(Mark One) | ||
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, 2007 | ||
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
Delaware | 42-1283895 | |
(State or other jurisdiction
of
incorporation or organization) |
(I.R.S. Employer
Identification Number) |
110 N. Wacker Dr., Chicago, IL | 60606 | |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $.01 par value | New York Stock Exchange | |
Preferred Stock Purchase Rights | New York Stock Exchange |
Large accelerated filer
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Accelerated filer o | Non-accelerated filer o | Smaller reporting Company o | |||
(Do
not check if a smaller reporting company)
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Item 1.
Business
Retail and Other.
includes the operation,
development and management of retail and other rental property,
primarily shopping centers
Master Planned Communities.
includes the
development and sale of land, primarily in large-scale,
long-term community development projects in and around Columbia,
Maryland; Summerlin, Nevada; and Houston, Texas
1
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Development projects, including new development and
redevelopment and expansion of existing properties. In September
2007, we opened Natick Collection in Natick, Massachusetts.
Natick Collection, which is the largest mall in New England, is
anchored by Nordstrom, Neiman Marcus, JC Penney,
Lord & Taylor, Macys and Sears and includes
retail, dining and recreation. Additionally, we opened The Shops
at Fallen Timbers in Maumee, Ohio in October 2007. This open-air
center includes approximately one million square feet of retail,
dining and entertainment space. Anchors include Dillards,
JC Penney, Barnes and Noble and a multi-screen theater. In
November 2007, we opened Park West in Peoria, Arizona. This
open-air shopping, dining and entertainment center is anchored
by a 16-screen Harkins Theatre. During 2007, including Natick
Collection, The Shops at Fallen Timbers and Park West, we
completed 39 projects with total costs of more than
$1.16 billion. Unlike prior years when our developments
consisted almost exclusively of traditional shopping malls, our
current development activity includes alternative uses and
densification. Certain of our current developments include
residential and hotel space. Development expenditures, including
new developments, redevelopments and expansions were
approximately $790 million in 2007 and are expected to
approximate $2.10 billion in 2008 through 2011.
Increasing net operating income (NOI) at our
existing retail operations through proactive property management
and leasing and through operating cost reductions. Specific
actions to increase productivity of our properties have included
changing the tenant mix, increasing alternative sources of
revenue and integrating new retail formats such as power,
lifestyle and mixed use centers.
Increasing our international focus, which includes both
attracting international retailers into our existing domestic
centers and investing in retail properties overseas. At
December 31, 2007, we had investments of approximately
$237.1 million relating to our joint ventures in Brazil,
Turkey and Costa Rica. During 2007 we opened Espark in
Eskisehir, Turkey, Bangu Shopping in Rio de Janeiro, Brazil and
Santana Parque Shopping in Sao Paulo, Brazil. Our joint venture
in Brazil have ownership interests in ten operating retail
centers, one third-party management company, and four retail
centers under development and our joint ventures in Turkey own a
third party management company, one operating retail center and
two retail centers under development.
Management and refinancing of our current debt.
2
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22
%
Lenscrafters, Mastercuts, Mia & Maxx, Pearl Vision, The
Picture People, Regis
15
Aerie, Banana Republic, Eddie Bauer, Express, Gap, J. Crew,
Lululemon, Athletica, MW Tux, Old Navy, S & K Menswear
13
Ann Taylor, bebe, Chicos, Christopher & Banks,
Coldwater Creek, H&M, J. Jill, Lane Bryant, Lucy, New York
& Co., Talbots, Victorias Secret
11
Abercrombie & Fitch, Aeropostale, American Eagle Forever
21, Hollister & Co., Hot Topic, Limited Too, Pac Sun, Zumiez
8
Aldo, Champs, Easy Spirit, Finish Line, FootLocker,
Journeys, Nine West, Payless Shoesource, Shoe Dept.
7
Applebees, Cheesecake Factory, Maggianos, Panera
Bread, PF Changs, Red Robin, Ruby Tuesday, TGI
Fridays
4
Apple Computer, Brookstone, EB Games, FYE, Gamestop, Radio
Shack, Ritz Camera, Suncoast
4
Crate & Barrel, Kirklands, Pottery Barn, Select
Comfort, Williams-Sonoma, Z Gallerie
3
Dicks Sporting Goods, Hibbetts, MC Sports, Pro
Image, Scheels All Sports
3
Carlton Cards, Hallmark, Papyrus, Spencer Gifts, Things
Remembered, Yankee Candle
2
Bailey, Banks, & Biddle, Ben Bridge Jewelers, Helzberg
Diamonds, Kay Jewelers, Piercing Pagoda, Whitehall Co.
Jewellers, Zales Jewelers
2
Abercrombie Kids, Build-A-Bear Workshop, Childrens Place,
Club Libby Lu, Gap Kids, Gymboree, Janie & Jack, Stride Rite
2
Arbys, Auntie Annes, Chick-Fil-A, McDonalds,
Sbarro, Subway, Taco Bell
3
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2
Aveda, Bath & Body Works, Bare Essentials, Crabtree &
Evelyn, M.A.C., LOccitane, Origins, Sephora, Trade Secret
2
Gloria Jeans Gourmet Coffee, GNC, Godiva Chocolatier,
Rocky Mountain Chocolate Factory, Starbucks, Teavana, Vitamin
World
100
%
As of December 31, 2007
Total
Remaining
Gross
Saleable
Location
Acres(1)
Acres(2)
Baltimore and Prince Georges County, Maryland/Washington
D.C. corridor
19,100
588
Northwest of Las Vegas, Nevada
22,500
7,682
Western Houston, Texas
11,400
7,287
Houston, Texas
28,400
2,571
(1)
Total Gross Acres encompasses all of the land located within the
borders of the Master Planned Community, including parcels
already sold, saleable parcels and non-saleable areas, such as
roads, parks and recreation and conservation areas.
(2)
Remaining Saleable Acres includes only parcels that are intended
for sale. Remaining saleable acres is likely to change over time
as the master plan for a particular project is developed over
time.
(3)
Maryland communities includes Columbia and Fairwood.
(4)
We own 52.5% of Woodlands. Total gross acres and remaining
saleable acres represent 100% of the project.
Table of Contents
Consumer demographics
Quality, design and location of properties
Total number and geographic distribution of properties
Diversity of retailers and anchor tenants at shopping center
locations
Management and operational expertise
Rental rates
Subject to certain limitations, the funds necessary for cash
acquisitions are available to us from a combination of sources,
including mortgage or unsecured financing, joint venture equity,
the issuance of company level public or private debt, equity or
hybrid securities.
We have the flexibility to pay for an acquisition with a
combination of cash, GGP equity securities or common or
preferred units of limited partnership interest in the Operating
Partnership. This last approach may create the opportunity for a
tax-advantaged transaction for the seller.
Our expertise allows us to evaluate proposed acquisitions of
existing retail properties for their increased profit potential
through expansion, remodeling, re-merchandising and more
efficient management of the property.
The size and scope of our master planned communities
The recreational and cultural amenities available within the
communities
The commercial centers in the communities
Our relationships with homebuilders
The proximity to major metropolitan areas
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Item 1A.
Risk
Factors
The regional and local economy, which may be negatively impacted
by plant closings, industry slowdowns, adverse weather
conditions, natural disasters and other factors
Local real estate conditions, such as an oversupply of, or a
reduction in demand for, retail space or retail goods, and the
availability and creditworthiness of current and prospective
tenants
Perceptions by retailers or shoppers of the safety, convenience
and attractiveness of the retail property
The convenience and quality of competing retail properties and
other retailing options such as the internet
Changes in laws and regulations applicable to real property,
including tax and zoning laws
Changes in interest rate levels and the availability and cost of
financing
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We may abandon development or expansion activities already under
way, which may result in additional cost recognition
Construction costs of a project may exceed original estimates or
available financing, possibly making the project unfeasible or
unprofitable
We may not be able to obtain financing or refinance construction
loans, which generally have full recourse to us
We may not be able to obtain zoning, occupancy or other required
governmental permits and authorizations
Occupancy rates and rents at a completed project may not meet
projections and, therefore, the project may not be profitable
We may not be able to obtain Anchor, mortgage lender and
property partner approvals, if applicable, for expansion or
redevelopment activities
8
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9
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Decreasing tenant sales as a result of decreased consumer
spending which could result in lower overage rents
Difficulty in replacing or renewing expiring leases with new
leases at higher base
and/or
overage rents
An inability to receive reimbursement from our tenants for their
share of certain operating expenses, including common area
maintenance, real estate taxes and insurance
Difficulties in managing international operations
Changes in foreign political environments, regionally,
nationally, and locally
Challenges of complying with a wide variety of foreign laws
including corporate governance, operations, taxes and litigation
Differing lending practices
Differences in cultures
Adverse effects of changes in exchange rates for foreign
currencies
Changes in applicable laws and regulations in the United States
that affect foreign operations
Obstacles to the repatriation of earnings and cash
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Limiting our ability to borrow additional amounts for working
capital, capital expenditures, debt service requirements,
execution of our growth strategy or other purposes
Limiting our ability to use operating cash flow in other areas
of our business or to pay dividends because we must dedicate a
substantial portion of these funds to service the debt
Increasing our vulnerability to general adverse economic and
industry conditions, including increases in interest rates,
particularly given our substantial indebtedness which bears
interest at variable rates
Limiting our ability to capitalize on business opportunities,
including the acquisition of additional properties, and to react
to competitive pressures and adverse changes in government
regulation
Limiting our ability or increasing the costs to refinance
indebtedness
Limiting our ability to enter into marketing and hedging
transactions by reducing the number of counterparties with whom
we can enter into such transactions as well as the volume of
those transactions
Incur indebtedness
Create liens on assets
Sell assets
Make capital expenditures
Engage in mergers and acquisitions
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To cause us to issue additional authorized but unissued shares
of common stock or preferred stock
To classify or reclassify, in one or more series, any unissued
preferred stock
To set the preferences, rights and other terms of any classified
or reclassified stock that we issue
Before that person became an interested stockholder, our board
of directors approved the transaction in which the interested
stockholder became an interested stockholder or approved the
business combination
Upon completion of the transaction that resulted in the
interested stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of our voting stock
outstanding at the time the transaction commenced, excluding for
purposes of determining the voting stock outstanding (but not
the outstanding voting stock owned by the interested
stockholder) stock held by directors who are also officers of
the Company and by employee stock plans that do not provide
employees with the right to determine confidentially whether
shares held under the plan will be tendered in a tender or
exchange offer
Following the transaction in which that person became an
interested stockholder, the business combination is approved by
our board of directors and authorized at a meeting of
stockholders by the affirmative vote of the holders of at least
two-thirds of our outstanding voting stock not owned by the
interested stockholder
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Our historical and anticipated quarterly and annual operating
results
Variations between our actual results and analyst and investor
expectations or changes in financial estimates and
recommendations by securities analysts
The performance and prospects of our industry
The depth and liquidity of the market for our common stock
Short sales of our stock triggered by hedging activities,
including the purchase of credit default swaps, by certain of
our lenders
Investor perception of us and the industry in which we operate
Domestic and international economic conditions
The extent of institutional investor interest in us
The reputation of REITs generally and the attractiveness of
their equity securities in comparison to other equity
securities, including securities issued by other real estate
companies, and fixed income securities
Our financial condition and performance
General market volatility, conditions and trends
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Projections of our revenues, income, earnings per share, Funds
From Operations (FFO), capital expenditures, income
tax and other contingent liabilities, dividends, leverage,
capital structure or other financial items
Descriptions of plans or objectives of our management for future
operations, including pending acquisitions
Forecasts of our future economic performance
Descriptions of assumptions underlying or relating to any of the
foregoing
Future development spending
Expected sales of our Master Planned Communities segment
Future development, management and leasing fees
Future financings, repayment of debt and interest rates
Distributions pursuant to the Contingent Stock Agreement
Future cash needed to meet federal income tax requirements
Item 1B.
Unresolved
Staff Comments
Item 2.
Properties
16
Table of Contents
GLA
Mall and
Anchor
Location(1)
Total
Freestanding
Anchors/Significant Tenants
Vacancies
Honolulu, HI
1,804,839
857,631
Barnes & Noble, Macys, Neiman Marcus, Old Navy,
Sears, Shirokiya
Pocatello, ID
190,341
190,341
2
Anaheim Crossing(2)(3)
Anaheim, CA
92,170
92,170
N/A
N/A
Animas Valley Mall
Farmington, NM
490,974
241,509
Allen Theatres, Dillards, JCPenney, Ross Dress for Less,
Sears
Apache Mall(2)
Rochester, MN
752,664
269,672
Herbergers, JCPenney, Macys, Sears
Arizona Center(2)
Phoenix, AZ
168,429
82,426
AMC Theatres
Augusta Mall(2)
Augusta, GA
1,070,069
409,846
Dicks Sporting Goods Dillards, JCPenney,
Macys, Sears
Austin Bluffs Plaza
Colorado Springs, CO
107,402
107,402
2
Bailey Hills Village
Eugene, OR
11,887
11,887
N/A
N/A
Baskin Robbins
Idaho Falls, ID
1,814
1,814
N/A
N/A
Bay City Mall
Bay City, MI
526,426
210,775
JCPenney, Sears, Target, Younkers
Baybrook Mall
Friendswood (Houston), TX
1,242,879
342,270
Dillards, JCPenney, Macys, Sears
1
Bayshore Mall(2)
Eureka, CA
615,439
395,181
Gottschalks, Mervyns, Sears
Bayside Marketplace(2)
Miami, FL
218,674
218,674
N/A
N/A
Beachwood Place
Beachwood, OH
914,516
334,936
Dillards, Nordstrom, Saks Fifth Avenue
Bellis Fair
Bellingham (Seattle), WA
773,036
334,712
JCPenney, Kohls, Macys, Macys Home Store,
Sears, Target
Birchwood Mall
Port Huron (Detroit), MI
786,822
330,593
GKC Theaters, JCPenney, Macys, Sears, Target, Younkers
Boise Plaza
Boise, ID
114,404
114,404
Albertsons, Burlington Coat Factory
Boise Towne Plaza(3)
Boise, ID
116,677
116,677
Circuit City, Linens N Things, Old Navy
Boise Towne Square(2)
Boise, ID
1,163,435
493,406
Dillards, JCPenney, Macys, Mervyns, Sears
Brass Mill Center
Waterbury, CT
987,994
330,655
Burlington Coat Factory, JCPenney, Macys, Regal Cinemas,
Sears, Steve & Barrys
Brass Mill Commons
Waterbury, CT
197,033
197,033
Barnes & Noble, Hometown Buffet, Michaels Arts and
Crafts, OfficeMax, Shaws Supermarket, Toys R Us
The Boulevard Mall
Las Vegas, NV
1,183,940
395,904
Dillards, JCPenney, Macys, Sears
Burlington Town Center(2)
Burlington, VT
309,280
162,527
Macys
Cache Valley Mall
Logan, UT
321,385
175,553
Dillards, Dillards Mens & Home, JCPenney
Cache Valley Marketplace
Logan, UT
179,996
179,996
Home Depot, Olive Garden,
T.J. Maxx
Canyon Point Village Center
Las Vegas, NV
57,229
57,229
N/A
N/A
17
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GLA
Mall and
Anchor
Location(1)
Total
Freestanding
Anchors/Significant Tenants
Vacancies
Capital Mall
Jefferson City, MO
563,878
330,801
Dillards, JCPenney, Sears
Century Plaza
Birmingham, AL
738,867
252,911
Sears
3
Chapel Hills Mall
Colorado Springs, CO
1,210,695
415,256
Burlington Coat Factory, Dicks Sporting Goods,
Dillards, JCPenney, Kmart, Macys, Sears
Chico Mall
Chico, CA
506,251
184,123
Gottschalks, JCPenney, Sears
1
Chula Vista (San Diego), CA
873,125
284,988
JCPenney, Macys, Mervyns, Sears, Ultrastar Theaters
Coastland Center(2)
Naples, FL
931,096
340,706
Dillards, JCPenney, Macys, Sears
Collin Creek
Plano, TX
1,118,156
328,073
Amazing Jakes, Dillards, JCPenney, Macys, Sears
Colony Square Mall
Zanesville, OH
514,952
268,170
Cinemark, Elder-Beerman, JCPenney, Sears
Columbia Mall
Columbia, MO
747,346
326,286
Dillards, JCPenney, Sears, Target
Columbiana Centre
Columbia, SC
823,986
265,009
Belk, Dillards, JCPenney, Sears
Coral Ridge Mall
Coralville (Iowa City), IA
1,075,620
420,455
Dillards, JCPenney, Scheels, Sears, Target, Younkers
Coronado Center(2)
Albuquerque, NM
1,151,372
377,043
Barnes & Noble, JCPenney, Macys, Mervyns,
Sears, Target
Cottonwood Mall
Salt Lake City, UT
220,954
6,600
Macys
Cottonwood Square(2)
Salt Lake City, UT
77,079
77,079
1
Country Hills Plaza
Ogden, UT
140,097
140,097
McKay-Dee Hospital Center, Smiths Food King
The Crossroads
Portage (Kalamazoo), MI
771,005
268,045
JCPenney, Macys, Burlington Coat Factory, Sears
Crossroads Center
St. Cloud, MN
896,245
290,565
JCPenney, Macys, Scheels, Sears, Target
Cumberland Mall
Atlanta, GA
1,037,923
389,939
Costco, Macys, Sears
Deerbrook Mall
Humble (Houston), TX
1,209,197
411,219
AMC Theatres, Dillards, JCPenney, Macys, Sears,
Steve & Barrys
Division Crossing
Portland, OR
100,910
100,910
Rite Aid, Safeway
Eagle Ridge Mall
Lake Wales (Orlando), FL
658,763
263,308
Dillards, JCPenney, Recreation Station, Regal Cinemas,
Sears
Eastridge Mall
San Jose, CA
1,331,019
496,625
AMC 15, Bed Bath & Beyond, JCPenney, Macys, Sears,
Sport Chalet
Eastridge Mall
Casper, WY
573,869
284,073
JCPenney, Macys, Sears, Target
Eden Prairie Center
Eden Prairie (Minneapolis), MN
1,135,303
326,300
AMC Theatres, JCPenney, Kohls, Sears, Target, Von Maur
Fallbrook Center(2)
West Hills (Los Angeles), CA
877,271
877,271
24 Hour Fitness, DSW Shoe Warehouse, Home Depot, Kohls,
Linens N Things, Mervyns, Michaels Arts &
Crafts, Old Navy, Party City
Faneuil Hall Marketplace(2)
Boston, MA
196,363
196,363
N/A
N/A
Fashion Place(2)
Murray, UT
886,889
320,916
Dillards, Nordstrom, Sears
Fashion Show
Las Vegas, NV
1,890,796
538,087
Bloomingdales Home, Dillards, Macys, Neiman
Marcus, Nordstrom, Saks Fifth Avenue
1
Foothills Mall
Fort Collins, CO
801,444
461,347
Macys, Sears
2
Fort Union(2)
Midvale (Salt Lake City), UT
32,968
32,968
N/A
N/A
Four Seasons Town Centre
Greensboro, NC
1,136,953
494,937
Belk, Dillards, JCPenney
Fox River Mall
Appleton, WI
1,207,390
518,753
Cost Plus World Market, Davids Bridal, DSW Shoe Warehouse,
Linens N Things, Macys, Scheels, Sears
Table of Contents
GLA
Mall and
Anchor
Location(1)
Total
Freestanding
Anchors/Significant Tenants
Vacancies
Las Vegas, NV
115,895
115,895
Asian Seafood & Grocery, Sav-On Drugs
The Gallery at Harborplace(2)
Baltimore, MD
132,105
132,105
N/A
N/A
Gateway Crossing Shopping Center
Bountiful (Salt Lake City), UT
183,526
183,526
All A Dollar, Barnes & Noble, T.J. Maxx
Gateway Mall
Springfield, OR
823,484
341,778
Ashley Furniture Homestore, Kohls, Movies 12, Ross Dress
for Less, Sears, Target
Gateway Overlook(2)
Columbia, MD
509,363
509,363
Best Buy, Costco, Golf Galaxy, Loehmanns, Lowes
Glenbrook Square
Fort Wayne, IN
1,215,563
438,693
JCPenney, Macys, Sears
1
Governors Square(2)
Tallahassee, FL
1,027,141
335,536
Dillards, JCPenney, Macys, Sears
The Grand Canal Shoppes
Las Vegas, NV
490,862
490,862
N/A
N/A
Grand Teton Mall
Idaho Falls, ID
543,090
219,165
Dillards, JCPenney, Macys, Sears
Grand Teton Plaza
Idaho Falls, ID
93,274
93,274
Best Buy, Linens N Things, Petsmart, Ross Dress for Less
Grand Traverse Mall
Traverse City, MI
591,430
278,039
GKC Theaters, JCPenney, Macys, Target
Greenwood Mall
Bowling Green, KY
845,285
416,232
Dillards, JCPenney, Macys, Sears
Halsey Crossing(2)
Gresham (Portland), OR
99,438
99,438
Safeway
Harborplace(2)
Baltimore, MD
151,783
151,783
N/A
N/A
Hulen Mall
Fort Worth, TX
948,458
351,888
Dillards, Macys, Sears
Jordan Creek Town Center
West Des Moines, IA
1,334,658
792,959
Century Theatres, Dillards, Scheels, Younkers
Knollwood Mall
St. Louis Park (Minneapolis), MN
463,905
167,682
Cub Foods, Kohls, Steve & Barrys, T.J. Maxx
Lakeland Square
Lakeland (Orlando), FL
893,913
283,875
Burlington Coat Factory, Dillards, Dillards
Mens & Home, JCPenney, Macys, Sears
Lakeside Mall
Sterling Heights, MI
1,523,432
502,714
JCPenney, Lord & Taylor, Macys, Macys
Mens & Home, Sears
Lakeview Square
Battle Creek, MI
553,842
262,249
JCPenney, Macys, Sears
Landmark Mall(2)
Alexandria (Washington, D.C.), VA
884,683
325,746
Lord & Taylor, Macys, Sears
Lansing Mall(2)
Lansing, MI
837,620
414,450
JCPenney, Macys, Steve & Barrys, T.J. Maxx,
Younkers
Lincolnshire Commons
Lincolnshire (Chicago), IL
122,727
122,727
DSW Shoe Warehouse
Lockport Mall
Lockport, NY
90,734
90,734
The Bon Ton
Lynnhaven Mall
Virginia Beach, VA
1,175,925
460,478
AMC Theatres, Dicks Sporting Goods, Dillards,
JCPenney, Macys, Steve & Barrys
The Maine Mall
South Portland, ME
853,154
346,093
Best Buy, Chuck E Cheese, JCPenney, Linens N Things,
Macys, Sears, Sports Authority
Mall at Sierra Vista
Sierra Vista, AZ
369,700
138,430
Cinemark, Dillards, Sears
The Mall in Columbia
Columbia, MD
1,399,973
599,805
JCPenney, Lord & Taylor, Macys, Nordstrom, Sears
Mall of Louisiana
Baton Rouge, LA
1,328,172
520,690
Dillards, JCPenney, Macys, Sears
Mall of the Bluffs
Council Bluffs (Omaha, NE), IA
706,070
379,848
Dillards, Hy-Vee, JCPenney, Sears, Target
Mall St. Matthews(2)
Louisville, KY
1,081,670
345,965
Dillards, Dillards Mens & Home, JCPenney
1
Shreveport, LA
533,653
185,653
Dillards, Sears
Table of Contents
GLA
Mall and
Anchor
Location(1)
Total
Freestanding
Anchors/Significant Tenants
Vacancies
Market Place Shopping Center
Champaign, IL
1,045,501
509,755
Bergners, JCPenney, Macys, Sears
Mayfair
Wauwatosa (Milwaukee), WI
1,110,479
491,095
AMC Theatres, Barnes & Noble, Boston Store, Macys
Meadows Mall
Las Vegas, NV
956,279
319,426
Dillards, JCPenney, Macys, Sears
Mondawmin Mall
Baltimore, MD
371,887
305,187
Shoppers Food and Pharmacy
Moreno Valley Mall
Moreno Valley (Riverside), CA
1,100,418
331,227
Gottschalks, Harkins Theatre, JCPenney, Macys, Sears
Newgate Mall
Ogden (Salt Lake City), UT
724,915
252,781
Cinemark Tinseltown 14, Dillards, Mervyns, Sears,
Sports Authority
NewPark Mall
Newark (San Francisco), CA
1,210,449
395,601
Century Theatres, JCPenney, Macys, Mervyns, Sears,
Target
North Plains Mall
Clovis, NM
303,197
109,116
Bealls, Dillards, JCPenney, Sears
North Point Mall
Alpharetta (Atlanta), GA
1,374,942
408,655
Belk, Dillards, JCPenney, Macys, Sears
1
North Star Mall
San Antonio, TX
1,253,528
428,656
Dillards, JCPenney, Macys, Mervyns, Saks Fifth
Avenue
North Temple Shops
Salt Lake City, UT
10,181
10,181
N/A
N/A
Northgate Mall
Chattanooga, TN
811,526
346,206
JCPenney, Proffitts, Proffitts Home Store, Sears,
T.J. Maxx
Northridge Fashion Center
Northridge (Los Angeles), CA
1,526,911
606,099
JCPenney, Macys, Pacific Theatres, Sears
NorthTown Mall
Spokane, WA
1,046,019
414,525
Bumpers Family Fun Center, JCPenney, Kohls, Macys,
Regal Cinemas, Sears, Steve & Barrys
Oak View Mall
Omaha, NE
864,966
260,706
Dillards, JCPenney, Sears, Younkers
Oakwood Center
Gretna, LA
756,982
239,588
Dillards, JCPenney, Sears
Oakwood Mall
Eau Claire, WI
817,707
332,631
JCPenney, Macys, Scheels, Sears, Younkers
Oglethorpe Mall
Savannah, GA
945,797
365,649
Belk, JCPenney, Macys, Macys Junior, Sears, Stein
Mart
Orem Plaza Center Street
Orem, UT
90,218
90,218
Chuck E Cheese, Roberts Crafts
Orem Plaza State Street
Orem, UT
27,603
27,603
N/A
N/A
Oviedo Marketplace
Oviedo, FL
951,286
286,357
Bed Bath & Beyond, Dillards, Macys, Regal
Cinemas, Sears
Owings Mills Mall
Owings Mills, MD
1,083,447
436,410
Boscovs, JCPenney, Macys
1
Oxmoor Center(2)
Louisville, KY
933,907
286,697
Dicks Sporting Goods, Macys, Sears, Von Maur
Paramus Park
Paramus, NJ
766,912
307,855
Macys, Sears
Park City Center
Lancaster (Philadelphia), PA
1,427,198
527,301
The Bon Ton, Boscovs, JCPenney, Kohls, Sears
Park Place
Tucson, AZ
1,057,426
402,689
Century Theatres, Dillards, Macys, Sears
Park West
Peoria, AZ
247,951
247,951
Harkins Threatre
The Parks at Arlington
Arlington (Dallas), TX
1,514,263
433,047
AMC Theatres, Barnes & Noble, Circuit City, Dicks
Sporting Goods, Dillards, Forever 21, JCPenney,
Macys, Sears
Peachtree Mall
Columbus, GA
818,028
309,413
Dillards, JCPenney, Macys, Parisian
Monroe, LA
943,865
328,429
Belk, Burlington Coat Factory, Dillards, JCPenney, Sears
Table of Contents
GLA
Mall and
Anchor
Location(1)
Total
Freestanding
Anchors/Significant Tenants
Vacancies
Pembroke Lakes Mall
Pembroke Pines (Fort Lauderdale), FL
1,137,341
356,066
Dillards, Dillards Mens & Home, JCPenney,
Macys, Macys Home Store, Sears
Piedmont Mall
Danville, VA
726,797
175,059
Belk, Belk Mens, Boscovs, JCPenney, Sears
Pierre Bossier Mall
Bossier City (Shreveport), LA
607,024
213,726
Dillards, JCPenney, Sears, Stage
1
Pine Ridge Mall(2)
Pocatello, ID
641,654
203,667
Dillards, JCPenney, Sears, ShopKo
1
The Pines
Pine Bluff, AR
644,469
262,049
Dillards, Holiday Inn Express, JCPenney, Sears
1
Pioneer Place(2)
Portland, OR
367,001
286,001
Saks Fifth Avenue
Plaza 800(2)
Sparks (Reno), NV
176,431
176,431
Save Mart Supermarkets
1
Plaza 9400(2)
Sandy (Salt Lake City), UT
228,661
228,661
Albertsons, Deseret Industries
1
Prince Kuhio Plaza(2)
Hilo, HI
504,807
272,185
Macys, Sears
1
Providence Place(2)
Providence, RI
1,263,207
517,659
Bed Bath & Beyond, Dave &
Busters, JCPenney, Macys, Nordstrom, Old Navy,
Providence Place Cinemas 16
Provo Towne Centre(3)
Provo, UT
800,294
230,225
Cinemark, Dillards, JCPenney, Sears
Red Cliffs Mall
St. George, UT
389,277
122,641
Barnes & Noble, Dillards, JCPenney, Sears
Red Cliffs Plaza
St. George, UT
57,304
57,304
Golds Gym, Sears
Regency Square Mall
Jacksonville, FL
1,384,492
525,486
Belk, Champs Sports/World Foot Locker, Dillards, Homeworks
Furniture Center, JCPenney, Sears
Ridgedale Center
Minnetonka, MN
1,043,975
341,595
JCPenney, Macys Mens & Home, Macys
Womens, Sears
Rio West Mall(2)(3)
Gallup, NM
515,038
333,905
Bealls, JCPenney
1
River Falls Mall
Clarksville, IN
890,744
890,744
Bass Pro Shops Outdoor World,
Dicks Sporting Goods, Louisville Athletic Club, Old Time
Pottery, Toys R Us
River Hills Mall
Mankato, MN
719,742
277,655
Herbergers, JCPenney, Scheels, Sears, Target
River Pointe Plaza
West Jordan (Salt Lake City), UT
224,277
224,277
Albertsons, ShopKo
Riverlands Shopping Center
LaPlace (New Orleans), LA
185,119
185,119
Burkes Outlet, Citi Trends, Mathernes Supermarkets,
Stage
Riverside Plaza
Provo, UT
176,189
176,189
Big Lots, Maceys, Rite Aid
Rivertown Crossings
Grandville (Grand Rapids), MI
1,270,582
421,524
Celebration Cinemas, Dicks Sporting Goods, JCPenney,
Kohls, Macys, Old Navy, Sears, Younkers
Riverwalk Marketplace(2)
New Orleans, LA
187,751
187,751
N/A
N/A
Rogue Valley Mall
Medford (Portland), OR
639,217
251,779
JCPenney, Kohls, Linens N Things, Macys,
Macys Home Store
Saint Louis Galleria
St. Louis, MO
1,159,184
469,504
Dillards, Macys
1
Salem Center(2)
Salem, OR
650,251
212,251
JCPenney, Kohls, Macys, Nordstrom
Manchester, CT
1,049,892
457,281
Dicks Sporting Goods, JCPenney, Macys, Macys
Mens & Home, Sears
The Shops at Fallen Timbers
Maumee, OH
574,313
377,355
Dillards, JCPenney, Staybridge Suites
The Shops at La Cantera(3)
San Antonio, TX
1,017,235
388,235
Dillards, Macys, Neiman Marcus, Nordstrom
Table of Contents
GLA
Mall and
Anchor
Location(1)
Total
Freestanding
Anchors/Significant Tenants
Vacancies
Sikes Senter
Wichita Falls, TX
667,551
262,027
Dillards, JCPenney, Sears, Sikes Ten Theatres
Silver Lake Mall
Coeur d Alene, ID
326,603
110,239
JCPenney, Macys, Sears
1
Sooner Mall
Norman, OK
508,971
168,899
Dillards, JCPenney, Old Navy, Sears, Stein Mart
South Street Seaport(2)
New York, NY
283,581
251,562
N/A
N/A
Southlake Mall
Morrow (Atlanta), GA
1,014,249
273,997
JCPenney, Macys, Sears
1
Southland Center
Taylor, MI
915,048
287,011
Best Buy, JCPenney, Macys
1
Southland Mall
Hayward, CA
1,277,567
537,303
JCPenney, Macys, Mervyns, Sears
Southshore Mall(2)
Aberdeen, WA
291,666
157,891
JCPenney, Sears
Southwest Plaza(2)
Littleton (Denver), CO
1,352,532
653,171
Dicks Sporting Goods, Dillards, JCPenney,
Macys, Sears, Steve & Barrys
Spokane Valley Mall(3)
Spokane, WA
738,010
318,926
JCPenney, Macys, Regal Act III, Sears
Spokane Valley Plaza(3)
Spokane, WA
132,048
132,048
Linens N Things, Old Navy, Sportsmans Warehouse,
T.J. Maxx
Spring Hill Mall
West Dundee (Chicago), IL
1,373,051
640,256
Carson Pirie Scott, JCPenney, Kohls, Macys, Sears,
Steve & Barrys
Staten Island Mall
Staten Island, NY
1,276,411
569,622
Babies R Us, JCPenney, Macys, Macys Home Store, Sears
Steeplegate Mall
Concord, NH
481,744
225,397
The Bon Ton, JCPenney, Sears
Stonestown Galleria
San Francisco, CA
863,676
435,383
Macys, Nordstrom
The Streets at Southpoint
Durham, NC
1,305,691
579,344
Barnes & Noble, Hudson Belk,
JCPenney, Macys, Maggianos, Nordstrom, Pottery Barn,
Sears, Urban Outfitters
Three Rivers Mall
Kelso, WA
430,111
236,878
JCPenney, Macys, Sears
1
Town East Mall
Mesquite (Dallas), TX
1,253,715
444,329
Dillards, JCPenney, Macys, Sears
Tucson Mall(2)
Tucson, AZ
1,326,359
468,095
Dillards, JCPenney, Macys, Mervyns, Sears
Twin Falls Crossing
Twin Falls, ID
37,680
37,680
Kalik Investors
Tysons Galleria
McLean (Washington, D.C.), VA
819,825
307,892
Macys, Neiman Marcus, Saks Fifth Avenue
University Crossing
Orem, UT
206,059
206,059
Barnes & Noble, CompUSA, Burlington Coat Factory,
OfficeMax, Pier 1 Imports
Valley Hills Mall
Hickory, NC
935,803
324,287
Belk, Dillards, JCPenney, Sears
Valley Plaza Mall
Bakersfield, CA
1,159,734
433,045
Gottschalks, JCPenney, Macys, Sears
1
The Village at Redlands
Redlands, CA
173,891
78,832
Gottschalks
Village of Cross Keys Retail
Baltimore, MD
74,172
74,172
N/A
N/A
Visalia Mall
Visalia, CA
442,344
185,344
Gottschalks, JCPenney
Las Vegas, NV
71,187
71,187
N/A
N/A
Vista Ridge Mall
Lewisville (Dallas), TX
1,105,378
336,531
Cinemark, Dillards, JCPenney, Macys, Sears
Ward Centers
Honolulu, HI
741,202
698,541
Sports Authority
Washington Park Mall
Bartlesville, OK
357,405
163,109
Dillards, JCPenney, Sears
West Oaks Mall
Ocoee (Orlando), FL
1,069,063
368,307
AMC Theatres, Belk, Dillards, JCPenney, Sears
West Valley Mall
Tracy (San Francisco), CA
879,663
482,754
Gottschalks, JCPenney, Movies 14,
Sears, Target
Westlake Center(2)
Seattle, WA
104,572
104,572
N/A
N/A
Westwood Mall
Jackson, MI
507,859
136,171
Elder-Beerman, JCPenney,
Wal-Mart
Table of Contents
GLA
Mall and
Anchor
Location(1)
Total
Freestanding
Anchors/Significant Tenants
Vacancies
White Marsh Mall
Baltimore, MD
1,152,983
373,339
Boscovs, JCPenney, Macys, Macys Home Store,
Sears, Sports Authority
White Mountain Mall
Rock Springs, WY
333,563
156,435
Flaming Gorge Harley Davidson, Herbergers, JCPenney, State
Of Wyoming
Willowbrook
Wayne, NJ
1,511,020
483,020
Bloomingdales, Lord & Taylor, Macys, Sears
Woodbridge Center
Woodbridge, NJ
1,647,530
562,495
Dicks Sporting Goods, Fortunoff, JCPenney, Lord &
Taylor, Macys, Sears
The Woodlands Mall
Woodlands (Houston), TX
1,354,766
509,537
Dillards, JCPenney, Macys, Macys Children
Store, Sears
Woodlands Village
Flagstaff, AZ
91,810
91,810
Yellowstone Square
Idaho Falls, ID
221,937
221,937
Yellowstone Warehouse
1
137,906,150
58,834,933
(1)
In certain cases, where a center is located in part of a larger
metropolitan area, the metropolitan area is identified in
parenthesis.
(2)
A portion of the property is subject to a ground lease.
(3)
Owned in a joint venture with independent, non-controlling
minority investors.
GLA
Ownership
Mall and
Anchor
Location(1)
Interest
Total
Freestanding
Anchors/Significant Tenants
Vacancies
Lynnwood (Seattle), WA
50.5
%
1,278,763
508,212
JCPenney, Loews Cineplex, Macys, Nordstrom, Sears
Altamonte Mall
Altamonte Springs (Orlando), FL
50
1,155,601
477,053
Dillards, JCPenney, Macys, Sears
Arrowhead Towne Center
Glendale, AZ
33.33
1,135,748
351,211
AMC Theatres, Dillards, JCPenney, Macys,
Mervyns, Sears
Bangu Shopping
Rio de Janeiro, Rio de Janeiro (Brazil)
34
472,167
246,125
C&A, Casa & Video, Casas Bahia, Cinesystem, Centaurol,
Insinuante, Leader, Leroy Merlin, Lojas Americanas, Unisuam
Bridgewater Commons
Bridgewater, NJ
35
962,188
426,299
AMC Theatres, Bloomingdales, Lord & Taylor,
Macys
Carolina Place
Pineville (Charlotte), NC
50.5
1,156,847
351,931
Barnes & Noble, Belk, Dillards, JCPenney,
Macys, Sears
Center Pointe Plaza
Las Vegas, NV
50
144,635
75,623
Albertsons, Beauty Center Salon Super Store
Christiana Mall
Newark, DE
50
871,865
308,461
Epicenter, JCPenney, Macys
Clackamas Town Center
Portland, OR
50
1,405,221
526,532
Barnes & Noble, Century Theatres, JCPenney, Macys,
Macys Home Store, Nordstrom, Sears
Espark Mall
Eskisehir, Turkey
50
482,137
387,436
MediaMarkt Saturn, Migros Hypermarket
2
Table of Contents
GLA
Ownership
Mall and
Anchor
Location(1)
Interest
Total
Freestanding
Anchors/Significant Tenants
Vacancies
First Colony Mall
Sugar Land (Houston), TX
50
1,114,952
495,904
Dillards, Dillards Mens & Home, JCPenney,
Macys
Florence Mall
Florence (Cincinnati, OH), KY
50
888,404
335,997
JCPenney, Macys, Macys Home Store, Sears
Galleria at Tyler(2)
Riverside, CA
50
1,177,538
555,830
JCPenney, Macys, Nordstrom
1
Glendale Galleria(2)
Glendale, CA
50
1,319,150
514,912
JCPenney, Macys, Mervyns, Nordstrom, Target
Highland Mall(2)
Austin, TX
50
1,116,231
397,490
Austin Leasehold Investors, Dillards, Dillards
Mens, Macys
Kenwood Towne Centre(2)
Cincinnati, OH
50
1,049,077
545,592
Dillards, Macys
Lake Mead & Buffalo Partners
Las Vegas, NV
50
150,948
73,583
.99 Cent Store, Vons
Village Center
Mizner Park(2)
Boca Raton, FL
50
238,259
127,437
Mizner Park Cinema, Robb & Stucky
Montclair Plaza
Montclair (San Bernadino), CA
50.5
1,347,124
549,547
Circuit City, Ethan Allen Gallery, JCPenney, Linens N
Things, Macys, Nordstrom, Sears, Ninety Nine Cent Only
Store
1
Natick Collection
Natick (Boston), MA
50
1,643,692
696,042
JCPenney, Lord & Taylor, Macys, Neiman Marcus,
Nordstrom, Sears
Neshaminy Mall
Bensalem, PA
50
1,022,123
324,137
AMC Theatres, Boscovs, Macys, Sears
Northbrook Court
Northbrook (Chicago), IL
50.5
1,002,075
386,156
AMC Theatres, Lord & Taylor, Macys, Neiman Marcus
Oakbrook Center
Oakbrook (Chicago), IL
47.46
2,092,258
807,278
Bloomingdales Home, Crate & Barrel, Lord &
Taylor, Macys, Neiman Marcus, Nordstrom, Sears
1
The Oaks Mall
Gainesville, FL
51
906,314
348,447
Belk, Dillards, JCPenney, Macys, Sears
Otay Ranch Town Center
Chula Vista (San Diego), CA
50
627,186
487,186
Macys, REI
Park Meadows
Littleton, CO
35
1,436,245
502,275
Crate & Barrel, Dicks Sporting Goods, Dillards,
JCPenney, Macys, Nordstrom
Atlanta, GA
50
1,563,768
510,494
Bloomingdales, Dillards, Macys, Nordstrom
Rogers, AR
50
919,230
615,690
Bed Bath & Beyond, Dillards,
Gordmans, JCPenney, Malco Theatre, Petsmart T.J. Maxx
Quail Springs Mall
Oklahoma City, OK
50
1,141,439
356,639
AMC Theatres, Dillards, JCPenney, Macys, Sears
Riverchase Galleria
Hoover (Birmingham), AL
50
1,551,685
502,778
Belk, Belk Home Store, Belk Mens, CompUSA, JCPenney, Sears
2
Table of Contents
GLA
Ownership
Mall and
Anchor
Location(1)
Interest
Total
Freestanding
Anchors/Significant Tenants
Vacancies
Santana Parque Shopping
Sao Paulo, Sao Paulo (Brazil)
25
285,948
131,111
Bio Ritmo, C&A, Camicado, Casas Bahia, Centauro, Lojas
Americanas, Ponto Frio, Renner, UCI
Shopping Iguatemi Salvador
Salvador, Bahia (Brazil)
15
591,308
386,462
C&A, Centauro, Cinema Multiplex, Insinuante, Lojas
Americanas, Marisa, Playland, Riachuelo, Renner, Zara
Shopping Iguatemi Campina Grande
Campina Grande, Paraiba (Brazil)
15
183,506
56,293
Bompreco, Cine Sercia, Gamestation,
Insinuante, Lojas Americanas, Marisa, Riachuelo
Shopping Taboao
Taboao da Serra, Sao Paulo (Brazil)
19
294,800
110,511
Besni, C&A, Carrefour, Casas Bahia, Cine Araujo, Lojas
Americanas, Riachuelo, Telha Norte
Shopping Leblon
Rio de Janeiro, Rio de Janeiro (Brazil)
21
247,049
173,087
Centauro, Cinema Kinoplex, Livraria da Travessa, Renner, Zara
Silver City Galleria
Taunton (Boston), MA
50
1,007,284
353,247
Best Buy, Dicks Sporting Goods, JCPenney, Macys,
Sears, Silver City Cinemas, Steve & Barrys
2
Stonebriar Centre
Frisco (Dallas), TX
50
1,649,123
527,904
AMC Theatres, Barnes & Noble, Dave & Busters,
Dicks Sporting Goods, Dillards, JCPenney,
Macys, Nordstrom, Sears
Superstition Springs Center(2)
East Mesa (Phoenix), AZ
33.3
1,080,014
342,860
Dillards, JCPenney, JCPenney Home Store, Macys,
Mervyns, Sears
Towson Town Center
Towson, MD
35
973,637
519,567
Crate & Barrel, Macys, Nordstrom
The Trails Village Center
Las Vegas, NV
50
174,660
92,145
Longs Drugs, Vons
Via Parque Shopping
Rio de Janeiro, Rio de Janeiro (Brazil)
42
609,888
234,725
C&C Casa e Construcao, Casa & Video, Casas Bahia, Cine
Via Parque, Citibank Hall, Kalunga, Leader, Lojas Americanas,
Marisa, Ponto Frio, Renner
Village of Merrick Park(2)
Coral Gables, FL
40
743,685
413,685
Neiman Marcus, Nordstrom
Water Tower Place
Chicago, IL
51.65
705,825
278,782
American Girl Place, Forever 21, Macys
1
Westroads Mall
Omaha, NE
51
1,059,785
373,131
Dicks Sporting Goods, JCPenney, Rave, Von Maur, Younkers
Whalers Village
Lahaina, HI
50
111,857
111,857
N/A
N/A
Willowbrook Mall
Houston, TX
50
1,502,190
395,606
Dillards, JCPenney, Macys, Sears
42,593,429
17,293,270
(1)
In certain cases, where a center is located in part of a larger
metropolitan area, the metropolitan area is identified in
parenthesis.
(2)
A portion of the property is subject to a ground lease.
Table of Contents
26
Table of Contents
Consolidated
Unconsolidated
Total
Total
Square Feet
Total
Square Feet
Total
Square Feet
Stores
(000s)
Stores
(000s)
Stores
(000s)
2
360
3
465
5
825
1
10
1
10
1
190
1
190
103
16,320
34
6,403
137
22,723
106
16,690
38
7,058
144
23,748
113
16,083
15
2,604
128
18,687
1
88
1
88
114
16,171
15
2,604
129
18,775
12
1,696
4
462
16
2,158
1
86
1
86
2
113
2
113
15
1,895
4
462
19
2,357
1
154
1
154
2
267
2
267
1
211
1
211
1
138
1
138
3
142
3
142
1
71
1
71
9
1,010
1
173
10
1,183
18
1,993
1
173
19
2,166
112
12,820
20
3,044
132
15,864
67
10,921
15
2,786
82
13,707
8
1,256
13
2,185
21
3,441
16
1,904
1
180
17
2,084
5
643
4
471
9
1,114
8
634
5
396
13
1,030
3
460
5
590
8
1,050
4
820
2
188
6
1,008
156
9,906
28
1,797
184
11,703
632
76,113
151
21,934
783
98,047
27
Table of Contents
Item 3.
Legal
Proceedings
Item 4.
Submission
of Matters to a Vote of Security Holders
Item 5.
Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
Stock Price
High
Low
$
57.84
$
39.31
55.20
42.40
65.89
51.36
67.43
51.16
$
56.14
$
46.14
48.70
43.49
49.06
41.92
52.32
46.23
Record
Date
Payment Date
Amount
October 17
October 31
.50
July 17
July 31
.45
April 13
April 28
.45
January 17
January 31
.45
October 17
October 31
.45
July 17
July 31
.41
April 13
April 28
.41
January 17
January 31
.41
28
Table of Contents
Item 6.
Selected
Financial Data
2007
2006
2005
2004
2003
(In thousands, except per share amounts)
$
3,261,801
$
3,256,283
$
3,072,704
$
1,799,881
$
1,262,791
(670,454
)
(690,194
)
(672,914
)
(364,854
)
(230,195
)
(1,513,486
)
(1,377,637
)
(1,340,806
)
(693,735
)
(484,196
)
(1,165,456
)
(1,105,852
)
(1,020,825
)
(468,958
)
(276,235
)
294,160
(98,984
)
(51,289
)
(2,383
)
(98
)
(77,012
)
(37,761
)
(43,989
)
(105,274
)
(110,984
)
158,401
114,241
120,986
88,191
94,480
287,954
60,096
63,867
252,868
255,563
(823
)
11,686
14,984
7,848
287,954
59,273
75,553
267,852
263,411
(13,030
)
$
287,954
$
59,273
$
75,553
$
267,852
$
250,381
$
1.18
$
0.25
$
0.27
$
1.15
$
1.21
0.05
0.07
0.04
$
1.18
$
0.25
$
0.32
$
1.22
$
1.25
$
1.18
$
0.24
$
0.27
$
1.15
$
1.19
0.05
0.06
0.03
$
1.18
$
0.24
$
0.32
$
1.21
$
1.22
$
1.85
$
1.68
$
1.49
$
1.26
$
0.78
$
30,449,086
$
26,160,637
$
25,404,891
$
25,254,333
$
10,307,961
28,814,319
25,241,445
25,307,019
25,718,625
9,582,897
24,282,139
20,521,967
20,418,875
20,310,947
6,649,490
121,482
182,828
205,944
403,161
495,211
351,362
347,753
430,292
551,282
408,613
1,456,696
1,664,079
1,932,918
2,143,150
1,670,409
29
Table of Contents
2007
2006
2005
2004
2003
(In thousands, except per share amounts)
$
707,416
$
816,351
$
841,978
$
719,376
$
585,735
(1,780,932
)
(210,400
)
(154,197
)
(9,020,815
)
(1,753,426
)
1,075,911
(611,603
)
(624,571
)
8,330,343
1,124,728
$
1,100,808
$
902,361
$
891,696
$
766,164
$
618,561
(193,798
)
(161,795
)
(165,205
)
(154,347
)
(138,568
)
$
907,010
$
740,566
$
726,491
$
611,817
$
479,993
(1)
Funds From Operations (FFO as defined below) does
not represent cash flow from operations as defined by Generally
Accepted Accounting Principles (GAAP).
Table of Contents
2007
2006
2005
2004
2003
(In thousands)
$
907,010
$
740,566
$
726,491
$
611,817
$
479,993
193,798
161,795
165,205
154,347
138,568
1,100,808
902,361
891,696
766,164
618,561
(797,189
)
(835,656
)
(799,337
)
(440,108
)
(299,711
)
45,944
8,401
(10,712
)
(6,235
)
(6,299
)
(61,609
)
(15,010
)
(17,780
)
(66,953
)
(56,988
)
287,954
60,096
63,867
252,868
255,563
(823
)
11,686
14,984
7,848
287,954
59,273
75,553
267,852
263,411
(13,030
)
$
287,954
$
59,273
$
75,553
$
267,852
$
250,381
Item 7.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
31
Table of Contents
Renewing expiring leases and re-leasing existing space at rates
higher than expiring or existing rates
Increasing occupancy at the properties so that more space is
generating rent
Increased tenant sales in which we participate through overage
rents
Consolidated
Unconsolidated
Retail
Retail
Retail
Company
Properties
Properties
Portfolio
93.4
%
94.9
%
93.8
%
93.4
94.2
93.6
$
444
$
521
$
462
3.0
%
7.9
%
4.3
%
1.1
2.4
1.4
48,786,727
13,969,602
62,756,329
$
44.90
$
53.35
39.64
50.17
31.38
37.95
(a)
Excludes properties currently being redeveloped and/or
remerchandised and miscellaneous (non-mall) properties.
(b)
Due to tenant sales reporting timelines, data presented is as of
November 2007.
(c)
Excludes current year acquisitions.
(d)
Data includes a significant portion of short term leases on
inline spaces that are leased for one year. Rent and recoverable
common area costs related to these short term leases are
typically much lower than those in long term leases.
32
Table of Contents
Elk Grove Promenade in Elk Grove, California
The Shops at La Cantera in San Antonio, Texas
Vista Commons in Las Vegas, Nevada
Boulevard in Belo Horizonte, Brazil
Caxias in Rio de Janeiro, Brazil
Echelon in Las Vegas, Nevada
Pinnacle Hills South in Rogers, Arkansas
RiverCrossing in Macon, Georgia
33
Table of Contents
34
Table of Contents
35
Table of Contents
36
Table of Contents
$ Increase
% Increase
2007
2006
(Decrease)
(Decrease)
(In thousands)
$
2,339,915
$
2,181,845
$
158,070
7.2
%
1,033,287
960,816
72,471
7.5
101,229
91,911
9,318
10.1
198,794
188,331
10,463
5.6
3,673,225
3,422,903
250,322
7.3
296,962
277,381
19,581
7.1
257,095
242,846
14,249
5.9
66,897
61,810
5,087
8.2
571,269
527,030
44,239
8.4
7,404
22,871
(15,467
)
(67.6
)
1,199,627
1,131,938
67,689
6.0
$
2,473,598
$
2,290,965
$
182,633
8.0
%
37
Table of Contents
$ Increase
% Increase
2007
2006
(Decrease)
(Decrease)
(In thousands)
$
230,666
$
508,744
$
(278,078
)
(54.7
)%
(174,521
)
(378,757
)
(204,236
)
(53.9
)
56,145
129,987
(73,842
)
(56.8
)
(127,600
)
127,600
100.0
$
(71,455
)
$
129,987
$
(201,442
)
(155.0
)%
Lot Sales and
Pricing
Acreage
Remaining
Total Gross
Saleable
2007
2006
Acres
Acres
($ in thousands)
10.7
46.5
263
$
420
$
966
20.4
55.2
325
$
548
$
681
19,100
588
39.3
251.2
6,815
$
1,246
$
1,067
20.8
22.5
867
$
1,108
$
251
(3)
22,500
7,682
38
Table of Contents
Lot Sales and
Pricing
Acreage
Remaining
Total Gross
Saleable
2007
2006
Acres
Acres
($ in thousands)
66.0
64.3
6,026
$
248
$
222
1,261
$
$
11,400
7,287
293.1
288.1
1,451
$
362
$
374
92.4
85.6
1,120
$
395
$
396
28,400
2,571
(1)
Maryland communities include Columbia and Fairwood.
(2)
Summerlin Does not reflect impact of CSA
(Note 14). Average price per acre includes assumption of
Special Improvement District financing.
(3)
Summerlin Includes the effect of a single sale of a
19.1 acre parcel to a school at a price of $25 thousand per
acre.
(4)
Woodlands Shown at 100%. Our share of The Woodlands
is 52.5%.
Table of Contents
$ Increase
% Increase
2007
2006
(Decrease)
(Decrease)
(In thousands)
$
2,882,491
$
2,602,487
$
280,004
10.8
%
145,649
423,183
(277,534
)
(65.6
)
944,338
861,351
82,987
9.6
244,308
316,453
(72,145
)
(22.8
)
106,584
115,798
(9,214
)
(8.0
)
198,610
181,033
17,577
9.7
37,005
18,800
18,205
96.8
89,225
89,225
100.0
670,454
690,194
(19,740
)
(2.9
)
1,174,097
1,117,437
56,660
5.1
(294,160
)
98,984
(393,144
)
(397.2
)
158,401
114,241
44,160
38.7
40
Table of Contents
$ Increase
% Increase
2006
2005
(Decrease)
(Decrease)
(In thousands)
$
2,181,845
$
2,064,127
$
117,718
5.7
%
960,816
936,029
24,787
2.6
91,911
83,713
8,198
9.8
188,331
172,477
15,854
9.2
3,422,903
3,256,346
166,557
5.1
277,381
261,331
16,050
6.1
242,846
238,703
4,143
1.7
61,810
78,227
(16,417
)
(21.0
)
527,030
510,432
16,598
3.3
22,871
18,725
4,146
22.1
1,131,938
1,107,418
24,520
2.2
$
2,290,965
$
2,148,928
$
142,037
6.6
%
Higher minimum rents, especially at The Shops at La Cantera
which opened in September 2005, and Ala Moana Center which was
recently redeveloped
The acquisition of Whalers Village by one of our joint
ventures, the acquisition of our partners share of GGP
Ivanhoe IV, Inc. and the acquisition of Shopping Campina Grande
as well as other properties in our Brazil joint venture
Higher specialty leasing and kiosk rents, especially at
properties acquired in the 2004 TRC Merger, as well as
higher termination income
Greater use of vacant space for temporary tenant rentals
41
Table of Contents
$ Increase
% Increase
2006
2005
(Decrease)
(Decrease)
(In thousands)
$
508,744
$
468,294
$
40,450
8.6
%
(378,757
)
(372,641
)
6,116
1.6
$
129,987
$
95,653
$
34,334
35.9
%
42
Table of Contents
Lot Sales and Pricing
Acreage
Total
Remaining
Gross
Saleable
2006
2005
Acres
Acres
($ in thousands)
46.5
86.9
228
$
966
$
833
55.2
50.3
352
$
681
$
438
19,100
580
251.2
269.7
5,527
$
1,067
$
860
22.5
10.0
888
$
251(3
)
$
511
22,500
6,415
64.3
5,308
$
222
$
1,211
$
$
10,200
6,519
288.1
337.3
1,814
$
374
$
312
96.0
109.9
1,188
$
397
$
372
28,400
3,002
(1)
Maryland communities include Columbia and Fairwood.
(2)
Summerlin Does not reflect impact of CSA
(Note 14). Average price per acre includes assumption of
Special Improvement District financing.
43
Table of Contents
(3)
Summerlin Includes the effect of a single sale of a
19.1 acre parcel to a school at a price of $25 thousand per
acre.
(4)
Woodlands Shown at 100%. Our share of The Woodlands
is 52.5%.
$ Increase
% Increase
2006
2005
(Decrease)
(Decrease)
(In thousands)
$
2,602,487
$
2,494,851
$
107,636
4.3
%
423,183
385,205
37,978
9.9
861,351
868,926
(7,575
)
(0.9
)
316,453
311,815
4,638
1.5
115,798
91,022
24,776
27.2
181,033
144,526
36,507
25.3
18,800
15,539
3,261
21.0
690,194
672,914
17,280
2.6
1,117,437
1,031,241
86,196
8.4
98,984
51,289
47,695
93.0
Increase in interest rates both on new fixed-rate financings and
variable-rate debt as a result of increases in the LIBOR rate
Lower amortization of purchase accounting
mark-to-market
adjustments (which reduce interest expense). This amortization
is reduced as debt is repaid and refinanced
Increased amortization of deferred finance costs as a result of
finance costs incurred in conjunction with the 2006 Credit
Facility
44
Table of Contents
Minor improvements made to individual
properties that are not recoverable through common area
maintenance charges to tenants
Dividend payments
Debt repayment requirements,
including both principal and interest
our Unconsolidated Real Estate Affiliates
Borrowings under revolving credit
facilities
Land sales from the Master Planned
Communities segment
Major redevelopment,
renovation or expansion programs at individual properties
Debt repayment
requirements,including both principal and interest
Acquisitions, including
Anchor stores and contingent amounts on owned properties or
communities
Income tax payments
International expansion
Unsecured loans at either a venture or
company level
Offerings of equity and/or debt
securities
Construction loans
Mini-permanent loans
Long-term project financing
Joint venture formation with
institutional partners
Asset sales
45
Table of Contents
46
Table of Contents
December 31,
2007
2006
2005
(In millions)
$
21,035
$
17,838
$
14,789
2,523
2,491
4,875
724
193
755
3,247
2,684
5,630
$
24,282
$
20,522
$
20,419
(exluding deferred finance costs)
5.55
%
5.70
%
5.64
%
$
2,750
$
3,588
$
2,788
299
296
455
$
3,049
$
3,884
$
3,243
5.74
%
5.66
%
5.56
%
47
Table of Contents
48
Table of Contents
Subsequent /
2009
2010
2011
2012
Other(6)
Total
(In thousands)
$
2,627,523
$
3,205,058
$
3,944,643
$
7,107,117
$
3,743,889
$
3,586,493
$
24,214,723
1,276,386
1,112,371
928,583
593,310
334,934
642,095
4,887,679
2,446
2,606
119,694
776
37,740
163,262
10,077
10,089
9,987
9,515
9,319
369,104
418,091
400,000
400,000
130,041
130,041
20,174
126,027
146,201
$
4,466,647
$
4,330,124
$
5,002,907
$
7,710,718
$
4,125,882
$
4,723,719
$
30,359,997
(3)
Reflects $300 million estimate of initial purchase price of
the Palazzo (Note 14), and $100 million to develop the
Echelon Retail Promenade which is expected to be completed in
the fall of 2010.
(4)
Reflects accrued and incurred construction costs payable in our
Retail and Other and Master Planned Communities segments.
Routine trade payables have been excluded. We expect development
and redevelopment expenditures of approximately
$2.10 billion from 2008 through 2011.
(5)
Other long-term liabilities related to ongoing real estate taxes
have not been included in the table as such amounts depend upon
future applicable real estate tax rates. Real estate tax expense
was $246.5 million in 2007, $218.5 million in 2006 and
$206.2 million in 2005.
(6)
The remaining FIN 48 liability for which reasonable
estimates about the timing of payments cannot be made is
disclosed within the Subsequent/Other column.
49
Table of Contents
50
Table of Contents
51
Table of Contents
52
Table of Contents
Item 8.
Financial
Statements and Supplementary Data
Item 9.
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
53
Table of Contents
February 26, 2008
54
Table of Contents
Item 10.
Directors,
Executive Officers and Corporate Governance
Item 11.
Executive
Compensation
Item 12.
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
55
Table of Contents
(c)
Number of
Securities
(a)
Remaining Available
Number of
for Future Issuance
Securities to be
(b)
Under Equity
Issued upon
Weighted-Average
Compensation Plans
Exercise of
Exercise Price of
(Excluding
Outstanding
Outstanding
Securities
Options, Warrants
Options, Warrants
Reflected in Column
and Rights
and Rights
(a))
5,731,579
$
53.56
7,462,039(2
)
N/A
N/A
1,442,279
5,731,579
$
53.56
8,904,318
(1)
Includes shares of common stock under the 1993 Stock Incentive
Plan (which terminated on April 4, 2003), the 1998
Incentive Stock Plan and the 2003 Incentive Stock Plan.
(2)
Includes 4,366,500 shares of common stock available for
issuance under the 2003 Incentive Stock Plan and
3,095,539 shares of common stock available for issuance
under the 1998 Incentive Stock Plan, which expires in 2008.
(3)
Represents shares of common stock under our Employee Stock
Purchase Plan, which was adopted by the Board of Directors in
November 1998. Under the Employee Stock Purchase Plan, eligible
employees make payroll deductions over a six-month period, at
which time the amounts withheld are used to purchase shares of
common stock at a purchase price equal to 85% of the lesser of
the closing price of a share of common stock on the first or
last trading day of the purchase period. Purchases of common
stock under the Employee Stock Purchase Plan are made on the
first business day of the next month after the close of the
purchase period. Under New York Stock Exchange rules then in
effect, stockholder approval was not required for the Employee
Stock Purchase Plan because it is a broad-based plan available
generally to all employees.
Item 13.
Certain
Relationships and Related Transactions, and Director
Independence
Item 14.
Principal
Accounting Fees and Services
56
Table of Contents
Item 15.
Exhibits and
Financial Statement Schedules
57
Table of Contents
By:
Director, Chairman Emeritus
February 26, 2008
Director, Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
February 26, 2008
Director, President
and Chief Operating Officer
February 26, 2008
Director, Executive Vice President
and Chief Financial Officer (Principal Financial and Accounting
Officer)
February 26, 2008
Director
February 26, 2008
Director
February 26, 2008
Director
February 26, 2008
Director
February 26, 2008
Director
February 26, 2008
Director
February 26, 2008
58
Page
Number
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
Organization
F-10
Summary of Significant Accounting Policies
F-11
Acquisitions and Intangibles
F-12
Discontinued Operations and Gains (Losses) on
Dispositions of Interests in Operating Properties
F-21
Unconsolidated Real Estate Affiliates
F-22
Mortgages, Notes and Loans Payable
F-28
Income Taxes
F-32
Rentals under Operating Leases
F-35
Transactions with Affiliates
F-36
Stock-Based Compensation Plans
F-36
Other Assets and Liabilities
F-41
Minority Interests
F-42
Accumulated Other Comprehensive Income
F-44
Commitments and Contingencies
F-44
Recently Issued Accounting Pronouncements
F-46
Segments
F-47
Pro Forma Financial Information
F-52
Quarterly Financial Information (Unaudited)
F-53
F-55
F-56
F-1
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
F-4
Table of Contents
F-5
Table of Contents
December 31,
2007
2006
(Dollars in thousands)
$
3,310,634
$
2,952,477
22,653,814
19,379,386
(3,605,199
)
(2,766,871
)
987,936
673,900
23,347,185
20,238,892
1,857,330
1,499,036
1,639,372
1,655,838
26,843,887
23,393,766
99,534
97,139
388,278
338,709
385,683
371,674
290,660
252,190
806,277
787,967
$
28,814,319
$
25,241,445
$
24,282,139
$
20,521,967
53,964
172,421
860,435
1,302,205
1,688,241
1,050,192
26,884,779
23,046,785
121,482
182,828
351,362
347,753
472,844
530,581
2,457
2,424
2,601,296
2,533,898
(1,087,080
)
(868,391
)
35,658
9,582
(95,635
)
(13,434
)
1,456,696
1,664,079
$
28,814,319
$
25,241,445
F-6
Table of Contents
Years Ended December 31,
2007
2006
2005
(Dollars in thousands, except for per share amounts)
$
1,933,674
$
1,753,508
$
1,670,387
859,801
773,034
754,836
89,016
75,945
69,628
145,649
423,183
385,205
106,584
115,798
91,022
127,077
114,815
101,626
3,261,801
3,256,283
3,072,704
246,484
218,549
206,193
216,536
199,078
195,292
54,664
48,626
63,522
421,228
373,020
390,051
244,308
316,453
311,815
5,426
22,078
13,868
198,610
181,033
144,526
37,005
18,800
15,539
89,225
670,454
690,194
672,914
2,183,940
2,067,831
2,013,720
1,077,861
1,188,452
1,058,984
8,641
11,585
10,416
(1,174,097
)
(1,117,437
)
(1,031,241
)
(87,595
)
82,600
38,159
294,160
(98,984
)
(51,289
)
(77,012
)
(37,761
)
(43,989
)
158,401
114,241
120,986
287,954
60,096
63,867
6,568
(823
)
5,118
(823
)
11,686
$
287,954
$
59,273
$
75,553
$
1.18
$
0.25
$
0.27
0.05
$
1.18
$
0.25
$
0.32
$
1.18
$
0.24
$
0.27
0.05
$
1.18
$
0.24
$
0.32
$
287,954
$
59,273
$
75,553
(2,295
)
(3,316
)
9,554
243
(2
)
(374
)
28,131
2,728
4,920
(3
)
(282
)
39
26,076
(872
)
14,139
$
314,030
$
58,401
$
89,692
F-7
Table of Contents
Notes
Retained
Receivable-
Accumulated
Additional
Earnings
Common
Other
Total
Common
Paid-In
(Accumulated
Stock
Comprehensive
Treasury
Stockholders
Stock
Capital
Deficit)
Purchase
Income (Loss)
Stock
Equity
(Dollars in thousands)
$
2,347
$
2,377,177
$
(227,511
)
$
(5,178
)
$
(3,685
)
$
$
2,143,150
75,553
75,553
(353,665
)
(353,665
)
25
23,907
23,932
7
14,330
14,337
13
40,135
(7,892
)
5,178
24,522
61,956
3,328
3,328
6
19,393
(5,040
)
44,696
59,055
1
3,116
3,117
(99,580
)
(99,580
)
14,139
14,139
(12,404
)
(12,404
)
$
2,399
$
2,468,982
$
(518,555
)
$
$
10,454
$
(30,362
)
1,932,918
59,273
59,273
(403,831
)
(403,831
)
8
5,784
5,792
5
10,021
10,026
10
34,333
(5,278
)
26,018
55,083
267
267
1
4,895
76,835
81,731
1
2,807
2,808
(85,925
)
(85,925
)
(872
)
(872
)
6,809
6,809
$
2,424
$
2,533,898
$
(868,391
)
$
$
9,582
$
(13,434
)
$
1,664,079
(54,128
)
(54,128
)
$
2,424
$
2,533,898
$
(922,519
)
$
$
9,582
$
(13,434
)
$
1,609,951
287,954
287,954
(450,854
)
(450,854
)
11
7,684
7,695
488
488
15
64,022
(1,661
)
6,657
69,033
3,531
3,531
6
29,875
6,790
36,671
1
2,695
2,696
(95,648
)
(95,648
)
26,076
26,076
(40,897
)
(40,897
)
$
2,457
$
2,601,296
$
(1,087,080
)
$
$
35,658
$
(95,635
)
$
1,456,696
F-8
Table of Contents
Years Ended December 31,
2007
2006
2005
(In thousands)
$
287,954
$
59,273
$
75,553
77,012
37,761
45,488
(158,401
)
(114,241
)
(120,986
)
5,426
22,078
13,876
124,481
111,864
119,602
635,873
663,523
657,358
34,581
26,671
21,037
(11,073
)
(13,570
)
(32,672
)
31,884
110,740
106,285
(243,323
)
(200,367
)
(170,026
)
48,794
175,184
181,301
127,600
(368,136
)
58,252
28,596
(24,334
)
(34,176
)
(33,994
)
(20,945
)
(41,668
)
(29,254
)
(21,868
)
(23,091
)
(51,131
)
53,819
28,165
(69,379
)
(37,878
)
(46,741
)
(73,048
)
135,980
(30,733
)
122,208
29,970
27,427
51,164
707,416
816,351
841,978
(1,495,334
)
(699,403
)
(497,977
)
3,252
23,117
143,543
(441,438
)
(285,747
)
(195,642
)
303,265
627,869
260,639
(161,892
)
67,821
126,500
(11,590
)
12,017
(22,950
)
22,805
43,926
31,690
(1,780,932
)
(210,400
)
(154,197
)
4,456,863
9,366,183
3,907,254
(2,692,907
)
(9,383,378
)
(3,791,978
)
(28,422
)
(38,916
)
(6,984
)
(450,854
)
(403,831
)
(353,665
)
(96,978
)
(88,992
)
(80,885
)
(13,873
)
(17,546
)
(27,329
)
60,625
49,267
45,208
(60,000
)
(183,000
)
(95,648
)
(85,925
)
(98,939
)
(2,895
)
(8,465
)
(34,253
)
1,075,911
(611,603
)
(624,571
)
2,395
(5,652
)
63,210
97,139
102,791
39,581
$
99,534
$
97,139
$
102,791
$
1,272,823
$
1,170,929
$
1,074,874
86,606
58,019
54,260
96,133
34,743
8,170
$
7,695
$
5,792
$
23,932
488
10,026
14,337
36,671
81,731
59,055
3,331,032
169,415
(134,166
)
2,381,942
169,415
(125,925
)
F-9
Table of Contents
Note 1
Organization
82
%
GGP, as sole general partner
16
Limited partners that indirectly include family members of the
original stockholders of the Company. Represented by common
units of limited partnership interest (the Common
Units)
2
Limited partners that include subsequent contributors of
properties to the Operating Partnership which are also
represented by Common Units.
100
%
GGPLP L.L.C., a Delaware limited liability company (the
LLC), has ownership interests in the majority of our
Consolidated Properties (as defined below) (other than those
acquired in The Rouse Company merger (the TRC
Merger).
The Rouse Company LP (TRCLP), successor to The Rouse
Company (TRC), which includes both REIT and taxable
REIT subsidiaries (TRSs), has ownership interests in
Consolidated Properties and Unconsolidated Properties (each as
defined below).
General Growth Management, Inc. (GGMI), a TRS,
manages, leases, and performs various other services for most of
our Unconsolidated Real Estate Affiliates (as defined below) and
approximately 30 properties owned by unaffiliated third parties.
Effective July 1, 2006, GGMI also performs tenant related
marketing and strategic partnership services at all of our
Consolidated Properties.
F-10
Table of Contents
Note 2
Summary
of Significant Accounting Policies
Years
40-45
5-10
F-11
Table of Contents
F-12
Table of Contents
2007
2006
2005
(In thousands)
$
3,720
$
4,982
$
27,740
643
578
3,416
F-13
Table of Contents
F-14
Table of Contents
F-15
Table of Contents
Years Ended December 31,
2007
2006
2005
Basic
Diluted
Basic
Diluted
Basic
Diluted
(In thousands)
$
287,954
$
287,954
$
60,096
$
60,096
$
63,867
$
63,867
(823
)
(823
)
11,686
11,686
$
287,954
$
287,954
$
59,273
$
59,273
$
75,553
$
75,553
243,992
243,992
241,222
241,222
237,673
237,673
546
832
796
243,992
244,538
241,222
242,054
237,673
238,469
F-16
Table of Contents
2007
2006
Carrying
Estimated
Carrying
Estimated
Amount
Fair Value
Amount
Fair Value
(In millions)
$
20,840
$
20,596
$
17,018
$
16,854
3,442
3,361
3,504
3,518
$
24,282
$
23,957
$
20,522
$
20,372
F-17
Table of Contents
F-18
Table of Contents
Note 3
Acquisitions
and Intangibles
(In thousands)
$
949,090
1,055,057
254,677
$
2,258,824
F-19
Table of Contents
(In thousands)
250,194
1,660,372
44,309
8,477
137,973
11,240
5,156
43,782
178,021
221,803
2,339,524
31,396
(12,883
)
62,188
80,701
$
2,258,824
F-20
Table of Contents
Accumulated
Gross Asset
(Amortization)/
(Liability)
Accretion
Net Carrying Amount
(In thousands)
$
679,329
$
(361,172
)
$
318,157
148,057
(72,772
)
75,285
(324,088
)
196,447
(127,641
)
(16,968
)
1,479
(15,489
)
293,435
(19,590
)
273,845
91,879
(12,425
)
79,454
$
667,492
$
(314,270
)
$
353,222
107,157
(53,176
)
53,981
(294,052
)
176,089
(117,963
)
(16,968
)
1,007
(15,961
)
293,435
(12,919
)
280,516
91,879
(8,501
)
83,378
Note 4
Discontinued
Operations and Gains (Losses) on Dispositions of Interests in
Operating Properties
F-21
Table of Contents
Note 5
Unconsolidated
Real Estate Affiliates
F-22
Table of Contents
December 31,
December 31,
2007
2006
(In thousands)
$
917,244
$
988,018
7,136,053
8,158,030
(1,361,649
)
(1,590,812
)
645,156
551,464
7,336,804
8,106,700
45,863
287,962
290,273
7,624,766
8,442,836
224,048
180,203
133,747
165,049
166,201
155,051
445,113
470,885
$
8,593,875
$
9,414,024
$
6,215,426
$
7,752,889
715,519
558,974
1,662,930
1,102,161
$
8,593,875
$
9,414,024
$
1,662,930
$
1,102,161
(853,459
)
(600,412
)
993,895
824,866
Unconsolidated Real Estate Affiliates, net
$
1,803,366
$
1,326,615
Unconsolidated Real Estate Affiliates
$
1,857,330
$
1,499,036
Unconsolidated Real Estate Affiliates
(53,964
)
(172,421
)
Unconsolidated Real Estate Affiliates, net
$
1,803,366
$
1,326,615
Table of Contents
Years Ended December 31,
2007
2006
2005
(In thousands)
$
829,356
$
864,368
$
795,185
358,941
378,413
365,325
25,314
31,889
28,592
161,938
162,790
158,181
41,538
15,712
156,822
164,019
126,069
1,573,909
1,617,191
1,473,352
104,523
119,426
112,225
84,840
88,243
87,816
25,275
26,485
29,561
293,568
311,267
239,194
91,539
103,519
89,561
4,185
1,494
10,182
94,268
77,290
59,548
19,013
7,947
2,684
89,225
259,015
269,327
257,153
1,065,451
1,004,998
887,924
508,458
612,193
585,428
26,334
30,498
14,432
(355,917
)
(361,114
)
(304,368
)
(9,263
)
(1,274
)
(1,157
)
(163
)
(588
)
3,389
6,509
5,384
172,838
286,224
299,719
106,016
18,115
438
$
278,854
$
304,339
$
300,157
$
278,854
$
304,339
$
300,157
(187,672
)
(160,099
)
(157,756
)
(19,019
)
(22,083
)
(20,844
)
89,225
(2,987
)
(7,916
)
(571
)
$
158,401
$
114,241
$
120,986
F-24
Table of Contents
GGP/Homart II
December 31,
December 31,
2007
2006
(In thousands)
$
248,094
$
224,158
2,654,780
2,261,123
(400,078
)
(326,340
)
108,078
286,396
2,610,874
2,445,337
30,851
6,289
40,319
35,506
76,297
58,712
39,032
36,656
$
2,797,373
$
2,582,500
$
2,110,947
$
2,284,763
237,688
146,781
448,738
150,956
$
2,797,373
$
2,582,500
F-25
Table of Contents
GGP/Homart II
Years Ended December 31,
2007
2006
2005
(In thousands)
$
230,420
$
205,835
$
194,938
103,265
94,298
92,862
7,008
5,935
6,432
10,028
9,057
8,543
350,721
315,125
302,775
29,615
29,883
27,132
23,100
19,362
19,671
8,332
7,583
8,726
41,099
37,776
29,490
1,315
(47
)
3,125
22,279
19,469
17,468
11,777
7,137
2,005
89,225
81,241
66,024
61,923
307,983
187,187
169,540
42,738
127,938
133,235
7,871
8,840
7,358
(109,209
)
(91,240
)
(77,285
)
(26
)
(2,202
)
(69
)
64
$
(60,828
)
$
45,469
$
63,372
Table of Contents
The Woodlands Partnership
December 31,
December 31,
2007
2006
(In thousands)
$
14,756
$
13,828
48,201
91,485
(10,638
)
(19,271
)
52,515
6,939
287,962
290,273
392,796
383,254
27,359
15,219
2,044
2,782
85,331
97,978
$
507,530
$
499,233
$
286,765
$
321,724
75,549
58,805
145,216
118,704
$
507,530
$
499,233
F-27
Table of Contents
The Woodlands Partnership
Years Ended December 31,
2007
2006
2005
(In thousands)
$
734
$
1,834
$
(9
)
161,938
161,540
157,581
34,750
34,244
31,947
197,422
197,618
189,519
131
453
257
311
39,162
32,207
33,083
91,539
102,989
89,313
3,504
5,218
4,659
134,593
141,178
127,055
62,829
56,440
62,464
676
332
224
(9,025
)
(6,434
)
(5,873
)
(1,918
)
52,562
50,338
56,815
94,556
16,547
$
147,118
$
66,885
$
56,815
Note 6
Mortgages,
Notes and Loans Payable
December 31,
December 31,
2007
2006
(In thousands)
$
$
868,765
16,943,760
13,762,381
3,895,922
2,386,334
20,839,682
17,017,480
819,607
388,287
429,150
60,000
2,193,700
3,056,200
3,442,457
3,504,487
$
24,282,139
$
20,521,967
Table of Contents
F-29
Table of Contents
F-30
Table of Contents
Property
Specific
$
195.0
4.78
%
LIBOR
F-31
Table of Contents
Note 7
Income
Taxes
2007
2006
2005
(In thousands)
$
73,976
$
40,732
$
22,693
(368,136
)
58,252
28,596
$
(294,160
)
$
98,984
$
51,289
F-32
Table of Contents
2007
2006
2005
(In thousands)
$
(2,172
)
$
55,678
$
40,723
160
936
(5,114
)
2,290
4,608
343
22,308
37,762
15,337
(320,956
)
(2,763
)
6,973
$
(294,160
)
$
98,984
$
51,289
Amount
Expiration Dates
(In thousands)
$
41,472
2008 - 2026
106,432
2008 - 2026
9,232
2009
847
n/a
2007
2006
(In thousands)
$
25,184
$
16,006
(1,096
)
(936
)
24,088
15,070
(860,435
)
(1,302,205
)
$
(836,347
)
$
(1,287,135
)
F-33
Table of Contents
2007
2006
(In thousands)
$
(796,142
)
$
(1,165,960
)
(206,652
)
(291,634
)
142,103
142,177
24,345
28,282
$
(836,347
)
$
(1,287,135
)
F-34
Table of Contents
2007
(In thousands)
$
135,062
1,970
10,029
(19,952
)
$
127,109
2007
2006
2005
$
0.926
$
0.542
$
0.993
0.501
0.497
0.501
0.432
0.423
0.205
$
1.850
$
1.680
$
1.490
Note 8
Rentals
Under Operating Leases
Amount
$
1,642,365
1,534,411
1,369,628
1,207,599
1,033,005
3,752,229
Table of Contents
Note 9
Transactions
with Affiliates
Note 10
Stock-Based
Compensation Plans
2007
2006
2005
Weighted
Weighted
Weighted
Average
Average
Average
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
3,167,348
$
38.41
2,546,174
$
29.57
1,875,687
$
22.17
1,205,000
65.81
1,370,000
49.78
1,352,500
36.13
(1,318,748
)
33.81
(573,226
)
24.70
(610,213
)
21.00
(30,000
)
47.26
(145,000
)
43.10
(70,000
)
33.49
(600
)
9.99
(600
)
9.99
(1,800
)
9.99
3,053,000
$
51.21
3,167,348
$
38.41
2,546,174
$
29.57
F-36
Table of Contents
Stock Options Outstanding
Stock Options Exercisable
Weighted
Weighted
Average
Weighted
Average
Weighted
Remaining
Average
Remaining
Average
Contractual
Exercise
Contractual
Exercise
Shares
Term (in years)
Price
Shares
Term (in years)
Price
4,500
2.30
$
9.99
4,500
2.30
$
9.99
73,000
4.60
15.41
73,000
4.60
15.41
197,000
1.10
30.94
145,000
1.10
30.94
571,000
2.20
35.71
351,000
2.20
35.57
50,000
2.80
44.59
20,000
2.80
44.59
952,500
3.20
49.52
547,500
3.20
49.88
1,205,000
4.20
65.81
201,000
4.20
65.81
3,053,000
2.93
$
51.21
1,342,000
2.93
$
44.39
$
$
Table of Contents
2007
2006
2005
Weighted
Weighted
Weighted
Average
Average
Average
Grant Date
Grant Date
Grant Date
Shares
Fair Value
Shares
Fair Value
Shares
Fair Value
72,666
$
47.62
15,000
$
16.77
80,001
$
16.71
96,500
65.29
99,000
47.91
66,000
35.41
(32,668
)
49.11
(41,334
)
37.13
(131,001
)
26.13
136,498
$
59.75
72,666
$
47.62
15,000
$
16.77
$
5,621
$
3,795
$
705
F-38
Table of Contents
TSO Grant Year
2007
2006
2005
1,400,000
1,000,000
(84,773
)
(118,332
)
(723,920
)
1,315,227
157,748
1,400,000
(86,110
)
(79,659
)
(1,334
)
(156,414
)
1,313,890
1,235,568
$
$
$
903
596
5,539
$
65.81
$
50.47
$
35.41
92.30
70.79
49.66
9.54
6.51
3.81
4.1
3.1
(1)
No TSO expirations for years presented.
(2)
TSOs outstanding at December 31, 2007 for the years 2004
and prior were 133,621.
(3)
Intrinsic value is not presented if the result is a negative
number.
(4)
A weighted average exercise price is not applicable as there is
only one grant date and issue per year.
2007
2006
2005
4.70
%
4.43
%
3.40
%
4.00
4.00
4.00
24.72
22.94
21.61
5.0
2.5-3.5
5.0
F-39
Table of Contents
F-40
Table of Contents
Note 11
Other
Assets and Liabilities
December 31,
December 31,
2007
2006
(In thousands)
$
273,845
$
280,516
114,979
111,694
83,638
76,834
79,454
83,378
75,285
53,981
58,200
64,819
52,820
37,528
24,088
15,070
14,616
17,119
14,952
29,352
32,076
$
806,277
$
787,967
December 31,
December 31,
2007
2006
(In thousands)
$
302,719
$
200,936
254,000
206,044
188,038
146,201
127,641
117,963
122,406
102,870
86,008
90,793
84,327
71,816
79,479
56,414
71,191
58,372
28,212
32,887
19,407
12,800
15,489
15,961
14,616
17,119
14,390
14,967
14,321
11,493
101,790
57,763
$
1,688,241
$
1,050,192
F-41
Table of Contents
Note 12
Minority
Interests
55,532,263
729,890
(3,200,258
)
53,061,895
1,163,333
(1,334,637
)
52,890,591
76,625
(1,116,230
)
51,850,986
F-42
Table of Contents
Number
of Units
as of
Per Unit
Coupon
Issuing
December 31,
Liquidation
Carrying Amount
Rate
Entity
2007
Preference
2007
2006
(In thousands)
8.95
%
LLC
$
250
$
$
60,000
8.25
%
LLC
20,000
250
5,000
5,000
5,000
65,000
8.50
%
GGPLP
1,284,715
50
64,237
64,724
7.00
%
GGPLP
50
974
6.50
%
GGPLP
532,750
50
26,637
26,637
7.00
%
GGPLP
502,658
50
25,132
25,132
116,006
117,467
N/A
various
476
1,000
476
361
$
121,482
$
182,828
Number of Common
Units for each
Preferred Unit
3.000
1.508
1.298
F-43
Table of Contents
Note 13
Accumulated
Other Comprehensive Income
2007
2006
(In thousands)
$
(909
)
$
1,386
(462
)
(705
)
37,369
9,238
(340
)
(337
)
$
35,658
$
9,582
Note 14
Commitments
and Contingencies
F-44
Table of Contents
Subsequent /
2008
2009
2010
2011
2012
Other (1)
Total
(In thousands)
$
2,643,190
$
3,219,734
$
3,956,797
$
7,111,582
$
3,744,743
$
3,606,093
$
24,282,139
2,446
2,606
119,694
776
37,740
163,262
15,895
15,907
15,805
15,333
15,137
596,964
675,041
20,174
126,027
146,201
$
2,681,705
$
3,238,247
$
4,092,296
$
7,127,691
$
3,797,620
$
4,329,084
$
25,266,643
(1)
The remaining FIN 48 liability for which reasonable
estimates about the timing of payments cannot be made is
disclosed within the Subsequent/Other column.
F-45
Table of Contents
Note 15
Recently
Issued Accounting Pronouncements
F-46
Table of Contents
Note 16
Segments
Retail and Other
includes the operation,
development and management of retail and other rental property,
primarily shopping centers
Master Planned Communities
includes the
development and sale of land, primarily in large-scale,
long-term community development projects in and around Columbia,
Maryland; Summerlin, Nevada; and Houston, Texas
F-47
Table of Contents
Year Ended December 31, 2007
Consolidated
Unconsolidated
Segment
Properties
Properties
Basis
(In thousands)
$
1,933,674
$
406,241
$
2,339,915
859,801
173,486
1,033,287
89,016
12,213
101,229
115,910
82,884
198,794
2,998,401
674,824
3,673,225
246,484
50,478
296,962
216,536
40,559
257,095
54,664
12,233
66,897
421,228
150,041
571,269
5,426
1,978
7,404
944,338
255,289
1,199,627
2,054,063
419,535
2,473,598
145,649
85,017
230,666
(116,708
)
(57,813
)
(174,521
)
28,941
27,204
56,145
(127,600
)
(127,600
)
(98,659
)
27,204
(71,455
)
$
1,955,404
$
446,739
$
2,402,143
F-48
Table of Contents
Year Ended December 31, 2006
Consolidated
Unconsolidated
Segment
Properties
Properties
Basis
(In thousands)
$
1,753,508
$
428,337
$
2,181,845
773,034
187,782
960,816
75,945
15,966
91,911
99,779
88,552
188,331
2,702,266
720,637
3,422,903
218,549
58,832
277,381
199,078
43,768
242,846
48,626
13,184
61,810
373,020
154,010
527,030
22,078
793
22,871
861,351
270,587
1,131,938
1,840,915
450,050
2,290,965
423,183
85,561
508,744
(316,453
)
(62,304
)
(378,757
)
106,730
23,257
129,987
$
1,947,645
$
473,307
$
2,420,952
Table of Contents
Year Ended December 31, 2005
Consolidated
Unconsolidated
Segment
Properties
Properties
Basis
(In thousands)
$
1,670,387
$
393,740
$
2,064,127
754,836
181,193
936,029
69,628
14,085
83,713
107,674
64,803
172,477
2,602,525
653,821
3,256,346
206,193
55,138
261,331
195,292
43,411
238,703
63,522
14,705
78,227
390,051
120,381
510,432
13,868
4,857
18,725
868,926
238,492
1,107,418
1,733,599
415,329
2,148,928
385,205
83,089
468,294
(311,815
)
(60,826
)
(372,641
)
73,390
22,263
95,653
$
1,806,989
$
437,592
$
2,244,581
Table of Contents
Years Ended December 31,
2007
2006
2005
(In thousands)
$
2,402,143
$
2,420,952
$
2,244,581
(446,739
)
(473,307
)
(437,592
)
1,955,404
1,947,645
1,806,989
106,584
115,798
91,022
(198,610
)
(181,033
)
(144,526
)
(37,005
)
(18,800
)
(15,539
)
(89,225
)
(670,454
)
(690,194
)
(672,914
)
11,167
15,036
(6,048
)
1,077,861
1,188,452
1,058,984
8,641
11,585
10,416
(1,174,097
)
(1,117,437
)
(1,031,241
)
294,160
(98,984
)
(51,289
)
(77,012
)
(37,761
)
(43,989
)
158,401
114,241
120,986
$
287,954
$
60,096
$
63,867
Years Ended December 31,
2007
2006
2005
(In thousands)
$
3,673,225
$
3,422,903
$
3,256,346
(674,824
)
(720,637
)
(653,821
)
145,649
423,183
385,205
106,584
115,798
91,022
11,167
15,036
(6,048
)
$
3,261,801
$
3,256,283
$
3,072,704
F-51
Table of Contents
2007
2006
(In thousands)
$
28,790,732
$
26,421,063
2,176,218
2,167,971
30,966,950
28,589,034
(4,143,866
)
(4,753,634
)
1,991,235
1,406,045
$
28,814,319
$
25,241,445
Note 17
Pro
Forma Financial Information
Year Ended December 31, 2007
Year Ended December 31, 2006
Pro Forma
Pro Forma
As Reported
Adjustments
Pro Forma
As Reported
Adjustments
Pro Forma
(In thousands except for per share amounts)
$
3,261,801
$
172,799
$
3,434,600
$
3,256,283
$
343,849
$
3,600,132
1,077,861
79,116
1,156,977
1,188,452
162,322
1,350,774
158,401
(7,691
)
150,710
114,241
(23,979
)
90,262
287,954
2,752
290,706
60,096
10,069
70,165
243,992
243,992
241,222
241,222
244,538
244,538
242,054
242,054
$
1.18
$
1.19
$
0.25
$
0.29
$
1.18
$
1.19
$
0.24
$
0.28
F-52
Table of Contents
Note 18
Quarterly
Financial Information (Unaudited)
2007
First
Second
Third
Fourth
Quarter
Quarter
Quarter
Quarter
(In thousands except for per share amounts)
$
728,788
$
740,082
$
864,258
$
928,668
242,174
277,146
327,543
230,993
230,194
8,392
(9,359
)
58,726
230,194
8,392
(9,359
)
58,726
0.94
0.03
(0.04
)
0.24
0.94
0.03
(0.04
)
0.24
0.94
0.03
(0.04
)
0.24
0.94
0.03
(0.04
)
0.24
0.45
0.45
0.45
0.50
243,653
244,960
243,775
243,867
244,406
245,627
243,775
244,258
F-53
Table of Contents
2006
First
Second
Third
Fourth
Quarter
Quarter
Quarter
Quarter
(In thousands except for per share amounts)
$
828,619
$
709,809
$
746,031
$
971,823
307,747
245,449
265,355
369,901
23,014
(25,813
)
(8,161
)
71,056
(823
)
23,014
(25,813
)
(8,161
)
70,233
0.10
(0.11
)
(0.03
)
0.29
0.10
(0.11
)
(0.03
)
0.29
0.10
(0.11
)
(0.03
)
0.29
0.10
(0.11
)
(0.03
)
0.29
0.41
0.41
0.41
0.45
240,621
241,330
241,150
241,779
241,588
241,330
241,150
242,739
*
Earnings (loss) per share for the quarters do not add up to the
annual earnings per share due to the issuance of additional
common stock during the year.
Table of Contents
SCHEDULE III REAL ESTATE AND
ACCUMULATED DEPRECIATION
DECEMBER 31, 2007
Costs Capitalized
Gross Amounts at Which
Life Upon Which
Initial Cost (b)
Subsequent to Acquisition (c)
Carried at Close of Period (d)
Latest Income
Buildings and
Buildings and
Buildings and
Accumulated
Date of
Date
Statement is
Location
Encumbrances (a)
Land
Improvements
Land
Improvements
Land
Improvements
Total
Depreciation (e)
Construction
Acquired
Computed
(In thousands)
Honolulu, HI
$
1,500,000
$
336,229
$
473,771
$
$
125,435
$
336,229
$
599,206
$
935,435
$
148,481
1999
(e)
Pocatello, ID
740
2,060
13
740
2,073
2,813
283
2002
(e)
Anaheim, CA
1,986
29
2,015
2,015
274
2002
(e)
Farmington, NM
24,746
6,464
35,902
8,168
6,464
44,070
50,534
6,283
2002
(e)
Rochester, MN
50,681
8,110
72,993
25,600
8,110
98,593
106,703
23,639
1998
(e)
Phoenix, AZ
489
2,314
132,158
(1,654
)
2,314
130,504
132,818
18,023
2004
(e)
Augusta, GA
175,000
787
162,272
1,217
52,082
2,004
214,354
216,358
18,980
2004
(e)
Colorado Springs, CO
2,383
1,080
3,007
225
1,080
3,232
4,312
440
2002
(e)
Eugene, OR
290
806
36
290
842
1,132
114
2002
(e)
Friendswood, TX
150,868
13,300
117,163
6,853
27,555
20,153
144,718
164,871
30,523
1999
(e)
Eureka, CA
31,720
3,005
27,399
36,835
3,005
64,234
67,239
30,440
1986-1987
(e)
Miami, FL
62,837
177,801
2,681
180,482
180,482
26,642
2004
(e)
Beachwood, OH
244,746
18,500
319,684
33,273
18,500
352,957
371,457
30,835
2004
(e)
Bellingham, WA
63,945
7,616
47,040
(131
)
14,759
7,485
61,799
69,284
29,260
1987-1988
(e)
Port Huron, MI
39,151
1,769
34,575
1,274
19,490
3,043
54,065
57,108
27,603
1989-1990
(e)
Boise, ID
374
1,042
112
374
1,154
1,528
152
2002
(e)
Boise, ID
11,219
3,988
11,101
146
3,988
11,247
15,235
1,545
2002
(e)
Boise, ID
74,464
23,449
131,001
1,019
29,122
24,468
160,123
184,591
21,703
2002
(e)
Burlington, VT
31,586
1,637
32,798
2,597
20,275
4,234
53,073
57,307
4,416
2004
(e)
Logan, UT
3,875
22,047
9,011
3,875
31,058
34,933
4,228
2002
(e)
Logan, UT
1,500
1,583
1,639
5,136
3,139
6,719
9,858
450
2002
(e)
Jefferson City, MO
20,710
4,200
14,201
(287
)
10,795
3,913
24,996
28,909
11,193
1993
(e)
Birmingham, AL
3,164
28,514
5,911
3,164
34,425
37,589
10,780
1997
(e)
Colorado Springs, CO
118,203
4,300
34,017
71,251
4,300
105,268
109,568
34,441
1993
(e)
Chico, CA
58,314
16,958
45,628
3,476
16,958
49,104
66,062
5,585
2003
(e)
Naples, FL
99,060
11,450
103,050
49,605
11,450
152,655
164,105
29,932
1998
(e)
Plano, TX
72,785
26,250
122,991
(1,613
)
26,250
121,378
147,628
11,594
2004
(e)
Zanesville, OH
1,000
24,500
597
24,927
1,597
49,427
51,024
24,166
1986
(e)
Columbia, MO
90,000
5,383
19,663
29,900
5,383
49,563
54,946
24,667
1984-1985
(e)
Coralville, IA
100,658
3,364
64,218
49
21,961
3,413
86,179
89,592
26,916
1998-1999
(e)
Albuquerque, NM
172,575
33,072
148,799
1,158
33,072
149,957
183,029
20,542
2003
(e)
Salt Lake City, UT
7,613
42,987
(27,324
)
7,613
15,663
23,276
2,012
2002
(e)
Salt Lake City, UT
1,558
4,339
218
1,558
4,557
6,115
612
2002
(e)
Ogden, UT
13,759
3,620
9,080
887
3,620
9,967
13,587
1,304
2002
(e)
St. Cloud, MN
86,433
10,813
72,203
2,393
40,050
13,206
112,253
125,459
19,347
2000
(e)
Atlanta, GA
160,278
15,199
136,787
10,042
68,018
25,241
204,805
230,046
38,161
1998
(e)
Portland, OR
5,492
1,773
4,935
421
1,773
5,356
7,129
726
2002
(e)
Lake Wales, FL
48,555
7,620
49,561
18,555
7,620
68,116
75,736
23,818
1995-1996
(e)
Casper, WY
40,069
6,171
34,384
(79
)
6,720
6,092
41,104
47,196
5,702
2002
(e)
San Jose, CA
170,000
36,724
178,018
15,100
36,724
193,118
229,842
17,477
2006
(e)
Eden Prairie, MN
81,908
465
19,024
28
122,215
493
141,239
141,732
37,576
1997
(e)
West Hills, CA
85,000
6,117
10,077
10
101,730
6,127
111,807
117,934
45,329
1984
(e)
Boston, MD
95,928
122,098
689
122,787
122,787
15,586
2004
(e)
Murray, UT
147,510
21,604
206,484
7,800
21,604
214,284
235,888
20,329
2004
(e)
Las Vegas, NV
358,998
523,650
602,288
11,163
523,650
613,451
1,137,101
67,078
2004
(e)
Fort Collins, CO
42,323
8,031
96,642
2,544
8,279
10,575
104,921
115,496
12,397
2003
(e)
Midvale, UT
2,867
3,842
24
3,866
3,866
539
2002
(e)
Greensboro, NC
103,795
27,231
141,978
4,942
27,231
146,920
174,151
16,883
2004
(e)
Appleton, WI
195,000
2,701
18,291
2,086
65,445
4,787
83,736
88,523
36,399
1983-1984
(e)
Las Vegas, NV
3,956
320
4,276
4,276
559
2002
(e)
Bountiful, UT
15,649
4,104
11,422
996
4,104
12,418
16,522
1,737
2002
(e)
Springfield, OR
40,588
8,728
34,707
38,249
8,728
72,956
81,684
31,297
1989-1990
(e)
Baltimore, MD
55,000
31,679
31,679
31,679
285
2007
(e)
F-56
Table of Contents
SCHEDULE III REAL ESTATE AND ACCUMULATED
DEPRECIATION (Continued)
DECEMBER 31, 2007
Costs Capitalized
Gross Amounts at Which
Life Upon Which
Initial Cost (b)
Subsequent to Acquisition (c)
Carried at Close of Period (d)
Latest Income
Buildings and
Buildings and
Buildings and
Accumulated
Date of
Date
Statement is
Location
Encumbrances (a)
Land
Improvements
Land
Improvements
Land
Improvements
Total
Depreciation(e)
Construction
Acquired
Computed
(In thousands)
Fort Wayne, IN
181,297
30,414
195,896
50
11,749
30,464
207,645
238,109
23,329
2003
(e)
Tallahassee, FL
63,172
121,482
4,794
126,276
126,276
14,999
2004
(e)
Idaho Falls, ID
26,514
6,973
44,030
11,114
6,973
55,144
62,117
7,211
2002
(e)
Idaho Falls, ID
2,349
7,336
588
2,349
7,924
10,273
739
2004
(e)
Traverse City, MI
87,188
3,534
20,776
30,138
3,534
50,914
54,448
25,522
1990-1991
(e)
Bowling Green, KY
45,569
3,200
40,202
187
35,916
3,387
76,118
79,505
29,966
1993
(e)
Gresham, OR
2,688
4,363
114
4,477
4,477
627
2002
(e)
Baltimore, MD
50,000
54,308
11,092
65,400
65,400
9,350
2004
(e)
Fort Worth, TX
115,661
8,910
153,894
2,826
8,910
156,720
165,630
17,011
2004
(e)
West Des Moines, IA
190,375
18,142
166,143
12,061
18,142
178,204
196,346
24,694
2004
(e)
St. Louis Park, MN
40,771
9,748
7,026
41,743
7,026
51,491
58,517
23,615
1978
(e)
Sterling Heights, MI
185,116
35,860
369,639
4,887
35,860
374,526
410,386
37,247
2004
(e)
Battle Creek, MI
42,094
3,579
32,210
19,291
3,579
51,501
55,080
16,024
1996
(e)
Alexandria, VA
28,396
67,235
(150
)
28,396
67,085
95,481
17,903
2003
(e)
Lansing, MI
25,536
6,978
62,800
4,518
46,672
11,496
109,472
120,968
31,183
1996
(e)
Lincolnshire, IL
28,000
10,784
9,441
18,646
10,784
28,087
38,871
1,514
2006
(e)
Lockport, NY
800
10,000
4,228
800
14,228
15,028
8,110
1986
(e)
Virginia Beach, VA
242,284
33,698
229,433
4,574
33,698
234,007
267,705
28,975
2003
(e)
Sierra Vista, AZ
3,652
20,450
3,423
3,652
23,873
27,525
3,360
2002
(e)
Baton Rouge, LA
238,000
24,591
246,452
30,425
24,591
276,877
301,468
26,962
2004
(e)
Council Bluffs, IA
39,151
1,860
24,016
35
24,942
1,895
48,958
50,853
25,228
1985-1986
(e)
Louisville, KY
148,207
176,583
7,974
184,557
184,557
21,640
2004
(e)
Shreveport, LA
49,000
2,640
23,760
9,802
2,640
33,562
36,202
9,966
1998
(e)
Champaign, IL
106,000
7,000
63,972
54,597
7,000
118,569
125,569
33,820
1997
(e)
Wauwatosa, WI
181,314
14,707
224,847
35,713
14,707
260,560
275,267
57,034
2003
(e)
Las Vegas, NV
105,193
24,634
104,088
(3,259
)
17,589
21,375
121,677
143,052
27,012
2003
(e)
Baltimore, MD
1,050
10,340
271
2,043
1,321
12,383
13,704
2,088
2004
(e)
Baltimore, MD
10,800
47,531
1,265
10,800
48,796
59,596
8,497
2004
(e)
Clovis, NM
2,722
15,048
3,404
2,722
18,452
21,174
2,877
2002
(e)
San Antonio, TX
238,619
29,230
467,961
3,791
34,678
33,021
502,639
535,660
46,222
2004
(e)
Salt Lake City, UT
168
468
6
168
474
642
65
2002
(e)
Spokane, WA
74,443
22,407
125,033
6,331
22,407
131,364
153,771
19,155
2002
(e)
Chattanooga, TN
45,812
2,525
43,944
8,371
2,525
52,315
54,840
13,108
2003
(e)
Northridge, CA
129,315
16,618
149,563
248
38,187
16,866
187,750
204,616
47,535
1998
(e)
Omaha, NE
116,974
12,056
113,042
5,823
12,056
118,865
130,921
23,273
2003
(e)
Gretna, LA
95,000
2,830
137,574
1,532
17,488
4,362
155,062
159,424
18,393
2004
(e)
Eau Claire, WI
52,201
3,267
18,281
28,505
3,267
46,786
50,053
25,557
1985-1986
(e)
Savannah, GA
144,628
16,036
92,978
7,971
16,036
100,949
116,985
23,868
2003
(e)
Orem, UT
2,562
1,069
2,974
2,383
1,069
5,357
6,426
483
2002
(e)
Orem, UT
1,586
592
1,649
157
592
1,806
2,398
233
2002
(e)
Orlando, FL
52,976
24,017
23,958
(2,045
)
762
21,972
24,720
46,692
8,988
2004
(e)
Owing Mills, MD
101,951
27,534
173,005
(6,208
)
3,895
21,326
176,900
198,226
21,723
2004
(e)
Louisville, KY
62,287
131,434
6,261
137,695
137,695
11,332
2004
(e)
Paramus, NJ
106,461
47,660
182,124
6,466
47,660
188,590
236,250
19,230
2004
(e)
Lancaster, PA
152,935
8,465
177,191
(276
)
35,644
8,189
212,835
221,024
43,860
2003
(e)
Tucson, AZ
180,593
4,996
44,993
(280
)
113,579
4,716
158,572
163,288
39,210
1996
(e)
Columbus, GA
91,593
22,052
67,679
5,641
22,052
73,320
95,372
10,891
2003
(e)
Monroe, LA
60,156
10,101
68,329
297
14,145
10,398
82,474
92,872
12,832
2002
(e)
Danville, VA
34,492
2,000
38,000
10,461
2,000
48,461
50,461
16,177
1995
(e)
Bossier City, LA
36,335
4,367
35,353
10,674
4,367
46,027
50,394
12,210
1998
(e)
Pocatello, ID
27,015
4,905
27,349
6,548
4,905
33,897
38,802
5,047
2002
(e)
Portland, OR
169,552
10,805
209,965
967
10,805
210,932
221,737
21,505
2004
(e)
Sparks, NV
5,430
31
5,461
5,461
680
2002
(e)
Sandy, UT
9,114
192
9,306
9,306
1,290
2002
(e)
Hilo, HI
38,957
9
42,710
1,959
9
44,669
44,678
10,149
2002
(e)
F-57
Table of Contents
SCHEDULE III REAL ESTATE AND ACCUMULATED
DEPRECIATION (Continued)
DECEMBER 31, 2007
F-58
Table of Contents
SCHEDULE III REAL ESTATE AND ACCUMULATED
DEPRECIATION (Continued)
DECEMBER 31, 2007
Costs Capitalized
Gross Amounts at Which
Life Upon Which
Initial Cost (b)
Subsequent to Acquisition (c)
Carried at Close of Period (d)
Latest Income
Buildings and
Buildings and
Buildings and
Accumulated
Date of
Date
Statement is
Location
Encumbrances (a)
Land
Improvements
Land
Improvements
Land
Improvements
Total
Depreciation(e)
Construction
Acquired
Computed
(In thousands)
Rock Springs, WY
1,363
7,611
7,729
1,363
15,340
16,703
2,563
2002
(e)
Wayne, NJ
172,346
28,810
444,762
30
10,670
28,840
455,432
484,272
44,348
2004
(e)
Woodbridge, NJ
213,521
50,737
420,703
5,987
50,737
426,690
477,427
45,742
2004
(e)
Flagstaff, AZ
7,257
2,689
7,484
278
2,689
7,762
10,451
1,034
2002
(e)
Idaho Falls, ID
1,057
2,943
147
1,057
3,090
4,147
424
2002
(e)
14,706,793
2,812,976
16,674,773
49,939
2,742,244
2,862,915
19,417,017
22,279,932
3,168,384
Bay City, MI
24,696
1,274
35,779
1,274
35,779
37,053
11,488
2007
(e)
Waterbury, CT
105,730
12,687
131,634
12,687
131,634
144,321
38,575
2007
(e)
Waterbury, CT
22,613
5,011
20,368
5,011
20,368
25,379
7,364
2007
(e)
Chula Vista, CA
60,182
6,387
63,526
6,387
63,526
69,913
18,344
2007
(e)
Columbia, SC
66,099
5,838
81,298
5,838
81,298
87,136
25,157
2007
(e)
Humble, TX
76,791
7,821
96,045
7,821
96,045
103,866
27,255
2007
(e)
Lakeland, FL
56,285
8,983
75,761
8,983
75,761
84,744
19,468
2007
(e)
Moreno Valley, CA
88,000
3,291
64,105
3,291
64,105
67,396
16,461
2007
(e)
Ogden, UT
42,064
1,061
22,910
1,061
22,910
23,971
6,690
2007
(e)
Newark, CA
69,601
6,560
100,918
6,560
100,918
107,478
37,869
2007
(e)
Alpharetta, GA
219,924
8,954
184,208
8,954
184,208
193,162
53,702
2007
(e)
Pembroke Pines, FL
133,549
16,939
121,507
16,939
121,507
138,446
36,139
2007
(e)
Concord, NH
79,781
2,926
59,030
2,926
59,030
61,956
20,047
2007
(e)
Arlington, TX
140,002
13,251
218,103
13,251
218,103
231,354
53,409
2007
(e)
Manchester, CT
168,770
18,852
177,139
18,852
177,139
195,991
35,611
2007
(e)
The Woodlands, TX
240,000
12,785
174,794
12,785
174,794
187,579
48,734
2007
(e)
McLean, VA
255,000
3,222
88,240
3,222
88,240
91,462
30,586
2007
(e)
Lewisville, TX
82,348
6,964
122,142
6,964
122,142
129,106
60,815
2007
(e)
Bartlesville, OK
12,378
1,401
16,242
1,401
16,242
17,643
5,689
2007
(e)
Ocoee, FL
71,501
13,534
70,909
13,534
70,909
84,443
25,899
2007
(e)
Chicago, IL
(11,413
)
173,174
783,523
173,174
783,523
956,697
(272,650
)
2,003,901
330,915
2,708,181
330,915
2,708,181
3,039,096
306,652
7,463,997
265,618
491,035
133,542
648,857
399,160
1,139,892
1,539,052
129,979
24,174,691
3,409,509
19,873,989
183,481
3,391,101
3,592,990
23,265,090
26,858,080
3,605,015
Houston, TX
32,030
257,222
113,000
1,001
370,222
1,001
371,223
149
2004
(e)
Howard County, MD
321,118
(169,165
)
150
151,953
150
152,103
22
2004
(e)
Prince Georges County, MD
136,434
(75,732
)
27
60,702
27
60,729
3
2004
(e)
Summerlin, NV
64,301
990,179
64,214
79
1,054,393
79
1,054,472
10
2004
(e)
11,117
2,102
93,047
2,102
93,047
95,149
107,448
1,704,953
(65,581
)
94,304
1,639,372
94,304
1,733,676
184
$
24,282,139
$
5,114,462
$
19,873,989
$
117,900
$
3,485,405
$
5,232,362
$
23,359,394
$
28,591,756
$
3,605,199
F-59
Table of Contents
(a)
See description of mortgages, notes and other debt payable in
Note 6 of Notes to Consolidated Financial Statements.
