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Exhibit 10.18
STOCKHOLDERS AGREEMENT
Dated as of December 20, 1995
By and Among
GGP/HOMART, INC.
GGP LIMITED PARTNERSHIP
THE COMPTROLLER OF THE STATE OF NEW YORK
AS TRUSTEE OF THE COMMON RETIREMENT FUND
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
USG ANNUITY & LIFE COMPANY
TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
and
GENERAL GROWTH PROPERTIES, INC.
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TABLE OF CONTENTS
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RECITALS
................................................................
1
ARTICLE I.
DEFINITIONS
.............................................................
1
1.1.
"Accredited Investor" .......................................
2
1.2.
"Additional Subscription Dates" .............................
2
1.3.
"Additional Subscription Payment" ...........................
2
1.4.
"Affiliate"
................................................. 2
1.5.
"Aggregate Subscription" ....................................
2
1.6.
"Annual Business Plan" ......................................
2
1.7.
"Assistant Attorney General" ................................
2
1.8.
"Available Subscription" ....................................
3
1.9.
"Benefit Plan Investor" .....................................
3
1.10.
"Board"
..................................................... 3
1.11.
"Called
Subscriptions" ...................................... 3
1.12.
"Cash
Reserves" .............................................
3
1.13.
"Cause"
..................................................... 3
1.14.
"Cause
Notice" .............................................. 3
1.15.
"Closing"
................................................... 3
1.16.
"Closing
Date" .............................................. 3
1.17.
"Change of
Control" ......................................... 3
1.18.
"Class A
Directors" ......................................... 4
1.19.
"Class A
Group" ............................................. 4
1.20.
"Class A Minimum Investment"
................................ 4
1.21.
"Class A
Stockholders" ...................................... 5
1.22.
"Class B
Directors" ......................................... 5
1.23.
"Class B
Group" ............................................. 5
1.24.
"Class B
Minimum Investment" ................................ 5
1.25.
"Class B
Stockholders" ...................................... 5
1.26.
"Class C
Stockholders" ...................................... 5
1.27.
"Code"
...................................................... 5
1.28.
"Company
Assets" ............................................ 5
1.29.
"Company
FFO" ............................................... 5
1.30.
"Cure
Notice" ...............................................
5
1.31.
"Defaulting Stockholder" ....................................
5
1.32.
"Development Manager" .......................................
5
1.33.
"Dissolution Commencement Notice" ...........................
5
1.34.
"Dissolution Purchase Price" ................................
5
1.35.
"Dissolution Trigger Date" ..................................
6
1.36.
"Dissolution Value of the Company"
.......................... 6
1.37.
"Dissolution Value of a Property" ...........................
6
1.38.
"Distributee" ...............................................
6
1.39.
"Electing
Class" ............................................ 6
1.40.
"ERISA"
..................................................... 6
1.41.
"Exchange
Amount" ........................................... 6
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1.42.
"Exchange
Amount Payment Notice" ............................ 6
1.43.
"Exchange
Election Notice" .................................. 6
1.44.
"Exchange
Trigger Date" ..................................... 6
1.45.
"Exchanging Stockholder" ....................................
6
1.46.
"Existing
Lender Arrangements" .............................. 6
1.47.
"Expenses"
.................................................. 6
1.48.
"Commitment" ................................................
8
1.49.
"FTC"
.......................................................
8
1.50.
"Funded
Subscription" ....................................... 9
1.51.
"Funding
Notice" ............................................ 9
1.52.
"GCL"
.......................................................
9
1.53.
"General
Growth Chairman" ................................... 9
1.54.
"General
Growth FFO" ........................................ 9
1.55.
"General
Growth Officers" ................................... 9
1.56.
"General
Growth Share Closing Price" ........................ 9
1.57.
"GG Stock"
.................................................. 9
1.58.
"Homart
Assets" ............................................. 10
1.59.
"Homart
Closing Date" ....................................... 10
1.60.
"Homart
Stock Purchase Agreement" ........................... 10
1.61.
"HSR"
.......................................................
10
1.62.
"Initial
Subscription" ...................................... 10
1.63.
"Investment Company Act" ....................................
10
1.64.
