreement or any information provided by any other Holder.
(g) Additional Investors . The parties hereto acknowledge that certain Persons may become stockholders of the Company and the Company may wish to grant such Persons registration rights with respect to the shares of Common Stock issued to such Persons. The Company may do so in its discretion so long as such registration rights are not inconsistent with the registration rights granted to the Holders hereunder and, if any registrations rights granted are more favorable than those provided to Holders of Common Stock hereunder, conforming changes reasonably acceptable to the Purchasers are made to this Agreement to provide Holders hereunder with substantially similar rights. For the avoidance of doubt, notwithstanding anything to the contrary set forth herein, Blackstone and its Permitted Assignees shall not be entitled to demand registration rights (pursuant to Section 2(a) hereof).
(h) Entire Agreement; Amendment and Waiver . This Agreement constitutes the entire understanding of the parties hereto relating to the subject matter hereof and supersedes all prior understandings among such parties. This Agreement may be amended with (and only with) the written consent of the Company and the Holders holding a majority of the then outstanding Registrable Securities and any such amendment shall apply to all Holders and all of their Registrable Securities; provided , however , that, notwithstanding the foregoing, no amendment to this Agreement may adversely affect the rights of a Holder hereunder without the prior written consent of such Holder; provided , further , that, notwithstanding the foregoing, additional Holders may become party hereto upon an assignment of rights and obligations hereunder pursuant to Section 3(e); provided further , however , that other than as set forth in Section 3(e), the Company may not add additional parties hereto without the consent of Holders holding a majority of the then outstanding Registrable Securities. The observance of any term of this Agreement may be waived by the party or parties waiving any rights hereunder; provided ,
that any such waiver shall apply to all Holders and all of their Registrable Securities only if made by Holders holding a majority of then-outstanding Registrable Securities.
(i) Injunctive Relief . It is hereby agreed and acknowledged that it will be impossible to measure in money the damage that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
(j) WAIVER OF JURY TRIAL . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTIONS, SUITS, DEMAND LETTERS, JUDICIAL, ADMINISTRATIVE OR REGULATORY PROCEEDINGS, OR HEARINGS, NOTICES OF VIOLATION OR INVESTIGATIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER AND (B) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY.
(k) No Inconsistent Agreements . The Company is not currently a party to any agreement which is, or could be inconsistent with, the rights granted to the Holders by this Agreement.
(l) Severability . In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect.
(m) Counterparts . This Agreement may be executed in two or more counterparts (including by email or facsimile signature), each of which shall be deemed an original and all of which together shall be considered one and the same agreement.
(n) Interpretation of this Agreement . Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Registration Rights Agreement as of the date first set forth above.
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
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PERSHING SQUARE CAPITAL MANAGEMENT, L.P. |
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On behalf of each of the Purchasers |
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By: PS Management GP, LLC |
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Its: General Partner |
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By: |
/s/ William A. Ackman |
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Name: |
William A. Ackman |
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Title: |
Managing Member |
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BLACKSTONE REAL ESTATE PARTNERS VI L.P. |
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By: Blackstone Real Estate Associates VI L.P., its General Partner |
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By: BREA VI L.L.C., its General Partner |
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By: |
/s/ A. J. Agarwal |
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Name: |
A. J. Agarwal |
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Title: |
Senior Managing Director |
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BLACKSTONE REAL ESTATE PARTNERS (AIV) VI L.P. |
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By: Blackstone Real Estate Associates VI L.P., its General Partner |
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By: BREA VI L.L.C., its General Partner |
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By: |
/s/ A. J. Agarwal |
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Name: |
A. J. Agarwal |
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Title: |
Senior Managing Director |
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[signature page to Pershing/Blackstone Registration Rights Agreement]
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BLACKSTONE REAL ESTATE PARTNERS VI.F L.P. |
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By: Blackstone Real Estate Associates VI L.P., its General Partner |
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By: BREA VI L.L.C., its General Partner |
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By: |
/s/ A.J. Agarwal |
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Name: |
A.J. Agarwal |
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Title: |
Senior Managing Director |
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BLACKSTONE REAL ESTATE PARTNERS VI.TE.1 L.P. |
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By: Blackstone Real Estate Associates VI L.P., its General Partner |
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By: BREA VI L.L.C., its General Partner |
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By: |
/s/ A.J. Agarwal |
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Name: |
A.J. Agarwal |
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Title: |
Senior Managing Director |
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BLACKSTONE REAL ESTATE PARTNERS VI.TE.2 L.P. |
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By: Blackstone Real Estate Associates VI L.P., its General Partner |
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By: BREA VI L.L.C., its General Partner |
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By: |
/s/ A.J. Agarwal |
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Name: |
A.J. Agarwal |
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Title: |
Senior Managing Director |
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BLACKSTONE REAL ESTATE HOLDINGS VI L.P. |
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By: BREP VI Side-by-Side GP L.L.C., its General Partner |
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By: |
/s/ A.J. Agarwal |
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Name: |
A.J. Agarwal |
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Title: |
Senior Managing Director |
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BLACKSTONE GGP PRINCIPAL TRANSACTION PARTNERS L.P. |
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By: Blackstone Real Estate Associates VI L.P., its General Partner |
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By: BREA VI L.L.C., its General Partner |
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By: |
/s/ A.J. Agarwal |
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Name: |
A.J. Agarwal |
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Title: |
Senior Managing Director |
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[signature page to Pershing/Blackstone Registration Rights Agreement]
Schedule I
Pershing Square, L.P., a Delaware limited partnership
Pershing Square II, L.P., a Delaware limited partnership
Pershing Square International, Ltd. a Cayman Islands exempted company
Pershing Square International V, Ltd., a Cayman Islands exempted company
Notice to any Purchaser set forth above (which shall constitute notice to each Purchaser set forth above) shall be made to:
Pershing Square Capital Management, L.P.
888 Seventh Avenue, 42nd Floor
New York, NY 10019
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Attention: |
William A. Ackman |
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Roy J. Katzovicz |
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Facsimile: |
(212) 286-1133 |
Schedule II
Blackstone Real Estate Partners VI L.P., a Delaware limited partnership
Blackstone Real Estate Partners (AIV) VI L.P., a Delaware limited partnership
Blackstone Real Estate Partners VI.F L.P., a Delaware limited partnership
Blackstone Real Estate Partners VI.TE.1 L.P., a Delaware limited partnership
Blackstone Real Estate Partners VI.TE.2 L.P., a Delaware limited partnership
Blackstone Real Estate Holdings VI L.P., a Delaware limited partnership
Blackstone GGP Principal Transaction Partners L.P., a Delaware limited partnership
Notice to any Blackstone entity set forth above (which shall constitute notice to each Blackstone entity set forth above) shall be made to:
Blackstone Real Estate Partners VI L.P.
345 Park Avenue
New York, New York 10154
Attention: A.J. Agarwal
Facsimile: (212) 583-5725
with a copy (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Brian M. Stadler, Esq.
Facsimile: (212) 455-2502
Exhibit 10.10
EXECUTION COPY
GENERAL GROWTH PROPERTIES, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 9, 2010 (this “ Agreement ”), by and between Teacher Retirement System of Texas, a public pension plan and entity of the State of Texas (“ Texas Teachers ”), and General Growth Properties, Inc., a Delaware corporation (the “ Company ”).
R E C I T A L S
WHEREAS, Texas Teachers has, pursuant to the terms of that certain Stock Purchase Agreement, dated as of July 8, 2010, by and between General Growth Properties, Inc., a Delaware corporation, and Texas Teachers (as the same may be amended from time to time, the “ Stock Purchase Agreement ”) agreed, among other things, to purchase 48,780,488 shares of common stock, par value $0.01 per share, of the Company (the “ Common Stock ”); and
WHEREAS, in case any securities held by Texas Teachers or its transferees are at any time not freely transferable by the holder in accordance with applicable laws, the Company and Texas Teachers desire to define certain registration rights with respect to the Common Stock and certain other securities on the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms have the respective meanings set forth below:
Affiliate : shall mean as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, the first Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise;
Agreement : shall have the meaning set forth in the Preamble hereto;
Brookfield Holders : shall mean the “Holders” defined in the Brookfield Registration Rights Agreement;
Brookfield/Fairholme/Pershing Holders : shall mean, collectively, Brookfield Holders, Fairholme Holders and Pershing Holders;
Brookfield Registration Rights Agreement : shall mean that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), a Delaware limited liability company, as amended from time to time;
Commission : shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act;
Common Stock : shall have the meaning set forth in the Recitals hereto;
Company : shall have the meaning set forth in the Preamble hereto;
Exchange Act : shall mean the Securities Exchange Act of 1934, as amended (or any successor act), and the rules and regulations promulgated thereunder;
Fairholme Holders : shall mean the “Holders” defined in the Fairholme Registration Rights Agreement;
Fairholme Registration Rights Agreement : shall mean that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and The Fairholme Fund, a series of Fairholme Funds, Inc., a Maryland corporation, and Fairholme Focused Income Fund, a series of Fairholme Funds, Inc., a Maryland corporation, as amended from time to time;
FINRA : shall mean the Financial Industry Regulatory Authority;
Holder : shall mean any holder of Registrable Securities subject to this Agreement, solely in their capacity as such, including Permitted Assignees;
Indemnified Party : shall have the meaning set forth in Section 2(e)(iii) hereof;
Indemnifying Party : shall have the meaning set forth in Section 2(e)(iii) hereof;
Investor Registration Rights Agreements : shall mean, collectively, the Brookfield Registration Rights Agreement, the Fairholme Registration Rights Agreement and the Pershing Registration Rights Agreement;
Issuer Free Writing Prospectus : shall mean an “Issuer Free Writing Prospectus,” as defined in Rule 433 under the Securities Act, relating to an offer of Registrable Securities;
Losses : shall have the meaning set forth in Section 2(e)(i) hereof;
Other Stockholders : shall mean Persons holding shares of Common Stock who, by virtue of agreements with the Company (other than this Agreement), including, without limitation, the Investor Registration Rights Agreements, are entitled to include their securities in any Registration Statement;
Participating Holders : shall mean Holders participating in the Registration relating to the Registrable Securities;
Permitted Assignees : shall have the meaning set forth in Section 3(e) hereto;
Pershing Holders : shall mean the “Holders” defined in the Pershing Registration Rights Agreement;
Pershing Registration Rights Agreement : shall mean that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and Pershing Square Capital Management, L.P., on behalf of Pershing Square, L.P., a Delaware limited partnership, Pershing Square II, L.P., a Delaware limited partnership, Pershing Square International, Ltd., a Cayman Islands exempted company, and Pershing Square International V, Ltd., a Cayman Islands exempted company, and Blackstone Real Estate Partners VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners (AIV) VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.F L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.1 L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.2 L.P., a Delaware limited partnership, Blackstone Real Estate Holdings VI L.P., a Delaware limited partnership, and Blackstone GGP Principal Transaction Partners L.P., a Delaware limited partnership, as amended from time to time;
Person : shall mean an individual, partnership, joint-stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof;
Prospectus : shall mean the prospectus (including any preliminary, final or summary prospectus) included in any Registration Statement, all amendments and supplements to such prospectus and all other material incorporated by reference in such prospectus;
Qualifying Employee Stock : shall mean (i) rights and options issued in the ordinary course of business under employee benefits plans of the Company or any predecessor or otherwise to executives in compensation arrangements approved by the Board of Directors of the Company or any predecessor and any securities issued after the date hereof upon exercise of such rights and options and options issued to employees of the Company or any predecessor as a result of adjustments to options in connection with the reorganization of the Company or any predecessor and (ii) restricted stock and restricted stock units issued after the date hereof in the ordinary course of business under employee benefit plans and securities issued after the date hereof in settlement of any such restricted stock units;
Register , Registered and Registration : shall mean a registration effected by preparing and (a) filing a Registration Statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such Registration Statement, or (b) filing a Prospectus and/or prospectus supplement in respect of an appropriate effective Registration Statement;
Registrable Securities : shall mean (A) any shares of Common Stock acquired or held by Texas Teachers on or after the date hereof (whether or not acquired pursuant to the Stock Purchase Agreement), (B) (i) any securities of the Company or its Affiliates issued as a dividend or other distribution with respect to, or in exchange for or in conversion, exercise or replacement of, any Registrable Securities described in (A) (the “ Initial Securities ”) or securities that may
become Registrable Securities by virtue of clause (B)(iii) or (ii) any securities of the Company or its Affiliates offered wholly or partly in consideration of the Initial Securities or securities that may become Registrable Securities by virtue of clause (B)(iii) in any tender or exchange offer or (iii) any securities of the Company or its Affiliates issued as a dividend or other distribution with respect to, or in exchange for or in conversion, exercise or replacement of or offered wholly or partly in any tender or exchange offer in consideration of any Registrable Securities described in (B)(i) or (B)(ii) and (C) any Registrable Securities described in (A) or (B) above acquired or held by a Person, for which rights and obligations have been assigned pursuant to and in accordance with the terms of Section 3(e) of this Agreement; provided , that as to any particular Registrable Securities, such securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such securities has been declared effective under the Securities Act and such securities have been disposed of pursuant to such Registration Statement, (ii) after such securities have been sold in accordance with Rule 144 (but not Rule 144A), (iii) after such securities shall have otherwise been transferred and new securities not subject to transfer restrictions under any federal securities laws and not bearing any legend restricting further transfer shall have been delivered by the Company, all applicable holding periods shall have expired, and no other applicable and legally binding restriction on transfer by the holder thereof shall exist, (iv) when such securities are eligible for sale pursuant to Rule 144 under the Securities Act without limitation thereunder on volume or manner of sale, or (v) when such securities cease to be outstanding;
Registration Expenses : shall mean (a) any and all expenses incurred by the Company and its Subsidiaries in effecting any Registration pursuant to this Agreement, including, without limitation, all (i) Registration and filing fees, and all other fees and expenses payable in connection with the listing of securities on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of compliance with any securities or “blue sky” laws (including fees and disbursements of counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any Registration Statements, Prospectuses, Issuer Free Writing Prospectus and other documents in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses, (v) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (vi) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses associated with the delivery by independent certified public accountants of any comfort letters requested pursuant to the terms hereof), (vii) fees and expenses of any special experts retained by the Company in connection with such Registration, (viii) fees and expenses in connection with any review by FINRA of any underwriting arrangements or other terms of the offering, and all reasonable fees and expenses of any “qualified independent underwriter”, (ix) reasonable fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding any underwriting fees, discounts and commissions attributable to the sale of Registrable Securities and fees and expenses of counsel, (x) costs of printing and producing any agreements among underwriters, underwriting agreements, any “blue sky” or legal investment memoranda and any selling agreements and other documents in connection with the offering, sale or delivery of the Registrable Securities, (xi) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering and (xii) expenses relating to any analyst or investor presentations
or any “road shows” undertaken in connection with the Registration, marketing or selling of the Registrable Securities and (b) reasonable and documented fees and expenses of one counsel for all of the Participating Holders, which counsel shall be selected by the Participating Holder holding the largest number of the Registrable Securities to be sold in the applicable Registration. Registration Expenses shall not include any out-of-pocket expenses of the Participating Holders;
Registration Statement : shall mean any registration statement of the Company that covers Registrable Securities (as defined in the Investor Registration Rights Agreements) filed with, or to be filed with, the Commission under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits, financial information and all material incorporated by reference in such registration statement;
Required Shelf Registration Statement : shall have the meaning set forth in
Section 2(b) hereof;
Required Shelf Registration Statement Period : shall have the meaning set forth in Section 2(b) hereof;
Rule 144; Rule 144A : shall mean Rule 144 and Rule 144A, respectively, under the Securities Act (or any successor provisions then in force);
security, securities : shall have the meaning set forth in Section 2(a)(1) of the Securities Act;
Securities Act : shall mean the Securities Act of 1933, as amended (or any successor statute thereto), and the rules and regulations promulgated thereunder;
Selling Expenses : shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and all fees and disbursements of counsel for each of the Holders, other than the fees and expenses of one counsel for all of the Holders, which shall be paid for by the Company in accordance with the terms set forth in clause (b) of the definition of “Registration Expenses” set forth herein;
Shelf Registration Statement : shall mean a “shelf” registration statement of the Company that covers all the Registrable Securities (and may cover other securities of the Company) containing a plan of distribution reasonably satisfactory to the Holders on Form S-3 and under Rule 415 or, if the Company is not then eligible to file on Form S-3, on Form S-1 under the Securities Act, or any successor rule that may be adopted by the Commission, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein;
Stock Purchase Agreement : shall have the meaning set forth in the Recitals hereto; and
Texas Teachers : shall have the meaning set forth in the Preamble hereto.
SECTION 2. REGISTRATION RIGHTS
(a) Piggyback Registration .
(i) If the Company shall determine to register any of its capital stock (including any warrants) either (x) for its own account or (y) for the account of any Other Stockholder (other than (A) a Registration relating solely to Qualifying Employee Stock, (B) a Registration relating solely to a Rule 145 transaction under the Securities Act or (C) a Registration on any Registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a Registration Statement), the Company will, subject to the conditions set forth in this Section 2(a):
(1) promptly give to each of the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and
(2) subject to Section 2(a)(ii) below and any transfer restrictions any Holder may be a party to, include in such Registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by the Holders. Such written request may specify all or a part of the Holders’ Registrable Securities and shall be received by the Company within ten (10) days after written notice from the Company is given under Section 2(a)(i)(1) above.
(ii) Underwriting . If the Registration of which the Company gives notice is for a Registered public offering involving an underwriting, the Company shall so advise each of the Holders as a part of the written notice given pursuant to Section 2(a)(i)(1) above. In such event, the right of each of the Holders to Registration pursuant to this Section 2(a) shall be conditioned upon such Holders’ participation in such underwriting and the inclusion of such Holders’ Registrable Securities in the underwriting to the extent provided herein. The Holders whose Registrable Securities are to be included in such Registration shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form for secondary public offerings with the managing underwriter or underwriters selected for underwriting by the Company; provided , however , that such underwriting agreement shall not provide for indemnification or contribution obligations on the part of any Holder or Other Stockholder greater than the obligations of the Holders under Section 2(e)(ii) or Section 2(e)(iv). Notwithstanding any other provision of this Section 2(a), if any Registration in respect of which any Holder is exercising its rights under this Section 2(a) involves an underwritten public offering (other than a demand Registration pursuant to Section 2(a) of the Investor Registration Rights Agreements, in which case the provisions with respect to priority of inclusion in such Registration set forth in Section 2(a) of the Investor Registration Rights Agreements shall apply) and the managing underwriter or underwriters advises the Company that in its view marketing factors require a limitation on the number of securities to be underwritten, then there shall be included in such underwritten offering the number or dollar amount of securities of the Company that in the opinion of the managing
underwriter or underwriters can be sold without adversely affecting such offering, and such number of securities of the Company shall be allocated for inclusion as follows: (1) first all securities of the Company being sold by the Company for its own account or by any Person exercising a contractual right to demand registration (including, without limitation, pursuant to the Investor Registration Rights Agreements); (2) second, all Registrable Securities requested to be included by the Holders, all Registrable Securities (as defined in the Investor Registration Rights Agreements) to be included by the Brookfied/ Fairholme/Pershing Holders and securities of the Company being sold by any Person (other than the Brookfied/ Fairholme/Pershing Holders) with piggyback registration rights, pro rata, based on the number of shares requested to be included in such registration by such Holders, Brookfield/Fairholme/Pershing Holders and Persons; and (3) third, among any other holders of securities of the Company requesting such registration, pro rata, based on the number of securities requested to be included in such registration by each such holder. If any of the Holders or any officer, director or Other Stockholder disapproves of the terms of any such underwriting, he, she or it may elect to withdraw therefrom by providing written notice to the Company and the underwriter, if any. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such Registration.
(b) Required Shelf Registration Statement . From and after the declaration of effectiveness by the Commission of the Shelf Registration Statement contemplated by Section 6.1(j) of the Stock Purchase Agreement (the “ Required Shelf Registration Statement ”) and subject to the terms and limitations of this Section 2, the Company shall use reasonable best efforts to cause such Required Shelf Registration Statement to be continuously effective until the one-year anniversary of the date of this Agreement (the “ Required Shelf Registration Statement Period ”). During the Required Shelf Registration Statement Period and in connection with the Required Shelf Registration Statement, the Company will, subject to the terms and limitations of this Section 2, as promptly as reasonably practicable upon notice from any Holder requesting Registration in accordance with the terms of this Section 2(b), cooperate in any shelf take-down by amending or supplementing the Prospectus related to such Registration as may be reasonably requested by such Holder or as otherwise required to reflect the number of Registrable Securities to be sold thereunder.
(c) Expenses of Registration . All Registration Expenses incurred in connection with any Registration, qualification or compliance pursuant to this Section 2 shall be borne by the Company, and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered (or, in the case of fees and disbursements of counsel and advisors to any Holders that do not constitute Registration Expenses, by the Holders as incurred).
(d) Registration Procedures . In the case of each Registration effected by the Company pursuant to this Section 2, the Company will keep the Participating Holders advised in writing as to the initiation of each Registration and as to the completion thereof. At its expense, the Company will:
(i) as promptly as practicable, prepare and file with the Commission such pre- and post-effective amendments to such Registration Statement, supplements to the Prospectus and such amendments or supplements to any Issuer Free Writing Prospectus as may be (1)
reasonably requested by any Participating Holder (to the extent such request relates to information relating to such Participating Holder), or (2) necessary to comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;
(ii) notify the Participating Holders and the managing underwriter or underwriters, if any, and (if requested) confirm such advice in writing and provide copies of the relevant documents, as promptly as practicable after notice thereof is received by the Company (1) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus or Issuer Free Writing Prospectus or any amendment or supplement thereto has been filed, (2) to the extent any of the following relates to the Participating Holders or information supplied by the Participating Holders, of any written comments by the Commission or any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement, Prospectus or Issuer Free Writing Prospectus or for additional information, (3) of the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement or any order by the Commission or any other regulatory authority preventing or suspending the use of any Prospectus or any Issuer Free Writing Prospectus or the initiation or threatening of any proceedings for such purposes, (4) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects, and (5) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(iii) promptly notify the Participating Holders and the managing underwriter or underwriters, if any, when the Company becomes aware of the happening of any event as a result of which the applicable Registration Statement, the Prospectus included in such Registration Statement (as then in effect) or any Issuer Free Writing Prospectus contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of such Prospectus or any Issuer Free Writing Prospectus, in light of the circumstances under which they were made) not misleading, and when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the Registration Statement, or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement, Prospectus or Issuer Free Writing Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission, and furnish without charge to the Participating Holders and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement, Prospectus or Issuer Free Writing Prospectus which shall correct such misstatement or omission or effect such compliance;
(iv) use its reasonable best efforts to prevent, or obtain the withdrawal of, any stop order or other order suspending the use of any Prospectus or any Issuer Free Writing Prospectus;
(v) deliver to each Participating Holder and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus), any
Issuer Free Writing Prospectus and any amendment or supplement thereto as such Participating Holder or underwriter may reasonably request (it being understood that the Company consents to the use of such Prospectus, any Issuer Free Writing Prospectus and any amendment or supplement thereto by such Holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities thereby) and such other documents as such Participating Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by such Participating Holder or underwriter;
(vi) on or prior to the date on which the applicable Registration Statement is declared effective, use its reasonable best efforts to register or qualify the Registrable Securities covered by such Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Participating Holder reasonably (in light of such Participating Holder’s intended plan of distribution) requests and do any and all other acts and things that may be reasonably necessary or advisable to enable such Participating Holder to consummate the disposition of the Registrable Securities owned by such Participating Holder pursuant to such Registration Statement; provided , however , that the Company shall not be obligated to effect, or take any action to effect, the registration or qualification of the Registrable Securities under such other securities or “blue sky” laws in any particular jurisdiction in which the Company would be required to execute a general consent to service of process or qualify to do business in effecting such Registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder;
(vii) make such representations and warranties to the Participating Holders and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in underwritten public offerings;
(viii) enter into such customary agreements (including underwriting and indemnification agreements) and take such other actions as the managing underwriter, if any, reasonably requests in order to expedite or facilitate the Registration and disposition of such Registrable Securities;
(ix) use its reasonable best efforts to obtain for delivery to the managing underwriter, if any, an opinion or opinions from counsel for the Company dated the effective date of the Registration Statement or, in the event of an underwritten offering, the date of the closing under the underwriting agreement, in form and substance as is customarily given to underwriters in an underwritten secondary public offering;
(x) in the case of an underwritten offering, use reasonable best efforts to obtain for delivery to the Company and the managing underwriter, if any, a “ comfort” letter from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants in an underwritten secondary public offering;
(xi) cooperate with each Participating Holder and the underwriters, if any, of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;
(xii) use its reasonable best efforts to cause all Registrable Securities covered by the applicable Registration Statement to be listed or quoted on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;
(xiii) cooperate with the Participating Holders and the underwriters, if any, to facilitate the timely preparation and delivery of certificates, with requisite CUSIP numbers, representing Registrable Securities to be sold and not bearing any restrictive legends;
(xiv) in the case of an underwritten offering, make reasonably available the senior executive officers of the Company to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter in any such underwritten offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;
(xv) use its reasonable best efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical security instruments into book-entry form in accordance with any procedures reasonably requested by the Holders or any managing underwriter(s);
(xvi) use its reasonable best efforts to take such actions as are under its control to become or remain a well-known seasoned issuer (as such term in defined in Rule 405 under the Securities Act) and not become an illegible issuer (as such term is defined in Rule 405 under the Securities Act) during the period when such Registration Statement remains in effect; and
(xvii) make available for inspection by a representative of Participating Holders that are selling at least five percent (5%) of the Registrable Securities included in such Registration (and who is named in the applicable prospectus supplement as a Person who may be deemed to be an underwriter with respect to an offering and sale of Registrable Securities), the managing underwriter(s), if any, and any attorneys or accountants retained by such Holders or the managing underwriters(s), at the offices where normally kept, during reasonable business hours, financial and other records and pertinent corporate documents of the Company, and cause the officers, directors and employees of the Company to supply all information in each case reasonably requested by any such representative, managing underwriter, attorney or accountant in connection with such Registration Statement; provided , that if any such information is identified by the Company as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information and shall sign customary confidentiality agreements reasonably requested by the Company prior to the receipt of such information.
(e) Indemnification .
(i) Indemnification by the Company . With respect to each Registration which has been effected pursuant to this Section 2, the Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, (1) each of the Participating Holders and each of its officers, directors, limited or general partners and members thereof, (2) each member, limited or general partner of each such member, limited or general partner, (3) each of their respective
Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each underwriter, if any, and each person who controls (within the meaning of the Securities Act or the Exchange Act) any underwriter, against any and all claims, losses, damages, penalties, judgments, suits, costs, liabilities and expenses (or actions in respect thereof) (collectively, the “ Losses ”) arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement (including any Prospectus or Issuer Free Writing Prospectus) or any other document incident to any such Registration, qualification or compliance, (B) 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 (in the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made not misleading), or (C) any violation by the Company of the Securities Act or the Exchange Act applicable to the Company and relating to action or inaction required of the Company in connection with any such Registration, qualification or compliance, and will reimburse each of the Persons listed above, for any reasonable and documented legal and any other expenses reasonably incurred in connection with investigating and defending any such Losses, provided , that the Company will not be liable in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission based upon written information furnished to the Company by the Participating Holders or underwriter and stated to be specifically for use therein.
(ii) Indemnification by the Participating Holders . Each of the Participating Holders agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers and each underwriter, if any, of the Company’s securities covered by such a Registration Statement, each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) or such underwriter, each other Participating Holder and each of their respective officers, directors, partners and members, and each Person controlling such Participating Holder (within the meaning of the Securities Act or the Exchange Act) against any and all Losses arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement (including any Prospectus or Issuer Free Writing Prospectus) or any other document incident to any such Registration, qualification or compliance (including any notification or the like) made by such Participating Holder in writing or (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements by such Participating Holder therein not misleading (in the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made not misleading) and will reimburse the Persons listed above for any reasonable and documented legal or any other expenses reasonably incurred in connection with investigating or defending any such Losses, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in reliance upon and in conformity with written information furnished to the Company by such Participating Holder and stated to be specifically for use therein; provided , however , that the obligations of each of the Participating Holders hereunder shall be limited to an amount equal to the net proceeds (after giving effect to any underwriters discounts and commissions) such Participating Holder receives in such Registration.
(iii) Conduct of the Indemnification Proceedings . Each party entitled to indemnification under this Section 2(e) (the “ Indemnified Party ”) shall give notice to the party required to provide indemnification (the “ Indemnifying Party ”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided , that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld) and the Indemnified Party may participate in such defense at such party’s expense (unless the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in such action, in which case the fees and expenses of counsel shall be at the expense of the Indemnifying Party), and provided , further , that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2(e) unless the Indemnifying Party is prejudiced thereby. It is understood and agreed that the Indemnifying Party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate legal counsel for all Indemnified Parties; provided , however , that where the failure to be provided separate legal counsel could potentially result in a conflict of interest on the part of such legal counsel for all Indemnified Parties, separate counsel shall be appointed for Indemnified Parties to the extent needed to alleviate such potential conflict of interest. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the prior written consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 2(e) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions (or alleged statements or omissions) which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided , however , that the obligations of each of the Participating Holders hereunder shall be several and not joint and shall be limited to an amount equal to the net proceeds (after giving effect to any underwriters discounts and commissions) such Participating Holder receives in such Registration and, provided , further , that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 2(e)(iv), each Person, if any, who controls an underwriter or agent within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such underwriter or agent and each director of the Company, each officer of the Company who signed a Registration Statement, and each Person, if any, who controls the Company or a selling Holder within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Company or such selling Holder, as the case may be.
(v) Subject to the limitations on the Holders’ liability set forth in Section 2(e)(ii) and Section 2(e)(iv), the remedies provided for in this Section 2(e) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Party at law or equity. The remedies shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and survive the transfer of such securities by such Holder.
(vi) The obligations of the Company and of the Participating Holders hereunder to indemnify any underwriter or agent who participates in an offering (or any Person, if any controlling such underwriter or agent within the meaning of Section 15 of the Securities Act) shall be conditioned upon the underwriting or agency agreement with such underwriter or agent containing an agreement by such underwriter or agent to indemnify and hold harmless the Company, each of its directors and officers, each other Participating Holder, and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) or such Participating Holder against all Losses, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such underwriter or agent expressly for use in such filings described in this sentence.
(f) Participating Holders .
(i) Each of the Participating Holders shall furnish to the Company such information regarding such Participating Holder and its partners and members, and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably requested in connection with any Registration, qualification or compliance referred to in this Section 2.
(ii) Each Holder agrees that at the time that such Holder is a Participating Holder, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2(d)(iii), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of a supplemented or amended Prospectus or Issuer Free Writing Prospectus or until such Holder is advised in writing by the Company that the use of the Prospectus or Issuer Free Writing Prospectus, as the case may be, may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company all copies, other than any permanent file copies then in such Holder’s possession, of the most recent Prospectus or any
Issuer Free Writing Prospectus covering such Registrable Securities at the time of receipt of such notice. If the Company shall give such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective by the number of days during the period from and including the date of the giving of notice pursuant to Section 2(d)(iii) to the date when the Company shall make available to such Holder a copy of the supplement or amended Prospectus or Issuer Free Writing Prospectus or is advised in writing that the use of the Prospectus or Issuer Free Writing Prospectus may be resumed.
(g) Rule 144 . With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of restricted securities to the public without Registration, the Company agrees to use its reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements (or, if the Company is not required to file such reports, it will, upon the reasonable request of the Holders holding a majority of the then outstanding Registrable Securities, make publicly available such necessary information for so long as necessary to permit sales pursuant to Rules 144 under the Securities Act).
(h) Termination . The registration rights set forth in this Section 2 shall terminate and cease to be available as to any securities held by Texas Teachers and its Permitted Assignees at such time as Texas Teachers or its Permitted Assignee (after owning) first ceases to own any Registrable Securities .
(i) Lock-Up Agreements . In the event that any Holder is an Affiliate of the Company at the time of an underwritten public offering by the Company, if requested by the managing underwriter in any such underwritten public offering, such Holder will enter into a customary “lock-up” agreement providing that it will not sell, grant any option for the sale of, or otherwise dispose of any Common Stock outside of such public offering (subject to customary exceptions) for a period of 60 days from the effective date of the Registration Statement pertaining to such Common Stock.
(j) Notwithstanding any provision of this Agreement to the contrary, if the Company is required to file a post-effective amendment to a Registration Statement to incorporate the Company’s quarterly and annual reports and related financial statements on Form 10-Q and Form 10-K, the Company shall use its reasonable best efforts to promptly file such post-effective amendment and may postpone or suspend effectiveness of such Registration Statement for a period not to exceed thirty (30) consecutive days to the extent the Company determines necessary to comply with applicable securities laws; provided , that the period by which the Company postpones or suspends the effectiveness of a shelf Registration Statement pursuant to this Section 2(j) plus any suspension, deferral or delay pursuant to Section 2(e)(iii) shall not exceed 60 days in the aggregate in any twelve-month period.
SECTION 3. MISCELLANEOUS
(a) Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas applicable to contracts made and to be performed entirely within such State without regard to conflicts of law principles.
(b) Section Headings . The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof.
(c) Notices .
(i) All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier:
(1) if to the Company, to:
General Growth Properties, Inc.
110 N. Wacker Drive
Chicago IL 60606
Attention: Ronald L. Gern, Esq., General Counsel
Fax: (312) 960-5485
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Malcolm E. Landau, Esq.
Matthew D. Bloch, Esq.
Facsimile: (212) 310-8007
(2) if to Texas Teachers, at the address set forth below or, if to any other Holder, at such other address or facsimile number as may have been furnished to the Company in writing:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Eric L. Lang and Richard Hall
Facsimile: (512) 370-5103
with a copy (which shall not constitute notice) to:
Fulbright & Jaworski L.L.P.
2200 Ross Avenue, Suite 2800
Dallas, Texas 75201
Attention: D. Forrest Brumbaugh, Esq.
Facsimile: (214) 855-8200
(ii) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; and if mailed by overnight courier, on the first business day following the date of such mailing.
(d) Reproduction of Documents . This Agreement and all documents relating thereto, including, without limitation, any consents, waivers and modifications which may hereafter be executed may be reproduced by the Holders by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the Holders may destroy any original document so reproduced. The parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Holders in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
(e) Successors and Assigns . Neither this Agreement nor any right or obligation hereunder may be assigned in whole or in part by any party without the prior written consent of the other parties hereto and any purported assignment in violation of this provision shall be void; provided , however , that the rights and obligations hereunder of Texas Teachers may be assigned, in whole or in part, to any Person who acquires such Registrable Securities that (i) is an Affiliate of Texas Teachers or (ii) is unable to immediately sell, without limitations (including, but not limited to, any limitation on volume or manner of sale) or restrictions under Rule 144, all Registrable Securities and other shares of Common Stock held by such Person ( provided , that for this clause (ii), any such rights and obligations may be assigned solely with respect to such Registrable Securities) (each such Person described in clauses (i) or (ii), a “ Permitted Assignee ”). Any assignment pursuant to this Section 3(e) shall be effective and any Person shall become a Permitted Assignee only upon receipt by the Company of (1) a written notice from the transferring Holder stating the name and address of the transferee and identifying the number of shares of Registrable Securities with respect to which the rights under this Agreement are being transferred and, if fewer than all of the rights attributable to a Holder hereunder are to be so transferred, the nature of the rights so transferred and (2) a written instrument by which the transferee agrees to be bound by all of the terms and conditions applicable to a Holder of such Registrable Securities. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties.
(f) Several Nature of Commitments . The obligations of each Holder hereunder are several and not joint and several, and relate only to the Registrable Securities held by such Holder from time to time. No Holder shall bear responsibility to the Company for breach of this Agreement or any information provided by any other Holder.
(g) Additional Investors . The parties hereto acknowledge that certain Persons may become stockholders of the Company and the Company may wish to grant such Persons registration rights with respect to the shares of Common Stock issued to such Persons. The Company may do so in its discretion so long as such registration rights are not inconsistent with or adverse to the registration rights granted to the Holders hereunder.
(h) Entire Agreement; Amendment and Waiver . This Agreement constitutes the entire understanding of the parties hereto relating to the subject matter hereof and supersedes all prior understandings among such parties. This Agreement may be amended with (and only with) the written consent of the Company and the Holders holding a majority of the then outstanding Registrable Securities and any such amendment shall apply to all Holders and all of their Registrable Securities; provided , that, notwithstanding the foregoing, additional Holders may become party hereto upon an assignment of rights and obligations hereunder pursuant to Section 3(e); provided further , however , that other than as set forth in Section 3(e), the Company may not add additional parties hereto without the consent of Holders holding a majority of the then outstanding Registrable Securities. The observance of any term of this Agreement may be waived by the party or parties waiving any rights hereunder; provided , that any such waiver shall apply to all Holders and all of their Registrable Securities only if made by Holders holding a majority of then-outstanding Registrable Securities.
(i) Injunctive Relief . It is hereby agreed and acknowledged that it will be impossible to measure in money the damage that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
(j) WAIVER OF JURY TRIAL . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTIONS, SUITS, DEMAND LETTERS, JUDICIAL, ADMINISTRATIVE OR REGULATORY PROCEEDINGS, OR HEARINGS, NOTICES OF VIOLATION OR INVESTIGATIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER AND (B) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY.
(k) No Inconsistent Agreements . The Company is not currently a party to any agreement which is, or could be inconsistent with, the rights granted to the Holders by this Agreement.
(l) Severability . In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect.
(m) Counterparts . This Agreement may be executed in two or more counterparts (including by email or facsimile signature), each of which shall be deemed an original and all of which together shall be considered one and the same agreement.
(n) Interpretation of this Agreement . Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
(o) Texas Teachers’ Status as an Entity of the State of Texas . Texas Teachers has advised the Company that some of Texas Teachers’ contractual rights under this Agreement and the agreements and transactions contemplated hereby may be limited by, and the Company agrees that, Texas Teachers’ obligations hereunder and thereunder are made subject to Texas Law applicable to Texas Teachers as an entity of the State of Texas, including, without limitation, principles of sovereign immunity.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Registration Rights Agreement as of the date first set forth above.
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
[SIGNATURE PAGE TO TRS REGISTRATION RIGHTS AGREEMENT]
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TEACHER RETIREMENT SYSTEM OF TEXAS |
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By: |
/s/ Richard Hall |
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Name: |
Richard Hall |
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Title: |
Director |
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[SIGNATURE PAGE TO TRS REGISTRATION RIGHTS AGREEMENT]
Exhibit 10.11
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 9, 2010 (this “ Agreement ”), by and among GGP, Inc., a Delaware corporation (“ GGPI ”), General Growth Properties, Inc., a Delaware corporation (“ Parent ”), GGP Real Estate Holding I, Inc., a Delaware corporation and a direct substantially wholly owned subsidiary of Parent (“ Holdco ”), and GGP Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Holdco (“ Merger Sub ”).
RECITALS:
WHEREAS, GGPI is a debtor in possession in that certain bankruptcy case under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended, filed on April 16, 2009 in the United States Bankruptcy Court for the Southern District of New York (the “Court”) under Case No. 09-11977 (ALG);
WHEREAS, GGPI and certain of its affiliates have proposed the Third Amended Joint Plan of Reorganization (the “ Plan of Reorganization ”), which was confirmed by the Court on October 21, 2010 and provides, among other things, for the merger of Merger Sub with and into GGPI in accordance with Sections 251 and 303 of the General Corporation Law of the State of Delaware (the “ DGCL ”), with GGPI as the surviving corporation in the Merger; and
WHEREAS, this Agreement is intended to constitute a plan of reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “ Code ”);
NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements set forth in this Agreement, and other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms of this Agreement and in accordance with the DGCL, at the Effective Time (as defined in Section 1.2 ) Merger Sub shall be merged with and into GGPI (the “ Merger ”), and the separate corporate existence of Merger Sub shall thereupon cease, and GGPI will be the surviving corporation in the Merger (the “ Surviving Corporation ”). As a result of the Merger, GGPI shall become a wholly owned subsidiary of Holdco. The Merger shall be effected in accordance with Sections 251 and 303 of the DGCL.
Section 1.2 Effective Time of the Merger. Upon the terms of this Agreement, an appropriate certificate of merger (the “ Certificate of Merger ”) shall be duly prepared, executed by each of Merger Sub and GGPI and delivered to and filed with the Secretary of State of the State of Delaware in accordance with, and in such form as complies with, the relevant provisions of the DGCL. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or, subject to the DGCL, at such later time as is agreed upon by the parties and specified in the Certificate of Merger. The term
“ Effective Time ” shall mean the time at which the Merger becomes effective.
Section 1.3 Effects of the Merger. From and after the Effective Time, the Merger shall have the effects set forth in the Plan of Reorganization, this Agreement, the Certificate of Merger and the applicable provisions of the DGCL.
Section 1.4 Certificate of Incorporation and By-Laws. Pursuant to the Merger, at and as of the Effective Time the certificate of incorporation and by-laws of GGPI immediately prior to the Effective Time shall be amended in their entirety to read as set forth in Exhibit A hereto and, as so amended, shall be the certificate of incorporation and by-laws of the Surviving Corporation from and after the Effective Time, until thereafter amended as provided therein or by applicable law.
Section 1.5 Directors. The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation from and following the Effective Time, each to hold office until his or her successor is duly elected and qualified or his or her earlier death, resignation or removal in accordance with the certificate of incorporation and by-laws of the Surviving Corporation.
Section 1.6 Officers. The officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation from and following the Effective Time, each to hold office until his or her successor is duly appointed and qualified or his or her earlier death or resignation or removal in accordance with the certificate of incorporation and by-laws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK
Section 2.1 Effect on Capital Stock of GGPI and Merger Sub. As of the Effective Time, by virtue of the Merger and the Plan of Reorganization and without any action on the part of any holder of any capital stock of GGPI or Merger Sub:
(a) Conversion of Common Stock of GGPI. Each share of common stock, par value $0.01 per share, of GGPI (“ GGPI Common Stock ”) issued and outstanding immediately prior to the Effective Time (other than shares to be canceled in accordance with Section 2.1(b) ) shall be converted into and represent the right to receive from Holdco one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of Parent (“ Parent Common Stock ”) (the “ Merger Consideration ”). As of the Effective Time, all such shares of GGPI Common Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate (or evidence of un-certificated shares in book-entry form) which immediately prior to the Effective Time represented any such shares of GGPI Common Stock shall thereafter cease to have any rights with respect thereto except the right to receive the Merger Consideration in respect of such shares in accordance with Section 2.2 and the Plan of Reorganization, without interest.
(b) Cancellation of Treasury Stock, Subsidiary-Owned Stock and Parent-Owned Stock. Notwithstanding the foregoing, any shares of GGPI Common Stock that are owned by
GGPI as treasury stock, and any shares of GGPI Common Stock owned by (or which would otherwise be owned by) Parent, Holdco, Merger Sub or any other Subsidiary of Parent shall be automatically canceled and shall cease to exist and no consideration shall be delivered in exchange therefor and each holder of a certificate formerly representing any such shares shall thereafter cease to have any rights with respect thereto. As used in this Agreement, “ Subsidiary ” means, with respect to any party, any corporation or other organization, whether incorporated or unincorporated, of which such party, either directly or indirectly, or any other Subsidiary of such party, either directly or indirectly, beneficially owns at least a majority of the voting or economic interests.
(c) Common Stock of Merger Sub. Each issued and outstanding share of common stock, without par value, of Merger Sub (“ Merger Sub Common Stock ”) shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, without par value, of the Surviving Corporation. From and after the Effective Time, all shares of Merger Sub Common Stock shall be deemed for all purposes to represent the number of shares of common stock of the Surviving Corporation into which they were converted in accordance with the immediately preceding sentence.
Section 2.2 Distribution of Merger Consideration. The Merger Consideration shall be issued in accordance with the Plan of Reorganization.
Section 2.3 Closing of Transfer Book. At the Effective Time, the stock transfer books of GGPI shall be closed and thereafter there shall be no further registration of any transfer of any shares of GGPI Common Stock that were outstanding immediately prior to the Effective Time.
Section 2.4 No Appraisal Rights . Pursuant to the DGCL, no holder of shares of GGPI Common Stock shall have any statutory right of appraisal of such shares in connection with the Merger.
Section 2.5 GGPI Options . Each option or right to acquire GGPI Common Stock under any incentive compensation plan of GGPI that is outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be converted in accordance with the Plan of Reorganization.
ARTICLE III
MISCELLANEOUS
Section 3.1 Amendment. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.
Section 3.2 Entire Agreement; No Third Party Beneficiaries. This Agreement (including the documents and the instruments referred to herein) (i) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof and (ii) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder.
Section 3.3 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties.
Section 3.4 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware applicable to contracts made, executed, delivered and performed wholly within the State of Delaware, without regard to any conflict of laws principles thereof that may require the application of the laws of another jurisdiction.
Section 3.5 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties, it being understood that all parties need not sign the same counterpart.
Section 3.6 Tax Treatment . This Agreement shall constitute a plan of reorganization within the meaning of Section 368(a)(1)(B) of the Code and each party hereto shall report the transactions contemplated by this Agreement consistently with its treatment as a tax-free reorganization.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective duly authorized officers as of the date first written above.
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GGP, INC. |
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By: |
/s/ Linda J. Wight |
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Name: Linda J. Wight |
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Title: Assistant Secretary |
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Linda J. Wight |
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Name: Linda J. Wight |
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Title: Assistant Secretary |
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GGP REAL ESTATE HOLDING I, INC. |
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By: |
/s/ Linda J. Wight |
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Name: Linda J. Wight |
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Title: Assistant Secretary |
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GGP MERGER SUB, INC. |
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By: |
/s/ Linda J. Wight |
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Name: Linda J. Wight |
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Title: Assistant Secretary |
[ Signature Page of Agreement and Plan of Merger ]
Exhibit 99.1
General Growth Properties Completes Financial Restructuring and Emerges From Chapter 11
David
Keating
Vice President
Corporate Communications
(312) 960-6325
CHICAGO — November 9, 2010 - General Growth Properties, Inc. (NYSE: GGP) today announced it has successfully completed the final steps of its financial restructuring and has emerged from Chapter 11. The emergence marks the conclusion of one of the largest and most complex bankruptcy cases in U.S. corporate history.
“Today marks the successful end of one chapter in GGP’s history and the beginning of another,” said Adam Metz, chief executive officer of GGP. “Over the past nineteen months, we have taken extraordinary steps to remake GGP’s entire financial structure while at the same time refocusing our operations across all of our shopping mall properties. I am especially grateful to our employees for their commitment and dedication throughout this challenging process. We continue the important work of executing on the many operational and financial improvements we initiated during the reorganization process.”
In its historic restructuring, GGP successfully:
Consensually restructured approximately $15 billion of project-level debt
Recapitalized with $6.8 billion in new equity capital
Paid all creditor claims in full
Achieved substantial recovery for equity holders
As part of its plan of reorganization, GGP has split itself into two separate and independent publicly traded corporations. GGP shareholders as of the record date of November 1, 2010 received common stock in both companies. The new GGP, which will commence trading tomorrow on The New York Stock Exchange under the ticker symbol “GGP,” is the second-largest shopping mall owner and operator in the country, with more than 183 regional malls in 43 states. The spin-off company, The Howard Hughes Corporation, consists of GGP’s portfolio of master planned communities and other strategic real estate development opportunities. This company will trade under the ticker symbol “HHC” on The New York Stock Exchange.
UBS Investment Bank and Miller Buckfire & Co., LLC are serving as financial advisors to General Growth Properties in connection with the restructuring, and Weil, Gotshal & Manges LLP and Kirkland & Ellis LLP are acting as legal counsel to the Company.
ABOUT “New” GGP
“New” GGP will have ownership and management interest in more than 183 regional
shopping malls in 43 states as well as ownership interests in other rental
properties.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. Actual results may
differ materially from the results suggested by these forward-looking
statements, for a number of reasons, including, but not limited to, the success
of our equity offering, our ability to refinance, extend, restructure or repay
our near and intermediate term debt, our substantial level of indebtedness, our
ability to raise capital through equity issuances, asset sales or the
incurrence of new debt, retail and credit market conditions, impairments, our
liquidity demands and retail and economic conditions. Readers are referred to
the documents filed by General Growth Properties, Inc. with the Securities
and Exchange Commission, which further identify the important risk factors
which could cause actual results to differ materially from the forward-looking
statements in this release. The Company disclaims any obligation to update any
forward-looking statements.
Exhibit 99.2
SEPARATION AGREEMENT
BY AND BETWEEN
GENERAL GROWTH PROPERTIES, INC.
AND
THE HOWARD HUGHES CORPORATION
Dated November 9, 2010
TABLE OF CONTENTS
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ARTICLE I |
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DEFINITIONS |
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2 |
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1.1 |
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Certain Definitions |
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2 |
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1.2 |
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Other Terms |
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12 |
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ARTICLE II |
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THE RESTRUCTURING |
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13 |
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2.1 |
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Transfer of Assets; Assumption of Liabilities |
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13 |
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2.2 |
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Spinco Assets |
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15 |
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2.3 |
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Spinco Liabilities. |
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16 |
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2.4 |
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Approvals and Notifications of Spinco Assets and Liabilities |
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18 |
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2.5 |
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Transfer of Non-Transferred Assets; Assumption of Non-Transferred Liabilities |
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19 |
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2.6 |
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Novation of Liabilities |
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21 |
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2.7 |
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Termination of Agreements and Arrangements |
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22 |
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2.8 |
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Bank Accounts; Cash Balances |
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22 |
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2.9 |
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Replacement of Letters of Credit Relating to the Spinco Business |
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24 |
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2.10 |
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Payment of Certain Ordinary Course, Pre-Petition Obligations |
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24 |
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2.11 |
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Payment of Certain Legal Fees of K&L Gates LLP |
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24 |
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2.12 |
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Mechanics’ and Materialman’s Liens |
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24 |
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2.13 |
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Disclaimer of Representations and Warranties |
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24 |
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ARTICLE III |
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THE DISTRIBUTION |
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25 |
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3.1 |
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Actions on or Prior to the Plan Effective Date |
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25 |
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3.2 |
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Conditions Precedent to Distribution |
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26 |
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3.3 |
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The Distribution |
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27 |
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3.4 |
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GGP Authorization of Agreement |
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27 |
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ARTICLE IV |
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ACCESS TO INFORMATION |
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28 |
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4.1 |
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Agreement for Exchange of Information; Archives |
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28 |
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4.2 |
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Ownership of Information |
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29 |
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4.3 |
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Compensation for Providing Information |
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29 |
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4.4 |
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Record Retention |
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29 |
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4.5 |
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Liability |
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30 |
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4.6 |
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Other Agreements Providing for Exchange of Information |
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30 |
TABLE OF CONTENTS
(continued)
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Page |
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4.7 |
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Production of Witnesses; Records; Cooperation |
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31 |
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4.8 |
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Privileged Matters |
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32 |
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ARTICLE V |
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RELEASE; INDEMNIFICATION; AND GUARANTEES |
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34 |
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5.1 |
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Release of Pre-Distribution Claims |
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34 |
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5.2 |
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General Indemnification by Spinco |
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36 |
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5.3 |
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General Indemnification by GGP |
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37 |
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5.4 |
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Disclosure Indemnification |
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37 |
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5.5 |
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Indemnification Obligations Net of Insurance Proceeds and Other Amounts |
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38 |
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5.6 |
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Procedures for Indemnification of Third Party Claims |
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38 |
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5.7 |
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Additional Matters |
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40 |
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5.8 |
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Remedies Cumulative; Limitations of Liability |
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41 |
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5.9 |
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Survival of Indemnities |
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41 |
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5.10 |
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Guarantees |
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41 |
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ARTICLE VI |
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OTHER AGREEMENTS |
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43 |
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6.1 |
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Further Assurances |
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43 |
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6.2 |
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Confidentiality |
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43 |
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6.3 |
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Insurance Matters |
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46 |
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6.4 |
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Allocation of Costs and Expenses |
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49 |
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6.5 |
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Litigation; Cooperation |
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49 |
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6.6 |
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Tax Matters |
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50 |
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6.7 |
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Employment Matters |
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51 |
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6.8 |
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Real Estate Agreements |
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51 |
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ARTICLE VII |
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DISPUTE RESOLUTION |
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51 |
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7.1 |
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General Provisions |
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51 |
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7.2 |
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Consideration by Senior Executives |
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52 |
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7.3 |
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Arbitration |
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52 |
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7.4 |
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Specific Performance |
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54 |
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ARTICLE VIII |
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MISCELLANEOUS |
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54 |
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8.1 |
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Corporate Power |
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54 |
TABLE OF CONTENTS
(continued)
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Page |
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8.2 |
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Governing Law |
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55 |
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8.3 |
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Survival of Covenants |
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55 |
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8.4 |
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Force Majeure |
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55 |
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8.5 |
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Notices |
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55 |
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8.6 |
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Termination |
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56 |
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8.7 |
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Severability |
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56 |
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8.8 |
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Entire Agreement |
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56 |
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8.9 |
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Assignment; No Third-Party Beneficiaries |
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56 |
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8.10 |
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Public Announcements |
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57 |
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8.11 |
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Amendment |
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57 |
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8.12 |
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Rules of Construction |
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57 |
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8.13 |
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Counterparts |
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57 |
EXHIBITS
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A-1 |
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Declaration of Condominium (Ala Moana Air Rights) |
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A-2 |
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Development Agreement (Ala Moana Air Rights) |
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B |
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Promissory Note (Arizona 2 Office Capital Lease Payments) |
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C |
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Assumption Agreement |
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D |
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Development Agreement and Memorandum of Intent Relating to the Core Development Area of Columbia Town Center |
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E |
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Employee Leasing Agreement |
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F |
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Employee Matters Agreement |
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G |
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Fashion Show Core Principles |
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H |
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Registration Rights Agreement |
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I-1 |
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Brookfield Stockholders Agreement |
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I-2 |
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Fairholme Stockholders Agreement |
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I-3 |
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Pershing Square Stockholders Agreement |
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J-1 |
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Sublease Agreement (110 N. Wacker, Chicago, IL) |
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J-2 |
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Sublease Agreement (10000 W. Charleston, Las Vegas, NV) |
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J-3 |
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Lease (Columbia Headquarters) |
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K |
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Surety Bond Indemnity Agreement |
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L |
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Tax Matters Agreement |
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M-1 |
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Transition Services Agreement |
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M-2 |
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Reverse Transition Services Agreement |
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N |
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Warrant and Registration Rights Agreement |
SCHEDULES
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2.1(a) |
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Spinoff Plan |
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6.5(a) |
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Assumed Actions |
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (this “ Agreement ”), dated as of November 9, 2010, is by and between General Growth Properties, Inc., a Delaware corporation (“ GGP ”), and The Howard Hughes Corporation, a Delaware corporation (“ Spinco ”). Capitalized terms used herein shall have the meanings assigned to them in Article I hereof or as otherwise expressly set forth herein.
RECITALS
WHEREAS, the board of directors of GGP has determined that it is in the best interests of GGP and its shareholders to create a new publicly traded company which shall operate the Spinco Business;
WHEREAS, Spinco has been incorporated solely for these purposes and has not engaged in activities except in preparation for its corporate restructuring and the distribution of its stock;
WHEREAS, the board of directors of GGP and the board of directors of Spinco have approved the transfer of the Spinco Assets to Spinco and its Subsidiaries and the assumption by Spinco and certain of its Subsidiaries of the Spinco Liabilities, all as more fully described in this Agreement and the other Transaction Documents;
WHEREAS, pursuant to the terms of the Order, the Bankruptcy Court approved the distribution of shares of the common stock, no par value per share, of Spinco (the “ Spinco Common Stock ”) to the holders of issued and outstanding units of GGP LP as of the close of business on the Record Date;
WHEREAS, pursuant to the terms of the Order, the Bankruptcy Court has further approved the distribution of Spinco Common Stock to the holders of issued and outstanding common shares, $0.01 par value per share, of GGP (the “ GGP Common Shares ”) as of the close of business on the Record Date, on the basis of 0.098344 shares of Spinco Common Stock for every one (1) GGP Common Share; provided , however , that no fractional shares shall be issued (the “ Distribution ”);
WHEREAS, GGP and Spinco have prepared, and Spinco has filed with the SEC, the Form 10, including the information statement contained therein, and which sets forth disclosure concerning Spinco and the Distribution;
WHEREAS, commencing on April 16, 2009 and continuing thereafter, GGP and certain of its Subsidiaries filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York (the “ Bankruptcy Court ”), Case No. 09-11977 (ALG) (collectively, the (the “ Bankruptcy Cases ”);
WHEREAS, the Distribution will be implemented in connection with the Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code by GGP and certain of its Subsidiaries filed with the United States Bankruptcy Court for the Southern District
of New York on August 27, 2010, as it may be subsequently amended and supplemented, as approved by the Bankruptcy Court (the “ Plan ”) and;
WHEREAS, for U.S. federal income tax purposes, certain steps of the Restructuring and the Distribution are intended to qualify for tax-free treatment under Sections 351, 355, 368(a) and related provisions of the Code;
WHEREAS, GGP has received a private letter ruling from the IRS to the effect that, among other things, (i) certain steps of the Restructuring and the Distribution, taken together, qualify as a transaction (a) that is described in Sections 355(a) and 368(a)(1)(G) of the Code, (b) in which the Spinco Common Stock distributed is “qualified property” under Section 361(c) of the Code and (c) in which the holders of GGP Common Shares recognize no income or gain for U.S. federal income tax purposes under Section 355 of the Code, and (ii) certain other steps of the Spinoff Plan qualify as transactions that are described in Sections 355(a) and 368(a)(1)(G) of the Code (the “ Private Letter Ruling ”);
WHEREAS, this Agreement is intended to be a “plan of reorganization” within the meaning of Treas. Reg. 1.368-2(g); and
WHEREAS, it is appropriate and desirable to set forth the principal corporate transactions required to effect the Restructuring and the Distribution and to set forth certain other agreements that will, following the Distribution, govern certain matters relating to the Restructuring and the Distribution and the relationship of GGP, Spinco and their respective Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions . For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1 :
“ Action ” means any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.
“ Affiliate ” (including, with a correlative meaning, “ affiliated ”) means, when used with respect to a specified Person, a Person that directly or indirectly, through one (1) or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “ control ” (including with correlative meanings, “ controlled by ” and “ under common control with ”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities or other interests, by Contract, agreement, obligation, promise, arrangement or otherwise. It is expressly agreed that, from and after the Effective Time and for purposes of this Agreement and the other Transaction Documents, no member of the Spinco Group shall be deemed to be an Affiliate of any member of the GGP Group, and no member of the GGP Group shall be deemed to be an Affiliate of any member of the Spinco Group.
“ Ala Moana Condominium Declaration ” means the Declaration of Condominium Property Regime of 1555 Kapiolani Condominium, attached hereto as Exhibit A-1 , to be recorded concurrently with the execution of the Ala Moana Development Agreement.
“ Ala Moana Development Agreement ” means the Development Agreement, attached hereto as Exhibit A-2 , to be entered into by Kapiolani Retail LLC and Kapiolani Residential, LLC on or prior to the Plan Effective Date.
“ Ancillary Documents ” means the Tax Matters Agreement, the Transition Services Agreement, the Reverse Transition Services Agreement, the Employee Matters Agreement, the Employee Leasing Agreement, the Real Estate Agreements, the Transfer Documents, the Subleases, the Surety Bond Indemnity Agreement, the Spinco Option Agreements and the Assumption Agreement.
“ Approvals or Notifications ” means any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any third Person, including any Governmental Authority.
“ Arizona 2 Promissory Note ” means the Promissory Note, attached hereto as Exhibit B , to be made by GGP LP on or prior to the Plan Effective Date.
“ Assets ” means, with respect to any Person, the assets, properties, claims and rights (including goodwill) held by or in the name of such Person, wherever located (including in the possession of vendors or other third Persons or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, known or unknown, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of such Person, including the following:
(a) all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape, electronic or any other form;
(b) all apparatus, computers and other electronic data processing and communications equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks, motor vehicles and other transportation equipment and other tangible personal property;
(c) all inventories of materials, parts, raw materials, components, supplies, work-in-process and finished goods and products;
(d) all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee, licensor, licensee or otherwise;
(e) (i) all interests in any capital stock or other equity interests of any Subsidiary or any other Person, (ii) all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, (iii) all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and (iv) all other investments in securities of any Person;
(f) all license agreements, leases of personal property, open purchase orders for raw materials, supplies, parts or services and other Contracts, agreements or commitments;
(g) all written (including in electronic form) or oral technical information, data, specifications, research and development information, engineering drawings and specifications, operating and maintenance manuals, and materials and analyses prepared by consultants and other third Persons;
(h) all Intellectual Property and Technology;
(i) all Software;
(j) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product data and literature, artwork, design, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;
(k) all prepaid expenses, trade accounts and other accounts and notes receivable;
(l) all rights under Contracts, agreements and entitlements, all claims or rights against any Person arising from the ownership of any Asset or otherwise, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued or contingent;
(m) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;
(n) all licenses, permits, approvals and authorizations which have been issued by any Governmental Authority; and
(o) all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.
“ Assumption Agreement ” means the Assumption Agreement, attached hereto as Exhibit C , to be entered into by GGP and Spinco on or prior to the Plan Effective Date.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Columbia Development Agreement ” means the Development Agreement and Memorandum of Intent in substantially the form attached hereto as Exhibit D to be entered into by GGP and Spinco on or prior to the Plan Effective Date.
“ Contract ” means any contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, license, commitment or other arrangement, understanding, undertaking, commitment or obligation, whether written or oral.
“ Cornerstone Investment Agreement ” means the Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010, by and between GGP and Brookfield Retail Holdings LLC (f/k/a REP Investments LLC), as it may be further amended.
“ Disclosure Statement ” means the disclosure statement in respect of the Plan, including all exhibits and schedules thereto, as it may be amended, supplemented or otherwise modified from time to time, and as approved by the Bankruptcy Court in accordance with Section 1125 of the Bankruptcy Code.
“ Distribution Agent ” means The Bank of New York Mellon Corporation (and/or its affiliates).
“ Effective Time ” means the time at which the Distribution occurs as provided in the Order.
“ Employee Leasing Agreement ” means the Employee Leasing Agreement, attached hereto as Exhibit E , to be entered into by and between GGP and Spinco or a Subsidiary thereof on or prior to the Plan Effective Date.
“ Employee Matters Agreement ” means the Employee Matters Agreement, attached hereto as Exhibit F , to be entered into by and between GGP and Spinco or a Subsidiary thereof on or prior to the Plan Effective Date.
“ Environmental Law ” means any applicable Law relating to pollution, protection or restoration of or prevention of harm to the environment or natural resources, including the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.
“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made.
“ Fairholme Investment Agreement ” means the Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between GGP and The Fairholme Fund, a series of Fairholme Funds, Inc., and Fairholme Focused Income Fund, a series of Fairholme Funds, Inc., as it may be further amended.
“ Fashion Show Core Principles ” means the Fashion Show Air Rights — Core Principles, attached hereto as Exhibit G , to be entered into by GGP and Spinco on or prior to the Plan Effective Date.
“ Force Majeure ” means, with respect to a party, an event beyond the reasonable control of such party (or any Person acting on its behalf), and includes acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one (1) or more acts of terrorism or failure of energy sources or distribution facilities. Notwithstanding the foregoing, the receipt by a party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such party’s response thereto shall not be deemed an event of Force Majeure.
“ Form 10 ” means the registration statement on Form 10 filed by Spinco with the SEC on August 25, 2010 to effect the registration of Spinco Common Stock pursuant to the Exchange Act in connection with the listing of Spinco’s common stock on the New York Stock Exchange, as such registration statement may be amended or supplemented from time to time.
“ GGP Accounts ” means the bank and brokerage accounts owned by GGP or any other member of the GGP Group.
“ GGP Business ” means the businesses and operations conducted immediately prior to the Effective Time by any member of the GGP Group that are not included in the Spinco Business.
“ GGP Disclosure Documents ” means any registration statement filed with the SEC in the name of any member of the GGP Group as registrant, and any prospectus, offering memorandum, offering circular or similar disclosure document, whether or not filed with the SEC or any other Governmental Authority, that is prepared in connection with any such registration statement.
“ GGP Group ” means GGP and each of its direct and indirect Subsidiaries immediately following implementation of the Spinoff Plan, expressly excluding the Spinco Group.
“ GGP Intellectual Property ” means (i) the GGP Name and GGP Marks and (ii) all other Intellectual Property that is owned by any member of the GGP Group immediately after the Effective Time.
“ GGP LP ” means GGP Limited Partnership, a Delaware limited partnership.
“ GGP Name and GGP Marks ” means the names, marks, trade dress, logos, monograms, domain names and other source or business identifiers of GGP or any of its Subsidiaries using or containing “GGP” (in block letters or otherwise), “GGP” either alone or in combination with other words or elements and all names, marks, trade dress, logos, monograms, domain names and other source or business identifiers confusingly similar to or embodying any of the foregoing either alone or in combination with other words or elements, together with the goodwill associated with any of the foregoing.
“ GGP Software ” means all Software that is owned by any member of the GGP Group immediately after the Effective Time.
“ GGP Technology ” means all Technology that is owned by any member of the GGP Group immediately after the Effective Time.
“ Governmental Authority ” means any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any executive official thereof.
“ Group ” means the GGP Group or the Spinco Group, as the context requires.
“ Hazardous Materials ” means any chemical, material, substance, waste, classified, regulated or otherwise classified as “hazardous,” “toxic,” “pollutant” or “contaminant,” or words of similar meaning or effect or any other material, substance or waste, that could result in liability under, or that is prohibited, limited or regulated by or pursuant to, any Environmental Law, and any natural or artificial substance (whether solid, liquid or gas, noise, ion, vapor or electromagnetic) which could cause harm to the environment, including petroleum, petroleum products and byproducts, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, electronic, medical or infectious wastes, polychlorinated biphenyls, radon gas, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances.
“ Information ” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, Contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.
“ Insurance Policies ” means the insurance policies written by insurance carriers, including any self-insurance arrangements, pursuant to which Spinco or one (1) or more of its Subsidiaries (or their respective officers or directors) will be insured parties after the Effective Time.
“ Insurance Proceeds ” means those monies (i) received by an insured from an insurance carrier, (ii) paid by an insurance carrier on behalf of the insured or (iii) received (including by way of set off) from any third Person in the nature of insurance, contribution or indemnification in respect of any Liability; in any such case net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof.
“ Intellectual Property ” means all of the following whether arising under the Laws of the United States or of any other foreign or multinational jurisdiction: (i) patents, patent
applications (including patents issued thereon) and statutory invention registrations, including reissues, divisions, continuations, continuations in part, substitutions, renewals, extensions and reexaminations of any of the foregoing, and all rights in any of the foregoing provided by international treaties or conventions, (ii) trademarks, service marks, trade names, service names, trade dress, logos and other source or business identifiers, including all goodwill associated with any of the foregoing, and any and all common law rights in and to any of the foregoing, registrations and applications for registration of any of the foregoing, all rights in and to any of the foregoing provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing, (iii) Internet domain names, (iv) copyrightable works, copyrights, moral rights, mask work rights, database rights and design rights, in each case, other than Software, whether or not registered, and all registrations and applications for registration of any of the foregoing, and all rights in and to any of the foregoing provided by international treaties or conventions, (v) confidential and proprietary information, including trade secrets, invention disclosures, processes and know-how, in each case, other than Software, and (vi) intellectual property rights arising from or in respect of any Technology.
“ Investment Agreements ” means the Cornerstone Investment Agreement, Fairholme Investment Agreement and Pershing Investment Agreement.
“ IP Application ” means any application for the registration, issuance or perfection of any intellectual property rights, including patent applications, copyright applications and trademark applications.
“ IRS ” means the United States Internal Revenue Service.
“ Law ” means any national, supranational, federal, state, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any income tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.
“ Liabilities ” means any and all debts, guarantees, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, reserved or unreserved, or determined or determinable (now or in the future), including those arising under any Law, claim (including any third Person product liability claim), demand, Action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority and those arising under any Contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking, or any fines, damages or equitable relief that is imposed, in each case, including all costs and expenses relating thereto.
“ Order ” means the order of the Bankruptcy Court approving the Distribution.
“ Pershing Investment Agreement ” means the Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between GGP and Pershing Square Capital Management, L.P. on behalf of Pershing Square, L.P., Pershing Square II, L.P., Pershing
Square International, Ltd. and Pershing Square International V, Ltd., as it may be further amended.
“ Person ” means any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, Governmental Authority or other entity.
“ Plan Effective Date ” means the date on which distributions to holders of claims and equity interests commences pursuant to the Plan, or such other time as determined by GGP in accordance with Section 3.3 .
“ Pre-GGP Insurance Policies ” means third-party insurance policies held by GGP or its Subsidiaries that are in effect immediately after the Effective Time that satisfy each of the following conditions: (i) such insurance policy was acquired directly or indirectly by GGP as a result of GGP’s acquisition of the holder of such insurance policy, and (ii) at the time of such acquisition, the business of the holder of such insurance policy related to some or all of the businesses comprising the Spinco Business.
“ Real Estate Agreements ” means the Ala Moana Condominium Declaration, the Ala Moana Development Agreement, the Arizona 2 Promissory Note, the Columbia Development Agreement and the Fashion Show Core Principles.
“ Record Date ” means November 1, 2010.
“ Registration Rights Agreement ” means the Registration Rights Agreement, attached hereto as Exhibit H , to be entered into by and between certain purchasers to be named therein and Spinco, as of the Effective Time.
“ Restructuring ” means the transfer of the Spinco Assets to Spinco and its Subsidiaries and the assumption of the Spinco Liabilities by Spinco and its Subsidiaries, and the transfer of certain Excluded Assets to GGP and its Subsidiaries and the assumption by GGP and its Subsidiaries of certain Excluded Liabilities, all as more fully described in this Agreement and the other Transaction Documents and including the steps set forth in the Spinoff Plan and the Plan.
“ Reverse Transition Services Agreement ” means the Reverse Transition Services Agreement, attached hereto as Exhibit M-2 , to be entered into by and between GGP and Spinco, and/or any of their respective Subsidiaries, on or prior to the Plan Effective Date.
“ SEC ” means the United States Securities and Exchange Commission.
“ Securities Act ” means the United States Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made.
“ Security Interest ” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any other nature.
“ Software ” means any and all (i) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow charts and other work products used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, and (iv) documentation, including user manuals and other training documentation, relating to any of the foregoing.
“ Spinco Balance Sheet ” means Spinco’s unaudited pro forma condensed combined balance sheet in Item 2 of the Form 10.
“ Spinco Business ” means the management, operation and development of the properties and assets described in Item 1 of the Form 10, as conducted by any member of the Spinco Group immediately prior to the Effective Time.
“ Spinco Contracts ” means the following Contracts, to the extent in effect immediately prior to the Effective Time:
(a) any Contracts to which one or more members of the Spinco Group is a party; provided that no members of the GGP Group are also party to such Contracts;
(b) any Contracts that relate exclusively to the Spinco Business; and
(c) any Contract that is otherwise expressly contemplated pursuant to this Agreement or any of the other Transaction Documents to be assigned to Spinco or any member of the Spinco Group.
“ Spinco Disclosure Documents ” means any registration statement (including the Form 10) filed with the SEC in the name of any member of the Spinco Group as registrant, and any prospectus, offering memorandum, offering circular or similar disclosure document, whether or not filed with the SEC or any other Governmental Authority, that is prepared in connection with any such registration statement.