(b)
Initial cost for constructed malls is cost at end of first
complete calendar year subsequent to opening.
(c)
For retail and other properties, costs capitalized subsequent to
acquisitions is net of cost of disposals or other property
write-downs. For Master Planned Communities, costs capitalized
subsequent to acquisitions are net of land sales.
(d)
The aggregate cost of land, buildings and improvements for
federal income tax purposes is approximately $17.5 billion.
(e)
Depreciation is computed based upon the following estimated
lives:
Years
40-45
Equipment, tenant improvements and fixtures
5-10
(f)
Initial cost for individual properties acquired in the Homart I
acquisition represents historical cost at December 31,
2007. As individual property values have not been finalized,
purchase accounting related adjustments are presented in total.
2007
2006
2005
(In thousands)
$
24,661,601
$
23,583,536
$
23,308,792
Acquisitions
3,152,350
234,624
Change in Master Planned Communities land
(16,466
)
4,775
5,363
Additions
866,353
855,529
496,362
(53,022
)
Dispositions and write-offs
(72,081
)
(16,863
)
(173,959
)
Balance at end of year
$
28,591,756
$
24,661,601
$
23,583,536
2007
2006
2005
(In thousands)
$
2,766,871
$
2,104,956
$
1,453,488
Depreciation expense
635,872
663,524
652,109
Acquisitions
274,537
(g)
Dispositions and write-offs
(72,081
)
(1,609
)
(641
)
Balance at end of year
$
3,605,199
$
2,766,871
$
2,104,956
(g)
Accumulated depreciation of our original 50% interest in the
properties acquired in the Homart I acquisition at July 6,
2007 (date of acquisition). Such properties were unconsolidated
prior to the date of acquisition.
F-60
Table of Contents
3
.1
Restated Certificate of Incorporation of General Growth
Properties, Inc. filed with the Delaware Secretary of State on
February 10, 2006 (previously filed as Exhibit 3.1 to the Annual
Report on Form 10-K for the year ended December 31, 2005 which
was filed with the SEC on March 31, 2006, incorporated herein by
reference).
3
.2
Bylaws of General Growth Properties, Inc., as amended
(previously filed as Exhibit 3(ii) to the Current Report on Form
8-K dated November 8, 2006 which was filed with the SEC on
November 14, 2006, incorporated herein by reference).
3
.3
Certificate of Designations, Preferences and Rights of
Increasing Rate Cumulative Preferred Stock, Series I filed with
the Delaware Secretary of State on February 26, 2007 (previously
filed as Exhibit 3.3 to the Annual Report on Form 10-K for the
year ended December 31, 2006, which was previously filed with
the SEC on March 1, 2007, incorporated herein by reference).
4
.1
Form of Common Stock Certificate (previously filed as Exhibit
4.1 to the Annual Report on Form 10-K for the year ended
December 31, 2005 which was filed with the SEC on March 31,
2006, incorporated herein by reference).
4
.2
Rights Agreement dated July 27, 1993, between General Growth
Properties, Inc. and certain other parties named therein
(previously filed as Exhibit 4.2 to the Annual Report on Form
10-K for the year ended December 31, 2005 which was filed with
the SEC on March 31, 2006, incorporated herein by reference).
4
.3
Amendment to Rights Agreement dated as of February 1, 2000,
between General Growth Properties, Inc. and certain other
parties named therein (previously filed as Exhibit 10.11 to the
Annual Report on Form 10-K for the year ended December 31, 2003,
incorporated herein by reference).
4
.4
Redemption Rights Agreement dated July 13, 1995, by and among
GGP Limited Partnership (the Operating Partnership),
General Growth Properties, Inc. and the persons listed on the
signature pages thereof (previously filed as Exhibit 4.4 to the
Annual Report on Form 10-K for the year ended December 31, 2005
which was filed with the SEC on March 31, 2006, incorporated
herein by reference).
4
.5
Redemption Rights Agreement dated December 6, 1996, among the
Operating Partnership, Forbes/Cohen Properties, Lakeview Square
Associates, and Jackson Properties (previously filed as Exhibit
4.5 to the Annual Report on Form 10-K for the year ended
December 31, 2005 which was filed with the SEC on March 31,
2006, incorporated herein by reference).
4
.6
Redemption Rights Agreement dated June 19, 1997, among the
Operating Partnership, General Growth Properties, Inc., and CA
Southlake Investors, Ltd. (previously filed as Exhibit 4.6 to
the Annual Report on Form 10-K for the year ended December 31,
2005 which was filed with the SEC on March 31, 2006,
incorporated herein by reference).
4
.7
Redemption Rights Agreement dated October 23, 1997, among
General Growth Properties, Inc., the Operating Partnership and
Peter Leibowits (previously filed as Exhibit 4.7 to the Annual
Report on Form 10-K for the year ended December 31, 2005 which
was filed with the SEC on March 31, 2006, incorporated herein by
reference).
4
.8
Redemption Rights Agreement dated April 2, 1998, among the
Operating Partnership, General Growth Properties, Inc. and
Southwest Properties Venture (previously filed as Exhibit 4.8 to
the Annual Report on Form 10-K for the year ended December 31,
2005 which was filed with the SEC on March 31, 2006,
incorporated herein by reference).
4
.9
Redemption Rights Agreement dated July 21, 1998, among the
Operating Partnership, General Growth Properties, Inc., Nashland
Associates, and HRE Altamonte, Inc. (previously filed as Exhibit
4.9 to the Annual Report on Form 10-K for the year ended
December 31, 2005 which was filed with the SEC on March 31,
2006, incorporated herein by reference).
4
.10
Redemption Rights Agreement dated October 21, 1998, among the
Operating Partnership, General Growth Properties, Inc. and the
persons on the signature pages thereof (previously filed as
Exhibit 4.10 to the Annual Report on Form 10-K for the year
ended December 31, 2005 which was filed with the SEC on March
31, 2006, incorporated herein by reference).
4
.11
Redemption Rights Agreement (Common Units) dated July 10, 2002,
by and among the Operating Partnership, General Growth
Properties, Inc. and the persons listed on the signature pages
thereof (filed herewith).
S-1
Table of Contents
4
.12
Redemption Rights Agreement (Series B Preferred Units) dated
July 10, 2002, by and among the Operating Partnership, General
Growth Properties, Inc. and the persons listed on the signature
pages thereof (filed herewith).
4
.13
Redemption Rights Agreement (Common Units) dated November 27,
2002, by and among the Operating Partnership, General Growth
Properties, Inc. and JSG, LLC (previously filed as Exhibit
10(MMM) to the Annual Report on Form 10-K for the year ended
December 31, 2002 which was filed with the SEC on March 14,
2003, incorporated herein by reference).
4
.14
Redemption Rights Agreement dated December 11, 2003, by and
among the Operating Partnership, General Growth Properties, Inc.
and Everitt Enterprises, Inc. (previously filed as Exhibit 10.44
to the Annual Report on Form 10-K for the year ended December
31, 2003 which was filed with the SEC on March 12, 2004,
incorporated herein by reference).
4
.15
Redemption Rights Agreement dated March 5, 2004, by and among
the Operating Partnership, General Growth Properties, Inc. and
Koury Corporation (filed herewith).
4
.16
Registration Rights Agreement dated April 15, 1993, between
General Growth Properties, Inc., Martin Bucksbaum, Matthew
Bucksbaum and the other parties named therein (filed herewith).
4
.17
Amendment to Registration Rights Agreement dated February 1,
2000, among General Growth Properties, Inc. and certain other
parties named therein (previously filed as Exhibit 10.16 to the
Annual Report on Form 10-K for the year ended December 31, 2003
which was filed with the SEC on March 12, 2004, incorporated
herein by reference).
4
.18
Registration Rights Agreement dated April 17, 2002, between
General Growth Properties, Inc. and GSEP 2002 Realty Corp.
(filed herewith).
4
.19
Rights Agreement dated November 18, 1998, between General Growth
Properties, Inc. and Norwest Bank Minnesota, N.A., as Rights
Agent (including the Form of Certificate of Designation of
Series A Junior Participating Preferred Stock attached thereto
as Exhibit A, the Form of Right Certificate attached thereto as
Exhibit B and the Summary of Rights to Purchase Preferred Shares
attached thereto as Exhibit C) (previously filed as Exhibit 4.19
to the Annual Report on Form 10-K for the year ended December
31, 2005 which was filed with the SEC on March 31, 2006,
incorporated herein by reference).
4
.20
First Amendment to Rights Agreement dated as of November 10,
1999, between General Growth Properties, Inc. and Norwest Bank
Minnesota, N.A. (previously filed as Exhibit 4.20 to the Annual
Report on Form 10-K for the year ended December 31, 2005 which
was filed with the SEC on March 31, 2006, incorporated herein by
reference).
4
.21
Second Amendment to Rights Agreement dated as of December 31,
2001, between General Growth Properties, Inc. and Mellon
Investor Services, LLC, successor to Norwest Bank Minnesota,
N.A. (previously filed as Exhibit 4.13 to the Registration
Statement on Form S-3 (No. 333-82134) dated February 4, 2002
which was filed with the SEC on February 5, 2002, incorporated
herein by reference).
4
.22
Letter Agreement concerning Rights Agreement dated November 10,
1999, between the Operating Partnership and NYSCRF (previously
filed as Exhibit 4.22 to the Annual Report on Form 10-K for the
year ended December 31, 2005 which was filed with the SEC on
March 31, 2006, incorporated herein by reference).
4
.23
The Rouse Company and The First National Bank of Chicago
(Trustee) Indenture dated as of February 24, 1995 (previously
filed as Exhibit 4.23 to the Annual Report on Form 10-K for the
year ended December 31, 2004 which was filed with the SEC on
March 22, 2005, incorporated herein by reference).
4
.24
The Rouse Company LP, TRC Co-Issuer, Inc. and LaSalle Bank
National Association (Trustee) Indenture dated May 5, 2006
(previously filed as Exhibit 4.24 to the Annual Report on Form
10-K for the year ended December 31, 2006, which was filed with
the SEC on March 1, 2007, incorporated herein by reference).
4
.25
Second Amended and Restated Credit Agreement dated as of
February 24, 2006 among General Growth Properties, Inc.,
Operating Partnership and GGPLP L.L.C., as Borrowers; the
several lenders from time to time parties thereto; Banc of
America Securities LLC, Eurohypo AG, New York Branch
(Eurohypo) and Wachovia Capital Markets, LLC, as
Arrangers; Eurohypo, as Administrative Agent; Bank of America,
N.A., and Wachovia Bank, National Association, as Syndication
Agents; and Lehman Commercial Paper, Inc., as Documentation
Agent (previously filed as Exhibit 4.1 to the Current Report on
Form 8-K dated February 24, 2006 which was filed with the SEC on
March 2, 2006, incorporated herein by reference).
Table of Contents
4
.26
Indenture, dated as of April 16, 2007, between the Operating
Partnership and LaSalle Bank National Association (previously
filed as Exhibit 4.1 to the Current Report on Form 8-K dated
April 16, 2007, which was filed with the SEC on April 19, 2007,
incorporated herein by reference).
10
.1
Second Amended and Restated Agreement of Limited Partnership of
the Operating Partnership dated April 1, 1998 (the LP
Agreement) (previously filed as Exhibit 10.1 to the Annual
Report on Form 10-K for the year ended December 31, 2005 which
was filed with the SEC on March 31, 2006, incorporated herein by
reference).
10
.2
First Amendment to the LP Agreement dated as of June 10, 1998
(previously filed as Exhibit 10(B) to the Annual Report on Form
10-K for the year ended December 31, 2002 which was filed with
the SEC on March 14, 2003, incorporated herein by reference).
10
.3
Second Amendment to the LP Agreement dated as of June 29, 1998
(previously filed as Exhibit 10(C) to the Annual Report on Form
10-K for the year ended December 31, 2002 which was filed with
the SEC on March 14, 2003, incorporated herein by reference).
10
.4
Third Amendment to the LP Agreement dated as of February 15,
2002 (filed herewith).
10
.5
Amendment to the LP Agreement dated as of April 24, 2002 (filed
herewith).
10
.6
Fourth Amendment to the LP Agreement dated as of July 10, 2002
(filed herewith).
10
.7
Amendment to the LP Agreement dated as of November 27, 2002
(previously filed as Exhibit 10(G) to the Annual Report on Form
10-K for the year ended December 31, 2002 which was filed with
the SEC on March 14, 2003, incorporated herein by reference).
10
.8
Sixth Amendment to the LP Agreement and Exhibit A to the
Amendment dated as of November 20, 2003 (previously filed as
Exhibit 10.8 to the Annual Report on Form 10-K for the year
ended December 31, 2003 which was filed with the SEC on March
12, 2004, incorporated herein by reference).
10
.9
Amendment to the LP Agreement and Exhibit A to the Amendment
dated as of December 11, 2003 (previously filed as an Exhibit
10.9 to the Annual Report on Form 10-K for the year ended
December 31, 2003 which was filed with the SEC on March 12,
2004, incorporated herein by reference).
10
.10
Amendment to the LP Agreement dated March 5, 2004 (previously
filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2004 which was filed with
the SEC on May 7, 2004, incorporated herein by reference).
10
.11
Amendment to the LP Agreement dated November 12, 2004
(previously filed as Exhibit 10.3 to the Current Report on Form
8-K/A dated November 12, 2004 which was filed with the SEC on
November 18, 2004, incorporated herein by reference).
10
.12
Amendment to the LP Agreement dated September 30, 2006
(previously filed as Exhibit 10.12 to the Annual Report on Form
10-K for the year ended December 31, 2006, which was filed with
the SEC on March 1, 2007, incorporated herein by reference).
10
.13
Twelfth Amendment to the LP Agreement dated December 31, 2006
(previously filed as Exhibit 10.13 to the Annual Report on Form
10-K for the year ended December 31, 2006, which was filed with
the SEC on March 1, 2007, incorporated herein by reference).
10
.14
Second Amended and Restated Operating Agreement of GGPLP L.L.C.
dated April 17, 2002 (the LLC Agreement) (filed
herewith).
10
.15
First Amendment to the LLC Agreement dated April 23, 2002 (filed
herewith).
10
.16
Second Amendment to the LLC Agreement dated May 13, 2002 (filed
herewith).
10
.17
Third Amendment to the LLC Agreement dated October 30, 2002
(previously filed as Exhibit 10(Y) to the Annual Report on Form
10-K for the year ended December 31, 2002 which was filed with
the SEC on March 14, 2003, incorporated herein by reference).
10
.18
Fourth Amendment to the LLC Agreement dated April 7, 2003
(previously filed as Exhibit 10.1 to the Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2003 which
was filed with the SEC on May 9, 2003, incorporated herein by
reference).
10
.19
Fifth Amendment to the LLC Agreement dated April 11, 2003
(previously filed as Exhibit 10.2 to the Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2003 which
was filed with the SEC on May 9, 2003, incorporated herein by
reference).
Table of Contents
10
.20
Sixth Amendment to the LLC Agreement dated November 12, 2004
(previously filed as Exhibit 10.2 to the Current Report on Form
8-K/A dated November 12, 2004 which was filed with the SEC on
November 18, 2004, incorporated herein by reference).
10
.21
Operating Agreement dated November 10, 1999, between the
Operating Partnership, NYSCRF, and GGP/Homart II L.L.C.
(previously filed as Exhibit 10.20 to the Annual Report on Form
10-K for the year ended December 31, 2005 which was filed with
the SEC on March 31, 2006, incorporated herein by reference).
10
.22
Amendment to the Operating Agreement of GGP/Homart II
L.L.C. dated November 22, 2002 (previously filed as Exhibit
10.21 to the Annual Report on Form 10-K for the year ended
December 31, 2005 which was filed with the SEC on March 31,
2006, incorporated herein by reference).
10
.23
Letter Amendment to the Operating Agreement of
GGP/Homart II L.L.C. dated January 31, 2003 (previously
filed as Exhibit 10.22 to the Annual Report on Form 10-K for the
year ended December 31, 2005 which was filed with the SEC on
March 31, 2006, incorporated herein by reference).
10
.24
Second Amendment to the Operating Agreement of
GGP/Homart II L.L.C. dated January 31, 2003 (previously
filed as Exhibit 10.23 to the Annual Report on Form 10-K for the
year ended December 31, 2005 which was filed with the SEC on
March 31, 2006, incorporated herein by reference).
10
.25
Third Amendment to the Operating Agreement of GGP/Homart II
L.L.C. dated February 8, 2008 (filed herewith).
10
.26
Amended and Restated Operating Agreement of GGP-TRS L.L.C. dated
August 26, 2002, between the Operating Partnership,
Teachers Retirement System of the State of Illinois and
GGP-TRS L.L.C. (previously filed as Exhibit 10.24 to the Annual
Report on Form 10-K for the year ended December 31, 2005 which
was filed with the SEC on March 31, 2006, incorporated herein by
reference).
10
.27
First Amendment to Amended and Restated Operating Agreement of
GGP-TRS L.L.C. dated December 19, 2002 (previously filed as
Exhibit 10.25 to the Annual Report on Form 10-K for the year
ended December 31, 2005 which was filed with the SEC on March
31, 2006, incorporated herein by reference).
10
.28
Second Amendment to Amended and Restated Operating Agreement of
GGP-TRS L.L.C. dated November 1, 2005 (previously filed as
Exhibit 10.26 to the Annual Report on Form 10-K for the year
ended December 31, 2005 which was filed with the SEC on March
31, 2006, incorporated herein by reference).
10
.29*
Summary of Non-Employee Director Compensation Program (filed
herewith).
10
.30
Contingent Stock Agreement, effective January 1, 1996, by The
Rouse Company and in favor of and for the benefit of the Holders
and the Representatives (as defined therein) (filed herewith).
10
.31
Assumption Agreement dated October 19, 2004 by General Growth
Properties, Inc. and The Rouse Company in favor of and for the
benefit of the Holders and the Representatives (as defined
therein) (previously filed as Exhibit 99.2 to the Registration
Statement on Form S-3/A (No. 333-120373) which was filed with
the SEC on December 23, 2004, incorporated herein by reference).
10
.32
Indemnity Agreement dated as of February 2006 by the Company and
The Rouse Company, LP. (previously filed as Exhibit 10.1 to the
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2006 which was filed with the SEC on May 10, 2006,
incorporated herein by reference).
10
.33*
General Growth Properties, Inc. 1998 Incentive Stock Plan, as
amended (previously filed as Exhibit 10.1 to the Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2005
which was filed with the SEC on August 8, 2005, incorporated
herein by reference).
10
.34*
Amendment dated November 8, 2006 and effective January 1, 2007
to General Growth Properties, Inc. 1998 Incentive Stock Plan
(previously filed as Exhibit 10.1 to the Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2006
which was filed with the SEC on November 8, 2006, incorporated
herein by reference).
10
.35*
Form of Option Agreement pursuant to 1998 Incentive Stock Plan
(previously filed as Exhibit 10.47 to the Annual Report on Form
10-K for the year ended December 31, 2004 which was filed with
the SEC on March 22, 2005, incorporated herein by reference).
10
.36*
General Growth Properties, Inc. 2003 Incentive Stock Plan, as
amended (previously filed as Exhibit 10.1 to the Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2006
which was filed with the SEC on August 9, 2006, incorporated
herein by reference).
Table of Contents
10
.37*
Amendment dated November 8, 2006 and effective January 1, 2007
to General Growth Properties, Inc. 2003 Incentive Stock Plan
(previously filed as Exhibit 10.2 to the Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2006
which was filed with the SEC on November 8, 2006, incorporated
herein by reference).
10
.38*
Form of Option Agreement pursuant to 2003 Incentive Stock Plan
(previously filed as Exhibit 10.48 to the Annual Report on Form
10-K for the year ended December 31, 2004 which was filed with
the SEC on March 22, 2005, incorporated herein by reference).
10
.39*
Form of Employee Restricted Stock Agreement pursuant to the 2003
Incentive Stock Plan (previously filed as Exhibit 10.2 to the
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2006 which was filed with the SEC on August 9, 2006,
incorporated herein by reference).
10
.40*
Form of Non-Employee Director Restricted Stock Agreement
pursuant to the 2003 Incentive Stock Plan (previously filed as
Exhibit 10.3 to the Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006 which was filed with the
SEC on August 9, 2006, incorporated herein by reference).
21
List of Subsidiaries (filed herewith).
23
.1
Consent of Deloitte & Touche LLP (filed herewith).
23
.2
Consent of KPMG LLP (filed herewith).
31
.1
Certification of Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (filed herewith).
31
.2
Certification of Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (filed herewith).
32
.1
Certification of Chief Executive Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (filed herewith).
32
.2
Certification of Chief Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (filed herewith).
99
.1
Financial Statements of TRCLP, a wholly owned subsidiary of
GGPLP (filed herewith).
(*)
A compensatory plan or arrangement required to be filed.
EXHIBIT 4.11
REDEMPTION RIGHTS AGREEMENT (COMMON UNITS)
Redemption Rights Agreement, dated July 10, 2002, among GGP Limited Partnership, a Delaware limited partnership (together with its successors and assigns, the "Partnership"), General Growth Properties, Inc., a Delaware corporation (together with its successors and assigns, the "General Partner"), and the parties who are designated as "Contributing Parties" on the signature pages hereof (the "Contributing Parties").
R E C I T A L S
WHEREAS, the General Partner is the general partner of the Partnership;
WHEREAS, shares of common stock, $.10 par value per share, of the General Partner (the "Common Stock") are listed on the New York Stock Exchange;
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of March 3, 2002 (as the same has been amended and may be further amended from time to time, the "Merger Agreement"), among the Partnership, the General Partner and the other parties thereto, the Contributing Parties are being admitted as limited partners of the Partnership and the Partnership is issuing to them 8.5% Series B Cumulative Convertible Preferred Units of limited partnership in the Partnership (such units that are being issued pursuant to the Merger Agreement or any other securities issued in substitution therefor pursuant to the Series B Preferred Unit Designation, the "Series B Preferred Units");
WHEREAS, pursuant to the Partnership Agreement (as defined below), the Series B Preferred Units may be converted into common units of limited partnership in the Partnership (such units into which Series B Preferred Units have been converted or any other securities issued in substitution therefor (other than pursuant to this Agreement), the "Common Units"); and
WHEREAS, the parties desire to set forth herein the terms and conditions upon which the Contributing Parties may cause the Partnership to redeem their Common Units.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:
"Acts" shall mean the Securities Act and the Exchange Act, collectively.
"Affiliates" shall mean "affiliates" as defined pursuant to the Securities Act and the regulations promulgated thereunder.
"Business Day" shall mean any day upon which commercial banks are open for business in Chicago, Illinois.
"Cash Purchase Price" shall mean, with respect to any redeemed or purchased Common Units, an amount of cash equal to the value of the Share Purchase Price (computed as of the
Computation Date and equal to the Current Per Share Market Price on such Computation Date multiplied by the number of Shares included in the Share Purchase Price) that would be payable with respect to such Common Units assuming the Share Purchase Price were paid in full satisfaction of the Purchase Price for such Common Units. In the event that the Share Purchase Price includes securities and/or other property other than Shares, then the value of such other securities and/or property shall be determined by the General Partner acting in good faith on the basis of the closing prices of securities if listed on a nationally recognized exchange and otherwise on the basis of such quotations and other information as the General Partner considers, in its reasonable judgment, appropriate.
"Certificate of Incorporation" shall mean the Certificate of Incorporation of the General Partner, as the same may be amended from time to time.
"Claims" shall have the meaning set forth in Section 4.1(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor code.
"Common Stock" shall have the meaning set forth in the recitals.
"Common Units" shall have the meaning set forth in the recitals.
"Computation Date" shall mean the date on which the applicable Notice is received by the Partnership or, if such date is not a Business Day, the first Business Day thereafter.
"Contributing Party Representative" shall mean Jay L. Bernstein, in his capacity as a member of Clifford Chance Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166, (212)878-8375 (facsimile), or such other Person as the holders of at least a majority of the issued and outstanding Common Units held by Contributing Parties shall designate from time to time by delivery of written notice to the General Partner and the Partnership (assuming that all of the Series B Preferred Units were converted into Common Units in accordance with the Partnership Agreement immediately prior to such designation).
"Conversion Factor" shall mean 100%, provided that such factor shall be adjusted in accordance with Section 6(a).
"Current Per Share Market Price" shall have the meaning set forth in the Partnership Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any successor statute.
"Exchange Act Reporting Company" shall mean any corporation or other entity which is subject to the reporting requirements of the Exchange Act.
"Expiration Date" shall mean the date upon which all Series B Preferred Units have been converted to Common Units and all Common Units have been redeemed or purchased in accordance with the terms hereof.
"Liens" shall have the meaning set forth in the Merger Agreement.
"Major Transaction Event" shall mean, with respect to the General
Partner, (a) a reclassification, capital reorganization or other similar change
regarding or affecting outstanding Shares (other than a change addressed in
Section 6(a)); (b) a merger or consolidation of the General Partner with one or
more other corporations or entities, other than a merger pursuant to which the
General Partner is the surviving corporation and the outstanding Shares are not
affected, (c) a sale, lease or exchange of all or substantially all of the
General Partner's assets or (d) the liquidation, dissolution or winding up of
the General Partner.
"Merger Agreement" shall have the meaning set forth in the recitals.
"Notice" shall have the meaning set forth in Section 3.2.
"Other Rights Agreement" shall mean the "Rights Agreements" referred to in the Partnership Agreement other than this Agreement and the Series B Preferred Units Redemption Rights Agreement.
"Partnership Agreement" shall mean that certain Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of April 1, 1998, as amended by that certain First Amendment thereto dated as of June 10, 1998, that certain Second Amendment thereto dated as of June 29, 1998, that certain Third Amendment thereto dated as of February 15, 2002, that certain Amendment dated as of April 24, 2002 and that certain Fourth Amendment thereto dated as of July 10, 2002 and as the same may be further amended from time to time.
"Person" shall mean any natural person, corporation, partnership, association, limited liability company, trust or other entity.
"Prospectus" shall have the meaning set forth in Section 4.1(a).
"Purchase Price" shall mean the Cash Purchase Price or the Share Purchase Price, or a combination thereof.
"Redemption Rights" shall have the meaning set forth in Section 2.
"Registration Statement" shall have the meaning set forth in Section 4.1(a).
"REIT" shall mean real estate investment trust as such term is defined under the Code.
"REIT Requirements" shall have the meaning set forth in the Partnership Agreement, as the same may change from time to time.
"Rights" shall have the meaning set forth in Section 6(b).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any successor statute.
"Series B Preferred Units" shall have the meaning set forth in the recitals.
"Series B Preferred Unit Designation" shall mean Schedule A to the Fourth Amendment referred to in the definition of "Partnership Agreement".
"Series B Preferred Units Redemption Rights Agreement" shall mean that certain Redemption Rights Agreement (Series B Preferred Units) dated the date hereof, among the parties hereto.
"Share Purchase Price" shall mean, with respect to the exercise of any Redemption Rights and subject to the provisions of Section 6(c), a number of Shares equal to the product of (a) the number of Common Units being redeemed or purchased multiplied by (b) the Conversion Factor; provided, however, that, in the event the General Partner, after the date of this Agreement, issues to all holders of Shares rights, options, warrants or convertible or exchangeable securities entitling the stockholders to subscribe for or purchase Shares (other than Rights referred to in Section 6(b) that have been issued pursuant thereto) or any other securities or property (other than distributions paid in cash), then the Share Purchase Price also shall include such rights, options, warrants or convertible or exchangeable securities or other securities or property that a holder of that number of Shares would have been entitled to receive had such holder held such Shares immediately prior to the time holders of Shares became entitled thereto (except to the extent that provision otherwise has been made for such holder to receive such rights, options, warrants or convertible or exchangeable securities or other securities or property or adjustment has been made in respect thereof under the Series B Preferred Unit Designation or otherwise).
"Shares" shall mean shares of the Common Stock.
2. Grant of Redemption Rights.
(a) Upon the terms and subject to the conditions contained herein, the Partnership does hereby grant to each Contributing Party, and such Contributing Party does hereby accept, the right, but without obligation on the part of such Contributing Party, to require the Partnership to redeem from time to time part or all of the Common Units of such Contributing Party for the Cash Purchase Price with respect to such Common Units ("Redemption Rights").
(b) Notwithstanding the provisions of Section 2(a), the General Partner may, in its sole and absolute discretion, assume and satisfy the obligation of the Partnership with respect to any Contributing Party's exercise of a Redemption Right by paying to such Contributing Party, at the General Partner's election (which may be exercised in the General Partner's sole discretion), either the Cash Purchase Price or the Share Purchase Price (or a combination thereof) with respect to the Common Units for which such Contributing Party exercised its Redemption Rights. If the General Partner assumes such obligations with respect to the exercise by any Contributing Party of a Redemption Right as to certain Common Units and makes the required payment of the Share Purchase Price, the Cash Purchase Price or any combination thereof, then the Partnership shall have no obligation to pay any amount to such Contributing Party with respect to the exercise of a Redemption Right for such Common Units, and any Common Units purchased shall be owned by the General Partner for all purposes.
(c) If the General Partner shall assume and satisfy the obligations of the Partnership with respect to the exercise of a Redemption Right by any Contributing Party, the Partnership, such Contributing Party and the General Partner each shall treat the transaction between the General Partner and such Contributing Party as a sale of such Contributing Party's Common Units (or a portion thereof) to the General Partner for federal income tax purposes.
(d) Upon the redemption or purchase of part or all of any Contributing Party's Common Units and the payment of the Purchase Price with respect thereto, such Person shall be deemed withdrawn as a Partner in the Partnership to the extent of the Common Units redeemed or purchased and shall have no further rights or obligations under this Agreement with respect to such redeemed or purchased Common Units; provided, however, that such Contributing Party's rights under this Agreement with regard to any other Common Units will continue in full force and effect.
(e) No fractional Shares shall be issued hereunder. In lieu of fractional Shares, the General Partner shall pay cash based on the Current Per Share Market Price on the relevant Computation Date.
(f) Notwithstanding anything to the contrary contained herein, the General Partner shall not issue the Share Purchase Price upon exercise of any Redemption Right with respect to any Common Units unless all of the Shares so issued are listed on the New York Stock Exchange and the Registration Statement (as herein defined) covering such Shares shall be in effect and available for use to effect a public distribution by the holder thereof of such Shares immediately upon such issuance and the General Partner only may issue the Share Purchase Price to the extent that the issuance of such Shares to such Contributing Party does not violate the Certificate of Incorporation (assuming such Contributing Party owns no shares of capital stock of the General Partner other than those issued pursuant hereto and pursuant to the Series B Preferred Units Redemption Rights Agreement).
3. Exercise of Redemption Rights.
3.1 Time for Exercise of Redemption Rights. Each Contributing Party may exercise its Redemption Rights in whole or in part and at any time and from time to time on or after the date hereof but prior to the Expiration Date; provided, however, that the Redemption Rights may not be exercised at any one time by any Contributing Party with respect to less than 1,000 Common Units (or all the Common Units then owned by such Contributing Party if such Contributing Party owns less than 1,000 Common Units) or in the event that such exercise of Redemption Rights (or the assignment of Common Units or delivery of either the Cash Purchase Price or the Share Purchase Price with respect thereto) violates the terms of the Partnership Agreement, the Certificate of Incorporation or applicable law. Once given, a Notice shall be irrevocable subject to the payment of the Purchase Price for the Common Units specified therein in accordance with the terms hereof.
3.2 Method of Exercise. The Redemption Rights shall be exercised by delivery to the Partnership of (a) written notice (the "Notice") in the form of Exhibit A specifying the number of the Common Units to be redeemed and the name or names (with address) in which any Shares issuable upon such exercise shall be registered if different than the Contributing Party and (b) the
certificates, if any, representing such Common Units. Notwithstanding anything to the contrary contained herein, in the event that the exercise of the Redemption Rights with respect to all of the Common Units of any deceased Contributing Party or the Common Units of any partnership, limited liability company or pass-through entity that are allocable to a deceased partner, member or other Person shall not result in the recognition of gain for federal income tax purposes by any party, the Partnership shall have the right to require the Contributing Party or partnership, limited liability company or other pass-through entity or its legal representative to exercise the Redemption Rights as to all of such Common Units and to take any and all necessary action hereunder to effect such exercise.
3.3 Closing. The closing of the redemption or purchase and sale pursuant to an exercise of the Redemption Rights by any Contributing Party shall occur within 30 days following the giving of the Notice; provided, however, that no closing may occur hereunder prior to the earlier of the one hundred twentieth day after the date hereof and the date of effectiveness of the Registration Statement. Such Contributing Party shall execute such other documents as the General Partner may reasonably require in connection with the closing of such redemption or purchase and sale.
3.4 Payment of Cash or Issuance of Shares. At the closing of the
redemption or purchase and sale of Common Units pursuant to an exercise of
Redemption Rights by a Contributing Party, the Partnership shall deliver to such
Contributing Party the Cash Purchase Price by check or, in the event that the
General Partner has assumed the obligations of the Partnership with respect to
such exercise of Redemption Rights, the General Partner shall deliver to such
Contributing Party, at the election of the General Partner (which may be
exercised in the General Partner's sole discretion) either (a) the Cash Purchase
Price by check or (b) certificates representing the Shares and any other
securities and/or other property constituting the Share Purchase Price, together
with cash in lieu of the issuance of any fraction of a Share as provided in
Section 2(e), or a combination thereof.
4. Matters Relating to Shares.
4.1 Registration.
(a) As soon as practicable following the date hereof, the General Partner shall file a Registration Statement on Form S-3 or other appropriate registration form (the "Registration Statement") with the SEC covering the resale by Contributing Parties of the Shares to be issued upon exercise of the Redemption Rights assuming full conversion of the Series B Preferred Units into Common Units and full satisfaction of the Redemption Rights by delivery of Shares and shall use its reasonable best efforts to cause the Registration Statement to become effective as soon as practicable thereafter. Following the effective date of the Registration Statement and until the Shares covered by the Registration Statement have been sold or are eligible for resale under Rule 144(k) promulgated under the Securities Act, the General Partner shall keep the Registration Statement current, effective and available for the resale by Contributing Parties of the Shares delivered to them pursuant hereto. The General Partner shall bear all expenses relating to filing such Registration Statement and keeping such Registration Statement current, effective and available; provided, however, that the General Partner shall not be responsible for any brokerage fees or underwriting commissions due and payable by any Contributing Party.
(b) During the time period when the Registration Statement is required to be current, effective and available under Section 4.1(a), the General Partner also shall:
(i) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus constituting a part thereof, as amended or supplemented (the "Prospectus"), as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale of the Shares covered by such Registration Statement whenever any Contributing Party shall desire to sell or otherwise dispose of the same but in no event beyond the period in which the Registration Statement is required to be kept in effect;
(ii) furnish to each Contributing Party, without charge, such number of authorized copies of the Prospectus, and any amendments or supplements to the Prospectus, in conformity with the requirements of the Securities Act, and such other documents as any Contributing Party may reasonably request in order to facilitate the public sale or other disposition of the Shares owned by Contributing Parties.
(iii) register or qualify the securities covered by the Registration Statement under state securities or blue sky laws of such jurisdictions as are reasonably required to effect a sale thereof and do any and all other acts and things which may be necessary or appropriate under such state securities or blue sky laws to enable Contributing Parties to consummate the public sale or other disposition in such jurisdictions of such securities;
(iv) before filing any amendments or supplements to the Registration Statement or the Prospectus, furnish copies of all such documents proposed to be filed to the Contributing Party Representative who shall be afforded a reasonable opportunity to review and comment thereon; provided, however, that all such documents shall be subject to the approval of the Contributing Party Representative insofar as they relate to information concerning Contributing Parties (including, without limitation, the proposed method of distribution of any Contributing Party's securities);
(v) notify Contributing Parties promptly (A) when any such Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (B) of any request by the SEC or any state securities authority for amendments and supplements to such Registration Statement and the Prospectus or for additional information, (C) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of any such Registration Statement or the initiation of any proceedings for the purpose, (D) if, between the effective date of any such Registration Statement and the sale of the Shares to which it relates, the General Partner receives any notification with respect to the suspension of the qualification of the Shares or initiation of any proceeding for such purpose, and (E) of the happening of any event during the period such Registration Statement is effective which in the judgment of the General Partner makes any statement made in the Registration Statement or the Prospectus untrue in any material respect or which requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading;
(vi) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest practicable time;
(vii) cooperate with each Contributing Party to facilitate the timely preparation and delivery of certificates representing Shares being sold, which certificates shall not bear any restrictive legends provided the Shares evidenced thereby have been sold in a manner permitted by the Prospectus; and
(viii) upon the occurrence of any event contemplated by
Section 4.1(b)(v)(E) hereof, promptly prepare and file a supplement or
post-effective amendment to the Registration Statement or the
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Shares, the Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein in light of the circumstances under
which they were made, not misleading; provided, however, that the
obligation to prepare and file any such supplement or post-effective
amendment shall be suspended if the General Partner, relying upon
advice of counsel, determines that disclosure of any information
required to be included therein would be adverse to its interests, but
such suspension shall not extend beyond 90 days with respect to any
such specified event.
(c) The General Partner hereby agrees to indemnify and hold harmless each Contributing Party and each person, if any, who controls such Contributing Party (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all losses, claims, damages, costs and expenses (including reasonable attorneys' fees) ("Claims") to which such Contributing Party or such controlling person may become subject, under the Securities Act or otherwise, caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such Contributing Party and each such controlling person for any legal or other expenses reasonably incurred by such Contributing Party in connection with investigating or defending any such loss as such expenses are incurred; provided, however, that the General Partner shall not be liable insofar as any such losses, claims, damages, costs and expenses (including reasonable attorneys' fees) are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the General Partner by any Contributing Party expressly for use therein. Each Contributing Party agrees to indemnify and hold harmless the General Partner and each person, if any, who controls the General Partner (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all Claims to which the General Partner or such controlling person may become subject, under the Securities Act or otherwise, caused by any untrue statement or omission or alleged untrue statement or omission based upon such information furnished in writing to the General Partner by such Contributing Party.
(d) Each Contributing Party agrees that, upon receipt of any notice
from the General Partner of the happening of any event of the kind described in
Section 4.1(b)(v)(E), such Contributing Party will forthwith discontinue
disposition of securities pursuant to the
Registration Statement until such Contributing Party's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 4.1(b)(viii).
(e) Upon the written request to the General Partner from time to time as below provided and subject to other contractual obligations of the General Partner, the Contributing Parties holding Shares covered by the Registration Statement who desire to do so may sell such Shares covered by the Registration Statement in an underwritten offering. In such underwritten offering, the investment banker or bankers and manager or managers that will administer the offering will be selected by, and the underwriting arrangements with respect thereto will be approved by, the Contributing Parties; provided that such investment bankers and managers and underwriting arrangements must be reasonably satisfactory to the General Partner. No Contributing Party may participate in any underwritten offering contemplated hereby unless such Contributing Party agrees to sell such Contributing Party's Shares covered by the Registration Statement in accordance with any approved underwriting arrangements and completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such approved underwriting arrangements. The General Partner shall be responsible for the costs of preparing and filing the amendment or supplement that is referred to below, and the selling securityholders shall pay their attorney's fees and underwriting discounts and commissions incurred in connection with such underwritten offerings. Notwithstanding the foregoing, upon receipt of a request from the managing underwriter or a representative of the Contributing Parties to prepare and file an amendment or supplement to the Registration Statement and Prospectus in connection with such underwritten offering, the General Partner may delay the filing of any such amendment or supplement or postpone taking action with respect to an underwritten offering for a period not to exceed an aggregate of 180 days in any calendar year, if the General Partner determines in its good faith judgment that the filing of such amendment or supplement or the taking of such action with respect to an underwritten offering would have a material adverse effect on the business, operations or prospects of the General Partner, or adversely affect a material financing, acquisition, disposition of assets or stock, merger or other comparable transaction. Notwithstanding anything to the contrary contained in the foregoing, the Contributing Parties shall not have the right to effect more than two underwritten offerings pursuant to this paragraph and each such offering shall be required to include minimum gross sales proceeds of $17,500,000.
(f) Notwithstanding anything to the contrary contained herein, the General Partner shall have no obligation to keep any registration statement filed pursuant to this Section 4.1 effective after the Expiration Date or if the status of the General Partner (or its successor) as an Exchange Act Reporting Company is terminated.
4.2 Reservation of Shares. At all times while the Redemption Rights are outstanding, the General Partner shall reserve for issuance such number of Shares as may be necessary to enable the General Partner to issue Shares in full satisfaction of all Redemption Rights which are from time to time outstanding (assuming that there are no limitations as to the ownership of such Shares under the Certificate of Incorporation which relate to compliance with the REIT Requirements, that all Series B Preferred Units have been converted into Common Units and that the General Partner elected to pay the Share Purchase Price with respect to all such Redemption Rights).
4.3 Fully Paid and Non-Assessable. All Shares which may be issued upon exercise of the Redemption Rights shall be duly and validly issued and fully paid and non-assessable.
5. Transfer and Similar Taxes. The General Partner shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property pursuant hereto; provided, however, that the General Partner shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the Common Units to be exchanged, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the General Partner the amount of any such tax or established, to the reasonable satisfaction of the General Partner, that such tax has been paid.
6. Anti-Dilution and Adjustment Provisions.
(a) The Conversion Factor shall be adjusted in the event that the
General Partner (i) declares or pays a dividend or distribution on its
outstanding Shares in Shares or makes a distribution to all holders of its
outstanding Shares in Shares, (ii) subdivides its outstanding Shares, or (iii)
combines its outstanding Shares into a smaller number of Shares. In such event,
the Conversion Factor shall be adjusted by multiplying the Conversion Factor by
a fraction, the numerator of which shall be the number of Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time) and the denominator of
which shall be the actual number of Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the Conversion
Factor pursuant to the immediately preceding sentence shall become effective
immediately after the effective date of such event retroactive to the opening of
business on the day next following the record date, if any, for such event. In
addition, the Conversion Factor shall be adjusted in the event that the
Partnership (i) declares or pays a dividend or distribution on its outstanding
Common Units in Common Units, (ii) subdivides its outstanding Common Units, or
(iii) combines its outstanding Common Units into a smaller number of Common
Units. In such event, the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the numerator of which shall be the actual
number of Common Units issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (determined without the below
assumption) and the denominator of which shall be the number of Common Units
issued and outstanding on such record date (assuming for such purposes that such
dividend, distribution, subdivision or combination has occurred as of such
time). Any adjustment to the Conversion Factor pursuant to the immediately
preceding sentence shall become effective on the effective date of such event
retroactive to the record date, if any, for such event.
(b) If at any time the holders of Common Stock are entitled to any right (a "Right") to subscribe pro rata for additional securities of the General Partner, whether Common Stock or other classifications, or for any other securities or interests that a Contributing Party would have been entitled to subscribe for if, immediately prior to such grant, such Contributing Party had exercised its Redemption Rights and received the Share Purchase Price in payment thereof, in lieu of any adjustment under any other subsection of this Section 6 or other provision of this
Agreement and except to the extent that provision otherwise has been made for such Contributing Party to receive such Right or adjustment has been made in respect thereof under the Series B Preferred Unit Designation or otherwise, such Contributing Party also shall receive from the General Partner, prior to or concurrent with the time such Right becomes exercisable, the same Right that such Contributing Party would have been entitled to if such Contributing Party had exercised its Redemption Rights in full and received the Share Purchase Price in satisfaction thereof immediately prior to the time holders of Common Stock became entitled to such Right.
(c) Upon the occurrence of a Major Transaction Event, the General Partner shall cause effective provision to be made so that, upon full conversion of the Series B Preferred Units of such Contributing Party into Common Units, exercise of the Redemption Rights by such Contributing Party in respect thereof and the election of the General Partner to pay the Purchase Price at any time following such Major Transaction Event by means of the Share Purchase Price, such Contributing Party shall have the right to acquire, in lieu of the Shares which otherwise would have been issued to such Contributing Party, the kind and amount of shares of stock and other securities and property (and the provisions contained in Section 4.1 shall apply anew to the extent that such securities are of a class of securities of the General Partner or its successor that are registered under the Exchange Act) and interests as would be issued or payable with respect to or in exchange for the number of Shares constituting the Share Purchase Price as if all Series B Preferred Units of such Contributing Party had been converted into Common Units, such Redemption Rights had been exercised and the General Partner had satisfied the Redemption Rights by delivery of the Share Purchase Price immediately before such Major Transaction Event.
(d) The Partnership shall give written notice to Contributing Parties of any Major Transaction Event promptly after such Major Transaction is announced to the public.
(e) Notwithstanding anything to the contrary contained herein, the adjustment provisions contained in this Agreement shall be applied so that there is no duplication of adjustments made pursuant to any other document. The provisions of this Section 6 shall apply to successive events that may occur from time to time but only shall apply to a particular event if it occurs prior to the exercise in full of the Redemption Rights or the liquidation of the Partnership. Nothing contained herein shall prevent or otherwise limit the liquidation of the Partnership pursuant to the Partnership Agreement, as amended from time to time.
(f) Whenever the Conversion Factor is adjusted as herein provided, the General Partner shall compute the adjusted Conversion Factor in accordance with this Section 6 and shall prepare a certificate signed by the chief financial officer of the General Partner setting forth the adjusted Conversion Factor and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed at the offices of the General Partner.
(g) Notwithstanding anything to the contrary contained herein (but subject to the first sentence of Section 6(e) hereof), the General Partner and the Partnership agree that they will apply the provisions of this Section 6, the definition of Share Purchase Price and any related provisions as if the Common Units were issued and outstanding as of July 10, 2002. Thus, for
example, if an event were to occur on December 31, 2002 that would adjust the number of Shares into which the Common Units would be exchangeable had such Common Units been outstanding as of such date, but the Common Units were not actually issued until December 31, 2003, then such adjustment would be applied so that, upon such issuance (but subject to further adjustment for subsequent events), the Common Units would be immediately exchangeable for the number of Shares for which the Common Units would have been exchangeable had such Common Units been outstanding on December 31, 2002.
7. Miscellaneous Provisions.
7.1 Notices. All notices or other communications given pursuant to this
Agreement, including without limitation any Notice, shall be sent to the party
to whom or to which such notice is being sent, by certified or registered mail,
return receipt requested, commercial overnight delivery service, facsimile or
delivered by hand with receipt acknowledged in writing and otherwise as set
forth in this Section 7.1. All notices (a) shall be deemed given when received
or, if mailed as described above, after 5 Business Days or, if sent by
facsimile, upon receipt of confirmed answerback and (b) may be given either by a
party or by such party's attorneys. For purposes of this Section 7.1, the
addresses of the parties shall be, in the case of the Partnership and the
General Partner, 110 N. Wacker Drive, Chicago, Illinois 60606, facsimile number
(312) 960-5463, Attention: Bernard Freibaum (with a copy to Neal, Gerber &
Eisenberg, Two North LaSalle Street, Suite 2200, Chicago, Illinois 60602, Attn:
Marshall E. Eisenberg, facsimile number (312) 269-1747), and, in the case of
each Contributing Party, as set forth on the records of the Partnership. The
address of any party may be changed by a notice in writing given in accordance
with the provisions hereof.
7.2 Assignment. The rights of any Contributing Party hereunder (including the Redemption Rights) shall automatically devolve upon any Person to the extent that such Person holds Common Units or Series B Preferred Units, and becomes a substituted partner with respect to such Common Units or Series B Preferred Units, in accordance with the Partnership Agreement and delivers to the Partnership a written instrument, in form reasonably satisfactory to the Partnership, pursuant to which such Person agrees to be bound by the terms hereof (but the rights of such Contributing Party hereunder are not otherwise assignable). Subject to the provisions of Section 6, the General Partner may assign this Agreement without the consent of any Contributing Party, provided that no such assignment shall relieve the General Partner of its obligations under this Agreement.
7.3 Binding Effect. Except as otherwise set forth herein, this Agreement shall be binding upon, and inure to the benefit of, the parties and their successors and permitted assigns.
7.4 Amendments. The provisions of this Agreement may be amended only with the written consent of the Partnership, the General Partner and the holders of at least a majority of the issued and outstanding Common Units held by Contributing Parties at the time (assuming that all of the Series B Preferred Units were converted into Common Units in accordance with the Partnership Agreement immediately prior to the execution of such amendment).
7.5 Governing Law. This Agreement shall be governed by the laws of the State of Delaware (without regard to its conflicts of law principles).
7.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one document.
7.7 Other Holders Rights. In addition, once Common Units are acquired by a Contributing Party, such Contributing Party shall be treated as favorably with respect to the anti-dilution and adjustment provisions set forth herein as are other holders of Common Units under Other Rights Agreements.
7.8 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes any prior written or oral understandings and/or agreements among them with respect thereto.
7.9 Pronouns; Headings; Etc. As used herein, all pronouns shall include the masculine, feminine and neuter, and all terms shall include the singular and plural thereof wherever the context and facts require such construction. The headings herein are inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. Any references in this Agreement to a "Section" or "Exhibit" shall refer to a Section or Exhibit of this Agreement unless otherwise specified.
7.10 Survival. The representations, warranties and covenants contained herein or made pursuant hereto shall survive the execution and delivery of this Agreement and the closing of any redemption or purchase and sale pursuant to an exercise of Redemption Rights hereunder.
7.11 Further Assurances. Each of the parties shall hereafter execute and deliver such other instruments and documents and do such further acts and things as may be required or useful to carry out the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.
CONTRIBUTING PARTIES:
GGP LIMITED PARTNERSHIP, a Delaware limited partnership, as attorney-in-fact for each of the following Contributing Parties:
Cache Valley Mall Partnership, Ltd.
Burke Cloward
Alan Cordano
James Cordano
Greg Curtis
Fairfax Holding, LLC
G. Rex Frazier
Michael Frei
Hall Investment Company
Kenneth Hansen
King American Hospital, Ltd.
Florence King
Warren P. King
Paul K. Mendenhall
Tom Mulkey
North Plains Development Company, Ltd.
North Plains Land Company, Ltd.
Carl E. Olson
Martin G. Peterson
Pine Ridge Land Company, Ltd.
Price Fremont Company, Ltd.
Deirdra Price
John Price
Steven Price
Red Cliffs Mall Investment Company
Taycor Ltd.
Jennifer Wallin
Keith Whatcott
Lena Wilcher, as Trustee of the Lena Wilcher Revocable
Trust
By: General Growth Properties, Inc.,
a Delaware corporation, its
general partner
By: /s/ Joel Bayer -------------------------------------------- Joel Bayer, Senior Vice President |
PARTNERSHIP:
GGP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: General Growth Properties, Inc. a Delaware corporation, its general partner
By: /s/ Joel Bayer -------------------------------------------- Joel Bayer, Senior Vice President |
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.
a Delaware corporation
By: /s/ Joel Bayer -------------------------------------------- Joel Bayer, Senior Vice President |
EXHIBIT A
Notice of Redemption
The undersigned hereby irrevocably (i) exercises its Redemption Rights as to ___________ Common Units (the "Transferred Units") in GGP Limited Partnership (the "Partnership") in accordance with the terms of that certain Redemption Rights Agreement, dated July 10, 2002 (the "Agreement"), among the Partnership, General Growth Properties, Inc. (the "General Partner"), and the other parties thereto, (ii) transfers and surrenders such Transferred Units and all right, title and interest of the undersigned therein to the party, which shall be either the Partnership or the General Partner, that shall purchase or redeem such Transferred Units pursuant to the Agreement, and (iii) directs that the Cash Purchase Price or Share Purchase Price payable upon exercise of the Redemption Right be delivered to the address specified below and, if the Share Purchase Price is to be delivered, the Shares shall be registered or placed in the name(s) and at the address(es) specified below. Attached hereto are the certificates, if any, representing the Transferred Units.
The undersigned hereby represents, warrants, certifies and agrees (i)
that the undersigned has good and marketable title to the Transferred Units,
free and clear of all Liens, (ii) that the undersigned has the full right, power
and authority to transfer and surrender the Transferred Units as provided herein
and such transfer and surrender has been authorized by all necessary action, and
(iii) that the undersigned has obtained the consent or approval of all persons
or entities, if any, having the right to consent to or approve such transfer and
surrender.
Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement.
Dated: ____________________ [NAME OF LIMITED PARTNER] By: -------------------------------------------- Its: ---------------------------------------- --------------------------------------------------- (Street Address) |
Signature Guaranteed By:
If Shares are to be issued, issue to:
Please insert social security or identifying number:
EXHIBIT 4.12
REDEMPTION RIGHTS AGREEMENT (SERIES B PREFERRED UNITS)
Redemption Rights Agreement, dated July 10, 2002, among GGP Limited Partnership, a Delaware limited partnership (the "Partnership"), General Growth Properties, Inc., a Delaware corporation (the "General Partner"), and the parties who are designated as "Contributing Parties" on the signature pages hereof (the "Contributing Parties").
WHEREAS, the General Partner is the general partner of the Partnership;
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of March 3, 2002 (as the same has been amended and may be further amended from time to time, the "Merger Agreement"), among the Partnership, the General Partner and the other parties thereto, the Contributing Parties are being admitted as limited partners of the Partnership and the Partnership is issuing to them 8.5% Series B Cumulative Convertible Preferred Units of limited partnership in the Partnership (such units that are being issued pursuant to the Merger Agreement or any other securities issued in substitution therefor (other than Common Units, as defined below) pursuant to the Series B Preferred Unit Designation (as defined below), the "Series B Preferred Units"); and
WHEREAS, the parties desire to set forth herein the terms and conditions upon which the Contributing Parties may cause the Partnership to redeem their Series B Preferred Units.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:
"Acts" shall mean the Securities Act and the Exchange Act, collectively.
"Affiliates" shall mean "affiliates" as defined pursuant to the Securities Act and the regulations promulgated thereunder.
"Business Day" shall mean any day upon which commercial banks are open for business in Chicago, Illinois.
"Cash Purchase Price" shall mean, with respect to any redeemed or
purchased Series B Preferred Units, an amount of cash equal to the product of
(i) the $50 face amount per Series B Preferred Unit plus an amount equal to all
distributions (whether or not earned or declared) accrued and unpaid thereon to
the closing date multiplied by (ii) the number of such redeemed or purchased
Series B Preferred Units.
"Certificate of Incorporation" shall mean the Certificate of Incorporation of the General Partner, as the same may be amended from time to time.
"Claims" shall have the meaning set forth in Section 4.1(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor code.
"Common Units" shall mean common units of limited partnership in the Partnership.
"Common Units Redemption Rights Agreement" shall mean that certain Redemption Rights Agreement (Common Units) dated the date hereof, among the parties hereto.
"Contributing Party Representative" shall mean Jay L. Bernstein, in his capacity as a member of Clifford Chance Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166, (212)878-8375 (facsimile), or such other Person as the holders of at least a majority of the issued and outstanding Series B Preferred Units may designate from time to time by delivery of written notice to the General Partner and the Partnership.
"Conversion Factor" shall mean .05, provided that such factor shall be adjusted in accordance with Section 6(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any successor statute.
"Exchange Act Reporting Company" shall mean any corporation or other entity which is subject to the reporting requirements of the Exchange Act.
"Expiration Date" shall mean the earlier of the fifteenth anniversary of the date hereof and the date upon which all Series B Preferred Units have been converted into Common Units or redeemed or purchased in accordance with the terms hereof.
"Liens" shall have the meaning set forth in the Merger Agreement.
"Major Transaction Event" shall mean, with respect to the General
Partner, (a) a reclassification, capital reorganization or other similar change
regarding or affecting outstanding Shares (other than a change addressed in
Section 6(a)); (b) a merger or consolidation of the General Partner with one or
more other corporations or entities, other than a merger pursuant to which the
General Partner is the surviving corporation and the outstanding Shares are not
affected, (c) a sale, lease or exchange of all or substantially all of the
General Partner's assets or (d) the liquidation, dissolution or winding up of
the General Partner.
"Merger Agreement" shall have the meaning set forth in the recitals.
"Notice" shall have the meaning set forth in Section 3.2.
"Partnership Agreement" shall mean that certain Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of April 1, 1998, as amended by that certain First Amendment thereto dated as of June 10, 1998, that certain Second Amendment thereto dated as of June 29, 1998, that certain Third Amendment thereto dated as of February 15, 2002, that certain Amendment dated as of April 24, 2002 and that certain Fourth Amendment thereto dated as July 10, 2002 and as the same may be further amended from time to time.
"Person" shall mean any natural person, corporation, partnership, association, limited liability company, trust or other entity.
"Prospectus" shall have the meaning set forth in Section 4.1(a).
"Preferred Stock" shall mean the 8.5% Cumulative Convertible Preferred Stock, Series C, $100 par value per share, of the General Partner.
"Purchase Price" shall mean the Cash Purchase Price or the Share Purchase Price, or a combination thereof.
"Redemption Rights" shall have the meaning set forth in Section 2.
"Registration Statement" shall have the meaning set forth in Section 4.1(a).
"REIT" shall mean real estate investment trust as such term is defined under the Code.
"REIT Requirements" shall have the meaning set forth in the Partnership Agreement, as the same may change from time to time.
"Rights" shall have the meaning set forth in Section 6(b).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any successor statute.
"Series B Preferred Units" shall have the meaning set forth in the recitals.
"Series B Preferred Unit Designation" shall mean Schedule A to the Fourth Amendment referred to in the definition of "Partnership Agreement".
"Share Purchase Price" shall mean, with respect to the exercise of any Redemption Rights and subject to the provisions of Section 6(c), a number of Shares equal to the product of (a) the number of Series B Preferred Units being redeemed or purchased multiplied by (b) the Conversion Factor; provided, however, that, in the event the General Partner, after the date of this Agreement, issues to all holders of Shares rights, options, warrants or convertible or exchangeable securities entitling the stockholders to subscribe for or purchase Shares (other than Rights referred to in Section 6(b)) or any other securities or property (other than distributions paid in cash), then the Share Purchase Price also shall include such rights, options, warrants or convertible or exchangeable securities or other securities or property that a holder of that number of Shares would have been entitled to receive had such holder held such Shares immediately prior to the time holders of Shares became entitled thereto.
"Shares" shall mean shares of the Preferred Stock.
2. Grant of Redemption Rights.
(a) Upon the terms and subject to the conditions contained herein, the Partnership does hereby grant to each Contributing Party, and such Contributing Party does hereby accept, the right, but without obligation on the part of such Contributing Party, to require the Partnership to redeem from time to time part or all of the Series B Preferred Units of such Contributing Party for the Cash Purchase Price with respect to such Series B Preferred Units ("Redemption Rights").
(b) Notwithstanding the provisions of Section 2(a), the General Partner may, in its sole and absolute discretion, assume and satisfy the obligation of the Partnership with respect to any Contributing Party's exercise of a Redemption Right by paying to such Contributing Party, at the General Partner's election (which may be exercised in the General Partner's sole discretion), either the Cash Purchase Price or the Share Purchase Price (or a combination thereof) with respect to the Series B Preferred Units for which such Contributing Party exercised its Redemption Rights. If the General Partner assumes such obligations with respect to the exercise by any Contributing Party of a Redemption Right as to certain Series B Preferred Units and makes the required payment of the Share Purchase Price, the Cash Purchase Price or any combination thereof, then the Partnership shall have no obligation to pay any amount to such Contributing Party with respect to the exercise of a Redemption Right for such Series B Preferred Units, and any Series B Preferred Units purchased shall be owned by the General Partner for all purposes.
(c) If the General Partner shall assume and satisfy the obligations of the Partnership with respect to the exercise of a Redemption Right by any Contributing Party, the Partnership, such Contributing Party and the General Partner each shall treat the transaction between the General Partner and such Contributing Party as a sale of such Contributing Party's Series B Preferred Units (or a portion thereof) to the General Partner for federal income tax purposes.
(d) Upon the redemption or purchase of part or all of any Contributing Party's Series B Preferred Units and the payment of the Purchase Price with respect thereto, such Person shall be deemed withdrawn as a Partner in the Partnership to the extent of the Series B Preferred Units redeemed or purchased and shall have no further rights or obligations under this Agreement with respect to such redeemed or purchased Series B Preferred Units; provided, however, that such Contributing Party's rights under this Agreement with regard to any other Series B Preferred Units will continue in full force and effect.
(e) No fractional Shares shall be issued hereunder. In lieu of fractional Shares, the General Partner shall pay cash based on the per Share liquidation preference on the relevant closing date.
(f) Notwithstanding anything to the contrary contained herein, the General Partner shall not issue the Share Purchase Price upon exercise of any Redemption Right by a Contributing Partner with respect to any Series B Preferred Units unless all of the Shares so issued are listed on the New York Stock Exchange and the Registration Statement (as herein defined) covering such Shares shall be in effect and available for use to effect a public distribution by the holder thereof of such Shares immediately upon such issuance and the General Partner only shall issue
such Share Purchase Price to the extent that the issuance of such Shares to such Contributing Party does not violate the Certificate of Incorporation (assuming such Contributing Party owns no shares of capital stock of the General Partner other than those issued pursuant hereto and pursuant to the Common Units Redemption Rights Agreement).
3. Exercise of Redemption Rights.
3.1 Time for Exercise of Redemption Rights. Each Contributing Party may exercise its Redemption Rights in whole or in part and at any time and from time to time on or after the date hereof but prior to the Expiration Date; provided, however, that the Redemption Rights may not be exercised at any one time by any Contributing Party with respect to less than 2,000 Series B Preferred Units (or all the Series B Preferred Units then owned by such Contributing Party if such Contributing Party owns less than 2,000 Series B Preferred Units) or in the event that such exercise of Redemption Rights (or the assignment of Series B Preferred Units or delivery of either the Cash Purchase Price or the Share Purchase Price with respect thereto) violates the terms of the Partnership Agreement, the Certificate of Incorporation or applicable law. Once given, a Notice shall be irrevocable subject to the payment of the Purchase Price for the Series B Preferred Units specified therein in accordance with the terms hereof.
3.2 Method of Exercise; Etc. The Redemption Rights shall be exercised
by delivery to the Partnership of (a) written notice (the "Notice") in the form
of Exhibit A specifying the number of the Series B Preferred Units to be
redeemed and the name or names (with address) in which any Shares issuable upon
such exercise shall be registered if different than the Contributing Party and
(b) the certificates, if any, representing such Series B Preferred Units.
Notwithstanding anything to the contrary contained herein, in the event that (A)
all of the Series B Preferred Units of any deceased Contributing Party or the
Series B Preferred Units of any partnership, limited liability company or
pass-through entity that are allocable to a deceased partner, member or other
Person have not been converted into Common Units on or prior to the date of
death of such Contributing Party or other Person, and (B) the exercise of the
Redemption Rights with respect to said Series B Preferred Units shall not result
in the recognition of gain for federal income tax purposes by any party, the
Partnership shall have the right to require the Contributing Party or
partnership, limited liability company or other pass-through entity or its legal
representative, to exercise the Redemption Rights as to all of such Series B
Preferred Units and to take any and all necessary action hereunder to effect
such exercise.
3.3 Closing. The closing of the redemption or purchase and sale pursuant to an exercise of the Redemption Rights by any Contributing Party shall occur within 30 days following the giving of the Notice; provided, however, that no closing may occur hereunder prior to the earlier of the one hundred twentieth day after the date hereof and the date of effectiveness of the Registration Statement. Such Contributing Party shall execute such other documents as the General Partner may reasonably require in connection with the closing of such redemption or purchase and sale.
3.4 Payment of Cash or Issuance of Shares. At the closing of the redemption or purchase and sale of Series B Preferred Units pursuant to an exercise of Redemption Rights by a Contributing Party, the Partnership shall deliver to such Contributing Party the Cash Purchase Price by check or, in the event that the General Partner has assumed the obligations of the
Partnership with respect to such exercise of Redemption Rights, the General
Partner shall deliver to such Contributing Party, at the election of the General
Partner (which may be exercised in the General Partner's sole discretion) either
(a) the Cash Purchase Price by check or (b) certificates representing the Shares
and any other securities and/or other property constituting the Share Purchase
Price, together with cash in lieu of the issuance of any fraction of a Share as
provided in Section 2(e), or a combination thereof. In addition, in the event
that the General Partner has assumed the obligations of the Partnership with
respect to such exercise of Redemption Rights and delivers the Share Purchase
Price, the General Partner also shall pay to such Contributing Partner the
accrued and unpaid distributions in respect of the Series B Preferred Units that
are acquired by the General Partner.
4. Matters Relating to Shares.
4.1 Registration.
(a) As soon as practicable following the date hereof, the General Partner shall file a Registration Statement on Form S-3 or other appropriate registration form (the "Registration Statement") with the SEC covering the resale by Contributing Parties of the Shares to be issued upon exercise of the Redemption Rights as to all Series B Preferred Units and full satisfaction of the Redemption Rights by delivery of Shares and/or the shares of common stock of the General Partner to be issued upon their conversion (all of such shares referred to hereafter in this Section 4.1 as the "Shares") and shall use its reasonable best efforts to cause the Registration Statement to become effective as soon as practicable thereafter. Following the effective date of the Registration Statement and until the Shares covered by the Registration Statement have been sold or are eligible for resale under Rule 144(k) promulgated under the Securities Act, the General Partner shall keep the Registration Statement current, effective and available for the resale by Contributing Parties of the Shares delivered to them pursuant hereto. The General Partner shall bear all expenses relating to filing such Registration Statement and keeping such Registration Statement current, effective and available; provided, however, that the General Partner shall not be responsible for any brokerage fees or underwriting commissions due and payable by any Contributing Party.
(b) During the time period when the Registration Statement is required to be current, effective and available under Section 4.1(a), the General Partner also shall:
(i) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus constituting a part thereof, as amended or supplemented (the "Prospectus"), as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale of the Shares covered by such Registration Statement whenever any Contributing Party shall desire to sell or otherwise dispose of the same but in no event beyond the period in which the Registration Statement is required to be kept in effect;
(ii) furnish to each Contributing Party, without charge, such number of authorized copies of the Prospectus, and any amendments or supplements to the Prospectus, in conformity with the requirements of the Securities Act, and such other
documents as any Contributing Party may reasonably request in order to facilitate the public sale or other disposition of the Shares owned by Contributing Parties.
(iii) register or qualify the securities covered by the Registration Statement under state securities or blue sky laws of such jurisdictions as are reasonably required to effect a sale thereof and do any and all other acts and things which may be necessary or appropriate under such state securities or blue sky laws to enable Contributing Parties to consummate the public sale or other disposition in such jurisdictions of such securities;
(iv) before filing any amendments or supplements to the Registration Statement or the Prospectus, furnish copies of all such documents proposed to be filed to the Contributing Party Representative who shall be afforded a reasonable opportunity to review and comment thereon; provided, however, that all such documents shall be subject to the approval of the Contributing Party Representative insofar as they relate to information concerning Contributing Parties (including, without limitation, the proposed method of distribution of any Contributing Party's securities);
(v) notify Contributing Parties promptly (A) when any such Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (B) of any request by the SEC or any state securities authority for amendments and supplements to such Registration Statement and the Prospectus or for additional information, (C) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of any such Registration Statement or the initiation of any proceedings for the purpose, (D) if, between the effective date of any such Registration Statement and the sale of the Shares to which it relates, the General Partner receives any notification with respect to the suspension of the qualification of the Shares or initiation of any proceeding for such purpose, and (E) of the happening of any event during the period such Registration Statement is effective which in the judgment of the General Partner makes any statement made in the Registration Statement or the Prospectus untrue in any material respect or which requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading;
(vi) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest practicable time;
(vii) cooperate with each Contributing Party to facilitate the timely preparation and delivery of certificates representing Shares being sold, which certificates shall not bear any restrictive legends provided the Shares evidenced thereby have been sold in a manner permitted by the Prospectus; and
(viii) upon the occurrence of any event contemplated by Section 4.1(b)(v)(E) hereof, promptly prepare and file a supplement or post-effective amendment to the Registration Statement or the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Shares, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein in
light of the circumstances under which they were made, not misleading; provided, however, that the obligation to prepare and file any such supplement or post-effective amendment shall be suspended if the General Partner, relying upon advice of counsel, determines that disclosure of any information required to be included therein would be adverse to its interests, but such suspension shall not extend beyond 90 days with respect to any such specified event.
(c) The General Partner hereby agrees to indemnify and hold harmless each Contributing Party and each person, if any, who controls such Contributing Party (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all losses, claims, damages, costs and expenses (including reasonable attorneys' fees) ("Claims") to which such Contributing Party or such controlling person may become subject, under the Securities Act or otherwise, caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such Contributing Party and each such controlling person for any legal or other expenses reasonably incurred by such Contributing Party in connection with investigating or defending any such loss as such expenses are incurred; provided, however, that the General Partner shall not be liable insofar as any such losses, claims, damages, costs and expenses (including reasonable attorneys' fees) are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the General Partner by any Contributing Party expressly for use therein. Each Contributing Party agrees to indemnify and hold harmless the General Partner and each person, if any, who controls the General Partner (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all Claims to which the General Partner or such controlling person may become subject, under the Securities Act or otherwise, caused by any untrue statement or omission or alleged untrue statement or omission based upon such information furnished in writing to the General Partner by such Contributing Party.
(d) Each Contributing Party agrees that, upon receipt of any notice
from the General Partner of the happening of any event of the kind described in
Section 4.1(b)(v)(E), such Contributing Party will forthwith discontinue
disposition of securities pursuant to the Registration Statement until such
Contributing Party's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4.1(b)(viii).
(e) Upon the written request to the General Partner from time to time as below provided and subject to other contractual obligations of the General Partner, the Contributing Parties holding Shares covered by the Registration Statement who desire to do so may sell such Shares covered by the Registration Statement in an underwritten offering. In such underwritten offering, the investment banker or bankers and manager or managers that will administer the offering will be selected by, and the underwriting arrangements with respect thereto will be approved by, the Contributing Parties; provided that such investment bankers and managers and underwriting arrangements must be reasonably satisfactory to the General Partner. No Contributing Party may participate in any underwritten offering contemplated hereby unless such Contributing Party agrees to sell such Contributing Party's Shares covered by the Registration Statement in accordance with any approved underwriting arrangements and completes and
executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such approved underwriting arrangements. The General Partner shall be responsible for the costs of preparing and filing the amendment or supplement that is referred to below, and the selling securityholders shall pay their attorney's fees and underwriting discounts and commissions incurred in connection with such underwritten offerings. Notwithstanding the foregoing, upon receipt of a request from the managing underwriter or a representative of the Contributing Parties to prepare and file an amendment or supplement to the Registration Statement and Prospectus in connection with such underwritten offering, the General Partner may delay the filing of any such amendment or supplement or postpone taking action with respect to an underwritten offering for a period not to exceed an aggregate of 180 days in any calendar year, if the General Partner determines in its good faith judgment that the filing of such amendment or supplement or the taking of such action with respect to an underwritten offering would have a material adverse effect on the business, operations or prospects of the General Partner, or adversely affect a material financing, acquisition, disposition of assets or stock, merger or other comparable transaction. Notwithstanding anything to the contrary contained in the foregoing, the Contributing Parties shall not have the right to effect more than two underwritten offerings pursuant to this paragraph and each such offering shall be required to include minimum gross sales proceeds of $17,500,000.
(f) Notwithstanding anything to the contrary contained herein, the General Partner shall have no obligation to keep any registration statement filed pursuant to this Section 4.1 effective after the Expiration Date or if the status of the General Partner (or its successor) as an Exchange Act Reporting Company is terminated.
4.2 Reservation of Shares. At all times while the Redemption Rights are outstanding, the General Partner shall reserve for issuance such number of Shares as may be necessary to enable the General Partner to issue Shares in full satisfaction of all Redemption Rights which are from time to time outstanding (assuming that there are no limitations as to the ownership of such Shares under the Certificate of Incorporation which relate to compliance with the REIT Requirements and that the General Partner elected to pay the Share Purchase Price with respect to all such Redemption Rights).
4.3 Fully Paid and Non-Assessable. All Shares which may be issued upon exercise of the Redemption Rights shall be duly and validly issued and fully paid and non-assessable.
5. Transfer and Similar Taxes. The General Partner shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Preferred Stock or other securities or property pursuant hereto; provided, however, that the General Partner shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Preferred Stock or other securities or property in a name other than that of the holder of the Preferred Units to be exchanged, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the General Partner the amount of any such tax or established, to the reasonable satisfaction of the General Partner, that such tax has been paid.
6. Anti-Dilution and Adjustment Provisions.
(a) The Conversion Factor shall be adjusted in the event that the General Partner (i) declares or pays a dividend or distribution on its outstanding Shares in Shares or makes a distribution to all holders of its outstanding Shares in Shares, (ii) subdivides its outstanding Shares, or (iii) combines its outstanding Shares into a smaller number of Shares. In such event, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the number of Shares issued and outstanding on the record date for such dividend, distribution, subdivision or combination (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time) and the denominator of which shall be the actual number of Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, subdivision or combination. Any adjustment to the Conversion Factor shall become effective immediately after the effective date of such event retroactive to the opening of business on the day next following the record date, if any, for such event.
(b) If at any time the holders of Shares are entitled to any right (a "Right") to subscribe pro rata for additional securities of the General Partner, whether Preferred Stock or other classifications, or for any other securities or interests that a Contributing Party would have been entitled to subscribe for if, immediately prior to such grant, such Contributing Party had exercised its Redemption Rights and received the Share Purchase Price in payment thereof, in lieu of any adjustment under any other subsection of this Section 6 or other provision of this Agreement and except to the extent that provision otherwise has been made for such Contributing Party to receive such Right, such Contributing Party also shall receive from the General Partner, prior to or concurrent with the time such Right becomes exercisable, the same Right that such Contributing Party would have been entitled to if such Contributing Party had exercised its Redemption Rights in full and received the Share Purchase Price in satisfaction thereof immediately prior to the time holders of Shares became entitled to such Right.
(c) Upon the occurrence of a Major Transaction Event, the General Partner shall cause effective provision to be made so that, upon exercise of the Redemption Rights by any Contributing Party and the election of the General Partner to pay the Purchase Price at any time following such Major Transaction Event by means of the Share Purchase Price, such Contributing Party shall have the right to acquire, in lieu of the Shares which otherwise would have been issued to such Contributing Party, the kind and amount of shares of stock and other securities and property (and the provisions contained in Section 4.1 shall apply anew to the extent that such securities are of a class of securities of the General Partner or its successor that are registered under the Exchange Act) and interests as would be issued or payable with respect to or in exchange for the number of Shares constituting the Share Purchase Price as if such Redemption Rights had been exercised and the General Partner had satisfied the Redemption Rights by delivery of the Share Purchase Price immediately before such Major Transaction Event.
(d) The Partnership shall give written notice to Contributing Parties of any Major Transaction Event promptly after such Major Transaction is announced to the public.
(e) Notwithstanding anything to the contrary contained herein, the adjustment provisions contained in this Agreement shall be applied so that there is no duplication of adjustments made pursuant to any other document. The provisions of this Section 6 shall apply to successive events that may occur from time to time but only shall apply to a particular event if it occurs prior to the exercise in full of the Redemption Rights or the liquidation of the Partnership. Nothing contained herein shall prevent or otherwise limit the liquidation of the Partnership pursuant to the Partnership Agreement, as amended from time to time.
(f) Whenever the Conversion Factor is adjusted as herein provided, the General Partner shall compute the adjusted Conversion Factor in accordance with this Section 6 and shall prepare a certificate signed by the chief financial officer of the General Partner setting forth the adjusted Conversion Factor and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed at the offices of the General Partner.
7. Miscellaneous Provisions.
7.1 Notices. All notices or other communications given pursuant to this
Agreement, including without limitation any Notice, shall be sent to the party
to whom or to which such notice is being sent, by certified or registered mail,
return receipt requested, commercial overnight delivery service, facsimile or
delivered by hand with receipt acknowledged in writing and otherwise as set
forth in this Section 7.1. All notices (a) shall be deemed given when received
or, if mailed as described above, after 5 Business Days or, if sent by
facsimile, upon receipt of confirmed answerback and (b) may be given either by a
party or by such party's attorneys. For purposes of this Section 7.1, the
addresses of the parties shall be, in the case of the Partnership and the
General Partner, 110 N. Wacker Drive, Chicago, Illinois 60606, facsimile number
(312) 960-5463, Attention: Bernard Freibaum (with a copy to Neal, Gerber &
Eisenberg, Two North LaSalle Street, Suite 2200, Chicago, Illinois 60602, Attn:
Marshall E. Eisenberg, facsimile number (312) 269-1747), and, in the case of
each Contributing Party, as set forth on the records of the Partnership. The
address of any party may be changed by a notice in writing given in accordance
with the provisions hereof.
7.2 Assignment. The rights of any Contributing Party hereunder (including the Redemption Rights) shall automatically devolve upon any Person to the extent that such Person holds Series B Preferred Units, and becomes a substituted partner with respect to such Series B Preferred Units, in accordance with the Partnership Agreement and delivers to the Partnership a written instrument, in form reasonably satisfactory to the Partnership, pursuant to which such Person agrees to be bound by the terms hereof (but the rights of such Contributing Party hereunder are not otherwise assignable). Subject to the provisions of Section 6, the General Partner may assign this Agreement without the consent of any Contributing Party, provided that no such assignment shall relieve the General Partner of its obligations under this Agreement.
7.3 Binding Effect. Except as otherwise set forth herein, this Agreement shall be binding upon, and inure to the benefit of, the parties and their successors and permitted assigns.
7.4 Amendments. The provisions of this Agreement may be amended only with the written consent of the Partnership, the General Partner and the holders of at least a majority of the issued and outstanding Series B Preferred Units.
7.5 Governing Law. This Agreement shall be governed by the laws of the State of Delaware (without regard to its conflicts of law principles).
7.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one document.
7.7 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes any prior written or oral understandings and/or agreements among them with respect thereto.
7.8 Pronouns; Headings; Etc. As used herein, all pronouns shall include the masculine, feminine and neuter, and all terms shall include the singular and plural thereof wherever the context and facts require such construction. The headings herein are inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. Any references in this Agreement to a "Section" or "Exhibit" shall refer to a Section or Exhibit of this Agreement unless otherwise specified.
7.9 Survival. The representations, warranties and covenants contained herein or made pursuant hereto shall survive the execution and delivery of this Agreement and the closing of any redemption or purchase and sale pursuant to an exercise of Redemption Rights hereunder.
7.10 Further Assurances. Each of the parties shall hereafter execute and deliver such other instruments and documents and do such further acts and things as may be required or useful to carry out the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.
CONTRIBUTING PARTIES:
GGP LIMITED PARTNERSHIP, a Delaware limited partnership, as attorney-in-fact for each of the following Contributing Parties:
Cache Valley Mall Partnership, Ltd.
Burke Cloward
Alan Cordano
James Cordano
Greg Curtis
Fairfax Holding, LLC
G. Rex Frazier
Michael Frei
Hall Investment Company
Kenneth Hansen
King American Hospital, Ltd.
Florence King
Warren P. King
Paul K. Mendenhall
Tom Mulkey
North Plains Development Company, Ltd.
North Plains Land Company, Ltd.
Carl E. Olson
Martin G. Peterson
Pine Ridge Land Company, Ltd.
Price Fremont Company, Ltd.
Deirdra Price
John Price
Steven Price
Red Cliffs Mall Investment Company
Taycor Ltd.
Jennifer Wallin
Keith Whatcott
Lena Wilcher, as Trustee of the Lena Wilcher
Revocable Trust
By: General Growth Properties, Inc.,
a Delaware corporation, its
general partner
By: /s/ Joel Bayer -------------------------------------------- Joel Bayer, Senior Vice President |
PARTNERSHIP:
GGP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: General Growth Properties, Inc.
a Delaware corporation, its general partner
By: /s/ Joel Bayer -------------------------------------------- Joel Bayer, Senior Vice President |
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.
a Delaware corporation
By: /s/ Joel Bayer -------------------------------------------- Joel Bayer, Senior Vice President |
EXHIBIT A
Notice of Redemption
The undersigned hereby irrevocably (i) exercises its Redemption Rights as to ___________ Series B Preferred Units (the "Transferred Units") in GGP Limited Partnership (the "Partnership") in accordance with the terms of that certain Redemption Rights Agreement, dated July 10, 2002 (the "Agreement"), among the Partnership, General Growth Properties, Inc. (the "General Partner"), and the other parties thereto, (ii) transfers and surrenders such Transferred Units and all right, title and interest of the undersigned therein to the party, which shall be either the Partnership or the General Partner, that shall purchase or redeem such Transferred Units pursuant to the Agreement, and (iii) directs that the Cash Purchase Price or Share Purchase Price payable upon exercise of the Redemption Right be delivered to the address specified below and, if the Share Purchase Price is to be delivered, the Shares shall be registered or placed in the name(s) and at the address(es) specified below. Attached hereto are the certificates, if any, representing the Transferred Units.
The undersigned hereby represents, warrants, certifies and agrees (i)
that the undersigned has good and marketable title to the Transferred Units,
free and clear of all Liens, (ii) that the undersigned has the full right, power
and authority to transfer and surrender the Transferred Units as provided herein
and such transfer and surrender has been authorized by all necessary action, and
(iii) that the undersigned has obtained the consent or approval of all persons
or entities, if any, having the right to consent to or approve such transfer and
surrender.
Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement.
Dated: ____________________ [NAME OF LIMITED PARTNER] By: ------------------------------------ Its: ------------------------------------ ------------------------------------ (Street Address) |
Signature Guaranteed By:
If Shares are to be issued, issue to:
Please insert social security or identifying number:
EXHIBIT -4.15
REDEMPTION RIGHTS AGREEMENT
Redemption Rights Agreement, dated March 5, 2004, among GGP Limited Partnership, a Delaware limited partnership (together with its successors and assigns, the "Partnership"), General Growth Properties, Inc., a Delaware corporation (together with its successors and assigns, the "General Partner"), and Koury Corporation, a North Carolina corporation (together with its successors and assigns, the "Contributing Party").
RECITALS
WHEREAS, the General Partner is the general partner of the Partnership;
WHEREAS, shares of common stock of the General Partner (the "Common Stock") are listed on the New York Stock Exchange;
WHEREAS, pursuant to that certain Amended and Restated Contribution Agreement dated as of March 5, 2004 (as the same has been amended and may be further amended from time to time, the "Contribution Agreement"), among the Partnership, Contributing Partner and the other parties thereto, the Contributing Party is being admitted as a limited partner of the Partnership and the Partnership is issuing to it 7% Series E Cumulative Convertible Preferred Units of limited partnership in the Partnership (such units that are being issued pursuant to the Contribution Agreement or any other securities issued in substitution therefor pursuant to the Series E Preferred Unit Designation, the "Series E Preferred Units");
WHEREAS, pursuant to the Series E Preferred Unit Designation (as defined below), the Series E Preferred Units may be converted into Common Units (as defined below) (the Common Units into which Series E Preferred Units have been converted or any other securities issued in substitution therefor (other than pursuant to this Agreement), the "Subject Common Units"); and
WHEREAS, the parties desire to set forth herein the terms and conditions upon which the Contributing Party may cause the Partnership to redeem its Subject Common Units.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:
"Acts" shall mean the Securities Act and the Exchange Act, collectively.
"Affiliates" shall mean "affiliates" as defined pursuant to the Securities Act and the regulations promulgated thereunder.
"Business Day" shall mean any day upon which commercial banks are open for business in Chicago, Illinois.
"Cash Purchase Price" shall mean, with respect to any redeemed or purchased Subject Common Units, an amount of cash equal to the value of the Share Purchase Price (computed as of the Computation Date and equal to the Current Per Share Market Price on such Computation
Date multiplied by the number of Shares included in the Share Purchase Price) that would be payable with respect to such Subject Common Units assuming the Share Purchase Price were paid in full satisfaction of the Purchase Price for such Subject Common Units. In the event that the Share Purchase Price includes securities and/or other property other than Shares, then the value of such other securities and/or property shall be determined by the General Partner acting in good faith on the basis of the closing prices of securities if listed on a nationally recognized exchange and otherwise on the basis of such quotations and other information as the General Partner considers, in its reasonable judgment, appropriate.
"Certificate of Incorporation" shall mean the Certificate of Incorporation of the General Partner, as the same may be amended from time to time.
"Claims" shall have the meaning set forth in Section 4.1(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor code.
"Common Stock" shall have the meaning set forth in the recitals.
"Common Units" shall mean common units of limited partnership in the Partnership.
"Computation Date" shall mean the date on which the applicable Notice is received by the Partnership or, if such date is not a Business Day, the first Business Day thereafter.
"Contribution Agreement" shall have the meaning set forth in the recitals.
"Conversion Factor" shall mean 100%, provided that such factor shall be adjusted in accordance with Section 6(a).
"Current Per Share Market Price" shall have the meaning set forth in the Partnership Agreement.
"Entity" shall mean any corporation, partnership, association, limited liability company, trust or other entity.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any successor statute.
"Exchange Act Reporting Company" shall mean any corporation or other entity which is subject to the reporting requirements of the Exchange Act.
"Liens" shall mean liens, pledges, security interests, mortgages, encumbrances and other claims of any type or kind.
"Major Transaction Event" shall mean, with respect to the General Partner,
(a) a reclassification, capital reorganization or other similar change regarding
or affecting outstanding Shares (other than a change addressed in Section 6(a));
(b) a merger or consolidation of the General Partner with one or more other
corporations or entities, other than a merger pursuant to
which the General Partner is the surviving corporation and the outstanding Shares are not affected, (c) a sale, lease or exchange of all or substantially all of the General Partner's assets or (d) the liquidation, dissolution or winding up of the General Partner.
"Notice" shall have the meaning set forth in Section 3.2.
"Partnership Agreement" shall mean that certain Second Amended and Restated Agreement of Limited Partnership of the Partnership dated April 1, 1998, as previously amended and as the same may be further amended from time to time.
"Person" shall mean any natural person or Entity.
"Preferred Units" shall mean preferred units of limited partnership in the Partnership that have been issued prior hereto or are issued hereafter.
"Prospectus" shall mean, with respect to the Resale Registration Statement, the prospectus constituting a part thereof, as amended or supplemented.
"Purchase Price" shall mean the Cash Purchase Price or the Share Purchase Price, or a combination thereof.
"Redemption Rights" shall have the meaning set forth in Section 2.
"REIT" shall mean real estate investment trust as such term is defined under the Code.
"REIT Requirements" shall have the meaning set forth in the Partnership Agreement.
"Resale Registration Statement" shall have the meaning set forth in Section 4.1(a).
"Rights" shall have the meaning set forth in Section 6(b).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any successor statute.
"Series E Preferred Units" shall have the meaning set forth in the recitals.
"Series E Preferred Unit Designation" shall mean Schedule A to the amendment to the Partnership Agreement that is being executed and delivered concurrently herewith.
"Share Purchase Price" shall mean, with respect to the exercise of any Redemption Rights and subject to the provisions of Section 6(c), a number of Shares equal to the product of (a) the number of Subject Common Units being redeemed or purchased multiplied by (b) the Conversion Factor; provided, however, that, in the event the General Partner, after the date of this Agreement, issues to all holders of Shares rights, options, warrants or convertible or exchangeable securities entitling the stockholders to subscribe for or purchase Shares (other than Rights referred to in Section 6(b) that have been issued pursuant thereto) or any other securities or property (other than distributions paid in cash), then the Share Purchase Price also shall
include such rights, options, warrants or convertible or exchangeable securities or other securities or property that a holder of that number of Shares would have been entitled to receive had such holder held such Shares immediately prior to the time holders of Shares became entitled thereto (except to the extent that provision otherwise has been made for such holder to receive such rights, options, warrants or convertible or exchangeable securities or other securities or property or similar rights, options, warrants or convertible or exchangeable securities in respect of Subject Common Units or adjustment otherwise has been made in respect thereof).
"Shares" shall mean shares of the Common Stock.
"Subject Common Units" shall have the meaning set forth in the recitals.
2. Grant of Redemption Rights.
(a) Upon the terms and subject to the conditions contained herein, the Partnership does hereby grant to the Contributing Party, and the Contributing Party does hereby accept, the right, but without obligation on the part of the Contributing Party, to require the Partnership to redeem from time to time part or all of the Subject Common Units of the Contributing Party for the Cash Purchase Price with respect to such Subject Common Units ("Redemption Rights").
(b) Notwithstanding the provisions of Section 2(a), the General Partner may, in its sole and absolute discretion, assume and satisfy the obligation of the Partnership with respect to the Contributing Party's exercise of a Redemption Right by paying to the Contributing Party, at the General Partner's election (which may be exercised in the General Partner's sole discretion), either the Cash Purchase Price or the Share Purchase Price (or a combination thereof) with respect to the Subject Common Units for which the Contributing Party exercised its Redemption Rights; provided, however, that if at the time of the satisfaction of such obligation the General Partner is not an Exchange Act Reporting Company or the Resale Registration Statement is not then current and effective and the General Partner is ineligible to file a registration statement with the SEC on Form S-3 (or any successor form), then notwithstanding anything to the contrary contained herein, if the General Partner elects to satisfy such obligation, then it shall be required to deliver the full Cash Purchase Price to the Contributing Party in accordance with the terms hereof. If the General Partner duly assumes such obligations with respect to the exercise by the Contributing Party of a Redemption Right as to certain Subject Common Units and makes the required payment of the Share Purchase Price, the Cash Purchase Price or any combination thereof, as applicable, then the Partnership shall have no obligation to pay any amount to the Contributing Party with respect to the exercise of a Redemption Right for such Subject Common Units, and any Subject Common Units purchased shall be owned by the General Partner for all purposes; provided, however, that until the General Partner makes such payment of the Share Purchase Price, the Cash Purchase Price or any combination thereof in accordance with the terms hereof, the Partnership shall remain liable to the Contributing Party for the Cash Purchase Price.
(c) If the General Partner shall duly assume and satisfy the obligations of the Partnership with respect to the exercise of a Redemption Right by the Contributing Party, the Partnership, the Contributing Party and the General Partner each shall treat the transaction between the General Partner and the Contributing Party as a sale of the Contributing Party's Subject Common Units (or a portion thereof) to the General Partner for federal income tax purposes.
(d) Upon the redemption or purchase of part or all of the Contributing Party's Subject Common Units and the payment of the Purchase Price with respect thereto, such Person shall be deemed withdrawn as a Partner in the Partnership to the extent of the Subject Common Units redeemed or purchased and shall have no further rights or obligations under this Agreement with respect to such redeemed or purchased Subject Common Units; provided, however, that the Contributing Party's rights under this Agreement with regard to any other Subject Common Units will continue in full force and effect.
(e) No fractional Shares shall be issued hereunder. In lieu of fractional Shares, the General Partner shall pay cash based on the Current Per Share Market Price on the relevant Computation Date.
3. Exercise of Redemption Rights.
3.1 Time for Exercise of Redemption Rights. The Contributing Party may exercise its Redemption Rights in whole or in part and at any time and from time to time on or after the first anniversary of the date hereof; provided, however, that the Redemption Rights may not be exercised at any one time by the Contributing Party with respect to less than 3,000 Subject Common Units (or all the Common Units then owned by the Contributing Party if the Contributing Party owns less than 3,000 Subject Common Units) or in the event that such exercise of Redemption Rights (or the assignment of Subject Common Units or delivery of either the Cash Purchase Price or the Share Purchase Price with respect thereto) violates the Partnership Agreement or applicable law. Once given, a Notice shall be irrevocable subject to the payment of the Purchase Price for the Subject Common Units specified therein in accordance with the terms hereof.
3.2 Method of Exercise. The Redemption Rights shall be exercised by delivery to the Partnership of (a) written notice (the "Notice") in the form of Exhibit A specifying the number of the Subject Common Units to be redeemed and the name or names (with address) in which any Shares issuable upon such exercise shall be registered if different than the Contributing Party and (b) the certificates, if any, representing such Subject Common Units.
3.3 Closing. The closing of the redemption or purchase and sale pursuant to an exercise of the Redemption Rights by the Contributing Party shall occur within 30 days following the giving of the Notice. The Contributing Party shall execute such other documents as the General Partner may reasonably require in connection with the closing of such redemption or purchase and sale.
3.4 Payment of Cash or Issuance of Shares. At the closing of the redemption or purchase and sale of Subject Common Units pursuant to an exercise of Redemption Rights by the Contributing Party, the Partnership shall deliver to the Contributing Party the Cash Purchase Price in immediately available funds or, in the event that the General Partner has duly assumed the obligations of the Partnership with respect to such exercise of Redemption Rights, the General Partner shall, subject to Section 2(b) hereof, deliver to the Contributing Party, at the election of the General Partner (which may be exercised in the General Partner's sole discretion) either (a) the Cash Purchase Price in immediately available funds or (b) certificates representing the Shares and any other securities and/or other property constituting the Share Purchase Price,
together with cash in lieu of the issuance of any fraction of a Share as provided in Section 2(e), or a combination thereof.
4. Matters Relating to Shares.
4.1 Registration.
(a) Within 15 days after the first issuance of any Shares pursuant hereto, the General Partner shall file with the SEC a registration statement on Form S-3 or other appropriate registration form with the SEC covering the resale by Contributing Party of such Shares and all other Shares issuable by the General Partner upon exercise of the Redemption Rights assuming full conversion of the Series E Preferred Units and full satisfaction of the Redemption Rights by delivery of Shares and shall use its reasonable best efforts to cause such registration statement (the "Resale Registration Statement") to become effective as soon as practicable thereafter. Following the effective date of the Resale Registration Statement and until the Shares covered by the Resale Registration Statement have been sold or are eligible for resale under Rule 144(k) promulgated under the Securities Act, the General Partner shall keep the Resale Registration Statement current, effective and available for the resale by Contributing Party of the Shares delivered to it pursuant hereto.
(b) During the time period when the Resale Registration Statement is required to be current, effective and available under this Section 4.1, the General Partner also shall:
(i) promptly prepare and file with the SEC such amendments and supplements to the Resale Registration Statement and the Prospectus relating thereto, as may be necessary to keep the Resale Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale of the Shares covered by the Resale Registration Statement whenever Contributing Party shall desire to sell or otherwise dispose of the same but in no event beyond the period in which the Registration Statement is required to be kept in effect. Upon ten (10) business days' notice, the General Partner shall file any supplement or post-effective amendment to the Resale Registration Statement with respect to the plan of distribution or a Contributing Party's ownership interests in its Shares that is reasonably necessary to permit the sale of such Contributing Party's Shares pursuant to the Resale Registration Statement;
(ii) furnish to Contributing Party, without charge, such number of authorized copies of the Prospectus relating thereto, and any amendments or supplements to such Prospectus, in conformity with the requirements of the Securities Act, and such other documents as Contributing Party may reasonably request in order to facilitate the public sale or other disposition of the Shares owned by Contributing Party;
(iii) register or qualify the securities covered by the Resale Registration Statement under state securities or blue sky laws of such jurisdictions as are reasonably required to effect a sale thereof and do any and all other acts and things which may be necessary or appropriate under such state securities or blue sky laws to enable Contributing Party to consummate the public sale or other disposition in such jurisdictions of such securities;
(iv) before filing any amendments or supplements to the Resale Registration Statement or the Prospectus relating thereto, furnish copies of all such documents proposed to be filed to the Contributing Party, who shall be afforded a reasonable opportunity to review and comment thereon; provided, however, that all such documents shall be subject to the approval of the Contributing Party insofar as they relate to information concerning the Contributing Party (including, without limitation, the proposed method of distribution of Contributing Party's securities);
(v) notify Contributing Party promptly (A) when the Resale Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (B) of any request by the SEC or any state securities authority for amendments and supplements to the Resale Registration Statement and the Prospectus relating thereto or for additional information, and (C) of the happening of any event during the period the Resale Registration Statement is effective which in the judgment of the General Partner makes any statement made in the Resale Registration Statement or such Prospectus untrue in any material respect or which requires the making of any changes in the Resale Registration Statement or such Prospectus in order to make the statements therein not misleading;
(vi) cooperate with Contributing Party to facilitate the timely preparation and delivery of certificates representing Shares being sold, which certificates shall not bear any restrictive legends provided the Shares evidenced thereby have been sold in a manner permitted by the Prospectus relating to the Resale Registration Statement;
(vii) upon the occurrence of any event contemplated by clause (v)(C) above, promptly prepare and file a supplement or post-effective amendment to the Resale Registration Statement or the Prospectus relating thereto or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Shares, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein in light of the circumstances under which they were made, not misleading; provided, however, that the obligation to prepare and file any such supplement or post-effective amendment shall be suspended if the General Partner, relying upon advice of counsel, determines in good faith that disclosure of any information required to be included therein would be adverse to its interests; provided further, however, that such suspension (A) shall not extend beyond sixty (60) days with respect to any such specified event and (B) shall not occur more than twice during any period of twelve (12) consecutive months; and
(viii) promptly notify each Contributing Party of, and confirm in writing, (A) the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of the Resale Registration Statement or the initiation of any proceedings for that purpose, or (ii) if, between the effective date of any the Resale Registration Statement and the sale of the Shares to which it relates, the General Partner receives any notification with respect to the suspension of the qualification of the Shares or initiation of any proceeding for such purpose. The General Partner shall use its reasonable best
efforts to obtain the withdrawal of any order suspending the effectiveness of the Resale Registration Statement at the earliest practicable time.
(c) The General Partner hereby agrees to indemnify and hold harmless Contributing Party and each person, if any, who controls Contributing Party (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all losses, claims, damages, costs and expenses (including reasonable attorneys' fees) ("Claims") to which Contributing Party or such controlling person may become subject, under the Securities Act or otherwise, caused by any untrue statement or alleged untrue statement of a material fact contained in the Resale Registration Statement or the Prospectus relating thereto or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such Contributing Party and each such controlling person for any legal or other expenses reasonably incurred by such Contributing Party in connection with investigating or defending any such loss as such expenses are incurred; provided, however, that the General Partner shall not be liable insofar as any such Claims are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the General Partner by any Contributing Party expressly for use therein. Each Contributing Party agrees to indemnify and hold harmless the General Partner and each person, if any, who controls the General Partner (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all Claims to which the General Partner or such controlling person may become subject, under the Securities Act or otherwise, caused by any such untrue statement or omission or such alleged untrue statement or omission based upon such information furnished in writing to the General Partner by such Contributing Party.
(d) Each Contributing Party agrees that, upon receipt of any notice from the General Partner of the happening of any event of the kind described in clause (b)(v)(C) above and without waiving any rights under clause (b)(vii) above, such Contributing Party will forthwith discontinue disposition of securities pursuant to the Resale Registration Statement until Contributing Party's receipt of the copies of the supplemented or amended Prospectus contemplated by clause (b)(vii) above.
(e) The General Partner shall bear all expenses relating to filing the Resale Registration Statement and keeping the Resale Registration Statement current, effective and available; provided, however, that the General Partner shall not be responsible for any brokerage fees or underwriting commissions due and payable in connection with the sale of Shares or any legal fees of Contributing Party.
(f) The General Partner shall use reasonable best efforts to cause all Shares to be listed or otherwise eligible for full trading privileges on the principal national securities exchange (currently the New York Stock Exchange) on which shares of Common Stock are then listed on or before the date on which the Resale Registration Statement covering the Shares becomes effective or the Shares are issued by the General Partner to a Contributing Party, whichever is later. The General Partner will use reasonable best efforts to continue the listing or trading privilege for all Shares on the exchange on which shares of Common Stock are then listed. The
General Partner will promptly notify the Contributing Party of, and confirm in writing, the delisting of the Shares.
(g) Notwithstanding anything to the contrary contained herein, the General Partner shall have no obligation to keep the Resale Registration Statement effective if the status of the General Partner (or its successor) as an Exchange Act Reporting Company is terminated.
4.2 Reservation of Shares; Etc. At all times while the Redemption Rights are outstanding, the General Partner shall reserve for issuance such number of Shares as may be necessary to enable the General Partner to issue Shares in full satisfaction of all Redemption Rights which are from time to time outstanding (assuming that there are no limitations as to the ownership of such Shares under the Certificate of Incorporation which relate to compliance with the REIT Requirements, that all Series E Preferred Units have been converted into Subject Common Units and that the General Partner elected to pay the Share Purchase Price with respect to all such Redemption Rights). Without the written consent of the holders of at least a majority of the issued and outstanding Subject Common Units (assuming that all of the issued and outstanding Series E Preferred Units were converted into Subject Common Units in accordance with the Partnership Agreement immediately prior to the execution of such consent), the Partnership Agreement may not be amended to materially adversely affect the right of the holders of the Subject Common Units to transfer the Subject Common Units if such amendment does not apply to the other holders of Common Units (including Common Units that may be issued upon conversion of Preferred Units other than the Series E Preferred Units) in the same manner on a Common Unit-for-Common Unit basis. Upon the request of Contributing Party, the Partnership agrees to provide Contributing Party with such information as is reasonably available to the Partnership regarding the sum of the percentage interests in the Partnership's capital or profits that is represented by interests in the Partnership that have been sold or otherwise disposed of during the taxable year in which the request is made by Contributing Party, for purposes of the "lack of actual trading" safe harbor from the definition of "publicly traded partnership".