"IRS"
.......................................................
10
1.65.
"Management Transfer Agreement" .............................
10
1.66.
"Material
Adverse Change" ................................... 10
1.67.
"Measurement Period" ........................................
10
1.68.
"Natick
Mall Agreement" ..................................... 10
1.69.
"Net
Disposition Proceeds" ..................................
10
1.70.
"Net
Taxable Income" ........................................
11
1.71.
"Non-Defaulting Stockholder" ................................
11
1.72.
"Non-Funding Stockholder" ...................................
11
1.73.
"Offer"
..................................................... 11
1.74.
"Offer
Effective Date" ...................................... 12
1.75.
"Operating
Cash Flow" ....................................... 12
1.76.
"Organic
Change" ............................................ 12
1.77.
"Person"
.................................................... 12
1.78.
"Plan
Asset Regulations .....................................
12
1.79.
"Planned
Expansion or Renovation Programs" .................. 12
1.80.
"Properties Currently Under Development" ....................
12
1.81.
"Property
Manager" .......................................... 12
1.82.
"Proportionate Share" .......................................
12
1.83.
"Receipts"
.................................................. 12
1.84.
"Relevant
Trade Area" ....................................... 13
1.85.
"Reserve
Amount" ............................................ 14
1.86.
"Response
Notice" ........................................... 14
1.87.
"Rules"
..................................................... 14
1.88.
"Serial
Transferee" ......................................... 14
1.89.
"Serial
Transferor" ......................................... 14
1.90.
"Significant Company Assets" ................................
14
1.91.
"Special
Reserve" ........................................... 14
1.92.
"Sublease"
.................................................. 14
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1.93.
"Subsidiaries" ..............................................
14
1.94.
"Ten Day
Average General Growth Share Closing Price" ........ 14
1.95.
"33 Act"
.................................................... 15
1.96.
"Trading
Day" ............................................... 15
1.97.
"Transfer"
.................................................. 15
1.98.
"Transferee" ................................................
15
ARTICLE II.
ACQUISITION OF SHARES; CLOSING
.......................................... 15
2.1.
Issuance and Acquisition of Shares ..........................
15
2.2.
Closing .....................................................
16
2.3.
Conditions to
Stockholders' Obligations ..................... 16
2.4.
Merger of Homart Newco One, Inc. into the Company; Issuance
of Preferred Stock .......................................
19
2.5.
Termination .................................................
19
ARTICLE III.
GOVERNANCE; BOARD OF DIRECTORS
.......................................... 20
3.1.
Action by Stockholders to Effectuate this Agreement .........
20
3.2. Classes of
Common Stock; Number of Directors; Voting
Rights ...................................................
20
3.3.
Initial Directors ...........................................
22
3.4.
Subsequent Election of Directors ............................
22
3.5.
Removal and Replacement of Directors ........................
22
3.6.
Officers; Management; Dissolution in the Event of Cause .....
22
3.7.
Chairman of the Board .......................................
26
3.8.
Committees ..................................................
26
3.9.
Certificate of Incorporation; By-Laws .......................
26
3.10.
Actions by
Directors ........................................ 27
3.11.
Meetings
of the Board ....................................... 32
3.12.
Restrictions on Other Agreements ............................
33
ARTICLE IV.
OTHER CORPORATE MATTERS
................................................. 33
4.1.
Fiscal Year; Designation of Auditors ........................
33
4.2.
Dividends ...................................................
33
4.3.
Conduct of Business .........................................
33
4.4.
Operation in Accordance with REIT Requirements and Other
Matters ..................................................
34
4.5.
Sources and Uses of Funds; Organizational Expenses;
Reorganization Expenses; Reserves ........................
34
4.6.
Other Activities of Stockholders ............................
36
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4.7.
Reports and Statements ......................................
37
ARTICLE V.
EXCHANGE RIGHT
..........................................................
40
5.1.
The
Exchange Right ..........................................
40
5.2.
Payment of the Exchange Amount ..............................
43
5.3.
Registered Stock; Registration Statement ....................
43
5.4.
Closing of an Exchange Transaction ..........................
44
5.5.
Necessary Government Filings ................................
45
5.6.