“ Spinco Employees ” means all Business Employees (as defined in the Employee Matters Agreement) and all Leased Employees (as defined in the Employee Leasing Agreement).
“ Spinco Group ” means Spinco and each of its direct and indirect Subsidiaries immediately following implementation of the Spinoff Plan.
“ Spinco Option Agreements ” means (i) The Howard Hughes Corporation Non-Qualified Stock Option Agreement entered into between Spinco and Thomas Nolan and (ii) The Howard Hughes Corporation Non-Qualified Stock Option Agreement entered into between Spinco and Adam Metz, pursuant to which Spinco will issue options to purchase Spinco Common Stock to Thomas Nolan and Adam Metz, respectively, in accordance with the terms thereof.
“ Stockholders Agreements ” means the letters attached hereto as Exhibits I-1 — I-3 , to be entered into by and between Spinco and each of Brookfield Retail Holdings LLC (and/or its affiliates), The Fairholme Fund (and/or its affiliates) and Pershing Square Capital Management, L.P. (and/or its affiliates) on or prior to the Plan Effective Date.
“ Subleases ” means the subleases and the lease, attached hereto as Exhibits J-1 — J-3 respectively, to be entered into by and between GGP (and/or a Subsidiary thereof) and Spinco (and/or a Subsidiary thereof) on or prior to the Plan Effective Date.
“ Subsidiary ” or “ subsidiary ” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (i) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Person, (B) the total combined equity interests or (C) the capital or profit interests, in the case of a partnership, or (ii) otherwise has the power to vote, either directly or indirectly, sufficient securities, or the contractual right, to elect a majority of the board of directors or similar governing body or the managing partner or managing member.
“ Surety Bond Indemnity Agreement ” means the Surety Bond Indemnity Agreement, attached hereto as Exhibit K , to be entered into by and between GGP and Spinco on or prior to the Plan Effective Date.
“ Tax ” has the meaning set forth in the Tax Matters Agreement.
“ Tax Attributes ” has the meaning set forth in the Tax Matters Agreement.
“ Tax Matters Agreement ” means the Tax Matters Agreement, attached hereto as Exhibit L , to be entered into by and between GGP and Spinco on or prior to the Plan Effective Date.
“ Technology ” means all technology, designs, formulae, algorithms, procedures, methods, discoveries, processes, techniques, ideas, know-how, research and development, technical data, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice) apparatus, creations, improvements, works of authorship in any media, confidential, proprietary or non-public information, and other similar materials, and all recordings, graphs, drawings, reports, analyses and other writings, and other tangible embodiments of the foregoing in any form whether or not listed herein, in each case, other than Software.
“ Transaction Documents ” means this Agreement, the Ancillary Documents, the Registration Rights Agreement, the Warrant and Registration Rights Agreement and the Stockholders Agreements.
“ Transactions ” means, collectively, (i) the Restructuring, (ii) the Distribution, and (iii) all other transactions contemplated by this Agreement or any other Transaction Document.
“ Transition Services Agreement ” means the Transition Services Agreement, attached hereto as Exhibit M-1 , to be entered into by and between GGP and Spinco, and/or any of their respective Subsidiaries, on or prior to the Plan Effective Date.
“ Warrant and Registration Rights Agreement ” means the Warrant and Registration Rights Agreement, attached hereto as Exhibit N , to be entered into by and between Spinco and Mellon Investor Services LLC, as of the Effective Time.
1.2 Other Terms . For purposes of this Agreement, the following terms have the meanings set forth in the sections indicated.
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Term |
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Section |
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Agreement |
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Preamble |
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Amended and Restated Bylaws |
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3.1(c) |
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Amended and Restated Certificate of Incorporation |
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3.1(c) |
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Assumed Actions |
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6.5(a) |
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Bankruptcy Cases |
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Recitals |
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Bankruptcy Closing |
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7.1(a) |
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Bankruptcy Court |
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Recitals |
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CPR |
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7.3(a) |
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CPR Arbitration Rules |
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7.3(a) |
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Dispute |
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7.1(b) |
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Distribution |
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Recitals |
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Excluded Assets |
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2.2(b) |
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Excluded Liabilities |
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2.3(b) |
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GGP |
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Preamble |
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GGP Accounts |
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2.8(a) |
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GGP Common Shares |
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Recitals |
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GGP Confidential Information |
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6.2(b) |
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GGP Indemnified Parties |
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5.2 |
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Guarantee Release |
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5.10(b) |
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Indemnified Party |
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5.5(a) |
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Indemnifying Party |
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5.5(a) |
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Indemnity Payment |
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5.5(a) |
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Initial Notice |
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7.2 |
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linked |
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2.8(a) |
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Non-Transferred Asset |
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2.5(a) |
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Non-Transferred Liability |
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2.5(a) |
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Petition Date |
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2.10 |
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Plan |
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Recitals |
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Private Letter Ruling |
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Recitals |
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Released Party |
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2.6(a) |
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Representatives |
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6.2(a) |
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Response |
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7.2 |
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Responsible Party |
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2.6(a) |
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Shared Information |
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6.2(c) |
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Term |
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Section |
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Special Damages |
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5.8 |
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Spinco |
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Preamble |
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Spinco Accounts |
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2.8(a) |
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Spinco Assets |
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2.2(a) |
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Spinco Common Stock |
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Recitals |
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Spinco Confidential Information |
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6.2(a) |
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Spinco Indemnified Parties |
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5.3 |
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Spinco Liabilities |
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2.3(a) |
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Spinoff Plan |
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2.1(a) |
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Third Party Claim |
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5.6(a) |
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Transfer Documents |
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2.1(b) |
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Transferee Party |
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2.5(a) |
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Transferor Party |
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2.5(a) |
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Transferred Actions |
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6.5(b) |
ARTICLE II
THE RESTRUCTURING
2.1 Transfer of Assets; Assumption of Liabilities .
(a) Prior to the Distribution, in accordance with the plan and structure set forth on Schedule 2.1(a) (such plan and structure being referred to herein as the “ Spinoff Plan ”) and to the extent not previously effected pursuant to the steps of the Spinoff Plan that have been completed prior to the date hereof:
(i) GGP shall, and shall cause its applicable Subsidiaries to, assign, transfer, convey and deliver to Spinco or certain of Spinco’s Subsidiaries designated by Spinco, and Spinco or such Subsidiaries shall accept from GGP and its applicable Subsidiaries, all of GGP’s and such Subsidiaries’ respective direct or indirect right, title and interest in and to all Spinco Assets existing immediately prior to the Distribution in accordance with Schedule 2.1(a) ;
(ii) Spinco and certain of its Subsidiaries designated by Spinco shall accept, assume and agree faithfully to perform, discharge and fulfill all the Spinco Liabilities in accordance with their respective terms. Spinco and such Subsidiaries shall be responsible for all Spinco Liabilities, regardless of when or where such Spinco Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Plan Effective Date, regardless of where or against whom such Spinco Liabilities are asserted or determined (including any Spinco Liabilities arising out of claims made by GGP’s or Spinco’s respective directors, officers, employees, agents or Subsidiaries against any member of the GGP Group or the Spinco Group) or whether asserted or determined prior to the date hereof, and, except as set forth in Section 2.3(b)(iii) , regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the GGP Group or the Spinco Group, or any of their respective directors, officers, employees, agents or Subsidiaries;
(iii) GGP shall cause its applicable Subsidiaries to assign, transfer, convey and deliver to certain of its other Subsidiaries designated by GGP, and such other Subsidiaries shall accept from such applicable Subsidiaries, such applicable Subsidiaries’ respective right, title and interest in and to any Excluded Assets specified by GGP to be so assigned, transferred, conveyed and delivered, all as more fully set forth in the Spinoff Plan; and
(iv) GGP shall and shall cause GGP LP, as a Subsidiary of GGP, to accept and assume as designated by GGP, and agree faithfully to perform, discharge and fulfill certain Excluded Liabilities specified by GGP, and GGP and such Subsidiary shall be responsible for all Excluded Liabilities, regardless of when or where such Excluded Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Plan Effective Date, regardless of where or against whom such Excluded Liabilities are asserted or determined (including any such Excluded Liabilities arising out of claims made by GGP’s or Spinco’s respective directors, officers, employees, agents, Subsidiaries or Subsidiaries against any member of the GGP Group or the Spinco Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the GGP Group or the Spinco Group, or any of their respective directors, officers, employees, agents or Subsidiaries.
(b) In furtherance of the assignment, transfer, conveyance and delivery of the Assets and the assumption of the Liabilities in accordance with Section 2.1(a) , on the date that such Assets are assigned, transferred, conveyed or delivered or such Liabilities are assumed (i) GGP and Spinco, as applicable, shall execute and deliver, and shall cause their respective Subsidiaries to execute and deliver, such bills of sale, quitclaim deeds, stock powers, certificates of title, assignments of partnership interests, assignments of Contracts and other instruments of transfer, conveyance and assignment as and to the extent reasonably necessary to evidence the transfer, conveyance and assignment of all right, title and interest in and to such Assets to the applicable transferee thereof provided in the Spinoff Plan, and (ii) GGP and Spinco shall execute and deliver, and shall cause their respective Subsidiaries to execute and deliver, such assumptions of Contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of such Liabilities by the applicable assignee thereof provided in the Spinoff Plan. All of the foregoing documents contemplated by this Section 2.1(b) shall be referred to collectively herein as the “ Transfer Documents .”
(c) Spinco hereby waives compliance by each and every member of the GGP Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Spinco Assets to any member of the Spinco Group.
(d) GGP hereby waives compliance by each and every member of the Spinco Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Excluded Assets to any member of the GGP Group.
2.2 Spinco Assets .
(a) For purposes of this Agreement, “ Spinco Assets ” shall mean (without duplication) the following Assets (except to the extent they constitute Excluded Assets):
(i) all Assets owned by any member of the Spinco Group immediately prior to the Effective Time, wherever such Assets may be located;
(ii) any cash and cash equivalents in the Spinco Accounts as of the Effective Time (and, for the avoidance of doubt, any cash and cash equivalents in the GGP Accounts as of the Effective Time that the parties mutually agree should have been in the Spinco Accounts as of the Effective Time pursuant to an express agreement set forth in this Agreement or any other Transaction Document), subject to Section 2.8(g) ;
(iii) any cash proceeds received directly or indirectly by GGP in respect of any sales of real property in the Summerlin master planned community in Clark County, Nevada to the extent such sales are closed by GGP or any of its then current Subsidiaries during the period beginning on September 7, 2010 and ending immediately prior to the Effective Time (net of any out-of-pocket costs, fees and expenses incurred in connection therewith);
(iv) all Spinco Contracts;
(v) subject to Section 6.3 , any rights or claims of any member of the Spinco Group under any of the Insurance Policies, including any rights or claims thereunder arising after the Effective Time in respect of any Insurance Policies;
(vi) any and all Assets reflected as Assets of Spinco and its Subsidiaries in the Spinco Balance Sheet, subject to any dispositions of such Assets subsequent to the date of the Spinco Balance Sheet;
(vii) any and all other Assets that are expressly provided by this Agreement, the Plan, the Spinoff Plan or any other Transaction Document as Assets to be transferred to Spinco or any other member of the Spinco Group; and
(viii) any and all Assets, other than Intellectual Property, Software and Technology, owned or held immediately prior to the Effective Time by GGP or any of its Subsidiaries that are used exclusively in the Spinco Business (the intention of this clause (viii) is only to rectify any inadvertent omission of transfer or conveyance of any Assets that, had the parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as a Spinco Asset; no Asset shall be deemed to be a Spinco Asset solely as a result of this clause (viii) if such Asset is within the category or type of Asset expressly covered by the terms of another Transaction Document unless the party claiming entitlement to such Asset can establish that the omission of the transfer or conveyance of such Asset was inadvertent, and no Asset shall be deemed a Spinco Asset solely as a result of this clause (viii) unless a claim with respect thereto is made by Spinco on or prior to the second (2nd) anniversary of the Plan Effective Date).
(b) For the purposes of this Agreement, “ Excluded Assets ” shall mean (without duplication):
(i) the GGP Intellectual Property, GGP Software and the GGP Technology;
(ii) any cash and cash equivalents (other than cash and cash equivalents specified in Section 2.2(a)(ii) and Section 2.2(a)(iii) );
(iii) any and all Assets that are expressly contemplated by this Agreement, the Plan, the Spinoff Plan or any other Transaction Document as Assets to be retained by GGP or any other member of the GGP Group;
(iv) any and all other Assets owned by any member of the GGP Group immediately prior to the Effective Time, wherever such Assets may be located (other than Spinco Assets); and
(v) any and all Assets owned or held immediately prior to the Effective Time by GGP or any of its Subsidiaries that are not used exclusively in the Spinco Business (the intention of this clause (v) is only to rectify any inadvertent transfer or conveyance of any Assets that, had the parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as an Excluded Asset; no Asset shall be deemed to be an Excluded Asset solely as a result of this clause (v) if such Asset is within the category or type of Asset expressly covered by the terms of another Transaction Document unless the party claiming entitlement to such Asset can establish that the transfer or conveyance of such Asset was inadvertent, and no Asset shall be deemed an Excluded Asset solely as a result of this clause (v) unless a claim with respect thereto is made by GGP on or prior to the second (2nd) anniversary of the Plan Effective Date).
2.3 Spinco Liabilities .
(a) For the purposes of this Agreement, “ Spinco Liabilities ” shall mean (without duplication) the following Liabilities (except to the extent they constitute Excluded Liabilities):
(i) any and all Liabilities of any member of the Spinco Group;
(ii) all Liabilities reflected as liabilities or obligations of Spinco or its Subsidiaries in the Spinco Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the Spinco Balance Sheet;
(iii) all other Liabilities that are expressly provided by this Agreement, the Plan, the Spinoff Plan or any other Transaction Document as Liabilities to be assumed by Spinco or any other member of the Spinco Group and all agreements or obligations of any member of the Spinco Group under this Agreement or any of the other Transaction Documents;
(iv) except as expressly provided in the Plan or this Agreement, all Liabilities to the extent relating to, arising out of or resulting from:
(A) the operation of the Spinco Business, as conducted at any time before, at or after the Effective Time (including any Liability relating to, arising out of or
resulting from any act or omission by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));
(B) the operation of any business conducted by any member of the Spinco Group at any time before, at or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));
(C) any Spinco Assets (including any Liability relating to, arising out of or resulting from any Spinco Contracts); and
(D) any Liability relating to the protection or restoration of, or prevention of harm to, the environment or natural resources, the protection of human and occupational health and safety, or otherwise arising under Environmental Laws or relating to Hazardous Materials arising out of (i) the operation of the Spinco Business, as conducted at any time before, at or after, the Effective Time, (ii) any of the Spinco Assets, including any other businesses, operations or properties associated with the Spinco Assets (including any businesses, operations or properties for which a current or future owner or operator of the Spinco Assets or the Spinco Business may be alleged to be responsible as a matter of Law, contract or otherwise due to such ownership or operation of the Spinco Assets or Spinco Business), in any such case, whether arising before, at or after the Effective Time or (iii) the operation of any business conducted by any member of the Spinco Group at any time before, at or after the Effective Time; and
(v) all Liabilities arising out of any claim made by any Spinco Employee arising in the course of such employee’s employment against any member of the GGP Group or the Spinco Group, regardless of whether such claim arises prior to or after the Effective Time.
(b) For the purposes of this Agreement, “ Excluded Liabilities ” shall mean (without duplication):
(i) any and all Liabilities that are expressly contemplated by this Agreement, the Plan, the Spinoff Plan or any other Transaction Document as Liabilities to be retained or assumed by GGP or any other member of the GGP Group, and all agreements and obligations of any member of the GGP Group under this Agreement or any of the other Transaction Documents;
(ii) any and all Liabilities of a member of the GGP Group to the extent relating to, arising out of or resulting from any Excluded Assets;
(iii) any and all liabilities arising from a knowing violation of Law, intentional fraud or intentional misrepresentation by any member of the GGP Group or any of their respective directors, officers, employees or agents (other than any individual who at the time of such act was acting in his or her capacity as a director, officer, employee or agent of any member of the Spinco Group or on behalf of the Spinco Business);
(iv) all Liabilities arising out of any claim made by any employee of any member of the GGP Group other than a Spinco Employee arising in the course of such employee’s employment against any member of the GGP Group or the Spinco Group, regardless of whether such claim arises prior to or after the Effective Time;
(v) any and all Liabilities of any members of the GGP Group that are not Spinco Liabilities; and
(vi) any and all Liabilities arising from claims set forth in Class 4.2 of the Plan.
2.4 Approvals and Notifications of Spinco Assets and Liabilities .
(a) If and to the extent that the valid, complete and perfected transfer or assignment to the Spinco Group of any Spinco Assets or assumption by the Spinco Group of any Spinco Liabilities would be a violation of applicable Law or require any Approvals or Notifications in connection with the Restructuring, or the Distribution, that has not been obtained or made by the Effective Time then, unless the parties hereto mutually shall otherwise determine, the transfer or assignment to the Spinco Group of such Spinco Assets or the assumption by the Spinco Group of such Spinco Liabilities, as the case may be, shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Approvals or Notifications have been obtained or made in accordance with this Section 2.4 hereof. Notwithstanding the foregoing, any such Spinco Assets or Spinco Liabilities shall continue to constitute Spinco Assets and Spinco Liabilities for all other purposes of this Agreement.
(b) If any transfer or assignment of any Spinco Asset or any assumption of any Spinco Liabilities intended to be transferred, assigned or assumed hereunder, as the case may be, is not consummated on or prior to the Plan Effective Date, whether as a result of the provisions of Section 2.4(a) or for any other reason, then, insofar as reasonably possible, the member of the GGP Group retaining such Spinco Asset or such Spinco Liability, as the case may be, shall thereafter hold such Spinco Asset or Spinco Liability, as the case may be, for the use and benefit of the member of the Spinco Group entitled thereto (at the expense of the member of the Spinco Group entitled thereto). In addition, the member of the GGP Group retaining such Spinco Asset or such Spinco Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Spinco Asset or Spinco Liability in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested (pursuant to Section 2.5(b) and otherwise) by the member of the Spinco Group to whom such Spinco Asset is to be transferred or assigned, or which will assume such Spinco Liability, as the case may be, in order to place such member of the Spinco Group in a substantially similar position as if such Spinco Asset or Spinco Liability had been transferred, assigned or assumed as contemplated hereby and so that all the benefits and burdens relating to such Spinco Asset or Spinco Liability, as the case may be, including use, risk of loss, potential for gain, and dominion, control and command over such Spinco Asset or Spinco Liability, as the case may be, is to inure from and after the Effective Time to the Spinco Group.
(c) If and when the Approvals or Notifications, the absence of which caused the deferral of transfer or assignment of any Spinco Asset or the deferral of assumption of any Spinco Liability pursuant to Section 2.4(a) , are obtained or made, and, if and when any other legal impediments for the transfer or assignment of any Spinco Asset or the assumption of any Spinco Liability have been removed, the transfer or assignment of the applicable Spinco Asset or the assumption of the applicable Spinco Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Transaction Document.
(d) The reasonable out-of-pocket costs and expenses associated with any such transfers or assignments of Spinco Assets or assumption of Spinco Liabilities, including reasonable attorneys’ fees and all recording or similar fees, shall be borne by GGP until the six month anniversary of the date of the Distribution, and thereafter by Spinco; provided, that the GGO Promissory Note (as defined in the Investment Agreements) shall be issued, and subsequently adjusted, on the terms and conditions set forth in the Investment Agreements.
2.5 Transfer of Non-Transferred Assets; Assumption of Non-Transferred Liabilities .
(a) If at any time or from time to time following the Effective Time, any party hereto (or any member of such party’s respective Group), shall receive or otherwise possess any Asset or Liability (including any Intellectual Property or Technology) that is allocated to any other Person pursuant to this Agreement or any other Transaction Document, such Person (or any member of such party’s respective Group, the “ Transferor Party ”) shall promptly transfer, or cause to be transferred, such Asset (each, a “ Non-Transferred Asset ”) or Liability (each, a “ Non-Transferred Liability ”), as the case may be, to the Person (or any member of such party’s respective Group, the “ Transferee Party ”) entitled to such Non-Transferred Asset or responsible for such Non-Transferred Liability, as the case may be, and the Transferee Party entitled to such Non-Transferred Asset or responsible for such Non-Transferred Liability shall accept such Non-Transferred Asset or accept, assume and agree faithfully to perform, discharge such Non-Transferred Liability, as applicable.
(b) In furtherance of the assignment, transfer, conveyance and delivery of Non-Transferred Assets and the assumption of Non-Transferred Liabilities set forth in this Section 2.5 , (i) the Transferor Party shall execute and deliver such bills of sale, quitclaim deeds, stock powers, certificates of title, assignments of contract and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment of all of the Transferee Party’s right, title and interest in and to the Non-Transferred Assets, and (ii) the Transferee Party shall execute and deliver such assumptions of contract and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Non-Transferred Liabilities.
(c) To the extent that the transfer or assignment of any Non-Transferred Assets or the assumption of any Non-Transferred Liabilities requires any Approvals or Notifications, the parties shall use their commercially reasonable efforts to obtain or make such Approvals or Notifications as soon as reasonably practicable; provided , however , that, except to the extent expressly provided in any of the other Transaction Documents, no member of the GGP Group or Spinco Group shall be obligated to contribute capital or pay any consideration in any
form (including providing any letter of credit, guaranty or other financial accommodation) to any Person in order to obtain or make such Approvals or Notifications.
(d) If and to the extent that the valid, complete and perfected transfer or assignment to the Transferee Party of any Non-Transferred Assets or the assumption by the Transferee Party of any Non-Transferred Liabilities would be a violation of applicable Law or require any material Approval or Notification that has not been made or obtained on or before the Plan Effective Date, then, unless the parties hereto mutually shall otherwise determine, the transfer or assignment to the Transferee Party of such Non-Transferred Assets or the assumption by the Transferee Party of such Non-Transferred Liabilities shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Approvals or Notifications have been obtained or made. Notwithstanding the foregoing, any such Non-Transferred Assets that are Excluded Assets or Non-Transferred Liabilities that are Excluded Liabilities shall continue to constitute Excluded Assets or Excluded Liabilities for all other purposes of this Agreement, and any such Non-Transferred Assets that are Spinco Assets or Non-Transferred Liabilities that are Spinco Liabilities shall continue to constitute Spinco Assets or Spinco Liabilities for all other purposes of this Agreement.
(e) If any transfer or assignment of any Non-Transferred Asset under this Section 2.5 , is not consummated on or prior to the Plan Effective Date, whether as a result of the provisions of Section 2.5(d) or for any other reason, then, insofar as reasonably possible, the Transferor Party retaining such Non-Transferred Asset, shall thereafter hold such Non-Transferred Asset for the use and benefit of the Transferee Party entitled thereto (at the expense of the member of the Transferee Party entitled thereto). In addition, the Transferor Party retaining such Non-Transferred Asset shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Non-Transferred Asset in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the Transferee Party to whom such Non-Transferred Asset is to be transferred or assigned, in order to place such Transferee Party in a substantially similar position as if such Non-Transferred Asset had been transferred as contemplated hereby and so that all the benefits and burdens relating to such Non-Transferred Asset, including use, risk of loss, potential for gain, and dominion, control and command over such Non-Transferred Asset, is to inure from and after the Effective Time to the Transferee Party.
(f) If and when the Approvals or Notifications, the absence of which caused the deferral of transfer or assignment of any Non-Transferred Asset or the deferral of assumption of any Non-Transferred Liability, are obtained or made, and, if and when any other legal impediments for the transfer or assignment of any Non-Transferred Assets or the assumption of any Non-Transferred Liabilities have been removed, the transfer or assignment of the applicable Non-Transferred Asset or the assumption of the applicable Non-Transferred Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Transaction Document.
(g) The reasonable out-of-pocket costs and expenses associated with any such transfers or assignments of Non-Transferred Assets or assumption of Non-Transferred Liabilities, including reasonable attorneys’ fees and all recording or similar fees, shall be borne
by the party that would have been responsible for such costs and expenses if the transfer, assignment or assumption had occurred at or prior to the Effective Time.
2.6 Novation of Liabilities .
(a) Each of GGP and Spinco, at the request of the other, shall use its commercially reasonable efforts to obtain, or to cause to be obtained, as soon as reasonably practicable, any consent, substitution, approval or amendment required to novate or assign all obligations under agreements, leases, licenses and other obligations or Liabilities that constitute Excluded Liabilities or Spinco Liabilities, as applicable, or to obtain in writing the unconditional release of all parties to such arrangements other than any member of the GGP Group or the Spinco Group, as applicable (the “ Released Party ”), so that, in any such case, the members of the GGP Group or the Spinco Group, as applicable (the “ Responsible Party ”) will be solely responsible for such Liabilities; provided , however , that, except as otherwise expressly provided in any of the other Transaction Documents, neither GGP nor Spinco shall be obligated to contribute any capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any third Person from whom any such consent, substitution, approval, amendment or release is requested.
(b) If the Released Party is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, amendment or release, the Released Party shall continue to be bound by such agreement, lease, license or other obligation or Liability and, unless not permitted by the terms thereof or by Law, the Responsible Party shall, as agent or subcontractor for the Released Party, pay, perform and discharge fully all the obligations or other Liabilities of the Released Party thereunder from and after the Effective Time. The Responsible Party shall indemnify the Released Party and any other members of its respective Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing and hold each of them harmless against any Liabilities arising in connection therewith; provided , that pursuant hereto the Responsible Party shall have no obligation to indemnify any Person that has engaged in any knowing violation of Law, fraud or misrepresentation in connection therewith. The Released Party shall cause each member of its respective Group, without further consideration, to pay and remit, or cause to be paid or remitted, to the Responsible Party or its designee promptly all money, rights and other consideration received by it or any member of its respective Group in respect of the document, agreement, Contract, obligation or Liability that gave rise to such performance (unless any such consideration is an Asset expressly allocated to the Released Party pursuant to this Agreement). If and when any such consent, substitution, approval, amendment or release shall be obtained or the obligations under such agreement, lease, license or other obligations or Liabilities shall otherwise become assignable or able to be novated, the Released Party shall promptly assign, or cause to be assigned, all its obligations and other Liabilities thereunder or any obligations of any member of its respective Group without payment of further consideration and the Responsible Party, without the payment of any further consideration, shall, or shall cause another member of its respective Group to, assume such obligations.
2.7 Termination of Agreements and Arrangements .
(a) Except as set forth in Section 2.7(b) , in furtherance of the releases and other provisions of Section 5.1 , Spinco and each member of the Spinco Group, on the one hand, and GGP and each member of the GGP Group, on the other hand, hereby terminate, effective as of the Effective Time, any and all agreements, arrangements, commitments or understandings, whether or not in writing, solely between or among Spinco and/or any member of the Spinco Group, on the one hand, and GGP and/or any member of the GGP Group, on the other hand, effective as of the Effective Time; provided , however , to the extent that termination of any such agreement, arrangement, commitment or understanding is inconsistent with any other Transaction Document, such termination shall be determined pursuant to the applicable Transaction Document. Notwithstanding the foregoing, the Groups shall settle all intercompany receivables and payables as of the Effective Time, and after the Effective Time neither Group shall owe any further amounts to the other Group in respect of such intercompany receivables and payables. No such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Effective Time (or, to the extent contemplated by the proviso to the immediately preceding sentence, after the effective date of the applicable Transaction Document). Each party shall, at the reasonable request of any other party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.
(b) The provisions of Section 2.7(a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof):
(i) this Agreement and the other Transaction Documents (and each other agreement or instrument expressly contemplated by this Agreement or any other Transaction Document to be entered into or continued by any of the parties hereto or any of the members of their respective Groups);
(ii) any agreements, arrangements, commitments or understandings to which any Person other than the parties hereto and their respective wholly-owned Subsidiaries is a party (it being understood that (A) directors’ qualifying shares, preferred or similar interests or shares issued by entities issuing such shares to satisfy REIT qualification requirements or the Code, will be disregarded for purposes of determining whether a Subsidiary is wholly owned and (B) to the extent that the rights and obligations of the parties and the members of their respective Groups under any such agreements, arrangements, commitments or understandings constitute Spinco Assets or Spinco Liabilities, they shall be assigned pursuant to Section 2.1 ); and
(iii) any other agreements, arrangements, commitments or understandings that this Agreement, the Plan, the Spinoff Plan or any other Transaction Document expressly contemplates will survive the Plan Effective Date.
2.8 Bank Accounts; Cash Balances .
Except as may be set forth in the Transition Services Agreement:
(a) GGP and Spinco each agrees to take, or cause the respective members of their respective Groups to take, to be effective at the Effective Time (or such earlier time as GGP
and Spinco may agree), all actions necessary to amend all Spinco Contracts governing each bank and brokerage account owned by Spinco or any other member of the Spinco Group (collectively, the “ Spinco Accounts ”), so that such Spinco Accounts, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “ linked ”) to any bank or brokerage account owned by GGP or any other member of the GGP Group (collectively, the “ GGP Accounts ”), are de-linked from the GGP Accounts effective on the Plan Effective Date.
(b) GGP and Spinco each agrees to take, or cause the respective members of their respective Groups to take, to be effective at the Effective Time (or such earlier time as GGP and Spinco may agree), all actions necessary to amend all Spinco Contracts governing the GGP Accounts so that such GGP Accounts, if currently linked to a Spinco Account, are de-linked from the Spinco Accounts.
(c) It is intended that, following consummation of the actions contemplated by Sections 2.8(a) and 2.8(b) , there will continue to be in place a centralized cash management process pursuant to which the Spinco Accounts will be managed centrally and funds collected will be transferred into one (1) or more centralized accounts maintained by Spinco.
(d) It is intended that, following consummation of the actions contemplated by Sections 2.8(a) and 2.8(b) , there will continue to be in place a centralized cash management process pursuant to which the GGP Accounts will be managed centrally and funds collected will be transferred into one (1) or more centralized accounts maintained by GGP.
(e) With respect to any outstanding checks issued by GGP, Spinco, or any of their respective Subsidiaries prior to the Effective Time, such outstanding checks shall be honored following the Effective Time by the Person or Group owning the account on which the check is drawn with prompt reimbursement from the Person or Group that issued such check, if applicable, in each case subject to the express provisions in the Plan or the Investment Agreements regarding payment of claims.
(f) As between GGP and Spinco (and the members of their respective Groups) all payments and reimbursements received after the Effective Time by either party (or member of its Group) in the ordinary course of business that relate to a business, Asset or Liability of the other party (or member of its Group), shall be held by such party in trust for the use and benefit of the party entitled thereto and, promptly upon receipt by such party of any such payment or reimbursement, such party shall pay over, or shall cause the applicable member of its Group to pay over to the other party the amount of such payment or reimbursement without right of set-off.
(g) Each of GGP and Spinco agrees that, prior to the Effective Time, GGP or any other member of the GGP Group may withdraw any and all cash or cash equivalents (other than the cash proceeds specified in Section 2.2(a)(iii) ) from the Spinco Accounts for the benefit of GGP or any other member of the GGP Group; provided , however , that neither GGP nor any other member of the GGP Group shall be entitled to withdraw any cash or cash equivalents from any Spinco Account if, and to the extent that, the amount of such cash or cash equivalents is necessary to cover any checks or wires made from or against (or to be made from or against) a
Spinco Account as of, or prior to, the Effective Time and which has not been paid or withdrawn as of the Effective Time.
2.9 Replacement of Letters of Credit Relating to the Spinco Business . Spinco shall use its commercially reasonable efforts to replace, as promptly as practicable following the Effective Time, each letter of credit relating to the Spinco Business in effect immediately prior to the Effective Time with a new letter of credit that does not involve any recourse, contingent or otherwise, to any member of the GGP Group.
2.10 Payment of Certain Ordinary Course, Pre-Petition Obligations . Notwithstanding Section 2.3 hereof, with respect to any claims for ordinary course obligations of any member of the Spinco Group that were incurred prior to the filing of the Bankruptcy Cases (the “ Petition Date ”) that are subject to the Plan but have been neither allowed nor disallowed as of the Plan Effective Date, GGP shall satisfy, or cause to be satisfied, such claims if and to the extent they become allowed claims; provided , however , that the aggregate Liability of the GGP Group with respect to this Section 2.10 shall not exceed a cap of $5,000,000 (it being understood that Liabilities allocated to the GGP Group in Section 2.3(b)(vi) shall not count towards such cap), and any Liabilities related to such claims in excess of such cap shall be borne by the Spinco Group.
2.11 Payment of Certain Legal Fees of K&L Gates LLP . GGP shall pay, or cause to be paid, the reasonable legal fees of K&L Gates LLP in connection with the Transactions, but only to the extent such fees are incurred on or prior to the Plan Effective Date and set forth on an itemized invoice delivered to GGP; provided , however , that the aggregate payment obligation of the GGP Group with respect to this Section 2.11 shall not exceed a cap of $600,000, and any payment obligations in excess of such cap shall be borne by the Spinco Group.
2.12 Mechanics’ and Materialman’s Liens . In connection with any financing, sale or other transfer involving all or any portion of any Asset of any member of the Spinco Group, GGP shall, promptly following request by Spinco, bond off, cause the removal from record of or otherwise address in a commercially reasonable manner, which is reasonably acceptable to Spinco, to the applicable lender, purchaser or other transferee, and to any title insurance company involved in such financing, sale or other transfer, any mechanics’ or materialmans’ liens affecting such Asset for which GGP is responsible for payment pursuant to the terms of this Agreement. Notwithstanding the foregoing, in the event that GGP chooses to bond off any such lien, GGP may request that Spinco be responsible for such bonding process, in which event GGP agrees to promptly reimburse Spinco for all actual third party costs incurred by Spinco or by any member of the Spinco Group in connection therewith.
2.13 Disclaimer of Representations and Warranties . EACH OF GGP (ON BEHALF OF ITSELF AND EACH MEMBER OF THE GGP GROUP) AND SPINCO (ON BEHALF OF ITSELF AND EACH MEMBER OF THE SPINCO GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY OTHER TRANSACTION DOCUMENT, NO PARTY TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, OR OTHERWISE, IS REPRESENTING OR WARRANTING TO ANY OTHER PARTY HERETO OR THERETO IN ANY WAY AS TO
THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY APPROVALS OR NOTIFICATIONS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH IN THIS AGREEMENT OR IN ANY TRANSACTION DOCUMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY APPROVALS OR NOTIFICATIONS ARE NOT OBTAINED OR MADE OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.
ARTICLE III
THE DISTRIBUTION
3.1 Actions on or Prior to the Plan Effective Date . Prior to the Distribution, the following shall occur:
(a) Listing . Spinco shall prepare, file and pursue an application to permit listing of the Spinco Common Stock on the New York Stock Exchange.
(b) Bankruptcy . The Bankruptcy Court shall have entered an order confirming the Plan and there shall not be a stay or injunction (or similar prohibition) in effect with respect to such order.
(c) Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws . (i) GGP and Spinco shall each take all necessary action that may be required to provide for the adoption by Spinco of the Amended and Restated Certificate of Incorporation of Spinco in substantially the form attached to the Plan (the “ Amended and Restated Certificate of Incorporation ”), and the Amended and Restated Bylaws of Spinco in substantially the form attached to the Plan (the “ Amended and Restated Bylaws ”) and (ii) Spinco shall file the Amended and Restated Certificate of Incorporation of Spinco with the Secretary of State of the State of Delaware.
(d) The Distribution Agent . GGP shall enter into a distribution agent agreement with the Distribution Agent or otherwise provide instructions to the Distribution Agent regarding the Distribution.
(e) Stock-Based Employee Benefit Plans . At or prior to the Effective Time, GGP and Spinco shall take all actions as may be necessary to approve the stock-based employee benefit plans of Spinco in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of the New York Stock Exchange.
3.2 Conditions Precedent to Distribution . In no event shall the Distribution occur unless each of the following conditions shall have been satisfied (or waived by GGP, in whole or in part, in its sole discretion):
(a) the Restructuring shall have been completed in accordance with the Plan;
(b) the Plan Effective Date shall have occurred;
(c) the Private Letter Ruling shall have been received and shall not have been revoked or modified in any material respect;
(d) the Form 10 filed with the SEC shall have been declared effective by the SEC, no stop order suspending the effectiveness of the Form 10 shall be in effect, no proceedings for such purpose shall be pending before or threatened by the SEC;
(e) the Spinco Common Stock to be delivered in the Distribution shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance;
(f) each of the other Transaction Documents shall have been duly executed and delivered by the parties thereto;
(g) no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution or any of the transactions related thereto, including the Restructuring, shall be in effect;
(h) prior to the Distribution, all of GGP’s representatives or designees shall have resigned or been removed as officers from all members of the Spinco Group, and all of Spinco’s representatives or designees shall have resigned or been removed as officers from all members of the GGP Group;
(i) the designees of Brookfield Retail Holdings LLC (or its affiliates) and Pershing Square Capital Management, L.P. (or its affiliates), as set forth in the Cornerstone Investment Agreement and the Pershing Investment Agreement, shall have been appointed to the to the board of directors of Spinco; and
(j) no event or development shall have occurred or exist that, in the judgment of the board of directors of GGP, in its sole discretion, makes it inadvisable to effect the Restructuring, the Distribution or the other transactions contemplated hereby.
Each of the foregoing conditions is for the sole benefit of GGP and shall not give rise to or create any duty on the part of GGP or its board of directors to waive or not to waive any such condition or to effect the Restructuring and the Distribution, or in any way limit GGP’s rights of
termination set forth in this Agreement. Any determination made by GGP prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.2 shall be conclusive and binding on the parties.
3.3 The Distribution .
(a) Subject to the terms and conditions set forth in this Agreement and the Plan, (i) on or prior to the Plan Effective Date, GGP shall deliver to the Distribution Agent for the benefit of holders of record of GGP Common Shares on the Record Date, book-entry transfer authorizations for such number of the issued and outstanding shares of Spinco Common Stock necessary to effect the Distribution, (ii) the Distribution shall be effective at the Effective Time and (iii) GGP shall instruct the Distribution Agent to distribute, on or as soon as practicable after the Effective Time, to each holder of record of GGP Common Shares as of the Record Date, by means of a pro rata distribution, 0.0983 shares of Spinco Common Stock for every one (1) GGP Common Share; provided , however , that no fractional shares shall be issued. Following the Plan Effective Date, Spinco agrees to provide all book-entry transfer authorizations for shares of Spinco Common Stock that GGP or the Distribution Agent shall require (after giving effect to Section 3.4 ) in order to effect the Distribution.
(b) Notwithstanding anything to the contrary contained in this Agreement, GGP shall, in its sole and absolute discretion, determine the Plan Effective Date and all terms of the Distribution, including the form, structure and terms of any transactions and/or offerings to effect the Distribution and the timing of and conditions to the consummation thereof. In addition, GGP may at any time and from time to time until the completion of the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution.
(c) The parties agree that this Agreement constitutes a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g).
(d) The parties agree that the steps of the Spinoff Plan shall be effected in the order and manner prescribed in the Spinoff Plan and the occurrence of each step shall be conditioned upon the completion of the preceding step.
3.4 GGP Authorization of Agreement . GGP has all requisite power, authority and legal capacity to execute and deliver this Agreement and each other Transaction Document to be executed by GGP in connection with the consummation of Distribution, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and each of the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized and approved by all required action on the part of GGP. This Agreement has been, and each of the Transaction Documents will be at or prior to the Closing, duly and validly executed and delivered by GGP and (assuming due authorization, execution and delivery by Spinco) this Agreement constitutes, and each of the Transaction Documents when so executed and delivered will constitute, legal, valid and binding obligations of GGP, enforceable against GGP in accordance with its terms.
ARTICLE IV
ACCESS TO INFORMATION
4.1 Agreement for Exchange of Information; Archives .
(a) After the Effective Time (or such earlier time as the parties may agree) and until the fifth (5th) anniversary of the date of this Agreement, each of GGP and Spinco, on behalf of its respective Group, agrees to provide, or cause to be provided, to the other Group, as soon as reasonably practicable after written request therefor, any Information in the possession or under the control of such respective Group which the requesting party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting party (including under applicable securities Laws) by a Governmental Authority having jurisdiction over the requesting party, (ii) to carry out its human resources functions or to establish, assume or administer its benefit plans or payroll functions, (iii) in order to satisfy audit, accounting or other similar requirements (except as otherwise provided in Section 4.1(d) ), or (iv) to comply with its obligations under this Agreement or any other Transaction Document; provided , however , that in the event that any party determines that any such provision of Information could be commercially detrimental, violate any Law or agreement, or waive any attorney-client privilege, the parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.
(b) After the Effective Time (or such earlier time as the parties may agree) and until the fifth (5th) anniversary of the date of this Agreement, (i) Spinco and its authorized accountants, counsel and other designated representatives shall have access during regular business hours (as in effect from time to time) to the documents and objects of historic significance that relate to the Spinco Business that are located in archives retained or maintained by any member of the GGP Group, and (ii) Spinco may obtain copies (but not originals unless it is a Spinco Asset) of documents for bona fide business purposes and may obtain objects for exhibition purposes for commercially reasonable periods of time if required for such bona fide business purposes; provided , that Spinco shall cause any such objects to be returned promptly in the same condition in which they were delivered to Spinco and Spinco shall comply with any rules, procedures or other requirements, and shall be subject to any restrictions (including prohibitions on removal of specified objects), that are then applicable to GGP; provided , further , that, notwithstanding any provisions of this Section 4.1(b) , any request for Information or access to Representatives in connection with any Third Party Claims shall be subject to Section 4.7 . Nothing herein shall be deemed to restrict the access of any member of the GGP Group to any such documents or objects or to impose any liability on any member of the GGP Group if any such documents or objects are not maintained or preserved by GGP.
(c) After the Effective Time (or such earlier time as the parties may agree) and until the fifth (5th) anniversary of the date of this Agreement, (i) GGP and its authorized accountants, counsel and other designated representatives shall have access during regular business hours (as in effect from time to time) to the documents and objects of historic significance that relate to the GGP Business that are located in archives retained or maintained by any member of the Spinco Group and (ii) GGP may obtain copies (but not originals unless it is not a Spinco Asset) of documents for bona fide business purposes and may obtain objects for
exhibition purposes for commercially reasonable periods of time if required for such bona fide business purposes; provided , that GGP shall cause any such objects to be returned promptly in the same condition in which they were delivered to GGP and GGP shall comply with any rules, procedures or other requirements, and shall be subject to any restrictions (including prohibitions on removal of specified objects), that are then applicable to Spinco; provided , further , that, notwithstanding any provisions of this Section 4.1(c) , any request for Information or access to Representatives in connection with any Third Party Claims shall be subject to Section 4.7 . Nothing herein shall be deemed to restrict the access of any member of the Spinco Group to any such documents or objects or to impose any liability on any member of the Spinco Group if any such documents or objects are not maintained or preserved by Spinco.
(d) Without limiting the generality of the foregoing, until the second (2nd) Spinco fiscal year end occurring after the Effective Time (and for a reasonable period of time afterwards as required for each of GGP and Spinco to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Plan Effective Date occurs), each of GGP and Spinco shall use its commercially reasonable efforts to cooperate with the other party’s Information requests to enable (i) the other party to meet its timetable for dissemination of its earnings releases, financial statements and management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K, and (ii) the other party’s accountants to timely complete their review of the quarterly financial statements and audit of the annual financial statements, including, to the extent applicable to such party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder.
4.2 Ownership of Information . Any Information owned by one Group that is provided to a requesting party pursuant to Section 4.1 shall be deemed to remain the property of the providing party, except where such Information is an Asset of the requesting party pursuant to the provisions of this Agreement or any other Transaction Document. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any Information requested or provided pursuant to Section 4.1 .
4.3 Compensation for Providing Information . The party requesting Information agrees to reimburse the other party for the reasonable out-of-pocket costs and expenses, if any, of creating, gathering and copying such Information (including any costs and expenses incurred in any review of Information for purposes of protecting the privileged Information of the providing party or in connection with the restoration of backup tapes for purposes of providing the requested Information), to the extent that such costs are incurred in connection with such other party’s provision of Information in response to the requesting party.
4.4 Record Retention .
(a) To facilitate the possible exchange of Information pursuant to this Article IV and other provisions of this Agreement after the Effective Time, the parties agree to use their commercially reasonable efforts to retain all Information in their respective possession or control in accordance with the policies or ordinary course practices of GGP or Spinco, as
applicable, in effect on the Plan Effective Date (including any Information that is subject to a “Litigation Hold” issued by either party prior to the Plan Effective Date) or such other policies or practices as may be reasonably adopted by the appropriate party after the Effective Time.
(b) Except in accordance with its, or its applicable Subsidiaries’, policies and ordinary course practices, no party will destroy, or permit any of its Subsidiaries to destroy, any Information that would, in accordance with such policies or ordinary course practices, be archived or otherwise filed in a centralized filing system by such party or its applicable Subsidiaries; provided , however , that (i) in the case of any Information relating to employee benefits, no party will destroy, or permit any of its Subsidiaries to destroy, any such Information until the expiration of the applicable statute of limitations (giving effect to any extensions thereof), (ii) in the case of any Information relating to a pending or threatened Action (including any pending or threatened investigation by a Governmental Authority) that is known to the members of the Group in possession of such Information, the parties shall comply with the requirements of the applicable “Litigation Hold” ( provided , that, with respect to any pending or threatened Action arising after the Plan Effective Date, the requirements of this clause (ii) shall apply only to the extent that whichever member of the GGP Group or the Spinco Group that is in possession of such Information has been notified in writing pursuant to a “Litigation Hold” by the other party of such pending or threatened Action) and (iii) no party will destroy, or permit any of its Subsidiaries to destroy, any Information required to be retained by applicable Law.
(c) In the event of either party’s or any of its Subsidiaries’ inadvertent failure to comply with its applicable document retention policies as required under this Section 4.4 , such party shall be liable to the other party solely for the amount of any monetary fines or penalties imposed or levied against such other party by a Governmental Authority (which fines or penalties shall not include any Liabilities asserted in connection with the claims underlying the applicable Action, other than fines or penalties resulting from any claim of spoliation) as a result of such other party’s inability to produce Information caused by such inadvertent failure and, notwithstanding Sections 5.2 and 5.3 , shall not be liable to such other party for any other Liabilities.
4.5 Liability . No party shall have any liability to any other party in the event that any Information exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate in the absence of willful misconduct by the party providing such Information.
4.6 Other Agreements Providing for Exchange of Information .
(a) The rights and obligations granted under this Article IV are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth in any other Transaction Document.
(b) Any party that receives, pursuant to a request for Information in accordance with this Article IV , Information that is not relevant to its request shall (i) either destroy such Information or return it to the providing party and (ii) deliver to the providing party a certificate certifying that such Information was destroyed or returned, as the case may be,
which certificate shall be signed by an officer of the requesting party holding the title of vice president or above.
(c) When any Information provided by one Group to the other (other than Information provided pursuant to Section 4.4 ) is no longer needed for the purposes contemplated by this Agreement or any other Transaction Document and is no longer required to be retained by applicable Law, the receiving party will promptly after request of the other party either return to the other party all Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon).
(d) The parties agree to comply with the requirements of the Health Insurance Portability and Accountability Act of 1996, as amended, in connection with the sharing of Information pursuant to this Article IV , including by entering into any business associate agreements that may be required for such compliance.
4.7 Production of Witnesses; Records; Cooperation .
(a) After the Effective Time (or such earlier time as the parties may agree), except in the case of an adversarial Action by one party against another party, each party hereto shall use its commercially reasonable efforts to make available to each other party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Action or IP Application in which the requesting party may from time to time be involved, regardless of whether such Action or IP Application is a matter with respect to which indemnification may be sought hereunder. The requesting party shall bear all out-of-pocket costs and expenses in connection therewith.
(b) If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third Party Claim, the Indemnified Party shall use commercially reasonable efforts to make available to such Indemnifying Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such persons (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such defense, settlement or compromise, or the prosecution, evaluation or pursuit thereof, as the case may be, and shall otherwise cooperate in such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be. The Indemnifying Party shall bear all out-of-pocket costs and expenses in connection therewith.
(c) In furtherance and without limiting the provisions of Sections 4.7(a) and (b) , the parties shall cooperate and consult to the extent reasonably necessary with respect to (i) any Third Party Claims and (ii) any written request for access to Information or
Representatives of the other party and members of such other party’s Group in connection with any Third Party Claim; provided that such request shall sufficiently identify the applicable custodian of the requested Information and, to the extent known to the requesting party, the date of, or any applicable time periods relating to, the requested Information and any other descriptions necessary to sufficiently identify the requested Information.
(d) Without limiting any provision of this Section 4.7 , each of the parties agrees to reasonably cooperate, and to cause each member of its respective Group to reasonably cooperate, with each other in the defense of any infringement, misappropriation or similar claim with respect to any Intellectual Property and shall not claim to acknowledge, or permit any member of its respective Group to claim to acknowledge, the validity, enforceability or misappropriation of any Intellectual Property of a third Person in a manner that would hamper or undermine the defense of such infringement, misappropriation or similar claim except as required by Law.
(e) The obligation of the parties to provide witnesses pursuant to this Section 4.7 is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to provide as witnesses inventors and other officers without regard to whether the witness or the employer of the witness could assert a possible business conflict (subject to the exception set forth in the first (1st) sentence of Section 4.7(a) ).
(f) In connection with any matter contemplated by this Section 4.7 , the parties will enter into a mutually acceptable joint defense agreement so as to maintain to the extent practicable any applicable attorney-client privilege, work product immunity or other applicable privileges or immunities of any member of any Group.
(g) For the avoidance of doubt, the provisions of this Section 4.7 are in furtherance of the provisions of Section 4.1 and shall not be deemed to in any way limit or otherwise modify the parties’ rights and obligations under Section 4.1 .
4.8 Privileged Matters .
(a) The parties recognize that legal and other professional services that have been and will be provided prior to the Effective Time have been and will be rendered for the collective benefit of each of the members of the GGP Group and the Spinco Group, and that each of the members of the GGP Group and the Spinco Group should be deemed to be the client with respect to such services for the purposes of asserting all privileges which may be asserted under applicable Law in connection therewith. The parties recognize that legal and other professional services will be provided following the Effective Time, which services will be rendered solely for the benefit of the GGP Group or the Spinco Group, as the case may be.
(b) The parties agree as follows:
(i) GGP shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with any privileged Information that relates solely to the GGP Business and not to the Spinco Business, whether or not the privileged Information is in the possession or under the control of any member of the GGP Group or any member of the Spinco Group. GGP shall also be entitled, in perpetuity, to control the assertion or waiver of all
privileges in connection with any privileged Information that relates solely to any Excluded Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the privileged Information is in the possession or under the control of any member of the GGP Group or any member of the Spinco Group; and
(ii) Spinco shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with any privileged Information that relates solely to the Spinco Business and not to the GGP Business, whether or not the privileged Information is in the possession or under the control of any member of the Spinco Group or any member of the GGP Group. Spinco shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with any privileged Information that relates solely to any Spinco Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the privileged Information is in the possession or under the control of any member of the Spinco Group or any member of the GGP Group.
(c) Subject to the restrictions set forth in this Section 4.8 , the parties agree that they shall have a shared privilege, each with equal right to assert any such shared privilege, with respect to all privileges not allocated pursuant to Section 4.8(b) and all privileges relating to any Actions or other matters that involve both the GGP Group and the Spinco Group and in respect of which both parties have Liabilities under this Agreement.
(d) Subject to Sections 4.8(e) and (f) , no party may waive any privilege that could be asserted under any applicable Law, and in which the other party has a shared privilege, without the consent of the other party, which consent shall (i) not be unreasonably withheld, conditioned or delayed, (ii) be in writing and (iii) be deemed to be granted unless written objection is made within twenty (20) days after notice has been given to the other party requesting such consent.
(e) In the event of any Actions between GGP and Spinco, or any members of their respective Groups, either party may waive a privilege in which the other party or member of such other party’s Group has a shared privilege, without obtaining consent pursuant to Section 4.8(d) ; provided , that such waiver of a shared privilege shall be effective only as to the use of Information with respect to the Action between the parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared privilege with respect to any third Person.
(f) If any dispute arises between GGP and Spinco, or any members of their respective Groups, regarding whether a privilege should be waived to protect or advance the interests of either the GGP Group or the Spinco Group, each party agrees that it shall (i) negotiate with the other party in good faith, (ii) endeavor to minimize any prejudice to the rights of the other party and (iii) not unreasonably withhold, condition or delay consent to any request for waiver by the other party. Further, each party specifically agrees that it will not withhold its consent to the waiver of a privilege for any purpose except to protect its own legitimate interests.
(g) Upon receipt by either party, or by any member of its respective Group, of any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of Information subject to a shared privilege or as to which another party
has the sole right hereunder to assert a privilege, or if either party obtains knowledge that any of its, or any member of its respective Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that may reasonably be expected to result in the production or disclosure of such privileged Information, such party shall promptly notify the other party of the existence of the request (which notice shall be delivered to such other party no later than five (5) business days following the receipt of any such subpoena, discovery or other request) and shall provide the other party a reasonable opportunity to review the Information and to assert any rights it or they may have under this Section 4.8 or otherwise to prevent the production or disclosure of such privileged Information.
(h) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of GGP and Spinco set forth in this Section 4.8 and in Section 6.2 to maintain the confidentiality of privileged Information and to assert and maintain all applicable privileges. The parties agree that their respective rights to any access to Information, witnesses and other Persons, the furnishing of notices and documents and other cooperative efforts between the parties contemplated by this Agreement, and the transfer of privileged Information between the parties and members of their respective Groups pursuant to this Agreement, shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.
(i) In furtherance of the parties’ agreement under this Section 4.8 , GGP and Spinco shall, and shall cause applicable members of their respective Group to, maintain their respective separate and joint privileges, including by executing joint defense and common interest agreements where necessary or useful for this purpose.
ARTICLE V
RELEASE; INDEMNIFICATION; AND GUARANTEES
5.1 Release of Pre-Distribution Claims .
(a) Except as provided in (i) Section 5.1(c) , (ii) any exceptions to the indemnification provisions of Sections 5.2 , 5.3 and 5.4 , and (iii) any other Transaction Document, effective as of the Effective Time, Spinco does hereby, for itself and each other member of the Spinco Group, their respective Subsidiaries, successors and assigns, and all Persons who at any time prior to the Effective Time have been directors, officers, agents or employees of any member of the Spinco Group (in each case, in their respective capacities as such), remise, release and forever discharge GGP and the other members of the GGP Group, their respective Subsidiaries, successors and assigns, and all Persons who at any time prior to the Effective Time have been stockholders, equityholders, directors, officers, agents or employees of any member of the GGP Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract or agreement, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Plan Effective Date, including in connection with the Bankruptcy Cases, the Plan, the transactions and all other
activities to implement the Restructuring, the Distribution and any of the other transactions contemplated hereunder and under the other Transaction Documents.
(b) Except as provided in (i) Section 5.1(c) , (ii) any exceptions to the indemnification provisions of Sections 5.2 , 5.3 and 5.4 , and (iii) any other Transaction Document, effective as of the Plan Effective Date, GGP does hereby, for itself and each other member of the GGP Group, their respective Subsidiaries, successors and assigns, and all Persons who at any time prior to the Effective Time have been stockholders, directors, officers, agents or employees of any member of the GGP Group (in each case, in their respective capacities as such), remise, release and forever discharge Spinco, the respective members of the Spinco Group, their respective Subsidiaries, successors and assigns, and all Persons who at any time prior to the Effective Time have been directors, officers, agents or employees of any member of the Spinco Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract or agreement, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Plan Effective Date, including in connection with the Bankruptcy Cases, the Plan, the transactions and all other activities to implement the Restructuring, the Distribution and any of the other transactions contemplated hereunder and under the other Transaction Documents.
(c) Nothing contained in Section 5.1(a) or Section 5.1(b) shall impair any right of any party to enforce this Agreement, or any other Transaction Document, in accordance with its terms. Nothing contained in Section 5.1(a) or Section 5.1(b) shall release any Person from:
(i) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any other Transaction Document;
(ii) any Liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of the other Group prior to the Effective Time;
(iii) any Liability that the parties may have with respect to indemnification or contribution pursuant to this Agreement or otherwise for claims brought against the parties by third Persons, which Liability shall be governed by the provisions of this Article V and, if applicable, the appropriate provisions of the other Transaction Documents; or
(iv) as to the GGP Group, any Liability expressly provided for in the Plan.
In addition, nothing contained in Section 5.1(a) shall release GGP from indemnifying any director, officer or employee of Spinco who was a director, officer or employee of GGP or any of its Subsidiaries on or prior to the Effective Time, to the extent such
director, officer or employee is or becomes a named defendant in any Action with respect to which he or she was entitled to such indemnification pursuant to then existing obligations, it being understood that if the underlying obligation giving rise to such Action is a Spinco Liability, Spinco shall indemnify GGP for such Liability (including GGP’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this Article V .
(d) Spinco shall not make, and shall not permit any member of the Spinco Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against GGP or any member of the GGP Group, or any other Person released pursuant to Section 5.1(a) , with respect to any Liabilities released pursuant to Section 5.1(a) . GGP shall not, and shall not permit any member of the GGP Group, to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification against Spinco or any member of the Spinco Group, or any other Person released pursuant to Section 5.1(b) , with respect to any Liabilities released pursuant to Section 5.1(b) .
(e) It is the intent of each of GGP and Spinco, by virtue of the provisions of this Section 5.1 , to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Plan Effective Date, between or among Spinco or any member of the Spinco Group, on the one hand, and GGP or any member of the GGP Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Plan Effective Date), except as expressly set forth in Section 5.1(c) . At any time, at the request of any other party, each party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.
5.2 General Indemnification by Spinco . Spinco shall, and shall cause the other members of the Spinco Group to, indemnify, defend and hold harmless each member of the GGP Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ GGP Indemnified Parties ”), from and against any and all Liabilities of the GGP Indemnified Parties relating to, arising out of or resulting from any of the following items (without duplication):
(a) any Spinco Liability;
(b) the failure of Spinco or any other member of the Spinco Group or any other Person to pay, perform or otherwise promptly discharge any Spinco Liabilities or Spinco Contract in accordance with its respective terms, whether prior to or after the Effective Time;
(c) any guarantee, indemnification obligation, surety bond or other credit support agreement, arrangement, commitment or understanding by any member of the GGP Group for the benefit of any member of the Spinco Group that survives the Effective Time, except to the extent any of the foregoing is (i) expressly governed by the Surety Bond Indemnity Agreement or (ii) an Excluded Liability; and
(d) any breach (including any breach of any representation or warranty) of this Agreement or any of the other Transaction Documents by any member of the Spinco Group, or any action by Spinco in contravention of its Amended and Restated Certificate of Incorporation or Bylaws as they exist at the Effective Time;
provided , however , that the indemnification provisions of this Section 5.2 shall not apply to the Transition Services Agreement, the Tax Matters Agreement, the Employee Leasing Agreement and the Subleases, which instead shall be subject to the indemnification provisions contained therein.
5.3 General Indemnification by GGP . GGP shall, and shall cause the other members of the GGP Group to, indemnify, defend and hold harmless each member of the Spinco Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Spinco Indemnified Parties ”), from and against any and all Liabilities of the Spinco Indemnified Parties relating to, arising out of or resulting from any of the following items (without duplication):
(a) any Excluded Liability;
(b) the failure of any member of the GGP Group or any other Person to pay, perform or otherwise promptly discharge any Excluded Liabilities, whether prior to or after the Effective Time;
(c) any guarantee, indemnification obligation, surety bond or other credit support agreement, arrangement, commitment or understanding by any member of the Spinco Group for the benefit of any member of the GGP Group that survives the Effective Time, except to the extent any of the foregoing is a Spinco Liability; and
(d) any breach (including any breach of any representation or warranty) of this Agreement or any of the other Transaction Documents by any member of the GGP Group;
provided , however , that the indemnification provisions of this Section 5.3 shall not apply to the Transition Services Agreement, the Tax Matters Agreement, the Employee Leasing Agreement and the Subleases, which instead shall be subject to the indemnification provisions contained therein.
5.4 Disclosure Indemnification .
(a) Spinco agrees to indemnify and hold harmless the GGP Indemnified Parties and each Person, if any, who controls any member of the GGP Group within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all Liabilities (whether arising before or after the Effective Time) out of or based upon any untrue statement or alleged untrue statement of a material fact contained in a Spinco Disclosure Document, or arising out of or based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
(b) GGP agrees to indemnify and hold harmless the Spinco Indemnified Parties and each Person, if any, who controls any member of the Spinco Group within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all Liabilities (whether arising before or after the Effective Time) out of or based upon any untrue statement or alleged untrue statement of a material fact contained in a GGP Disclosure Document, or arising out of or based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
5.5 Indemnification Obligations Net of Insurance Proceeds and Other Amounts .
(a) Any Liability subject to indemnification or contribution pursuant to this Article V , will be net of Insurance Proceeds that actually reduce the amount of the Liability or Loss, as applicable. Accordingly, the amount which any party (an “ Indemnifying Party ”) is required to pay to any Person entitled to indemnification under this Article V (an “ Indemnified Party ”) will be reduced by any Insurance Proceeds theretofore actually recovered by or on behalf of the Indemnified Party in respect of the related Liability. If an Indemnified Party receives a payment (an “ Indemnity Payment ”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds, then the Indemnified Party will pay to the Indemnifying Party an amount equal to such Insurance Proceeds but not exceeding the amount of the Indemnity Payment paid by the Indemnifying Party in respect of such Liability.
(b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto. The Indemnified Party shall use its commercially reasonable efforts to seek to collect or recover any third-party Insurance Proceeds (other than Insurance Proceeds under an arrangement where future premiums are adjusted to reflect prior claims in excess of prior premiums) to which the Indemnified Party is entitled in connection with any Liability for which the Indemnified Party seeks indemnification pursuant to this Article V ; provided , that the Indemnified Party’s inability to collect or recover any such Insurance Proceeds shall not limit the Indemnifying Party’s obligations hereunder.
(c) Subject to Section 5.7(e) , any indemnity payment under this Article V shall be increased to take into account any inclusion in income of the Indemnified Party arising from the receipt of such indemnity payment and shall be decreased to take into account any reduction in income of the Indemnified Party arising from such indemnified Liability. For purposes hereof, any inclusion or reduction shall be determined (i) using the highest marginal rates in effect at the time of the determination and applicable to a corporate resident of Chicago, Illinois and (ii) assuming that the Indemnified Party, including any entity that qualifies as a real estate investment trust, will be liable for Taxes at such rate and has no Tax Attributes at the time of the determination.
5.6 Procedures for Indemnification of Third Party Claims .
(a) If an Indemnified Party receives written notice that a Person (including any Governmental Authority) that is not a member of GGP Group or Spinco Group has asserted any claim or commenced any Action (collectively, a “ Third Party Claim ”) that may implicate an Indemnifying Party’s obligation to indemnify pursuant to Sections 5.2 , 5.3 or 5.4 , or any other
Section of this Agreement or any other Transaction Document, the Indemnified Party shall provide the Indemnifying Party written notice thereof as promptly as practicable (and no later than twenty (20) days or sooner, if the nature of the Third Party Claim so requires) after becoming aware of the Third Party Claim. Such notice shall describe the Third Party Claim in reasonable detail and include copies of all notices and documents (including court papers) received by the Indemnified Party relating to the Third Party Claim. Notwithstanding the foregoing, the failure of an Indemnified Party to provide notice in accordance with this Section 5.6(a) shall not relieve an Indemnifying Party of its indemnification obligations under this Agreement, except to the extent to which the Indemnifying Party is actually prejudiced by the Indemnified Party’s failure to provide notice in accordance with this Section 5.6(a) .
(b) Subject to this Section 5.6(b) and Section 5.6(c) , an Indemnifying Party may elect to defend (and seek to settle or compromise), at its own expense and with its own counsel, any Third Party Claim. Within thirty (30) days after the receipt of notice from an Indemnified Party in accordance with Section 5.6(a) (or sooner, if the nature of the Third Party Claim so requires), the Indemnifying Party shall notify the Indemnified Party whether the Indemnifying Party will assume responsibility for defending the Third Party Claim and shall specify any reservations or exceptions to its defense. After receiving notice of an Indemnifying Party’s election to assume the defense of a Third Party Claim, whether with or without any reservations or exceptions with respect to such defense, an Indemnified Party shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the Indemnified Party shall be responsible for the fees and expenses of its counsel and, in any event, shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses, information and materials in such Indemnified Party’s possession or under such Indemnified Party’s control relating thereto as are reasonably required by the Indemnifying Party. If an Indemnifying Party has elected to assume the defense of a Third Party Claim, whether with or without any reservations or exceptions with respect to such defense, then such Indemnifying Party shall be solely liable for all fees and expenses incurred by it in connection with the defense of such Third Party Claim and shall not be entitled to seek any indemnification or reimbursement from the Indemnified Party for any such fees or expenses incurred during the course of its defense of such Third Party Claim, regardless of any subsequent decision by the Indemnifying Party to reject or otherwise abandon its assumption of such defense.
(c) Notwithstanding Section 5.6(b) , if any Indemnified Party shall in good faith determine that there is an actual conflict of interest if counsel for the Indemnifying Party represented both the Indemnified Party and Indemnifying Party, then the Indemnified Party shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, and the Indemnifying Party shall bear the reasonable fees and expenses of one (1) separate counsel for all Indemnified Parties.
(d) If an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnified Party of its election within thirty (30) days after the receipt of notice from an Indemnified Party as provided in Section 5.6(b) , the Indemnified Party may defend the Third Party Claim at the cost and expense of the Indemnifying Party. If the Indemnified Party is conducting the defense against any such Third Party Claim, the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make
available to the Indemnified Party, at the Indemnifying Party’s expense, all witnesses, information and materials in such Indemnifying Party’s possession or under such Indemnifying Party’s control relating thereto as are reasonably required by the Indemnified Party.
(e) Without the prior written consent of any Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed, no Indemnified Party may settle or compromise, or seek to settle or compromise, any Third Party Claim; provided , however , in the event that the Indemnifying Party elects not to assume responsibility for defending a Third Party Claim or fails to notify the Indemnified Party of its election within thirty (30) days after the receipt of notice from the Indemnified Party as provided in Section 5.6(b) , the Indemnified Party shall have the right to settle or compromise such Third Party Claim in its sole discretion. Without the prior written consent of any Indemnified Party, which consent shall not be unreasonably withheld, conditioned or delayed, no Indemnifying Party shall consent to the entry of any judgment or enter into any settlement of any pending or threatened Third Party Claim if such Indemnified Party is or could have been a party to the pending or threatened Third Party Claim and could have sought indemnity pursuant to this Section 5.6 , unless such judgment or settlement is solely for monetary damages, and provides for a full, unconditional and irrevocable release of that Indemnified Party from all liability in connection with the Third Party Claim.
5.7 Additional Matters .
(a) Indemnification or contribution payments in respect of any Liabilities for which an Indemnified Party is entitled to indemnification or contribution under this Article V shall be paid by the Indemnifying Party to the Indemnified Party as such Liabilities are incurred upon reasonable demand by the Indemnified Party, including reasonably satisfactory documentation setting forth the basis for the amount of such indemnification or contribution payment, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities. The indemnity and contribution agreements contained in this Article V shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnified Party, (ii) the knowledge by the Indemnified Party of Liabilities for which it might be entitled to indemnification or contribution hereunder and (iii) any termination of this Agreement.
(b) Any claim on account of a Liability which does not result from a Third Party Claim shall be asserted by written notice given by the Indemnified Party to the applicable Indemnifying Party. Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such thirty (30)-day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment. If such Indemnifying Party does not respond within such thirty (30)-day period or rejects such claim in whole or in part, such Indemnified Party shall be free to pursue such remedies as may be available to such party as contemplated by this Agreement and the other Transaction Documents without prejudice to its continuing rights to pursue indemnification or contribution hereunder.
(c) If payment is made by or on behalf of any Indemnifying Party to any Indemnified Party in connection with any Third Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnified Party as to any events or circumstances in respect of which such Indemnified Party may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person. Such Indemnified Party shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.
(d) In an Action in which the Indemnifying Party is not a named defendant, if either the Indemnified Party or Indemnifying Party shall so request, the parties shall endeavor to substitute the Indemnifying Party for the named defendant if they conclude that substitution is desirable and practical. If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in this Section 5.7(d) , and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement, and the cost of any interest or penalties relating to any judgment or settlement.
(e) For all Tax purposes, GGP and Spinco agree to treat (i) any payment required by this Agreement (other than payments with respect to interest accruing after the Effective Time) as either a contribution by GGP to Spinco or a distribution by Spinco to GGP, as the case may be, occurring immediately prior to the Effective Time or as a payment of an assumed or retained Liability, and (ii) any payment of interest as taxable or deductible, as the case may be, to the party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case except as otherwise required by applicable Law.
5.8 Remedies Cumulative; Limitations of Liability . The rights provided in this Article V shall be cumulative and, subject to the provisions of Article VII , shall not preclude assertion by any Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party. Notwithstanding the foregoing, neither Spinco or its Subsidiaries, on the one hand, nor GGP or its Subsidiaries, on the other hand, shall be liable to the other for any special, indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages (collectively, “ Special Damages ”) of the other arising in connection with the Transactions ( provided , that any such liability with respect to a Third Party Claim shall be considered direct damages).
5.9 Survival of Indemnities . The rights and obligations of each of GGP and Spinco and their respective Indemnified Parties under this Article V shall survive the sale or other transfer by any party of any Assets or businesses or the assignment by it of any Liabilities.
5.10 Guarantees .
(a) Except as otherwise specified in any other Transaction Document, on or prior to the Effective Time or as soon as practicable thereafter, (i) GGP shall (with the reasonable cooperation of the applicable member(s) of the Spinco Group) use its commercially reasonable efforts to have any member(s) of the Spinco Group removed as guarantor of or obligor for any Excluded Liability, to the extent that they relate to Excluded Liabilities, and (ii)
Spinco shall (with the reasonable cooperation of the applicable member(s) of the GGP Group) use its commercially reasonable efforts to have any member(s) of the GGP Group removed as guarantor of or obligor for any Spinco Liability, to the extent that they relate to Spinco Liabilities.
(b) On or prior to the Effective Time, to the extent required to obtain a release from a guarantee (a “ Guarantee Release ”):
(i) of any member of the GGP Group, Spinco shall execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (A) with which Spinco would be reasonably unable to comply or (B) which would be reasonably expected to be breached; and
(ii) of any member of the Spinco Group, GGP shall execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (A) with which GGP would be reasonably unable to comply or (B) which would be reasonably expected to be breached.
(c) If GGP or Spinco is unable to obtain, or to cause to be obtained, any such required removal as set forth in clauses (a) and (b) of this Section 5.10 , (i) the relevant member of the GGP Group or Spinco Group, as applicable, that has assumed the Liability with respect to such guarantee shall indemnify and hold harmless the guarantor or obligor for any Liability arising from or relating thereto (in accordance with the provisions of this Article V ) and shall or shall cause one (1) of its Subsidiaries, as agent or subcontractor for such guarantor or obligor to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder, and (ii) each of GGP and Spinco, on behalf of themselves and the members of their respective Groups, agree not to renew or extend the term of, increase its obligations under, or transfer to a third Person, any loan, guarantee, lease, Contract or other obligation for which the other party or member of such party’s Group is or may be liable unless all obligations of such other party and the other members of such party’s Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such party; provided , however , with respect to leases, in the event a Guarantee Release is not obtained and the relevant beneficiary wishes to extend the term of such guaranteed lease, then such beneficiary shall have the option of extending the term if it provides such security as is reasonably satisfactory to the guarantor under such guaranteed lease.