4.3 Fully Paid and Non-Assessable. All Shares which may be issued upon exercise of the Redemption Rights shall be duly and validly issued and fully paid and non-assessable.
5. Transfer and Similar Taxes. The General Partner shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property pursuant hereto; provided, however, that the General Partner shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the Subject Common Units to be exchanged, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the General Partner the amount of any such tax or established, to the reasonable satisfaction of the General Partner, that such tax has been paid.
6. Anti-Dilution and Adjustment Provisions.
(a) The Conversion Factor shall be adjusted in the event that the General Partner (i) declares or pays a dividend or distribution on its outstanding Shares in Shares or makes a distribution to all holders of its outstanding Shares in Shares, (ii) subdivides its outstanding Shares, or (iii) combines its outstanding Shares into a smaller number of Shares. In such event, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the number of Shares issued and outstanding on the record date (or, if none, the effective date) for such dividend, distribution, subdivision or combination (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time) and the denominator of which shall be the actual number of Shares (determined without the above assumption) issued and outstanding on the record date (or, if none, the effective date) for such dividend, distribution, subdivision or combination. In addition, the Conversion Factor shall be adjusted in the event that the Partnership (i) declares or pays a dividend or distribution on its outstanding Common Units in Common Units, (ii) subdivides its outstanding Common Units, or (iii) combines its outstanding Common Units into a smaller number of Common Units. In such event, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the actual number of Common Units issued and outstanding on the record date (or, if none, the effective date) for such dividend, distribution, subdivision or combination (determined without the below assumption) and the denominator of which shall be the number of Common Units issued and outstanding on such record date (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time) or effective date.
(b) If at any time the holders of Common Stock are entitled to any right (a "Right") to subscribe pro rata for additional securities of the General Partner, whether Common Stock or other classifications, or for any other securities or interests that the Contributing Party would have been entitled to subscribe for if, immediately prior to such grant, the Contributing Party had exercised its Redemption Rights and received the Share Purchase Price in payment thereof, in lieu of any adjustment under any other subsection of this Section 6 or other provision of this Agreement and except to the extent that provision otherwise has been made for the Contributing Party to receive such Right or a similar right in respect of the Subject Common Units or adjustment otherwise has been made in respect thereof, the Contributing Party also shall receive from the General Partner, prior to or concurrent with the time such Right becomes exercisable, the same Right that the Contributing Party would have been entitled to if the Contributing Party had exercised its Redemption Rights in full and received the Share Purchase Price in satisfaction thereof immediately prior to the time holders of Common Stock became entitled to such Right.
(c) Upon the occurrence of a Major Transaction Event, the General Partner shall cause effective provision to be made so that, upon full conversion of the Series E Preferred Units of the Contributing Party into Subject Common Units, exercise of the Redemption Rights by the Contributing Party in respect thereof and the election of the General Partner to pay the Purchase Price at any time following such Major Transaction Event by means of the Share Purchase Price, the Contributing Party shall have the right to acquire, in lieu of the Shares which otherwise would have been issued to the Contributing Party, the kind and amount of shares of stock and other securities and property (and the provisions contained in Section 4.1 shall apply anew to the extent that such securities are of a class of securities of the General Partner or its successor that
are registered under the Exchange Act) and interests as would be issued or payable with respect to or in exchange for the number of Shares constituting the Share Purchase Price as if all Series E Preferred Units of the Contributing Party had been converted into Subject Common Units, such Redemption Rights had been exercised and the General Partner had satisfied the Redemption Rights by delivery of the Share Purchase Price immediately before such Major Transaction Event.
(d) The Partnership shall give written notice to the Contributing Party of any Major Transaction Event promptly after such Major Transaction Event is announced to the public.
(e) Notwithstanding anything to the contrary contained herein, the adjustment provisions contained in this Agreement shall be applied so that there is no duplication of adjustments made pursuant to any other document or other section hereof. The provisions of this Section 6 shall apply to successive events that may occur from time to time but only shall apply to a particular event if it occurs prior to the exercise in full of the Redemption Rights or the liquidation of the Partnership. Nothing contained herein shall prevent or otherwise limit the liquidation of the Partnership or other transaction described in clause (Z) of Section 4(b) of the Series E Preferred Unit Designation.
(f) Whenever the Conversion Factor is adjusted as herein provided, the General Partner shall compute the adjusted Conversion Factor in accordance with this Section 6 and shall prepare a certificate signed by the chief financial officer of the General Partner setting forth the adjusted Conversion Factor and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed at the offices of the General Partner and a copy thereof shall be promptly sent to the Contributing Party. Any adjustment to the Conversion Factor pursuant to Section 6(a) with respect to any event shall become effective at such time as is necessary to prevent dilution or expansion of the Redemption Rights on account of such event.
(g) Notwithstanding anything to the contrary contained herein (but subject to the first sentence of Section 6(e) hereof), the General Partner and the Partnership agree that they will apply the provisions of this Section 6, the definition of Share Purchase Price and any related provisions as if the Subject Common Units were issued and outstanding as of the date hereof. Thus, for example, if an event were to occur on December 31, 2004 that would adjust the number of Shares into which the Subject Common Units would be exchangeable had such Subject Common Units been outstanding as of such date, but the Subject Common Units were not actually issued until December 31, 2005, then such adjustment would be applied so that, upon such issuance (but subject to further adjustment for subsequent events), the Subject Common Units would be exchangeable in accordance with the other terms hereof for the number of Shares for which the Subject Common Units would have been exchangeable had such Subject Common Units been outstanding on December 31, 2004.
7. Miscellaneous Provisions.
7.1 Notices. All notices or other communications given pursuant to this Agreement, including without limitation any Notice, shall be sent to the party to whom or to which such notice is being sent, by certified or registered mail, return receipt requested, commercial overnight delivery service, or delivered by hand with receipt acknowledged in writing and
otherwise as set forth in this Section 7.1. All notices and other communications
(a) shall be deemed given when received or, if sent by facsimile, upon receipt
of confirmed answerback and (b) may be given either by a party or by such
party's attorneys. For purposes of this Section 7.1, the addresses of the
parties shall be, in the case of the Partnership and the General Partner, 110 N.
Wacker Drive, Chicago, Illinois 60606, facsimile number (312) 960-5463,
Attention: Bernard Freibaum (with a copy to Neal, Gerber & Eisenberg, Two North
LaSalle Street, Suite 2200, Chicago, Illinois 60602, Attn: Marshall E.
Eisenberg, facsimile number (312) 269-1747), and, in the case of the
Contributing Party, as set forth on the records of the Partnership. The address
of any party may be changed by a notice in writing given in accordance with the
provisions hereof.
7.2 Assignment. The rights of the Contributing Party hereunder (including the Redemption Rights) shall automatically devolve upon any Person to the extent that such Person holds Subject Common Units or Series E Preferred Units, and becomes a substituted partner with respect to such Subject Common Units or Series E Preferred Units, in accordance with the Partnership Agreement and delivers to the Partnership a written instrument, in form reasonably satisfactory to the Partnership, pursuant to which such Person agrees to be bound by the terms hereof (but the rights of the Contributing Party hereunder are not otherwise assignable). All references herein to Contributing Party shall be deemed to be references to each assignee pursuant to this paragraph. Subject to the provisions of Section 6, the General Partner may assign this Agreement in connection with any Major Transaction Event without the consent of the Contributing Party, provided that no such assignment shall relieve the General Partner of its obligations under this Agreement.
7.3 Binding Effect. Except as otherwise set forth herein, this Agreement shall be binding upon, and inure to the benefit of, the parties and their successors and permitted assigns.
7.4 Amendments. The provisions of this Agreement may be amended only with the written consent of the Partnership, the General Partner and the holders of at least a majority of the issued and outstanding Subject Common Units (assuming that all of the then issued and outstanding Series E Preferred Units were converted into Subject Common Units in accordance with the Partnership Agreement immediately prior to the execution of such amendment and constitute issued and outstanding Subject Common Units at such time).
7.5 Governing Law. This Agreement shall be governed by the laws of the State of Delaware (without regard to its conflicts of law principles).
7.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one document.
7.7 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes any prior written or oral understandings and/or agreements among them with respect thereto.
7.8 Pronouns; Headings; Etc. As used herein, all pronouns shall include the masculine, feminine and neuter, and all terms shall include the singular and plural thereof wherever the context and facts require such construction. The headings herein are inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof.
Any references in this Agreement to a "Section" or "Exhibit" shall refer to a
Section or Exhibit of this Agreement unless otherwise specified.
7.9 Survival. The representations, warranties and covenants contained herein or made pursuant hereto shall survive the execution and delivery of this Agreement and the closing of any redemption or purchase and sale pursuant to an exercise of Redemption Rights hereunder.
7.10 Further Assurances. Each of the parties shall hereafter execute and deliver such other instruments and documents and do such further acts and things as may be required or useful to carry out the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.
CONTRIBUTING PARTY:
KOURY CORPORATION, a North Carolina ATTEST: corporation By: /s/ Stephen D. Showfety By: --------------------------------- ------------------------------------ Name: Stephen D. Showfety Name: Title: President Title: PARTNERSHIP: GGP LIMITED PARTNERSHIP, a Delaware limited partnership By: General Growth Properties, Inc., a Delaware corporation, its general partner By: /s/ Ronald L. Gern --------------------------------- Ronald L. Gern, Senior Vice President |
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.
a Delaware corporation
By: /s/ Ronald L. Gern --------------------------------- Ronald L. Gern, Senior Vice President |
EXHIBIT A
Notice of Redemption
The undersigned hereby irrevocably (i) exercises its Redemption Rights as
to ___________ Common Units (the "Transferred Units") in GGP Limited Partnership
(the "Partnership") in accordance with the terms of that certain Redemption
Rights Agreement, dated ____________ (the "Agreement"), among the Partnership,
General Growth Properties, Inc. (the "General Partner"), and Koury Corporation,
(ii) transfers and surrenders such Transferred Units and all right, title and
interest of the undersigned therein to the party, which shall be either the
Partnership or the General Partner, that shall purchase or redeem such
Transferred Units pursuant to the Agreement, and (iii) directs that the Cash
Purchase Price or Share Purchase Price, if applicable, payable upon exercise of
the Redemption Right be delivered to the address specified below and, if the
Share Purchase Price is to be delivered, the Shares shall be registered or
placed in the name(s) and at the address(es) specified below. Attached hereto
are the certificates, if any, representing the Transferred Units.
The undersigned hereby represents, warrants and certifies that, as of the
date hereof and as of the closing of the purchase or redemption of the
Transferred Units pursuant to the exercise of Redemption Rights effected hereby,
(i) that the undersigned has good and marketable title to the Transferred Units,
free and clear of all Liens, (ii) that the undersigned has the full right, power
and authority to transfer and surrender the Transferred Units as provided herein
and such transfer and surrender has been authorized by all necessary action,
(iii) that the undersigned is an accredited investor as defined in Regulation D
under the Securities Act and any Shares that are acquired by it on account of
this Notice of Redemption would be acquired for its own account, for investment
purposes only and not with a view to, and with no present intention of, selling
or distributing the same in violation of federal or state securities laws (but
nothing contained in this clause (iii) impairs the right of Contributing Party
to sell Shares pursuant to the Resale Registration Statement) and (iv) that the
undersigned has obtained the consent or approval of all persons or entities, if
any, having the right to consent to or approve such transfer and surrender.
Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement.
[NAME OF PERSON]
Signature Guaranteed By:
If Shares are to be issued, issue to:
Please insert social security or identifying number:
Exhibit 4.16
REGISTRATION RIGHTS AGREEMENT
between
GENERAL GROWTH PROPERTIES, INC.,
MARTIN BUCKSBAUM,
MATTHEW BUCKSBAUM,
GENERAL GROWTH VENTURE L.P.,
and
APPLETON TRUST, FALLBROOK TRUST,
MARTIN INVESTMENT TRUST A, MARTIN INVESTMENT TRUST B,
MARTIN INVESTMENT TRUST C, MARTIN INVESTMENT TRUST D,
MARTIN INVESTMENT TRUST E, MARTIN INVESTMENT TRUST F,
MATTHEW INVESTMENT TRUST A, MATTHEW INVESTMENT TRUST B,
MATTHEW INVESTMENT TRUST C, MATTHEW INVESTMENT TRUST D,
MATTHEW INVESTMENT TRUST E, MATTHEW INVESTMENT TRUST F,
MBA TRUST, MBB TRUST, MBC TRUST, FALLBROOK INVESTORS, M.B.
CAPITAL PARTNERS and MB CAPITAL PARTNERS II
Dated: As of April 15, 1993
TABLE OF CONTENTS
Page ---- ARTICLE I CERTAIN DEFINITIONS 1.1 Business Day ........................................................ 1 1.2 Eligible Securities ................................................. 1 1.3 Person .............................................................. 2 1.4 Permitted Transferees ............................................... 2 1.5 Registration Expenses ............................................... 2 1.6 SEC ................................................................. 3 1.7 Securities Act ...................................................... 3 ARTICLE II EFFECTIVENESS OF REGISTRATION RIGHTS 2.1 Effectiveness of Registration Rights ................................ 3 ARTICLE III REGISTRATION REQUEST 3.1 Notices ............................................................. 4 3.2 Registration Expenses ............................................... 5 3.3 Third Person Shares ................................................. 5 ARTICLE IV INCIDENTAL REGISTRATION 4.1 Notice and Registration ............................................. 7 4.2 Registration Expenses ............................................... 9 ARTICLE V REGISTRATION PROCEDURES 5.1 Registration and Qualification ...................................... 9 5.2 Underwriting ........................................................ 11 |
page ---- 5.3 Blackout Periods .................................................... 12 5.4 Qualification for Rule 144 Sales .................................... 13 ARTICLE VI PREPARATION: REASONABLE INVESTIGATION 6.1 Preparation; Reasonable Investigation ............................... 13 ARTICLE VII INDEMNIFICATION AND CONTRIBUTION 7.1 Indemnification and Contribution .................................... 14 ARTICLE VIII BENEFITS OF REGISTRATION RIGHTS 8.1 Benefits of Registration Rights ..................................... 15 ARTICLE IX MISCELLANEOUS 9.1 Captions ............................................................ 16 9.2 Severability ........................................................ 16 9.3 Governing Law ....................................................... 16 9.4 Modification and Amendment .......................................... 16 9.5 Counterparts ........................................................ 16 9.6 Entire Agreement .................................................... 16 9.7 Notices ............................................................. 16 SIGNATURES .............................................................. 18 |
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made as of the 15th day of April 1993 (this "Agreement"), among GENERAL GROWTH PROPERTIES, INC., a Delaware corporation (the "Company"). MARTIN BUCKSBAUM, MATTHEW BUCKSBAUM, GENERAL GROWTH VENTURE L.P., APPELTON TRUST, FALLBROOK TRUST, MARTIN INVESTMENT TRUST A, MARTIN INVESTMENT TRUST B, MARTIN INVESTMENT TRUST C, MARTIN INVESTMENT TRUST D, MARTIN INVESTMENT TRUST E, MARTIN INVESTMENT TRUST F, MATTHEW INVESTMENT TRUST A, MATTHEW INVESTMENT TRUST B, MATTHEW INVESTMENT TRUST C, MATTHEW INVESTMENT TRUST D, MATTHEW INVESTMENT TRUST E, MATTHEW INVESTMENT TRUST F, MBA TRUST, MBB TRUST, MBC TRUST, FALLBROOK INVESTORS, M.B. CAPITAL PARTNERS and MB CAPITAL PARTNERS, II (each an "Investor" and collectively the "Investors").
WITNESSETH:
WHEREAS, the Investors will hold an aggregate of 1,315,671 shares (the "Investor Shares") of common stock, par value $.10 per share, of the Company (the "Common Stock") and a 44.4% limited partnership interest (the "LP Interests") in GGP Limited Partnership, a Delaware limited partnership, which may be converted into shares of Common stock; and
WHEREAS, the Company has agreed to provide Investors with certain registration rights as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to and on the terms and conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS.
1.1. "Business Day" means any day on which the New York Stock Exchange is open for trading.
1.2. "Eligible Securities" means all or any portion of the Investors Shares and any shares of Common Stock acquired by the Investors upon conversion of the LP Interests.
As to any proposed offer or sale of Eligible Securities, such securities shall cease to be Eligible Securities with respect to such proposed offer or sale when (i) a registration statement with respect to the sale of
such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement or (ii) such securities are permitted to be distributed pursuant to Rule 144(k) (or any successor provision to such Rule) under the Securities Act to be confirmed in a written opinion of counsel to the Company addressed to the Investors, or (iii) such securities shall have been otherwise transferred pursuant to an applicable exemption under the Securities Act, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and such securities shall be freely transferable to the public without registration under the Securities Act.
1.3. "person" means an individual, a partnership (general or limited), corporation, joint venture, business trust, cooperative, association or other form of business organization, whether or not regarded as a legal entity under applicable law, a trust (inter vivos or testamentary), an estate of a deceased, insane or incompetent person, a quasi-governmental entity, a government or any agency, authority, political subdivision or other instrumentality thereof, or any other entity.
1.4. "Permitted Transferees" with respect to each Investor shall mean any Affiliates of such Investor, as defined in the Agreement of Limited Partnership of GGP Limited Partnership, dated April ____, 1993.
1.5. "Registration Expenses" means all expenses incident to the Company's performance of or compliance with the registration requirements set forth in this Agreement including, without limitation, the following: (i) the fees, disbursements and expenses of the Company's counsel(s) (United States and foreign), accountants and experts in connection with the registration of Eligible Securities to be disposed of under the Securities Act; (ii) all expenses in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus, any other offering document and amendments and supplements thereto and the mailing and delivering of copies thereof to the underwriters and dealers; (iii) the cost of printing or producing any agreement(s) among underwriters, underwriting agreement(s) and blue sky or legal investment memoranda, any selling agreements and any other documents in connection with the offering, sale or delivery of Eligible Securities to be disposed of; (iv) all expenses in connection with the qualification of Eligible
Securities to be disposed of for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters in connection with such qualification and in connection with any blue sky and legal investment surveys; (v) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of Eligible Securities to be disposed of; and (vi) fees and expenses incurred in connection with the listing of Eligible Securities on each securities exchange on which securities of the same class are then listed; provided, however, that Registration Expenses with respect to any registration pursuant to this Agreement shall not include underwriting discounts or commissions attributable to Eligible Securities, SEC or blue sky registration fees attributable to Eligible Securities or transfer taxes applicable to Eligible Securities.
1.6. "SEC" means the Securities and Exchange Commission.
1.7. "Securities Act" shall mean the 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 relevant time.
ARTICLE II
EFFECTIVENESS OF REGISTRATION RIGHTS
2.1 Effectiveness of Registration Rights. This Agreement shall become effective immediately, provided, however, that the exercise of any registration rights granted pursuant to Articles 3 and 4 hereof prior to the third anniversary of the date of the prospectus to be used by the Company in its initial public offering of shares of Common Stock (the "IPO") shall be subject to the Investors first having received written consent from the Company and Goldman, Sachs & Co. to the waiver of the restrictions on transfer of the Common Stock held by the Investors under the terms of the letter agreement restricting such transfers, to be entered by the Investors and the underwriters in connection with the IPO.
ARTICLE III
REGISTRATION REQUEST
3.1 NOTICE. Upon written notice front an Investor requesting that the Company effect the registration under the Securities Act of all or part of the Eligible Securities held by such Investor, which notice shall specify the intended method or methods of disposition of such Eligible Securities, the Company will use all reasonable efforts to effect (at the earliest possible date) the registration, under the Securities Act, of such Eligible Securities for disposition in accordance with the intended method or methods of disposition stated in such request, provided that:
(a) if the Company shall have previously effected a registration with respect to Eligible Securities pursuant to Article 4 hereof, the Company shall not be required to effect a registration pursuant to this Article 3 until a period of one hundred twenty (120) days shall have elapsed from the effective date of the most recent such previous registration;
(b) if, upon receipt of a registration request pursuant to this Article 3, the Company is advised in writing (with a copy to the Selling Shareholders (as defined below)) by a nationally recognized independent investment banking firm selected by the Company to act as lead underwriter in connection with a public offering of securities by the Company that, in such firm's opinion, a registration at the time and on the terms requested would materially adversely affect such public offering of securities by the Company (other than an offering in connection with employee benefit and similar plans) (a "Company Offering") that had been contemplated by the Company prior to the notice by the Investors who initially requested registration, the Company shall not be required to effect a registration pursuant to this Article 3 until the earliest of (i) three months after the completion of such Company Offering, (ii) the termination of any "black out" period, if any, required by the underwriters to be applicable to the Selling Investors (as defined below) in connection with such Company Offering and agreed to in writing by the Selling Investors, (iii) promptly after abandonment of such Company Offering or (iv) four months after the date of written notice from the Investor who initially requested registration;
(c) if, while a registration request is pending pursuant to Article 3, the Company determines in the good faith judgment of the Board of Directors of the Company, with the advice of counsel, that the filing of a registration statement would require the disclosure of non-public material information the disclosure of which would have a material adverse effect on the Company or would otherwise adversely affect a material financing, acquisition, disposition, merger or other comparable transaction, the Company shall deliver a certificate to such effect signed by its President or any Vice President to the Selling Shareholders and the Company shall not be required to effect a registration pursuant to this Article 3 until the earlier of (i) the date upon which such material information is disclosed to the public or ceases to be material or (ii) 60 days after the Company makes such good faith determination; and
(d) the Company shall not be required to effect more than one registration pursuant to this Article 3 in any calendar year. No registration of Eligible Securities under this Article 3 shall relieve the Company of its obligation (if any) to effect registrations of Eligible Securities pursuant to Article 4.
3.2. Registration Expenses. With respect to the registrations requested pursuant to this Article 3 and any registration arising from an exercise of a Blackout Termination Right (as defined below), the Company shall pay all Registration Expenses.
3.3. Third Person Shares. (a) Upon receipt of the written notice from an Investor requesting registration under Section 3.1, the Company shall give written notice to each other Investor, the other parties (the "Primary Third Parties") entitled to substantially similar registration rights under a Registration Rights Agreement entered into by the Company on the date hereof and the parties (the "Incidental Parties") entitled only to incidental registration rights pursuant to an Incidental Registration Rights Agreement entered into by the Company on the date hereof. The Company shall have the right to cause the registration of securities for sale for the account of any Person in any registration of Eligible Securities requested pursuant to this Article 3 who has delivered written notice to the Company within fifteen (15) business days (which notice shall specify the number of shares to be disposed of
and the intended method of disposition), provided that the Company shall not have the right to cause the registration of all of such securities if the Investor who requested such registration is advised in writing (with a copy to the Company) by a nationally recognized independent investment banking firm selected by such Investor that, in such firm's opinion, registration of all of such securities would adversely affect the offering and sale of Eligible Securities then contemplated by such Investor. The Investor or Investors and any other Persons who elect to participate in an offering pursuant to registration rights are referred to herein as the "Selling Shareholders". The Investor or Investors who initially requested registration pursuant to Section 3.1 and each other Investor who elects to participate in such offering are herein referred to as the "Selling Investors".
(b) If the Company cannot, pursuant to the terms of this Section 3.3, register all of the shares requested to be registered, the Company shall register the Maximum Amount (as defined below), and such amount shall be allocated among the Persons requesting registrations follows:
(i) if the Selling Investors and the Principal Third Parties each exercise registration rights on the same day, the Maximum Amount shall be allocated between such Persons pro rata according to the number of shares for which registration was initially requested by each such Person; and
(ii) in all other cases in which both Selling Investors and the Principal Third Parties seek to register shares, the Maximum Amount shall be allocated pro rata according to the total number of shares of Common Stock owned by the Investors taken as a whole on the one hand and the Principal Third Party on the other hand on the day the Company first received the demand request with respect to such registration.
For purposes of this Section, "Maximum Amount" shall mean the largest number of shares (if any) which, after deducting any shares for which registration is requested by any Incidental Parties, in the opinion of the nationally recognized underwriter selected by the Investors for purposes of Section 3.3(a), could be offered to the public without adversely affecting the offering and sale of Eligible Securities as then contemplated by the Selling Investors. Notwithstanding anything to the contrary contained herein, if any Incidental Party seeks to register
shares in a registration that was initiated by the Selling Investors under this Article 3, such Incidental Party shall not suffer any reduction in the number of shares it seeks to register pursuant to the foregoing provisions of this Section 3.3(b).
(c) In the event that both Selling Investors taken as a whole on the one hand and the Principal Third Parties on the other hand exercise registration rights on the same day, the party (as between such two parties) who initially requested registration of the larger number of shares shall be entitled to select the lead underwriter for such registered offering. In all other cases, the first Person to exercise registration rights with respect to any registration demand shall be entitled to select the lead underwriter for such registered offering.
ARTICLE IV
INCIDENTAL REGISTRATION.
4.1. Notice and Registration. If the Company proposes to register any shares of Common Stock or other securities issued by it having terms substantially similar to Eligible Securities ("Other Securities") for public sale under the Securities Act (whether proposed to be offered for sale by the Company or by any other Person) on a form and in a manner which would permit registration of Eligible Securities for sale to the public under the Securities Act, it will give prompt written notice to Investors of its intention to do so, and upon the written request of Investors delivered to the Company within fifteen (15) Business Days after the giving of any such notice (which request shall specify the number of Eligible Securities intended to be disposed of by Investors and the intended method of disposition thereof) the Company will use all reasonable efforts to effect, in connection with the registration of the Other Securities, the registration under the Securities Act of all Eligible Securities which the Company has been so requested to register by the Selling Investors, to the extent required to permit the disposition (in accordance with the intended method or methods thereof as aforesaid) of Eligible Securities so to be registered, provided that:
(a) if, at any time after giving such written notice of its intention to register any Other Securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company shall determine for any reason not to register the Other Securities, the Company may, at its election, give written notice of such determination to Investors and thereupon the Company shall be relieved of its obligation to register such Eligible Securities in connection with the registration of such Other Securities (but not from its obligation to pay Registration Expenses to the extent incurred in connection therewith as provided in Section 4.2), without prejudice, however, to the rights (if any) of Investors immediately to request that such registration be effected as a registration under Article 3;
(b) The Company will not be required to effect any registration pursuant to this Article 4 if the Company shall have been advised in writing (with a copy to the Selling Investors) by a nationally recognized independent investment banking firm selected by the Company to act as lead underwriter in connection with the public offering of securities by the Company that, in such firm's opinion, a registration at that time would materially and adversely affect the Company's own scheduled offering, provided, however, that if an offering of some but not all of the shares requested to be registered by Investor would not adversely affect the Company's offering, the aggregate number of shares requested to be included in such offering by the Selling Shareholders (other than the Incidental Persons, whose requests shall not be reduced under this proviso) shall be reduced pro rata according to the total number of shares of Common Stock owned by the Investor on the one hand and the Principal Third Parties taken as a whole on the other hand on the day the Company first delivered its notice to the Investors of its proposed offering;
(c) The Company shall not be required to effect any registration of Eligible Securities under this Article 4 incidental to the registration of any of its securities in connection with mergers, acquisitions, exchange offers, subscription offers, dividend reinvestment plans or stock options or other employee benefit plans.
No registration of Eligible Securities effected under this Article 4 shall relieve the Company of its obligation (if
any) to effect registrations of Eligible Securities pursuant to Article 3.
4.2. Registration Expenses. The Company (as between the Company and the Selling Investors) shall be responsible for the payment of all Registration Expenses in connection with any registration pursuant to this Article 4.
ARTICLE V
REGISTRATION PROCEDURES.
5.1. Registration and Qualification. If and whenever the Company is required to use all reasonable efforts to effect the registration of any Eligible Securities under the Securities Act as provided in Articles 3 or 4, the Company will as promptly as is practicable:
(a) prepare, file and use all reasonable efforts to cause to become effective a registration statement under the Securities Act regarding the Eligible Securities to be offered;
(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Eligible Securities until the earlier of such time as all of such Eligible Securities have been disposed of in accordance with the intended methods of disposition by the Selling Investors set forth in such registration statement or the expiration of twelve months after such Registration Statement becomes effective;
(c) furnish to the Selling Investors and to any underwriter of such Eligible Securities such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, such documents incorporated by reference in such registration statement or prospectus, and such other documents as the Selling Investors or such underwriter may reasonably request;
(d) use all reasonable efforts to register or qualify all Eligible Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as the Selling Investors or any underwriter of such Eligible Securities shall reasonably request, and do any and all other acts and things which may be reasonably requested by the Selling Investors or any underwriter to consummate the disposition in such jurisdictions of the Eligible Securities covered by such registration statement, except the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, or to subject itself to taxation in any jurisdiction where it is not then subject to taxation, or to consent to general service of process in any jurisdiction where it is not then subject to service of process;
(e) use all reasonable efforts to list the Eligible Securities on each national securities exchange on which the Common Stock is then listed, if the listing of such securities is then permitted under the rules of such exchange;
(f) (i) furnish to the Selling Investors, an opinion of counsel for the Company, addressed to them, dated the date of the closing under the underwriting agreement, and (ii) use all reasonable efforts to furnish to the Selling Investors, addressed to them, a "comfort letter" signed by the independent public accountants who have certified the Company's financial statements included in such registration statement, addressed to them, each such document covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities and such other matters as the Selling Investors may reasonably request; and
(g) immediately notify the Selling Investors at any time when a prospectus relating to a registration pursuant to Article 3 or 4 hereof is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and at the request of the Selling investors prepare and furnish to the Selling Investors as many copies of a supplement to or an amendment of such prospectus as the Selling Investors reasonably request so that, as thereafter delivered to the purchasers of such Eligible Securities, such prospectus shall not include an 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.
The Company may require the Selling Investors to furnish the Company such information regarding the Selling Investors and the distribution of such securities as the Company may from time to time reasonably request in writing and as shall be required by law or by the SEC in connection with any registration.
5.2. Underwriting. (a) If requested by the underwriters for any underwritten offering of Eligible Securities pursuant to a registration requested hereunder, the Company will enter into and perform its obligations under an underwriting agreement with such underwriters for such offering, such agreement to contain such representations and warranties by the Company and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution to the effect and to the extent provided in Article 7 hereof and the provision of opinions of counsel and accountants' letters to the effect and to the extent provided in Section 5.l(f). The holders of Eligible Securities on whose behalf Eligible Securities are to be distributed by such underwriters shall be parties to any such underwriting agreement and the representations and warranties by, and the other agreements on the part of, the company to and for the benefit of such underwriters shall also be made to and for the benefit of such holders of Eligible Securities. Notwithstanding the foregoing, any Selling Investor may elect, in writing prior to the effective date of the registration statement filed in connection with such registration, not to register such Eligible Securities in connection with such registration.
(b) In the event that any registration pursuant to Article 4 hereof shall involve, in whole or in part, an underwritten offering, the Company may require Eligible Securities requested to be registered pursuant to Article 4 to be included in such underwriting on the same terms and conditions as shall be applicable to the Other Securities being sold through underwriters under such registration. In such case, the holders of Eligible Securities on whose behalf Eligible Securities are to be distributed by such underwriters shall be parties to any such underwriting agreement. Such agreement shall contain such representations and warranties by the Selling Investors and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution to the effect and to the extent provided in Article 7. The representations and warranties in such underwriting agreement by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such holders of Eligible Securities.
5.3 Blackout Periods. (a) At any time when a registration statement effected pursuant to Article 3 relating to Eligible Securities is effective, upon written notice from the Company to Investors that the Company determines in the good faith judgment of the Board of Directors of the Company, with the advice of counsel, that Selling Investors' sale of Eligible Securities pursuant to the registration statement would require disclosure of non-public material information the disclosure of which would have a material adverse effect on the Company (an "Information Blackout"), the Selling Investors shall suspend sales of Eligible Securities pursuant to such registration statement until the earlier of:
(X) (A) the date upon which such material information is disclosed to the public or ceases to be material or (B) 60 days after the Company makes such good faith determination, and
(Y) such time as the Company notifies the Selling Investors that sales pursuant to such registration statement may be resumed (the number of days from such suspension of sales by the Selling Investors until the day when such sales may be resumed hereunder is hereinafter called a "Sales Blackout Period").
(b) Any delivery by the Company of notice of an Information Blackout during the 90 days immediately following effectiveness of any registration statement effected pursuant to Article 3 hereof shall give the Investors the right, by written notice to the Company within 20 Business Days after the end of such blackout period, to cancel such registration and obtain one additional registration right during such calendar year (a "Blackout Termination Right") under Section 3.1(d).
(c) If there is an Information Blackout and the Investors do not exercise their cancellation right, if any, pursuant to (b) above, or, if such cancellation right is not available, the time period set forth in Section 5.l(b) shall be extended for a number of days equal to the number of days in the Sales Blackout Period.
5.4. QUALIFICATION FOR RULE 144 SALES. The Company will take all actions reasonably necessary to comply with the filing requirements described in Rule 144(c)(l) so as to enable the Investors to sell Eligible Securities without registration under the Securities Act and, upon the written request of any Investor, the Company will deliver to such Investor a written statement as to whether it has complied with such filing requirements.
ARTICLE VI
PREPARATION: REASONABLE INVESTIGATION.
6.1. PREPARATION: REASONABLE INVESTIGATION. In connection with the preparation and filing of each registration statement registering Eligible Securities under the Securities Act, the Company will give the Selling Investors and the underwriters, if any, and their respective counsel and accountants, drafts of such registration statement for their review and comment prior to filing and such reasonable and customary access to its books and records and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of the Selling Investors and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.
ARTICLE VII
INDEMNIFICATION AND CONTRIBUTION.
7.1. INDEMNIFICATION AND CONTRIBUTION. (a) In the event of any registration of any Eligible Securities hereunder, the Company will enter into customary indemnification arrangements to indemnify and hold harmless each Investor who exercises his registration rights hereunder and, to the extent applicable, its directors and officers, its partners, its trustees and each Person who controls any of such Persons, each Person who participates as an underwriter in the offering or sale of such securities, and each Person, if any, who controls such underwriter within the meaning of the Securities Act against any losses, claims, damages, liabilities and expenses, joint or several, to which such Person may be subject under the Securities Act or otherwise insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus included therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will promptly reimburse each such Person for any legal or any other expenses reasonably incurred by such Person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expenses arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus or final prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Selling Investors or such underwriter expressly for use in the registration statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Investors or any such Person and shall survive the transfer of such securities by the Investors. The Company also shall agree to provide provision for contribution as shall be reasonably
requested by the investors or any underwriters in circumstances where such indemnity is held unenforceable.
(b) The Selling Investors, by virtue of exercising their registration rights hereunder, agree and undertake to enter into customary indemnification arrangements to severally and not jointly indemnify and hold harmless (in the same manner and to the same extent as set forth in clause (a) of this Article 7) the Company, each director of the Company, each officer of the Company who shall sign such registration statement, each Person who participates as an underwriter in the offering or sale of such securities, each Person, if any, who controls the Company or any such underwriter within the meaning of the Securities Act, with respect to any statement in or omission from such registration statement, any preliminary prospectus or final prospectus included therein, or any amendment or supplement thereto, but only to the extent that such statement or omission was made in reliance upon and in conformity with written information furnished by such Selling Investors to the Company expressly for use in the registration statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling Person and shall survive the transfer of the registered securities by the Selling Investors and the expiration of this Agreement. The Selling Investors also shall agree to provide provision for contribution as shall be reasonably requested by the Company or any underwriters in circumstance where such indemnity if held unenforceable.
(c) Indemnification and contribution similar to that specified in the preceding subdivisions of this Article 7 (with appropriate modifications) shall be given by the Company and the Selling Investors with respect to any required registration or other qualification of such Eligible Securities under any federal or state law or regulation of governmental authority other than the Securities Act.
ARTICLE VIII
BENEFITS OF REGISTRATION RIGHTS.
8.1. BENEFITS OF REGISTRATION RIGHTS. Subject to the limitations of Sections 3.1 and 4.1, Investors and any Permitted Transferees of Eligible Securities may severally or jointly exercise the registration rights hereunder in
such manner and in such proportion as they shall agree among themselves.
ARTICLE IX
MISCELLANEOUS
9.1 CAPTIONS. The captions or headings in this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope or intent of this Agreement.
9.2 SEVERABILITY. If any clause, provision or section of this Agreement shall be invalid or unenforceable, the invalidity or unenforceability of such clause, provision or section shall not affect the enforceability or validity of any of the remaining clauses, provisions or sections hereof to the extent permitted by applicable law.
9.3 GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the internal laws of the State of Delaware, without reference to its rules as to conflicts or choice of laws.
9.4 MODIFICATION aND AMENDMENT. This Agreement may not be changed, modified, discharged or amended, except by an instrument signed by all of the parties hereto.
9.5 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.
9.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding among the parties and supersedes any prior understandings and/or written or oral agreements among them respecting the subject matter herein.
9.7. NOTICES. All notices, requests, demands, consents and other communications required or permitted to be given pursuant to this Agreement shall be in writing and delivered by hand, by overnight courier delivery service or by certified mail, return receipt requested, postage prepaid. Notices shall be deemed given when actually received, which shall be deemed to be not later than the next Business Day if sent by overnight courier or after five
(5) Business Days if sent by mail. Notice to Investors shall be made to the address listed on the stock transfer records of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed as of the day and year first above written.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Matthew Bucksbaum ------------------------------------ Name: Matthew Bucksbaum Title: President By: /s/ Martin Bucksbaum ------------------------------------ Martin Bucksbaum By: /s/ Matthew Bucksbaum ------------------------------------ Matthew Bucksbaum APPELTON TRUST FALLBROOK TRUST By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP MARTIN INVESTMENT TRUST A MARTIN INVESTMENT TRUST B By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP MARTIN INVESTMENT TRUST C MARTIN INVESTMENT TRUST D By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP MARTIN INVESTMENT TRUST E MARTIN INVESTMENT TRUST F By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP MATTHEW INVESTMENT TRUST A MATTHEW INVESTMENT TRUST B By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP |
MATTHEW INVESTMENT TRUST C MATTHEW INVESTMENT TRUST D By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP MATTHEW INVESTMENT TRUST E MATTHEW INVESTMENT TRUST F By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP MBA TRUST MBB TRUST By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP MBC TRUST FALLBROOK INVESTORS, a California general partnership By: GENERAL TRUST COMPANY, By: MATTHEW FAMILY TRUST A, Trustee a partner By: GENERAL TRUST COMPANY, Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP |
M.B. CAPITAL PARTNERS, MB CAPITAL PARTNERS, II, a South Dakota general a South Dakota general partnership partnership By: MBA TRUST, a partner By: MBA TRUST, a partner By: GENERAL TRUST COMPANY, By: GENERAL TRUST COMPANY, Trustee Trustee By: /s/ Michael Greaves By: /s/ Michael Greaves ----------------------- -------------------------- Name: Michael Greaves Name: Michael Greaves Title: VP Title: VP |
GENERAL GROWTH VENTURE L.P.
By: M.B. VENTURE CORPORATION
By: /s/ Martin Bucksbaum ----------------------- Name: Martin Bucksbaum Title: President |
EXHIBIT 4.18
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of April 17, 2002 by and between GENERAL GROWTH PROPERTIES, INC., a Delaware corporation (the "Company"), and GSEP 2002 REALTY CORP., a Delaware corporation (the "Holder").
WHEREAS, the Holder is receiving on the date hereof Preferred Units of limited liability company interest ("Units") in GGPLP L.L.C, a Delaware limited liability company (the "LLC");
WHEREAS, in connection therewith, the Company has agreed to grant to the Holder the Registration Rights (as defined in Section 1 hereof);
NOW, THEREFORE, the parties hereto, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, hereby agree as follows:
SECTION 1. REGISTRATION RIGHTS
If Holder receives REIT Preferred Shares (including depositary
shares representing fractions of REIT Preferred Shares) or Common Shares (each
as defined in the Second Amended and Restated Operating Agreement of the LLC
dated as of the date hereof (as amended from time to time, the "Operating
Agreement")) of the Company upon exchange of Units (the "Covered Shares")
pursuant to the Operating Agreement, then, unless such Covered Shares are issued
to the Holder pursuant to an Issuer Registration Statement as provided in
Section 2 below, Holder shall be entitled to offer for sale pursuant to a shelf
registration statement, the Covered Shares, subject to the terms and conditions
set forth in Section 3 hereof (the "Registration Rights").
SECTION 2. ISSUER REGISTRATION STATEMENT
Anything contained herein to the contrary notwithstanding, in the event that the Covered Shares are issued by the Company to Holder pursuant to an effective registration statement (an "Issuer Registration Statement") filed with the Securities and Exchange Commission (the "Commission"), the Company shall be deemed to have satisfied all of its registration obligations under this Agreement with respect to such Covered Shares.
SECTION 3. DEMAND REGISTRATION RIGHTS
3.1 (a) Registration Procedure. Unless such Covered Shares are issued pursuant to an Issuer Registration Statement as provided in Section 2 hereof, then subject to Sections 3.1(c) and 3.2 hereof, if the Holder desires to exercise Registration Rights with respect to the Covered Shares, the Holder shall deliver to the Company a written
Registration Rights Agreement
notice (a "Registration Notice") informing the Company of such exercise and specifying the number of shares to be offered by such Holder (such shares to be offered, and all additional REIT Preferred Shares and Common Shares obtainable upon exchange of Units which the Company elects to register in a registration hereunder, being referred to herein as the "Registrable Securities"). Such notice may be given at any time on or after the date a notice of exchange is delivered by the Holder to the LLC pursuant to the Operating Agreement, but must be given at least fifteen (15) Business Days prior to the date on which the Holder proposes to consummate the sale of Registrable Securities. As used in this Agreement, a "Business Day" is any Monday, Tuesday, Wednesday, Thursday or Friday other than a day on which banks and other financial institutions are authorized or required to be closed for business in the State of New York. Upon receipt of the Registration Notice, the Company, if it has not already caused the Registrable Securities to be included as part of an existing shelf registration statement (prior to the filing of which the Company shall have given ten (10) Business Days notice to the Holder) and related prospectus that the Company then has on file with the Commission (the "Shelf Registration Statement") (in which event the Company shall be deemed to have satisfied its registration obligation under this Section 3), will cause to be filed with the Commission as soon as reasonably practicable after receiving the Registration Notice a new registration statement and related prospectus that may include only the Covered Shares that are the subject of the Registration Notice or, at the election of the Company, all REIT Preferred Shares and Common Shares obtainable upon exchange of Units (in which event the Company shall be deemed to have satisfied its registration obligation under this Section 3 with respect to such shares and all such shares shall constitute Registrable Securities hereunder and any person receiving such shares upon exchange of Units shall thereupon be a Holder hereunder) (a "New Registration Statement") that complies as to form in all material respects with applicable Commission rules providing for the sale by the Holder of the Registrable Securities, and agrees (subject to Section 3.2 hereof) to use its reasonable best efforts to cause such New Registration Statement to be declared effective by the Commission as soon as practicable. (As used herein, "Registration Statement" and "Prospectus" refer to the Shelf Registration Statement and related prospectus (including any preliminary prospectus) or the New Registration Statement and related prospectus (including any preliminary prospectus), whichever is utilized by the Company to satisfy Holder's Registration Rights pursuant to this Section 3, including in each case any documents incorporated therein by reference.)
The Holder agrees to provide in writing in a timely manner information regarding the proposed plan of distribution by the Holder of the Registrable Securities and such other information reasonably requested by the Company in connection with the preparation of and for inclusion in the Registration Statement. The Company agrees (subject to Section 3.2 hereof) to use its reasonable best efforts to keep the Registration Statement effective (including the preparation and filing of any amendments and supplements necessary for that purpose) until the earlier of (i) the date on which the sale of all of the Registrable Securities registered under the Registration Statement is consummated or (ii) the date on which all of the Registrable Securities are eligible for
Registration Rights Agreement
sale pursuant to Rule 144(k) (or any successor provision) or in a single transaction pursuant to Rule 144(e) (or any successor provision) under the Securities Act of 1933, as amended (the "Act"). The Company agrees to provide to Holder a reasonable number of copies of the final Prospectus and any amendments or supplements thereto.
Notwithstanding the foregoing, the Company may at any time, in its sole discretion and prior to receiving any Registration Notice from the Holder, include all of Holder's Covered Shares or any portion thereof in any Shelf Registration Statement. In connection with any Registration Statement utilized by the Company to satisfy Holder's Registration Rights pursuant to this Section 3, Holder agrees that it will respond in writing within ten (10) Business Days to any request by the Company to provide or verify information regarding Holder or Holder's Registrable Securities as may be required to be included in such Registration Statement pursuant to the rules and regulations of the Commission.
(b) Offers and Sales. All offers and sales by the Holder under the Registration Statement referred to in this Section 3 shall be completed within the period during which the Registration Statement is required to remain effective pursuant to Section 3.1(a) of this Section 3, and upon expiration of such period Holder will not offer or sell any Registrable Securities under the Registration Statement. If directed by the Company, the Holder will return all undistributed copies of the Prospectus in its possession upon the expiration of such period.
(c) Limitations on Registration Rights. Each exercise by the Holder of a Registration Right shall be with respect to a minimum of the lesser of (i) an amount of Common Shares or depositary shares of REIT Preferred Shares having a sale price of at least $350,000 or (ii) the total number of Covered Shares held by the Holder at such time, in each case plus the number of Covered Shares that may be issued upon exchange of Units by Holder. The right of the Holder to deliver a Registration Notice commences upon the first date the Holder is permitted to exchange Units pursuant to the Operating Agreement. The right of the Holder to deliver a Registration Notice shall expire on the date on which all of the Covered Shares held by the Holder or issuable upon redemption of Units held by the Holder are eligible for sale pursuant to Rule 144(k) (or any successor provision) or in a single transaction pursuant to Rule 144(e) (or any successor provision) under the Act. The Registration Rights granted pursuant to this Section 3.1 may be exercised in connection with an underwritten public offering; provided, that the Company shall have the right to select the underwriter or underwriters in connection with such public offering, which shall be subject to the reasonable approval of the Holder.
3.2 Suspension of Offering. Upon any notice by the Company, either before or after the Holder has delivered a Registration Notice, that a negotiation or consummation of a transaction by the Company or any of its subsidiaries is pending or an event has occurred, which negotiation, consummation or event would require additional disclosure by the Company in a Registration Statement of material information which the
Registration Rights Agreement
Company has a bona fide business purpose for keeping confidential and the nondisclosure of which in the Registration Statement might cause the Registration Statement to fail to comply with applicable disclosure requirements (a "Materiality Notice"), Holder agrees that (a) it will immediately discontinue offers and sales of the Registrable Securities under the Registration Statement, until Holder receives copies of a supplemented or amended Prospectus that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or (b) its rights to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to the Registration Statement shall be suspended for the period described in the Materiality Notice; provided, that the Company may delay, suspend or withdraw the Registration Statement for such reason for no more than 90 days after delivery of the Materiality Notice at any one time and only once in any 180 day period. If so directed by the Company, Holder will deliver to the Company all copies of the Prospectus covering the Registrable Securities current at the time of receipt of any Materiality Notice.
3.3 Qualification. The Company agrees to use its reasonable best
efforts to register or qualify the Registrable Securities by the time the
applicable Registration Statement is declared effective by the Commission under
all applicable state securities or "blue sky" laws of such jurisdictions as
Holder shall reasonably request in writing, to keep each such registration or
qualification effective during the period such Registration Statement is
required to be kept effective or during the period offers or sales are being
made by Holder after delivery of a Registration Notice to the Company, whichever
is shorter, and to do any and all other acts and things which may be reasonably
necessary or advisable to enable Holder to consummate the disposition in each
such jurisdiction of the Registrable Securities owned by Holder; provided,
however, that the Company shall not be required to (x) qualify generally to do
business in any jurisdiction or to register as a broker or dealer in such
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.3, (y) subject itself to taxation in any such jurisdiction or (z)
submit to the general service of process in any such jurisdiction.
3.4 Actions by the Company. Whenever the Company is required to effect the registration of Covered Shares under the Act pursuant to Section 3.1 of this Agreement, subject to Section 3.2 hereof, the Company shall:
(a) prepare and file with the Commission (as soon as reasonably practical after receiving the Registration Notice, and in any event within 60 days after receipt of such Registration Notice) the requisite Registration Statement to effect such registration, which Registration Statement shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by reference all financial statements required by the Commission to be filed therewith, and the Company shall use its reasonable best efforts to cause such Registration Statement to become effective; provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto, or comparable statements under securities or
Registration Rights Agreement
blue sky laws of any jurisdiction, the Company shall (i) provide Holder with an adequate and appropriate opportunity to provide written comments with respect to such Registration Statement and each Prospectus included therein (and each amendment or supplement thereto or comparable statement) to be filed with the Commission and (ii) not file any such Registration Statement or Prospectus (or amendment or supplement thereto or comparable statement) with the Commission to which Holder's counsel or any underwriter shall have reasonably objected on the grounds that such filing does not comply in all material respects with the requirements of the Act or of the rules or regulations thereunder;
(b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary (i) to keep such Registration Statement effective and (ii) to comply with the provisions of the Act with respect to the disposition of the Covered Shares covered by such Registration Statement, in each case until such time as all of such Covered Shares have been disposed of in accordance with the intended methods of disposition by the seller(s) thereof set forth in such Registration Statement; provided, that except with respect to any Shelf Registration Statement, such period need not extend beyond six months after the effective date of the Registration Statement; and provided further, that with respect to any Shelf Registration Statement, such period need not extend beyond the time period provided in Section 3.1(a), and which periods, in any event, shall terminate when all the Covered Shares covered by such Registration Statement have been sold (but not before the expiration of the time period referred to in Section 4(3) of the Act and Rule 174 thereunder, if applicable);
(c) furnish, without charge, to the Holder and each underwriter, if any, of the exchange shares covered by such Registration Statement, such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits), and the Prospectus included in such Registration Statement (including each preliminary Prospectus), and other documents, as the Holder and such underwriter may reasonably request in order to facilitate the public sale or other disposition of the Covered Shares owned by the Holder;
(d) promptly notify the Holder and the sole or lead managing underwriter, if any: (i) when the Registration Statement, any pre-effective amendment, the Prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any state securities or blue sky authority for amendments or supplements to the Registration Statement or the Prospectus related thereto or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation or threat of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Covered Shares for sale under
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the securities or blue sky laws of any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the existence of any fact of which the
Company becomes aware or the happening of any event which results in (A) the
Registration Statement containing an untrue statement of a material fact or
omitting to state a material fact required to be stated therein or necessary to
make any statements therein not misleading or (B) the Prospectus included in
such Registration Statement containing an untrue statement of a material fact or
omitting to state a material fact required to be stated therein or necessary to
make any statements therein, in the light of the circumstances under which they
were made, not misleading and (vi) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be appropriate
or that there exist circumstances not yet disclosed to the public which make
further sales under such Registration Statement inadvisable pending such
disclosure and post-effective amendment; and, if the notification relates to an
event described in any of the clauses (v) or (vi) of this Section 3.4(e),
subject to Section 3.2, the Company shall promptly prepare a supplement or
post-effective amendment to such Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that (1) such Registration Statement shall 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 not misleading and
(2) as thereafter delivered to the purchasers of the Covered Shares being sold
thereunder, such Prospectus shall not include an 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 the light of the circumstances under which
they were made, not misleading (and shall furnish to the Holder and each
underwriter, if any, a reasonable number of copies of such Prospectus so
supplemented or amended); and if the notification relates to an event described
in clauses (ii) through (iv) of this Section 3.4(e), the Company shall use its
reasonable best efforts to remedy such matters;
(e) make reasonably available for inspection by the Holder, any sole or lead managing underwriter participating in any disposition pursuant to such Registration Statement, Holder's counsel and any attorney, accountant or other agent retained by any such seller or any underwriter material financial and other relevant information concerning the business and operations of the Company and the properties of the Company and any subsidiaries thereof as may be in existence at such time as shall be necessary, in the reasonable opinion of such Holder's and such underwriters' respective counsel, to enable them to conduct a reasonable investigation within the meaning of the Act, and cause the Company's and any subsidiaries' officers, directors and employees, and the independent public accountants of the Company, to supply such information as may be reasonably requested by any such parties in connection with such Registration Statement;
(f) obtain an opinion from the Company's counsel and a "cold comfort" letter from the Company's independent public accountants who have certified the Company's financial statements included or incorporated by reference in such
Registration Rights Agreement
Registration Statement in customary form and covering such matters as are customarily covered by such opinions and "cold comfort" letters delivered to underwriters in underwritten public offerings, which opinion and letter shall be reasonably satisfactory to the sole or lead managing underwriter, if any, and to the Holder, and furnish to the Holder participating in the offering and to each underwriter, if any, a copy of such opinion and letter addressed to the underwriter;
(g) in the case of an underwritten offering, make generally available to its security holders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c)), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);
(h) use its reasonable best efforts to cause all such Covered Shares to be listed (i) on the national securities exchange on which the Company's common shares are then listed or (ii) if common shares of the Company are not at the time listed on any national securities exchange (or if the listing of Covered Shares is not permitted under the rules of such national securities exchange on which the Company's common shares are then listed), on another national securities exchange;
(i) furnish to the Holder and the sole or lead managing underwriter, if any, without charge, at least one manually signed copy of the Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those deemed to be incorporated by reference);
(j) if requested by the sole or lead managing underwriter or the Holder of Covered Shares, incorporate in a prospectus supplement or post-effective amendment such information concerning the Holder, the underwriters or the intended method of distribution as the sole or lead managing underwriter or the Holder reasonably requests to be included therein and as is appropriate in the reasonable judgment of the Company, including, without limitation, information with respect to the number of Covered Shares being sold to the underwriters, the purchase price being paid therefor by such underwriters and any other terms of the underwritten offering of the Covered Shares to be sold in such offering; and
(k) use its reasonable best efforts to take all other steps necessary to expedite or facilitate the registration and disposition of the Covered Shares contemplated hereby, including obtaining necessary governmental approvals and effecting required filings; entering into customary agreements (including customary underwriting agreements, if the public offering is underwritten); cooperating with the Holder and any underwriters in connection with any filings required by the National Association of Securities Dealers, Inc. (the "NASD"); providing appropriate certificates not bearing
Registration Rights Agreement
restrictive legends representing the Covered Shares; and providing a CUSIP number and maintaining a transfer agent and registrar for the Covered Shares.
3.5 Indemnification by the Company. The Company agrees to indemnify and hold harmless the Holder and each person, if any, who controls the Holder within the meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as follows:
(i) against any and all loss, liability, claim and damage whatsoever, as incurred, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) pursuant to which the Registrable Securities were registered under the Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim and damage whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and
(iii) against any and all expenses reasonably incurred, as incurred (including reasonable fees and disbursements of counsel), in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not a party, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above;
provided, however, that the indemnity provided pursuant to this Section 3.5 does not apply with respect to any loss, liability, claim, damage or expense to the extent arising out of (A) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by
Registration Rights Agreement
the Holder expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) or (B) the Holder's failure to deliver an amended or supplemental Prospectus provided to the Holder by the Company if such loss, liability, claim, damage or expense would not have arisen had such delivery occurred.
3.6 Indemnification by the Holder. The Holder (and each permitted assignee of the Holder, on a several basis) agrees to indemnify and hold harmless the Company, and each of its trustees/directors and officers (including each trustee/director and officer of the Company who signed a Registration Statement), and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) pursuant to which the Registrable Securities were registered under the Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Holder; and
(iii) against any and all expense whatsoever, as incurred (including reasonable fees and disbursements of counsel), reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not a party, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above;
Registration Rights Agreement
provided, however, that the indemnity provided pursuant to this Section 3.6 shall only apply with respect to any loss, liability, claim, damage or expense to the extent arising out of (A) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Holder expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) or (B) the Holder's failure to deliver an amended or supplemental Prospectus provided to the Holder by the Company if such loss, liability, claim, damage or expense would not have arisen had such delivery occurred. Notwithstanding the provisions of this Section 3.6, the Holder and any permitted assignee shall not be required to indemnify the Company, its officers, trustees/directors or control persons with respect to any amount in excess of the amount of the gross proceeds to the Holder or such permitted assignee, as the case may be, from sales of the Registrable Securities of the Holder under the Registration Statement.
3.7 Conduct of Indemnification Proceedings. An indemnified party hereunder shall give reasonably prompt notice to the indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify the indemnifying party (i) shall not relieve it from any liability which it may have under the indemnity agreement provided in Section 3.5 or 3.6 above, unless and to the extent it did not otherwise learn of such action and the lack of notice by the indemnified party results in the forfeiture by the indemnifying party of substantial rights and defenses, and (ii) shall not, in any event, relieve the indemnifying party from any obligations to the indemnified party other than the indemnification obligation provided under Section 3.5 or 3.6 above. If the indemnifying party so elects within a reasonable time after receipt of such notice, the indemnifying party may assume the defense of such action or proceeding at such indemnifying party's own expense with counsel chosen by the indemnifying party and approved by the indemnified party, which approval shall not be unreasonably withheld; provided, however, that the indemnifying party will not settle any such action or proceeding without the written consent of the indemnified party unless, as a condition to such settlement, the indemnifying party secures the unconditional release of the indemnified party; and provided further, that if the indemnified party reasonably determines that a conflict of interest exists where it is advisable for the indemnified party to be represented by separate counsel or that, upon advice of counsel, there may be legal defenses available to it which are different from or in addition to those available to the indemnifying party, then the indemnifying party shall not be entitled to assume such defense and the indemnified party shall be entitled to separate counsel at the indemnifying party's expense. If the indemnifying party is not entitled to assume the defense of such action or proceeding as a result of the second proviso to the preceding sentence, the indemnifying party's counsel shall be entitled to conduct the indemnifying party's defense and counsel for the indemnified party shall be entitled to conduct the defense of the indemnified party, it being understood that both such counsel will cooperate with each other to conduct the defense of such action or proceeding as efficiently as possible. If the indemnifying party is not so entitled to assume the defense of such action or does not assume such defense, after having received
Registration Rights Agreement
the notice referred to in the first sentence of this paragraph, the indemnifying party will pay the reasonable fees and expenses of counsel for the indemnified party. In such event, however, the indemnifying party will not be liable for any settlement effected without the written consent of the indemnifying party. If an indemnifying party is entitled to assume, and assumes, the defense of such action or proceeding in accordance with this paragraph, the indemnifying party shall not be liable for any fees and expenses of counsel for the indemnified party incurred thereafter in connection with such action or proceeding.
3.8 Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Sections 3.5 and 3.6 above is for any reason held to be unenforceable by the indemnified party although applicable in accordance with its terms, the Company and the Holder shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement incurred by the Company and the Holder, (i) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Holder on the other, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative fault of, but also the relative benefits to, the Company on the one hand and the Holder on the other, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits to the indemnifying party and indemnified party shall be determined by reference to, among other things, the gross proceeds received by the indemnifying party and indemnified party in connection with the offering to which such losses, claims, damages, liabilities or expenses relate. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether the action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, the indemnifying party or the indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 3.8 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 3.8, the Holder shall not be required to contribute any amount in excess of the amount of the gross proceeds to the Holder from sales of the Registrable Securities of the Holder under the Registration Statement.
Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 3.8, each person, if any, who controls the Holder within the
Registration Rights Agreement
meaning of Section 15 of the Act shall have the same rights to contribution as the Holder, and each trustee/director of the Company, each officer of the Company who signed a Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Act shall have the same rights to contribution as the Company.
SECTION 4. EXPENSES
The Company shall pay all expenses incident to the performance by the Company of the Company's registration obligations under Sections 2 and 3, including (i) all stock exchange, Commission and state securities registration, listing and filing fees, (ii) all expenses incurred in connection with the preparation, printing and distributing of any Issuer Registration Statement or Registration Statement and Prospectus and (iii) fees and disbursements of counsel for the Company and of the independent public accountants of the Company. The Holder shall be responsible for the payment of any brokerage and sales commissions, fees and disbursements of the Holder's counsel, accountants and other advisors and any transfer taxes relating to the sale or disposition of the Registrable Securities by the Holder pursuant to Section 3 or otherwise.
SECTION 5. RULE 144 COMPLIANCE
The Company covenants that it will use its reasonable best efforts to timely file the reports required to be filed by the Company under the Act and the Exchange Act so as to enable the Holder to sell Registrable Securities pursuant to Rule 144 under the Act. In connection with any sale, transfer or other disposition by the Holder of any Registrable Securities pursuant to Rule 144 under the Act, the Company shall cooperate with the Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any Act legend, and enable certificates for such Registrable Securities to be for such number of shares and registered in such names as Holder may reasonably request at least ten (10) Business Days prior to any sale of Registrable Securities hereunder.
SECTION 6. MISCELLANEOUS
6.1 Integration; Amendment. This Agreement constitutes the entire agreement among the parties hereto with respect to the matters set forth herein and supersedes and renders of no force and effect all prior oral or written agreements, commitments and understandings among the parties with respect to the matters set forth herein. Except as otherwise expressly provided in this Agreement, no amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed by the Company and the Holder.
6.2 Waivers. No waiver by a party hereto shall be effective unless made in a written instrument duly executed by the party against whom such waiver is sought to be enforced, and only to the extent set forth in such instrument. Neither the waiver by
Registration Rights Agreement
any of the parties hereto of a breach or a default under any of the provisions of this Agreement, nor the failure of any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.
6.3 Assignment; Successors and Assigns. This Agreement and the rights granted hereunder may not be assigned by the Holder without the written consent of the Company; provided, however, that the Holder may assign its rights and obligations hereunder, following at least ten (10) days prior written notice to the Company, (i) to Goldman Sachs 2002 Exchange Place Fund, L.P. ("Holder's Parent") or to the direct equity owners (e.g., partners or members) or beneficiaries of Holder's Parent in connection with the transfer of the Holder's Units to Holder's Parent or to the equity owners or beneficiaries of Holder's Parent (provided such transfer is made in accordance with the Operating Agreement and in compliance with applicable federal and state securities laws) and (ii) to a permitted transferee in connection with a transfer of the Holder's Units in accordance with the terms of the Operating Agreement, if, in the case of (i) and (ii) above, such persons agree in writing to be bound by all of the provisions hereof and any of such assignees shall be deemed to be a Holder hereunder. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of all of the parties hereto.
6.4 Burden and Benefit. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and, subject to
Section 6.3 above, assigns.
6.5 Notices. All notices called for under this Agreement shall be in writing and shall be deemed to have been delivered (i) on the date personally delivered or (ii) one Business Day after being properly sent by recognized overnight courier, addressed to the respective parties at their address set forth in this Agreement or (iii) on the day (or if not a Business Day on the first Business Day thereafter) transmitted by facsimile so long as a confirmation copy is simultaneously forwarded by recognized overnight courier, in each case addressed to the respective parties at their address set forth on Schedule A. Either party hereto may designate a different address by providing written notice of such new address to the other party hereto as provided above.
6.6 Specific Performance. The parties hereto acknowledge that the obligations undertaken by them hereunder are unique and that there would be no adequate remedy at law if either party fails to perform any of its obligations hereunder, and accordingly agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to (i) compel specific performance of the obligations, covenants and agreements of the other party under this Agreement in accordance with the terms and conditions of this Agreement and (ii) obtain preliminary injunctive relief to secure specific performance and to prevent a breach or contemplated
Registration Rights Agreement
breach of this Agreement in any court of the United States or any State thereof having jurisdiction.
6.7 Governing Law. This Agreement shall be governed by the laws of the State of New York, without regard, to the fullest extent permitted by law, to the conflict of laws rules thereof which might result in the application of the laws of any other jurisdiction.
6.8 Headings. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.
6.9 Pronouns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or entity may require.
6.10 Execution in Counterparts. To facilitate execution, this Agreement may be executed in as many counterparts as may be required. It shall not be necessary that the signature of or on behalf of each party appears on each counterpart, but it shall be sufficient that the signature of or on behalf of each party appears on one or more of the counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in any proof of this Agreement to produce or account for more than a number of counterparts containing the respective signatures of or on behalf of both of the parties.
6.11 Severability. If fulfillment of any provision of this Agreement, at the time such fulfillment shall be due, shall transcend the limit of validity prescribed by law, then the obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or provision contained in this Agreement operates or would operate to invalidate this Agreement, in whole or in part, then such clause or provision only shall be held ineffective, as though not herein contained, and the remainder of this Agreement shall remain operative and in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed on its behalf as of the date first herein above set forth.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Bernard Freibaum ----------------------------------- Name: Bernard Freibaum Title: Executive Vice President |
GSEP 2002 REALTY CORP.
By: /s/ Eric Lane ----------------------------------- Name: Eric Lane Title: President and CEO |
[Signature Page to Registration Rights Agreement]
SCHEDULE A
General Growth Properties, Inc
110 W. Wacker Drive
Chicago, Illinois 60606.
Attention: John Bucksbaum
With a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg, Esq.
GSEP 2002 Realty Corp.
c/o Goldman, Sachs & Co.
One New York Plaza, 40th Floor
New York, New York 10004
Attention: Eric Lane
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Lawrence Barshay, Esq.
EXHIBIT 10.4
THIRD AMENDMENT
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP LIMITED PARTNERSHIP
THIS THIRD AMENDMENT (the "Third Amendment") is made and entered into on the 15th day of February, 2002, by and among the undersigned parties.
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership (the "Partnership") exists pursuant to that certain Second Amended and Restated Agreement of Limited Partnership of GGP Limited Partnership dated as of April 1, 1998, as amended by that certain First Amendment thereto dated as of June 10, 1998, and that certain Second Amendment thereto dated as of June 29, 1998 (such Second Amended and Restated Agreement of Limited Partnership, as so amended, the "Second Restated Partnership Agreement"), and the Delaware Revised Uniform Limited Partnership Act;
WHEREAS, General Growth Properties, Inc., a Delaware corporation, is the general partner of the Partnership (the "General Partner"); and
WHEREAS, the parties hereto, being the sole general partner of the Partnership and the holders of a Majority-in-Interest of the Common Units (as defined in the Second Restated Partnership Agreement) desire to amend the Second Restated Partnership Agreement to reflect certain understandings among them as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used but not defined herein shall have the definitions assigned to such terms in the Second Restated Partnership Agreement, as amended hereby.
2. ADDITIONAL DEFINITIONS. Section 1.1 of the Second Restated Partnership Agreement is hereby amended by inserting the following new definitions:
"Preferred Units" shall mean the Series A Preferred Units and any other series of preferred units of limited partnership interest in the Partnership that are established and issued from time to time in accordance with the terms hereof.
"Stock Plans" shall mean the Incentive Stock Plan and the other option, stock purchase and/or dividend reinvestment plans of the General Partner or the Partnership that are in effect from time to time.
3. AMENDED DEFINITIONS.
(a) The definition of "Common Units" set forth in Section 1.1 of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in its place and stead:
"'Common Units' shall mean all Units other than Preferred Units."
(b) The definition of "Percentage Interest" set forth in Section 1.1 of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in its place and stead:
"'Percentage Interest' shall mean, with respect to any Partner at any time, the percentage ownership interest of such Partner in the Partnership at such time, which percentage ownership interest shall be equal to the quotient of the number of Common Units owned by such Partner at such time divided by the aggregate number of issued and outstanding Common Units at such time, and any holder of Preferred Units shall have a 0% Percentage Interest in respect of such Preferred Units. The Percentage Interest of each Partner on the date hereof is set forth opposite its name on Exhibit A."
4. ADDITIONAL FUNDS. Section 4.3(b) of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in its place and stead:
"(b) Effective on each Adjustment Date and without the consent of any other Partner, the Partnership shall issue to the General Partner (i) with respect to Contributed Funds relating to an issuance by the General Partner of Common Stock, the number of additional Common Units equal to the product of (x) the number of shares of Common Stock issued by the General Partner in connection with obtaining such Contributed Funds, and (y) the Conversion Factor, and (ii) with respect to Contributed Funds relating to an issuance by the General Partner of Series A Preferred Shares, an equal number of Series A Preferred Units. The General Partner shall be authorized on behalf of each of the Partners to amend this Agreement to reflect the issuance of Units in accordance with Sections 4.3 and 4.4 in the event that the General Partner deems such amendment to be desirable."
5. STOCK PLANS. Section 4.4 of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in its place and stead:
"4.4 STOCK PLANS. If at any time or from time to time options granted in connection with the General Partner's Stock Incentive Plan or any other Stock Plan are exercised in accordance with the terms thereof or shares of Common Stock are otherwise issued pursuant to any of the Stock Plans:
(a) the General Partner shall, as soon as practicable after such exercise or other issuance, contribute to the capital of the Partnership an amount equal to the exercise price or other purchase price paid to the General Partner by the exercising or purchasing party in connection with such exercise or issuance; and
(b) the Partnership shall issue to the General Partner, with respect to any exercise of options or purchase of shares of Common Stock pursuant to the Stock Plans, the number of additional Common Units equal to the product of (i) the number of shares of Common Stock issued by the General Partner in connection with such exercise or purchase, multiplied by (ii) the Conversion Factor."
6. DISTRIBUTIONS WITH RESPECT TO COMMON UNITS. Section 5.2(a) of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in its place and stead: -
"5.2 DISTRIBUTIONS WITH RESPECT TO COMMON UNITS.
(a) Subject to the terms of the Preferred Units and after giving effect to the same, the General Partner shall, from time to time as determined by the General Partner (but in any event not less frequently than quarterly), cause the Partnership to distribute all or a portion of the remaining Net Operating Cash Flow to the holders of Common Units on the relevant Partnership Record Date in such amounts as the General Partner shall determine; provided, however, that all such distributions shall be made pro rata in accordance with the Partners' then Percentage Interests; and provided further, that notwithstanding anything to the contrary contained herein, the General Partner shall use its best efforts to cause the Partnership to distribute sufficient amounts to enable the General Partner to pay shareholder dividends that will (i) satisfy the requirements for qualifying as a REIT under the Code and Regulations ("REIT Requirements"), and (ii) avoid any federal income or excise tax liability of the General Partner."
7. DISTRIBUTIONS WITH RESPECT TO SERIES A PREFERRED UNITS. Section 5.9(c) of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in its place and stead:
"(c) If the Partnership has not authorized and paid full cumulative distributions with respect to the Series A Preferred Units for all past distribution periods and the then current distribution period, or has not authorized and set apart a sum sufficient for the payment thereof, then the Partnership shall not authorize, pay or set aside for payment any distributions with respect to the Common Units or any other series of Preferred Units (other than distributions made in the form of Common Units or Preferred Units, as the case may be), nor shall the Partnership redeem, purchase or otherwise acquire any Common Units or Preferred Units of any other series (or set apart any monies as a sinking fund for such purpose) for any consideration other than Common Units or Preferred Units, as the case may be (including without limitation in connection with the exercise of Rights)."
8. POWERS AND DUTIES OF GENERAL PARTNER. Section 6.2 of the Second Restated Partnership Agreement is hereby amended by inserting the phrase "but without limiting the foregoing grant of power, authority and discretion" after the word "hereof" and before the comma in the twelfth line thereof.
9. MAJOR DECISIONS. Section 6.3(a) of the Second Restated Partnership Agreement is hereby amended by inserting the phrase "and other than as provided in other sections hereof" after the word "hereof" and before the period in the last line of such section.
10. DISTRIBUTIONS ON DISSOLUTION. Section 7.2(d) of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in its place and stead:
(a) Payment to the holders of Preferred Units in accordance with the terms of thereof; and
(b) To the Partners holding Common Units in accordance with their respective Percentage Interests."
11. LIQUIDATION PREFERENCE OF SERIES A PREFERRED UNITS. The phrase "or other series of Preferred Units" is hereby added after the word "Units" and before the period in the last line of Section 7.8(a) of the Second Restated Partnership Agreement.
12. AMENDMENTS. The second sentence of Section 13.7 of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in its place and stead:
"Notwithstanding anything to the contrary contained herein,
(a) without the written consent of a Limited Partner, this Agreement
may not be amended to convert such Limited Partner's partnership
interest in the Partnership to a general partnership interest (or
otherwise adversely affect such Limited Partner's limited liability)
and (b) without the written consent of a Limited Partner holding Common
Units, this Agreement may not be amended to materially adversely affect
such Limited Partner's rights to distributions or allocations in
respect of such Common Units except in connection with the admission of
Additional Partners or unless such amendment affects the Bucksbaum
Limited Partners in the same manner on a Unit-for-Unit basis."
13. NEW EXHIBIT A. Exhibit A to the Second Restated Partnership Agreement, identifying the Partners, the number of Units owned by them and their respective Percentage Interests, if any, is hereby deleted in its entirety and the Exhibit A in the form attached hereto is hereby inserted in its place and stead.
14. OTHER PROVISIONS UNAFFECTED. Except as expressly amended hereby, the Second Restated Partnership Agreement shall remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the undersigned have executed this Third Amendment on the day and year first above written.
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ Bernard Freibaum ----------------------------------------- Its: Executive Vice President/Chief Financial Officer |
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By: /s/ Marshall E. Eisenberg ------------------------- Its: President |
EXHIBIT 10.5
AMENDMENT
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP LIMITED PARTNERSHIP
THIS AMENDMENT (the "Amendment") is made and entered into as of the 24th day of April, 2002, by and among the undersigned parties.
W I T N E S S E T H:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership (the "Partnership") exists pursuant to that certain Second Amended and Restated Agreement of Limited Partnership of GGP Limited Partnership dated as of April 1, 1998, as amended by that certain First Amendment thereto dated as of June 10, 1998, that certain Second Amendment thereto dated as of June 29, 1998 and that certain Third Amendment thereto dated as of February 15, 2002 (such Second Amended and Restated Agreement of Limited Partnership, as so amended, the "Second Restated Partnership Agreement"), and the Delaware Revised Uniform Limited Partnership Act;
WHEREAS, General Growth Properties, Inc., a Delaware corporation, is the general partner of the Partnership (the "General Partner"); and
WHEREAS, the parties hereto, being the sole general partner of the Partnership and the holders of a Majority-in-Interest of the Common Units (as defined in the Second Restated Partnership Agreement), desire to amend the Second Restated Partnership Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used but not defined herein shall have the definitions assigned to such terms in the Second Restated Partnership Agreement, as amended hereby.
2. AMENDMENT TO SECTION 8.4. Section 8.4 of the Second Restated Partnership Agreement is hereby deleted in its entirety and the following is hereby inserted in lieu thereof :
"8.4 Restrictions on Transfer. In addition to any other restrictions on transfer herein contained, in no event may any transfer or assignment of Units by any Partner be made (i) to any Person who lacks the legal right, power or capacity to own Units; (ii) in violation of any provision of any mortgage or trust deed (or the note or bond secured thereby) constituting a Lien against a Property or any part thereof, or other instrument, document or agreement to which the Partnership or any Property Partnership is a party or
otherwise bound; (iii) in violation of applicable law; (iv) of any component portion of a Unit, such as the Capital Account, or rights to Net Operating Cash Flow, separate and apart from all other components of such Unit (other than such assignments of the right to receive distributions as the General Partner shall approve in writing which approval the General Partner may withhold in its sole discretion), (v) in the event such transfer would cause the General Partner to cease to comply with the REIT Requirements, (vi) if such transfer would cause a termination of the Partnership for federal income tax purposes, (vii) if such transfer would, in the opinion of counsel to the Partnership, cause the Partnership to cease to be classified as a partnership for Federal income tax purposes, (viii) if such transfer would cause the Partnership to become, with respect to any "benefit plan investor," as defined in 29 C.F.R. ss. 2510.3-101(f)(2) (a "Benefit Plan Investor"), a "party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in Section 4975(e) of the Code), (ix) if such transfer would, in the opinion of counsel to the Partnership, cause any portion of the assets of the Partnership to constitute assets of a Benefit Plan Investor pursuant to 29 C.F.R. ss. 2510.3-101 or (x) if such transfer is effectuated through an "established securities market" or "secondary market" (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code or such transfer causes the Partnership to become a "publicly traded partnership" as such term is defined in Section 7704(b) of the Code. Notwithstanding anything in this Agreement to the contrary:
(a) no Limited Partner admitted to the Partnership after June 29, 1998 may sell, assign or otherwise transfer its Units or other interest in the Partnership or any portion thereof to any Foreign Owner (and no interest in such Limited Partner or any Person that directly or indirectly owns an interest in such Limited Partner may be transferred if such Limited Partner shall become a Foreign Owner as the result of such transfer) without the prior written consent of the General Partner (which consent may be given or withheld in the sole discretion of the General Partner); and
(b) no other Limited Partner may sell, assign or otherwise transfer its Units or other interest in the Partnership or any portion thereof to any Foreign Owner (and no interest in such Limited Partner or any Person that directly or indirectly owns an interest in such Limited Partner may be transferred if such Limited Partner shall become a Foreign Owner as the result of such transfer) without providing written notice of the same to the General Partner. Any such written notice shall be received by the General Partner at least thirty days prior to any such sale, assignment or other transfer.
Any sale, assignment or other transfer of Units or other interests in the Partnership made in violation of this Agreement (including without limitation any sale, assignment or other transfer of Units made without giving the notice described above at the time described above) shall be null and void ab initio.
3. OTHER PROVISIONS UNAFFECTED. Except as expressly amended hereby, the Second Restated Partnership Agreement shall remain in full force and effect in accordance with its terms.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment on the day and year first above written.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ Bernard Freibaum -------------------------------------------- Its: Executive Vice President/Chief Financial Officer |
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By: /s/ Marshall E. Eisenberg ---------------------------------------- Its: President |
EXHIBIT 10.6
FOURTH AMENDMENT
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP LIMITED PARTNERSHIP
THIS FOURTH AMENDMENT (the "Fourth Amendment") is made and entered into on the 10th day of July, 2002, by and among the undersigned parties.
W I T N E S S E T H:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership (the "Partnership") exists pursuant to that certain Second Amended and Restated Agreement of Limited Partnership of GGP Limited Partnership dated as of April 1, 1998, as amended by that certain First Amendment thereto dated as of June 10, 1998, that certain Second Amendment thereto dated as of June 29, 1998, that certain Third Amendment thereto dated as of February 15, 2002 and that certain Amendment dated as of April 24, 2002 (such Second Amended and Restated Agreement of Limited Partnership, as so amended, the "Second Restated Partnership Agreement"), and the Delaware Revised Uniform Limited Partnership Act;
WHEREAS, General Growth Properties, Inc., a Delaware corporation, is the general partner of the Partnership (the "General Partner");
WHEREAS, upon the closing of the transactions contemplated pursuant to that certain Agreement and Plan of Merger dated as of March 3, 2002, among the Partnership, the General Partner and the other parties thereto (the "Merger Agreement"), the parties who are designated as "New Limited Partners" on the signature pages hereto (collectively, the "New Limited Partners") are to receive Series B Preferred Units (as defined below); and
WHEREAS, the parties hereto, being the sole general partner of the Partnership, the holders of a Majority-in-Interest of the Common Units (as defined in the Second Restated Partnership Agreement) and the New Limited Partners, desire to amend the Second Restated Partnership Agreement to effect the creation and issuance of the Series B Preferred Units, to reflect the issuance of additional Common Units to the General Partner and a certain transfer of Common Units and to reflect certain other understandings among them as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used but not defined herein (including without limitation in attached Schedule A) shall have the definitions assigned to such terms in the Second Restated Partnership Agreement, as amended hereby.
2. ADDITIONAL DEFINITIONS. Section 1.1 of the Second Restated Partnership Agreement is hereby amended by inserting the following new definitions:
"Aggregate Protected Amount" shall mean, with respect to the Obligated Partners, as a group, the aggregate amount of the Protected Amounts, if any, of the Obligated Partners, as determined on the date in question.
"Indirect Owner" shall mean, in the case of an Obligated Partner that is an entity that is classified as a partnership or disregarded entity for federal income tax purposes, any person owning an equity interest in such Obligated Partner, and, in the case of any Indirect Owner that itself is an entity that is classified as a partnership or disregarded entity for federal income tax purposes, any person owning an equity interest in such entity.
"Obligated Partner" shall mean that or those Limited Partners listed as Obligated Partners on Exhibit D attached hereto and made a part hereof, as such Exhibit may be amended from time to time by the General Partner, whether by express amendment to this Agreement or by execution of a written instrument by and between any additional Obligated Partner being directly affected thereby and the General Partner acting on behalf of the Partnership and without the prior consent of the Limited Partners (other than the Obligated Partners being affected thereby).
"Partner Nonrecourse Debt" shall mean a liability as defined in Regulations Section 1.704-2(b)(4).
"Protected Amount" shall mean, with respect to any Obligated Partner, the amount set forth opposite the name of such Obligated Partner on Exhibit D hereto and made a part hereof, as such Exhibit may be amended from time to time by an amendment to the Partnership Agreement or by execution of a written instrument by and between any Obligated Partners being affected thereby and the General Partner, acting on behalf of the Partnership and without the prior consent of the Limited Partners (other than the Obligated Partners being affected thereby); provided, however, that, in the case of an Obligated Partner that is an entity that is classified as a partnership or disregarded entity for federal income tax purposes, upon the date nine months after the death of any Indirect Owner in such Obligated Partner, or upon a fully taxable sale or exchange of all of an Indirect Owner's equity interest in such Obligated Partner (i.e., a sale or exchange in which the transferee's basis in the Indirect Owner's equity interest in the Obligated Partner is not determined, in whole or in part, by reference to the Indirect Owner's basis in the Obligated Partner), the Protected Amount of such Obligated Partner shall be reduced to the extent of the Indirect Owner's allocable share of the Obligated Partner's Protected Amount. The principles of the preceding sentence shall apply in the same manner in the case of any Indirect Owner that itself is an entity that is classified as a partnership or disregarded entity for federal income tax purposes.
"Recourse Liabilities" shall mean, as of the date of determination, the amount of indebtedness of the Partnership on that date other than Nonrecourse Liabilities and Partner Nonrecourse Debt.
3. ESTABLISHMENT AND ISSUANCE OF SERIES B PREFERRED UNITS. A new series of Preferred Units designated as the "8.5% Series B Cumulative Convertible Preferred Units" (the
"Series B Preferred Units") is hereby established and shall have such rights, preferences, limitations and qualifications as are described on Schedule A, attached hereto and by this reference made a part hereof (in addition to the rights, preferences, limitations and qualifications contained in the Second Restated Partnership Agreement to the extent applicable). Pursuant to the Merger Agreement, the Partnership hereby issues to each New Limited Partner the number of Series B Preferred Units set forth opposite its name on Exhibit A, attached hereto and by this reference made a part hereof. Each New Limited Partner is hereby admitted as a Limited Partner in respect of the Series B Preferred Units issued to it, and such New Limited Partner hereby agrees to be bound by the provisions of the Second Restated Partnership Agreement, as the same is amended hereby and as the same may be amended from time to time, with respect to such Series B Preferred Units (including without limitation the provisions of Sections 8.2, 8.4, 9.1, 9.2 and 9.3 thereof).
4. NEGATIVE CAPITAL ACCOUNTS. The following new Section 7.8 is hereby added to the Second Restated Partnership Agreement:
"7.8 NEGATIVE CAPITAL ACCOUNTS.
(a) Except as provided in the next sentence and Section 7.8(b), no Partner shall be liable to the Partnership or to any other partner for any deficit or negative balance which may exist in its Capital Account. Upon liquidation of any Obligated Partner's interest in the Partnership, whether pursuant to a liquidation of the Partnership or by means of a distribution to the Obligated Partner by the Partnership, if such Obligated Partner has a deficit balance in its Capital Account, after giving effect to all contributions, distributions, allocations and adjustments to Capital Accounts for all periods, each such Obligated Partner shall contribute to the capital of the Partnership an amount equal to its respective deficit balance. Each Obligated Partner having such an obligation to restore a deficit Capital Account shall satisfy such obligation by the end of the fiscal year of liquidation (or, if later, within ninety (90) days following the liquidation and dissolution of the Partnership). Any such contribution by an Obligated Partner shall be used to make payments to creditors of the Partnership and such Obligated Partners (i) shall not be subrogated to the rights of any such creditor against the General Partner, the Partnership, another Partner, or any Person related thereto, and (ii) hereby waive any right to reimbursement, contribution or similar right to which such Obligated Partners might otherwise be entitled as a result of the performance of their obligations under this Agreement.
(b) Notwithstanding any other provision of this Agreement, an
Obligated Partner shall cease to be an Obligated Partner upon the
earlier of (i) nine months after the death of such Obligated Partner or
(ii) six months after (A) any date after the third anniversary date of
the date hereof which is selected by the Obligated Partner as the date
upon which such Obligated Partner's obligation hereunder shall
terminate (and for which notice of such date shall be given at least 60
days prior to such selected date) or (B) an exchange of all of such
Obligated Partner's remaining Units for shares of Common Stock or
preferred stock of the General Partner (pursuant to a Rights Agreement)
or in an otherwise taxable sale or exchange of all of such Obligated
Partner's Units provided that at the time of, or during such six-month
period following such event set forth in (ii)(A)
or (B), there has not been: (X) an entry of a decree or order for relief in respect of the Partnership by a court having jurisdiction over a substantial part of the Partnership's assets, or the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Partnership or of any substantial part of its property, or ordering the winding up or liquidation of the Partnership's affairs, in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law; or (Y) the commencement against the Partnership of an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law; or (Z) the commencement by the Partnership of a voluntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or the consent by it to the entry of an order for relief in an involuntary case under any such law or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Partnership or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the failure of the Partnership generally to pay its debts as such debts become due or the taking of any action in furtherance of any of the foregoing. Following the passage of the six-month period after the event set forth in clause (ii)(A) or (B) of this paragraph, an Obligated Partner shall cease to be an Obligated Partner at the first time, if any, that all of the conditions set forth in (X) through (Z) above are no longer in existence."
5. NEW EXHIBIT A. Exhibit A to the Second Restated Partnership Agreement, identifying the Partners, the number and class or series of Units owned by them and their respective Percentage Interests, if any, is hereby deleted in its entirety and the Exhibit A in the form attached hereto is hereby inserted in its place and stead.
6. ALLOCATIONS. Exhibit C of the Second Restated Partnership Agreement, describing the allocations of the Net Income, Net Loss and/or other Partnership items, is hereby deleted in its entirety and the Exhibit C in the form attached hereto is hereby inserted in its place and stead.
7. OTHER PROVISIONS UNAFFECTED. Except as expressly amended hereby, the Second Restated Partnership Agreement shall remain in full force and effect in accordance with its terms.
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IN WITNESS WHEREOF, the undersigned have executed this Fourth Amendment on the day and year first above written.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ Joel Bayer -------------------------------------------- Joel Bayer, Senior Vice President |
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By: /s/ Marshall E. Eisenberg ---------------------------------------- Marshall E. Eisenberg, President |
NEW LIMITED PARTNERS:
GGP LIMITED PARTNERSHIP, a
Delaware limited partnership, as
attorney-in-fact for each of the
following New Limited Partners:
Cache Valley Mall Partnership, Ltd.
Burke Cloward
Alan Cordano
James Cordano
Greg Curtis
Fairfax Holding, LLC
G. Rex Frazier
Michael Frei
Hall Investment Company
Kenneth Hansen
King American Hospital, Ltd.
Florence King
Warren P. King
Paul K. Mendenhall
Tom Mulkey
North Plains Development Company, Ltd.
North Plains Land Company, Ltd.
Carl E. Olson
Martin G. Peterson
Pine Ridge Land Company, Ltd.
Price Fremont Company, Ltd.
Deirdra Price
John Price
Steven Price
Red Cliffs Mall Investment Company
Taycor Ltd.
Jennifer Wallin
Keith Whatcott
Lena Wilcher, as Trustee of the Lena Wilcher
Revocable Trust
By: GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation, its general partner
By: /s/ Joel Bayer ------------------------------------------- Joel Bayer, Executive Vice President |
EXHIBIT A
PARTNERS
SEE ATTACHED
EXHIBIT C
ALLOCATIONS
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided herein, Net Income for any fiscal year or other applicable period shall be allocated in the following order and priority:
(1) First, to the General Partner to the extent the cumulative
Net Loss allocated to the General Partner pursuant to subparagraph
(b)(5) below exceeds the cumulative Net Income allocated to the General
Partner pursuant to this subparagraph (a)(1);
(2) Second, to each Partner in proportion to and to the extent of the amount by which the cumulative Net Loss allocated to such Partner pursuant to subparagraph (b)(4) exceeds the cumulative Net Income allocated to such Partner pursuant to this subparagraph (a)(2);
(3) Third, to the General Partner until the cumulative Net Income allocated to the General Partner pursuant to this subparagraph (a)(3) equals the cumulative Net Loss allocated to the General Partner pursuant to subparagraph (b)(3);
(4) Fourth, to each holder of Preferred Units to the extent of
and in proportion to the excess of (I) the cumulative amount of
distributions made in respect of such Preferred Units, reduced by in
the case of the Series B Preferred Units the cumulative Common Unit
Reallocated Amounts, and increased by in the case of the Series B
Preferred Units the cumulative Series B Preferred Unit Reallocated
Amounts, pursuant to the provisos below, over (II) the cumulative
amount of Net Income allocated to each holder of Preferred Units
pursuant to this subparagraph (a)(4) and subparagraph (a)(5) for such
period and all prior periods reduced by the cumulative amount of Net
Loss allocated to such holder of Preferred Units pursuant to
subparagraph (b)(2) below for all prior periods; provided, however,
that in the event the cumulative Net Income allocable to the holders of
the Common Units pursuant to this subparagraph (a)(4) and subparagraph
(a)(5) below for such period and all prior periods (before application
of this proviso for such period) exceeds the cumulative distributions
made to the holders of Common Units with respect to such Units for such
period and all prior periods, the Series B Preferred Unit Reallocated
Amount shall be reallocated pro rata to the holders of Series B
Preferred Units; and
(5) Thereafter, to the holders of Common Units pro rata in accordance with their Percentage Interests; provided, however, that in the event the cumulative distributions made to the holders of Common Units with respect to such Units for such period and all prior periods exceed the cumulative Net Income allocable to the holders of the Common Units pursuant to subparagraph (a)(4) and this subparagraph (a)(5) for such period and all prior periods (before application of this proviso for such period), the Common Unit Reallocated Amount shall be reallocated pro rata to the holders of Common Units.
The term "Common Unit Reallocated Amount" shall mean an amount equal to the difference between (I) the amount of Net Income allocable to the Series B Preferred Units pursuant to subparagraph (a)(4) with respect to such fiscal year or other period, and (II) the product obtained by multiplying (A) a fraction, the numerator of which is the number of the Common Units into which the Series B Preferred Units are convertible and the denominator of which is the sum of the number of Common Units into which the Series B Preferred Units are convertible plus the number of Common Units and (B) the sum of (i) the Net Income allocable to the Series B Preferred Units pursuant to subparagraph (a)(4) with respect to such fiscal year or other period and (ii) the Net Income allocable to the Common Units pursuant to subparagraph (a)(5) with respect to such fiscal year or other period. The Common Unit Reallocated Amount shall be calculated based on the amounts of Net Income allocable under subparagraphs (a)(4) and (a)(5) prior to the application of the provisos contained in such subparagraphs with respect to such fiscal year or other period.
The term "Series B Preferred Unit Reallocated Amount" shall mean the difference between (I) the amount of Net Income allocable to the Common Units pursuant to subparagraph (a)(5) with respect to such fiscal year or other period, and (II) the product obtained by multiplying (A) a fraction, the numerator of which is the number of Common Units and the denominator of which is the sum of the number of Common Units into which the Series B Preferred Units are convertible plus the number of Common Units and (B) the sum of (i) Net Income allocable to the Series B Preferred Units pursuant to subparagraph (a)(4) with respect to such fiscal year or other period and (ii) the Net Income allocable to the Common Units pursuant to this subparagraph (a)(5) with respect to such fiscal year or other period; provided, however, that to the extent the allocation of the Series B Preferred Unit Reallocated Amount to the holders of Series B Preferred Units would cause such holders on a cumulative basis to have been allocated Net Income in excess of distributions, the Series B Preferred Unit Reallocated Amount shall be reduced by such excess. The Series B Preferred Unit Reallocated Amount shall be calculated based on the amounts of Net Income allocable pursuant to subparagraphs (a)(4) and (a)(5) prior to the application of the provisos contained in such subparagraphs with respect to such fiscal year or other period.
It is the intention of the parties that the application of subparagraphs (a)(4) and (a)(5) above will result in corresponding return of capital distributions (per Unit) to the Series B Preferred Units (on an as-converted basis) and Common Units on a cumulative basis and shall be applied and interpreted consistently therewith.
(b) Net Loss. Except as otherwise provided herein, Net Loss of the Partnership for each fiscal year or other applicable period shall be allocated as follows:
(1) First, to the holders of Common Units, in proportion to their respective Percentage Interests provided that the Net Loss allocated to a holder of Common Units pursuant to this Section (b)(1) shall not exceed the maximum amount of Net Loss that can be allocated without causing a holder of Common Units to have an Adjusted Capital Account Deficit (excluding for this purpose any increase to such Adjusted Capital Account Deficit for a holder's actual obligation to fund a deficit Capital Account balance,
including the obligation of an Obligated Partner to fund a deficit Capital Account Balance pursuant to Section 7.8 hereof and also excluding for this purpose the balance of such holder's Capital Account attributable to such holder's Preferred Units, if any);
(2) Second, to the holders of Preferred Units in proportion to each such holder's Capital Account balance in such Preferred Units, provided that the Net Loss allocated to a holder of Preferred Units pursuant to this Section (b)(1) shall not exceed the maximum amount of Net Loss that can be allocated without causing any holder of Preferred Units to have an Adjusted Capital Account Deficit (excluding for this purpose any increase to such Adjusted Capital Account Deficit for a holder's actual obligation to fund a deficit Capital Account balance, including the obligation of an Obligated Partner to fund a deficit Capital Account Balance pursuant to Section 7.8 hereof);
(3) Third, to the General Partner, until the General Partner's Adjusted Capital Account Deficit (excluding for this purpose any increase to such Adjusted Capital Account Deficit for the obligation of the General Partner to actually fund a deficit Capital Account balance, including any deemed obligation pursuant to Regulation Section 1.704-(1)(b)(2)(ii)(c)) equals the excess of (i) the amount of Recourse Liabilities over (ii) the Aggregate Protected Amount;
(4) Fourth, to the Obligated Partners, in proportion to their respective Protected Amounts, until such time as the Obligated Partners have been allocated an aggregate amount of Net Loss pursuant to this subparagraph (b)(4) equal to the Aggregate Protected Amount; and
(5) Thereafter, to the General Partner.
2. Special Allocations.
Notwithstanding any provisions of paragraph 1 of this Exhibit C, the following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a net decrease in Partnership Minimum Gain for any Partnership fiscal year (except as a result of conversion or refinancing of Partnership indebtedness, certain capital contributions or revaluation of the Partnership property as further outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Partner's share of the net decrease in Partnership Minimum Gain. The items to be so allocated shall be determined in accordance with Regulation Section 1.704-2(f). This paragraph (a) is intended to comply with the minimum gain chargeback requirement in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this paragraph (a) shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any fiscal year (other than due to the conversion, refinancing or other change in the debt instrument causing it to become partially or wholly nonrecourse, certain capital contributions, or certain revaluations of
Partnership property as further outlined in Regulation Section 1.704-2(i)(4)), each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Partner's share of the net decrease in the Minimum Gain Attributable to Partner Nonrecourse Debt. The items to be so allocated shall be determined in accordance with Regulation Section 1.704-2(i)(4) and (j)(2). This paragraph (b) is intended to comply with the minimum gain chargeback requirement with respect to Partner Nonrecourse Debt contained in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this paragraph (b) shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Limited Partner unexpectedly receives any adjustments, allocations or distributions described in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Limited Partner has an Adjusted Capital Account Deficit, items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly as possible. This paragraph (c) is intended to constitute a "qualified income offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(d) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any fiscal year or other applicable period shall be specially allocated to the Partner that bears the economic risk of loss for the debt (i.e., the Partner Nonrecourse Debt) in respect of which such Partner Nonrecourse Deductions are attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1)).
(e) Allocations With Respect to Preferred Unit Redemptions. After giving effect to the special allocations set forth above, Net Income of the Partnership shall be allocated to the holders of Preferred Units, at the time of redemption of such Preferred Units (other than in the case of a redemption occurring pursuant to a final liquidation of the Partnership), in an amount equal to the portion of any redemption distribution that exceeds the Liquidation Preference Amount (other than any accrued but unpaid distribution thereon) per Preferred Unit established for such Preferred Unit in the applicable Preferred Unit designation. The character of the items of Net Income allocated to the holders of Preferred Units pursuant to this subparagraph (e) shall proportionately reflect the relative amounts of the items of Partnership income and gain as determined for federal income tax purposes under Section 703(a) of the Code.
(f) Tax Treatment of Conversion of Preferred Units. Upon conversion of a Preferred Unit(s) into Common Unit(s), the Company will specially allocate to the converting Partner any Net Income or Net Loss attributable to an adjustment of Gross Asset Values under subparagraph (b) of the definition of "Gross Asset Value" until the portion of such Partner's Capital Account attributable to each Common Unit received upon conversion equals the Capital Account attributable to a Common Unit at the time of conversion. To the extent that such allocation is insufficient to bring the portion of the Capital Account attributable to each Common Unit received upon conversion by the converting Partner to the Capital Account attributable to a Common Unit at the time of conversion, a portion of the Capital Account of the non-converting Partners will be shifted, pro rata in accordance with their relative Capital Account balances, to the converted Partner and such transaction shall be treated by the Partnership and the Converting Partner as a transaction defined in Section 721 of the Code.
(g) Curative Allocations. The Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss, and deduction among the Partners so that, to the extent possible, the cumulative net amount of allocations of Partnership items under paragraphs 1 and 2 of this Exhibit C shall be equal to the net amount that would have been allocated to each Partner if the Regulatory Allocations had not occurred. This subparagraph (g) is intended to minimize to the extent possible and to the extent necessary any economic distortions which may result from application of the Regulatory Allocations and shall be interpreted in a manner consistent therewith. For purposes hereof, "Regulatory Allocations" shall mean the allocations provided under subparagraphs 2(a) through (d).
3. Tax Allocations.
(a) Generally. Subject to paragraphs (b) and (c) hereof, items of income, gain, loss, deduction and credit to be allocated for income tax purposes (collectively, "Tax Items") shall be allocated among the Partners on the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the sale of property is treated as gain which is ordinary income by virtue of the application of Code Sections 1245 or 1250 ("Affected Gain"), then (A) such Affected Gain shall be allocated among the Partners in the same proportion that the depreciation and amortization deductions giving rise to the Affected Gain were allocated and (B) other Tax Items of gain of the same character that would have been recognized, but for the application of Code Sections 1245 and/or 1250, shall be allocated away from those Partners who are allocated Affected Gain pursuant to Clause (A) so that, to the extent possible, the other Partners are allocated the same amount, and type, of capital gain that would have been allocated to them had Code Sections 1245 and/or 1250 not applied. For purposes hereof, in order to determine the proportionate allocations of depreciation and amortization deductions for each fiscal year or other applicable period, such deductions shall be deemed allocated on the same basis as Net Income and Net Loss for such respective period.
(c) Allocations Respecting Section 704(c) and Revaluations; Curative
Allocations Resulting from the Ceiling Rule. Notwithstanding paragraph (b)
hereof, Tax Items with respect to Partnership property that is subject to Code
Section 704(c) and/or Regulation Section 1.704-1(b)(2)(iv)(f) (collectively
"Section 704(c) Tax Items") shall be allocated in accordance with said Code
section and/or Regulation Section 1.704-1(b)(4)(i), as the case may be. The
allocation of Tax Items shall be in accordance with the "traditional method" set
forth in Treas. Reg. ss.1.704-3(b)(1), unless otherwise determined by the
General Partner, and shall be subject to the ceiling rule stated in Regulation
Section 1.704-3(b)(1). The General Partner is authorized to specially allocate
Tax Items (other than Section 704(c) Tax Items) to cure for the effect of the
ceiling rule. The intent of this Section 3(c) is that each Partner who
contributed to the capital of the Partnership a partnership interest in an
existing Property Partnership will bear, through reduced allocations of
depreciation and increased allocations of gain or other items, the tax
detriments associated with any precontribution gain and this Section 3(c) shall
be interpreted consistently with such intent.
4. Allocations Upon Final Liquidation.
With respect to the fiscal year in which the final liquidation of the Partnership occurs in accordance with Section 7.2 of the Agreement, and notwithstanding any other provision of Sections 1, 2, or 3 hereof, items of Partnership income, gain, loss and deduction shall be specially allocated to the Partners in such amounts and priorities as are necessary so that the positive capital accounts of the Partners shall, as closely as possible, equal the amounts that will be distributed to the Partners pursuant to Section 7.2.
EXHIBIT D
OBLIGATED PARTNERS
SEE ATTACHED
SCHEDULE A
1. DEFINITIONS. As used herein, the following terms shall have the meanings set forth below, unless the context otherwise requires:
"Distribution Period" shall mean the quarterly period that is then the
dividend period with respect to the Common Stock or, if no such dividend period
is established, the calendar quarter shall be the Dividend Period; provided that
(a) the initial distribution period shall commence on July 10, 2002 and end on
and include September 30, 2002 and (b) the distribution period in which the
final liquidation payment is made pursuant to Section 7.2 of the Second Restated
Partnership Agreement shall commence on the first day following the immediately
preceding Distribution Period and end on the date of such final liquidation
payment.
"Distribution Payment Date" shall mean, with respect to any Distribution Period, the payment date for the distribution declared by the General Partner on its shares of Common Stock for such Distribution Period or, if no such distribution payment date is established, the last business day of such Distribution Period.
"Fair Market Value" shall mean the average of the daily Closing Price during the five consecutive Trading Days selected by the General Partner commencing not more than 20 Trading Days before, and ending not later than, the day in question with respect to the issuance or distribution requiring such computation.
"Fifteenth Anniversary Date" shall mean July 10, 2017.
2. DESIGNATION AND NUMBER; ETC. The Series B Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Second Restated Partnership Agreement to the extent applicable). The authorized number of Series B Preferred Units shall be 1,426,392.6660. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule A and any other provision of the Second Restated Partnership Agreement, the provisions of this Schedule A shall control. For purposes of this Amendment, the rights of the Series B Preferred Units shall be construed to include their rights under the Redemption Rights Agreement (Common Units) and Redemption Rights Agreement (Series B Preferred Units).
3. RANK. The Series B Preferred Units shall, with respect to the payment of distributions and the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, rank as follows:
(a) senior to all classes or series of Common Units and to all Units the terms of which provide that such Units shall rank junior to such Series B Preferred Units;
(b) on a parity with the Series A Preferred Units and each other series of Preferred Units issued by the Partnership which does not provide by its express terms that it ranks junior in right of payment to the Series B Preferred Units with respect to payment of distributions or amounts upon liquidation, dissolution or winding-up; and
(c) junior to any class or series of Preferred Units issued by the
Partnership that ranks senior to the Series B Preferred Units in accordance with
Section 4 of this Schedule A.
4. VOTING.
(a) Holders of Series B Preferred Units shall not have any voting
rights, except as provided by applicable law and as described below in this
Section 4.
(b) So long as any Series B Preferred Units remain outstanding, the Partnership shall not, without the affirmative vote or consent of the holders of at least a majority of the Series B Preferred Units outstanding at the time, given in person or by proxy, either in writing or at a meeting (such series voting separately as a class), (i) authorize, create, issue or increase the authorized or issued amount of, any class or series of partnership interests in the Partnership ranking prior to the Series B Preferred Units with respect to the payment of distributions or the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership or reclassify any Common Units into such partnership interests, or create, authorize or issue any obligation or security convertible or exchangeable into or evidencing the right to purchase any such partnership interests; or (ii) amend, alter or repeal the provisions of the Partnership Agreement, whether by merger or consolidation or otherwise (an "Event"), so as to materially and adversely affect any right, preference, privilege or voting power of the Series B Preferred Units or the holders thereof. Notwithstanding anything to the contrary contained herein, none of the following shall be deemed to materially and adversely affect any such right, preference, privilege or voting power or otherwise require the vote or consent of the holders of the Series B Preferred Units: (X) the occurrence of any Event so long as either (1) the Partnership is the surviving entity, such entity is the principal direct subsidiary of a publicly traded REIT whose common equity is traded on the New York Stock Exchange and the Series B Preferred Units remain outstanding with the terms thereof materially unchanged or (2) interests in an entity having substantially the same rights and terms as the Series B Preferred Units are substituted for the Series B Preferred Units and such entity is the principal direct subsidiary of a publicly traded REIT whose common equity is traded on the New York Stock Exchange, (Y) any increase in the amount of the authorized Preferred Units or Common Units or the creation or issuance of any other series or class of Preferred Units or Common Units or any increase in the amount of Common Units or any other series of Preferred Units, in each case ranking on a parity with or junior to the Series B Preferred Units with respect to payment of distributions and the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership and (Z) the dissolution, liquidation and/or winding up of the Partnership.