Board Representation ........................................
47
5.7.
GG
Properties Organic Change ................................
48
ARTICLE VI.
TRANSFERS OF COMMON STOCK
............................................... 49
6.1.
Certain Restrictions ........................................
49
6.2.
Compliance with Securities Laws .............................
49
6.3.
Transfer of Ownership Interests in Affiliates ...............
49
6.4.
Transfers of Common Stock by Stockholders ...................
50
6.5.
Certain Prohibited Transfers of Common Stock by
Stockholders .............................................
52
6.6.
Expenses of Transfer ........................................
53
6.7.
Indemnification by Transferor ...............................
53
6.8.
Acceptance of Prior Acts ....................................
54
6.9.
Certain Conditions to Transfer ..............................
54
6.10.
Responsibility for Subscriptions ............................
54
ARTICLE VII.
SUBSCRIPTIONS
...........................................................
55
7.1.
Additional Subscriptions ....................................
55
7.2.
Delay or Acceleration of Additional Subscription Payments ...
55
7.3.
Certain Rights and Obligations with Respect to Additional
Subscription Payments ....................................
56
7.4.
Failure to Make Additional Subscription Payments ............
56
7.5.
Funding Shortfalls ..........................................
57
ARTICLE VIII.
DISSOLUTION RIGHT
.......................................................
57
8.1.
Special Dissolution Right ...................................
57
8.2.
Other Dissolutions ..........................................
65
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ARTICLE IX.
LEGENDS
.................................................................
66
ARTICLE X.
POST-CLOSING TERMINATION
................................................ 67
ARTICLE XI.
MISCELLANEOUS
...........................................................
68
11.1.
Recapitalization, Exchanges, etc. Affecting the Common
Stock ....................................................
68
11.2.
Injunctive
Relief ........................................... 68
11.3.
Successors
and Assigns ...................................... 68
11.4.
Amendment;
Waiver ........................................... 69
11.5.
Representations by Stockholders .............................
69
11.6.
Notices
..................................................... 71
11.7.
Further
Assurances .......................................... 71
11.8.
Confidentiality .............................................
71
11.9.
Waiver of
Claims Against Directors .......................... 72
11.10.
APPLICABLE LAW
.............................................. 72
11.11.
Headings
.................................................... 72
11.12.
Entire Agreement
............................................ 72
11.13.
Severability
................................................ 73
11.14.
Counterparts
................................................ 73
11.15.
Arbitration
................................................. 73
11.16.
Consent to
Jurisdiction ..................................... 74
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Schedule I Aggregate,
Initial and Additional Subscriptions
Schedule II Planned
Expansions or Renovation Programs
Schedule III Properties Currently
Under Development
Schedule IV Properties
Securing Wells Fargo Credit Facility
Schedule V Loan
Expansions
Schedule VI List of Existing
Lender Consents
Schedule VII Management
Policies
Schedule VIII
Intentionally Omitted
Schedule IX Excluded Costs
and Expenses
Schedule X Management
Fees and Reimbursements
Schedule XI Intentionally
Omitted
Schedule XII Intentionally
Omitted
Schedule XIII
Planned Regional Malls
Schedule XIV Expenses
Schedule XV Special
Reserves
Schedule XVI Grandfathered
Malls
Schedule XVII
Additional Subscriptions
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Exhibit A Definition of Company FFO
Exhibit B Definition of General Growth FFO
Exhibit C Significant Company Assets
Exhibit D Form of Amended and Restated Certificate of
Incorporation
Exhibit E Form of By-laws
Exhibit F Form of Natick Mall Agreement
Exhibit G Form of Management Transfer Agreement
Exhibit H Form of Sublease
Exhibit I Form of Annual Business Plan
Exhibit J Trade Area Maps
Exhibit K Form of Transferee Agreement
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STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is made and
entered
into as of December 20, 1995, by and among GGP/HOMART, INC., a
Delaware
corporation (the "Company"), GGP LIMITED PARTNERSHIP, a Delaware
limited
partnership ("GGP"), THE COMPTROLLER OF THE STATE OF NEW YORK AS
TRUSTEE OF THE
COMMON RETIREMENT FUND ("NYSCRF"), 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, EQUITABLE LIFE INSURANCE COMPANY OF IOWA, USG
ANNUITY & LIFE
COMPANY, TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA and GENERAL
GROWTH
PROPERTIES, INC., a Delaware corporation ("GG Properties"). GGP,
NYSCRF,
EQUITABLE LIFE INSURANCE COMPANY OF IOWA, USG ANNUITY & LIFE
COMPANY AND
TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA are sometimes referred
to herein
individually as a "Stockholder" or collectively as the
"Stockholders."