ARTICLE VI
OTHER AGREEMENTS
6.1 Further Assurances .
(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto will cooperate with each other and use (and will cause their respective Subsidiaries to use) commercially reasonable efforts, prior to, on and after the Plan Effective Date, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement and the other Transaction Documents.
(b) Without limiting the foregoing, prior to, on and after the Plan Effective Date, each party hereto shall cooperate with the other parties, and without any further consideration, but at the expense of the requesting party from and after the Effective Time, to execute and deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to obtain or make any Approvals or Notifications from or with any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument, and to take all such other actions as such party may reasonably be requested to take by any other party hereto from time to time, consistent with the terms of this Agreement and the other Transaction Documents, in order to effectuate the provisions and purposes of this Agreement and the other Transaction Documents and the transfers of the Spinco Assets and the assignment and assumption of the Spinco Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each party will, at the reasonable request, cost and expense of any other party, take such other actions as may be reasonably necessary to vest in such other party good and marketable title to the Assets allocated to such party under this Agreement or any of the other Transaction Documents, free and clear of any Security Interest.
(c) At or prior to the Effective Time, GGP and Spinco in their respective capacities as direct and indirect stockholders of their respective Subsidiaries, shall each ratify any actions that are reasonably necessary or desirable to be taken by Spinco or any other Subsidiary of GGP or Spinco, as the case may be, to effectuate the transactions contemplated by this Agreement.
(d) Upon a party’s written request of the other party regarding any pre-existing and specifically identifiable database, spreadsheet or other proprietary information that such requesting party determines in good faith is reasonably necessary to operate its business in the manner it was operated immediately prior to the Effective Time, the parties shall work in good faith to enter into a reasonable and customary cross-licensing arrangement, or another mutually agreeable arrangement, providing rights to use (but no obligation to maintain or update) such requested information.
6.2 Confidentiality .
(a) From and after the Effective Time, subject to Section 6.2(d) and except as contemplated by or otherwise provided in this Agreement or any other Transaction Document, without the prior written consent of Spinco (which may be withheld in Spinco’s sole discretion), GGP shall not, and shall cause its Subsidiaries and officers, directors, employees, and other agents and representatives, including attorneys, agents, customers, suppliers, contractors, consultants and other representatives of any Person providing financing (collectively,
“ Representatives ”), not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than Representatives of such party or of its Subsidiaries who reasonably need to know such information to provide services to any member of the GGP Group, or use or otherwise exploit for its own benefit or for the benefit of any third Person, any Spinco Confidential Information. If any disclosures are made in connection with providing services to any member of the GGP Group under this Agreement or any other Transaction Document, then the Spinco Confidential Information so disclosed shall be used for the sole purpose of performing such services. GGP shall use the same degree of care to prevent and restrain the unauthorized use or disclosure of the Spinco Confidential Information by any of its Representatives as it currently uses for its own confidential information of a like nature, but in no event less than a reasonable standard of care. For purposes of this Section 6.2(a) , any Information, material or document exclusively relating to the Spinco Business that is furnished to, or in the possession of, GGP, irrespective of the form of communication, and all notes, analyses, compilations, forecasts, data, translations, studies, memoranda or other documents prepared by GGP or its officers, directors and Subsidiaries, that contain or otherwise reflect such information, material or document, is herein referred to as “ Spinco Confidential Information .” Spinco Confidential Information does not include, and there shall be no obligation hereunder with respect to, information that (i) is or becomes generally available to the public, other than as a result of a disclosure by GGP not otherwise permissible hereunder, (ii) GGP can demonstrate was or became available to GGP from a source other than Spinco or its Subsidiaries or (iii) is developed independently by GGP without reference to the Spinco Confidential Information; provided , however , that, in the case of clause (ii), the source of such information was not known by GGP to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, Spinco or any member of the Spinco Group with respect to such information.
(b) From and after the Effective Time, subject to Section 6.2(d) and except as contemplated by this Agreement or any other Transaction Document, without the prior written consent of GGP (which may be withheld in GGP’s sole discretion), Spinco shall not, and shall cause its Subsidiaries and their respective Representatives, not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than Representatives of such party or of its Subsidiaries who reasonably need to know such information to provide services to Spinco or any member of the Spinco Group, or use or otherwise exploit for its own benefit or for the benefit of any third Person, any GGP Confidential Information. If any disclosures are made in connection with providing services to any member of the Spinco Group under this Agreement or any other Transaction Document, then the GGP Confidential Information so disclosed shall be used for the sole purpose of performing such services. The Spinco Group shall use the same degree of care to prevent and restrain the unauthorized use or disclosure of the GGP Confidential Information by any of their Representatives as they currently use for their own confidential information of a like nature, but in no event less than a reasonable standard of care. For purposes of this Section 6.2(b) , any Information, material or document exclusively relating to the businesses currently or formerly conducted, or proposed to be conducted, by GGP or any of its Subsidiaries (other than any member of the Spinco Group) that is furnished to, or in the possession of, any member of the Spinco Group, irrespective of the form of communication, and all notes, analyses, compilations, forecasts, data, translations, studies, memoranda or other documents prepared by Spinco, any member of the Spinco Group or their respective officers, directors and Subsidiaries, that contain or otherwise reflect such information, material or document, is herein referred to as
“ GGP Confidential Information .” GGP Confidential Information does not include, and there shall be no obligation hereunder with respect to, information that (i) is or becomes generally available to the public, other than as a result of a disclosure by any member of the Spinco Group not otherwise permissible hereunder, (ii) Spinco can demonstrate was or became available to Spinco from a source other than GGP and its respective Subsidiaries or (iii) is developed independently by such member of the Spinco Group without reference to the GGP Confidential Information; provided , however , that, in the case of clause (ii), the source of such information was not known by Spinco to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, GGP or its Subsidiaries with respect to such information.
(c) From and after the Effective Time, subject to Section 6.2(d) and except as contemplated by this Agreement or any other Transaction Document, without the prior written consent of the other party (not to be unreasonably withheld, conditioned or delayed), each party shall not, and shall cause its Subsidiaries and their respective Representatives, not to, directly or indirectly, disclose, reveal, divulge or communicate any Shared Information to any Person other than Representatives of such party or of its Subsidiaries who reasonably need to know such information for the purpose of operating such party’s business in its ordinary course. The GGP Group and the Spinco Group shall use the same degree of care to prevent and restrain the unauthorized use or disclosure of the Shared Information by any of their Representatives as they currently use for their own confidential information of a like nature, but in no event less than a reasonable standard of care. For purposes of this Section 6.2(c) , any Information, material or document relating to both (i) the businesses currently or formerly conducted, or proposed to be conducted, by GGP or any of its Subsidiaries (other than any member of the Spinco Group) and (ii) the Spinco Business that is furnished to, or in the possession of, any member of the GGP Group or any member of the Spinco Group, irrespective of the form of communication, and all notes, analyses, compilations, forecasts, data, translations, studies, memoranda or other documents prepared by, for or on behalf of the party possessing such Information, material or document, is herein referred to as “ Shared Information .” Shared Information does not include, and there shall be no obligation hereunder with respect to, information that (i) is or becomes generally available to the public, other than as a result of a disclosure by any member of the GGP Group or any member of the Spinco Group (as applicable) not otherwise permissible hereunder, (ii) GGP or Spinco (as applicable) can demonstrate was or became available to such party from a source other than the other party and its respective Subsidiaries or (iii) is developed independently without reference to the Shared Information; provided , however , that, in the case of clause (ii), the source of such information was not known by such party to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the other party or its Subsidiaries with respect to such information.
(d) If GGP or its Subsidiaries, on the one hand, or Spinco or its Subsidiaries, on the other hand, are requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or pursuant to applicable Law to disclose or provide any Shared Information (applicable to both parties) or Spinco Confidential Information or GGP Confidential Information (as applicable), the Person receiving such request or demand shall use commercially reasonable efforts to provide the other party with written notice of such request or demand as promptly as practicable under the circumstances so that such other party shall have an
opportunity to seek an appropriate protective order. The party receiving such request or demand agrees to take, and cause its representatives to take, at the requesting party’s expense, all other reasonable steps necessary to obtain confidential treatment by the recipient. Subject to the foregoing, the party that received such request or demand may thereafter disclose or provide any Shared Information, Spinco Confidential Information or GGP Confidential Information, as the case may be, to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority. This Section 6.2(d) shall not apply to any Information furnished pursuant to the provisions of Article IV of this Agreement.
(e) Each of GGP and Spinco acknowledges that it and the other members of its Group may have in their possession confidential or proprietary information of third Persons that was received under confidentiality or non-disclosure agreements with such third Person prior to the Plan Effective Date. GGP and Spinco each agrees that it will hold, and will cause the other members of its Group and their respective Representatives to hold, in strict confidence the confidential and proprietary information of third Persons to which it or any other member of its respective Group has access, in accordance with the terms of any agreements entered into prior to the Plan Effective Date between or among one (1) or more members of the applicable party’s Group and such third Persons.
6.3 Insurance Matters .
(a) Except as expressly provided herein or in any of the other Transaction Documents, Spinco acknowledges and agrees, on its own behalf and on behalf of each other member of the Spinco Group, that, from and after the Effective Time, neither Spinco nor any member of the Spinco Group shall have any rights to or under any of GGP’s or its Subsidiaries’ insurance policies, other than any insurance policies acquired prior to the Effective Time directly by and in the name of a member of the Spinco Group or as expressly provided in this Section 6.3 or in the Transition Services Agreement or the Employee Matters Agreement; provided , however , that Spinco shall be entitled to any loss recoveries paid to any member of the GGP Group subsequent to the Effective Time in respect of any insurance claims to the extent related to the Spinco Business that were formally filed and open prior to the Effective Time less the amount of (i) any Liabilities (other than Excluded Liabilities) that GGP or its Subsidiaries (including, for the avoidance of doubt, any member of the Spinco Group) incurred and paid in connection therewith prior to the Effective Time and (ii) any Liabilities incurred by any member of the GGP Group in connection with obtaining such insurance recoveries.
(b) Notwithstanding Section 6.3(a) , from and after the Effective Time, with respect to losses, damages, wrongful acts or liability incurred prior to the Effective Time, Spinco may access GGP’s insurance policies as follows:
(i) to file claims against GGP’s occurrence policies including Workers’ Compensation, Employers Liability, General Liability, Automobile Liability and Excess Umbrella Policies for losses occurring on or before the Effective Time; and
(ii) to file claims against GGP’s claims made policies including Directors & Officers, Fiduciary Liability, Employment Practices Liability, Crime, and Pollution
Legal Liability coverage in force at the time the claim is made if the act giving rise to the claim occurred prior to the Effective Time;
provided , however , that, in the case of each of clause (i) and (ii), such access to, and the right to make claims under such insurance policies , shall be subject to the terms and conditions of the applicable insurance policies, including any limits on coverage or scope, any deductible and other fees and expenses, and shall be subject to:
(A) For so long as Spinco may access GGP’s policies, Spinco shall report as promptly as practicable (1) claims under the Workers’ Compensation and Automobile Liability policy directly to the applicable insurance company in accordance with GGP’s claim reporting procedures in effect immediately prior to the Effective Time and provide copies of such reported claims to GGP’s Corporate Insurance and Risk Management Department and (2) claims under all other insurance policies to the GGP Corporate Insurance Department;
(B) Spinco shall indemnify, hold harmless and reimburse GGP and its Subsidiaries for any deductibles and self-insured retention incurred by GGP or its Subsidiaries to the extent resulting from any access to, any claims made by Spinco or any of its Subsidiaries under, any insurance provided pursuant to Section 6.3(b)(i) and Section 6.3(b)(ii) , including any indemnity payments, settlements, judgments, legal fees and allocated claims expenses and claim handling fees, whether such claims are made by Spinco, its employees or third Persons;
(C) Spinco shall exclusively bear and be responsible for (and GGP shall have no obligation to repay or reimburse Spinco or any of its Subsidiaries for) and pay the applicable insurers as required under the applicable insurance policies for any and all costs as a result of having access to, or making claims under, any insurance provided pursuant to Pre-GGP Insurance Policies, including any deductibles and self-insured retention associated with such claims, retrospective, retroactive or prospective premium adjustments associated with the applicable insurance policies, catastrophic coverage charges, overhead, claim handling and administrative costs, Taxes, surcharges, state assessments, reinsurance costs, other related costs and claim payments, relating to all open, closed or re-opened claims covered by the applicable policies, whether such claims are made by Spinco, its employees or third Persons; and
(D) Spinco shall exclusively bear (and GGP shall have no obligation to repay or reimburse Spinco or its Subsidiaries for) and shall be liable for all uninsured, uncovered, unavailable or uncollectible amounts of all such claims made by Spinco or any of its Subsidiaries under the policies as provided for in this Section 6.3(b) .
(c) Any payments, costs and adjustments required pursuant to Section 6.3(b) (other than payments, costs and adjustments with respect to Pre-GGP Insurance Policies, which payments, costs and adjustments shall be paid by Spinco directly to the applicable insurers) shall be billed by GGP to Spinco on a monthly basis and payable within thirty (30) days from receipt of invoice. If payment is not made within ninety (90) days of invoice, the outstanding amount will accrue interest from and including the ninetieth (90th) day following the date of the invoice to (but excluding) the date of payment at a rate per annum equal to ten percent ( 10 %) . If GGP
incurs costs to enforce Spinco’s obligations herein, Spinco agrees to indemnify GGP for such enforcement costs, including attorneys’ fees.
(d) Except as set forth in the proviso to Section 6.3(a) and the Employee Matters Agreement, Spinco acknowledges and agrees on its own behalf, and on behalf of each other member of the Spinco Group, that neither Spinco nor any member of the Spinco Group shall have any right or claim against GGP or any of its Subsidiaries for reimbursement, payment or any other obligation arising from any insurance policy covering Spinco, any Spinco Asset or any member of the Spinco Group, and hereby irrevocably releases, as of the Effective Time, GGP and its Subsidiaries from all of the duties, obligations, responsibilities and liabilities, known or unknown, reported or not reported, imposed upon GGP or any of its Subsidiaries to the extent resulting from, relating to or arising out of any such insurance policy, without recourse to GGP or any of its Subsidiaries.
(e) GGP shall retain the exclusive right to control its insurance policies and programs, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its insurance policies and programs and to amend, modify or waive any rights under any such insurance policies and programs, notwithstanding whether any such policies or programs apply to any Spinco Liabilities and/or claims Spinco has made or could make in the future, and no member of the Spinco Group shall, without the prior written consent of GGP, erode, exhaust, settle, release, commute, buy-back or otherwise resolve disputes with GGP’s insurers with respect to any of GGP’s insurance policies and programs, or amend, modify or waive any rights under any such insurance policies and programs. Spinco shall cooperate with GGP and share such information as is reasonably necessary in order to permit GGP to manage and conduct its insurance matters as it deems appropriate.
(f) At the Effective Time, Spinco shall have in effect, except as contemplated by the Transition Services Agreement, all insurance programs required to comply with law or Spinco’s contractual obligations and such other insurance policies as reasonably necessary or customary for companies operating a business similar to Spinco’s.
(g) Except as otherwise provided in Section 6.3(i) , GGP and its Subsidiaries shall have no obligation to secure extended reporting for any claims under any of GGP’s or its Subsidiaries’ claims-made or occurrence-reported liability policies for any acts or omissions by any member of the Spinco Group incurred prior to the Effective Time.
(h) GGP has obtained and shall provide for the joint benefit of GGP and Spinco, a fully paid directors and officers liability run-off insurance policy, for claims made after the Effective Time covering wrongful acts which take place after the commencement of the Bankruptcy Cases and on or prior to the Effective Time and arising out of or relating to the entities and business that are part of the Spinco Group as of immediately after the Effective Time, with a policy period of at least three (3) years from and after the Effective Time, covering (i) current as of the Effective Time and former directors and officers of GGP, (ii) current as of the Effective Time and former directors and officers of the entities and business that are part of the Spinco Group as of immediately after the Effective Time, (iii) current as of the Effective Time and former GGP employees for securities claims and (iv) GGP and its Subsidiaries and the entities and business that are part of the Spinco Group as of immediately after the Effective Time
and its Subsidiaries for securities claims. Such directors and officers liability run-off insurance policy shall be materially consistent with the directors and officers liability insurance policy currently maintained by GGP (except for the policy period and provisions excluding coverage for wrongful acts occurring after the Effective Time).
(i) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the GGP Group in respect of any of the GGP insurance policies and programs or any other Contract or policy of insurance.
6.4 Allocation of Costs and Expenses . Subject to the terms of the Investment Agreements, GGP shall pay for all out-of-pocket fees, costs and expenses incurred by GGP or any of its Subsidiaries prior to the Effective Time in connection with the Transactions, including (i) the preparation and negotiation of this Agreement, each other Transaction Document (unless otherwise expressly provided therein), each of the financing transactions described in the Form 10 as occurring on or prior to the Plan Effective Date, including any financing transactions to be entered into by Spinco or any of its Subsidiaries and all other documentation related to the Transactions and all related transactions, (ii) the preparation and execution or filing of any and all other documents, agreements, forms, applications, Contracts or consents associated with the Transactions and all related transactions, (iii) the preparation and filing of Spinco’s and its Subsidiaries’ organizational documents, (iv) the preparation, printing and filing of the Form 10 and the information statement contained therein and/or any other required securities filings, including all fees and expenses of complying with applicable federal and state securities Laws and domestic securities exchange rules and regulations, together with fees and expenses of counsel retained to effect such compliance, (v) obtaining the Private Letter Ruling, (vi) the initial listing of the Spinco Common Stock on the New York Stock Exchange, (vii) the fees and expenses of Deloitte & Touche incurred in connection with the Form 10 and the information statement contained therein and/or any other required securities filings, (viii) the fees and expenses related to the bankruptcy proceeding of GGP and (ix) the fees and expenses of Weil, Gotshal & Manges LLP incurred in connection with rendering the legal opinions of outside tax counsel contemplated by Section 3.2(c) .
6.5 Litigation; Cooperation .
(a) As of the Effective Time, Spinco shall assume and thereafter, except as provided in Article V , be responsible for the administration of all Liabilities that may result from the Assumed Actions and all fees and costs relating to the defense of the Assumed Actions, including attorneys’ fees and costs incurred after the Effective Time. “ Assumed Actions ” means those Actions (in which any member of the GGP Group or any Subsidiary of a member of the GGP Group is a defendant or the party against whom the claim or investigation is directed) primarily relating to the Spinco Business, including the Actions listed on Schedule 6.5(a) . Spinco shall use its commercially reasonable efforts to cause each member of the GGP Group to be removed from the Assumed Actions; provided , however , that if Spinco is unable to cause each member of the GGP Group to be removed from an Assumed Action, GGP and Spinco shall cooperate and consult to the extent necessary or advisable with respect to such Assumed Action.
(b) The GGP Group shall transfer the Transferred Actions to Spinco, and Spinco shall receive and have the benefit of all of the proceeds of such Transferred Actions. “ Transferred Actions ” means those Actions (in which any member of the GGP Group or any Subsidiary of a member of the GGP Group is a plaintiff or claimant) primarily relating to the Spinco Business. Spinco shall use its commercially reasonable efforts to cause each member of the GGP Group to be removed from the Transferred Actions; provided , however , that if Spinco is unable to cause each member of the GGP Group to be removed from a Transferred Action, GGP and Spinco shall cooperate and consult to the extent necessary or advisable with respect to such Transferred Action.
(c) (i) GGP agrees that at all times from and after the Effective Time if a Third Party Claim relating primarily to the GGP Business is commenced naming both a member of the GGP Group and a member of the Spinco Group as defendants thereto, then GGP shall use its commercially reasonable efforts to cause each such member of the Spinco Group to be removed from such Third Party Claim; provided , that, if GGP is unable to cause each such member of the Spinco Group to be removed from such Third Party Claim, GGP and Spinco shall cooperate and consult to the extent necessary or advisable with respect to such Third Party Claim.
(ii) Spinco agrees that at all times from and after the Effective Time if a Third Party Claim relating primarily to the Spinco Business is commenced naming both a member of the GGP Group and a member of the Spinco Group as defendants thereto, then Spinco shall use its commercially reasonable efforts to cause each member of the GGP Group to be removed from such Third Party Claim; provided , that, if Spinco is unable to cause each member of the GGP Group to be removed from such Third Party Claim, GGP and Spinco shall cooperate and consult to the extent necessary or advisable with respect to such Third Party Claim.
(iii) GGP and Spinco agree that at all times from and after the Effective Time if a Third Party Claim which does not relate primarily to the Spinco Business or the GGP Business is commenced naming both GGP (or any member of the GGP Group) and Spinco (or any member of the Spinco Group) as defendants thereto, then GGP and Spinco shall cooperate fully with each other, maintain a joint defense (in a manner that would preserve for both parties and their respective Subsidiaries any attorney-client privilege, joint defense or other privilege with respect thereto) and consult each other to the extent necessary or advisable with respect to such Third Party Claim.
(d) GGP and Spinco agree that, with respect to any Assumed Action, Transferred Action, Third Party Claim, or any other Action to which either a member of the GGP Group or a member of the Spinco Group is a party and that is governed by this Section 6.5 , neither GGP or any member of the GGP Group, on the one hand, nor Spinco or any member of the Spinco Group, on the other hand, shall settle such Action in a manner that would reasonably be expected to result in any liability or equitable relief, contingent or otherwise, against the other.
6.6 Tax Matters . GGP and Spinco shall enter into the Tax Matters Agreement on or prior to the Plan Effective Date. To the extent any representations, warranties, covenants or agreements between the parties with respect to Taxes or other matters are set forth in the Tax
Matters Agreement, such Taxes and other matters shall be governed exclusively by the Tax Matters Agreement and not by this Agreement.
6.7 Employment Matters . GGP and Spinco shall enter into the Employee Matters Agreement concurrent with this Agreement. To the extent that any representations, warranties, covenants or agreements between the parties with respect to employment matters are set forth in the Employee Matters Agreement, such employment matters shall be governed exclusively by the Employee Matters Agreement and not by this Agreement, if applicable, with respect to Spinco Employees.
6.8 Real Estate Agreements . GGP and Spinco shall enter into the Real Estate Agreements on or prior to the Plan Effective Date. To the extent that any representations, warranties, covenants or agreements between the parties with respect to the subject matters contemplated by the Real Estate Agreements are set forth in the Real Estate Agreements, such subject matters shall be governed exclusively by the Real Estate Agreements and not by this Agreement.
ARTICLE VII
DISPUTE RESOLUTION
7.1 General Provisions .
(a) Any dispute, controversy or claim arising out of or relating to this Agreement that arises prior to the closing of the Bankruptcy Cases (such time, the “ Bankruptcy Closing ”) shall be subject to the jurisdiction of and determination by the Bankruptcy Court, and any dispute, controversy or claim arising out of or relating to this Agreement that arises after the Bankruptcy Closing shall be subject to the procedures in this Article VII . Each of the parties hereto (i) consents to the exclusive personal jurisdiction of the Bankruptcy Court (prior to the Bankruptcy Closing) or the procedures set forth in this Article VII (after the Bankruptcy Closing) in connection with any dispute arising out of or relating to this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such courts for actions brought prior to the Bankruptcy Closing and (iii) agrees that it will not bring any action relating to this Agreement in any court other than the Bankruptcy Court (prior to the Bankruptcy Closing), unless such court first determines it does not have subject matter jurisdiction or otherwise declines to hear the dispute.
(b) Subject to Section 7.1(a) , any dispute, controversy or claim arising out of or relating to this Agreement or the other Transaction Documents (other than the Transition Services Agreement and the Tax Matters Agreement, which shall be subject to the dispute resolution provisions contained therein), or the validity, interpretation, breach or termination thereof that arises after the final determination of the Bankruptcy Cases (a “ Dispute ”), shall be resolved in accordance with the procedures set forth in this Article VII , which shall be the sole and exclusive procedures for the resolution of any such Dispute unless otherwise specified in the applicable Transaction Document or in this Article VII below.
(c) Commencing with a request contemplated by Section 7.2 set forth below, all communications between the parties or their representatives in connection with the attempted resolution of any Dispute shall be deemed to have been delivered in furtherance of a Dispute settlement and shall be exempt from discovery and production, and shall not be admissible into evidence for any reason (whether as an admission or otherwise), in any arbitral or other proceeding for the resolution of any Dispute.
(d) THE PARTIES EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO (I) SPECIAL DAMAGES, AS DEFINED HEREIN ( PROVIDED , THAT LIABILITY FOR ANY SUCH SPECIAL DAMAGES, AS DEFINED HEREIN, WITH RESPECT TO ANY THIRD PARTY CLAIM SHALL BE CONSIDERED DIRECT DAMAGES) AND (II) TRIAL BY JURY.
(e) The specific procedures set forth in this Article VII below, including the time limits referenced therein, may be modified by agreement of both of the parties in writing.
(f) All applicable statutes of limitations and defenses based upon the passage of time shall be tolled while the procedures specified in this Article VII are pending. The parties will take any necessary or appropriate action required to effectuate such tolling.
7.2 Consideration by Senior Executives . Following the Bankruptcy Closing, if a Dispute is not resolved in the normal course of business at the operational level, the parties shall attempt in good faith to resolve the Dispute by negotiation between the Groups’ executives who hold, respectively, the office of Vice President (or a more senior office). Either party may initiate the executive negotiation process by providing a written notice to the other (the “ Initial Notice ”). Within fifteen (15) days, the receiving party shall submit to the other a written response (the “ Response ”). The Initial Notice and the Response shall include (i) a statement of the Dispute and of each party’s position and (ii) the name and title of the executive who will represent that party and of any other person who will accompany the executive. The parties agree that such executives shall have full and complete authority to resolve any Disputes submitted pursuant to this Section 7.2 . Such executives will meet in person or by teleconference or video conference within thirty (30) days (or, where the Dispute relates to the a matter controlled by the Transition Services Agreement, then within the time periods set forth therein with respect to the Transition Services Agreement, twenty-five (25) days) of the date of the Initial Notice to seek a resolution of the Dispute. In the event that the executives are unable to agree to a location or format for such meeting, the meeting shall be convened by teleconference.
7.3 Arbitration .
(a) Following the Bankruptcy Closing, if a Dispute is not resolved by negotiation as provided in Section 7.2 within forty-five (45) days (or, where the Dispute relates to the Transition Services Agreement, thirty (30) days) from the delivery of the Initial Notice, then either party shall (i) pursuant to its rights under Section 7.1 , submit a request for interim injunctive relief to the arbitrator appointed pursuant to Section 7.3(b) ( provided , that, if the tribunal shall not have been constituted, either party may seek interim relief either before a special arbitrator, as provided for in Rule 14 of the CPR Institute for Dispute Resolution (the “ CPR ”) Arbitration Rules, or before any court of competent jurisdiction) without first complying
with the provisions of Section 7.2 if, in the reasonable opinion of such party, such interim injunctive relief is necessary to preserve its rights pending resolution of the Dispute, and (ii) if such Dispute is not finally resolved pursuant to Section 7.2 , submit such Dispute to be finally resolved by binding arbitration, in each case, pursuant to the CPR Rules for Non-Administered Arbitration as then in effect (the “ CPR Arbitration Rules ”).
(b) The neutral organization for purposes of the CPR Arbitration Rules will be the CPR. The arbitrator will be composed of one (1) arbitrator. The one (1) arbitrator will be appointed by CPR from a list of six (6) proposed neutrals submitted by the CPR. Each party may strike no more than two (2) neutrals from the list submitted by CPR.
(c) Arbitration will take place in the Borough of Manhattan in New York, New York. Along with the arbitrator appointed, the parties will agree to a mutually convenient date and time to conduct the arbitration, but in no event will the hearing(s) be scheduled less than nine (9) months from submission of the Dispute to arbitration unless the parties agree otherwise in writing; provided , that, if injunctive or other interim relief contemplated by Section 7.3(d) below is requested, the hearing(s) will be expedited in accordance with any order entered by the court, tribunal or special arbitrator adjudicating that request.
(d) The arbitrator will have the right to award, on an interim basis, or include in the final award, money damages (with interest on unpaid amounts from the due date), injunctive relief (including specific performance) and attorneys’ fees and costs; provided , that the arbitrator will not award any relief not specifically requested by the parties and, in any event, will not award Special Damages. Upon appointment of the arbitrator following any grant of interim relief by a special arbitrator or court pursuant to Sections 7.3(a) and 7.4 , the tribunal may affirm or disaffirm that relief, and the parties will seek modification or rescission of the order entered by the special arbitrator or court as necessary to accord with the tribunal’s decision.
(e) The parties agree to be bound by the provisions of Rule 13 of the Federal Rules of Civil Procedure with respect to compulsory counterclaims (as the same may be amended from time to time); provided , that any such compulsory counterclaim shall be filed within thirty (30) days of the filing of the original claim.
(f) So long as either party has a timely claim to assert, the agreement to arbitrate Disputes set forth in this Section 7.3 will continue in full force and effect subsequent to, and notwithstanding the completion, expiration or termination of, this Agreement.
(g) A party obtaining an order of interim injunctive relief may enter judgment upon such award in any court of competent jurisdiction. The final award in an arbitration pursuant to this Article VII shall be conclusive and binding upon the parties, and a party obtaining a final award may enter judgment upon such award in any court of competent jurisdiction.
(h) It is the intent of the parties that the agreement to arbitrate Disputes set forth in this Section 7.3 shall be interpreted and applied broadly such that all reasonable doubts as to arbitrability of a Dispute shall be decided in favor of arbitration.
(i) If a Dispute includes both arbitrable and nonarbitrable claims, counterclaims or defenses, the parties shall arbitrate all such arbitrable claims, counterclaims or defenses and shall concurrently litigate all such nonarbitrable claims, counterclaims or defenses.
(j) The parties agree that any Dispute submitted to mediation and/or arbitration shall be governed by, and construed and interpreted in accordance with, Section 8.2 and, except as otherwise provided in this Article VII or mutually agreed to in writing by the parties, the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., shall govern any arbitration between the parties pursuant to this Section 7.3 .
(k) Each party shall bear (i) its own fees, costs and expenses and (ii) an equal share of other expenses of the arbitration, including the fees, costs and expenses of the one (1) arbitrator; provided , in the case of any Disputes relating to the parties’ rights and obligations with respect to indemnification under Article V , the prevailing party shall be entitled to reimbursement by the other party of its reasonable out-of-pocket fees and expenses (including attorneys’ fees) incurred in connection with the arbitration.
7.4 Specific Performance . In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Tax Matters Agreement, the Employee Matters Agreement or any of the Real Estate Agreements, the party or parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under such agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the parties to this Agreement. Notwithstanding the foregoing, except with respect to breaches of Section 6.2 of this Agreement, specific performance can only be sought and granted in proceedings before the Bankruptcy Court or the independent arbitrator pursuant to this Article VII .
ARTICLE VIII
MISCELLANEOUS
8.1 Corporate Power . GGP represents on behalf of itself and on behalf of other members of the GGP Group, and Spinco represents on behalf of itself and on behalf of other members of the Spinco Group, as of the date hereof, as follows:
(a) each such Person has the requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform each of this Agreement and each other Transaction Document to which it is a party and to consummate the transactions contemplated hereby and thereby; and
(b) this Agreement and each Transaction Document to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.
8.2 Governing Law . This Agreement and, unless expressly provided therein, each other Transaction Document, shall be governed by and construed and interpreted in accordance with the Laws of the State of New York irrespective of the choice of Laws principles of the State of New York.
8.3 Survival of Covenants . Except as expressly set forth in any other Transaction Document, the covenants and other agreements contained in this Agreement and each other Transaction Document, and liability for the breach of any obligations contained herein or therein, shall survive each of the Restructuring and the Distribution and shall remain in full force and effect.
8.4 Force Majeure . No party hereto (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement or, unless otherwise expressly provided therein, any other Transaction Document, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (i) notify the other parties of the nature and extent of any such Force Majeure condition and (ii) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.
8.5 Notices . All notices, requests, claims, demands and other communications under this Agreement and, to the extent applicable and unless otherwise provided therein, under each of the other Transaction Documents shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.5 ):
(i) if to GGP:
General
Growth Properties, Inc.
110 N. Wacker Drive
Chicago, IL 60606
Attention: General Counsel
Facsimile: (312) 960-5485
(ii) if to Spinco:
The
Howard Hughes Corporation
13355 Noel Road
Suite 950
Dallas, TX 75240
Attention: Grant Herlitz
Facsimile: (214) 741-3021
a copy of all notices should also be sent to:
Weil,
Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Gary Holtzer and Marcia Goldstein
Facsimile: (212) 310-8007
8.6 Termination . Notwithstanding any provision to the contrary, this Agreement may be terminated and the Distribution abandoned at any time prior to the Effective Time by and in the sole discretion of GGP without the prior approval of any Person, including Spinco. In the event of such termination, this Agreement shall become void and no party, or any of its officers and directors, shall have any liability to any Person by reason of this Agreement. After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by each of the parties to this Agreement.
8.7 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.
8.8 Entire Agreement . Except as otherwise expressly provided in this Agreement, this Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement of the parties hereto with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the parties hereto with respect to the subject matter of this Agreement.
8.9 Assignment; No Third-Party Beneficiaries . This Agreement shall not be assigned by either party without the prior written consent of the other party. Notwithstanding the foregoing, either party may assign (i) any or all of its rights and obligations under this Agreement to any of its Subsidiaries and (ii) any or all of its rights and obligations under this Agreement in connection with a sale or disposition of any assets or entities or lines of business; provided , however , that, in each case, no such assignment shall (i) release the assigning party from any liability or obligation under this Agreement or (ii) change any of the steps in the Spinoff Plan or the Plan. Except as provided in Article V with respect to Indemnified Parties, this Agreement is for the sole benefit of the parties to this Agreement and members of their
respective Group and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
8.10 Public Announcements . From and after the Effective Time, GGP and Spinco shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to any matters covered by this Agreement, and shall not issue any such press release or make any such 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 or national securities quotation system.
8.11 Amendment . No provision of this Agreement may be amended or modified except by a written instrument signed by all the parties to this Agreement. No waiver by any party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the party so waiving. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
8.12 Rules of Construction . Interpretation of this Agreement shall be governed by the following rules of construction: (i) in the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of any Ancillary Document, the terms and conditions of the Ancillary Document shall govern and control this Agreement, unless otherwise specified herein; (ii) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (iii) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement unless otherwise specified; (iv) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (v) references to “$” shall mean U.S. dollars; (vi) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (vii) the word “or” shall not be exclusive; (viii) references to “written” or “in writing” include in electronic form; (ix) unless the context requires otherwise, references to “party” shall mean GGP or Spinco, as appropriate, and references to “parties” shall mean GGP and Spinco; (x) provisions shall apply, when appropriate, to successive events and transactions; (xi) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (xii) GGP and Spinco have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or burdening either party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (xiii) a reference to any Person includes such Person’s successors and permitted assigns.
8.13 Counterparts . This Agreement may be executed in one (1) or more counterparts, and by the different parties to each such agreement in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.
[ The remainder of this page is intentionally left blank .]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan Jr. |
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Name: |
Thomas H. Nolan, Jr. |
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Title: |
President |
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THE HOWARD HUGHES CORPORATION |
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By: |
/s/ David Arthur |
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Name: |
David Arthur |
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Title |
Interim Chief Executive Officer |
Signature Page to Separation Agreement
Exhibit 99.3
TRANSITION SERVICES AGREEMENT
dated as of November 9, 2010
among
GGP LIMITED PARTNERSHIP,
GENERAL GROWTH MANAGEMENT, INC.,
and
THE HOWARD HUGHES CORPORATION
TABLE OF CONTENTS
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ARTICLE I |
DEFINITIONS |
1 |
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Section 1.01. |
Certain Defined Terms |
1 |
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ARTICLE II |
SERVICES, DURATION AND SERVICE MANAGERS |
3 |
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Section 2.01. |
Services |
3 |
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Section 2.02. |
Duration of Services |
3 |
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Section 2.03. |
Additional Unspecified Services |
4 |
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Section 2.04. |
Transition Service Managers |
5 |
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Section 2.05. |
Personnel |
6 |
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Section 2.06. |
No Duplication |
6 |
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ARTICLE III |
GGP MATERIALS |
6 |
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Section 3.01. |
Corporate Policies |
6 |
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Section 3.02. |
Limitation on Rights and Obligations with Respect to the GGP Materials |
7 |
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ARTICLE IV |
OTHER ARRANGEMENTS AND ADDITIONAL AGREEMENTS |
8 |
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Section 4.01. |
Software and Software Licenses |
8 |
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Section 4.02. |
GGP Computer-Based and Other Resources |
8 |
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Section 4.03. |
Spinco Computer-Based and Other Resources |
9 |
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Section 4.04. |
Access |
9 |
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Section 4.05. |
Insider Trading Policy |
9 |
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Section 4.06. |
Cooperation |
9 |
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ARTICLE V |
COSTS AND DISBURSEMENTS |
10 |
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Section 5.01. |
Costs and Disbursements |
10 |
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Section 5.02. |
Taxes |
11 |
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Section 5.03. |
No Right to Set-Off |
11 |
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ARTICLE VI |
STANDARD FOR SERVICE |
11 |
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Section 6.01. |
Standard for Service |
11 |
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Section 6.02. |
Disclaimer of Warranties |
12 |
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Section 6.03. |
Compliance with Laws and Regulations |
12 |
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ARTICLE VII |
LIMITED LIABILITY AND INDEMNIFICATION |
12 |
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Section 7.01. |
Consequential and Other Damages |
12 |
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Section 7.02. |
Limitation of Liability |
12 |
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Section 7.03. |
Obligation to Reperform and GGP Indemnity |
13 |
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Section 7.04. |
Release and Spinco Indemnity |
13 |
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Section 7.05. |
Indemnification Procedures |
13 |
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Section 7.06. |
Liability for Payment Obligations |
13 |
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Section 7.07. |
Exclusion of Other Remedies |
13 |
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ARTICLE VIII |
DISPUTE RESOLUTION |
14 |
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Section 8.01. |
Dispute Resolution. |
14 |
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ARTICLE IX |
TERM AND TERMINATION |
14 |
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Section 9.01. |
Term and Termination |
14 |
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Section 9.02. |
Effect of Termination |
15 |
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Section 9.03. |
Force Majeure |
16 |
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ARTICLE X |
GENERAL PROVISIONS |
16 |
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Section 10.01. |
No Agency |
16 |
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Section 10.02. |
Subcontractors |
16 |
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Section 10.03. |
Treatment of Confidential Information |
17 |
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Section 10.04. |
Further Assurances |
18 |
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Section 10.05. |
Notices |
18 |
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Section 10.06. |
Severability |
19 |
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Section 10.07. |
Entire Agreement |
19 |
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Section 10.08. |
No Third-Party Beneficiaries |
19 |
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Section 10.09. |
Governing Law |
19 |
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Section 10.10. |
Amendment |
19 |
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Section 10.11. |
Rules of Construction |
20 |
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Section 10.12. |
Counterparts |
20 |
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Section 10.13. |
Assignability |
20 |
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Section 10.14. |
Waiver of Jury Trial |
21 |
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Section 10.15. |
Specific Performance |
21 |
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Section 10.16. |
Non-Recourse |
22 |
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EXHIBITS |
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I |
Direct Payroll Costs |
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II |
Service Managers |
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SCHEDULES |
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A-1 |
Insurance |
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A-2 |
Development |
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A-3 |
Asset Management |
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A-4 |
Leasing |
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A-5 |
Marketing and Communications |
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A-6 |
Legal |
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A-7 |
Accounting |
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A-8 |
Real and Personal Property Tax |
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A-9 |
Income Tax |
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A-10 |
Information Technology |
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A-11 |
Public Accounting, Internal Audit and Sarbanes-Oxley |
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A-12 |
Treasury |
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (this “ Agreement ”), dated as of November 9, 2010, is by and among GGP Limited Partnership, a Delaware limited partnership (“ GGPLP ”), General Growth Management, Inc., a Delaware corporation (“ GGMI ” and, collectively with GGPLP, “ GGP ”), and The Howard Hughes Corporation, a Delaware corporation (“ Spinco ”).
RECITALS
WHEREAS, General Growth Properties, Inc. (“ GGPI ”) and Spinco entered into the Separation Agreement, dated as of the date hereof (as amended, modified or supplemented from time to time in accordance with its terms, the “ Separation Agreement ”); and
WHEREAS, pursuant to the Separation Agreement, the Parties agreed that GGPI (and/or its Subsidiaries on the date of this Agreement immediately after giving effect to, and subject to the occurrence of, the Distribution, collectively referred to as the “ GGP Entities ”) shall provide or cause to be provided to Spinco (and/or its Subsidiaries on the date of this Agreement immediately after giving effect to, and subject to the occurrence of, the Distribution, collectively referred to as the “ Spinco Entities ”) certain services on a transitional basis and in accordance with the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the Separation Agreement requires execution and delivery of this Agreement by GGP and Spinco on or prior to the Plan Effective Date.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained in this Agreement, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms . (a) Unless otherwise defined in this Agreement, all capitalized terms used in this Agreement shall have the same meaning as in the Separation Agreement.
(b) The following capitalized terms used in this Agreement shall have the meanings set forth below:
“ Additional Services ” shall have the meaning set forth in Section 2.03(a) .
“ Agreement ” shall have the meaning set forth in the Preamble.
“ Competitor of GGP ” shall mean an entity that is directly or indirectly (or whose Affiliates are directly or indirectly) in the business of owning or managing retail malls.
“ Confidential Information ” shall have the meaning set forth in Section 10.03(a) .
“ Cost Multiplier ” shall mean: 110% during the period beginning on the Plan Effective Date and ending on the last day of the 6th month after the Plan Effective Date; 150% during the period beginning on the first day of the 7th month after the Plan Effective Date and ending on the last day of the 12th month after the Plan Effective Date; and 200% during the period beginning on the first day of the 13th month after the Plan Effective Date and ending on the date that this Agreement terminates.
“ Direct Payroll Costs ” shall mean, with respect to each GGP Employee providing a particular Service, the applicable hourly rate set forth on Exhibit I .
“ Dispute ” shall have the meaning set forth in Section 8.01(a) .
“ GGMI ” shall have the meaning set forth in the Preamble.
“ GGP ” shall have the meaning set forth in the Preamble.
“ GGP Employee ” shall mean an employee of any of the GGP Entities.
“ GGP Entities ” shall have the meaning set forth in the Recitals.
“ GGP Indemnified Party ” shall have the meaning set forth in Section 7.04 .
“ GGP Intranet ” shall mean GGPI’s internal computer network Intranet site generally accessible only by GGP Employees.
“ GGPI ” shall have the meaning set forth in the Recitals.
“ GGPLP ” shall have the meaning set forth in the Preamble.
“ GGP Materials ” shall have the meaning set forth in Section 3.01(a) .
“ GGP Overall Service Manager ” shall have the meaning set forth in Section 2.04(a) .
“ GGP Service Manager ” shall have the meaning set forth in Section 2.04(a) .
“ Interest Rate ” shall have the meaning set forth in Section 5.01(b) .
“ Out-of-Pocket Expenses ” shall mean, with respect to a particular Service, any out-of-pocket costs, fees and expenses that GGP or any other member of the GGP Group actually pays to an unaffiliated third party in the course of providing such Service, without any additional charge or mark up. The term “Out-of-Pocket Expenses” shall not include any rent, utilities, taxes, clerical support, GGP Employee compensation and benefits or any other general or administrative overhead or other similar costs or expenses.
“ Overall Service Managers ” shall mean the GGP Overall Service Manager and the Spinco Overall Service Manager.
“ Party ” shall mean GGP and Spinco individually, and “ Parties ” means GGP and Spinco collectively, and, in each case, their permitted successors and assigns.
“ Representative ” shall mean, with respect to any Person, any director, officer, employee, agent, consultant, accountant, auditor, attorney or other representative of such Person.
“ Schedule(s) ” shall have the meaning set forth in Section 2.02 .
“ Separation Agreement ” shall have the meaning set forth in the Recitals.
“ Service Charges ” shall have the meaning set forth in Section 5.01(a) .
“ Service Increases ” shall have the meaning set forth in Section 2.03(b) .
“ Service Resource Cost ” shall mean, with respect to a particular Service, (A) an amount equal to the product of (x) the Direct Payroll Cost of the GGP Employee providing the Service multiplied by (y) the number of hours such employee spent performing the Service, or (B) if a different pricing methodology is expressly provided for in the applicable Schedule with respect to such Service, an amount calculated based on such pricing methodology.
“ Services ” shall have the meaning set forth in Section 2.01 .
“ Spinco ” shall have the meaning set forth in the Preamble.
“ Spinco Entities ” shall have the meaning set forth in the Recitals.
“ Spinco Indemnified Party ” shall have the meaning set forth in Section 7.03 .
“ Spinco Intranet ” shall have the meaning set forth in Section 4.02(a) .
“ Spinco Overall Service Manager ” shall have the meaning set forth in Section 2.04(b) .
“ Spinco Service Manager ” shall have the meaning set forth in Section 2.04(b) .
ARTICLE II
SERVICES, DURATION AND SERVICE MANAGERS
Section 2.01. Services . Subject to the terms and conditions of this Agreement, GGP shall provide (or cause to be provided) to the Spinco Entities, as requested from time to time by Spinco, the services listed on Schedule A (which may be grouped by type of Services in sub-schedules) to this Agreement (the “ Services ”). All of the Services shall be for the sole use and benefit of the Spinco Entities as constituted on the Plan Effective Date.
Section 2.02. Duration of Services . Subject to the terms of this Agreement, commencing on the Plan Effective Date, GGP shall provide or cause to be provided to the Spinco Entities each Service until the earlier to occur of, with respect to each such Service, (i) the expiration of the period of the maximum duration for such Service as set forth on the sub-
schedules attached hereto defining such Service (each a “ Schedule ”, and collectively, the “ Schedules ”) and (ii) the date on which such Service is terminated under Section 9.01 ; provided , however , that Spinco shall use commercially reasonable efforts in good faith to transition itself to a stand-alone entity with respect to each Service during the period for such Service as set forth in the relevant Schedules. In the event that GGP sells, transfers or otherwise disposes of its interest in any of its Subsidiaries that is engaged in providing one or more Services, GGP shall (x) if requested by Spinco, use commercially reasonable efforts to cause such Subsidiary or the acquiror thereof to agree that such Subsidiary will continue to provide such Services to the same extent provided pursuant to the terms of this Agreement or (y) if requested by Spinco, or to the extent the Subsidiary or the acquiror will not agree to provide such Services after GGP’s exertion of commercially reasonable efforts pursuant to (x), secure such Services from a reputable and experienced third-party vendor at substantially equivalent service levels for the remaining term of such Services.
Section 2.03. Additional Unspecified Services . (a) After the Plan Effective Date, if Spinco (i) identifies a service that the GGP Entities provided to the Spinco Business prior to the Plan Effective Date that is reasonably necessary in order for the Spinco Business to continue to operate in substantially the same manner in which the Spinco Business operated prior to the Plan Effective Date and is otherwise material to operations of the Spinco Business, and such service was not included on the Schedules, and (ii) provides written notice to GGP within one hundred twenty (120) days following the Plan Effective Date requesting such additional service, then GGP shall, subject to the negotiation of mutually acceptable terms of the applicable Schedule (as described in the next sentence), provide such requested additional service provided that (i) the GGP Entities have adequate resources to provide such service, (ii) such service can be provided without unreasonable disruption to the GGP Entities’ businesses and (iii) the provision of such service will not violate (whether directly or by virtue of a cross-default) a material contract or agreement of a GGP Entity or result in a violation of applicable Law (such additional services, the “ Additional Services ”). In connection with any request for Additional Services in accordance with this Section 2.03(a) , the GGP Service Manager and the Spinco Service Manager shall in good faith negotiate the terms of a supplemental Schedule, which terms shall be consistent with the terms of, and the pricing methodology used for, similar Services provided under this Agreement. The Parties shall agree to the applicable Service Charge and the supplemental Schedule shall describe in reasonable detail the nature, scope, service period(s), termination provisions and other terms applicable to such Additional Services. Each supplemental Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such Schedule and the Additional Services set forth therein shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.
(b) After the Plan Effective Date, if (i) (x) Spinco requests GGP to increase, relative to historical levels prior to the Plan Effective Date, the volume, amount, level or frequency, as applicable, of any Service provided by GGP and (ii) such increase is reasonably determined by Spinco as necessary for Spinco to operate its businesses (such increases, the “ Service Increases ”), then GGP shall, subject to the negotiation of mutually acceptable terms of the applicable Schedule (as described in the next sentence), provide the Service Increases in accordance with such request; provided , that GGP shall not be obligated to provide any Service Increase if it does not, in its reasonable judgment, have adequate resources to provide such
Service Increase or if the provision of such Service Increase would significantly disrupt the operation of any of its businesses or violate an existing material contract or agreement or applicable Law. In connection with any request for Service Increases in accordance with this Section 2.03(b) , the GGP Service Manager and the Spinco Service Manager shall in good faith negotiate the terms of an amendment to the applicable Schedule, which amendment shall be consistent with the terms of, and the pricing methodology used for, the applicable Service. Each amended Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such amendment to the Schedule and the Service Increases set forth therein shall be deemed a part of the “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.
Section 2.04. Transition Service Managers . (a) GGP hereby appoints and designates the individual holding the GGP position set forth on Exhibit II to act as its initial service manager (the “ GGP Overall Service Manager ”), who will be directly responsible for coordinating and managing the delivery of the Services and have authority to act on GGP’s behalf with respect to matters relating to this Agreement. In addition, GGP hereby appoints, with respect to each Service, the individual set forth on the applicable Schedule as its initial service manager (each such manager, a “ GGP Service Manager ”) with respect to such Service, who will be directly responsible for coordinating and managing the delivery of such Service on a day-to-day basis. The GGP Service Managers will work with the personnel of the GGP Entities to periodically address issues and matters raised by Spinco relating to this Agreement. The GGP Overall Service Manager will oversee the GGP Service Managers and will be responsible for coordinating the overall delivery of the Services. Notwithstanding the notice requirements of Section 10.05 , all communications from Spinco to GGP pursuant to this Agreement regarding routine matters involving the Services set forth on the Schedules shall be made through the applicable GGP Service Manager, or such other individual as specified by the applicable GGP Service Manager in writing and delivered to Spinco by email or facsimile transmission with receipt confirmed. GGP shall notify Spinco of the appointment of a different GGP Overall Service Manager or GGP Service Manager, if necessary, in accordance with Section 10.05 .
(b) Spinco hereby appoints and designates the individual holding the Spinco position set forth on Exhibit II to act as its initial service manager (the “ Spinco Overall Service Manager ”), who will be directly responsible for coordinating and managing the receipt of the Services and have authority to act on Spinco’s behalf with respect to matters relating to this Agreement. In addition, Spinco hereby appoints, with respect to each Service, the individual set forth on the applicable Schedule as its initial service manager (each such manager, a “ Spinco Service Manager ”) with respect to such Service, who will be directly responsible for coordinating and managing the receipt of such Service on a day-to-day basis. The Spinco Service Managers will work with the personnel of Spinco Entities to periodically address issues and matters raised by GGP relating to this Agreement. The Spinco Overall Service Manager will oversee the Spinco Service Managers and will be responsible for coordinating the overall receipt of the Services. Notwithstanding the notice requirements of Section 10.05 , all communications from GGP to Spinco pursuant to this Agreement regarding routine matters involving the Services set forth on the Schedules shall be made through the applicable Spinco Service Manager or such other individual as specified by the applicable Spinco Service Manager in writing and delivered to GGP by email or facsimile transmission with receipt confirmed. Spinco shall notify GGP of
the appointment of a different Spinco Overall Service Manager or Spinco Service Manager, if necessary, in accordance with Section 10.05 .
Section 2.05. Personnel . (a) GGP will make available such appropriately qualified personnel as may be reasonably necessary to provide the Services, and will use reasonable efforts to make available personnel specifically requested by Spinco. Notwithstanding the foregoing, GGP will have the right, in its sole reasonable discretion, to (i) designate which personnel it will assign to perform each Service, and (ii) remove and replace such personnel at any time with personnel of similar qualifications and experience levels, if such action would not reasonably be expected to cause a material increase in costs and/or a material decrease in level of service for Spinco with respect to such Service; provided , however , that GGP will use its commercially reasonable efforts to limit the disruption to Spinco in the transition of the Services to different personnel.
(b) In the event that the provision of any Service by GGP requires, as set forth in the Schedules, the cooperation and services of the applicable personnel of Spinco, Spinco will make available to GGP such personnel (who shall be appropriately qualified for purposes of the provision of such Service by GGP) as may be necessary for GGP to provide such Service.
Section 2.06. No Duplication .
(a) GGP shall not charge any Service Charges under this Agreement or any other amounts for any Services performed by any GGP Employees if, and to the extent that, the employees performing such Services are doing so pursuant to the Employee Leasing Agreement, and the costs of such employees are being reimbursed pursuant thereto.
(b) GGP shall not charge any Service Charges or other amounts for any Services if, and to the extent that, such Service Charges are duplicative of services performed under the Employee Leasing Agreement or the Employee Matters Agreement.
ARTICLE III
GGP MATERIALS
Section 3.01. Corporate Policies . (a) At the Plan Effective Date or reasonably promptly thereafter, GGP shall make available to Spinco its then existing policies and manuals that GGP determines in good faith are reasonably necessary for the operation of the Spinco Business (the “ GGP Materials ”). Subject to the terms and conditions of this Agreement, GGP grants to Spinco a non-exclusive, royalty-free, fully paid-up, worldwide license to create or have created any derivative works or materials based on the GGP Materials for distribution to employees and suppliers of Spinco and use such materials in the operation of the Spinco Business in substantially the same manner as the GGP Materials were used by GGP prior to the Distribution. It is understood and agreed that GGP makes no representation or warranty, express or implied, as to the accuracy or completeness of any of the GGP Materials, as to the noninfringement of any of the GGP Materials or as to the suitability of any of the GGP Materials for use by Spinco in respect of its business or otherwise. Access to any GGP Materials shall be
limited to those Representatives of Spinco who need access in order to perform their responsibilities.
(b) Notwithstanding the foregoing, the text of any materials related to or based upon any of the GGP Materials created by, for or on behalf of Spinco may not contain any references to the GGP Entities (or any use of the GGP Entities’ marks, names, trade dress, logos or other source or business identifiers, including the GGP Name and GGP Marks), the GGP Entities’ publications, the GGP Entities’ personnel (including senior management), the GGP Entities’ management structures or any other indication that in each instance such materials are based upon any of the GGP Materials.
Section 3.02. Limitation on Rights and Obligations with Respect to the GGP Materials .
(a) Spinco acknowledges and agrees that, except as expressly set forth above, GGP reserves all rights (including all Intellectual Property rights) in, to and under the GGP Materials and no rights with respect to ownership or use, except as otherwise expressly provided in this Agreement, shall vest in Spinco.
(b) GGP shall have no obligation to (i) notify Spinco of any changes or proposed changes to any of the GGP Materials, (ii) include Spinco in any consideration of proposed changes to any of the GGP Materials, (iii) provide draft changes of any of the GGP Materials to Spinco for review and/or comment or (iv) provide Spinco with any updated materials relating to any of the GGP Materials except to the extent such changes would affect the provision of Services in accordance with the terms hereof. The Parties acknowledge and agree that the GGP Materials are the Confidential Information of GGP. Spinco shall use at least the same degree of care to prevent and restrain the unauthorized use or disclosure of any materials created by, for or on behalf of Spinco that are based upon any of the GGP Materials as it uses for its other confidential information of a like nature, but in no event less than a reasonable degree of care. Spinco will allow GGP reasonable access to its personnel and information as reasonably necessary to determine Spinco’s compliance with the provisions set forth above; provided , however , such access shall not unreasonably interfere with any of the business or operations of Spinco. Subject to Section 8.01 , in the event that GGP determines that Spinco has not materially complied with some or all of its obligations with respect to any or all of the GGP Materials, and such noncompliance is not cured within thirty (30) days following Spinco’s receipt of written notice thereof from GGP, GGP may terminate Spinco’s rights with respect to such GGP Materials upon written notice to Spinco and, in such case, GGP shall be entitled to require such GGP Materials to be returned to GGP or destroyed and any materials created by or for Spinco that are based upon such GGP Materials to be destroyed (with such destruction certified by Spinco in writing to GGP promptly after such termination).
(c) If Spinco determines to cease to avail itself of any of the GGP Materials or upon expiration or termination of any period during which Spinco is permitted to use any of the GGP Materials, GGP and Spinco shall cooperate in good faith to take reasonable and appropriate actions to effectuate such determination, expiration or termination, to arrange for the return to GGP or destruction of such GGP Materials and to protect GGP’s rights and interests in such GGP Materials.
ARTICLE IV
OTHER ARRANGEMENTS AND ADDITIONAL AGREEMENTS
Section 4.01. Software and Software Licenses . If and to the extent requested by Spinco, GGP shall use commercially reasonable efforts to (x) obtain permission from third-party licensors of computer software to allow GGP to provide services to Spinco as required hereunder and (y) assist Spinco in its efforts to obtain licenses (or other appropriate rights) to use, duplicate and distribute, as necessary and applicable, certain computer software necessary for GGP to provide, or Spinco to receive, Services (which assistance shall include to the extent appropriate providing Spinco the opportunity to receive a copy of, or participate in, any communication between GGP and the applicable third party licensor in connection therewith); provided , however , that GGP and Spinco shall mutually agree upon the specific types and quantities of any such software licenses; provided , further , that GGP shall not be required to pay any fees or other payments unless such fees and payments are reimbursed fully by Spinco or incur any obligations or liabilities to enable GGP to provide such services or enable Spinco to obtain any such license or rights; provided , further , that GGP shall not be required to seek broader rights or more favorable terms for Spinco than those applicable to GGP prior to the date of this Agreement or as may be applicable to GGP from time to time hereafter; and, provided , further , that Spinco shall bear only those costs that relate directly to obtaining such licenses (or other appropriation rights), which shall not include any payments relating to the discharge of Excluded Liabilities which are not related to the provision of Services. The Parties acknowledge and agree that there can be no assurance that GGP’s efforts will be successful or that Spinco will be able to obtain such licenses or rights on acceptable terms or at all and, where GGP enjoys rights under any enterprise or site license or similar license, the Parties acknowledge that such license typically precludes partial transfers or assignments or operation of a service bureau on behalf of unaffiliated entities. In the event that Spinco is unable to obtain such software licenses, the Parties shall work together using commercially reasonable efforts to obtain an alternative software license or modification to an existing GGP license to allow GGP to provide, or Spinco to receive, such Services, and the Parties shall negotiate in good faith an amendment to the applicable Schedule to reflect any such new arrangement, which amended Schedule shall not require Spinco to pay for any fees, expenses or costs relating to the software license that Spinco was unable to obtain pursuant to the provisions of this Section 4.01 .
Section 4.02. GGP Computer-Based and Other Resources .
(a) As of the Plan Effective Date, except as otherwise expressly provided in the Separation Agreement, in any Schedule hereto, or in any other Transaction Documents, Spinco and its Subsidiaries shall have no further access to, and GGP shall have no obligation to otherwise provide access to, the GGP Intranet, and Spinco shall have no access to, and GGP shall have no obligation to otherwise provide access to, computer-based resources (including access to GGPI’s or its Subsidiaries’ computer networks and databases) that require a password or are available on a secured access basis only. Notwithstanding the foregoing, from and after the Plan Effective Date, GGP shall use reasonable efforts to make available to Spinco an intranet (the “ Spinco Intranet ”) accessible by Spinco and its Subsidiaries that contains (i) the GGP Materials and (ii) any materials that GGP determines in good faith that any member of the Spinco Group needs to access in connection with the performance or delivery of any Service.
(b) From and after the Plan Effective Date, Spinco and its Subsidiaries shall cause all of their personnel having access to the GGP Intranet or such other computer software, networks, hardware, technology or computer-based resources pursuant to the Separation Agreement, any Transaction Document or in connection with performance, receipt or delivery of a Service to comply with all reasonable security guidelines (including physical security, network access, Internet security, confidentiality and personal data security guidelines) of GGPI and its Subsidiaries (of which GGP provides Spinco notice). Spinco shall ensure that the access contemplated by this Section 4.02 shall be used by such personnel only for the purposes contemplated by, and subject to the terms of, this Agreement.
Section 4.03. Spinco Computer-Based and Other Resources . From and after the date of this Agreement, GGP and its Subsidiaries shall cause all of their personnel having access to the Spinco Intranet or such other computer software, networks, hardware, technology or computer based resources pursuant to the Separation Agreement, any Transaction Document or in connection with performance, receipt or delivery of a Service to comply with all reasonable security guidelines (including physical security, network access, internet security, confidentiality and personal data security guidelines) of Spinco and its Subsidiaries (of which Spinco provides GGP notice). GGP shall ensure that the access contemplated by this Section 4.03 shall be used by such personnel only for the purposes contemplated by, and subject to the terms of, this Agreement.
Section 4.04. Access . (a) Spinco shall, and shall cause its Subsidiaries to, allow GGP and its Representatives reasonable access to the facilities of Spinco necessary for GGP to fulfill its obligations under this Agreement.
(b) Notwithstanding the other rights of access of the Parties under this Agreement, each Party shall, and shall cause its Subsidiaries to, afford the other Party, its Subsidiaries and Representatives reasonable access, upon reasonable notice, during normal business hours to the facilities, information, systems, infrastructure, and personnel of the other Party as reasonably necessary for the other Party to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided , however , such access shall not unreasonably interfere with any of the business or operations of such Party or its Subsidiaries.
Section 4.05. Insider Trading Policy . Each of the Parties hereby agrees that it will instruct its Representatives that it is a violation of applicable Law for any Representative to purchase or sell securities of the other Party based on non-public information obtained in connection with the performance of this Agreement.
Section 4.06. Cooperation . It is understood that it will require the significant efforts of both Parties to implement this Agreement and to ensure performance of this Agreement by the Parties at the agreed upon levels in accordance with all of the terms and conditions of this Agreement. The Parties will cooperate, acting in good faith and using commercially reasonable efforts, to effect a smooth and orderly transition of the Services provided under this Agreement from GGP to Spinco (including repairs and maintenance Services and the assignment or transfer of the rights and obligations under any third-party contracts relating to the Services) and Spinco
agrees that it will use commercially reasonable efforts to eliminate its need for the Services as quickly as practicable; provided , however , that this Section 4.06 shall not require either Party to incur any out-of-pocket costs or expenses unless and except as expressly provided in this Agreement or otherwise agreed to in writing by the Parties (acknowledging that Spinco will be required to incur costs and expenses in conjunction with eliminating its need for the Services).
ARTICLE V
COSTS AND DISBURSEMENTS
Section 5.01. Costs and Disbursements . (a) Spinco shall pay to GGP a fee for each Service (such fee constituting a “ Service Charge ” and, the fees for all Services collectively, “ Service Charges ”) equal to the sum of (A) the product of (i) the Cost Multiplier multiplied by (ii) the applicable Service Resource Cost plus (B) the amount of any Out-of-Pocket Expenses incurred with respect to such Service; provided , however , that the Cost Multiplier shall be held constant at 110% for the term of this Agreement with respect to Services in support of the JD Edwards application (including, for the avoidance of doubt, the applicable Services set forth in Schedule A-7: Accounting and Schedule A-10: Information Technology Services), in each case solely to the extent such Services are in support of the JD Edwards application.
(b) GGP shall invoice Spinco for the Service Charges monthly in arrears; provided that the Service Charges shall be pro rated for any partial month. Spinco shall pay the amount of each such invoice by wire transfer or check to GGP within thirty (30) days of the receipt of each such invoice. If Spinco fails to pay such amount (other than any portion of such amount being disputed in good faith in accordance with the terms of this Agreement) by such date, Spinco shall be obligated to pay to GGP, in addition to the amount due, interest thereon at an annual percentage rate of ten percent (10%) (the “ Interest Rate ”) accruing from the date the payment was due through the date of actual payment. Each invoice shall specify, for each type of Service, (A) (i) the aggregate number of hours GGP Employees in each group level set forth on Exhibit I spent performing such Service and (ii) the Direct Payroll Costs for each such group level (or the calculation under a different pricing methodology, as applicable), (B) the Cost Multiplier in effect and (C) any Out-of-Pocket Expenses incurred with respect to such Service. Together with any invoice for Service Charges, GGP shall provide Spinco with data and documentation (including documentation of Out-of-Pocket Expenses) as reasonably requested by Spinco for the purpose of verifying the accuracy of the calculation of such Service Charges; provided , however , that GGP shall provide Spinco with copies of all applicable third-party invoices as soon as reasonably practicable following receipt by GGP, it being understood that GGP’s receipt of applicable third-party invoices may be delayed for thirty (30) or more days.
(c) At any time during the term of this Agreement, and for two (2) years after the expiration or termination of this Agreement, Spinco or its auditors or other reputable accounting firm, upon ten (10) business days’ prior written notice to GGP, may audit the books and records of the GGP Group relating to this Agreement for the purpose of verifying the Service Charges (at Spinco’s sole expense). GGP shall, and shall cause its Affiliates to, reasonably cooperate in such audit, make available on a timely basis the information reasonably required to conduct the review, and assist the designated representatives of Spinco or its auditors as reasonably necessary. GGP shall, and shall cause its Affiliates to, retain all such books and
records relating to this Agreement and the performance of the Services for two (2) years after the expiration or termination of this Agreement or such longer period as may be required by applicable law. GGP shall refund any overcharges or other amounts owed to Spinco, occurring at any time during the term of this Agreement, disclosed by such audit, within thirty (30) days after the completion of such audit.
Section 5.02. Taxes .
(a) Without limiting any provisions of this Agreement, Spinco shall pay any sales, use and other similar taxes imposed on, or payable with respect to, any Services provided to it under this Agreement; provided , however , that Spinco shall not pay, or be responsible for, any applicable income, franchise or gross receipts taxes imposed on, or payable with respect to, the income derived by GGP from providing these Services to Spinco.
(b) Notwithstanding anything to the contrary in Section 5.02(a) or elsewhere in this Agreement, Spinco shall be entitled to withhold from any payments to GGP any such taxes that Spinco is required by law to withhold and shall pay over such taxes to the applicable taxing authority.
Section 5.03. No Right to Set-Off . Spinco shall pay the full amount of Service Charges and shall not set-off, counterclaim or otherwise withhold any amount owed to GGP under this Agreement on account of any obligation owed by GGP to Spinco that has not been finally adjudicated, settled or otherwise agreed upon by the Parties in writing.
ARTICLE VI
STANDARD FOR SERVICE
Section 6.01. Standard for Service . Except where GGP is restricted by an existing Contract with a third party or by Law, GGP agrees (i) to perform the Services such that the nature, quality, standard of care and the service levels at which such Services are performed are no less than that which are substantially similar to the nature, quality, standard of care and service levels at which the same or similar services were performed by or on behalf of GGP prior to the Plan Effective Date (or, if not so previously provided, then substantially similar to that which are applicable to similar services provided to GGP’s Subsidiaries or other business components), but in any event, in at least a good and workmanlike manner in accordance with past practice; (ii) upon receipt of written notice from Spinco identifying any outage, interruption or other failure of any Service, to respond to such outage, interruption or other failure of any Services in a manner that is no less than that which is substantially similar to the manner in which GGP or its Subsidiaries responded to any outage, interruption or other failure of the same or similar services prior to the Plan Effective Date (the Parties acknowledge that an outage, interruption or other failure of any Service shall not be deemed to be a breach of the provisions of this Section 6.01 so long as GGP complies with this clause (ii)). As of or following the date of this Agreement, if GGP is or becomes aware of any restriction on GGP by an existing Contract with a third-party that would restrict the nature, quality, standard of care or service levels applicable to delivery of the Services to be provided by GGP to Spinco, GGP shall (x) promptly notify Spinco of any such restriction (which notice shall in any event promptly
follow any change to, or reduction in, the nature, quality, standard of care or service levels applicable to delivery of the Services resulting from such restriction), (y) use commercially reasonable efforts to negotiate an amendment to the Contract to remove such restriction or otherwise obtain the third party’s consent to allow the Services to be performed to the standards described in this Section 6.01 , and (z) use commercially reasonable efforts to provide such Services in a manner as closely as possible to the standards described in this Section 6.01 while attempting to secure the amendment or consent contemplated by (y). To the extent that GGP is unable to obtain the amendment or consent described above, the Parties shall negotiate in good faith an amendment to the applicable Schedule to reflect any such new arrangement.
Section 6.02. Disclaimer of Warranties . Except as expressly set forth in this Agreement or any Schedule, the Parties acknowledge and agree that the Services are provided as-is, that Spinco assumes all risks and liability arising from or relating to its use of and reliance upon the Services and GGP makes no representation or warranty with respect thereto. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, GGP HEREBY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, PERFORMANCE, NONINFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS OF THE SERVICES FOR A PARTICULAR PURPOSE.
Section 6.03. Compliance with Laws and Regulations . Each Party shall be responsible for its own compliance with any and all Laws applicable to its performance under this Agreement. No Party will knowingly take any action in violation of any such applicable Law that results in liability being imposed on the other Party.
ARTICLE VII
LIMITED LIABILITY AND INDEMNIFICATION
Section 7.01. Consequential and Other Damages . Notwithstanding anything to the contrary contained in the Separation Agreement or this Agreement, neither Spinco or its Subsidiaries, on the one hand, nor GGP or its Subsidiaries, on the other hand, shall be liable to the other Party or any of its Subsidiaries or Representatives, whether in contract, tort (including negligence and strict liability) or otherwise, at law or equity, for any special, indirect, incidental or consequential damages whatsoever (including lost profits or damages calculated on multiples of earnings approaches), which in any way arise out of, relate to or are a consequence of, the performance or nonperformance by the Party (including any Subsidiaries and Representatives of such Party and, in the case of GGP, any third-party providers providing the applicable Services) under this Agreement or the provision of, or failure to provide, or termination of, any Services under this Agreement, including with respect to loss of profits, business interruptions or claims of customers (provided, that any liability with respect to a Third Party Claim shall be considered direct damages).
Section 7.02. Limitation of Liability . Subject to Section 7.03 , the Liabilities of GGP and its Subsidiaries and Representatives, collectively, under this Agreement for any act or failure to act in connection herewith (including the performance or breach of this Agreement), or
from the sale, delivery, provision, use or termination of any Services provided under or contemplated by this Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, shall not exceed the greater of (a) the total aggregate Service Charges (excluding any Out-of-Pocket Expenses included in such Service Charges) actually paid to GGP by Spinco pursuant to this Agreement and (b) $10,000,000.
Section 7.03. Obligation to Reperform and GGP Indemnity . In the event of any breach of this Agreement by GGP with respect to the provision of any Services, GGP shall (a) promptly correct in all material respects any error or defect resulting in such breach or reperform in all material respects such Services at the request of Spinco and at the sole cost and expense of GGP and (b) subject to the limitations set forth in Sections 7.01 and 7.02 , indemnify Spinco and its Subsidiaries and Representatives (each, a “ Spinco Indemnified Party ”) for Liabilities (including direct damages, whether arising out of a Third Party Claim or otherwise) attributable to such breach by GGP; provided , however , that, to the extent any such breach can be cured through reperformance, the reperformance remedy set forth in Section 7.03(a) shall be the sole and exclusive remedy of Spinco for such portion of such breach; provided , further , however , that GGP shall indemnify each Spinco Indemnified Party to the extent any such party incurs indemnifiable losses that cannot be cured through reperformance. Any request for reperformance in accordance with Section 7.03(a) by Spinco must be in writing and specify in reasonable detail the particular error or defect resulting in such breach.