The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series B Preferred Units shall have been converted or redeemed.
For purposes of the foregoing provisions of this Section 4, each Series B Preferred Unit shall have one (1) vote. Except as otherwise required by applicable law or as set forth herein, the Series B Preferred Units shall not have any voting rights or powers and the consent of the holders thereof shall not be required for the taking of any action.
5. DISTRIBUTIONS.
(a) With respect to each Distribution Period and subject to the rights of the holders of Preferred Units ranking senior to or on parity with the Series B Preferred Units, the holders of Series B Preferred Units shall be entitled to receive, when, as and if declared by the General Partner, out of assets of the Partnership legally available for the payment of distributions, quarterly cumulative cash distributions in an amount per Series B Preferred Unit equal to the greater of (i) $1.0625 and (ii) the amount of the regular quarterly cash distribution for such Distribution Period upon the number of Common Units (or portion thereof) into which such Series B Preferred Unit is then convertible in accordance with Section 7 of this Schedule A (but, with respect to any Distribution Period ending after the Fifteenth Anniversary Date, no amount shall be paid in respect of clause (ii) of this paragraph in respect of the portion of such Distribution Period occurring after the Fifteenth Anniversary Date). Notwithstanding anything to the contrary contained herein, the amount of distributions described under each of clause (i) and (ii) of this paragraph for the initial Distribution Period, or any other period shorter than a full Distribution Period, shall be prorated and computed on the basis of twelve 30-day months and a 360-day year. The distributions upon the Series B Preferred Units for each Distribution Period shall, if and to the extent declared or authorized by the General Partner on behalf of the Partnership, be paid in arrears (without interest or other amount) on the Distribution Payment Date with respect thereto, and, if not paid on such date, shall accumulate, whether or not there are funds legally available for the payment thereof and whether or not such distributions are declared or authorized. The record date for distributions upon the Series B Preferred Units for any Distribution Period shall be the same as the record date for the distributions upon the Common Units for such Distribution Period (or, if no such record is set for the Common Units, the fifteenth day of the calendar month in which the applicable Distribution Payment Date falls). Accumulated and unpaid distributions for any past Distribution Periods may be declared and paid at any time, without reference to any Distribution Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the General Partner. Any distribution payment made upon the Series B Preferred Units shall first be credited against the earliest accumulated but unpaid distributions due with respect to such Units which remains payable. No interest, or sum of money in lieu of interest, shall be owing or payable in respect of any distribution payment or payments on the Series B Preferred Units, whether or not in arrears, including, without limitation, any distribution payment that is deferred pursuant to Section 5(g) of this Schedule A.
(b) No distribution on the Series B Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as the terms and provisions of any agreement of the Partnership, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. Notwithstanding the foregoing, distributions on the Series B Preferred Units shall accumulate whether or not any of the foregoing restrictions exist.
(c) Except as provided in Section 5(d) of this Schedule A, so long as any Series B Preferred Units are outstanding, (i) no distributions (other than in Common Units or other Units ranking junior to the Series B Preferred Units as to payment of distributions and amounts upon
liquidation, dissolution or winding-up of the Partnership) shall be declared or paid or set apart for payment upon the Common Units or any other class or series of partnership interests in the Partnership or Units ranking, as to payment of distributions or amounts distributable upon liquidation, dissolution or winding-up of the Partnership, on a parity with or junior to the Series B Preferred Units, for any period and (ii) no Common Units or other Units ranking junior to or on a parity with the Series B Preferred Units as to payment of distributions or amounts upon liquidation, dissolution or winding-up of the Partnership, shall be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange for other Units ranking junior to the Series B Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership or by redemptions pursuant to Rights Agreements) unless, in the case of either clause (i) or (ii), full cumulative distributions have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series B Preferred Units for all Distribution Periods ending on or prior to the distribution payment date for the Common Units or such other class or series of Unit or the date of such redemption, purchase or other acquisition.
(d) When distributions are not paid in full (or a sum sufficient for such full payment is not set apart for such payment) upon the Series B Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series B Preferred Units, all distributions declared upon the Series B Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series B Preferred Units shall be declared pro rata so that the amount of distributions declared per Unit of Series B Preferred Units and such other partnership interests in the Partnership or Units shall in all cases bear to each other the same ratio that accrued distributions per Unit on the Series B Preferred Units and such other partnership interests in the Partnership or Units (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such Units do not have cumulative distributions) bear to each other.
(e) Holders of Series B Preferred Units shall not be entitled to any distributions, whether payable in cash, property or Units, in excess of the cumulative distributions described in Section 5(a) above.
(f) Distributions with respect to the Series B Preferred Units are intended to qualify as permitted distributions of cash that are not treated as a disguised sale within the meaning of Treasury Regulation ss.1.707-4 and the provisions of this Schedule A shall be construed and applied consistently with such Treasury Regulations.
(g) Notwithstanding anything to the contrary contained herein (but subject to the last sentence of Section 5(a) hereof), if the distributions with respect to the Series B Preferred Units made on or prior to the second anniversary of the issuance of the Series B Preferred Units would result in any holder of Series B Preferred Units receiving an annual return on such holder's "unreturned capital" (as defined for purposes of Treasury Regulation Section 1.707-4(a)) for a fiscal year (treating the fiscal year in which such second anniversary occurs as ending on such date) in excess of the Safe Harbor Rate (as defined below), then the distributions to such holder
in excess of such Safe Harbor Rate will be deferred, will cumulate and will be paid, if and to the extent declared or authorized by the General Partner on behalf of the Partnership and subject to the provisions of Section 5(b) hereof, on the earlier to occur of (i) the disposition of the Series B Preferred Units to which such deferred distributions relate in a transaction in which the disposing holder recognizes taxable gain thereon or (ii) the first distribution payment date with respect to the Series B Preferred Units following the second anniversary of the issuance of the Series B Preferred Units. For purposes of the foregoing, the "Safe Harbor Rate" shall equal 150% of the highest applicable federal rate, based on annual compounding, in effect for purposes of Section 1274(d) of the Code at any time between the date of the issuance of the Series B Preferred Units and the date on which the relevant distribution payment is made. Notwithstanding anything to the contrary contained herein, any distributions that are deferred under this Section 5(g) shall be deemed to have been paid in full for purposes of Sections 5(c) and (d) of this Schedule A until the end of the Distribution Period during which they are to be paid as provided above.
(h) For any quarterly period, any amounts paid with respect to the Series B Preferred Units in excess of the amount that would have been paid with respect to such Units for such period had they been converted into Common Units in accordance with the terms of Section 7 of this Schedule A are intended to constitute guaranteed payments within the meaning of Section 707(c) of the Code and shall not be treated as distributions for purposes of allocating Net Income and Net Loss or otherwise maintaining Capital Accounts.
6. LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, before any payment or distribution of the assets of the Partnership (whether capital or surplus) shall be made to or set apart for the holders of Common Units or any other partnership interests in the Partnership or Units ranking junior to the Series B Preferred Units as to the distribution of assets upon the liquidation, dissolution or winding-up of the Partnership, the holders of the Series B Preferred Units shall, with respect to each such Unit, be entitled to receive, out of the assets of the Partnership available for distribution to Partners after payment or provision for payment of all debts and other liabilities of the Partnership, an amount equal to the greater of (i) $50.00, plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution and (ii) the amount that a holder of such Series B Preferred Unit would have received upon final distribution in respect of the number of Common Units into which such Series B Preferred Unit was convertible immediately prior to such date of final distribution (but no amount shall be paid in respect of the foregoing clause (ii) after the Fifteenth Anniversary Date). If, upon any such voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of the Series B Preferred Units are insufficient to pay in full the preferential amount aforesaid on the Series B Preferred Units and liquidating payments on any other Units or partnership interests in the Partnership of any class or series ranking, as to payment of distributions and amounts upon the liquidation, dissolution or winding-up of the Partnership, on a parity with the Series B Preferred Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series B Preferred Units and any such other Units or partnership interests in the Partnership ratably in accordance with the respective amounts that would be payable on such Series B Preferred Units and such other Units or partnership interests in the Partnership if all amounts payable thereon were paid in full. For the
purposes of this Section 6, none of (i) a consolidation or merger of the Partnership with or into another entity, (ii) a merger of another entity with or into the Partnership or (iii) a sale, lease or conveyance of all or substantially all of the Partnership's assets, properties or business shall be deemed to be a liquidation, dissolution or winding-up of the Partnership.
(b) Written notice of such liquidation, dissolution or winding-up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series B Preferred Units at the respective addresses of such holders as the same shall appear on the transfer records of the Partnership.
(c) After payment of the full amount of liquidating distributions to which they are entitled as provided in Section 6(a) of this Schedule A, the holders of Series B Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.
7. CONVERSION. Holders of Series B Preferred Units shall have the right to convert all or a portion of such Units into Common Units, as follows:
(a) A holder of Series B Preferred Units shall have the right, at such
holder's option, at any time (subject to the proviso contained in the
immediately succeeding sentence), to convert any whole number of Series B
Preferred Units, in whole or in part, into Common Units. Each Series B Preferred
Unit shall be convertible into the number of Common Units determined by dividing
(i) the $50 face amount per Unit, plus an amount equal to all distributions
(whether or not earned or declared) accrued and unpaid thereon to the end of the
last Distribution Period (but without duplication of the distributions, if any,
which the holder of such Series B Preferred Unit is entitled to receive for such
last Distribution Period pursuant to the third paragraph of Section 7(b) of this
Schedule A or in respect of the Common Units into which such Series B Preferred
Unit is converted) by (ii) a conversion price of $50.00 per Common Unit
(equivalent to an initial conversion rate of one Common Unit for each Series B
Preferred Unit), subject to adjustment as described in Section 7(c) hereof (the
"Conversion Price"); provided, however, that the right to convert Series B
Preferred Units may not be exercised after the Fifteenth Anniversary Date. No
fractional Common Units will be issued upon any conversion of Series B Preferred
Units. Instead, the number of Common Units to be issued upon each conversion
shall be rounded to the nearest whole number of Common Units.
(b) To exercise the conversion right, the holder of each Series B Preferred Unit to be converted shall execute and deliver to the General Partner, at the principal office of the Partnership, a written notice (the "Conversion Notice") indicating that the holder thereof elects to convert such Series B Preferred Unit. Unless the Units issuable on conversion are to be issued in the same name as the name in which such Series B Preferred Unit is registered, each Series B Preferred Unit surrendered for conversion shall be accompanied by instruments of transfer, in form reasonably satisfactory to the Partnership, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Partnership demonstrating that such taxes have been paid).
As promptly as practicable after delivery of the Conversion Notice as aforesaid, the Partnership shall amend the Partnership Agreement to reflect the conversion and the issuance of Common Units issuable upon the conversion of such Series B Preferred Units in accordance with the provisions of this Section 7. In addition, the Partnership shall deliver to the holder at its address as reflected on the records of the Partnership, a copy of such amendment.
A holder of Series B Preferred Units at the close of business on the record date for any Distribution Period shall be entitled to receive the distribution payable on such Units on the corresponding Distribution Payment Date notwithstanding the conversion of such Series B Preferred Units following such record date and prior to such Distribution Payment Date and shall have no right to receive any distribution for such Distribution Period in respect of the Common Units into which such Series B Preferred Units were converted. Except as provided herein, the Partnership shall make no payment or allowance for unpaid distributions, whether or not in arrears, on converted Series B Preferred Units or for distributions on the Common Units that are issued upon such conversion.
Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the Conversion Notice is received by the Partnership as aforesaid, and the person or persons in whose name or names any Common Units shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of such Units at such time on such date, and such conversion shall be at the Conversion Price in effect at such time and on such date unless the transfer books of the Partnership shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such Units have been surrendered and such notice received by the Partnership.
(c) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Partnership shall, after the date on which the Series B Preferred Units are first issued (the "Issue Date"), (A) pay or make a distribution to holders of its partnership interests or Units in Common Units, (B) subdivide its outstanding Common Units into a greater number of Units or distribute Common Units to the holders thereof, (C) combine its outstanding Common Units into a smaller number of Units or (D) issue any partnership interests or Units by reclassification of its Common Units, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of holders entitled to receive such distribution or at the opening of business on the day next following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any Series B Preferred Unit thereafter surrendered for conversion shall be entitled to receive the number of Common Units or other partnership interests or securities that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such Series B Preferred Unit been converted immediately prior to the record date in the case of a distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subsection (i) shall become effective immediately after the opening of business on the day next following the record date (except as provided in subsection (g) below) in the
case of a distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification.
(ii) If the Partnership shall issue after the Issue Date rights, options or warrants to all holders of Common Units entitling them to subscribe for or purchase Common Units (or securities convertible into or exchangeable for Common Units) at a price per Unit less than the Fair Market Value per Common Unit on the record date for the determination of holders of Common Units entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the opening of business on the day following the date fixed for such determination by (II) a fraction, the numerator of which shall be the sum of (A) the number of Common Units outstanding at the close of business on the date fixed for such determination and (B) the number of Common Units that the aggregate proceeds to the Partnership from the exercise of such rights, options or warrants for Common Units would purchase at such Fair Market Value, and the denominator of which shall be the sum of (A) the number of Common Units outstanding at the close of business on the date fixed for such determination and (B) the number of additional Common Units offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in subsection (g) below). In determining whether any rights, options or warrants entitle the holders of Common Units to subscribe for or purchase Common Units at less than the Fair Market Value, there shall be taken into account any consideration received by the Partnership upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of the General Partner.
(iii) If the Partnership shall distribute after the Issue Date to all holders of Common Units any other securities or evidences of its indebtedness or assets (excluding those rights, options and warrants referred to in and treated under subsection (ii) above, and excluding distributions paid exclusively in cash) (any of the foregoing being hereinafter in this subsection (iii) called the "Securities"), then in each case the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of holders of Common Units entitled to receive such distribution by (II) a fraction, the numerator of which shall be the Fair Market Value per Common Unit on the record date mentioned below less the then fair market value (as determined in good faith by the Board of the General Partner) of the portion of the Securities so distributed applicable to one Common Unit, and the denominator of which shall be the Fair Market Value per Common Unit on the record date mentioned below. Such adjustment shall become effective immediately at the opening of business on the business day next following (except as provided in subsection (g) below) the record date for the determination of holders of Common Units entitled to receive such distribution. For the purposes of this subsection (iii), a distribution in the form of a Security, which is distributed not only to the holders of the Common Units on the date
fixed for the determination of holders of Common Units entitled to such distribution of such Security, but also is distributed with each Common Unit delivered to a person converting a Series B Preferred Unit after such determination date, shall not require an adjustment of the Conversion Price pursuant to this subsection (iii); provided that on the date, if any, on which a person converting a Series B Preferred Unit would no longer be entitled to receive such Security with a Common Unit, a distribution of such Securities shall be deemed to have occurred, and the Conversion Price shall be adjusted as provided in this subsection (iii) (and such day shall be deemed to be "the date fixed for the determination of the holders of Common Units entitled to receive such distribution" and "the record date" within the meaning of the two preceding sentences).
(iv) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any adjustments
that by reason of this subsection (iv) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment shall
be required and made in accordance with the provisions of this Section
7 (other than this subsection (iv)) not later than such time as may be
required in order to preserve the tax-free nature of a distribution to
the holders of Common Units. Notwithstanding any other provisions of
this Section 7, the Partnership shall not be required to make any
adjustment to the Conversion Price for the issuance of any Common Units
pursuant to any plan providing for the reinvestment of distributions or
interest payable on securities of the Partnership and the investment of
additional optional amounts in Common Units under such plan. All
calculations under this Section 7 shall be made to the nearest cent
(with $.005 being rounded upward) or to the nearest one-tenth of a Unit
(with .05 of a Unit being rounded upward), as the case may be. Anything
in this subsection (c) to the contrary notwithstanding, the Partnership
shall be entitled, to the extent permitted by law, to make such
reductions in the Conversion Price, in addition to those required by
this subsection (c), as it in its discretion shall determine to be
advisable in order that any Unit distributions, subdivision of Units,
reclassification or combination of Units, distribution of rights,
options or warrants to purchase Units or securities, or a distribution
consisting of other assets (other than cash distributions) hereafter
made by the Partnership to its holders of Units shall not be taxable
but any such adjustment shall not adversely affect the value of the
Series B Preferred Units.
(d) If the Partnership shall be a party to any transaction (including, without limitation, a merger, consolidation, self tender offer for all or substantially all of the Common Units, sale of all or substantially all of the Partnership's assets or recapitalization of the Common Units and excluding any transaction as to which subsection (c)(i) of this Section 7 applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which Common Units shall be converted into the right to receive other partnership interests, shares, stock, securities or other property (including cash or any combination thereof), each Series B Preferred Unit which is not converted into the right to receive other partnership interests, shares, stock, securities or other property in connection with such Transaction shall thereafter be convertible into the kind and amount of shares, stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of Common Units into which one Series B Preferred Unit was convertible immediately
prior to such Transaction, assuming such holder of Common Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a "Constituent Person"), or an affiliate of a Constituent Person. The Partnership shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this subsection (d), and it shall not consent or agree to the occurrence of any Transaction until the Partnership has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series B Preferred Units that will contain provisions enabling the holders of Series B Preferred Units that remain outstanding after such Transaction to convert into the consideration received by holders of Common Units at the Conversion Price in effect immediately prior to such Transaction (with the holder having the option to elect the type of consideration if a choice was offered in the Transaction). The provisions of this subsection (d) shall similarly apply to successive Transactions.
(e) If:
(i) the Partnership shall declare a distribution on the Common Units (other than a cash distribution) or there shall be a reclassification, subdivision or combination of Common Units; or
(ii) the Partnership shall authorize the granting to the holders of the Common Units of rights, options or warrants to subscribe for or purchase any Units of any class or any other rights, options or warrants; or
(iii) there shall be any reclassification of the Common Units or any consolidation or merger to which the Partnership is a party and for which approval of any partners of the Partnership is required, involving the conversion or exchange of Common Units into securities or other property, or a self tender offer by the Partnership for all or substantially all of the Common Units, or the sale or transfer of all or substantially all of the assets of the Partnership as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding-up of the Partnership,
then the Partnership shall cause to be mailed to the holders of the Series B Preferred Units at their addresses as shown on the records of the Partnership, as promptly as possible a notice stating (A) the date on which a record is to be taken for the purpose of such distribution of rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Units of record to be entitled to such distribution of rights, options or warrants are to be determined or (B) the date on which such reclassification, subdivision, combination, consolidation, merger, sale, transfer, liquidation, dissolution or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Units of record shall be entitled to exchange their Common Units for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding-up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.
(f) Whenever the Conversion Price is adjusted as herein provided, the Partnership shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to the holder of each Series B Preferred Unit at such holder's last address as shown on the records of the Partnership.
(g) In any case in which subsection (c) of this Section 7 provides that an adjustment shall become effective on the date next following the record date for an event, the Partnership may defer until the occurrence of such event issuing to the holder of any Series B Preferred Unit converted after such record date and before the occurrence of such event the additional Common Units issuable upon such conversion by reason of the adjustment required by such event over and above the Common Units issuable upon such conversion before giving effect to such adjustment.
(h) For purposes of this Section 7, the number of Common Units at any time outstanding shall not include any Common Units then owned or held by or for the account of the Partnership. The Partnership shall not make any distribution on Common Units held in the treasury of the Partnership.
(i) If any action or transaction would require adjustment of the Conversion Price pursuant to more than one subsection of this Section 7, only one adjustment shall be made, and such adjustment shall be the amount of adjustment that has the highest absolute value.
(j) If the Partnership shall take any action affecting the Common Units, other than action described in this Section 7, that in the reasonable judgment of the General Partner would materially and adversely affect the conversion rights of the holders of the Series B Preferred Units, the Conversion Price for the Series B Preferred Units may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the General Partner determines to be equitable in the circumstances.
(k) The Partnership covenants that Common Units issued upon conversion of the Series B Preferred Units shall be validly issued, fully paid and nonassessable and the holder thereof shall be entitled to rights of a holder of Common Units specified in the Partnership Agreement. Prior to the delivery of any securities that the Partnership shall be obligated to deliver upon conversion of the Series B Preferred Units, the Partnership shall endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof, by any governmental authority.
(l) The Partnership will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Common Units or other securities or property on conversion of the Series B Preferred Units pursuant hereto; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of Common Units or other securities or property in a name other than that of the holder of the Series B Preferred Units to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Partnership the amount of any such tax or established, to the reasonable satisfaction of the Partnership, that such tax has been paid.
(m) Notwithstanding anything to the contrary contained herein, the adjustment provisions contained in this Section 7 shall be applied so that there is no duplication of adjustments made pursuant to any other document.
Exhibit 10.14
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
GGPLP L.L.C.
TABLE OF CONTENTS
PAGE ARTICLE I Definitions; Etc........................................... 1 1.1 Definitions................................................... 1 1.2 Exhibits, Etc................................................. 15 1.3 Pronouns and Headings......................................... 16 ARTICLE II Continuation............................................... 16 2.1 Continuation.................................................. 16 2.2 Name.......................................................... 16 2.3 Character of the Business..................................... 16 2.4 Location of the Principal Place of Business................... 17 2.5 Registered Agent and Registered Office........................ 17 ARTICLE III Term....................................................... 17 3.1 Commencement.................................................. 17 3.2 Dissolution................................................... 17 ARTICLE IV Classes of Units........................................... 17 4.1 Common Units.................................................. 17 4.2 Preferred Units............................................... 18 4.3 Establishment of Series A Preferred Units..................... 18 4.4 No Third Party Beneficiary.................................... 32 4.5 No Interest; No Return; No Withdrawal......................... 33 4.6 No Other Capital Contributions................................ 33 4.7 Establishment and Issuance of Series B Preferred Units........ 33 ARTICLE V Allocations and Other Tax and Accounting Matters........... 33 5.1 Allocations................................................... 33 5.2 Distributions................................................. 33 5.3 Books of Account.............................................. 34 5.4 Reports....................................................... 34 5.5 Tax Elections and Returns..................................... 34 5.6 Tax Matters Member............................................ 34 |
TABLE OF CONTENTS
(continued)
PAGE 5.7 Withholding................................................... 34 ARTICLE VI Rights, Duties and Restrictions of the Managing Member..... 35 6.1 Expenditures by Company....................................... 35 6.2 Powers and Duties of Managing Member.......................... 35 6.3 Proscriptions................................................. 38 6.4 Title Holder.................................................. 38 6.5 Compensation of the Managing Member........................... 38 6.6 Waiver and Indemnification.................................... 38 6.7 Operation in Accordance with REIT Requirements................ 39 6.8 Duties and Conflicts.......................................... 39 ARTICLE VII Dissolution, Liquidation and Winding-Up.................... 40 7.1 Accounting.................................................... 40 7.2 Distribution on Dissolution................................... 40 7.3 Timing Requirements........................................... 40 7.4 Sale of Company Assets........................................ 41 7.5 Distributions in Kind......................................... 41 7.6 Documentation of Liquidation.................................. 41 7.7 Negative Capital Accounts..................................... 41 ARTICLE VIII Transfer of Units.......................................... 41 8.1 Managing Member Transfer...................................... 41 8.2 Transfers by Other Members.................................... 42 8.3 Restrictions on Transfer...................................... 42 8.4 Bankruptcy of a Member........................................ 43 ARTICLE IX Arbitration of Disputes.................................... 43 9.1 Arbitration................................................... 43 9.2 Procedures.................................................... 43 9.3 Binding Character............................................. 44 9.4 Exclusivity................................................... 44 |
TABLE OF CONTENTS
(continued)
PAGE 9.5 No Alteration of Agreement.................................... 44 ARTICLE X General Provisions......................................... 45 10.1 Notices....................................................... 45 10.2 Successors.................................................... 45 10.3 Effect and Interpretation..................................... 45 10.4 Counterparts.................................................. 45 10.5 Members Not Agents............................................ 45 10.6 Entire Understanding; Etc..................................... 45 10.7 Amendments.................................................... 45 10.8 Severability.................................................. 45 10.9 Trust Provision............................................... 45 10.10 Issuance of Certificates Representing Units................... 46 10.11 Specific Performance.......................................... 46 10.12 Power of Attorney............................................. 46 |
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SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
GGPLP L.L.C.
THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT is made and
entered into this 17th day of April, 2002, by and among the undersigned parties.
W I T N E S S E T H:
WHEREAS, a Delaware limited liability company known as GGPLP L.L.C. (the "Company") exists pursuant to the Delaware Limited Liability Company Act and that certain Amended and Restated Operating Agreement dated as of May 25, 2000 (the "Original Agreement"), among GGP Limited Partnership, a Delaware limited partnership (the "Operating Partnership"), GGP American Properties Inc., a Delaware corporation, Caledonian Holding Company, Inc., a Delaware corporation, Goldman Sachs 2000 Exchange Place Fund, L.P. (the "GS 2000 Exchange Fund"), and General Growth Properties, Inc., a Delaware corporation ("GGPI");
WHEREAS, the GS 2000 Exchange Fund has previously assigned its preferred units of membership interest in the Company to GSEP 2000 Realty Corp., a Delaware corporation (the "GS 2000 REIT");
WHEREAS, concurrently herewith, GSEP 2002 Realty Corp., a Delaware corporation (the "GS 2002 REIT"), is contributing $50,000,000 to the capital of the Company and, in exchange therefor, the Company is issuing to the GS 2002 REIT Series B Preferred Units (as defined below); and
WHEREAS, the parties hereto, being all of the existing members of the Company and the GS 2002 REIT, desire to amend and restate the Original Agreement in its entirety to reflect such capital contribution, to effect the creation and issuance of the Series B Preferred Units and to reflect the transfer referred to in the second recital hereof and the other understandings among the parties hereto in respect of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, do hereby amend and restate the Original Agreement to read in its entirety as follows:
ARTICLE I
DEFINITIONS; ETC.
1.1 DEFINITIONS. Except as otherwise herein expressly provided, the following terms and phrases shall have the meanings set forth below (such definitions to be equally applicable to the singular and plural forms of the terms so defined):
"Accountants" shall mean the firm or firms of independent certified public accountants selected by the Managing Member on behalf of the Company and the Property Partnerships.
"Act" shall mean the Limited Liability Company Act as enacted in the State of Delaware, as the same has been amended and as the same may hereafter be amended from time to time.
"Adjusted Capital Account Deficit" shall mean, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of any relevant fiscal year and after giving effect to the following adjustments:
(a) credit to such Capital Account any amounts which such Member is obligated or treated as obligated to restore with respect to any deficit balance in such Capital Account pursuant to Section 1.704-1(b)(2)(ii)(c) of the Regulations, or is deemed to be obligated to restore with respect to any deficit balance pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
(b) debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the requirements of the alternate test for economic effect contained in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith
"Adjusted Consolidated Tangible Net Worth" shall mean, as of the time of determination, the Consolidated Tangible Net Worth at such time less any Reserve Amount at such time.
"Administrative Expenses" shall mean (i) all administrative and operating costs and expenses incurred by the Company, (ii) all administrative, operating and other costs and expenses incurred by the Property Partnerships, which expenses are being assumed by the Company pursuant to Section 6.1, (iii) a pro rata portion (as determined in the reasonable judgment of the Managing Member) of administrative costs and expenses of the Managing Member and GGPI, including salaries paid to officers of the Managing Member and GGPI and accounting and legal expenses undertaken by the Managing Member and GGPI on behalf or for the benefit of the Company, and (iv) to the extent not included in clause (iii) above, a pro rata portion (as determined in the reasonable discretion of the Managing Member) of REIT Expenses.
"Affiliate" shall mean, with respect to any Member (or as to any other
Person the affiliates of whom are relevant for purposes of any of the provisions
of this Agreement), (i) any member of the Immediate Family of such Member; (ii)
any trustee or beneficiary of a Member; (iii) any legal representative,
successor, or assignee of such Member or any Person referred to in the preceding
clauses (i) and (ii); (iv) any trustee of any trust for the benefit of such
Member or any Person referred to in the preceding clauses (i) through (iii); or
(v) any Person which directly or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such Member or any
Person referred to in the preceding clauses (i) through (iv).
"Agreement" shall mean this Amended and Restated Operating Agreement, as originally executed and as amended, modified, supplemented or restated from time to time, as the context requires.
"Approved Replacement Property" means, with respect to a Property being sold, conveyed, transferred or otherwise disposed of, a real estate asset with a fair market value of at least 90% of the fair market value of the Property being sold, conveyed, transferred or disposed of.
"Bankruptcy" shall mean, with respect to any Member or the Company, (i)
the commencement by such Member or the Company of any proceeding seeking relief
under any provision or chapter of the federal Bankruptcy Code or any other
federal or state law relating to insolvency, bankruptcy or reorganization, (ii)
an adjudication that such Member or the Company is insolvent or bankrupt; (iii)
the entry of an order for relief under the federal Bankruptcy Code with respect
to such Member or the Company, (iv) the filing of any such petition or the
commencement of any such case or proceeding against such Member or the Company,
unless such petition and the case or proceeding initiated thereby are dismissed
within ninety (90) days from the date of such filing, (v) the filing of an
answer by such Member or the Company admitting the allegations of any such
petition, (vi) the appointment of a trustee, receiver or custodian for all or
substantially all of the assets of such Member or the Company unless such
appointment is vacated or dismissed within ninety (90) days from the date of
such appointment but not less than five (5) days before the proposed sale of any
assets of such Member or the Company, (vii) the insolvency of such Member or the
Company or the execution by such Member or the Company of a general assignment
for the benefit of creditors, (viii) the convening by such Member or the Company
of a meeting of its creditors, or any class thereof, for purposes of effecting a
moratorium upon or extension or composition of its debts, (ix) the failure of
such Member or the Company to pay its debts as they mature, (x) the levy,
attachment, execution or other seizure of substantially all of the assets of
such Member or the Company where such seizure is not discharged within thirty
(30) days thereafter, or (xi) the admission by such Member or the Company in
writing of its inability to pay its debts as they mature or that it is generally
not paying its debts as they become due.
"Business Day" shall mean a day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.
"Capital Account" shall mean, with respect to any Member, the separate "book" account which the Company shall establish and maintain for such Member in accordance with Section 704(b) of the Code and Section 1.704-1(b)(2)(iv) of the Regulations and such other provisions of Section 1.704-1(b) of the Regulations that must be complied with in order for the Capital Accounts to be determined in accordance with the provisions of said Regulations. In furtherance of the foregoing, the Capital Accounts shall be maintained in compliance with Section 1.704-1(b)(2)(iv) of the Regulations; and the provisions hereof shall be interpreted and applied in a manner consistent therewith. In the event that any Units are transferred in accordance with the terms of this Agreement, the Capital Account, at the time of the transfer, of the transferor attributable to the transferred Units shall carry over to the transferee.
"Capital Contribution" shall mean, with respect to any Member, the amount of money and the initial Gross Asset Value of any property other than money contributed to the Company with respect to the Units held by such Member (net of liabilities to which such property is subject).
"Certificate" shall mean the Certificate of Formation establishing the Company, as filed with the office of the Delaware Secretary of State, as it may be amended from time to time in accordance with the terms of this Agreement and the Act.
"Charter" shall mean the certificate of incorporation of GGPI, as filed with the office of the Delaware Secretary of State, as it may be amended from time to time.
"Closing Price" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Shares are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Common Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares as such person is selected from time to time by the Board of Directors of GGPI.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Shares" shall mean the shares of the common stock, par value $.10 per share, of GGPI.
"Common Unit Record Date" shall mean the record date established by the
Managing Member for a distribution of Net Operating Cash Flow pursuant to
Section 5.2.
"Common Units" shall mean all Units other than Preferred Units.
"Company" shall have the meaning set forth in the preliminary recitals hereto.
"Consent of the Holders of Common Units" shall mean the written consent of the holders of a Majority-In-Interest of the Common Units, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and may be given or withheld by the holders of a Majority-In-Interest of the Common Units, unless otherwise expressly provided herein, in their sole and absolute discretion.
"Consolidated Group" means the Company and all Subsidiaries.
"Consolidated Group Pro Rata Share" shall mean, with respect to any Investment Affiliate, the percentage of the aggregate equity ownership interests held by the Consolidated Group in such Investment Affiliate, determined by calculating the greater of (i) the percentage of the issued and outstanding stock, partnership interests or membership interests in such Investment Affiliate held by the Consolidated Group in the aggregate and (ii) the percentage of the total book value of such Investment Affiliate that would be received by the Consolidated Group in the aggregate upon liquidation of such Investment Affiliate after repayment in full of all Indebtedness of such Investment Affiliate.
"Consolidated Interest Expense" shall mean, for any period, without duplication, the sum of (a) the amount of interest expense, determined in accordance with GAAP, of the Consolidated Group for such period related to Consolidated Outstanding Indebtedness for such period plus (b) the Consolidated Group Pro Rata Share of any interest expense, determined in accordance with GAAP, of any Investment Affiliate, for such period, whether recourse or non-recourse (in the case of each of clause (a) or (b), excluding prepayment fees, premiums or penalties and net of amortization of deferred costs associated with new financings or refinancings of existing Indebtedness).
"Consolidated Outstanding Indebtedness" shall mean, as of any date of
determination, without duplication, the sum of (a) all Indebtedness of the
Consolidated Group outstanding at such date, determined on a consolidated basis
in accordance with GAAP, plus (b) the applicable Consolidated Group Pro Rata
Share of any Indebtedness of each Investment Affiliate outstanding at such date
other than Indebtedness of such Investment Affiliate to a member of the
Consolidated Group, less (c) with respect to each Subsidiary in which the
Company does not directly or indirectly hold a 100% ownership interest, a
percentage of any Indebtedness of such Subsidiary which is included under clause
(a) of this definition and which is not guaranteed by the Company equal to the
percentage ownership interest in such consolidated Subsidiary which is not held
directly or indirectly by the Company on such date. Notwithstanding anything to
the contrary contained herein, Parent Indebtedness shall not be included in the
calculation of Consolidated Outstanding Indebtedness.
"Consolidated Tangible Net Worth" shall mean, as of any date of determination, the excess, without duplication, of (a) the total fair market value of the assets (including cash and cash equivalents) of the Consolidated Group and the applicable Consolidated Group Pro Rata Shares of the assets of the Investment Affiliates as of such date over (b) Consolidated Outstanding Indebtedness as of such date; provided, that for purposes of this definition, the determination of total assets shall exclude (a) all assets which in accordance with GAAP should be classified as intangible assets (such as goodwill, patents, trademarks, copyrights, franchises, unamortized debt discount, capitalized research and development costs, capitalized software costs and organization costs), (b) cash held in a sinking or other similar fund established for the purpose of redemption or other retirement of capital stock and (c) to the extent not already deducted from total assets, reserves for depreciation, depletion, obsolescence or amortization of properties and other reserves or appropriations of retained earnings which have been established or which a prudent owner and operator should establish in connection with the business of operating and maintaining the Company properties. For purposes of the calculation of Consolidated Tangible Net Worth, (a) the fair market value of income producing real property
shall be the quotient of four times the Net Operating Income of such property
for the most recently completed calendar quarter divided by an 8.25%
capitalization rate, (b) the fair market value of any raw land, vacant
out-parcel or real estate under construction shall equal the aggregate sums
expended therefor (including without limitation land acquisition costs)
(provided, however, that (i) the fair market value of the land portion of those
assets which are listed on Schedule 1 to the Term Loan Agreement shall be as set
forth on such Schedule 1 and (ii) no amount shall be included under this clause
(b) with respect to real estate under construction if the Company has included
income therefrom in the calculation of Net Operating Income unless the
construction in question involves renovation or expansion of a property that is
otherwise completed, open for business and operational, the construction in
question will not materially interrupt, limit or impair such ongoing business
and operations and the inclusion of such income in the calculation of Net
Operating Income and such costs and/or other amounts under this clause (b) is
not duplicative) and (c) the fair market value of any other asset shall be the
lesser of cost and fair market value (as determined in good faith by the
Managing Member) thereof.
"Control" shall have the meaning provided in the regulations promulgated under the Securities Exchange Act of 1934, as amended.
"Current Per Share Market Price" shall mean, as of any date, the average of the Closing Price for the twenty consecutive Trading Days ending on such date.
"Demand Notice" shall have the meaning set forth in Section 9.2.
"Depreciation" shall mean, with respect to any asset of the Company for any fiscal year or other period, the depreciation, depletion or amortization, as the case may be, allowed or allowable for Federal income tax purposes in respect of such asset for such fiscal year or other period; provided, however, that if there is a difference between the Gross Asset Value and the adjusted tax basis of such asset, Depreciation shall mean "book depreciation, depletion or amortization" as determined under Section 1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Entity" shall mean any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association or other entity.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time (or any corresponding provisions of succeeding laws).
"Event" shall have the meaning set forth in Section 4.3(c).
"Excess Units" shall have the meaning set forth in Section 4.3(g)(i)(F).
"Financial Statements" shall mean financial statements (balance sheet, statement of income, statement of partners' equity and statement of cash flows) prepared in accordance with generally accepted accounting principles.
"Fixed Charges" shall mean, for any period (without duplication), the sum of (a) Consolidated Interest Expense for such period plus (b) the aggregate of all scheduled principal
payments on Consolidated Outstanding Indebtedness during such period (excluding balloon, bullet or similar payments of principal due upon the stated maturity of Indebtedness) plus (c) the aggregate of all dividends paid or accrued on any shares of Preferred Stock issued by members of the Consolidated Group and the Consolidated Group Pro Rata Share of all dividends paid or accrued on any shares of Preferred Stock issued by Investment Affiliates (provided that dividends paid or accrued on shares of Preferred Stock owned by the Company or any Subsidiary that is 100% owned by the Company shall be excluded from the amount calculated under clause (c) of this definition and with respect to dividends on Preferred Stock owned by a consolidated Subsidiary of the Company in which the Company does not directly or indirectly hold a 100% ownership interest, a percentage of the paid or accrued dividends attributable to such consolidated Subsidiary shall be excluded from the amount calculated under clause (c) of this definition equal to the percentage ownership interest in such consolidated Subsidiary which is held directly or indirectly by the Company).
"GAAP" shall mean generally accepted accounting principles in the United States as in effect from time to time.
"GGPI" shall mean General Growth Properties, Inc., a Delaware corporation and the general partner of the Managing Member.
"Gross Asset Value" shall mean, with respect to any asset of the Company, such asset's adjusted basis for Federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of (i) the assets contributed by each Member to the Company prior to the date hereof is the gross fair market value of such contributed assets as indicated in the books and records of the Company as of the date hereof, and (ii) any asset hereafter contributed by a Member (including the Managing Member), other than money, is the gross fair market value thereof as reasonably determined by the Managing Member using such reasonable method of valuation as the Managing Member may adopt;
(b) if the Managing Member reasonably determines that an adjustment is necessary or appropriate to reflect the relative economic interests of the Members, the Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the Managing Member, as of the following times:
(i) a Capital Contribution (other than a de minimis Capital Contribution) to the Company by a new or existing Member as consideration for Units;
(ii) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for the redemption of Units; and
(iii) the liquidation of the Company within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations;
(c) the Gross Asset Values of Company assets distributed to
any Member shall be the gross fair market values of such assets (taking
Section 7701(g) of the Code into account) as reasonably determined by
the Managing Member as of the date of distribution; and
(d) the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations (See Exhibit A); provided, however, that Gross Asset Values shall not be adjusted pursuant to this paragraph to the extent that the Managing Member reasonably determines that an adjustment pursuant to paragraph (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken into account with respect to the Company's assets for purposes of computing Net Income and Net Loss. Any adjustment to the Gross Asset Values of Company property shall require an adjustment to the Members' Capital Accounts; as for the manner in which such adjustments are allocated to the Capital Accounts, see paragraph (c) of the definition of Net Income and Net Loss in the case of adjustment by Depreciation, and paragraph (e) of said definition in all other cases.
"Guarantee" shall mean, with respect to any Person and without duplication, any direct or indirect obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person in any manner. "Guaranteed" has a meaning correlative to the term "Guarantee."
"Immediate Family" shall mean, with respect to any Person, such Person's spouse, parents, parents-in-law, descendants, nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law and children-in-law.
"Indebtedness" shall mean, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money including without limitation any repurchase obligation or liability of such Person with respect to securities, accounts or notes receivable sold by such Person, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), to the extent such obligations constitute indebtedness for purposes of GAAP, (c) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (d) all capitalized lease obligations of such Person, (e) all obligations of such Person in respect of acceptances issued or created for the account of such Person, (f) all guarantee obligations of such Person (excluding in any calculation of Consolidated Outstanding Indebtedness, guarantee obligations of one member of the Consolidated Group in respect of primary obligations of any other member of the Consolidated Group) (g) all reimbursement obligations of such Person for letters of credit and other contingent liabilities, and (h) all liabilities secured by any lien (other than liens for taxes not yet due and payable) on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof. Notwithstanding the foregoing, any indebtedness between or among the Company and any of its Subsidiaries or among the Subsidiaries and the Consolidated Group Pro Rata Share of any indebtedness between or among the Company or any Subsidiary and any Investment Affiliate or among Investment Affiliates shall not be treated as Indebtedness.
"Investment Affiliate" means any Person in which the Consolidated Group, directly or indirectly, has an ownership interest, whose financial results are not consolidated under GAAP with the financial results of the Consolidated Group.
"Junior Units" shall have the meaning set forth in Section 4.3(b)(i).
"JV" shall mean any Subsidiary or Investment Affiliate in which both the Company and the Operating Partnership directly or indirectly have ownership interests; provided, however, that, for purposes of this definition, (a) the ownership by the Operating Partnership of an indirect interest in such Entity through the Company shall not be taken into account and (b) the ownership of any other direct and/or indirect interest of not more than 1% of the total ownership interests in such Entity shall not be taken into account.
"JV Indebtedness" shall mean, with respect to any JV at any date, the Indebtedness of such JV on such date.
"Lien" shall mean any liens, security interests, mortgages, deeds of trust, charges, claims, encumbrances, pledges, options, rights of first offer or first refusal and any other rights or interests of others of any kind or nature, actual or contingent, or other similar encumbrances of any nature whatsoever.
"Liquidating Trustee" shall mean such individual or Entity as is selected as the Liquidating Trustee hereunder by the Managing Member, which individual or Entity may include the Managing Member or an Affiliate of the Managing Member, provided such Liquidating Trustee agrees in writing to be bound by the terms of this Agreement. The Liquidating Trustee shall be empowered to give and receive notices, reports and payments in connection with the dissolution, liquidation and/or winding-up of the Company and shall hold and exercise such other rights and powers as are necessary or required to permit all parties to deal with the Liquidating Trustee in connection with the dissolution, liquidation and/or winding-up of the Company.
"Majority-In-Interest of the Common Units" shall mean holders of more than fifty percent (50%) of then issued and outstanding Common Units.
"Management Agreement" shall mean a property management agreement with respect to the property management of each Property entered into (a) with respect to any Property in which the Company directly holds or acquires ownership of a fee or leasehold interest, between the Company, as owner, and the Property Manager, or such other property manager as the Managing Member shall engage, as manager, and (b) with respect to all Properties other than those described in (a) above, between each Property Partnership, as owner, and the Property Manager, or such other property manager as the Managing Member shall engage, as such agreement may be amended, modified or supplemented from time to time.
"Managing Member" shall mean the Operating Partnership, its duly admitted successors and assigns and any other Person who is a Managing Member of the Company at the time of reference thereto. The Managing Member may not be removed as Managing Member for any reason.
"Members" shall mean the Persons listed under the caption "Members" on the signature pages hereto, their permitted successors or assigns or any Person who, at the time of reference thereto, is a member of the Company, including the holders of Common Units and Preferred Units on the date thereof.
"Minimum Gain Attributable to Partner Nonrecourse Debt" shall mean "partner nonrecourse debt minimum gain" as determined in accordance with Regulation Section 1.704-2(i)(2).
"Net Financing Proceeds" shall mean the cash proceeds received by the Company in connection with any borrowing or refinancing of borrowing by or on behalf of the Company or by or on behalf of any Property Partnership (whether or not secured), after deduction of all costs and expenses incurred by the Company or the Property Partnership in connection with such borrowing, and after deduction of that portion of such proceeds used to repay any other indebtedness of the Company or Property Partnerships, or any interest or premium thereon.
"Net Income or Net Loss" shall mean, for each fiscal year or other applicable period, an amount equal to the Company's net income or loss for such year or period as determined for federal income tax purposes by the Accountants, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a) of the Code shall be included in taxable income or loss), with the following adjustments: (a) by including as an item of gross income any tax-exempt income received by the Company; (b) by treating as a deductible expense any expenditure of the Company described in Section 705(a)(2)(B) of the Code (including amounts paid or incurred to organize the Company (unless an election is made pursuant to Code Section 709(b)) or to promote the sale of interests in the Company and by treating deductions for any losses incurred in connection with the sale or exchange of Company property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code as expenditures described in Section 705(a)(2)(B) of the Code); (c) in lieu of depreciation, depletion, amortization, and other cost recovery deductions taken into account in computing total income or loss, there shall be taken into account Depreciation; (d) gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of such property rather than its adjusted tax basis; and (e) in the event of an adjustment of the Gross Asset Value of any Company asset which requires that the Capital Accounts of the Company be adjusted pursuant to Regulation Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such adjustment is to be taken into account as additional Net Income or Net Loss pursuant to Exhibit A.
"Net Operating Cash Flow" shall mean, with respect to any fiscal period of the Company, the excess, if any, of "Receipts" over "Expenditures." For purposes hereof, the term "Receipts" means the sum of all cash receipts of the Company from all sources for such period, including Net Sale Proceeds and Net Financing Proceeds but excluding Capital Contributions, and any amounts held as reserves as of the last day of such period which the Managing Member reasonably deems to
be in excess of necessary reserves as determined below. The term "Expenditures" means the sum of (a) all cash expenses or expenditures of the Company for such period, (b) the amount of all payments of principal and interest on account of any indebtedness of the Company, or amounts due on such indebtedness during such period (in the case of clauses (a) and (b), excluding expenses or expenditures paid from previously established reserves or deducted in computing Net Financing Proceeds or Net Sales Proceeds), and (c) such additional cash reserves as of the last day of such period as the Managing Member deems necessary for any capital or operating expenditure permitted hereunder.
"Net Operating Income" shall mean, (a) with respect to any property of the Company or any Subsidiary for any calendar quarter, the sum of "net operating income" of the Consolidated Group (as determined by GAAP) attributable to such property for such calendar quarter determined without regard to any percentage rent or temporary rent, plus the product of 25% and the percentage rent and temporary rent for such calendar quarter and the immediately preceding three calendar quarters and (b) with respect to any property of an Investment Affiliate for any calendar quarter, the Consolidated Group Pro Rata Share of "Net Operating Income" of such Investment Affiliate attributable to such property, calculated in the same manner as in clause (a) of this paragraph.
"Net Sale Proceeds" means the cash proceeds received by the Company in connection with a sale of any asset by or on behalf of the Company or by or on behalf of a Property Partnership after deduction of any costs or expenses incurred by the Company or a Property Partnership, or payable specifically out of the proceeds of such sale (including, without limitation, any repayment of any indebtedness required to be repaid as a result of such sale or which the Managing Member elects to repay out of the proceeds of such sale, together with accrued interest and premium, if any, thereon and any sales commissions or other costs and expenses due and payable to any Person in connection with a sale, including to a Member or its Affiliates).
"19.95% Limit" shall have the meaning set forth in Section 4.3(g)(i)(D).
"Nonrecourse Deductions" shall have the meaning set forth in Sections 1.704-2(b)(1) and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning set forth in Section 1.704-2(b)(3) of the Regulations.
"Original Agreement" shall have the meaning set forth in the preliminary recitals hereto.
"Parent Group" shall mean the Operating Partnership, any of the subsidiaries of the Operating Partnership and any other Person in which the Operating Partnership, directly or indirectly, has an ownership interest (other than members of the Consolidated Group and the Investment Affiliates).
"Parent Indebtedness" shall mean, as of the time of determination, the then outstanding aggregate Indebtedness of the Parent Group but excluding Indebtedness allocated to the members of the Consolidated Group and/or the Investment Affiliates pursuant to (a) any of the sharing agreements referred to on Schedule 3.aa to the Purchase Agreement and/or (b) the letter
agreement dated the date hereof, between the Company and the Operating Partnership, relating to the Term Loan Agreement.
"Parity Units" shall have the meaning set forth in Section 4.3(b).
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Regulations.
"Partnership Minimum Gain" shall have the meaning set forth in Section 1.704-2(b)(2) of the Regulations.
"Person" or "person" shall mean any individual or Entity.
"Preferred Stock" shall mean, with respect to any Person, shares of capital stock of, or other equity interests in, such Person which are entitled to preference or priority over any other capital stock of, or other equity interest in, such Person in respect of the payment of dividends or distribution of assets upon liquidation or both.
"Preferred Units" shall mean the Series A Preferred Units, the Series B Preferred Units and any other series of preferred units of membership interest in the Company that are established and issued from time to time in accordance with the terms hereof.
"Prime Rate" shall mean the prime rate announced from time to time by Wells Fargo Bank, N.A. or any successor thereof.
"Property" shall mean a Shopping Center Project in which the Company or any Property Partnership, directly or indirectly, acquires ownership of a fee or leasehold interest.
"Property Manager" shall mean General Growth Management, Inc., a Delaware corporation, or its successors or assigns.
"Property Partnership" shall mean and include any partnership, limited liability company or other Entity in which the Company directly or indirectly is or becomes a partner, member or other equity participant and which has been or is formed for the purpose of directly or indirectly acquiring, developing or owning a Property or a proposed Property.
"Property Partnership Interests" shall mean and include the interest of the Company or any other Entity as a partner, member or other equity participant in any Property Partnership.
"PTP" shall have the meaning set forth in Section 4.3(g)(i)(C).
"Purchase Agreement" shall mean that certain Purchase Agreement dated the date hereof, among the Company, the Operating Partnership, GGPI, the GS 2002 REIT and the Goldman Sachs 2002 Exchange Place Fund, L.P.
"Qualified Entity" shall mean a partnership, limited liability company or other Entity that is organized under the laws of any state and that is not taxable as a corporation for U.S. federal income tax purposes.
"Qualified Individual" shall have the meaning set forth in Section 9.2.
"Regulations" shall mean the final, temporary or proposed Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
"Regulatory Allocations" shall have the meaning set forth in Exhibit A.
"REIT" shall mean a real estate investment trust as defined in Section 856 of the Code.
"REIT Expenses" shall mean (i) costs and expenses relating to the
formation and continuity of existence of GGPI and its subsidiaries (which
subsidiaries shall, for purposes of this definition, be included within the
definition of GGPI), including taxes, fees and assessments associated therewith,
any and all costs, expenses or fees payable to any director or trustee of GGPI
or such subsidiaries, (ii) costs and expenses relating to any offer or
registration of securities by GGPI and all statements, reports, fees and
expenses incidental thereto, including underwriting discounts and selling
commissions applicable to any such offer of securities, (iii) costs and expenses
associated with the preparation and filing of any periodic reports by GGPI under
federal, state or local laws or regulations, including filings with the SEC,
(iv)costs and expenses associated with compliance by GGPI with laws, rules and
regulations promulgated by any regulatory body, including the SEC, and (v) all
other operating or administrative costs of GGPI incurred in the ordinary course
of its business.
"REIT Preferred Shares" shall mean 8.95% Cumulative Redeemable Preferred Stock, Series B, par value $100 per share, of GGPI.
"REIT Requirements" shall have the meaning set forth in Section 5.2.
"Requesting Party" shall have the meaning set forth in Section 9.2.
"Reserve Amount" shall mean, as at any time, without duplication, the sum of (i) the amount of all Parent Indebtedness then Guaranteed by any member of the Consolidated Group or any Investment Affiliate and (ii) the amount of all Parent Indebtedness collateralized by Liens on property or assets of any member of the Consolidated Group or any Investment Affiliate.
"Responding Party" shall have the meaning set forth in Section 9.2.
"SEC" shall mean the United States Securities and Exchange Commission.
"Section 704(c) Tax Items" shall have the meaning set forth in Exhibit
A.
"Series A Accumulated Preferred Unit Distributions" shall have the meaning set forth in Section 4.3(d)(ii).
"Series A Common Exchange Rate" shall have the meaning set forth in
Section 4.3(g)(i)(B).
"Series A Exchange Price" shall have the meaning set forth in Section 4.3(g)(i)(E).
"Series A Preferred Exchange Rate" shall have the meaning set forth in
Section 4.3(g)(i)(A).
"Series A Preferred Unit Distribution" shall have the meaning set forth in Section 4.3(d)(i).
"Series A Preferred Unit Distribution Payment Date" shall have the meaning set forth in Section 4.3(d)(i).
"Series A Preferred Units" shall have the meaning set forth in Section 4.3(a).
"Series A Redemption Date" shall have the meaning set forth in Section 4.3(h)(iii).
"Series A Redemption Price" shall have the meaning set forth in Section 4.3(h)(i).
"Series A Third Party Redemption Date" shall have the meaning set forth in Section 4.3(h)(ii).
"Series B Accumulated Preferred Unit Distributions" shall have the meaning set forth in Section 4(b) of Schedule B.
"Series B Common Exchange Rate" shall have the meaning set forth in
Section 7(a)(ii) of Schedule B.
"Series B Event" shall have the meaning set forth in Section 3 of Schedule B.
"Series B Excess Units" shall have the meaning set forth in Section 7(a)(vi) of Schedule B.
"Series B Exchange Price" shall have the meaning set forth in Section 7(a)(v) of Schedule B.
"Series B Junior Units" shall have the meaning set forth in Section 2(a) of Schedule B.
"Series B Parity Units" shall have the meaning set forth in Section 2(b) of Schedule B.
"Series B Preferred Exchange Rate" shall have the meaning set forth in
Section 7(a)(i) of Schedule B.
"Series B Preferred Unit Distribution" shall have the meaning set forth in Section 4(a) of Schedule B.
"Series B Preferred Unit Distribution Payment Date" shall have the meaning set forth in Section 4(a) of Schedule B.
"Series B Preferred Units" shall have the meaning set forth in Section 4.7.
"Series B Redemption Date" shall have the meaning set forth in Section 8(c) of Schedule B.
"Series B Redemption Price" shall have the meaning set forth in Section 8(a) of Schedule B.
"Series B Third Party Redemption Date" shall have the meaning set forth in Section 8(b) of Schedule B.
"Series G Preferred REIT Shares" shall have the meaning set forth in
Section 7(a)(i) of Schedule B.
"Shopping Center Project" shall mean any shopping center, including construction and improvement activities undertaken with respect thereto and off-site improvements, on-site improvements, structures, buildings and/or related parking and other facilities.
"Subsidiaries" shall mean all Entities in which the Company has a direct or indirect interest and that would be consolidated with the Company for financial accounting purposes under GAAP.
"Substituted Member" shall have the meaning set forth in Section 8.2.
"Tax Items" shall have the meaning set forth in Exhibit A.
"Term Loan Agreement" shall mean that certain Term Loan Agreement dated as of July 31, 2000, among the Company and the Operating Partnership, as borrowers, Bankers Trust Company, as administrative agent and a lender, and the other parties thereto from time to time as agents and/or lenders.
"Trading Day" shall mean a day on which the principal national securities exchange on which the Common Shares are listed or admitted to trading is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities exchange, shall mean any Business Day.
"Units" shall mean the units of membership interest in the Company established and issued from time to time in accordance with the terms hereof, including without limitation Common Units and Preferred Units. The number and designation of all Units held by each Member as of the date hereof is set forth opposite such Member's name on Schedule A.
1.2 EXHIBITS, ETC. References to an "Exhibit" or to a "Schedule" are, unless otherwise specified, to one of the Exhibits or Schedules attached to this Agreement, and references to an "Article" or a "Section" are, unless otherwise specified, to one of the Articles or
Sections of this Agreement. Each Exhibit and Schedule attached hereto and referred to herein is hereby incorporated herein by reference.
1.3 PRONOUNS AND HEADINGS. As used herein, all pronouns shall include the masculine, feminine and neuter, and all defined terms shall include the singular and plural thereof wherever the context and facts require such construction. The headings, titles and subtitles herein are inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. Any references in this Agreement to "including" shall be deemed to mean "including without limitation".
ARTICLE II
CONTINUATION
2.1 CONTINUATION. The Company was formed as a limited liability company under the Act on May 17, 2000 by the filing of the Certificate with the Delaware Secretary of State on such date. The Members agree that the rights and liabilities of the Members shall be as provided in this Agreement (which amends and restates and supercedes the Original Agreement in its entirety) and, to the extent not provided herein, in the Act. The Managing Member shall cause such notices, instruments, documents, or certificates as may be required by applicable law or which may be necessary to enable the Company to conduct its business and to own its properties in the Company name to be filed or recorded in all appropriate public offices.
2.2 NAME. The business of the Company shall be conducted under the name of "GGPLP L.L.C." or such other name as the Managing Member may select, and all transactions of the Company, to the extent permitted by applicable law, shall be carried on and completed in such name.
2.3 CHARACTER OF THE BUSINESS. The purpose of the Company shall be to acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange, and otherwise dispose of or deal with Properties; to acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange, and otherwise dispose of or deal with real and personal property of all kinds; to exercise all of the powers of a partner, member or other equity participant in Property Partnerships; to acquire, own, deal with and dispose of Property Partnership Interests; to undertake such other activities as may be necessary, advisable, desirable or convenient to the business of the Company, and to engage in such other ancillary activities as shall be necessary or desirable to effectuate the foregoing purposes. The Company shall have all powers necessary or desirable to accomplish the purposes enumerated. In connection with and without limiting the foregoing, but subject to all of the terms, covenants, conditions and limitations contained in this Agreement and any other agreement entered into by the Company, the Company shall have full power and authority, directly or through its interests in Property Partnerships, to enter into, perform, and carry out contracts of any kind, to borrow money and to issue evidences of indebtedness, whether or not secured by mortgage, trust deed, pledge or other Lien, and, directly or indirectly, to acquire and construct additional Properties.
2.4 LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. The location of the principal place of business of the Company shall be at 110 North Wacker Drive, Chicago, Illinois 60606, or at such other location as shall be selected by the Managing Member from time to time in its sole discretion.
2.5 REGISTERED AGENT AND REGISTERED OFFICE. The Company shall maintain a registered agent and registered office as is required by the Act.
ARTICLE III
TERM
3.1 COMMENCEMENT. The Company heretofore commenced business as a limited liability company.
3.2 DISSOLUTION. The Company shall continue until dissolved upon the occurrence of the earliest of the following events:
(a) The dissolution, termination, retirement or Bankruptcy of
the Managing Member unless the Company is continued as provided in
Section 8.1;
(b) The sale or other disposition of all or substantially all the assets of the Company unless the Managing Member elects to continue the Company business for the purpose of the receipt and the collection of indebtedness or the collection of any other consideration to be received in exchange for the assets of the Company (which activities shall be deemed to be part of the winding up of the affairs of the Company);
(c) Dissolution required by operation of law; or
(d) December 31, 2075.
ARTICLE IV
CLASSES OF UNITS
4.1 COMMON UNITS. The Company has issued to the Members (other than the GS 2000 REIT and the GS 2002 REIT) the number of common units of membership interest in the Company (the "Common Units") set forth opposite their names on Schedule A, and, in exchange therefor, such Members have contributed to the Company as their Capital Contributions the cash and other property set forth in the books and records of the Company. The Common Units have such rights as are described herein. The Managing Member may, without the consent of the other Members, issue additional Common Units to itself and others from time to time for such consideration as it deems is appropriate. The Managing Member shall be authorized to amend this Agreement to reflect the issuance of Common Units in accordance with this Section 4.1 without the joinder of any other Member.
4.2 PREFERRED UNITS. The Managing Member shall have the right, without the consent of the other Members (except as otherwise provided herein), to establish and issue from time to time series of preferred units of membership interest in the Company ("Preferred Units") and to establish from time to time the number of Preferred Units to be included in each such series, to fix the designation, powers, preferences and rights of the Preferred Units of each such series and the qualifications, limitations and restrictions thereof and to determine the consideration to be paid from time to time for the Preferred Units in each such series. Except as otherwise provided herein, Preferred Units that are cancelled or redeemed or purchased by the Company may, at the election of the Managing Member, either (a) be reissued by the Company or (b) be cancelled. The Managing Member shall be authorized to amend this Agreement to effect the provisions of this Section 4.2 without the joinder of any other Member (except as otherwise provided herein).
4.3 ESTABLISHMENT OF SERIES A PREFERRED UNITS.
(a) ESTABLISHMENT OF SERIES A PREFERRED UNITS. A series of preferred units of the Company designated as the "8.95% Series A Cumulative Redeemable Preferred Units" (the "Series A Preferred Units") was previously established and has such preferences and other rights as are described herein. The maximum number of Series A Preferred Units which may be issued by the Company from time to time shall be 700,000. The Company heretofore issued 700,000 Series A Preferred Units, the current holder of which is the GS 2000 REIT, in exchange for a Capital Contribution of $175,000,000. Series A Preferred Units shall not have any relative, participating, optional or other special rights and powers other than as set forth herein. Series A Preferred Units that are redeemed or purchased by the Company shall be cancelled and may not be reissued.
(b) RANK OF THE SERIES A PREFERRED UNITS. The Series A Preferred Units shall, with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Company, rank as follows:
(i) senior to all classes or series of Common Units and all other series of Preferred Units other than (A) each series of Preferred Units referred to in Section 4.3(b)(iii) and (B) each series of Preferred Units the express terms of which provide that such series ranks on parity with the Series A Preferred Units (the Common Units and Preferred Units ranking junior to the Series A Preferred Units with respect to distribution rights and rights upon liquidation, dissolution and winding up, collectively, "Junior Units");
(ii) on parity with each series of Preferred Units which provides by its express terms that it ranks on parity with the Series A Preferred Units as to distribution rights and rights upon liquidation, dissolution and winding-up of the Company ("Parity Units") (and if the distribution rates, distribution payment dates or redemption or liquidation prices per Unit are different from those of the Series A Preferred Units, the units of such class or series and the Series A Preferred Units shall be entitled to the receipt of distributions and the amounts distributable upon liquidation, dissolution and
winding-up in proportion to their respective amounts of accrued and unpaid distributions per unit or liquidation preferences, without preference or priority one over the other); and
(iii) junior to any class or series of Preferred Units that is hereafter established, that provides by its express terms that it ranks senior to the Series A Preferred Units and that is approved in accordance with the provisions of Section 4.3(c).
(c) VOTING. The Company shall not, without the affirmative vote or consent of the holders of at least fifty-one percent (51%) of the Series A Preferred Units outstanding at such time, (i) authorize or create, or increase the authorized or issued amount of, any class or series of Units ranking senior to the Series A Preferred Units with respect to payments of distributions or rights upon liquidation, dissolution or winding up of the Company or reclassify any Common Units into Preferred Units ranking senior to or on parity with the Series A Preferred Units with respect to the payment of distributions or distribution of assets upon liquidation, dissolution or winding-up of the Company, (ii) issue additional Series A Preferred Units or (iii) amend, alter or repeal this Section 4.3 or any other provisions of this Agreement, whether by merger, consolidation or otherwise (an "Event") so as to negate the provisions of clause (i) or (ii) of this paragraph or materially and adversely affect any right, preference, privilege or voting power of the holders of the Series A Preferred Units. Notwithstanding anything to the contrary contained herein, (A) with respect to the occurrence of any of the Events set forth in clause (iii) of this paragraph, so long as Series A Preferred Units remain outstanding with the terms thereof materially unchanged (taking into account that, upon the occurrence of such Event, the Company may not be the surviving entity) and the surviving entity is a Qualified Entity, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of the Series A Preferred Units and (B) the authorization or creation of, or the increase in the authorized or issued amount of, the Common Units or any other series of Preferred Units, in either case which rank junior to or on parity with the Series A Preferred Units (and any amendments to this Agreement to effect such increase, creation or issuance), shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers or otherwise require the vote or consent of the holders of the Series A Preferred Units.
For purposes of the provisions of this Section 4.3(c), each Series A Preferred Unit shall have one (1) vote.
Notwithstanding anything to the contrary contained herein, the foregoing voting provisions shall not apply if, prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series A Preferred Units shall have been exchanged or redeemed.
Except as provided herein, the holders of Series A Preferred Units shall have no voting or consent rights or other rights to participate in the management of the Company or to receive notices of meetings.
(d) DISTRIBUTIONS.
(i) PAYMENT OF DISTRIBUTIONS. Each holder of Series A Preferred Units will be entitled to receive, when, as and if declared by the Managing Member, out of Net Operating Cash Flow and subject to the right to payment of the holders of Preferred Units ranking senior to or on parity with the Series A Preferred Units, cumulative preferential cash distributions per Series A Preferred Unit at the rate per annum of 8.95% of the $250 base liquidation preference thereof (or $5.59375 per quarter) (the "Series A Preferred Unit Distribution"). Series A Preferred Unit Distributions with respect to any Series A Preferred Units shall be cumulative, shall accrue from the date of the issuance of such Series A Preferred Units and will be payable (A) quarterly when, as and if authorized and declared by the Managing Member, in arrears, on the 15th day of January, April, July and October of each year and (B) in the event of an exchange or redemption of Series A Preferred Units, on the exchange or redemption date, as applicable (each a "Series A Preferred Unit Distribution Payment Date"), commencing on the first of such payment dates to occur following their original date of issuance. The amount of distribution per Series A Preferred Unit accruing in each full quarterly distribution period shall be computed by dividing the annual distribution rate by four. The amount of distributions payable for the initial distribution period or any other period shorter or longer than a full quarterly distribution period on the Series A Preferred Units will be computed on the basis of twelve 30-day months and a 360-day year and the actual number of days elapsed in such a thirty (30) day month. If any Series A Preferred Unit Distribution Payment Date is not a Business Day, then payment of the Series A Preferred Unit Distribution to be made on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (without any deduction), in each case with the same force and effect as if made on such date. Series A Preferred Unit Distributions will be made to the holders of Series A Preferred Units of record on the relevant record dates, which will be fifteen (15) days prior to the relevant Series A Preferred Unit Distribution Payment Date.
(ii) DISTRIBUTIONS CUMULATIVE. Notwithstanding the foregoing, Series A Preferred Unit Distributions will accrue whether or not the terms and provisions of this Agreement or any other agreement of the Company at any time prohibit the current payment of distributions, whether or not the Company has revenues, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are authorized. Accrued but unpaid Series A Preferred Unit Distributions will accumulate as of the Series A Preferred Unit Distribution Payment Date on which they first become payable. Any accrued but unpaid Series A Preferred Unit Distributions that are not paid on or prior to the date that they first become payable are hereinafter referred to as "Series A Accumulated Preferred Unit Distributions". No interest or sum of money in lieu of interest will be payable in respect of any Series A Accumulated Preferred Unit Distributions. Series A Accumulated Preferred Unit Distributions may be declared and paid at any time, without reference to any regular Series A Preferred Unit Distribution Payment Date.
(iii) PRIORITY AS TO DISTRIBUTIONS.
(A) So long as any Series A Preferred Units are outstanding, no distribution of cash or other property shall be authorized, declared, paid or set apart for payment on or with respect to any Parity Units, nor shall any cash or other property be set aside for or applied to the purchase, redemption or other acquisition for consideration of any Series A Preferred Units or any Parity Units, unless, in each case, all Series A Accumulated Preferred Unit Distributions have been paid in full (or have been declared and a sum sufficient for such payment has been set aside therefor) or when Series A Accumulated Preferred Unit Distributions are not paid in full or declared and a sum sufficient for such payment is not set apart, as aforesaid, all distributions declared upon Series A Preferred Units and all distributions declared upon any other series or class or classes of Parity Units shall be declared ratably in proportion to the respective amounts of distributions accumulated and unpaid on the Series A Preferred Units and such Parity Units.
(B) So long as any Series A Preferred Units are outstanding, no distribution of cash or other property (other than distributions paid solely in Junior Units or options, warrants or other rights to subscribe for or purchase Junior Units) shall be authorized, declared, paid or set apart for payment on or with respect to any class or series of Junior Units nor shall any cash or other property be set aside for or applied to the purchase, redemption or other acquisition for consideration of any Junior Units (other than consideration paid solely in Junior Units or options, warrants or other rights to subscribe for or purchase Junior Units) unless, in each case, all Series A Accumulated Preferred Unit Distributions have been paid in full or set apart for payment.
(C) So long as there are Series A Accumulated Preferred Unit Distributions (and a sum sufficient for full payment of Series A Accumulated Preferred Unit Distributions is not so set apart), all future Series A Preferred Unit Distributions shall be authorized and declared so that the amount of Series A Preferred Unit Distributions per Series A Preferred Unit shall in all cases bear to each other the same ratio that Series A Accumulated Preferred Unit Distributions per Series A Preferred Unit bear to each other.
(D) Notwithstanding anything to the contrary set forth herein, distributions on Units held by the Managing Member ranking junior to or on parity with the Series A Preferred Units may be made, without preserving the priority of distributions described in Section 4.3(d)(iii)(A) and (B), but only to the extent such distributions are required to preserve the REIT status of GGPI.
(iv) NO FURTHER RIGHTS. Holders of Series A Preferred Units shall not be entitled to any distributions, whether payable in cash, other property or otherwise, in excess of the Series A Preferred Unit Distributions (and any Series A Accumulated Preferred Unit Distributions) described herein.
(e) LIQUIDATION PREFERENCE. (i) In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, before any payment or distribution of the assets of the Company shall be made to or set apart for the holders of Junior Units, each holder of the Series A Preferred Units shall be entitled to receive an amount equal to such holder's Capital Account in respect of its Series A Preferred Units; but the holders of Series A Preferred Units shall not be entitled to any further payment. If, upon any such liquidation, dissolution or winding up of the Company, the assets of the Company, or proceeds thereof, distributable to the holders of Series A Preferred Units, shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other Parity Units, then such assets, or the proceeds thereof, shall be distributed among the holders of the Series A Preferred Units and the holders of any such other Parity Units ratably in accordance with the respective amounts that would be payable on such Series A Preferred Units and any such other Parity Units if all amounts payable thereon were paid in full. For the purposes of this Section 4.3(e), none of (i) a consolidation or merger of the Company with or into one or more entities, (ii) a merger of an entity with or into the Company, (iii) a statutory share exchange by the Company or (iv) a sale, lease or conveyance of all or substantially all of the Company's assets shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Company.
(ii) Subject to the rights of the holders of Parity Units, after payment shall have been made in full to the holders of the Series A Preferred Units as provided in this Section, any series or class or classes of Junior Units shall, subject to any respective terms and provisions applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series A Preferred Units shall not be entitled to share therein.
(f) TRANSFER BY HOLDERS OF SERIES A PREFERRED UNITS. Notwithstanding
anything to the contrary contained herein, a holder of Series A Preferred Units
may sell, assign or otherwise transfer all or part of its Series A Preferred
Units without the consent of the Managing Member; provided, however, that no
such sale, conveyance or other transfer may be made unless the requirements of
Section 8.3 (other than Section 8.3(b)) and the second and fourth sentences of
Section 8.2 are satisfied with respect to such sale, conveyance or other
transfer.
(g) EXCHANGE RIGHTS.
(i) RIGHT TO EXCHANGE.
(A) Series A Preferred Units will be exchangeable in whole but not in part with GGPI at any time on or after May 25, 2010, at the option of the holders of at least fifty-one percent (51%) of all outstanding Series A Preferred Units for authorized but previously unissued REIT Preferred Shares (and in the event such option is exercised, such exercise and the Exchange Notice given in connection therewith shall be deemed to apply to all issued and outstanding Series A Preferred Units and the holders thereof). Each holder of Series A Preferred
Units will be entitled to receive for each Series A Preferred Unit held by it a number of REIT Preferred Shares equal to the quotient of the Capital Account per Series A Preferred Unit of such holder of Series A Preferred Units (adjusted to reflect fair market value through the exchange date) divided by $1,000 (the "Series A Preferred Exchange Rate"). This exchange right is only exercisable if, at the time of exercise, the fair market value of the Company's assets exceeds the Company's liabilities (and any preferred security claims senior to the Series A Preferred Units) by an amount at least equal to twice the sum of (1) the aggregate Capital Accounts of all holders of Series A Preferred Units plus (2) the aggregate Capital Accounts of all holders of Parity Units. The GS 2000 REIT hereby agrees to the amendment of the terms of the REIT Preferred Shares to reflect the changes reflected on Exhibit B.
(B) The Series A Preferred Units will be exchangeable with GGPI at any time on or after May 25, 2005, in whole but not in part, at the option of the holders of at least fifty-one percent (51%) of all outstanding Series A Preferred Units, for authorized but previously unissued Common Shares if at any time Series A Accumulated Preferred Unit Distributions exist with respect to the Series A Preferred Units in an amount equal to the amount that should have been distributed in six (6) prior quarterly distribution periods, whether or not consecutive, at the following exchange rate: for each Series A Preferred Unit, a number of Common Shares equal to the quotient of (x) the sum of $250 and the Series A Accumulated Preferred Unit Distributions with respect thereto (but only up to an amount equal to the amount distributable for six (6) quarterly distribution periods) divided by (y) $37.25 (as adjusted to reflect any splits, combinations or the like after the date hereof) (the "Series A Common Exchange Rate") (and in the event such option is exercised, such exercise and the Exchange Notice given in connection therewith shall be deemed to apply to all issued and outstanding Series A Preferred Units and the holders thereof).
(C) Series A Preferred Units will be exchangeable at
any time, in whole but not in part, with GGPI at the option of the
holders of at least fifty-one percent (51%) of all outstanding Series A
Preferred Units for authorized but previously unissued REIT Preferred
Shares at the Series A Preferred Exchange Rate upon receipt by a holder
or holders of Series A Preferred Units of (A) notice from the Managing
Member that the Managing Member or an Affiliate of the Managing Member
has taken the position that the Company is, or upon the consummation of
an identified event in the immediate future will be, a "publicly traded
partnership", taxable as a corporation (a "PTP") within the meaning of
Section 7704 of the Code or (B) an opinion rendered by independent
counsel familiar with such matters addressed to a holder or holders of
Series A Preferred Units, that the Company is or likely is, or upon the
occurrence of an imminent identified event will be or likely will be, a
PTP (and in the event such option is exercised, such exercise and the
Exchange Notice given in connection therewith shall be deemed to apply
to all issued and outstanding Series A Preferred Units
and the holders thereof). This exchange right is exercisable only under the circumstances described in the last sentence of Section 4.3(g)(i)(A).
(D) Series A Preferred Units will be exchangeable with GGPI at any time in whole but not in part, at the option of a holder for authorized but previously unissued Common Shares at the Series A Common Exchange Rate if such holder concludes based on results or projected results that there exists (in the reasonable judgment of such holder as confirmed by an opinion of nationally recognized independent counsel or accounting firm) an imminent and substantial risk that such holder's interest in the Company represents or will represent more than nineteen and ninety-five one hundredths percent (19.95%) of the total profits or capital interests in the Company for a taxable year (the "19.95% Limit") (determined in accordance with Treasury Regulations Section 1.731-2(e)(4)) (and in the event such option is exercised, such exercise and the Exchange Notice given in connection therewith shall only apply to all issued and outstanding Series A Preferred Units of the exercising holder).
(E) Notwithstanding anything to the contrary set forth in Sections 4.3(g)(i)(A) through (D), if an Exchange Notice (as defined herein) has been delivered to the Managing Member and GGPI, then the Managing Member or GGPI may at its option, within ten (10) Business Days after receipt of the Exchange Notice, elect to purchase or cause the Company to redeem all or a portion of the outstanding Series A Preferred Units (for which Exchange Notices have been delivered or are deemed to have been delivered) for cash or Common Shares, in each case at the Series A Exchange Price per Series A Preferred Unit as of the date the Exchange Notice is sent. The "Series A Exchange Price" of an outstanding Series A Preferred Unit shall equal: (1) in the event that the holders of the Series A Preferred Units are exchanging such Unit for Common Shares, the product of the number of Common Shares issued in respect of such Preferred Unit multiplied by the Current Per Share Market Price, or (2) in the event that the holders of the Series A Preferred Units are exchanging such Unit for REIT Preferred Shares, the pro rata portion of the Capital Account (as adjusted and booked up or down immediately prior to such purchase or redemption) allocable to that Series A Preferred Unit. If such election is made with respect to fewer than all of the outstanding Series A Preferred Units, the number of Series A Preferred Units held by each holder of Series A Preferred Units to be redeemed or purchased shall equal such holder's pro rata share (based on the percentage of the aggregate number of outstanding Series A Preferred Units that the total number of Series A Preferred Units held by such holder of Series A Preferred Units represents) of the aggregate number of Series A Preferred Units being redeemed. An election by the Managing Member or GGPI under this Section shall be effected by delivering notice thereof to the holders identified in the Exchange Notice.
(F) If an exchange of all Series A Preferred Units pursuant to Sections 4.3(g)(i)(A) through (D) would violate the provisions on ownership
limitation of GGPI set forth in its Charter and such ownership limitation is not waived by GGPI, each holder of Series A Preferred Units shall be entitled to exchange that number of Series A Preferred Units which would comply with the provisions on the ownership limitation of GGPI and any Series A Preferred Units not so exchanged (the "Excess Units") shall be redeemed by the Company for cash in an amount determined in the manner set forth in subsection (E).
(ii) PROCEDURE FOR EXCHANGE AND/OR REDEMPTION OF SERIES A PREFERRED UNITS.
(A) Any exchange right shall be exercised pursuant to
a written notice of exchange (the "Exchange Notice") delivered to the
Managing Member and GGPI by holders of Series A Preferred Units owning
at least fifty-one percent (51%) of the outstanding Series A Preferred
Units (or by a holder of Series A Preferred Units in the case of an
exchange pursuant to Section 4.3(g)(i)(D) hereof) by fax and certified
mail postage prepaid. The Exchange Notice shall specify the name or
names of the holders of Series A Preferred Units that are exercising
(or are deemed to have exercised) the exchange rights and the number of
Series A Preferred Units as to which such rights are being exercised
(or are deemed to have been exercised). The closing of the exchange or
redemption pursuant to this Section 4.3(g) shall occur within fifteen
(15) Business Days following the giving of the Exchange Notice. At the
closing, the exchanging holder(s) shall deliver such instruments of
transfer and other documents as GGPI or the Managing Member may
reasonably request and GGPI and/or the Company shall deliver to the
exchanging holder certificates representing the REIT Preferred Shares
or Common Shares and/or the cash redemption price. Notwithstanding
anything to the contrary contained herein, any and all Series A
Preferred Units to be exchanged for Common Shares or REIT Preferred
Shares pursuant to this Section shall be so exchanged in a single
transaction at one time. As a condition to exchange, each holder of
Series A Preferred Units shall make such customary representations as
may be reasonably necessary for the Managing Member or GGPI to
establish that the issuance of Common Shares or REIT Preferred Shares
pursuant to the exchange shall not be required to be registered under
the Securities Act of 1933, as amended, or any applicable state
securities laws. Any Common Shares or REIT Preferred Shares issued
pursuant to this Section shall be delivered as shares which are duly
authorized, validly issued, fully paid and nonassessable, free of any
pledge, lien, encumbrance or restriction other than those provided in
the Charter or the by-laws of GGPI, the Securities Act and relevant
state securities or blue sky laws and any Series A Preferred Units as
to which the exchange right has been exercised shall be free of any
pledge, lien, encumbrance or restriction other than those provided in
this Agreement, the Securities Act and relevant state securities or
blue sky laws (and the parties shall make representations and
warranties to the other to such effect). The certificates representing
the Common Shares or REIT Preferred Shares issued upon exchange of the
Series A Preferred Units shall, in addition to any legend required by
the Charter, contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR (B) IF THE CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS THEREUNDER.
Notwithstanding anything to the contrary contained herein and at the request of a majority of the holders of Series A Preferred Shares that have exercised (or are deemed to have exercised) the exchange right pursuant to this Section 4.3(g), GGPI shall cause depositary shares to be issued to such holders upon the closing of the exchange in lieu of REIT Preferred Shares, each depositary share (1) to have a face amount of $25 (or such other amount as may be specified by holders of a majority of the Series A Preferred Units prior to any such exchange) and (2) to represent a fraction of a REIT Preferred Share the denominator of which is $1,000 and the numerator of which is the face amount of such depositary share. At the request of holders of a majority of the Series A Preferred Units, the Company shall take such actions as are necessary to provide for such depositary shares to be issued immediately upon exchange of Series A Preferred Units for REIT Preferred Shares.
(B) In the event of an exchange of Series A Preferred Units, an amount equal to the Series A Accumulated Preferred Unit Distributions to the date of exchange on any Series A Preferred Units tendered for exchange shall continue to accrue on such Series A Preferred Units, which remain outstanding following such exchange, with the Managing Member as the holder of such Series A Preferred Units (GGPI having contributed the Series A Preferred Units to the Managing Member). Fractional REIT Preferred Shares or Common Shares are not to be issued upon exchange but, in lieu thereof, the Managing Member will pay a cash adjustment based upon either (i) the fair market value of the REIT Preferred Shares on the day prior to the exchange date as determined in good faith by the Board of Directors of the Managing Member or (ii) the Current Per Share Market Price of the Common Shares as of the date immediately prior to the exchange date, as the case may be.
(iii) ADJUSTMENT OF EXCHANGE PRICE. In case GGPI shall be a party to any transaction (including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of GGPI's Common Shares or sale of all or substantially all of GGPI's assets), in each case as a result of which the REIT Preferred Shares or Common Shares will be converted into the right to receive shares of capital stock, other securities or other property (including cash or any combination thereof), each Series A Preferred Unit will thereafter be exchangeable into the kind and amount of shares of capital stock and other securities and property receivable (including cash or any combination thereof) upon the consummation of such transaction by a holder of that number of REIT Preferred Shares or Common Shares or fraction thereof into which one (1) Series A Preferred Unit was exchangeable immediately prior to such transaction. GGPI may not become a party to any such transaction unless the terms thereof are consistent with the foregoing.
(iv) NO OTHER EXCHANGE RIGHTS. The Series A Preferred Units are not convertible into or redeemable or exchangeable for any other property or securities of GGPI, the Managing Member, the Company or any other Person at the option of any holder of Series A Preferred Units except as expressly provided in this Section 4.3(g).
(h) REDEMPTION.
(i) The Series A Preferred Units shall not be redeemable prior to May 25, 2005. On and after May 25, 2005, the Managing Member may, at its option, cause the Company to redeem the Series A Preferred Units in whole or in part, as set forth herein, subject to the provisions described below, at a redemption price, payable in cash, in an amount equal to $250 per Series A Preferred Unit being redeemed (the "Series A Redemption Price"). Upon any such redemption, the Company shall also pay any accumulated and unpaid distributions owing in respect of the Series A Preferred Units being redeemed.
(ii) Such Series A Preferred Units as are not held by the
Managing Member may be redeemed by the Company on or after May 25, 2005, in
whole or in part, at any time or from time to time, upon not less than 30 nor
more than 60 days' written notice. If fewer than all of the outstanding Series A
Preferred Units that are not held by the Managing Member are to be redeemed, the
Series A Preferred Units to be redeemed from each holder (other than the
Managing Member) shall be selected pro rata (as nearly as practicable without
creating fractional units). Any notice of redemption delivered pursuant to this
Section 4.3(h) will be mailed by the Company, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the date upon which
such redemption is to occur (the "Series A Third Party Redemption Date"),
addressed to each holder of record of the Series A Preferred Units at their
respective addresses as they appear on the records of the Company. No failure to
give or defect in such notice shall affect the validity of the proceedings for
the redemption of any Series A Preferred Units. In addition to any information
required by law, each such notice shall state: (a) the Series A Third Party
Redemption Date, (b) the amount payable per Series A Preferred Unit upon
redemption, including the Series A Redemption Price and any amount payable
pursuant to Section 4.3(h)(iv) hereof, (c) the aggregate number of Series A
Preferred Units to be redeemed and, if fewer than all of the outstanding Series
A Preferred Units
are to be redeemed, the number of Series A Preferred Units to be redeemed held by such holder, which number shall equal such holder's pro rata share (based on the percentage of the aggregate number of outstanding Series A Preferred Units not held by the Managing Member that the total number of Series A Preferred Units held by such holder represents and determined as nearly as practicable without creating fractional interests) of the aggregate number of Series A Preferred Units to be redeemed, (d) the place or places where the instrument of transfer is to be surrendered for payment of the amount payable upon redemption and (e) that payment of such amount will be made upon presentation and surrender of the instrument of transfer in the form provided by the Managing Member. If the Company gives a notice of redemption in respect of Series A Preferred Units pursuant to this Section 4.3(h), then, by 12:00 noon, New York City time, on the Series A Third Party Redemption Date, the Company will deposit irrevocably in trust for the benefit of the holders of Series A Preferred Units being redeemed funds sufficient to pay the applicable amount payable with respect to such Series A Preferred Units and will give irrevocable instructions and authority to pay such amount to the holders of the Series A Preferred Units upon surrender of the Series A Preferred Units and such instruments of transfer by such holders at the place designated in the notice of redemption. Any Series A Preferred Units surrendered shall be free and clear of all Liens and the holders thereof shall make representations and warranties to such effect.
(iii) Such Series A Preferred Units as may be held by the Managing Member may be redeemed, in whole or in part, at the option of the Managing Member, at any time, upon payment by the Company to the Managing Member of the Series A Redemption Price and any amount payable pursuant to Section 4.3(h)(iv) hereof with respect to such Series A Preferred Units; provided that GGPI shall redeem an equivalent number of REIT Preferred Shares to the extent that there are REIT Preferred Shares issued and outstanding. Such redemption of Series A Preferred Units shall occur substantially concurrently with the redemption by GGPI of such REIT Preferred Shares (such date is herein referred to collectively with the Third Party Redemption Date as the "Series A Redemption Date").
(iv) Upon any redemption of Series A Preferred Units, the Company shall pay any accumulated and unpaid distributions for any distribution period, or any other period shorter than a full distribution period, ending on or prior to the Redemption Date. On and after the Redemption Date, distributions will cease to accumulate on the Series A Preferred Units called for redemption, unless the Company defaults in payment therefor. If any date fixed for redemption of Series A Preferred Units is not a Business Day, then payment of the Series A Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Series A Redemption Price is improperly withheld or refused and not paid by the Company, distributions on such Series A Preferred Units will continue to accumulate from the original redemption date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of
calculating the applicable Series A Redemption Price. Except as provided above, the Company shall make no payment or allowance for unpaid distributions, whether or not in arrears, on Series A Preferred Units called for redemption under this Section 4.3(h).
(v) If full cumulative distributions on the Series A Preferred Units and any other Parity Units for distribution periods ending on or prior to the date of redemption have not been paid or declared and set apart for payment, the Series A Preferred Units may not be redeemed in part and the Company may not purchase, redeem or otherwise acquire Series A Preferred Units or any Parity Units other than in exchange for Junior Units.
(vi) As promptly as practicable after the surrender of any such Series A Preferred Units so redeemed, such Series A Preferred Units shall be exchanged for the amount of cash (without interest thereon) payable therefor pursuant to Section 4.3(h). If fewer than all the Series A Preferred Units represented by any physical certificate are redeemed, then the Company shall issue new certificates representing the unredeemed Series A Preferred Units without cost to the holder thereof.
(i) OTHER MATTERS. As long as any of the Series A Preferred Units are outstanding, the Company shall comply with the following:
(i) DIVIDENDS. The Company shall not make any distributions on the Common Units or any other Junior Units or redeem any such Units unless at the time such distribution or redemption is made, and after giving effect to such distribution or redemption, each of the following conditions shall be met:
(A) Consolidated Tangible Net Worth to Reserve Amount. The ratio of the Consolidated Tangible Net Worth to the Reserve Amount is at least 2.0 to 1.0;
(B) Adjusted Consolidated Tangible Net Worth. The ratio of the Adjusted Consolidated Tangible Net Worth to the sum of (i) the Capital Accounts of all Preferred Units plus (ii) the amount of accrued Preferred Unit distributions (whether or not declared or paid) for which allocations have not as yet been reflected in the Capital Accounts is at least 1.0 to 1.0;
(C) Loan to Value Ratio. The ratio of (x) the Consolidated Outstanding Indebtedness to (y) the Consolidated Tangible Net Worth is no greater than 0.75 to 1.0;
provided, however, that the foregoing shall not prohibit the Company from making distributions (including distributions in redemption of Common Units) to the holders of Common Units in any calendar year in an aggregate amount no greater than the minimum amount a real estate investment trust would be required to distribute under Section 857(a)(1)(A) of the Code for such calendar year (in order to avoid being taxed as a Subchapter C corporation), if such real estate investment trust owned all of the Common Units and had no income from any source other than the Common Units.
(ii) AFFILIATE TRANSACTIONS.
(A) Except as expressly provided elsewhere in this Agreement, the Company shall not, nor will it permit any of its Subsidiaries to, enter into any transaction (including, without limitation, the purchase or sale of any property or service) with, or make any payment or transfer to, any Affiliate of the Company except in the ordinary course of business and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than the Company or such Subsidiary would obtain in a comparable arms-length transaction (but this paragraph shall not restrict the making of distributions by the Company).
(B) The Company shall not, and shall not permit any of its Subsidiaries or Investment Affiliates to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect thereof, pursuant to any arrangement relating to Parent Indebtedness, except for Liens arising out of any arrangement referred to on Schedule 3.aa to the Purchase Agreement (which arrangements are hereby approved) but only to the extent that the Parent Indebtedness outstanding at any time relating to such arrangement does not exceed the maximum amount of Parent Indebtedness that may be incurred in connection with such arrangement in accordance with the terms thereof as of April 17, 2002 (but nothing contained herein shall prohibit the extension of such arrangements in accordance with the existing extension options relating thereto).
(C) The Company shall not, and shall not permit any of its Subsidiaries or Investment Affiliates to, incur, assume or permit to exist any Guarantee of Parent Indebtedness by any member of the Consolidated Group or any Investment Affiliate other than Guarantees arising out of any arrangement referred to on Schedule 3.aa to the Purchase Agreement (which arrangements are hereby approved) but only to the extent that the Parent Indebtedness outstanding at any time relating to such arrangement does not exceed the maximum amount of Parent Indebtedness that may be incurred in connection with such arrangement in accordance with the terms thereof as of April 17, 2002 (but nothing contained herein shall prohibit the extension of such arrangements in accordance with the existing extension options relating thereto).
(D) With respect to any JV, (i) the Company shall not, and shall not permit any of its Subsidiaries or Investment Affiliates (other than such JV) to, incur, assume or permit to exist any Guarantee of JV Indebtedness by any member of the Consolidated Group or any Investment Affiliate (other than such JV) other than a Guarantee of no more than the Company's pro rata portion (based on the Company's direct or indirect percentage ownership interest in such JV) of such JV Indebtedness; (ii) the Company shall not, and shall not permit any of its Subsidiaries or Investment Affiliates (other than such JV) to, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect thereof, pursuant to any arrangement relating to JV Indebtedness; (iii) the Company shall not permit such JV to create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect thereof, pursuant to any arrangement relating to Indebtedness of another Entity (other than a member of the Consolidated Group or an Investment Affiliate, in either case that is not another JV); and (iv) the Company shall not permit such JV to create, incur or assume any Guaranty pursuant to any arrangement relating to Indebtedness of another Entity (other than a member of the Consolidated Group or an Investment Affiliate, in either case that is not another JV).
(iii) CONSOLIDATED TANGIBLE NET WORTH. The Company shall provide the holders of Series A Preferred Units prompt written notice in the event Consolidated Tangible Net Worth is or is reasonably likely to be less than $600 million as of the last day of any quarter.
(iv) ASSET TRANSFER. Without the prior written consent of the holders of at least fifty-one percent (51%) of Series A Preferred Units, the Company shall not, and shall not permit any of its Subsidiaries to sell, convey, transfer or otherwise dispose of any Property (i) to any Affiliate of the Company (other than Subsidiaries of the Company) or (ii) to any person that is not an Affiliate of the Company, unless simultaneously therewith, the Company or such Subsidiary acquires an Approved Replacement Property or the following requirements are met:
(A) the net income of the Company for the most recently completed twelve months, calculated in accordance with GAAP on a pro forma basis as though such Property had been sold, transferred, conveyed or otherwise disposed of prior to the beginning of such period, would be at least $90 million; and
(B) after giving effect to any such sale, conveyance, transfer or other disposition, the Consolidated Tangible Net Worth would not be less than $1 billion; and
(C) after giving effect to any such sale, conveyance, transfer or other disposition, the interest of no holder of Series A Preferred Units would represent more than 17.5% of the total profits or capital interests in the Company immediately following such sale, conveyance, transfer or other disposition (determined in accordance with Treasury Regulation Section 1.731-2(e)(4)).
The Company shall give the holders of the Series A Preferred Units notice of any such sale, transfer or other disposition.
Notwithstanding anything to the contrary contained herein, the provisions of this Section 4.3(i)(iv) shall not apply to (i) the conveyance of any Property or any part thereof
to any Person in connection with a foreclosure or eminent domain proceeding or deed in lieu thereof, (ii) the sale, exchange or other disposition of all or substantially all of the properties of the Company and its Subsidiaries, (iii) the grant of an easement or right-of-way, (iv) the lease of the Properties in the ordinary course of business, (v) the sale to any department store or retailer of the portion of the property occupied or proposed to be occupied by it (including parking area and other surrounding area), (vi) the mortgage of any Property or (vii) the other sale, conveyance, transfer or other disposal of a portion of a Property or interests therein in the ordinary course of business, and no notice need be given to the holders of the Series A Preferred Units in connection with a transaction described in this sentence.
(v) NET OPERATING INCOME. The Company shall provide the holders of Series A Preferred Units prompt written notice in the event aggregate Net Operating Income for any two consecutive calendar quarters from all properties owned in fee simple or ground leased by the Company, a Subsidiary, or an Investment Affiliate is, or is reasonably likely to be, less than 2.1 times the portion of the Consolidated Interest Expense for such two fiscal quarters attributable to debt, as of the last day of any fiscal quarter.
(vi) FIXED CHARGE COVERAGE. The Company shall provide the holders of Series A Preferred Units prompt written notice in the event the ratio of (i) aggregate Net Operating Income for any two consecutive calendar quarters from all properties owned in fee simple or ground leased by the Company, a Subsidiary or an Investment Affiliate, to (ii) Fixed Charges determined on a consolidated basis for such two calendar-quarter period, is or is reasonably likely to be, less than 1.8 to 1 at the end of such two calendar-quarter period.
(vii) EFFECT OF BREACH. In the event of any material breach of any of the covenants set forth in this Section 4.3(i), the holders of Series A Preferred Units shall have all rights at law. The occurrence of any matter for which notice is required to be given in accordance with Section 4.3(i)(iii), (v) or (vi) shall not in and of itself constitute a breach hereof; however, the failure to provide written notice in accordance with each such section is a breach of this Agreement.
4.4 NO THIRD PARTY BENEFICIARY. No creditor or other third party having dealings with the Company shall have the right to enforce the right or obligation of any Member to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Members herein set forth to make Capital Contributions or loans to the Company shall be deemed an asset of the Company for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Company or pledged or encumbered by the Company to secure any debt or other obligation of the Company or of any of the Members.
4.5 NO INTEREST; NO RETURN; NO WITHDRAWAL. No Member shall be entitled to interest on its Capital Contribution or on its Capital Account. Except as provided herein or by law, no Member shall have any right to demand or receive the return of its Capital Contribution from the Company. No Member may withdraw from the Company without the prior written consent of the Managing Member, other than as expressly provided in this Agreement.
4.6 NO OTHER CAPITAL CONTRIBUTIONS. No Member shall have any obligation to make any additional Capital Contribution to the Company.
4.7 ESTABLISHMENT AND ISSUANCE OF SERIES B PREFERRED UNITS. A new series of Preferred Units designated as the "8.95% Series B Cumulative Redeemable Preferred Units" (the "Series B Preferred Units") is hereby established and shall have such rights, preferences, limitations and qualifications as are described on Schedule B, attached hereto and by this reference made a part hereof (in addition to the rights, preferences, limitations and qualifications contained elsewhere in this Agreement, to the extent applicable). The maximum number of Series B Preferred Units which may be issued by the Company from time to time shall be 200,000. Concurrently herewith, the Company is issuing to the GS 2002 REIT 200,000 Series B Preferred Units in exchange for a Capital Contribution by the GS 2002 REIT of $50,000,000. The GS 2002 REIT is hereby admitted as a Member in respect of the Series B Preferred Units issued to it, and the GS 2002 REIT hereby agrees to be bound by the provisions of this Agreement, as the same may be amended from time to time, with respect to such Series B Preferred Units. Series B Preferred Units shall not have any relative, participating, optional or other special rights and powers other than as set forth herein. Series B Preferred Units that are redeemed or purchased by the Company shall be cancelled and may not be reissued.
ARTICLE V
ALLOCATIONS AND OTHER TAX AND ACCOUNTING MATTERS
5.1 ALLOCATIONS. The Net Income, Net Loss and/or other Company items shall be allocated pursuant to the provisions of Exhibit A hereto.
5.2 DISTRIBUTIONS.
(a) Subject to the rights of holders of Preferred Units, the Managing Member shall, from time to time as determined by the Managing Member (but in any event not less frequently than quarterly), cause the Company to distribute all or a portion of Net Operating Cash Flow to the holders of the Common Units who are such on the relevant Common Unit Record Date in such amounts as the Managing Member shall determine; provided, however, that all such distributions shall be made pro rata in accordance with the number of Common Units then owned by the Members; and provided further, that notwithstanding the foregoing, the Managing Member shall use its best efforts to cause the Company to distribute sufficient amounts to enable GGPI to pay shareholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations ("REIT Requirements"), and (b) avoid any federal income or excise tax liability of GGPI.
(b) The Company shall pay distributions in respect of each series of Preferred Units as provided in Section 4.3 hereof, Schedule B and/or any amendment hereto relating to such series of Preferred Units.
5.3 BOOKS OF ACCOUNT. At all times during the continuance of the Company, the Managing Member shall maintain or cause to be maintained full, true, complete and correct books of account in accordance with generally accepted accounting principles wherein shall be entered particulars of all monies, goods or effects belonging to or owing to or by the Company, or paid, received, sold or purchased in the course of the Company's business, and all of such other transactions, matters and things relating to the business of the Company as are usually entered in books of account kept by persons engaged in a business of a like kind and character. In addition, the Company shall keep all records as required to be kept pursuant to the Act. The books and records of account shall be kept at the principal office of the Company, and each Member shall at all reasonable times have access to such books and records and the right to inspect the same.
5.4 REPORTS. The Managing Member shall cause to be submitted to the other Members, promptly following the end of the last calendar year, copies of Financial Statements prepared on a consolidated basis for the Company and the Property Partnerships. The Company shall also cause to be prepared such reports and/or information as are necessary for GGPI to determine its qualification as a REIT and its compliance with the REIT Requirements.
5.5 TAX ELECTIONS AND RETURNS.
(a) All elections required or permitted to be made by the Company under any applicable tax law shall be made by the Managing Member in its sole discretion, including without limitation an election on behalf of the Company pursuant to Section 754 of the Code to adjust the basis of the Company property in the case of transfers of Units, and the Managing Member shall not be required to make any such election.
(b) The Managing Member shall cause the Accountants to prepare and file all state and federal tax returns on a timely basis.
5.6 TAX MATTERS MEMBER. The Managing Member is hereby designated as the Tax Matters Member of the Company, which has the meaning of "Tax Matters Partner" as specified in Section 6231(a)(7) of the Code; provided, however, in exercising its authority as Tax Matters Member it shall be limited by the provisions of this Agreement affecting tax aspects of the Company;
5.7 WITHHOLDING. Each Member hereby authorizes the Company to withhold or pay on behalf of or with respect to such Member any amount of federal, state, local or foreign taxes that the Managing Member determines the Company is required to withhold or pay with respect to any amount distributable or allocable to such Member pursuant to this Agreement, including without limitation any taxes required to be withheld or paid by the Company pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. Any amount paid on behalf of or with respect to a Member shall constitute a loan by the Company to such Member, which loan shall be due within fifteen (15) days after repayment is demanded of such Member and shall be repaid
through withholding of subsequent distributions to such Member. Any amounts payable by a Member hereunder shall bear interest at the lesser of (a) the Prime Rate and (b) the maximum lawful rate of interest on such obligation, such interest to accrue from the date such amount is due (i.e., fifteen (15) days after demand) until such amount is paid in full. To the extent the payment or accrual of withholding tax results in a federal, state or local tax credit to the Company, such credit shall be allocated to the Member to whose distribution the tax is attributable.
ARTICLE VI
RIGHTS, DUTIES AND RESTRICTIONS OF THE MANAGING MEMBER
6.1 EXPENDITURES BY COMPANY. The Managing Member is hereby authorized to pay compensation for accounting, administrative, legal, technical, management and other services rendered to the Company. All of the aforesaid expenditures shall be made on behalf of the Company, and the Managing Member shall be entitled to reimbursement by the Company for any expenditures incurred by it on behalf of the Company which shall be made other than out of the funds of the Company. The Company also shall assume, and pay when due, all Administrative Expenses.
6.2 POWERS AND DUTIES OF MANAGING MEMBER. The Managing Member shall be responsible for the management of the Company's business and affairs. Except as otherwise herein expressly provided, the Managing Member shall have, and is hereby granted, full, complete and exclusive power, authority and discretion under all circumstances to manage the business of the Company and to take all actions for and on behalf of the Company and in its name as the Managing Member shall, in its sole and absolute discretion, deem necessary or appropriate to carry out the purposes for which the Company was organized. Except as otherwise expressly provided herein and without limiting the foregoing, the Managing Member shall have the right, power and authority:
(a) To manage, control, invest, reinvest, acquire by purchase, lease or otherwise, sell, contract to purchase or sell, grant, obtain, or exercise options to purchase, options to sell or conversion rights, assign, transfer, convey, deliver, endorse, exchange, pledge, mortgage, abandon, improve, repair, maintain, insure, lease for any term and otherwise deal with any and all property of whatsoever kind and nature, and wheresoever situated, in furtherance of the purposes of the Company;
(b) To acquire, directly or indirectly, interests in real estate of any kind and of any type, and any and all kinds of interests therein, and to determine the manner in which title thereto is to be held; to manage, insure against loss, protect and subdivide any of the real estate, interests therein or parts thereof; to improve, develop or redevelop any such real estate; to participate in the ownership and development of any property; to dedicate for public use, to vacate any subdivisions or parts thereof, to resubdivide, to contract to sell, to grant options to purchase or lease, to sell on any terms; to convey, to mortgage, pledge or otherwise encumber said property, or any part thereof; to lease said property or any part thereof from time to time, upon any terms and for any period of time, and to renew or extend leases, to amend, change or modify the terms and provisions of any leases and
to grant options to lease and options to renew leases and options to purchase; to partition or to exchange said real property, or any part thereof, for other real or personal property; to grant easements or charges of any kind; to release, convey or assign any right, title or interest in or about or easement appurtenant to said property or any part thereof; to construct and reconstruct, remodel, alter, repair, add to or take from buildings on said premises; to insure any Person having an interest in or responsibility for the care, management or repair of such property; to direct the trustee of any land trust to mortgage, lease, convey or contract to convey the real estate held in such land trust or to execute and deliver deeds, mortgages, notes, and any and all documents pertaining to the property subject to such land trust or in any matter regarding such trust; to execute assignments of all or any part of the beneficial interest in such land trust;
(c) To employ, engage or contract with or dismiss from employment or engagement Persons to the extent deemed necessary by the Managing Member for the operation and management of the Company business, including but not limited to, the engagement of the Property Manager pursuant to the Management Agreements and the employment or engagement of other contractors, subcontractors, engineers, architects, surveyors, mechanics, consultants, accountants, attorneys, insurance brokers, real estate brokers and others;
(d) To enter into contracts on behalf of the Company;
(e) To borrow money, procure loans and advances from any Person for Company purposes, and to apply for and secure, from any Person, credit or accommodations; to contract liabilities and obligations, direct or contingent and of every kind and nature with or without security; and to repay, discharge, settle, adjust, compromise, or liquidate any such loan, advance, credit, obligation or liability;
(f) To pledge, hypothecate, mortgage, assign, deposit, deliver, enter into sale and leaseback arrangements or otherwise give as security or as additional or substitute security, or for sale or other disposition any and all Company property, tangible or intangible, including, but not limited to, real estate and beneficial interests in land trusts, and to make substitutions thereof, and to receive any proceeds thereof upon the release or surrender thereof; to sign, execute and deliver any and all assignments, deeds and other contracts and instruments in writing; to authorize, give, make, procure, accept and receive moneys, payments, property, notices, demands, vouchers, receipts, releases, compromises and adjustments; to waive notices, demands, protests and authorize and execute waivers of every kind and nature; to enter into, make, execute, deliver and receive written agreements, undertakings and instruments of every kind and nature; to give oral instructions and make oral agreements; and generally to do any and all other acts and things incidental to any of the foregoing or with reference to any dealings or transactions which any attorney may deem necessary, proper or advisable;
(g) To acquire and enter into any contract of insurance which the Managing Member deems necessary or appropriate for the protection of the Company, for the
conservation of the Company's assets or for any purpose convenient or beneficial to the Company;
(h) To conduct any and all banking transactions on behalf of the Company; to adjust and settle checking, savings, and other accounts with such institutions as the Managing Member shall deem appropriate; to draw, sign, execute, accept, endorse, guarantee, deliver, receive and pay any checks, drafts, bills of exchange, acceptances, notes, obligations, undertakings and other instruments for or relating to the payment of money in, into, or from any account in the Company's name; to execute, procure, consent to and authorize extensions and renewals of the same; to make deposits and withdraw the same and to negotiate or discount commercial paper, acceptances, negotiable instruments, bills of exchange and dollar drafts;
(i) To demand, sue for, receive, and otherwise take steps to collect or recover all debts, rents, proceeds, interests, dividends, goods, chattels, income from property, damages and all other property, to which the Company may be entitled or which are or may become due the Company from any Person; to commence, prosecute or enforce, or to defend, answer or oppose, contest and abandon all legal proceedings in which the Company is or may hereafter be interested; and to settle, compromise or submit to arbitration any accounts, debts, claims, disputes and matters which may arise between the Company and any other Person and to grant an extension of time for the payment or satisfaction thereof on any terms, with or without security;
(j) To make arrangements for financing, including the taking of all action deemed necessary or appropriate by the Managing Member to cause any approved loans to be closed;
(k) To take all reasonable measures necessary to insure compliance by the Company with applicable arrangements, and other contractual obligations and arrangements entered into by the Company from time to time in accordance with the provisions of this Agreement, including periodic reports as required to lenders and using all due diligence to insure that the Company is in compliance with its contractual obligations;
(l) To maintain the Company's books and records;
(m) To prepare and deliver, or cause to be prepared and delivered by the Company's Accountants, all financial and other reports with respect to the operations of the Company, and preparation and filing of all Federal and state tax returns and reports; and
(n) Any and all other actions that the Managing Member, in its sole and absolute discretion, may deem necessary or appropriate in furtherance of the business of the Company.