RECITALS
A. Upon the Closing (as defined below), the Stockholders will
have
funded their Initial Subscriptions (as defined below) and will own
all of the
issued and outstanding shares of Class A Common Stock, Class B
Common Stock and
Class C Common Stock, each with a par value of $.01 per share, of
the Company
(collectively, the "Common Stock").
B. Each of the Stockholders desires to promote the interests of
the
Company and the mutual interests of the Stockholders by
establishing herein
certain terms and conditions upon which the Common Stock will be
held, including
provisions relating to election of members of the board of
directors of the
Company, governance of the Company, dissolution of the Company, the
transfer or
exchange of the shares of Common Stock and other matters contained
herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable
consideration,
receipt and sufficiency of which is hereby acknowledged, the
Company, the
Stockholders and GG Properties hereby agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings
ascribed to them below:
<PAGE>
1.1. "Accredited Investor" shall mean any institutional
accredited
investor as defined in Rule 501(a)(1), (2), (3) or (7) under the 33
Act or as
defined under Rule 501(a)(8) under the 33 Act (if all of the equity
owners of
such investor are Persons defined in Rule 501(a)(1), (2), (3) or
(7) under the
33 Act); provided that such institutional accredited investor has
total assets
in excess of $200,000,000.
1.2. "Additional Subscription Dates" shall have the meaning set
forth
in Section 7.1.
1.3. "Additional Subscription Payment" shall have the meaning
set
forth in Section 7.1.
1.4. "Affiliate" shall mean, with respect to any Person, any
other
Person that, directly or indirectly through one or more
intermediaries,
controls, or is controlled by, or is under common control with,
such Person, and
the term "Affiliated" has a meaning correlative to the foregoing.
As used
herein, the term "control" shall mean either (i) having (directly
or indirectly
through one or more intermediaries) the exclusive power to direct
the management
and policies of a Person or (ii) having both (A) at least fifty
percent (50%) of
the economic interest in a Person and (B) at least fifty percent
(50%) of the
voting rights with respect to such Person with the full right to
exercise such
vote, and the term "controlled" has a meaning correlative to the
foregoing.
Notwithstanding the foregoing, General Growth Management, Inc., GGP
Management,
Inc., any successor of either of them and any other Person shall be
deemed to be
Affiliates of GGP, provided that GG Properties or GGP, directly or
indirectly,
is entitled to receive at least seventy-five percent (75%) of all
dividends or
other distributions made by such entity.
1.5. "Aggregate Subscription" shall mean, with respect to any
Stockholder, the amount set forth opposite such Stockholder's name
on Schedule I
attached hereto representing the maximum subscription price such
Stockholder may
be obligated to pay to the Company for the total number of shares
of Class A,
Class B or Class C Common Stock set forth opposite such
Stockholder's name on
Schedule I attached hereto.
1.6. "Annual Business Plan" shall have the meaning set forth in
Section 3.10(c).
1.7. "Assistant Attorney General" shall have the meaning set forth
in
Section 5.5(a).
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1.8. "Available Subscription" shall mean, with respect to any
Stockholder as of any date, such Stockholder's Aggregate
Subscription minus the
sum of the Initial Subscription, the Funded Subscriptions and the
Called
Subscriptions (which have not yet been funded) of such Stockholder
to the
Company.
1.9. "Benefit Plan Investor" shall have the meaning set forth
in
Section 4.4(b).
1.10. "Board" shall mean the Board of Directors of the Company
in
office at the applicable time, as elected in accordance with the
provisions of
the Certificate of Incorporation and this Agreement.