Section 7.04. Release and Spinco Indemnity . Subject to Section 7.01 , Section 7.02 and Section 7.03 , Spinco hereby releases GGP and its Subsidiaries and Representatives (each, a “ GGP Indemnified Party ”), and Spinco hereby agrees to indemnify, defend and hold harmless each such GGP Indemnified Party from and against any and all Liabilities arising from, relating to or in connection with the use of any Services by Spinco or any of its Subsidiaries, Representatives or other Persons using such Services, except to the extent that such Liabilities arise out of, relate to or are a consequence of the applicable GGP Indemnified Party’s bad faith, gross negligence or willful misconduct.
Section 7.05. Indemnification Procedures . The provisions of Article V of the Separation Agreement shall govern claims for indemnification under this Agreement.
Section 7.06. Liability for Payment Obligations . Nothing in this Article VII shall be deemed to eliminate or limit, in any respect, Spinco’s express obligation in this Agreement to pay Service Charges for Services rendered in accordance with this Agreement.
Section 7.07. Exclusion of Other Remedies . The provisions of Sections 7.03 and 7.04 of this Agreement shall be the sole and exclusive remedies for any claim, loss, damage, expense or liability, whether arising from statute, principle of common or civil law, principles of strict liability, tort, contract or otherwise under this Agreement.
ARTICLE VIII
DISPUTE RESOLUTION
Section 8.01. Dispute Resolution .
(a) In the event of any dispute, controversy or claim arising out of or relating to the transactions contemplated by this Agreement, or the validity, interpretation, breach or termination of any provision of this Agreement, or calculation or allocation of the costs of any Service, including claims seeking redress or asserting rights under any Law (each, a “ Dispute ”), GGP and Spinco agree that the GGP Overall Service Manager and the Spinco Overall Service Manager (or such other Persons as GGP and Spinco may designate) shall negotiate in good faith in an attempt to resolve such Dispute amicably. If such Dispute has not been resolved to the mutual satisfaction of the Overall Service Managers within fifteen (15) days after the initial written notice of the Dispute by one Party to another Party (or such longer period as the Parties may agree), then the respective Chief Executive Officers of GGPI and Spinco shall negotiate in good faith in an attempt to resolve such Dispute amicably. If such Dispute has not been resolved to the mutual satisfaction of the Chief Executive Officers of GGPI and Spinco within fifteen (15) days after the Dispute was referred to them for negotiation (or such longer period as the Parties may agree), then the Dispute shall be resolved in accordance with the dispute resolution process set forth in Sections 7.3 and 7.4 of the Separation Agreement; provided , that such dispute resolution process shall not modify or add to the remedies available to the Parties under this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, either Party may immediately seek equitable relief (without the necessity of posting a bond) including, without limitation, temporary injunctive relief, against the other Party with respect to any and all equitable remedies sought in connection with this Agreement in accordance with Article VII of the Separation Agreement.
(c) In any Dispute regarding the amount of a Service Charge, if after such Dispute is finally resolved pursuant to the dispute resolution process set forth or referred to in Section 8.01(a) , it is determined that the Service Charge that GGP has invoiced Spinco, and that Spinco has paid to GGP, is greater or less than the amount that the Service Charge should have been, then (a) if it is determined that Spinco has overpaid the Service Charge, GGP shall within ten (10) business days after such determination reimburse Spinco an amount of cash equal to such overpayment, plus interest thereon at the Interest Rate accruing from the date of such overpayment to the time of reimbursement by GGP, and (b) if it is determined that Spinco has underpaid the Service Charge, Spinco shall within ten (10) business days after such determination pay GGP an amount of cash equal to such underpayment, plus interest thereon at the Interest Rate accruing from the date of such underpayment (or when such payment was due if not paid at all) to the time of payment by Spinco.
ARTICLE IX
TERM AND TERMINATION
Section 9.01. Term and Termination . (a) This Agreement shall commence immediately upon the Plan Effective Date and shall terminate upon the earlier to occur of: (i) the last date on which either Party is obligated to provide any Service to the other Party and the completion of all other obligations hereunder in accordance with the terms of this Agreement and (ii) the mutual written agreement of the Parties to terminate this Agreement in its entirety. Notwithstanding anything to the contrary contained in this Agreement or any Schedule,
(i) GGP’s obligation to provide, or cause to be provided, Services to the Spinco Entities shall terminate, at GGP’s sole option, with respect to any Spinco Entity that Spinco, directly or indirectly, sells, or otherwise transfers ownership and control of, to a non-Spinco Entity (e.g., pursuant to equity sale, asset sale, merger or otherwise) and (ii) in no event shall the provision of any Service extend beyond the date that is twenty-four (24) months from the Plan Effective Date.
(b) Without prejudice to Spinco’s rights with respect to a Force Majeure, Spinco may from time to time terminate this Agreement with respect to the entirety of any individual Service but not a portion thereof, (A) for any reason or no reason upon providing to GGP the requisite prior written notice for such termination as specified in the applicable Schedule or, if no such notice period is provided in the applicable Schedule, on five (5) days’ prior written notice, or (B) if GGP has failed to perform any of its material obligations under this Agreement with respect to such Service, and such failure shall continue to exist thirty (30) days after receipt by GGP of written notice of such failure from Spinco; and (ii) GGP may terminate this Agreement with respect to one or more Services, in whole but not in part, at any time upon prior written notice to Spinco if Spinco has failed to perform any of its material obligations under this Agreement relating to such Services, including making payment of any Service Charges when due, and such failure shall be continued uncured for a period of thirty (30) days after receipt by Spinco of a written notice of such failure from GGP. The relevant Schedule shall be updated to reflect any terminated Service. In the event that any Service is terminated other than at the end of a month, the Service Charge associated with such Service shall be pro-rated as applicable. In the event that Spinco terminates any Service pursuant to clause (A) of this Section 9.01(b) , the GGP Group shall have the right to (i) terminate or discontinue any contract or other arrangement with an unaffiliated third party to the extent such contract or arrangement relates to such terminated Service, and any charges and out-of-pocket costs, fees and expenses payable by any member of the GGP Group in connection with the exercise of such right (other than severance obligations or other amounts payable to any GGP Employee) shall be reimbursed by Spinco promptly upon GGP’s presentation to Spinco of the applicable third party invoice therefor and (ii) charge Spinco for any applicable Service Charges incurred in connection with the orderly unwinding and transfer of such terminated Service.
(c) Without prejudice to the rights and obligations of the Parties in Section 2.03 and Section 4.06 , either Party may from time to time request a reduction in part of the scope or amount of any Service. If requested to do so by the other Party, each Party agrees to discuss in good faith appropriate reductions to the relevant Service Charges in light of all relevant factors including the costs and benefits to the Parties of any such reductions. If, after such discussions, Spinco and GGP do not agree to any requested reduction of the scope or amount of any Service and the relevant Service Charges in connection therewith, then there shall be no change to the scope or amount of any Services or Service Charges under this Agreement. In the event that Spinco and GGP agreed to any reduction of Service and the relevant Service Charges, the relevant Schedule shall be updated to reflect such reduced Service and relevant Service Charges if any. In the event that any Service is reduced other than at the end of a month, the Service Charge associated with such Service for the month in which such Service is reduced shall be pro-rated appropriately.
Section 9.02. Effect of Termination . Upon termination of any Service pursuant to this Agreement, GGP will have no further obligation to provide the terminated Service, and
Spinco will have no obligation to pay any future Service Charges relating to any such Service; provided , that Spinco shall remain obligated to GGP for the Service Charges owed and payable in respect of Services provided prior to the effective date of termination as set forth in the Schedule relating to such Service. In connection with termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall survive any such termination, and in connection with a termination of this Agreement, Article I , Article VII (including liability in respect of any indemnifiable Liabilities under this Agreement arising or occurring on or prior to the date of termination), Article VIII , Article IX , Article X , all confidentiality obligations under this Agreement and liability for all due and unpaid Service Charges shall continue to survive indefinitely.
Section 9.03. Force Majeure . (a) GGP (and any Person acting on its behalf) shall not have any liability or responsibility for failure to fulfill any obligation under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure; provided , that (i) GGP (or such Person) shall have exercised commercially reasonable efforts to minimize the effect of Force Majeure on its obligations; and (ii) the nature, quality and standard of care that GGP shall provide in delivering a Service after a Force Majeure shall be substantially the same as the nature, quality and standard of care that GGP provides to its Subsidiaries and its other business components with respect to such Service. In the event of an occurrence of a Force Majeure, GGP shall give notice of suspension as soon as reasonably practicable to the other Party stating the date and extent of such suspension and the cause thereof, and GGP shall resume the performance of such obligations as soon as reasonably practicable after the removal of such cause.
(b) During the period of a Force Majeure, Spinco shall be entitled to seek an alternative service provider with respect to such Service(s) and shall be entitled to permanently terminate such Service(s) (and shall be relieved of the obligation to pay Service Charges for such Services(s) throughout the duration of such Force Majeure) if a Force Majeure shall continue to exist for more than fifteen (15) consecutive days, it being understood that Spinco shall not be required to provide any advance notice of such termination to GGP in connection therewith.
ARTICLE X
GENERAL PROVISIONS
Section 10.01. No Agency . Nothing in this Agreement shall be deemed in any way or for any purpose to constitute any Party an agent of another unaffiliated Party in the conduct of such other Party’s business. GGP shall act as an independent contractor and not as the agent of Spinco in performing such Services, maintaining control over GGP Employees, GGP’s subcontractors and their employees and complying with all withholding of income and other requirements of Law, whether federal, state, local or foreign and no member of the GGP Group shall have any authority to bind any member of the Spinco Group by contract or otherwise.
Section 10.02. Subcontractors . GGP may hire or engage one or more subcontractors to perform any or all of its obligations under this Agreement; provided , that
(i) GGP shall use the same degree of care in selecting any such subcontractor as it would if such contractor was being retained to provide similar services to GGP, (ii) GGP shall in all cases remain primarily responsible for all of its obligations under this Agreement with respect to the scope of the Services, the standard for services as set forth in Article VI and the content of the Services provided to Spinco and (iii) without the prior written consent of the applicable Spinco Service Manager (not to be unreasonably withheld, conditioned or delayed), GGP shall not remove and/or replace any subcontractor if such action would reasonably be expected to cause a material increase in cost with respect to the applicable Service. Notwithstanding the foregoing, (x) Spinco (or any other member of the Spinco Group) shall have the right to hire or engage any subcontractor directly and (y) if GGP does hire or engage any subcontractor to provide any Service hereunder, then, notwithstanding any provision of this Agreement or any other Transaction Document to the contrary, the applicable Service Charge for the provision of such Service performed by such subcontractor shall be only the amount actually paid to such subcontractor for providing such Service, without any additional charge or mark up.
Section 10.03. Treatment of Confidential Information .
(a) The Parties shall not, and shall cause their respective Representatives and all other Persons providing Services or having access to information of the other Party that is known to such Party as confidential or proprietary (“ Confidential Information ”) not to, disclose to any other Person or use, except for purposes of this Agreement, any Confidential Information of the other Party; provided , however , that each Party may disclose Confidential Information of the other Party and to the extent permitted by applicable Law: (i) to its Representatives on a need-to-know basis in connection with the performance of such Party’s obligations under this Agreement; (ii) in any report, statement, testimony or other submission required to be made to any Governmental Authority having jurisdiction over the disclosing Party; or (iii) in order to comply with applicable Law, or in response to any summons, subpoena or other legal process or formal or informal investigative demand issued to the disclosing Party in the course of any litigation, investigation or administrative proceeding. In the event that a Party becomes legally compelled (based on advice of counsel) by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar judicial or administrative process to disclose any Confidential Information of the other Party, such disclosing Party shall provide the other Party with prompt prior written notice of such requirement, and, to the extent reasonably practicable, cooperate with the other Party (at such other Party’s expense) to obtain a protective order or similar remedy to cause such Confidential Information not to be disclosed, including interposing all available objections thereto, such as objections based on settlement privilege. In the event that such protective order or other similar remedy is not obtained, the disclosing Party shall furnish only that portion of the Confidential Information that has been legally compelled, and shall exercise its commercially reasonable efforts (at such other Party’s expense) to obtain assurance that confidential treatment will be accorded such Confidential Information.
(b) Each Party shall, and shall cause its Representatives to protect the Confidential Information of the other Party by using the same degree of care to prevent the unauthorized disclosure of such as the Party uses to protect its own confidential information of a like nature but in any event not less than reasonable means.
(c) Each Party shall cause its Representatives to agree to be bound by the same restrictions on use and disclosure of Confidential Information as are binding upon such Party in advance of the disclosure of any such Confidential Information to them.
(d) The restrictions set forth in Sections 10.03(a) and (b) shall not prevent either Party from disclosing Confidential Information which belongs to that Party or (a) is in or enters the public domain without breach of this Agreement or any other Transaction Document, (b) the receiving Party was lawfully and demonstrably in possession of prior to first receiving it from the disclosing Party, (c) the receiving Party can demonstrate was developed by the receiving Party independently and without use of or reference to the disclosing Party’s Confidential Information, (d) the receiving Party receives from a third party without restriction on disclosure and without breach of a nondisclosure obligation, or (e) is approved by the other Party for disclosure.
(e) Each Party shall comply with all applicable state, federal and foreign privacy and data protection Laws that are or that may in the future be applicable to the provision of Services under this Agreement.
Section 10.04. Further Assurances . Each Party covenants and agrees that, without any additional consideration, it shall execute and deliver any further legal instruments and perform any acts that are or may become necessary to effectuate this Agreement.
Section 10.05. Notices . Except with respect to routine communications by the GGP Service Managers and Spinco Service Managers under Section 2.04 , all notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 10.05 ):
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if to GGP: |
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General Growth Properties, Inc. |
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110 N. Wacker Drive |
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Chicago, IL 60606 |
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Attention: |
General Counsel |
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Facsimile: |
(312) 960-5485 |
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if to Spinco: |
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The Howard Hughes Corporation |
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13355 Noel Road |
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Suite 950 |
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Dallas, TX 75240 |
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Attention: |
Grant Herlitz |
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Facsimile: |
(214) 741-3021 |
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in each case, with a copy to: |
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Weil, Gotshal & Manges LLP |
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767 Fifth Avenue |
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New York, NY 10153 |
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Attention: |
Gary Holtzer and Marcia Goldstein |
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Facsimile: |
(212) 310-8007 |
Section 10.06. Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.
Section 10.07. Entire Agreement . Except as otherwise expressly provided in this Agreement, this Agreement, the Separation Agreement and the other Transaction Documents constitute the entire agreement of the Parties with respect to the subject matter of this Agreement and supersede all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matter of this Agreement.
Section 10.08. No Third-Party Beneficiaries . Except as provided in Article VII with respect to GGP Indemnified Parties, this Agreement is for the sole benefit of the Parties and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person, including any union, any current or former GGP Employee or any current or former employee of Spinco, any legal or equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement.
Section 10.09. Governing Law . This Agreement (and any claims or disputes arising out of or related to this Agreement or to the transactions contemplated by this Agreement or to the inducement of any Party to enter into this Agreement or the transactions contemplated by this Agreement, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall in all respects be governed by, and construed in accordance with, the Laws of the State of New York, including all matters of construction, validity and performance, in each case without reference to any conflict of Law rules that might lead to the application of the Laws of any other jurisdiction.
Section 10.10. Amendment . No provision of this Agreement, including any Schedules to this Agreement, may be amended, supplemented or modified except by a written
instrument making specific reference to this Agreement or any such Schedules to this Agreement, as applicable, signed by all the Parties.
Section 10.11. Rules of Construction . Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Schedule are references to the Articles, Sections, paragraphs and Schedules of this Agreement unless otherwise specified; (c) references to “$” shall mean U.S. dollars; (d) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (e) the word “or” shall not be exclusive; (f) references to “written” or “in writing” include in electronic form; (g) provisions shall apply, when appropriate, to successive events and transactions; (h) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (i) GGP and Spinco have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; (j) a reference to any Person includes such Person’s successors and permitted assigns; (k) any reference to “days” means calendar days unless business days are expressly specified; and (l) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded, if the last day of such period is not a business day, the period shall end on the next succeeding business day.
Section 10.12. Counterparts . This Agreement may be executed in one or more counterparts, and by each Party in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of this Agreement.
Section 10.13. Assignability . (a) This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of GGP and Spinco, except that each Party may:
(i) assign all of its rights and obligations under this Agreement to any of its Subsidiaries; provided , that no such assignment shall release GGP or Spinco, as the case may be, from any liability or obligation under this Agreement;
(ii) in connection with the divestiture of any Subsidiary or business of Spinco to an acquiror that is not a Competitor of GGP, assign to the acquiror of such Subsidiary or business its rights and obligations as a recipient with respect to the Services provided to such divested Subsidiary or business under this Agreement; provided , that (i) no such assignment shall release GGP or Spinco, as the case may be, from any liability or obligation under this Agreement, (ii) any and all costs and expenses incurred by either Party in connection with such
assignment (including in connection with clause (iii) of this proviso) shall be borne solely by the assigning Party, and (iii) the Parties shall in good faith negotiate any amendments to this Agreement, including the Annexes and Schedules to this Agreement, that may be necessary or appropriate in order to assign such Services; and
(iii) in connection with the divestiture of any Subsidiary or business of Spinco to an acquiror that is a Competitor of GGP, assign to the acquiror of such Subsidiary or business its rights and obligations as a recipient with respect to the Services provided to such divested Subsidiary or business under this Agreement; provided , that (i) no such assignment shall release GGP or Spinco, as the case may be, from any liability or obligation under this Agreement, (ii) any and all costs and expenses incurred by either Party in connection with such assignment (including in connection with clause (iii) of this proviso) shall be borne solely by the assigning Party, (iii) the Parties shall in good faith negotiate any amendments to this Agreement, including the Annexes and Schedules to this Agreement, that may be necessary or appropriate in order to ensure that such assignment will not (x) materially and adversely affect the businesses and operations of each of the Parties and their respective Subsidiaries or (y) create a competitive disadvantage for GGP with respect to an acquiror that is a Competitor of GGP, and (iv) GGP shall not be obligated to provide any such assigned Services to an acquiror that is a Competitor of GGP if the provision of such assigned Services to such acquiror would disrupt the operation of GGP’s businesses or create a competitive disadvantage for GGP with respect to such acquiror.
(b) In the event of the (i) merger, amalgamation or consolidation of Spinco and another Person, (ii) sale of all or substantially all of the assets of Spinco to another Person, (iii) the acquisition of a majority of the voting stock of Spinco by any Person or “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) or (iv) the election of, or appointment to, the board of directors of Spinco of directors constituting a majority of the directors then serving if such elected or appointed directors have not been nominated as directors by the Nominating Committee of the board of directors prior to their election or appointment, then the requirement of GGP to provide Services hereunder shall automatically terminate without further action by the Parties thirty (30) days after the occurrence of such event.
Section 10.14. Waiver of Jury Trial . EACH PARTY TO THIS AGREEMENT WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY TO THIS AGREEMENT HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION AGREEMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.14 .
Section 10.15. Specific Performance . The provisions of Section 7.4 of the Separation Agreement shall govern specific performance under this Agreement.
Section 10.16. Non-Recourse . Other than the GGP Group and the Spinco Group, no past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or representative of either GGP or Spinco or their Subsidiaries shall have any liability for any obligations or liabilities of GGP or Spinco, respectively, under this Agreement or for any claims based on, in respect of, or by reason of, the transactions contemplated by this Agreement.
[ The remainder of this page is intentionally left blank .]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.
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GGP LIMITED PARTNERSHIP |
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General Growth Properties, Inc. |
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its general partner |
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/s/ Thomas H. Nolan, Jr. |
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Name: |
Thomas H. Nolan, Jr. |
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President |
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GENERAL GROWTH MANAGEMENT, INC. |
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/s/ Thomas H. Nolan, Jr. |
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Name: |
Thomas H. Nolan, Jr. |
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Title: |
President |
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THE HOWARD HUGHES CORPORATION |
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/s/ David Arthur |
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Name: |
David Arthur |
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Title: |
Interim Chief Executive Officer |
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Signature Page to Transition Services Agreement
Exhibit 99.4
TAX MATTERS AGREEMENT
by and between
General Growth Properties, Inc.
and
The Howard Hughes Corporation
Dated as of November 9, 2010
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (this “ Agreement ”), dated as of November 9, 2010, is by and between General Growth Properties, Inc., a Delaware corporation (“ GGP ”) and The Howard Hughes Corporation, a Delaware corporation (“ Spinco ”). Each of GGP and Spinco is sometimes referred to herein as a “ Party ” and, collectively, as the “ Parties .”
WHEREAS, the board of directors of GGP has determined that it is in the best interests of GGP and its shareholders to create a new publicly traded company which shall operate the Spinco Business;
WHEREAS, the board of directors of GGP and the board of directors of Spinco have approved (i) the Restructuring, and (ii) the Distribution, all as more fully described in the Separation Agreement and the other Transaction Documents;
WHEREAS, for U.S. federal income tax purposes, certain steps of the Restructuring and the Distribution are intended to qualify for tax-free treatment under Sections 351, 355, 368(a) and related provisions of the Code;
WHEREAS, GGP has received the Private Letter Ruling from the IRS to the effect that, among other things, (i) certain steps of the Restructuring and the Distribution, taken together, qualify as a transaction (a) that is described in Sections 355(a) and 368(a)(1)(G) of the Code, (b) in which the Spinco Common Stock distributed is “qualified property” under Section 361(c) of the Code and (c) in which the holders of GGP Common Shares recognize no income or gain for U.S. federal income tax purposes under Section 355 of the Code, and (ii) certain other steps of the Spinoff Plan qualify as transactions that are described in Sections 355(a) and 368(a)(1)(G) of the Code;
WHEREAS, as a result of the Restructuring and Distribution, the Parties desire to enter into this Agreement to provide for certain Tax matters, including the assignment of responsibility for the preparation and filing of Tax Returns, the payment of and indemnification for Taxes (including any Taxes incurred in connection with the Restructuring and Distribution), entitlement to refunds of Taxes, and the prosecution and defense of any Tax controversies;
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and provisions of this Agreement, each of the Parties mutually covenants and agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.01. General . As used in this Agreement, the following terms shall have the following meanings:
“ Accounting Firm ” has the meaning set forth in Section 9.01.
“ Adjusted CDND ” has the meaning ascribed to it in the Investment Agreements.
“ Adjustment ” means any proposed or final change in the Tax liability of a taxpayer.
“ Agreement ” has the meaning set forth in the preamble to this Agreement.
“ Common Parent ” means (i) for U.S. federal income tax purposes, the “common parent corporation” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code) filing a U.S. federal consolidated income Tax Return, or (ii) for state, local or foreign Tax purposes, the common parent (or the equivalent thereof) of a Tax Group.
“ Consolidated Return ” means, with respect to the GGP Group and Spinco Group, respectively, the U.S. federal income Tax Return required to be filed by (i) a GGP Entity as the Common Parent or (ii) a Spinco Entity as the Common Parent.
“ Cornerstone Investment Agreement ” means that certain Cornerstone Investment Agreement effective as of March 31, 2010 between REP Investments LLC and GGP, as amended to the date hereof.
“ Disqualifying Action ” means a GGP Disqualifying Action or a Spinco Disqualifying Action.
“ Due Date ” means (i) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and (ii) with respect to a payment of Taxes, the date on which such payment is required to be made to avoid the incurrence of interest, penalties and/or additions to Tax.
“ Effective Date ” means the date of the Distribution.
“ Excess Surplus Amount ” has the meaning ascribed to it in the Investment Agreements.
“ Final Determination ” means the final resolution of liability for any Tax for any taxable period, by or as a result of (i) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed; (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the entire Tax liability for any taxable period; (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax; or (iv) any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other Taxing Authority.
“ GGP ” has the meaning set forth in the preamble to this Agreement.
“ GGP Disqualifying Action ” means (i) any action (or the failure to take any action) within its control by any GGP Entity (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) that, (ii) any event (or series of events) involving the capital stock of GGP or any assets of any GGP Entity that, or (iii) any breach by any GGP Entity of any representation, warranty or covenant made by them in the Transaction Documents that, in each case, would reasonably be expected to negate the Tax-Free Status of the Transactions; provided , however , the term “ GGP Disqualifying Action ” shall not include any action required by the Separation Agreement or any other Transaction Document or that is undertaken pursuant to the Restructuring or the Distribution.
“ GGP Entity ” means any member of the GGP Group.
“ GGP Liability Percentage ” means the quotient, expressed as a percentage and rounded to two (2) decimal points, of (i) the GGP Market Capitalization, divided by (ii) the sum of the GGP Market Capitalization plus the Spinco Market Capitalization.
“ GGP Market Capitalization ” means the product of (i) the volume-weighted average trading price per share of GGP Common Shares for the twenty (20) consecutive trading days beginning on and following the thirty-first (31st) trading day following the Effective Time, as quoted by Bloomberg Financial Services through its “Volume at Price” function, rounded to the nearest whole cent, multiplied by (ii) the arithmetic average of the number of GGP Common Shares outstanding, on a fully-diluted basis, on each of such twenty (20) trading days, rounded to two (2) decimal points.
“ GGP Taxes ” means any Taxes allocated to GGP pursuant to Article II.
“ Income Taxes ” means any Taxes based upon, measured by, or calculated with respect to net income, profits, or gains (including, but not limited to, any capital gains, minimum Tax or any Tax on items of Tax preference, but not including sales, use, real or personal property, excise, or transfer or similar Taxes).
“ Indemnity Cap ” has the meaning ascribed to it in Section 2.01(b).
“ Indemnifying Party ” means the Party from which the other Party is entitled to seek indemnification pursuant to the provisions of Article IV.
“ Indemnified Party ” means the Party which is entitled to seek indemnification from the other Party pursuant to the provisions of Article IV.
“ Independent Firm ” has the meaning set forth in Section 8.01(b).
“ Information ” has the meaning set forth in Section 8.01(a).
“ Information Request ” has the meaning set forth in Section 8.01(a).
“ IRS ” means the U.S. Internal Revenue Service or any successor thereto, including, but not limited to its agents, representatives, and attorneys.
“ MPC Assets ” means residential and commercial lots in the “master planned communities” owned, for federal income tax purposes, by Howard Hughes Properties, Inc. or The Hughes Corporation or related to the Emerson Master Planned Community.
“ MPC Taxes ” means all liability for Income Taxes in respect of sales of MPC assets sold prior to March 31, 2010.
“ New GGPI ” means, after the Distribution, the publicly held corporation that will indirectly acquire 100% of the outstanding common stock of GGP.
“ Notified Action ” has the meaning set forth in Section 7.02(a).
“ Party ” has the meaning set forth in the preamble to this Agreement.
“ Past Practice ” has the meaning set forth in Section 3.03(a)(i).
“ Pre-Closing Period ” means any taxable period ending on or before the Effective Date.
“ Post-Closing Period ” means any taxable period beginning after the Effective Date.
“ Refund ” means any refund (or credit in lieu thereof) of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied to other Taxes payable), including any interest paid on or with respect to such refund of Taxes.
“ Restructuring/Distribution Taxes ” means any Taxes incurred in or by reason of the Restructuring or the Distribution, other than Spin-Off Taxes. For the avoidance of doubt, Restructuring/Distribution Taxes include Taxes by reason of deferred intercompany transactions triggered by the Restructuring or the Distribution.
“ Representative ” has the meaning set forth in Section 8.01(b).
“ Response Deadline ” has the meaning set forth in Section 8.01(b).
“ Separate Return ” means (i) in the case of the GGP Group, a Tax Return of any GGP Entity (including any Consolidated, combined, affiliated, or unitary Tax Return) that does not include, for any portion of the relevant taxable period, any Spinco Entity that is a regarded entity for U.S. federal income tax purposes and (ii) in the case of the Spinco Group, a Tax Return of any Spinco Entity (including any Consolidated, combined, affiliated, or unitary Tax Return) and that does not include, for any portion of the relevant taxable period, any GGP Entity that is a regarded entity for U.S. federal income tax purposes.
“ Separation Agreement ” means the Separation Agreement by and between the Parties dated as of November 9, 2010.
“ Spin-off Taxes ” means any Taxes or other Liabilities incurred solely as a result of the failure of the Tax-Free Status of the Transactions.
“ Spinco ” has the meaning set forth in the preamble to this Agreement.
“ Spinco Disqualifying Action ” means (i) any action (or the failure to take any action) within its control by any Spinco Entity (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) that, (ii) any event (or series of events) involving the capital stock of Spinco or any assets of any Spinco Entity that, or (iii) any breach by any Spinco Entity of any representation, warranty or covenant made by them in the Transaction Documents that, in each case, would reasonably be expected to negate the Tax-Free Status of the Transactions; provided , however , the term “ Spinco Disqualifying Action ” shall not include any action required by the Separation Agreement or any other Transaction Document or that is undertaken pursuant to the Restructuring or the Distribution.
“ Spinco Entity ” means any member of the Spinco Group.
“ Spinco Liability Percentage ” means the difference, expressed as a percentage, of (i) one hundred percent (100%) minus (ii) the GGP Liability Percentage.
“ Spinco Market Capitalization ” means the product of (i) the volume-weighted average trading price per share of shares of Spinco Common Stock for the twenty (20) consecutive trading days beginning on and following the thirty-first (31st) trading day following the Effective Time, as quoted by Bloomberg Financial Services through its “Volume at Price” function, rounded to the nearest whole cent, multiplied by (ii) the arithmetic average of the number of shares of Spinco Common Stock outstanding, on a fully-diluted basis, on each of such twenty (20) trading days, rounded to two (2) decimal points.
“ Spinco Taxes ” means any Taxes allocated to Spinco pursuant to Article II.
“ Straddle Period ” means any taxable period that begins on or before and ends after the Effective Date.
“ Supplemental Ruling ” means a private letter ruling, without substantive qualifications, of the IRS, to the effect that a transaction will not affect the Tax-Free Status of the Transactions.
“ Suspended Deductions ” means the interest deductions of The Hughes Corporation suspended by Section 163(j) of the Code and available for use as of the Effective Date. Such deductions were estimated to be approximately $406,000,000 as of December 31, 2009. The amount of Suspended Deductions available for use as of the Effective Date will be calculated based on an interim closing of the books and records of The Hughes Corporation as of the close of business on the Effective Date.
“ Tax ” means (i) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any U.S. federal, state or local or foreign governmental authority, including, but not limited to, income, gross receipts, excise, property, sales, use, license, capital stock, transfer, franchise, payroll, withholding, social security, value added and other taxes, (ii) any interest, penalties or additions attributable thereto and (iii) all liabilities in respect of any
items described in clauses (i) or (ii) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).
“ Tax Attributes ” means net operating losses, capital losses, earnings and profits, overall foreign losses, previously taxed income, separate limitation losses, deferred or suspended losses or deductions, foreign tax credits or other tax credits and all other Tax attributes.
“ Tax Detriment ” shall mean an increase in the Tax liability of a Person for any Taxable Period. Except as otherwise provided in this Agreement, a Tax Detriment shall be deemed to have been realized or suffered from a Tax Item or Items in a taxable period only if and to the extent that the Tax liability of such Person for such period is greater than it would have been if such Tax liability were determined without regard to such Tax Item.
“ Tax-Free Status of the Transactions ” means the tax-free treatment accorded to certain of the transactions taken in connection with the Restructuring and the Distribution as set forth in the Private Letter Ruling.
“ Tax Group ” means any U.S. federal, state, local or foreign affiliated, consolidated, combined, unitary or similar group or fiscal unity that joins in the filing of a single Tax Return.
“ Taxing Authority ” means any governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).
“ Tax Item ” shall mean any item of income, gain, loss, deduction, credit, recapture of credit, Tax Attribute, or any other item which may have the effect of increasing or decreasing Taxes paid or payable.
“ Tax Matter ” has the meaning set forth in Section 8.01(a).
“ Tax Package ” means all relevant Tax-related information relating to the operations of the GGP Business or the Spinco Business, as applicable, that is reasonably necessary to prepare and file the applicable Tax Return.
“ Tax Proceeding ” means any audit, assessment of Taxes, pre-filing agreement, other examination by any Taxing Authority, proceeding, appeal of a proceeding or litigation relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations.
“ Tax Return ” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, or declaration of estimated Tax) supplied to, or filed with, or required to be supplied to, or filed with, a Taxing Authority with respect to Taxes.
“ Treasury Regulations ” means the final and temporary (but not proposed) income Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“ Unqualified Tax Opinion ” means a “will” opinion, without substantive qualifications, of a nationally recognized law firm, which law firm is reasonably acceptable to GGP and Spinco, to the effect that a transaction will not affect the Tax-Free Status of the Transactions.
Section 1.02. Additional Definitions .
(a) Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Separation Agreement.
ARTICLE II
ALLOCATION OF TAX LIABILITIES AND REFUNDS
Section 2.01. Allocation of Tax Liabilities .
(a) Income and Other Taxes .
(i) Except as provided in Section 2.01 (d), GGP shall be liable for all Taxes of GGP Entities for all taxable periods; provided, that Spinco shall be liable for and shall indemnify GGP from and against all Taxes imposed on a GGP Entity pursuant to Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law) resulting from operations of a Spinco Entity.
(ii) Except as provided in Section 2.01(b), (c) and (d), Spinco shall be liable for all Taxes of Spinco Entities for all taxable periods; provided that (A), notwithstanding any provision of any of the Investment Agreements to the contrary, if Spinco is obligated to pay in cash (after utilization of any available Tax Attributes), in the period ending 36 months after the Effective Date, any MPC Taxes and GGP is not liable for its allocable share of such MPC Taxes pursuant to Section 2.01(b) below as a consequence of the Indemnity Cap, then GGP shall loan to Spinco the amount of such MPC Taxes not payable by GGP as a consequence of the Indemnity Cap (any such loan shall have the terms and conditions described in Section 5.17(g) of the Cornerstone Investment Agreement); and (B) GGP shall be liable for and shall indemnify Spinco from and against Taxes imposed on a Spinco Entity pursuant to Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law) resulting from operations of a GGP Entity.
(b) MPC Taxes . Notwithstanding any provision of any of the Investment Agreements or any provision of this Agreement or any of the other Transaction Documents to the contrary, GGP shall be liable for 93.75% of any MPC Taxes payable in cash by Spinco or any of its Subsidiaries; provided , however , that, except as provided herein with respect to interest or penalties, GGP’s liability pursuant to this Section 2.01(b) shall be capped at the lesser of (i) $303,750,000 and (ii) the then effective Excess Surplus Amount (if any) (the applicable amount described in clause (i) or clause (ii) is referred to herein as the “ Indemnity Cap ”). In the event
that any Suspended Deductions are utilized by Spinco or any of its Subsidiaries to offset taxable income or gain realized by Spinco or any of its Subsidiaries other than taxable income attributable to sales of MPC Assets sold prior to March 31, 2010, GGP’s current and future liability, if any, pursuant to this Section 2.01(b) shall be reduced by an amount equal to 93.75% of the incremental Taxes that would have been payable in cash by Spinco or any of its Subsidiaries had such Suspended Deductions not been so utilized. In the event that any Tax Attributes other than Suspended Deductions are utilized by Spinco or any of its Subsidiaries to offset and reduce taxable income or gain generated with respect to sales of MPC Assets sold prior to March 31, 2010, GGP shall be liable for 93.75% of any Income Taxes payable in cash by Spinco or any of its Subsidiaries that would not have been so payable had such Tax Attributes not been so utilized. In addition, notwithstanding any provision of the Investment Agreements or any provision of this Agreement or any of the other Transaction Documents to the contrary, GGP shall also be liable for one hundred percent (100%) of any interest or penalties attributable to any MPC Taxes which interest or penalties accrue with respect to periods ending on or before the date that Spinco assumes control of all Tax Proceedings relating to MPC Taxes pursuant to Section 6.03 (it being understood and agreed by the parties hereto that, for purposes of this Agreement, all penalties are deemed to accrue as of the date that the applicable penalty has been asserted or claimed by the IRS) and GGP’s liability for such interest or penalties shall not be limited by or subject to the Indemnity Cap. Spinco shall use commercially reasonable efforts to utilize the Suspended Deductions as expeditiously as possible and will not take any action, the principal purpose of which is, to cause GGP’s aggregate liability pursuant to this Section 2.01(b) to be materially greater than it would have been had such action not been taken.
In order to place Spinco and GGP in the same economic position as they would have been had certain post-Effective Date determinations been made as of the Effective Date, the Indemnity Cap shall be re-calculated and adjusted to reflect any such determination using the Adjusted CDND as provided in the Investment Agreements . Additionally, to the extent any promissory note was issued by Spinco in favor of GGP pursuant to Section 2.01(a)(ii), then, in order to place Spinco and GGP in the same economic position as they would have been had the recalculated Indemnity Cap been used for purposes of calculating such note, (i) the principal amount of such note will be reduced based on the new calculation using the Adjusted CDND, and (ii) to the extent applicable, any interest payments made by Spinco to GGP on such note prior to such re-calculation shall be refunded in respect of such reductions and accrued but unpaid interest in respect of such reductions shall be eliminated. Consistent with the foregoing, this Section 2.01(b) shall be retroactively applied using the recalculated Indemnity Cap and any resulting amounts payable thereunder shall be promptly paid by GGP.
(c) Restructuring/Distribution Taxes .
(i) GGP shall be liable for all Restructuring/Distribution Taxes.
(d) Spin-Off Taxes .
(i) GGP shall be liable for any Spin-Off Taxes attributable to a GGP Disqualifying Action.
(ii) Spinco shall be liable for any Spin-Off Taxes attributable to a Spinco Disqualifying Action.
(iii) Any Spin-Off Taxes that are not the result of a Disqualifying Action shall be allocated between GGP and Spinco according to the GGP Liability Percentage and the Spinco Liability Percentage, respectively.
Section 2.02. Allocation of Refunds .
(a) Except as provided in Section 2.02(b), GGP shall be entitled to all Refunds with respect to Taxes for which GGP is or may be liable pursuant to Article II, and Spinco shall be entitled to all Refunds of Taxes for which Spinco is or may be liable pursuant to Article II. A Party receiving a Refund to which the other Party is entitled pursuant to this Agreement shall pay the amount to which such other Party is entitled (less any costs or Taxes incurred with respect to the receipt thereof) within ten (10) days after the receipt of such Refund.
(b) To the extent that the amount of any Refund under this Section 2.02 is later reduced by a Taxing Authority or a Tax Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 2.02 and an appropriate adjusting payment shall be made.
ARTICLE III
PREPARATION, FILING AND PAYMENT OF TAXES SHOWN DUE ON TAX RETURNS
Section 3.01. Preparation and Filing of Tax Returns . GGP shall prepare and file all Tax Returns of the GGP Group (including Consolidated Returns of the GGP Group) relating to any taxable period and shall pay all Taxes shown to be due and payable on such Tax Returns. Spinco shall prepare and file all Tax Returns of the Spinco Group (including Consolidated Returns of the Spinco Group) relating to any taxable period and shall pay all Taxes shown to be due and payable on such Tax Returns.
Section 3.02. Amended Tax Returns .
(a) Returns Filed by GGP . GGP shall, in its sole discretion, be permitted to amend any Tax Return that a GGP Entity is responsible for filing pursuant to Section 3.01 ; provided , however , that, unless otherwise required by Law or a Final Determination, GGP shall not amend any such Tax Return to the extent that any such amendment would reasonably be expected to cause a Spinco Entity to experience any Tax Detriment (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), without the prior written consent of Spinco, which consent shall not be unreasonably withheld or delayed.
(b) Returns Filed by Spinco . Spinco shall, in its sole discretion, be permitted to amend any Tax Return that a Spinco Entity is responsible for filing pursuant to Section 3.01 ; provided , however , that, unless otherwise required by Law or a Final Determination, Spinco shall not amend any such Tax Return to the extent that any such amendment would reasonably
be expected to cause a GGP Entity to experience any Tax Detriment (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used) without the prior written consent of GGP, which consent shall not be unreasonably withheld or delayed.
Section 3.03. Tax Return Procedures .
(a) Procedures Relating to the Manner of Preparing Tax Returns .
(i) All Tax Returns prepared by GGP that include a member of the Spinco Group or by Spinco that include a member of the GGP Group shall be prepared in accordance with past practices, accounting methods, elections and conventions (“ Past Practice ”), unless otherwise required by Law or agreed to in writing by Spinco or GGP, as applicable.
(ii) In the event that Past Practice is not applicable to a particular item or matter arising in a Tax Return described in Section 3.03(a)(i) , GGP or Spinco, as applicable, shall determine the reporting of such item or matter provided that such reporting is more likely than not to be sustained and provided further that the other Party shall agree as to the reporting of any such item or matter which is not more likely than not to be sustained. The Parties shall attempt in good faith to mutually resolve any disagreements, including by appointing an Accounting Firm pursuant to Section 9.01, regarding such items or matters prior to the Due Date for filing the applicable Tax Return; provided , that the failure to resolve all disagreements prior to such date shall not relieve the Indemnified Party of its obligation to file (or cause to be filed) such Tax Return.
(b) Timing of Tax Return Filing and Payments . All Taxes or Tax Returns required to be paid or filed pursuant to this Article III by either GGP or Spinco to or with an applicable Taxing Authority shall be paid or filed on or before the Due Date for the payment or filing of such Taxes or Tax Returns.
(c) Review of Tax Returns . With respect to any Tax Return including Taxes subject to indemnification pursuant to Article IV, the Indemnified Party preparing such Tax Return shall, at least 10 days prior to the Due Date applicable to such Tax Return, prepare and deliver to the Indemnifying Party a schedule showing in reasonable detail the Indemnified Party’s good faith calculation of any indemnification payments to be made by the Indemnifying Party. The Indemnifying Party shall have the right to review and approve (such approval shall not be unreasonably withheld) such schedule. The Parties shall attempt in good faith to mutually resolve any disagreements, including by appointing an Accounting Firm pursuant to Section 9.01, regarding such schedule prior to the Due Date for filing the applicable Tax Return; provided , however , that the failure to resolve all disagreements prior to such date shall not relieve the Indemnified Party of its obligation to file (or cause to be filed) such Tax Return.
Section 3.04. Expenses . Except as otherwise provided in this Agreement, each Party shall bear its own expenses incurred in connection with this Article III.
ARTICLE IV
INDEMNIFICATION
Section 4.01. Indemnification by GGP . GGP shall pay, and shall indemnify and hold the Spinco Indemnified Parties harmless from and against, without duplication, (i) all GGP Taxes, (ii) all Taxes incurred by Spinco or any Spinco Entity by reason of the breach by GGP of any of its representations, warranties or covenants hereunder, and (iii) any costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses).
Section 4.02. Indemnification by Spinco . Spinco shall pay, and shall indemnify and hold the GGP Indemnified Parties harmless from and against, without duplication, (i) all Spinco Taxes, (ii) all Taxes incurred by GGP or any GGP Entity by reason of the breach by Spinco of any of its representations, warranties or covenants hereunder, and (iii) any costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses).
Section 4.03. Characterization of and Adjustments to Payments . For all Tax purposes, GGP and Spinco agree to treat (i) any payment required by this Article IV (other than payments with respect to interest accruing after the Effective Date) as either a contribution by GGP to Spinco or a distribution by Spinco to GGP, as the case may be, occurring immediately prior to the Effective Date or as a payment of an assumed or retained liability and (ii) any payment of non-federal Taxes by or to a Taxing Authority or any payment of interest as taxable or deductible, as the case may be, to the Party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case except as otherwise required by applicable Law.
Section 4.04. Timing of Indemnification Payments . Indemnification payments in respect of any Liabilities for which an Indemnified Party is entitled to indemnification pursuant to this Article IV shall be paid by the Indemnifying Party to the Indemnified Party (i) with respect to Liabilities requiring a payment to a Taxing Authority, not later than one business day prior to the Due Date of such Liability, and (ii) with respect to any other Liabilities, as such Liabilities are incurred upon demand by the Indemnified Party, including reasonably satisfactory documentation setting forth the basis for the amount of such indemnification payment.
ARTICLE V
CARRYBACKS, AMENDMENTS AND TAX ITEMS
Section 5.01. Carrybacks .
(a) The carryback of any loss, credit or other Tax Attribute from any Post-Closing Period shall be in accordance with the provisions of the Code and Treasury Regulations (and any applicable state, local or foreign Laws).
(b) To the extent permitted by applicable Law, GGP and Spinco shall waive the right to carryback any Tax Attribute of a member of their respective Groups arising in a Post-Closing Period to a Pre-Closing or Straddle Period; provided , however , that (i) GGP and Spinco may carryback any Tax Attribute if such carryback claim is reported on a Separate Return or is
utilized to offset and reduce the liability for MPC Taxes, (ii) GGP may carryback any Tax Attribute if such carryback claim is reported on a Consolidated Return of the GGP Group, and (iii) Spinco may carryback any Tax Attribute if such carryback claim is reported on a Consolidated Return of the Spinco Group.
(c) In the event that, notwithstanding Section 5.01(b), GGP or Spinco is required to carryback Tax Attributes in order to avoid losing the benefit of such Tax Attributes, the Party responsible for filing the Tax Return on which such carryback claim is reported will cooperate with the other Party in seeking from the appropriate Taxing Authority any Refund that would be allocated to the other Party pursuant to Section 2.02 and that reasonably would result from such carryback (including by filing an amended Tax Return) at the other Party’s cost and expense; provided , however , that no Party shall be required or permitted to seek such Refund to the extent that such Refund would reasonably be expected to result in a Tax Detriment to a GGP Entity or a Spinco Entity, as the case may be, (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), in each case, without the prior written consent of GGP or Spinco, as applicable, which consent shall not be unreasonably withheld or delayed.
Section 5.02. Tax Items .
(a) Tax Items arising in a Pre-Closing Period shall be allocated to the GGP Group and the Spinco Group in accordance with the Code and Treasury Regulations (and any applicable state, local and foreign Laws) and in accordance with the allocation of Tax Liabilities in Article II. GGP and Spinco shall jointly determine the allocation of such Tax Items arising in Pre-Closing Periods as soon as reasonably practicable following the Effective Date, and hereby agree to compute all Taxes for all Straddle Periods and Post-Closing Periods consistently with that determination unless otherwise required by Law or a Final Determination.
(b) To the extent that the amount of any Tax Item is later reduced or increased by a Taxing Authority or Tax Proceeding, such reduction or increase shall be allocated to or borne by the Party to which such Tax Item was allocated pursuant to Section 5.02(a).
Section 5.03. Treatment of Deductions Associated with Equity-Related Compensation .
(a) To the extent permitted by Law, solely GGP, New GGPI, or a GGP Entity, as the case may be, shall be entitled to claim any Tax deduction associated with the following items:
(i) The exercise of any Spinco stock options or stock appreciation rights by any GGP Employee (as defined below) and the vesting of Spinco restricted stock or the vesting or settlement of Spinco restricted stock units held by any GGP Employee and the payment of any dividends with respect to such Spinco restricted stock.
(ii) The exercise of any GGP or New GGPI stock options or stock appreciation rights by any GGP Employee and the vesting of GGP or New GGPI restricted stock or the vesting or settlement of GGP or New GGPI restricted stock units held by any GGP Employee (and payment of any dividends on such GGP restricted stock).
(b) To the extent permitted by Law, solely Spinco or a Spinco Entity, as the case may be, shall be entitled to claim any Tax deduction associated with the following items:
(i) The exercise of any GGP or New GGPI stock options or stock appreciation rights by any Spinco Employee (as defined below) and the vesting of GGP or New GGPI restricted stock or the vesting or settlement of GGP or New GGPI restricted stock units held by any Spinco Employee and the payment of any dividends on such restricted stock at any time on or after the first date any Spinco Entity employed such Spinco Employee.
(ii) The exercise of any Spinco stock options or stock appreciation rights by any Spinco Employee and the vesting of Spinco restricted stock or the vesting or settlement of Spinco restricted stock units held by any Spinco Employee and the payment of any dividends with respect to such Spinco restricted stock.
(c) The following terms shall have the following meanings:
(i) “Spinco Employee” means any person employed or formerly employed by any Spinco Entity at the time of the exercise, vesting, settlement, disqualifying disposition or payment, as appropriate, unless, at such time, such person is employed by a member of the GGP Group or was more recently employed by a GGP Entity than by a Spinco Entity;
(ii) “GGP Employee” means any person employed or formerly employed by any GGP Entity at the time of the exercise, vesting, settlement, disqualifying disposition or payment, as appropriate, unless, at such time, such person is a Spinco Employee.
ARTICLE VI
TAX PROCEEDINGS
Section 6.01. Notification of Tax Proceedings . Within ten (10) days after an Indemnified Party becomes aware of the commencement of a Tax Proceeding that may give rise to Taxes for which an Indemnifying Party is responsible pursuant to Article II, such Indemnified Party shall notify the Indemnifying Party of such Tax Proceeding, and thereafter shall promptly forward or make available to the Indemnifying Party copies of notices and communications relating to such Tax Proceeding. The failure of the Indemnified Party to notify the Indemnifying Party of the commencement of any such Tax Proceeding within such ten (10) day period or promptly forward any further notices or communications shall not relieve the Indemnifying Party of any obligation which it may have to the Indemnified Party under this Agreement except to the extent that the Indemnifying Party is actually prejudiced by such failure.
Section 6.02. Statute of Limitations . Any extension of the statute of limitations for any Taxes or a Tax Return for any Pre-Closing Period or a Straddle Period shall be made by the Party required to file such Tax Return or pay such Taxes to a Taxing Authority; provided that to the extent such Taxes or Tax Return may result in an indemnity payment pursuant to this Agreement by the Party other than the filing Party, the Indemnifying Party may, in its reasonable discretion, require that the filing Party extend the applicable statute of limitations for such period as determined by the Indemnifying Party.
Section 6.03. Tax Proceeding Procedures Generally . Except as provided herein or in Section 6.04, each Party shall be entitled to contest, compromise and settle any Adjustment proposed, asserted or assessed pursuant to any Tax Proceeding involving a Tax reported (or that, it is asserted, should have been reported) on a Tax Return that such Party is responsible for preparing and filing (or causing to be prepared and filed) pursuant to Article III; provided , however , that (A) GGP shall retain exclusive control over all Tax Proceedings relating to MPC Taxes (whether ongoing as of the date of this Agreement or not) for so long as GGP may be liable under Section 2.01(b) for more than 50% of the total MPC Taxes at issue in the relevant Tax Proceeding, (B) GGP may not enter into any closing, settlement or other similar agreement with any Taxing Authority with respect to Tax Proceedings described in the preceding clause (A) without the prior written consent of Spinco, which consent shall not be unreasonably withheld, (C) GGP shall keep Spinco informed in a timely manner of all actions proposed to be taken by GGP and shall permit Spinco to observe (at its own cost) all proceedings with respect to such Tax Proceedings, (D) GGP shall provide Spinco with written notice reasonably in advance of, and Spinco shall have the right to attend and participate in (at its own cost), any scheduled meetings with any Taxing Authority with respect to such Tax Proceedings and (E) notwithstanding the foregoing, Spinco shall have the right (but not the obligation) to immediately assume control of any and all Tax Proceedings relating to MPC Taxes, at its own cost and expense, if, at any time prior to the conclusion of such Tax Proceeding, the potential liability of GGP for MPC Taxes under the provisions set forth in Section 2.01(b) is less than fifty percent (50%) of the total liability for MPC Taxes at issue in the relevant Tax Proceeding.
Section 6.04. Tax Proceedings in Respect of Indemnified Taxes .
(a) In General . Notwithstanding Section 6.03 , if the Party entitled to control a Tax Proceeding is an Indemnified Party, any defense of the Tax Proceeding shall be conducted by such Party diligently and in good faith; provided , however , that the Indemnified Party shall keep the Indemnifying Party informed in a timely manner of all actions proposed to be taken by the Indemnified Party and shall permit the Indemnifying Party to observe (at its own cost) all proceedings with respect to such Tax Proceeding; and provided further , that, if the applicable Tax Proceeding (or any Adjustments proposed or asserted in connection therewith) reasonably would be expected to give rise to an indemnity obligation in excess of $1 million, in the aggregate, then, unless waived by the Parties in writing, the Indemnified Party shall (a) prepare all correspondence or filings to be submitted to any Taxing Authority or judicial authority in a manner consistent with the Tax Return which is the subject of such Adjustment as filed and timely provide the Indemnifying Party with copies of any such correspondence or filings for the Indemnifying Party’s prior review and consent, which consent shall not be unreasonably withheld, (b) provide the Indemnifying Party with written notice reasonably in advance of, and the Indemnifying Party shall have the right to attend and participate in (at its own cost), any formally scheduled meetings with any Taxing Authority or hearings or proceedings before any judicial authority with respect to such Adjustment, (c) not enter into any closing, settlement or other similar agreement with any Taxing Authority with respect to the relevant Tax Proceeding (or any proposed Adjustment) without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld and (d) not contest any proposed or asserted Adjustment before a judicial authority unless (A) such Adjustment (separately or together with other proposed or asserted Adjustments) reasonably would be expected to give rise to Taxes payable by the Indemnified Party in an amount of $1 million or more, in the aggregate, or (B) the
Indemnified Party has received an opinion of a nationally recognized law firm that it is more likely than not to prevail on the merits.
(b) Tax Proceedings in Respect of Restructuring/Distribution Taxes and Disqualifying Actions . Notwithstanding Section 6.03, GGP and Spinco shall be entitled to jointly contest, compromise and settle any Adjustment proposed, asserted or assessed pursuant to any Tax Proceeding relating to (i) Restructuring/Distribution Taxes and (ii) any Taxes attributable to a Spinco Disqualifying Action. Notwithstanding Section 6.03, GGP shall be entitled to contest, compromise and settle any Adjustment proposed, asserted or assessed pursuant to any Tax Proceeding relating to any Taxes attributable to a GGP Disqualifying Action and shall defend such Adjustment diligently and in good faith; provided , that , unless waived by the Parties in writing, GGP shall (i) keep Spinco informed in a timely manner of all actions taken or proposed to be taken by GGP, (ii) provide copies of all correspondence or filings to be submitted to any Taxing Authority or judicial authority to Spinco for its prior review and consent, which consent shall not be unreasonably withheld and (iii) provide Spinco with written notice reasonably in advance of, and Spinco shall have the right to attend (at its own cost), any formally scheduled meetings with any Taxing Authority or hearings or proceedings before any judicial authority.
ARTICLE VII
TAX-FREE STATUS OF THE DISTRIBUTION
Section 7.01. Representations and Warranties .
(a) Tax Reporting . Each of GGP and Spinco covenants and agrees that it will not take, and will cause its respective Affiliates to refrain from taking, any position on any Tax Return that is inconsistent with the Tax-Free Status of the Transactions.
(b) Restrictions Relating to the Distribution . Neither GGP nor Spinco shall, nor shall GGP or Spinco permit any GGP Entity or any Spinco Entity, respectively, to, take or fail to take, as applicable, any action that constitutes a Disqualifying Action described in the definitions of GGP Disqualifying Action and Spinco Disqualifying Action, respectively.
(c) Ordinary Course of Business . GGP represents that neither it nor any of its Subsidiaries altered the manner in which they satisfied their respective Tax payment obligations as a result of the pendency of the Restructuring and Distribution.
Section 7.02. Procedures Regarding Opinions and Rulings .
(a) If Spinco notifies GGP that it desires to take one of the actions potentially described in Section 7.01 (a “ Notified Action ”), GGP shall cooperate with Spinco and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a Supplemental Ruling or an Unqualified Tax Opinion for the purpose of permitting Spinco to take the Notified Action unless GGP shall have waived the requirement to obtain such ruling or opinion. If such a ruling is to be sought, GGP shall apply for such ruling and GGP and Spinco shall jointly control the process of obtaining such ruling. In no event shall GGP be required to file any such request unless Spinco represents that (i) it has read such request, and (ii) all information and
representations, if any, relating to any member of the Spinco Group, contained in such request documents are (subject to any qualifications therein) true, correct and complete. Spinco shall reimburse GGP for all reasonable costs and expenses incurred by the GGP Group in obtaining a Supplemental Ruling or Unqualified Tax Opinion requested by Spinco within ten (10) days after receiving an invoice from GGP therefor.
(b) GGP shall have the right to obtain a Supplemental Ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If GGP determines to obtain such ruling or opinion, Spinco shall (and shall cause each Spinco Entity to) cooperate with GGP and take any and all actions reasonably requested by GGP in connection with obtaining such ruling or opinion (including by making any representation or reasonable covenant or providing any materials requested by the IRS or the law firm issuing such opinion); provided that Spinco shall not be required to make (or cause a Spinco Entity to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control. In connection with obtaining such ruling, GGP shall apply for such ruling and shall have sole and exclusive control over the process of obtaining such ruling. GGP shall reimburse Spinco for all reasonable costs and expenses incurred by the Spinco Group in obtaining a Supplemental Ruling or Unqualified Tax Opinion requested by GGP.
(c) Except as provided in Sections 7.02(a) and (b), no Spinco Entity shall seek any guidance from the IRS or any other Tax Authority (whether written, verbal or otherwise) at any time concerning the Restructuring or Distribution (including the impact of any transaction on the Restructuring or Distribution).
ARTICLE VIII
COOPERATION
Section 8.01. General Cooperation .
(a) Subject to Section 8.03, the Parties shall each cooperate fully (and each shall cause its respective Subsidiaries to cooperate fully) with all reasonable requests in writing (“ Information Request ”) from another Party hereto, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of Tax Returns (including the preparation of Tax Packages), claims for Refunds, Tax Proceedings, and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement and the establishment of any reserve required in connection with any financial reporting (a “ Tax Matter ”). Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter (“ Information ”) and shall include, without limitation, at each Party’s own cost:
(i) the provision of any Tax Returns of the Parties and their respective Subsidiaries, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;
(ii) the execution of any document (including any power of attorney) in connection with any Tax Proceedings of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or a Refund claim of the Parties or any of their respective Subsidiaries;
(iii) the use of the Party’s reasonable best efforts to obtain any documentation in connection with a Tax Matter; and
(iv) the use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records or other information in connection with the filing of any Tax Returns of any of the Parties or their Subsidiaries.
Each Party shall make its employees, advisors, and facilities available, without charge, on a reasonable and mutually convenient basis in connection with the foregoing matters.
(b) Subject to Section 8.03, with respect to any written request by a Party in accordance with the provisions of Section 8.01(a) for access to Information or Representatives of the other Party and members of such other Party’s Tax Group in connection with any Tax Return, Tax Proceeding or otherwise in connection with this Agreement:
(i) The responding Party shall (A) make available to the requesting Party the requested Information within the deadline reasonably agreed upon by the Parties (the Response Deadline ”), and (B) following the Response Deadline, promptly (and no later than five (5) days following its discovery of such Information) make available to the requesting Party any other Information it discovers that is within its possession or control which would reasonably be expected to be relevant to the Information Request.
(ii) In the event that the responding Party breaches its obligations under the preceding sentence by (A) failing to respond to the Information Request by the Response Deadline without providing a legitimate reason for such failure that is reasonably satisfactory to the requesting Party ( provided , that the provision of Information by the responding Party after the Response Deadline pursuant to paragraph (b)(i)(B) shall not be deemed to be a breach described in this clause (A)) or (B) withholding Information within its possession or control that is material to the Information Request, then the provisions of paragraph (b)(iii) shall apply.
(iii) In the event of a breach described in paragraph (b)(ii)(A) that is not cured within ten (10) days following the Response Deadline or an alleged breach described in Paragraph (b)(ii)(B), the requesting Party shall have the right to engage an independent consulting, accounting or law firm selected in its sole discretion (the “ Independent Firm ”) to access any and all books, records and other documents of the responding Party and any applicable members of such responding Party’s group or an agent, representative or advisor of the responding Party (or such members of their relevant group) (“ Representative ”) for purposes of identifying and extracting the Information requested by the requesting Party and the responding Party shall be required to provide to the Independent Firm access to all such books, records and other documents and Representatives; provided , that (x) the Independent Firm shall have executed, for the benefit of both parties, a non-disclosure and confidentiality agreement that
is in form and substance customary for similar engagements, (y) such access shall be provided by the responding Party only upon at least two (2) days prior written notice and during reasonable business hours, and (z) in the event of a breach described in paragraph (b)(ii)(A) that is not cured within ten (10) days following the Response Deadline or a breach described in paragraph (b)(ii)(B), as determined by the Independent Firm following its extraction of Information pursuant to this sentence, the costs and expenses of the Independent Firm shall be borne by (i) the responding Party in the event of a breach by the responding Party of paragraph (b)(i), or (ii) the requesting Party in the event there has been no breach by the responding Party of paragraph (b)(i).
Section 8.02. Retention of Records . GGP and Spinco shall retain or cause to be retained all Tax Returns, schedules and workpapers, and all material records or other documents relating thereto in their possession, until sixty (60) days after the expiration of the applicable statute of limitations (including any waivers or extensions thereof) of the taxable periods to which such Tax Returns and other documents relate or until the expiration of any additional period that any Party reasonably requests, in writing, with respect to specific material records or documents. A Party intending to destroy any material records or documents shall provide the other Party with reasonable advance notice and the opportunity to copy or take possession of such records and documents. The Parties hereto will notify each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records or other documents must be retained.
Section 8.03. Confidentiality . Notwithstanding any other provision of this Agreement or any other Transaction Document, any information obtained by either Party under this Agreement shall be kept confidential, except as may be necessary in connection with the filing of Tax Returns or claims for Refunds or in connection with any Tax Proceeding or any dispute, proceeding, suit or action concerning any issues or matters addressed in this Agreement, or unless a Party is compelled to disclose information by judicial or administrative process, or, in the opinion of its counsel, by other requirements of Law. Spinco shall not be required to make available to GGP or its representatives any books, records, documents or other information that Spinco reasonably determines to be subject to attorney-client privilege; provided , however , that Spinco shall be required to make available to GGP any information reasonably requested by GGP pursuant to Section 8.01 in connection with the preparation of any Tax Return required to be prepared by GGP pursuant to this Agreement or any Tax Proceeding in connection with such Tax Returns. GGP shall not be required to make available to Spinco or its representatives any books, records, documents or other information that GGP reasonably determines to be subject to attorney-client privilege; provided , however , that GGP shall be required to make available to Spinco any information reasonably requested by Spinco pursuant to Section 8.01 in connection with the preparation of any Tax Return required to be prepared by Spinco pursuant to this Agreement or any Tax Proceeding in connection with such Tax Returns.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Dispute Resolution . Other than as set forth in Section 8.01(b)(iii), with respect to any dispute between the Parties as to any matter covered by this Agreement, the
Parties shall appoint a nationally recognized independent public accounting firm (the “ Accounting Firm ”) to resolve such dispute. In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by GGP and Spinco and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor of one Party only. The Parties shall require the Accounting Firm to resolve all disputes no later than thirty (30) days after the submission of such dispute to the Accounting Firm, but in no event later than the Due Date for the payment of Taxes or the filing of the applicable Tax Return, if applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties. The Accounting Firm shall resolve all disputes in a manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the Past Practices of GGP and its Subsidiaries, except as otherwise required by applicable Law. The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination. The fees and expenses of the Accounting Firm shall be paid by the non-prevailing Party.
Section 9.02. Tax Sharing Agreements . All Tax sharing, indemnification and similar agreements, written or unwritten, as between a GGP Entity, on the one hand, and a Spinco Entity, on the other (other than this Agreement or any other Transaction Document), shall be or shall have been terminated on or before the Effective Date and, after the Effective Date, no GGP Entity, on the one hand, or Spinco Entity, on the other, shall have any further rights or obligations with respect to each other under any such Tax sharing, indemnification or similar agreement.
Section 9.03. Interest on Late Payments . With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate per annum equal to the rate in effect for underpayments under Section 6621 of the Code from such due date to and including the earlier of the ninetieth (90th) day or the payment date and thereafter will accrue interest at a rate per annum equal to 9%.
Section 9.04. Survival of Covenants . Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Effective Date and remain in full force and effect in accordance with their applicable terms, provided, however, that the representations and warranties and all indemnification for Taxes shall survive until sixty (60) days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, of the Tax that gave rise to the indemnification, provided, further, that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.
Section 9.05. Termination . This Agreement may not be terminated except by an agreement in writing signed by each of the Parties to this Agreement.
Section 9.06. Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all
other conditions and provisions of this Agreement shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.
Section 9.07. Entire Agreement . Except as otherwise expressly provided in this Agreement, this Agreement constitutes the entire agreement of the Parties hereto with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties hereto with respect to the subject matter of this Agreement.
Section 9.08. Assignment; No Third-Party Beneficiaries . This Agreement shall not be assigned by any Party without the prior written consent of the other Party hereto, except that GGP may assign (i) any or all of its rights and obligations under this Agreement to any of its Affiliates and (ii) any or all of its rights and obligations under this Agreement in connection with a sale or disposition of any assets or entities or lines of business of GGP; provided , however , that, in each case, no such assignment shall release GGP from any liability or obligation under this Agreement nor change any of the steps in the Spinoff Plan. Except as provided in Article IV with respect to indemnified Parties, this Agreement is for the sole benefit of the Parties to this Agreement and their respective Subsidiaries and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 9.09. Specific Performance . In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is or is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by the Parties to this Agreement.
Section 9.10. Amendment . No provision of this Agreement may be amended or modified except by a written instrument signed by the Parties to this Agreement. No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the Party so waiving. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 9.11. Rules of Construction . Interpretation of this Agreement shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (ii) references to the terms Article, Section, paragraph, clause, Exhibit and
Schedule are references to the Articles, Sections, paragraphs, clauses, exhibits and schedules of this Agreement unless otherwise specified; (iii) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (iv) references to “$” shall mean U.S. dollars; (v) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (vi) the word “or” shall not be exclusive; (vii) references to “written” or “in writing” include in electronic form; (viii) provisions shall apply, when appropriate, to successive events and transactions; (ix) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (x) GGP and Spinco have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (xi) a reference to any Person includes such Person’s successors and permitted assigns.
Section 9.12. Counterparts . This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.
Section 9.13. Coordination with the Employee Matters Agreement . To the extent any covenants or agreements between the Parties with respect to employee withholding Taxes are set forth in the Employee Matters Agreement, such Taxes shall be governed exclusively by the Employee Matters Agreement and not by this Agreement.
Section 9.14. Coordination with the Separation Agreement . To the extent any representations, warranties, covenants or agreements between the parties with respect to Taxes or other Tax matters are set forth in this Agreement, such Taxes and other Tax matters shall be governed exclusively by this Agreement and not by the Separation Agreement.
Section 9.15. Effective Date . This Agreement shall become effective only upon the occurrence of the Distribution.
[ The remainder of this page is intentionally left blank. ]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.
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GENERAL GROWTH PROPERTIES, INC. |
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/s/ Thomas H. Nolan, Jr. |
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Name: |
Thomas H. Nolan, Jr. |
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Title: |
President |
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THE HOWARD HUGHES CORPORATION |
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/s/ David Arthur |
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David Arthur |
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Interim Chief Executive Officer |
Signature Page to Tax Matters Agreement
Exhibit 99.5
BROOKFIELD ASSET MANAGEMENT INC.
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GENERAL GROWTH PROPERTIES, INC.
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RELATIONSHIP AGREEMENT |
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November 9, 2010
TABLE OF CONTENTS
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ARTICLE 1 |
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INTERPRETATION |
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1.1 |
Definitions |
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1.2 |
Headings and Table of Contents |
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1.3 |
Gender and Number |
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1.4 |
Invalidity of Provisions |
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1.5 |
Entire Agreement |
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1.6 |
Waiver, Amendment |
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1.7 |
Governing Law |
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ARTICLE 2 |
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ACQUISITIONS |
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2.1 |
Primary Vehicle |
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No Exclusivity and Limitations on Acquisition Opportunities |
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2.3 |
Corporate Opportunity |
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ARTICLE 3 |
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REPRESENTATIONS AND WARRANTIES |
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3.1 |
Representations and Warranties of Brookfield |
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Representations and Warranties of GGP |
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ARTICLE 4 |
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TERMINATION |
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4.1 |
Term |
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4.2 |
Termination |
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ARTICLE 5 |
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LIMITATION OF LIABILITY |
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No Liability |
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Survival |
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ARTICLE 6 |
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GENERAL PROVISIONS |
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6.1 |
Assignment |
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6.2 |
Enurement |
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6.3 |
Notices |
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Further Assurances |
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6.5 |
Counterparts |
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RELATIONSHIP AGREEMENT
THIS AGREEMENT made as of the 9th day of November, 2010.
B E T W E E N:
BROOKFIELD ASSET MANAGEMENT INC. (“ Brookfield ”), a corporation existing under the laws of the Province of Ontario
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GENERAL GROWTH PROPERTIES, INC. (“ GGP ”) , a corporation existing under the laws of the state of Delaware
RECITALS:
A. Members of the GGP Group (as defined below) directly or indirectly own and operate regional shopping malls (“ Regional Malls ”) located throughout the United States;
B. An affiliate of Brookfield has entered into an agreement to sponsor the recapitalization of GGP on the terms and subject to the conditions set forth in the CIA; and
C. As a condition to the obligation of GGP to consummate the transactions contemplated by the CIA, Brookfield has agreed to enter into this Agreement (as defined below) to provide GGP with the benefit of being associated with the broader Brookfield platform in accessing potential acquisition and development opportunities for Regional Malls in the United States and Canada.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, except where the context otherwise requires, the following terms will have the following meanings:
1.1.1 “ Affiliate ” means, with respect to a Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls or is Controlled by such Person, or is under common Control of a third Person;
1.1.2 “ Agreement ” means this Relationship Agreement as the same may be amended from time to time, and “herein”, “hereof”, “hereby”, “hereunder” and similar expressions
refer to this Agreement and include every instrument supplemental or ancillary to this Agreement and, except where the context otherwise requires, not to any particular article or section thereof;
1.1.3 “ Brookfield ” has the meaning assigned thereto in the preamble;
1.1.4 “ Brookfield Group ” means Brookfield and its Affiliates and their respective officers, directors, agents, members or partners (but excluding, for greater certainty, any member of the GGP Group);
1.1.5 “ Brookfield Letter ” means the letter agreement entered into between Brookfield and General Growth dated , 2010,
1.1.6 “ Business Day ” means any day, other than a Saturday, a Sunday or any legal holiday recognized as such by banks in New York;
1.1.7 “ CIA” means the Cornerstone Investment Agreement between REP Investments LLC and GGP, dated as of March 31, 2010, as the same may be modified or amended from time to time.