The Managing Member shall not have any obligations hereunder except to the extent that Company funds are reasonably available to it for the performance of such duties, and nothing herein
contained shall be deemed to authorize or require the Managing Member, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Company. Subject to the terms of Section 4.3 and the terms of any other Preferred Units, the merger or consolidation of the Company with or into another Entity shall be authorized by the Consent of the Holders of Common Units.
6.3 PROSCRIPTIONS. The Managing Member shall not have the authority to:
(a) Do any act in contravention of this Agreement or which would make it impossible to carry on the ordinary business of the Company (other than a sale of all or substantially all of the Company assets or the dissolution of the Company, each of which is within the power and authority of the Managing Member and do not require the consent of the Members;
(b) Possess any Company property or assign rights in specific Company property for other than Company purposes; or
(c) Do any act in contravention of applicable law.
Nothing herein contained shall impose any obligation on any Person or firm doing business with the Company to inquire as to whether or not the Managing Member has properly exercised its authority in executing any contract, lease, mortgage, deed or other instrument or document on behalf of the Company, and any such third Person shall be fully protected in relying upon such authority.
6.4 TITLE HOLDER. To the extent allowable under applicable law, title to all or any part of the properties of the Company may be held in the name of the Company or any other individual, corporation, partnership, trust or otherwise, the beneficial interest in which shall at all times be vested in the Company. Any such title holder shall perform any and all of its respective functions to the extent and upon such terms and conditions as may be determined from time to time by the Managing Member.
6.5 COMPENSATION OF THE MANAGING MEMBER. The Managing Member shall not be entitled to any compensation for services rendered to the Company solely in its capacity as Managing Member except with respect to reimbursement for those costs and expenses constituting Administrative Expenses.
6.6 WAIVER AND INDEMNIFICATION.
(a) Neither the Managing Member nor any Person acting on its behalf, pursuant hereto, shall be liable, responsible or accountable in damages or otherwise to the Company or to any Member for any acts or omissions performed or omitted to be performed by them (whether on, prior to or after the date hereof) within the scope of the authority conferred upon the Managing Member by this Agreement and the Act; provided that (i) the Managing Member's or such other Person's conduct or omission to act was taken in good faith and in the belief that such conduct or omission was in the best interests of the Company and (ii) the Managing Member or such other Person shall not be guilty of fraud, willful misconduct or gross negligence. The Company shall, and hereby
does, indemnify and hold harmless the Managing Member and its Affiliates and any individual acting on their behalf from any loss, damage, claim or liability, including, but not limited to, reasonable attorneys' fees and expenses, incurred by them by reason of any act performed or omitted to be performed by them (whether on, prior to or after the date hereof) in accordance with the standards set forth above or in enforcing the provisions of this indemnity; provided, however, no Member shall have any personal liability with respect to the foregoing indemnification, any such indemnification to be satisfied solely out of the assets of the Company.
(b) Any Person entitled to indemnification under this Agreement shall be entitled to receive, upon application therefor, advances to cover the costs of defending any proceeding against such Person; provided, however, that such advances shall be repaid to the Company, without interest, if such Person is found by a court of competent jurisdiction upon entry of a final judgment not to be entitled to such indemnification. All rights of the indemnitee hereunder shall survive the dissolution of the Company. The indemnification rights contained in this Agreement shall be cumulative of, and in addition to, any and all rights, remedies and recourse to which the person seeking indemnification shall be entitled, whether at law or at equity. Indemnification pursuant to this Agreement shall be made solely and entirely from the assets of the Company and no Member shall be liable therefor.
(c) The provisions of this Section 6.6 also shall apply to the Liquidating Trustee and the Tax Matters Member.
6.7 OPERATION IN ACCORDANCE WITH REIT REQUIREMENTS. The Members acknowledge and agree that the Company shall be operated in a manner that will enable GGPI to (a) satisfy the REIT Requirements and (b) avoid the imposition of any federal income or excise tax liability. The Company shall avoid taking any action, or permitting any Property Partnership to take any action, which would result in GGPI ceasing to satisfy the REIT Requirements or would result in the imposition of any federal income or excise tax liability on GGPI.
6.8 DUTIES AND CONFLICTS. The Managing Member only shall be required to devote such time to the management of the business of the Company as it deems necessary to promote the interests of the Company. Each Member recognizes that the other Members (including the Managing Member) and their Affiliates have or may hereafter have other business interests, activities and investments, some of which may be in conflict or competition with the business or properties of the Company, and that such Persons are entitled to carry on such other business interests, activities and investments. The Members (including the Managing Member) and their Affiliates may engage in or possess an interest in any other business or venture of any kind, independently or with others, on their own behalf or on behalf of other entities with which they are affiliated or associated, and such persons may engage in any activities, whether or not competitive with the Company, without any obligation to offer any interest in such activities to the Company or to any Member. Neither the Company nor any Member shall have any right, by virtue of this Agreement, in or to such activities, or the income or profits derived therefrom, and the pursuit of such activities, even if competitive with the business of the Company, shall not be deemed wrongful or improper. Without limiting the foregoing, each Member recognizes that (a)
the Managing Member and/or its Affiliates (other than the Company and its Subsidiaries) own, independently and/or with others, direct and/or indirect interests in Shopping Center Projects in which the Company and its Subsidiaries have no interest and which may be in conflict or competition with the business or properties of the Company and its Subsidiaries, (b) the Managing Member intends to continue to conduct and expand such business and activities and (c) the Managing Member and its Affiliates (other than the Company and its Subsidiaries) are entitled to carry on such other business and activities and own such properties without any obligation to offer any interest in such business, activities or properties to the Company or to any Member.
ARTICLE VII
DISSOLUTION, LIQUIDATION AND WINDING-UP
7.1 ACCOUNTING. In the event of the dissolution, liquidation and winding-up of the Company, a proper accounting (which shall be certified) shall be made of the Capital Account of each Member and of the Net Profits or Net Losses of the Company from the date of the last previous accounting to the date of dissolution. Financial statements presenting such accounting shall include a report of a certified public accountant selected by the Liquidating Trustee.
7.2 DISTRIBUTION ON DISSOLUTION. In the event of the dissolution and liquidation of the Company for any reason, the assets of the Company shall be liquidated for distribution in the following rank and order:
(a) Payment of creditors of the Company (other than Members) in the order of priority as provided by law;
(b) Establishment of reserves as provided by the Managing Member to provide for contingent liabilities, if any;
(c) Payment of debts of the Company to Members, if any, in the order of priority provided by law; and
(d) Payment to holders of Units in accordance with their Capital Accounts.
Whenever the Liquidating Trustee reasonably determines that any reserves established pursuant to paragraph (b) above are in excess of the reasonable requirements of the Company, the amount determined to be excess shall be distributed to the Members in accordance with the above provisions.
7.3 TIMING REQUIREMENTS. In the event that the Company is "liquidated" within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and all distributions to the Members pursuant to Section 7.2(d) hereof shall be made no later than the later to occur of (i) the last day of the taxable year of the Company in which such liquidation occurs or (ii) ninety (90) days after the date of such liquidation.
7.4 SALE OF COMPANY ASSETS. In the event of the liquidation of the Company in accordance with the terms of this Agreement, the Liquidating Trustee may sell Company or Property Partnership property if the Liquidating Trustee has in good faith solicited bids from unrelated third parties and obtained independent appraisals before making any such sale; provided, however, all sales, leases, encumbrances or transfers of Company assets shall be made by the Liquidating Trustee solely on an "arm's-length" basis, at the best price and on the best terms and conditions as the Liquidating Trustee in good faith believes are reasonably available at the time and under the circumstances and on a non-recourse basis to the Members. The liquidation of the Company shall not be deemed finally terminated until the Company shall have received cash payments in full with respect to obligations such as notes, installment sale contracts or other similar receivables received by the Company in connection with the sale of Company assets and all obligations of the Company have been satisfied. The Liquidating Trustee shall continue to act to enforce all of the rights of the Company pursuant to any such obligations until paid in full.
7.5 DISTRIBUTIONS IN KIND. In the event that it becomes necessary to make a distribution of Company property in kind, the Managing Member may transfer and convey such property to the distributees as tenants in common, subject to any liabilities attached thereto, so as to vest in them undivided interests in the whole of such property in proportion to their respective rights to share in the proceeds of the sale of such property (other than as a creditor) in accordance with the provisions of Section 7.2 hereof.
7.6 DOCUMENTATION OF LIQUIDATION. Upon the completion of the dissolution and liquidation of the Company, the Company shall terminate and the Liquidating Trustee shall have the authority to execute and record any and all documents or instruments required to effect the dissolution, liquidation and termination of the Company.
7.7 NEGATIVE CAPITAL ACCOUNTS. No Member shall be liable to the Company or to any other Member for any deficit or negative balance which may exist in its Capital Account.
ARTICLE VIII
TRANSFER OF UNITS
8.1 MANAGING MEMBER TRANSFER. The Managing Member shall not withdraw
from the Company and shall not sell, assign, pledge, encumber or otherwise
dispose of all or any portion of its Units without (i) the Consent of the
Holders of Common Units; and (ii) the consent of the holders of at least
fifty-one percent (51%) of the outstanding Series A Preferred Units, which
consent may not be unreasonably withheld (except that the Managing Member may
sell, assign or transfer its interest to an Affiliate without the consent of the
Members). Upon any transfer of Units in accordance with the provisions of this
Section 8.1, the transferee Managing Member shall become vested with the powers
and rights of the transferor Managing Member, and shall be liable for all
obligations and responsible for all duties of the Managing Member, once such
transferee has executed such instruments as may be necessary to effectuate such
admission and to confirm the agreement of such transferee to be bound by all the
terms and provisions of this Agreement with respect to the Units so acquired. It
is a condition to any
transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Managing Member under this Agreement with respect to such transferred Units and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Managing Member are assumed by a successor corporation by operation of law) shall relieve the transferor Managing Member of its obligations under this Agreement without the Consent of the Holders of the Common Units, in their reasonable discretion. In the event the Managing Member withdraws from the Company, in violation of this Agreement or otherwise, or dissolves or terminates or upon the Bankruptcy of the Managing Member, a Majority in Interest of the Common Units and the holders of at least fifty-one percent (51%) of the outstanding Series A Preferred Units, voting separately as separate classes, may elect to continue the Company business by selecting a substitute Managing Member.
8.2 TRANSFERS BY OTHER MEMBERS. Except as otherwise provided herein, no Member (other than the Managing Member) shall have the right to transfer all or a portion of its Units to any Person without the written consent of the Managing Member, which consent may be given or withheld in the sole discretion of the Managing Member. It is a condition to any transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Member under this Agreement with respect to such transferred Units and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Member are assumed by a successor corporation by operation of law) shall relieve the transferor Member of its obligations under this Agreement without the approval of the Managing Member, which may be given or withheld in its sole discretion. Upon such transfer, the transferee shall be admitted as a substituted member of the Company (the "Substituted Member") and shall succeed to all of the rights of the transferor Member under this Agreement in the place and stead of such transferor Member. Any transferee, whether or not admitted as a Substituted Member, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substituted Member, no transferee, whether by a voluntary transfer, by operation of law or otherwise, shall have rights hereunder, other than to receive such portion of the distributions made by the Company as are allocable to the Units transferred.
8.3 RESTRICTIONS ON TRANSFER. In addition to any other restrictions on
transfer herein contained, in no event may any transfer or assignment of Units
by any Member be made (a) to any Person who lacks the legal right, power or
capacity to own Units; (b) in violation of any provision of any mortgage or
trust deed (or the note or bond secured thereby) constituting a Lien against a
Property or any part thereof, or other instrument, document or agreement to
which the Company or any Property Partnership is a party or otherwise bound; (c)
in violation of applicable law; (d) unless such assignment or transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended, or is exempt from registration thereunder; (e) of any
component portion of a Unit, such as the Capital Account, or rights to Net
Operating Cash Flow, separate and apart from all other components of such Unit,
(f) in the event such transfer would cause GGPI to cease to comply with the REIT
Requirements, (g) if such transfer would cause a termination of the Company for
federal income tax purposes, (h) if such transfer would, in the opinion of
counsel to the Company, cause the Company to cease to be classified as a
partnership for Federal income tax purposes, cause the Company to fail to
satisfy the safe harbor
requirements of Section 1.7704-1(j) of the Regulations during 2002 or cause the
Company to have more than 100 partners within the meaning of Reg.
Section1.7704-1(h), (i) if such transfer would cause the Company to become, with
respect to any employee benefit plan subject to Title 1 of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(e)(2) of the Code), or (j) if such transfer
would, in the opinion of counsel to the Company, cause any portion of the assets
of the Company to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.3-101.
8.4 BANKRUPTCY OF A MEMBER. The Bankruptcy of any Member (other than the Managing Member) shall not cause a dissolution of the Company, but the rights of such Member to share in the Net Profits or Net Losses of the Company and to receive distributions of Company funds shall, on the happening of such event, devolve on its successors or assigns, subject to the terms and conditions of this Agreement, and the Company shall continue as a limited liability company. However, in no event shall such assignee(s) become a Substituted Member without the written consent of the Managing Member.
ARTICLE IX
ARBITRATION OF DISPUTES
9.1 ARBITRATION. Notwithstanding anything to the contrary contained in this Agreement, all claims, disputes and controversies between the parties hereto (including, without limitation, any claims, disputes and controversies between the Company and any one or more of the Members and any claims, disputes and controversies between any one or more Members) arising out of or in connection with this Agreement or the Company shall be resolved by binding arbitration in (x) New York, New York with respect to any dispute involving the Series A Preferred Units or the Series B Preferred Units and (y) with respect to all other disputes, Chicago, Illinois, in accordance with this Article IX and, to the extent not inconsistent herewith, the Expedited Procedures and Commercial Arbitration Rules of the American Arbitration Association.
9.2 PROCEDURES. Any arbitration called for by this Article IX shall be conducted in accordance with the following procedures:
(a) The Company or any Member (the "Requesting Party") may demand arbitration pursuant to Section 9.1 at any time by giving written notice of such demand (the "Demand Notice") to all other Members and (if the Requesting Party is not the Company) to the Company which Demand Notice shall describe in reasonable detail the nature of the claim, dispute or controversy.
(b) Within fifteen (15) days after the giving of a Demand Notice, the Requesting Party, on the one hand, and each of the other Members and/or the Company against whom the claim has been made or with respect to which a dispute has arisen (collectively, the "Responding Party"), on the other hand, shall select and designate in writing to the other party one reputable, disinterested individual (a "Qualified Individual") willing to act as an arbitrator of the claim, dispute or controversy in
question. Each of the Requesting Party and the Responding Party shall use their best efforts to select a lawyer or retired judge having no affiliation with any of the parties as their respective Qualified Individual. Within fifteen (15) days after the foregoing selections have been made, the arbitrators so selected shall jointly select a lawyer or retired judge having no affiliation with any of the parties as the third Qualified Individual willing to act as an arbitrator of the claim, dispute or controversy in question. In the event that the two arbitrators initially selected are unable to agree on a third arbitrator within the second fifteen (15) day period referred to above, then, on the application of either party, the American Arbitration Association shall promptly select and appoint a lawyer or retired judge having no affiliation with any of the parties as the Qualified Individual to act as the third arbitrator. The three arbitrators selected pursuant to this subsection (b) shall constitute the arbitration panel for the arbitration in question.
(c) The presentations of the parties hereto in the arbitration proceeding shall be commenced and completed within sixty (60) days after the selection of the arbitration panel pursuant to subsection (b) above, and the arbitration panel shall render its decision in writing within thirty (30) days after the completion of such presentations. Any decision concurred in by any two (2) of the arbitrators shall constitute the decision of the arbitration panel, and unanimity shall not be required.
(d) The arbitration panel shall have the discretion to include in its decision a direction that all or part of the attorneys' fees and costs of any party or parties and/or the costs of such arbitration be paid by any other party or parties. On the application of a party before or after the initial decision of the arbitration panel, and proof of its attorneys' fees and costs, the arbitration panel shall order the other party to make any payments directed pursuant to the preceding sentence.
9.3 BINDING CHARACTER. Any decision rendered by the arbitration panel pursuant to this Article IX shall be final and binding on the parties hereto, and judgment thereon may be entered by any state or federal court of competent jurisdiction.
9.4 EXCLUSIVITY. Arbitration shall be the exclusive method available for resolution of claims, disputes and controversies described in Section 9.1, and the Company and its Members stipulate that the provisions hereof shall be a complete defense to any suit, action, or proceeding in any court or before any administrative or arbitration tribunal with respect to any such claim, controversy or dispute. The provisions of this Article IX shall survive the dissolution of the Company. Notwithstanding the foregoing, the parties may seek injunctive relief or similar relief from a court of competent jurisdiction in New York, New York before an arbitration panel has been appointed.
9.5 NO ALTERATION OF AGREEMENT. Nothing contained herein shall be deemed to give the arbitrators any authority, power or right to alter, change, amend, modify, add to, or subtract from any of the provisions of this Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 NOTICES. Except as otherwise provided herein, all notices, offers or other communications required or permitted to be given pursuant to this Agreement shall be in writing and may be personally served, delivered by nationally recognized overnight courier, telecopied or sent by registered or certified United States mail, postage prepaid and properly addressed, and shall be deemed to have been given when delivered in person or by nationally recognized courier or registered or certified U.S. mail or upon receipt of telecopy by the appropriate party. For purposes of this Section 10.1, the addresses of the parties hereto shall be as set forth opposite their names on the signature pages thereto. The address of any party hereto may be changed by a notice in writing given in accordance with the provisions hereof.
10.2 SUCCESSORS. This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of all Members, and their legal representatives, heirs, successors and permitted assigns, except as expressly herein otherwise provided.
10.3 EFFECT AND INTERPRETATION. This Agreement shall be governed by and construed in conformity with the laws of the State of Delaware (without regard to its conflicts of law principles, which might result in the application of the laws of any other jurisdiction).
10.4 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one and the same document and all signatures need not appear on the same page.
10.5 MEMBERS NOT AGENTS. Nothing contained herein shall be construed to constitute any Member the agent of another Member, except as specifically provided herein, or in any manner to limit the Members in the carrying on of their own respective businesses or activities.
10.6 ENTIRE UNDERSTANDING; ETC. This Agreement constitutes the entire agreement and understanding among the Members and supersedes any prior understandings and/or written or oral agreements among them respecting the subject matter within (including without limitation the Original Agreement).
10.7 AMENDMENTS. Except as otherwise provided herein (including the provisions of Section 4.3), this Agreement may not be amended, and no provision may be waived, except by a written instrument signed by the holders of a Majority in Interest of the Common Units.
10.8 SEVERABILITY. If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid by a court of competent jurisdiction, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it is held invalid by such court, shall not be affected thereby.
10.9 TRUST PROVISION. This Agreement, to the extent executed by the trustee of a trust, is executed by such trustee solely as trustee and not in a separate capacity. Nothing herein
contained shall create any liability on, or require the performance of any covenant by, any such trustee individually, nor shall anything contained herein subject the individual personal property of any trustee to any liability.
10.10 ISSUANCE OF CERTIFICATES REPRESENTING UNITS. The Managing Member may, in its sole discretion, issue certificates representing all or a portion of the Units of one or more Members and, in such event, the Managing Member shall establish such rules and regulations relating to issuances and reissuances of certificates upon transfer of Units, the division of Units among multiple certificates and the loss, theft, destruction or mutilation of certificates as the Managing Member reasonably deems appropriate.
10.11 SPECIFIC PERFORMANCE. The parties agree that irreparable damage will result in the event that this Agreement is not specifically enforced, and the parties agree that any damages available at law for a breach of this Agreement would not be an adequate remedy. Therefore, the provisions hereof and the obligations of the parties hereunder shall be enforceable in a court of equity or other tribunal with jurisdiction by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which a party may have under this Agreement or otherwise.
10.12 POWER OF ATTORNEY. Each Member (other than the holders of Series A Preferred Units or Series B Preferred Units) hereby irrevocably constitutes and appoints the Managing Member his or its true and lawful attorney-in-fact, in his or its name, place and stead with full power of substitution, to consent to, make, execute, sign, acknowledge, swear to, record and file, on behalf of such Member and/or on behalf of the Company, the following:
(a) this Agreement, any certificate of foreign limited liability company, any certificate of doing business under an assumed name, and any other certificates or instruments which may be required to be filed by the Company or such Member under the laws of the State of Delaware or any other jurisdiction the laws of which may be applicable;
(b) a certificate of cancellation of the Certificate of Formation of the Company and such other instruments or documents as may be deemed necessary or desirable by said attorneys upon the termination of the Company;
(c) any and all amendments or restatements of the documents described in subsections (a) and (b) above, provided such amendments are either required by law, are necessary to correct statements herein or therein, or are consistent with this Agreement (including without limitation any amendments referred to in Sections 4.1 and 4.2); and
(d) any and all such other documents as may be deemed necessary or desirable by said attorney to carry out fully the provisions of this Agreement and as are consistent with the terms hereof.
The foregoing grant of authority: (i) is a special power of attorney coupled with an interest, is irrevocable and shall survive the death or incapacity of each member and (ii) shall survive the delivery of an assignment by a Member of the whole or any portion of his or its Units.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, and GGPI has executed this Agreement solely for the purpose of binding itself under Section 4.3(g), as of the date and year first above written.
MANAGING MEMBER:
GGP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: General Growth Properties, Inc., a Delaware
corporation, its general partner
By: /s/ Bernard Freibaum ----------------------------------- Name: Bernard Freibaum ------------------------------ Title: Executive Vice President ---------------------------- |
110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum
OTHER MEMBERS:
CALEDONIAN HOLDING COMPANY, INC.,
a Delaware corporation
By: /s/ Bernard Freibaum ---------------------------------------- Name: Bernard Freibaum --------------------------------- Title: Vice President -------------------------------- |
110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum
GGP AMERICAN PROPERTIES INC.,
a Delaware corporation
By: /s/ Bernard Freibaum ---------------------------------------- Name: Bernard Freibaum --------------------------------- Title: Vice President -------------------------------- |
110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum
GSEP 2000 REALTY CORP.
By: /s/ Eric Lane ---------------------------------------- Name: Eric Lane --------------------------------- Title: President and CEO -------------------------------- |
c/o Goldman, Sachs & Co.
One New York Plaza
New York, New York 10004
Attention: Eric Lane
GSEP 2002 REALTY CORP.
By: /s/ Eric Lane ---------------------------------------- Name: Eric Lane --------------------------------- Title: President and CEO -------------------------------- |
c/o Goldman, Sachs & Co.
One New York Plaza, 40th Floor
New York, New York 10004
Attention: Eric Lane
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ Bernard Freibaum ---------------------------------------- Name: Bernard Freibaum --------------------------------- Title: Executive Vice President -------------------------------- |
110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum
EXHIBIT A
TO THE
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
OF
GGPLP L.L.C.
ALLOCATIONS
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided herein, Net Income for any fiscal year or other applicable period shall be allocated in the following order and priority:
(1) First, to each Member holding Common Units in proportion to, and to the extent of, the excess of (i) the cumulative amount of Net Loss allocated with respect to such Common Units pursuant to paragraph (b)(5) below for all prior periods over (ii) the cumulative amount of Net Income allocated with respect to such Common Units pursuant to this paragraph (a)(1) for all prior periods;
(2) Second, to each Member holding Preferred Units until the cumulative Net Income allocated with respect to each Preferred Unit pursuant to this paragraph (a)(2) for such period and all prior periods equals the cumulative Net Loss allocated with respect to each such Preferred Unit pursuant to paragraph (b)(4) below for all prior periods (such allocation to be among the Members holding Preferred Units in the reverse order that such Net Loss was allocated to them);
(3) Third, to each Member holding Preferred Units in proportion to, and to the extent of, the excess of (i) the cumulative amount of accrued distributions with respect to such Preferred Units for such period and all prior periods (whether or not declared or paid) over (ii) the cumulative amount of Net Income allocated with respect to such Preferred Units pursuant to this paragraph (a)(3) for all prior periods (net of the cumulative Net Loss, if any, allocated with respect to such Preferred Units pursuant to paragraph (b)(3) hereof for all prior periods);
(4) Fourth, to each Member holding Common Units until the cumulative Net Income allocated with respect to each Common Unit pursuant to this paragraph (a)(4) for such period and all prior periods equals the cumulative Net Loss allocated with respect to each such Common Unit pursuant to paragraph (b)(2) below for all prior periods (such allocation to be among the Members holding Common Units in the reverse order that such Net Loss was allocated to them); and
(5) Thereafter, the balance of the Net Income, if any, shall be allocated among the Members holding Common Units in proportion to the number of Common Units held by them.
(b) Net Loss. Except as otherwise provided herein, Net Loss of the Company for each fiscal year or other applicable period shall be allocated as follows:
(1) First, to the Members holding Common Units, until the cumulative amount of Net Loss allocated with respect to each Common Unit under this paragraph (b)(1) for such period and all prior periods equals the cumulative amount of Net Income allocated to such Common Unit pursuant to paragraph (a)(5) for all prior periods;
(2) Second, to the holders of Common Units in proportion to the number of Common Units held by them (provided, however, that to the extent any Net Loss allocated to a Member holding Common Units under this paragraph (b)(2) would cause such Member (hereinafter, a "Restricted Member") to have an Adjusted Capital Account Deficit as of the end of the fiscal year to which such Net Loss relates, such Net Loss shall not be allocated to such Restricted Member but shall instead, to the extent possible, be allocated to the other Member(s) holding Common Units (hereinafter, the "Permitted Members") pro rata in accordance with the Common Units held by all Permitted Members (for this purpose, a Member's Adjusted Capital Account Deficit shall be determined by considering only those adjustments to such Member's capital account (including any adjustments for capital contributed) that were made in respect of the Member's Common Units));
(3) Third, to the Members holding Preferred Units in
proportion to, and to the extent of, the excess of (i) the cumulative
Net Income allocated with respect to each Preferred Unit pursuant to
paragraph (a)(3) hereof for all prior periods over (ii) the cumulative
distributions made with respect to each such Preferred Unit pursuant to
Section 5.2(b) of the Agreement for the current and all prior periods;
(4) Fourth, to the Members holding Preferred Units in proportion to the number of Preferred Units held by them (provided, however, that to the extent any Net Loss allocated to a Member holding Preferred Units under this paragraph (b)(2) would cause such Member (hereinafter, a "Restricted Preferred Member") to have an Adjusted Capital Account Deficit as of the end of the fiscal year to which such Net Loss relates, such Net Loss shall not be allocated to such Restricted Preferred Member but shall instead, to the extent possible, be allocated to the other Member(s) holding Preferred Units (hereinafter, the "Permitted Preferred Members") pro rata in accordance with the Preferred Units held by all Permitted Preferred Members (for this purpose, a Member's Adjusted Capital Account Deficit shall be determined by considering only those adjustments to such Member's capital account (including any adjustments for capital contributed) that were made in respect of the Member's Preferred Units)); and
(5) Fifth, to the holders of Common Units in proportion to the number of Common Units held by them.
2. Special Allocations.
Notwithstanding any provisions of paragraph 1 of this Exhibit A, the following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a net decrease in Partnership Minimum Gain for any Company fiscal year (except as a result of conversion or refinancing of Company indebtedness, certain capital contributions or revaluation of the Company property as further outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Member's share of the net decrease in Partnership Minimum Gain. The items to be so allocated shall be determined in accordance with Regulation Section 1.704-2(f). This paragraph (a) is intended to comply with the minimum gain chargeback requirement in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this paragraph (a) shall be made in proportion to the respective amounts required to be allocated to each Member pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there is
a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during
any fiscal year (other than due to the conversion, refinancing or other change
in the debt instrument causing it to become partially or wholly nonrecourse,
certain capital contributions, or certain revaluations of Company property as
further outlined in Regulation Section 1.704-2(i)(4)), each Member shall be
specially allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to that Member's share of the
net decrease in the Minimum Gain Attributable to Partner Nonrecourse Debt. The
items to be so allocated shall be determined in accordance with Regulation
Section 1.704-2(i)(4) and (j)(2). This paragraph (b) is intended to comply with
the minimum gain chargeback requirement with respect to Partner Nonrecourse Debt
contained in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this paragraph (b) shall be made
in proportion to the respective amounts required to be allocated to each Member
pursuant hereto.
(c) Qualified Income Offset. In the event a Member unexpectedly
receives any adjustments, allocations or distributions described in Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Member has an Adjusted
Capital Account Deficit, items of Company income and gain shall be specially
allocated to such Member in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit as quickly as possible. This paragraph (c) is
intended to constitute a "qualified income offset" under Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or other applicable period shall be allocated among the Members holding Common Units in proportion to the number of Common Units held.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any fiscal year or other applicable period shall be specially allocated to the Member that bears the economic risk of loss for the debt (i.e., the Partner Nonrecourse Debt) to which such Partner Nonrecourse Deductions are attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1)).
(f) Curative Allocations. The Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss, and deduction among the Members so that, to the
extent possible, the cumulative net amount of allocations of Company items under paragraphs 1 and 2 of this Exhibit A shall be equal to the net amount that would have been allocated to each Member if the Regulatory Allocations had not occurred. This paragraph (f) is intended to minimize to the extent possible and to the extent necessary any economic distortions which may result from application of the Regulatory Allocations and shall be interpreted in a manner consistent therewith. For purposes hereof, "Regulatory Allocations" shall mean the allocations provided for by subsections (a) through (e) of this Section 2.
3. Tax Allocations.
(a) Generally. Subject to paragraphs (b) and (c) hereof, items of income, gain, loss, deduction and credit to be allocated for income tax purposes (collectively, "Tax Items") shall be allocated among the Members on the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the sale of property is treated as ordinary income by virtue of the application of Code Sections 1245 or 1250 ("Affected Gain"), then (A) such Affected Gain shall be allocated among the Members in the same proportion that the depreciation and amortization deductions giving rise to the Affected Gain were allocated and (B) other Tax Items of gain of the same character that would have been recognized, but for the application of Code Sections 1245 and/or 1250, shall be allocated away from those Members who are allocated Affected Gain pursuant to Clause (A) so that, to the extent possible, the other Members are allocated the same amount, and type, of capital gain that would have been allocated to them had Code Sections 1245 and/or 1250 not applied. For purposes hereof, in order to determine the proportionate allocations of depreciation and amortization deductions for each fiscal year or other applicable period, such deductions shall be deemed allocated on the same basis as Net Income and Net Loss for such respective period.
(c) Allocations Respecting Section 704(c) and Revaluations; Curative
Allocations Resulting from the Ceiling Rule. Notwithstanding paragraph (b)
hereof, Tax Items with respect to Company property that is subject to Code
Section 704(c) and/or Regulation Section 1.704-3 (collectively "Section 704(c)
Tax Items") shall be allocated in accordance with said Code Section and/or
Regulation Section 1.704-3, as the case may be. The allocation of Tax Items
shall be in accordance with the "traditional method" set forth in Regulation
Section 1.704-3(b)(1), unless otherwise determined by the Managing Member, and
shall be subject to the ceiling rule stated in Regulation Section 1.704-3(b)(1).
The Managing Member is authorized to specially allocate Tax Items (other than
the Section 704(c) Tax Items) to cure for the effect of the ceiling rule.
SCHEDULE A
TO THE
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
OF
GGPLP L.L.C.
MEMBERS
Member Common Units Preferred Units GGP Limited Partnership 911,000 0 Caledonian Holding Company, Inc. 29,600 0 GGP American Properties Inc. 58,500 0 GSEP 2000 Realty Corp. 0 700,000 Series A Preferred Units GSEP 2002 Realty Corp. 0 200,000 Series B Preferred Units |
SCHEDULE B
TO THE
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
OF
GGPLP L.L.C.
DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B PREFERRED UNITS
1. DESIGNATION AND NUMBER; ETC. The Series B Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Agreement to the extent applicable). The authorized number of Series B Preferred Units shall be 200,000. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule B and any other provision of the Agreement, the provisions of this Schedule B shall control. Series B Preferred Units shall not have any relative, participating, optional or other special rights and powers other than as set forth herein.
2. RANK OF THE SERIES B PREFERRED UNITS. The Series B Preferred Units shall, with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Company, rank as follows:
(a) senior to all classes or series of Common Units and all other series of Preferred Units other than each series of Preferred Units referred to in Section 2(b) or (c) hereof (the Common Units and the Preferred Units ranking junior to the Series B Preferred Units with respect to distribution rights and rights upon liquidation, dissolution and winding up, collectively, "Series B Junior Units");
(b) on parity with the Series A Preferred Units and each other series of Preferred Units which provides by its express terms that it ranks on parity with the Series B Preferred Units as to distribution rights and rights upon liquidation, dissolution and winding-up of the Company (the "Series B Parity Units") (and if the distribution rates, distribution payment dates or redemption or liquidation prices per Unit are different from those of the Series B Preferred Units, the units of such class or series and the Series B Preferred Units shall be entitled to the receipt of distributions and the amounts distributable upon liquidation, dissolution and winding-up in proportion to their respective amounts of accrued and unpaid distributions per unit or liquidation preferences, without preference or priority one over the other); and
(c) junior to any class or series of Preferred Units that is hereafter established, that provides by its express terms that it ranks senior to the Series B Preferred Units and that is approved in accordance with the provisions of Section 3 hereof.
3. VOTING. The Company shall not, without the affirmative vote or consent of the holders of at least fifty-one percent (51%) of the Series B Preferred Units outstanding at such time, (a) authorize or create, or increase the authorized or issued amount of, any class or series of Units ranking senior to the Series B Preferred Units with respect to payments of distributions or rights upon liquidation, dissolution or winding up of the Company or reclassify any Common Units into Preferred Units ranking senior to or on parity with the Series B Preferred Units with
respect to the payment of distributions or distribution of assets upon
liquidation, dissolution or winding-up of the Company, (b) issue additional
Series B Preferred Units or (c) amend, alter or repeal this Section 3 or any
other provisions of this Schedule B or the Agreement, whether by merger,
consolidation or otherwise (a "Series B Event"), so as to negate the provisions
of clause (a) or (b) of this paragraph or materially and adversely affect any
right, preference, privilege or voting power of the holders of the Series B
Preferred Units. Notwithstanding anything to the contrary contained herein, (A)
with respect to the occurrence of any of the Series B Events set forth in clause
(c) of this paragraph, so long as Series B Preferred Units remain outstanding
with the terms thereof materially unchanged (taking into account that, upon the
occurrence of such Series B Event, the Company may not be the surviving entity)
and the surviving entity is a Qualified Entity, the occurrence of any such
Series B Event shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting power of holders of the Series B
Preferred Units and (B) the authorization or creation of, or the increase in the
authorized or issued amount of, the Common Units or any other series of
Preferred Units, in either case which rank junior to or on parity with the
Series B Preferred Units (and any amendments to the Agreement to effect such
increase, creation or issuance), shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers or otherwise
require the vote or consent of the holders of the Series B Preferred Units.
For purposes of the provisions of this Section 3, each Series B Preferred Unit shall have one (1) vote.
Notwithstanding anything to the contrary contained herein, the foregoing voting provisions shall not apply if, prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series B Preferred Units shall have been exchanged or redeemed.
Except as provided herein or in the Agreement, the holders of Series B Preferred Units shall have no voting or consent rights or other rights to participate in the management of the Company or to receive notices of meetings.
4. DISTRIBUTIONS.
(a) PAYMENT OF DISTRIBUTIONS. Each holder of Series B Preferred Units will be entitled to receive, when, as and if declared by the Managing Member, out of Net Operating Cash Flow and subject to the right to payment of the holders of Preferred Units ranking senior to or on parity with the Series B Preferred Units, cumulative preferential cash distributions per Series B Preferred Unit at the rate per annum of 8.95% of the $250 base liquidation preference thereof (or $5.59375 per quarter) (the "Series B Preferred Unit Distribution"). Series B Preferred Unit Distributions with respect to any Series B Preferred Units shall be cumulative, shall accrue from the date of the issuance of such Series B Preferred Units and will be payable (i) quarterly when, as and if authorized and declared by the Managing Member, in arrears, on the 15th day of January, April, July and October of each year and (ii) in the event of an exchange or redemption of Series B Preferred Units, on the exchange or redemption date, as applicable (each a "Series B Preferred Unit Distribution Payment Date"), commencing on the first of such payment dates to occur following their original date of issuance. The amount of distribution per Series B
Preferred Unit accruing in each full quarterly distribution period shall be computed by dividing the annual distribution rate by four. The amount of distributions payable for the initial distribution period or any other period shorter or longer than a full quarterly distribution period on the Series B Preferred Units will be computed on the basis of twelve 30-day months and a 360-day year and the actual number of days elapsed in such a thirty (30) day month. If any Series B Preferred Unit Distribution Payment Date is not a Business Day, then payment of the Series B Preferred Unit Distribution to be made on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (without any deduction), in each case with the same force and effect as if made on such date. Series B Preferred Unit Distributions will be made to the holders of Series B Preferred Units of record on the relevant record dates, which will be fifteen (15) days prior to the relevant Series B Preferred Unit Distribution Payment Date.
(b) DISTRIBUTIONS CUMULATIVE. Notwithstanding the foregoing, Series B Preferred Unit Distributions will accrue whether or not the terms and provisions of the Agreement or any other agreement of the Company at any time prohibit the current payment of distributions, whether or not the Company has revenues, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are authorized. Accrued but unpaid Series B Preferred Unit Distributions will accumulate as of the Series B Preferred Unit Distribution Payment Date on which they first become payable. Any accrued but unpaid Series B Preferred Unit Distributions that are not paid on or prior to the date that they first become payable are hereinafter referred to as "Series B Accumulated Preferred Unit Distributions". No interest or sum of money in lieu of interest will be payable in respect of any Series B Accumulated Preferred Unit Distributions. Series B Accumulated Preferred Unit Distributions may be declared and paid at any time, without reference to any regular Series B Preferred Unit Distribution Payment Date.
(c) PRIORITY AS TO DISTRIBUTIONS.
(i) So long as any Series B Preferred Units are outstanding, no distribution of cash or other property shall be authorized, declared, paid or set apart for payment on or with respect to any Series B Parity Units, nor shall any cash or other property be set aside for or applied to the purchase, redemption or other acquisition for consideration of any Series B Preferred Units or any Series B Parity Units, unless, in each case, all Series B Accumulated Preferred Unit Distributions have been paid in full (or have been declared and a sum sufficient for such payment has been set aside therefor) or when Series B Accumulated Preferred Unit Distributions are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all distributions declared upon Series B Preferred Units and all distributions declared upon any other series or class or classes of Series B Parity Units shall be declared ratably in proportion to the respective amounts of distributions accumulated and unpaid on the Series B Preferred Units and such Series B Parity Units.
(ii) So long as any Series B Preferred Units are outstanding, no distribution of cash or other property (other than distributions paid solely in Series B Junior Units or options, warrants or other rights to subscribe for or purchase Series B Junior Units) shall be authorized, declared, paid or set apart for payment on or with respect to any class or series of Series B Junior Units nor shall any cash or other property be set aside for or applied to the purchase, redemption or other acquisition for consideration of any Series B Junior Units (other than consideration paid solely in Series B Junior Units or options, warrants or other rights to subscribe for or purchase Series B Junior Units) unless, in each case, all Series B Accumulated Preferred Unit Distributions have been paid in full or set apart for payment.
(iii) So long as there are Series B Accumulated Preferred Unit Distributions (and a sum sufficient for full payment of Series B Accumulated Preferred Unit Distributions is not so set apart), all future Series B Preferred Unit Distributions shall be authorized and declared so that the amount of Series B Preferred Unit Distributions per Series B Preferred Unit shall in all cases bear to each other the same ratio that Series B Accumulated Preferred Unit Distributions per Series B Preferred Unit bear to each other.
(iv) Notwithstanding anything to the contrary set forth herein, distributions on Units held by the Managing Member ranking junior to or on parity with the Series B Preferred Units may be made, without preserving the priority of distributions described in Sections 4(c)(i) and (ii) hereof, but only to the extent such distributions are required to preserve the REIT status of GGPI.
(d) NO FURTHER RIGHTS. Holders of Series B Preferred Units shall not be entitled to any distributions, whether payable in cash, other property or otherwise, in excess of the Series B Preferred Unit Distributions (and any Series B Accumulated Preferred Unit Distributions) described herein.
5. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, before any payment or distribution of the assets of the Company shall be made to or set apart for the holders of Series B Junior Units, each holder of the Series B Preferred Units shall be entitled to receive an amount equal to such holder's Capital Account in respect of its Series B Preferred Units; but the holders of Series B Preferred Units shall not be entitled to any further payment. If, upon any such liquidation, dissolution or winding up of the Company, the assets of the Company, or proceeds thereof, distributable to the holders of Series B Preferred Units, shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other Series B Parity Units, then such assets, or the proceeds thereof, shall be distributed among the holders of the Series B Preferred Units and the holders of any such other Series B Parity Units ratably in accordance with the respective amounts that would be payable on such Series B Preferred Units and any such other Series B Parity Units if all amounts payable thereon were paid in full. For the purposes of this Section 5, none of (i) a consolidation or merger of the Company with or into one or more entities, (ii) a merger of an entity with or into the Company, (iii) a statutory share exchange by the Company or
(iv) a sale, lease or conveyance of all or substantially all of the Company's assets shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Company.
(b) Subject to the rights of the holders of Series B Parity Units, after payment shall have been made in full to the holders of the Series B Preferred Units as provided in this Section, any series or class or classes of Series B Junior Units shall, subject to any respective terms and provisions applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series B Preferred Units shall not be entitled to share therein.
6. TRANSFER BY HOLDERS OF SERIES B PREFERRED UNITS. Notwithstanding
anything to the contrary contained herein, a holder of Series B Preferred Units
may sell, assign or otherwise transfer all or part of its Series B Preferred
Units without the consent of the Managing Member; provided, however, that no
such sale, conveyance or other transfer may be made unless the requirements of
Section 8.3 of the Agreement (other than Section 8.3(b) thereof) and the second
and fourth sentences of Section 8.2 of the Agreement are satisfied with respect
to such sale, conveyance or other transfer.
7. EXCHANGE RIGHTS.
(a) RIGHT TO EXCHANGE.
(i) Series B Preferred Units will be exchangeable in whole but
not in part with GGPI at any time on or after April 17, 2012, at the
option of the holders of at least fifty-one percent (51%) of all
outstanding Series B Preferred Units, for authorized but previously
unissued 8.95% Cumulative Redeemable Preferred Stock, Series G, par
value $100 per share, of GGPI ("Series G REIT Preferred Shares") (and
in the event such option is exercised, such exercise and the Series B
Exchange Notice given in connection therewith shall be deemed to apply
to all issued and outstanding Series B Preferred Units and the holders
thereof). Each holder of Series B Preferred Units will be entitled to
receive for each Series B Preferred Unit held by it a number of Series
G REIT Preferred Shares equal to the quotient of the Capital Account
per Series B Preferred Unit of such holder of Series B Preferred Units
(adjusted to reflect fair market value through the exchange date)
divided by $1,000 (the "Series B Preferred Exchange Rate"). This
exchange right is only exercisable if, at the time of exercise, the
fair market value of the Company's assets exceeds the Company's
liabilities (and any preferred security claims senior to the Series B
Preferred Units) by an amount at least equal to twice the sum of (1)
the aggregate Capital Accounts of all holders of Series B Preferred
Units plus (2) the aggregate Capital Accounts of all holders of Series
B Parity Units.
(ii) The Series B Preferred Units will be exchangeable with GGPI at any time on or after April 17, 2007, in whole but not in part, at the option of the holders of at least fifty-one percent (51%) of all outstanding Series B Preferred Units, for authorized but previously unissued Common Shares if at any time Series B Accumulated Preferred Unit Distributions exist with respect to the Series B Preferred Units in an amount equal to the amount that should have been distributed in six (6) prior quarterly distribution periods, whether or not consecutive, at the following exchange rate: for each Series B Preferred
Unit, a number of Common Shares equal to the quotient of (x) the sum of
$250 and the Series B Accumulated Preferred Unit Distributions with
respect thereto (but only up to an amount equal to the amount
distributable for six (6) quarterly distribution periods) divided by
(y) $54.26 (as adjusted to reflect any splits, combinations or the like
after the date hereof) (the "Series B Common Exchange Rate") (and in
the event such option is exercised, such exercise and the Series B
Exchange Notice given in connection therewith shall be deemed to apply
to all issued and outstanding Series B Preferred Units and the holders
thereof).
(iii) [INTENTIONALLY OMITTED].
(iv) Series B Preferred Units will be exchangeable with GGPI at any time in whole but not in part, at the option of a holder thereof, for authorized but previously unissued Common Shares at the Series B Common Exchange Rate if such holder concludes, based on results or projected results, that there exists (in the reasonable judgment of such holder as confirmed by an opinion of nationally recognized independent counsel or accounting firm) an imminent and substantial risk that such holder's interest in the Company represents or will represent more than the 19.95% Limit (and in the event such option is exercised, such exercise and the Series B Exchange Notice given in connection therewith shall only apply to all issued and outstanding Series B Preferred Units of the exercising holder).
(v) Notwithstanding anything to the contrary set forth in
Sections 7(a)(i) through (iv), if a Series B Exchange Notice has been
delivered to the Managing Member and GGPI, then the Managing Member or
GGPI may at its option, within ten (10) Business Days after receipt of
the Series B Exchange Notice, elect to purchase or cause the Company to
redeem all or a portion of the outstanding Series B Preferred Units
(for which Series B Exchange Notices have been delivered or are deemed
to have been delivered) for cash or Common Shares, in each case at the
Series B Exchange Price per Series B Preferred Unit as of the date the
Series B Exchange Notice is sent. The "Series B Exchange Price" of an
outstanding Series B Preferred Unit shall equal: (A) in the event that
the holders of the Series B Preferred Units are exchanging such Unit
for Common Shares, the product of the number of Common Shares issued in
respect of such Preferred Unit multiplied by the Current Per Share
Market Price, or (B) in the event that the holders of the Series B
Preferred Units are exchanging such Unit for Series G REIT Preferred
Shares, the pro rata portion of the Capital Account (as adjusted and
booked up or down immediately prior to such purchase or redemption)
allocable to that Series B Preferred Unit. If such election is made
with respect to fewer than all of the outstanding Series B Preferred
Units, the number of Series B Preferred Units held by each holder of
Series B Preferred Units to be redeemed or purchased shall equal such
holder's pro rata share (based on the percentage of the aggregate
number of outstanding Series B Preferred Units that the total number of
Series B Preferred Units held by such holder of Series B Preferred
Units represents) of the aggregate number of Series B Preferred Units
being redeemed. An election by the Managing Member or GGPI under this
Section shall be effected by delivering notice thereof to the holders
identified in the Series B Exchange Notice.
(vi) If an exchange of all Series B Preferred Units pursuant to Sections 7(a)(i) through (iv) would violate the provisions on ownership limitation of GGPI set forth in its Charter and such ownership limitation is not waived by GGPI, each holder of Series B Preferred Units shall be entitled to exchange that number of Series B Preferred Units which would comply with the provisions on the ownership limitation of GGPI and any Series B Preferred Units not so exchanged (the "Series B Excess Units") shall be redeemed by the Company for cash in an amount determined in the manner set forth in subsection (v).
(b) PROCEDURE FOR EXCHANGE AND/OR REDEMPTION OF SERIES B PREFERRED UNITS.
(i) Any exchange right shall be exercised pursuant to a
written notice of exchange (the "Series B Exchange Notice") delivered
to the Managing Member and GGPI by holders of Series B Preferred Units
owning at least fifty-one percent (51%) of the outstanding Series B
Preferred Units (or by a holder of Series B Preferred Units in the case
of an exchange pursuant to Section 7(a)(iv) hereof) by fax and
certified mail postage prepaid. The Series B Exchange Notice shall
specify the name or names of the holders of Series B Preferred Units
that are exercising (or are deemed to have exercised) the exchange
rights and the number of Series B Preferred Units as to which such
rights are being exercised (or are deemed to have been exercised). The
closing of the exchange or redemption pursuant to this Section 7 shall
occur within fifteen (15) Business Days following the giving of the
Series B Exchange Notice. At the closing, the exchanging holder(s)
shall deliver such instruments of transfer and other documents as GGPI
or the Managing Member may reasonably request and GGPI and/or the
Company shall deliver to the exchanging holder certificates
representing the Series G REIT Preferred Shares or Common Shares and/or
the cash redemption price. Notwithstanding anything to the contrary
contained herein, any and all Series B Preferred Units to be exchanged
for Common Shares or Series G REIT Preferred Shares pursuant to this
Section shall be so exchanged in a single transaction at one time. As a
condition to exchange, each holder of Series B Preferred Units shall
make such customary representations as may be reasonably necessary for
the Managing Member or GGPI to establish that the issuance of Common
Shares or Series G REIT Preferred Shares pursuant to the exchange shall
not be required to be registered under the Securities Act of 1933, as
amended, or any applicable state securities laws. Any Common Shares or
Series G REIT Preferred Shares issued pursuant to this Section shall be
delivered as shares which are duly authorized, validly issued, fully
paid and nonassessable, free of any pledge, lien, encumbrance or
restriction other than those provided in the Charter or the by-laws of
GGPI, the Securities Act and relevant state securities or blue sky laws
and any Series B Preferred Units as to which the exchange right has
been exercised shall be free of any pledge, lien, encumbrance or
restriction other than those provided in the Agreement, the Securities
Act and relevant state securities or blue sky laws (and the parties
shall make representations and warranties to the other to such effect).
The certificates representing the Common Shares or Series G REIT
Preferred Shares issued upon exchange of the Series B Preferred Units
shall, in addition to any legend required by the Charter, contain the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR (B) IF THE CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS THEREUNDER.
Notwithstanding anything to the contrary contained herein and at the request of a majority of the holders of Series B Preferred Shares that have exercised (or are deemed to have exercised) the exchange right pursuant to this Section 7, GGPI shall cause depositary shares to be issued to such holders upon the closing of the exchange in lieu of Series G REIT Preferred Shares, each depositary share (1) to have a face amount of $25 (or such other amount as may be specified by holders of a majority of the Series B Preferred Units prior to any such exchange) and (2) to represent a fraction of a Series G REIT Preferred Share the denominator of which is $1,000 and the numerator of which is the face amount of such depositary share. At the request of holders of a majority of the Series B Preferred Units, the Company shall take such actions as are necessary to provide for such depositary shares to be issued immediately upon exchange of Series B Preferred Units for Series G REIT Preferred Shares.
(ii) In the event of an exchange of Series B Preferred Units, an amount equal to the Series B Accumulated Preferred Unit Distributions to the date of exchange on any Series B Preferred Units tendered for exchange shall continue to accrue on such Series B Preferred Units, which remain outstanding following such exchange, with the Managing Member as the holder of such Series B Preferred Units (GGPI having contributed the Series B Preferred Units to the Managing Member). Fractional Series G REIT Preferred Shares or Common Shares are not to be issued upon exchange but, in lieu thereof, the Managing Member will pay a cash adjustment based upon either (i) the fair market value of the Series G REIT Preferred Shares on the day prior to the exchange date as determined in good faith by the Board of Directors of the Managing Member or (ii) the Current Per Share Market Price of the Common Shares as of the date immediately prior to the exchange date, as the case may be.
(c) ADJUSTMENT OF EXCHANGE PRICE. In case GGPI shall be a party to any transaction (including, without limitation, a merger, consolidation, statutory share exchange, tender offer for all or substantially all of GGPI's Common Shares or sale of all or substantially all of GGPI's assets), in each case as a result of which the Series G REIT Preferred Shares or Common Shares will be converted into the right to receive shares of capital stock, other securities or other
property (including cash or any combination thereof), each Series B Preferred Unit will thereafter be exchangeable into the kind and amount of shares of capital stock and other securities and property receivable (including cash or any combination thereof) upon the consummation of such transaction by a holder of that number of Series G REIT Preferred Shares or Common Shares or fraction thereof into which one (1) Series B Preferred Unit was exchangeable immediately prior to such transaction. GGPI may not become a party to any such transaction unless the terms thereof are consistent with the foregoing.
(d) NO OTHER EXCHANGE RIGHTS. The Series B Preferred Units are not convertible into or redeemable or exchangeable for any other property or securities of GGPI, the Managing Member, the Company or any other Person at the option of any holder of Series B Preferred Units except as expressly provided in this Section 7.
8. REDEMPTION.
(a) The Series B Preferred Units shall not be redeemable prior to April 17, 2007. On and after April 17, 2007, the Managing Member may, at its option, cause the Company to redeem the Series B Preferred Units in whole or in part, as set forth herein, subject to the provisions described below, at a redemption price, payable in cash, in an amount equal to $250 per Series B Preferred Unit being redeemed (the "Series B Redemption Price"). Upon any such redemption, the Company shall also pay any accumulated and unpaid distributions owing in respect of the Series B Preferred Units being redeemed.
(b) Such Series B Preferred Units as are not held by the Managing Member may be redeemed by the Company on or after April 17, 2007, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days' written notice. If fewer than all of the outstanding Series B Preferred Units that are not held by the Managing Member are to be redeemed, the Series B Preferred Units to be redeemed from each holder (other than the Managing Member) shall be selected pro rata (as nearly as practicable without creating fractional units). Any notice of redemption delivered pursuant to this Section 8 will be mailed by the Company, by certified mail, postage prepaid, not less than 30 nor more than 60 days prior to the date upon which such redemption is to occur (the "Series B Third Party Redemption Date"), addressed to each holder of record of the Series B Preferred Units at their respective addresses as they appear on the records of the Company. No failure to give or defect in such notice shall affect the validity of the proceedings for the redemption of any Series B Preferred Units. In addition to any information required by law, each such notice shall state: (i) the Series B Third Party Redemption Date, (ii) the amount payable per Series B Preferred Unit upon redemption, including the Series B Redemption Price and any amount payable pursuant to Section 8(d) hereof, (iii) the aggregate number of Series B Preferred Units to be redeemed and, if fewer than all of the outstanding Series B Preferred Units are to be redeemed, the number of Series B Preferred Units to be redeemed held by such holder, which number shall equal such holder's pro rata share (based on the percentage of the aggregate number of outstanding Series B Preferred Units not held by the Managing Member that the total number of Series B Preferred Units held by such holder represents and determined as nearly as practicable without creating fractional interests) of the aggregate number of Series B Preferred Units to be redeemed, (iv) the place or places where the instrument of transfer is to be surrendered for payment of the amount payable
upon redemption and (v) that payment of such amount will be made upon presentation and surrender of the instrument of transfer in the form provided by the Managing Member. If the Company gives a notice of redemption in respect of Series B Preferred Units pursuant to this Section 8, then, by 12:00 noon, New York City time, on the Series B Third Party Redemption Date, the Company will deposit irrevocably in trust for the benefit of the holders of Series B Preferred Units being redeemed funds sufficient to pay the applicable amount payable with respect to such Series B Preferred Units and will give irrevocable instructions and authority to pay such amount to the holders of the Series B Preferred Units upon surrender of the Series B Preferred Units and such instruments of transfer by such holders at the place designated in the notice of redemption. Any Series B Preferred Units surrendered shall be free and clear of all Liens and the holders thereof shall make representations and warranties to such effect.
(c) Such Series B Preferred Units as may be held by the Managing Member may be redeemed, in whole or in part, at the option of the Managing Member, at any time, upon payment by the Company to the Managing Member of the Series B Redemption Price and any amount payable pursuant to Section 8(d) hereof with respect to such Series B Preferred Units; provided that GGPI shall redeem an equivalent number of Series G REIT Preferred Shares to the extent that there are Series G REIT Preferred Shares issued and outstanding. Such redemption of Series B Preferred Units shall occur substantially concurrently with the redemption by GGPI of such Series G REIT Preferred Shares (such date is herein referred to collectively with the Series B Third Party Redemption Date as the "Series B Redemption Date").
(d) Upon any redemption of Series B Preferred Units, the Company shall pay any accumulated and unpaid distributions for any distribution period, or any other period shorter than a full distribution period, ending on or prior to the Series B Redemption Date. On and after the Series B Redemption Date, distributions will cease to accumulate on the Series B Preferred Units called for redemption, unless the Company defaults in payment therefor. If any date fixed for redemption of Series B Preferred Units is not a Business Day, then payment of the Series B Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Series B Redemption Price is improperly withheld or refused and not paid by the Company, distributions on such Series B Preferred Units will continue to accumulate from the original redemption date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the applicable Series B Redemption Price. Except as provided above, the Company shall make no payment or allowance for unpaid distributions, whether or not in arrears, on Series B Preferred Units called for redemption under this Section 8.
(e) If full cumulative distributions on the Series B Preferred Units and any other Parity Units for distribution periods ending on or prior to the date of redemption have not been paid or declared and set apart for payment, the Series B Preferred Units may not be redeemed in part and the Company may not purchase, redeem or otherwise acquire Series B Preferred Units or any Series B Parity Units other than in exchange for Series B Junior Units.
(f) As promptly as practicable after the surrender of any such Series B
Preferred Units so redeemed, such Series B Preferred Units shall be exchanged
for the amount of cash (without interest thereon) payable therefor pursuant to
Section 8. If fewer than all the Series B Preferred Units represented by any
physical certificate are redeemed, then the Company shall issue new certificates
representing the unredeemed Series B Preferred Units without cost to the holder
thereof.
9. OTHER MATTERS. As long as any of the Series B Preferred Units are outstanding, the Company shall comply with the following:
(a) DIVIDENDS. The Company shall not make any distributions on the Common Units or any other Series B Junior Units or redeem any such Units unless at the time such distribution or redemption is made, and after giving effect to such distribution or redemption, each of the following conditions shall be met:
(i) Consolidated Tangible Net Worth to Reserve Amount. The ratio of the Consolidated Tangible Net Worth to the Reserve Amount is at least 2.0 to 1.0;
(ii) Adjusted Consolidated Tangible Net Worth. The ratio of the Adjusted Consolidated Tangible Net Worth to the sum of (i) the Capital Accounts of all Preferred Units plus (ii) the amount of accrued Preferred Unit distributions (whether or not declared or paid) for which allocations have not as yet been reflected in the Capital Accounts is at least 1.0 to 1.0;
(iii) Loan to Value Ratio. The ratio of (x) the Consolidated Outstanding Indebtedness to (y) the Consolidated Tangible Net Worth is no greater than 0.75 to 1.0;
provided, however, that the foregoing shall not prohibit the Company from making distributions (including distributions in redemption of Common Units) to the holders of Common Units in any calendar year in an aggregate amount no greater than the minimum amount a real estate investment trust would be required to distribute under Section 857(a)(1)(A) of the Code for such calendar year (in order to avoid being taxed as a Subchapter C corporation), if such real estate investment trust owned all of the Common Units and had no income from any source other than the Common Units.
(b) AFFILIATE TRANSACTIONS.
(i) Except as expressly provided elsewhere in the Agreement, the Company shall not, nor will it permit any of its Subsidiaries to, enter into any transaction (including, without limitation, the purchase or sale of any property or service) with, or make any payment or transfer to, any Affiliate of the Company except in the ordinary course of business and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than the Company or such Subsidiary would obtain in a comparable arms-length transaction (but this paragraph shall not restrict the making of distributions by the Company).
(ii) The Company shall not, and shall not permit any of its Subsidiaries or Investment Affiliates to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect thereof, pursuant to any arrangement relating to Parent Indebtedness, except for Liens arising out of any arrangement referred to on Schedule 3.aa to the Purchase Agreement (which arrangements are hereby approved) but only to the extent that the Parent Indebtedness outstanding at any time relating to such arrangement does not exceed the maximum amount of Parent Indebtedness that may be incurred in connection with such arrangement in accordance with the terms thereof as of April 17, 2002 (but nothing contained herein shall prohibit the extension of such arrangements in accordance with the existing extension options relating thereto).
(iii) The Company shall not, and shall not permit any of its Subsidiaries or Investment Affiliates to, incur, assume or permit to exist any Guarantee of Parent Indebtedness by any member of the Consolidated Group or any Investment Affiliate other than Guarantees arising out of any arrangement referred to on Schedule 3.aa to the Purchase Agreement (which arrangements are hereby approved) but only to the extent that the Parent Indebtedness outstanding at any time relating to such arrangement does not exceed the maximum amount of Parent Indebtedness that may be incurred in connection with such arrangement in accordance with the terms thereof as of April 17, 2002 (but nothing contained herein shall prohibit the extension of such arrangements in accordance with the existing extension options relating thereto).
(iv) With respect to any JV, (i) the Company shall not, and shall not permit any of its Subsidiaries or Investment Affiliates (other than such JV) to, incur, assume or permit to exist any Guarantee of JV Indebtedness by any member of the Consolidated Group or any Investment Affiliate (other than such JV) other than a Guarantee of no more than the Company's pro rata portion (based on the Company's direct or indirect percentage ownership interest in such JV) of such JV Indebtedness; (ii) the Company shall not, and shall not permit any of its Subsidiaries or Investment Affiliates (other than such JV) to, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect thereof, pursuant to any arrangement relating to JV Indebtedness; (iii) the Company shall not permit such JV to create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect thereof, pursuant to any arrangement relating to Indebtedness of another Entity (other than a member of the Consolidated Group or an Investment Affiliate, in either case that is not another JV); and (iv) the Company shall not permit such JV to create, incur or assume any Guaranty pursuant to any arrangement relating to Indebtedness of another Entity (other than a member of the Consolidated Group or an Investment Affiliate, in either case that is not another JV).
(c) CONSOLIDATED TANGIBLE NET WORTH. The Company shall provide the holders of Series B Preferred Units prompt written notice in the event Consolidated Tangible Net Worth is or is reasonably likely to be less than $600 million as of the last day of any quarter.
(d) ASSET TRANSFER. Without the prior written consent of the holders of at least fifty-one percent (51%) of Series B Preferred Units, the Company shall not, and shall not permit any of its Subsidiaries to sell, convey, transfer or otherwise dispose of any Property (i) to any Affiliate of the Company (other than Subsidiaries of the Company) or (ii) to any person that is not an Affiliate of the Company, unless simultaneously therewith, the Company or such Subsidiary acquires an Approved Replacement Property or the following requirements are met:
(i) the net income of the Company for the most recently completed twelve months, calculated in accordance with GAAP on a pro forma basis as though such Property had been sold, transferred, conveyed or otherwise disposed of prior to the beginning of such period, would be at least $90 million; and
(ii) after giving effect to any such sale, conveyance, transfer or other disposition, the Consolidated Tangible Net Worth would not be less than $1 billion; and
(iii) after giving effect to any such sale, conveyance, transfer or other disposition, the interest of no holder of Series B Preferred Units would represent more than 17.5% of the total profits or capital interests in the Company immediately following such sale, conveyance, transfer of other disposition (determined in accordance with Treasury Regulation Section 1.731-2(e)(4)).
The Company shall give the holders of the Series B Preferred Units notice of any such sale, transfer or other disposition.
Notwithstanding anything to the contrary contained herein, the provisions of this Section 9(d) shall not apply to (i) the conveyance of any Property or any part thereof to any Person in connection with a foreclosure or eminent domain proceeding or deed in lieu thereof, (ii) the sale, exchange or other disposition of all or substantially all of the properties of the Company and its Subsidiaries, (iii) the grant of an easement or right-of-way, (iv) the lease of the Properties in the ordinary course of business, (v) the sale to any department store or retailer of the portion of the property occupied or proposed to be occupied by it (including parking area and other surrounding area), (vi) the mortgage of any Property or (vii) the other sale, conveyance, transfer or other disposal of a portion of a Property or interests therein in the ordinary course of business, and no notice need be given to the holders of the Series B Preferred Units in connection with a transaction described in this sentence.
(e) NET OPERATING INCOME. The Company shall provide the holders of Series B Preferred Units prompt written notice in the event aggregate Net Operating Income for any two consecutive calendar quarters from all properties owned in fee simple or ground leased by the Company, a Subsidiary, or an Investment Affiliate is, or is reasonably likely to be, less than 2.1 times the portion of the Consolidated Interest Expense for such two fiscal quarters attributable to debt, as of the last day of any fiscal quarter.
(f) FIXED CHARGE COVERAGE. The Company shall provide the holders of Series B Preferred Units prompt written notice in the event the ratio of (i) aggregate Net Operating Income for any two consecutive calendar quarters from all properties owned in fee simple or ground leased by the Company, a Subsidiary or an Investment Affiliate, to (ii) Fixed Charges determined on a consolidated basis for such two calendar-quarter period, is or is reasonably likely to be, less than 1.8 to 1 at the end of such two calendar-quarter period.
(g) EFFECT OF BREACH. In the event of any material breach of any of the covenants set forth in this Section 9, the holders of Series B Preferred Units shall have all rights at law. The occurrence of any matter for which notice is required to be given in accordance with Section 9(c), (e) or (f) shall not in and of itself constitute a breach hereof; however, the failure to provide written notice in accordance with each such section is a breach of this Agreement.
EXHIBIT 10.15
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED OPERATING AGREEMENT OF
GGPLP L.L.C.
THIS FIRST AMENDMENT (the "First Amendment") is made and entered into on the 23rd day of April, 2002, by and among the undersigned parties.
W I T N E S S E T H:
WHEREAS, a Delaware limited liability company known as GGPLP L.L.C. (the "Company") exists pursuant to the Delaware Limited Liability Company Act and that certain Second Amended and Restated Operating Agreement dated April 17, 2002, as amended (the "Restated Agreement"), among GGP Limited Partnership, a Delaware limited partnership (the "Operating Partnership"), GGP American Properties Inc., a Delaware corporation, Caledonian Holding Company, Inc., a Delaware corporation, GSEP 2000 Realty Corp., a Delaware corporation (the "GS 2000 REIT"), GS 2002 Realty Corp., a Delaware corporation ("GS 2002 REIT"), and General Growth Properties, Inc., a Delaware corporation ("GGPI");
WHEREAS, GGPI has granted certain registration rights to the GS 2002 REIT pursuant to that certain Registration Rights Agreement dated April 17, 2002 (the "Registration Rights Agreement"), between the GS 2002 REIT and GGPI;
WHEREAS, concurrently herewith, the GS 2002 REIT is contributing an additional $10,000,000 to the capital of the Company and, in exchange therefor, the Company is issuing to the GS 2002 REIT additional Series B Preferred Units (as defined in the Restated Agreement); and
WHEREAS, the parties hereto, being all of the members of the Company, desire to amend the Restated Agreement to reflect such capital contribution and issuance of Series B Preferred Units and to set forth certain understandings among them.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used but not defined herein shall have the definitions assigned to such terms in the Restated Agreement, as amended hereby.
2. AMENDMENT TO SECTION 1.1. Section 1.1 of the Restated Agreement is hereby amended by deleting the last sentence of the definition of "Units" and inserting the following in its place and stead:
"The number and designation of all Units held by each Member as of April 23, 2002 is set forth opposite such Member's name on Schedule A."
3. AMENDMENT TO SECTION 4.7. Section 4.7 of the Restated Agreement is hereby amended by deleting the number "200,000" after the word "be" and before the period in the seventh and eighth lines thereof and inserting the number "240,000" in its place and stead.
4. AMENDMENT TO SECTION 1 OF SCHEDULE B . Section 1 of Schedule B of the Restated Agreement is hereby amended by deleting the number "200,000" after the word "be" and before the period in the fourth line thereof and inserting the number "240,000" in its place and stead.
5. AMENDMENTS TO SECTIONS 7 AND 8 OF SCHEDULE B. Sections 7 and 8 of Schedule B to the Restated Agreement are hereby amended by deleting the phrase "April 17" each time it appears therein and substituting "April 23" in its place and stead.
6. AMENDMENT TO SIGNATURE PAGE. The first signature page of the Restated Agreement is hereby amended by inserting the phrase "and Section 7 of Schedule B" after the phrase "Section 4.3(g)" and before the comma in the first paragraph thereof.
7. AMENDMENT TO SECTION 4.3(c), ETC. The word "special" is hereby inserted
after the word "any" and before the word "right" in clause (iii) of the first
paragraph of Section 4.3(c) of the Restated Agreement, clause (c) of the first
paragraph of Section 3 of Schedule B to the Restated Agreement, clause (iii) of
Section IV(a) of Exhibit B to the Restated Agreement and Section 5.b of the
purchase agreements relating to the previous issuances of Series A Preferred
Units and/or Series B Preferred Units. The GS 2002 REIT hereby approves the same
change to the Certificate of Designations creating the Series G REIT Preferred
Shares.
8. ISSUANCE OF ADDITIONAL SERIES B PREFERRED UNITS. Concurrently herewith, the Company is issuing to the GS 2002 REIT 40,000 Series B Preferred Units in exchange for a Capital Contribution by the GS 2002 REIT of $10,000,000. The GS 2002 REIT is hereby admitted as a Member in respect of such Series B Preferred Units, and the GS 2002 REIT hereby agrees to be bound by the provisions of the Restated Agreement, as the same is amended hereby and as the same may be amended from time to time, with respect to such Series B Preferred Units. The reference in the Registration Rights Agreement to "Units" shall be deemed to include the Series B Preferred Units referred to in this Section 7.
9. NEW SCHEDULE A. Schedule A to the Restated Agreement, identifying the Members and the number and type of Units owned by them, is hereby deleted in its entirety and the Schedule A in the form attached hereto is hereby inserted in its place and stead.
10. OTHER PROVISIONS UNAFFECTED. Except as expressly amended hereby, the Restated Agreement shall remain in full force and effect in accordance with its terms.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
(and GGPI has executed this First Amendment solely for the purpose of binding
itself under Section 4.3(g) of the Restated Agreement, as amended hereby,
Section 7 of Schedule B to the Restated Agreement, as amended hereby, and the
last sentence of Section 7 of this First Amendment) on the day and year first
above written.
MANAGING MEMBER:
GGP LIMITED PARTNERSHIP, a Delaware
limited partnership
By: General Growth Properties, Inc., a
Delaware corporation, its general
partner
By: /s/ Bernard Freibaum ------------------------------- Name: Bernard Freibaum ------------------------ Title: Executive Vice President ------------------------ |
110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum
OTHER MEMBERS:
CALEDONIAN HOLDING COMPANY, INC., a
Delaware corporation
By: /s/ Bernard Freibaum ------------------------------------ Name: Bernard Freibaum ----------------------------- Title: Vice President ----------------------------- 110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum |
GGP AMERICAN PROPERTIES INC., a Delaware
corporation
By: /s/ Bernard Freibaum ------------------------------------ Name: Bernard Freibaum ----------------------------- Title: Vice President ----------------------------- |
110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum
GSEP 2000 REALTY CORP.
By: /s/ Eric Lane ------------------------------------ Name: Eric Lane ----------------------------- Title: President and CEO ----------------------------- |
c/o Goldman, Sachs & Co.
One New York Plaza
New York, New York 10004
Attention: Eric Lane
GSEP 2002 REALTY CORP.
By: /s/ Eric Lane ------------------------------------ Name: Eric Lane ----------------------------- Title: President and CEO ----------------------------- |
c/o Goldman, Sachs & Co.
One New York Plaza, 40th Floor
New York, New York 10004
Attention: Eric Lane
GGPI:
GENERAL GROWTH PROPERTIES, INC., a
Delaware corporation
By: /s/ Bernard Freibaum ------------------------------------ Name: Bernard Freibaum ----------------------------- Title: Executive Vice President ----------------------------- |
110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum
SCHEDULE A
MEMBERS
Member Common Units Preferred Units ------ ------------ --------------- GGP Limited Partnership 911,000 0 Caledonian Holding Company, Inc. 29,600 0 GGP American Properties Inc. 58,500 0 GSEP 2000 Realty Corp. 0 700,000 Series A Preferred Units GSEP 2002 Realty Corp. 0 240,000 Series B Preferred Units |
EXHIBIT 10.16
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED OPERATING AGREEMENT OF
GGPLP L.L.C.
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED OPERATING AGREEMENT OF GGPLP L.L.C. (this "Second Amendment") is made and entered into on the 13th day of May, 2002, by and among the undersigned parties.
WHEREAS, a Delaware limited liability company known as GGPLP L.L.C. (the "Company") exists pursuant to the Delaware Limited Liability Company Act and that certain Second Amended and Restated Operating Agreement dated April 17, 2002, as amended by that certain First Amendment thereto dated April 23, 2002 (the "Restated Agreement"), among GGP Limited Partnership, a Delaware limited partnership, GGP American Properties Inc., a Delaware corporation, Caledonian Holding Company, Inc., a Delaware corporation, GSEP 2000 Realty Corp., a Delaware corporation, GS 2002 Realty Corp., a Delaware corporation, and General Growth Properties, Inc., a Delaware corporation ("GGPI");
WHEREAS, concurrently herewith, DA Retail Investments, LLC, a Delaware limited liability company ("DAI"), is contributing $5,000,000 to the capital of the Company and, in exchange therefor, the Company is issuing to DAI Series C Preferred Units (as defined in the Restated Agreement, as amended hereby); and
WHEREAS, the parties hereto, constituting a Majority-In-Interest of the Common Units (as defined in the Restated Agreement) and DAI, desire to amend the Restated Agreement to reflect such capital contribution and the establishment and issuance of Series C Preferred Units and to set forth certain other understandings.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used but not defined herein shall have the definitions assigned to such terms in the Restated Agreement, as amended hereby.
2. AMENDMENT TO SECTION 1.1.
(a) Section 1.1 of the Restated Agreement is hereby amended by deleting the last sentence of the definition of "Units" and inserting the following in its place and stead:
"The number and designation of all Units held by each Member as of May 13, 2002 is set forth opposite such Member's name on Schedule A."
(b) Section 1.1 of the Restated Agreement is hereby amended by deleting the definition of "Closing Price" and inserting the following in its place and stead:
"`Closing Price' shall mean, with respect to any Common Shares on any date, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system if the Common Shares are listed or admitted to trading on the New York Stock Exchange or, if the Common Shares are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Common Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares as such person is selected from time to time by the Board of Directors of GGPI."
(c) Section 1.1 of the Restated Agreement is hereby amended by deleting the definition of "Gross Asset Value" and inserting the following in its place and stead:
"Gross Asset Value" shall mean, with respect to any asset of the Company, such asset's adjusted basis for Federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of (i) the assets contributed by each Member to the Company prior to the date hereof is the gross fair market value of such contributed assets as indicated in the books and records of the Company as of the date hereof, and (ii) any asset hereafter contributed by a Member (including the Managing Member), other than money, is the gross fair market value thereof as reasonably determined by the Managing Member using such reasonable method of valuation as the Managing Member may adopt;
(b) if the Managing Member reasonably determines that an adjustment is necessary or appropriate to reflect the relative economic interests of the Members, the Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the Managing Member, as of the following times:
(i) a Capital Contribution (other than a de minimis Capital Contribution) to the Company by a new or existing Member as consideration for Units; and
(ii) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for the redemption of Units; and
(c) the Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the Managing Member, upon the liquidation of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations;
(d) the Gross Asset Values of Company assets distributed to any Member shall be the gross fair market values of such assets (taking Section 7701(g) of the Code into account) as reasonably determined by the Managing Member as of the date of distribution; and
(e) the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations (See Exhibit A); provided, however, that Gross Asset Values shall not be adjusted pursuant to this paragraph to the extent that the Managing Member reasonably determines that an adjustment pursuant to paragraph (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (e).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken into account with respect to the Company's assets for purposes of computing Net Income and Net Loss. Any adjustment to the Gross Asset Values of Company property shall require an adjustment to the Members' Capital Accounts; as for the manner in which such adjustments are allocated to the Capital Accounts, see paragraph (c) of the definition of Net Income and Net Loss in the case of adjustment by Depreciation, and paragraph (e) of said definition in all other cases.
(d) Section 1.1 of the Restated Agreement is hereby amended by inserting the following new defined terms in appropriate alphabetical order in such section:
"DAI" shall mean DA Retail Investments, LLC, a Delaware limited liability company.
"DAI Contribution Obligation" shall mean the obligation of DAI to make a Capital Contribution pursuant to Section 7.8 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended."
"Exculpatory Liabilities" shall mean Company liabilities with respect to which both of the following conditions are met: (i) the creditor's right to repayment is not limited to specified assets of the Company (i.e., the liability constitutes a recourse obligation of the Company), and (ii) no Member or related person bears the economic risk of loss for such liability (as determined pursuant to Section 1.752-2 of the Regulations, except that for this purpose the DAI Contribution Obligation shall be disregarded).
"Gross Asset Value Available to Pay Recourse Liabilities and Exculpatory Liabilities" shall be determined upon liquidation of the Company and shall mean the excess of (i) the aggregate Gross Asset Value of all Company assets (not including the DAI Contribution Obligation or any similar capital contribution obligation or capital account restoration obligation of any other Member), except that for this purpose Code Section 7701(g) shall not be applied in determining the fair market value of an asset solely because it is subject to or available to satisfy one or more Exculpatory Liabilities, over (ii) the aggregate amount of all Nonrecourse Liabilities other than Exculpatory Liabilities.
"Recourse Liabilities" shall mean Company liabilities with respect to which a Member or related person bears the economic risk of loss (as determined pursuant to Section 1.752-2 of the Regulations, except that for this purpose the DAI Contribution Obligation shall be disregarded).
"Securities Act" shall mean the Securities Act of 1933, as amended.
3. NEW SECTION 4.8. Article IV of the Restated Agreement is hereby amended by adding the following new section at the end thereof:
"4.8 ESTABLISHMENT OF SERIES C PREFERRED UNITS. A new series of Preferred Units designated as the "8.25% Series C Cumulative Preferred Units" (the "Series C Preferred Units") is hereby established and shall have such rights, preferences, limitations and qualifications as are described on Schedule C, attached hereto and by this reference made a part hereof (in addition to the rights, preferences, limitations and qualifications contained elsewhere in this Agreement, to the extent applicable). The maximum number of Series C Preferred Units which may be issued by the Company from time to time shall be 20,000."
4. ISSUANCE OF SERIES C PREFERRED UNITS. Concurrently herewith, the Company is issuing to DAI 20,000 Series C Preferred Units in exchange for a Capital Contribution by DAI of $5,000,000. DAI is hereby admitted as a Member in respect of the Series C Preferred Units issued to it, and DAI hereby agrees to be bound by the provisions of the Restated Agreement, as the same is amended hereby and as the same may be amended from time to time, with respect to such Series C Preferred Units. Series C Preferred Units shall not have any relative, participating, optional or other special rights and powers other than as set forth in the Restated Agreement, as the same is amended hereby. Series C Preferred Units that are redeemed or purchased by the Company shall be cancelled and may not be reissued.
5. AMENDMENT TO SECTION 7. Section 7 of the Restated Agreement is hereby amended by adding the following new Section 7.8 at the end thereof:
"7.8 DAI CONTRIBUTION OBLIGATION. Notwithstanding any other provision of this Agreement (including Schedule C to this Agreement):
(a) Upon liquidation of the Company, in the event that the Gross Asset Value Available to Pay Recourse Liabilities and Exculpatory Liabilities is less than One Hundred Million Dollars ($100,000,000), DAI shall make a Capital
Contribution to the Company of cash in immediately available funds
equal to the least of (i) One Hundred Million Dollars ($100,000,000),
(ii) the amount by which One Hundred Million Dollars ($100,000,000)
exceeds the Gross Asset Value Available to Pay Recourse Liabilities and
Exculpatory Liabilities and (iii) the aggregate amount of Recourse
Liabilities and Exculpatory Liabilities outstanding immediately prior
to the liquidation of the Company. Such amount shall be used to pay
Recourse Liabilities and/or Exculpatory Liabilities or shall be
distributed to Members other than DAI in accordance with their positive
Capital Account balances.
(b) DAI shall make any Capital Contribution required to be made by it pursuant to this Section 7.8 no later than the later to occur of (i) the last day of the taxable year of the Company in which such liquidation occurs or (ii) 90 days after the date of such liquidation.
(c) Any Capital Contribution made by DAI pursuant to this
Section 7.8 and the associated Capital Account credit shall be taken
into account in allocating Net Income and Net Loss and other items of
income, gain, loss and deduction for the taxable year of liquidation.
(d) DAI shall not be subrogated to the rights of any creditor or other person receiving the proceeds of the Capital Contribution made by DAI pursuant to this Section 7.8 against the Managing Member, the Company, another Member or any person. DAI hereby waives any right to reimbursement, contribution or similar right to which DAI might otherwise be entitled as a result of the performance of its obligations under this Section 7.8.
(e) Section 4.4 and Section 4.6 hereof shall not apply with respect to DAI's obligations pursuant to this Section 7.8.
(f) The parties intend that DAI shall bear the economic risk of loss within the meaning of Section 1.752-2(a) of the Regulations with respect to an amount of Exculpatory Liabilities and/or Recourse Liabilities equal to the lesser of One Hundred Million Dollars ($100,000,000) and the aggregate amount of Recourse Liabilities and Exculpatory Liabilities, and this Section 7.8 and other relevant provisions of this Agreement shall be interpreted and applied in a manner consistent therewith.
(g) Notwithstanding any other provision of this Agreement, at any time on or after June 1, 2005, DAI may terminate the DAI Contribution Obligation by providing twelve (12) months' prior written notice to the Company, provided however that the DAI Contribution Obligation shall not terminate if during the twelve (12) month period following such notice there has been:
(i) An entry of a decree or order for relief in respect of the Company by a court having jurisdiction over a substantial part of the Company's assets, or the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of the Company's affairs, in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law; or
(ii) The commencement against the Company of an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law; or
(iii) The commencement by the Company of a voluntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or the consent by it to the entry of an order for relief in an involuntary case under any such law or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the failure of Company generally to pay its debts as such debts become due or the taking of any action in furtherance of any of the foregoing;
provided that, after the passage of such 12 months, DAI shall cease to be liable for the DAI Contribution Obligation, at the first time, if any, that the appointment, case or proceeding referred to in Section 7.8(g)(i) through (iii) above has terminated.
(h) As a result of the transfer of all or a portion of the
Series C Preferred Units to a Permitted DAI Transferee pursuant to
Section 7 of Schedule C, the transferor shall continue to be obligated
for the entire amount of the DAI Contribution Obligation except to the
extent that such Permitted DAI Transferee agrees to assume all or a
portion of such transferor's obligation under the DAI Contribution
Obligation. In the event of such a transfer to and assumption by the
Permitted DAI Transferee, (1) the transferor and the Permitted DAI
Transferee assuming the obligation under the DAI Contribution
Obligation shall notify the Company that the Permitted DAI Transferee
has assumed all or a portion of the DAI Contribution Obligation in
connection with such transfer, and (2) this Agreement shall be amended
to reflect such Permitted DAI Transferee's assumption of all or a
portion of the DAI Contribution Obligation. Except to the extent that
the Permitted DAI Transferee assumes all or a portion of the obligation
under the DAI Contribution Obligation in accordance with this Section
7.8(h), the transferor shall not be relieved of such obligation and
shall continue to be obligated under the DAI Contribution Obligation
notwithstanding the transfer and to the same extent as if the transfer
had not occurred. Following the transfer of Series C Preferred Units to
GGPI or the Managing Member pursuant to Section 6 of Schedule C, the
transferor shall continue to be obligated for the entire amount
of the DAI Contribution Obligation in accordance with its terms and neither GGPI nor the Managing Member shall have any liability therefor."
6. NEW SCHEDULE A. Schedule A to the Restated Agreement, identifying the Members and the number and type hereby inserted in its place and stead.
7. NEW SCHEDULE C. Schedule C in the form attached hereto, fixing the powers, preferences, rights, qualifications, limitations and restrictions of the Series C Preferred Units, is hereby added to the Restated Agreement and inserted after Schedule B thereto.
8. OTHER PROVISIONS UNAFFECTED. Except as expressly amended hereby, the Restated Agreement shall remain in full force and effect in accordance with its terms.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the parties hereto has executed this Second Amendment (and GGPI has executed this Second Amendment solely for the purpose of binding itself under Section 6 of Schedule C to the Restated Agreement, as amended hereby) on the day and year first above written.
GGP LIMITED PARTNERSHIP, a Delaware
limited partnership
By: GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation, its general partner
By: /s/ Bernard Freibaum --------------------------------------- Name: Bernard Freibaum ---------------------------------- Title: Executive Vice President ---------------------------------- 110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum Facsimile No.: 312-960-5463 |
DA RETAIL INVESTMENTS, LLC
By: SAMUEL ZELL/ROBERT LURIE
GENERAL PARTNERS, INC.
a Delaware corporation,
its managing member
By: /s/ Philip Tinkler --------------------------------------- Name: Philip Tinkler ---------------------------------- Title: Treasurer ---------------------------------- c/o Equity Group Investment, LLC Two North Riverside Plaza, Suite 600 Chicago, Illinois 60606 Attention: Donald J. Liebentritt Facsimile No.: 312-575-7024 |
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ Bernard Freibaum ------------------------------------------- Name: Bernard Freibaum -------------------------------------- Title: Executive Vice President -------------------------------------- 110 North Wacker Drive Chicago, Illinois 60606 Attention: John Bucksbaum Facsimile No.: 312-960-5463 |
SCHEDULE A
MEMBERS
Member Common Units Preferred Units ------ ------------ --------------- GGP Limited Partnership 911,000 0 Caledonian Holding Company, Inc. 29,600 0 GGP American Properties Inc. 58,500 0 GSEP 2000 Realty Corp. 0 700,000 Series A Preferred Units GSEP 2002 Realty Corp. 0 240,000 Series B Preferred Units DA Retail Investments, LLC 0 20,000 Series C Preferred Units |
SCHEDULE C
TO THE
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
OF
GGPLP L.L.C.
DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C PREFERRED UNITS
1. DESIGNATION AND NUMBER; ETC. The Series C Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Agreement to the extent applicable). The authorized number of Series C Preferred Units shall be 20,000. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule C and any other provision of the Agreement, the provisions of this Schedule C shall control. Series C Preferred Units shall not have any relative, participating, optional or other special rights and powers other than as set forth herein.
2. RANK OF THE SERIES C PREFERRED UNITS. The Series C Preferred Units shall, with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Company, rank as follows:
(a) senior to all classes or series of Common Units and all series of Preferred Units that are not referred to in Section 2(b) or (c) of this Schedule C (the Common Units and the Preferred Units ranking junior to the Series C Preferred Units with respect to distribution rights and rights upon liquidation, dissolution and winding up, collectively, "Series C Junior Units");
(b) on parity with the Series A Preferred Units, the Series B Preferred Units and each other series of Preferred Units that is hereafter created and that provides by its express terms that it ranks on parity with the Series C Preferred Units as to distribution rights and rights upon liquidation, dissolution and winding-up of the Company (the "Series C Parity Units"); and
(c) junior to any class or series of Preferred Units that is hereafter established, that provides by its express terms that it ranks senior to the Series C Preferred Units and that is approved in accordance with the provisions of Section 3 of this Schedule C.
3. VOTING. The Company shall not, without the affirmative vote or consent of the holders of at least fifty-one percent (51%) of the Series C Preferred Units outstanding at such time, (a) reclassify any Common Units into Preferred Units ranking senior to or on parity with the Series C Preferred Units with respect to the payment of distributions or distribution of assets upon liquidation, dissolution or winding-up of the Company, (b) issue additional Series C Preferred Units or (c) amend, alter or repeal this Section 3 or any other provisions of this Schedule C or the Agreement, whether by merger, consolidation or otherwise (a "Series C Event"), so as to negate the provisions of clause (a) or (b) of this paragraph or materially and adversely affect any special right, preference, privilege or voting power of the holders of the Series C Preferred Units. Notwithstanding anything to the contrary contained herein, each of the following shall be deemed not to materially and adversely affect such rights, preferences, privileges or voting power and shall not require the vote or consent of the holders of the Series C
Preferred Units: (A) the occurrence of any of the Series C Events set forth in clause (c) of this paragraph so long as Series C Preferred Units remain outstanding with the terms thereof materially unchanged (taking into account that, upon the occurrence of such Series C Event, the Company may not be the surviving entity) and the surviving entity is a Qualified Entity, (B) the authorization or creation of, or the increase in the authorized or issued amount of, the Common Units or any other series of Preferred Units, whether ranking senior or junior to or on parity with the Series C Preferred Units (and any amendments to the Agreement to effect such increase, creation or issuance), provided that no such action alters the parity of the Series C Preferred Units with the Series A Preferred Units and the Series B Preferred Units, and (C) the liquidation, dissolution and winding-up of the Company. In addition, the Company shall not, without the affirmative vote or consent of the holders of at least fifty-one percent (51%) of the Series A Preferred Units, Series B Preferred Units and Series C Preferred Units outstanding at such time (voting together as a single class), authorize or create, or increase the authorized or issued amount of, any class or series of Units ranking senior to the Series C Preferred Units with respect to payments of distributions or rights upon liquidation, dissolution or winding up of the Company (but the provisions of this sentence only shall apply with respect to any such authorization, creation or increase if there are Series A Preferred Units and/or Series B Preferred Units outstanding at the time of such authorization, creation or issuance).
For purposes of the provisions of this Section 3, each Series C Preferred Unit (and for purposes of the last sentence of the immediately preceding paragraph, the Series A Preferred Units and Series B Preferred Units) shall have one (1) vote.
Notwithstanding anything to the contrary contained herein, the foregoing voting provisions shall not apply if, prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series C Preferred Units shall have been exchanged or redeemed.
Except as provided herein, the holders of Series C Preferred Units shall have no voting or consent rights or other rights to participate in the management of the Company or to receive notices of meetings.
4. DISTRIBUTIONS.
(a) Payment of Distributions. Each holder of Series C Preferred Units will be entitled to receive, when, as and if declared by the Managing Member, out of Net Operating Cash Flow and subject to the right to payment of the holders of Preferred Units ranking senior to or on parity with the Series C Preferred Units, cumulative preferential cash distributions per Series C Preferred Unit at the rate per annum of 8.25% of the $250 base liquidation preference thereof (or $5.15625 per quarter) (the "Series C Preferred Unit Distribution"). Series C Preferred Unit Distributions with respect to any Series C Preferred Units shall be cumulative, shall accrue from the date of the issuance of such Series C Preferred Units and will be payable (i) quarterly when, as and if authorized and declared by the Managing Member, in arrears, on the 15th day of January, April, July and October of each year and (ii) in the event of an exchange or redemption of Series C Preferred Units, on the exchange or redemption date, as applicable (each a "Series C Preferred Unit Distribution Payment Date"), commencing on the first of such payment dates to occur following their original date of issuance. The amount of distribution per Series C
Preferred Unit accruing in each full quarterly distribution period shall be computed by dividing the annual distribution rate by four. The amount of distributions payable for the initial distribution period or any other period shorter or longer than a full quarterly distribution period on the Series C Preferred Units will be computed on the basis of twelve 30-day months and a 360-day year and the actual number of days elapsed in such a thirty (30) day month. If any Series C Preferred Unit Distribution Payment Date is not a Business Day, then payment of the Series C Preferred Unit Distribution to be made on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (without any deduction), in each case with the same force and effect as if made on such date. Series C Preferred Unit Distributions will be made to the holders of Series C Preferred Units of record on the relevant record dates, which will be fifteen (15) days prior to the relevant Series C Preferred Unit Distribution Payment Date.
(b) Distributions Cumulative. Notwithstanding the foregoing, Series C Preferred Unit Distributions will accrue whether or not the terms and provisions of the Agreement or any other agreement of the Company at any time prohibit the current payment of distributions, whether or not the Company has revenues, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are authorized. Accrued but unpaid Series C Preferred Unit Distributions will accumulate as of the Series C Preferred Unit Distribution Payment Date on which they first become payable. Any accrued but unpaid Series C Preferred Unit Distributions that are not paid on or prior to the date that they first become payable are hereinafter referred to as "Series C Accumulated Preferred Unit Distributions." No interest or sum of money in lieu of interest will be payable in respect of any Series C Accumulated Preferred Unit Distributions. Series C Accumulated Preferred Unit Distributions may be declared and paid at any time, without reference to any regular Series C Preferred Unit Distribution Payment Date.
(c) Priority as to Distributions.
(i) So long as any Series C Preferred Units are outstanding, no distribution of cash or other property shall be authorized, declared, paid or set apart for payment on or with respect to any Series C Parity Units, nor shall any cash or other property be set aside for or applied to the purchase, redemption or other acquisition for consideration of any Series C Parity Units, unless, in each case, all Series C Accumulated Preferred Unit Distributions have been paid in full (or have been declared and a sum sufficient for such payment has been set aside therefor) or when Series C Accumulated Preferred Unit Distributions are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all distributions declared upon Series C Preferred Units and all distributions declared upon any other series or class or classes of Series C Parity Units shall be declared ratably in proportion to the respective amounts of distributions accumulated and unpaid on the Series C Preferred Units and such Series C Parity Units.
(ii) So long as any Series C Preferred Units are outstanding, no distribution of cash or other property (other than distributions paid solely in Series C Junior Units or options, warrants or other rights to subscribe for or purchase Series C Junior Units) shall
be authorized, declared, paid or set apart for payment on or with respect to any class or series of Series C Junior Units nor shall any cash or other property be set aside for or applied to the purchase, redemption or other acquisition for consideration of any Series C Junior Units (other than consideration paid solely in Series C Junior Units or options, warrants or other rights to subscribe for or purchase Series C Junior Units) unless, in each case, all Series C Accumulated Preferred Unit Distributions have been paid in full or have been declared and a sum sufficient for payment thereof has been set aside therefor.
(iii) So long as there are Series C Accumulated Preferred Unit Distributions (and a sum sufficient for full payment of Series C Accumulated Preferred Unit Distributions is not so set apart), all future Series C Preferred Unit Distributions shall be authorized and declared so that the amount of Series C Preferred Unit Distributions per Series C Preferred Unit shall in all cases bear to each other the same ratio that Series C Accumulated Preferred Unit Distributions per Series C Preferred Unit bear to each other.
(iv) Notwithstanding anything to the contrary set forth herein, distributions on Units held by the Managing Member ranking junior to or on parity with the Series C Preferred Units may be made, without preserving the priority of distributions described in Sections 4(c)(i) and (ii) of this Schedule C, but only to the extent such distributions are required to preserve the REIT status of GGPI.
(d) No Further Rights. Except as provided in Section 5 hereof, holders of Series C Preferred Units shall not be entitled to any distributions, whether payable in cash, other property or otherwise, in excess of the Series C Preferred Unit Distributions (and any Series C Accumulated Preferred Unit Distributions) described herein.
5. LIQUIDATION PREFERENCE.
(a) Payment to Holders of Series C Preferred Units. In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, and subject to the right to payment of holders of Preferred Units ranking senior to or on parity with the Series C Preferred Units, before any payment or distribution of the assets of the Company shall be made to or set apart for the holders of Series C Junior Units, each holder of the Series C Preferred Units shall be entitled to receive an amount equal to such holder's Capital Account in respect of its Series C Preferred Units, but the holders of Series C Preferred Units shall not be entitled to any further payment in respect of their Series C Preferred Units. If, upon any such liquidation, dissolution or winding up of the Company, the assets of the Company, or proceeds thereof, distributable to the holders of Series C Preferred Units shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other Series C Parity Units, then such assets, or the proceeds thereof, shall be distributed among the holders of the Series C Preferred Units and the holders of any such other Series C Parity Units ratably in accordance with the respective amounts that would be payable on such Series C Preferred Units and any such other Series C Parity Units if all amounts payable thereon were paid in full. For the purposes of this Section 5, none of a consolidation or merger of the Company with or into one or more entities, a merger of an entity with or into the Company, a statutory share exchange by the Company or a sale, lease or conveyance of all or substantially all of the Company's assets shall
be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Company.
(b) Payments to Holders of Series C Junior Units. Subject to the rights of the holders of Series C Parity Units, after payment shall have been made in full to the holders of the Series C Preferred Units as provided in this Section 5, any series or class or classes of Series C Junior Units shall, subject to any respective terms and provisions applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series C Preferred Units shall not be entitled to share therein.
6. EXCHANGE RIGHTS.
(a) Right to Exchange.
(i) Subject to the other terms and conditions of this Section 6,
Series C Preferred Units will be exchangeable in whole but not in part with
GGPI at any time on or after June 1, 2012, at the option of the holders of
at least fifty-one percent (51%) of all outstanding Series C Preferred
Units, for authorized but previously unissued Common Shares (and in the
event such option is exercised, such exercise and the Series C Exchange
Notice (as defined below) given in connection therewith shall be deemed to
apply to all issued and outstanding Series C Preferred Units and the
holders thereof). Each holder of Series C Preferred Units will be entitled
to receive for each Series C Preferred Unit held by it a number of Common
Shares equal to the quotient of the Capital Account relating to such Series
C Preferred Unit (adjusted and booked up or down to reflect fair market
value of Company assets through the exchange closing date) (the amount of
such Capital Account, the "Series C Exchange Price") divided by the Current
Per Share Market Price as of the Trading Day immediately preceding the
exchange closing date. This exchange right is only exercisable if, at the
time of exercise, the fair market value of the Company's assets exceeds the
Company's liabilities (and any preferred security claims senior to the
Series C Preferred Units) by an amount at least equal to twice the sum of
(1) the aggregate Capital Accounts of all holders of Series C Preferred
Units plus (2) the aggregate Capital Accounts of all holders of Series C
Parity Units.
(ii) Notwithstanding anything to the contrary set forth in Section 6(a)(i) of this Schedule C, if a Series C Exchange Notice has been delivered to the Managing Member and GGPI, then the Managing Member or GGPI may at its option, within ten (10) Business Days after receipt of the Series C Exchange Notice, elect to purchase or cause the Company to redeem all or a portion of the outstanding Series C Preferred Units for cash at the Series C Exchange Price per Series C Preferred Unit. If such election by GGPI is made with respect to fewer than all of the outstanding Series C Preferred Units, the number of Series C Preferred Units held by each holder of Series C Preferred Units to be redeemed or purchased shall equal such holder's pro rata share (based on the percentage of the aggregate number of outstanding Series C Preferred Units that the total number of Series C Preferred Units held by such holder of Series C Preferred Units represents) of the aggregate number of Series C Preferred Units being redeemed or purchased. An election by the Managing Member or GGPI under this Section shall be
effected by delivering notice thereof to the holders identified in the Series C Exchange Notice.
(iii) If an exchange of all Series C Preferred Units pursuant to
Section 6(a)(i) of this Schedule C would violate the provisions on
ownership limitation of GGPI set forth in its Charter and such ownership
limitation is not waived by GGPI, each holder of Series C Preferred Units
shall be entitled to exchange the maximum number of Series C Preferred
Units which would comply with the provisions on the ownership limitation of
GGPI, and any Series C Preferred Units not so exchanged shall be purchased
by GGPI or redeemed by the Company for cash in an amount determined in the
manner set forth in subsection (ii) of this Section 6(a).
(iv) If an exchange of all Series C Preferred Units pursuant to
Section 6(a)(i) of this Schedule C is prohibited by virtue of the holder of
the Series C Preferred Units being unable to make such customary
representations and warranties as may be reasonably necessary for the
Managing Member or GGPI to establish that the issuance of Common Shares
pursuant to the exchange shall not be required to be registered under the
Securities Act or any applicable state securities laws pursuant to Section
6(b)(i) below, any Series C Preferred Units not so exchanged shall be
purchased by GGPI or redeemed by the Company for cash in an amount
determined in the manner set forth in subsection (ii) of this Section 6(a).
(b) Procedure for Exchange and/or Redemption of Series C Preferred Units.
(i) The exchange right only may be exercised pursuant to a written notice of exchange (the "Series C Exchange Notice") delivered to the Managing Member and GGPI by holders of Series C Preferred Units owning at least fifty-one percent (51%) of the outstanding Series C Preferred Units by fax and certified mail postage prepaid. The closing of the exchange, purchase and/or redemption pursuant to this Section 6 shall occur within fifteen (15) Business Days following the giving of the Series C Exchange Notice. At the closing, the exchanging holder(s) shall deliver such instruments of transfer and other documents as GGPI or the Managing Member may reasonably request, and GGPI and/or the Company shall deliver to the exchanging holder(s) certificates representing the Common Shares and/or the cash redemption and/or purchase price. Notwithstanding anything to the contrary contained herein, any and all Series C Preferred Units to be exchanged for Common Shares pursuant to this Section shall be so exchanged in a single transaction at one time. As a condition to the exercise of the rights contained in this Section 6, each holder of Series C Preferred Units shall make such customary representations and warranties as may be reasonably necessary for the Managing Member or GGPI to establish that the issuance of Common Shares pursuant to the exchange shall not be required to be registered under the Securities Act or any applicable state securities laws, including without limitation representations and warranties that such holder is an accredited investor as such term is defined in Rule 501 of Regulation D promulgated pursuant to the Securities Act and that such holder is acquiring such Common Shares for investment, solely for its own account and not with a view to or for the resale or distribution thereof (other than pursuant to the Registration Statement, as defined below); provided, however, that in the event a holder is unable to make such representations, the
condition shall be deemed satisfied with respect to such holder by virtue of Section 6(a)(iv). Any Common Shares issued pursuant to this Section to a holder of Series C Preferred Units shall be delivered as shares which are duly authorized, validly issued, fully paid and nonassessable, free of any pledge, lien, encumbrance or restriction other than those provided in the Charter or the by-laws of GGPI, the Securities Act or relevant state securities or blue sky laws or created by, through or under such holder, and any Series C Preferred Units as to which the exchange right has been exercised shall be free of any pledge, lien, encumbrance or restriction other than those provided in the Agreement, the Securities Act and relevant state securities or blue sky laws (and the parties shall make representations and warranties to the other to such effect). Subject to the provisions of Section 6(c) of this Schedule C, the certificates representing the Common Shares issued upon exchange of the Series C Preferred Units shall, in addition to any legend required by the Charter, contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR (B) IF THE CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS THEREUNDER.
(ii) In the event of an exchange of Series C Preferred Units, an amount equal to the Series C Accumulated Preferred Unit Distributions to the date of exchange on any Series C Preferred Units tendered for exchange shall continue to accrue on such Series C Preferred Units, which remain outstanding following such exchange, with the Managing Member as the holder of such Series C Preferred Units (GGPI having contributed the Series C Preferred Units to the Managing Member). Fractional Common Shares are not to be issued upon exchange but, in lieu thereof, the Managing Member will pay a cash adjustment based upon the Current Per Share Market Price as of the exchange closing date.
(iii) During the thirty day period ending on the closing of any exchange, purchase and/or redemption pursuant to this Section 6, the holders of Series C Preferred Units shall not, directly or indirectly, buy or sell (including without limitation short-sell) any Common Shares, whether in the open market or in a negotiated transaction.
(c) Registration of Common Shares.
(i) As soon as practicable following the issuance of Common Shares pursuant to this Section 6 (but, subject to the provisions of the last sentence of Section 6(c)(ii) of this Schedule C, in no event more than 90 days following such issuance), GGPI shall file a Registration Statement on Form S-3 or other appropriate registration form (the "Registration Statement") with the SEC covering the resale by the initial holders of such Common Shares (the "Initial Holders") and shall use its reasonable best efforts to cause the Registration Statement to become effective as soon as practicable thereafter. Following the effective date of the Registration Statement and until the Common Shares covered by the Registration Statement have been sold or are eligible for resale under Rule 144(k) promulgated under the Securities Act, GGPI shall keep the Registration Statement current, effective and available for the resale by the Initial Holders of the Common Shares delivered to them pursuant to this Section 6. GGPI shall bear all expenses relating to filing such Registration Statement and keeping such Registration Statement current, effective and available; provided, however, that GGPI shall not be responsible for any brokerage fees or underwriting commissions due and payable by any holder of such Common Shares.