1.11. "Called Subscriptions" shall mean, with respect to any
Stockholder as of any date, an amount (not to exceed in the
aggregate such
Stockholder's Available Subscription) that is required to be paid
to the Company
at a date specified in a Funding Notice delivered on or prior to
such date in
accordance with Section 7.2.
1.12. "Cash Reserves" shall mean $_________ to be funded from
the
Initial Subscription plus the aggregate amount of all Reserve
Amounts.
1.13. "Cause" shall have the meaning set forth in Section
3.6(d).
1.14. "Cause Notice" shall have the meaning set forth in
Section
3.6(e).
1.15. "Closing" shall have the meaning set forth in Section
2.2.
1.16. "Closing Date" shall have the meaning set forth in Section
2.2.
1.17. "Change of Control" shall mean, (a) with respect to GGP,
GG
Properties or any successor (that would not otherwise result in a
Change of
Control) ceasing to be the sole general partner of GGP, or (b) with
respect to
GG Properties, any of the following: (i) any Person, other than the
Bucksbaum
Family or any Stockholder becoming the beneficial owner of (x) more
than 25% of
the GG Stock (assuming the Bucksbaum Family has converted all of
their operating
partnership units in GGP into GG Stock) and (y) more than 110% of
the GG Stock
beneficially owned by the Bucksbaum Family (assuming the Bucksbaum
Family has
converted all of their operating partnership units in GGP into GG
Stock); (ii)
the sale or transfer (other than by way
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of merger or any other transaction in which GG Properties'
stockholders receive
interests in a successor entity) of all or substantially all of GG
Properties'
interests in its properties in a single transaction or a series of
related
transactions; (iii) the merger of GGP or GG Properties and another
Person and,
within eighteen (18) months after such merger, a majority of the
Persons who
were officers (holding a position of executive vice president or
higher or
having the responsibilities of any such positions) of GG Properties
90 days
prior to such merger are no longer employed by GG Properties or the
survivor in
the merger (for reasons other than death or disability) in the same
or a senior
position, or with the same or more senior responsibilities, as
prior to the
merger; (iv) during any period of two consecutive calendar years,
individuals
who at the beginning of such period constituted the board of
directors of GG
Properties (together with any new directors whose election or
nomination for
election was approved by a vote of a majority of the directors (or
by a
nominating committee of the board of directors) then still in
office, who either
were directors at the beginning of such period or whose election or
nomination
for election was previously so approved) cease for any reason to
constitute a
majority of the directors of GG Properties or its successor by
merger or
otherwise then in office or (v) the taking of any action, including
the filing
of a petition, with respect to (x) an assignment for the benefit of
creditors of
GGP or GG Properties, (y) the bankruptcy, insolvency,
reorganization,
dissolution or any similar occurrence of GGP or GG Properties or
(z) a
liquidation or any other occurrence that might result in the
termination of GGP
or GG Properties (other than in connection with a merger or other
transaction in
which GG Properties' stockholders receive interests in a successor
entity) which
action, if taken by someone other than GGP or GG Properties has not
been
discharged within sixty (60) days. For purposes of this Section
1.16, the term
"Bucksbaum Family" shall mean Matthew Bucksbaum, his spouse,
children,
descendants and trusts for the benefit of any of them and the
spouse, children,
descendants and estate of Martin Bucksbaum and any trusts for the
benefit of any
of them.
1.18. "Class A Directors" shall have the meaning set forth in
Section
3.2(a).
1.19. "Class A Group" shall have the meaning set forth in
Section
8.1(a).
1.20. "Class A Minimum Investment" shall have the meaning set forth
in
Section 6.4(a).
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1.21. "Class A Stockholders" shall mean the holders of Class A
Common
Stock.
1.22. "Class B Directors" shall have the meaning set forth in
Section
3.2(a).
1.23. "Class B Group" shall have the meaning set forth in
Section
8.1(a).
1.24. "Class B Minimum Investment" shall have the meaning set forth
in
Section 6.4(b).
1.25. "Class B Stockholders" shall mean the holders of Class B
Common
Stock.
1.26. "Class C Stockholders" shall mean the holders of Class C
Common
Stock.
1.27. "Code" shall mean the Internal Revenue Code of 1986, as
amended
from time to time, or any corresponding provisions of succeeding
law.