1.1.8 “ Control ” means the control of one Person of another Person in accordance with the following: a Person (“A”) controls another Person (“B”) where A has the power to determine the management and policies of B by contract or status (for example the status of A being the general partner of B) or by virtue of beneficial ownership of a majority of the voting interests in B; and for certainty and without limitation, if A owns shares to which more than 50% of the votes permitted to be cast in the election of directors to the Governing Body of B or A is the general partner of B, a limited partnership, or A is the managing member of B, a limited liability company then in each case A Controls B for this purpose;
1.1.9 “ Effective Date ” means the date on which the transactions contemplated in the CIA are consummated in accordance with the terms of the CIA;
1.1.10 “ GGO ” means General Growth Opportunities, Inc., a corporation existing under the laws of the state of Delaware;
1.1.11 “ GGO Management Agreement ” means the management services agreement to be entered into by an Affiliate of Brookfield and GGO;
1.1.12 “ GGP Group ” means GGP, the Operating Partnership and any other direct or indirect Subsidiary of GGP;
1.1.13 “ Governing Body ” means (i) with respect to a corporation or limited company, the board of directors of such corporation or limited company, (ii) with respect to a limited liability company, the manager(s) or managing partner(s) of such limited liability company, (iii) with respect to a partnership, the board, committee or other body of the general partner of such partnership that serves a similar function (or if any such general partner is itself a partnership, the board, committee or other body of such general partner’s
general partner that serves a similar function) and (iv) with respect to any other Person, the body of such Person that serves a similar function;
1.1.14 “ Liabilities ” means any claims, liabilities, losses, damages, costs or expenses (including legal fees) incurred or threatened in connection with any and all actions, suits, investigations, proceedings or claims of any kind whatsoever, whether arising under statute or action of a regulatory authority or otherwise or in connection with the business, investments and activities in respect of or arising from this Agreement;
1.1.15 “ Operating Partnership ” means GGP Limited Partnership, a Delaware limited partnership and a Subsidiary of GGP.
1.1.16 “ Person ” means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted;
1.1.17 “ Regional Mall ” means an enclosed shopping centre with more than 750,000 square feet of enclosed shopping space;
1.1.18 “ Subsidiary ” means, with respect to any Person, (i) any other Person that is directly or indirectly Controlled by such Person, (ii) any trust in which such Person holds all of the beneficial interests or (iii) any partnership, limited liability company or similar entity in which such Person holds all of the interests other than the interests of any general partner, managing member or similar Person;
1.1.19 “Target Area ” has the meaning assigned thereto in Section 2.1
1.1.20 “Target Opportunity” has the meaning assigned thereto in Section 2.1; and
1.1.21 “ Term ” has the meaning assigned thereto in Section 4.1.
1.2 Headings and Table of Contents
The inclusion of headings and a table of contents in this Agreement are for convenience of reference only and will not affect the construction or interpretation hereof.
1.3 Gender and Number
In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa, words importing gender include all genders or the neuter, and words importing the neuter include all genders.
1.4 Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of
competent jurisdiction will not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of law which renders any provision of this Agreement invalid or unenforceable in any respect. The parties will engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces.
1.5 Entire Agreement
This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. For greater certainty, this agreement supercedes and replaces any covenant in either the CIA or the Brookfield Letter regarding the subject matter contained herein. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, or any amendment or supplement thereto, by any party to this Agreement or its directors, officers, employees or agents, to any other party to this Agreement or its directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement, and none of the parties to this Agreement has been induced to enter into this Agreement or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact. Accordingly, there will be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above.
1.6 Waiver, Amendment
Except as expressly provided in this Agreement, no amendment or waiver of this Agreement will be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement will constitute a waiver of any other provision nor will any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.
1.7 Governing Law
This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.
ARTICLE 2
ACQUISITIONS
2.1 Primary Vehicle
On the basis and Subject to the other terms in this Article 2, Brookfield agrees that, during the Term, the GGP Group will serve as the primary vehicle through which opportunities presented to Brookfield and its Affiliates to acquire or develop Regional Malls or portfolios of Regional Malls (“ Target Opportunities ”) in Canada and the United States (the “ Target Area ”) will be made by Brookfield and its Affiliates.
2.2 No Exclusivity and Limitations on Acquisition Opportunities
2.2.1 GGP acknowledges and agrees that:
2.2.1.1 GGO has requested that an Affiliate of Brookfield provide certain management services to GGO pursuant to the GGO Management Agreement and nothing in this Agreement shall restrict or limit members of the Brookfield Group from performing their obligations under the GGO Management Agreement or from acting in a similar capacity in relation to GGO following the term of the GGO Management Agreement.
2.2.1.2 Nothing in this Agreement shall require Brookfield to allocate any minimum level of dedicated resources for the pursuit of Target Opportunities. Members of the Brookfield Group have established or advise, and may continue to establish or advise, other Persons that rely on the diligence, skill and business contacts of the Brookfield Group’s professionals and the information and acquisition opportunities they generate during the normal course of their activities.
2.2.1.3 The members of the Brookfield Group carry on a diverse range of businesses in the Target Area and worldwide, including the development, ownership and/or management of office properties and other real estate assets, homebuilding operations, and investing and advising on investing in any of the foregoing or loans, debt instruments and other securities with underlying real estate collateral or exposure including Regional Malls, both as principal and through other public companies that are Brookfield Affiliates or through private investment vehicles and accounts established or managed by Brookfield Affiliates. Except as explicitly provided herein, nothing in this Agreement shall in any way limit or restrict members of the Brookfield Group from carrying on their respective business and in particular:
2.2.1.3.1 Nothing shall limit or restrict the ability of the Brookfield Group from making any investment recommendation or taking any other action in connection with its public securities advisory businesses;
2.2.1.3.2 Nothing herein shall limit or restrict any Member of the Brookfield Group from investing in any loans or debt securities outside of its public securities advisory businesses or from taking any action in connection with any loan or debt security notwithstanding that the underlying collateral is comprised of or includes a Regional Mall or portfolio or Regional Malls in the Target Area provided that the original purpose of the investment was not to acquire a Controlling interest in a Regional Mall or portfolio consisting primarily of Regional Malls; and
2.2.1.3.3 The Brookfield Group has established and manages a real estate investment turnaround program and a general real estate opportunity fund whose investment objectives include Target Opportunities in the
Target Area and may in the future establish similar funds (“ Brookfield Funds ”). Nothing herein shall limit or restrict Brookfield or any member of the Brookfield Group from establishing or advising a Brookfield Fund or carrying out any investment provided that for any investment carried out by a Brookfield Fund that involves a Target Opportunity in the Target Area the GGP Group will be offered the opportunity to take up a portion of Brookfield’s share of such Target Opportunity (subject to any limitations required by Brookfield Fund investors) and, where applicable be the property manager of the underlying Regional Mall(s).
2.2.1.3.4 Nothing herein shall in any way restrict Brookfield from acquiring or holding an investment of less than 5% of the outstanding shares of any publicly traded company or from carrying out any other investment of a company or real estate portfolio where the underlying assets do not principally constitute Regional Malls.
2.2.1.4 In the event that GGP declines any Target Opportunity that Brookfield has made available to the GGP Group (or does not confirm that it wishes to pursue such opportunity within a reasonable period of time after such opportunity has been presented), Brookfield may pursue such Target Opportunity for its own account, without restriction.
2.3 Corporate Opportunity
Notwithstanding anything herein to the contrary, GGP acknowledges that the agreements provided by Brookfield in this Agreement are for the benefit of GGP and that members of the Brookfield Group may engage or invest in, independently or with others, any business activity, including real estate related businesses, that may compete with, or be complementary to, the business of GGP and its Affiliates (a “ Corporate Opportunity ”). Other than as set forth in this Agreement, GGP and its Affiliates and stockholders do not have any interest in, or expectation that, such Corporate Opportunity will be presented to it or they will be able to participate in any such Corporate Opportunities and any such interest or expectation otherwise due GGP or its stockholders or Affiliates with respect to such Corporate Opportunity is hereby renounced by GGP. In consideration for the foregoing, GGP acknowledges that this Section 2.3 renounces specified business opportunities as contemplated by Section 122(17) of the Delaware General Corporation Law and GGP will request that the board of directors of GGP adopt a code of business conduct and ethics consistent with the foregoing for the benefit of members of the Brookfield Group, including its designees to the board of directors of GGP. Accordingly, members of the Brookfield Group (i) except to the extent required pursuant to this Agreement, shall have no duty to communicate or present such Corporate Opportunity to GGP or its stockholders or Affiliates, (ii) shall have the right to hold any such Corporate Opportunity for its own account, or the account of another Person, or to recommend, sell, assign or otherwise transfer such Corporate Opportunity to Persons and (iii) shall not be liable, whether for breach of fiduciary duty or otherwise, to GGP, any of its stockholders, or its Affiliates as a stockholder of GGP, member of GGP’s board of directors or otherwise by reason of the fact that such person pursues or acquires such Corporate Opportunity for itself, directs, sells, assigns or otherwise transfers such Corporate Opportunity to another Person, or does not communicate information
regarding such Corporate Opportunity to GGP or its board of directors, stockholders, or its Affiliates except as required by this Agreement. Notwithstanding the foregoing, if a Corporate Opportunity is expressly presented or offered to GGP or a member of the Brookfield Group directly and exclusively in his or her capacity as a director of GGP (a “ Restricted Opportunity ”), such individual may not pursue the Restricted Opportunity, directly or indirectly through a controlled affiliate in which such individual has an ownership interest, without the approval of the non-employee directors of GGP (the “ Independent Directors ”) or a duly designated committee thereof (excluding the individual in question); provided, however, if a majority of the Independent Directors of the board of directors or a duly designated committee thereof (excluding the individual in question) declines to pursue or use a Restricted Opportunity, such opportunity shall cease to be a Restricted Opportunity; and, provided further, that no opportunity that GGP’s Chief Legal Officer or outside counsel determines is not a Corporate Opportunity required to be offered to GGP under applicable law will be deemed to be a Restricted Opportunity.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Brookfield
Brookfield hereby represents and warrants that:
3.1.1 it is validly organized and existing under the relevant laws governing its formation and existence;
3.1.2 it has the power, capacity and authority to enter into this Agreement and to perform its duties and obligations hereunder;
3.1.3 it has taken all necessary action to authorize the execution, delivery and performance of this Agreement;
3.1.4 the execution and delivery of this Agreement by it and the performance by it of its obligations hereunder do not and will not contravene, breach or result in any default under its articles, by-laws, constituent documents or other organizational documents;
3.1.5 no authorization, consent or approval, or filing with or notice to any Person is required in connection with the execution, delivery or performance by it of this Agreement; and
3.1.6 this Agreement constitutes a valid and legally binding obligation of it enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and other laws of general application limiting the enforcement of creditors’ rights and remedies generally and (ii) general principles of equity, including standards of materiality, good faith, fair dealing and reasonableness, equitable defenses and limits as to the availability of equitable remedies, whether such principles are considered in a proceeding at law or in equity.
3.2 Representations and Warranties of GGP
GGP hereby represents and warrants that:
3.2.1 it is validly organized and existing under the relevant laws governing its formation and existence;
3.2.2 it has the power, capacity and authority to enter into this Agreement and to perform its duties and obligations hereunder;
3.2.3 it has taken all necessary action to authorize the execution, delivery and performance of this Agreement;
3.2.4 the execution and delivery of this Agreement by it and the performance by it of its obligations hereunder do not and will not contravene, breach or result in any default under its articles, by-laws, constituent documents or other organizational documents;
3.2.5 no authorization, consent or approval, or filing with or notice to any Person is required in connection with the execution, delivery or performance by it of this Agreement; and
3.2.6 this Agreement constitutes a valid and legally binding obligation of it enforceable against it in accordance with its terms, subject to: (i) applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and other laws of general application limiting the enforcement of creditors’ rights and remedies generally; and (ii) general principles of equity, including standards of materiality, good faith, fair dealing and reasonableness, equitable defenses and limits as to the availability of equitable remedies, whether such principles are considered in a proceeding at law or in equity.
ARTICLE 4
TERMINATION
4.1 Term
The term of this Agreement (“ Term ”) will begin on the Effective Date and will continue in full force and effect for so long as Brookfield is entitled to nominate three directors to the Board of Directors of GGP.
4.2 Termination
The rights and obligations of the parties to this Agreement will terminate and no longer be of any effect concurrently with the termination of this Agreement in accordance with its terms, other than Article 5, which shall survive termination.
ARTICLE 5
LIMITATION OF LIABILITY
5.1 No Liability
GGP hereby agrees that no member of the Brookfield Group, nor any director, officer, agent, member, partner, shareholder or employee of any member of the Brookfield Group, will be liable to any member of the GGP Group for any Liabilities that may occur as a result of any acts or omissions by any member of the Brookfield Group pursuant to or in accordance with this Agreement, except to the extent that such Liabilities are finally determined by a final and non-appealable judgment entered by a court of competent jurisdiction to have resulted from a Brookfield Group member’s bad faith, fraud, wilful misconduct, gross negligence, or in the case of a criminal matter, conduct undertaken with knowledge that the conduct was unlawful. For greater certainty, Brookfield makes no representations or warranties of any kind whatsoever regarding the suitability or characteristics of any Target Opportunity that may be presented or its ability to source or make available Target Opportunities or concerning any other matter whatsoever, and the parties agree that nothing herein or the activities of the Brookfield Group contemplated hereby constitutes investment advice or establishes any fiduciary duties on the part of any member of the Brookfield Group to any member of the GGP Group.
5.2 Survival
The provisions of this Article 5 will survive the termination of this Agreement.
ARTICLE 6
GENERAL PROVISIONS
6.1 Assignment
6.1.1 None of the rights or obligations hereunder shall be assignable or transferable by any party without the prior written consent of the other party.
6.1.2 Any purported assignment of this Agreement in violation of this Article 6 shall be null and void.
6.2 Enurement
This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
6.3 Notices
Any notice or other communication required or permitted to be given hereunder will be in writing and will be given by prepaid first-class mail, by facsimile or other means of electronic communication or by hand-delivery as hereinafter provided. Any such notice or other communication, if mailed by prepaid first-class mail at any time other than during a general
discontinuance of postal service due to strike, lockout or otherwise, will be deemed to have been received on the 4 th Business Day after the post-marked date thereof, or if sent by facsimile or other means of electronic communication, will be deemed to have been received on the Business Day following the sending, or if delivered by hand will be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. Notice of change of address will also be governed by this section. In the event of a general discontinuance of postal service due to strike, lock-out or otherwise, notices or other communications will be delivered by hand or sent by facsimile or other means of electronic communication and will be deemed to have been received in accordance with this section. Notices and other communications will be addressed as follows:
6.3.1 if to GGP:
General Growth Properties, Inc.
110 N. Wacker Drive
Chicago, IL 60606
Attention:
Secretary
Telecopier number:
312-960-5485
6.3.2 if to Brookfield:
Brookfield Asset
Management Inc.
Suite 300, Brookfield Place
181 Bay Street, Box 762,
Toronto, Ontario
M5J 2T3
Attention: General Counsel
Telecopier number:
416-365-9642
6.4 Further Assurances
Each of the parties hereto will promptly do, make, execute or deliver, or cause to be done, made, executed or delivered, all such further acts, documents and things as the other party hereto may reasonably require from time to time for the purpose of giving effect to this Agreement and will use reasonable efforts and take all such steps as may be reasonably within its power to implement to their full extent the provisions of this Agreement.
6.5 Counterparts
This Agreement may be signed in counterparts and each of such counterparts will constitute an original document and such counterparts, taken together, will constitute one and the same instrument.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written.
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BROOKFIELD ASSET MANAGEMENT, INC. |
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By: |
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Name: |
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Title: |
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By: |
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Name: |
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Title: |
[Signature Page to Brookfield Relationship Agreement]
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GENERAL GROWTH PROPERTIES, INC. |
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By: |
/s/ Thomas H. Nolan, Jr. |
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Name: Thomas H. Nolan, Jr. |
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Title: President and Chief Operating Officer |
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[Signature Page to Brookfield Relationship Agreement]
Exhibit 99.6
EXECUTION VERSION
CREDIT AND GUARANTY AGREEMENT
dated as of November 9, 2010
among
GGP LIMITED PARTNERSHIP,
GGPLP L.L.C.,
GGPLP REAL ESTATE 2010 LOAN PLEDGOR HOLDING, LLC,
GGPLPLLC 2010 LOAN PLEDGOR HOLDING, LLC
and
GGPLP 2010 LOAN PLEDGOR HOLDING, LLC
as Borrowers,
GENERAL GROWTH PROPERTIES, INC. AND CERTAIN OF ITS SUBSIDIARIES,
as Guarantors,
VARIOUS LENDERS,
DEUTSCHE BANK SECURITIES INC., WELLS FARGO SECURITIES, LLC AND
RBC CAPITAL MARKETS,
as Joint Lead Arrangers and Joint Bookrunners,
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Administrative Agent and Collateral Agent,
WELLS FARGO BANK, N.A. AND RBC CAPITAL MARKETS,
as Syndication Agents,
and
BARCLAYS CAPITAL, THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, GOLDMAN SACHS LENDING PARTNERS LLC, MACQUARIE CAPITAL (USA) INC., MORGAN STANLEY SENIOR FUNDING, INC., TD SECURITIES (USA) LLC AND UBS SECURITIES LLC,
as Documentation Agents and Joint Bookrunners
$300,000,000 Senior Secured Credit Facility
TABLE OF CONTENTS
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Page |
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SECTION 1. DEFINITIONS AND INTERPRETATION |
2 |
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1.1. Definitions |
2 |
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1.2. Accounting Terms |
32 |
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1.3. Interpretation, Etc. |
33 |
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SECTION 2. LOANS AND LETTERS OF CREDIT |
33 |
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2.1. Intentionally Omitted |
33 |
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2.2. Revolving Loans |
33 |
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2.3. Swing Line Loans |
34 |
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2.4. Issuance of Letters of Credit and Purchase of Participations Therein |
37 |
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2.5. Pro Rata Shares; Availability of Funds |
42 |
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2.6. Use of Proceeds |
43 |
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2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes |
43 |
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2.8. Interest on Loans |
44 |
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2.9. Conversion/Continuation |
46 |
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2.10. Default Interest |
46 |
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2.11. Fees |
47 |
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2.12. Scheduled Payments/Commitment Reductions |
48 |
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2.13. Voluntary Prepayments/Commitment Reductions |
48 |
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2.14. Intentionally Omitted |
49 |
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2.15. Application of Prepayments/Reductions |
49 |
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2.16. General Provisions Regarding Payments |
50 |
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2.17. Ratable Sharing |
51 |
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2.18. Making or Maintaining Eurodollar Rate Loans |
51 |
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2.19. Increased Costs; Capital Adequacy |
53 |
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2.20. Taxes; Withholding, Etc. |
55 |
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2.21. Obligation to Mitigate |
57 |
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2.22. Defaulting Lenders |
58 |
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2.23. Removal or Replacement of a Lender |
59 |
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2.24. Co-Borrowers |
60 |
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SECTION 3. CONDITIONS PRECEDENT |
63 |
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3.1. Closing Date |
63 |
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3.2. Conditions to Each Credit Extension |
66 |
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SECTION 4. REPRESENTATIONS AND WARRANTIES |
67 |
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4.1. Organization; Requisite Power and Authority; Qualification |
67 |
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4.2. Capital Stock and Ownership |
68 |
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4.3. Due Authorization |
68 |
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4.4. No Conflict |
68 |
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4.5. Governmental Consents |
68 |
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4.6. Binding Obligation |
68 |
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4.7. Historical Financial Statements |
69 |
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4.8. Projections |
69 |
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4.9. No Material Adverse Effect |
69 |
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4.10. Adverse Proceedings, Etc. |
69 |
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4.11. Payment of Taxes |
69 |
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4.12. Properties |
69 |
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4.13. Environmental Matters |
70 |
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4.14. No Defaults |
71 |
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4.15. Intentionally Omitted |
71 |
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4.16. Governmental Regulation |
71 |
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4.17. Employee Matters |
71 |
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4.18. Employee Benefit Plans |
71 |
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4.19. Solvency |
72 |
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4.20. Security Documents |
72 |
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4.21. Compliance with Statutes, Etc. |
73 |
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4.22. Disclosure |
73 |
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4.23. PATRIOT Act |
74 |
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4.24. Sanctioned Persons |
74 |
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4.25. Use of Proceeds |
74 |
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4.26. REIT Status |
74 |
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4.27. Insurance |
74 |
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SECTION 5. AFFIRMATIVE COVENANTS |
74 |
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5.1. Financial Statements and Other Reports |
75 |
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5.2. Existence |
77 |
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5.3. Payment of Taxes, Claims, and Obligations |
77 |
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5.4. Maintenance and Operation of Properties |
77 |
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5.5. Insurance |
78 |
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5.6. Books and Records; Inspections |
78 |
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5.7. Compliance with Laws and Material Contracts |
78 |
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5.8. Additional Guarantees |
79 |
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5.9. Additional Collateral |
79 |
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5.10. Use of Proceeds |
80 |
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5.11. Maintenance of REIT Status |
80 |
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5.12. Further Assurances |
80 |
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5.13. Intentionally Omitted |
80 |
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5.14. Environmental Compliance |
80 |
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5.15. Post Closing Obligations |
81 |
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SECTION 6. NEGATIVE COVENANTS |
81 |
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6.1. Indebtedness |
82 |
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6.2. Liens |
84 |
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6.3. No Further Negative Pledges |
86 |
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6.4. Restricted Junior Payments |
86 |
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6.5. Restrictions on Subsidiary Distributions |
87 |
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6.6. Investments |
88 |
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6.7. Financial Covenants |
90 |
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6.8. Fundamental Changes; Disposition of Assets |
93 |
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6.9. Transactions with Shareholders and Affiliates |
95 |
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6.10. Conduct of Business |
95 |
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6.11. Amendments or Waivers of Organizational Documents and Certain Related Agreements |
95 |
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6.12. Amendments or Waivers and Prepayments with respect to Certain Indebtedness |
96 |
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6.13. Fiscal Year |
96 |
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6.14. Limitation on Hedge Agreements |
96 |
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SECTION 7. GUARANTY |
96 |
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7.1. Guaranty of the Obligations |
96 |
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7.2. Contribution by Guarantors |
96 |
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7.3. Payment by Guarantors |
97 |
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7.4. Liability of Guarantors Absolute |
97 |
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7.5. Waivers by Guarantors |
100 |
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7.6. Guarantors’ Rights of Subrogation, Contribution, Etc. |
101 |
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7.7. Subordination of Other Obligations |
101 |
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7.8. Continuing Guaranty |
102 |
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7.9. Authority of Guarantors or Borrowers |
102 |
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7.10. Financial Condition of Borrowers |
102 |
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7.11. Bankruptcy, Etc. |
102 |
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7.12. Discharge of Guaranty Upon Sale of Guarantor |
103 |
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7.13. Mortgages; Guarantor Obligations |
103 |
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SECTION 8. EVENTS OF DEFAULT |
103 |
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8.1. Events of Default |
103 |
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8.2. Application of Proceeds |
107 |
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SECTION 9. AGENTS |
108 |
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9.1. Appointment of Agents |
108 |
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9.2. Powers and Duties |
109 |
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9.3. General Immunity |
109 |
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9.4. Agents Entitled to Act as Lender |
111 |
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9.5. Lenders’ Representations, Warranties and Acknowledgment |
111 |
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9.6. Right to Indemnity |
111 |
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9.7. Successor Administrative Agent, Collateral Agent and Swing Line Lender |
112 |
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9.8. Collateral Documents and Guaranty |
114 |
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9.9. Withholding Taxes |
116 |
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SECTION 10. MISCELLANEOUS |
116 |
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10.1. Notices |
116 |
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10.2. Expenses |
118 |
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10.3. Indemnity |
118 |
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10.4. Set-Off |
120 |
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10.5. Amendments and Waivers |
120 |
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10.6. Successors and Assigns; Participations |
122 |
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10.7. Independence of Covenants |
125 |
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10.8. Survival of Representations, Warranties and Agreements |
126 |
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10.9. No Waiver; Remedies Cumulative |
126 |
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10.10. Marshalling; Payments Set Aside |
126 |
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10.11. Severability |
126 |
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10.12. Obligations Several; Independent Nature of Lenders’ Rights |
127 |
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10.13. Headings |
127 |
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10.14. APPLICABLE LAW |
127 |
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10.15. CONSENT TO JURISDICTION |
127 |
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10.16. WAIVER OF JURY TRIAL |
128 |
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10.17. Confidentiality |
128 |
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10.18. Usury Savings Clause |
129 |
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10.19. Counterparts |
130 |
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10.20. Effectiveness; Entire Agreement |
130 |
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10.21. PATRIOT Act |
130 |
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10.22. Electronic Execution of Assignments |
130 |
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10.23. No Fiduciary Duty |
130 |
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10.24. Disclosure of Information Relating to Agreement |
131 |
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APPENDICES: |
A |
Revolving Commitments |
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B |
Notice Addresses |
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SCHEDULES: |
1.1 |
Guarantors |
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1.2 |
Special Consideration Properties |
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3.1(d) |
Closing Date Mortgaged Properties |
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3.1(e) |
Closing Date Pledged Properties |
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4.1 |
Jurisdictions of Organization and Qualification |
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4.2 |
Capital Stock and Ownership |
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4.12 |
Title to Properties |
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5.15 |
Post Closing Obligations |
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6.2 |
Existing Liens |
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EXHIBITS: |
A-1 |
Funding Notice |
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A-2 |
Conversion/Continuation Notice |
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A-3 |
Issuance Notice |
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B-1 |
Revolving Loan Note |
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B-2 |
Swing Line Note |
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C |
Compliance Certificate |
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D |
Opinions of Counsel |
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E |
Assignment Agreement |
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F |
Certificate re Non-Bank Status |
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G-1 |
Closing Date Certificate |
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G-2 |
Solvency Certificate |
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H |
Counterpart Agreement |
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I |
Pledge Agreement |
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J |
Mortgage |
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K |
Budget |
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L |
Subordination, Non-Disturbance and Attornment Agreement |
CREDIT AND GUARANTY AGREEMENT
This CREDIT AND GUARANTY AGREEMENT , dated as of November 9, 2010 is entered into by and among GGP LIMITED PARTNERSHIP , a Delaware limited partnership (the “Partnership” ), GGPLP L.L.C. , a Delaware limited liability company (the “LLC” ) GGPLP REAL ESTATE 2010 LOAN PLEDGOR HOLDING, LLC , a Delaware limited liability company ( “GGPLP RE Pledgor” ), GGPLPLLC 2010 LOAN PLEDGOR HOLDING, LLC , a Delaware limited liability company ( “GGPLPLLC Pledgor” ), and GGPLP 2010 LOAN PLEDGOR HOLDING, LLC , a Delaware limited liability company ( “GGPLP Pledgor” and, together with the Partnership, the LLC, GGPLP RE Pledgor and GGPLPLLC Pledgor, being referred to herein, individually or collectively, as the context shall require, as “Borrower” or “Borrowers” ), GENERAL GROWTH PROPERTIES, INC. , a Delaware corporation formerly known as New GGP, Inc. ( “Parent” ), and CERTAIN SUBSIDIARIES OF PARENT , as Guarantors, the Lenders party hereto from time to time, WELLS FARGO BANK, N.A. and RBC CAPITAL MARKETS , as Syndication Agents (in such capacity, “Syndication Agents” ), DEUTSCHE BANK TRUST COMPANY AMERICAS ( “DBTCA” ), as Administrative Agent (together with its permitted successors in such capacity, “Administrative Agent” ) and as Collateral Agent (together with its permitted successors in such capacity, “Collateral Agent” ), and BARCLAYS CAPITAL, THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, GOLDMAN SACHS LENDING PARTNERS LLC, MACQUARIE CAPITAL (USA) INC., MORGAN STANLEY SENIOR FUNDING, INC., TD SECURITIES (USA) LLC and UBS SECURITIES LLC , as Documentation Agents (in such capacity, “Documentation Agents” ).
RECITALS:
WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;
WHEREAS, General Growth Properties, Inc., a Delaware corporation ( “Existing GGPI” ), the Partnership, the LLC and certain of their Subsidiaries, are debtors and debtors-in-possession in jointly administered cases, Case No. 09-11977 (ALG) (collectively, the “Bankruptcy Cases” and such Subsidiaries, the “Debtor Subsidiaries” ), pending in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court” ) under the Bankruptcy Code.
WHEREAS, as part of the implementation of the Plan, Borrowers have requested, and Lenders have agreed to make available to Borrowers, a revolving credit facility consisting of $300,000,000 aggregate principal amount of Revolving Commitments. The proceeds of the Revolving Loans made on the Closing Date, if any, together with the proceeds of the contribution of new equity, will be used on the Closing Date to finance the Plan, which may include the refinancing of certain Indebtedness of Existing GGPI and its Subsidiaries, including, without limitation, the Matured Rouse Notes, and to pay fees, commissions and expenses in connection therewith. The proceeds of the Revolving Loans may also be used on and after the Closing Date for general corporate purposes (including working capital).
WHEREAS, Borrowers have agreed to secure all of their Secured Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on the Mortgaged Properties and the Pledged Properties owned by them; and
WHEREAS, Guarantors have agreed to guarantee the Obligations of Borrowers hereunder and to secure their respective Secured Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on the Mortgaged Properties and the Pledged Properties owned by them, as the case may be, if any.
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1. Definitions. The following terms used herein, including (except to the extent specifically stated otherwise) in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:
“Adjusted EBITDA” means with respect to any GGP Property or Parent Guarantors, Borrowers or the Management Company, as the case may be, for any period, an amount equal to such GGP Property’s or such Person’s net income (calculated on a GAAP basis and, for the avoidance of doubt, in the case of Parent Guarantors, Borrowers or the Management Company, taking into account such Person’s corporate overhead) plus, to the extent reducing such net income, the sum, without duplication, of amounts for (a) depreciation, (b) amortization, (c) interest expense (less interest income), (d) income taxes, (e) impairment expenses, (f) costs and expenses incurred in connection with any restructurings or reorganizations of such GGP Property or any entity owning a direct or indirect interest therein or Parent Guarantors, Borrowers or the Management Company, as the case may be (including in connection with the Bankruptcy Cases and in connection with the transactions contemplated by the Credit Documents, the Cornerstone Agreement and the Plan and hereinafter each a “Restructuring” ), provided that cash restructuring charges not associated with the Bankruptcy Cases and the transactions contemplated by the Credit Documents, the Cornerstone Agreement and the Plan, shall be subject to a cumulative cap of $25,000,000 per annum and $100,000,000 during the term of this Agreement, (g) the costs and expenses of legal settlements, fines, judgments or orders to the extent reimbursed by insurance, (h) non-cash charges, expenses or other items (including the effects of purchase accounting) and items related to FAS 107 adjustments, FAS 141 adjustments, the straight lining of rents, tax stabilization adjustments, the amortization of non-cash interest expense and the amortization of market rate adjustments on any Indebtedness permitted under this Agreement (but excluding non-cash charges, expenses or other items that constitute an accrual of or reserve for future cash payments), and (i) extraordinary, unusual or non-recurring losses (which losses shall not be duplicative of expense items treated added back pursuant to clauses (a) through (h) above) (and minus extraordinary, unusual or non-recurring gains) related to (i) the sale of assets, (ii) foreign currency exchange rates, (iii) litigation, (iv) securities available-for-sale (but only where such security gain or loss is unrealized) and (v) the early extinguishment or forgiveness of debt. Adjusted EBITDA shall be calculated on a pro forma
basis for any GGP Property that has been open for business for less than four (4) calendar quarters.
“Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/10,000 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/10,000 of 1%) equal to the rate reasonably determined by Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum (rounded to the nearest 1/10,000 of 1%) equal to the rate reasonably determined by Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/10,000 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by DBTCA for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan of Administrative Agent, in its capacity as a Lender, for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement.
“Administrative Agent” as defined in the preamble hereto.
“Adverse Proceeding” means any action, suit, proceeding, hearing (in each case, whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Parent or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, whether pending or, to the knowledge of Parent or any of its Subsidiaries, threatened against or affecting Parent or any of its Subsidiaries or any property of Parent or any of its Subsidiaries.
“Affected Lender” as defined in Section 2.18(b) .
“Affected Loans” as defined in Section 2.18(b) .
“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (a) to vote 15% or more of the Capital Stock having ordinary voting power for the election of directors of such Person or (b) to direct or
cause the direction of the management and policies of that Person, whether through the ownership of voting Capital Stock or by contract or otherwise.
“Agent” means each of (a) Administrative Agent, (b) Syndication Agents, (c) Collateral Agent, (d) Documentation Agents and (e) any other Person appointed under and in accordance with the Credit Documents to serve in an agent or similar capacity.
“Agent Affiliates” as defined in Section 10.1(b)(iii) .
“Aggregate Amounts Due” as defined in Section 2.17 .
“Aggregate Payments” as defined in Section 7.2 .
“Agreement” means this Credit and Guaranty Agreement, dated as of November 9, 2010, as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Applicable Margin” means (a) in the case of Eurodollar Rate Loans, 4.50% per annum and (b) in the case of Base Rate Loans, 3.50% per annum.
“Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate Loan, the maximum rate, expressed as a decimal, at which reserves (including any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted Eurodollar Rate or any other interest rate of a Loan is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Rate Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurodollar Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.
“Applicable Revolving Commitment Fee Percentage” means 0.50% per annum; provided that at any time that the Total Utilization of Revolving Commitments exceeds 50% of the aggregate Revolving Commitments, the Applicable Revolving Commitment Fee Percentage shall equal 0.375% per annum.
“Approved Electronic Communications” means any notice, demand, communication, information, document or other material that any Credit Party provides to Administrative Agent pursuant to any Credit Document or the transactions contemplated therein which is distributed to Agents, Lenders or Issuing Bank by means of electronic communications pursuant to Section 10.1(b) .
“Asset Sale” means a sale, lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, exclusive license (as licensor or sublicensor), transfer or other disposition to, or any exchange of property with, any Person, in one transaction or a series of transactions, of all or any part of Parent’s or any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or licensed, including the Capital Stock of any of Parent’s Subsidiaries or any Joint Ventures owned by Parent or any of its Subsidiaries.
“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit E , with such amendments or modifications as may be approved by Administrative Agent.
“Assignment Effective Date” as defined in Section 10.6(b) .
“Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president, chief operating officer, executive vice president of finance or chief financial officer of such Person; provided that the secretary or any assistant secretary of such Person shall have delivered an incumbency certificate to Administrative Agent as to the authority of such Authorized Officer.
“Bank Products” means any services provided from time to time by any Agent, any Lender or any of their respective Affiliates to any Borrower or any other Credit Party in connection with collections, payroll, trust, or other depository or disbursement accounts, including automatic clearinghouse, controlled disbursement, depository, electronic funds transfer, information reporting, lockbox, stop payment, overdraft and/or wire transfer services.
“Bankruptcy Cases” as defined in the recitals hereto.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
“Bankruptcy Court” as defined in the recitals hereto.
“Base Rate” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
“Base Rate Loan” means a Loan bearing interest at a rate determined by reference to the Base Rate.
“Beneficiary” means each Agent, Issuing Bank, Lender and Lender Counterparty.
“Board of Governors” means the Board of Governors of the United States Federal Reserve System, or any successor thereto.
“Borrower” as defined in the preamble hereto.
“Bridge Notes” as defined in the Plan.
“Budget” as defined in Section 5.1(g) .
“Business Day” means (a) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close and (b) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, the term “Business Day” means any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.
“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by a Person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person; provided , however , that notwithstanding the foregoing, in no event will any lease that would have been categorized as an operating lease in accordance with GAAP as of the Closing Date be considered to be a Capital Lease for any purpose under this Agreement.
“Capital Lease Obligations” means, with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as Capital Leases on a balance sheet of such Person under GAAP; and, for the purposes of the Credit Documents, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.
“Capital Stock” means any and all capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.
“Cash” means money, currency or a credit balance in any demand or Deposit Account.
“Cash Equivalents” means, as at any date of determination, any of the following: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits, bankers’ acceptances or overnight bank deposits having maturities of one year or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States of America, any state thereof, the District of Columbia, any foreign bank, or its branches or agencies (fully protected against currency fluctuations) having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-2 by S&P or P-2 by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing one year
or less from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of no more than 30 days with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition, issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; and (h) the equivalents of the foregoing in any jurisdiction in which any Subsidiary or Joint Venture of Parent is organized or doing business.
“Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit F .
“Change in Law” as defined in Section 2.19(a) .
“Change of Control” means the failure of the Parent to be, or to have Control of, the general partner of the Partnership.
“Closing Date” means November 9, 2010.
“Closing Date Certificate” means a Closing Date Certificate substantially in the form of Exhibit G-1 .
“Closing Date Mortgaged Property” as defined in Section 3.1(d) .
“Closing Date Pledged Property” as defined in Section 3.1(e) .
“Collateral” means, collectively, all of the real, personal and mixed property (including Capital Stock) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Secured Obligations.
“Collateral Agent” as defined in the preamble hereto.
“Collateral Documents” means the Pledge Agreement, the Mortgages, and all other instruments, documents and agreements delivered by or on behalf of any Credit Party pursuant to this Agreement or any of the other Credit Documents in order to grant to, or perfect in favor of, Collateral Agent, for the benefit of Secured Parties, a Lien on any real, personal or mixed property of that Credit Party as security for the Secured Obligations.
“Combined EBITDA” means, for any period, the sum of (a) 100% of the Adjusted EBITDA of any GGP Properties owned or leased by Parent Guarantors, Borrowers and the Wholly Owned Subsidiaries of Borrowers for such period; (b) the portion of the Adjusted EBITDA of the GGP Properties of any consolidated non-Wholly Owned Subsidiaries or Joint
Ventures of Borrowers or Parent Guarantors for such period allocable (based on economic share and not necessarily the percentage ownership) to Parent Guarantors, Borrowers or their Wholly Owned Subsidiaries; and (c) Adjusted EBITDA of Parent Guarantors, Borrowers and the Management Company; provided , that Combined EBITDA shall include Adjusted EBITDA allocable to the Management Company only to the extent that Adjusted EBITDA allocable to the Management Company does not exceed 4% of Combined EBITDA.
“Combined Total Debt” means, as at any date of determination, the difference of (a) total Indebtedness (calculated at the outstanding principal amount based on the contract and not reflecting purchase accounting adjustments pursuant to GAAP) of Parent Guarantors, Borrowers and their Subsidiaries and Joint Ventures (but, in the case of consolidated non-Wholly Owned Subsidiaries and Joint Ventures of Parent Guarantors or Borrowers, only to the extent allocable (based on economic share and not necessarily the percentage ownership) to Parent Guarantors, Borrowers or their Wholly Owned Subsidiaries) minus (b) unrestricted Cash and Cash Equivalents (and restricted Cash and Cash Equivalents securing Indebtedness (i) which are held in a lockbox or cash management account and are to be applied toward the next installment of regularly scheduled principal payments under any Permitted Project Level Financing so long as no event of default has occurred and is continuing under such Permitted Project Level Financing or (ii) the application of which is to be made against the principal of such Indebtedness) of Parent Guarantors, Borrowers and their Subsidiaries and Joint Ventures (but, in the case of consolidated non-Wholly Owned Subsidiaries and Joint Ventures of Parent Guarantors or Borrowers, only to the extent allocable (based on economic share and not necessarily the percentage ownership) to Parent Guarantors, Borrowers or their Wholly Owned Subsidiaries), in each case as determined in accordance with GAAP, except as otherwise noted above with respect to the principal amount of Indebtedness and non-Wholly Owned Subsidiary and Joint Venture allocations, without duplication and collectively in an amount not to exceed $1,500,000,000.
“Commitment” means any Revolving Commitment.
“Commitment Letter” as defined in Section 10.20 .
“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C .
“Confirmation Order” as defined in Section 3.1(c) .
“Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures of Parent and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items, or which should otherwise be capitalized, reflected in the consolidated statement of cash flows of Parent and its Subsidiaries.
“Consolidated Cash Management System” means the cash management system of Parent and its Subsidiaries substantially as in effect on the Closing Date.
“Contingent Obligations” means, as to any Person, without duplication, (a) any contingent obligation of such Person required to be included in such Person’s balance sheet in
accordance with GAAP, and (b) any obligation required to be included in the disclosure contained in the footnotes to such Person’s financial statements in accordance with GAAP, guaranteeing partially or in whole any Non-Recourse Indebtedness, lease, dividend or other obligation, exclusive of (i) contractual indemnities (including, without limitation, any indemnity or price-adjustment provision relating to the purchase or sale of securities or other assets) and (ii) guarantees of non-monetary obligations (other than guarantees of completion), in each case under clauses (i) and (ii) which have not yet been called on or quantified, of such Person or of any other Person. The amount of any Contingent Obligation described in clause (b) above in this definition shall be deemed to be (A) with respect to a guaranty of interest, interest and principal, or operating income, the sum of all payments required to be made thereunder (which in the case of an operating income guaranty shall be deemed to be equal to the debt service for the note secured thereby), calculated at the interest rate applicable to such Indebtedness, through (x) in the case of an interest or interest and principal guaranty, the stated date of maturity of the obligation (and commencing on the date interest could first be payable thereunder), or (y) in the case of an operating income guaranty, the date through which such guaranty will remain in effect, and (B) with respect to all guarantees not covered by the preceding clause (A) , an amount equal to the stated or determinable amount of the primary obligation in respect of which such guaranty is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as recorded on the balance sheet and in the footnotes to the most recent financial statements required to be delivered pursuant to Sections 5.1(a) and 5.1(b) . Notwithstanding anything contained herein to the contrary, guarantees of completion or other performance shall not be deemed to be Contingent Obligations unless and until a claim for payment has been made thereunder, at which time any such guaranty of completion or other performance shall be deemed to be a Contingent Obligation in an amount equal to any such claim. Subject to the preceding sentence, (1) in the case of a joint and several guaranty given by such Person and another Person (but only to the extent such guaranty is Recourse Indebtedness, directly or indirectly to such Person or any of its Subsidiaries), the amount of the guaranty shall be deemed to be 100% thereof unless and only to the extent that (i) such other Person has delivered Cash or Cash Equivalents to secure all or any part of such Person’s obligations under such joint and several guaranty or (ii) such other Person holds an Investment Grade Credit Rating from any of Fitch, Moody’s or S&P, or has creditworthiness otherwise reasonably acceptable to the Administrative Agent, and (2) in the case of a guaranty (whether or not joint and several) of an obligation otherwise constituting Indebtedness of such Person, the amount of such guaranty shall be deemed to be only that amount in excess of the amount of the obligation constituting Indebtedness of such Person. Notwithstanding anything contained herein to the contrary, “Contingent Obligations” shall not be deemed to include guarantees of loan commitments or of construction loans to the extent the same have not been drawn.
“Contractual Obligation” means, as applied to any Person, any provision of any Capital Stock issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.
“Contributing Guarantors” as defined in Section 7.2 .
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person.
“Conversion/Continuation Date” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.
“Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2 .
“Cornerstone Agreement” as defined in Section 3.1(c) .
“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit H delivered by a Credit Party pursuant to Section 5.8 .
“Credit Date” means the date of a Credit Extension.
“Credit Document” means any of this Agreement, the Notes, if any, the Collateral Documents, the Perfection Certificate, any documents or certificates executed by any Borrower in favor of Issuing Bank relating to Letters of Credit, and all other documents, certificates, instruments or agreements executed and delivered by or on behalf of a Credit Party for the benefit of any Agent, Issuing Bank or any Lender required to be delivered under any of the foregoing.
“Credit Extension” means the making of a Loan or the issuing of a Letter of Credit.
“Credit Party” means the Borrowers and the Guarantors from time to time party to a Credit Document.
“DBTCA” as defined in the preamble hereto.
“Default” means a condition or event that, with notice or lapse of time or both, shall become an Event of Default.
“Default Excess” means, with respect to any Funds Defaulting Lender, (a) in the case of a failure to fund a Loan, the excess, if any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Funds Defaulting Lenders (including such Funds Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans actually funded by such Funds Defaulting Lender and (b) in the case of a failure to purchase participations under Section 2.3(b)(v) or Section 2.4(e) or to fund its Pro Rata Share of any payment under Section 9.6 , such Lender’s Pro Rata Share with respect to such participation or payment.
“Default Period” means, (a) with respect to any Defaulting Lender, the period commencing on the date that such Lender became a Defaulting Lender and ending on the earlier of: (i) the date on which (x) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any of its Defaulted Loans or by the non-pro rata application of any voluntary prepayments of the Loans in
accordance with the terms of Section 2.13 or by a combination thereof) and/or such Defaulting Lender shall have purchased all participations required under Section 2.3(b)(v) and Section 2.4(e) or shall have paid all amounts required to be paid by it under Section 9.6 , as the case may be, and (y) such Defaulting Lender shall have delivered to Borrowers and Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitments, and (ii) the date on which Borrowers, Administrative Agent and Requisite Lenders waive all failures of such Defaulting Lender to fund or make payments required hereunder in writing; and (b) with respect to any Insolvency Defaulting Lender, the period commencing on the date such Lender became an Insolvency Defaulting Lender and ending on the date that such Defaulting Lender ceases to hold any portion of the Loans or Commitments.
“Defaulted Loan” means any Revolving Loan or portion of any unreimbursed payment under Section 2.3(b)(v) or 2.4(e) not made by any Lender when required hereunder.
“Defaulting Lender” means any Funds Defaulting Lender or Insolvency Defaulting Lender.
“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.
“Designated Environmental Property” means any Mortgaged Property and any Underlying Collateral Property (in each case, other than a Specified Property) that is owned by Parent or any of its Material Subsidiaries.
“Disqualified Capital Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely for Capital Stock which is not Disqualified Capital Stock) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (in each case, other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date that is 91 days after the third anniversary of the Closing Date; provided , however , that if such Capital Stock is issued to any plan for the benefit of employees of Parent or its direct or indirect Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased in order to satisfy applicable statutory or regulatory obligations.
“Disqualified Institutions” means (a) competitors of Borrowers and Affiliates of such competitors, in each case identified by Borrowers to Administrative Agent in writing prior to the date of the Commitment Letter, with respect to the Lenders on the Closing Date and subsequent assignments and participations in accordance with Section 10.6 , and additional competitors and Affiliates of such competitors identified by Borrowers to Administrative Agent (and Administrative Agent shall forward such list to Lenders) in writing from time to time after the Closing Date with respect to subsequent assignments and participations (but no such identification shall apply retroactively to Persons that already acquired and continue to hold an
assignment or participation interest) and (b) other Persons identified by Borrowers to Administrative Agent in writing prior to the date of the Commitment Letter.
“Documentation Agents” as defined in the preamble hereto.
“Dollars” and the sign “$” mean the lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.
“Eligible Assignee” means any Person other than a natural Person that is (a) a Lender, an affiliate of any Lender or a Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), or (b) a commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans in the ordinary course of business; provided , neither any Disqualified Institution nor any Credit Party nor any Affiliate thereof shall be an Eligible Assignee.
“Employee Benefit Plan” means (a) any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, Parent or any of its Subsidiaries or (b) any “employee benefit plan” as defined in Section 3(3) of ERISA, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA, with respect to any of their respective ERISA Affiliates.
“Environmental Claim” means any investigation, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority, arising or resulting from or related to any Hazardous Material Activity or violation of any Environmental Law.
“Environmental Laws” means any and all applicable foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other legally binding requirements of Governmental Authorities relating to (a) the protection of the environment, including those relating to any Hazardous Materials Activity; or (b) the generation, use, storage, transportation or disposal of Hazardous Materials, in any manner applicable to Parent or any of its Subsidiaries or any Facility.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.
“ERISA Affiliate” means, as applied to any Person, (a) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (b) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (c) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (a) above or any trade or business described in clause (b) above is a member. Any former ERISA Affiliate of Parent or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Parent or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Parent or such Subsidiary and with respect to liabilities arising after such period for which Parent or such Subsidiary could be liable under the Internal Revenue Code or ERISA.
“ERISA Event” means (a) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (b) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the withdrawal by Parent, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Parent, any of its Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (e) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of liability on Parent, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the withdrawal of Parent, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefore, or the receipt by Parent, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (h) the occurrence of an act or omission which could give rise to the imposition on Parent, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (i) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (j) the imposition of a lien pursuant to Section 430(k) of the Internal Revenue Code or ERISA or a violation of Section 436 of the Internal Revenue Code.
“Eurodollar Rate Loan” means a Loan bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate.
“Event of Default” means each of the conditions or events set forth in Section 8.1 .
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
“Exchangeable Notes” means, collectively, any of the 3.98% Exchangeable Senior Notes due 2027 of the Partnership.
“Existing GGPI” as defined in the recitals hereto.
“Facility” means any real property (including all buildings, fixtures or other improvements located thereon) at any time owned, leased, or operated by Parent or any of its Subsidiaries or any of their respective Affiliates.
“Fair Market Value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as reasonably determined by the Person making an Asset Sale or other determination of Fair Market Value; provided that solely with respect to the calculation of Value, if Parent or its Subsidiary or Joint Venture obtains or causes any other Person to obtain a third party appraisal with respect to any asset by an appraiser reasonably acceptable to Administrative Agent having an effective date no more than 180 days prior to the date of calculation, the Fair Market Value of such asset is to be conclusively determined by such appraisal.
“Fair Share” as defined in Section 7.2 .
“Fair Share Contribution Amount” as defined in Section 7.2 .
“Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/10,000 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided , (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Administrative Agent on such day on such transactions as reasonably determined by Administrative Agent.
“Fee Letter” means that certain Fee Letter dated as of September 21, 2010 among the Lender Commitment Parties (as defined therein), the Partnership, the LLC and Existing GGP.
“FFO” means net income, excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and Joint Ventures (which will be calculated to reflect funds from operations on the
same basis), as determined and adjusted in accordance with the standards established from time to time by the National Association of Real Estate Investment Trusts.
“Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer of Parent that such financial statements fairly present, in all material respects, the financial condition of Parent and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.
“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien.
“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.
“Fiscal Year” means the fiscal year of Parent and its Subsidiaries ending on December 31 of each calendar year.
“Fitch” means Fitch, Inc.
“Flood Hazard Property” means any Real Estate Asset subject to a mortgage in favor of Collateral Agent, for the benefit of Secured Parties, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.
“Foreign Subsidiary” means (a) any Subsidiary that is not a Domestic Subsidiary or (b) any Subsidiary that is a Domestic Subsidiary that is treated as a disregarded entity for U.S. federal income tax purposes and substantially all of the assets of which consists of Capital Stock of one or more Foreign Subsidiaries.
“Fraudulent Transfer Laws” as defined in Section 2.24(a) .
“Funding Borrower” as defined in Section 2.24(b) .
“Funding Guarantors” as defined in Section 7.2 .
“Funding Notice” means a notice substantially in the form of Exhibit A-1 .
“Funds Defaulting Lender” means a Lender that has (a) failed to fund any portion of the Loans, or participations in Letter of Credit or Swing Line Loan exposure required to be funded by it on the date required, (b) otherwise failed to pay Administrative Agent or any other Lender any other amount required to be paid under the Credit Documents on the date when due unless the subject of a good faith dispute, (c) notified Administrative Agent or Borrowers in writing that it does not intend to comply with any of its obligations under the Credit Documents or (d) failed, within three (3) Business Days after request by Administrative Agent or the Partnership, to affirm its willingness to comply with its funding obligations under the Credit Documents.
“GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2 , generally accepted accounting principles in the United States of America as in effect from time to time.
“GGP” means GGP, Inc. (f/k/a General Growth Properties, Inc.), a Delaware corporation.
“GGP LP II” means GGP Limited Partnership II, a Delaware limited partnership.
“GGP Properties” means any asset owned, leased or operated by any Parent Guarantor, a Borrower or any Subsidiary of Parent Guarantors or Borrowers (whether a Wholly Owned Subsidiary or otherwise) or Joint Venture owned by Parent or any of its Subsidiaries.
“Good Faith Contest” means, in the case of any disputed Tax, Lien, or Environmental Claim, that such matter is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserves or other appropriate provision, as shall be required in conformity with GAAP shall have been made therefor, and (b) in the case of such matter which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim.
“Governmental Acts” means any act or omission, whether rightful or wrongful, of any present or future Governmental Authority.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity of competent authority and jurisdiction exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government.
“Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.
“Guaranteed Obligations” as defined in Section 7.1 .
“Guarantor” means (a) on the Closing Date, each of the entities listed on Schedule 1.1 hereto (other than, in the case of any Borrower, with respect to those Secured Obligations in respect of which such Borrower is the primary obligor) and (b) after the Closing Date, each Person listed in clause (a) and each other Domestic Subsidiary of Parent owning any Mortgaged Properties or Pledged Properties, in each case, other than Foreign Subsidiaries. For the avoidance of doubt, none of The Rouse Company, LLC, formerly known as The Rouse Company LP, or any of its Subsidiaries shall be Guarantors.
“Guarantor Subsidiary” means each Guarantor other than Borrowers and Parent Guarantors.
“Guaranty” means the guaranty of each Guarantor set forth in Section 7 .
“Hazardous Materials” means any substance, material, or waste that is classified, characterized or regulated as “hazardous”, “toxic”, a “pollutant”, or “contaminant”, or words of similar meaning under the Environmental Laws; provided, however, that “Hazardous Materials” shall not include the foregoing items to the extent (a) the same exist on the applicable Real Estate Asset in retail packaging for sale as consumer products or are present in negligible amounts in connection with the construction, heating and cooling or repair and maintenance activities at such property and are stored and used in accordance with all Environmental Laws or (b) are used in connection with a tire or battery retail store provided the same are stored, sold and used in accordance with all Environmental Laws.
“Hazardous Materials Activity” means any condition, event or occurrence involving any Hazardous Material that has resulted in a violation of Environmental Laws, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials in violation of Environmental Laws.
“Hedge Agreement ” means an interest rate or currency swap, cap or collar agreement, foreign exchange agreement, commodity contract or similar arrangement entered into by Parent or any of its Subsidiaries providing for protection against fluctuations in interest rates, currency exchange rates, commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies.
“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.
“Historical Financial Statements” means as of the Closing Date, (a) the audited financial statements of Existing GGPI, for the Fiscal Year ended December 31, 2009, consisting of balance sheets and the related consolidated statements of income and cash flows for such Fiscal Year, and (b) the unaudited financial statements of Existing GGPI and its Subsidiaries for each Fiscal Quarter ended after December 31, 2009 and at least 60 days prior to the Closing Date, consisting of a balance sheet and the related consolidated statements of income and cash flows for the three-, six-or nine-month period, as applicable, ending on such date.
“Holding Companies” means, collectively, GGP Real Estate Holding I, Inc., a Delaware corporation, and GGP Real Estate Holding II, Inc., a Delaware corporation.
“Immaterial Subsidiaries” means, at any time, Subsidiaries that, on a consolidated basis with their respective Subsidiaries and treated as if all such Subsidiaries and their respective Subsidiaries were combined and consolidated as a single Subsidiary, have an aggregate net equity value of $200,000,000 or less.
“Increased-Cost Lenders” as defined in Section 2.23 .
“Indebtedness” means, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables and accrued expenses incurred by such Person in the ordinary course of business) and only to the extent such obligations constitute indebtedness for purposes of GAAP, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit or similar facilities, (g) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any Disqualified Capital Stock of such Person (other than (i) obligations existing on the Closing Date that any direct or indirect parent of such Person has the right (subject to satisfaction of applicable securities law requirements, including the filing of registration statements) to satisfy by delivery of its Capital Stock, (ii) obligations that any direct or indirect parent of such Person is given the right to satisfy by delivery of its Capital Stock and (iii) obligations to redeem trust preferred securities), (h) all Contingent Obligations of such Person in respect of the foregoing items (a) through (g), (i) all obligations of the kind referred to in clause (a) through (h) above secured by any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and (j) for the purposes of Section 8.1(b) only, the net obligations of such Person in respect of Hedge Agreements. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor. The amount of any Indebtedness under clause (i) above shall be limited to the lesser of the amount of such Indebtedness that is Non-Recourse Indebtedness or the fair market value of the assets securing such Indebtedness that is Non-Recourse Indebtedness, as reasonably determined by Borrowers. The amount of Indebtedness of any Person shall be calculated at the outstanding principal amount based on the contract and not reflecting purchase accounting or other adjustments pursuant to GAAP.
“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims, actions, judgments, suits, costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials present in the environment at concentrations exceeding those allowed by Environmental Laws), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding or hearing commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity; provided that the Indemnitees shall use their reasonable efforts to use a single outside counsel for all such Indemnitees taken as a whole (and, if reasonably necessary, one local counsel in any relevant material jurisdiction) to represent them, with exceptions in the case of conflicts of
interest and in all cases the total legal fees for all counsel representing the Indemnitees must be reasonable taken as a whole, taking into account the nature of the proceeding or hearing and, in the case of multiple counsel, the necessity of same), whether direct, indirect, special or consequential (but subject to Section 10.3(b) ) and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (a) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to make Credit Extensions, the syndication of the credit facilities provided for herein or the use or intended use of the proceeds thereof, any amendments, waivers or consents with respect to any provision of this Agreement or any of the other Credit Documents, or any enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (b) the Commitment Letter, the Fee Letter and any related fee letter delivered to Borrowers with respect to the transactions contemplated by this Agreement; or (c) any Environmental Claim or any Hazardous Materials Activity relating to or arising from any past or present activity, operation, land ownership, or practice of Parent or any of its Subsidiaries.
“Indemnitee” as defined in Section 10.3(a) .
“Insolvency Defaulting Lender” means any Lender that has become, or whose direct or indirect parent has become, insolvent or is the subject of a receivership, bankruptcy or other insolvency proceeding; provided that a Lender shall not be an Insolvency Defaulting Lender solely by virtue of the ownership or acquisition by a Governmental Authority or an instrumentality thereof of any Capital Stock in such Lender or a parent company thereof.
“Interest Coverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i) Combined EBITDA for the four-Fiscal Quarter period then ended to (ii) Net Cash Interest Expense for such four-Fiscal Quarter period.
“Interest Payment Date” means with respect to (a) any Loan that is a Base Rate Loan, each January 1, April 1, July 1 and October 1, commencing on the first such date to occur after the Closing Date and the final maturity date of such Loan; and (b) any Loan that is a Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided , in the case of each Interest Period of longer than three months “Interest Payment Date” shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period.
“Interest Period” means, in connection with a Eurodollar Rate Loan, an interest period of one-, two-, three-, six- or (if agreed to by all Lenders) nine-months, as selected by Borrowers in the applicable Funding Notice or Conversion/Continuation Notice, (a) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (b) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided , (i) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the
immediately preceding Business Day; (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (iii) of this definition, end on the last Business Day of a calendar month; and (iii) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the third anniversary of the Closing Date.
“Interest Rate Determination Date” means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.
“Intermediate Parent” means, collectively, GGP and GGP LP II.
“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute.
“Investment” means (a) any purchase or other acquisition by Parent or any of its Subsidiaries of, or of a beneficial interest in, any Capital Stock of any other Person (other than Parent or a Guarantor Subsidiary); (b) any loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by Parent or any of its Subsidiaries to any other Person (other than Parent or any Guarantor Subsidiary), including all Indebtedness of that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business and (c) all investments consisting of any exchange traded or over the counter derivative transaction, including any Hedge Agreement, whether entered into for hedging or speculative purposes or otherwise. The amount of any Investment of the type described in clauses (a) , (b) and (c) shall be the original cost of such Investment plus the cost of all additions thereto, minus repayment of or returns on such Investment, but without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.
“Investment Grade Credit Rating” means (a) with respect to Fitch, a credit rating of BBB- or higher, (b) with respect to Moody’s, a credit rating of Baa3 or higher and (c) with respect to S&P, a credit rating of BBB- or higher.
“Issuance Notice” means an Issuance Notice substantially in the form of Exhibit A-3 .
“Issuing Bank” means DBTCA as Issuing Bank hereunder and other Lenders with a Revolving Commitment that agree in writing with Borrowers and Administrative Agent to issue Letters of Credit hereunder, in each case, together with their respective permitted successors and assigns in such capacity.
“Joint Lead Arrangers” means, collectively, Deutsche Bank Securities Inc., Wells Fargo Securities, LLC and RBC Capital Markets, in their capacity as Joint Lead Arrangers.
“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided , in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.
“Leasehold Property” means any leasehold interest of any Credit Party as lessee under any lease of real property included in the Collateral as a Mortgaged Property.
“Lender” means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement.
“Lender Bank Product Provider” means each Lender and each of their respective Affiliates that provides Bank Products (including any Person who is a Lender (and any Affiliate thereof) as of the Closing Date but subsequently, whether before or after providing any such Bank Products, ceases to be a Lender).
“Lender Counterparty” means each Lender and each of their respective Affiliates counterparty to a Hedge Agreement (including any Person who is a Lender (and any Affiliate thereof) as of the Closing Date but subsequently, whether before or after entering into a Hedge Agreement, ceases to be a Lender).
“Letter of Credit” means a standby letter of credit issued or to be issued by Issuing Bank pursuant to this Agreement.
“Letter of Credit Sublimit” means the lesser of (a) $75,000,000 and (b) the aggregate unused amount of the Revolving Commitments then in effect.
“Letter of Credit Usage” means, as at any date of determination, the sum of (a) the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all Letters of Credit then outstanding, and (b) the aggregate amount of all drawings under Letters of Credit honored by Issuing Bank and not theretofore reimbursed by or on behalf of Borrowers.
“Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (a) Combined Total Debt to (b) Combined EBITDA for the four-Fiscal Quarter period ending on such date.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement in respect of the property of a Person, in each case, in the nature of security (including, without limitation, any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing).
“Limited Minority Holdings” means non-Wholly Owned Subsidiaries or Joint Ventures in which (a) Parent and its Wholly Owned Subsidiaries have a less than 50% ownership interest and (b) Parent and its Wholly Owned Subsidiaries do not control the day-to-day management of such non-Wholly Owned Subsidiary or Joint Venture, whether as the general partner or managing member of such non-Wholly Owned Subsidiary or Joint Venture, or otherwise. As used in this definition, Parent and any Wholly Owned Subsidiaries shall be deemed to “control” the management of such non-Wholly Owned Subsidiary or Joint Venture if
such Person has the authority to manage day-to-day operations of such non-Wholly Owned Subsidiary or Joint Venture.
“LLC” as defined in the preamble hereto.
“Loan” means a Revolving Loan and a Swing Line Loan.
“Management Company” means General Growth Management, Inc., a Delaware corporation, and any of its successors and assigns that are Affiliates of Parent.
“Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time.
“Material Adverse Effect” means, a material adverse effect on (a) the business, operations or financial condition of Parent and its Subsidiaries, taken as a whole; (b) the material rights and remedies of Administrative Agent and the Lenders, taken as a whole, under the Credit Documents; or (c) the legality, validity or enforceability of the Credit Documents, taken as a whole.
“Material Contract” means any contract or other arrangement to which Parent or any of its Subsidiaries is a party (other than the Credit Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect.
“Material Real Estate Asset” means all or a portion of any Real Estate Asset with a purchase price in excess of $10,000,000 (calculated at the amount allocable to Borrowers or their Wholly Owned Subsidiaries on the date of such acquisition).
“Material REIT Subsidiary” means a Material Subsidiary of Parent that is a REIT (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties or equity of a Person all or substantially all of whose assets comprise any Specified Property).
“Material Subsidiary” means each Subsidiary of Parent that is not an Immaterial Subsidiary.
“Matured Rouse Notes” means, collectively, the 3.625% Notes due 2009 of The Rouse Company LP and the 8.00% Notes due 2009 of The Rouse Company LP.
“Moody’s” means Moody’s Investors Services, Inc.
“Mortgage” means a mortgage or deed of trust substantially in the form of Exhibit J , as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Mortgaged Properties” means, collectively, the Closing Date Mortgaged Properties and each other Material Real Estate Asset subject to the Lien of the Collateral
Documents in favor of Collateral Agent, for the benefit of Secured Parties, pursuant to the requirements of Section 5.9 .
“Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) of ERISA.
“Municipal Financing” means any tax increment financings, sales or real estate tax rebates, payment in lieu of taxes (PILOTs), special improvement districts, financings funded by the issuance of bonds or other negotiable instruments sponsored or issued by a Governmental Authority or quasi-Governmental Authority, financings related to on-site or off-site infrastructure or public works or any other financing arrangements for which Parent or any of its Subsidiaries is an obligor and a Governmental Authority or quasi-Governmental Authority is the obligee.
“NAIC” means The National Association of Insurance Commissioners, and any successor thereto.
“Narrative Report” means, with respect to the financial statements for which such narrative report is required, a customary narrative report describing the operations of Parent and its Subsidiaries in the form prepared for presentation to senior management thereof for the applicable Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate. For the avoidance of doubt, any such narrative report in compliance with the requirements of Form 10-Q (in the case of each applicable Fiscal Quarter) and Form 10-K (in the case of each Fiscal Year) under the Exchange Act shall satisfy this definition.
“Net Cash Interest Expense” means, for any period, total interest expense (including (a) that portion attributable to Capital Leases in accordance with GAAP, (b) commissions, discounts, and other fees and charges owed with respect to letters of credit, and (c) net costs under Hedge Agreements, including any termination fee or payment thereunder, provided that notwithstanding the treatment of such fees or payments under GAAP, such termination fee or payment shall be amortized on a straight-line basis over the remaining term of the applicable terminated Hedge Agreement) of Parent Guarantors, Borrowers and their Subsidiaries and Joint Ventures (but, in the case of consolidated non-Wholly Owned Subsidiaries and Joint Ventures of Parent Guarantors or Borrowers, only to the extent allocable (based on economic share and not necessarily the percentage ownership) to Parent Guarantors, Borrowers or their Wholly Owned Subsidiaries), but excluding, however, (i) any amount not payable in Cash, (ii) one-time payments, (iii) original issue discount, (iv) fees payable under the Fee Letter and any amounts referred to in Section 2.11(d) , (v) fees and expenses paid in connection with (x) any Investment permitted under Section 6.6, (y) Indebtedness incurred under Section 6.1 or (z) issuance of Capital Stock, in each case whether or not consummated, and (vii) any default interest, make-whole or similar payments required to be paid pursuant to the Plan.
“Net Indebtedness to Value Ratio” means the ratio as of the last day of any Fiscal Quarter of (a) Combined Total Debt to (b) Value (less the aggregate amount of unrestricted Cash and Cash equivalents subtracted from Indebtedness pursuant to clause (b) of the definition of Combined Total Debt) for the four-Fiscal Quarter period ending on such date.
“Next Day Revolving Loans” as defined in Section 2.2(b)(i) .
“Non-Consenting Lender” as defined in Section 2.23 .
“Non-Public Information” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.
“Non-Recourse Indebtedness” means Indebtedness which is not Recourse Indebtedness.
“Non-US Lender” as defined in Section 2.20(c) .
“Note” means a Revolving Loan Note or a Swing Line Note.
“Notice” means a Funding Notice, an Issuance Notice, or a Conversion/ Continuation Notice.
“Obligation Aggregate Payments” as defined in Section 2.24(b) .
“Obligation Fair Share” as defined in Section 2.24(b) .
“Obligation Fair Share Contribution Amount” as defined in Section 2.24(b) .
“Obligation Fair Share Shortfall” as defined in Section 2.24(b) .
“Obligations” means all obligations of every nature of each Credit Party owing from time to time to Agents (including former Agents), Joint Lead Arrangers, Lenders or any of them under any Credit Document, whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, fees, expenses, indemnification or otherwise required under any Credit Document.
“Obligee Guarantor” as defined in Section 7.7 .
“OFAC” means the Office of Foreign Assets Control of the U.S. Treasury Department.
“Organizational Documents” means (a) with respect to any corporation or company, its certificate, memorandum or articles of incorporation, organization or association, as amended, and its by-laws, as amended, (b) with respect to any limited partnership, its certificate or declaration of limited partnership, as amended, and its partnership agreement, as amended, (c) with respect to any general partnership, its partnership agreement, as amended, (d) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended, and (e) for any trust, the trust agreement and any other instrument or agreement relating to the rights between the trustors, trustees and beneficiaries or pursuant to which such trust is formed. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or
similar Governmental Authority, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such Governmental Authority.
“Other Taxes” means any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies (and interest, fines, penalties and additions related thereto) arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Credit Document.
“Participant Register” as defined in Section 10.6(g)(i) .
“Parent” as defined in the preamble hereto.
“Parent Guarantors” means Parent, GGP, GGP LP II and the Holding Companies.
“Partnership” as defined in the preamble hereto.
“PATRIOT Act” as defined in Section 3.1(r) .
“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.
“Perfection Certificate” means a certificate in form reasonably satisfactory to Collateral Agent that provides information with respect to the personal or mixed property of each Credit Party.
“Permitted Liens” means each of the Liens permitted pursuant to Section 6.2 .
“Permitted Project Level Financing” means any Indebtedness secured by a mortgage (or negative pledge (which, for purposes of this Agreement and the other Credit Documents, shall constitute a Lien) or similar security instrument in lieu of any of the foregoing) on any Real Estate Asset (or, for convenience, to avoid expense or for other bona fide business purposes of Borrowers, secured by rentals or cash flow of one or more Real Estate Assets but not by a mortgage) or secured by a Lien on any Capital Stock of any Person whose primary asset is (a) the Real Estate Asset financed by such Indebtedness or (b) the Capital Stock of an entity that directly or indirectly owns such Real Estate Asset; provided , that Permitted Project Level Financing shall not be secured by any Collateral.
“Permitted Refinancing” means, with respect to any Person, any modification, amendment, restatement, amendment and restatement, refinancing, refunding, renewal or extension of any Indebtedness of such Person (the “Original Indebtedness” ); provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Original Indebtedness except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such modification, amendment, restatement, amendment and restatement, refinancing, refunding, renewal or extension and by an amount equal to any existing commitments unutilized thereunder (to the extent such commitments could be drawn at the time of such refinancing in compliance with this Agreement) or as otherwise permitted pursuant to Section 6.1 , (b) if the Original Indebtedness is subordinated in right of payment to the Obligations, such modification, amendment, restatement, amendment and restatement, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Original Indebtedness, (c) such modification, amendment, restatement, amendment and restatement, refinancing, refunding, renewal or extension shall not be secured (i) by any Lien on any asset other than the assets that secured the Original Indebtedness (or would have been required to secure such Original Indebtedness pursuant to the terms thereof); provided , that this clause (c) shall not prohibit such modification, amendment, restatement, amendment and restatement, refinancing, refunding, renewal or extension to be secured by a Lien on assets other than those that secured the Original Indebtedness if such Indebtedness may be secured pursuant to a Permitted Lien or (ii), in the event Liens securing such Original Indebtedness shall have been contractually subordinated to any Lien securing the Obligations, by any Lien that shall not have been contractually subordinated to at least the same extent and (d) at the time thereof, no Default or Event of Default shall have occurred and be continuing.
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, Joint Venture, Governmental Authority or other entity of whatever nature.
“Plan” means the Third Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated August 27, 2010, filed by Existing GGPI, the Partnership, the LLC and the Debtor Subsidiaries with the Bankruptcy Court, together with all exhibits, supplements, annexes, schedules and any other attachments filed as of the date of the Commitment Letter.
“Platform” as defined in Section 5.1(j) .
“Pledge Agreement” means the Pledge Agreement to be executed by the Pledgors substantially in the form of Exhibit I , as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Pledged Properties” means, collectively, the Closing Date Pledged Properties and the additional Capital Stock subject to the Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties, pursuant to the requirements of Section 5.8 .
“Pledgor” as defined in the Pledge Agreement.
“Prime Rate” means the rate of interest quoted in the print edition of The Wall Street Journal , Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty (30) largest banks), as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Administrative Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.
“Principal Office” means, for each of Administrative Agent, Swing Line Lender and Issuing Bank, such Person’s “Principal Office” as set forth on Appendix B, or such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to Borrowers, Administrative Agent and each Lender.
“Projections” as defined in Section 4.8 .
“Pro Rata Share” with respect to any Lender means the percentage obtained by dividing (a) the Revolving Exposure of that Lender, by (b) the aggregate Revolving Exposure of all Lenders.
“Public Lenders” means Lenders that do not wish to receive material Non-Public Information with respect to Parent, its Subsidiaries or their securities.