(ii) During the time period when the Registration Statement is required to be current, effective and available under Section 6(c)(i) of this Schedule C, GGPI also shall:
(1) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus constituting a part thereof, as amended or supplemented (the "Prospectus"), as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale of the Common Shares covered by such Registration Statement whenever any Initial Holder shall desire to sell or otherwise dispose of the same but in no event beyond the period in which the Registration Statement is required to be kept in effect under Section 6(c)(i) of this Schedule C;
(2) furnish to each Initial Holder, without charge, such number of authorized copies of the Prospectus, and any amendments or supplements to the Prospectus, in conformity with the requirements of the Securities Act, and such other documents as any Initial Holder may reasonably request in order to facilitate the public sale or other disposition of the Common Shares owned by the Initial Holders.
(3) register or qualify the securities covered by the Registration Statement under state securities or blue sky laws of such jurisdictions as are reasonably required to effect a sale thereof and do any and all other acts and things which may be necessary or appropriate under such state securities or blue sky laws to enable the Initial Holders to consummate the public sale or other disposition in such jurisdictions of such securities;
(4) before filing any amendments or supplements to the Registration Statement or the Prospectus, furnish copies of all such documents proposed to be filed to the Initial Holders who shall be afforded a reasonable
opportunity to review and comment thereon; provided, however, that all such documents shall be subject to the approval of the Initial Holders insofar as they relate to information concerning the Initial Holders (including, without limitation, the proposed method of distribution of any Initial Holder's securities);
(5) notify the Initial Holders promptly (A) when any such Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (B) of any request by the SEC or any state securities authority for amendments and supplements to such Registration Statement and the Prospectus or for additional information, (C) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of any such Registration Statement or the initiation of any proceedings for the purpose, (D) if, between the effective date of any such Registration Statement and the sale of the Common Shares to which it relates, GGPI receives any notification with respect to the suspension of the qualification of the Common Shares or initiation of any proceeding for such purpose, and (E) of the happening of any event during the period such Registration Statement is effective which in the judgment of GGPI makes any statement made in the Registration Statement or the Prospectus untrue in any material respect or which requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading;
(6) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest practicable time;
(7) cooperate with each Initial Holder to facilitate the timely preparation and delivery of certificates representing Common Shares being sold, which certificates shall not bear any restrictive legends, provided the Common Shares evidenced thereby have been sold in a manner permitted by the Prospectus; and
(8) upon the occurrence of any event contemplated by Section 6(c)(ii)(5)(E) hereof, promptly prepare and file a supplement or post-effective amendment to the Registration Statement or the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Common Shares, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein in light of the circumstances under which they were made, not misleading.
Notwithstanding anything to the contrary contained herein, the obligation to prepare and file the Registration Statement or any supplement or post-effective amendment thereto and any other obligations of GGPI hereunder shall be suspended if GGPI, relying upon advice of counsel, determines that disclosure of any information required to be included therein would be adverse to its interests, but such suspension shall not extend beyond 120 days with respect to any such specified event.
(iii) GGPI hereby agrees to indemnify and hold harmless each Initial Holder and each person, if any, who controls such Initial Holder (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all losses, claims, damages, costs and expenses (including reasonable attorneys' fees) ("Claims") to which such Initial Holder or such controlling person may become subject, under the Securities Act or otherwise, caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such Initial Holder and each such controlling person for any legal or other expenses reasonably incurred by such Initial Holder in connection with investigating or defending any such loss as such expenses are incurred; provided, however, that GGPI shall not be liable insofar as any such losses, claims, damages, costs and expenses (including reasonable attorneys' fees) are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to GGPI by any Initial Holder expressly for use therein. Each Initial Holder agrees to indemnify and hold harmless GGPI and each person, if any, who controls GGPI (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all Claims to which GGPI or such controlling person may become subject, under the Securities Act or otherwise, caused by any untrue statement or omission or alleged untrue statement or omission based upon such information furnished in writing to GGPI by such Initial Holder.
(iv) Each Initial Holder agrees that, upon receipt of any notice from
GGPI of the happening of any event of the kind described in Section
6(c)(ii)(5)(E), such Initial Holder will forthwith discontinue disposition
of securities pursuant to the Registration Statement until such Initial
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(ii)(8).
(d) NO OTHER EXCHANGE RIGHTS. The Series C Preferred Units are not convertible into or redeemable or exchangeable for any other property or securities of GGPI, the Managing Member, the Company or any other Person at the option of any holder of Series C Preferred Units except as expressly provided in this Section 6 or in that certain Debt Maintenance Agreement by and between the Company and DAI of even date herewith.
7. TRANSFERS. Notwithstanding anything to the contrary contained in the Agreement, DAI, and any Permitted DAI Transferee (hereinafter defined) pursuant to this Section 7, may sell, assign or otherwise transfer all but not part of its Series C Preferred Units to a single Permitted DAI Transferee, without the consent of the Managing Member; provided, however, that (i) no such sale, conveyance or other transfer may be made unless the requirements of Section 8.3 of the Agreement (other than Section 8.3(b) thereof) and the second and fourth sentences of Section 8.2 of the Agreement are satisfied with respect to such sale, conveyance or other transfer, (ii) such Series C Preferred Units are held by one person for purposes of Treasury Regulation ss. 1.7704-1(h)(1)(ii), taking into account the "look-through" rules of Treas. Reg.ss. 1.7704-1(h)(3), (iii) the transferor and transferee provide the Company with representations and covenants reasonably satisfactory to the Company to assure the Company that the requirements
described in (ii) above will be satisfied immediately after the transfer and at all times thereafter and (iv) the organizational documents of the proposed transferee prohibit the issuance or the transfer of any membership or other equity interests in such transferee if such transferee would thereafter be treated as owned by more than 14 persons under Treas. Reg.ss. 1.7704-1(h)(1), taking into account the look through rules of Treas. Reg.ss. 1.7704-1(h)(3). For this purpose, a "Permitted DAI Transferee" shall mean a transferee pursuant to this Section 7 that is any Person or Entity that is an Affiliate of DAI or a transferee pursuant to this Section 7 that is any Person or Entity that is an Affiliate of a Permitted DAI Transferee who was the transferee of Series C Preferred Units pursuant to this Section 7 by virtue of having itself constituted an Affiliate of DAI. In addition, DAI and each Permitted DAI Transferee respectively covenants on behalf of themselves and their respective direct or indirect equity owners that no issuances of membership or equity interests or transfers of membership or equity interests in DAI or any DAI Permitted Transferee or any Person owning a direct or indirect equity interest in either shall be made or effective if the Series C Preferred Units held by DAI or the DAI Permitted Transferee would thereafter be treated as owned by more than 14 persons under Treas. Reg.ss. 1.7704-1(h)(1), taking into account the look through rules of Treas. Reg.ss.1.7704-1(h)(3).
EXHIBIT - 10.25
AMENDMENT TO OPERATING AGREEMENT
OF GGP/HOMART II L.L.C.
Amendment to Operating Agreement, dated February 8, 2008 (the "Amendment"), among GGP Limited Partnership, a Delaware limited partnership ("GGPLP"), The Comptroller of the State of New York as Trustee of the Common Retirement Fund, a fund established pursuant to NY Retirement and Social Security Law Section 422, in the custody of the Comptroller of the State of New York ("CRF" and, together with GGPLP, the "Members"), and GGP/Homart II L.L.C., a Delaware limited liability company (the "Company").
RECITALS
WHEREAS, the Members are all of the members of the Company;
WHEREAS, the Company and the Members entered into that certain Operating Agreement dated November 10, 1999, as amended (the "Existing Operating Agreement"), relating to, among other things, the management of the Company and the transfer of units of membership interest therein; and
WHEREAS, the Company and the Members desire to amend the Existing Operating Agreement as set forth herein to opt-in under Article 8 of the Uniform Commercial Code and provide for the certification of units of membership interest in the Company.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition shall have the meanings set forth in the Existing Operating Agreement.
2. Amendment to Definition of "Units". The definition of "Units" contained in Section 1.1 of the Existing Operating Agreement is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:
"Units" shall mean units of membership interest in the Company, including (except as otherwise expressly provided herein) the rights to allocations, distributions, management, approval and participation provided herein. Each unit of membership interest in the Company shall constitute a "security" within the meaning of, and governed by, (a) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (b) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the
National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.
3. Amendment to Section 2.5 of Existing Operating Agreement. Section 2.5 of the Existing Operating Agreement is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:
2.5 Classes of Units; Issuance of Certificates.
(a) There shall be, initially, two classes of Units, consisting of Class A Units ("Class A Units") and Class B Units (the "Class B Units"), which shall have the rights and be subject to the limitations contained herein.
(b) The Company may issue one or more certificates representing the Units of any Member and, in such event, the following shall apply with respect to each such certificate and the Units represented thereby:
(i) Such certificate shall certify the number and class of Units owned by such Member represented by such certificate and be signed by, or in the name of the Company by, the President or a Vice President, and countersigned by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the Company.
(ii) Such certificate shall bear a legend in substantially the following form:
"THE RIGHTS, POWERS, PREFERENCES, RESTRICTIONS (INCLUDING TRANSFER RESTRICTIONS) AND LIMITATIONS OF THE UNITS OF MEMBERSHIP INTEREST REPRESENTED HEREBY ARE SET FORTH IN, AND THIS CERTIFICATE AND THE UNITS OF MEMBERSHIP INTEREST REPRESENTED HEREBY ARE ISSUED AND SHALL IN ALL RESPECTS BE SUBJECT TO THE TERMS AND PROVISIONS OF, THE OPERATING AGREEMENT OF THE COMPANY, DATED AS OF NOVEMBER 10, 1999, AS AMENDED AND/OR RESTATED FROM TIME TO TIME (THE "AGREEMENT"). EACH UNIT OF MEMBERSHIP INTEREST IN THE COMPANY REPRESENTED HEREBY SHALL CONSTITUTE A "SECURITY" WITHIN THE MEANING OF, AND GOVERNED BY, (A) ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE (INCLUDING SECTION 8-102(a)(15) THEREOF) AS IN EFFECT FROM TIME TO TIME IN THE STATE OF DELAWARE, AND (B) ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF ANY OTHER
APPLICABLE JURISDICTION THAT NOW OR HEREAFTER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS TO ARTICLE 8 THEREOF AS ADOPTED BY THE AMERICAN LAW INSTITUTE AND THE NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS AND APPROVED BY THE AMERICAN BAR ASSOCIATION ON FEBRUARY 14, 1995. THE UNITS OF MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION THEREFROM."
(iii) The Units represented by such certificate may only be transferred upon surrender of such certificate duly endorsed or accompanied by proper evidence of succession or assignment. Upon surrender to the Company of such certificate duly endorsed or accompanied by proper evidence of succession or assignment, it shall be the duty of the Company to issue a new certificate to the Person entitled thereto, cancel the old certificate and record the transaction upon its books, subject, however, to any restrictions or limitations on the transfer thereof which may be set forth in other sections of this Agreement or which may be imposed by law or by any other agreement to which the holder of such Units is subject. The Company shall maintain books for the purpose of registering the transfer of Units.
(iv) In the event of loss, theft, mutilation or destruction of such certificate, a duplicate certificate shall be issued upon such terms as the Company shall reasonably prescribe.
4. Addition of New Section 8.13 to Existing Operating Agreement. A new
Section 8.13 is hereby inserted into the Existing Operating Agreement as
follows:
8.13. Pledge of Interests to CRF. Notwithstanding anything to the contrary contained in this Agreement, the restrictions upon Transfer set forth in this Agreement shall not apply to:
(i) the pledge by GGPLP of its membership interests in the Company (the "Pledged Collateral") to CRF and its successors and assigns to the extent that such Pledged Collateral is included in the Collateral (under and as defined in the Pledge and Security Agreement, dated as of February 8, 2008, by and among CRF and GGPLP (as amended, restated, supplemented, or otherwise modified from time to time, the "Pledge Agreement")) (such pledge and the related delivery of the certificate representing GGPLP's Units to CRF, duly endorsed and/or assigned, shall
not constitute a Transfer for any purpose and GGPLP shall not cease to own such Units as the result of such pledge and/or delivery); or
(ii) any foreclosure upon or subsequent disposition of such Collateral by CRF in accordance with the terms and conditions of the Pledge Agreement (each such foreclosure or subsequent disposition, a "Collateral Transfer").
In connection with a Collateral Transfer as to any of GGPLP's Units, the assignee shall be admitted as a Member and shall have all of the rights and powers that GGPLP previously had with respect to such Units without any further consent of the Company or any Member. Upon such Collateral Transfer as to all of GGPLP's Units, GGPLP shall cease to be a Member and shall have no further rights or obligations under this Agreement.
5. Counterparts. This Amendment may be executed in counterparts, each of which shall constitute an original and all of which together shall constitute the same agreement.
6. Captions. The article and section headings appearing in this Amendment are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof.
7. Full Force and Effect; Etc. Except to the extent waived or modified herein, this Amendment does not constitute a waiver or modification of any provision of the Existing Operating Agreement. Except as amended hereby, the Existing Operating Agreement shall continue in full force and effect in accordance with the provisions thereof on the date hereof. Any references in the Existing Operating Agreement or any other document to the Existing Operating Agreement (including by use of the terms "herein," "hereof," "hereinafter," "hereto" and words of similar import), shall, unless the context otherwise requires, mean the Existing Operating Agreement, as amended by this Amendment. Notwithstanding anything to the contrary contained in the Existing Operating Agreement, the execution and performance of this Amendment by the General Growth Officers on behalf of the Company shall be deemed to have been approved by the Board (to the extent any such approval may be required) and shall not require separate approval by the Board.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment on the date first written above.
GGP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: General Growth Properties, Inc.,
a Delaware corporation, its general
partner
By: /s/ Ronald L. Gern ------------------------------------ Name: Ronald L. Gern Title: Senior Vice President |
THE COMPTROLLER OF THE STATE OF NEW YORK
AS TRUSTEE OF THE COMMON RETIREMENT
FUND, a fund established pursuant to NY
Retirement and Social Security Law
Section 422, in the custody of the
Comptroller of the State of New York
By: /s/ Nick Smirensky ------------------------------------ Name: Nick Smirensky Title: Deputy Comptroller |
GGP/HOMART II L.L.C., a Delaware limited liability company
By: /s/ Ronald L. Gern ------------------------------------ Name: Ronald L. Gern Title: Senior Vice President |
EXHIBIT 10.29
SUMMARY OF NON-EMPLOYEE DIRECTOR COMPENSATION PROGRAM
1. An annual retainer in the amount of $40,000 for each non-employee director.
2. An additional annual retainer in the amount of $20,000 for the Lead Director.
3. A meeting fee of $1,000 for each Board or Committee meeting attended in person or telephonically, except that each member of the Audit Committee shall receive $1,500, rather than $1,000 for each Audit Committee meeting attended in person or telephonically.
4. An annual fee of $2,500 for each member of the Audit Committee, provided that the Chair of the Audit Committee shall receive $20,000, rather than $2,500 for such Committee service.
5. An annual fee of $10,000 for the Chair of the Compensation Committee, and an annual fee of $5,000 for the Chair of the Nominating & Governance Committee.
6. An annual fee of not to exceed $20,000 for the Chair of each Committee that may be established from time to time other than the Audit Committee, Compensation Committee, and Nominating & Governance Committee.
7. An annual restricted stock award of 1,500 shares to be made following the certification of the director election results from each annual meeting of the Company's stockholders to each non-employee director who then holds office. Each restricted stock award will be made pursuant to a restricted stock agreement adopted pursuant to the Company's 2003 Incentive Stock Plan (the "2003 Plan") (or an alternative plan upon the expiration of the 2003 Plan), providing that each award will vest one-third on the date of grant and one-third on each of the first and second anniversaries of the date of the grant. Vesting will be accelerated upon the director's retirement or the failure of the director to be re-nominated for election to the Board upon expiration of the director's current term in office. Each director will be entitled to receive any cash dividends paid with respect to shares subject to a restricted stock award, regardless of whether the award is fully vested.
8. A restricted stock award of 1,500 shares for each new non-employee director when the director joins the Board. The terms of this restricted stock award will match those of the annual restricted stock award described above.
9. Reimbursement of expenses incurred by each director in attending meetings.
EXHIBIT-10.30
THE ROUSE COMPANY
CONTINGENT STOCK AGREEMENT
DATED AS OF JANUARY 1, 1996
TABLE OF CONTENTS
PAGE ---- ARTICLE I Definitions and Interpretation Section 1.01. Certain Defined Terms 1 Section 1.02. Interpretation 15 ARTICLE II Contingent Shares Section 2.01. General 16 Section 2.02. Business Unit Accounts 16 Section 2.03. Value Index for the General Business Unit Account 16 Section 2.04. Value Index for the Howard Hughes Center Business Unit Account 17 Section 2.05. Value Index for the Playa Vista Business Unit Account 17 Section 2.06. Value Index for the Summerlin Business Unit Account 18 Section 2.07. Asset Appraisals and Holders' FMV Allocation 19 Section 2.08. Delivery of Contingent Shares 20 Section 2.09. Debits to the Business Unit Accounts 24 Section 2.10. Tax Adjustments 24 Section 2.11. Company Loans 25 Section 2.12. Advances 25 Section 2.13. Underfunding of Employee Benefit Plans 25 ARTICLE III Representations and Warranties of the Company ARTICLE IV Certain Covenants Section 4.01. Information 28 Section 4.02. Ownership of Assets of the Business Units 30 Section 4.03. Capitalization of Business Units 30 Section 4.04. Records and Books of Account 32 Section 4.05. Negative Covenants of the Company and the Business Unit Entities 32 Section 4.06. Board Representation 34 Section 4.07. Treasury Shares 34 Section 4.08. Inspection 34 Section 4.09. Maintain Registry 35 Section 4.10. Compliance with Laws 35 Section 4.11. Taxes; Claims 35 Section 4.12. Insurance 35 Section 4.13. Corporate Existence; Etc 35 Section 4.14. Registration of Contingent Shares and Contingent Preferred Shares; Compliance with Securities Laws 35 Section 4.15. Rouse Shareholder Approval 36 Section 4.16. Contingent Preferred Shares 36 |
Section 4.17. Reservation of Shares 37 Section 4.18. Abandonment of Assets 37 ARTICLE V Concerning the Representatives Section 5.01. Authority and Liabilities of the Representatives 37 Section 5.02. Directions to Representatives 38 Section 5.03. Reliance Upon Documents and Opinions of Counsel 39 Section 5.04. No Responsibility for Recitals, Etc 39 Section 5.05. Actions by Representatives 39 Section 5.06. Resignation and Removal 39 Section 5.07. Appointment of Successor Representative 40 Section 5.08. Acceptance of Appointment by Successor Representative 40 Section 5.09. Compensation and Indemnification 40 Section 5.10. Representatives' Escrow Account 41 Section 5.11. Confidentiality 43 Section 5.12. Controlling Provisions 43 Section 5.13. Indemnification 43 ARTICLE VI Concerning the Review Committee Section 6.01. General 43 Section 6.02. Composition 44 Section 6.03. Resignation and Removal 44 Section 6.04. Actions, Etc 44 Section 6.05. Confidentiality 45 Section 6.06. Indemnification 45 ARTICLE VII Miscellaneous Section 7.01. Notices 45 Section 7.02. Dispute Resolution 47 Section 7.03. Benefit and Burden 47 Section 7.04. Consolidations, Mergers, Etc 48 Section 7.05. Company as Fiduciary 48 Section 7.06. No Third Party Rights 49 Section 7.07. Amendments and Waiver 49 Section 7.08. Further Documents 50 Section 7.09. Assignments 50 Section 7.10. Severability 50 Section 7.11. Specific Performance 51 Section 7.12. APPLICABLE LAW 51 Section 7.13. Submission to Jurisdiction 51 Section 7.14. Expenses 51 Section 7.15. No Right of Set Off 51 Section 7.16. No Partnership, Joint Venture or Agency 51 Section 7.17. Survival of Representations, Warranties, Etc 52 Section 7.18. Payments and Interest 52 Section 7.19. Entire Agreement 52 |
CONTINGENT STOCK AGREEMENT
This Contingent Stock Agreement, effective as of January 1, 1996, is by The Rouse Company, a Maryland corporation (the "Company"), in favor of and for the benefit of the Holders and the Representatives (as such terms are hereinafter defined).
PRELIMINARY STATEMENTS
1. The Company, TRC Acquisition Company I, a newly-formed Delaware corporation and a wholly-owned subsidiary of the Company ("Newco"), and The Hughes Corporation, a Delaware corporation ("THC"), are parties to that certain Agreement and Plan of Merger dated as of February 22, 1996 (the "Merger Agreement"), which provides, among other things, for the merger of THC with and into Newco (the "Merger"), as a result of which each outstanding share of common stock of THC (other than shares held by THC or any of its subsidiaries) will be converted into the right to receive (i) upon the effectiveness of the Merger, shares of Rouse Common Stock (as hereinafter defined) and, if required pursuant to the terms of the Merger Agreement, cash and (ii) subsequent to the effectiveness of the Merger, additional shares of Rouse Common Stock or, in certain circumstances, Rouse Preferred Stock, pursuant to the terms of this Agreement.
2. The number of shares of Rouse Common Stock deliverable by the Company upon the effectiveness of the Merger will be determined as provided in the Merger Agreement. The number of shares of Rouse Common Stock deliverable by the Company subsequent to the effectiveness of the Merger (the "Contingent Shares") is not susceptible of being ascertained as of the time of the Merger because of the uncertainty as to the value of certain Assets (as hereinafter defined) as of the time of the Merger. Accordingly, the number of Contingent Shares will be determined as provided in this Agreement based upon the future economic performance of the Business Units (as hereinafter defined) and related Assets.
3. It is a condition precedent to the obligations of THC to close the transactions contemplated by the Merger Agreement that the Company shall have executed and delivered this Agreement.
4. This Agreement and the Merger Agreement are inter-related and non-severable, and the parties to the Merger Agreement would not have consummated the Merger had this Agreement not been executed and delivered and vice versa.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein and in the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, intending to be legally bound, hereby agrees as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Certain Defined Terms. Capitalized terms used in this Agreement shall have the following respective meanings, except as otherwise provided herein or as the context shall otherwise require:
"Adjusted Fair Market Value" has the meaning specified in Section 2.07(d).
"Adjusted Net Equity Balance" means, with respect to the General Business Unit and the Summerlin Business Unit, an amount (not less than zero) determined as of the beginning of each Computation Period equal to (i) the Initial Net Equity of such Business Unit minus (ii) an amount equal to 200% of the aggregate credits to the Business Unit Account for such Business Unit under Section 2.03(b) or Section 2.06(b), as applicable, for all Prior Computation Periods (if any).
"Advance" has the meaning specified in Section 2.12.
"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Person. The term "control" (including, with correlative meaning, the terms "controlling", "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise; provided, however, that in no event shall the Company be deemed an Affiliate of any Holder or vice versa.
"Agreement" means this Contingent Stock Agreement.
"All Computation Periods" means, with respect to any Calculation Date, all Computation Periods ending on or prior to such Calculation Date.
"Applicable Federal Rate" means, with respect to any day, the federal short-term rate, mid-term rate or long-term rate, as applicable, determined pursuant to Section 1274(d) of the Code and published by the Secretary of the Treasury or his delegate for the most recent calendar month ending prior to such day. The Applicable Federal Rate shall be based on semi-annual compounding.
"Applicable Tax Rate" means, with respect to any Business Unit, 33.33% of the marginal tax rate applicable to corporations subject to Subchapter C of Chapter 1 of Subtitle A of the Code for each category of items of Business Unit Income or Loss for such Business Unit for the period in which such Business Unit Income or Loss was realized or sustained.
"Appraisal Panel" has the meaning specified in Section 2.07(b).
"Assets" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, tangible or intangible, and wherever situated, including Equity Interests in any other Person.
"Associate" means, with respect to any Person, (i) any Affiliate of such Person, (ii) any trust or estate in which such Person has a substantial beneficial interest or as to which such Person serves as a trustee or in a similar fiduciary capacity, (iii) any relative or spouse of such Person or any relative of such spouse, (iv) any relative or spouse of any director or officer of such Person, (v) any current or former employee, agent, advisor, consultant, officer, director, partner or stockholder of such Person and (vi) any Person in which such Person has an Equity Interest or with which such Person has a business relationship.
"Authorized Officer" means the chief executive officer, the president, the chief financial officer, the chief accounting officer or any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.
"Business Unit Accounts" has the meaning specified in Section 2.02.
"Business Unit Entity" has the meaning specified in Section 4.02.
"Business Unit Income or Loss" has the meaning specified in Section 2.10(a).
"Business Units" means (i) the General Business Unit, (ii) the Howard Hughes Center Business Unit, (iii) the Playa Vista Business Unit and (iv) the Summerlin Business Unit.
"Calculation Date" means the last day of each Computation Period.
"Capital Expenditure" means any expenditure which, in accordance with GAAP, should be classified as a capital expenditure.
"Cash" means (i) cash and cash equivalents, (ii) Marketable Securities and
(iii) any other item that would be reflected as cash or cash equivalents on a
balance sheet prepared in accordance with GAAP.
"Claim" means any claim, demand, investigation, cause of action, suit, default, assessment, litigation, third party action, arbitral proceeding or proceeding by or before any Governmental Authority or any other Person.
"Code" means the Internal Revenue Code of 1986, and any successor statute of similar import, together with the regulations thereunder.
"Company" has the meaning specified in the introductory paragraph of this Agreement.
"Company Consolidated Group" has the meaning specified in Section 2.10(a).
"Company Loan" has the meaning specified in Section 2.11.
"Company Members" has the meaning specified in Section 6.02.
"Computation Period" means the six-month period beginning on each January 1 and July 1 of each year; provided, however, that with respect to each Business Unit (i) the first Computation Period shall commence on January 1, 1996 and (ii) the final Computation Period shall end on the Valuation Date applicable to such Business Unit.
"Computation Period Distribution Amount" has the meaning specified in
Section 2.08(b).
"Computation Period Tax Adjustment" has the meaning specified in Section 2.10(c).
"Contingent Preferred Shares" has the meaning specified in Section 4.16.
"Contingent Shares" has the meaning specified in the Preliminary Statements of this Agreement.
"Contingent Stock Distribution Discount Rate" means a rate equal to (i) the lesser of (A) the lowest Applicable Federal Rate in effect during the three-month period ended on February 29, 1996 and (B) the lowest Applicable Federal Rate in effect during the three-month period ending on the last day of the month in which the Effective Time occurs or (ii) such other rate as may be required under applicable tax Laws.
"Contingent Stock Distribution Interest" means, with respect to any Contingent Stock Distribution Value, such Contingent Stock Distribution Value minus the applicable Contingent Stock Distribution Principal.
"Contingent Stock Distribution Principal" has the meaning specified in
Section 2.08(h).
"Contingent Stock Distribution Value" means, with respect to any Holder,
(i) in the case of any delivery of Contingent Shares (A) for any Calculation
Date, the product of (x) the Current Share Value as of such Calculation Date
times (y) the Computation Period Distribution Amount with respect to such
Calculation Date times (z) such Holder's Percentage Interest and (B) for any
Valuation Distribution Date, the product of (x) the Valuation Distribution Share
Value as of such Valuation Distribution Date times (y) the number of Contingent
Shares delivered to such Holder on such Valuation Distribution Date and (ii) in
the case of any delivery of Contingent Preferred Shares for any Calculation Date
or Valuation Distribution Date, the product of (A) the stated liquidation value
of a Contingent Preferred Share times (B) the number of Contingent Preferred
Shares delivered to such Holder in connection with such Calculation Date or
Valuation Distribution Date.
"Contract" means any agreement, lease, license, evidence of indebtedness, mortgage, deed of trust, note, bond, indenture, security agreement, commitment, instrument, understanding or other contract, obligation or arrangement of any kind.
"Current Share Value" means, as of any date (the "computation date"), the average of the closing per share sales prices of Rouse Common Stock during the ten trading days consisting of (i) the five consecutive trading days ending on the last day of the calendar month immediately preceding the calendar month in which the
computation date falls and (ii) the five consecutive trading days ending on the computation date, in each case, on the Composite Tape of the New York Stock Exchange or, if shares of Rouse Common Stock are not then listed on the New York Stock Exchange, on the principal United States securities exchange registered under the Exchange Act on which shares of Rouse Common Stock are then listed or, if shares of Rouse Common Stock are not then listed on any such stock exchange, the average of the average closing bid and ask quotations with respect to a share of Rouse Common Stock during the ten trading days consisting of (A) the five consecutive trading days ending on the last day of the calendar month immediately preceding the calendar month in which the computation date falls and (B) the five consecutive trading days ending on the computation date, in each case, on the NASDAQ or any successor system then in use or, if no such quotations are then available, the average of the bid and asked prices with respect to a share of Rouse Common Stock for such trading days, as furnished by a member of the New York Stock Exchange regularly making a market in the Rouse Common Stock selected by the Rouse Board, or, if no such member firm is then making a market in Rouse Common Stock, the fair market value on the computation date of a share of Rouse Common Stock as determined in good faith by a majority of the members of the Rouse Board after consultation with an independent financial advisor of recognized national standing.
"Debt" means, for any Person, all Liabilities of such Person (i) for the repayment of money borrowed (whether or not represented by bonds, debentures, notes, securities or other similar instruments), (ii) to pay the deferred or unpaid purchase price of goods, services or Assets, (iii) as lessee under any lease which, in conformity with GAAP, is required to be capitalized for balance sheet purposes, (iv) under guaranties, endorsements (other than for collection or deposit in the ordinary course of business) or assumptions of, or other contingent obligations in respect of, or to purchase or otherwise acquire, any Liabilities of any other Person, (v) in respect of letters of credit or other similar instruments, (vi) secured by a Lien existing on Assets owned by such Person, whether or not the Liabilities secured thereby shall have been assumed by such Person and/or (vii) to redeem or repurchase any of such Person's Equity Interests.
"Debtor Relief Laws" means the Bankruptcy Code of the United States, and any successor statute of similar import, and all other applicable dissolution, liquidation, conservatorship, bankruptcy, moratorium, readjustment of debt, compromise, rearrangement, receivership, insolvency, fraudulent transfer or conveyance, reorganization or similar debtor relief Laws from time to time in effect affecting the rights of creditors generally.
"Delaware Courts" has the meaning specified in Section 7.13.
"Delivery Date" has the meaning specified in Section 4.16.
"Disputants" has the meaning specified in Section 7.02(a).
"Dividend Adjustment" means, with respect to any Calculation Date or Valuation Date, an amount equal to the product of (i) the sum of any and all dividends and other distributions paid on a share of Rouse Common Stock after the date hereof, but only if, in the case of each such dividend or distribution, the record date fixed for the purpose of determining the Persons entitled to receive payment of such dividend or other distribution falls within the period commencing on such Calculation Date or Valuation Date, as applicable, and ending on the date on which the Contingent Shares required to be delivered by the Company in connection with such Calculation Date or Valuation Date, as applicable, are actually delivered to the Holders times (ii) the number of Contingent Shares which the Company is otherwise required to deliver to the Holders in connection with such Calculation Date or Valuation Date, as applicable.
"Effective Date" has the meaning specified in the Merger Agreement.
"Effective Time" has the meaning specified in the Merger Agreement.
"Eligible Assignee" means an assignee or transferee of the rights of a Holder hereunder but only if such assignee or transferee is (i) a beneficial owner of Equity Interests of such Holder as of the date hereof, (ii) an executor, administrator or guardian of the estate of such Holder or beneficial owner, (iii) an inter vivos trust for the benefit of such Holder or beneficial owner or a member of such Holder's or beneficial owner's immediate family, (iv) a legatee or heir of such Holder or beneficial owner under the will of such Holder or beneficial owner or
pursuant to the Laws of descent and distribution, (v) a Person who acquires such rights by operation of Law (including pursuant to a property settlement agreement, plan or arrangement approved or ordered by any court) or (vi) the Company or any Subsidiary of the Company.
"Environmental Laws" means any and all Laws, including any judgment, permit, approval, decision or determination, pertaining to the environment now or hereafter in effect and applicable to the Assets comprising any Business Unit, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. (S) 9601 et seq., as amended by the Superfund Amendment and Reauthorization Act of 1986 and as further amended, the Federal Water Pollution Control Act, 33 U.S.C. (S) 1251 et seq., as amended, the Solid Waste Disposal Act of 1976, 42 U.S.C. (S) 6901 et seq., as amended, the Clean Air Act, 42 U.S.C. (S) 7401 et seq., as amended, the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., as amended, the Hazardous Materials Transportation Act, 49 Ap. U.S.C.A. (S) 1801 et seq., as amended, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S) 136 et seq., as amended, and comparable state and local Laws, and other environmental conservation and protection Laws.
"Equity Interests" means, with respect to any Person and whether now outstanding or issued after the date of this Agreement, any and all shares, interests, participations or other equivalents in the equity (however designated) of such Person and any and all options, warrants and other rights to purchase or otherwise acquire an equity interest in such Person.
"Escrow Account" has the meaning specified in Section 5.10(a).
"Escrow Agent" has the meaning specified in Section 5.10(a).
"Escrow Agreement" has the meaning specified in Section 5.10(a).
"Escrow Termination Date" has the meaning specified in Section 5.10(a).
"Event of Default" means any of the following events:
(a) any representation, warranty or statement made by the Company in this Agreement or in any writing furnished by the Company to the Review Committee, any Representative or any Holder pursuant to this Agreement is inaccurate in any respect on the date as of which made and in light of the circumstances under which made, which inaccuracy, alone or together with all other such inaccuracies, could reasonably be expected to have a Material Adverse Effect;
(b) the Company fails to perform or observe any covenant or agreement contained in Section 2.08;
(c) the Company fails to perform or observe any other material agreement, term or condition contained in this Agreement and such failure (if capable of being remedied) is not remedied within 30 consecutive days after the date on which such failure first became known to the Company;
(d) the Company takes or omits to take any action with the knowledge that such action or omission will result, and such action or omission does result, in the default by the Company of any its covenants or agreements contained in this Agreement;
(e) the Company or HHPLP makes an assignment for the benefit of creditors or is generally not paying its Debts as they become due;
(f) any decree or order for relief in respect of the Company or HHPLP is entered under any Debtor Relief Law of any jurisdiction;
(g) the Company or HHPLP files a petition or otherwise applies to any Governmental Authority for, or consents to, the appointment of, or the taking of possession by, a trustee, receiver,
custodian, liquidator or similar official of it or any substantial part of its Assets, or commences a voluntary case under any Debtor Relief Law of any jurisdiction;
(h) any such petition or application described in clause (g) above is filed, or any such proceeding commenced, against the Company or HHPLP, and the Company or HHPLP, as applicable, by any act indicates its approval thereof, consents thereto or acquiesces therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceeding, and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days;
(i) any order, judgment or decree is entered in any proceeding against the Company or HHPLP decreeing the dissolution, winding-up or liquidation of the Company or HHPLP, and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days;
(j) any order, judgment or decree is entered in any proceedings against the Company or HHPLP decreeing a split-up of the Company or HHPLP, or which requires the divestiture of any material Asset or any material portion of the Assets of the Company or HHPLP, and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days;
(k) this Agreement shall at any time, for any reason, cease to be in full force and effect or shall be declared to be null and void in whole or in any material part by an order, judgment or decree of any Governmental Authority, or the validity or enforceability of this Agreement shall be contested by or on behalf of the Company, or the Company shall renounce, or deny that it is bound by the terms of, any material provision of this Agreement, it being understood that nothing herein shall restrict the Company from asserting that its actions or omissions do not constitute a violation of this Agreement;
(l) any violation or breach of, or default under, the governing documents of any Business Unit Entity shall occur and (if capable of being remedied) is not remedied within 30 consecutive days after the date on which such failure first became known to the Company or such Business Unit Entity, which violation, breach or default, alone or together with all other such violations, breaches and defaults, could reasonably be expected to have a Material Adverse Effect; or
(m) the failure of the shareholders of the Company to approve this Agreement and the issuance and delivery of securities of the Company as contemplated hereby prior to July 15, 1997.
"Excess Cash Flow" means, with respect to any Business Unit for any Computation Period, an amount equal to its Receipts for such Computation Period minus the sum of its Expenditures and Computation Period Tax Adjustment (if any) for such Computation Period.
"Exchange Act" means the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.
"Expenditures" means, with respect to any Business Unit for any Computation Period, all costs and expenses incurred by the Company or any of its Subsidiaries which are properly chargeable to such Business Unit in accordance with GAAP and actually paid during such Computation Period and all adjustments to the records and books of account of such Business Unit made in accordance with the terms of this Agreement which have the effect of decreasing the Cash accounts of such Business Unit during such Computation Period, including any and all:
(a) real estate commissions, legal fees and title costs incurred in connection with the Transfer of any of the Assets comprising such Business Unit;
(b) sales, franchise, licensing, property and other taxes (other than taxes of any Governmental Authority measured by income);
(c) Capital Expenditures, insurance premiums, labor, supplies, utilities and other services, infrastructure, amenities, improvements and enhancements, whether on-site, off-site or regional, not reimbursed by the purchaser of any of the Assets comprising such Business Unit or otherwise, including costs in connection with installing utilities, roadways and landscaping, which costs are allocable to any of the Assets comprising such Business Unit on a basis reasonably determined by the Company;
(d) payments on indebtedness for borrowed money (including any Company Loan and any Revolving Credit Loan), whether for principal or interest, which indebtedness existed on the effective date hereof or was incurred subsequent to the effective date hereof in the ordinary course of business of any Business Unit Entity in accordance with the terms of this Agreement;
(e) overhead directly related to such Business Unit or, to the extent that services are provided to the related Business Unit Entity by employees of the Company or any of its Subsidiaries (such as financial, personnel, legal, accounting, tax or other administrative services), the reasonable actual costs incurred for such services, which costs shall not exceed the costs at which such services could have been obtained by such Business Unit Entity in an arms'-length transaction with a Person that is not an Associate of the Company or any Business Unit Entity;
(f) costs and expenses in connection with the direct management of the Assets comprising such Business Unit other than Howard Hughes Center Management Costs and Playa Vista Management Costs;
(g) fees and expenses in connection with or as a result of any action or proceeding brought, or any Claim made, by any Governmental Authority or any other Person (other than the Review Committee, any Representative or any Holder) directly relating to any of the Assets comprising such Business Unit, unless such incurrence resulted from the gross negligence or willful misconduct of the Company or any of its Subsidiaries constituting a material breach of its obligations under this Agreement;
(h) increases in Reserves but only if and to the extent that such increases are permitted by the definition of "Reserve" contained herein;
(i) fees, costs and expenses of the Review Committee which have been allocated to such Business Unit in accordance with Section 6.01;
(j) Advances (or any portion thereof) repaid to any other Business Unit; and
(k) Advances made to any other Business Unit;
provided, however, that except as expressly provided in the foregoing clauses
(a) through (k), the term "Expenditure" shall not include (i) any cost or
expense of the Company or any of its Subsidiaries for general overhead or
non-operating items, such as financial, personnel, legal, accounting, tax and
other general administrative services, (ii) any charges for interest on
intercompany advances or charges for other intercompany payments of any nature
other than payments for Assets or services directly related to the operation of
the Assets comprising such Business Unit or (iii) any share of the consolidated
tax Liability of the Company Consolidated Group (federal, state or local), and
provided further, that all Expenditures incurred by THC and its Subsidiaries
during the period commencing January 1, 1996 to and including the Effective
Time, which would be properly chargeable to any Business Unit in accordance with
GAAP and are actually paid during such period, shall be deemed for all purposes
of this Agreement to have been incurred and actually paid by the Company during
such period with respect to such Business Unit.
"Fair Market Value" has the meaning specified in Section 2.07(e).
"Funding Requirement" has the meaning specified in Section 4.03(a).
"GAAP" means generally accepted United States accounting principles, applied on a consistent basis (except for changes in which the independent auditors of the Person in question concur) as in effect from time to time unless the application of a principle of accounting not in effect at the date hereof would in any way be prejudicial to the Holders or to the Company, in which event the generally accepted United States accounting principles as in effect on the date hereof will be applied.
"General Business Unit" means any and all rights, title and interests
(subject to any related Liabilities) of the Company and its Subsidiaries and
Affiliates in and to (i) (A) the Assets located in Nevada and California
described on Exhibit B and all improvements thereon (if any), (B) the available
land component of Hughes Airport Center (as designated on Exhibit D), (C) the
available land component of Hughes Center (as designated on Exhibit E) and (D)
the available land component of Hughes Cheyenne Center (as designated on Exhibit
F) and (ii) to the extent that any of the foregoing are held indirectly by the
Company or any Business Unit Entity through any other Person, (A) the Equity
Interests held by the Company or such Business Unit Entity in such other Person,
(B) any securities issued or issuable with respect to any such Equity Interests
by way of distribution, (C) any Assets or securities into which such Equity
Interests or securities may be converted in connection with a recapitalization,
merger, consolidation or other reorganization or otherwise and (D) any Cash,
Equity Interests or other Assets distributed with respect to such Equity
Interests, securities or Assets.
"General Business Unit Account" has the meaning specified in Section 2.03.
"General Business Unit Reduction Amount" means, with respect to the General
Business Unit Account for any Calculation Date, an amount equal to the sum of
(i) 3% of the gross cash proceeds from sales of real estate comprising the
General Business Unit during All Computation Periods (except in connection with
the allocation of the Fair Market Value of any Assets among the Company and the
Holders in which case such amount shall be determined as provided in Section
2.07(d)), reduced by all amounts taken into account in Section 2.03(c)(ii)(B) in
all Prior Computation Periods plus (ii) to the extent that all or any portion of
the amount obtained under clause (i) is not taken into account in Section
2.03(c)(ii)(B) on the Calculation Date for the Computation Period during which
such gross cash proceeds were actually received by the Company or any of its
Subsidiaries, a cumulative 7.5% per annum, compounded semi-annually, return on
such amount from the Calculation Date for the Computation Period during which
such gross cash proceeds were so received until the Calculation Date for the
Computation Period in which such amount is taken into account in Section
2.03(c)(ii)(B).
"Governmental Approval" means any authorization, consent, approval, license, franchise, lease, ruling, tariff, rate, permit, certificate or exemption of, or filing or registration with, any Governmental Authority.
"Governmental Authority" means (i) any nation or government, (ii) any federal, state, county, province, city, town, municipality, local or other political subdivision thereof or thereto, (iii) any court, tribunal, department, commission, board, bureau, instrumentality, agency, council, arbitrator or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and (iv) any other governmental entity, agency or authority having or exercising jurisdiction over any relevant Person, item or matter.
"Hazardous Materials" means any hazardous or toxic substances or contaminated material including asbestos (friable, non-friable or any other form), polychlorinated biphenyls and any flammable materials, explosives, radioactive materials, hazardous materials, hazardous waste, hazardous or toxic or regulated substances or related materials defined in or under any Environmental Law and any other substance, waste, pollutant, contaminant or material, including petroleum products and derivatives, crude oil or fractions thereof or any chemical which causes cancer or reproductive effects, which are defined by applicable Law as hazardous or toxic or the use, transport, disposal, storage, treatment, recycling, handling, discharge, Release or emission of which is regulated or governed by any applicable Law.
"HHPLP" means Howard Hughes Properties, Limited Partnership, a Delaware limited partnership.
"Holder Members" has the meaning specified in Section 6.02.
"Holders" means the Persons listed on Schedule 1 and all Eligible Assignees.
"Holders' Designee" has the meaning specified in Section 4.06(a).
"Holders' FMV Allocation" has the meaning specified in Section 2.07(d).
"Holders' FMV Allocation Amount" has the meaning specified in Section 2.08(c)(ii).
"Howard Hughes Center Business Unit" means any and all rights, title and interests (subject to any related Liabilities) of the Company and its Subsidiaries and Affiliates in and to (i) the approximately 69-acre tract of land located in Los Angeles, California described on Exhibit C and all improvements thereon and (ii) to the extent that any of the foregoing are held indirectly by the Company or any Business Unit Entity through any other Person, (A) the Equity Interests held by the Company or such Business Unit Entity in such other Person, (B) any securities issued or issuable with respect to any such Equity Interests by way of distribution, (C) any Assets or securities into which such Equity Interests may be converted in connection with a recapitalization, merger, consolidation or other reorganization or otherwise and (D) any Cash, Equity Interests or other Assets distributed with respect to such Equity Interests, securities or Assets.
"Howard Hughes Center Business Unit Account" has the meaning specified in
Section 2.03.
"Howard Hughes Center Management Costs" means, with respect to any Calculation Date, the aggregate amount of direct management costs incurred and actually paid by the Company and any of its Subsidiaries in connection with the Howard Hughes Center Business Unit during All Computation Periods which have not been taken into account under Section 2.04 in any Prior Computation Period.
"Hughes Airport Center" means the approximately 382-acre tract of land located in Las Vegas, Nevada described on Exhibit D and all improvements thereon (except as noted on such Exhibit).
"Hughes Center" means the approximately 84-acre tract of land located in Las Vegas, Nevada described on Exhibit E and all improvements thereon (except as noted on such Exhibit).
"Hughes Cheyenne Center" means the approximately 211-acre tract of land located in Las Vegas, Nevada described on Exhibit F and all improvements thereon (except as noted on such Exhibit).
"Hughes Funding" means the lesser of (i) the amount funded by the Company pursuant to the Funding Requirement and (ii) $10,000,000; provided, however, that solely for the purposes of making the calculations required by Section 2.05(a) with respect to any Calculation Date, such amount shall be reduced by an amount equal to the aggregate credits to the Playa Vista Business Unit Account under Section 2.05(b) for all Prior Computation Periods.
"Independent Member" has the meaning specified in Section 6.02.
"Initial Net Equity" means (i) $40,900,000 with respect to the General Business Unit and (ii) $64,900,000 with respect to the Summerlin Business Unit.
"Laws" means all laws, statutes, rules, regulations, ordinances, orders, writs, injunctions or decrees and other pronouncements having the effect of law of any Governmental Authority.
"Liability" means, with respect to any Person, any indebtedness, obligation and other liability of such Person, whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due.
"Lien" means (i) any mortgage, lien, charge, pledge, hypothecation, assignment, deposit arrangement, encumbrance, security interest, assessment, adverse claim, levy, preference or priority or other security agreement of any kind or nature whatsoever (whether voluntary or involuntary, affirmative or negative, and whether imposed or created by Contract, operation of Law or otherwise) in, on, of or with respect to any Assets or Equity
Interests, whether now owned or hereafter acquired, (ii) any other interest in Assets or Equity Interests designed to secure the repayment of Debt or any other obligation, whether arising by Contract, operation of Law or otherwise, (iii) any Contract to give any of the foregoing and (iv) any conditional sale or other title retention agreement and any financing lease having substantially the same effect as any of the foregoing.
"Losses" means any and all damages (including consequential, punitive and exemplary), fines, penalties, judgments, deficiencies, losses, costs and expenses, including court costs, reasonable fees of attorneys, accountants and other experts and other reasonable expenses of any Claim.
"Maguire Thomas Partners" means (i) Maguire Thomas Partners/JMB Associates, a California limited partnership, and (ii) Maguire Thomas Partners/JMB Area C Associates, a California limited partnership.
"Majority Holders" means, at any time, Holders whose combined Percentage Interests represent more than 50% of the Percentage Interests of all Holders (excluding the Company and its Subsidiaries and Affiliates).
"Marketable Securities" means (i) securities which (a) are listed on the New York Stock Exchange or the American Stock Exchange, (b) are reported on NASDAQ, (c) are part of an issue which is listed on the New York Stock Exchange or the American Stock Exchange or is reported on NASDAQ or (d) are regularly quoted by brokers or dealers making a market in such securities and (ii) readily marketable securities or obligations issued or guaranteed by any Governmental Authority.
"Material Adverse Effect" means a material adverse effect on (i) the business, operations, condition (financial or otherwise), results of operations or prospects of the Company, any Business Unit Entity or any Business Unit, (ii) the Company's ability to perform its obligations under this Agreement, (iii) the value, condition or marketability of any material Assets comprising any Business Unit, (iv) the validity, legality or enforceability of this Agreement, (v) the ability of any Holder to exercise or enforce any of its rights, powers or remedies under this Agreement or (vi) the ability of any Representative or any member of the Review Committee to perform any of his duties or obligations, or to exercise or enforce any of his rights, powers or remedies, under this Agreement, but excluding from clauses (i) and (iii) hereof any effect caused by matters of general applicability, such as economic, regulatory, tax or other matters of general applicability, or matters generally affecting real estate or real estate markets. For purposes of this definition, the financial condition of the Company, any Business Unit Entity or any Business Unit shall be determined on the basis of the current value net worth of such Person.
"Merger" has the meaning specified in the Preliminary Statements of this Agreement.
"Merger Agreement" has the meaning specified in the Preliminary Statements of this Agreement.
"Merger Agreements" means (i) the Merger Agreement and (ii) the Agreement and Plan of Merger, dated as of February 22, 1996, among the Company, TRC Acquisition Company II and HHPLP relating to the Partnership Merger.
"NASDAQ" means The Nasdaq Stock Market. "Newco" has the meaning specified in the Preliminary Statements of this Agreement. |
"Parties" means the Company, the Holders and the Representatives.
"Partnership Merger" means the merger of TRC Acquisition Company II, a newly formed Delaware corporation and a wholly-owned subsidiary of the Company, with and into HHPLP, as a result of which each outstanding Class 1 LP Unit of HHPLP will be converted into the right to receive cash.
"Percentage Interest" means (i) with respect to each Holder, the percentage set opposite such Holder's name on Schedule 1, as such percentage may be adjusted in connection with a Transfer to an Eligible
Assignee, and (ii) with respect to any Eligible Assignee, the percentage Transferred to such Eligible Assignee by the Transferring Holder.
"Permitted Encumbrances" means any and all (i) Liens for taxes if the same shall at the time not be delinquent or thereafter may be paid without penalty or if such taxes are being contested in good faith by appropriate proceedings promptly initiated and diligently conducted, but only if (A) such contest could not reasonably be expected to have a Material Adverse Effect and (B) such reserves or other appropriate provisions (if any) as shall be required by GAAP shall have been made therefor, (ii) Liens consisting of easements, zoning restrictions or other restrictions on the use of real property that do not materially affect the value of the Assets encumbered thereby or materially impair the ability of the Company or any Business Unit Entity to use such Assets in its business, (iii) Liens of landlords, mechanics, materialmen, warehousemen, carriers or other statutory Liens securing obligations that are not yet due and are incurred in the ordinary course of business, (iv) Liens resulting from deposits to secure payments of workmen's compensation or other social security programs or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids or Contracts in the ordinary course of business and (v) Liens existing on the date hereof or created after the date hereof in accordance with the terms of this Agreement.
"Permitted Investments" has the meaning specified in Section 5.09(f).
"Person" means any individual, firm, corporation, trust, association, company, limited liability company, joint stock company, partnership, joint venture, Governmental Authority or other entity or enterprise.
"Playa Vista Business Unit" means any and all rights, title and interests (subject to any related Liabilities) of the Company and its Subsidiaries and Affiliates in and to (i) the limited partner interests held by HHPLP in the Playa Vista Partnerships, (ii) any securities issued or issuable with respect to any such limited partner interests by way of distribution, (iii) any Assets or securities into which such limited partner interests or securities may be converted in connection with a recapitalization, merger, consolidation or other reorganization or otherwise and (iv) any Cash, Equity Interests or other Assets distributed with respect to such limited partner interests, securities or Assets.
"Playa Vista Business Unit Account" has the meaning specified in Section 2.05.
"Playa Vista Financings" has the meaning specified in Section 4.03(a).
"Playa Vista Management Costs" means, with respect to any Calculation Date, the aggregate amount of direct management costs incurred by the Company and its Subsidiaries in connection with the Playa Vista Business Unit during All Computation Periods which have not been taken into account under Section 2.05 in any Prior Computation Period.
"Playa Vista Management Costs Return" means a cumulative 15% per annum, compounded semi-annually, return on the Playa Vista Management Costs from the last day of the Computation Period during which such costs were actually paid by the Company or any of its Subsidiaries until the Calculation Date for the Computation Period in which such amount is taken into account under Section 2.05(a).
"Playa Vista Partnership Agreements" means (i) the Amended and Restated Agreement of Limited Partnership dated February 14, 1989 of Maguire Thomas Partners--Playa Vista, a California limited partnership, and (ii) the Agreement of Limited Partnership dated September 26, 1990 of Maguire Thomas Partners--Playa Vista Area C, a California limited partnership.
"Playa Vista Partnerships" means (i) Maguire Thomas Partners--Playa Vista, a California limited partnership, and (ii) Maguire Thomas Partners--Playa Vista Area C, a California limited partnership, being the entities formed by the Playa Vista Partnership Agreements.
"Prior Computation Periods" means, with respect to any Calculation Date, all Computation Periods ending prior to, but not on or after, such Calculation Date.
"Process Agent" has the meaning specified in Section 7.13.
"Prohibited Transaction" has the meaning specified in Section 7.04(b).
"Proposed Transaction" has the meaning specified in Section 7.04(c).
"Receipts" means, with respect to any Business Unit for any Computation Period, all Cash actually received by the Company or any of its Subsidiaries during such Computation Period with respect to the operation and business of such Business Unit and the Assets comprising such Business Unit and all adjustments to the records and books of account of such Business Unit made in accordance with the terms of this Agreement which have the effect of increasing the Cash accounts of such Business Unit during such Computation Period, including any and all:
(a) proceeds from the purchaser of any of the Assets comprising such Business Unit (including any purchaser pursuant to an agreement that was entered into prior to the effective date hereof), including, with respect to the General Business Unit, the Howard Hughes Center Business Unit and the Summerlin Business Unit, any proceeds paid (or deemed paid) by the Company or any of its Subsidiaries to the applicable Business Unit Entity for the account of the applicable Business Unit in connection with a Transfer of any of the Assets of the General Business Unit, the Howard Hughes Center Business Unit or the Summerlin Business Unit to the Company or any of its Subsidiaries;
(b) proceeds of indebtedness for borrowed money (including any Company Loan and any Revolving Credit Loan) received subsequent to the effective date hereof;
(c) decreases in any Reserves;
(d) insurance proceeds in respect of any casualty or other insured loss to or affecting any of the Assets comprising such Business Unit;
(e) proceeds in respect of any taking of any of the Assets comprising such Business Unit, or of any rights appurtenant thereto, by condemnation, eminent domain or transfer in lieu thereof for public or quasi-public use under any Law or arising out of any damage or diminution in value to the Assets comprising such Business Unit in connection therewith;
(f) payments (including sinking fund payments) and distributions on or in respect of any Equity Interests in any Person included in the Assets comprising such Business Unit;
(j) Advances received from any other Business Unit; and
(k) repayments by any other Business Unit of any Advance (or any portion thereof) made by such Business Unit;
provided, however, that for purposes of determining Receipts hereunder, to the extent that the Company or any of its Subsidiaries receives proceeds, Cash, Assets or other amounts of a kind described herein that relate both to the Assets comprising such Business Unit and to other Assets of the Company or any of its Subsidiaries, such proceeds, Cash, Assets and other amounts shall be allocated to such Business Unit and to such other Assets by the Company on a reasonable and equitable basis and, to the extent applicable, in accordance with GAAP, and, provided further, that all Receipts actually received by THC and its Subsidiaries during the period commencing January 1, 1996 to and including the Effective Time with respect to the operation and business of the Assets comprising such Business Unit shall be deemed for all purposes of this Agreement to have been actually received by the Company during such period with respect to such Business Unit.
"Registration Statement" has the meaning specified in paragraph (j) of Article III.
"Release" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment (including the abandonment or discarding of barrels, containers and other closed receptacles).
"Representatives" means Platt W. Davis, III, David G. Elkins and Kenneth E. Studdard and their respective successors who shall become such in the manner prescribed in Article V.
"Representatives' Diversion Notice" has the meaning specified in Section 5.10(b).
"Reserve" means, with respect to any Business Unit, any contingency reserve established and maintained in good faith by the Company or the relevant Business Unit Entity with respect to such Business Unit in accordance with GAAP, if applicable, but only if such reserve is reasonably necessary (i) for working capital purposes approved by the Company in good faith, (ii) to fund any payments for indebtedness for borrowed money with respect to such Business Unit to the extent, and only to the extent, that such indebtedness exists on the date hereof or is incurred subsequent to the date hereof (x) in the ordinary course of the business of the Company or any of its Subsidiaries, (y) in compliance with the terms of this Agreement and (z) solely for the purpose of funding Expenditures or (iii) for any other proper purpose; provided, however, that no such reserve may be established or maintained at any time unless, and then only to the extent that, such action is consistent with sound business practices and is in accordance with industry practices.
"Review Committee" has the meaning specified in Section 6.01.
"Revolving Credit Loans" has the meaning specified in Section 4.03(b).
"Rouse Board" means the board of directors of the Company.
"Rouse Common Stock" means the common stock, par value $0.01, of the Company, being the class of common stock of the Company listed on the New York Stock Exchange on the date hereof, and any securities issued or issuable with respect to any such common stock by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.
"Rouse Funding" means the amount (not to exceed $5,000,000) funded by the
Company pursuant to the Funding Requirement in excess of $10,000,000; provided,
however, that solely for the purposes of making the calculations required by
Section 2.05(c) with respect to any Calculation Date, such amount shall be
reduced by an amount equal to 1,000% of the aggregate credits to the Playa Vista
Business Unit Account under Section 2.05(d) for all Prior Computation Periods.
"Rouse Increasing Rate Preferred Stock" means the series of Rouse Preferred Stock created and designated pursuant to the Articles Supplementary to the Charter of the Company attached hereto as Exhibit A and consisting of 10,000,000 authorized and unissued shares.
"Rouse Preferred Stock" means the preferred stock, par value $0.01, of the Company.
"SEC" means the Securities and Exchange Commission of the United States of America or any successor thereof.
"Securities Act" means the Securities Act of 1933 and the rules and regulations promulgated thereunder.
"State and Local Tax Adjustment" means, with respect to any Business Unit for any taxable year, 33 1/3% of the aggregate income taxes that would be imposed on the income of such Business Unit by each State or local tax authority ("jurisdiction") as a result of the location of the Assets of such Business Unit within such jurisdiction or the conduct of business by such Business Unit within such jurisdiction, computed as if the Assets of such Business Unit located in such jurisdiction or the operations of such Business Unit in such jurisdiction were
owned and conducted by a separate corporation which has no contacts or nexus with any other jurisdiction other than the jurisdiction in which such Assets are located or business is conducted.
"Subsidiary" means, with respect to any Person, each other Person of which or in which such Person and its other Subsidiaries own, hold or control, directly or indirectly, Equity Interests having ordinary voting power, in the absence of contingencies, to elect a majority of the board of directors of such other Person, or other Persons performing similar functions for such other Person, or, if there are no such directors or other Persons, having a majority of the general voting power with respect to the policies and activities of such other Person.
"Summerlin" means the tract of land located in Las Vegas, Nevada described on Exhibit G.
"Summerlin Business Unit" means any and all rights, title and interests (subject to any related Liabilities) of the Company and its Subsidiaries and Affiliates in and to (i)(A) the Assets located in Summerlin described on Exhibit H and all improvements thereon (if any) and (B) the available land component of Summerlin Commercial (as designated on Exhibit I), (ii) the Tournament Players Club golf club located in Summerlin, including the 18-hole championship golf course, the clubhouse and related structures, and (iii) to the extent that any of the foregoing are held indirectly by the Company or any Business Unit Entity through any other Person, (A) the Equity Interests held by the Company or such Business Unit Entity in such other Person, (B) any securities issued or issuable with respect to any such Equity Interests by way of distribution, (C) any Assets or securities into which such Equity Interests or securities may be converted in connection with a recapitalization, merger, consolidation or other reorganization or otherwise and (D) any Cash or other Assets distributed with respect to such Equity Interests, securities or Assets.
"Summerlin Business Unit Account" has the meaning specified in Section 2.06.
"Summerlin Business Unit Reduction Amount" means, with respect to the Summerlin Business Unit Account for any Calculation Date, an amount equal to the sum of (i) 3% of the gross cash proceeds from sales of real estate comprising the Summerlin Business Unit during All Computation Periods (except in connection with the allocation of the Fair Market Value of any Assets among the Company and the Holders in which case such amount shall be determined as provided in Section 2.07(d)), reduced by all amounts taken into account in Section 2.06(e)(ii)(D) in all Prior Computation Periods plus (ii) to the extent that all or any portion of the amount obtained under clause (i) is not taken into account in Section 2.06(e)(ii)(D) on the Calculation Date for the Computation Period during which such gross cash proceeds were actually received by the Company or any of its Subsidiaries, a cumulative 7.5% per annum, compounded semi-annually, return on such amount from the Calculation Date for the Computation Period during which such gross cash proceeds were so received until the Calculation Date for the Computation Period in which such amount is taken into account in Section 2.06(e)(ii)(D).
"Summerlin Commercial" means that portion of Summerlin identified as such on Exhibit I and all improvements thereon (except as noted on such Exhibit).
"Summerlin North" means that portion of Summerlin identified as being owned by HHPLP on Exhibit J and all improvements thereon and the available land component of Summerlin Commercial (as designated on Exhibit I).
"Tax Adjustment" means, with respect to any Business Unit for any taxable year, the sum of (i) the product of (A) Business Unit Income or Loss for such Business Unit for such taxable year times (B) the Applicable Tax Rate plus (ii) the State and Local Tax Adjustment for such Business Unit for such taxable year; provided, however, that the Tax Adjustment shall not be a negative number.
"Termination Date" has the meaning specified in Section 4.03(a).
"THC" has the meaning specified in the Preliminary Statements of this Agreement.
"Transfer" means, with respect to any Assets, any sale, Lien, pledge, assignment or other disposition of such Assets, and such term, when used as a verb, shall have correlative meanings.
"Treasury Shares" means shares of Rouse Common Stock held in the treasury of the Company or any shares of authorized and unissued Rouse Common Stock treated as treasury shares for purposes of listing on the New York Stock Exchange by virtue of having been reacquired by the Company and restored to the status of authorized but unissued shares.
"Valuation Date" means (i) with respect to the General Business Unit and the portion of the Summerlin Business Unit comprised of Summerlin North, December 31, 2000, (ii) with respect to the Howard Hughes Center Business Unit and the Playa Vista Business Unit, December 31, 2005 and (iii) with respect to the remaining Assets comprising the Summerlin Business Unit, December 31, 2009.
"Valuation Distribution Date" means, with respect to any Business Unit, the date on which any of the Contingent Shares required to be delivered by the Company to the Holders in connection with the Valuation Date for such Business Unit are actually delivered by the Company to the Holders.
"Valuation Distribution Share Value" means, as of any date (the "computation date"), the average of the closing per share sales prices of Rouse Common Stock during the twenty trading days consisting of the five consecutive trading days ending on the last day of each of the four calendar months immediately preceding the calendar month in which the computation date falls, in each case, on the Composite Tape of the New York Stock Exchange or, if shares of Rouse Common Stock are not then listed on the New York Stock Exchange, on the principal United States securities exchange registered under the Exchange Act on which shares of Rouse Common Stock are then listed or, if shares of Rouse Common Stock are not then listed on any such stock exchange, the average of the average closing bid and ask quotations with respect to a share of Rouse Common Stock during the twenty trading days consisting of the five consecutive trading days ending on the last day of each of the four calendar months immediately preceding the calendar month in which the computation date falls, in each case, on the NASDAQ or any successor system then in use or, if no such quotations are then available, the average of the bid and asked prices with respect to a share of Rouse Common Stock for such trading days, as furnished by a member of the New York Stock Exchange regularly making a market in the Rouse Common Stock selected by the Rouse Board, or, if no such member firm is then making a market in Rouse Common Stock, the fair market value on the computation date of a share of Rouse Common Stock as determined in good faith by a majority of the members of the Rouse Board after consultation with an independent financial advisor of recognized national standing.
Section 1.02. Interpretation. In this Agreement, unless a clear contrary intention appears:
(a) the words "hereof," "herein" and "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement;
(b) reference to any gender includes each other gender and the neuter;
(c) all terms defined in the singular shall have the same meanings in the plural and vice versa;
(d) reference to any Person includes such Person's heirs, executors, personal representatives, administrators, successors and assigns; provided, however, that nothing contained in this clause (d) is intended to authorize any assignment not otherwise permitted by this Agreement;
(e) reference to a Person in a particular capacity excludes such Person in any other capacity or individually;
(f) reference to any Contract means such Contract as amended, supplemented or modified from time to time in accordance with the terms thereof;
(g) all references to Articles, Sections, Schedules and Exhibits shall be deemed to be references to the Articles and Sections of this Agreement and the Schedules and Exhibits attached hereto which are made a part hereof;
(h) the word "including" (and with correlative meaning "include") means including, without limiting the generality of any description preceding such term;
(i) with respect to the determination of any period of time, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding";
(j) the captions and headings contained in this Agreement shall not be considered or given any effect in construing the provisions hereof if any question of intent should arise;
(k) reference to any Law or any Governmental Approval means such Law or Governmental Approval as amended, modified, codified, reenacted, supplemented or superseded in whole or in part, and in effect from time to time;
(l) accounting terms used but not defined herein shall be construed in accordance with GAAP, and whenever the character or amount of any Asset, Liability or item of income or expense is required to be determined, or any consolidation or accounting computation is required to be made, such determination or computation shall be made in accordance with GAAP;
(m) all computations and calculations to be made hereunder in accordance with GAAP shall be made by utilizing such allocations, conventions and methods as are consistent with GAAP and have been utilized by the Company prior to the date hereof or which may be subsequently adopted by the Company in accordance with GAAP except as otherwise provided herein;
(n) the word "knowledge", when used in any representation, covenant or warranty of the Company contained herein, means the actual knowledge of any officer, director, key employee, division head or similar Person of the Company or any of its Subsidiaries;
(o) where any provision of 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; and
(p) no provision of this Agreement shall be interpreted or construed against any Person solely because that Person or its legal representative drafted such provision.
ARTICLE II
CONTINGENT SHARES
Section 2.01. General. As part of the consideration to be received by the Holders in connection with the Merger, the Company shall deliver the Contingent Shares to the Holders (and, if required pursuant to Section 2.08(k), the Representatives) in the amounts and at the times set forth in this Agreement. At the time they are delivered, the Contingent Shares shall be (i) freely tradable shares (other than as a result of the actions, or based upon the status, of the holder thereof) which are registered with the SEC under the Securities Act of 1933, (ii) listed on the New York Stock Exchange, the American Stock Exchange or NASDAQ and (iii) duly authorized, legally and validly issued, fully paid and nonassessable and free of preemptive rights.
Section 2.02. Business Unit Accounts. The Company shall establish and maintain a separate account on its financial books and records with respect to each Business Unit (collectively, the "Business Unit Accounts"). The initial balance of each Business Unit Account shall be zero. Adjustments to the Business Unit Accounts shall be made as of each Calculation Date in accordance with the following provisions of this Article II.
Section 2.03. Value Index for the General Business Unit Account. As of each Calculation Date, the Business Unit Account maintained with respect to the General Business Unit (the "General Business Unit Account") shall be credited with an amount equal to the sum of the following:
(a) an amount equal to 50% of Excess Cash Flow of the General Business Unit for the applicable Computation Period until the aggregate credits to the General Business Unit Account under this clause (a) for All Computation Periods equal a cumulative 7.5% per annum, compounded semi-annually, amount calculated on the Adjusted Net Equity Balance of the General Business Account as of the beginning of each Prior Computation Period;
(b) an amount equal to 50% of (i) Excess Cash Flow for the General Business Unit for the applicable Computation Period minus (ii) 200% of the credits to the General Business Unit Account under clause (a) above for such Computation Period, until the aggregate credits to the General Business Unit Account under this clause (b) for All Computation Periods equal 50% of the Initial Net Equity of the General Business Unit Account; and
(c) an amount equal to 50% of (i) Excess Cash Flow for the General Business Unit for the applicable Computation Period minus (ii) the sum of (A) 200% of the credits to the General Business Unit Account under clauses (a) and (b) above for such Computation Period plus (B) the General Business Unit Reduction Amount as of such Calculation Date.
Section 2.04. Value Index for the Howard Hughes Center Business Unit Account. As of each Calculation Date, the Business Unit Account maintained with respect to the Howard Hughes Center Business Unit (the "Howard Hughes Center Business Unit Account") shall be credited with an amount equal to 80% of (a) Excess Cash Flow for the Howard Hughes Center Business Unit for the applicable Computation Period minus (b) the sum of (i) the Howard Hughes Center Management Costs plus (ii) to the extent not taken into account under this clause (ii) in any Prior Computation Period, an amount equal to a cumulative 15% per annum, compounded semi-annually, return on the Howard Hughes Center Management Costs from the last day of the Computation Period during which such costs were actually paid by the Company or any of its Subsidiaries until the Calculation Date for the Computation Period in which such amount is taken into account under this clause (ii); provided, however, that on each Calculation Date, the credit that would otherwise be made to the Howard Hughes Center Business Unit Account on such Calculation Date shall be reduced by (A) the aggregate of all amounts paid by the Company or any of its Subsidiaries to Tooley & Company pursuant to that certain Managing Developer Agreement dated August 15, 1993 between Tooley & Company and HHPLP during All Computation Periods minus (B) the aggregate of all such amounts taken into account pursuant to this Section 2.04 in all Prior Computation Periods.
Section 2.05. Value Index for the Playa Vista Business Unit Account. As of each Calculation Date, the Business Unit Account maintained with respect to the Playa Vista Business Unit (the "Playa Vista Business Unit Account") shall be credited with an amount equal to the sum of the following:
(a) an amount equal to 90% of (i) Excess Cash Flow of the Playa Vista Business Unit for the applicable Computation Period minus (ii) the sum of (A) the Playa Vista Management Costs plus (B) the Playa Vista Management Costs Return until the aggregate credits to the Playa Vista Business Unit Account under this clause (a) for All Computation Periods equal a cumulative 7% per annum, compounded semi-annually, amount calculated on the Hughes Funding as of the beginning of each Prior Computation Period;
(b) an amount equal to 90% of (i) Excess Cash Flow for the Playa Vista Business Unit for the applicable Computation Period minus (ii) the sum of (A) the Playa Vista Management Costs plus (B) the Playa Vista Management Costs Return taken into account under clause (a) above for the applicable Computation Period plus (C) 10/9ths of the credits to the Playa Vista Business Unit Account under clause (a) above for such Computation Period, until the aggregate credits to the Playa Vista Business Unit Account under this clause (b) for All Computation Periods equal the Hughes Funding;
(c) an amount equal to 10% of (i) Excess Cash Flow for the Playa Vista Business Unit for the applicable Computation Period minus (ii) the sum of (A) the Playa Vista Management Costs plus (B) the Playa Vista Management Costs Return taken into account under clause (a) above for the applicable Computation Period plus (C) 10/9ths of the credits to the Playa Vista Business Unit Account under clauses (a) and (b) above for such Computation Period, until the aggregate credits to the Playa Vista Business Unit Account under this clause (c) for All Computation Periods equal a cumulative 7/9ths of 1% per annum, compounded semi-annually, amount calculated on the Rouse Funding as of the beginning of each Prior Computation Period;
(d) an amount equal to 10% of (i) Excess Cash Flow for the Playa Vista Business Unit for the applicable Computation Period minus (ii) the sum of (A) the Playa Vista Management Costs plus (B) the Playa Vista Management Costs Return taken into account under clause (a) above for the applicable Computation Period plus (C) 10/9ths of the credits to the Playa Vista Business Unit Account under clauses (a) and (b) above for such Computation Period plus (D) 1,000% of the credits to the Playa Vista Business Unit Account under clause (c) above for such Computation Period, until the aggregate credits to the Playa Vista Business Unit Account under this clause (d) for All Computation Periods equal 1/9th of the Rouse Funding;
(e) an amount equal to 75% of (i) Excess Cash Flow for the Playa Vista Business Unit for the applicable Computation Period minus (ii) the sum of (A) the Playa Vista Management Costs plus (B) the Playa Vista Management Costs Return taken into account under clause (a) above for the applicable Computation Period plus (C) 10/9ths of the credits to the Playa Vista Business Unit Account under clauses (a) and (b) above for such Computation Period plus (D) 1,000% of the credits to the Playa Vista Business Unit Account under clauses (c) and (d) above for such Computation Period, until the aggregate credits to the Playa Vista Business Unit Account under this clause (e) for All Computation Periods equal $25,000,000;
(f) an amount equal to 25% of (i) Excess Cash Flow for the Playa Vista Business Unit for the applicable Computation Period minus (ii) the sum of (A) the Playa Vista Management Costs plus (B) the Playa Vista Management Costs Return taken into account under clause (a) above for the applicable Computation Period plus (C) 10/9ths of the credits to the Playa Vista Business Unit Account under clauses (a) and (b) above for such Computation Period plus (D) 1,000% of the credits to the Playa Vista Business Unit Account under clauses (c) and (d) above for such Computation Period plus (E) 4/3rds of the credits to the Playa Vista Business Unit Account under clause (e) above for such Computation Period, until the aggregate credits to the Playa Vista Business Unit Account under this clause (f) for All Computation Periods equal $8,333,333; and
(g) an amount equal to 50% of (i) Excess Cash Flow for the Playa Vista Business Unit for the applicable Computation Period minus (ii) the sum of (A) the Playa Vista Management Costs plus (B) the Playa Vista Management Costs Return taken into account under clause (a) above for the applicable Computation Period plus (C) 10/9ths of the credits to the Playa Vista Business Unit Account under clauses (a) and (b) above for such Computation Period plus (D) 1,000% of the credits to the Playa Vista Business Unit Account under clauses (c) and (d) above for such Computation Period plus (E) 4/3rds of the credits to the Playa Vista Business Unit Account under clause (e) above for such Computation Period plus (F) 400% of the credits to the Playa Vista Business Unit Account under clause (f) above for such Computation Period.
Section 2.06. Value Index for the Summerlin Business Unit Account. As of each Calculation Date, the Business Unit Account maintained with respect to the Summerlin Business Unit (the "Summerlin Business Unit Account") shall be credited with an amount equal to the sum of the following:
(a) an amount equal to 50% of Excess Cash Flow of the Summerlin Business Unit for the applicable Computation Period until the aggregate credits to the Summerlin Business Unit Account under this clause (a) for All Computation Periods equal a cumulative 7.5% per annum, compounded semi-annually, amount calculated on the Adjusted Net Equity Balance of the Summerlin Business Unit Account as of the beginning of each Prior Computation Period;
(b) an amount equal to 50% of (i) Excess Cash Flow for the Summerlin Business Unit for the applicable Computation Period minus (ii) 200% of the credits to the Summerlin Business Unit Account under clause (a) above for such Computation Period, until the aggregate credits to the Summerlin Business Unit Account under this clause (b) for All Computation Periods equal to 50% of the Initial Net Equity of the Summerlin Business Unit;
(c) an amount equal to 75% of (i) Excess Cash Flow for the Summerlin Business Unit for the applicable Computation Period minus (ii) 200% of the credits to the Summerlin Business Unit Account under clauses (a) and (b) above for such Computation Period, until the aggregate credits to the Summerlin Business Unit Account under this clause (c) for All Computation Periods equal $40,000,000;
(d) an amount equal to 25% of (i) Excess Cash Flow for the Summerlin
Business Unit for the applicable Computation Period minus (ii) the sum of (A)
200% of the credits to the Summerlin Business Unit Account under clauses (a) and
(b) above for such Computation Period plus (B) 4/3rds of the credits to the
Summerlin Business Unit Account under clause (c) above for such Computation
Period, until the aggregate credits to the Summerlin Business Unit Account under
this clause (d) for All Computation Periods equal $13,333,333; and
(e) an amount equal to 50% of (i) Excess Cash Flow for the Summerlin
Business Unit for the applicable Computation Period minus (ii) the sum of (A)
200% of the credits to the Summerlin Business Unit Account under clauses (a) and
(b) above for such Computation Period plus (B) 4/3rds of the credits to the
Summerlin Business Unit Account under clause (c) above for such Computation
Period plus (C) 400% of the credits to the Summerlin Business Unit Account under
clause (d) above for such Computation Period plus (D) the Summerlin Business
Unit Reduction Amount as of such Calculation Date.
Section 2.07. Asset Appraisals and Holders' FMV Allocation. (a) The Fair Market Value of the Assets comprising each Business Unit or portion thereof shall be determined by appraisal as of the Valuation Date with respect to such Business Unit or portion thereof. If any of the Assets comprising any Business Unit are held indirectly by the Company or any Business Unit Entity through any other Person, the appraisal required under this Section 2.07 with respect to such Assets shall determine the Fair Market Value of such Assets as owned by such other Person, in which event the Fair Market Value of such Assets for purposes of computing the number of Contingent Shares to be delivered by the Company in connection with such Valuation Date shall be determined by multiplying such Fair Market Value by the percentage interest in the equity of such other Person owned by the Company or such Business Unit Entity, taking into account any preferential rights associated with any Equity Interest owned by any Person therein.
(b) Within five days after the Valuation Date with respect to each Business Unit or portion thereof, the Representatives and the Company shall each appoint one appraiser for each item of Assets included in such Business Unit or portion thereof. The two appraisers so appointed shall, within five days after the second of them has been appointed, appoint a third appraiser and such appraisers shall constitute the "Appraisal Panel" with respect to such item of Assets. If the two appraisers appointed are unable to agree on the third appraiser within such five-day period, either the Representatives or the Company may apply to any court of competent jurisdiction for the appointment of a third appraiser. If either the Representatives or the Company fails to appoint an appraiser within five days after notice from the other that the recipient of such notice has failed to appoint an appraiser within the five-day period referred to above, the appraiser appointed by the other shall be deemed to constitute the Appraisal Panel. Each appraiser shall be a real estate and financial expert who is generally recognized as having current competence in the valuation of Assets similar to the Assets being appraised in the area(s) where such Assets are located. Each appraiser shall be independent and, as such, shall not be an Associate of the Company or any Holder (other than as a result of contractual relationships arising out of such appraisal or any prior appraisal pursuant to this Agreement). The fees and expenses of each Appraisal Panel shall be paid by the Company. Notwithstanding anything to the contrary set forth above, any appraiser may be appointed to appraise more than one item of Assets at any one time, or may be appointed repeatedly over time.
(c) Each Appraisal Panel shall be instructed to determine, within 45 days of its appointment, the Fair Market Value of the Assets comprising the relevant Business Unit or portion thereof as of the relevant Valuation Date. If any Appraisal Panel consists of three appraisers, the Fair Market Value determination that shall differ the most from the second highest Fair Market Value determination of all three appraisers shall be excluded, the remaining two Fair Market Value determinations shall be averaged and such average shall constitute the determination of the Appraisal Panel. Each Appraisal Panel shall furnish the Company and the Representatives with a written report of its determination within the 45-day period referred to above, which report shall (i) be signed by each member of such Appraisal Panel and (ii) specify the amount determined by such Appraisal Panel to be the Fair Market Value of the relevant Assets as of the relevant Valuation Date. The determination of the Fair Market Value of such Assets by the Appraisal Panel shall be final and binding on the Parties.
(d) Upon determining the Fair Market Value of the Assets comprising any Business Unit or portion thereof, the aggregate Fair Market Value of all of the Assets comprising such Business Unit or portion thereof shall be reduced by an amount equal to the amount of all accounts payable and other indebtedness properly reflected on the records and books of account of such Business Unit or portion thereof in accordance with the terms
of this Agreement which have not been taken into account as an Expenditure in determining the Excess Cash Flow for any Computation Period for the applicable Business Unit Account of such Business Unit or portion thereof, excluding any such amounts which were taken into account in determining the Fair Market Value of any of such Assets (the "Adjusted Fair Market Value"). Upon determining the Adjusted Fair Market Value of any Business Unit or portion thereof, an amount equal to such Adjusted Fair Market Value shall be allocated between the Company and the Holders in the same manner that credits to the Business Unit Account for such Business Unit are calculated under Section 2.03, 2.04, 2.05 or 2.06 (as appropriate), as if such Adjusted Fair Market Value were the Excess Cash Flow upon which such calculations are to be made and taking into account all previous credits which have been made to such Business Unit Account based upon Excess Cash Flow for such Business Unit; provided, however, that (i) such allocations shall be determined without regard to any development or management fee otherwise payable to the Company or any of its Subsidiaries, other than any General Business Unit Reduction Amount or Summerlin Business Unit Reduction Amount (which for purposes of this paragraph (d) shall include 3% of the gross proceeds from sales of real estate comprising the applicable Business Unit prior to such Valuation Date irrespective of whether such proceeds have been received by the Company or any of its Subsidiaries) which represents amounts actually received by or owing to the Company or any of its Subsidiaries which have not been taken into account under Section 2.03(c)(ii)(B) or 2.06(e)(ii)(D), respectively, with regard to the sale, prior to the applicable Valuation Date, of any real estate which comprised the General Business Unit or the Summerlin Business Unit, and (ii) the amount determined to be allocable to the Holders as provided above shall be reduced by an amount equal to 50% of the fees and expenses of each Appraisal Panel which have been paid by the Company with respect to such Business Unit or portion thereof. As used herein, "Holders' FMV Allocation", when used with reference to the Assets comprising any Business Unit or portion thereof, means the portion of the Adjusted Fair Market Value of such Assets allocable to the account of the Holders pursuant to this paragraph (d).
(e) For purposes of this Agreement, "Fair Market Value" means, with respect to any Asset, the most probable price in terms of money which such Asset would bring at a fair sale for its highest reasonable use, determined in a commercially reasonable manner, and where the title to such Asset will pass from the seller to the buyer with (i) each of the buyer and the seller acting prudently and knowledgeably, (ii) the price not being affected by any undue stimulus, (iii) neither the buyer nor seller being under compulsion to sell or buy such Asset, (iv) each of the buyer and the seller being typically motivated, well informed and advised and acting in what it considers to be its best interests, (v) a reasonable period of time being allowed for exposure of such Asset in the open market and (vi) the payment of the purchase price being made in cash. In determining the Fair Market Value of any Asset, there shall be taken into account, as appropriate, all Liabilities relating to such Asset to the extent that they are secured by a Lien on such Asset or would otherwise encumber such Asset in the hands of the buyer, and the appraisers shall assume that the Asset being appraised is to be sold in a commercially reasonable manner.
Section 2.08. Delivery of Contingent Shares. (a) The Company shall be obligated to deliver Contingent Shares with respect to each Business Unit (i) following each Calculation Date (including the Valuation Date for such Business Unit) as provided in paragraph (b) below and (ii) following the Valuation Date for such Business Unit or portion thereof as provided in paragraph (c) below.
(b) The aggregate number of Contingent Shares to be delivered by the Company to the Holders with respect to all of the Business Units following each Calculation Date as contemplated by paragraph (a)(i) above shall be determined as of such Calculation Date and shall be a number (the "Computation Period Distribution Amount") equal to the product of (i) 0.992 times (ii) the sum of (A) an amount equal to (x) the aggregate positive balances of the Business Unit Accounts as of such Calculation Date divided by (y) the Current Share Value as of such Calculation Date plus (B) an amount equal to (x) the Dividend Adjustment with respect to the number of Contingent Shares determined under clause (A) above divided by (y) the Current Share Value as of such Calculation Date. The Company shall unconditionally and irrevocably deliver to each Holder (or his designee), as soon as practicable and in any event within 60 days after each Calculation Date, that number of Contingent Shares determined by multiplying (1) the Computation Period Distribution Amount with respect to such Calculation Date by (2) such Holder's Percentage Interest.
(c) The aggregate number of Contingent Shares to be delivered by the Company to the Holders with respect to any Business Unit or portion thereof as contemplated by paragraph (a)(ii) above shall be determined as follows:
(i) In the event that the Company delivers all of the Contingent Shares contemplated by paragraph (a)(ii) above with respect to any Business Unit or portion thereof in one installment, the aggregate number of Contingent Shares to be delivered by the Company shall be determined as of the Valuation Distribution Date for such Business Unit or portion thereof and shall be a number equal to the product of (A) 0.992 times (B) the sum of:
(x) an amount equal to (1) the Holders' FMV Allocation with respect to such Assets divided by (2) the Valuation Distribution Share Value as of the Valuation Distribution Date for such Business Unit or portion thereof plus
(y) an amount equal to (1) the Dividend Adjustment with respect to the number of Contingent Shares determined under clause (x) above divided by (2) the Valuation Distribution Share Value as of such Valuation Distribution Date.
The Company shall unconditionally and irrevocably deliver to each Holder (or his designee), as soon as practicable and in any event within 12 months after the applicable Valuation Date, that number of Contingent Shares determined by multiplying (a) the aggregate number of Contingent Shares being delivered by the Company on such Valuation Distribution Date under this clause (i) by (b) such Holder's Percentage Interest.
(ii) In the event that the Company delivers the Contingent Shares contemplated by paragraph (a)(ii) above with respect to any Business Unit or portion thereof in more than one installment, on each Valuation Distribution Date for such Business Unit or portion thereof, the "Holders' FMV Allocation Amount" shall be calculated, being an amount equal to the product of:
(A) the aggregate number of Contingent Shares being delivered by the Company on such Valuation Distribution Date times
(B) the Valuation Distribution Share Value with respect to such Valuation Distribution Date times
(C) a fraction, the numerator of which is such Valuation
Distribution Share Value and the denominator of which is the sum of
(x) such Valuation Distribution Share Value plus (y) the Dividend
Adjustment with respect to one share of Rouse Common Stock during the
period commencing on the applicable Valuation Date to and including
such Valuation Distribution Date times
(D) 0.992.
The Company shall continue to deliver Contingent Shares to the Holders with respect to such Business Unit or portion thereof pursuant to this clause (ii) until such time as the sum of the Holders' FMV Allocation Amount with respect to each Valuation Distribution Date for such Business Unit or portion thereof equals the Holders' FMV Allocation with respect to such Business Unit or portion thereof. In connection with each such Valuation Distribution Date, the Company shall unconditionally and irrevocably deliver to each Holder (or his designee) a number of Contingent Shares equal to the product of (1) the aggregate number of Contingent Shares being delivered by the Company on such Valuation Distribution Date under this clause (ii) times (2) such Holder's Percentage Interest. The Company shall unconditionally and irrevocably deliver to each Holder (or his designee), as soon as practicable and in any event within 12 months after the applicable Valuation Date, all Contingent Shares required to be delivered under paragraph (a)(ii) above with respect to each Business Unit or portion thereof.
(d) In the event that the Company fails to deliver Contingent Shares on or before the date on which the Company is obligated to deliver such Contingent Shares, the Company shall become obligated to deliver to each Holder that number of additional Contingent Shares which is equal to the quotient of (i) the return, calculated at the Applicable Federal Rate plus 5%, on an amount equal to (A) the number of Contingent Shares
which should have been delivered to such Holder times (B) the Current Share
Value utilized to determine the number of Contingent Shares to be delivered by
the Company in connection with the applicable Calculation Date, such return to
accrue on such amount for the period commencing on the day that such Contingent
Shares were required to be delivered by the Company to such Holder and
continuing thereafter until the Company delivers such Contingent Shares to such
Holder or delivers Contingent Preferred Shares to such Holder in accordance with
Section 4.16 divided by (ii) the Current Share Value utilized to determine the
number of Contingent Shares to be delivered by the Company in connection with
the applicable Calculation Date.
(e) If an Event of Default shall have occurred and be continuing (other
than any Event of Default applicable under the circumstances described in
paragraph (f) below), the Representatives may, by notice in writing delivered to
the Company, (i) accelerate the Company's obligation to deliver Contingent
Shares pursuant to paragraph (c) above or (ii) require the Company, in
satisfaction of the Company's obligation to deliver Contingent Shares
thereafter, to issue and deliver to the Holders an aggregate number of
Contingent Preferred Shares (including fractional shares) determined by dividing
(A) the aggregate number of Contingent Shares which would otherwise be delivered
to the Holders pursuant to paragraph (c) above by (B) the quotient of (x) $100
divided by (y) the Current Share Value as of the date of such notice. Upon
receipt of such notice, the Company shall cause the appraisals described in
Section 2.07 to be initiated and completed as soon as practicable as of the
Calculation Date for the most recent Computation Period ended on or before the
date of such notice, and the Company shall unconditionally and irrevocably
deliver such Contingent Shares or Contingent Preferred Shares, as applicable, as
soon as practicable and in any event within 15 days after the completion of such
appraisals.
(f) If (i) but for the provisions of Section 7.05(b), an Event of Default described in clause (c) of the definition thereof would have occurred and be continuing with respect to any Business Unit Entity solely on account of the non-performance by the Company of any covenant contained in Section 4.10, 4.11, 4.12 or 4.13 as such covenant relates to such Business Unit Entity and (ii) in connection with such circumstances, (A) the Company shall have determined in good faith that it would neither be commercially reasonable nor in the best interests of the Company and the Holders for the Company to take, or cause to be taken, the actions necessary to avoid such non-performance and (B) the Company shall have given prior written notice of such non-performance to the Representatives confirming that the Company has made the determination described in subclause (A) and setting forth, in reasonable detail, the reasons therefor, then the Representatives may, by notice in writing delivered to the Company, (i) accelerate the Company's obligation to deliver Contingent Shares pursuant to paragraph (c) above with respect to the Assets comprising the Business Unit to which such non-performance relates or (ii) require the Company, in satisfaction of the Company's obligation to deliver Contingent Shares thereafter with respect to the Assets comprising the Business Unit to which such non-performance relates, to issue and deliver to the Holders an aggregate number of Contingent Preferred Shares (including fractional shares) determined by dividing (A) the aggregate number of Contingent Shares which would otherwise be delivered to the Holders pursuant to paragraph (c) above by (B) the quotient of (x) $100 divided by (y) the Current Share Value as of the date of such notice. Upon receipt of such notice, the Company shall cause the appraisals described in Section 2.07 to be initiated and completed with respect to such Assets as soon as practicable as of the Calculation Date for the most recent Computation Period ended on or before the date of such notice, and the Company shall unconditionally and irrevocably deliver such Contingent Shares or Contingent Preferred Shares, as applicable, as soon as practicable and in any event within 15 days after the completion of such appraisals; provided, however, that in connection with any appraisal conducted pursuant to this paragraph (f), the Appraisal Panel shall be instructed to determine the Fair Market Value of the relevant Assets as if no Person is required to make any additional contribution to the capital of, or investment in, or loan or advance in respect of, such Assets.
(g) If any foreclosure on, or the exercise of any similar remedy with respect to, any of the Assets comprising any Business Unit shall occur or (i) an Event of Default described in clause (e), (f), (g), (h), (i) or (j) of the definition thereof shall have occurred and be continuing with respect to any Business Unit Entity other than HHPLP, as if such clauses applied to each such Business Unit Entity instead of the Company and HHPLP and (ii) if, in connection with such Event of Default, (A) the Company shall have determined in good faith that it would neither be commercially reasonable nor in the best interests of the Company and the Holders for the Company to take, or cause to be taken, the actions necessary to avoid such Event of Default and (B) the Company shall have given prior written notice of such Event of Default to the Representatives confirming that the Company has made the determination described in subclause (A) and setting forth, in reasonable detail, the reasons therefor, then in any such event the Representatives may, by notice in writing delivered to the Company, (i) accelerate the Company's
obligation to deliver Contingent Shares pursuant to paragraph (c) above with respect to any Assets comprising any Business Unit which are owned by such Business Unit Entity or (ii) require the Company, in satisfaction of the Company's obligation to deliver Contingent Shares thereafter with respect to any Assets comprising any Business Unit which are owned by such Business Unit Entity, to issue and deliver to the Holders an aggregate number of Contingent Preferred Shares (including fractional shares) determined by dividing (A) the aggregate number of Contingent Shares which would otherwise be delivered to the Holders pursuant to paragraph (c) above by (B) the quotient of (x) $100 divided by (y) the Current Share Value as of the date of such notice. Upon receipt of such notice, the Company shall cause the appraisals described in Section 2.07 to be initiated and completed with respect to such Assets as soon as practicable as of the Calculation Date for the most recent Computation Period ended on or before the date of such notice, and the Company shall unconditionally and irrevocably deliver such Contingent Shares or Contingent Preferred Shares, as applicable, as soon as practicable and in any event within 15 days after the completion of such appraisals; provided, however, that in connection with any appraisal conducted pursuant to this paragraph (g), the Appraisal Panel shall be instructed to determine the Fair Market Value of the relevant Assets as if no Person is required to make any additional contribution to the capital of, or investment in, or loan or advance in respect of, such Assets.
(h) Except as otherwise required by applicable tax Laws, in connection with each delivery of Contingent Shares or Contingent Preferred Shares pursuant to this Agreement, the Contingent Stock Distribution Value of each Holder shall be discounted to the effective date hereof at the Contingent Stock Distribution Discount Rate to determine the amount of contingent stock distribution principal (the "Contingent Stock Distribution Principal") and the amount of Contingent Stock Distribution Interest. Contingent Stock Distribution Interest shall be treated by the Company and each Holder as interest for federal income tax purposes.
(i) All Contingent Shares to be delivered hereunder shall be newly-issued shares of Rouse Common Stock or, at the election of the Company, Treasury Shares; provided, however, that (i) in the event the Company is precluded or otherwise unable, for any reason, to deliver newly-issued shares of Rouse Common Stock to the Holders, the Company shall deliver or cause to be delivered Treasury Shares to the Holders and (ii) in the event the Company is precluded or otherwise unable, for any reason, to deliver Treasury Shares to the Holders, the Company shall deliver or cause to be delivered newly-issued shares of Rouse Common Stock to the Holders.
(j) Notwithstanding anything to the contrary contained herein, at any time at which the Company is obligated to deliver Contingent Shares to the Holders pursuant to the terms of this Agreement, the Company shall not deliver any fractional shares of Rouse Common Stock to any Holder and, in lieu of delivering such fractional shares, the following provisions shall apply:
(i) with respect to any fractional shares which would have otherwise been delivered by the Company to a Holder based upon Excess Cash Flow:
(A) if the last Calculation Date with respect to any
Business Unit shall not have occurred, on the next succeeding
Calculation Date the Company shall deliver to such Holder a number of
Contingent Shares equal to the sum of (x) such number of fractional
shares plus (y) the number of Contingent Shares which the Company is
obligated to deliver to such Holder based upon Excess Cash Flow for
the Computation Period ending on such succeeding Calculation Date plus
(z) a number of Contingent Shares equal to (1) the Dividend Adjustment
with respect to a share of Rouse Common Stock during the period
commencing on the Calculation Date on which such fractional shares
would have otherwise been delivered and ending on the date on which
the Contingent Shares to be delivered by the Company in connection
with such succeeding Calculation Date are actually delivered to the
Holders multiplied by (2) the number of such fractional shares divided
by (3) the Current Share Value utilized in determining the number of
Contingent Shares to be delivered by the Company in connection with
such succeeding Calculation Date; and
(B) if no Calculation Date with respect to any Business Unit or portion thereof will occur after such Calculation Date, the Company shall pay such Holder an amount in cash equal to such fractional shares times the Current Share Value utilized in determining the
number of Contingent Shares to be delivered by the Company in connection with such Calculation Date; and
(ii) with respect to any fractional shares which would otherwise have been delivered by the Company to the Holders in connection with any Valuation Date, the Company shall pay each Holder an amount in cash equal to (A) the number of fractional shares which would have otherwise been delivered by the Company to such Holder in connection with such Valuation Date times (B) the Valuation Distribution Share Value utilized in determining the number of Contingent Shares to be delivered by the Company to the Holders in connection with such Valuation Date.
(k) Notwithstanding anything to the contrary contained in this Agreement, in the event that the Company receives a Representatives' Diversion Notice in accordance with the provisions of Section 5.10(b), the Company shall, in lieu of delivering the number of Contingent Shares described in such Representatives' Diversion Notice to the Holders, deliver such Contingent Shares to the Representatives, in which event the number of Contingent Shares otherwise deliverable to the Holders shall be appropriately reduced pro rata in accordance with their respective Percentage Interests.
Section 2.09. Debits to the Business Unit Accounts. Upon the delivery by the Company to the Holders of all Contingent Shares required to be delivered in connection with any Calculation Date, the Business Unit Account with respect to which such Contingent Shares were delivered shall be debited by an amount equal to the product of (i) the sum of the number of Contingent Shares so delivered by the Company plus the aggregate number of fractional shares which were not delivered to the Holders in accordance with the provisions of Section 2.08(j) times (ii) the Current Share Value utilized in determining the number of Contingent Shares delivered times (iii) 1.008.
Section 2.10. Tax Adjustments. (a) The Company shall compute the pro forma taxable income or loss for each Business Unit ("Business Unit Income or Loss") for each taxable year, utilizing the method of tax accounting and, to the extent applicable, the elections employed in the preparation of the consolidated federal income tax return of the group of corporations of which the Company is the common parent (the "Company Consolidated Group") for such taxable year. Notwithstanding the form of ownership of a Business Unit, such computation shall be made as though each Business Unit was a separate corporation filing a separate return of taxable income which was taxed at the Applicable Tax Rate, as determined with respect to such Business Unit. The Business Unit Income or Loss for each Business Unit shall be computed utilizing the actual items of income, gain, loss and deduction attributable to the Assets, Liabilities and operations of such Business Unit; provided, however, that in making such computation, the State and Local Tax Adjustment shall be taken as a deduction.
(b) If such calculation results in a Business Unit Income or Loss which is a loss for such taxable year, the Tax Adjustment for such year shall be zero and such loss shall be carried forward and treated as an item of deduction that will reduce any calculation of Business Unit Income or Loss of such Business Unit which results in income in any future period in accordance with the principles of Section 172(b) of the Code and the regulations promulgated thereunder. No unutilized Business Unit Income or Loss which is a loss will be carried back to any prior taxable year.
(c) The Company shall estimate the Business Unit Income or Loss of each Business Unit for each Computation Period and, based upon such estimates, shall compute the estimated Tax Adjustment for such Computation Period for each Business Unit (the "Computation Period Tax Adjustment"). In the event and to the extent that the Tax Adjustment with respect to any Business Unit for the calendar year is different than the aggregate Computation Period Tax Adjustments for such Business Unit for such year, such difference shall be added to, or subtracted from, the next succeeding Computation Period Tax Adjustment for such Business Unit until fully accounted for.
(d) The Business Unit Income or Loss and the Computation Period Tax Adjustments for each Business Unit for each Computation Period shall be determined by the Company within 20 days following the end of such Computation Period.
(e) The Business Unit Income or Loss and the Computation Period Tax Adjustments for each Business Unit for each taxable year shall be reviewed and reported on by KPMG Peat Marwick LLP (or other independent certified public accountants satisfactory to the Representatives) within 90 days following the end of such taxable year. Such report shall be submitted to the Review Committee for its approval within 90 days following the end of such taxable year and, once approved, shall (except for adjustments contemplated by this Section 2.10) be final, binding and conclusive for purposes of the determinations to be made pursuant hereto.
(f) The Company shall furnish to the Representatives all information and documentation necessary or useful in the computation of each Computation Period Tax Adjustment and the Tax Adjustment. The Company shall permit the Representatives, or their designated representatives, to have full access, at any reasonable time and from time to time during the term of this Agreement and for a period of five years thereafter, to all relevant tax returns and supporting papers of the Company Consolidated Group and their Affiliates, wherever located, and shall furnish, and request that the independent accountants of the Company Consolidated Group furnish, to the Representatives, such additional tax and other information and documents in the possession of such Persons with respect to the Company Consolidated Group and the computation of each Computation Period Tax Adjustment and the Tax Adjustment as the Representatives may from time to time reasonably request.
Section 2.11. Company Loans. The Company may, at its option, make loans and
advances to any Business Unit Entity for the account of any Business Unit from
time to time for the sole purpose of providing working capital and other funds
for use in connection with such Business Unit as contemplated by this Agreement
(each a "Company Loan"); provided, however, that prior to making any Company
Loan, the Company shall pay or cause to be paid in cash any payable owed to such
Business Unit by the Company or any Affiliate of the Company, irrespective of
whether the same are due and payable. To the extent that any Business Unit
requires funds for such purposes, the Company may, at its option, (a) cause the
applicable Business Unit Entity to borrow such funds for the account of such
Business Unit from a financial institution on commercially reasonable terms or
(b) make a Company Loan to such Business Unit Entity for the account of such
Business Unit. The interest rate applicable to each Company Loan shall be no
greater than the interest rate that would be charged to the relevant Business
Unit Entity for a comparable loan made to such Business Unit Entity in an
arms'-length transaction with a Person that is not an Associate of the Company;
provided, however, that if such Business Unit Entity could not reasonably be
expected to obtain such funds through a borrowing from a financial institution
at a per annum interest rate of less than 15%, then such Company Loan shall
accrue interest at the rate of 15% per annum.
Section 2.12. Advances. In the event that (a) any Business Unit has insufficient funds for working capital purposes, (b) the Company is not obligated to make a Revolving Credit Loan to the applicable Business Unit Entity pursuant to Section 4.03(b), (c) third party financing to fund such working capital requirements is unavailable to such Business Unit Entity and (d) the Company elects not to make a Company Loan to such Business Unit Entity for the account of such Business Unit, such Business Unit Entity or any other Business Unit Entity may, with the unanimous consent of the Review Committee, loan funds to such Business Unit from any other Business Unit (each such loan, an "Advance"); provided, however, that prior to any Advance being made to such Business Unit, the Company shall pay or cause to be paid in cash any payable owed to such Business Unit by the Company or any Affiliate of the Company, irrespective of whether the same are due and payable. Advances shall not bear any interest and shall be repaid by the recipient Business Unit to the Business Unit making such Advance on each Calculation Date thereafter, to the extent that the Excess Cash Flow of such Business Unit as of such Calculation Date exceeds its working capital requirements after giving effect to any payments required to be made to the Company pursuant to Section 4.03(c).