1.28. "Company Assets" shall mean all right, title and interest of
the
Company or any of its Subsidiaries in and to all or any portion of
the assets of
the Company and such Subsidiaries and any property (real or
personal) or estate
acquired in exchange therefor or in connection therewith.
1.29. "Company FFO" as defined on Exhibit A hereto.
1.30. "Cure Notice" shall have the meaning set forth in Section
3.6(e).
1.31. "Defaulting Stockholder" shall have the meaning set forth
in
Section 7.4.
1.32. "Development Manager" shall mean GGP, General Growth
Management,
Inc., a Delaware corporation, or another Affiliate of GGP
designated by GGP to
act as the development manager for the Company or one or more of
its
Subsidiaries pursuant to Section 3.6(b).
1.33. "Dissolution Commencement Notice" shall have the meaning
set
forth in Section 8.1(a).
1.34. "Dissolution Purchase Price" shall have the meaning set forth
in
Section 8.1(c).
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1.35. "Dissolution Trigger Date" shall mean the earlier of (i)
the
date on which a Change of Control has occurred and (ii) the date
that is four
years after the Homart Closing Date.
1.36. "Dissolution Value of the Company" shall have the meaning
set
forth in Section 8.1(c).
1.37. "Dissolution Value of a Property" shall have the meaning
set
forth in Section 8.1(f).
1.38. "Distributee" shall have the meaning set forth in Section
8.1(f).
1.39. "Electing Class" shall have the meaning set forth in
Section
3.2(b).
1.40. "ERISA" shall have the meaning set forth in Section
4.4(b).
1.41. "Exchange Amount" shall have the meaning set forth in
Section
5.1(b).
1.42. "Exchange Amount Payment Notice" shall have the meaning
set
forth in Section 5.2.
1.43. "Exchange Election Notice" shall have the meaning set forth
in
Section 5.1(a).
1.44. "Exchange Trigger Date" shall mean the earlier to occur of
(i)
the date that is, two years after the Homart Closing Date, (ii) the
date on
which an Organic Change occurs and (iii) the date on which all of
the
Stockholders Aggregate Subscriptions were required to have been
fully paid to
the Company pursuant to Sections 2.1, 7.1 and 7.2.
1.45. "Exchanging Stockholder" shall have the meaning set forth
in
Section 5.1(a)
1.46. "Existing Lender Arrangements" shall have the meaning set
forth
in Section 2.3(h).
1.47.
"Expenses" for a given period of time shall mean a sum equal to
the aggregate of expenses, charges and costs actually paid or
required to be
paid during such period of time in connection with the business of
the Company
or the properties owned by the Company or any wholly-owned
Subsidiary of the
Company including, without limitation:
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(a) expenses, costs, fees and charges in connection with the
ownership, operation, management or leasing of the Company's
properties, including without limitation, all fees and
reimbursement amounts payable pursuant to Section 3.6(b);
(b) expenses, costs and charges in connection with the
repair, maintenance, replacement, alteration or addition or
capital improvement to any property owned by the Company or a
wholly-owned Subsidiary, including any casualty or condemnation
losses to the extent that such losses are not reimbursed during
such period by any third party responsible therefor or through
insurance maintained by the Company;
(c) all payments of scheduled amortization of principal,
interest, points or fees on, or hedging costs associated with,
the mortgage loans or other loans to the Company or its
wholly-owned Subsidiaries, including upon any refinancing
thereof;
(d) all sales, payroll, real estate, personal property,
occupancy and other excise, income, franchise, property,
privilege or similar taxes and assessments imposed upon the
Company, any wholly-owned Subsidiary, or any of their
properties;
(e) utility costs and deposits and other costs and deposits
required to obtain or lease any service or equipment relating
to
the Company, any property owned by the Company or a
wholly-owned
Subsidiary;
(f) leasing commissions and expenditures required to be made
in connection with any lease covering space in or at any
property
owned by the Company or a wholly-owned Subsidiary, including
tenant improvements, tenant allowances and payments, costs
incurred in connection with the Company's assuming a tenant's
lease obligations with respect to other real property and costs
incurred in connection with the Company's exercise of a right
to
"take-back" space in a property owned by the Company or a
wholly-
owned Subsidiary;
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<PAGE>
(g) the Reserve Amount;
(h) the fees and expenses of investment bankers, attorneys,
accountants, architects, engineers, appraisers and other
professionals retained by or on behalf of the Company in
accordance with the terms hereof (other than such fees and
expenses that are referred to in Section 4.5(b));
(i) any liabilities for which the Special Reserve has been
established unless paid from the Special Reserve; and
(j) all other costs and expenses of the Company incurred in
accordance with this Agreement or as determined by the Board.