“Qualified Capital Stock” means Capital Stock that is not Disqualified Capital Stock.
“Qualified Permitted Liens” as defined in the Pledge Agreement.
“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) then directly owned by any Credit Party or any Subsidiary of a Credit Party in any real property.
“Recourse Indebtedness” means any Indebtedness, to the extent that recourse of the applicable lender for non-payment is not limited to such lender’s Liens on a particular asset or group of assets.
“Recourse Secured Mortgage Indebtedness” means any Permitted Project Level Financing that is Recourse Indebtedness.
“Refunded Swing Line Loans” as defined in Section 2.3(b)(iv) .
“Register” as defined in Section 2.7(b) .
“Regulation D” means Regulation D of the Board of Governors, as in effect from time to time.
“Regulation FD” means Regulation FD as promulgated by the U.S. Securities and Exchange Commission under the Securities Act and Exchange Act as in effect from time to time.
“Reimbursement Date” as defined in Section 2.4(d) .
“Reinstated Rouse Notes” means, collectively, any of the 7.20% Notes due 2012 of The Rouse Company LP, any of the 5.375% Notes due 2013 of The Rouse Company LP, and
any of the 6¾% Notes due 2013 of The Rouse Company LP, together with any refinancing or replacement thereof contemplated by the Plan.
“REIT” means a domestic trust or corporation that qualifies as a real estate investment trust under the provisions of Sections 856, et seq. of the Internal Revenue Code.
“REIT Subsidiary” means a Subsidiary of Parent that is a REIT.
“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.
“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the environment, including the movement of any Hazardous Material through the air, soil, surface water or groundwater.
“Replacement Lender” as defined in Section 2.23 .
“Requisite Lenders” means one or more Lenders having or holding Revolving Exposure and representing more than 50% of the aggregate Revolving Exposure of all Lenders.
“Restricted Junior Payment” means any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of the Partnership or any Parent Guarantor now or hereafter outstanding, except a dividend payable solely in shares of Capital Stock of such Person or of any direct or indirect parent of such Person or in rights to subscribe for the purchase of such Capital Stock.
“Revolving Commitment” means the commitment of a Lender to make or otherwise fund any Revolving Loan and to acquire participations in Letters of Credit and Swing Line Loans hereunder and “Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Revolving Commitment, if any, is set forth on Appendix A or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Revolving Commitments as of the Closing Date is $300,000,000.
“Revolving Commitment Period” means the period from the Closing Date to but excluding the Revolving Commitment Termination Date.
“Revolving Commitment Termination Date” means the earliest to occur of (a) the third anniversary of the Closing Date, (b) the date the Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) , and (c) the date of the termination of the Revolving Commitments pursuant to Section 8.1 .
“Revolving Exposure” means, with respect to any Lender as of any date of determination, (a) prior to the termination of the Revolving Commitments, that Lender’s Revolving Commitment; and (b) after the termination of the Revolving Commitments, the sum of (i) the aggregate outstanding principal amount of the Revolving Loans of that Lender, (ii) in
the case of Issuing Bank, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (net of any participations by Lenders in such Letters of Credit), (iii) the aggregate amount of all participations by that Lender in any outstanding Letters of Credit or any unreimbursed drawing under any Letter of Credit, (iv) in the case of Swing Line Lender, the aggregate outstanding principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and (v) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line Loans.
“Revolving Loan” means a Loan made by a Lender to Borrowers pursuant to Section 2.2(a) .
“Revolving Loan Note” means a promissory note in the form of Exhibit B-1 , as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“S&P” means Standard & Poor’s, a Division of The McGraw-Hill Companies, Inc.
“Secured Bank Product Agreement” means any agreement or instrument governing any Bank Products provided by any Lender Bank Product Provider.
“Secured Hedge Agreement” means any Hedge Agreement entered into with a Lender Counterparty.
“Secured Obligations” means the Obligations and any obligations of every nature of each Credit Party owing from time to time to any Lender Counterparty (including any Agent or Joint Lead Arranger in its capacity as a Lender Counterparty) under any Secured Hedge Agreement (including payments for each termination of Secured Hedge Agreements) and to any Lender Bank Product Providers under any Secured Bank Product Agreement.
“Secured Parties” has the meaning assigned to that term in the Pledge Agreement.
“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.
“Solvency Certificate” means a Solvency Certificate of the chief financial officer of Parent substantially in the form of Exhibit G-2 .
“Solvent” means, with respect to any Credit Party, that as of the date of determination, both (a) (i) the sum of such Credit Party’s debt (including contingent liabilities) does not exceed the present fair saleable value of such Credit Party’s present assets; (ii) such Credit Party’s capital is not unreasonably small in relation to its business as contemplated on the Closing Date or with respect to any transaction contemplated to be undertaken after the Closing Date; and (iii) such Person has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (b) such Person is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and
conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No.5).
“Special Consideration Properties” means those Real Estate Assets identified on Schedule 1.2 hereto.
“Specified Equity Contribution” as defined in Section 6.7(e) .
“Specified Properties” means the Special Consideration Properties and Real Estate Assets and/or Subsidiaries having an aggregate net equity value less than $200,000,000.
“Subject Transaction” as defined in Section 6.7(d)(i) .
“Subordinated Indebtedness” means any Indebtedness expressly subordinated in right of payment to the Obligations.
“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company, trust, estate or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity are at the time owned, directly or indirectly through one or more intermediaries, or both, by such Person.
“Swing Line Lender” means DBTCA in its capacity as Swing Line Lender hereunder, together with its permitted successors and assigns in such capacity.
“Swing Line Loan” means a Loan made by Swing Line Lender to Borrowers pursuant to Section 2.3 .
“Swing Line Note” means a promissory note in the form of Exhibit B-2 , as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Swing Line Sublimit” means the lesser of (i) $30,000,000, and (ii) the aggregate unused amount of Revolving Commitments then in effect.
“Syndication Agents” as defined in the preamble hereto.
“Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding (together with interest, penalties and other additions thereto) of any nature and whatever called, imposed, levied, collected, withheld or assessed by any Governmental Authority; provided , “Tax on the overall net income” of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person is organized or in which that Person’s applicable principal office (and/or, in the case of a Lender, its lending
office) is located on all or part of the overall net income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its applicable lending office).
“Terminated Lender” as defined in Section 2.23 .
“Total Utilization of Revolving Commitments” means, as at any date of determination, the sum of (a) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing Issuing Bank for any amount drawn under any Letter of Credit, but not yet so applied), (b) the aggregate principal amount of all outstanding Swing Line Loans, and (c) the Letter of Credit Usage.
“Transaction Costs” means the fees, costs and expenses payable by Parent or any of its Subsidiaries on or before the Closing Date in connection with the transactions contemplated by the Credit Documents.
“TRUP Notes” means, collectively, any of the TRUP Junior Subordinated Notes due 2036 of the Partnership.
“Trust Preferred Securities Issuer” means a special purpose entity of which Parent or any of Borrowers and the Wholly Owned Subsidiaries of one or more of Borrowers owns 100% of the common interests, which special purpose entity is established for the purpose of issuing such trust preferred securities and using the proceeds of such issuance to make loans to Parent or a Borrower or a Wholly Owned Subsidiary of one or more of Borrowers.
“Type of Loan” means (a) with respect to Revolving Loans, a Base Rate Loan or a Eurodollar Rate Loan, and (b) with respect to Swing Line Loans, a Base Rate Loan.
“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect from time to time in any applicable jurisdiction.
“Underlying Collateral Properties” means all Real Estate Assets directly owned by the entities whose Capital Stock constitutes Pledged Properties and their Subsidiaries.
“Unsecured Indebtedness Sublimit” as defined in Section 6.1(c) .
“U.S. Lender” as defined in Section 2.20(c) .
“Value” means the sum, without duplication, of (a) Combined EBITDA for the immediately preceding four (4) calendar quarters capped at 7.25% (excluding any GGP Property included on a cost basis pursuant to clause (c) below), (b) the Fair Market Value of development and inactive assets owned by Parent, Borrowers or any of their Subsidiaries (Wholly Owned Subsidiaries or otherwise) or Joint Ventures, including raw land, vacant outparcels, loans receivable, capital expenditures and the headquarters buildings in Illinois and Maryland and other underutilized assets with de minimis income (at the lesser of cost or fair market value, provided that the headquarters buildings shall be valued at their appraised values); (c) the cost
basis of new acquisitions of Parent, Borrowers or any of their Subsidiaries (Wholly Owned Subsidiaries or otherwise) or Joint Ventures (calculated as (i) 100% for assets owned by any Parent Guarantor, any Borrower or any Wholly Owned Subsidiary of Borrowers and (ii) in the case of consolidated non-Wholly Owned Subsidiaries and Joint Ventures of Parent Guarantors or Borrowers, only to the extent allocable (based on economic share and not necessarily the percentage ownership) to Parent Guarantors, Borrowers or their Wholly Owned Subsidiaries for the twelve month period after any such acquisition); (d) unrestricted Cash and Cash Equivalents of Parent Guarantors, Borrowers and their Subsidiaries and Joint Ventures (but, in the case of consolidated non-Wholly Owned Subsidiaries and Joint Ventures of Parent Guarantors or Borrowers, only to the extent allocable (based on economic share and not necessarily the percentage ownership) to Parent Guarantors, Borrowers or their Wholly Owned Subsidiaries), in each case as determined in accordance with GAAP, except as otherwise noted above with respect to non-Wholly Owned Subsidiary and Joint Venture allocations, without duplication; and (e) aggregate sums spent on the construction of improvements (including land acquisition costs) for any Real Estate Asset which is raw land, vacant out-parcels or is the subject of a material construction project but excluding such sums with respect to Real Estate Assets subject to material construction projects, if Parent elects to include revenues in Adjusted EBITDA ( provided that such costs can be included if the project is a renovation or expansion of a Real Estate Asset that is otherwise complete and operational, the construction will not impair ongoing business and operations and the inclusion of such revenues in Adjusted EBITDA and such aggregate sums in Value is not duplicative).
“Wholly Owned Subsidiary” means, as to any Person or Persons, any Subsidiary of any of such Person or Persons all of the Capital Stock of which (other than directors’ qualifying shares and, in the case of any REIT Subsidiary, non-participating preferred equity with a base liquidation preference of no more than $180,000) is owned by such Person or Persons directly or indirectly.
1.2. Accounting Terms. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements required to be delivered by Parent to Administrative Agent pursuant to Section 5.1(a) and 5.1(b) shall be prepared in accordance with GAAP as in effect at the time of such preparation. Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall (i) utilize accounting principles and policies in conformity with GAAP and (ii) shall not give effect to any election made by Parent or any of its Subsidiaries under Accounting Standards Codification 825-10 (or any other Financial Accounting Standard having a similar result or effect) to value Indebtedness or other liabilities of any Credit Party or any Subsidiary of any Credit Party or any Joint Venture at “fair value.” If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and Parent shall so request, Administrative Agent and Parent shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of Requisite Lenders), provided that, until so amended, such ratio or requirement shall continue to be computed in conformity with those accounting principles and policies in effect before giving effect to such change in GAAP.
1.3. Interpretation, Etc. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The terms lease and license shall include sub-lease and sub-license, as applicable. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made as set forth in Section 2.16(e) and (f) , the provisos set forth in the definition of “Interest Period”, or, to the extent provided in any amendment, waiver, or modification of a Credit Document, as provided therein, as applicable. Whenever performance of any other obligation or agreement is required on a day that is not a Business Day, the date for such performance shall be extended to the next succeeding Business Day.
SECTION 2. LOANS AND LETTERS OF CREDIT
2.1. Intentionally Omitted .
2.2. Revolving Loans .
(a) Revolving Commitments . During the Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Revolving Loans to Borrowers in an aggregate amount up to but not exceeding such Lender’s Revolving Commitment; provided , that after giving effect to the making of any Revolving Loans in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.2(a) may be repaid and reborrowed during the Revolving Commitment Period. Each Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Commitments shall be paid in full no later than such date.
(b) Borrowing Mechanics for Revolving Loans .
(i) Revolving Loans that are Base Rate Loans (other than Revolving Loans made pursuant to Section 2.4(d) ), shall be made in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount, and Revolving Loans that are Eurodollar Rate Loans shall be in an aggregate minimum amount of $3,000,000 and integral multiples of $500,000 in excess of that amount. Notwithstanding the foregoing, if Swing Line Lender resigns and no replacement Swing Line Lender is appointed within thirty (30) days after such resignation, Borrowers may request Revolving Loans that are Base Rate Loans on one Business Day’s notice ( “Next Day Revolving Loans” ) in an aggregate minimum amount of $250,000 and integral multiples
of $50,000, but in no event shall such Next Day Revolving Loans, in the aggregate, exceed the Swing Line Sublimit.
(ii) Subject to Section 3.2(b) , whenever Borrowers desire that Lenders make Revolving Loans, Borrowers shall deliver to Administrative Agent a fully executed and delivered Funding Notice no later than 11:00 a.m. (New York City time) at least three Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate Loan, and at least one Business Day in advance of the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan. Notwithstanding the foregoing, if Swing Line Lender resigns and no replacement Swing Line Lender is appointed within thirty (30) days after such resignation, Borrowers may request Next Day Revolving Loans by delivering to Administrative Agent a fully executed and delivered Funding Notice no later than 5:00 p.m. (New York City time) one Business Day in advance of the proposed Credit Date. Except as otherwise provided herein, a Funding Notice for a Revolving Loan that is a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and Borrowers shall be bound to make a borrowing in accordance therewith.
(iii) Notice of receipt of each Funding Notice in respect of Revolving Loans, together with the amount of each Lender’s Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by Administrative Agent to each applicable Lender by facsimile or electronic mail with reasonable promptness, but (provided Administrative Agent shall have received such notice by 11:00 a.m. (New York City time) (or 5:00 p.m. (New York City time) in the case of Next Day Revolving Loans)) not later than 3:00 p.m. (New York City time) (or 6:00 p.m. (New York City time) in the case of Next Day Revolving Loans) on the same day as Administrative Agent’s receipt of such Notice from Borrowers.
(iv) Each Lender shall make the amount of its Revolving Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at the Principal Office of Administrative Agent. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Revolving Loans available to Borrowers on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Revolving Loans received by Administrative Agent from Lenders to be credited to the account of Borrowers at the Principal Office designated by Administrative Agent or such other account as may be designated in writing to Administrative Agent by Borrowers.
2.3. Swing Line Loans .
(a) Swing Line Loans Commitments . During the Revolving Commitment Period, subject to the terms and conditions hereof, Swing Line Lender agrees to make Swing Line Loans to Borrowers in the aggregate amount up to but not exceeding the Swing Line Sublimit; provided , that after giving effect to the making of any Swing Line Loan, in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.3 may be repaid and reborrowed
during the Revolving Commitment Period. Swing Line Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder with respect to the Swing Line Loans and the Revolving Commitments shall be paid in full no later than such date.
(b) Borrowing Mechanics for Swing Line Loans .
(i) Swing Line Loans shall be made in an aggregate minimum amount of $250,000 and integral multiples of $50,000 in excess of that amount.
(ii) Subject to Section 3.2(b) , whenever Borrowers desire that Swing Line Lender make a Swing Line Loan, Borrowers shall deliver to Administrative Agent a Funding Notice no later than 1:00 p.m. (New York City time) on the proposed Credit Date.
(iii) Swing Line Lender shall make the amount of its Swing Line Loan available to Administrative Agent not later than 3:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at Administrative Agent’s Principal Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Swing Line Loans available to Borrowers on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Swing Line Loans received by Administrative Agent from Swing Line Lender to be credited to the account of Borrowers at Administrative Agent’s Principal Office, or to such other account as may be designated in writing to Administrative Agent by Borrowers.
(iv) With respect to any Swing Line Loans which have not been voluntarily prepaid by Borrowers pursuant to Section 2.13 , Swing Line Lender may at any time in its sole and absolute discretion, deliver to Administrative Agent (with a copy to Borrowers), no later than 11:00 a.m. (New York City time) at least one Business Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a Funding Notice given by Borrower) requesting that each Lender holding a Revolving Commitment make Revolving Loans that are Base Rate Loans to Borrowers on such Credit Date in an amount equal to the amount of such Swing Line Loans (the “Refunded Swing Line Loans” ) outstanding on the date such notice is given which Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the Lenders other than Swing Line Lender shall be immediately delivered by Administrative Agent to Swing Line Lender (and not to Borrowers) and applied to repay a corresponding portion of the Refunded Swing Line Loans and (2) on the day such Revolving Loans are made, Swing Line Lender’s Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender to Borrowers, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note, if any, of Swing Line Lender but shall instead constitute part of Swing Line Lender’s outstanding Revolving Loans to Borrowers and shall be due under the Revolving Loan Note, if any, issued by Borrowers to Swing Line Lender. If any portion
of any such amount paid (or deemed to be paid) to Swing Line Lender should be recovered by or on behalf of Borrowers from Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be ratably shared among all Lenders in the manner contemplated by Section 2.17 .
(v) If for any reason Revolving Loans are not made pursuant to Section 2.3(b)(iv) in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after written demand for the making thereof by Swing Line Lender, each Lender holding a Revolving Commitment shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding Swing Line Loans in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon. Upon one Business Day’s notice from Swing Line Lender, each Lender holding a Revolving Commitment shall deliver to Swing Line Lender an amount equal to its respective participation in the applicable unpaid amount in same day funds at the Principal Office of Swing Line Lender. In order to evidence such participation, each Lender holding a Revolving Commitment agrees to enter into a participation agreement at the request of Swing Line Lender in form and substance reasonably satisfactory to Swing Line Lender. In the event any Lender holding a Revolving Commitment fails to make available to Swing Line Lender the amount of such Lender’s participation as provided in this paragraph, Swing Line Lender shall be entitled to recover such amount on written demand from such Lender together with interest thereon for three Business Days at the rate customarily used by Swing Line Lender for the correction of errors among banks and thereafter at the Base Rate, as applicable.
(vi) Notwithstanding anything contained herein to the contrary, (1) each Lender’s obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to the second preceding paragraph and each Lender’s obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Swing Line Lender, any Credit Party or any other Person for any reason whatsoever; (B) the occurrence or continuation of a Default or Event of Default; (C) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Credit Party; (D) any breach of this Agreement or any other Credit Document by any party thereto; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that such obligations of each Lender are subject to the condition that Swing Line Lender had not received prior notice from Borrowers or Requisite Lenders that any of the conditions under Section 3.2 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans were not satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made; and (2) Swing Line Lender shall not be obligated to make any Swing Line Loans (A) if it has elected not to do so after the occurrence and during the continuation of a Default or Event of Default, (B) it does not in good faith believe that all conditions under Section 3.2 to the making of such Swing Line Loan have been satisfied or waived by Requisite Lenders or (C) at a time when any Lender is a Defaulting Lender
unless (x) first , Administrative Agent is holding sufficient Cash collateral for the obligations of such Defaulting Lender, (y) second , after taking into account the reallocation of such Defaulting Lender’s participation obligations pro rata, among the non-Defaulting Lenders, the Revolving Exposure of such Revolving Lenders does not exceed their respective Revolving Commitments or (z) third , Swing Line Lender has entered into arrangements reasonably satisfactory to it and Borrowers to eliminate Swing Line Lender’s risk with respect to the Defaulting Lender’s participation obligations in respect of such Swing Line Loan, including by Cash collateralizing such Defaulting Lender’s Pro Rata Share of the outstanding Swing Line Loans.
(c) Resignation and Removal of Swing Line Lender . Swing Line Lender may resign as Swing Line Lender upon 30 days prior written notice to Administrative Agent, Lenders and Borrowers. Swing Line Lender may be replaced at any time by written agreement among Borrowers, Administrative Agent, the replaced Swing Line Lender ( provided that no consent will be required if the replaced Swing Line Lender has no Swing Line Loans outstanding) and the successor Swing Line Lender. Administrative Agent shall notify Lenders of any such replacement of Swing Line Lender. At the time any such replacement or resignation shall become effective, (i) Borrowers shall prepay any outstanding Swing Line Loans made by the resigning or removed Swing Line Lender, (ii) upon such prepayment, the resigning or removed Swing Line Lender shall surrender any Swing Line Note held by it to Borrowers for cancellation, and (iii) Borrowers shall issue, if so requested by the successor Swing Line Loan Lender, a new Swing Line Note to the successor Swing Line Lender, in the principal amount of the Swing Line Sublimit then in effect and with other appropriate insertions. From and after the effective date of any such replacement or resignation, (x) any successor Swing Line Lender shall have all the rights and obligations of a Swing Line Lender under this Agreement with respect to Swing Line Loans made thereafter and (y) references herein to the term “Swing Line Lender” shall be deemed to refer to such successor or to any previous Swing Line Lender, or to such successor and all previous Swing Line Lenders, as the context shall require.
2.4. Issuance of Letters of Credit and Purchase of Participations Therein .
(a) Letters of Credit . During the Revolving Commitment Period, subject to the terms and conditions hereof, Issuing Bank agrees to issue Letters of Credit for the account of Borrowers in the aggregate amount up to but not exceeding the Letter of Credit Sublimit; provided , (i) each Letter of Credit shall be denominated in Dollars; (ii) the stated amount of each Letter of Credit shall not be less than $5,000 or such lesser amount as the applicable Issuing Bank and Borrowers may agree; (iii) after giving effect to such issuance, in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect; (iv) after giving effect to such issuance, in no event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit then in effect; and (v) no event Letter of Credit shall have an expiration date later than the earlier of (1) five days prior to the third anniversary of the Closing Date (the “ Letter of Credit Expiration Date ”) and (2) the date which is one year from the date of issuance of such Letter of Credit; provided , however , that Issuing Bank may agree in its reasonable discretion that a Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each (but in any event, not beyond the Letter of Credit Expiration Date unless Borrowers shall, not later than five days preceding the
Letter of Credit Expiration Date, Cash collateralize in accordance with Section 2.4(i) , on terms and conditions reasonably satisfactory to Administrative Agent and Issuing Bank, an amount equal to the Letter of Credit Usage with respect to any Letters of Credit having an expiry date later than the Letter of Credit Expiration Date; provided , further , that the obligations under this Section 2.4 in respect of such Letters of Credit of (i) Borrowers shall survive the Revolving Commitment Termination Date and shall remain in effect until no such Letters of Credit remain outstanding and (ii) each Lender shall be reinstated, to the extent any such Cash collateral, the application thereof or reimbursement in respect thereof is required to be returned to Borrowers by Issuing Bank after the Revolving Commitment Termination Date and while the related Letter of Credit remains outstanding . Amounts held in such cash collateral account shall be held and applied by Administrative Agent in the manner and for the purposes set forth in Section 2.4(d) ), unless Issuing Bank elects not to extend for any such additional period; provided , Issuing Bank shall not extend any such Letter of Credit if it has received written notice that an Event of Default has occurred and is continuing at the time Issuing Bank must elect to allow such extension; provided , further , if any Lender is a Defaulting Lender, Issuing Bank shall not be required to issue any Letter of Credit unless (x) first , Administrative Agent is holding sufficient Cash collateral for the obligations of such Defaulting Lender, (y) second , after taking into account the reallocation of such Defaulting Lender’s participation obligations pro rata, among the non-Defaulting Lenders, the Revolving Exposure of such Revolving Lenders does not exceed their respective Revolving Commitments or (z) third , Issuing Bank has entered into arrangements reasonably satisfactory to it and Borrowers to eliminate Issuing Bank’s risk with respect to the Defaulting Lenders’ participation obligations in respect of Letters of Credit of the Defaulting Lender, including by Cash collateralizing such Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage.
(b) Notice of Issuance . Subject to Section 3.2(b) , whenever any Borrower desires the issuance of a Letter of Credit, it shall deliver to Administrative Agent an Issuance Notice no later than 12:00 p.m. (New York City time) at least three Business Days, or such shorter period as may be agreed to by Issuing Bank in any particular instance, in advance of the requested date of issuance. Subject to satisfaction or waiver of the conditions set forth in Section 3.2 , Issuing Bank shall issue the requested Letter of Credit on the requested date of issuance in accordance with Issuing Bank’s standard operating procedures. Upon the issuance of any Letter of Credit or amendment or modification to a Letter of Credit, Issuing Bank shall promptly notify each Lender with a Revolving Commitment of such issuance, and, if requested by a Lender, provide a copy of such Letter of Credit or amendment or modification to a Letter of Credit and the amount of such Lender’s respective participation in such Letter of Credit pursuant to Section 2.4(e) .
(c) Responsibility of Issuing Bank With Respect to Requests for Drawings and Payments . In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, Issuing Bank shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. As between Borrowers and Issuing Bank, Borrowers assume all risks of the acts and omissions of, or misuse of the Letters of Credit issued by Issuing Bank by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, Issuing Bank shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Issuing Bank, including any Governmental Acts; none of the above shall affect or impair, or prevent the vesting of, any of Issuing Bank’s rights or powers hereunder. Without limiting the foregoing and in furtherance thereof, any action taken or omitted by Issuing Bank under or in connection with the Letters of Credit or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not give rise to any liability on the part of Issuing Bank to Borrowers. Notwithstanding anything to the contrary contained in this Section 2.4(c) , each Borrower shall retain any and all rights it may have against Issuing Bank for any liability arising solely out of the gross negligence or willful misconduct of Issuing Bank as determined by a final, non-appealable judgment of a court of competent jurisdiction.
(d) Reimbursement by Borrowers of Amounts Drawn or Paid Under Letters of Credit . In the event Issuing Bank has determined to honor a drawing under a Letter of Credit, it shall immediately notify Borrowers and Administrative Agent, and Borrowers shall reimburse Issuing Bank on or before the Business Day immediately following the date on which such drawing is honored (the “Reimbursement Date” ) in an amount in Dollars and in same day funds equal to the amount of such honored drawing; provided , anything contained herein to the contrary notwithstanding, (i) unless Borrowers shall have notified Administrative Agent and Issuing Bank prior to 10:00 a.m. (New York City time) on the date such drawing is honored that Borrowers intend to reimburse Issuing Bank for the amount of such honored drawing with funds other than the proceeds of Revolving Loans, Borrowers shall be deemed to have given a timely Funding Notice to Administrative Agent requesting Lenders with Revolving Commitments to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount of such honored drawing, and (ii) subject to satisfaction or waiver of the conditions specified in Section 3.2 , Lenders with Revolving Commitments shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount of such honored drawing, the proceeds of which shall be applied directly by Administrative Agent to reimburse Issuing Bank for the amount of such honored drawing; and provided further , if for any reason proceeds of Revolving Loans are not received by Issuing Bank on the Reimbursement Date in an amount equal to the amount of such honored drawing, Borrowers shall reimburse Issuing Bank, on written demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this Section 2.4(d) shall be deemed to relieve any Lender with a Revolving Commitment from its
obligation to make Revolving Loans on the terms and conditions set forth herein, and each Borrower shall retain any and all rights it may have against any such Lender resulting from the failure of such Lender to make such Revolving Loans under this Section 2.4(d) .
(e) Lenders’ Purchase of Participations in Letters of Credit . Immediately upon the issuance of each Letter of Credit, each Lender having a Revolving Commitment shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from Issuing Bank a participation in such Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the Revolving Commitments) of the maximum amount which is or at any time may become available to be drawn thereunder. In the event that Borrowers shall fail for any reason to reimburse Issuing Bank as provided in Section 2.4(d) , Issuing Bank shall promptly notify each Lender with a Revolving Commitment of the unreimbursed amount of such honored drawing and of such Lender’s respective participation therein based on such Lender’s Pro Rata Share of the Revolving Commitments. Each Lender with a Revolving Commitment shall make available to Issuing Bank an amount equal to its respective participation, in Dollars and in same day funds, at the office of Issuing Bank specified in such notice, not later than 12:00 p.m. (New York City time) on the first Business Day after the date notified by Issuing Bank. In the event that any Lender with a Revolving Commitment fails to make available to Issuing Bank on such Business Day the amount of such Lender’s participation in such Letter of Credit as provided in this Section 2.4(e) , Issuing Bank shall be entitled to recover such amount on written demand from such Lender together with interest thereon for three Business Days at the rate customarily used by Issuing Bank for the correction of errors among banks and thereafter at the Base Rate. Nothing in this Section 2.4(e) shall be deemed to prejudice the right of any Lender with a Revolving Commitment to recover from Issuing Bank any amounts made available by such Lender to Issuing Bank pursuant to this Section in the event that the payment with respect to a Letter of Credit in respect of which payment was made by such Lender constituted gross negligence or willful misconduct on the part of Issuing Bank. In the event Issuing Bank shall have been reimbursed by other Lenders pursuant to this Section 2.4(e) for all or any portion of any drawing honored by Issuing Bank under a Letter of Credit, such Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under this Section 2.4(e) with respect to such honored drawing such Lender’s Pro Rata Share of all payments subsequently received by Issuing Bank from Borrowers in reimbursement of such honored drawing when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth below its name on Appendix B or at such other address as such Lender may request.
(f) Obligations Absolute . The obligation of Borrowers to reimburse Issuing Bank for drawings honored under the Letters of Credit issued by it and to repay any Revolving Loans made by Lenders pursuant to Section 2.4(d) and the obligations of Lenders under Section 2.4(e) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under all circumstances including any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Borrowers or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), Issuing Bank, Lender or any other Person or, in the case of a Lender, against Borrowers, whether in connection herewith, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between a Borrower or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by Issuing Bank under any Letter of Credit against presentation of a draft or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Parent or any of its Subsidiaries; (vi) any breach hereof or any other Credit Document by any party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (viii) the fact that an Event of Default or a Default shall have occurred and be continuing; provided , in each case, that payment by Issuing Bank under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of Issuing Bank under the circumstances in question as determined by a final, non-appealable judgment of a court of competent jurisdiction.
(g) Indemnification . Without duplication of any obligation of Borrowers under Sections 2.20 , 10.2 or 10.3 , in addition to amounts payable as provided herein, each Borrower hereby agrees to protect, indemnify, pay and save harmless Issuing Bank from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, out-of-pocket expenses and disbursements of outside counsel) which Issuing Bank may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct of Issuing Bank as determined by a final, non-appealable judgment of a court of competent jurisdiction or (2) the wrongful dishonor by Issuing Bank of a proper written demand for payment made under any Letter of Credit issued by it, or (ii) the failure of Issuing Bank to honor a drawing under any such Letter of Credit as a result of any Governmental Act; provided , that to the extent such claims, demands, liabilities, damages, losses, costs, charges and expenses relate to Taxes, they shall be subject to the provisions of Section 2.20 .
(h) Resignation and Removal of Issuing Bank . An Issuing Bank may resign as Issuing Bank upon 60 days prior written notice to Administrative Agent, Lenders and Borrowers. An Issuing Bank may be replaced at any time by written agreement among Borrowers, Administrative Agent, the replaced Issuing Bank ( provided that no consent will be required if the replaced Issuing Bank has no Letters of Credit or reimbursement Obligations with respect thereto outstanding) and the successor Issuing Bank. Administrative Agent shall notify Lenders of any such replacement of such Issuing Bank. At the time any such replacement or resignation shall become effective, Borrowers shall pay all unpaid fees accrued for the account of the replaced Issuing Bank. From and after the effective date of any such replacement or resignation, (i) any successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement or resignation of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto to the extent that Letters of Credit issued by it remain outstanding and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement or resignation, but shall not be required to issue additional Letters of Credit.
(i) Cash Collateral . For purposes of this Agreement, providing “Cash collateral” or “Cash collateralization” for, or to “Cash collateralize” a Letter of Credit means to pledge and deposit with or deliver to Administrative Agent, for the benefit of Issuing Bank and Lenders funding a participation in Letters of Credit pursuant to Section 2.4(e) , as collateral for the Obligations under the Letters of Credit, Cash in the currency in which the Letters of Credit are denominated and in an amount equal to the undrawn amount of such Letter of Credit and pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent and Borrowers. Borrowers hereby grant to Administrative Agent, for the benefit of Issuing Bank and each Lender funding a participation in Letters of Credit pursuant to Section 2.4(e) , a security interest in all such Cash, deposit accounts and all proceeds of the foregoing. All Cash collateral shall be maintained with Administrative Agent for the benefit of Issuing Bank and each Lender in an account subject to an account control agreement in form and substance reasonably satisfactory to Administrative Agent.
(j) Conflicts with Letter of Credit Documentation . In the event of any conflict or inconsistency between the terms hereof and any Letter of Credit documentation, the terms hereof shall control and all representations, warranties or covenants contained in any Letter of Credit documentation shall be qualified in the manner and to the extent set forth herein mutatis mutandis and to the extent not contained herein shall be null and void.
2.5. Pro Rata Shares; Availability of Funds .
(a) Pro Rata Shares . Subject to Section 2.22 , all Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Revolving Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby.
(b) Availability of Funds . Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Borrowers a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand therefor, Administrative Agent shall promptly notify Borrowers and Borrowers shall promptly pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans for such Class of Loans. Nothing in this Section 2.5(b) shall be deemed to
relieve any Lender from its obligation to fulfill its Revolving Commitments hereunder or to prejudice any rights that Borrowers may have against any Lender as a result of any default by such Lender hereunder.
2.6. Use of Proceeds . The proceeds of the Revolving Loans, if any, made on the Closing Date shall be applied by Borrowers to finance the Plan, which may include the refinancing of certain Indebtedness of Existing GGPI and its Subsidiaries, including, without limitation, the Matured Rouse Notes, and to pay fees, commissions and expenses in connection therewith. The proceeds of the Revolving Loans, Swing Line Loans and Letters of Credit made on and after the Closing Date may also be applied by Borrowers for working capital and general corporate purposes of Parent and its Subsidiaries. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors or any other regulation thereof or to violate the Exchange Act.
2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes.
(a) Lenders’ Evidence of Debt . Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Borrowers to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Borrowers, absent manifest error; provided , that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitments or Borrowers’ Obligations in respect of any applicable Loans; and provided further , in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern.
(b) Register . Administrative Agent (or its agent or sub-agent appointed by it) shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the Revolving Commitments and Loans of each Lender from time to time (the “Register” ). The Register shall be available for inspection by Borrowers or any Lender (with respect to any entry relating to such Lender’s Loans) at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record, or shall cause to be recorded, in the Register the Revolving Commitments and the Loans in accordance with the provisions of Section 10.6 , and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on Borrowers and each Lender, absent manifest error; provided , failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitments or Borrowers’ Obligations in respect of any Loan. Borrowers hereby designate Administrative Agent to serve as Borrowers’ agent solely for purposes of maintaining the Register as provided in this Section 2.7 , and Borrowers hereby agree that, to the extent Administrative Agent serves in such capacity, Administrative Agent and its officers, directors, employees, agents, sub-agents and affiliates shall constitute “Indemnitees.”
(c) Notes . If so requested by any Lender by written notice to Borrowers (with a copy to Administrative Agent) at least three Business Days prior to the Closing Date, or at any time thereafter, Borrowers shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to
Section 10.6 ) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Borrowers’ receipt of such notice) a Note or Notes to evidence such Lender’s Revolving Loan or Swing Line Loan, as the case may be.
2.8. Interest on Loans .
(a) Except as otherwise set forth herein, each Loan shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows:
(i) in the case of Revolving Loans:
(1) if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or
(2) if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin; or
(ii) in the case of Swing Line Loans, at the Base Rate plus the Applicable Margin.
(b) The basis for determining the rate of interest with respect to any Loan (except a Swing Line Loan which can be made and maintained as Base Rate Loans only), and the Interest Period with respect to any Eurodollar Rate Loan, shall be selected by Borrowers and notified to Administrative Agent and Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case may be; provided , until the earlier of (i) the date on which Joint Lead Arrangers notify Borrowers that the primary syndication of the Loans and Revolving Commitments has been completed, as determined by Joint Lead Arrangers, and (ii) the date that is 60 days after the Closing Date, the Loans shall be maintained as either (1) Eurodollar Rate Loans having an Interest Period of no longer than one month or (2) Base Rate Loans.
(c) In connection with Eurodollar Rate Loans there shall be no more than eight (8) Interest Periods outstanding at any time. In the event Borrowers fail to specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the event Borrowers fail to specify an Interest Period for any Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, Borrowers shall be deemed to have selected an Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrowers and each Lender.
(d) Interest payable pursuant to Section 2.8(a) shall be computed (i) in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided , if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.
(e) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to the day immediately preceding such payment date; (ii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in arrears at maturity of the Loans, including final maturity of the Loans; provided , however, with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date.
(f) Except to the extent funded with Revolving Loans deemed made pursuant to Section 2.4(d) , Borrowers agree to pay to Issuing Bank, with respect to drawings honored under any Letter of Credit, interest on the amount paid by Issuing Bank in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by or on behalf of Borrowers at a rate equal to (i) for the period from the date one Business Day following the date such drawing is honored to but excluding the applicable Reimbursement Date, the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans and (ii) thereafter, a rate determined in accordance with Section 2.10 .
(g) Interest payable pursuant to Section 2.8(f) shall be computed on the basis of a 365/366-day year for the actual number of days elapsed in the period during which it accrues, and shall be payable on written demand or, if no such demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. Promptly upon receipt by Issuing Bank of any payment of interest pursuant to Section 2.8(f) , Issuing Bank shall distribute to each Lender, out of the interest received by Issuing Bank in respect of the period from the date such drawing is honored to but excluding the date on which Issuing Bank is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of any Revolving Loans), the amount that such Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period if no drawing had been honored under such Letter of Credit. In the event Issuing Bank shall have been reimbursed by Lenders for all or any portion of such honored drawing, Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under Section 2.4(e) with respect to such honored drawing such Lender’s Pro Rata Share of any interest received by Issuing Bank in respect of that portion of such honored
drawing so reimbursed by Lenders for the period from the date on which Issuing Bank was so reimbursed by Lenders to but excluding the date on which such portion of such honored drawing is reimbursed by Borrowers.
2.9. Conversion/Continuation .
(a) Subject to Section 2.18 and so long as no Event of Default shall have occurred and then be continuing, Borrowers shall have the option:
(i) to convert at any time all or any part of any Revolving Loan equal to $3,000,000 and integral multiples of $500,000 in excess of that amount from one Type of Loan to another Type of Loan; provided , (x) a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless Borrowers shall pay all amounts due under Section 2.18 in connection with any such conversion and (y) if a Default (but not an Event of Default) has occurred and is continuing, Borrowers may not elect an Interest Period longer than one month; or
(ii) upon the expiration of any Interest Period applicable to any Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $3,000,000 and integral multiples of $500,000 in excess of that amount as a Eurodollar Rate Loan; provided that if a Default (but not an Event of Default) has occurred and is continuing, Borrowers may not elect an Interest Period longer than one month.
(b) Subject to Section 3.2(b) , Borrowers shall deliver a Conversion/Continuation Notice to Administrative Agent no later than 11:00 a.m. (New York City time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans shall be irrevocable on and after the related Interest Rate Determination Date, and Borrowers shall be bound to effect a conversion or continuation in accordance therewith. If on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan.
2.10. Default Interest. Upon the occurrence and during the continuance of an Event of Default under Section 8.1(a) , the overdue principal amount of Loans outstanding and, to the extent permitted by applicable law, any overdue interest payments on the Loans or any overdue fees or other amounts owed hereunder, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on written demand at a rate that is 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans); provided , in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear
interest payable upon written demand at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender.
2.11. Fees .
(a) Borrowers agree to pay to Lenders having Revolving Exposure:
(i) commitment fees equal to (1) the daily difference between (a) the Revolving Commitments and (b) the aggregate principal amount of (x) all outstanding Revolving Loans (for the avoidance of doubt, excluding Swing Line Loans) plus (y) the Letter of Credit Usage, times (2) the Applicable Revolving Commitment Fee Percentage; and
(ii) letter of credit fees equal to (1) the Applicable Margin for Revolving Loans that are Base Rate Loans, times (2) the aggregate daily maximum amount available to be drawn under all such Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination).
All fees referred to in this Section 2.11(a) shall be paid to Administrative Agent at its Principal Office and upon receipt, Administrative Agent shall promptly distribute to each Lender its Pro Rata Share thereof.
(b) Borrowers agree to pay directly to Issuing Bank, for its own account, the following fees:
(i) a fronting fee equal to 0.250% per annum or such lesser amount as Borrowers and Issuing Bank may agree (which shall not be less than $500 per annum per Letter of Credit), times the aggregate daily maximum amount available to be drawn under all Letters of Credit (determined as of the close of business on any date of determination); and
(ii) such documentary and processing charges and a courier delivery fee of $15 for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with Issuing Bank’s standard schedule for such charges and as in effect at the time of such issuance, amendment, transfer or payment, as the case may be.
(c) All fees referred to in Section 2.11(a) and 2.11(b)(i) shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year during the Revolving Commitment Period, commencing on the first such date to occur after the Closing Date, and on the Revolving Commitment Termination Date.
(d) In addition to any of the foregoing fees, Borrowers agree to pay to Agents such other fees in the amounts and at the times separately agreed upon in writing.
2.12. Scheduled Payments/Commitment Reductions. The principal amounts of the Revolving Loans, together with all other amounts owed hereunder with respect thereto, shall be paid in full no later than the Revolving Commitment Termination Date.
2.13. Voluntary Prepayments/Commitment Reductions .
(a) Voluntary Prepayments .
(i) Any time and from time to time:
(1) with respect to Base Rate Loans, Borrowers may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount (or the remaining outstanding balance of such Loans);
(2) with respect to Eurodollar Rate Loans, Borrowers may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $3,000,000 and integral multiples of $500,000 in excess of that amount (or the remaining outstanding balance of such Loans); and
(3) with respect to Swing Line Loans, Borrowers may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $250,000, and in integral multiples of $50,000 in excess of that amount (or the remaining outstanding balance of such Loans).
(ii) All such prepayments shall be made:
(1) upon not less than one Business Day’s prior written or telephonic notice in the case of Base Rate Loans;
(2) upon not less than three Business Days’ prior written or telephonic notice in the case of Eurodollar Rate Loans; and
(3) upon written or telephonic notice on the date of prepayment, in the case of Swing Line Loans;
in each case given to Administrative Agent or Swing Line Lender, as the case may be, by 12:00 p.m. (New York City time) on the date required and, if given by telephone, promptly confirmed by delivery of written notice thereof to Administrative Agent (and Administrative Agent will promptly transmit such original notice for Revolving Loans by facsimile, electronic mail or telephone to each Lender) or Swing Line Lender, as the case may be. Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein; provided , that any such notice may be conditioned on the consummation of a refinancing or other transaction and may be rescinded or postponed on or prior to the proposed prepayment date if such refinancing or other transaction is not consummated or is delayed. Any such voluntary prepayment shall be applied as specified in Section 2.15(a) .
(b) Voluntary Commitment Reductions .
(i) Borrowers may, upon not less than three Business Days’ prior written or telephonic notice promptly confirmed by delivery of written notice thereof to Administrative Agent (which original written notice Administrative Agent will promptly transmit by facsimile, electronic mail or telephone to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Revolving Commitments in an amount up to the amount by which the Revolving Commitments exceed the Total Utilization of Revolving Commitments at the time of such proposed termination or reduction (after giving effect to any concurrent prepayments on such date); provided , any such partial reduction of the Revolving Commitments shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of that amount.
(ii) Borrowers’ notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Commitments shall be effective on the date specified in Borrowers’ notice and shall reduce the Revolving Commitment of each Lender proportionately to its Pro Rata Share thereof; provided , that any such notice may be conditioned on the consummation of a refinancing or other transaction and may be rescinded or postponed on or prior to the proposed reduction date if such refinancing or other transaction is not consummated or is delayed.
2.14. Intentionally Omitted .
2.15. Application of Prepayments/Reductions .
(a) Application of Voluntary Prepayments by Type of Loans . Any prepayment of any Loan pursuant to Section 2.13(a) shall be applied as specified by Borrowers in the applicable notice of prepayment; provided , in the event Borrowers fail to specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied as follows:
first , to repay outstanding Swing Line Loans to the full extent thereof;
second , to repay outstanding Revolving Loans to the full extent thereof; and
third , to Cash collateralize any outstanding Letters of Credit;
provided that application pursuant to clause second above shall be made with the objective of minimizing breakage costs, if any, that would be payable by Borrowers pursuant to Section 2.18(c) .
(b) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate Loans . Any prepayment shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Borrowers pursuant to Section 2.18(c) .
2.16. General Provisions Regarding Payments .
(a) All payments by Borrowers of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, recoupment, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 2:00 p.m. (New York City time) on the date due at the Principal Office of Administrative Agent for the account of Lenders; for purposes of computing interest and fees, funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Borrowers on the next succeeding Business Day.
(b) All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Revolving Loans and Swing Line Loans) shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid, and all such payments (and, in any event, any payments in respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be applied to the payment of interest then due and payable before application to principal.
(c) Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including all fees payable with respect thereto, to the extent received by Administrative Agent.
(d) Notwithstanding the foregoing provisions hereof, if any Conversion/ Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter.
(e) Subject to the provisos set forth in the definition of “Interest Period” as they may apply to Revolving Loans, whenever any payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and, with respect to Revolving Loans only, such extension of time shall be included in the computation of the payment of interest hereunder or of the Revolving Commitment fees hereunder.
(f) Administrative Agent shall deem any payment by or on behalf of Borrowers hereunder that is not made in same day funds prior to 2:00 p.m. (New York City time) on the date due to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. Administrative Agent shall give prompt telephonic notice to Borrowers and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a) . Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the rate determined pursuant to
Section 2.10 from the date such amount was due and payable until the date such amount is paid in full.
(g) If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.1 , all payments or proceeds received by Agents in respect of any of the Obligations shall be applied in accordance with the application arrangements described in Section 8.2 .
2.17. Ratable Sharing. Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Credit Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided , if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of any Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Borrowers expressly consent to the foregoing arrangement and agree that any holder of a participation so purchased may exercise any and all rights of banker’s lien, consolidation, set-off or counterclaim with respect to any and all monies owing by Borrowers to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. The provisions of this Section 2.17 shall not be construed to apply to (a) any payment made by Borrowers pursuant to and in accordance with the express terms of this Agreement or (b) any payment obtained by any Lender as consideration for the assignment or sale of a participation in any of its Loans or other Obligations owed to it.
2.18. Making or Maintaining Eurodollar Rate Loans .
(a) Inability to Determine Applicable Interest Rate . In the event that Administrative Agent shall have determined in good faith (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by facsimile, electronic mail or by telephone confirmed in writing) to Borrowers and each Lender of such determination,
whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Borrowers and Lenders that the circumstances giving rise to such notice no longer exist (which notice shall be given as soon as reasonably practicable), and (ii) any Funding Notice or Conversion/Continuation Notice given by Borrowers with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded or converted into a request for borrowing of Base Rate Loans at Borrowers’ option, in each case without payment of any amount under Section 2.18(c) .
(b) Illegality or Impracticability of Eurodollar Rate Loans . In the event that on any date any Lender shall have determined in good faith (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Borrowers and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result of contingencies occurring after the date hereof which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an “Affected Lender” and it shall on that day give notice (by e-mail or by telephone confirmed in writing) to Borrowers and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). If Administrative Agent receives a notice from (x) any Lender pursuant to clause (i) of the preceding sentence or (y) a notice from Lenders constituting Requisite Lenders pursuant to clause (ii) of the preceding sentence, then (1) the obligation of the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by each Affected Lender (which withdrawal shall be made as soon as reasonably practicable), (2) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Borrowers pursuant to a Funding Notice or a Conversion/Continuation Notice, the Lenders (or in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Lenders’ (or in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender’s) obligations to maintain their respective outstanding Eurodollar Rate Loans (the “Affected Loans” ) shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Borrowers pursuant to a Funding Notice or a Conversion/Continuation Notice, Borrowers shall have the option, subject to the provisions of Section 2.18(c) , to rescind such Funding Notice or Conversion/Continuation Notice as to all Lenders by giving written or telephonic notice (promptly confirmed by delivery of written notice thereof) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this Section 2.18(b) shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms hereof.
(c) Compensation for Breakage or Non-Commencement of Interest Periods . Borrowers shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid or payable by such Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds but excluding loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Funding Notice or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice or a telephonic request for conversion or continuation; (ii) if any prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan; or (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Borrowers.
(d) Booking of Eurodollar Rate Loans . Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of such Lender.
(e) Assumptions Concerning Funding of Eurodollar Rate Loans . Calculation of all amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall be made as though such Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided , however , each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.18 and under Section 2.19 .
2.19. Increased Costs; Capital Adequacy .
(a) Compensation For Increased Costs and Taxes . Subject to the provisions of Section 2.20 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender (which term shall include Issuing Bank for purposes of this Section 2.19(a) ) shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a Governmental Authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other Governmental or
quasi-Governmental Authority (whether or not having the force of law) (a “Change in Law” ): (i) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate); or (ii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrowers shall promptly, but in no event more than ten (10) Business Days after such Lender’s demand, pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder, so long as such Lender generally requires similar obligors under other credit facilities of this type made available by such Lender to similarly so compensate such Lender. Such Lender shall deliver to Borrowers (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(a) , which statement shall be conclusive and binding upon all parties hereto absent manifest error.
(b) Capital Adequacy Adjustment . In the event that any Lender (which term shall include Issuing Bank for purposes of this Section 2.19(b) ) shall have determined that the adoption, effectiveness, phase-in or applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans or Revolving Commitments or Letters of Credit, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, promptly but in any event no more than ten (10) Business Days after receipt by Borrowers from such Lender of the statement referred to in the next sentence, Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction, so long as such Lender generally requires similar obligors under other credit facilities of this type made available by such Lender to similarly so compensate such Lender. Such Lender shall deliver to Borrowers (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts
owed to Lender under this Section 2.19(b) , which statement shall be conclusive and binding upon all parties hereto absent manifest error.
2.20. Taxes; Withholding, Etc.
(a) Payments to Be Free and Clear . All sums payable by or on behalf of any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by any Governmental Authority.
(b) Withholding of Taxes . If any Credit Party or any other Person (acting as a withholding agent) is (in such withholding agent’s reasonable good faith discretion) required by law to make any deduction or withholding on account of any Tax from any sum paid or payable by any Credit Party to Administrative Agent or any Lender (which term shall include Issuing Bank for purposes of this Section 2.20(b) ) under any of the Credit Documents: (i) Borrowers shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as any Borrower becomes aware of it; (ii) Borrowers shall pay, or cause to be paid, any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit Party) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii) except for any deduction or withholding on account of any Taxes on the overall net income of any Lender or as otherwise provided in this Section 2.20 , the sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty days after the due date of payment of any Tax which it is required by clause (ii) above to pay, Borrowers shall deliver to Administrative Agent evidence reasonably satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided , no such additional amount shall be required to be paid to any Lender (other than a Lender that becomes a Lender pursuant to Section 2.23 ) under clause (iii) above except to the extent that any change after the date hereof (in the case of each Lender listed on the signature pages hereof on the Closing Date), after the effective date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender), or after the date any such Lender designates a new lending office in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the date hereof, at the date of such Assignment Agreement or at the date such new lending office is designated, as the case may be, in respect of payments to such Lender; provided that additional amounts shall be payable to a Lender to the extent such Lender’s assignor (including a Lender that designates a new lending office) was entitled to receive such additional amounts; provided further , that no such additional amount shall be required to be paid to any Lender under clause (iii) above to the extent such amount is attributable to any United States federal withholding Tax under Sections 1471 through 1474 of the Internal Revenue Code, or any amended version or successor provision
that is substantively comparable thereto, and, in each case, any regulations promulgated thereunder and any interpretation or other guidance issued in connection therewith.
(c) Evidence of Exemption From U.S. Withholding Tax . Each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a “ Non-US Lender ”) shall, to the extent such Lender is legally able to do so, deliver to Administrative Agent for transmission to Borrowers, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Borrowers or Administrative Agent (each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue Service Form W-8BEN, W-8ECI, W-8EXP and/or W-8IMY (or, in each case, any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrowers to establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Credit Documents, or (ii) if such Lender is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrowers to establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Credit Documents. Each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for United States federal income tax purposes (a “ U.S. Lender ”) and is not an exempt recipient within the meaning of Treasury Regulation Section 1.6049-4(c) shall deliver to Administrative Agent and Borrowers on or prior to the Closing Date (or, if later, on or prior to the date on which such Lender becomes a party to this Agreement) two original copies of Internal Revenue Service Form W-9 (or any successor form), properly completed and duly executed by such Lender, certifying that such U.S. Lender is entitled to an exemption from United States backup withholding tax, or otherwise prove that it is entitled to such an exemption. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.20(c) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to Administrative Agent for transmission to Borrowers two new original copies of Internal Revenue Service Form W-8BEN, W-8ECI, W-8EXP, W-8IMY and/or W-9 (or, in each case, any successor form), or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8BEN (or any successor form), as the case may be, properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrowers to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Credit Documents, or notify Administrative Agent and Borrowers of its inability to deliver any such
forms, certificates or other evidence. Borrowers shall not be required to pay any additional amount to any Non-US Lender under Section 2.20(b)(iii) if such Lender shall have failed (1) to deliver the forms, certificates or other evidence required by the first sentence of this Section 2.20(c) , or (2) to notify Administrative Agent and Borrowers of its inability to deliver any such forms, certificates or other evidence, as the case may be; provided, if such Lender shall have satisfied the requirements of the first sentence of this Section 2.20(c) on the Closing Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as applicable, nothing in this last sentence of Section 2.20(c) shall relieve Borrowers of their obligation to pay any additional amounts pursuant this Section 2.20 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described herein.
(d) Without limiting or duplicating the provisions of Section 2.20(a) or 2.20(b) , Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities in accordance with applicable law. Borrowers shall deliver to Administrative Agent official receipts or other evidence of such payment reasonably satisfactory to Administrative Agent in respect of any Other Taxes payable hereunder promptly after payment of such Other Taxes.
(e) Borrowers shall indemnify the Administrative Agent and any Lender for the full amount of Taxes for which additional amounts are required to be paid pursuant to Section 2.20(b) arising in connection with payments made under this Agreement or any other Credit Document and Other Taxes (including any such Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.20(e) ) paid by the Administrative Agent or Lender or any of their respective Affiliates and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to such Credit Party shall be conclusive absent manifest error. Such payment shall be due within thirty (30) days of such Credit Party’s receipt of such certificate.
2.21. Obligation to Mitigate . Each Lender (which term shall include Issuing Bank for purposes of this Section 2.21 ) agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.18 , 2.19 or 2.20 , it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions, including any Affected Loans, through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.18 , 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments, Loans or Letters of Credit through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect
such Revolving Commitments, Loans or Letters of Credit or the interests of such Lender; provided, such Lender will not be obligated to utilize such other office pursuant to this Section 2.21 unless Borrowers agree to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described above. A certificate as to the amount of any such expenses payable by Borrowers pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Borrowers (with a copy to Administrative Agent) shall be conclusive absent manifest error. Notwithstanding anything in Section 2.18 , 2.19 or 2.20 to the contrary, Borrowers shall not be required to compensate a Lender pursuant to such Sections for any amount incurred or reductions suffered more than ninety (90) days prior to the date that such Lender obtains actual knowledge of the event that gives rise to such claim (except that, if the change giving rise to such claim is retroactive, then the 90-day period referred to above shall be extended to include the period of retroactive effect thereof).
2.22. Defaulting Lenders. Anything contained herein to the contrary notwithstanding, in the event that any Lender becomes a Defaulting Lender, then during any Default Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of any amendment, waiver or consent with respect to any provision of the Credit Documents that requires the approval of Requisite Lenders, and Borrowers shall pay to Administrative Agent such additional amounts of cash as reasonably requested by Issuing Bank or Swing Line Lender to be held as security for Borrowers’ reimbursement Obligations in respect of Letters of Credit and Swing Line Loans then outstanding (such amount not to exceed such Defaulting Lender’s obligations under Section 2.3 and 2.4 ) (after taking into account the reallocation of such Defaulting Lender’s participation obligations pro rata, among the non-Defaulting Lenders (so long as no such non-Defaulting Lender’s Revolving Exposure, after giving effect to such reallocation, exceeds its Revolving Commitment) provided for in the immediately succeeding sentence). During any Default Period with respect to any Defaulting Lender, (a) any amounts that would otherwise be payable to such Defaulting Lender with respect to its Revolving Loans and Revolving Commitments under the Credit Documents (including, without limitation, voluntary and mandatory prepayments and fees) may, in lieu of being distributed to such Defaulting Lender, at the written direction of Borrowers to Administrative Agent, be retained by Administrative Agent and applied in the following order of priority: first, to the payment of any amounts owing by such Defaulting Lender to Administrative Agent and to collateralize indemnification and reimbursement obligations of such Defaulting Lender in an amount reasonably determined by Administrative Agent, second, to the payment of any amounts owing by such Defaulting Lender to Swing Line Lender, third, to the payment of any amounts owing by such Defaulting Lender to Issuing Bank, and fourth, to the payment of the Revolving Loans of other Lenders (but not to the Revolving Loans of such Defaulting Lender) as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender; (b) the Total Utilization of Revolving Commitments as at any date of determination shall be calculated as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender; and (c) any Revolving Loans to be made or participation interests with respect to Letters of Credit or Swing Line Loans shall first be reallocated to non-Defaulting Lenders holding Revolving Commitments (but not in excess of such Lenders’ Revolving Commitments) prior to the requirement that Borrowers provide Cash to secure the Borrowers’ reimbursement Obligations. No Revolving Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.22 , performance by Borrowers of their Obligations
hereunder and the other Credit Documents shall not be excused or otherwise modified as a result of any Lender becoming a Defaulting Lender or the operation of this Section 2.22 . The rights and remedies against a Defaulting Lender under this Section 2.22 are in addition to other rights and remedies which Borrowers may have against such Defaulting Lender as a result of it becoming a Defaulting Lender and which Administrative Agent or any Lender may have against such Defaulting Lender with respect thereto. Administrative Agent shall not be required to ascertain or inquire as to the existence of any Defaulting Lender. Notwithstanding any other provision of this Agreement to the contrary, solely to the extent that and so long as the application of Section 2.22(a) with respect to an Insolvency Defaulting Lender would violate the Bankruptcy Code or any final order of a court of competent jurisdiction entered pursuant to a bankruptcy or similar insolvency proceeding with respect to such Insolvency Defaulting Lender, Section 2.20(a) shall not apply with respect to such Insolvency Defaulting Lender, and any amounts that would otherwise be payable to such Insolvency Defaulting Lender under the Credit Documents (including without limitation, voluntary prepayments and fees) shall, to the extent permitted under applicable law and at the written direction of the Borrowers to Administrative Agent, be retained by Administrative Agent to collateralize the indemnification and reimbursement obligations of such Insolvency Defaulting Lender in an amount reasonably determined by Administrative Agent, in lieu of being distributed to such Insolvency Defaulting Lender.
2.23. Removal or Replacement of a Lender. Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an “Increased-Cost Lender” ) shall give notice to Borrowers that such Lender is an Affected Lender or that such Lender is entitled to receive payments under Section 2.18 , 2.19 or 2.20 , (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after Borrowers’ request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender, (ii) the Default Period for such Defaulting Lender shall remain in effect, and (iii) such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five Business Days after Borrowers’ request that it cure such default; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.5(b) , the consent of Requisite Lenders shall have been obtained but the consent of one or more of such other Lenders (each a “Non-Consenting Lender” ) whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated Lender” ), Borrowers may, by giving written notice to Administrative Agent and any Terminated Lender of their election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans and its Revolving Commitments, if any, in full to one or more Eligible Assignees (each a “Replacement Lender” ) in accordance with the provisions of Section 10.6 and Borrowers shall pay the fees, if any, payable thereunder in connection with any such assignment from an Increased-Cost Lender or a Non-Consenting Lender (and no fees shall be payable in connection with any such assignment from a Defaulting Lender); provided , (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender, (B) an amount equal to all unreimbursed drawings under Letters of Credit that have been funded by such Terminated Lender, together with all then
unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.11 ; (2) on the date of such assignment, Borrowers shall pay any amounts payable to such Terminated Lender pursuant to Section 2.18(c) , 2.19 or 2.20 or otherwise as if it were a prepayment and (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender; provided , Borrowers may not make such election with respect to any Terminated Lender that is also an Issuing Bank unless, prior to the effectiveness of such election, arrangements reasonably satisfactory to such Issuing Bank (including (x) the furnishing of a back-up standby letter of credit in form and substance, and issued by an issuer reasonably satisfactory to such Issuing Bank or (y) the depositing of Cash collateral into a cash collateral account, in each case in an amount not to exceed 103% of the face amount of all Letters of Credit of such Issuing Bank and pursuant to arrangements reasonably satisfactory to such Issuing Bank) have been made with respect to each outstanding Letter of Credit issued by such Issuing Bank (or such outstanding Letter of Credit has been cancelled). Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s Revolving Commitments, if any, such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided , any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender. Each Lender agrees that if Borrowers exercise their option hereunder to cause an assignment by such Lender as a Terminated Lender, such Lender shall, promptly after receipt of written notice of such election, execute and deliver all documentation necessary to effectuate such assignment in accordance with Section 10.6 . In the event that a Lender does not comply with the requirements of the immediately preceding sentence within one Business Day after receipt of such notice, each Lender hereby authorizes and directs Administrative Agent to execute and deliver such documentation as may be required to give effect to an assignment in accordance with Section 10.6 on behalf of a Terminated Lender and any such documentation so executed by the Administrative Agent shall be effective for purposes of documenting an assignment pursuant to Section 10.6 .
2.24. Co-Borrowers.
(a) Joint and Several Liability . All Obligations of Borrowers under this Agreement and the other Credit Documents shall be joint and several Obligations of each Borrower. Anything contained in this Agreement and the other Credit Documents to the contrary notwithstanding, the Obligations of each Borrower hereunder, solely to the extent that such Borrower did not receive proceeds of Loans from any borrowing hereunder, shall be limited to a maximum aggregate amount equal to the largest amount that would not render its Obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under section 548 of the Bankruptcy Code, 11 U.S.C. §548, or any applicable provisions of comparable state law (collectively, the “Fraudulent Transfer Laws” ), in each case after giving effect to all other liabilities of such Borrower, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Borrower in respect of intercompany Indebtedness to any other Credit Party or Affiliates of any other Credit Party to the extent that such Indebtedness would be discharged in an amount equal to the amount paid by such Credit Party hereunder) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any
rights to subrogation or contribution of such Borrower pursuant to (i) applicable law or (ii) any agreement providing for an equitable allocation among such Borrower and other Affiliates of any Credit Party of Obligations arising under the Guaranty by such parties.
(b) Subrogation . Until the Obligations shall have been paid in full in Cash, each Borrower shall withhold exercise of any right of subrogation, contribution or any other right to enforce any remedy that it now has or may hereafter have against the other Borrowers or any other Guarantor of the Obligations. Each Borrower further agrees that, to the extent the waiver of its rights of subrogation, contribution and remedies as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any such rights such Borrower may have against the other Borrowers, any collateral or security or any such other Guarantor, shall be junior and subordinate to any rights Collateral Agent may have against the other Borrowers, any such collateral or security, and any such other Guarantor. Borrowers together desire to allocate among themselves, in a fair and equitable manner, their Obligations arising under this Agreement and the other Credit Documents. Accordingly, in the event any payment or distribution is made on any date by any Borrower under this Agreement and the other Credit Documents (a “Funding Borrower” ) that exceeds its Obligation Fair Share (as defined below) as of such date, that Funding Borrower shall be entitled to a contribution from the other Borrowers in the amount of such other Borrowers’ Obligation Fair Share Shortfalls (as defined below) as of such date, with the result that all such contributions will cause each Borrower’s Obligation Aggregate Payments (as defined below) to equal its Obligation Fair Share as of such date. “Obligation Fair Share” means, with respect to a Borrower as of any date of determination, an amount equal to (i) the ratio of (X) the Obligation Fair Share Contribution Amount (as defined below) with respect to such Borrower to (Y) the aggregate of the Obligation Fair Share Contribution Amounts with respect to all Borrowers, multiplied by (ii) the aggregate amount paid or distributed on or before such date by all Funding Borrowers under this Agreement and the other Credit Documents in respect of the Obligations guarantied. “Obligation Fair Share Shortfall” means, with respect to a Borrower as of any date of determination, the excess, if any, of the Obligation Fair Share of such Borrower over the Obligation Aggregate Payments of such Borrower. “Obligation Fair Share Contribution Amount” means, with respect to a Borrower as of any date of determination, the maximum aggregate amount of the Obligations of such Borrower under this Agreement and the other Credit Documents that would not render its Obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided that, solely for purposes of calculating the Obligation Fair Share Contribution Amount with respect to any Borrower for purposes of this Section 2.24 , any assets or liabilities of such Credit Party arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or Obligations of contribution hereunder shall not be considered as assets or liabilities of such Borrower. “Obligation Aggregate Payments” means, with respect to a Borrower as of any date of determination, an amount equal to (i) the aggregate amount of all payments and distributions made on or before such date by such Borrower in respect of this Agreement and the other Credit Documents (including in respect of this Section 2.24 ) minus (ii) the aggregate amount of all payments received on or before such date by such Borrower from the other Borrowers as contributions under this Section 2.24 . The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Borrower. The allocation among Borrowers of their
Obligations as set forth in this Section 2.24 shall not be construed in any way to limit the liability of any Borrower hereunder or under any Credit Document.
(c) Representative of Borrowers . Each of LLC, GGPLP Pledgor, GGPLP RE Pledgor and GGPLPLLC Pledgor hereby appoints the Partnership as its agent, attorney-in-fact and representative for the purpose of (i) making any borrowing requests or other requests required under this Agreement, (ii) the giving and receipt of notices by and to Borrowers under this Agreement, (iii) the delivery of all documents, reports, financial statements and written materials required to be delivered by Borrowers under this Agreement, and (iv) all other purposes incidental to any of the foregoing. Each of LLC, GGPLP Pledgor, GGPLP RE Pledgor and GGPLPLLC Pledgor agrees that any action taken by the Partnership as the agent, attorney-in-fact and representative of such Person shall be binding upon such Person to the same extent as if directly taken by such Person.
(d) Allocation of Loans . All Loans shall be made to the Partnership as borrower unless a different allocation of the Loans as among Borrowers with respect to any borrowing hereunder is included in the applicable Funding Notice.
(e) Obligations Absolute . Each Borrower hereby waives, for the benefit of Beneficiaries, to the maximum extent permitted by applicable law: (a) any right to require any Beneficiary, as a condition of payment or performance by such Borrower, to (i) proceed against any other Borrower, any Guarantor of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from any other Borrower, any Guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of any other Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any other Borrower or any Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of any other Borrower or any Guarantor from any cause other than payment in full of the Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Obligations, except behavior which amounts to gross negligence, willful misconduct or bad faith or failure to duly credit to Borrowers payments actually received by Lenders in full satisfaction of the Obligations (and which payments are not being contested or subject to ongoing proceedings for or an order directing disgorgement or reimbursement to Borrowers); (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Borrower’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Borrower’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims (except after payment in full of the Obligations, which payments are not being contested or subject to ongoing proceedings for or an order directing disgorgement or reimbursement to Borrowers), and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any
action or inaction, including acceptance hereof, notices of default under this Agreement, the Secured Hedge Agreements, the Secured Bank Product Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Obligations or any agreement related thereto, notices of any extension of credit to Borrowers and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof (other than payment in full of the Obligations, which payments are not being contested or subject to ongoing proceedings for or an order directing disgorgement or reimbursement to Borrowers).
SECTION 3. CONDITIONS PRECEDENT
3.1. Closing Date . The obligation of each Lender or Issuing Bank, as applicable, to make a Credit Extension on the Closing Date is subject to the satisfaction, or waiver in accordance with Section 10.5 , of the following conditions on or before the Closing Date:
(a) Credit Documents . Administrative Agent and Joint Lead Arrangers shall have received sufficient copies of each Credit Document as Administrative Agent shall request, originally executed and delivered by each applicable Credit Party.
(b) Organizational Documents; Incumbency . Administrative Agent and Joint Lead Arrangers shall have received, in respect of each Credit Party, (i) copies of each Organizational Document as Administrative Agent shall reasonably request, and, to the extent applicable, certified as of the Closing Date or a recent date prior thereto by the appropriate Governmental Authority; (ii) signature and incumbency certificates of the officers of such Credit Party; (iii) copies of resolutions of the Board of Directors or similar governing body of such Credit Party approving and authorizing the execution, delivery and performance of this Agreement and the other Credit Documents to which it is a party as of the Closing Date, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; and (iv) a good standing certificate from the applicable Governmental Authority of such Credit Party’s jurisdiction of incorporation, organization or formation, each dated the Closing Date or a recent date prior thereto.
(c) Confirmation Order . The Bankruptcy Court shall have entered an order (the “Confirmation Order” ) confirming the plan of reorganization of Existing GGPI, the Partnership, the LLC and the Debtor Subsidiaries in accordance with section 1129 of the Bankruptcy Code, which plan of reorganization shall not have been modified or amended in any manner materially adverse to the interests of Administrative Agent and Lenders, taken as a whole, from the Plan, the Confirmation Order shall be in full force and effect (without waiver of the 14 day period set forth in Bankruptcy Rule 3020(e)) as of the Closing Date and shall not be subject to a stay of effectiveness. The time to appeal, petition for certiorari or move for reargument or rehearing of the Confirmation Order shall have expired and no appeal, petition for certiorari or other proceedings for reargument or rehearing shall be pending. If an appeal, writ of certiorari, reargument or rehearing of the Confirmation Order has been sought, the Confirmation Order shall have been affirmed by the highest court to which it has been
appealed, or certiorari shall have been denied or reargument or rehearing shall have been denied or resulted in no modification thereof materially adverse to the interests of Administrative Agent and Lenders, and the time to take any further appeal, petition for certiorari or move for reargument or rehearing shall have expired. The effective date of the plan of reorganization of Existing GGPI, the Partnership, the LLC and the Debtor Subsidiaries shall have occurred or shall occur substantially simultaneously with the Closing Date and substantial consummation of such plan (including the payment of any Indebtedness as and when contemplated by the Plan) shall have occurred or shall be scheduled to occur but for the funding of the Loans and the use of proceeds thereof. The Closing (as defined in that certain Amended and Restated Cornerstone Investment Agreement effective as of March 31, 2010, between Existing GGPI and REP Investments LLC (as further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Cornerstone Agreement” )) shall occur concurrently with the initial funding of the Loans and no provision of the Cornerstone Agreement shall have been amended or waived in any respect materially adverse to the Lenders without the prior or concurrent written consent of the Joint Lead Arrangers, such consent not to be unreasonably withheld.
(d) Real Estate Assets . In order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in certain Real Estate Assets, Collateral Agent shall have received from each applicable Credit Party fully executed and notarized Mortgages, in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering each Real Estate Asset listed in Schedule 3.1(d) (each, a “Closing Date Mortgaged Property” ).
(e) Personal Property Collateral . In order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid, perfected First Priority security interest in the Capital Stock listed on Schedule 3.1(e) (the “Closing Date Pledged Property” ), each Pledgor shall have (i) delivered to Collateral Agent a fully executed counterpart of the Pledge Agreement and authorized the filing of UCC financing statements describing such Closing Date Pledged Property and delivered any certificated Closing Date Pledged Property as provided therein and (ii) executed and delivered or caused to be executed and delivered any other documents and instruments required to perfect Collateral Agent’s First Priority security interests in the Collateral to the extent required by the Credit Documents.
(f) Title Reports; Surveys . Collateral Agent shall have received (i) title reports with respect to each Closing Date Mortgaged Property and (ii) copies of any existing surveys of the Closing Date Mortgaged Properties in Borrowers’ possession.