Section 2.13. Underfunding of Employee Benefit Plans. Notwithstanding anything to the contrary contained in this Agreement, in the event that (a) the termination of the qualified defined benefit plan currently maintained by THC results in any costs or benefit payments (other than taxes) paid or to be paid or incurred by THC or any of its Subsidiaries as the result of such termination (after all costs that may be paid by such plan are paid by the plan) which are in excess of the reversion amount (before taxes), if any, of such plan on the date of its liquidation (the amount of such costs or benefit payments together with interest accruing thereon at the rate of 5% from the date such costs are incurred or benefit payments made until the date such benefit costs or payments are deducted as set forth below being referred to as the "Underfunded Amount") and (b) the Business Unit Accounts have an aggregate positive balance as of any Calculation Date ending after the final determination of such Underfunded Amount, then the aggregate positive balances of the Business Unit Accounts shall be reduced, prior to
calculating the aggregate number of Contingent Shares to be delivered by the Company to the Holders pursuant to Section 2.08(b), by an amount equal to the lesser of (i) the aggregate positive balances of the Business Unit Accounts as of such Calculation Date and (ii) the amount of such Underfunded Amount which has not previously been utilized to reduce the aggregate positive balances of the Business Unit Accounts; provided, however, that in no event shall the aggregate amount of such reduction to the aggregate positive balances of the Business Unit Accounts exceed the amount of such Underfunded Amount. The Representatives shall be entitled to participate in all material decisions related to the termination of such Pension Plan, including the bidding and selection of any annuities purchased to fund the obligations of such Pension Plan, and Rouse shall keep the Representatives fully informed of the status and details of all actions taken or proposed to be taken in connection therewith.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Holder and each Representative that:
(a) the Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Maryland and has all requisite corporate power and authority to own, lease and operate its Assets, to carry on its business as it is now being conducted and proposed to be conducted and to execute and deliver this Agreement and consummate the transactions contemplated hereby;
(b) each Subsidiary of the Company is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and has all requisite power and authority to own, lease and operate its Assets and to carry on its business as it is now being conducted and proposed to be conducted, except where the failure to be so organized, qualified and in good standing, alone or together with all such other failures, could not reasonably be expected to have a Material Adverse Effect;
(c) the Company and each of its Subsidiaries is duly qualified to do business and is in good standing in each jurisdiction in which its Assets or the nature of the business conducted by it makes such qualification necessary and where failure to so qualify would have a Material Adverse Effect;
(d) the execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Rouse Board and no other corporate proceedings or approvals on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby;
(e) this Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement may be limited by applicable Debtor Relief Laws and general equitable principles;
(f) except as provided herein, no Governmental Approvals and no notifications, filings or registrations to or with any Governmental Authority or any other Person is or will be necessary for the valid execution and delivery by the Company of this Agreement or the consummation of the transactions contemplated hereby, or the enforceability hereof, other than those which have been obtained or made and are in full force and effect and those which if not made or obtained, as the case may be, would not, individually or in the aggregate, have a Material Adverse Effect;
(g) the execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated hereby do not and shall not, by the lapse of time, the giving of notice or otherwise, (i) constitute a breach or violation of, or default under, any Law, any provision contained in the charter, bylaws or similar governing instruments of the Company or any of its Subsidiaries or any provision contained in any Governmental Approval or writ, injunction, order, judgment or decree of any Governmental Authority or any Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective Assets is bound or affected, which breach, violation or default, alone or together with all other such breaches, violations and defaults, could reasonably be expected to have a Material
Adverse Effect or (ii) result in or require the creation of any Lien upon any of the Assets comprising any Business Unit;
(h) each share of Rouse Common Stock delivered pursuant to this Agreement will, at the time of its delivery, be (i) freely tradable (other than as a result of the actions, or based upon the status, of the holder thereof) and registered with the SEC under the Securities Act, (ii) listed on the New York Stock Exchange, the American Stock Exchange or NASDAQ and (iii) duly authorized, legally and validly issued, fully paid and nonassessable and free of preemptive rights;
(i) each share of Rouse Preferred Stock delivered pursuant to this
Agreement will, at the time of its delivery, (i) be duly authorized, legally and
validly issued, fully paid and nonassessable and free of preemptive rights and
(ii) have the rights, preferences and privileges set forth in the Articles
Supplementary to the Charter of the Company attached hereto as Exhibit A which
have been duly adopted by the Company and filed with the Maryland State
Department of Assessments and Taxation;
(j) the Company has heretofore filed with the SEC a registration statement on Form S-4 (No-333-01693) (the "Registration Statement"), covering the shares of Rouse Common Stock issuable pursuant to the Merger Agreement and the shares of Rouse Common Stock and Rouse Preferred Stock issuable pursuant to this Agreement;
(k) the Registration Statement has become effective in accordance with the provisions of the Securities Act, and no stop order suspending such effectiveness has been issued and is in effect and no proceedings for that purpose have been instituted by the SEC or any other Governmental Authority;
(l) the securities covered by the Registration Statement have been registered or qualified under all blue sky and other securities Laws necessary to enable the Holders to consummate the disposition of such securities by the Holders;
(m) the Company has reserved, free from preemptive rights, out of its authorized but unissued shares of Rouse Common Stock or Treasury Shares, such number of shares of Rouse Common Stock as shall be issuable pursuant to this Agreement, such reservation being solely for the issuance of Contingent Shares pursuant to this Agreement;
(n) the Company has reserved, free from preemptive rights, out of its authorized but unissued shares of Rouse Preferred Stock, such number of shares of Rouse Preferred Stock as shall be issuable pursuant to this Agreement, such reservation being solely for the issuance of Contingent Preferred Shares pursuant to this Agreement;
(o) there are no Claims pending or, to the knowledge of the Company, threatened, and the Company has no knowledge of the basis for any Claim, which, either alone or in the aggregate, (i) seeks to restrain or enjoin the execution and delivery of this Agreement or the consummation of any of the transactions contemplated hereby or the performance of any obligation of the Company or any Business Unit Entity or (ii) could reasonably be expected to have a Material Adverse Effect;
(p) there are no judgments or outstanding orders, injunctions, decrees,
stipulations or awards (whether rendered by a Governmental Authority or by an
arbitrator) against the Company or any of its Subsidiaries which prohibit or
restrict or could reasonably be expected to have a material adverse effect on
(i) the Company's ability to perform its obligations under this Agreement, (ii)
the value, condition or marketability of any Assets comprising any Business
Unit, (iii) the validity, legality or enforceability of this Agreement, (iv) the
ability of any Holder to exercise or enforce any of its rights, powers or
remedies under this Agreement or (v) the ability of any Representative or any
member of the Review Committee to perform any of his duties or obligations, or
to exercise or enforce any of his rights, powers or remedies, under this
Agreement;
(q) none of the factual information hereafter furnished by the Company or any Business Entity to the Review Committee, the Representatives or the Holders for purposes of or in connection with this
Agreement or any transaction contemplated hereby will be intentionally untrue, incorrect, incomplete or misleading in any respect as of the date as of which such information is dated or certified; and
(r) the Company has no knowledge of any fact, circumstance, happening, occurrence, event or any other matter which, alone or in the aggregate, could reasonably be expected to have a material adverse effect on (i) the Company's ability to perform its obligations under this Agreement, (ii) the validity, legality or enforceability of this Agreement, (iii) the ability of any Holder to exercise or enforce any of its rights, powers or remedies under this Agreement or (iv) the ability of any Representative or any member of the Review Committee to perform any of his duties or obligations, or to exercise or enforce any of his rights, powers or remedies, under this Agreement.
Each of the foregoing representations and warranties is made only as of the
date hereof, except that the representations and warranties contained in clauses
(g), (h), (i), (q) and (r) shall also apply prospectively as contemplated
thereby.
ARTICLE IV
CERTAIN COVENANTS
Section 4.01. Information. The Company shall furnish to the Review Committee and the Representatives all of the following:
(a) as soon as available (and in any event not later than 60 days) after the end of each Computation Period, a report prepared and certified by an Authorized Officer with respect to each Business Unit, prepared as of the last day of such Computation Period, setting forth the amount and purpose of each Reserve established and/or maintained by the Company or any Business Unit Entity with respect to any of the Business Units, accompanied by a certificate of such Authorized Officer stating (i) that all such Reserves comply with and satisfy the definition of "Reserve" contained in this Agreement and (ii) that the signer has reviewed this Agreement and has made, or caused to be made under his supervision, a review of the transactions of the Company and each Business Unit Entity relating to such Computation Period and that such review did not disclose the existence during or at the end of such Computation Period of any Event of Default or, if any Event of Default exists, specifying the nature and period of existence thereof and what action the Company or such Business Unit Entity has taken, is taking or proposes to take with respect thereto;
(b) as soon as available (and in any event not later than 60 days) after the end of each Computation Period, a report prepared and certified by an Authorized Officer with respect to each Business Unit, prepared as of the last day of such Computation Period (i) specifying (A) any and all Receipts received by the Company, any Business Unit Entity or any of their respective Subsidiaries during such Computation Period with respect to such Business Unit and the aggregate amount of any and all Receipts received by the Company, any Business Unit Entity or any of their respective Subsidiaries during the period from the effective date hereof to and including the last day of such Computation Period with respect to such Business Unit, (B) any and all Expenditures incurred by the Company, any Business Unit Entity or any of their respective Subsidiaries during such Computation Period with respect to such Business Unit and the aggregate amount of any and all Expenditures incurred by the Company, any Business Unit Entity or any of their respective Subsidiaries during the period from the effective date hereof to and including the last day of such Computation Period with respect to such Business Unit and (C) the amount of Excess Cash Flow with respect to such Business Unit as of the last day of such Computation Period and the aggregate amount of Excess Cash Flow during the period from the effective date hereof to and including the last day of such Computation Period with respect to such Business Unit and (ii) showing in reasonable detail the manner in which such amounts were calculated;
(c) as soon as available (and in any event not later than 60 days) after the end of each Computation Period (except the last Computation Period of any calendar year), an operating statement with respect to each Business Unit for such Computation Period and the portion of the calendar year then ended, together with a certificate of an Authorized Officer stating that such operating statement has been prepared (i) in accordance with GAAP (except that such operating statement need not include footnotes as required by GAAP) and (ii) using such allocations, conventions and methods as are consistent with GAAP and have been consistently utilized by the Company or the applicable Business Unit Entity with respect to such Business Unit;
(d) as soon as available (and in any event not later than 120 days) after the end of each calendar year, an operating statement with respect to each Business Unit for such calendar year, together with a certificate of an Authorized Officer stating that such operating statement has been prepared (i) in accordance with GAAP (except that such operating statement need not include footnotes as required by GAAP) and (ii) using such allocations, conventions and methods as are consistent with GAAP and have been consistently utilized by the Company or the applicable Business Unit Entity with respect to such Business Unit;
(e) promptly upon the Company or any Business Unit Entity obtaining knowledge thereof, written notice of the existence of any Event of Default specifying the nature and period of existence thereof and what action the Company or such Business Unit Entity has taken, is taking or proposes to take with respect thereto;
(f) promptly upon any officer or director of the Company, of any Business Unit Entity or of any of their respective Subsidiaries obtaining knowledge thereof, notice of (i) any violation of, noncompliance with or remedial obligations under any Governmental Approval or Environmental Law involving or directly affecting any of the Assets comprising any Business Unit, (ii) any Release or threatened Release involving or directly affecting in any material respect any of the Assets comprising any Business Unit and (iii) the amendment or revocation of any Governmental Approval with respect to any of the Assets comprising any Business Unit that, in any such case referred to in this paragraph (f), could reasonably be expected to have a Material Adverse Effect;
(g) promptly upon receipt thereof by any officer or director of the Company, of any Business Unit Entity or of any of their respective Subsidiaries, and in any event within ten days after such receipt, a copy of (i) any notice or Claim involving or directly affecting any of the Business Units or any of the Assets comprising any Business Unit to the effect that the Company, any Business Unit Entity, any of their respective Subsidiaries or any other Person is or may be liable to any Person as a result of the Release by the Company, any Business Unit Entity, any of their respective Subsidiaries or any other Person of any Hazardous Material into the environment and (ii) any notice involving or directly affecting any of the Business Units or any of the Assets comprising any Business Unit alleging any violation of any Governmental Approval or Environmental Law by the Company, any Business Unit Entity, any of their respective Subsidiaries or any other Person, which, in any case referred to in this paragraph (g), could reasonably be expected to have a Material Adverse Effect;
(h) promptly upon any officer or director of the Company, of any Business Unit Entity or of any of their respective Subsidiaries obtaining knowledge thereof, and in any event within ten days thereafter, written notice of the institution of, or threat of, any Claim or any other matter involving or directly affecting any of the Business Units or any of the Assets comprising any Business Unit that could reasonably be expected to have a Material Adverse Effect and that has not previously been disclosed in writing to the Review Committee and the Representatives pursuant to this Agreement, and such information with respect to any material developments in any such Claim as the Review Committee or any Representative may reasonably request from time to time;
(i) promptly upon any officer or director of the Company, of any Business Unit Entity or of any of their respective Subsidiaries obtaining knowledge thereof, notice of (i) any taking, or proposal to take, any action with respect to a Lien on any of the Assets comprising any Business Unit or (ii) the creation or incurrence of any Lien (other than Permitted Encumbrances) on any of the Assets comprising any Business Unit, in any such case, which could reasonably be expected to have a Material Adverse Effect;
(j) promptly after the sending or filing thereof, copies of all proxy statements which the Company sends to any holders of any of its securities, and copies of all regular and periodic reports and all registration statements (other than on Form S-8) which the Company files with the SEC or any national securities exchange;
(k) promptly upon their distribution, copies of all press releases and other written statements made available generally by the Company to the public which relate to any of the Business Units or any of the Assets comprising any Business Unit or which relate to any event, circumstance or condition which could reasonably be expected to have a Material Adverse Effect; and
(l) promptly, such other information in the possession of the Company, any Business Unit Entity or any of their respective Subsidiaries as any member of the Review Committee may from time to time reasonably request respecting the Business Units or the Assets comprising any Business Unit.
Section 4.02. Ownership of Assets of the Business Units. The Company shall
cause the Assets comprising each Business Unit to be maintained at all times in
(a) HHPLP or (b) with the prior written consent of the Representatives, a (i)
separate partnership in which the Company and its Subsidiaries are the only
partners or (ii) direct or indirect wholly-owned Subsidiary of the Company (each
of HHPLP and such partnerships or wholly-owned Subsidiaries being herein called
a "Business Unit Entity"). The Company shall at all times be the direct or
indirect owner of 100% of the Equity Interests of each Business Unit Entity. The
Assets of each Business Unit Entity shall be developed and operated separate and
apart from other Assets now owned or hereafter acquired by the Company or any of
its Subsidiaries or Affiliates and shall be accounted for and administered
hereunder as a single functional unit. The Company shall, as soon as practicable
and in any event within 30 days after the execution and delivery of this
Agreement, amend the Sixth Amended and Restated Agreement of Limited Partnership
of HHPLP, dated as of January 1, 1990, to include provisions which, and the
Company shall cause each other Business Unit Entity to have governing documents
or be a party to Contracts which, (A) implement the provisions of this Article
IV, including provisions which prohibit such Business Unit Entity from taking,
directly or indirectly, any of the actions described in Section 4.05 without the
prior written consent of a majority of the members of the Review Committee, (B)
prohibit such Business Unit Entity from developing commercial buildings on any
of the Assets comprising any Business Unit, (C) prohibit such Business Unit
Entity, without the prior unanimous approval of the Review Committee, from
Transferring any of the Assets comprising any Business Unit other than in
transactions entered into on terms no less favorable than those that could be
obtained in an arm's-length transaction with a Person that is not an Associate
of the Company or any Business Unit Entity and which provide consideration to
the Company or such Business Unit Entity in an amount at least equal to the Fair
Market Value of such Assets and (D) prohibit such Business Unit Entity from
amending, modifying or supplementing its governing documents or such Contracts
in any manner which affects the provisions described in clauses (A) through (C)
above or this clause (D). The Company shall, to the extent reasonably
practicable, consult with the Review Committee before initiating or responding
to any material Claim affecting any Business Unit or any of the Assets
comprising such Business Unit. The Representatives may, by an instrument in
writing, waive compliance by the Company with any provision of this Section
4.02, either generally or in a particular instance and either retroactively or
prospectively.
Section 4.03. Capitalization of Business Units. (a) With respect to the Playa Vista Business Unit, capital requirements shall be as determined under the Playa Vista Partnership Agreements. At the present time, capital requirements are mutually determined by Maguire Thomas Partners and by HHPLP or its Affiliates. However, such requirements are currently under review in connection with the restructuring of the Playa Vista Partnership Agreements to permit participation by Dreamworks SKG and the related equity and debt financings which are contemplated in connection with such restructuring (the "Playa Vista Financings"). To the extent that HHPLP (which term includes for purposes of the remaining provisions of this paragraph (a) any Business Unit Entity succeeding to the interests of HHPLP in the Assets comprising the Playa Vista Business Unit) or its Affiliates, together with Maguire Thomas Partners, determine to contribute additional capital to either of the Playa Vista Partnerships (including any contributions in connection with the Dreamworks SKG restructuring), the Company shall make such contributions to the Playa Vista Partnerships on behalf of HHPLP or its Affiliates in an amount not to exceed $15,000,000 (the "Funding Requirement"); provided, however, that the Company shall not be obligated to make any such contribution unless (i) with respect to all or any portion of the first $10,000,000 of the Funding Requirement, a majority of the members of the Review Committee determine that the Company should make such contribution at such time and (ii) with respect to all or any portion of the Funding Requirement in excess of $10,000,000, all of the members of the Review Committee determine that the Company should make such contribution at such time and, provided further, that any capital contributions made to the Playa Vista Partnerships during the period commencing January 1, 1996 to and including the Effective Time shall be deemed for all purposes of this Agreement to have been made by the Company pursuant to the Funding Requirement. If funding is provided by the Company pursuant to the Funding Requirement, the Holders shall be entitled to the benefit of the Hughes Funding pursuant to the Value Indices with respect to the Playa Vista Business Unit. If the Company funds less than $10,000,000 pursuant to the Funding Requirement, the Company shall, on or before the tenth day after the Termination Date, credit the Playa Vista Business Unit Account with an amount equal to (A) $10,000,000 minus the amount of the Hughes Funding plus (B) a 7% per annum, compounded semi-annually, return on such amount
accruing from the effective date hereof until such amount is credited to the Playa Vista Business Unit Account. To the extent that all or any portion of the Funding Requirement is not funded nor required to be funded pursuant to this paragraph (a) and is not credited nor required to be credited to the Playa Vista Business Unit Account pursuant to the immediately preceding sentence, the obligation of the Company to fund such amount shall expire at such time as the Playa Vista Financings are consummated or, if not consummated, at such time as the agreements between HHPLP or its Affiliates and Maguire Thomas Partners for mutually agreed commitments to capital for the project expire or are terminated (the "Termination Date").
(b) Subject to the terms and conditions hereof, during the period commencing on the Effective Date and continuing thereafter to and until the date which is nine months after the Effective Date, the Company shall, from time to time, make a loan or loans to the Business Unit Entities owning the Assets comprising the General Business Unit, the Howard Hughes Center Business Unit and the Summerlin Business Unit, on a revolving credit basis, in an aggregate principal amount not at any time exceeding $25,000,000 (the "Revolving Credit Loans"); provided, however, that if, on the date which is nine months after the Effective Date, the unutilized portion of the commitment under the working capital component of the Bank of America credit facility currently available to HHPLP, or any replacement facility, is less than $20,000,000, then the Company shall continue to, from time to time, make Revolving Credit Loans to such Business Unit Entities until the date which is two years after the Effective Date, in an aggregate principal amount not at any time exceeding $20,000,000 minus the unutilized portion of such commitment on the date which is nine months after the Effective Date. Each Revolving Credit Loan made by the Company to a Business Unit Entity shall be made solely for the account of a single Business Unit. In no event will the Company be obligated to make any Revolving Credit Loan to any Business Unit Entity unless such Business Unit Entity could not reasonably be expected to obtain funds for the working capital requirements of the applicable Business Unit through a borrowing from a financial institution on commercially reasonable terms. The proceeds of each Revolving Credit Loan shall be used by the Business Unit Entity borrowing such funds solely (i) for working capital purposes of the relevant Business Unit for whose account such Revolving Credit Loan was made and (ii) in connection with the operation of the relevant Business Unit for whose account such Revolving Credit Loan was made and the Assets comprising such Business Unit. The terms and conditions of each Revolving Credit Loan shall be no less favorable to the borrowing Business Unit Entity than would be obtained in an arms'-length transaction with a Person that is not an Associate, except that each Revolving Credit Loan shall bear interest on the unpaid principal amount thereof from the date such Revolving Credit Loan is made until repaid at a floating rate per annum equal to the prime rate of interest charged from time to time by the First National Bank of Maryland. In the event that the aggregate working capital requirements of two or more of the Business Units referred to above exceed $25,000,000 at any time, the Revolving Credit Loans required hereby may be allocated by the Company between or among such Business Units as it reasonably determines in good faith. The Revolving Credit Loans will not be deemed to be Company Loans and vice versa.
(c) On each Calculation Date occurring while any amount under any Revolving Credit Loan remains outstanding, the working capital needs of the General Business Unit, the Howard Hughes Business Unit and the Summerlin Business Unit shall be reviewed. To the extent that Excess Cash Flow for the applicable Computation Period for any such Business Unit exceeds the funds required by such Business Unit for working capital purposes, such excess shall be paid by the applicable Business Unit Entity towards the repayment of any Revolving Credit Loans made by the Company to such Business Unit Entity for the account of such Business Unit. To the extent that any amount under any Revolving Credit Loan remains outstanding after giving effect to the payments contemplated by the immediately preceding sentence, any amounts held by the applicable Business Unit Entities for the account of any Business Unit in excess of the funds required by such Business Unit for working capital purposes shall be paid to the Company by such Business Unit Entities, pro rata based upon the amounts of such excess funds, towards the repayment of any Revolving Credit Loans made by the Company to any Business Unit Entity for the account of any other Business Unit. Any amount paid by a Business Unit Entity for the account of a Business Unit towards the payment of a Revolving Credit Loan made to a Business Unit Entity for the account of any other Business Unit shall constitute (i) an Advance by the Business Unit for whose account such payment is being made to the Business Unit for whose account such Revolving Credit Loan was borrowed and (ii) a payment from the Business Unit for whose account such Revolving Credit Loan was borrowed to the Company. Any payments made by any Business Unit Entity to the Company pursuant to this paragraph (c) shall be applied first to interest, then to principal.
Section 4.04. Records and Books of Account. In order to enable the Company and the Business Unit Entities to calculate the credits to the Business Unit Accounts required to be made pursuant to Article II, the Company shall keep adequate records and books of account in which complete entries will be made accurately and fairly reflecting all financial transactions relating to each Business Unit. The Company shall maintain, and shall cause each Business Unit and each Business Unit Entity to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP and the financial reports required under Section 4.01. The Company shall, and shall cause each Business Unit Entity to, maintain separate records on a cash basis and accurately record therein any and all Receipts, Expenditures, Reserves and Tax Adjustments.
Section 4.05. Negative Covenants of the Company and the Business Unit Entities. (a) Without the prior written consent of a majority of the members of the Review Committee, the Company shall not permit or cause any Business Unit Entity to, directly or indirectly:
(i) Transfer in bulk more than 500 acres of real estate comprising any Business Unit;
(ii) borrow or otherwise become obligated in respect of any indebtedness in excess of (A) $10,000,000 with respect to the General Business Unit, (B) $5,000,000 with respect to the Howard Hughes Center Business Unit, (C) zero with respect to the Playa Vista Business Unit or (D) $75,000,000 plus the amount of any special improvement district financings with respect to the Summerlin Business Unit;
(iii) create, incur or permit to exist any Lien upon any of the Assets comprising any Business Unit (other than Permitted Encumbrances), except in connection with a financing where the proceeds of such financing will be used exclusively for the development or operation of such Assets;
(iv) engage in the development of amenities in connection with the Assets comprising any Business Unit where the reasonably anticipated costs and expenses of such development will exceed $10,000,000 (other than infrastructure required by Law or pursuant to any Governmental Approval in order to permit development which would not otherwise be subject to Review Committee approval);
(v) make any premature infrastructure expenditures or any other infrastructure expenditures which are excessive when considered in light of the projected schedule for development of the Assets of the Business Unit to which such infrastructure relates;
(vi) consolidate with or merge into any Person or permit any Person to consolidate with or merge into such Business Unit Entity, sell all or substantially all of the Assets comprising any Business Unit or dissolve or liquidate; or
(vii) generally not pay, or admit in writing its inability to pay, its Debts as they mature, make a general assignment for the benefit of creditors, institute any proceeding under any Debtor Relief Law seeking to adjudicate itself insolvent, seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its Debts, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Assets, or take any action in furtherance of any of such actions or, in any involuntary proceeding under any Debtor Relief Law, by any act indicate its approval of such proceedings, its consent thereto or its acquiescence therein.
(b) Without the prior consent of majority of the members of the Review Committee, the Company shall not, and shall not permit or cause any Business Unit Entity to, directly or indirectly:
(i) permit any of the Assets comprising any Business Unit to be subject to the Claims of creditors of the Company, any Business Unit Entity or any of their respective Affiliates except for (A) Claims arising directly from the operation or ownership of such Assets in the ordinary course of business in compliance with the provisions of this Agreement and (B) Claims of any Person that is not
an Associate of the Company or any Business Unit Entity (other than
Persons that are Associates of the Company or any Business Unit Entity
solely due to the contractual relationships under the applicable
Contract), arising under any Contract pursuant to which such Person
provides products or services to (x) the applicable Business Unit
Entity in connection with the Assets comprising such Business Unit and
(y) the Company, any other Business Unit Entity or such Business Unit
Entity in connection with its other operations, or any of their
respective Affiliates, and other Claims arising by operation of Law,
to the extent that such Claims are being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted,
but only if adequate reserves have been established on the books of
the Company in connection with such Claims in accordance with GAAP;
(ii) enter into or permit to exist any Contract, including any financing agreement or arrangement, joint venture agreement or partnership agreement, which precludes or places any material conditions or restrictions on the right or ability of the Company or any Business Unit Entity to (A) make any payment or Transfer or perform any act required under the terms of this Agreement or (B) manage or develop the Assets comprising any Business Unit in the ordinary course, including pursuant to any non-competition covenant, restriction on capital expenditures or indebtedness or restriction on transactions with affiliates contained in any such Contract;
(iii) enter into any transaction with any of its Subsidiaries, Affiliates or Associates (other than Persons that will become Associates solely as a result of such transaction), which (A) involves any of the Business Units or any of the Assets comprising any Business Unit, other than transactions entered into in the ordinary course of business on terms no less favorable than those that could be obtained in an arm's- length transaction with a Person that is not an Associate of the Company or any Business Unit Entity, or (B) could reasonably be expected to result in a material adverse effect on (1) the Company's ability to perform its obligations under this Agreement, (2) the value, condition or marketability of any Assets comprising any Business Unit, (3) the validity, legality or enforceability of this Agreement, (4) the ability of any Holder to exercise or enforce any of its rights, powers or remedies under this Agreement or (5) the ability of any Representative or any member of the Review Committee to perform any of his duties or obligations, or to exercise or enforce any of his rights, powers or remedies, under this Agreement; or
(iv) enter into any transaction involving competition in any material respect with any Business Unit or the Assets comprising any Business Unit, it being understood and agreed, however, that the purchase by the Company from HHPLP of the Assets comprising the Summerlin Business Unit which are described in Exhibit K (subject to such adjustments to the configuration and boundaries thereof as may become reasonably necessary during the planning process and are approved by a majority of the members of the Review Committee) for the purpose of constructing and operating for the foreseeable future a regional shopping mall and entertainment complex thereon shall not, in and of itself, be deemed to involve competition between the Company and the Summerlin Business Unit;
(c) Notwithstanding the foregoing, no transaction described in clauses
(a)(i) through (a)(iv) above or clauses (b)(ii) through (b)(iv) above shall
require the consent of the Review Committee if and to the extent that such
transaction has been duly approved by the Board of Directors of THC prior to the
Effective Date; provided, however, that any such transaction which is described
in clause (a)(ii) above shall be taken into account in determining whether the
applicable Business Unit has borrowed or otherwise become obligated with respect
to indebtedness in excess of the relevant amount.
(d) Subject to the terms of the Articles Supplementary to the Charter of the Company creating and designating the Rouse Increasing Rate Preferred Stock, the Company shall not amend, alter or otherwise modify such Articles or the number of shares, rights, preferences or privileges of the Rouse Increasing Rate Preferred Stock thereunder unless (i) in the event that any Contingent Preferred Shares shall have been issued and remain outstanding, such amendment, alteration or other modification shall have been duly approved by the holders of the Contingent Preferred Shares or the Representatives in accordance with the provisions of the Rouse Increasing Rate Preferred Stock or (ii) in the event that no Contingent Preferred Shares are issued and outstanding, the Company shall have obtained the approval of its shareholders contemplated by Section 4.15; provided, however, that at any time during which the circumstances described in clause (ii) have been satisfied, the Company may, without the consent of any Holder or the Representatives, amend such Articles to eliminate the restrictions contained
therein with respect to the issuance of any capital stock of the Company ranking on a parity with, or superior to, the shares of Rouse Increasing Rate Preferred Stock with respect to distributions of assets upon any dissolution, liquidation (partial or complete) or winding up of the Company or with respect to the payment of dividends.
Section 4.06. Board Representation. (a) From the date of this Agreement until the earlier to occur of (i) the first day on which the Holders shall no longer own, beneficially or of record, at least 5% of the outstanding shares of Rouse Common Stock and (ii) the expiration of ten years from the date of this Agreement, the Representatives will be entitled to designate an individual for election to the Rouse Board; provided, however, that such individual is reasonably acceptable to the Company at the time of his initial designation. Pursuant to the terms of the Merger Agreement, the Company, in accordance with its bylaws, has increased the size of the Rouse Board by one and caused the vacancy created by such increase to be filled by the election of the individual designated on behalf of the Holders in the Merger Agreement (the "Holders' Designee"), which election is effective as of the Effective Date. Such Holders' Designee will serve until the first annual meeting of the stockholders of the Company following the date hereof and until his successor shall be duly elected and qualified or until his death, disability, removal or resignation.
(b) So long as the Representatives possess the right of designation described in paragraph (a) above, the Company shall nominate (or shall cause to be nominated) for election at each annual meeting of the stockholders of the Company after the date hereof, the incumbent Holders' Designee or such other individual as the Representatives may designate; provided, however, that such other individual is reasonably acceptable to the Company at the time of his initial designation.
(c) So long as the Representatives possess the right of designation described in paragraph (a) above, if the Holders' Designee should die, become disabled, be removed, retire or resign during the term of his office, the Representatives shall be entitled to designate a successor Holders' Designee reasonably acceptable to the Company at the time of his initial designation, in which event the Company shall cause such successor Holders' Designee to be promptly elected as a member of the Rouse Board to fill the vacancy created by such death, disability, removal, retirement or resignation.
(d) So long as the Representatives possess the right of designation described in paragraph (a) above, without the prior written consent of the Representatives (which consent will not be unreasonably withheld), neither the Company nor the Rouse Board will (i) recommend that the Holders' Designee be removed by the stockholders of the Company or (ii) fail to recommend any incumbent Holders' Designee for reelection.
Section 4.07. Treasury Shares. All purchases or other acquisitions of shares of Rouse Common Stock by the Company shall be implemented in compliance with applicable Laws, including Rules 10b-5 and 10b-6 under the Exchange Act. The Company will not purchase or otherwise acquire shares of Rouse Common Stock with the intention or for the specific purpose, directly or indirectly, of increasing the amount of any Current Share Value to be calculated hereunder.
Section 4.08. Inspection. The Company shall permit, and shall cause each
Business Unit Entity to permit, each Review Committee member, each
Representative and their respective representatives to (a) visit and inspect the
Assets comprising any Business Unit; (b) examine its books and records and make
copies thereof or extracts therefrom to the extent that the same relate to the
performance or non-performance of any of the terms of this Agreement, any
Business Unit or any of the Assets comprising any Business Unit; and (c) discuss
its affairs, finances and accounts with its officers and independent accountants
to the extent that the same relate to the performance or non-performance of any
of the terms of this Agreement, any Business Unit or any of the Assets
comprising any Business Unit (and by this provision the Company authorizes such
accountants to discuss with such Persons, to such extent, the affairs, finances
and accounts of the Company and any Business Unit Entity), all at such
reasonable times and as often as such Review Committee member or such
Representative may reasonably request. As an accommodation to the Company, the
Representatives will endeavor to arrange their visits and inspections hereunder
to coincide with the regular meetings of the Review Committee contemplated by
Section 6.01; provided, however, that the Representatives shall not be so
obligated if they believe the Company may not be in compliance with any
provision of this Agreement. All out-of-pocket expenses incurred by the Company,
the Holder Members and the Independent Member in connection with such visits and
inspections shall constitute Expenditures hereunder; provided, however, that (i)
in no event shall any other cost or expense, including any salary or other
wages, incurred
by the Company or any Business Unit Entity in connection with discussions between any member of the Review Committee and any officers, directors or employees of the Company or any Business Unit Entity be deemed an Expenditure hereunder and (ii) if an Event of Default shall have occurred and be continuing, no costs or expenses in connection with any visit or inspection by a member of the Review Committee shall be deemed an Expenditure hereunder. All such visits and inspections by a Representative shall be at the expense of the Holders; provided, however, that (A) in no event shall the Company or any Business Unit Entity be entitled to reimbursement for any cost or expense, including any salary or other wages, incurred in connection with discussions between any Representative and any officers, directors or employees of the Company or any Business Unit Entity, (B) if an Event of Default shall have occurred and be continuing, all such visits and inspections shall be at the expense of the Company and (C) no costs or expenses described in clauses (A) and (B) shall be deemed an Expenditure hereunder.
Section 4.09. Maintain Registry. The Company shall maintain a registry of the Holders and record therein each Holder's name, address and Percentage Interest. Such registry shall be kept at the principal corporate office of the Company and shall be made available for inspection by any Representative or any Holder during normal business hours upon reasonable prior notice. Such registry shall initially be comprised of the Persons and other information set forth on Schedule 1. Upon receipt of a written notice of Transfer to an Eligible Assignee, such notice specifying the name of the Transferring Holder, the name and address for notice purposes of such Eligible Assignee, the Percentage Interest Transferred to such Eligible Assignee and the cause (if applicable) of the Transfer, the Company shall revise the registry to reflect such Transfer. The Company, the Representatives and the Escrow Agent may deem and treat the Persons listed in the registry as the Holders for all purposes of this Agreement. Any request, authority or consent of any Person who, at the time of making of such request or giving such authority or consent, is a Holder shall be conclusive and binding on any subsequent Eligible Assignee of such Holder.
Section 4.10. Compliance with Laws. Subject to the provisions of Section 7.05(b), the Company shall comply, and shall cause each Business Unit Entity to comply, with all applicable Laws (including Environmental Laws) and Governmental Approvals applicable to any of the Assets comprising any Business Unit, non-compliance with which, alone or together with all other such non-compliances, could reasonably be expected to have a Material Adverse Effect. Subject to the provisions of Section 7.05(b), the Company shall obtain and maintain, and shall cause each Business Unit Entity to obtain and maintain, as and when required by applicable Law, all Governmental Approvals necessary for its ownership and use of the Assets comprising any Business Unit, other than such failures to obtain or maintain Governmental Approvals which, alone or together with all other such failures, could not reasonably be expected to have a Material Adverse Effect.
Section 4.11. Taxes; Claims. Subject to the provisions of Section 7.05(b), the Company shall pay and discharge, and shall cause each Business Unit Entity to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon the Assets comprising any Business Unit and all lawful Claims, other than such failures to pay and discharge taxes, assessments, charges, levies and Claims which, alone or together with all such other such failures, could not reasonably be expected to have a Material Adverse Effect.
Section 4.12. Insurance. Subject to the provisions of Section 7.05(b), the Company shall maintain, and shall cause each Business Unit Entity to maintain, insurance with financially sound, responsible and reputable insurance companies or associations with respect to the Assets comprising any Business Unit against such risks and in such amounts (and with co-insurance and deductibles) as is customarily obtained by the Company in connection with its own Assets and operations.
Section 4.13. Corporate Existence; Etc. Subject to the provisions of
Section 7.05(b), and except as provided in Sections 4.05(a)(vi) and 7.04, the
Company shall, and shall cause each Business Unit Entity to, preserve and
maintain its existence, and the Company shall, and shall cause each Business
Unit Entity to, qualify and remain qualified as a foreign Person in each
jurisdiction in which any of the Assets comprising any Business Unit is located
for so long as the Company or such Business Unit Entity is the owner of such
Assets.
Section 4.14. Registration of Contingent Shares and Contingent Preferred Shares; Compliance with Securities Laws. In connection with each delivery of Contingent Shares or Contingent Preferred Shares under this Agreement, the Company shall:
(a) cause the delivery of such Contingent Shares or Contingent Preferred Shares to have been registered or qualified under the Securities Act and all applicable blue sky and other securities Laws, such that the Contingent Shares or Contingent Preferred Shares so delivered shall be transferable by the Holders receiving such Contingent Shares or Contingent Preferred Shares free of any restrictions imposed by the Securities Act (except for restrictions, if applicable, under Rule 145 under the Securities Act);
(b) furnish to each Representative a signed counterpart, addressed to the Representatives for the benefit of the Holders, of an opinion of counsel to the Company, dated the date of delivery of such Contingent Shares or Contingent Preferred Shares, reasonably satisfactory in form and substance to the Representatives, to the effect that the delivery of such Contingent Shares or Contingent Preferred Shares to the Holders has been registered under the Securities Act, and all applicable blue sky and other securities Laws;
(c) otherwise comply with all applicable rules and regulations of the SEC with respect to the delivery of such Contingent Shares or Contingent Preferred Shares;
(d) provide and cause to be maintained a transfer agent and registrar for all Contingent Shares or Contingent Preferred Shares so delivered;
(e) cause such Contingent Shares to be listed, on or prior to the date of such delivery, on the New York Stock Exchange, the American Stock Exchange or NASDAQ;
(f) provide or have provided a CUSIP number for all Contingent Shares or Contingent Preferred Shares so delivered; and
(g) make or have made all periodic filings that the Company shall be or have been required to make or have made with the SEC pursuant to and containing the information required by the Exchange Act.
Section 4.15. Rouse Shareholder Approval. (a) The Company shall use its reasonable best efforts to obtain shareholder approval of this Agreement and the transactions contemplated hereby, to the extent that the rules of the New York Stock Exchange require such approval prior to the Company issuing new shares of Rouse Common Stock for delivery to the Holders in satisfaction of its obligation to deliver Contingent Shares hereunder, prior to July 15, 1997. Without limitation of the foregoing, if and to the extent so required, prior to July 1, 1997 the Company shall (i) submit this Agreement and the transactions contemplated hereby for the approval of its shareholders at a meeting of its shareholders to be held prior to July 15, 1997, (ii) through the Rouse Board, recommend to its shareholders approval of this Agreement and the transactions contemplated hereby and (iii) take such other actions as may be required, or as the Representatives may reasonably request, in order to obtain such shareholder approval prior to July 15, 1997. None of the information to be supplied by the Company or its Subsidiaries for inclusion in the proxy statement to be distributed in connection with the shareholders meeting referred to above will, at the time of the mailing thereof and amendments or supplements thereto and at the time of the meeting of the shareholders referred to above, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Such proxy statement will comply as to form in all material respects with all applicable Laws.
(b) The Company (i) acknowledges that a breach of its covenant contained in paragraph (a) above to convene a meeting of its shareholders and call for a vote thereat with respect to the approval of this Agreement and the transactions contemplated hereby will result in irreparable harm to the Holders which will not be compensable in money damages and (ii) agrees that such covenant shall be specifically enforceable and that specific performance and injunctive relief shall be a remedy properly available to the Representatives and the Holders for a breach of such covenant.
Section 4.16. Contingent Preferred Shares. Notwithstanding any provision of this Agreement to the contrary, if the Company is required to deliver Contingent Shares pursuant to this Agreement on any date (the "Delivery Date") and if the Company is precluded or otherwise unable for any reason to deliver such Contingent Shares on the Delivery Date, including any such preclusion or inability which results because the issuance by the
Company of shares of Rouse Common Stock and delivery of such shares to the
Holders in satisfaction of its obligation to deliver Contingent Shares hereunder
would be a breach or violation of any then effective New York Stock Exchange
Listing Agreement to which the Company is a party, then the Company shall
immediately issue and deliver shares of Rouse Increasing Rate Preferred Stock
("Contingent Preferred Shares") in lieu thereof. The aggregate number of
Contingent Preferred Shares (including fractional shares) to be issued and
delivered by the Company on any Delivery Date shall be determined by dividing
(a) 125% of the sum of (i) the aggregate number of Contingent Shares originally
required to be delivered by the Company on the Delivery Date plus (ii) the
aggregate number of Contingent Shares required to be delivered by the Company
pursuant to Section 2.08(d) by (b) the quotient of (i) $100 divided by (ii) the
Current Share Value used in calculating such aggregate number of such Contingent
Shares. The obligation of the Company to issue and deliver shares of Contingent
Preferred Shares under this Section 4.16 shall terminate if and when this
Agreement and the transactions contemplated hereby have been duly and validly
approved by the Company's shareholders as contemplated by Section 4.15;
provided, however, that no such termination shall relieve the Company from (A)
any liability for any breach of this Section 4.16 prior to such termination or
(B) any obligation to deliver Contingent Preferred Shares pursuant to Section
2.08(e).
Section 4.17. Reservation of Shares. (a) The Company will at all times reserve and keep available (free of preemptive rights), out of its authorized and unissued shares of Rouse Common Stock solely for issuance pursuant to this Agreement, the full number of shares of Rouse Common Stock as the Rouse Board, after consultation with independent financial advisors and legal counsel, shall determine in good faith to be issuable under this Agreement.
(b) The Company will at all times reserve and keep available (free of preemptive rights), solely for issuance pursuant to this Agreement, all shares of Rouse Preferred Stock constituting the Rouse Increasing Rate Preferred Stock.
Section 4.18. Abandonment of Assets. In the event that: (a) the Company, in
its good faith judgment, determines, based upon reasonable assumptions and after
consultation with the Review Committee, that the continued ownership and
operation of any Business Unit would be neither profitable to nor in the best
interests of the Company and the Holders; (b) the Company is not obligated to
make a Revolving Credit Loan to the applicable Business Unit Entity pursuant to
Section 4.03(b); (c) third party financing to fund the cash requirements of such
Business Unit is unavailable to the applicable Business Unit Entity; (d) the
Company is unwilling to make a Company Loan to the applicable Business Unit
Entity in connection with such Business Unit; and (e) the Review Committee has
rejected a request to have another Business Unit make an Advance to such
Business Unit, then the Company may cease to operate such Business Unit;
provided, however, that prior to any such cessation, the Company shall (i)
unless otherwise consented to by the Representatives, use commercially
reasonable efforts for a period of at least 12 months to market and sell or
lease the Assets comprising such Business Unit and (ii) if no potential
purchaser or lessee for any of such Assets exists as of the last day of such
period, the Company shall, unless otherwise consented to by the Representatives,
sell any such Assets at a public auction, for cash or credit, at the highest
price bid for such Assets at such auction. Any and all costs, expenses and
proceeds that are incurred, paid and received, as applicable, in connection with
any such sale of Assets shall constitute Receipts and Expenditures, as
applicable, with respect to the applicable Business Unit and, provided further,
that in the event that such cessation relates to the Playa Vista Business Unit
prior to the Termination Date, and the Company has funded less than $10,000,000
pursuant to the Funding Requirement, the Company shall, on the date of such
cessation, credit the Playa Vista Business Unit Account with an amount equal to:
(i) $10,000,000 minus the amount of the Hughes Funding plus (ii) a 7% per annum,
compounded semi-annually, return on such amount accruing from the effective date
hereof until such amount is credited to the Playa Vista Business Unit Account.
ARTICLE V
CONCERNING THE REPRESENTATIVES
Section 5.01. Authority and Liabilities of the Representatives. (a) Except as otherwise provided herein, (i) the Representatives shall have full power and authority to represent the Holders with respect to all matters arising under this Agreement and shall have, and may exercise, such rights, powers, privileges and remedies as are reasonably incidental thereto and (ii) all actions taken by the Representatives hereunder shall be binding upon the Holders, as if expressly confirmed and ratified by each of the Holders. Without limiting the
generality of the foregoing, except as otherwise provided herein, the Representatives shall have full power and authority, on behalf of the Holders, to interpret all of the terms and provisions of this Agreement and to compromise and settle all disputes between the Company and the Holders (or any of them) arising under this Agreement. So long as the Representatives are authorized to act under this Agreement, each of the Holders hereby irrevocably appoints the Representatives to act as the attorney-in-fact of such Holder, with full authority in its place and stead, and in the name of the Holders, the Representatives or otherwise, from time to time to take any action and to execute any instrument which the Representatives may deem necessary or advisable to carry out their duties and responsibilities and otherwise act under this Agreement.
(b) The Representatives will be acting herein solely as an accommodation to the Holders, and each Representative, in exercising his rights, powers, privileges and remedies and performing his duties and responsibilities hereunder, will endeavor to use the same care that he uses when acting solely for his own account. The duties of the Representatives shall be determined only with reference to this Agreement, and no Representative is or shall be charged with knowledge of, or with any duties or responsibilities under or in connection with, any other document or instrument. No implied duties or covenants shall be read into this Agreement on the part of the Representatives. No Representative shall be obligated to take any legal action hereunder which is contrary to applicable Law or which might, in such Representative's judgment, involve any expense or Liability unless such Representative has been indemnified to his satisfaction by the Holders. The Representatives shall be authorized to exercise their discretion in acting or refraining from acting hereunder and in connection herewith and shall not be liable for any mistakes of fact or errors of judgment, or for any acts or omissions of any kind, unless caused by the willful misconduct or gross negligence of such Representative. IT IS THE INTENT OF THE PARTIES THAT NO REPRESENTATIVE SHALL BE LIABLE FOR OR ON ACCOUNT OF ANY ACTION TAKEN OR OMITTED BY HIM HEREUNDER OR IN CONNECTION HEREWITH CAUSED BY THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OF SUCH REPRESENTATIVE. In no event shall any Representative be liable to any Person for incidental, consequential or indirect damages in his capacity as such. Except as provided in Sections 5.01(e) and 5.11, no Representative shall have any duty to the Company, any of its Subsidiaries or the Review Committee, nor shall any Representative be liable to the Company or any of its officers, directors, shareholders, partners, employees, agents, servants or Subsidiaries or any member of the Review Committee for any act or failure to act hereunder or connection herewith.
(c) No Representative shall be under any obligation to make any investigation in respect of the subject matter of this Agreement. No Representative shall be charged with knowledge (actual or constructive) of any Event of Default or any failure on the part of the Company in the performance of its obligations hereunder, unless a clear written notice thereof shall have been previously furnished to such Representative.
(d) Each individual serving as a Representative hereunder will be acting only in his capacity as a Representative and not in his individual capacity or in any other capacity, including as an agent, representative, employee, officer, director, stockholder, partner or fiduciary of any other Person. Accordingly, notwithstanding anything contained herein or elsewhere to the contrary, in no event shall any Associate of any Representative be liable for or on account of any action taken or omitted by such Representative nor shall recourse be had to the Assets or business of any such Associate on account of any such action or omission.
(e) Any Representative may be or become a Holder and may otherwise deal with the Company and its Subsidiaries with the same rights he would have if he were not a Representative hereunder. Without limitation of the foregoing, any Representative who is also a Holder shall have, and may exercise, all the rights and powers vested in such Representative in his capacity as a Holder the same as if such Representative were not a Representative hereunder.
(f) No Representative shall hold himself out to be an agent, employee or representative of the Company, and no act or omission by any Representative shall bind or obligate the Company, any of its Subsidiaries or any Business Unit Entity.
Section 5.02. Directions to Representatives. (a) The Representatives may rely upon and shall in all respects be fully protected in acting or refraining from acting in accordance with any request, instruction or direction of the Majority Holders, and the Representatives shall not be liable for any action taken, suffered or omitted by them in accordance with any such request, instruction or direction. Each request, instruction or direction
made or given to the Representatives by the Majority Holders, and any action taken, suffered or omitted by the Representatives pursuant thereto, shall be binding upon all Holders. No Representative shall be under any obligation to take any action or refrain from taking action at the request, instruction or direction of the Holders (or any of them).
(b) The Representatives may at any time request instructions from the Majority Holders with respect to any matter arising hereunder or in connection herewith, and the Representatives (i) shall be entitled to refrain from acting with respect to such matter unless and until they have received instructions from the Majority Holders to do so and (ii) shall not incur Liability to any Person by reason of so refraining.
Section 5.03. Reliance Upon Documents and Opinions of Counsel. Each Representative may rely and shall be fully protected in acting upon any notice, request, consent, certificate, resolution, appraisal, report or other paper or document believed by him to be genuine and to have signed or presented by the proper Person or Persons. Each Representative may consult with counsel (who may be of counsel to the Company) and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by such Representative hereunder in good faith and in accordance with the opinion of such counsel.
Section 5.04. No Responsibility for Recitals, Etc. The recitals and statements contained in this Agreement shall be taken as the recitals and statements of the Company only, and no Representative assumes responsibility for the correctness of the same. No Representative shall be liable or responsible to any Person for (i) the representations, warranties or other statements made by any other Person, (ii) the performance of this Agreement or any other instrument or document by the Company or any of its Subsidiaries, (iii) any actions taken or omitted by any other Person or (iv) the execution, value, sufficiency, validity or enforceability of this Agreement or any other instrument or document. No Representative shall be accountable to any Holder for any shares of Rouse Common Stock or Rouse Increasing Rate Preferred Stock delivered hereunder or responsible for the business, operations, Assets, condition (financial or other) or results of operation of the Company or any of its Subsidiaries.
Section 5.05. Actions by Representatives. (a) Except as otherwise expressly provided herein, all actions required or permitted to be taken by the Representatives hereunder shall be evidenced by, and taken upon, the written direction of a majority of the Representatives. The Company shall be entitled to rely on the representations of a majority of the Representatives as to their authority to take any action under or in connection with this Agreement.
(b) The Representatives may exercise any of their rights, power, privileges or remedies hereunder or perform any of their duties hereunder either directly or by or through agents or attorneys, and no Representative shall be responsible for any misconduct or negligence on the part of any agent or attorneys appointed by the Representatives with due care hereunder. The Representatives shall be entitled to retain and consult with such independent advisors and other experts as the Representatives shall deem necessary or appropriate in connection with the performance of their duties and responsibilities and the exercise of their authority or powers hereunder.
Section 5.06. Resignation and Removal. (a) Any Representative may at any time resign and be discharged of his duties and obligations hereunder by giving not less than 30 days' prior written notice to the Company, the other Representatives and the Holders. Such resignation shall take place on the day specified in such notice, unless previously a successor Representative shall have been appointed as provided in Section 5.07, in which event such resignation shall take effect immediately upon the appointment of such successor Representative.
(b) Any Representative may be removed at any time, with or without cause, by an instrument or instruments in writing signed by the Majority Holders, specifying the removal and the date when it shall take effect. Upon the resignation or removal of any Representative becoming effective, all the rights, powers, duties and obligations of such Representative shall forthwith terminate except as otherwise provided herein.
(c) Subject to the provisions of Sections 5.01, 5.02, 5.03, 5.04 and 5.05, no such resignation or removal shall relieve any Representative from Liability for any breach of this Agreement by such Representative prior to the effective date of such resignation or removal. Anything herein to the contrary notwithstanding, all
indemnities and rights to payment and reimbursement of each Representative hereunder shall survive his resignation or removal and the Company's performance of its obligations hereunder.
Section 5.07. Appointment of Successor Representative. (a) In the event of
the death, resignation or incapacity of any Representative, the remaining
Representatives (whether one or more) shall appoint a successor Representative
by an instrument or instruments in writing executed by the remaining
Representatives and delivered to the Company and the Holders; provided, however,
that if no appointment of a successor Representative shall have been made within
30 days after the date of such death, resignation or incapacity, as the case may
be, the Majority Holders shall have the right to appoint a successor
Representative by written notice given to the Company and the remaining
Representatives. For purposes of this paragraph (a), "incapacity" means, when
respect to any Representative, a physical or mental condition which, in the good
faith judgment of the other Representatives, (i) prevents such Representative
from being able to perform the services contemplated to be performed by a
Representative under this Agreement, (ii) has continued for at least 90 days and
(iii) is expected to continue.
(b) In the event a Representative shall be removed by the Majority Holders as provided in Section 5.06(b), the Majority Holders may appoint a successor Representative by an instrument or instruments in writing signed by the Majority Holders and delivered to the Company and the remaining Representatives. In the event the Majority Holders fail to so appoint a successor Representative within 30 days after the date of such removal, the remaining Representatives (whether one or more) shall have the right to appoint a successor Representative by an instrument or instruments in writing executed by the remaining Representatives and delivered to the Company and the Holders.
(c) If any Representative shall die or resign or be removed in accordance with Section 5.06 and if a successor Representative shall not have been appointed within 60 days after the day of such death, resignation or removal, either of the remaining Representatives may apply to any court of competent jurisdiction to appoint a successor Representative, and such court may thereupon, after such notice (if any) as it may consider proper, appoint a successor Representative.
Section 5.08. Acceptance of Appointment by Successor Representative. Any successor Representative appointed hereunder shall execute and deliver to the remaining Representatives (for the express benefit of all the Holders) an instrument in writing accepting such appointment (a copy of which shall be sent to all Holders), and thereupon such successor Representative, without further act or deed, shall become vested with all the rights, powers, duties and obligations of his predecessor, with like effect as if originally named as a Representative herein.
Section 5.09. Compensation and Indemnification. (a) The Representatives shall look solely to the Holders and the Escrow Account for payment of any compensation payable to them for their services hereunder and for any indemnification against any Liability incurred by them in connection with the Agreement. As compensation for performance of services hereunder as Representatives, each Representative shall receive an amount equal to $30,000 (subject to adjustment as provided below) per annum, payable monthly in arrears on the last day of each calendar month for so long as such Representative has any duties or obligations under this Agreement, plus such additional compensation as may at any time or from time to time be proposed in writing by the Representatives (or any one of them) and approved by the Majority Holders. In the event this Agreement, or the period of service hereunder of any Representative, shall commence or end on other than the first or last day of a calendar month, such monthly amount (but no other amount unless otherwise agreed) shall be appropriately prorated. All payments due to the Representatives under the foregoing sentence may be paid from the Escrow Account and the Representatives shall be authorized to make withdrawals from the Escrow Account for such purpose. The amount of the annual fee referred to above shall be adjusted upwards or downwards, as the case may be, for each calendar year commencing after the date hereof by the amount of the change (if any) in the Cost of Living during the prior calendar year based on the Consumer Price Index for Urban Consumers All Items--Less Shelter--Index (1967=100) as published with respect to the greater Houston metropolitan area by the Bureau of Labor Statistics for the United States Department of Labor. If such Index is discontinued or revised in any material respect, the Representatives, acting in good faith and after consultation with an independent consultant, shall designate a substitute index which shall thereafter be used in order to obtain substantially the same result as would have been obtained had such Index not been so discontinued or revised.
(b) In addition to the fees described above, each Representative shall be entitled to be promptly reimbursed by the Holders for the reasonable out-of-pocket expenses incurred by such Representative in connection with his service as a Representative hereunder. All payments due to the Representatives under the foregoing sentence may be paid from the Escrow Account and the Representatives shall be authorized to make withdrawals from the Escrow Account for such purpose.
Section 5.10. Representatives' Escrow Account. (a) Contemporaneously with the execution of this Agreement, the Representatives shall establish a special purpose escrow account with a bank or trust company selected by the Representatives (the "Escrow Agent"). The Escrow Agent shall administer the Escrow Account in accordance with the terms and conditions of an escrow agreement to be entered into between the Representatives and the Escrow Agent (the "Escrow Agreement"). The Escrow Agreement shall be in such form and contain such terms and conditions (consistent with this Agreement) as the Representatives shall approve. The Escrow Account shall be held by and remain in the exclusive possession of, and under the sole dominion and control of, the Representatives for the ratable benefit of the Holders and the Representatives during the period from the date hereof until the date on which the Representatives shall cease to have any further duties or obligations hereunder (the "Escrow Termination Date") and shall be maintained at all times in accordance with the terms of this Agreement. Unless otherwise specifically provided herein, the Escrow Account shall be subject to debit or withdrawals solely by the Representatives as provided in this Agreement and no other Person shall have any control over or right of withdrawal from the Escrow Account; provided, however, that if at any time there shall not be any Representative then serving hereunder, disbursements from the Escrow Account may be authorized upon written instructions from the Majority Holders. No payments shall be made out of the Escrow Account except for the purposes and on the terms provided in this Agreement. As security for all compensation, expenses, indemnification payments and other amounts due or to become due to the Representative hereunder, each Representative, without any action on the part of the Holders, the Escrow Agent or any other Person, shall have and may enforce a first priority security interest in and Lien upon all moneys and other Assets contained from time to time in the Escrow Account.
(b) Concurrently with the execution of this Agreement, there is being transferred to the Escrow Account the sum of $1,500,000 pursuant to authorization set forth in that certain Agreement and Plan of Merger dated as of February 22, 1996 among the Company, TRC Acquisition Company II, a Delaware corporation, and HHPLP relating to the Partnership Merger. If, subsequent to the date hereof, the Representatives acting in good faith believe that additional funds are required or may be required for the Escrow Account in order to enable the Representatives to receive the compensation to which they are entitled hereunder and to discharge their responsibilities and duties and otherwise act on behalf of Holders pursuant to this Agreement, the Representatives shall have the right to direct that a specified number of the Contingent Shares and/or Contingent Preferred Shares otherwise issuable to the Holders hereunder, determined as of the next succeeding Calculation Date, be withheld and instead delivered to or as directed by the Representatives, such Contingent Shares and/or Contingent Preferred Shares to be withheld from the Contingent Shares and/or Contingent Preferred Shares otherwise deliverable to the Holders pro rata in accordance with their respective Percentage Interests. Such direction shall be evidenced by notice duly authorized and given by the Representatives to the Company (a "Representatives' Diversion Notice"), a copy of which shall be concurrently mailed to all Holders, in which event the Company shall be obligated to withhold and so direct and deliver the Contingent Shares and/or Contingent Preferred Shares as provided in the Representatives' Diversion Notice. The Representatives shall cause the Contingent Shares and/or Contingent Preferred Shares so received to be sold as promptly as prudent marketing conditions will permit with the net proceeds of each such sale to be deposited to the Escrow Account. Any and all deposits made into the Escrow Account shall be irrevocable and the amount of such deposit and any interest and investment earnings thereon shall be held by the Representatives and applied, invested and transferred solely as provided herein and in the Escrow Agreement.
(c) Anything in this Section 5.10 to the contrary notwithstanding, the Majority Holders may at any time or from time to time by written notice to the Representatives (i) instruct the Representatives to withdraw any Representatives' Diversion Notice or (ii) authorize or direct that all or part of any amounts deposited in the Escrow Account in accordance with paragraph (b) above be distributed to all Holders ratably in accordance with their respective Percentage Interests.
(d) The Representatives shall maintain or cause to be maintained at the
expense of the Holders, books of account on a cash basis and record therein (i)
all funds received by the Representatives on behalf of the Holders, (ii) all
payments or disbursements of funds to the Representatives in payment of
compensation or for reimbursement of expenses pursuant to Section 5.09, (iii)
all payments or disbursements to any other Person for the benefit of, or
approved by, the Holders, (iv) all other deposits into and transfers to and from
the Escrow Account and (v) all investment transactions contemplated by paragraph
(f) below effected by the Representatives and/or the Escrow Agent. The
Representatives shall endeavor to make such books of account available during
normal business hours for inspection by the Holders and their respective
representatives upon reasonable prior notice, but only if the Holders or Holders
requesting such inspection agree to pay all costs and expenses relating thereto.
In addition to such books of account, the Representatives shall maintain or
cause to be maintained at all times a current list of the investments in the
Escrow Account. Not later than the 60th day after each Calculation Date, the
Representatives shall provide or cause to be provided to the Holders a statement
specifying the amounts held in, and the activity for, the Escrow Account at the
close of business on the last business day preceding such Calculation Date.
(e) The Representatives shall transfer funds available in the Escrow Account as follows:
(i) at any time and from time to time, the Representatives shall withdraw amounts held in the Escrow Account and apply such amounts as required or permitted by this Agreement; and
(ii) on the Escrow Termination Date, the Representatives shall withdraw any and all amounts held in the Escrow Account from the Escrow Account and, after the payment or provision for payment of all expenses and Liabilities of the Holders and the Representatives under this Agreement, transfer the remaining amount to the Holders ratably in accordance with their respective Percentage Interests.
In addition, the Representatives may at any time or from time to time withdraw all or part of the funds in the Escrow Account and distribute the funds so withdrawn to the Holders ratably in accordance with their respective Percentage Interests.
(f) Amounts held in the Escrow Account shall be invested only in Permitted Investments. Any interest, investment income or gain realized as a result of any of the amounts held in the Escrow Account (net of the expenses incurred in connection with making any Permitted Investments) shall be credited to the Escrow Account and may be reinvested in Permitted Investments. Neither the Escrow Agent nor any of the Representatives (or their Associates) shall have any liability to any of the Holders or any other Person for any Loss resulting from any Permitted Investment other than Losses arising out of his or its willful misconduct, fraud or gross negligence. For purposes of this Agreement, the term "Permitted Investments" means any of the following investments: (i) 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 a maturity not exceeding 30 days from the date of acquisition, (ii) time deposits and certificates of deposit of any commercial bank of recognized standing having capital and surplus in excess of $500,000,000, provided that the long term senior unsecured debt of such bank is rated at least A+ or the equivalent thereof by Standard & Poor's Corporation or at least A1 or the equivalent thereof by Moody's Investors Service, having a maturity not exceeding 30 days from the date of acquisition, and (iii) commercial paper issued by the parent corporation of any commercial bank or by any domestic corporation, provided that such commercial paper is rated at least A-1 or the equivalent thereof by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by Moody's Investors Service, having a maturity not exceeding 30 days from the date of acquisition.
(g) Any and all interest and other income earned or loss realized on any Contingent Shares or Preferred Contingent Shares held by the Representatives for the benefit of the Holders or any amounts held in the Escrow Account for any and all federal, state and local income tax purposes shall be attributed to the Holders. The Representatives shall provide, or cause to be provided, information to the Holders to enable the Holders to (i) determine any and all requirements of governmental authorities for the payment of taxes and the reporting or withholding of any payments for tax purposes hereunder and (ii) prepare and file, or cause to be prepared and filed, all tax returns, reports and other information required with respect to the Escrow Account. The Holders, ratably according to their respective Percentage Interests, shall indemnify and hold the Representatives harmless against any and all Claims, Liabilities and Losses for tax withholding and/or reporting for any payments made hereunder. Such indemnities shall survive the Escrow Termination Date, the termination or discharge of this Agreement and the
death, resignation or removal of any Representative. The Representatives shall have no obligation whatsoever with respect to the making, reporting or withholding of any payments for tax purposes. If requested by the Representatives, each Holder will provide the Representatives with such information as may be required by applicable taxing authorities or tax Laws.
Section 5.11. Confidentiality. No Representative will disclose to any Person, or use for any improper purpose, any of documents or other information furnished to it by the Company hereunder except for the purposes contemplated by this Agreement. Notwithstanding the foregoing, each Representative shall be permitted to:
(a) disclose any such documents or other information (i) to the Company or any employee, agent, advisor, consultant, officer, director or stockholder of the Company or any Affiliate of the Company, (ii) to any member of the Review Committee or any employee, agent, legal counsel, accountant, advisor or consultant of the Review Committee or (iii) to the extent that such documents or information (A) are furnished or made available to such Representative by the Company on a non-confidential basis, (B) is or becomes generally known or available other than as a result of a disclosure by such Representative or (C) is or becomes known or available to such Representative on a non-confidential basis from a source (other than the Company) which, to such Representative's knowledge, is not prohibited from disclosing such documents or information to such Representative by a legal, contractual, fiduciary or other obligation to the Company; and
(b) otherwise disclose and use any such documents or other information (i) as the Company shall approve from time to time (which approval shall not be unreasonably withheld), (ii) as shall be required in response to any summons or subpoena or in connection with any litigation, (iii) to the extent such Representative believes it necessary to comply with applicable Law or (iv) to the extent such Representative believes it necessary in the performance of his duties and obligations hereunder or in the exercise or enforcement of his rights, powers, privileges, remedies or immunities hereunder.
If any Representative intends to disclose any information which is subject
to the foregoing confidentiality restriction pursuant to clause (b)(ii) or
(b)(iii) above, such Representative will notify the Company, to the extent
practicable, so that the Company may seek an appropriate protective order. If
requested by the Company, each Representative will acknowledge in writing that
he is aware that the United States securities laws prohibit any Person who has
material non-public information about a company with securities registered under
the Exchange Act from purchasing or selling securities of such company based on
such non-public information or disclosing such information to any other Person
under circumstances where it is reasonably foreseeable that other such Person is
likely to sell securities of such company based on such non-public information.
Section 5.12. Controlling Provisions. If any provision of this Article V conflicts with or is contrary to any other provision of this Agreement, such provision of this Article V shall govern and control.
Section 5.13. Indemnification. The Holders shall indemnify and save each Representative harmless against any Claims, Liabilities and Losses, not arising from his own gross negligence or intentional misconduct, which such Representative may incur in the good faith exercise and performance of his powers and responsibilities hereunder.
ARTICLE VI
CONCERNING THE REVIEW COMMITTEE
Section 6.01. General. A committee (the "Review Committee") shall be established for the purpose of meeting on a periodic basis (no less frequently than once during each calendar quarter unless all of the members of the Review Committee shall otherwise agree) to review and discuss the management, operation and development of the Business Units and related Assets. In connection with its preparation of any business plan for the management, development and operation of the Business Units and related Assets or any amendment thereto, the Company will consult with the Review Committee for the purpose of seeking advice and recommendations from the Review Committee regarding such business plan or amendment thereto. Promptly after each business plan (or amendment thereto) is finalized, the Company will provide each member of the Review Committee with a copy
thereof. It is understood and agreed that the object of each such business plan will be to maximize the value of the Business Units and related Assets. The reasonable fees of, and the reasonable costs and expenses incurred by, the Review Committee and its members in furtherance of their responsibilities shall be borne by the Company and fairly allocated among the Business Units for purposes of determining the Excess Cash Flow of the Business Units, such allocation to be made in a manner reasonably determined by the Company in good faith.
Section 6.02. Composition. The Review Committee shall be composed of five members. Two members shall be designated by the Company (the "Company Members") and two members shall be designated by the Representatives (the "Holder Members"). The Company Members and the Holder Members shall jointly appoint a fifth member (the "Independent Member") who shall be independent and, as such, shall not be an Associate of the Company or any Holder. Each Company Member may be an officer, employee or consultant of the Company. Each member of the Review Committee shall be experienced in, and shall be generally recognized as having current competence in, the management and development of residential and commercial properties similar to the Assets comprising the Business Units.
Section 6.03. Resignation and Removal. (a) Any member of the Review Committee may at any time resign and be discharged of his duties and obligations hereunder by giving prior written notice to the Company, the Representatives and the other members of the Review Committee.
(b) The Company shall have the exclusive right at any time, with or without cause, to remove each Company Member by giving written notice to the Representatives and the other members of the Review Committee, which notice shall name the individual appointed by the Company to succeed such member. If either Company Member shall die or resign, the Company shall have the exclusive right to appoint a successor by giving written notice to the Representatives and the other members of the Review Committee. If the Company fails to appoint a successor within 15 days of becoming aware of such death or resignation, the remaining members of the Review Committee shall be deemed to constitute the Review Committee until such time as the Company appoints a successor as aforesaid.
(c) The Representatives shall have the exclusive right at any time, with or without cause, to remove each Holder Member by giving written notice to the Company and the other members of the Review Committee, which notice shall name the individual appointed by the Representatives to succeed such member. If either Holder Member shall die or resign, the Representatives shall have the exclusive right to appoint a successor by giving written notice to the Company and the other members of the Review Committee. If the Representatives fail to appoint a successor within 15 days of becoming aware of such death or resignation, the remaining members of the Review Committee shall be deemed to constitute the Review Committee until such time as the Representatives appoint a successor as aforesaid.
(d) The Company Members and the Holder Members, acting unanimously, shall have the exclusive right at any time, with or without cause, to remove the Independent Member by giving written notice to the Representatives and the Company, which notice shall name the individual unanimously appointed by the Company Members and the Holder Members to succeed such Independent Member. If the Independent Member shall die or resign, the Company Members and the Holder Members, acting unanimously, shall have the exclusive right to appoint a successor by giving written notice to the Representatives and the Company. If the Company Members and the Holder Members fail to unanimously appoint a successor Independent Member within 15 days of becoming aware of such death or resignation, any Company Member or Holder Member may apply to any court of competent jurisdiction to appoint a successor Independent Member, and such court may thereupon, after such notice (if any) as it may consider proper, appoint a successor Independent Member.
(e) No such resignation or removal shall relieve any member of the Review Committee from Liability for any breach of this Agreement by such member prior to the effective date of such resignation or removal.
Section 6.04. Actions, Etc. (a) Except as otherwise provided herein, all actions required or permitted to be made by the Review Committee hereunder shall require the affirmative vote of a majority of all the members of the Review Committee.
(b) All actions of the Review Committee shall be taken either at a meeting of the Review Committee at which all members are present (in person or by telephone) or by unanimous written consent, and any purported action of the Review Committee taken by any other means shall be void and of no effect for purposes of this Agreement. Any member of the Review Committee may call a meeting thereof on three days' notice (oral or written) to the other members. The Review Committee shall keep regular minutes of its proceedings and report the same to the Representatives when required. Subject to the foregoing provisions of this Article VI, the Review Committee may fix its rules of procedure.
(c) The Review Committee shall be entitled to retain and consult with such independent advisors and other experts as the Review Committee shall deem necessary or appropriate in connection with the performance of its duties and responsibilities and the exercise of its powers and authority hereunder.
Section 6.05. Confidentiality. The Company shall not be obligated to provide any documents or other information to any member of the Review Committee unless such member shall agree that all such documents and other information will be kept confidential by such member and will be used by such member only for the purposes contemplated by this Agreement. Notwithstanding the foregoing, each member of the Review Committee shall be permitted to:
(a) disclose any such documents or other information (i) to the Company or any employee, agent, advisor, consultant, officer, director or stockholder of the Company or any Affiliate of the Company, (ii) to any Representative or any employee, agent, legal counsel, accountant, advisor or consultant of the Representatives or (iii) to the extent that such documents or information (A) are furnished or made available to such member by the Company on a non-confidential basis, (B) is or becomes generally known or available other than as a result of a disclosure by such member or (C) is or becomes known or available to such member on a non-confidential basis from a source (other than the Company) which, to such member's knowledge, is not prohibited from disclosing such documents or information to such member by a legal, contractual, fiduciary or other obligation to the Company; and
(b) disclose and use any such documents or other information (i) as the Company shall approve from time to time (which approval shall not be unreasonably withheld), (ii) as shall be required in response to any summons or subpoena or in connection with any litigation, (iii) to the extent such member believes it necessary to comply with applicable Law or (iv) to the extent such member believes it necessary in the performance of his duties and obligations hereunder or in the exercise or enforcement of his rights, powers, privileges, remedies or immunities hereunder.
If any member of the Review Committee intends to disclose any information which
is subject to the foregoing confidentiality restriction pursuant to clause
(b)(ii) or (b)(iii) above, such member of the Review Committee will notify the
Company, to the extent practicable, so that the Company may seek an appropriate
protective order. If requested by the Company, each member of the Review
Committee will acknowledge in writing that he is aware that the United States
securities laws prohibit any Person who has material non-public information
about a company with securities registered under the Exchange Act from
purchasing or selling securities of such company based on such non-public
information or disclosing such information to any other Person under
circumstances where it is reasonably foreseeable that such Person is likely to
sell securities of such company based on such non-public information.
Section 6.06. Indemnification. The Company shall indemnify and save each member of the Review Committee harmless against any Claims, Liabilities and Losses, not arising from his own default, gross negligence or intentional misconduct, which such member may incur in the good faith exercise and performance of his powers and responsibilities hereunder.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Notices. Any and all notices, requests or other communications hereunder shall be given in writing and delivered by: (a) regular, overnight or registered or certified mail (return receipt requested),
with first class postage prepaid; (b) hand delivery; (c) facsimile transmission; or (d) overnight courier service, to the Parties at the following addresses or facsimile numbers:
(i) If to the Company:
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
Attention: General Counsel
Telephone Number: (410) 992-6400
Facsimile Number: (410) 992-6392
With a copy to:
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
Attention: President
(ii) If to the Representatives, to their respective addresses set forth below:
Platt W. Davis, III
2500 First City Tower
1001 Fannin
Houston, Texas 77002
Telephone Number: (713) 758-2294
Facsimile Number: (713) 615-5246
David G. Elkins
4200 Texas Commerce Tower
600 Travis
Houston, Texas 77002
Telephone Number: (713) 220-4364
Facsimile Number: (713) 220-4285
Kenneth E. Studdard
6150 Westview
Houston, Texas 77055
Telephone Number: (713) 688-9233
Facsimile Number: (713) 688-5661
(iii) If to the Holders, as their names and addresses appear on the registry described in Section 4.09, with copies to the Representatives or at such other address or number as shall be designated in a notice by the Company to the Holders and the Representatives or by any Holder to the Company and the Representatives or by any Representative to the Company, the Holders and the other Representatives, in each case, given in accordance with this Section 7.01. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given (A) in the case of a notice sent by regular mail, three business days after it is duly deposited in the mails; (B) in the case of a notice sent by registered or certified mail, on the date receipted for (or refused) on the return receipt; (C) in the case of a notice delivered by hand, when personally delivered; (D) in the case of a notice sent by facsimile, upon transmission subject to telephone confirmation of receipt; and (E) in the case of a notice sent by overnight mail or overnight courier service, the date delivered at the designated address, in each case given or addressed as aforesaid.
Section 7.02. Dispute Resolution. (a) In the event of any dispute between the Company, on the one hand, and the Representatives, on the other hand, with respect to any matter covered by this Agreement (including whether the provisions of this Agreement have been complied with), the Company and the Representatives (the "Disputants") shall first use their best efforts to resolve such dispute between themselves. If the Disputants are unable to resolve the dispute within 15 days, they agree to submit the dispute to mediation in accordance with the Commercial Mediation Rules of the American Arbitration Association. The Disputants will jointly appoint a mutually acceptable mediator, seeking assistance in such regard from the American Arbitration Association if they are unable to agree upon such appointment within ten days following the 15-day period referred to above. Upon appointment of the mediator, the Disputants agree to participate in good faith in the mediation and negotiations relating thereto for 20 days. If the Disputants are not successful in resolving the dispute through mediation within such 20-day period, either Disputant may submit the dispute to arbitration in accordance with the following provisions of this Section 7.02. The fees and expenses of the mediator shall be borne by the non-prevailing party or, in the event there is no clear prevailing party, as the mediator deems appropriate.
(b) To submit a dispute to arbitration as contemplated by paragraph (a) above, a Disputant must give written notice to the other Disputant, in which event the dispute shall be settled by arbitration in accordance with the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association except as otherwise provided below. The arbitrators shall have sole discretion with regard to the admissibility of evidence. Each Disputant shall have the right to be represented by counsel. All rulings of the arbitrators shall be in writing, shall be determined by at least a majority of their number and shall be delivered to the Disputants. The fees and expenses of the arbitrators shall be borne by the non-prevailing Disputant or, in the event there is no clear prevailing Disputant, as the arbitrators deem appropriate.
(c) In the event there is any disputed question of law involved in any arbitration proceeding hereunder, such as the proper legal interpretation of any provision of this Agreement, the arbitrators shall make separate and distinct findings of all facts material to the disputed question of law to be decided and, on the basis of the facts so found, express their conclusion of the question of law. The facts so found shall be conclusive and binding on the Disputants, but any legal conclusion reached by the arbitrators from such facts may be submitted by either Disputant to a court of law for final determination by initiation of a civil action in the manner provided by law. Such action, to be valid, must be commenced within 20 days after receipt of the arbitrators' decision. If no civil action is commenced within such 20-day period, the legal conclusion reached by the arbitrators shall be conclusive and binding on the Disputants. Any such civil action shall be submitted, heard and determined solely on the basis of the facts found by the arbitrators. Neither of the Disputants shall, or shall be entitled to, submit any additional or different facts for consideration by the court. In the event any civil action is commenced under this paragraph (c), the party who prevails or substantially prevails (as determined by the court) in such civil action shall be entitled to recover from the other party all of its Losses incurred in connection with such action and on appeal.
(d) Except as limited by paragraph (c) above, the Disputants agree that judgment upon the award rendered by the arbitrators may be entered in any court of competent jurisdiction, and the Disputants hereby consent and commit themselves to the jurisdiction of the courts of the State of Delaware and the United States District Court for New Castle County, Delaware for purposes of the enforcement of any arbitration award. In the event legal proceedings are commenced to enforce the rights awarded in any arbitration proceeding hereunder, the party who prevails or substantially prevails (as determined by the court) in such legal proceeding shall be entitled to recover from the other party all of its Losses incurred in connection with such legal proceeding and on appeal.
(e) All arbitration conferences and hearings pursuant to this Section 7.02 shall be conducted in Wilmington, Delaware or at such other place as the Disputants may mutually agree.
Section 7.03. Benefit and Burden. (a) This Agreement shall inure to the benefit of and shall be binding upon, the Parties and their respective executors, personal representatives, administrators, successors, heirs, distributees, devisees, legatees and permitted assigns.
(b) Anything herein or elsewhere to the contrary notwithstanding, all covenants and agreements on the part of the Company herein are hereby declared to be for the benefit of the Holders and the Representatives and their respective executors, personal representatives, administrators, successors, heirs, devisees, legatees and permitted assigns, and each such Person shall be entitled to enforce this Agreement the same as if it
were a signatory hereto. Nothing in this Agreement is intended to, or shall, preclude or restrict any Holder from instituting and maintaining in his or its own name such suits and proceedings as such Person may deem necessary to enforce delivery of all Contingent Shares and Contingent Preferred Shares which such Person is entitled to receive hereunder or to otherwise protect and enforce such Person's rights, privileges and interests hereunder.
Section 7.04. Consolidations, Mergers, Etc. (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or Assets of the Company, by agreement in form and substance reasonably acceptable to the Representatives, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a material breach of this Agreement. As used herein, the term "Company" shall include any successor to its business and/or Assets as aforesaid which executes and delivers the agreement provided for in this paragraph (a) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of Law.
(b) The Company acknowledges that this Agreement and the rights of the Holders hereunder (including (i) the right of the Holders to receive securities which are freely tradable and readily marketable and (ii) the non-taxable receipt by the Holders of Rouse Common Stock pursuant to the Merger and of Contingent Shares hereunder) are of major importance to the Holders and that each Holder is justified in believing and assuming that the Company will not voluntarily undertake or complete any Prohibited Transaction. The Company expressly agrees that, without the prior written consent of the Majority Holders, it will not undertake or complete any Prohibited Transaction. As used herein, "Prohibited Transaction" means (A) any reorganization of the Company or any consolidation or merger of the Company with or into another entity, (B) any recapitalization, reclassification or change in the capital structure of the Company, (C) any partial or complete liquidation, dissolution or winding up of the affairs of the Company or (D) any other transaction or event if, in any such case and for any reason, (i) the Company or any successor to the Company shall be incapable of, or restricted or prohibited from, delivering (on a timely basis) freely tradable and readily marketable securities comparable to the Contingent Shares or the Contingent Preferred Shares (as applicable) hereunder or (ii) such transaction or event could reasonably be expected to have a prejudicial effect on the Holders with respect to their non-taxable receipt of securities pursuant to the Merger Agreement or this Agreement.
(c) In the event the Company desires to implement any transaction of the
type described in clauses (A) through (D) of paragraph (b) above which the
Company has concluded, in good faith, does not constitute a Prohibited
Transaction (a "Proposed Transaction"), the Company shall, as soon as
practicable prior to the implementation of the Proposed Transaction, give
written notice to the Representatives describing the Proposed Transaction in
reasonable detail and setting forth the Company's conclusion that the Proposed
Transaction does not constitute a Prohibited Transaction and the reasons
therefor. Such notice may also contain a request that the Representatives agree
with the conclusion set forth therein. Upon receipt of any such request, the
Representatives shall consider the same in good faith and shall be authorized
(but not obligated) to agree, on behalf of the Holders, with the Company's
conclusion that the Proposed Transaction does not constitute a Prohibited
Transaction. Any such agreement of the Representatives (i) shall be in writing,
(ii) shall be limited to the Proposed Transaction in question and shall not
extend or apply to any other transaction or event and (iii) may be conditioned
upon and subject to the execution and delivery to the Representatives of one or
more instruments in writing designed to fairly and equitably protect the rights,
privileges, interests and remedies of the Holders and the Representatives
against one or more effects of the Proposed Transaction. Moreover, each such
agreement of the Representatives shall be binding upon the Holders and, in the
absence of fraud or bad faith, the Company shall be fully protected for purposes
of this Section 7.04 in acting in accordance with such agreement.
(d) Nothing in this Section 7.04 shall relieve the Company of any of its obligations contained elsewhere in this Agreement.
Section 7.05. Company as Fiduciary. (a) The Company acknowledges and agrees that it is accountable as a fiduciary to the Holders and their respective executors, personal representatives, administrators, successors, heirs, distributees, devisees, legatees and permitted assigns, which fiduciary duty shall be the same as the fiduciary duty owed by a director of a corporation to the stockholders of such corporation. Without limitation of the foregoing, the Company shall, and shall cause each Business Unit Entity to, (i) exercise reasonable care and act with
good faith and integrity in managing and operating the Business Units and the Assets comprising the Business Units and (ii) deal with the Holders and the Representatives fairly and in good faith.
(b) Except as provided in Section 4.03, no obligation or covenant imposed on the Company by this Agreement, including under Sections 4.10, 4.11, 4.12 and 4.13, shall be construed to obligate the Company or any of its Subsidiaries in any way to make loans to, advance funds to, invest additional capital in or extend its credit in order to obtain financing for, or provide working capital for, any Business Unit or any Business Unit Entity, except in its sole and absolute discretion. The Company makes no representation or warranty that the operation of any Business Unit or any portion of the Assets of any Business Unit shall be profitable or that any Business Unit will have Receipts sufficient to obligate the Company to deliver Contingent Shares hereunder.
Section 7.06. No Third Party Rights. Nothing in this Agreement shall be deemed to create any right in any creditor or other Person other than the Parties, the members of the Review Committee and the other Persons referred to in Section 7.03(a), and this Agreement shall not be construed in any respect to be a Contract in whole or in part for the benefit of any Person other than the Parties, the members of the Review Committee and the other Persons referred to in Section 7.03(a).
Section 7.07. Amendments and Waiver. (a) Except as provided in Section
4.02, this Agreement may be not be amended, supplemented or modified, nor may
compliance by the Company with any provision of this Agreement be waived (either
generally or in a particular instance and either retroactively or
prospectively), except in each case by an instrument in writing duly entered
into by the Company and all of the Representatives. Without limitation of the
foregoing, the Representatives may, without the consent of any of the Holders,
enter into one or more instruments supplemental hereto as they may deem
desirable in order to (i) add to the covenants of the Company in this Agreement,
(ii) surrender any right or power conferred upon the Company by this Agreement,
(iii) evidence any succession of any Person to the Company and the assumption by
such successor of the covenants of the Company contained herein, (iv) cure any
ambiguity in (or cure, correct or supplement any defective provision of) this
Agreement in such manner as shall not be inconsistent with this Agreement or
adversely affect the rights, privileges or remedies of the Holders under this
Agreement. Notwithstanding the foregoing, no such amendment, supplement,
modification or waiver will be effective:
(A) except as provided in clause (B) below, without the prior
written consent of the Majority Holders, if such amendment,
supplement, modification or waiver would (1) add any provision to this
Agreement, change in any manner or eliminate any of the provisions of
this Agreement or modify in any respect the rights of the Holders
under this Agreement, in each case if such addition, change,
elimination or modification would materially and adversely affect the
rights, privileges or remedies of the Holders under this Agreement, or
(2) waive any Event of Default;
(B) without the prior written consent of all the Holders, if such
amendment, supplement, modification or waiver would (1) change the
amount of, or times for the delivery of, Contingent Shares or
Contingent Preferred Shares to be delivered by the Company under this
Agreement in a manner adverse to the Holders, (2) change the Valuation
Date of any Business Unit, (3) reduce the Percentage Interest of any
Holder (other than due to an assignment to an Eligible Assignee), (4)
substitute any Equity Interest for the Contingent Shares or Contingent
Preferred Shares required to be delivered by the Company under this
Agreement (unless otherwise specifically permitted in this Agreement),
(5) waive any Event of Default under clause (b) of the definition
thereof or (6) change the provisions of this Section 7.07 (except to
increase any percentage required to approve any such amendment,
supplement, modification or waiver or to provide that certain other
provisions of this Agreement cannot be amended, supplemented, modified
or waived without the consent of all of the Holders affected thereby);
(C) without the prior written consent of all members of the Review Committee, if such amendment, supplement, modification or waiver would adversely affect the rights, duties or immunities of the members of the Review Committee under this Agreement; or
(D) without the prior written consent of all of the Representatives, if such amendment, supplement, modification or waiver would adversely affect the rights, duties or immunities of the Representatives under this Agreement.
Notwithstanding anything to the contrary contained herein, Article V of this Agreement may be amended, supplemented or modified at any time solely by an instrument in writing signed (x) by the Representatives with the consent of the Majority Holders and (y) if and to the extent that such amendment, modification or supplement would in any way be prejudicial to the Company, by the Company. In the case of any amendment, supplement, modification or waiver referred to in clause (x) above, it shall not be necessary for the Majority Holders to approve the particular form of such amendment, supplement, modification or waiver, but it shall be sufficient if the Majority Holders shall approve the substance thereof. Similarly, in the case of any amendment, supplement, modification or waiver referred to in clause (y) above, it shall not be necessary for the Holders to approve the particular form of such amendment, supplement, modification or waiver, but it shall be sufficient if the Holders shall approve the substance thereof. No such amendment, supplement, modification or waiver shall extend to or affect any provision, term or obligation not expressly amended, supplemented, modified or waived thereby or impair any right consequent thereon. Any amendment, supplement, modification or waiver entered into pursuant to this paragraph (a) shall be binding upon all Parties. Copies of each amendment, supplement, modification or waiver entered into pursuant to this paragraph (a) shall be delivered by the Company to each of the Representatives and each Holder.
(b) The Company will not, directly or indirectly, pay or cause to be paid any remuneration (whether in the form of a fee or otherwise) to any Holder as consideration for or as an inducement to such Holder's consenting to any proposed amendment, supplement, modification or waiver of this Agreement unless such remuneration is concurrently paid, on the same terms, ratably to all the Holders.
(c) No failure or delay on the part of any Party in exercising any right, power or privilege hereunder and no course of dealing between or among any of the Parties shall operate as a waiver of any right, power or privilege hereunder. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. No notice to or demand on any Party in any case shall entitle such Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Party to any other or further action in any circumstances without notice or demand.
(d) None of the expenses (including, without limitation, counsel fees and expenses) incurred by the Company or any Business Unit Entity in connection with any amendment, supplement, modification or waiver of this Agreement shall be deemed an Expenditure hereunder unless otherwise consented to by the Representatives in writing.
Section 7.08. Further Documents. The Company agrees to execute any and all documents, and to perform any and all other acts, as may be necessary or reasonably requested by the Representatives to accomplish the purposes of this Agreement.
Section 7.09. Assignments. (a) Except for a Transfer by a Holder to an Eligible Assignee or as permitted by Section 7.04, neither this Agreement nor any right, interest or obligation hereunder may be assigned by (i) by the Company without the prior written consent of the Representatives or (ii) by any Holder, and any attempt to do so shall be null and void.
(b) Except as otherwise provided herein or prohibited by applicable law, the Company may acquire from any Holder all (but not less than all) of the rights and interests of such Holder hereunder; provided, however, that (i) voting or consensual rights of such Holder hereunder shall automatically expire and terminate concurrently with the assignment to the Company of the rights and interests of such Holder hereunder and (ii) in no event shall the Company or any Subsidiary or Affiliate of the Company acquire the rights and interests of a Holder hereunder prior to December 31, 1997.
Section 7.10. Severability. Should any clause, sentence, paragraph, subsection, Section or Article of this Agreement be judicially declared to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Agreement, and the part or parts of this Agreement so held to
be invalid, unenforceable or void will be deemed to have been stricken herefrom, and the remainder will have the same force and effectiveness as if such stricken part or parts had never been included herein.
Section 7.11. Specific Performance. The covenants and obligations contained in this Agreement relate to special, unique and extraordinary matters and a violation of any of the terms hereof or thereof by the Company would cause irreparable injury to the Holders and/or the Representatives in an amount which would be impossible to estimate or determine and for which any remedy at law would be inadequate. As such, the Company agrees that if the Company fails or refuses to fulfill any of its obligations under this Agreement or to make any payment or deliver any instrument required hereunder, then the Holders and/or the Representatives shall have the remedy of specific performance, which remedy shall be cumulative and nonexclusive and shall be in addition to any other rights and remedies otherwise available under any other Contract or at law or in equity and to which the Holders and/or the Representatives might be entitled.
Section 7.12. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
Section 7.13. Submission to Jurisdiction. The Company hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of Delaware and the United States of America located in the State of Delaware (the "Delaware Courts") for any litigation arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in a Delaware Court), waives any objection to the laying of venue of any such litigation in any Delaware Court and agrees not to plead or claim that any litigation brought in any Delaware Court has been brought in an inconvenient forum; provided, however, that nothing contained in this Section 7.13 is intended to waive the right of the Company to remove any action or proceeding commenced in any state Delaware Court to an appropriate federal Delaware Court to the extent the basis for such removal exists under applicable Law. The Company hereby irrevocably (i) appoints The Corporation Trust Company (the "Process Agent"), with an office on the date hereof at 1209 Orange Street, Wilmington, Delaware 19801, as its agent to receive on behalf of it and its Assets service of copies of the summons and complaint and any other process which may be served in any such action or proceeding, (ii) agrees that service of process may be made on the Company by mailing, by certified mail, a copy of such process to the Company in care of the Process Agent at the Process Agent's above address, with a copy to the Company at its address for notices specified herein, and (iii) authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, the Company also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing by certified or registered mail, return receipt requested, of any process required by any Delaware Court, to the address specified for notices to the Company in Section 7.01.
Section 7.14. Expenses. Except as otherwise provided herein, each of the Parties shall pay its own expenses incident to this Agreement and the transactions contemplated hereby, including all legal and accounting fees and disbursements. Notwithstanding anything contained herein to the contrary, if any Party commences an action against another Party to enforce any of the terms, covenants, conditions or provisions of this Agreement, or because of a breach or alleged breach by such other Party of its obligations under this Agreement, the prevailing Party in any such action shall be entitled to recover its Losses incurred in connection with the prosecution or defense of such action, from the losing Party.
Section 7.15. No Right of Set Off. Anything herein or elsewhere to the contrary notwithstanding, the Company's obligations to make the payments and deliver the Contingent Shares and Contingent Preferred Shares required under this Agreement and otherwise perform its obligations hereunder shall not be affected by any set off, counterclaim, recoupment, defense or other Claim, right or action that the Company may have against any Person.
Section 7.16. No Partnership, Joint Venture or Agency. Neither the execution, delivery or performance of this Agreement nor the consummation of any of the transactions contemplated hereby is intended, nor will the same be deemed or construed, to create a partnership, joint venture or agency for any purpose between the Company or any Business Unit Entity and the Holders so as to entitle any Holder to any share of the profits of
any Business Unit or to make any Holder in any way responsible for the Debts or Losses of the Company or any Business Unit Entity, including those related to the Business Units.
Section 7.17. Survival of Representations, Warranties, Etc. All representations, warranties, indemnities, covenants and agreements made by the Company in this Agreement or in any certificate, document or other instrument delivered pursuant to this Agreement shall survive the execution and delivery of this Agreement, any delivery of Contingent Shares or Contingent Preferred Shares hereunder and any permitted Transfer of any of the rights of a Holder hereunder, in each case notwithstanding any investigation heretofore or hereafter made by or on behalf of such Holder.
Section 7.18. Payments and Interest. All cash payments payable or to be payable by the Company pursuant to this Agreement shall be payable in immediately available funds and in such coin or currency of the United States of America that, at the time of payment, is legal tender for the payment of public and private debts in the United States of America and shall be made by electronic funds transfer as the payee shall have directed to the Company in writing or, if no such direction shall have been given to the Company, by check payable to the order of the payee and mailed in the manner and at the address referred to in Section 7.01. All amounts due under this Agreement which are not paid when due shall bear interest until paid at the Applicable Federal Rate plus 5%.
Section 7.19. Entire Agreement. This Agreement sets forth all of the promises, agreements, conditions, understandings, warranties and representations among the Parties with respect to the transactions contemplated hereby, and supersedes all prior agreements, arrangements and understandings among the Parties, whether written, oral or otherwise. There are no promises, agreements, conditions, understandings, warranties or representations, oral or written, express or implied, among the Parties concerning the subject matter hereof except as set forth herein.
IN WITNESS WHEREOF, the Company has executed this Agreement as of the date first stated herein.
The Rouse Company
By: /s/ Bruce I. Rothschild ------------------------------------ Printed Name: Bruce I. Rothschild Title: Vice President |
ACCEPTANCE OF APPOINTMENT BY
REPRESENTATIVES
The undersigned hereby (i) acknowledge
that they have agreed to serve, and
hereby accept their respective
appointments, as Representatives under
the foregoing Contingent Stock Agreement
and (ii) assume and agree to perform all
the rights, powers, duties and
obligations set forth with respect to
the Representatives in such Contingent
Stock Agreement.
/s/ Platt W. Davis, III ---------------------------------------- Platt W. Davis, III /s/ David G. Elkins ---------------------------------------- David G. Elkins /s/ Kenneth E. Studdard ---------------------------------------- Kenneth E. Studdard |
EXHIBIT 21
FOLLOWING IS A LIST OF ACTIVE SUBSIDIARIES OF THE REGISTRANT. CERTAIN SUBSIDIARIES THAT ARE INACTIVE, HAVE INSIGNIFICANT ASSETS OR EXIST SOLELY TO PROTECT BUSINESS NAMES BUT DO NOT CONDUCT BUSINESS HAVE BEEN OMITTED. THE OMITTED SUBSIDIARIES, CONSIDERED IN THE AGGREGATE, DO NOT CONSTITUTE A SIGNIFICANT SUBSIDIARY.
ENTITY: PLACE OF FORMATION: ------- ------------------- 10 CCC BUSINESS TRUST MARYLAND 10000 WEST CHARLESTON BOULEVARD, LLC NEVADA 10450 WEST CHARLESTON BOULEVARD, LLC NEVADA 1450 CENTER CROSSING DRIVE, LLC DELAWARE 1451 CENTER CROSSING DRIVE, LLC DELAWARE 1551 HILLSHIRE DRIVE, LLC DELAWARE 1645 VILLAGE CENTER CIRCLE, LLC DELAWARE 170 RETAIL ASSOCIATES, LTD. TEXAS 20 CCC BUSINESS TRUST MARYLAND 30 CCC BUSINESS TRUST MARYLAND 500 WEST ASSOCIATES, LLC UTAH 500 WEST CAPITAL, L.C. UTAH A/T ROUSE LIMITED PARTNERSHIP, THE DELAWARE ABBEY ACQUISITION LLC DELAWARE ACAPURANA PARTICIPACOES LTDA BRAZIL ACB PARKING BUSINESS TRUST MARYLAND ALAMEDA MALL ASSOCIATES ILLINOIS ALAMEDA MALL, L.L.C. DELAWARE ALBARPA PARTICIPACOES LTDA. BRAZIL ALDERWOOD MALL L.L.C. DELAWARE ALDERWOOD MALL HOLDING L.L.C. DELAWARE ALIANSCE ADMINISTRACAO DE EMPREENDIMENTOS COMERCIAIS LTDA. BRAZIL ALIANSCE ADMINISTRACAO DE SHOPPING CENTERS LTDA. BRAZIL ALIANSCE SHOPPING CENTERS S.A. BRAZIL ALLENTOWNE MALL, LLC DELAWARE ALPAR INVESTIMENTOS E PARTICIPACOES S.A. BRAZIL AUGUSTA MALL ANCHOR ACQUISITION, LLC DELAWARE AUGUSTA MALL ANCHOR HOLDING, LLC DELAWARE AUGUSTA MALL HOLDING, LLC DELAWARE AUGUSTA MALL, LLC DELAWARE AUSTIN MALL LIMITED PARTNERSHIP DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- AUSTIN MALL, LLC MARYLAND BAKERSFIELD MALL LLC DELAWARE BAKERSFIELD MALL, INC. DELAWARE BALTIMORE CENTER ASSOCIATES LIMITED PARTNERSHIP MARYLAND BALTIMORE CENTER GARAGE LIMITED PARTNERSHIP MARYLAND BALTIMORE CENTER, LLC DELAWARE BARPA EMPREENDIMENTOS E PARTICIPACOES S.A. BRAZIL BAY CITY MALL ASSOCIATES L.L.C. MICHIGAN BAY SHORE MALL II L.L.C. DELAWARE BAY SHORE MALL PARTNERS CALIFORNIA BAY SHORE MALL, INC. DELAWARE BAYBROOK MALL, LLC DELAWARE BAYSIDE CENTER LIMITED PARTNERSHIP MARYLAND BEACHWOOD PLACE HOLDING, LLC DELAWARE BEACHWOOD PLACE MALL, LLC DELAWARE BEACHWOOD PLACE, LLC MARYLAND BELLIS FAIR PARTNERS WASHINGTON BENSON PARK BUSINESS TRUST MARYLAND BEVERAGE OPERATIONS, INC. TEXAS BIRCHWOOD MALL PARTNERS L.L.C. MICHIGAN BIRCHWOOD MALL, INC. DELAWARE BOISE MALL, LLC DELAWARE BOISE TOWN SQUARE ANCHOR ACQUISITION, LLC DELAWARE BOISE TOWNE PLAZA L.L.C. DELAWARE BOSSIER OUTPARCEL, L.P. DELAWARE BOULEVARD ASSOCIATES NEVADA BOULEVARD MALL I LLC NEVADA BOULEVARD MALL II LLC NEVADA BOULEVARD MALL, INC. DELAWARE BRIDGELAND GP, LLC DELAWARE BRIDGEWATER COMMONS MALL DEVELOPMENT, LLC MARYLAND BRIDGEWATER COMMONS MALL II, LLC DELAWARE BRIDGEWATER COMMONS MALL, LLC MARYLAND BSC SHOPPING CENTER S.A. BRAZIL |
ENTITY: PLACE OF FORMATION: ------- ------------------- BTS PROPERTIES L.L.C. DELAWARE BURLINGTON TOWN CENTER II LLC DELAWARE BURLINGTON TOWN CENTER LLC, THE DELAWARE C.V. CENTER, INC. DELAWARE CALEDONIAN HOLDING COMPANY, INC. DELAWARE CAPITAL MALL L.L.C. DELAWARE CAPITAL MALL, INC. DELAWARE CAROLINA PLACE L.L.C. DELAWARE CENCOM S.A. BRAZIL CENTER POINTE PLAZA LLC NEVADA CENTURY PLAZA L.L.C. DELAWARE CENTURY PLAZA, INC. DELAWARE CHAMPAIGN MARKET PLACE L.L.C. DELAWARE CHAPEL HILLS MALL L.L.C. DELAWARE CHATTANOOGA MALL, INC. DELAWARE CHESAPEAKE INVESTORS, LLC DELAWARE CHICO MALL L.L.C. DELAWARE CHICO MALL, L.P. DELAWARE CHRISTIANA ACQUISITION LLC DELAWARE CHRISTIANA ANCHOR ACQUISITION, LLC DELAWARE CHRISTIANA HOLDINGS I LLC DELAWARE CHRISTIANA MALL LLC DELAWARE CLACKAMAS MALL L.L.C. DELAWARE CLOVER ACQUISITIONS LLC DELAWARE CM THEATRE BUSINESS TRUST MARYLAND CMA ACCESS COMPANY, LLC MARYLAND CM-H BUSINESS TRUST MARYLAND CMI CORPORATE PARKING BUSINESS TRUST MARYLAND CM-N BUSINESS TRUST MARYLAND COASTLAND CENTER, INC. DELAWARE COASTLAND CENTER, L.P. DELAWARE COLINA SHOPPING CENTER LTDA. BRAZIL COLLIN CREEK ANCHOR ACQUISITION, LLC DELAWARE COLLIN CREEK MALL, LLC DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- COLONY SQUARE MALL L.L.C. DELAWARE COLUMBIA CROSSING, LLC DELAWARE COLUMBIA LAND HOLDINGS, INC. MARYLAND COLUMBIA MALL BUSINESS TRUST MARYLAND COLUMBIA MALL L.L.C. DELAWARE COLUMBIA MALL SPE, LLC MARYLAND COLUMBIA MALL, INC. MARYLAND COLUMBIA MANAGEMENT, INC. MARYLAND CORONADO CENTER HOLDING L.L.C. DELAWARE CORONADO CENTER L.L.C. DELAWARE COUNTRY HILLS PLAZA, LLC DELAWARE CPM LAND L.L.C. DELAWARE CROCKER DOWNTOWN DEVELOPMENT ASSOCIATES FLORIDA CROCKER MIZNER PARK III, LTD. FLORIDA CROCKER MIZNER PARK IV, LTD. FLORIDA CROSS KEYS VILLAGE SQUARE CONDOMINIUM, INC. MARYLAND CROSSROADS MALL LAND L.L.C., THE DELAWARE CROSSROADS MALL LAND, INC., THE DELAWARE CURA/GGP GAYRIMENKUL INSAAT YONETIM VE GELISTIRME ANONIM SIRKETI TURKEY CURA/GGP INVESTMENT CORPORATION S.A.R.L. LUXEMBOURG CYPRESS LA, LLC DELAWARE DAYJAY ASSOCIATES OKLAHOMA DEERBROOK ANCHOR ACQUISITION, LLC DELAWARE DEERBROOK MALL, LLC DELAWARE DK BURLINGTON TOWN CENTER LLC DELAWARE EAGLE RIDGE MALL, INC. DELAWARE EAGLE RIDGE MALL, L.P. DELAWARE EAST MESA LAND L.L.C. DELAWARE EAST MESA MALL L.L.C. DELAWARE EASTRIDGE SHOPPING CENTER L.L.C. DELAWARE ECE TURKIYE PROJE YONETIMI A.S. TURKEY ECHELON MALL, LLC MARYLAND ECHELON PLACE RETAIL PROMENADE, LLC DELAWARE EDEN PRAIRIE ANCHOR BUILDING L.L.C. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- EDEN PRAIRIE MALL L.L.C. DELAWARE EDEN PRAIRIE MALL, INC. DELAWARE ELK GROVE TOWN CENTER L.L.C. DELAWARE ELK GROVE TOWN CENTER, L.P. DELAWARE EMERSON LAND BUSINESS TRUST MARYLAND EMERSON LAND, LLC DELAWARE ER LAND ACQUISITION L.L.C. DELAWARE FAIRWOOD COMMERCIAL FRONT FOOT BENEFIT COMPANY, LLC MARYLAND FAIRWOOD FRONT FOOT BENEFIT COMPANY, LLC MARYLAND FAIRWOOD-FOUR FRONT-FOOT BENEFIT COMPANY, LLC MARYLAND FAIRWOOD-GPP FRONT-FOOT BENEFIT COMPANY, LLC MARYLAND FAIRWOOD-PROMISE FRONT-FOOT BENEFIT COMPANY, LLC MARYLAND FAIRWOOD-PROSPECT FRONT-FOOT BENEFIT COMPANY, LLC MARYLAND FAIRWOOD-THREE FRONT-FOOT BENEFIT COMPANY, LLC MARYLAND FALLBROOK SQUARE PARTNERS L.L.C. DELAWARE FALLBROOK SQUARE PARTNERS LIMITED PARTNERSHIP DELAWARE FANEUIL HALL BEVERAGE, LLC MARYLAND FANEUIL HALL MARKETPLACE, LLC DELAWARE FASHION PLACE ANCHOR ACQUISITION, LLC DELAWARE FASHION PLACE, LLC DELAWARE FASHION SHOW MALL LLC DELAWARE FIFTY COLUMBIA CORPORATE CENTER, LLC DELAWARE FIRST COLONY MALL, LLC DELAWARE FLORENCE MALL L.L.C. DELAWARE FORTY COLUMBIA CORPORATE CENTER, LLC DELAWARE FOUR OM SPE, LLC DELAWARE FOUR OM, LLC DELAWARE FOUR OWINGS MILLS CORPORATE CENTER LAND LIMITED PARTNERSHIP MARYLAND FOUR STATE FACILITY CORPORATION DELAWARE FOUR STATE PROPERTIES, LLC DELAWARE FOX RIVER SHOPPING CENTER, LLC DELAWARE FRANKLIN PARK MALL COMPANY, LLC MARYLAND FRANKLIN PARK MALL, LLC DELAWARE FRASCATTI INVESTIMENTOS IMOBILIARIOS LTDA. BRAZIL |
ENTITY: PLACE OF FORMATION: ------- ------------------- FREMONT PLAZA L.L.C. DELAWARE FUNDO DE INVESTIMENTO IMOBILIARIO VIA PARQUE SHOPPING BRAZIL GATEWAY CROSSING L.L.C. DELAWARE GATEWAY OVERLOOK BORROWER, LLC DELAWARE GATEWAY OVERLOOK BUSINESS TRUST MARYLAND GATEWAY OVERLOOK II BORROWER, LLC DELAWARE GATEWAY OVERLOOK II BUSINESS TRUST MARYLAND GEAPE LAND HOLDINGS II, INC. MARYLAND GENERAL GROWTH - WESTLAKE (GP), INC. DELAWARE GENERAL GROWTH - WESTLAKE, L.P. DELAWARE GENERAL GROWTH 170 (GP), LLC DELAWARE GENERAL GROWTH 170, LP DELAWARE GENERAL GROWTH MANAGEMENT, INC. DELAWARE GENERAL GROWTH OAK VIEW MALL, INC. DELAWARE GG DR, L.L.C. ILLINOIS GGP - BRIDGELAND, LP MARYLAND GGP 110 HOLDING L.L.C. DELAWARE GGP 110 L.L.C. DELAWARE GGP 110, INC. DELAWARE GGP ACQUISITION, L.L.C. DELAWARE GGP ALA MOANA HOLDINGS L.L.C. DELAWARE GGP ALA MOANA L.L.C. DELAWARE GGP AMERICAN HOLDINGS INC. DELAWARE GGP AMERICAN PROPERTIES INC. DELAWARE GGP BOSSIER MALL, INC. DELAWARE GGP BRASIL PARTICIPACOES S.A. BRAZIL GGP BRAZIL I L.L.C. DELAWARE GGP BRAZIL II L.L.C. DELAWARE GGP CAPITAL TRUST I DELAWARE GGP CONTRACTOR, INC. DELAWARE GGP ECHELON PLACE, LLC DELAWARE GGP GENERAL II, INC. DELAWARE GGP HOLDING II, INC. DELAWARE GGP HOLDING SERVICES, INC. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- GGP HOLDING, INC. DELAWARE GGP INTERNATIONAL, LLC DELAWARE GGP IVANHOE II, INC. DELAWARE GGP IVANHOE IV SERVICES, INC. DELAWARE GGP IVANHOE SERVICES, INC. DELAWARE GGP IVANHOE, INC. DELAWARE GGP JORDAN CREEK L.L.C. DELAWARE GGP KAPIOLANI DEVELOPMENT L.L.C. DELAWARE GGP KNOLLWOOD MALL, LP DELAWARE GGP LIMITED PARTNERSHIP DELAWARE GGP LUX CO. S.A.R.L. LUXEMBOURG GGP MEADOWS MALL L.L.C. DELAWARE GGP NATICK RESIDENCE LLC DELAWARE GGP SAVANNAH L.L.C. DELAWARE GGP TURKEY INVESTCO, LLC DELAWARE GGP TURKEY MANAGEMENT, LLC DELAWARE GGP VENTURES BRAZIL HOLDING L.L.C. DELAWARE GGP VENTURES COSTA RICA, L.L.C. DELAWARE GGP VILLAGE AT JORDAN CREEK L.L.C. DELAWARE GGP/HOMART II L.L.C. DELAWARE GGP/HOMART SERVICES, INC. DELAWARE GGP/HOMART, INC. DELAWARE GGP-ARROWHEAD, INC. DELAWARE GGP-BAY CITY ONE, INC. DELAWARE GGP-BRASS MILL, INC. DELAWARE GGP-BUCKLAND HILLS ONE, INC. DELAWARE GGP-BURLINGTON L.L.C. DELAWARE GGP-CANAL SHOPPES L.L.C. DELAWARE GGP-CAROLINA PLACE, INC. DELAWARE GGP-COLUMBIANA TRUST DELAWARE GGP-CONCORD LAND CO., INC. DELAWARE GGP-CUMBERLAND LAND L.L.C. DELAWARE GGP-FOOTHILLS L.L.C. DELAWARE GGP-FOOTHILLS LAND L.L.C. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- GGP-FOUR SEASONS L.L.C. DELAWARE GGP-GATEWAY MALL L.L.C. DELAWARE GGP-GATEWAY MALL, INC. DELAWARE GGP-GLENBROOK HOLDING L.L.C. DELAWARE GGP-GLENBROOK L.L.C. DELAWARE GGP-GLENDALE, INC. DELAWARE GGP-GRANDVILLE II L.L.C. DELAWARE GGP-GRANDVILLE L.L.C. DELAWARE GGP-GRANDVILLE LAND L.L.C. DELAWARE GGP-KENTUCKY, INC. KENTUCKY GGP-LA PLACE, INC. DELAWARE GGP-LAKELAND, INC. DELAWARE GGP-LAKEVIEW SQUARE, INC. DELAWARE GGP-LANSING MALL, INC. DELAWARE GGPLP L.L.C. DELAWARE GGP-MACON, LLC DELAWARE GGP-MAINE MALL HOLDING L.L.C. DELAWARE GGP-MAINE MALL L.L.C. DELAWARE GGP-MAINE MALL LAND L.L.C. DELAWARE GGP-MALL OF LOUISIANA II, L.P. DELAWARE GGP-MALL OF LOUISIANA, INC. DELAWARE GGP-MALL OF LOUISIANA, L.P. DELAWARE GGP-MINT HILL L.L.C. DELAWARE GGP-MORENO VALLEY, INC. DELAWARE GGP-NATICK SERVICES, INC. DELAWARE GGP-NATICK TRUST MASSACHUSETTS GGP-NATICK WEST L.L.C. DELAWARE GGP-NESHAMINY TRUST DELAWARE GGP-NEWGATE MALL, INC. DELAWARE GGP-NEWPARK L.L.C. DELAWARE GGP-NEWPARK, INC. DELAWARE GGP-NORTH POINT LAND L.L.C. DELAWARE GGP-NORTH POINT, INC. DELAWARE GGP-NORTHBROOK, INC. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- GGP-OTAY RANCH L.L.C. DELAWARE GGP-OTAY RANCH, L.P. DELAWARE GGP-PARAMUS PARK MALL, LLC DELAWARE GGP-PECANLAND II, L.P. DELAWARE GGP-PECANLAND, INC. DELAWARE GGP-PECANLAND, L.P. DELAWARE GGP-PEMBROKE LAKES II, INC. DELAWARE GGP-PEMBROKE LAKES, INC. DELAWARE GGP-REDLANDS MALL L.L.C. DELAWARE GGP-REDLANDS MALL, L.P. DELAWARE GGP-ROCHESTER MALL, INC. DELAWARE GGP-ROGERS RETAIL L.L.C. DELAWARE GGP-SOUTH SHORE PARTNERS, INC. DELAWARE GGP-STEEPLEGATE, INC. DELAWARE GGP-TRS L.L.C. DELAWARE GGP-TRS SERVICES, INC. DELAWARE GGP-TUCSON LAND L.L.C. DELAWARE GGP-TUCSON MALL L.L.C. DELAWARE GGP-TYLER MALL L.L.C. DELAWARE GGP-UC L.L.C. DELAWARE GLENDALE ANCHOR ACQUISITION, LLC DELAWARE GLENDALE HOLDING, INC. DELAWARE GLENDALE HOLDING, L.L.C. DELAWARE GLENDALE I MALL ASSOCIATES, LLC DELAWARE GLENDALE II MALL ASSOCIATES, LLC DELAWARE GLENDALE OHRBACH'S ASSOCIATES, LLC DELAWARE GRAND CANAL SHOPS II, LLC DELAWARE GRAND TRAVERSE MALL HOLDING, INC. DELAWARE GRAND TRAVERSE MALL PARTNERS, LP DELAWARE GRANDVILLE MALL II, INC. DELAWARE GRANDVILLE MALL, INC. DELAWARE GREENGATE MALL, INC. PENNSYLVANIA GREENWOOD MALL L.L.C. DELAWARE GREENWOOD MALL, INC. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- HARBOR PLACE ASSOCIATES LIMITED PARTNERSHIP MARYLAND HARBORPLACE BORROWER, LLC DELAWARE HARBORPLACE MANAGEMENT COMPANY, LLC MARYLAND HARPER'S CHOICE BUSINESS TRUST MARYLAND HEAD ACQUISITION, LP DELAWARE HEX HOLDING, LLC DELAWARE HEXALON REAL ESTATE, INC. DELAWARE HHP GOVERNMENT SERVICES, LIMITED PARTNERSHIP NEVADA HICKORY RIDGE VILLAGE CENTER, INC. MARYLAND HIGHLAND MALL JOINT VENTURE, THE NEW YORK HIGHLAND MALL LIMITED PARTNERSHIP DELAWARE HMF PROPERTIES, LLC DELAWARE HO RETAIL PROPERTIES I LIMITED PARTNERSHIP ILLINOIS HO RETAIL PROPERTIES II LIMITED PARTNERSHIP ILLINOIS HOCKER OXMOOR PARTNERS, LLC KENTUCKY HOCKER OXMOOR, LLC DELAWARE HOOVER MALL HOLDING, L.L.C. DELAWARE HOOVER MALL LIMITED, L.L.C. DELAWARE HOWARD HUGHES CANYON POINTE Q4, LLC NEVADA HOWARD HUGHES CENTERPOINT, LLC NEVADA HOWARD HUGHES CORPORATION, THE DELAWARE HOWARD HUGHES PROPERTIES IV, LLC DELAWARE HOWARD HUGHES PROPERTIES V, LLC DELAWARE HOWARD HUGHES PROPERTIES, INC. NEVADA HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP DELAWARE HOWARD RESEARCH AND DEVELOPMENT CORPORATION, THE MARYLAND HOWARD RETAIL INVESTMENT COMPANY, LLC MARYLAND HRD PARKING DECK BUSINESS TRUST MARYLAND HRD PARKING, INC. MARYLAND HRD REMAINDER, INC. MARYLAND HRE FLANC, INC. DELAWARE HRE KI SMBT DELAWARE HRE PENNSYLVANIA SMBT DELAWARE H-TEX, INCORPORATED TEXAS |
ENTITY: PLACE OF FORMATION: ------- ------------------- HUGHES CORPORATION, THE DELAWARE HULEN MALL, LLC DELAWARE HUNT VALLEY TITLE HOLDING COMPANY, LLC MARYLAND KALAMAZOO MALL L.L.C. DELAWARE KALAMAZOO MALL, INC. DELAWARE KENWOOD MALL HOLDING, LLC DELAWARE KENWOOD MALL L.L.C. DELAWARE KNOLLWOOD MALL, INC. DELAWARE LA CANTERA HOLDING GP, LLC DELAWARE LA CANTERA HOLDING, LP DELAWARE LA CANTERA RETAIL LIMITED PARTNERSHIP TEXAS LA CANTERA SPECIALTY RETAIL, LP TEXAS LA PLACE SHOPPING, L.P. DELAWARE LAKE MEADE & BUFFALO PARTNERSHIP NEVADA LAKESIDE MALL PROPERTY LLC DELAWARE LAKESIDE MALL, LLC MICHIGAN LAKEVIEW SQUARE LIMITED PARTNERSHIP DELAWARE LANCASTER TRUST ILLINOIS LAND TRUST NO. 89433 HAWAII LAND TRUST NO. 89434 HAWAII LAND TRUST NO. FHB-TRES 200601 HAWAII LAND TRUST NO. FHB-TRES 200602 HAWAII LANDMARK MALL L.L.C. DELAWARE LANDMARK MALL, INC. DELAWARE LANSING MALL LIMITED PARTNERSHIP DELAWARE LEARNING MALL L.L.C., THE DELAWARE LINCOLNSHIRE COMMONS, LLC DELAWARE LOCKPORT L.L.C. NEW YORK LOT 48 BUSINESS TRUST MARYLAND LOT 49 BUSINESS TRUST MARYLAND LP ROUSE-HOUSTON, LLC MARYLAND LRVC BUSINESS TRUST MARYLAND LYNNHAVEN HOLDING L.L.C. DELAWARE LYNNHAVEN MALL L.L.C. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- MAJESTIC PARTNERS-PROVO, LLC UTAH MALL ENTRANCES BUSINESS TRUST MARYLAND MALL IN COLUMBIA BUSINESS TRUST, THE MARYLAND MALL IN COLUMBIA HOLDING II L.L.C., THE DELAWARE MALL IN COLUMBIA HOLDING L.L.C., THE DELAWARE MALL OF LOUISIANA HOLDING, INC. DELAWARE MALL OF LOUISIANA LAND HOLDING, LLC DELAWARE MALL OF LOUISIANA LAND, LP DELAWARE MALL OF THE BLUFFS PARTNERS L.L.C. IOWA MALL OF THE BLUFFS, INC. DELAWARE MALL ST. MATTHEWS COMPANY, LLC DELAWARE MALL ST. VINCENT, INC. DELAWARE MALL ST. VINCENT, L.P. DELAWARE MAYFAIR PROPERTY INC. DELAWARE MERRICK PARK HOLDING, LLC DELAWARE MERRICK PARK LLC MARYLAND MERRICK PARK PARKING LLC DELAWARE MERRIWEATHER POST BUSINESS TRUST MARYLAND MIZNER PARK HOLDINGS I, LLC DELAWARE MIZNER PARK HOLDINGS II, LLC DELAWARE MIZNER PARK HOLDINGS III, LLC DELAWARE MIZNER PARK HOLDINGS IV, LLC DELAWARE MIZNER PARK HOLDINGS V, LLC DELAWARE MIZNER PARK VENTURE, LLC DELAWARE MONDAWMIN BUSINESS TRUST MARYLAND MONTCLAIR PLAZA L.L.C. DELAWARE MSAB HOLDINGS L.L.C. DELAWARE MSAB HOLDINGS, INC. DELAWARE MSM PROPERTY L.L.C. DELAWARE NACIONAL IGUATEMI ADMININISTRACAO LTDA. BRAZIL NACIONAL IGUATEMI BAHIA ADMINISTRACAO E PARTICIPACOES LTDA. BRAZIL NATICK MALL, LLC DELAWARE NATICK RETAIL, LLC DELAWARE NESHAMINY MALL JOINT VENTURE LIMITED PARTNERSHIP ILLINOIS |
ENTITY: PLACE OF FORMATION: ------- ------------------- NEW ORLEANS RIVERWALK ASSOCIATES LOUISIANA NEW ORLEANS RIVERWALK LIMITED PARTNERSHIP MARYLAND NEW RIVER ASSOCIATES ARIZONA NEWGATE MALL LAND ACQUISITION, LLC DELAWARE NEWPARK ANCHOR ACQUISITION, LLC DELAWARE NEWPARK MALL L.L.C. DELAWARE NORTH STAR ANCHOR ACQUISITION, LLC DELAWARE NORTH STAR MALL, LLC DELAWARE NORTHBROOK COURT I L.L.C. DELAWARE NORTHBROOK COURT II L.L.C. DELAWARE NORTHBROOK COURT L.L.C. DELAWARE NORTHGATE MALL L.L.C. DELAWARE NORTHWEST ASSOCIATES MARYLAND NORTHWEST OHIO MALL L.L.C. DELAWARE NSMJV, LLC DELAWARE O.M. INVESTMENT II LIMITED PARTNERSHIP MARYLAND O.M. INVESTMENT LIMITED PARTNERSHIP MARYLAND O.M. LAND DEVELOPMENT, LLC MARYLAND O.M. MALL COMPANY, LLC MARYLAND OAK BROOK URBAN VENTURE, L.P. ILLINOIS OAK VIEW MALL L.L.C. DELAWARE OAKBROOK FACILITIES CORPORATION MARYLAND OAKBROOK SHOPPING CENTER, LLC DELAWARE OAKLAND RIDGE INDUSTRIAL DEVELOPMENT CORPORATION MARYLAND OAKS MALL, LLC DELAWARE OAKWOOD HILLS MALL PARTNERS L.L.P. WISCONSIN OAKWOOD HILLS MALL, INC. DELAWARE OAKWOOD SHOPPING CENTER LIMITED PARTNERSHIP LOUISIANA OGLETHORPE MALL L.L.C. DELAWARE OKLAHOMA MALL L.L.C. DELAWARE OKLAHOMA MALL, INC. DELAWARE ONE OWINGS MILLS CORPORATE CENTER ASSOCIATES LIMITED PARTNERSHIP MARYLAND ONE OWINGS MILLS CORPORATE CENTER, LLC MARYLAND ONE WILLOW COMPANY, LLC DELAWARE |
EXHIBIT 21
ENTITY: PLACE OF FORMATION: ------- ------------------- OWINGS MILLS LIMITED PARTNERSHIP MARYLAND PARAMUS EQUITIES, LLC TEXAS PARAMUS PARK SHOPPING CENTER LIMITED PARTNERSHIP NEW JERSEY PARAMUS PARK, LLC MARYLAND PARCEL C BUSINESS TRUST MARYLAND PARCEL D BUSINESS TRUST MARYLAND PARCIT-IIP LANCASTER VENTURE ILLINOIS PARCITY L.L.C. DELAWARE PARCITY TRUST DELAWARE PARK CITY HOLDING, INC. DELAWARE PARK MALL L.L.C. DELAWARE PARK MALL, INC. DELAWARE PARK MEADOWS MALL HOLDING, LLC DELAWARE PARK MEADOWS MALL, LLC DELAWARE PARK SQUARE LIMITED PARTNERSHIP MARYLAND PARKE WEST, LLC DELAWARE PARKS AT ARLINGTON, LLC DELAWARE PARKSIDE LIMITED PARTNERSHIP MARYLAND PARKVIEW OFFICE BUILDING LIMITED PARTNERSHIP MARYLAND PAVILIONS AT BUCKLAND HILLS L.L.C. CONNECTICUT PC LANCASTER L.L.C. DELAWARE PC LANCASTER TRUST DELAWARE PDC COMMUNITY CENTERS L.L.C. DELAWARE PDC HOLDING, LLC DELAWARE PDC-EASTRIDGE MALL L.L.C. DELAWARE PDC-RED CLIFFS MALL L.L.C. DELAWARE PEACHTREE MALL L.L.C DELAWARE PECANLAND ANCHOR ACQUISITION, LLC DELAWARE PEMBROKE LAKES MALL LTD. FLORIDA PERIMETER MALL FACILITIES, LLC DELAWARE PERIMETER MALL VENTURE, LLC DELAWARE PERIMETER MALL, LLC MARYLAND PIEDMONT MALL, LLC DELAWARE PIERRE BOSSIER MALL, INC. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- PIERRE BOSSIER MALL, L.P. DELAWARE PINE RIDGE MALL L.L.C. DELAWARE PINES MALL PARTNERS IOWA PINNACLE HILLS, LLC DELAWARE PINNACLE SOUTH, LLC DELAWARE PIONEER OFFICE LIMITED PARTNERSHIP MARYLAND PIONEER PLACE LIMITED PARTNERSHIP MARYLAND PLYMOUTH MEETING PROPERTY LLC DELAWARE PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP MARYLAND PRICE DEVELOPMENT TRS, INC. DELAWARE PRICE FINANCING PARTNERSHIP, L.P. DELAWARE PRICE GP L.L.C. DELAWARE PRICE NT L.L.C. DELAWARE PRICE SPOKANE LIMITED PARTNERSHIP DELAWARE PRICE-ASG L.L.C. DELAWARE PRICE-BOISE COMPANY, LTD. UTAH PRICE-JAMES COMPANY UTAH PRINCE KUHIO PLAZA, INC. DELAWARE PRINCETON LAND EAST, LLC DELAWARE PRINCETON LAND, LLC DELAWARE PROVIDENCE PLACE HOLDINGS, LLC DELAWARE PROVO MALL DEVELOPMENT COMPANY, LTD. UTAH PROVO MALL L.L.C. DELAWARE RASCAP REALTY, LTD. NEW YORK RED ROCK INVESTMENT, LLC NEVADA REDLANDS LAND ACQUISITION COMPANY L.L.C. DELAWARE REDLANDS LAND ACQUISITION COMPANY, L.P. DELAWARE REDLANDS LAND HOLDING L.L.C. DELAWARE RIDGEDALE CENTER, LLC MARYLAND RII HOLDING, LLC TEXAS RIO WEST L.L.C. DELAWARE RIVER HILLS MALL, LLC DELAWARE RIVERCHASE ANCHOR ACQUISITION, LLC DELAWARE RIVERS PARK ABC, LLC DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- RIVERSPARK ASSOCIATES LIMITED PARTNERSHIP MARYLAND ROCHESTER MALL LLC DELAWARE ROGERS RETAIL L.L.C. DELAWARE ROGUE VALLEY MALL HOLDING L.L.C. DELAWARE ROGUE VALLEY MALL, L.L.C. DELAWARE ROUSE COMMERCIAL PROPERTIES, LLC MARYLAND ROUSE COMPANY AT OWINGS MILLS, LLC, THE MARYLAND ROUSE COMPANY BT, LLC, THE MARYLAND ROUSE COMPANY LP, THE DELAWARE ROUSE COMPANY OF FLORIDA, LLC, THE FLORIDA ROUSE COMPANY OF GEORGIA, LLC, THE GEORGIA ROUSE COMPANY OF LOUISIANA, LLC, THE MARYLAND ROUSE COMPANY OF MASSACHUSETTS, LLC, THE MARYLAND ROUSE COMPANY OF MICHIGAN, LLC, THE MARYLAND ROUSE COMPANY OF MINNESOTA, LLC, THE MARYLAND ROUSE COMPANY OF NEW JERSEY, LLC, THE NEW JERSEY ROUSE COMPANY OF NEW YORK, LLC, THE NEW YORK ROUSE COMPANY OF OHIO, LLC, THE OHIO ROUSE COMPANY OF OREGON, LLC, THE MARYLAND ROUSE COMPANY OF TEXAS, LLC, THE TEXAS ROUSE COMPANY OF WASHINGTON, LLC, THE MARYLAND ROUSE COMPANY OPERATING PARTNERSHIP LP, THE DELAWARE ROUSE COMPANY PROTECTIVE TRUST, INC., THE DELAWARE ROUSE F.S., LLC MARYLAND ROUSE HOLDING COMPANY OF ARIZONA, LLC, THE MARYLAND ROUSE HOLDING LIMITED PARTNERSHIP MARYLAND ROUSE INVESTING COMPANY, LLC MARYLAND ROUSE LLC DELAWARE ROUSE OAKBROOK, LLC DELAWARE ROUSE OFFICE MANAGEMENT OF ARIZONA, LLC MARYLAND ROUSE PROVIDENCE LLC DELAWARE ROUSE RIDGEDALE HOLDING, LLC MARYLAND ROUSE RIDGEDALE, LLC DELAWARE ROUSE SI SHOPPING CENTER, LLC MARYLAND |
ENTITY: PLACE OF FORMATION: ------- ------------------- ROUSE SOUTHLAND, LLC MARYLAND ROUSE TRANSPORTATION, LLC MARYLAND ROUSE TRI-PARTY MISCELLANEOUS, LLC MARYLAND ROUSE TRI-PARTY TRS, INC. MARYLAND ROUSE-ABBEY, LLC MARYLAND ROUSE-ARIZONA CENTER, LLC MARYLAND ROUSE-ARIZONA RETAIL CENTER LIMITED PARTNERSHIP MARYLAND ROUSE-BRIDGEWATER COMMONS, LLC MARYLAND ROUSE-EASTFIELD, LLC MARYLAND ROUSE-FAIRWOOD DEVELOPMENT CORPORATION MARYLAND ROUSE-FAIRWOOD DEVELOPMENT LIMITED PARTNERSHIP MARYLAND ROUSE-GOVERNOR'S SQUARE, LLC MARYLAND ROUSE-HIGHLAND, LLC DELAWARE ROUSE-MIAMI, LLC DELAWARE ROUSE-MIZNER PARK, LLC DELAWARE ROUSE-NEW ORLEANS, LLC MARYLAND ROUSE-OAKWOOD SHOPPING CENTER, LLC MARYLAND ROUSE-ORLANDO, LLC DELAWARE ROUSE-PHOENIX CINEMA, LLC MARYLAND ROUSE-PHOENIX CORPORATE CENTER LIMITED PARTNERSHIP MARYLAND ROUSE-PHOENIX DEVELOPMENT COMPANY, LLC MARYLAND ROUSE-PHOENIX MASTER LIMITED PARTNERSHIP MARYLAND ROUSE-PHOENIX THEATRE LIMITED PARTNERSHIP MARYLAND ROUSE-PHOENIX TWO CORPORATE CENTER, LLC MARYLAND ROUSE-PORTLAND, LLC MARYLAND ROUSE-SEATTLE, LLC DELAWARE ROUSE-TOWSON TOWN CENTER, LLC MARYLAND ROUSE-TTC FUNDING, LLC MARYLAND ROUSE-URBAN ACQUISITION, LLC MARYLAND ROUSE-URBAN, LLC MARYLAND ROUSE-WESTLAKE LIMITED PARTNERSHIP MARYLAND ROUSE-WESTLAKE LIMITED PARTNERSHIP II DELAWARE ROUSE-WINCOPIN, LLC MARYLAND RREF HOLDING, LLC TEXAS |
ENTITY: PLACE OF FORMATION: ------- ------------------- RS PROPERTIES INC. DELAWARE RUNNING BROOK BUSINESS TRUST MARYLAND SAINT LOUIS GALLERIA ANCHOR ACQUISITION, LLC DELAWARE SAINT LOUIS GALLERIA HOLDING L.L.C. DELAWARE SAINT LOUIS GALLERIA L.L.C. DELAWARE SAINT LOUIS LAND L.L.C. DELAWARE SALEM MALL, LLC MARYLAND SCGR EMPREENIMENTOS E PARTICIPACOES SA BRAZIL SDT 3 CENTRO COMERCIAL LTDA. BRAZIL SEAPORT MARKETPLACE THEATRE, LLC MARYLAND SEAPORT MARKETPLACE, LLC MARYLAND SEVENTY COLUMBIA CORPORATE CENTER LIMITED PARTNERSHIP MARYLAND SEVENTY COLUMBIA CORPORATE CENTER, LLC DELAWARE SHOPPES AT RIVER CROSSING, LLC DELAWARE SIKES SENTER, LLC DELAWARE SILVER CITY GALLERIA L.L.C. DELAWARE SILVER LAKE MALL, LLC DELAWARE SIXTY COLUMBIA CORPORATE CENTER, LLC DELAWARE SOONER FASHION MALL L.L.C. DELAWARE SOUTH SHORE PARTNERS, L.P. WASHINGTON SOUTH STREET SEAPORT LIMITED PARTNERSHIP MARYLAND SOUTHLAKE MALL L.L.C. DELAWARE SOUTHLAND CENTER HOLDING, LLC MARYLAND SOUTHLAND CENTER, LLC DELAWARE SOUTHLAND MALL, INC. DELAWARE SOUTHLAND MALL, L.P. DELAWARE SOUTHPOINT MALL, LLC DELAWARE SOUTHWEST DENVER LAND L.L.C. DELAWARE SOUTHWEST PLAZA L.L.C. DELAWARE SPOKANE MALL DEVELOPMENT COMPANY LIMITED PARTNERSHIP UTAH SPOKANE MALL L.L.C. DELAWARE SPRING HILL MALL L.L.C. DELAWARE SPRING HILL MALL, INC. DELAWARE ST. CLOUD LAND L.L.C. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- ST. CLOUD MALL HOLDING L.L.C. DELAWARE ST. CLOUD MALL L.L.C. DELAWARE STONE LAKE CORPORATION MARYLAND STONEBRIAR MALL, LLC DELAWARE STONESTOWN SHOPPING CENTER HOLDING L.L.C. DELAWARE STONESTOWN SHOPPING CENTER L.L.C. DELAWARE STONESTOWN SHOPPING CENTER, L.P. DELAWARE SUMMERLIN CENTRE, LLC DELAWARE SUMMERLIN CORPORATION DELAWARE SUPERSTITION SPRINGS HOLDING, LLC DELAWARE SUPERSTITION SPRINGS, INC. DELAWARE TALLAHASSEE ASSOCIATES MARYLAND THC-HRE, LLC MARYLAND THREE OM SPE, LLC DELAWARE THREE OM, LLC DELAWARE THREE OWINGS MILLS CORPORATE CENTER LAND LIMITED PARTNERSHIP MARYLAND THREE RIVERS MALL L.L.C. DELAWARE THREE WILLOW COMPANY, LLC DELAWARE TOWN CENTER DEVELOPMENT COMPANY GP, LLC TEXAS TOWN CENTER DEVELOPMENT COMPANY, LP TEXAS TOWN CENTER EAST BUSINESS TRUST MARYLAND TOWN CENTER EAST PARKING LOT BUSINESS TRUST MARYLAND TOWN EAST MALL, LLC DELAWARE TOWSON TC, LLC MARYLAND TRACY MALL PARTNERS I L.L.C. DELAWARE TRACY MALL PARTNERS II, L.P. DELAWARE TRACY MALL PARTNERS, L.P. DELAWARE TRACY MALL, INC. DELAWARE TRAILS VILLAGE CENTER CO. NEVADA TRC CO-ISSUER, INC. DELAWARE TRC NJ HOLDING, LP DELAWARE TRC PARKING BUSINESS TRUST MARYLAND TRC PROPERTY HOLDINGS, INC. MARYLAND TRC WILLOW, LLC MARYLAND |
ENTITY: PLACE OF FORMATION: ------- ------------------- TRIANGLE BUSINESS CENTER I LIMITED PARTNERSHIP MARYLAND TRI-PARTY MISCELLANEOUS, LLC DELAWARE TRI-PARTY NON-856 ASSETS, LLC DELAWARE TTC MEMBER, LLC MARYLAND TTC SPE, LLC MARYLAND TUCSON ANCHOR ACQUISITION, LLC DELAWARE TV INVESTMENT, LLC DELAWARE TWC COMMERCIAL PROPERTIES, LLC DELAWARE TWC COMMERCIAL PROPERTIES, LP DELAWARE TWC LAND DEVELOPMENT, LLC DELAWARE TWC LAND DEVELOPMENT, LP DELAWARE TWC OPERATING HOLDINGS, INC. DELAWARE TWC OPERATING, LLC DELAWARE TWC OPERATING, LP DELAWARE TWCPC HOLDINGS GP, LLC TEXAS TWCPC HOLDINGS, L.P. TEXAS TWLDC HOLDINGS GP, LLC TEXAS TWLDC HOLDINGS, LP TEXAS TWO OWINGS MILLS CORPORATE CENTER ASSOCIATES LIMITED PARTNERSHIP MARYLAND TWO OWINGS MILLS CORPORATE CENTER, LLC MARYLAND TWO WILLOW COMPANY, LLC DELAWARE TYLER MALL LIMITED PARTNERSHIP DELAWARE TYSONS GALLERIA L.L.C. DELAWARE U.K.-AMERICAN PROPERTIES, INC. DELAWARE U.K.-LASALLE, INC. DELAWARE UC OAKBROOK GENPAR, LLC DELAWARE URBAN SHOPPING CENTERS, LP ILLINOIS VALLEY HILLS MALL L.L.C. DELAWARE VALLEY HILLS MALL, INC. DELAWARE VALLEY PLAZA ANCHOR ACQUISITION, LLC DELAWARE VCK BUSINESS TRUST MARYLAND VICTORIA WARD CENTER L.L.C. DELAWARE VICTORIA WARD ENTERTAINMENT CENTER L.L.C. DELAWARE VICTORIA WARD SERVICES, INC. DELAWARE |
ENTITY: PLACE OF FORMATION: ------- ------------------- VICTORIA WARD, LIMITED DELAWARE VILLAGE OF CROSS KEYS, LLC, THE MARYLAND VISALIA MALL L.L.C. DELAWARE VISALIA MALL, L.P. DELAWARE VISTA RIDGE MALL, LLC DELAWARE WARD GATEWAY-INDUSTRIAL-VILLAGE, LLC DELAWARE WARD PLAZA-WAREHOUSE, LLC DELAWARE WATER TOWER JOINT VENTURE ILLINOIS WATER TOWER LLC DELAWARE WECCR GENERAL PARTNERSHIP TEXAS WECCR, INC. TEXAS WEEPING WILLOW RNA, LLC DELAWARE WEST KENDALL HOLDINGS, LLC MARYLAND WEST OAKS ANCHOR ACQUISITION, LLC DELAWARE WEST OAKS MALL TRUST DELAWARE WESTCOAST ESTATES CALIFORNIA WESTLAKE CENTER ASSOCIATES LIMITED PARTNERSHIP WASHINGTON WESTLAKE RETAIL ASSOCIATES, LTD. TEXAS WESTROADS MALL L.L.C. DELAWARE WESTWOOD MALL, LLC DELAWARE WHITE MARSH GENERAL PARTNERSHIP MARYLAND WHITE MARSH MALL ASSOCIATES MARYLAND WHITE MARSH MALL, LLC DELAWARE WHITE MARSH PHASE II ASSOCIATES MARYLAND WHITE MOUNTAIN MALL, LLC DELAWARE WILLOW SPE, LLC DELAWARE WILLOWBROOK COMPANY, LLC, THE MARYLAND WILLOWBROOK II, LLC MARYLAND WILLOWBROOK MALL (TX), LLC DELAWARE WILLOWBROOK MALL ANCHOR ACQUISITION (TX), LLC DELAWARE WILLOWBROOK MALL, LLC DELAWARE WINCOPIN RESTAURANT BUSINESS TRUST MARYLAND WOODBRIDGE CENTER PROPERTY, LLC DELAWARE WOODBRIDGE CENTER, LLC MARYLAND |
ENTITY: PLACE OF FORMATION: ------- ------------------- WOODLANDS BEVERAGE, INC., THE TEXAS WOODLANDS BROKERAGE, LLC, THE TEXAS WOODLANDS COMMERCIAL BROKERAGE CO., LP, THE TEXAS WOODLANDS COMMERCIAL PROPERTIES COMPANY, LP, THE TEXAS WOODLANDS CORPORATION, THE DELAWARE WOODLANDS CUSTOM RESIDENTIAL SALES, LLC, THE TEXAS WOODLANDS CUSTOM SALES, LP, THE TEXAS WOODLANDS HOLDING HOTEL, LP, THE TEXAS WOODLANDS HOTEL GP, LLC, THE DELAWARE WOODLANDS HOTEL, LP, THE TEXAS WOODLANDS LAND DEVELOPMENT CO., LP, THE TEXAS WOODLANDS MALL ASSOCIATES, LLC, THE DELAWARE WOODLANDS OFFICE EQUITIES-95, LTD. TEXAS WOODLANDS OPERATING COMPANY, L.P., THE TEXAS WOODLANDS VTO 2000 COMMERCIAL, GP, LLC TEXAS WOODLANDS VTO 2000 COMMERCIAL, LP TEXAS WV SUB, LLC DELAWARE YANGON PARTICIPACOES LTDA. BRAZIL |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-11067, 333-15907, 333-17021, Amendment No. 1 to 333-23035, 333-37247, 333-37383, 333-41603, 333-58045, 333-68505, 333-76379, 333-76757, 333-82134, 333-82569, 333-84419, 333-88813, 333-88819, Amendment No. 1 to 333-91621, 333-115693, 333-115694, Amendment No. 1 to 333-120373, 333-139349, and 333-145649 on Form S-3 and Registration Statement Nos. 333-07241, 333-11237, 333-28449, 333-74461, 333-79737, 333-105882, 333-125605, 333-135118, and 333-144214 on Form S-8 of our reports dated February 26, 2008, relating to the consolidated financial statements (which report expresses an unqualified opinion and includes an explanatory paragraph regarding the adoption of Financial Accounting Standards Board Interpretation No. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES) and consolidated financial statement schedule of General Growth Properties, Inc. and subsidiaries , and the effectiveness of General Growth Properties, Inc. and subsidiaries' internal control over financial reporting, appearing in this Annual Report on Form 10-K of General Growth Properties, Inc. for the year ended December 31, 2007.
/s/ Deloitte & Touche LLP Chicago, Illinois February 26, 2008 |
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
General Growth Properties, Inc.:
We consent to the incorporation by reference in the registration statements (Nos. 333-11067, 333-15907, 333-17021, 333-23035, 333-37247, 333-37383, 333-41603, 333-58045, 333-68505, 333-76379, 333-76757, 333-82134, 333-82569, 333-84419, 333-88813, 333-88819, 333-91621, 333-115693, 333-115694, 333-120373, 333-139349, and 333-145649) on Form S-3 and the registration statements (Nos. 33-79372, 333-07241, 333-11237, 333-28449, 333-74461, 333-79737, 333-105882, 333-125605, and 333-144214) on Form S-8 of General Growth Properties, Inc. of our report dated February 27, 2007, with respect to the consolidated balance sheets of GGP/Homart, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of income and comprehensive income, stockholders' equity (deficit) and cash flows for each of the years in the three-year period ended December 31, 2006, our report dated February 22, 2008, with respect to the consolidated balance sheets of GGP/Homart II L.L.C. and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income and comprehensive income, changes in members' capital and cash flows for each of the years in the three-year period ended December 31, 2007, and our report dated February 22, 2008, with respect to the consolidated balance sheets of GGP - TRS L.L.C. and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, changes in members' capital and cash flows for the years then ended, which reports appear in the December 31, 2007 annual report on Form 10-K of General Growth Properties, Inc.
/s/ KPMG LLP Chicago, Illinois February 22, 2008 |
EXHIBIT 99.1 THE ROUSE COMPANY LP, A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
Under the terms of an Indenture dated as of February 24, 1995, The Rouse Company LP ("TRCLP") was required to file with the SEC the annual and quarterly reports and other documents which TRCLP would be required to file as if it was subject to Section 13(a) or 15(d) of the Exchange Act, regardless of whether TRCLP was subject to such requirements. TRCLP is no longer required to file reports or other documents with the SEC under Section 13(a) or 15(d). Accordingly, in lieu of such filing, certain financial and other information related to TRCLP has been included as this exhibit 99.1 to the General Growth Properties, Inc. ("GGP") Form 10-K.
All references to numbered notes are to specific footnotes to the consolidated financial statements of TRCLP as included in this exhibit. The descriptions included in such notes are incorporated into the applicable response by reference. The following discussion should be read in conjunction with such consolidated financial statements and related notes. The terms "we," "us," and "our" in this exhibit may also be used to refer to TRCLP and its subsidiaries.
TRCLP (a Delaware limited partnership) is the successor company to The Rouse Company ("TRC"), which was incorporated as a business corporation under the laws of the State of Maryland in 1956. TRC was acquired by GGP (the "Merger") on November 12, 2004. The Merger (Note 1) resulted in TRCLP being a subsidiary of GGP, headquartered in Chicago, Illinois. GGP is a self-administered and self-managed Real Estate Investment Trust ("REIT"). GGP is a Delaware corporation and was organized in 1986.
MANAGEMENT'S OVERVIEW AND SUMMARY
We operate our business in two segments: the Retail and Other segment and the Master Planned Communities segment. Our primary business (our Retail and Other segment) is the ownership, management, leasing and development of rental properties, primarily shopping centers. We also develop and sell land for residential, commercial and other uses primarily in master planned communities (our Master Planned Communities segment). Management believes the most significant operating factor affecting incremental revenues and cash flow and real estate net operating income is increased rents (either base rental revenue or overage rents) earned from tenants at our properties. These rental revenue increases are primarily achieved by re-leasing existing space at higher current rents, increasing occupancy which results in more space generating rent and increasing tenant sales which results in increased overage rents. The expansion and renovation of a property also results in increased cash flows and net income as a result of increased customer traffic, trade area penetration and improved competitive position of the property.
Our Retail and Other segment includes retail or mixed-use centers, and office buildings (the "Consolidated Retail Properties") and interests in retail or mixed-use properties, and office buildings through investments in Unconsolidated Real Estate Affiliates (the "Unconsolidated Retail Properties"). For the purposes of this exhibit, the Consolidated Retail Properties and the Unconsolidated Retail Properties are collectively referred to as our "Operating Property Portfolio."
Our Master Planned Communities segment includes the development and sale of residential and commercial land, primarily in large-scale projects in and around Columbia, Maryland; Summerlin (Las Vegas), Nevada; and Houston, Texas. We develop and sell finished and undeveloped land in such communities to builders and other developers for residential, commercial and other uses. In addition, our Master Planned Communities segment includes our interest in The Woodlands, a master planned community in the Houston, Texas metropolitan area. This project is classified in our Unconsolidated Real Estate Affiliates. Reference is made to Notes 2 and 5 for a further discussion of our investments in Unconsolidated Real Estate Affiliates.
Effective January 1, 2007, Rouse Property Management, Inc. ("RPMI"), a taxable REIT subsidiary of TRCLP, was merged into GGMI, a taxable REIT subsidiary (a "TRS") of GGPLP. Pursuant to SFAS No. 144, the operations of RPMI prior to the merger date have been reported as discontinued operations in the accompanying TRCLP financial statements.
In addition, effective March 31, 2007, through a series of transactions, a private REIT owned by General Growth Properties Limited Partnership ("GGPLP") was contributed to TRCLP and that additional TRS became a qualified REIT subsidiary of that private REIT ("the Private REIT/TRS Restructuring"). This Private REIT/TRS Restructuring resulted in approximately a $328.4 million decrease in our net deferred tax liabilities, an approximate $7.4 million increase in our current taxes payable and an approximate $321.0 million income tax benefit related to the properties now owned by the private REIT. In accordance with the guidance established for mergers involving
affiliates under common control, the financial statements of TRCLP have been restated to include the results of the private REIT for all periods presented, similar to a pooling of interests. This restructuring increased total assets by $2.7 billion, total liabilities by $2.1 billion and total partners' capital by $0.6 billion as of December 31, 2006. As a result of the restatement, net income was increased by $76.6 million and $71.3 million for the years ended December 31, 2006 and 2005, respectively.
MANAGEMENT'S DISCUSSION OF TRCLP OPERATIONS AND LIQUIDITY
REVENUES
Tenant rents (which includes minimum rents, tenant recoveries, and overage rents) increased in 2007 primarily due to increased gross rents from tenants at various properties. In addition, as discussed in Note 11 to the TRCLP consolidated financial statements, we reached settlements with certain of our insurance carriers with respect to property damage and business interruption claims at our Riverwalk Marketplace and Oakwood Center properties. Such settlements yielded the recognition of $6.8 million in additional minimum rents. Such increase was partially offset by a $2.5 million decrease in lease termination income in 2007 as compared to 2006. Tenant recovery revenues at various properties also increased in 2007 due to higher occupancy and property operating expenses. These increases in revenue were more than offset by a $278.9 million decrease in land sales primarily due to decreased sales volumes at our Summerlin development during 2007.
OPERATING EXPENSES
Operating expenses decreased by $123.5 million in 2007 due primarily to a $199.7 million decrease in land sales operations expense as a result of decreased land activity discussed above, partially offset by the non-cash impairment charge of $127.6 we recognized related to Columbia and Fairwood communities. Property operating costs increased primarily as a result of increased insurance and utility costs in 2007. Real estate taxes, repairs and maintenance and other property operating expenses are generally recoverable from tenants and the increases in these expenses are generally consistent with the increases in tenant recovery revenues. The provision for doubtful accounts decreased in 2007 primarily due to the recognition of approximately $13.4 million at Oakwood Center and Riverwalk Marketplace (discussed above) as we recovered previously reserved tenant rents due to business interruption insurance recoveries.
BENEFIT FROM (PROVISION FOR) INCOME TAXES
The benefit from income taxes for the year ended December 31, 2007 resulted primarily from the Private REIT/TRS Restructuring benefit of $321.0 million discussed above and the $50.5 million deferred income tax benefit associated with the impairment charge discussed above. Also impacting the change was the recognition of potential interest expense and penalties related to unrecognized tax benefits recorded as the result of the adoption of FIN 48.
NET INCOME
Interest expense increased as a result of higher interest rates and higher year over year average outstanding debt balances primarily during the first quarter of 2007.
CASH POSITION AT DECEMBER 31, 2007
TRCLP's cash and cash equivalents decreased $41.7 million to $23.7 million as of December 31, 2007 as compared to December 31, 2006. The cash position of TRCLP is largely determined at any point in time by the relative short-term demands for cash by TRCLP and GGP, TRCLP's parent. TRCLP expects to remain current with respect to its debt obligations and be able to access additional funds as required from GGP.
THE ROUSE COMPANY LP
A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
Page Number ------ CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm T-4 Consolidated Balance Sheets as of December 31, 2007 and 2006 T-5 Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2007, 2006 and 2005 T-6 Consolidated Statements of Partners' Capital for the Years Ended December 31, 2007, 2006 and 2005 T-7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005 T-8 Notes to Consolidated Financial Statements T-10 Note 1 Organization T-10 Note 2 Summary of Significant Accounting Policies T-10 Note 3 Acquisitions and Intangibles T-16 Note 4 Discontinued Operations and Gains (Losses) on Dispositions of Interests in Operating Properties T-16 Note 5 Unconsolidated Real Estate Affiliates T-17 Note 6 Mortgages, Notes and Loans Payable T-21 Note 7 Income Taxes T-21 Note 8 Rentals under Operating Leases T-24 Note 9 Transactions with Affiliates T-24 Note 10 Other Assets and Liabilities T-25 Note 11 Commitments and Contingencies T-25 Note 12 Recently Issued Accounting Pronouncements T-27 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners of
The Rouse Company LP
Chicago, Illinois
We have audited the accompanying consolidated balance sheets of The Rouse Company LP and subsidiaries (the "Company") as of December 31, 2007 and 2006, and the related consolidated statements of operations and comprehensive income, partners' capital, and cash flows for each of the three years in the period ended December 31, 2007. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of The Rouse Company LP and subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 7 to the consolidated financial statements, on January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
/s/ Deloitte & Touche LLP Chicago, Illinois February 26, 2008 |
The Rouse Company LP and Subsidiaries
A Subsidiary of General Growth Properties, Inc.
CONSOLIDATED BALANCE SHEETS
December 31, ---------------------------- 2007 2006 ------------ ------------ (Dollars in thousands) ASSETS: Investment in real estate: Land $ 1,556,115 $ 1,552,570 Buildings and equipment 11,040,398 10,855,031 Less accumulated depreciation (1,318,032) (1,039,325) Developments in progress 291,643 247,295 ------------ ------------ Net property and equipment 11,570,124 11,615,571 Investment in and loans to/from Unconsolidated Real Estate Affiliates 1,377,634 1,431,463 Investment land and land held for development and sale 1,639,372 1,655,838 ------------ ------------ Net investment in real estate 14,587,130 14,702,872 Cash and cash equivalents 23,679 65,416 Accounts and notes receivable, net 155,950 148,843 Goodwill 385,683 371,674 Deferred expenses, net 106,028 96,265 Prepaid expenses and other assets 622,645 688,402 ------------ ------------ Total assets $ 15,881,115 $ 16,073,472 ============ ============ LIABILITIES AND PARTNERS' CAPITAL: Mortgages, notes and loans payable $ 9,455,727 $ 9,318,327 Investment in and loans to/from Unconsolidated Real Estate Affiliates 25,632 21,864 Deferred tax liabilities 854,000 1,302,205 Accounts payable and accrued expenses 623,098 583,807 ------------ ------------ Total liabilities 10,958,457 11,226,203 ------------ ------------ Minority interests 3,983 5,798 Commitments and contingencies -- -- Partners' capital: Partners' capital 8,934,378 8,444,777 Accumulated other comprehensive loss (419) (9) ------------ ------------ Total partners' capital, before receivable from General Growth Properties, Inc. 8,933,959 8,444,768 Receivable from General Growth Properties, Inc. (4,015,284) (3,603,297) ------------ ------------ Total partners' capital 4,918,675 4,841,471 ------------ ------------ Total liabilities and partners' capital $ 15,881,115 $ 16,073,472 ============ ============ |
The accompanying notes are an integral part of these consolidated financial statements.
The Rouse Company LP and Subsidiaries
A Subsidiary of General Growth Properties, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Dollars in thousands)
Year Ended December 31, ----------------------------------------- 2007 2006 2005 ----------- ----------- ----------- Revenues: Minimum rents $ 878,975 $ 862,666 $ 811,629 Tenant recoveries 395,118 385,800 382,437 Overage rents 41,804 36,165 31,236 Land sales 145,649 424,516 385,205 Management and other fees 686 664 1,848 Other 59,766 52,372 50,668 ----------- ----------- ----------- Total revenues 1,521,998 1,762,183 1,663,023 ----------- ----------- ----------- Expenses: Real estate taxes 108,608 106,497 100,925 Repairs and maintenance 103,005 102,733 101,310 Marketing 22,042 18,872 27,942 Other property operating expenses 220,014 203,169 234,573 Land sales operations 244,308 316,453 311,815 Property management and other costs 63,600 61,271 41,170 Provision for doubtful accounts 2,287 18,071 7,220 Depreciation and amortization 336,071 396,418 388,930 ----------- ----------- ----------- Total expenses 1,099,935 1,223,484 1,213,885 ----------- ----------- ----------- OPERATING INCOME 422,063 538,699 449,138 Interest income 3,673 5,884 7,384 Interest expense (443,520) (424,515) (346,311) ----------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTERESTS AND EQUITY IN INCOME OF UNCONSOLIDATED AFFILIATES (17,784) 120,068 110,211 Benefit from (provision for) income taxes 307,181 (87,968) (49,497) Minority interests (1,355) (4,656) (1,189) Equity in income of unconsolidated affiliates 107,174 48,484 40,389 ----------- ----------- ----------- INCOME FROM CONTINUING OPERATIONS 395,216 75,928 99,914 Discontinued operations -- (1,224) 11,441 ----------- ----------- ----------- NET INCOME 395,216 74,704 111,355 Other items of comprehensive income (loss): Unrealized losses on available-for-sale securities (44) (328) (82) Net unrealized gains (losses) on financial instruments (366) (558) 870 ----------- ----------- ----------- Total other comprehensive income (loss) (410) (886) 788 ----------- ----------- ----------- COMPREHENSIVE INCOME, NET $ 394,806 $ 73,818 $ 112,143 =========== =========== =========== |
The accompanying notes are an integral part of these consolidated financial statements.
The Rouse Company LP and Subsidiaries
A Subsidiary of General Growth Properties, Inc.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
Accumulated other Receivable from comprehensive General Growth Partners' Capital income (loss) Properties, Inc. Total ------------------ ----------------- ---------------- ------------ (Dollars in thousands) BALANCE AT JANUARY 1, 2005 $ 8,371,626 $ 89 $ (1,171,572) $ 7,200,143 Net income 111,355 -- -- 111,355 Other comprehensive income -- 788 -- 788 Receivable from General Growth Properties, Inc. -- -- (1,220,644) (1,220,644) Tax benefit from stock options 1,067 -- -- 1,067 ------------------ ----------------- ---------------- ------------ BALANCE AT DECEMBER 31, 2005 8,484,048 877 (2,392,216) 6,092,709 Net income 74,704 -- -- 74,704 Other comprehensive loss -- (886) -- (886) Distribution of Augusta Mall to General Growth Properties, Inc. (113,965) -- -- (113,965) Receivable from General Growth Properties, Inc. -- -- (1,211,081) (1,211,081) Tax expense from stock options (10) -- -- (10) ------------------ ----------------- ---------------- ------------ BALANCE AT DECEMBER 31, 2006 8,444,777 (9) (3,603,297) 4,841,471 Cumulative effect of adoption of FIN 48 (6,378) -- -- (6,378) ------------------ ----------------- ---------------- ------------ ADJUSTED BALANCE AT JANUARY 1, 2007 8,438,399 (9) (3,603,297) 4,835,093 Net income 395,216 -- -- 395,216 Other comprehensive loss -- (410) -- (410) Receivable from General Growth Properties, Inc. -- -- (411,987) (411,987) Capital contribution from GGPLP 100,000 -- -- 100,000 Tax benefit from stock options 763 -- -- 763 ------------------ ----------------- ---------------- ------------ BALANCE AT DECEMBER 31, 2007 $ 8,934,378 $ (419) $ (4,015,284) $ 4,918,675 ================== ================= ================ ============ |
The accompanying notes are an integral part of these consolidated financial statements.
The Rouse Company LP and Subsidiaries
A Subsidiary of General Growth Properties, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended December 31, -------------------------------------- 2007 2006 2005 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 395,216 $ 74,704 $ 111,355 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, including discontinued 336,071 397,940 394,410 operations Minority interests, including discontinued operations 1,355 4,642 1,474 Equity in income of Unconsolidated Real Estate Affiliates (107,174) (48,765) (40,389) Operating distributions received from Unconsolidated Real Estate Affiliates 75,804 41,790 22,858 Impairment of investment land and land held for development and sale 127,600 -- -- Participation expense pursuant to Contingent Stock Agreement 31,884 110,740 106,285 Land development and acquisition expenditures (173,989) (200,367) (170,026) Cost of land sales 48,794 175,184 181,301 Provision for doubtful accounts, including discontinued 2,287 18,209 7,228 operations Deferred income taxes, including tax restructuring benefit (375,285) 53,469 26,945 Straight-line rent amortization (14,044) (25,702) (21,509) Amortization of intangibles other than in-place leases 2,182 (5,091) 1,814 Amortization of debt market rate adjustment and other non-cash interest expense (29,508) (30,290) (43,818) Net changes: Accounts and notes receivable (17,880) (18,901) (42,066) Prepaid expenses and other assets 23,100 4,396 (93,556) Accounts payable, accrued expenses and other liabilities (34,445) (94,715) 67,242 Other, including insurance recoveries, net 23,986 12,611 40,627 ---------- ---------- ---------- Net cash provided by operating activities 315,954 469,854 550,175 ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition/development of real estate and improvements and additions to properties (307,514) (226,307) (209,349) Proceeds from sale of investment properties 500 23,117 143,543 Distributions received from Unconsolidated Real Estate Affiliates in excess of income 110,326 27,099 45,032 Increase in investments in Unconsolidated Real Estate Affiliates (20,332) (35,572) (15,481) (Increase) decrease in restricted cash 3,627 21,128 (26,256) Collection of long-term notes receivable -- 4,822 15,374 Other, including insurance recoveries, net 22,805 35,608 10,515 ---------- ---------- ---------- Net cash used by investing activities (190,588) (150,105) (36,622) ---------- ---------- ---------- |
The accompanying notes are an integral part of these consolidated financial statements.
The Rouse Company LP and Subsidiaries
A Subsidiary of General Growth Properties, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
Year ended December 31, ------------------------------------------ 2007 2006 2005 ---------- ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of mortgages, notes and loans payable 846,000 2,058,183 2,072,254 Principal payments on mortgages, notes and loans payable (689,711) (1,073,919) (1,220,621) Advances to General Growth Properties, Inc. (418,797) (1,295,677) (1,286,700) Capital contribution from GGPLP 100,000 -- -- Deferred financing costs (1,811) (10,005) (4,189) Distributions to minority interest partners of excess financing proceeds -- -- (26,816) Other, net (2,784) (7,271) (3,499) ---------- ------------ ------------ Net cash used by financing activities (167,103) (328,689) (469,571) ---------- ------------ ------------ Net change in cash and cash equivalents (41,737) (8,940) 43,982 Cash and cash equivalents at beginning of period 65,416 74,356 30,374 ---------- ------------ ------------ Cash and cash equivalents at end of period $ 23,679 $ 65,416 $ 74,356 ========== ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 533,594 $ 503,473 $ 390,640 Interest capitalized 54,799 47,702 46,706 Income taxes paid 89,455 32,435 7,358 SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Transfer of deferred compensation and retirement accounts from TRCLP to GGMI $ -- $ 20,062 $ -- Distribution of Augusta Mall from TRCLP to GGPLP -- 113,965 -- Tax benefit (expense) related to nonqualified stock options exercised 763 (10) 1,067 Debt assumed by purchasers of land and other assets 2,623 5,640 11,371 Purchase price adjustments related to Merger: Land -- -- (2,720) Building and equipment -- -- (24,808) Development in progress -- -- (52,904) Investment in Unconsolidated Real Estate Affiliates -- -- 49,203 Mortgages, notes and loans payable -- -- 35,862 |
The accompanying notes are an integral part of these consolidated financial statements.
The Rouse Company LP and Subsidiaries
A Subsidiary of General Growth Properties, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 ORGANIZATION
GENERAL
The Rouse Company LP (the successor to The Rouse Company) ("TRC"), ("we," "TRCLP" or "us") is a limited partnership and subsidiary of General Growth Properties, Inc ("GGP") after a merger (the "Merger") of TRC and GGP completed November, 2004. Through our subsidiaries and affiliates, we develop and manage operating rental properties located throughout the United States and develop and sell land for residential, commercial and other uses primarily in master planned communities. The operating properties consist of retail centers, office and industrial buildings and mixed-use and other properties. The retail centers are primarily regional shopping centers in suburban market areas, but also include specialty marketplaces in certain downtown areas and several community retail centers. The office and industrial properties are located primarily in the Baltimore-Washington and Las Vegas markets or are components of large-scale mixed-use properties (which include retail, parking and other uses) located in other urban markets. Land development and sales operations are predominantly related to large scale, long-term community development projects in and around Columbia, Maryland; Summerlin, Nevada; and Houston, Texas.
In this report, we refer to our ownership interests in majority owned or controlled properties as "Consolidated Properties," to our ownership interests in joint ventures in which we own a non-controlling interest as "Unconsolidated Real Estate Affiliates" and the properties owned by such joint ventures as the "Unconsolidated Properties." Our "Company Portfolio" includes both our Consolidated Properties and our Unconsolidated Properties.
PRIVATE REIT/TRS RESTRUCTURING
Effective January 1, 2007, Rouse Property Management, Inc. ("RPMI"), a taxable REIT subsidiary of TRCLP, was merged into GGMI, a taxable REIT subsidiary of GGPLP. Pursuant to SFAS No. 144, the operations of RPMI prior to the merger date have been reported as discontinued operations in the accompanying TRCLP financial statements.
In addition, effective March 31, 2007, through a series of transactions, a private REIT owned by General Growth Properties Limited Partnership ("GGPLP"), a subsidiary of GGP, was contributed to TRCLP and that additional TRS became a qualified REIT subsidiary of that private REIT ("the Private REIT/TRS Restructuring"). This Private REIT/TRS Restructuring resulted in approximately a $328.4 million decrease in our net deferred tax liabilities, an approximate $7.4 million increase in our current taxes payable and an approximate $321.0 million income tax benefit related to the properties now owned by the private REIT. In accordance with the guidance established for mergers involving affiliates under common control, the financial statements of TRCLP have been restated to include the results of the private REIT for all periods presented, similar to a pooling of interests. This restructuring increased total assets by $2.7 billion, total liabilities by $2.1 billion and total partners' capital by $0.6 billion as of December 31, 2006. As a result of the restatement, net income was increased by $76.6 million and $71.3 million for the years ended December 31, 2006 and 2005, respectively.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of TRCLP, our subsidiaries and joint ventures in which we have a controlling interest. For consolidated joint ventures, the non-controlling partner's share of operations (generally computed as the joint venture partner's ownership percentage) is included in Minority Interest. All significant intercompany balances and transactions have been eliminated.
PROPERTIES
Real estate assets acquired subsequent to the Merger date are stated at cost. For property owned by TRC at the Merger date, the carrying value of such assets was set at fair value by purchase accounting adjustments (Note 3). Construction and improvement costs incurred in connection with the development of new properties or the redevelopment of existing properties are capitalized to the extent the total carrying value of the property does not
exceed the estimated fair value of the completed property. Real estate taxes and interest costs incurred during construction periods are capitalized. Capitalized interest costs are based on qualified expenditures and interest rates in place during the construction period. Capitalized real estate taxes and interest costs are amortized over lives which are consistent with the constructed assets.
Pre-development costs, which generally include legal and professional fees and other directly related third-party costs are capitalized as part of the property being developed. In the event a development is no longer deemed to be probable, the costs previously capitalized are expensed.
Tenant improvements, either paid directly or in the form of construction allowances paid to tenants, are capitalized and depreciated over the average lease term. Maintenance and repairs are charged to expense when incurred. Expenditures for significant betterments and improvements are capitalized.
Depreciation or amortization expense is computed using the straight-line method based upon the following estimated useful lives:
YEARS ------- Buildings and improvements 40-45 Equipment, tenant improvements and fixtures 5-10 |
IMPAIRMENT
Our real estate assets, including developments in progress and investment land and land held for development and sale, are reviewed for potential impairment indicators whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment indicators for our retail and other segment are assessed separately for each property and include, but are not limited to, significant decreases in real estate property net operating income and occupancy percentages. Impairment indicators for our master planned communities segment are assessed separately for each community and include, but are not limited to; significant decreases in sales pace, average selling prices; significant increases in expected land development and construction costs or cancellation rates; and projected losses on expected future land sales. Impairment indicators for development in progress or other developments are assessed by project and include, but are not limited to: significant changes in projected completion dates, development costs, and market factors.
If an indicator of potential impairment exists, the asset would be tested for recoverability by comparing its carrying value to the estimated future undiscounted operating cash flow. A real estate asset is considered to be impaired when the estimated future undiscounted operating cash flow is less than its carrying value. To the extent an impairment has occurred, the excess of the carrying value of the asset over its estimated fair value will be expensed to operations.
Based on the results of our evaluations, we recognized a non-cash impairment charge of $127.6 million in 2007 related to our Columbia and Fairwood communities in our master planned communities segment. The carrying value of the investment land and land held for development and sale that was impacted by this non-cash impairment charge totaled $1.64 billion at December 31, 2007 and $1.66 billion at December 31, 2006. This impairment charge is included in land sales operations in our Consolidated Statements of Income and Comprehensive Income.
There were no impairments present for our retail and other segment as of December 31, 2007 and 2006.
ACQUISITIONS OF OPERATING PROPERTIES
Acquisitions of properties are accounted for utilizing the purchase method and, accordingly, the results of operations of acquired properties are included in our results of operations from the respective dates of acquisition. Estimates of future cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, buildings and improvements, equipment and identifiable intangible assets and liabilities such as amounts related to in-place at-market tenant leases, acquired above and below-market tenant and ground leases and tenant relationships. Initial valuations are subject to change until such information is finalized no later than 12 months from the acquisition date.
The fair values of tangible assets are determined on an "if-vacant" basis. The "if-vacant" fair value is allocated to land, where applicable, buildings, tenant improvements and equipment based on comparable sales and other relevant information obtained in connection with the acquisition of the property.
The estimated fair value of acquired in-place at-market tenant leases are the costs we would have incurred to lease the property to the occupancy level of the property at the date of acquisition. Such estimate includes the fair value of leasing commissions, legal costs and tenant coordination costs that would be incurred to lease the property to this occupancy level. Additionally, we evaluate the time period over which such occupancy level would be achieved and include an estimate of the net operating costs (primarily real estate taxes, insurance and utilities) incurred during the lease-up period, which generally ranges up to one year. Acquired in-place at-market tenant leases are amortized over periods that approximate the related lease terms.
Intangible assets and liabilities are also recorded for above-market and below-market in-place tenant and ground leases where we are either the lessor or the lessee. Above-market and below-market in-place tenant and ground lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be received or paid pursuant to the in-place leases and our estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the leases. Above and below-market lease values are amortized over the remaining non-cancelable terms of the respective leases (averaging approximately five years for tenant leases and approximately 50 years for ground leases).
Due to existing contacts and relationships with tenants at our currently owned properties and at properties currently managed for others, no significant value has been ascribed to the tenant relationships at the acquired properties.
The excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Since each individual rental property or each operating property is an operating segment, which is each considered a reporting unit, we perform this test by comparing the fair value of each property with our book value of the property, including goodwill. If the implied fair value of goodwill is less than the book value of goodwill, then an impairment charge would be recorded. As of December 31, 2007 and 2006, we do not believe that any of our goodwill is impaired.
INVESTMENTS IN UNCONSOLIDATED REAL ESTATE AFFILIATES
We account for investments in joint ventures where we own a non-controlling joint interest using the equity method. Under the equity method, the cost of our investment is adjusted for our share of the equity in earnings of such Unconsolidated Real Estate Affiliates from the date of acquisition and reduced by distributions received. Generally, the operating agreements with respect to our Unconsolidated Real Estate Affiliates provide that assets, liabilities and funding obligations are shared in accordance with our ownership percentages. Therefore, we generally also share in the profit and losses, cash flows and other matters relating to our Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages. Differences between the carrying value of our investment in Unconsolidated Real Estate Affiliates and our share of the underlying equity of such Unconsolidated Real Estate Affiliates are amortized over lives ranging from five to forty years.
When cumulative distributions, which are primarily from financing proceeds, exceed our investment in the joint venture, the investment is reported as a liability in our Consolidated Balance Sheets.
For those joint ventures where we own less than approximately 5% interest and have virtually no influence on the joint venture's operating and financial policies, we account for our investments using the cost method.
CASH AND CASH EQUIVALENTS
Highly-liquid investments with maturities at dates of purchase of three months or less are classified as cash equivalents.
INVESTMENTS IN MARKETABLE SECURITIES
Investments in marketable securities with maturities at dates of purchase in excess of three months are carried at amortized cost as it is our intention to hold these investments until maturity. Other investments in marketable equity securities subject to significant restrictions on sale or transfer are classified as available-for-sale and are carried at fair value with unrealized changes in values recognized in other comprehensive income.
RECEIVABLE FROM GENERAL GROWTH PROPERTIES, INC.
The amounts receivable from General Growth Properties, Inc. are non-interest bearing, unsecured, payable on demand, and have been reflected as a component of Partners' Capital.
LEASES
Leases which transfer substantially all the risks and benefits of ownership to tenants are considered finance leases and the present values of the minimum lease payments and the estimated residual values of the leased properties, if any, are accounted for as receivables. Leases which transfer substantially all the risks and benefits of ownership to us are considered capital leases and the present values of the minimum lease payments are accounted for as assets and liabilities.
DEFERRED EXPENSES
Deferred expenses consist principally of financing fees, leasing costs and commissions. Deferred financing fees are amortized to interest expense using the interest method (or other methods which approximate the interest method) over the terms of the respective agreements. Deferred leasing costs and commissions are amortized using the straight-line method over periods that approximate the related lease terms. Deferred expenses in our Consolidated Balance Sheets are shown at cost, net of accumulated amortization of $33.7 million as of December 31, 2007 and $23.6 million as of December 31, 2006.
REVENUE RECOGNITION AND RELATED MATTERS
Minimum rent revenues are recognized on a straight-line basis over the terms of the related leases. Minimum rent revenues also include amounts collected from tenants to allow the termination of their leases prior to their scheduled termination dates and accretion related to above and below-market tenant leases on acquired properties. Termination income recognized for the years ended December 31, 2007, 2006 and 2005 was approximately $10.9 million, $13.3 million and $9.1 million, respectively. Accretion related to above- and below-market tenant leases for the years ended December 31, 2007, 2006 and 2005 was approximately $7.9 million, $12.7 million and $9.5 million, respectively.
Straight-line rents receivable, which represent the current net cumulative rents recognized prior to when billed and collectible as provided by the terms of the leases, of approximately $75.4 million as of December 31, 2007 and $61.3 million as of December 31, 2006 are included in Accounts and notes receivable, net in our Consolidated Balance Sheets.
We provide an allowance for doubtful accounts against the portion of accounts receivable, including straight-line rents, which is estimated to be uncollectible. Such allowances are reviewed periodically based upon our recovery experience. We also evaluate the probability of collecting future rent which is recognized currently under a straight-line methodology. This analysis considers the long-term nature of our leases, as a certain portion of the straight-line rent currently recognizable will not be billed to the tenant until many years into the future. Our experience relative to unbilled deferred rent receivable is that a certain portion of the amounts recorded as straight-line rental revenue are never collected from (or billed to) tenants due to early lease terminations. For that portion of the otherwise recognizable deferred rent that is not deemed to be probable of collection, no revenue is recognized. Accounts and notes receivable in our Consolidated Balance Sheets are shown net of an allowance for doubtful accounts of $52.3 million as of December 31, 2007 and $41.6 million as of December 31, 2006.
Overage rents are recognized on an accrual basis once tenant sales exceed contractual tenant lease thresholds. Recoveries from tenants are established in the leases or computed based upon a formula related to real estate taxes, insurance and other shopping center operating expenses and are generally recognized as revenues in the period the related costs are incurred.
Revenues from land sales are recognized using the full accrual method provided that various criteria relating to the terms of the transactions and our subsequent involvement with the land sold are met. Revenues relating to transactions that do not meet the established criteria are deferred and recognized when the criteria are met or using the installment or cost recovery methods, as appropriate in the circumstances. For land sale transactions in which we are required to perform additional services and incur significant costs after title has passed, revenues and cost of sales are recognized on a percentage of completion basis.
Cost ratios for land sales are determined as a specified percentage of land sales revenues recognized for each community development project. The cost ratios used are based on actual costs incurred and estimates of future development costs and sales revenues to completion of each project. The ratios are reviewed regularly and revised for changes in sales and cost estimates or development plans. Significant changes in these estimates or development plans, whether due to changes in market conditions or other factors, could result in changes to the cost ratio used for a specific project. The specific identification method is used to determine cost of sales for certain parcels of land, including acquired parcels we do not intend to develop or for which development is complete at the date of acquisition.
INCOME TAXES (NOTE 7)
Deferred income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. An increase or decrease in the deferred tax liability that results from a change in circumstances, and which causes a change in our judgment about expected future tax consequences of events, is included in the current tax provision. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. An increase or decrease in the valuation allowance that results from a change in circumstances, and which causes a change in our judgment about the realizability of the related deferred tax asset, is included in the current tax provision.
On January 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Prior to adoption of FIN 48, we did not treat either interest or penalties related to tax uncertainties as part of income tax expense. With the adoption of FIN 48, we have chosen to change this accounting policy. As a result, we recognize and report interest and penalties, if necessary, within our provision for income tax expense from January 1, 2007 forward.
In many of our Master Planned Communities, gains with respect to sales of land for commercial use, condominiums or apartments are reported for tax purposes on the percentage of completion method. Under the percentage of completion method, gain is recognized for tax purposes as costs are incurred in satisfaction of contractual obligations. In contrast, gains with respect to sales of land for single family residential residences are reported for tax purposes under the completed contract method. Under the completed contract method, gain is recognized for tax purposes when 95% of the costs of our contractual obligations are incurred.
DERIVATIVE FINANCIAL INSTRUMENTS
We use derivative financial instruments to reduce risk associated with movements in interest rates. We may choose or be required by lenders to reduce cash flow and earnings volatility associated with interest rate risk exposure on variable-rate borrowings and/or forecasted fixed-rate borrowings by entering into interest rate swaps or interest rate caps. We do not use derivative financial instruments for speculative purposes.
Under interest rate cap agreements, we make initial premium payments to the counterparties in exchange for the right to receive payments from them if interest rates exceed specified levels during the agreement period. Under interest rate swap agreements, we and the counterparties agree to exchange the difference between fixed-rate and variable-rate interest amounts calculated by reference to specified notional principal amounts during the agreement period. Notional principal amounts are used to express the volume of these transactions, but the cash requirements and amounts subject to credit risk are substantially less.
Parties to interest rate exchange agreements are subject to market risk for changes in interest rates and risk of credit loss in the event of nonperformance by the counterparty. We do not require any collateral under these agreements, but deal only with highly-rated financial institution counterparties (which, in certain cases, are also the lenders on the related debt) and expect that all counterparties will meet their obligations.
All of our interest rate swap and other derivative financial instruments qualify as cash flow hedges and hedge our exposure to forecasted interest payments on variable-rate LIBOR-based debt. Accordingly, the effective portion of
the instruments' gains or losses is reported as a component of other comprehensive income and reclassified into earnings when the related forecasted transactions affect earnings. If we discontinue a cash flow hedge because it is no longer probable that the original forecasted transaction will occur, or if a hedge is deemed no longer effective, the net gain or loss in accumulated other comprehensive income (loss) is immediately reclassified into earnings.
We have not recognized any losses as a result of hedge discontinuance and the expense that we recognized related to changes in the time value of interest rate cap agreements and ineffective hedges was insignificant for 2007, 2006 and 2005.
Amounts receivable or payable under interest rate cap and swap agreements are accounted for as adjustments to interest expense on the related debt.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of our financial instruments approximate their carrying value in our financial statements except for debt. We estimated the fair value of our debt based on quoted market prices for publicly-traded debt and on the discounted estimated future cash payments to be made for other debt. The discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality, assume the debt is outstanding through maturity and consider the debt's collateral (if applicable). We have utilized market information as available or present value techniques to estimate the amounts required to be disclosed. Since such amounts are estimates, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument.
The carrying amount and estimated fair value of our debt are summarized as follows (in thousands):
2007 2006 --------------------------- ----------------------------- CARRYING ESTIMATED CARRYING ESTIMATED FAIR (IN THOUSANDS) AMOUNT FAIR VALUE AMOUNT VALUE ------------------ ------------ ------------ ------------ -------------- Fixed-rate debt $ 9,358,290 $ 9,334,335 $ 9,030,040 $ 8,937,819 Variable-rate debt 97,437 97,470 288,287 289,692 ------------ ------------ ------------ -------------- $ 9,455,727 $ 9,431,805 $ 9,318,327 $ 9,227,511 ============ ============ ============ ============== |
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. For example, significant estimates and assumptions have been made with respect to useful lives of assets, capitalization of development and leasing costs, provision for income taxes, recoverable amounts of receivables and deferred taxes, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to acquisitions, and cost ratios and completion percentages used for land sales. Actual results could differ from these and other estimates.
RECLASSIFICATIONS AND CORRECTIONS
Certain amounts in the 2006 and 2005 Consolidated Financial Statements have been reclassified to conform to the current year presentation.
NOTE 3 ACQUISITIONS AND INTANGIBLES
The following table summarizes our intangible assets and liabilities (in thousands):
Accumulated Gross Asset (Amortization)/ Net Carrying (Liability) Accretion Amount ----------- --------------- -------------- DECEMBER 31, 2007 Tenant leases: In-place value $ 529,964 $ (304,777) $ 225,187 Above-market 103,478 (67,849) 35,629 Below-market (160,302) 100,421 (59,881) Ground leases: Above-market (16,968) 1,479 (15,489) Below-market 291,907 (19,468) 272,439 Real estate tax stabilization agreement 91,879 (12,425) 79,454 DECEMBER 31, 2006 Tenant leases: In-place value $ 559,979 $ (275,689) $ 284,290 Above-market 106,360 (52,702) 53,658 Below-market (163,599) 78,746 (84,853) Ground leases: Above-market (16,968) 1,007 (15,961) Below-market 291,907 (12,836) 279,071 Real estate tax stabilization agreement 91,879 (8,501) 83,378 |
The gross asset balances of the in-place value of tenant leases are included in Buildings and equipment in our Consolidated Balance Sheets. The above-market and below-market tenant and ground leases, as well as the real estate tax stabilization agreement intangible asset, are included in Prepaid expenses and other assets and Accounts payable and accrued expenses as detailed in Note 10.
Amortization/accretion of these intangible assets and liabilities and similar assets and liabilities from our unconsolidated real estate affiliates, at our share, decreased income (excluding the impact of provision for income taxes) by $73.6 million in 2007, $145.5 million in 2006, and $162.0 million in 2005.
Future amortization, including our share of such amounts from unconsolidated real estate affiliates, is estimated to decrease income (excluding the impact of provision for income taxes) by approximately $65.8 million in 2008, $60.6 million in 2009, $49.9 million in 2010, and $35.1 million in 2011.
OTHER ACQUISITION ACTIVITIES
In December 2006, we acquired our joint venture partner's interest in the Owings Mills 3 and 4 office properties for $6.0 million.
NOTE 4 DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES
We sell interests in retail centers that are not consistent with our long-term business strategies or not meeting our investment criteria and office and other properties that are not located in our master-planned communities or not part of urban mixed-use properties. We may also dispose of properties for other reasons.
Effective January 1, 2007, RPMI (Note 1) was merged into GGMI, a taxable REIT subsidiary (a "TRS") of GGPLP. The operations of RPMI consist mainly of managing unconsolidated real estate affiliates. The fees charged to Unconsolidated Properties of approximately $15.0 million and $10.9 million for years 2006 and 2005, respectively are included in discontinued operations.
In December 2005, the GGP Board of Directors approved two separate plans to dispose of certain office/industrial properties. The plans included 21 office properties which were sold at an aggregate sale price of approximately $125 million and 16 industrial buildings which were sold at an aggregate sale price of approximately $57 million. All of the properties were located in Hunt Valley and Woodlawn, Baltimore, Maryland. The sales closed in December 2005. As a result of the dispositions, we recognized a loss of approximately $1.3 million in 2006 and a gain of approximately $6.2 million in 2005.
Pursuant to SFAS No. 144, the operations of these properties (net of minority interests) have been reported as discontinued operations in the accompanying consolidated financial statements. Revenues and income before minority interest for TRCLP office/industrial properties for the year ended December 31, 2005 was $24.3 million and $8.1 million, respectively.
Effective October 27, 2006, we distributed our ownership interest in Augusta Mall, LLC to GGP.
The operating results of RPMI and the properties included in discontinued operations are summarized as follows (in thousands):
Year ended December 31, ------------------------ 2006 2005 ---------- ---------- Revenues $ 21,571 $ 37,506 Operating expenses, exclusive of depreciation, amortization and impairments (16,023) (26,735) Interest expense, net (9,556) (829) Depreciation and amortization (1,522) (5,481) Gains (losses) on dispositions of operating properties, net (1,003) 6,249 Income tax benefit, primarily deferred 5,014 1,016 Income allocated to minority interests 14 (285) Equity in income of unconsolidated affiliates 281 -- ---------- ---------- Discontinued operations $ (1,224) $ 11,441 ========== ========== |
NOTE 5 UNCONSOLIDATED REAL ESTATE AFFILIATES
The Unconsolidated Real Estate Affiliates include our non-controlling investments in real estate joint ventures. Generally, we share in the profits and losses, cash flows and other matters relating to our investments in Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages. We manage most of the properties owned by these joint ventures. Some of the joint ventures have elected to be taxed as REITs. We account for these joint ventures using the equity method because we have joint interest and control of these ventures with our venture partners and they have substantive participating rights in such ventures.
At December 31, 2007, these ventures were primarily partnerships and corporations which own retail centers (most of which we manage) and a venture developing the master planned community known as The Woodlands, near Houston, Texas. We own a 52.5% economic interest in certain entities (which we refer to as the "Woodlands Entities") that own The Woodlands, Other assets owned by the Woodlands Entities at the Merger date included approximately 5,500 acres of land, three golf course complexes, a resort conference center, a hotel, interests in five office buildings and other assets. In March 2007, one building was sold; in May 2007, the Woodlands entities sold a Country Club and two golf courses; and in December 2007, the Woodlands entities sold the hotel, for total cash proceeds of $63.8 million and a gain of approximately $45.2 million. In January 2006 one building was sold and in December 2006 four buildings were sold for total cash proceeds of $17.7 million and a gain of approximately $9.0 million. Of this amount, $5.3 million was recorded as operating income, as the building was constructed with the intent to sell and considered inventory.
The private REIT that was contributed to TRCLP in the Private REIT/TRS Restructuring (Note 1) owns a 9.3% interest in General Growth Properties Limited Partnership Limited Liability Company ("GGPLP, LLC") and some smaller interests in five other properties still controlled by GGPLP. In accordance with the guidance established for mergers involving affiliates under common control, the financial statements of TRCLP have been restated to include the equity ownership interest of the private REIT for all periods presented similar to a pooling of interests. This restructuring increased Investment in and loans to/from Unconsolidated Real Estate Affiliates by $255.0 million as of December 31, 2006. As a result of the restatement, equity in income of unconsolidated affiliates was increased by $11.4 million and $18.3 million for the years ended December 31, 2006 and 2005, respectively.
As a result of the ongoing operations of the ventures, cumulative distributions, primarily from financing proceeds, from certain of these ventures exceed our investments in them. This balance aggregated $25.6 million and $21.9 million at December 31, 2007 and 2006, respectively and is included as a liability in our Consolidated Balance Sheets.
The significant accounting policies used by the Unconsolidated Real Estate Affiliates are the same as ours.
CONDENSED COMBINED FINANCIAL INFORMATION OF UNCONSOLIDATED REAL ESTATE AFFILIATES
Following is summarized financial information for our Unconsolidated Real Estate Affiliates as of December 31, 2007 and 2006 and for the years ended December 31, 2007, 2006 and 2005. Certain 2006 and 2005 amounts have been reclassified to conform to the 2007 presentation (in thousands).
DECEMBER 31, DECEMBER 31, (IN THOUSANDS) 2007 2006 ------------------------------------------------------------------------- -------------- -------------- CONDENSED COMBINED BALANCE SHEETS - UNCONSOLIDATED REAL ESTATE AFFILIATES Assets: Land $ 1,678,477 $ 1,698,229 Buildings and equipment 9,807,090 9,704,723 Less accumulated depreciation (2,120,466) (1,887,127) Developments in progress 612,380 218,061 -------------- -------------- Net property and equipment 9,977,481 9,733,886 Investment land and land held for sale and development 287,962 290,273 -------------- -------------- Net investment in real estate 10,265,443 10,024,159 Cash and cash equivalents 119,405 82,077 Accounts and notes receivable, net 201,854 201,737 Deferred expenses, net 118,368 131,637 Prepaid expenses and other assets 3,872,972 4,073,255 -------------- -------------- Total assets $ 14,578,042 $ 14,512,865 ============== ============== Liabilities and Owners' Equity: Mortgages, notes and loans payable $ 9,874,172 $ 9,836,236 Accounts payable and accrued expenses 495,965 424,227 Minority interest 79,312 135,877 Owners' equity 4,128,593 4,116,525 -------------- -------------- Total liabilities and owners' equity $ 14,578,042 $ 14,512,865 ============== ============== INVESTMENT IN AND LOANS TO/FROM UNCONSOLIDATED REAL ESTATE AFFILIATES, NET Owners' equity $ 4,128,593 $ 4,116,525 Less joint venture partners' equity (3,497,965) (3,471,967) Capital or basis differences and loans 721,374 765,041 -------------- -------------- Investment in and loans to/from Unconsolidated Real Estate Affiliates, net $ 1,352,002 $ 1,409,599 ============== ============== RECONCILIATION - INVESTMENT IN AND LOANS TO/FROM UNCONSOLIDATED REAL ESTATE AFFILIATES Asset - Investment in and loans to/from Unconsolidated Real Estate Affiliates $ 1,377,634 $ 1,431,463 Liability - Investment in and loans to/from Unconsolidated Real Estate Affiliates (25,632) (21,864) -------------- -------------- Investment in and loans to/from Unconsolidated Real Estate Affiliates, net $ 1,352,002 $ 1,409,599 ============== ============== |
YEARS ENDED DECEMBER 31, -------------------------------------------- (IN THOUSANDS) 2007 2006 2005 -------------------------------------------------------- ------------ ------------ ------------ CONDENSED COMBINED STATEMENTS OF INCOME - UNCONSOLIDATED REAL ESTATE AFFILIATES Revenues: Minimum rents $ 1,047,518 $ 1,006,967 $ 948,542 Tenant recoveries 451,464 428,974 416,699 Overage rents 44,382 44,029 42,887 Land sales 161,938 162,790 158,181 Other 149,750 162,203 126,526 ------------ ------------ ------------ Total revenues 1,855,052 1,804,963 1,692,835 ------------ ------------ ------------ Expenses: Real estate taxes 131,984 128,738 123,649 Repairs and maintenance 111,912 109,121 106,300 Marketing 32,516 31,433 35,166 Other property operating costs 314,203 332,127 278,293 Land sales operations 91,539 103,519 89,561 Provision for doubtful accounts 5,792 4,045 8,320 Property management and other costs 11,509 10,811 10,195 Depreciation and amortization 319,958 320,099 314,082 ------------ ------------ ------------ Total expenses 1,019,413 1,039,893 965,566 ------------ ------------ ------------ Operating income 835,639 765,070 727,269 Interest income 7,980 6,732 4,550 Interest expense (531,040) (511,909) (398,821) Provision for income taxes (6,011) (408) (343) Income allocated to minority interest (5,480) (8,204) (13,596) Equity in income of unconsolidated joint ventures - - (619) ------------ ------------ ------------ Income from continuing operations 301,088 251,281 318,440 ------------ ------------ ------------ Discontinued operations, including gain on dispositions 106,016 18,115 438 ------------ ------------ ------------ Net income $ 407,104 $ 269,396 $ 318,878 ============ ============ ============ EQUITY IN INCOME OF UNCONSOLIDATED REAL ESTATE AFFILIATES Net income of Unconsolidated Real Estate Affiliates $ 407,104 $ 269,396 $ 318,878 Joint venture partners' share of income of Unconsolidated Real Estate Affiliates (276,402) (200,947) (257,101) Amortization of capital or basis differences (23,528) (19,684) (21,388) ------------ ------------ ------------ Equity in income of Unconsolidated Real Estate Affiliates $ 107,174 $ 48,765 $ 40,389 ============ ============ ============ |
NOTE 6 MORTGAGES, NOTES AND LOANS PAYABLE
Mortgages, notes and loans payable are summarized as follows (in thousands):
December 31, --------------------------- 2007 2006 ------------ ------------ Fixed-rate debt: Collateralized mortgages, notes and loans payable $ 6,822,802 $ 6,478,645 Corporate and other unsecured term loans 2,535,488 2,551,395 ------------ ------------ Total fixed-rate debt 9,358,290 9,030,040 ------------ ------------ Variable-rate debt: Collateralized mortgages, notes and loans payable 97,437 288,287 ------------ ------------ Total variable-rate debt 97,437 288,287 ------------ ------------ Total mortgages, notes and loans payable $ 9,455,727 $ 9,318,327 ============ ============ |
The weighted-average annual interest rate (including the effects of swaps and excluding the effects of deferred finance costs) on our mortgages, notes and loans payable was 5.6% at December 31, 2007 and 5.7% at December 31, 2006. Our mortgages, notes and loans payable have various maturities through 2033. The weighted-average remaining term of our mortgages, notes and loans payable was 3.76 years as of December 31, 2007.
At December 31, 2007, we had a $95.0 million interest rate swap agreement that effectively fixed the LIBOR rate (4.22% at December 31, 2007) on a portion of our variable-rate debt through February 2008 at 6.1%. The swap has a notional amount of $95.0 million. The rate on the underlying debt is LIBOR plus 1.3%.
As of December 31, 2007, approximately $11.3 billion of land, buildings and equipment and investment land and land held for development and sale (before accumulated depreciation) have been pledged as collateral for our mortgages, notes and loans payable. Certain properties are subject to financial performance covenants, primarily debt service coverage ratios, which we are in compliance with at December 31, 2007.
The agreements relating to various loans impose limitations on us. The most restrictive of these limit the levels and types of debt we and our affiliates may incur and require us and our affiliates to maintain specified minimum levels of debt service coverage and net worth. The agreements also impose restrictions on sale, lease and certain other transactions, subject to various exclusions and limitations. These restrictions have not and are not expected to limit our normal business activities as we expect to be able to access additional funds as necessary from GGP.
In February 2006, in conjunction with various refinancings by GGP, we issued a $500 million bridge loan ("Bridge Loan"). On May 5, 2006 we fully repaid the Bridge Loan with a portion of the proceeds obtained from the sale of $800 million of senior unsecured notes which provide for semi-annual payments (commencing November 1, 2006) of interest only at a rate of 6.75% and payment of the principal in full on May 1, 2013.
LETTERS OF CREDIT AND SURETY BONDS
We had outstanding letters of credit and surety bonds of approximately $185 million as of December 31, 2007. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.
NOTE 7 INCOME TAXES
TRCLP is a limited partnership, which is an entity disregarded for federal income tax purposes and we are not liable for federal income taxes.
However, as a subsidiary of GGP (which operates as a Real Estate Investment Trust ("REIT")), we own and operate several TRS entities that are taxable corporations that are used by REITs generally to engage in nonqualifying REIT activities or perform nonqualifying services, and therefore we are liable for federal and state income taxes with respect to such TRS entities. Such TRS entities principally engage in the development and sale of land for
residential, commercial and other uses, primarily in and around Columbia, Maryland; Summerlin, Nevada and Houston, Texas. The TRS entities also operate and/or own several retail centers and office and other properties. Except with respect to the TRS entities, management does not believe that we will be liable for significant income taxes at the federal level or in most of the states in which we operate in 2007 and future years. Current federal income taxes of the TRS entities are likely to increase significantly in future years as we exhaust the net loss carryforwards of certain TRS entities and complete certain land development projects. These increases could be significant.
Effective March 31, 2007, through a series of transactions, a private REIT owned by GGPLP was contributed to TRCLP and one of our TRS entities became a qualified REIT subsidiary of that private REIT. This transaction resulted in approximately a $328.4 million decrease in our net deferred tax liabilities, an approximate $7.4 million increase in our current taxes payable and an approximate $321.0 million income tax benefit related to the properties now owned by that private REIT.
The (benefit from) provision for income taxes for the years ended December 31, 2007, 2006 and 2005 are summarized as follows (in thousands):
2007 2006 2005 ---------------------------------- ------------------------------ ------------------------------- Current Deferred Total Current Deferred Total Current Deferred Total -------- ---------- ---------- -------- -------- -------- -------- -------- -------- Continuing operations: Operating income $ 68,104 $ (375,285) $ (307,181) $ 29,483 $ 58,485 $ 87,968 $ 21,525 $ 27,972 $ 49,497 Discontinued operations: Operating income -- -- -- 2 (5,016) (5,014) 11 (1,027) (1,016) -------- ---------- ---------- -------- -------- -------- -------- -------- -------- $ 68,104 $ (375,285) $ (307,181) $ 29,485 $ 53,469 $ 82,954 $ 21,536 $ 26,945 $ 48,481 ======== ========== ========== ======== ======== ======== ======== ======== ======== |
Income tax expense attributable to continuing operations is reconciled to the amount computed by applying the federal corporate tax rate as follows (in thousands):
2007 2006 2005 ---------- ---------- ---------- Tax at statutory rate on income from continuing operations before income taxes $ 30,812 $ 86,715 $ 27,089 Increase in valuations allowance, net 160 -- -- State income taxes, net of federal income tax benefit 1,224 3,069 (98) Tax at statutory rate on (income) loss not subject to federal income taxes and other permanent differences (26,463) (1,816) 22,506 Tax benefit from Private REIT/TRS Restructuring (320,956) -- -- FIN 48 tax expense, excluding interest 3,185 -- -- FIN 48 interest, net of federal income tax benefit 4,857 -- -- ---------- ---------- ---------- (Benefit from) provision for income taxes $ (307,181) $ 87,968 $ 49,497 ========== ========== ========== |
Each TRS is a tax paying component for purposes of classifying deferred tax assets and liabilities. Net deferred tax assets (liabilities) are summarized as follows (in thousands):
2007 2006 ------------ ------------ Total deferred tax assets $ 13,013 $ 15,097 Valuation allowance (1,061) (901) ------------ ------------ Net deferred tax asset 11,952 14,196 Total deferred tax liabilities (854,000) (1,302,205) ------------ ------------ Net deferred tax liabilities $ (842,048) $ (1,288,009) ============ ============ |
The tax effects of temporary differences and loss carryforwards included in the net deferred tax assets (liabilities) at December 31, 2007 and 2006 are summarized as follows (in thousands):
2007 2006 ------------ ------------ Property, primarily differences in depreciation and amortization, the tax basis of land assets and treatment of interest and certain other costs $ (797,358) $ (1,169,296) Deferred income (207,200) (291,634) Interest deduction carryforwards 142,103 142,177 Operating loss and tax credit carryforwards 20,407 30,744 ------------ ------------ Total $ (842,048) $ (1,288,009) ============ ============ |
Although we believe our tax returns are correct, the final determination of tax audits and any related litigation could be different than that which was reported on the returns. In the opinion of management, we have made adequate tax provisions for years subject to examination. Generally, we are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2004 through 2007 and are open to audit by state taxing authorities for years ending December 31, 2003 through 2007. Several of our taxable REIT subsidiaries are under examination by the Internal Revenue Service for the years 2001 through 2005. We are unable to determine when the remaining audits will be resolved.
On January 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.
At January 1, 2007, we had total unrecognized tax benefits of approximately $92.9 million, excluding accrued interest, of which approximately $27.0 million would impact our effective tax rate. The future adoption of SFAS 141 (R) (as defined and described in Note 12) may impact the amounts of total unrecognized tax benefits that would impact our effective tax rate. These unrecognized tax benefits increased our income tax liabilities by $34.4 million, increased goodwill by $28.0 million and cumulatively reduced partners' capital by $6.4 million. As of January 1, 2007, we had accrued interest of approximately $8.6 million related to these unrecognized tax benefits and no penalties. Prior to adoption of FIN 48, we did not treat either interest or penalties related to tax uncertainties as part of income tax expense. With the adoption of FIN 48, we have chosen to change this accounting policy. As a result, we will recognize and report interest and penalties, if necessary, within our provision for income tax expense from January 1, 2007 forward. We recognized potential interest expense related to the unrecognized tax benefits of $5.3 million for the year ended December 31, 2007. During the year ended December 31, 2007, we recognized previously unrecognized tax benefits, excluding accrued interest, of $14.8 million, which decreased goodwill. The recognition of the previously unrecognized tax benefits resulted in the reduction of interest expense accrued related to these amounts. At December 31, 2007, we had total unrecognized tax benefits of approximately $89.9 million excluding accrued interest, of which approximately $8.8 million would impact our effective tax rate.
(IN THOUSANDS) 2007 ------------------------------------------------- ---------- Unrecognized tax benefits, opening balance $ 92,922 Gross increases - tax positions in prior period 1,672 Gross increases - tax positions in current period 10,029 Settlements - Lapse of statute of limitations (14,748) ---------- Unrecognized tax benefits, ending balance $ 89,875 ========== |
Based on our assessment of the expected outcome of existing examinations or examinations that may commence, or as a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits, excluding accrued interest, for tax positions taken regarding previously filed tax returns will materially change from those recorded at January 1, 2007. A material change in unrecognized tax benefits could have a material effect on our statements of operations and comprehensive income. As of December 31, 2007, there is approximately $70.5 million of unrecognized tax benefits, excluding accrued interest, which due to the reasons above, could significantly increase or decrease during the next twelve months.
The TRS net operating loss, charitable contributions, and capital loss carryforwards at December 31, 2007 for federal income tax purposes were approximately $57.8 million in total and will begin to expire in 2007. The TRS interest deduction carryforwards at December 31, 2007 for Federal income tax purposes were approximately $406.0 million and do not expire.
The amounts and expiration dates of operating loss and tax credit carryforwards for tax purposes are as follows:
(IN THOUSANDS) Amount Expiration Dates --------- ---------------- Net operating loss carryforwards - Federal $ 35,719 2008-2026 Net operating loss carryforwards - State 62,179 2008-2026 Capital loss carryforward 9,232 2009 Tax credit carryforwards - Federal AMT 847 n/a |
NOTE 8 RENTALS UNDER OPERATING LEASES
We receive rental income from the leasing of retail and other space under operating leases. The minimum future rentals to be received from tenants under operating leases in effect at our consolidated properties included in continuing operations at December 31, 2007 are summarized as follows (in thousands):
2008 $ 701,977 2009 650,824 2010 579,757 2011 508,442 2012 416,283 Subsequent 1,445,148 |
Minimum future rentals exclude amounts which are payable by certain tenants based upon a percentage of their gross sales or as reimbursement of operating expenses and amortization of above and below-market tenant leases.
We also receive rental income from the leasing of retail and other space under finance leases. Rents under finance leases aggregated $8.3 million in 2007, $8.4 million in 2006, and $9.0 million in 2005.
Minimum rent payments to be received from tenants under finance leases in effect at December 31, 2007 are summarized as follows (in thousands):
2008 $ 8,284 2009 7,266 2010 7,062 2011 7,062 2012 7,062 Subsequent 21,213 |
NOTE 9 TRANSACTIONS WITH AFFILIATES
Effective January 1, 2007, RPMI (Note 1) was merged into GGMI, a taxable REIT subsidiary (a "TRS") of GGPLP. The operations of RPMI consist mainly of managing unconsolidated real estate affiliates. Management fee revenues primarily represent management and leasing fees, financing fees, and fees for other ancillary services performed for the benefit of certain Unconsolidated Real Estate Affiliates and for properties owned by third parties. The fees charged to Unconsolidated Properties of approximately $15.0 million and $10.9 million for years 2006 and 2005, respectively are included in discontinued operations (Note 4).
GGP directly performs functions such as payroll, benefits, and insurance for TRCLP and related costs for such functions are either charged directly to or allocated, as applicable, to TRCLP.
NOTE 10 OTHER ASSETS AND LIABILITIES
The following table summarizes the significant components of prepaid expenses and other assets as of December 31, 2007 and December 31, 2006 (in thousands):
2007 2006 ---------- ---------- Below-market ground leases $ 272,439 $ 279,071 Receivables - finance leases and bonds 78,853 92,263 Security and escrow deposits 37,218 45,436 Real estate tax stabilization agreement 79,454 83,378 Special Improvement District receivable 58,200 64,819 Above-market tenant leases 35,629 53,658 Prepaid expenses 36,680 27,167 Deferred income tax 11,952 14,196 Insurance recovery receivable -- 14,952 Other 12,220 13,462 ---------- ---------- $ 622,645 $ 688,402 ========== ========== |
The following table summarizes the significant components of accounts payable and accrued expenses as of December 31, 2007 and December 31, 2006 (in thousands):
2007 2006 ---------- ---------- Accounts payable, deposits and accrued expenses $ 90,115 $ 130,024 Below-market tenant leases 59,881 84,853 Construction payable 72,516 92,462 Accrued interest 54,838 60,830 FIN 48 liability 103,380 -- Hughes participation payable 86,008 90,793 Accrued real estate taxes 23,859 24,495 Accrued payroll and other employee liabilities 6,206 6,935 Deferred gains/income 27,482 22,149 Tenant and other deposits 15,307 22,354 Insurance reserve 7,320 7,266 Above-market ground leases 15,489 15,961 FIN 47 liability 3,758 3,893 Capital lease obligations 14,315 14,967 Other 42,624 6,825 ---------- ---------- $ 623,098 $ 583,807 ========== ========== |
NOTE 11 COMMITMENTS AND CONTINGENCIES
In the normal course of business, from time to time, we are involved in legal proceedings relating to the ownership and operations of our properties. In management's opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material adverse effect on our consolidated financial position, results of operations or liquidity.
See Note 7 for our obligations related to FIN 48.
We periodically enter into contingent agreements for the acquisition of properties. Each acquisition is subject to satisfactory completion of due diligence and, in the case of property acquired under development, completion of the project. In conjunction with the acquisition of The Grand Canal Shoppes in 2004, we entered into an agreement (the "Phase II Agreement") to acquire the multi-level retail space that is part of The Palazzo in Las Vegas, Nevada (the "Phase II Acquisition") which is connected to the existing Venetian and the Sands Expo and Convention Center facilities and The Grand Canal Shoppes. The project opened on January 18, 2008. The Phase II Agreement provides for the payment of a purchase price amount computed on a 6% capitalization rate on the projected net operating income of the Phase II retail space, as defined by the Phase II Agreement ("Phase II NOI"), up to $38 million and on a capitalization rate of 8% on Phase II NOI in excess of $38 million. We have agreed to an initial purchase price of approximately $300 million and additional payments will be made during the 48 months after closing if Phase II NOI increases. Closing of the acquisition, although subject to customary closing conditions, is now expected to be in the first quarter of 2008.
We lease land or buildings at certain properties from third parties. The leases generally provide us with a right of first refusal in the event of a proposed sale of the property by the landlord. Rental payments are expensed as incurred and have, to the extent applicable, been straight-lined over the term of the lease. Rental expense, including participation rent and excluding amortization of above and below-market ground leases and straight-line rents, was $9.3 million in 2007, $7.5 million in 2006 and $13.7 million in 2005.
The following table summarizes the contractual maturities of our long-term commitments . Both long-term debt and ground leases include the related purchase accounting fair value adjustments:
Subsequent/ (In thousands) 2008 2009 2010 2011 2012 Other (1) Total ----------------------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- Long-term debt-principal $ 1,008,575 $ 1,946,932 $ 2,221,463 $ 969,434 $ 1,497,443 $ 1,811,880 $ 9,455,727 Ground lease payments 13,684 13,708 13,621 13,312 13,451 520,207 587,983 FIN 48 obligations, including interest and penalties 17,515 - - - - 85,865 103,380 ----------- ----------- ------------ ----------- ----------- ------------ ----------- $ 1,039,774 $ 1,960,640 $ 2,235,084 $ 982,746 $ 1,510,894 $ 2,417,952 $10,147,090 =========== =========== ============ =========== =========== ============ =========== |
(1) The remaining FIN 48 liability for which reasonable estimates about the timing of payments cannot be made is disclosed within the Subsequent/ Other column.
OTHER COMMITMENTS AND CONTINGENCIES
(In thousands) Construction contracts for properties in development: Consolidated subsidiaries $ 18,479 Our share of unconsolidated real estate affiliates 8,037 Construction and purchase contracts for land development 54,149 Our share of long-term ground lease obligations of unconsolidated real estate affiliates 117,463 ------------ $ 198,128 ============ |
CONTINGENT STOCK AGREEMENT
In connection with the acquisition of The Hughes Corporation ("Hughes") in 1996, we entered into a Contingent Stock Agreement ("CSA") for the benefit of the former Hughes owners or their successors ("beneficiaries"). Under terms of the CSA, additional shares of common stock (or in certain circumstances, Increasing Rate Cumulative Preferred stock) are issuable to the beneficiaries based on certain indemnification obligations and on the appraised values of four defined groups of acquired assets at specified termination dates to 2009 and/or cash flows generated from the development and/or sale of those assets prior to the termination dates ("earnout periods"). Subsequent to the Merger, shares of GGP common stock are used to satisfy distribution requirements. The distributions of additional shares, based on cash flows, are determined and payable semiannually as of June 30 and December 31. At December 31, 2007 and 2006, 698,601 and 1,814,810, respectively, of GGP shares of common stock ($36.7 million and $81.7 million, respectively) were issued to the beneficiaries, representing their share of cash flows for the years ended December 31, 2007 and 2006, respectively.
The CSA is, in substance, an arrangement under which we and the beneficiaries will share in cash flows from development and/or sale of the defined assets during their respective earnout periods, and GGP will issue additional shares of common stock to the beneficiaries based on the value, if any, of the defined asset groups at specified termination dates. We account for the beneficiaries' shares of earnings from the assets subject to the agreement as an operating expense. We will account for any final stock distributions to the beneficiaries in 2010, which are likely to be significant, in connection with the final valuation at the end of 2009 related to assets we own as of such termination date as additional investments in the related assets (i.e., contingent consideration).
OAKWOOD AND RIVERWALK MARKETPLACE DAMAGES
In September 2005, two of our operating retail properties, Oakwood Center, located in Gretna, Louisiana, and Riverwalk Marketplace, which is located near the convention center in downtown New Orleans, incurred hurricane and/or vandalism damage. We have comprehensive insurance coverage for both property damage and business interruption and, therefore, recorded insurance recovery receivables for both of such coverages. However, in 2006, because of actual and potential disputes with our insurance carriers, we commenced litigation to preserve our rights regarding certain claims. Both properties have now reopened.
The net book value of the property damage at these properties had been estimated to be approximately $36 million. The Oakwood component of such estimate continues to be subject to review and revision as discussed below. During 2007, we reached a final settlement with our insurance carrier with respect to Riverwalk Marketplace in the cumulative amount of approximately $17.5 million. Also during 2007, in connection with Oakwood Center, we reached final settlements with all of the insurance carriers for our first two layers of insurance coverage pursuant to which we have received a cumulative total to date of approximately $50 million. All of such insurance recovery proceeds from such carriers have been applied against the estimated property damage with the remainder recorded as recovery of operating costs and repairs, minimum rents and provision for doubtful accounts. As of December 31, 2007, although all recorded insurance recovery receivables have been collected, the litigation with respect to Oakwood Center remains pending and we continue to have discussions with our remaining insurance carriers at Oakwood Center regarding our unresolved and disputed claims with respect to deductibles, exclusions, additional business interruption coverage and the scope and cost of repair, cleaning, and replacement required at the property. While we believe that our claims are valid, there can be no assurance that any additional amounts will be collected.
NOTE 12 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In August 2007, the FASB proposed FASB Staff Position No. APB 14-a, "Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (including Partial Cash Settlements)" (FSP 14-a). FSP 14-a would require companies to separately account for the liability and equity components of the debt instruments in a manner that will reflect the nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. If the final FSP is issued, it would be retrospectively applied and effective for financial statements issued for fiscal years beginning after December 15, 2007. We are evaluating the impact of FSP 14-a on our financial statements.
In June 2007, the FASB ratified EITF Issue No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards" (EITF 06-11). EITF 06-11 requires companies to recognize the income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid to employees for nonvested equity-classified employee share-based payment awards as an increase to additional paid-in capital. EITF 06-11 is effective for fiscal years beginning after December 15, 2007. We are evaluating the impact of EITF 06-11 on our financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159") which provides companies with an option to report selected financial assets and liabilities at fair value. The standard's objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007. Although SFAS 159 is effective for the year ending December 31, 2008, as permitted, management has elected not to adopt SFAS 159 for its existing financial assets and liabilities on January 1, 2008.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157") which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS 157 also requires expanded disclosure about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. However, on December 14, 2007, the FASB issued proposed Financial Staff Position No. SFAS 157-b (FSP 157-b) which would delay the effective date of SFAS 157 for all non financial assets and non financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. FSP 157-b partially defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008 for those items within its scope. We will adopt SFAS 157 except as it applies to those non financial assets and non financial liabilities as noted in FSP 157-b. In February 2008, the FASB issued two Staff Positions on SFAS 157: (1) FASB Staff Position No. FAS 157-1 (FAS 157-1), "Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement Under Statement 13," and (2) FASB Staff Position No. FAS 157-2 (FAS 157-2), "Effective Date of FASB Statement No. 157." FAS 157-1 excludes FASB Statement No. 13, Accounting for Leases, as well as other accounting pronouncements that address fair value measurements on lease classification or measurement under Statement 13, from SFAS 157's scope. FAS 157-2 partially defers Statement 157's effective date. The partial adoption of SFAS 157 is not expected to have a material impact on our financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity," ("SFAS 150") which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability. The effective date of SFAS 150 relating to measurement and classification provisions has been indefinitely postponed by the FASB. We did not enter into new financial instruments subsequent to May 2003 which would fall within the scope of this statement. Though we have certain limited life ventures that appear to meet the criteria for liability recognition, we do not believe that the adoption of the currently postponed provisions of SFAS 150, if required, will have a material impact on our financial statements.
In December 2007, the FASB issued FASB Statement No. 141 (R) Business Combinations and FASB Statement No. 160 Non-controlling Interests in Consolidated Financial Statements ("SFAS 141 (R)" and "SFAS 160", respectively). SFAS 141 (R) will change how business acquisitions are accounted for and will impact the financial statements both on the acquisition date and in subsequent periods. SFAS 160 will change the accounting and reporting for minority interests, which will be re-characterized as non-controlling interests and classified as a component of equity. SFAS 141 (R) and SFAS 160 are effective for periods beginning on or after December 15, 2008. Early adoption is not permitted. We are currently evaluating the impact of these new statements on our financial statements.