(g) Environmental Reports . To the extent requested and in Borrowers’ possession, Administrative Agent and Joint Lead Arrangers shall have received (or been provided access to) existing Phase I environmental reports with respect to each of the Closing Date Mortgaged Properties.
(h) Financial Statements . Administrative Agent shall have received unaudited consolidated balance sheets and related statements of income and cash flows of Existing GGPI for each Fiscal Quarter of 2010 ended more than 60 days prior to the Closing Date, and
certified by the chief financial officer of Existing GGPI that they fairly present, in all material respects, the financial condition of Existing GGPI as at the dates indicated and the results of its operations and its cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.
(i) Evidence of Insurance . Collateral Agent shall have received a certificate from the applicable Credit Party’s insurance broker or other evidence reasonably satisfactory to it that all insurance required to be maintained pursuant to Section 5.5 is in full force and effect, together with customary insurance certificates naming Collateral Agent, for the benefit of Secured Parties, as additional insured and loss payee thereunder to the extent required under Section 5.5.
(j) Opinions of Counsel to Credit Parties . Agents and Lenders and their respective counsel shall have received custonary written opinions of (i) Weil, Gotshal & Manges LLP, counsel for Credit Parties, and Borrowers’ general counsel as to such matters as Administrative Agent may reasonably request, dated as of the Closing Date, and (ii) counsel (which counsel shall be satisfactory to Collateral Agent) in each state in which a Closing Date Mortgaged Property is located with respect to the enforceability of the form(s) of Mortgages to be recorded in such state and such other matters as Collateral Agent may reasonably request, in each case, in form and substance reasonably satisfactory to Administrative Agent (and each Credit Party hereby instructs such counsel to deliver such opinions to Agents and Lenders).
(k) Fees . Lenders, Administrative Agent and Joint Lead Arrangers shall have received all fees due as of the Closing Date under the Credit Documents and the Fee Letter, and all expenses required to be paid under the Credit Documents and the Fee Letter for which invoices have been presented at least three business days prior to the Closing Date.
(l) Solvency Certificate . On the Closing Date, Administrative Agent and Joint Lead Arrangers shall have received a Solvency Certificate from Parent and Borrowers on behalf of all Credit Parties.
(m) Closing Date Certificate . Parent and Borrowers shall have delivered to Administrative Agent an originally executed Closing Date Certificate, together with all attachments thereto.
(n) Intentionally Omitted .
(o) No Restriction . To the extent any Indebtedness remains outstanding (whether by reinstatement, amendment, consent or otherwise) pursuant to the Plan, no term (as reinstated, amended or otherwise existing) of any such Indebtedness shall prohibit or otherwise restrict the Loans and Commitments hereunder, the transactions contemplated hereby and by the other Credit Documents or the Liens granted to Collateral Agent under the Collateral Documents.
(p) Completion of Proceedings . All partnership, corporate and other proceedings required to authorize the transactions contemplated hereby shall have been completed, and Administrative Agent and its counsel shall have received copies of all documents incidental thereto as Administrative Agent may reasonably request.
(q) PATRIOT Act . Administrative Agent and Lenders shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) the “ PATRIOT Act ”); provided such information shall have been requested at least ten (10) days prior to the Closing Date.
(r) UCC Lien, Judgment and Tax Lien Search Results . Administrative Agent shall have received the results of recent UCC Lien, judgment and tax Lien searches in each relevant jurisdiction with respect to each of the Credit Parties, and such search results shall reveal no Liens on any of the assets of the Credit Parties, except for Liens permitted by the Plan, Permitted Liens or Liens to be discharged on or prior to the Closing Date.
(s) No Material Adverse Effect . No Material Adverse Effect (as defined in the Cornerstone Agreement) shall have occurred.
3.2. Conditions to Each Credit Extension .
(a) Conditions Precedent . The obligation of each Lender to make any Loan, or Issuing Bank to issue any Letter of Credit, on any Credit Date, including the Closing Date, are subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions precedent:
(i) Administrative Agent shall have received a fully executed and delivered Funding Notice or Issuance Notice, as the case may be;
(ii) after making the Credit Extensions requested on such Credit Date, the Total Utilization of Revolving Commitments shall not exceed the Revolving Commitments then in effect;
(iii) as of such Credit Date, the representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date;
(iv) as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute an Event of Default or a Default; and
(v) on or before the date of issuance of any Letter of Credit, Administrative Agent shall have received all other information required by the applicable Issuance Notice, and such other documents or information as Issuing Bank may reasonably require in connection with the issuance of such Letter of Credit;
provided , that the conditions set forth in clauses (iii) and (iv) above shall not apply in the case of extensions, renewals or amendments of Letters of Credit not resulting in an increase in the face amount thereof.
(b) Notices . Any Notice shall be executed by an Authorized Officer of Borrowers in a writing delivered to Administrative Agent. In lieu of delivering a Notice, Borrowers may give Administrative Agent telephonic notice by the required time of any proposed borrowing, conversion or continuation of any Loan or issuance of a Letter of Credit, as the case may be; provided each such notice shall be promptly confirmed in writing by delivery of the applicable Notice to Administrative Agent on or before the close of business on the date that the telephonic notice is given. In the event of a discrepancy between the telephone notice and the written Notice, the written Notice shall govern. In the case of any Notice that is irrevocable once given, if Borrowers provide telephonic notice in lieu thereof, such telephonic notice shall also be irrevocable once given. Neither Administrative Agent nor any Lender shall incur any liability to Borrowers in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by an Authorized Officer of any Borrower or for otherwise acting in good faith, including, without limitation, as a result of a discrepancy between a telephonic notice and a subsequent written Notice.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce Agents, Lenders and Issuing Bank to enter into this Agreement and to make each Credit Extension to be made thereby, each Credit Party represents and warrants to each Agent, Lender and Issuing Bank, on the Closing Date and on each Credit Date (other than the extension, renewal or amendment of Letters of Credit not resulting in an increase in the face amount thereof), as follows (it being understood and agreed that the representations and warranties made on the Closing Date are deemed to be made concurrently with the effective date of the Plan as contemplated hereby):
4.1. Organization; Requisite Power and Authority; Qualification. Each of Parent and its Subsidiaries (a) is duly organized and validly existing under the laws of its jurisdiction of organization as identified in Schedule 4.1 except (i) as the result of any transaction permitted under Section 6.8(g) or (l) or (ii) where the failure of such Person (other than the Credit Parties) to be so organized or validly existing has not had, and could not reasonably be expected to have, a Material Adverse Effect, (b) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted, to enter into the Credit Documents to which it is a party and to carry out the transactions contemplated thereby, except where the failure of such Person (other than the Credit Parties) to do so has not had, and could not reasonably be expected to have, a Material Adverse Effect, and (c) is qualified to do business and in good standing in its jurisdiction of organization and every jurisdiction where necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not be reasonably expected to have, a Material Adverse Effect.
4.2. Capital Stock and Ownership. Schedule 4.2 correctly sets forth in all material respects the ownership interest of Parent and each of its Subsidiaries in their respective Subsidiaries and Joint Ventures as of the Closing Date after giving effect to the Plan. From and after the Closing Date, Schedule 4.2 (as supplemented from time to time in accordance with Section 5.8 ) correctly sets forth in all material respects the ownership interest of Parent and each of its Subsidiaries in their respective Subsidiaries and Joint Ventures; provided that any Subsidiary or Joint Venture that is sold, transferred or otherwise disposed of pursuant to an Asset Sale, or is merged, consolidated or amalgamated out of existence pursuant to a transaction, in each case permitted by Section 6.8 shall be presumptively deleted from such Schedule solely for purposes of this sentence.
4.3. Due Authorization. The execution, delivery and performance of the Credit Documents have been duly authorized by all necessary action on the part of each Credit Party that is a party thereto.
4.4. No Conflict. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the borrowing of the Loans, the issuances of Letters of Credit and the use of proceeds thereof do not and will not (a) violate (i) in any material respect any provision of any law or any governmental rule or regulation applicable to Parent or any of its Subsidiaries, (ii) any of the Organizational Documents of Parent or any of its Subsidiaries, or (iii) in any material respect any order, judgment or decree of any court or other agency of government binding on Parent or any of its Subsidiaries; (b) conflict in any material respect with, result in a material breach of or constitute (with due notice or lapse of time or both) a material default under any Material Contract; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Parent or any of its Subsidiaries (other than any Liens created under any of the Credit Documents in favor of Collateral Agent, on behalf of the Secured Parties, and/or Permitted Liens).
4.5. Governmental Consents. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the borrowing of the Loans, the issuances of Letters of Credit and the use of proceeds thereof do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority except for (a) the entry of the Confirmation Order by the Bankruptcy Court, (b) filings and recordings with respect to the Collateral to be made, or otherwise delivered to Collateral Agent for filing and/or recordation, as of the Closing Date, (c) any such approvals or consents the failure of which to obtain could not reasonably be expected to have a material adverse effect on any of the Collateral or any of the Underlying Collateral Properties and (d) any other approvals or consents the failure of which to obtain could not reasonably be expected to have a Material Adverse Effect.
4.6. Binding Obligation. Each Credit Document has been duly executed and delivered by each Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.
4.7. Historical Financial Statements. The Historical Financial Statements were prepared in all material respects in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments.
4.8. Projections. On and as of the Closing Date, the projections of Parent and its Subsidiaries for the period of Fiscal Year 2010 through and including Fiscal Year 2015 (the “Projections” ) were prepared in good faith and are based on reasonable assumptions made by the management of Parent at the time prepared; provided , the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that the differences may be material.
4.9. No Material Adverse Effect. Since December 31, 2009, no event, circumstance or change has occurred that has had, or could reasonably be expected to have, either in any case or in the aggregate, a Material Adverse Effect after giving effect to any change resulting from the consummation of the Plan and each transaction specifically contemplated thereby (including the spin-off of Spinco) in accordance with its terms, the consummation of the transactions specifically contemplated in the Investment Agreements in accordance with their terms; provided , that no fact or circumstance disclosed in the Plan, the disclosure statements filed with respect to the Plan and other documents related thereto that have been delivered to Administrative Agent prior to the Closing Date shall constitute a Material Adverse Effect.
4.10. Adverse Proceedings, Etc. There are no Adverse Proceedings that could reasonably be expected to have a Material Adverse Effect. Neither Parent nor any of its Subsidiaries is subject to or in material default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any Governmental Authority which could reasonably be expected to result, individually or in the aggregate, in an Event of Default under Section 8.1(h) .
4.11. Payment of Taxes. Except as otherwise permitted under Section 5.3 , all federal and other material Tax returns and reports of Parent and its Subsidiaries required to be filed by any of them have been timely filed (taking into account any extension of the due date thereof), all such Tax returns are true and accurate in all material respects, and all material amounts of Taxes shown on such Tax returns to be due and payable and all material assessments, fees and other material governmental charges upon Parent and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable.
4.12. Properties .
(a) Title . Except as set forth on Schedule 4.12 , each of Parent and its Subsidiaries has (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), (iii) valid licensed rights in (in the case of licensed interests in intellectual property)
and (iv) good title to (in the case of all other personal property), (x) all of the Collateral and Underlying Collateral Properties and (y) all of their other respective properties and assets (other than any Special Consideration Properties) reflected in their respective Historical Financial Statements referred to in Section 4.7 and in the most recent financial statements delivered pursuant to Section 5.1 , except in the case of this clause (y) where the failure to have such right, title, interest or licensed right could not reasonably be expected to have a Material Adverse Effect and, in each case of clauses (x) and (y) , except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.8 . Except as permitted by this Agreement, all such properties and assets are free and clear of Liens.
(b) Intellectual Property . Except as could not reasonably be expected to have a Material Adverse Effect, (i) each of Parent and its Subsidiaries owns, is licensed to use, or otherwise has the right to use, all intellectual property necessary for the conduct of its business as currently conducted, (ii) no claim has been asserted and is pending by any Person challenging or questioning the use of any intellectual property or the validity or effectiveness of any intellectual property owned or licensed by Parent and its Subsidiaries, nor does any of Parent or any of its Subsidiaries know of any valid basis for any such claim and (iii) the use of intellectual property necessary for the conduct of its business as currently conducted by each of Parent and its Subsidiaries does not infringe on the rights of any Person.
4.13. Environmental Matters. Neither Parent nor any of its Subsidiaries nor any of their respective Real Estate Assets are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any Hazardous Materials Activity that (a) in the case of any Designated Environmental Properties, could reasonably be expected to have, individually or in the aggregate, a material adverse effect on any such Designated Environmental Property or (b) in the case of all other Real Estate Assets, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Neither Parent nor any of its Subsidiaries has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law that (i) in the case of any Designated Environmental Properties, could reasonably be expected to have, individually or in the aggregate, a material adverse effect on any such Designated Environmental Property or (ii) in the case of all other Real Estate Assets, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. To the best knowledge of the Credit Parties, there have been no conditions, occurrences, or Hazardous Materials Activities which could reasonably be expected to form the basis of an Environmental Claim against Parent or any of its Subsidiaries that (x) in the case of any Designated Environmental Properties, could reasonably be expected to have, individually or in the aggregate, a material adverse effect on any such Designated Environmental Property or (y) in the case of all other Real Estate Assets, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Neither Parent nor any of its Subsidiaries nor, to any Credit Party’s knowledge, any predecessor of Parent or any of its Subsidiaries has filed any notice under any Environmental Law indicating past or present treatment of Hazardous Materials at any Facility, and, to the Credit Parties’ best knowledge, none of Parent’s or any of its Subsidiaries’ operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent, except in each case as could not reasonably result a violation of
Environmental Laws and a material adverse effect to a Designated Environmental Property or the owner thereof. Compliance with all current Environmental Laws could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. No event or condition has occurred or is occurring with respect to Parent or any of its Subsidiaries relating to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
4.14. No Defaults. Neither Parent nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Material Contracts, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.15. Intentionally Omitted .
4.16. Governmental Regulation. Neither Parent nor any of its Subsidiaries is subject to regulation under the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. Neither Parent nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.
4.17. Employee Matters. Neither Parent nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against Parent or any of its Subsidiaries, or to the knowledge of Parent and Borrowers, threatened against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against Parent or any of its Subsidiaries or to the knowledge of Parent and Borrowers, threatened in writing against any of them, (b) no strike or work stoppage in existence or threatened in writing involving Parent or any of its Subsidiaries, and (c) to the knowledge of Parent and Borrowers, no union representation question existing with respect to the employees of Parent or any of its Subsidiaries and, to the knowledge of Parent and Borrowers, no union organization activity that is taking place, except (with respect to any matter specified in clause (a) , (b) or (c) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect.
4.18. Employee Benefit Plans. Except as could not reasonably be expected to have a Material Adverse Effect, (a) Parent, each of its Subsidiaries and each of their respective ERISA Affiliates are in compliance with all applicable provisions and requirements of applicable law, including, without limitation, ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan; (b) each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating
that such Employee Benefit Plan is so qualified, and each trust forming a part of any such Employee Benefit Plan that is intended to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code is so exempt; (c) no liability to the PBGC (other than required premium payments), the Internal Revenue Service, any Employee Benefit Plan or any trust established under Title IV of ERISA has been or is expected to be incurred by Parent, any of its Subsidiaries or any of their ERISA Affiliates; (d) no ERISA Event has occurred or is reasonably expected to occur; (e) except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Parent, any of its Subsidiaries or any of their respective ERISA Affiliates; (f) the present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by Parent, any of its Subsidiaries or any of their ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan), did not exceed the aggregate current value of the assets of such Pension Plan; (g) as of the most recent valuation date for each Multiemployer Plan for which the actuarial report is available, the potential liability of Parent, its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, based on information available pursuant to Section 4221(e) of ERISA is zero; and (h) Parent, each of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.
4.19. Solvency. (i) Parent and its Subsidiaries, taken as a whole, and (ii) the Credit Parties, taken as a whole, in each case, are Solvent.
4.20. Security Documents.
(a) Pledge Agreement . The Pledge Agreement is effective to create in favor of Collateral Agent for the benefit of Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Collateral (as defined in the Pledge Agreement) and (i) when financing statements and other filings in appropriate form are filed and (ii) upon the taking of possession by Collateral Agent of certificates, if any, representing the Collateral (as defined in the Pledge Agreement), the Liens created by the Pledge Agreement shall constitute fully perfected Liens on all right, title and interest of the Pledgors in the Collateral (as defined in the Pledge Agreement), in each case subject to no Liens other than Qualified Permitted Liens.
(b) Mortgages . Each Mortgage is effective to create, in favor of Collateral Agent, for its benefit and the benefit of Secured Parties, legal, valid and enforceable First Priority Liens on all of Credit Parties’ right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, and when the Mortgages are filed in the appropriate offices specified in the local counsel opinions delivered with respect thereto, the Mortgages shall constitute fully perfected Liens on all right, title and interest of Credit Parties in the Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other Person, other than Permitted Liens; provided , however , that no default under this Section 4.19(b) shall be deemed to arise with respect to Mortgaged Properties having,
individually or in the aggregate, an equity value less than $25,000,000 so long as (i) the failure to duly perfect the Lien of the Mortgages as otherwise contemplated herein is a result of an inadvertent error in the form or filing of the Mortgages or as a result of an act or omission of Collateral Agent, and (ii) any such error is corrected and such Mortgages constitute fully perfected First Priority Liens on such Mortgaged Properties within ten (10) days after the applicable Credit Party is notified or otherwise obtains knowledge of such error.
(c) Valid Liens . Each Collateral Document delivered pursuant to Section 5.9 will, upon execution and delivery thereof, be effective to create in favor of Collateral Agent, for the benefit of Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of Credit Parties’ right, title and interest in and to the Collateral thereunder, and (i) when all appropriate filings or recordings are made in the appropriate offices as may be required under applicable law and (ii) upon the taking of possession by Collateral Agent of certificates, if any, representing the Collateral (as defined in the Pledge Agreement), such Collateral Document will constitute fully perfected Liens on, and security interests in, all right, title and interest of Credit Parties in such Collateral, in each case subject to no Liens other than (A) Qualified Permitted Liens, in the case of the Pledged Properties and (B) Permitted Liens, in the case of the Mortgaged Properties; provided , however , that no default under this Section 4.19(c) shall be deemed to arise with respect to Mortgaged Properties having, individually or in the aggregate, an equity value less than $25,000,000 so long as (i) the failure to duly perfect the Lien under any Mortgage as otherwise contemplated herein is a result of an inadvertent error in the form or filing of the Mortgages or as a result of an act or omission of Collateral Agent, and (ii) any such error is corrected and such Mortgages constitute fully perfected First Priority Liens on such Mortgaged Properties within ten (10) days after the applicable Credit Party is notified or otherwise obtains knowledge of such error.
4.21. Compliance with Statutes, Etc. Each of Parent and its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including compliance with all applicable Environmental Laws with respect to any Real Estate Asset or governing its business and the requirements of any permits issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of Parent or any of its Subsidiaries), except such non-compliance that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
4.22. Disclosure. No representation or warranty of any Credit Party contained in any Credit Document or in any other documents, certificates or written statements (other than any projections, pro forma financial information, other forward-looking information and information of a general economic or industry-specific nature) furnished to any Agent or Lender by or on behalf of Parent or any of its Subsidiaries for use in connection with the transactions contemplated hereby, when taken as a whole, contained at the time furnished any untrue statement of a material fact or omitted to state a material fact (known to Parent or Borrowers, in the case of any document not furnished by either of them) necessary in order to make the statements contained herein or therein not materially misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by Parent or Borrowers to be reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.
4.23. PATRIOT Act. To the extent applicable, each Credit Party is in compliance, in all material respects, with (a) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) the PATRIOT Act. No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
4.24. Sanctioned Persons . None of Parent or any of its Subsidiaries nor, to the knowledge of Parent or any Borrower, (i) any director, officer, agent or employee of Parent or any of its Subsidiaries, or (ii) any Affiliate that is Controlled by Parent or any of its Subsidiaries, or (iii) any other Affiliate of Parent (except to the extent in the case of this clause (iii) that Parent has complied with the filing or notification requirements, if any, under OFAC in connection with or as a result of such Person’s acquisition of Capital Stock of Parent), is currently subject to any U.S. sanctions administered by OFAC. Borrowers will not directly or indirectly use the proceeds of the Loans or otherwise make available such proceeds to any Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.
4.25. Use of Proceeds . The proceeds of the Loans shall be used for purposes permitted by Section 2.6 .
4.26. REIT Status . Beginning with its taxable year ending December 31, 2010, (a) Parent has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code, (b) Parent’s proposed method of operation will enable it to meet the requirements for qualification and taxation as a REIT under the Internal Revenue Code, (c) Parent has not revoked its election to be taxed as a REIT and such election has not been terminated, and (d) Parent has not engaged in any “prohibited transaction” as defined for purposes of Section 857(b)(6) of the Internal Revenue Code that could have a Material Adverse Effect.
4.27. Insurance . The insurance coverages required by Section 5.5 have been obtained and are in effect as of the Closing Date.
SECTION 5. AFFIRMATIVE COVENANTS
Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent Obligations for which no claim has been made) and cancellation or expiration or Cash collateralization in accordance with Section
2.4(i) of all Letters of Credit, each Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 5 .
5.1. Financial Statements and Other Reports. Parent will deliver to Administrative Agent (for further distribution to Lenders), which delivery may be made in accordance with Section 10.1(b) :
(a) Quarterly Financial Statements . As soon as available, and in any event within sixty (60) days after the end of each of the first three Fiscal Quarters of each Fiscal Year, commencing with the Fiscal Quarter ending March 31, 2011, the consolidated balance sheets of Parent and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income and cash flows of Parent and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year (the making of such comparisons to commence with the financial statements delivered for the Fiscal Quarter ending March 31, 2012), in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto;
(b) Annual Financial Statements . As soon as available, and in any event within one hundred five (105) days after the end of each Fiscal Year, commencing with the Fiscal Year in which the Closing Date occurs, (i) the consolidated balance sheets of Parent and its Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income and cash flows of Parent and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year (the making of such comparisons to commence with the financial statements delivered for the Fiscal Year ending December 31, 2012), in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; and (ii) with respect to such consolidated financial statements a report thereon of Deloitte & Touche LLP, any other “Big Four” accounting firm selected by Parent, or any other independent certified public accountants of recognized national standing selected by Parent and reasonably satisfactory to Administrative Agent (which report and/or the accompanying financial statements shall be unqualified as to going concern and scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Parent and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards);
(c) Compliance Certificate . Together with each delivery of financial statements of Parent and its Subsidiaries pursuant to Sections 5.1(a) and 5.1(b) , a duly executed and completed Compliance Certificate (including notices of any material damage, destruction or condemnation of any Collateral);
(d) Notice of Default . Promptly upon any Authorized Officer of Parent or any Borrower obtaining actual knowledge (i) of any condition or event that constitutes a Default or
an Event of Default; (ii) the occurrence of any environmental event that has had or could reasonably be expected to have a Material Adverse Effect; or (iii) of the occurrence of any event or change that has had, either in any case or in the aggregate, a Material Adverse Effect, a certificate of an Authorized Officer specifying the nature and period of existence of such condition, event or change, and what action, if any, any Borrower has taken, is taking and proposes to take with respect thereto;
(e) Notice of Litigation . Promptly upon any Authorized Officer of Parent or any Borrower obtaining actual knowledge of (i) any Adverse Proceeding not previously disclosed in writing by Borrowers to Lenders, or (ii) any development in any Adverse Proceeding that, in the case of either clause (i) or (ii) , could be reasonably expected to have a Material Adverse Effect, written notice thereof together with such other non-privileged information as may be reasonably available to Parent or Borrowers to enable Lenders and their counsel to evaluate such matters;
(f) ERISA . (i) Promptly upon becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event that could reasonably be expected to result in liability in excess of $5,000,000, a written notice specifying the nature thereof, what action Parent, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Parent, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan that could reasonably be expected to result in liability in excess of $5,000,000; (2) all notices received by Parent, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request;
(g) Budget . As soon as practicable and in any event no later than ninety (90) days after the beginning of each Fiscal Year, a budget for Parent and its Subsidiaries for such Fiscal Year in the form of Exhibit K hereto, or otherwise in form and substance reasonably satisfactory to Administrative Agent (a “Budget” ), with appropriate presentation and discussion of the principal assumptions upon which such Budget is based;
(h) Information Regarding Collateral . At the time of delivery of financial statements in accordance with Section 5.1(a) and within sixty (60) days after the end of each Fiscal Year (commencing with the Fiscal Year ending December 31, 2010), Borrowers will furnish to Collateral Agent prompt written notice of any change during the 90-day period prior to such delivery date (i) in any Credit Party’s corporate name, (ii) in any Credit Party’s identity or corporate structure, (iii) in any Credit Party’s jurisdiction of organization or (iv) in any Credit Party’s Federal Taxpayer Identification Number or state organizational identification number;
(i) Other Information . Such other information and data with respect to Parent or any of its Subsidiaries as from time to time may be reasonably requested by Administrative Agent or any Lender (acting through Administrative Agent); and
(j) Certification of Public Information . Parent, each Borrower and each Lender acknowledge that certain of the Lenders may be Public Lenders and, if documents or notices required to be delivered pursuant to this Section 5.1 or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant website or other information platform (the “Platform” ), any document or notice that Parent or any Borrower has indicated contains Non-Public Information shall not be posted on that portion of the Platform designated for such Public Lenders. Each of Parent and each Borrower agrees to clearly designate all information provided to Administrative Agent by or on behalf of Parent or Borrowers which is suitable to make available to Public Lenders. If Parent has not, or Borrowers have not, as applicable, indicated whether a document or notice delivered pursuant to this Section 5.1 contains Non-Public Information, Administrative Agent shall post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material non-public information with respect to Parent, its Subsidiaries and their securities.
5.2. Existence. Except as otherwise permitted under Section 6.8 , each Credit Party shall, and shall cause each of its Material Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; provided , no Credit Party (other than any Borrower with respect to existence) or any of its Material Subsidiaries shall be required to preserve any such existence, right or franchise, licenses or permits if (a) such Person’s board of directors (or similar governing body) shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to such Person or to Lenders or (b) solely in the case of rights, franchises, licenses and permits, the failure to maintain such could not reasonably be expected to have a Material Adverse Effect.
5.3. Payment of Taxes, Claims, and Obligations. Each Credit Party shall, and shall cause each of its Subsidiaries to, (a) other than with respect to obligations that upon becoming a Lien would result in a Default under Section 6.2(b) or 6.2(c) do not exceed $50,000,000 in the aggregate, pay its material obligations (other than Indebtedness) in accordance with their terms, pay all material Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises, and pay all claims (including claims for labor, services, materials and supplies), in each case either (i) prior to such sums becoming, or having a reasonable likelihood of becoming, a Lien upon any of its properties or assets; or (ii) within 30 days from the date such sums first become overdue, unless, in each case, the applicable Credit Party has initiated and is maintaining a Good Faith Contest with respect to such matter; and (b) perform or comply with, as the case may be, all its Obligations in the manner specified in this Agreement and the other Credit Documents. No Credit Party will, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Parent or any of its Subsidiaries).
5.4. Maintenance and Operation of Properties. Except (a) with respect to the Special Consideration Properties, or (b) as otherwise permitted under Section 6.8 , each Credit Party shall, and shall cause each of its Material Subsidiaries to, maintain or cause to be maintained in
good repair, working order and condition, as determined in Parent’s reasonable business judgment, ordinary wear and tear and casualty and condemnation excepted, all material properties used or useful in the business of Parent and its Material Subsidiaries and (i) from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof as determined in Parent’s reasonable business judgment, and (ii) operate such properties in the ordinary course of business.
5.5. Insurance. Parent will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, property and business of Parent and its Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Without limiting the generality of the foregoing, Parent will maintain or cause to be maintained replacement value casualty insurance on the Mortgaged Properties under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses. Each such policy of insurance in respect of the Mortgaged Properties shall (i) name Collateral Agent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear, (ii) in the case of each casualty insurance policy, contain a loss payable clause or endorsement, reasonably satisfactory in form and substance to Collateral Agent, that names Collateral Agent, on behalf of the Secured Parties, as the loss payee thereunder and provide for at least thirty (30) days’ prior written notice to Collateral Agent of any modification or cancellation of such policy (other than non-payment, which shall be ten (10) days’ prior written notice).
5.6. Books and Records; Inspections. Each Credit Party shall, and shall cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct shall be made to enable the preparation of the financial statements entries in conformity in all material respects with GAAP. Each Credit Party shall, and shall cause each of its Subsidiaries to, permit any authorized representatives designated by Administrative Agent and any Lender (when accompanying Administrative Agent) to visit and inspect any of the properties of any Credit Party and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants; provided , that the representatives of such Credit Party shall be given the opportunity to be present at or participate in any such discussion, all upon reasonable notice and at such reasonable times during normal business hours; provided further that, unless an Event of Default has occurred and is continuing, (a) Borrowers shall not be required to pay the expense of any such visit and (b) only two such visits shall be permitted during any Fiscal Year.
5.7. Compliance with Laws and Material Contracts. Each Credit Party shall comply, and shall cause each of its Subsidiaries and use commercially reasonable efforts to cause all other Persons, if any, on or occupying any Facilities to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including all
Environmental Laws), except where such noncompliance, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Each Credit Party shall, and shall cause each of its Subsidiaries to, comply and perform in all material respects in accordance with the terms and conditions of all Material Contracts; provided , that such material breach of a Material Contract shall not constitute a default under this Section 5.7 if such breach is cured within 30 days after the applicable Credit Party or Subsidiary obtains knowledge of such failure.
5.8. Additional Guarantees. In the event that any Material Real Estate Asset or Capital Stock is required to be pledged to Collateral Agent in accordance with Section 5.9 , Borrowers shall (a) promptly, but in no event later than thirty (30) days following the acquisition of such Material Real Estate Asset or Capital Stock, cause the applicable Domestic Subsidiary of Parent owning such Material Real Estate Asset or Capital Stock, if not already a Guarantor hereunder, to become a Guarantor hereunder and, if applicable, a Pledgor under the Pledge Agreement by executing and delivering to Administrative Agent and Collateral Agent a Counterpart Agreement, and (b) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates reasonably requested by Collateral Agent, including those which are similar to those described in Sections 3.1(b) and 3.1(k) . With respect to each Subsidiary required to become a Guarantor which is formed or acquired after the Closing Date, Borrowers shall promptly send to Administrative Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of Parent, and (ii) all of the data required to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of Parent; and such written notice shall be deemed to supplement Schedules 4.1 and 4.2 for all purposes hereof.
5.9. Additional Collateral . In the event that any Credit Party acquires a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties, then such Credit Party shall promptly, but in no event later than thirty (30) days following the acquisition of such Material Real Estate Asset, take all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates, including those which are similar to those described in Sections 3.1(e) , 3.1(f) , 3.1(g) and 3.1(h) with respect to each such Material Real Estate Asset that Collateral Agent shall reasonably request to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority Lien on such Material Real Estate Assets (or if a Lien on any such Real Estate Asset cannot be provided, a First Priority perfected Lien on the Capital Stock of the Subsidiary that owns a direct interest in such Real Estate Asset; provided that if such Subsidiary is a Foreign Subsidiary, the Domestic Subsidiary owning such Foreign Subsidiary (directly or through other Foreign Subsidiaries) shall grant a First Priority perfected Lien on the Capital Stock of any such directly-owned Foreign Subsidiary, which Lien shall be limited to (A) 66% of the voting Capital Stock of such Foreign Subsidiary and (B) 100% of the non-voting Capital Stock of such Subsidiary), in each case, subject to Permitted Liens; provided that neither Parent nor any other Credit Party shall be required to provide or cause to be provided such additional Collateral (or Guarantees pursuant to Section 5.8 ) if (i) at the time of acquisition of such Material Real Estate Asset or Capital Stock, the ratio of (A) the aggregate Value of all Collateral securing the Secured Obligations (determined as of the most recent Fiscal Quarter or Fiscal Year for which financial statements are available) to (B) the aggregate Revolving Commitments of all Lenders is at least 4.00 to 1:00
or (ii) any existing Contractual Obligations assumed or entered into by Parent or any such Subsidiary to effectuate or reasonably facilitate the acquisition of such Material Real Estate Assets (including Contractual Obligations governing non-Wholly Owned Subsidiaries or Joint Ventures and Indebtedness permitted to be incurred pursuant to Section 6.1 ) prohibits the granting of such Lien.
5.10. Use of Proceeds . The Borrowers shall use the proceeds of the Loans solely for the purposes permitted by Section 2.6 .
5.11. Maintenance of REIT Status . Parent and each of its Material REIT Subsidiaries shall (a) solely in the case of Parent, on or before September 15, 2011, elect REIT status for the 2010 tax year, take all actions necessary to qualify as a REIT beginning with such year, and maintain its status as a REIT at all times after the effective date of such election, (b) in the case of each Material REIT Subsidiary, maintain its status as a REIT, (c) not revoke its election to be taxed as a REIT or cause or allow such election to be terminated, and (d) not engage in any “prohibited transaction” as defined for purposes of Section 857(b)(6) of the Internal Revenue Code that could reasonably be expected to have a Material Adverse Effect; provided , however , that the foregoing shall not prohibit any Material REIT Subsidiary from engaging in any transaction permitted under Section 6.8(g) or otherwise failing to maintain its election to be taxed as a REIT, in each case, so long as such action does not result in a material adverse tax impact that is not reasonably compensated or offset by other material benefits to Parent or its Subsidiaries from such action.
5.12. Further Assurances. At any time or from time to time upon the request of Administrative Agent, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as Administrative Agent or Collateral Agent may reasonably request in order to effect fully the purposes of the Credit Documents. In furtherance and not in limitation of the foregoing, each Credit Party shall take such actions as Administrative Agent or Collateral Agent may reasonably request from time to time to ensure that the Secured Obligations are guarantied by the Guarantors and are secured by the Mortgaged Properties and the Pledged Properties (subject to (i) limitations contained in Section 5.8 with respect to certain Real Estate Assets and Capital Stock acquired after the Closing Date and (ii) any transactions permitted under Section 6.8 ).
5.13. Intentionally Omitted .
5.14. Environmental Compliance . The Parent shall, and shall cause each of its Subsidiaries to:
(a) Keep and maintain (i) all Designated Environmental Properties in material compliance with any Environmental Laws unless the failure to so comply would not be reasonably expected to result in a material adverse effect to such Designated Environmental Property or the owner thereof and (ii) all other Real Estate Assets in compliance with any Environmental Laws except to the extent such noncompliance could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;
(b) Promptly (i) cause the removal of any Hazardous Materials Released in, on or under (x) any Designated Environmental Properties that are in violation of any Environmental Laws and which could be reasonably expected to have a material adverse effect on such Designated Environmental Property or the owner thereof or (y) any other Real Estate Assets that are in violation of any Environmental Laws and which could be reasonably expected to result in a Material Adverse Effect, and (ii) cause any remediation required by any Environmental Laws or Governmental Authority to be performed, (x) except where the failure to so cause such removal or remediation with respect to any Designated Environmental Property could not reasonably be expected to have a material adverse effect on such Designated Environmental Property or (y) except where the failure to so cause such removal or remediation with respect to any other Real Estate Assets could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; provided , that no such action shall be required if any action is subject to a Good Faith Contest. In the course of carrying out such actions, Borrowers shall provide Administrative Agent with such periodic information and notices regarding the status of investigation, removal, and remediation, as Administrative Agent may reasonably require; provided, Borrowers shall not be required to provide such information and notices where doing so could reasonably be expected to void any privilege attached to such information or notices; and
(c) Promptly advise Administrative Agent in writing of any of the following: (i) any Environmental Claims known to Borrowers that could be reasonably expected to result in (x) a material adverse effect on any Designated Environmental Property or (y) in the case of any other Real Estate Assets, a Material Adverse Effect; (ii) the receipt of any notice of any alleged violation of Environmental Laws with respect to any Designated Environmental Property or any other Real Estate Assets (and Borrowers shall promptly provide Administrative Agent with a copy of such notice of violation), provided that such alleged violation, if true (and if any release of the Hazardous Materials alleged therein were not promptly remediated), would result in a breach of subsections (a) or (b) above; and (iii) the discovery of any occurrence or condition on any Designated Environmental Properties or other Real Estate Assets that could cause such Designated Environmental Properties, such other Real Estate Assets or any part thereof to be in violation of clauses (a) or, if not promptly remediated, (b) above. If Administrative Agent, Issuing Lender and/or any Lender shall be joined in any legal proceedings or actions initiated in connection with any Environmental Claims, each Credit Party shall indemnify, defend, and hold harmless such Person in accordance with Section 10.3 .
5.15. Post Closing Obligations . Each of the Credit Parties shall satisfy the requirements set forth on Schedule 5.15 on or before the date specified for such requirement or such later date to be determined by Administrative Agent.
SECTION 6. NEGATIVE COVENANTS
Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent Obligations for which no claim has been made) and cancellation or expiration or Cash collateralization in accordance with Section
2.4(i) of all Letters of Credit, such Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6 .
6.1. Indebtedness. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except:
(a) the Obligations;
(b) intercompany Indebtedness among Parent and its Subsidiaries incurred (i) in the ordinary course of business (including transactions in the ordinary course of business in accordance with the Consolidated Cash Management System and intercompany Indebtedness in lieu of an Investment otherwise permitted under Section 6.6 ) or (ii) outside the ordinary course of business in connection with tax, accounting, corporate structuring or reorganization or similar transactions together with refinancings thereof to the extent such refinancing Indebtedness would otherwise be permitted under this Section 6.1(b) ; provided that intercompany Indebtedness pursuant to clause (ii) shall be subordinated to the Obligations in a manner reasonably satisfactory to Administrative Agent to the extent not otherwise restricted by any Contractual Obligation;
(c) Indebtedness (including letters of credit not provided under this Agreement) which, when aggregated with Indebtedness of Parent, Borrowers and their Subsidiaries and Joint Ventures (but, in the case of consolidated non-Wholly Owned Subsidiaries and Joint Ventures of Parent Guarantors or Borrowers, only to the extent allocable (based on economic share and not necessarily the percentage ownership) to Parent Guarantors, Borrowers or their Wholly Owned Subsidiaries), would not cause Parent to fail to be in pro forma compliance with the financial covenant set forth in Section 6.7(c) together with Permitted Refinancings thereof to the extent such refinancing Indebtedness would otherwise be permitted under this Section 6.1(c) ; provided that (i) Parent and its Subsidiaries and Joint Ventures shall not incur unsecured Indebtedness (other than unsecured Indebtedness permitted to exist as of the Closing Date and Permitted Refinancings thereof) in excess of $300,000,000 (the “Unsecured Indebtedness Sublimit” ) and (ii) the aggregate outstanding amount of any Recourse Secured Mortgage Indebtedness shall not exceed the amount of Recourse Secured Mortgage Indebtedness outstanding on the Closing Date plus $750,000,000; provided that such Recourse Secured Mortgage Indebtedness is (A) incurred to refinance, replace or extend Permitted Project Level Financing or (B) incurred to finance the construction, development, redevelopment, repair or improvement of any GGP Property;
(d) Indebtedness in respect of a Lien that is permitted under Section 6.2 ;
(e) guaranties by any Borrower of Indebtedness of a Guarantor Subsidiary or guaranties by a Guarantor Subsidiary of Indebtedness of any Borrower or another Guarantor Subsidiary, in each case, with respect to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.1 ; provided , that if the Indebtedness that is being guarantied is unsecured and/or subordinated to the Obligations, the guaranty shall also be unsecured and/or subordinated to the Obligations;
(f) (i) Indebtedness existing on the Closing Date described in the plan of reorganization of Existing GGPI, the Partnershp, the LLC and the Debtor Subsidiaries and the disclosure statement in connection therewith that is not required to be repaid in accordance with such plan and (ii) Permitted Refinancings thereof;
(g) (i) Indebtedness of any Borrower or its Subsidiaries with respect to Capital Leases and (ii) purchase money Indebtedness of any Borrower or its Subsidiaries;
(h) Indebtedness consisting of financing of insurance premiums in the ordinary course of business;
(i) Indebtedness and other transactions specifically contemplated by the Plan (including the reinstatement of the Exchangeable Notes, the reinstatement of the TRUP Notes, the Reinstated Rouse Notes and the issuance of the Bridge Notes) or specifically contemplated by the Investment Agreements, and Permitted Refinancings thereof;
(j) cash management obligations and other Indebtedness in respect of endorsements for collection or deposit, netting services, overdraft protections and similar arrangements in each case in connection with deposit accounts; provided that such Indebtedness is extinguished within five (5) Business Days after its incurrence;
(k) Indebtedness consisting of (i) take-or-pay obligations contained in utility supply arrangements and (ii) customary indemnification obligations, in each case, incurred in the ordinary course of business and not in connection with debt for money borrowed;
(l) letters of credit, bank guaranties or similar instruments in support of obligations in respect of workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or Capital Leases);
(m) Indebtedness arising from agreements of Parent or any of its Subsidiaries providing for indemnification, adjustment of purchase or acquisition price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets (including Capital Stock) of Parent or any of its Subsidiaries not prohibited by Section 6.6 or Section 6.8 ;
(n) Indebtedness incurred by Parent or any of its Subsidiaries representing deferred compensation to directors, officers, employees, members of management and consultants of such Person in the ordinary course of business;
(o) Indebtedness in respect of bankers’ acceptances supporting trade payables, warehouse receipts or similar facilities entered into in the ordinary course of business;
(p) Indebtedness incurred in lieu of (and not in an amount in excess of) any Restricted Junior Payment permitted pursuant to Section 6.4 ;
(q) Indebtedness constituting a Municipal Financing incurred in the ordinary course of business in connection with a new development or redevelopment of real property;
(r) to the extent constituting Indebtedness, Investments in repurchase agreements constituting Cash Equivalents; and
(s) to the extent constituting Indebtedness, all premiums (if any), interest, fees, expenses, charges and additional or contingent interest on Indebtedness described in clauses (a) through (r) above.
6.2. Liens. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of Parent or any of its Subsidiaries, whether now owned or hereafter acquired or licensed, or any income, profits or royalties therefrom, or file or authorize the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any Collateral under the UCC of any State or under any similar recording or notice statute, except:
(a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant to any Credit Document;
(b) Liens for Taxes, assessments, utilities or governmental charges not more than 30 days overdue, or if more than 30 days overdue, (x) that are the subject of a Good Faith Contest, (y) which consist of Liens on one or more Specified Properties or (z) which taxes, assessments, utilities or governmental charges do not exceed $50,000,000 in the aggregate;
(c) statutory Liens of landlords, banks (and rights of set-off), carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 430(k) of the Internal Revenue Code or ERISA or a violation of Section 436 of the Internal Revenue Code), in each case incurred in the ordinary course of business (i) for amounts not more than 30 days overdue or (ii) for amounts that are more than 30 days overdue (x) that are the subject of a Good Faith Contest, (y) which consist of Liens on one or more Specified Properties or (z) which amounts do not exceed $50,000,000 in the aggregate;
(d) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or Capital Leases), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof;
(e) easements, reciprocal easement agreements, rights-of-way, restrictions, encroachments, outstanding mineral and royalty interests, minor defects or irregularities in title, and other similar encumbrances in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of Parent or any of its Subsidiaries;
(f) any interest or title of a lessor or sublessor under any lease not prohibited hereunder;
(g) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business;
(h) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property;
(i) licenses of patents, copyrights, trademarks and other intellectual property rights granted by Parent or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the ordinary conduct of or materially detracting from the value of the business of Borrowers or such Subsidiary;
(j) Liens described in Schedule 6.2 or on a title report or survey delivered pursuant to Section 3.1(g) ;
(k) Liens securing Indebtedness permitted pursuant to Section 6.1(g) ; provided , any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness; provided , that individual financings otherwise permitted to be secured hereunder provided by one Person (or its Affiliates) may be cross collateralized to other such financings provided by such Person (or its Affiliates);
(l) Liens securing Permitted Project Level Financings and other Indebtedness permitted to be secured under Section 6.1(c) ;
(m) Intentionally omitted;
(n) Liens on Capital Stock of any non-Wholly Owned Subsidiary or Joint Venture of Parent or any of its Subsidiaries securing obligations arising in favor of other holders of Capital Stock of such Person pursuant to agreements governing such Person;
(o) Liens securing judgments that do not constitute an Event of Default under Section 8.1(h) ;
(p) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks in the ordinary course of business not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of Parent or any of its Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Parent or any of its Subsidiaries, (iii) relating to purchase orders and other agreements entered into with customers of Parent or any of its Subsidiaries in the ordinary course of business and (iv) attaching to brokerage accounts incurred in the ordinary course of business;
(q) Liens in respect of leases, subleases, licenses, sublicenses or other occupancy agreements of property in the ordinary course of business;
(r) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(s) Liens securing Hedge Agreements permitted hereunder, provided that such Hedge Agreements are fixing floating rate debt only (i.e. provide for payments by the counterparty in the event the specified floating rate exceeds a specified strike price);
(t) deposits made in the ordinary course of business to secure liability to insurance carriers and Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(u) (i) Liens on advances of Cash or Cash Equivalents in favor of the seller of any property to be acquired in a transaction not prohibited hereunder to be applied against the purchase price for such transaction, (ii) Liens consisting of an agreement in respect of any Asset Sale not prohibited hereunder and (iii) earnest money deposits of Cash or Cash Equivalents by Parent or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;
(v) Liens deemed to exist in connection with repurchase agreements constituting Cash Equivalents; provided , that such Liens do not extend to any assets other than those that are the subject of such repurchase agreement;
(w) Liens evidencing and/or securing any Municipal Financing; provided , that to the extent such Municipal Financing constitutes Indebtedness, such Indebtedness is permitted under Section 6.1(q) ; and
(x) other Liens on assets other than the Collateral securing Indebtedness in an aggregate amount not to exceed $75,000,000 at any time outstanding.
6.3. No Further Negative Pledges. Except with respect to (a) specific property encumbered to secure payment of particular Indebtedness permitted under Section 6.1 , (b) property that is the subject of an executed agreement with respect to a permitted Asset Sale, (c) property subject to Liens permitted under Section 6.2(d) , (j) , (k) , (n) , (s) , (t) , (u) , (v) and (w) , (d) restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business ( provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses, easements, occupancy agreements or similar agreements, as the case may be), (e) restrictions granted in connection with any Indebtedness permitted under Section 6.1(g) , (h) and (l) , and (f) restrictions existing at the time a property or asset is acquired by a Credit Party or any of its Subsidiaries so long as such restriction (i) is not entered into in contemplation of such acquisition and (ii) does not apply to any property or assets other than those acquired, no Credit Party nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired, to secure the Obligations.
6.4. Restricted Junior Payments. Neither the Partnership nor any Parent Guarantor shall, directly or indirectly, declare, order, pay, make or set apart, or agree to declare, order, pay, make or set apart, any sum for any Restricted Junior Payment except that:
(a) the Partnership and any other Parent Guarantor may pay or make Restricted Junior Payments (and Parent may make Restricted Junior Payments to its shareholders) in any period in an amount which would allow Parent to make Restricted Junior Payments not in excess of the greater of (i) the amount required to be distributed (assuming 100% Cash distributions by Parent are required) during such period in order to maintain REIT status of Parent and its REIT Subsidiaries and avoid entity-level taxes and (ii) 90% of the FFO of Parent Guarantors, Borrowers and their Subsidiaries and Joint Ventures (but, in the case of consolidated non-Wholly Owned Subsidiaries and Joint Ventures of Parent Guarantors or Borrowers, only to the extent allocable (based on economic share and not necessarily the percentage ownership) to Parent Guarantors, Borrowers or their Wholly Owned Subsidiaries) for such period;
(b) transactions in the ordinary course of business in accordance with the Consolidated Cash Management System of Parent and its Subsidiaries shall be permitted;
(c) the Partnership and any other Parent Guarantor may pay or make Restricted Junior Payments to permit Parent or any other Parent Guarantor to (i) pay any tax liabilities, operating expenses and other corporate overhead in the ordinary course of business (including directors fees and expenses, indemnification and similar items, franchise and other similar taxes and fees and expenses of debt or equity offerings (whether successful or not)) and (ii) purchase, redeem, retire or acquire Capital Stock (A) of Parent Guarantors or the Partnership held as of the Closing Date by Persons other than Subsidiaries of Parent or issued to any such Person after the Closing Date pursuant to Section 6.8(h) and (B) of Parent (x) as contemplated by the Plan upon Parent’s exercise of the New GGP Post-Emergence Public Offering Clawback Election (as defined in the Plan) or (y) held by any present (at the time of such transaction) or former director, officer or employee of Parent or any of its Subsidiaries or Joint Ventures (or the heirs, estate, family members, spouse or former spouse of any of the foregoing) in the case of this clause (y) in an amount not in excess of $25,000,000 per Fiscal Year; and
(d) to the extent constituting a Restricted Junior Payment, the Partnership and Parent Guarantors may make Investments not otherwise prohibited under the Credit Documents; and
(e) the Partnership and Parent Guarantors may make Restricted Junior Payments deemed to occur upon the non-cash exercise of stock options and warrants, and the payment of taxes in respect of such options, warrants and similar items.
6.5. Restrictions on Subsidiary Distributions. Except as provided herein, no Credit Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of any Borrower to (i) pay dividends or make any other distributions on any of such Subsidiary’s Capital Stock owned by any Borrower or any other Subsidiary of any Borrower, (ii) repay or prepay any Indebtedness owed by such Subsidiary to any Borrower or any other Subsidiary of Borrower, (iii) make loans or advances to Borrowers or any other Subsidiary of any Borrower, or (iv) transfer, lease or license any of its property or assets to any Borrower or any other Subsidiary of any Borrower, other than:
(a) restrictions in agreements evidencing Indebtedness secured by a Lien on particular property, which restrictions shall only apply to the obligors on such Indebtedness and their Subsidiaries;
(b) restrictions in agreements, the obligations with respect to which are secured by Liens permitted under Section 6.2(d) , (j) , (k) , (n) , (s) , (t) , (u) , (v) and (w) ;
(c) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements, asset sale agreements and similar agreements entered into in the ordinary course of business;
(d) restrictions that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement;
(e) customary restrictions on the assignment of any agreement; and
(f) restrictions on the distribution of deposits posted by Parent or any of its Subsidiaries imposed under agreements entered into in the ordinary course of business.
6.6. Investments. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including any Joint Venture, except:
(a) Investments in Cash and Cash Equivalents;
(b) Investments owned as of the Closing Date;
(c) Investments made after the Closing Date (i) among the Credit Parties and the Wholly Owned Subsidiaries of Borrowers and (ii) in non-Wholly Owned Subsidiaries of Borrowers and Joint Ventures owned as of the Closing Date; provided , however , that no Investment under this clause (ii) will be made in such existing entities which are dormant and/or immaterial entities with no assets (other than (w) holding companies whose only assets are Capital Stock of Subsidiaries or Joint Ventures that hold, directly or indirectly, GGP Properties, (x) any entity that is party to an indemnity deed of trust structure, (y) Investments in amounts required to cover reasonable costs and expenses of such entities and (z) Investments in such entities permitted in clause (i) below);
(d) Investments consisting of deposits, prepayments and other credits to suppliers made in the ordinary course of business of Parent and its Subsidiaries;
(e) intercompany loans to the extent permitted under Section 6.1(b) ;
(f) Consolidated Capital Expenditures (if, after giving effect to such capital expenditure, Parent would be in compliance with Section 6.7 );
(g) loans and advances to directors, officers and employees of Parent and its Subsidiaries (i) made in connection with an employee stock purchase plan or similar
arrangement or (ii) made in the ordinary course of business in an aggregate principal amount at any time outstanding not to exceed $5,000,000;
(h) Investments pursuant to Hedge Agreements not prohibited by Section 6.14 ;
(i) Investments in any after-acquired real or personal property (including in any newly-formed or after-acquired non-Wholly Owned Subsidiary of Parent or Joint Venture owning such property or any existing dormant or immaterial entity); provided that (x) Investments in real estate upon which material improvements are not complete (as evidenced by being opened for business to the general public) shall not exceed, in the aggregate, 10% of Value (it being understood that no Real Estate Asset that is at least 80% leased shall be subject to this clause (x) and that for the purposes of this provision any portion of such Real Estate Asset that is under a binding contract of sale to an “anchor tenant” shall be deemed to be leased), (y) Investments in any single Person owning any GGP Property shall not exceed 25% of Value and (z) Investments in Limited Minority Holdings shall not exceed, in the aggregate, 20% of Value after giving effect to such Investment;
(j) the spin-off of Spinco Inc., as contemplated in the Plan;
(k) Investments reasonably required in the minimum amount necessary for Parent and each of its REIT Subsidiaries to maintain its qualification as a REIT;
(l) Investments received in connection with the bankruptcy or reorganization of suppliers and lessees and in settlement of delinquent obligations of, and other disputes with, lessees and suppliers arising in the ordinary course of business;
(m) deposits with financial institutions available for withdrawal on demand, prepaid expenses, and accounts receivable, in each case, made or incurred in the ordinary course of business;
(n) guarantees of Indebtedness to the extent permitted by Section 6.1 and guarantees of other liabilities and obligations of Parent and its Subsidiaries and Joint Ventures in the ordinary course of business;
(o) Investments in any Trust Preferred Securities Issuer and Investments by any Trust Preferred Securities Issuer in Parent and its Subsidiaries;
(p) transactions in the ordinary course of business in accordance with the Consolidated Cash Management System of Parent and its Subsidiaries;
(q) extensions of trade credit in the ordinary course of business;
(r) Investments in the ordinary course of business consisting of endorsements for collection or deposit;
(s) loans and advances to tenants, customers, suppliers and distributors made in the ordinary course of business and in accordance with Parent’s reasonable business judgment;
(t) any other Investments required or specifically contemplated by the Investment Agreements or the Plan; and
(u) other Investments in an aggregate amount not to exceed $100,000,000 at any time outstanding.
6.7. Financial Covenants .
(a) Net Indebtedness to Value Ratio . Parent shall not permit the Net Indebtedness to Value Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2011, to exceed the correlative ratio indicated:
|
Fiscal Quarter |
|
Net Indebtedness to Value
|
|
March 31, 2011 |
|
0.750:1.00 |
|
June 30, 2011 |
|
0.740:1.00 |
|
September 30, 2011 |
|
0.730:1.00 |
|
December 31, 2011 |
|
0.725:1.00 |
|
March 31, 2012 |
|
0.715:1.00 |
|
June 30, 2012 |
|
0.705:1.00 |
|
September 30, 2012 |
|
0.695:1.00 |
|
December 31, 2012 |
|
0.675:1.00 |
|
March 31, 2013 and each Fiscal Quarter ending thereafter prior to the Revolving Commitment Termination Date |
|
0.650:1.00 |
(b) Interest Coverage Ratio . Parent shall not permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2011, to be less than the correlative ratio indicated:
|
Fiscal Quarter |
|
Interest Coverage Ratio |
|
March 31, 2011 |
|
1.500:1.00 |
|
June 30, 2011 |
|
1.500:1.00 |
|
September 30, 2011 |
|
1.500:1.00 |
|
December 31, 2011 |
|
1.500:1.00 |
|
March 31, 2012 |
|
1.500:1.00 |
|
Fiscal Quarter |
|
Interest Coverage Ratio |
|
June 30, 2012 |
|
1.550:1.00 |
|
September 30, 2012 |
|
1.600:1.00 |
|
December 31, 2012 |
|
1.650:1.00 |
|
March 31, 2013 and each Fiscal Quarter ending thereafter prior to the Revolving Commitment Termination Date |
|
1.750:1.00 |
(c) Leverage Ratio . Parent shall not permit the Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2011, to exceed the correlative ratio indicated:
|
Fiscal Quarter |
|
Leverage Ratio |
|
March 31, 2011 |
|
10.000:1.00 |
|
June 30, 2011 |
|
9.950:1.00 |
|
September 30, 2011 |
|
9.900:1.00 |
|
December 31, 2011 |
|
9.875:1.00 |
|
March 31, 2012 |
|
9.700:1.00 |
|
June 30, 2012 |
|
9.500:1.00 |
|
September 30, 2012 |
|
9.300:1.00 |
|
December 31, 2012 |
|
9.000:1.00 |
|
March 31, 2013 |
|
8.500:1.00 |
|
June 30, 2013 |
|
8.500:1.00 |
|
September 30, 2013 and each Fiscal Quarter ending thereafter prior to the Revolving Commitment Termination Date |
|
8.250:1.00 |
(d) Certain Calculations .
(i) With respect to any period during which an Asset Sale has occurred (each, a “Subject Transaction” ), for purposes of determining compliance with the financial covenants set forth in Section 6.7(a) and 6.7(c) , but not for purposes of 6.7(b) , Combined EBITDA shall be calculated with respect to such period on a pro forma basis
(including pro forma adjustments arising out of events which are directly attributable to a specific transaction, are factually supportable and are expected to have a continuing impact, in each case determined on a basis consistent with Article 11 of Regulation S-X promulgated under the Securities Act and as interpreted by the staff of the Securities and Exchange Commission, which would include cost savings resulting from head count reduction, closure of facilities and similar restructuring charges, which pro forma adjustments shall be certified by the chief financial officer of Parent) using the historical audited financial statements of any business so sold or to be sold and the consolidated financial statements of Parent and its Subsidiaries which shall be reformulated as if such Subject Transaction, and any Indebtedness repaid in connection therewith, had been consummated or repaid at the beginning of such period.
(ii) With respect to any period and for purposes of determining compliance with the financial covenants set forth in this Section 6.7 , the Special Consideration Properties and any Person all or substantially all of whose assets comprise Special Consideration Properties shall be excluded from the calculation thereof.
(e) Equity Cure . Notwithstanding anything to the contrary contained in Section 6.7 , for purposes of determining compliance with the financial covenants set forth in this Section 6.7 , a cash equity contribution in Parent (in the form of a cash contribution or in exchange for Qualified Capital Stock) made after the commencement of the applicable Fiscal Quarter and on or prior to the day that is ten days after the day on which financial statements are required to be delivered for such Fiscal Quarter will, at the request of Parent, which request will be made at the time of contribution, be included in the calculation of Combined EBITDA for the purposes of determining the Leverage Ratio and the Interest Coverage Ratio and as Cash and Cash Equivalents in the definition of Value for purposes of determining the Net Indebtedness to Value Ratio, in each case solely for purposes of determining compliance with such financial covenants at the end of such Fiscal Quarter and applicable subsequent periods that include such Fiscal Quarter (any such equity contribution so included in the calculation of Combined EBITDA or Value, as the case may be, a “Specified Equity Contribution” ); provided that (a)(i) Parent shall not be permitted to so request that a Specified Equity Contribution be included in the calculation of Combined EBITDA or as Cash and Cash Equivalents as described above with respect to any Fiscal Quarter unless, after giving effect to such requested Specified Equity Contribution, there will be a period of at least two consecutive Fiscal Quarters in the Relevant Four Fiscal Quarter Period (as defined below) in which no Specified Equity Contribution has been made, and (ii) only three Specified Equity Contributions may be made during the term of this Agreement, (b) the amount of any Specified Equity Contribution shall be no greater than the amount required to cause Parent to be in compliance with such financial covenant(s) and (c) all Specified Equity Contributions will be disregarded for purposes of determining the availability of any baskets with respect to the covenants contained in the Credit Documents. To the extent that the proceeds of the Specified Equity Contribution are used to repay Indebtedness, such Indebtedness shall not be deemed to have been repaid for purposes of calculating any financial covenant set forth in Section 6.7 for the Relevant Four Fiscal Quarter Period. For purposes of this paragraph, the term “Relevant Four Fiscal Quarter Period” shall mean, with respect to any requested Specified Equity Contribution, the four Fiscal Quarter period ending on (and including) the Fiscal Quarter in
which Combined EBITDA or Cash and Cash Equivalents, as the case may be, will be increased as a result of such Specified Equity Contribution.
6.8. Fundamental Changes; Disposition of Assets. No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into (i) any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or (ii) any Asset Sale, except:
(a) Asset Sales of inventory;
(b) Asset Sales of Cash and Cash Equivalents;
(c) Asset Sales of obsolete or worn out personal property and fixtures;
(d) Asset Sales in connection with (or as a result of) Investments made in accordance with Section 6.6 ;
(e) Asset Sales of the Special Consideration Properties and the other Specified Properties;
(f) Asset Sales for Fair Market Value, so long as (x) Borrowers shall be in compliance with the financial covenants set forth in Section 6.7 on a pro forma basis after giving effect to such Asset Sale as of the last day of the Fiscal Quarter most recently ended and (y) if such Asset Sale is with respect to Collateral, the ratio of (i) the Value of all remaining Collateral to (ii) the aggregate Revolving Commitments of all Lenders shall be at least 4:00 to 1:00;
(g) amalgamations, mergers, liquidations, dissolutions and consolidations among Parent and/or its Subsidiaries or with any Person the purpose of which is to effect an Investment otherwise permitted under Section 6.6 so long as (w) a Borrower is the survivor of any such transaction involving a Borrower, (x) one or more Credit Parties is the survivor of any such transaction involving a Credit Party or the survivor shall expressly assume the Obligations of such Credit Party under the Credit Documents in a manner reasonably acceptable to Administrative Agent, (y) Parent is the survivor of any such transaction involving Parent or, if Parent is not the survivor, (A) the survivor shall expressly assume the Obligations of Parent under the Credit Documents in a manner reasonably acceptable to Administrative Agent, (B) no Default or Event of Default shall occur after giving effect to such transaction and (C) Credit Parties shall be in compliance with the financial covenants set forth in Section 6.7 on a pro forma basis after giving effect to such transaction as of the last day of the Fiscal Quarter most recently ended for which financial statements are available and shall provide a certificate to Administrative Agent demonstrating the same, and (z) in the case of a transaction involving any non-Wholly Owned Subsidiary of Borrowers, either a Wholly Owned Subsidiary shall be the survivor of any such transaction or the transaction shall constitute an Investment permitted under Section 6.6 ;
(h) Asset Sales of Capital Stock by any REIT Subsidiary to individuals of preferred equity with a base liquidation preference of no more than $180,000 in the aggregate for any such REIT Subsidiary;
(i) Asset Sales as a result of the exercise of (i) a buy/sell provision with respect to any non-Wholly Owned Subsidiary or Joint Venture and (ii) any options to purchase or lease, rights of first offer, rights of first refusal and executed agreements with respect to pending Asset Sales existing as of the Closing Date;
(j) spin-off of Spinco Inc., as contemplated in the Plan and other transactions specifically contemplated by the Investment Agreements or the Plan;
(k) Asset Sales of property as a result of (x) any condemnation proceeding (or credible threat thereof) or Asset Sale in lieu thereof or (y) a casualty;
(l) amalgamations, mergers, liquidations, dissolutions and consolidations the purpose of which is to effect any Asset Sale otherwise permitted under the Credit Documents;
(m) Asset Sales of personal property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Asset Sales are promptly applied to the purchase price of such replacement property;
(n) Asset Sales or discounts of accounts receivable or notes in connection with the collection or compromise thereof;
(o) Asset Sales in the ordinary course of business consisting of the abandonment of intellectual property rights which, in the reasonable good faith determination of the Credit Parties are not material to the conduct of the business of Parent or its Subsidiaries;
(p) the expiration of any option agreement in respect of real or personal property;
(q) to the extent constituting an Asset Sale, the granting of any Lien permitted by Section 6.2 , and the making of any Restricted Junior Payment permitted by Section 6.4 ;
(r) Asset Sales of Capital Stock in order to qualify members of the board of directors (or similar governing body) of any Credit Party or any of their Subsidiaries if required by applicable law or contract;
(s) (i) any involuntary terminations of Hedge Agreements not resulting in an Event of Default under Section 8.1(b) , (ii) any voluntary terminations of Hedge Agreements that do not require payment of any termination fee by Parent or any of its Subsidiaries and (iii) any voluntary terminations of Hedge Agreements that require payment of a termination fee so long as Parent is in pro forma compliance with the financial covenant set forth in Section 6.7(b) after giving effect thereto;
(t) Asset Sales to any Credit Party or any Wholly Owned Subsidiary of a Credit Party or, in the case of any non-Wholly Owned Subsidiary of a Credit Party, to a Credit Party, a Wholly Owned Subsidiary of a Credit Party or to the owners of such non-Wholly Owned Subsidiary on a pro rata basis;
(u) any lease, license, easement or other occupancy agreement entered into in the ordinary course of business; and
(v) Asset Sales as a result of any transaction solely in connection with the mortgage or other transfer of property for Permitted Project Level Financing.
6.9. Transactions with Shareholders and Affiliates. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any officer, director, employee or Affiliate of Parent or any of its Subsidiaries; provided , the foregoing restriction shall not apply to (a) any such transaction that is for fair market value and on fair and reasonable terms no less favorable to such Credit Party or such Subsidiary than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate, (b) any transaction between Parent and its Subsidiaries and Joint Ventures to the extent permitted under the Credit Documents; (c) reasonable and customary fees and expenses, indemnification, incentive plans and similar items paid to members of the board of directors (or similar governing body) of Parent and its Subsidiaries; (d) employment and compensation arrangements for officers and other employees of Parent and its Subsidiaries entered into in the ordinary course of business (including base salary and incentives); (e) transactions in existence on the Closing Date; (f) transactions contemplated by the Plan, including arrangements with Spinco, Inc. and in connection with the spin-off thereof; (g) transactions in the ordinary course of business in accordance with the Consolidated Cash Management System of Parent and its Subsidiaries; (h) reimbursement of travel, moving and similar expenses in the ordinary course of business; (i) loans and advances to directors, officers and employees in the ordinary course of business or otherwise permitted hereunder; (j) (A) guarantees of the Indebtedness and other obligations not otherwise prohibited under the Credit Documents and (B) other customary guarantees in the ordinary course of business; (k) Restricted Junior Payments permitted under Section 6.4 ; and (l) Asset Sales of Capital Stock in order to qualify members of the board of directors (or similar governing body) of any Credit Party or any of their Subsidiaries if required by applicable law or contract.
6.10. Conduct of Business. From and after the Closing Date, no Credit Party shall, nor shall it permit any of its Subsidiaries to, make any material changes in the nature of the business conducted by Parent and its Subsidiaries on and as of the Closing Date, except for Asset Sales, mergers, consolidations, liquidations and amalgamations permitted by Section 6.8 and any business reasonably related or ancillary thereto.
6.11. Amendments or Waivers of Organizational Documents and Certain Related Agreements. After the Closing Date, no Credit Party shall nor shall it permit any of its Subsidiaries to, agree to any amendment, restatement, supplement or other modification to, or waiver of, (a) any of its Organizational Documents or (b) any of its rights under any Material Contract (except as could not reasonably be expected to have a Material Adverse Effect), in each case, other than such amendments, restatements, supplements or other modifications or waivers (i) that are not materially adverse to Administrative Agent or Lenders or their respective interests in and under the Loans, the Collateral, or the Loan Documents in the case of Organizational Documents or (ii) as required in connection with the Plan (including the spin-off of Spinco, Inc. as contemplated by the Plan).
6.12. Amendments or Waivers and Prepayments with respect to Certain Indebtedness . No Credit Party shall, nor shall it permit any of its Subsidiaries to, (a) amend the subordination provisions of any Subordinated Indebtedness in a manner that is materially adverse to such Person or the Lenders or (b) make any payment or prepayment of principal of, premium, if any, or interest on, or redeem, purchase, retire, defease (including in substance or legal defeasance), establish a sinking fund or similar payment with respect to, any Subordinated Indebtedness (including payment on the maturity date thereof), other than the payment of regularly scheduled payments in respect of any Subordinated Indebtedness in accordance with the terms of, and only to the extent required by, and subject to any subordination provisions contained in, the indenture or other agreement pursuant to which such Subordinated Indebtedness was issued; provided that (i) Borrowers may pay, prepay, redeem, purchase, retire, defease, establish a sinking fund or similar payment for Subordinated Indebtedness (A) with the proceeds of Capital Stock or other Subordinated Indebtedness, (B) as a result of the conversion to or in exchange for Capital Stock and (C) in an amount not to exceed $100,000,000 over the term of this Agreement and (ii) Borrowers may pay, prepay, redeem, purchase, retire, defease, establish a sinking fund or similar payment for the TRUPS Notes.
6.13. Fiscal Year . No Credit Party shall, nor shall it permit any of its Subsidiaries to, change its Fiscal Year without the consent of Administrative Agent.
6.14. Limitation on Hedge Agreements . No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into any Hedge Agreement other than Hedge Agreements entered into in the ordinary course of business, and not for speculative purposes, to protect against changes in interest rates or foreign exchange rates; provided , that in the case of interest rate Hedge Agreements, such agreements shall only provide for floating-to-fixed rates.
SECTION 7. GUARANTY
7.1. Guaranty of the Obligations. Subject to the provisions of Section 7.2 , Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Secured Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code) (collectively, the “Guaranteed Obligations” ).
7.2. Contribution by Guarantors. All Guarantors desire to allocate among themselves (collectively, the “Contributing Guarantors” ), in a fair and equitable manner, their Secured Obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “Funding Guarantor” ) under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with
respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the Secured Obligations guaranteed. “Fair Share Contribution Amount” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the Secured Obligations of such Contributing Guarantor under this Guaranty that would not render its Secured Obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code or any comparable applicable provisions of state law; provided , solely for purposes of calculating the Fair Share Contribution Amount with respect to any Contributing Guarantor for purposes of this Section 7.2 , any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including in respect of this Section 7.2 ), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.2 . The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their Secured Obligations as set forth in this Section 7.2 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2 .
7.3. Payment by Guarantors. Subject to Section 7.2 , Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrowers to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code), Guarantors will upon written demand pay, or cause to be paid, in Cash, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for any Borrower becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Borrowers for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.
7.4. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees, to the maximum extent permitted by applicable law, as follows:
(a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;
(b) Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between any Borrower and any Beneficiary with respect to the existence of such Event of Default;
(c) the obligations of each Guarantor hereunder are independent of the obligations of Borrowers and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrowers, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against any Borrower or any of such other guarantors and whether or not any Borrower is joined in any such action or actions;
(d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;
(e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its reasonable discretion may determine consistent herewith, the applicable Secured Hedge Agreement or the applicable Secured Bank Product Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against any other
Credit Party or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Credit Documents, any Secured Hedge Agreements or any Secured Bank Product Agreement, as applicable; and
(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit Documents, any Secured Hedge Agreements, any Secured Bank Product Agreement, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Credit Documents, any of the Secured Hedge Agreements, any Secured Bank Product Agreement or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Credit Document, such Secured Hedge Agreement, such Secured Bank Product Agreement or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Credit Documents, any of the Secured Hedge Agreements, any Secured Bank Product Agreement or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of Parent or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which any Borrower may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.
(g) For the avoidance of doubt, each Indemnity Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing ( “IDOT” ) executed and delivered by (i) Benson Park Business Trust, a Maryland business trust, (ii) Running Brook Business Trust, a Maryland business trust, (iii) 10 CCC Business Trust, a Maryland business trust, (iv) 20 CCC Business Trust, a Maryland business trust, (v) 30 CCC Business Trust, a Maryland business trust, (vi) Forty Columbia Corporate Center, LLC, a Delaware limited liability company, (vii) Fifty Columbia Corporate Center, LLC, a Delaware limited liability company, and (viii) Sixty
Columbia Corporate Center, LLC, a Delaware limited liability company (collectively the “Maryland Guarantors” ), respectively, secures only the Guaranteed Obligations of the Maryland Guarantor which is the “Grantor” thereunder, and no IDOT secures the Obligations of Borrowers.
7.5. Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Beneficiaries, to the maximum extent permitted by applicable law: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against any Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from any Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of any Credit Party or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any Borrower or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of any Borrower or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to gross negligence, willful misconduct or bad faith or failure to duly credit to Borrowers payments actually received by Lenders in full satisfaction of the Guaranteed Obligations (and which payments are not being contested or subject to ongoing proceedings for or an order directing disgorgement or reimbursement to any Credit Party); (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims (except after payment in full of the Guaranteed Obligations, which payments are not being contested or subject to ongoing proceedings for or an order directing disgorgement or reimbursement to any Credit Party), and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default under this Agreement, the Secured Hedge Agreements, any Secured Bank Product Agreement or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Borrowers and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof (other than payment in full of the Guaranteed Obligations, except after payment in full of the Guaranteed Obligations, which payments are not being contested or subject to ongoing proceedings for or an order directing disgorgement or reimbursement to any Credit Party).
7.6. Guarantors’ Rights of Subrogation, Contribution, Etc. Until the Guaranteed Obligations (other than contingent obligations for which no claim has been made) shall have been paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled or Cash collateralized in accordance with Section 2.4(i) , each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against any Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against any Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against any Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations (other than contingent obligations for which no claim has been made) shall have been paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled or Cash collateralized in accordance with Section 2.4(i) , each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including any such right of contribution as contemplated by Section 7.2 . Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against any Borrower or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against any Borrower, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations (other than contingent obligations for which no claim has been made) shall not have been finally paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.
7.7. Subordination of Other Obligations. Any Indebtedness of Borrowers or any Guarantor permitted under Section 6.1(b)(y) now or hereafter held by any Guarantor (the “Obligee Guarantor” ) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such Indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof, it being understood that absent an Event of Default, the Credit Parties may make payments (whether of principal, interest or otherwise) to the Obligee Guarantor.
7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled or Cash collateralized in accordance with Section 2.4(i) . Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.
7.9. Authority of Guarantors or Borrowers . It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or any Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.
7.10. Financial Condition of Borrowers. Any Credit Extension may be made to Borrowers or continued from time to time, and any Secured Hedge Agreements and Secured Bank Product Agreements may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of Borrowers at the time of any such grant or continuation or at the time such Secured Hedge Agreement or such Secured Bank Product Agreement, as applicable, is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Borrowers. Each Guarantor has adequate means to obtain information from Borrowers on a continuing basis concerning the financial condition of Borrowers and their ability to perform their Secured Obligations under the Credit Documents, the Secured Hedge Agreements and the Secured Bank Product Agreements, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrowers and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Borrowers now known or hereafter known by any Beneficiary.
7.11. Bankruptcy, Etc. (a) So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency case or proceeding of or against any Borrower or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of any Borrower or any other Guarantor or by any defense which any Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be
determined without regard to any rule of law or order which may relieve Borrowers of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.
(c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrowers, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder; provided , that interest or fees on any such reinstated Guaranteed Obligations shall not be payable for the period during which the Beneficiaries were paid such funds until the date such funds were disgorged by such Beneficiaries.
7.12. Discharge of Guaranty Upon Sale of Guarantor. If all of the Capital Stock of any Guarantor or any of its successors in interest hereunder shall be the subject of a Permitted Asset Sale, merger, consolidation, liquidation, winding up or dissolution in accordance with the terms and conditions hereof, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such Asset Sale, merger, consolidation, liquidation, winding up or dissolution.
7.13. Mortgages; Guarantor Obligations . Notwithstanding anything herein or in any other Credit Document to the contrary, each Mortgage provided by a Guarantor or other Credit Party in connection with this Agreement shall only secure the Secured Obligations of such Guarantor or other Credit Party, as applicable, and not any other Secured Obligations.
SECTION 8. EVENTS OF DEFAULT
8.1. Events of Default. If any one or more of the following conditions or events shall occur:
(a) Failure to Make Payments When Due . Failure by Borrowers to pay (i) when due any installment of principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary prepayment or otherwise; (ii) when due any amount payable to Issuing Bank in reimbursement of any drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee or any other amount due hereunder within five days after the date due; or
(b) Default in Other Agreements . (i) Failure of any Credit Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount, including any payment in settlement, payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a) ) (A) in the case of Recourse Indebtedness, in an aggregate amount in excess of $50,000,000 and (B) in the case of Non- Recourse Indebtedness, involving properties of entities having an aggregate net equity value in
an amount after the Closing Date in excess of $200,000,000 (in each case, excluding such defaults solely relating to any Specified Property or any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Special Consideration Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property) or (ii) the occurrence of an event of default or equivalent condition (which has not been permanently waived) with respect to Indebtedness of any Credit Party or any of their respective Subsidiaries with respect to one or more items of Recourse Indebtedness or Non-Recourse Indebtedness in the aggregate amount or with respect to properties or entities having an aggregate net equity value after the Closing Date in the amount set forth in clauses (i)(A) and (i)(B) above, respectively, in the case of each of clauses (i) and (ii) , beyond the applicable grace period, if any, provided therefor, if the effect of such event of default or equivalent condition is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or subject to a compulsory repurchase or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be (in each case, excluding such events of default or equivalent conditions solely relating to any Specified Property or any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Special Consideration Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property); or
(c) Breach of Certain Covenants . Failure of any Credit Party to perform or comply with any term or condition contained in Section 5.1(d)(i) , Section 5.2 as it relates to the existence of any Borrower or Section 6 ; or
(d) Breach of Representations, Etc. Any representation, warranty, certification or other statement made or deemed made by any Credit Party in any Credit Document or in any statement or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant to the terms hereof or thereof shall be false in any material respect as of the date made or deemed made; or
(e) Other Defaults Under Credit Documents . Any Credit Party shall default in the performance of or compliance with any term contained herein or any of the other Credit Documents, other than any such term referred to in any other Section of this Section 8.1 and such default shall not have been remedied or waived within 30 days after the earlier of (i) an Authorized Officer of Parent or any Borrower becoming aware of such default or (ii) receipt by Parent or any Borrower of notice from Administrative Agent or any Lender of such default ; or
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Parent, any Borrower or any Material Subsidiary of Parent (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property) in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; (ii) an involuntary case shall be commenced against Parent, any Borrower or any Material Subsidiary of Parent (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties
or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property) under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; and any such event described in this clause (ii) shall continue for 30 days without having been dismissed, bonded or discharged; or (iii) or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Parent, any Borrower or any Material Subsidiary of Parent (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property), or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of Parent, any Borrower or any Material Subsidiary of Parent (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property) for all or a substantial part of its property, and any such receiver, liquidator, sequestrator, trustee, custodian or other officer described in this clause (iii) shall not have been removed within 90 days of appointment; or
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. (i) Parent, any Borrower or any Material Subsidiary of Parent (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property) shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Parent, any Borrower or any Material Subsidiary of Parent (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property) shall make any assignment for the benefit of creditors; or (ii) Parent, any Borrower or any Material Subsidiary (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property) shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or similar governing body) of Parent, any Borrower or any Material Subsidiary of Parent (other than any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Specified Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property) (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f) ; or
(h) Judgments and Attachments . Any final money judgments or orders, in an aggregate amount in excess of $50,000,000 in the case of judgments or orders not in respect of Non-Recourse Indebtedness (and in the case of judgments or orders in respect of Non-Recourse Indebtedness, with respect to any property having an aggregate net equity value in an amount after the Closing Date in excess of $200,000,000) in each case, (i) excluding judgments
solely relating to any Specified Property or any Subsidiary or Subsidiaries all or substantially all of whose assets comprise Special Consideration Properties or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property, and (ii) to the extent not adequately covered by insurance as to which a solvent insurance company has assumed defense of the claim or otherwise commenced settlement or adjustment of such claim and has not denied coverage, shall be entered or filed against Parent or any of its Subsidiaries or any of their respective assets and shall remain unsatisfied, undischarged, unvacated, unstayed or unbonded pending appeal for a period of 60 days; or
(i) Employee Benefit Plans . There shall occur one or more ERISA Events that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or
(j) Change of Control . A Change of Control shall occur; or
(k) Guaranties, Collateral Documents and other Credit Documents . At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder in writing, (ii) this Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or Collateral Agent shall not have or shall cease to have a valid and perfected first priority Lien (subject to Permitted Liens) in any Collateral having, individually or in the aggregate, a net equity value in excess of $25,000,000 purported to be covered by the Collateral Documents, except to the extent (x) any such loss of perfection or priority results from an act or omission of Administrative Agent, (y) such loss is covered by a lender’s title insurance policy as to which the insurer has been notified of such loss and does not deny coverage or (z) such loss of perfected security interest may be remedied by the filing of appropriate documentation without the loss of priority (other than non-consensual Permitted Liens) or (iii) any Credit Party shall contest the validity or enforceability of any Credit Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Credit Document to which it is a party or shall contest the validity or perfection of any Lien in any Collateral purported to be covered by the Collateral Documents (other than with respect to releases of such Liens in accordance with the terms of the Credit Documents); or
(l) Security Realization . Any third-party security realization occurs against property of Parent, any Borrower or any of its Material Subsidiary having an aggregate net equity value in an aggregate amount after the Closing Date in excess of $200,000,000, which realization shall continue and not be released, discharged, vacated, stayed or bonded within the lesser of 30 days and the period of time prescribed under applicable laws for completion of such realization (excluding any Specified Property or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property); or
(m) Seizure of Property . Any third-party seizure occurs with respect to property of Parent, any Borrower or any Material Subsidiary having an aggregate net equity
value in an aggregate amount after the Closing Date in excess of $200,000,000, which seizure shall continue and not be released, discharged, vacated, stayed or bonded within the lesser of 30 days and the period of time prescribed under applicable laws for completion of the sale of or realization against the property subject to such seizure (excluding any Specified Property or Capital Stock of a Person all or substantially all of whose assets comprise any Specified Property);
THEN , (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g) , automatically, and (2) upon the occurrence and during the continuance of any other Event of Default, at the request of (or with the consent of) Requisite Lenders, upon notice to Borrowers by Administrative Agent, (A) the Revolving Commitments, if any, of each Lender having such Revolving Commitments and the obligation of Issuing Bank to issue any Letter of Credit shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit), and (III) all other Obligations; provided , the foregoing shall not affect in any way the obligations of Lenders under Section 2.3(b)(v) or Section 2.4(e) ; (C) Administrative Agent may cause Collateral Agent to enforce any and all Liens created pursuant to Collateral Documents; and (D) Administrative Agent shall direct Borrowers to pay (and Borrowers hereby agree upon receipt of such notice, or upon the occurrence of any Event of Default specified in Sections 8.1(f) and (g) to pay) to Administrative Agent such additional amounts of cash as reasonably requested by Issuing Bank, to be held as security for Borrowers’ reimbursement Obligations in respect of Letters of Credit then outstanding.
With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this Section 8.1 , the Borrowers shall at such time Cash collateralize in accordance with Section 2.4(i) an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such Cash collateral account shall be applied by Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of Borrowers hereunder and under the other Credit Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all obligations of Borrowers to reimburse Issuing Bank pursuant to Section 2.4(i) for amounts drawn under Letters of Credit shall have been satisfied and all other Obligations of Borrowers hereunder and under the other Credit Documents shall have been paid in full, the balance, if any, in such Cash collateral account shall be returned to Borrowers (or such other Person as may be lawfully entitled thereto).
8.2. Application of Proceeds . Except as expressly provided elsewhere in this Agreement, all proceeds received by Collateral Agent in respect of any sale of, any collection from, or other realization upon all or any part of the Collateral shall be applied, in full or in part, promptly by Collateral Agent against the Secured Obligations in the following order of priority:
first , to the payment of all costs and expenses of such sale, collection or other realization, including reasonable compensation to Collateral Agent and its agents and counsel, and all other expenses, liabilities and advances made or incurred by Collateral Agent in connection therewith, and all amounts for which Collateral Agent is entitled to indemnification hereunder (in its capacity as Collateral Agent and not as a Lender) or any other Credit Document and all advances made by Collateral Agent hereunder or under any other Credit Document for the account of the applicable Credit Party, and to the payment of all costs and expenses paid or incurred by Collateral Agent in connection with the exercise of any right or remedy hereunder or under the other Credit Documents, all in accordance with the terms hereof or thereof;
second , to the extent of any excess of such proceeds, to the payment of all other costs and expenses of such sale, collection or other realization including compensation to the other Secured Parties and their agents and counsel and all expenses, liabilities and advances made or incurred by the other Secured Parties in connection therewith;
third , to the extent of any excess of such proceeds and without duplication of amounts applied pursuant to clauses first and second above, to the payment in full in cash, pro rata, of interest and other amounts constituting Secured Obligations (other than principal, reimbursement Obligations with respect to Letters of Credit and obligations to Cash collateralize Letters of Credit) and any fees, premiums and scheduled periodic payments due under Secured Hedge Agreements or Secured Bank Product Agreements and any interest accrued thereon, in each case equally and ratably in accordance with the respective amounts thereof then due and owing;
fourth , to the extent of any excess of such proceeds, to the payment in full in cash, pro rata, of the principal amount of the Secured Obligations and any premium thereon (including reimbursement Obligations with respect to Letters of Credit and obligations to Cash collateralize Letters of Credit) and any breakage, termination or other payments under Secured Hedge Agreements and Secured Bank Product Agreements; and
fifth , the balance, if any, to the Person lawfully entitled thereto (including the applicable Credit Party or its successors or assigns) or as a court of competent jurisdiction may direct.
In the event that any such proceeds are insufficient to pay in full the items described in clauses first through fifth of this Section 8.02 , the Credit Parties shall remain liable, jointly and severally, for any deficiency.
SECTION 9. AGENTS
9.1. Appointment of Agents. Wells Fargo Bank, N.A. and RBC Capital Markets are hereby appointed Syndication Agents hereunder, and each Lender hereby authorizes Wells Fargo Bank, N.A. and RBC Capital Markets to act as Syndication Agents in accordance with the terms hereof and the other Credit Documents. DBTCA is hereby appointed Administrative Agent and
Collateral Agent hereunder and under the other Credit Documents and each Lender hereby authorizes DBTCA to act as Administrative Agent and Collateral Agent in accordance with the terms hereof and the other Credit Documents. Each of the Documentation Agents listed in the definition thereof is hereby appointed as a Documentation Agent hereunder, and each Lender hereby authorizes such Documentation Agents to act as Documentation Agents in accordance with the terms hereof and the other Credit Documents. Each Agent hereby agrees to act in its capacity as such upon the express conditions contained herein and the other Credit Documents, as applicable. Except as set forth in Section 9.7(a) , (b) and (d) and 9.8 , the provisions of this Section 9 are solely for the benefit of Agents and Lenders and no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Parent or any of its Subsidiaries (other than with respect to the maintenance of the Register as set forth in Section 2.7(b) ). Each Syndication Agent and each Documentation Agent, without consent of or notice to any party hereto, may assign any and all of its rights or obligations hereunder to any of its Affiliates. As of the Closing Date, neither any Syndication Agent, in its capacity as a Syndication Agent, nor any Documentation Agent, in its capacity as a Documentation Agent, shall have any obligations but shall be entitled to all benefits of this Section 9 . Each of Syndication Agent, each Documentation Agent and any Agent described in clause (e) of the definition thereof may resign from such role at any time, with immediate effect, by giving prior written notice thereof to Administrative Agent and Borrowers.
9.2. Powers and Duties . Each Lender irrevocably authorizes each Agent to take such action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Credit Documents. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Credit Documents, a fiduciary relationship in respect of any Lender; and nothing herein or any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents except as expressly set forth herein or therein.
9.3. General Immunity .
(a) No Responsibility for Certain Matters . No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by or on behalf of any Credit Party to any Agent or any Lender in connection with the Credit Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the use of the
proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof.
(b) Exculpatory Provisions . No Agent nor any of its officers, partners, directors, employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under or in connection with any of the Credit Documents except to the extent caused by such Agent’s gross negligence, bad faith or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Credit Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5 ) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Parent and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Credit Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5 ).
(c) Delegation of Duties . Administrative Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Credit Document by or through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9.3 and of Section 9.6 shall apply to any Affiliates of Administrative Agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9.3 and of Section 9.6 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by Administrative Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other Person, against
any or all of Credit Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to Administrative Agent and not to any Credit Party, Lender or any other Person and no Credit Party, Lender or any other Person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent.
9.4. Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Parent or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrowers for services in connection herewith and otherwise without having to account for the same to Lenders.
9.5. Lenders’ Representations, Warranties and Acknowledgment .
(a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Parent and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Parent and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.
(b) Each Lender, by delivering its signature page to this Agreement or an Assignment Agreement and funding its Revolving Loans, if any, on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date.
9.6. Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Credit Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Credit Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Credit Documents; provided , no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence, bad faith or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided , in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided further , this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.
9.7. Successor Administrative Agent, Collateral Agent and Swing Line Lender. (a) Administrative Agent shall have the right to resign at any time by giving prior written notice thereof to Lenders and Borrowers and, from and after the date, if any, that Administrative Agent ceases to be a Lender with Revolving Commitments hereunder, Administrative Agent may be removed with or without cause by an instrument or concurrent instruments in writing delivered to Borrowers and Administrative Agent and signed by Requisite Lenders. Administrative Agent shall have the right to appoint a financial institution to act as Administrative Agent and/or Collateral Agent hereunder and Administrative Agent’s resignation (but not removal) shall become effective on the earliest of (i) 30 days after delivery of the notice of resignation, (ii) the acceptance of such successor Administrative Agent by Borrowers and Requisite Lenders or (iii) such other date, if any, agreed to by Requisite Lenders. Administrative Agent’s removal shall become effective only upon appointment of a successor Administrative Agent by Requisite Lenders with consent of Borrowers in accordance with Section 9.7(d) . Upon any such notice of resignation, if a successor Administrative Agent has not already been appointed by the retiring Administrative Agent, Requisite Lenders shall have the right, upon five Business Days’ notice to Borrowers, to appoint a successor Administrative Agent. If neither Requisite Lenders nor Administrative Agent have appointed a successor Administrative Agent, from and after the time such resignation becomes effective, Requisite Lenders shall be deemed to have succeeded to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that, until a successor Administrative Agent is so appointed by Requisite Lenders or Administrative Agent, any collateral security held by Administrative Agent in its role as Collateral Agent on behalf of Lenders or Issuing Bank under any of the Credit Documents shall continue to be held by the retiring Collateral Agent as nominee until such time as a successor Collateral Agent is appointed. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall promptly (i) transfer to such successor Administrative Agent all sums, Capital Stock and other items of Collateral held under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent under the Credit Documents, and (ii) execute and deliver to such successor Administrative Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent of the security interests created under the Collateral
Documents, whereupon such retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder. Except as provided above, any resignation or removal of DBTCA or its successor as Administrative Agent pursuant to this Section shall also constitute the resignation or removal of DBTCA or its successor as Collateral Agent. After any retiring or removed Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder. Any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Collateral Agent for all purposes hereunder.
(b) In addition to the foregoing, Collateral Agent may resign at any time by giving prior written notice thereof to Lenders and the Pledgors and, from and after the date, if any, that Collateral Agent ceases to be a Lender with Revolving Commitments hereunder, Collateral Agent may be removed with or without cause by an instrument or concurrent instruments in writing delivered to the Pledgors and Collateral Agent signed by Requisite Lenders. Administrative Agent shall have the right to appoint a financial institution as Collateral Agent hereunder, and Collateral Agent’s resignation (but not removal) shall become effective on the earliest of (i) 30 days after delivery of the notice of resignation, (ii) the acceptance of such successor Collateral Agent by Borrowers and Requisite Lenders or (iii) such other date, if any, agreed to by Requisite Lenders. Collateral Agent’s removal shall become effective only upon appointment of a successor Collateral Agent by Requisite Lenders with reasonable consent of Borrowers in accordance with Section 9.7(d) . Upon any such notice of resignation, if a successor Collateral Agent has not already been appointed by Administrative Agent, Requisite Lenders shall have the right to appoint a successor Collateral Agent. Until a successor Collateral Agent is so appointed by Requisite Lenders or Administrative Agent, any collateral security held by Collateral Agent on behalf of the Lenders or the Issuing Bank under any of the Credit Documents shall continue to be held by the retiring Collateral Agent as nominee until such time as a successor Collateral Agent is appointed. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, that successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Collateral Agent under this Agreement and the Collateral Documents, and the retiring or removed Collateral Agent under this Agreement shall promptly (i) transfer to such successor Collateral Agent all sums, Capital Stock and other items of Collateral held hereunder or under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Collateral Agent under this Agreement and the Collateral Documents, and (ii) execute and deliver to such successor Collateral Agent or otherwise authorize the filing of such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Collateral Agent of the security interests created under the Collateral Documents, whereupon such retiring or removed Collateral Agent shall be discharged from its duties and obligations under this Agreement and the Collateral Documents. After any retiring or removed Collateral Agent’s resignation or removal hereunder as the Collateral Agent, the provisions of this Agreement and the Collateral Documents shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement or the Collateral Documents while it was the Collateral Agent hereunder.
(c) Any resignation or removal of DBTCA or its successor as Administrative Agent pursuant to this Section shall also constitute the resignation or removal of DBTCA or its successor as Swing Line Lender, and any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Swing Line Lender for all purposes hereunder. In such event (a) Borrowers shall prepay any outstanding Swing Line Loans made by the retiring or removed Administrative Agent in its capacity as Swing Line Lender, (b) upon such prepayment, the retiring or removed Administrative Agent and Swing Line Lender shall surrender any Swing Line Note held by it to Borrowers for cancellation, and (c) Borrowers shall issue, if so requested by successor Administrative Agent and Swing Line Loan Lender, a new Swing Line Note to the successor Administrative Agent and Swing Line Lender, in the principal amount of the Swing Line Sublimit then in effect and with other appropriate insertions.
(d) Notwithstanding anything in this Section 9.7 to the contrary, Borrowers shall have the right to consent (such consent not to be unreasonably withheld) to the identity of any successor Agent appointed pursuant to this Section 9.7 so long as no Event of Default described in Section 8.1(f) or 8.1(g) has occurred and is continuing, and any appointment, replacement or substitution of any Agent in the absence of such consent shall be null and void.
9.8. Collateral Documents and Guaranty .
(a) Agents under Collateral Documents and Guaranty . Each Secured Party hereby further authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, to be the agent for and representative of Secured Parties with respect to the Guaranty, the Collateral and the Collateral Documents; provided that neither Administrative Agent nor Collateral Agent shall owe any fiduciary duty, duty of loyalty, duty of care, duty of disclosure or any other obligation whatsoever to any holder of Obligations with respect to any Secured Hedge Agreement or any Secured Bank Product Agreement. Subject to Section 10.5 , without further written consent or authorization from any Secured Party, Administrative Agent or Collateral Agent, as applicable, shall, promptly upon the request of any Borrower, (i) in connection with any Asset Sale permitted by this Agreement, execute any documents or instruments necessary or reasonably desirable to release any Lien encumbering any item of Collateral that is the subject of such Asset Sale or to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5 ) have otherwise consented, (ii) execute any documents or instruments necessary or reasonably desirable to release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5 ) have otherwise consented, (iii) execute any documents or instruments necessary or reasonably desirable to subordinate any Lien on any Mortgaged Properties to any ordinary course Lien permitted under Section 6.2(e) or (iv) enter into a subordination, non-disturbance and attornment agreement (substantially in the form attached hereto as Exhibit L with respect to any lease, sublease, license, sublicense or other occupancy agreement in respect of any of the Mortgaged Properties permitted pursuant to Section 6.2(q) .
(b) Right to Realize on Collateral and Enforce Guaranty . Anything contained in any of the Credit Documents to the contrary notwithstanding, Borrowers, Administrative Agent, Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall
have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Collateral Agent at such sale or other disposition.
(c) Rights under Hedge Agreements and Secured Bank Product Agreements . No Secured Hedge Agreement or Secured Bank Product Agreement will create (or be deemed to create) in favor of any Lender Counterparty or Lender Bank Product Provider, as applicable, that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Credit Documents except as expressly provided in Section 10.5(c)(v) of this Agreement. By accepting the benefits of the Collateral, such Lender Counterparty or such Lender Bank Product Provider, as applicable, shall be deemed to have appointed Collateral Agent as its agent and agreed to be bound by the Credit Documents as a Secured Party, subject to the limitations set forth in this clause (c) .
(d) Release of Collateral and Guarantees, Termination of Credit Documents . Notwithstanding anything to the contrary contained herein or any other Credit Document, when all Secured Obligations (other than contingent Obligations for which no claim has been made and obligations in respect of any Secured Hedge Agreement or any Secured Bank Product Agreement) have been paid in full, all Commitments have terminated or expired and all Letters of Credit shall have expired or been cancelled or Cash collateralized in accordance with Section 2.4(i) , upon request of Borrowers, Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Secured Hedge Agreement or Secured Bank Product Agreement) take such actions as shall be required to release its security interest in all Collateral, and to release all guarantee obligations provided for in any Credit Document, whether or not on the date of such release there may be outstanding Secured Obligations in respect of Secured Hedge Agreements with Lender Counterparties and/or in respect of Secured Bank Product Agreements with Lender Bank Product Providers. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.
9.9. Withholding Taxes . To the extent required by any applicable law, Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, or if Administrative Agent reasonably determines that a payment was made to a Lender pursuant to this Agreement without deduction of applicable withholding taax from such payment, such Lender shall indemnify Administrative Agent fully for all amounts paid, directly or indirectly, by Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.
SECTION 10. MISCELLANEOUS
10.1. Notices.
(a) Notices Generally . Any notice or other communication herein required or permitted to be given to any Credit Party, any Syndication Agent, Collateral Agent, Administrative Agent, Swing Line Lender, Issuing Bank or any Documentation Agent, shall be sent to such Person’s address as set forth on Appendix B or in the other relevant Credit Document, and in the case of any Lender, the address as indicated on Appendix B or otherwise indicated to Administrative Agent in writing. Except as otherwise set forth in Section 3.2(b) or clause (b) below, each notice hereunder shall be in writing and may be personally served or sent by facsimile or electronic mail or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of facsimile or electronic mail, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided , no notice to any Agent shall be effective until received by such Agent; provided further , any such notice or other communication shall at the request of Administrative Agent be provided to any sub-agent appointed pursuant to Section 9.3(c) hereto as designated in writing by Administrative Agent from time to time.
(b) Electronic Communications .
(i) Notices and other communications to any Agent, Lenders, Swing Line Lender and Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites, including the Platform) pursuant to procedures reasonably prescribed by Administrative Agent, provided that the foregoing shall not apply to notices to any Agent, any Lender, Swing Line Lender or any applicable Issuing Bank pursuant to Section 2 if such Person has notified Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. Administrative Agent or any Borrower shall accept notices and other communications to it hereunder by electronic communications pursuant to
procedures reasonably prescribed by such Person, provided that such procedures may be limited to particular notices or communications. Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received on the date (x) on which Borrowers post such notices, communications or documents, or provide a link thereto on the website of the Securities and Exchange Commission at http://www.sec.gov or on the website of Parent at www.ggp.com or (y) on which such notices are posted on Borrowers’ behalf on the Platform or another website to which each Lender and Administrative Agent have access (whether a commercial, third-party website or whether sponsored by Administrative Agent); provided that Borrowers shall notify Administrative Agent of any such communications (which notice may be by facsimile or electronic mail as described in the foregoing clause (i) ).
(ii) Each Credit Party understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct, bad faith or gross negligence of Administrative Agent, as determined by a final, non-appealable judgment of a court of competent jurisdiction.
(iii) The Platform and any Approved Electronic Communications are provided “as is” and “as available”. None of the Agents nor any of their respective officers, directors, employees, agents, advisors or representatives (the “ Agent Affiliates ”) warrant the accuracy, adequacy, or completeness of the Approved Electronic Communications or the Platform and each expressly disclaims liability for errors or omissions in the Platform and the Approved Electronic Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Agent Affiliates in connection with the Platform or the Approved Electronic Communications.
(iv) Each Credit Party, each Lender, each Issuing Bank and each Agent agrees that Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Platform in accordance with Administrative Agent’s customary document retention procedures and policies.
(c) Private Side Information Contacts . Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States federal and state
securities laws, to make reference to information that is not made available through the “Public Side Information” portion of the Platform and that may contain Non-Public Information with respect to Parent, its Subsidiaries or their securities for purposes of United States federal or state securities laws. In the event that any Public Lender has determined for itself to not access any information disclosed through the Platform or otherwise, such Public Lender acknowledges that (i) other Lenders may have availed themselves of such information and (ii) neither any Borrower nor Administrative Agent has any responsibility for such Public Lender’s decision to limit the scope of the information it has obtained in connection with this Agreement and the other Credit Documents.
10.2. Expenses. Whether or not the transactions contemplated hereby shall be consummated, Borrowers agree to pay promptly on written demand (a) to the extent set forth in the Fee Letter, all the reasonable and documented out-of-pocket costs and expenses incurred in connection with the negotiation, preparation and execution of the Credit Documents; (b) all the costs of furnishing all opinions by counsel for Borrowers and the other Credit Parties; (c) the reasonable and documented fees, expenses and disbursements of Administrative Agent in connection with the negotiation, preparation, execution and administration of the Credit Documents and any consents, amendments, waivers, supplements or other modifications thereto and any other documents or matters requested by Borrowers, and the consummation and administration of the transactions contemplated hereby and thereby, limited, in the case of attorneys’ fees, to one primary outside counsel to Agents, taken as a whole, in the performance of their role as Agents acting on behalf of the Lenders, and one local counsel to Agents in each material relevant jurisdiction, if necessary; provided that if counsel for Administrative Agent determines in good faith that there is an actual or potential conflict of interest that requires separate representation for Agents, Borrowers shall be required to pay for additional counsel for such Agents and in all cases, the total legal fees for all counsel representing Agents is reasonable taken as a whole, taking into account the nature of the matter involved and, in the case of multiple counsel, the necessity of same; (d) all the actual costs and reasonable and documented expenses incurred by Collateral Agent in connection with creating, perfecting, recording, maintaining and preserving Liens in favor of Collateral Agent, for the benefit of Secured Parties, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of one primary outside counsel to each Agent and of counsel providing any opinions that any Agent or Requisite Lenders may reasonably request in respect of the Collateral or the Liens created pursuant to the Collateral Documents; (e) all other actual and reasonable costs and expenses incurred by each Agent in connection with the syndication of the Loans and Commitments and the transactions contemplated by the Credit Documents and any consents, amendments, waivers or other modifications thereto and (f) after the occurrence and during the continuation of an Event of Default, all costs and expenses, including reasonable attorneys’ fees and costs of settlement, incurred by any Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Credit Documents by reason of such Event of Default (including in connection with the sale, lease or license of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or bankruptcy cases or proceedings.
10.3. Indemnity .
(a) In addition to the payment of expenses pursuant to Section 10.2 , whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject to Indemnitees’ selection of counsel; provided , however , that the Indemnitees shall use their reasonable efforts to use a single outside counsel for all such Indemnitees taken as a whole (and, if reasonably necessary, one local counsel in any relevant material jurisdiction) to represent them, with exceptions in the case of conflicts of interest and in all cases the total legal fees for all counsel representing the Indemnitees must be reasonable taken as a whole, taking into account the nature of the investigative, administrative or judicial proceeding or hearing involved and, in the case of multiple counsel, the necessity of same), indemnify, pay and hold harmless, each Agent and Lender and each of their respective officers, partners, members, directors, trustees, advisors, employees, agents, sub-agents and affiliates (each, an “Indemnitee” ), from and against any and all Indemnified Liabilities; provided , no Credit Party shall have any obligation to any Indemnitee hereunder (i) with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence, bad faith or willful misconduct of, or breach of the Credit Documents by, such Indemnitee, in each case, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (ii) with respect to any investigative, administrative or judicial proceeding or hearing that is brought by an Indemnitee against any other Indemnitee that does not also include a claim against any Credit Party or any of their respective Subsidiaries; provided , that Administrative Agent shall remain indemnified in respect of such disputes to the extent otherwise entitled to be so indemnified hereunder, (iii) to the extent that such Indemnified Liabilities relate to Hazardous Materials Activities, Releases or violations of Environmental Laws that first occur at any property after such property is transferred to an Indemnitee or any successor or assign by foreclosure, deed-in-lieu of foreclosure or similar transfer, or (iv) to the extent such Indemnified Liabilities relate to Taxes (and any liabilities relating thereto) addressed in Section 2.20 , the indemnity for which shall be subject to the provisions of Section 2.20 . To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.
(b) To the extent permitted by applicable law, no party hereto shall assert, and each party hereto hereby waives, any claim against any other party hereto, each Joint Lead Arranger and their respective Affiliates, directors, employees, attorneys, agents and sub-agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each party hereto hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor, except, in the case of the Credit Parties, to the extent otherwise subject to indemnification pursuant to this Section 10.3 .
10.4. Set-Off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default each Lender and Issuing Bank is hereby authorized by each Credit Party at any time or from time to time subject to the consent of Requisite Lenders (such consent not to be unreasonably withheld or delayed), without notice to any Credit Party or to any other Person (other than Administrative Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender or Issuing Bank to or for the credit or the account of any Credit Party against and on account of the Obligations and liabilities of any Credit Party to such Lender or Issuing Bank hereunder, the Letters of Credit and participations therein and under the other Credit Documents, including all claims of any nature or description arising out of or connected hereto, the Letters of Credit and participations therein or with any other Credit Document, irrespective of whether or not (a) such Lender or Issuing Bank shall have made any demand hereunder or (b) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 2 and although such Obligations and liabilities, or any of them, may be contingent or unmatured.
10.5. Amendments and Waivers .
(a) Requisite Lenders’ Consent . Subject to the additional requirements of Sections 10.5(b) and 10.5(c) , no amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of Requisite Lenders; provided that Administrative Agent may, with the consent of Borrowers only, amend, modify or supplement this Agreement to cure any ambiguity, omission, defect or inconsistency, so long as such amendment, modification or supplement does not adversely affect the rights of any Lender or Issuing Bank; provided further that the written concurrence of Requisite Lenders shall not be required for any amendment, modification, termination, or consent set forth in Section 10.5(b)(ii) , 10.5(b)(iv) , 10.5(b)(v) or 10.5(b)(vi) that is consented to by each Lender that would be directly and adversely affected thereby.
(b) Affected Lenders’ Consent . Without the written consent of each Lender that would be directly and adversely affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would:
(i) extend the scheduled final maturity of any Loan or Note;
(ii) intentionally omitted;
(iii) extend the Revolving Commitment Termination Date or, other than as expressly set forth in Section 2.4(a) , the stated expiration date of any Letter of Credit beyond the Revolving Commitment Termination Date;
(iv) reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.10 ) or any fee or any premium payable hereunder;
(v) extend the time for payment of any such interest or fees;
(vi) reduce the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit;
(vii) amend, modify, terminate or waive this Section 10.5(b), Section 10.5(c) or, to the extent provided in any amendment, waiver, or modification of a Credit Document, any other provision that expressly provides that the consent of all Lenders is required as provided therein, as applicable;
(viii) amend the definition of “Requisite Lenders” or “Pro Rata Share” ; provided , with the consent solely of Requisite Lenders, (x) additional extensions of credit pursuant hereto (which may or may not be new money tranches) may be included in the determination of “Requisite Lenders” or “Pro Rata Share” on substantially the same basis as the Revolving Commitments and the Revolving Loans are included on the Closing Date, (y) such terms and any provisions in any Credit Document requiring pro rata payments, distributions or commitment reductions may be amended on customary terms in connection with (I) such additional extension of credit referred to in clause (x) or (II) “amend and extend” transactions;
(ix) release all or substantially all of the Collateral or all or substantially all of value of the Guaranty except as expressly provided in the Credit Documents; or
(x) consent to the assignment or transfer by any Borrower of any of its rights and Obligations under any Credit Document except as expressly provided in the Credit Documents;
provided that, for the avoidance of doubt, all Lenders shall be deemed directly affected thereby with respect to any amendment described in clauses (vii) , (viii) and (ix) .
(c) Other Consents . No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall:
(i) increase any Revolving Commitment of any Lender over the amount thereof then in effect without the consent of such Lender; provided , no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Revolving Commitment of any Lender;
(ii) amend, modify, terminate or waive any provision hereof relating to the Swing Line Sublimit or the Swing Line Loans without the consent of Swing Line Lender;
(iii) amend, modify, terminate or waive any obligation of Lenders relating to the purchase of participations in Letters of Credit as provided in Section 2.4(e) without the written consent of Administrative Agent and of Issuing Bank;
(iv) amend, modify or waive this Agreement or the Pledge Agreement so as to alter the ratable treatment of Obligations arising under the Credit Documents, Secured Obligations arising under Secured Hedge Agreements and Secured Obligations arising under Secured Bank Product Agreements or the definition of “ Lender Counterparty ,” “ Hedge Agreement ,” “ Secured Hedge Agreement ,” “Lender Bank Product Provider , ” “Bank Product , ” “ Secured Bank Product Agreement , ” “ Obligations ” or “ Secured Obligations ” (as defined in any applicable Collateral Document) in each case in a manner materially adverse to any Lender Counterparty with Obligations then outstanding without the written consent of any such Lender Counterparty; or
(v) amend, modify, terminate or waive any provision of Section 9 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent.
(d) Intentionally Omitted .
(e) Execution of Amendments, Etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.
10.6. Successors and Assigns; Participations .
(a) Generally . This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders and other Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Register . Borrowers, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless
and until recorded in the Register following receipt of a fully executed Assignment Agreement effecting the assignment or transfer thereof, together with the required forms and certificates regarding tax matters and any fees payable in connection with such assignment, in each case, as provided in Section 10.6(d) . Each assignment shall be recorded in the Register promptly following receipt by the Administrative Agent of the fully executed Assignment Agreement and all other necessary documents and approvals, prompt notice thereof shall be provided to Borrowers and a copy of such Assignment Agreement shall be maintained by Administrative Agent. The date of such recordation of a transfer shall be referred to herein as the “Assignment Effective Date.” Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans.
(c) Right to Assign . Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including all or a portion of its Commitment or Loans owing to it or other Obligations ( provided , however , that pro rata assignments shall not be required and each assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any applicable Loan and any related Commitments):
(i) to any Person meeting the criteria of clause (a) of the definition of the term of “Eligible Assignee” upon the giving of notice to Borrowers and Administrative Agent but with no consent required of any of them; and
(ii) to any Person meeting the criteria of clause (b) of the definition of the term of “Eligible Assignee” upon giving of notice to Borrowers and Administrative Agent and, in the case of assignments of Loans or Revolving Commitments to any such Person, consented to by each Borrower and Administrative Agent (such consent not to be (x) unreasonably withheld or delayed or, (y) in the case of Borrower, required at any time an Event of Default with respect to any Borrower under Sections 8.1(a) , 8.1(f) or 8.1(g) shall have occurred and then be continuing); provided , further , that each such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than $5,000,000 (or such lesser amount as may be agreed to by Borrowers and Administrative Agent or as shall constitute the aggregate amount of the Revolving Commitments and Revolving Loans of the assigning Lender).
(d) Mechanics . Assignments and assumptions of Loans and Commitments by Lenders shall be effected by manual execution and delivery to Administrative Agent of an Assignment Agreement. Assignments made pursuant to the foregoing provision shall be effective as of the Assignment Effective Date. In connection with all assignments there shall be delivered to Administrative Agent such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.20(c) , together with payment to the Administrative Agent of a registration and processing fee of $3,500 (except that no such registration and processing fee shall be payable in the case of an assignee which is already a Lender or is an affiliate or Related Fund of a Lender or a Person under common management with a Lender) unless waived by Administrative Agent.
(e) Representations and Warranties of Assignee . Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants as of the Closing Date or as of the Assignment Effective Date that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii) it will make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6 , the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control).
(f) Effect of Assignment . Subject to the terms and conditions of this Section 10.6 , as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent of its interest in the Loans and Commitments as reflected in the Register and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof under Section 10.8 ) and be released from its obligations hereunder (and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date; provided , anything contained in any of the Credit Documents to the contrary notwithstanding, (y) Issuing Bank shall continue to have all rights and obligations thereof with respect to all Letters of Credit issued by it until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (z) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be modified to reflect any Commitment of such assignee and any Revolving Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Borrowers shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Revolving Commitments and/or outstanding Loans of the assignee and/or the assigning Lender.
(g) Participations .
(i) Each Lender shall have the right at any time to sell one or more participations to any Person (other than any Disqualified Institution, Parent or any of its Subsidiaries or any of their Affiliates) in all or any part of its Commitments, Loans or in any other Obligation. Each Lender that sells a participation pursuant to this Section 10.6(g) shall maintain a register on which it records the name and address of each participant and the principal amounts of each participant’s participation interest (each, a “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to Borrowers, Administrative Agent or any
other Person (including the identity of any Participant or any information relating to a participant’s interest in the Commitments, Loans or other Obligations) except to the extent necessary to establish that such Commitments, Loans or other Obligations are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations and/or to establish that any such Participant is not a Disqualified Institution. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of a participation for all purposes under this Agreement, notwithstanding any notice to the contrary.
(ii) The holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver pursuant to Section 10.5(b) or (c)(i) that would require the consent of such Lender.
(iii) Borrowers agree that each participant shall be entitled to the benefits of Sections 2.18(c) , 2.19 and 2.20 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (c) of this Section; provided , (x) a participant shall not be entitled to receive any greater payment under Section 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation to such participant is made with Borrowers’ explicit prior written consent to such entitlement to receive greater payments and (y) a participant that would be a Non-US Lender if it were a Lender shall not be entitled to the benefits of Section 2.20 unless Borrowers are notified of the participation sold to such participant and such participant agrees, for the benefit of Borrowers, to comply, and does comply, with Section 2.20 as though it were a Lender; provided further that, except as specifically set forth in clauses (x) and (y) of this sentence, nothing herein shall require any notice to Borrowers or any other Person in connection with the sale of any participation. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17 as though it were a Lender.
(h) Certain Other Assignments and Participations . In addition to any other assignment or participation permitted pursuant to this Section 10.6 any Lender may assign, pledge and/or grant a security interest in all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors and any operating circular issued by such Federal Reserve Bank; provided , that no Lender, as between Borrowers and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge, and provided further , that in no event shall the applicable Federal Reserve Bank, pledgee or trustee, be considered to be a “Lender” or be entitled to require the assigning Lender to take or omit to take any action hereunder.
10.7. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.
10.8. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.18(c) , 2.19 , 2.20 , 10.2 , 10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17 , 9.3(b) and 9.6 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof.
10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any Lender or, in the case of Sections 2.22 and 2.23 , any Credit Party, in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to (a) each Agent and each Lender hereby and (b) the Credit Parties under Sections 2.22 and 2.23 , in each case are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Credit Documents, any of the Secured Hedge Agreements or any of the Secured Bank Product Agreements. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.
10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to Administrative Agent, Issuing Bank or Lenders (or to Administrative Agent, on behalf of Lenders or Issuing Bank), or any Agent, Issuing Bank or Lender enforces any security interests or exercises any right of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred; provided , that with respect to calculating interest on any Obligation that is so reinstated, interest shall accrue from the date that such Obligation is first reinstated and not from the previous date of payment.
10.11. Severability. In case any provision herein or obligation hereunder or under any other Credit Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
10.12. Obligations Several; Independent Nature of Lenders’ Rights. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and, subject to Section 9.8(b) , each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.
10.13. Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.
10.14. APPLICABLE LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF AND ANY DETERMINATIONS WITH RESPECT TO POST-JUDGMENT INTEREST) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.
10.15. CONSENT TO JURISDICTION . SUBJECT TO CLAUSE (E) OF THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENTS, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT OR AN ASSIGNMENT AGREEMENT, EACH PARTY HERETO, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN WITH RESPECT TO ACTIONS BY ANY AGENT IN RESPECT OF RIGHTS UNDER ANY COLLATERAL DOCUMENT GOVERNED BY LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1 ; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES, SUBJECT TO SECTION 9.8(b) , THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY CREDIT DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT.
10.16. WAIVER OF JURY TRIAL . EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
10.17. Confidentiality . Each Agent (which term shall for the purposes of this Section 10.17 include the Joint Lead Arrangers), and each Lender (which term shall for the purposes of this Section 10.17 include the Issuing Bank) shall hold confidential all non-public information regarding Parent and its Subsidiaries and their businesses, it being understood and agreed by Borrowers that, in any event, Administrative Agent may disclose such information to the Lenders (other than Public Lenders) and each Agent and each such Lender may make (a) disclosures of such information to Affiliates of such Lender or Agent and to such Lender’s, Agent’s or Affiliate’s agents, advisors, directors, officers and employees (and to other Persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17 ) solely in connection with the transactions contemplated by this Agreement (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and directed to keep such information confidential), (b) disclosures of such
information reasonably required by (i) any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation of any Loans or any participations therein or (ii) any swap or derivative agreements, or by any contractual counterparties to such swap or derivative agreements (or the professional advisors thereto) relating to any Borrower and its obligations ( provided , that in the case of clauses (i) and (ii) , such assignees, transferees, participants, counterparties and advisors are advised of and agree to be bound by either the provisions of this Section 10.17 or other provisions at least as restrictive as this Section 10.17 ), (c) disclosure to any nationally recognized rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to Credit Parties received by it from any Agent or any Lender, (d) disclosures required in connection with the exercise of any remedies hereunder or under any other Credit Document and (e) disclosures required or requested by any Governmental Authority or representative thereof or by the NAIC or pursuant to legal or judicial process; provided , unless specifically prohibited by applicable law or court order and to the extent practicable, each Lender and each Agent shall make reasonable efforts to notify Borrowers of any request by any Governmental Authority or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information. Notwithstanding anything to the contrary set forth herein, each party (and each of their respective employees, representatives or other agents) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions and other tax analyses) that are provided to any such party relating to such tax treatment and tax structure. However, any information relating to the tax treatment or tax structure shall remain subject to the confidentiality provisions hereof (and the foregoing sentence shall not apply) to the extent reasonably necessary to enable the parties hereto, their respective Affiliates, and their and their respective Affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax structure” means any facts relevant to the federal income tax treatment of the transactions contemplated by this Agreement but does not include information relating to the identity of any of the parties hereto or any of their respective Affiliates.
10.18. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Borrowers shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all
times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Borrowers to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Loans made hereunder or be refunded to Borrowers.
10.19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.
10.20. Effectiveness; Entire Agreement. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto or receipt by Borrowers and Administrative Agent of written notification of such execution and authorization of delivery thereof. With the exception of the Surviving Provisions (as defined in the Commitment Letter, dated September 21, 2010, among the Lender Commitment Parties (as defined therein) signatory thereto, the Partnership, the LLC and Existing GGPI (the “Commitment Letter” )), which by the terms of the Commitment Letter remain in full force and effect for the periods set forth therein, all of the Lender Commitment Parties’ obligations under the Commitment Letter shall terminate and be superseded by the Credit Documents and the Lender Commitment Parties shall be released from all liability in connection therewith, including any claim for injury or damages, whether consequential, special, direct, indirect, punitive or otherwise.
10.21. PATRIOT Act. Each Lender and Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Credit Party that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Lender or Administrative Agent, as applicable, to identify such Credit Party in accordance with the PATRIOT Act.
10.22. Electronic Execution of Assignments . The words “execution,” “signed,” “signature,” and words of like import in any Assignment Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
10.23. No Fiduciary Duty . Each Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “ Lenders ”), may have economic interests that conflict with those of the Credit Parties, their stockholders and/or their Affiliates. Each Credit Party agrees that nothing in the Credit Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Credit Party, its stockholders or its Affiliates, on the other. The Credit Parties acknowledge and agree that (a) the transactions contemplated by the Credit Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length
commercial transactions between the Lenders, on the one hand, and the Credit Parties, on the other, and (b) in connection with the transactions contemplated by the Credit Documents and with the process leading thereto, (i) no Lender has assumed an advisory or fiduciary responsibility in favor of any Credit Party, its stockholders or its Affiliates with respect to the transactions contemplated by the Credit Documents (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Credit Party, its stockholders or its Affiliates on other matters) or any other obligation to any Credit Party in connection therewith except the obligations expressly set forth in the Credit Documents and (ii) each Lender is acting solely as principal and not as the agent or fiduciary of any Credit Party, its management, stockholders, creditors or any other Person. Each Credit Party acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Each Credit Party agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Credit Party, in connection with such transaction or the process leading thereto.
10.24. Disclosure of Information Relating to Agreement . Each Agent and each Lender may disclose the existence of this Agreement, the size of the credit facilities hereunder, the number and nature of tranches (i.e., revolver, term loan, etc.) hereunder, the Revolving Commitment Termination Date, the names and title of the Agents hereunder and the number of Lenders to market data collectors, similar services providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement and the other Credit Documents.
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IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.
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BORROWERS: |
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GGP LIMITED PARTNERSHIP |
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GGP, Inc., its general partner |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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GGPLP L.L.C. |
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GGP Limited Partnership, |
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its managing member |
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By: |
GGP, Inc., its general partner |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
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GGPLPLLC 2010 LOAN PLEDGOR HOLDING, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
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GGPLP 2010 LOAN PLEDGOR HOLDING, LLC |
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/s/ Heath Fear |
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Heath Fear |
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Signature Page to Credit and Guaranty Agreement
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GGPLP
REAL ESTATE 2010 LOAN
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By: |
/s/ Heath Fear |
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Heath Fear |
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Title: |
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OTHER CREDIT PARTIES: |
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GGP, INC. (f/k/a General Growth Properties, Inc.) |
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/s/ Heath Fear |
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Heath Fear |
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GGP LIMITED PARTNERSHIP II |
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GGP, Inc., its general partner |
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By: |
/s/ Heath Fear |
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Heath Fear |
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GGP REAL ESTATE HOLDING I, INC. |
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Heath Fear |
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GGP REAL ESTATE HOLDING II, INC. |
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Signature Page to Credit and Guaranty Agreement
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GENERAL
GROWTH PROPERTIES, INC.
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BAILEY HILLS VILLAGE, LLC |
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Heath Fear |
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BENSON PARK BUSINESS TRUST |
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Heath Fear |
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10 CCC BUSINESS TRUST |
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20 CCC BUSINESS TRUST |
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30 CCC BUSINESS TRUST |
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FORTY COLUMBIA CORPORATE CENTER, LLC |
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FIFTY COLUMBIA CORPORATE CENTER, LLC |
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Heath Fear |
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SIXTY COLUMBIA CORPORATE CENTER, LLC |
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By: |
/s/ Heath Fear |
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Heath Fear |
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RUNNING BROOK BUSINESS TRUST |
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By: |
/s/ Heath Fear |
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Heath Fear |
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Signature Page to Credit and Guaranty Agreement
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FREMONT PLAZA L.L.C. |
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By: |
/s/ Heath Fear |
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Heath Fear |
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Authorized Signatory |
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BR-STCR, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
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THE ROUSE COMPANY OF FLORIDA, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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GGP SAVANNAH L.L.C. |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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PLAZA 9400, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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PROVO DEVELOPMENT LAND, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
Signature Page to Credit and Guaranty Agreement
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RED CLIFFS PLAZA, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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CANYON POINTE VILLAGE CENTER, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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YELLOWSTONE SQUARE, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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TWIN FALLS CROSSING, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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NEWPARK ANCHOR ACQUISITION, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
Signature Page to Credit and Guaranty Agreement
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WEST OAKS ANCHOR ACQUISITION, LLC |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
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GGPLP REAL ESTATE, INC. |
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By: |
/s/ Heath Fear |
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Name: |
Heath Fear |
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Title: |
Authorized Signatory |
Signature Page to Credit and Guaranty Agreement
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DEUTSCHE BANK TRUST COMPANY AMERICAS , |
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as Administrative Agent, Collateral Agent, Swing
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By: |
/s/ George R. Reynold |
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Name: |
George R. Reynolds |
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Title: |
Director |
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By: |
/s/ James Roliso |
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Name: |
James Roliso |
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Title: |
Managing Director |
Signature Page to Credit and Guaranty Agreement
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WELLS FARGO BANK, N.A., |
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as a Lender and as a Syndication Agent |
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By: |
/s/ Scott S. Solis |
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Name: |
Scott S. Solis |
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Title: |
Senior Vice President |
Signature Page to Credit and Guaranty Agreement
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RBC CAPITAL MARKETS , |
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as a Syndication Agent |
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By: |
/s/ Dan LePage |
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Name: |
Dan LePage |
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Title: |
Authorized Signatory |
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ROYAL BANK OF CANADA , |
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as a Lender |
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By: |
/s/ Dan LePage |
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Name: |
Dan LePage |
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Title: |
Authorized Signatory |
Signature Page to Credit and Guaranty Agreement
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BARCLAYS BANK PLC , |
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as a Documentation Agent and a Lender |
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By: |
/s/ Craig Malloy |
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Name: |
Craig Malloy |
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Title: |
Director |
Signature Page to Credit and Guaranty Agreement
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BANK OF AMERICA, N.A. , |
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as a Lender |
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By: |
/s/ Eyal Namordi |
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Name: Eyal Namordi |
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Title: Senior Vice President |
Signature Page to Credit and Guaranty Agreement
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GOLDMAN SACHS LENDING PARTNERS LLC, |
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as Documentation Agent and a Lender |
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By: |
/s/ Alexis Maged |
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Authorized Signatory |
Signature Page to Credit and Guaranty Agreement
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MIHI LLC , |
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as a Lender |
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By: |
/s/ Steve Mehos |
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Name: |
Steve Mehos |
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Title: |
Attorney in Fact |
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MACQUARIE CAPITAL (USA) INC. , |
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as a Documentation Agent |
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By: |
/s/ Robert D. Redmond |
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Name: |
Robert D. Redmond |
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Title: |
Senior Managing Director |
Signature Page to Credit and Guaranty Agreement
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MORGAN STANLEY BANK, N.A. , |
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as a Lender |
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By: |
/s/ Ryan Vetsch |
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Name: |
Ryan Vetsch |
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Title: |
Authorized Signatory |
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MORGAN STANLEY SENIOR FUNDING, INC. , |
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as a Documentation Agent |
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By: |
/s/ Ryan Vetsch |
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Name: |
Ryan Vetsch |
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Title: |
Vice President |
Signature Page to Credit and Guaranty Agreement
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TORONTO DOMINION (NEW YORK) LLC , |
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as a Lender |
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By: |
/s/ Robyn Zeller |
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Name: |
Robyn Zeller |
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Title: |
Vice President |
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TD SECURITIES (USA) LLC , |
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as a Documentation Agent |
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By: |
/s/ William Balassone |
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Name: |
William Balassone |
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Title: |
Director |
Signature Page to Credit and Guaranty Agreement
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UBS LOAN FINANCE LLC , |
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as a Lender |
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By: |
/s/ Irja R. Otsa |
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Name: |
Irja R. Otsa |
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Title: |
Associate Director, Banking Products Services US |
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By: |
/s/ Mary E. Evans |
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Name: |
Mary E. Evans |
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Title: |
Associate Director, Banking Products Services US |
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UBS SECURITIES LLC , |
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as a Documentation Agent |
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By: |
/s/ Irja R. Otsa |
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Name: |
Irja R. Otsa |
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Title: |
Associate Director, Banking Products Services US |
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By: |
/s/ Mary E. Evans |
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Name: |
Mary E. Evans |
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Title: |
Associate Director, Banking Products Services US |
Signature Page to Credit and Guaranty Agreement
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U S BANK NATIONAL ASSOCIATION, |
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as a Lender |
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By: |
/s/ Dennis J. Redpath |
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Name: |
Dennis J. Redpath |
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Title: |
Senior Vice President |
Signature Page to Credit and Guaranty Agreement
APPENDIX A
TO CREDIT AND GUARANTY AGREEMENT
Revolving Commitments
|
Lender |
|
Revolving Commitment |
|
Pro
|
|
|
|
Barclays Bank plc |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
Bank of America, N.A. |
|
$ |
25,000,000.00 |
|
8.33 |
% |
|
Deutsche Bank Trust Company Americas |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
Goldman Sachs Lending Partners LLC |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
MIHI LLC |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
Morgan Stanley Bank, N.A. |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
Royal Bank of Canada |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
Toronto Dominion (New York) LLC |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
UBS Loan Finance LLC |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
U S Bank National Association |
|
$ |
25,000,000.00 |
|
8.33 |
% |
|
Wells Fargo Bank, N.A. |
|
$ |
27,777,777.78 |
|
9.26 |
% |
|
Total |
|
$ |
300,000,000.00 |
|
100 |
% |
APPENDIX B
TO CREDIT AND GUARANTY AGREEMENT
Notice Addresses
All Credit Parties
c/o General Growth Properties, Inc.
110 N. Wacker Drive
Chicago, Illinois 60606
Attention: Heath R. Fear
Telephone: 312-960-5024
Facsimile: 312-442-6371
E-mail: heath.fear@ggp.com
in each case, with a copy to:
c/o General Growth Properties, Inc.
110 N. Wacker Drive
Chicago, Illinois 60606
Attention: Pamela Kain
Telephone: 312-960-5767
Facsimile: 312-442-6371
E-mail: pamela.kain@ggp.com
and
Weil, Gotshal & Manges LLP
200 Crescent Court, Suite 300
Dallas, Texas 75201
Attention: Angela L. Fontana
Telephone: 214-746-7895
Facsimile: 214-746-7777
E-mail: angela.fontana@weil.com
DEUTSCHE BANK TRUST COMPANY AMERICAS ,
as Administrative Agent, Collateral Agent,
Swing Line Lender, Issuing Bank and a Lender
Administrative Agent’s and Swing Line Lenders’ Principal Office:
Deutsche Bank Trust Company Americas
c/o Deutsche Bank Securities Inc.
Real Estate
200 Crescent Court, Suite 550
Dallas, Texas 75201
Attention: Scott Speer, Vice President, Loan Syndication and Structuring
Telephone: 214-740-7903
Facsimile: 214-740-7910
E-mail: scott.p.speer@db.com
Issuing Bank’s Principal Office:
Deutsche Bank
Global Loan Operations, Standby L/C Unit
MS: NYC60-0926
60 Wall Street
New York, New York 10005
Attention: Charles P. Ferris
Telephone: 212-250-1214
Facsimile: 212-797-0403
E-mail: charles.ferris@db.com
in each case, with a copy to:
James G. Rolison
Managing Director
Deutsche Bank Securities Inc.
Commercial Real Estate
MS: NYC60-1005
60 Wall Street
New York, New York 10005
Telephone: 212-250-3352
Facsimile: 212-797-4496
E-mail: james.rolison@db.com
George Reynolds
Director
Deutsche Bank Securities Inc.
Commercial Real Estate
MS: NYC60-1005
60 Wall Street, 10th Floor
New York, NY 10005
Telephone: 212-250-2362
Facsimile: 212-797-4496
E-mail: george.r.reynolds@db.com
Anita Cheung
Vice President
Deutsche Bank
Commercial Real Estate
MS NYC60-1008
60 Wall Street, 10th Floor
New York, New York 10005
Telephone: 212-250-6293
Facsimile: 212-797-4940
E-mail: anita.cheung@db.com
WELLS FARGO BANK, N.A. ,
as a Lender and as a Syndication Agent
Wells Fargo Bank, N.A.
MN Loan Center
608 2 nd Avenue South, 11 th Floor
Minneapolis, MN 55402-1916
Attention: Michael K. Burns, Loan Servicing Specialist
Telephone: 612-667-6333
Facsimile: 866-595-7868
E-mail: Michael.k.burns@wellsfargo.com
with a copy to:
Wells Fargo Bank, N.A.
123 North Wacker Drive, Suite 1900
Chicago, Illinois 60606
Attention: Winita Lau
Telephone: 312-269-4848
Facsimile: 312-782-0969
E-mail: Winita.V.Lau@wellsfargo.com
RBC CAPITAL MARKETS ,
as a Syndication Agent
ROYAL BANK OF CANADA ,
as a Lender
Royal Bank of Canada
One Liberty Plaza, 3 rd Floor
165 Broadway
New York, New York 10006-1404
Attention: Dan LePage
Telephone: 212-428-6605
Facsimile: 212-428-6459
E-mail: Dan.LePage@rbccm.com
with a copy to:
Royal Bank of Canada
One Liberty Plaza, 3 rd Floor
165 Broadway
New York, New York 10006-1404
Attention: Daniel Lin
Telephone: 212-428-6950
Facsimile: 212-428-6459
E-mail: Daniel.Lin@rbccm.com
BARCLAYS BANK PLC ,
as a Documentation Agent and a Lender
Barclays Capital
70 Hudson Street
Jersey City, New Jersey 07302
Attention: Vincent Cangiano
Telephone: 201-499-2710
Facsimile: 212-412-7401
E-mail: xrausloanops1@barclayscapital.com
with a copy to:
Barclays Capital
745 7 th Avenue, 26 th Floor
New York, New York 10119
Attention: Noam Azachi
Telephone: 212-526-1957
Facsimile: 212-526-5115
E-mail: noam.azachi@barcap.com
GOLDMAN SACHS LENDING PARTNERS LLC ,
as a Documentation Agent and a Lender:
30 Hudson Street, 38 th Floor
Jersey City, New Jersey 07302
Attention: Lauren Day
Telephone: 212-934-3921
E-mail: gsd.link@gs.com
MIHI LLC ,
as a Lender
MACQUARIE CAPITAL (USA) INC. ,
as a Documentation Agent
MIHI LLC
125 West 55 th Street
New York, New York 1019
Attention: Arvind Admal
Telephone: 212-231-2099
Attention: David Anekstein
Telephone:212-231-6187
Facsimile: 212-231-0629
E-mail: loan.admin@macquarie.com
TORONTO DOMINION (NEW YORK) LLC ,
as a Lender
TD SECURITIES (USA) LLC ,
as a Documentation Agent
Toronto Dominion (New York) LLC
c/o TD Securities
Royal Trust Tower, 18th Floor
77 King Street West
Toronto Ontario M5K 1A2
Attention: Brian Pirotta
Telephone: 416-590-4340
Facsimile: 416-590-4335
E-mail: Brian.Pirotta@TDSecurities.com
with a copy to:
Toronto Dominion (New York) LLC
c/o TD Securities
Royal Trust Tower, 18th Floor
77 King Street West
Toronto Ontario M5K 1A2
Attention: Ruth Bengo
Telephone: 416-590-4350
Facsimile: 416-590-4335
E-mail: Ruth.Bengo@TDSecurities.com
UBS LOAN FINANCE LLC ,
as a Lender
UBS SECURITIES LLC ,
as a Documentation Agent
UBS Loan Finance LLC
677 Washington Boulevard
Stamford, Connecticut 06901
Attention: Rayad Yadali, Loan Administrator
Telephone: 203-719-3937
Facsimile: 203-719-3888
E-mail: rayad.yadali@ubs.com
U S BANK NATIONAL ASSOCIATION ,
as a Lender
U S Bank National Association
209 South LaSalle Street, Suite 210
Chicago, IL 60604
Attention: Dennis J. Redpath, Senior Vice President
Telephone: 312-325-8875
Facsimile: 312-325-8852
Email: dennis.redpath@usbank.com
with a copy to:
U S Bank National Association
209 South LaSalle Street, Suite 210
Chicago, IL 60604
Attention: Jackie Rios, Loan Administration
Telephone: 312-325-8864
Facsimile: 312-325-8853
Email: jacqueline.rios@usbank.com
MORGAN STANLEY BANK, N.A. ,
as a Lender
MORGAN STANLEY SENIOR FUNDING, INC. ,
as a Documentation Agent
1 Pierrepont Plaza
Brooklyn, NY 11201
Attention: Michael Gavin
Telephone: 718-754-4041
Facsimile: 718-233-2132
Email: primarydocs@morganstanley.com
with a copy to:
Morgan Stanley Loan Servicing
1300 Thames Street Wharf, 4th floor
Baltimore, MD 21231
Telephone: 443-627-4355
Facsimile: 718-233-2140
Email: msloanservicing@morganstanley.com
BANK OF AMERICA, N.A. ,
as a Lender
Bank of America, N.A.
135 South LaSalle Street, Suite 1225
Chicago, IL 60603
Attention: Eyal Namordi, Senior Vice President
Telephone: 312-828-2575
Facsimile: 415-503-5142
Email: eyal.namordi@baml.com
with a copy to:
Bank of America, N.A.
Corporate Credit Services
901 Main Street/ TX1-492-14-11
Dallas, TX 75202
Attention: Diana R. Lopez, Credit Services Consultant
Telephone: 214-209-2138
Facsimile: 214-290-8384
Email: diana.r.lopez@baml.com
Exhibit 99.7
EXECUTION VERSION
GENERAL GROWTH PROPERTIES, INC.
6% Promissory Note
Date of Issue: November 9, 2010 (the “ Issue Date ”)
FOR VALUE RECEIVED, General Growth Properties, Inc., a Delaware corporation (“ Maker ”), hereby unconditionally promises to pay to PSRH, Inc. (“ Holder ”), a Cayman Islands corporation and a wholly-owned subsidiary of Pershing Square International, Ltd., a Cayman Islands exempted company, the sum of three hundred and fifty million U.S. Dollars ($350,000,000) (the “ Principal Amount ”), together with interest thereon as set forth in this Note. This Note is a “Bridge Note” issued pursuant to the Amended And Restated Stock Purchase Agreement, effective as of March 31, 2010 (the “ Agreement ”), by and between General Growth Properties, Inc. and Pershing Square Capital Management, L.P. on behalf of Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. (collectively, the “ Purchasers ”).
1. Maturity . The outstanding Principal Amount under this Note and accrued but unpaid interest thereon shall be due and payable on the first Business Day occurring at least 211 days after the Issue Date set forth above (the “ Maturity Date ”). As used in this Note, “ Business Day ” means any day other than (a) a Saturday, (b) a Sunday, or (c) any day on which commercial banks in New York, New York are required or authorized to close by law or executive order.
2. Interest . Interest on the outstanding Principal Amount shall accrue at the rate of six percent (6%) (the “ Note Interest Rate ”) per annum from (but excluding) the Issue Date through (and including) the date of payment (computed on the basis of a 360 day year and applied to the actual number of days elapsed, compounding quarterly in arrears on the last day of each March, June, September and December during which this Note is outstanding, commencing on December 31, 2010). Interest shall be payable only upon payment or prepayment of the Principal Amount. If the outstanding Principal Amount under this Note and accrued but unpaid interest thereon shall not have been paid prior to 10:00 p.m. New York City time on the Maturity Date, then commencing with the day following the Maturity Date interest on the outstanding Principal Amount under this Note and the accrued but unpaid interest thereon shall accrue at a default rate per annum equal to the Note Interest Rate plus two percent (2%) computed on the basis of a 360 day year and applied to the actual number of days elapsed after the Maturity Date during which this Note is outstanding.
3. Prepayment . The unpaid principal and interest of this Note may be prepaid in whole or in part without premium or penalty at any time; provided that any partial prepayment is in an amount equal to at least $10,000,000.
4. Default . An event of default shall exist if any one or more of the following events (an “ Event of Default ”) shall occur: (a) Maker shall fail to pay when due on the Maturity Date the outstanding Principal Amount and accrued but unpaid interest thereon; (b) Maker shall fail to comply with the provisions of Section 8 below; or (c) (i) commencement of a case or proceeding by or against, or the entry of an order for relief with respect to, one or more of the Company and its consolidated subsidiaries (together holding a substantial part of the Company’s property and assets on a consolidated basis) by a court of competent jurisdiction under title 11 of the United States Code or other applicable bankruptcy or insolvency law, (ii) the entry of any order in furtherance of the winding up or liquidation of the affairs of one or more of the Company and such consolidated subsidiaries or (iii) the appointment of a receiver, liquidator, insolvency trustee or similar official under any applicable bankruptcy or insolvency law with respect to any substantial part of the Company’s consolidated property or assets; provided, however, that, in the case of any case or proceeding instituted against Maker (without Maker’s consent or support) either such case or proceeding shall remain undismissed or unstayed for a period of 45 days or more or such court shall enter a decree or order granting the relief sought in such case or proceeding. If any Event of Default described in this Section occurs, then the outstanding Principal Amount and accrued but unpaid interest thereon shall immediately become due and payable without notice by any party.
5. Treatment . Maker and Holder intend to enter into a debtor-creditor relationship and the Note is intended to document such relationship. Each of Maker and Holder agrees to treat this Note and the underlying loan related thereto as debt for U.S. federal income tax purposes and shall not take any positions or actions contrary thereto.
6. Power and Authority; Validity . Maker ha s all necessary legal power and ability to execute, deliver and perform on this Note. This Note has been duly executed and delivered by Maker and constitutes a legal, valid, and binding obligation of Maker, enforceable against Maker in accordance with its terms.
7. Waiver . Maker hereby waives diligence, presentment, protest and demand, notice of protest, notice of dishonor, notice of nonpayment and any and all other notices and demands in connection with the delivery, acceptance, performance, default or enforcement of this Note. Maker agrees that this Note is an instrument for the payment of money only and the Holder may bring a motion for summary judgment in lieu of complaint pursuant to Section 3213 of the New York Civil Practice Law and Rules for payment of any amounts owing hereunder. Maker further waives, to the full est extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note.
8. Amendment . This Note cannot be changed, modified, amended or terminated and no provisions hereof may be waived without the express, written consent of Holder, which it may grant or withhold in its sole discretion.
9. Successorship .
(a) Maker covenants and agrees that it shall not, and shall not permit any consolidated subsidiary to, directly or indirectly (including by means of any merger or consolidation) convey, sell, transfer or otherwise dispose of all or substantially all of the Company’s consolidated assets, property or business, whether now owned or hereafter acquired, except to a successor entity that also assumes in a written instrument reasonably acceptable to Holder all of Maker’s obligations hereunder.
(b) This Note shall inure to the benefit of Holder and its successors and permitted assigns and shall be binding upon Maker, and its successors and permitted assigns.
10. Expenses . All of the Holder’s costs and expenses of enforcing its rights hereunder, including any costs of collection, addressing any requests of Maker for amendments or waivers and any reasonable attorney’s fees in connection therewith, shall be paid by Maker as promptly as practicable following demand .
11. Assignment . (a) (a) Other than as set forth in Section 9(a) of this Agreement, Maker may not assign or otherwise transfer this Note or any of the rights or obligations hereunder without Holder’s specific prior written consent and (b) at all times when no Event of Default has occurred, this Note may not be assigned or otherwise transferred by Holder without Maker’s specific prior written consent (not to be unreasonably withheld, conditioned or delayed), and, in each case, any purported assignment or other transfer in violation of the foregoing shall be null and void. For the avoidance of doubt, Maker shall in no event be obligated to register this Note under any securities laws.
12. Notices . All notices and other communications under this Note shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as provided in Section 13.1 of the Agreement.
13. Severability . If any provision of this Note shall be declared void or unenforceable by any judicial or administrative authority, the validity of any other provision and of the entire Note shall not be affected thereby.
14. Governing Law . This Note shall be governed by and construed in accordance with the internal laws of the State of New York. Each holder of this Note irrevocably submits to the jurisdiction of, and venue in, the United States Bankruptcy Court for the Southern District of New York and waives any objection based on forum non conveniens.
[Signature Page follows]
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its duly authorized officer on the Issue Date set forth above.
|
|
GENERAL GROWTH PROPERTIES, INC. |
|
|
|
|
|
|
|
By: |
/s/ Linda J. Wight |
|
|
Name: |
Linda J. Wight |
|
|
Title: |
Vice President and Assistant Secretary |
[Signature Page to PSRH — GGP Bridge Note]