Notwithstanding the foregoing, there shall, however, be
excluded from Expenses:
(1) all non-cash items such as depreciation and
amortization;
(2) amounts distributed as dividends pursuant to this
Agreement;
(3) all payments and expenses taken into account in
determining Net Disposition Proceeds;
(4) any expense, cost or charge enumerated in clauses (a)
through (j) above incurred in connection with any of the Properties
Currently
Under Development or the Planned Expansion or Renovation Programs
which are
included within the budgets therefor prior to completion of such
properties,
expansions or renovations; and
(5) any expense, cost or charge enumerated in clauses (a)
through (j) above (other than clause (g)) to the extent such
expense, cost or
charge was paid from Cash Reserves.
1.48. "Commitment" shall have the meaning set forth in Section
2.3(g).
1.49. "FTC" shall have the meaning set forth in Section 5.5(a).
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<PAGE>
1.50. "Funded Subscription" shall mean, with respect to any
Stockholder as of any date, such Stockholder's Initial Subscription
plus all
Additional Subscription Payments which have actually been paid to
the Company on
or before such date pursuant to Section 7.1 or 7.2(b).
1.51. "Funding Notice" shall have the meaning set forth in
Section
7.2(b).
1.52. "GCL" shall mean the Delaware General Corporation Law, as
amended from time to time.
1.53. "General Growth Chairman" shall have the meaning set forth
in
Section 3.7(a).
1.54. "General Growth FFO" as defined on Exhibit B hereto.
1.55. "General Growth Officers" shall have the meaning set forth
in
Section 3.6(a).
1.56. "General Growth Share Closing Price" on any date shall
mean,
with respect to the GG Stock, 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 GG Stock is 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 GG Stock is
listed or
admitted to trading or, if the GG Stock is 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 GG
Stock' is 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
GG Stock as
such person is selected from time to time by the Board of Directors
of GG
Properties.
1.57. "GG Stock" shall mean the common stock, par value $.10
per
share, of GG Properties.
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<PAGE>
1.58. "Homart Assets" shall mean the real estate and other
assets
acquired either directly, or indirectly through the investment in
and purchase
of the Stock, and the other assets purchased pursuant to the Homart
Stock
Purchase Agreement.
1.59. "Homart Closing Date" shall have the meaning assigned to
the
term "Closing Date" in the Stock Purchase Agreement.
1.60. "Homart Stock Purchase Agreement" shall mean, collectively,
the
Amended and Restated Stock Purchase Agreement, dated as of October
16, 1995 (the
"Stock Purchase Agreement"), between Sears, Roebuck and Co., Homart
Development
Co., Homart Newco One, Inc. and the Company; the Real Estate
Purchase Agreement
dated as of July 31, 1995, as amended as of October 16, 1995, by
and among the
Company, Homart Development Co. and Sears, Roebuck and Co.; and all
of the
related documents entered into in connection with such agreements
in each case
as subsequently amended or supplemented through the date
hereof.
1.61. "HSR" shall have the meaning set forth in Section 5.5(a).
1.62. "Initial Subscription" shall have the meaning set forth
in
Section 2.1.
1.63. "Investment Company Act" shall mean the Investment Company
Act
of 1940, as the same may be amended from time to time.
1.64. "IRS" shall mean the Internal Revenue Service.
1.65. "Management Transfer Agreement" shall have the meaning set
forth
in Section 2.3(e).
1.66.
"Material Adverse Change" shall have the meaning set forth in
Section 8.1(d).
1.67. "Measurement Period" shall have the meaning set forth in
Section
5.1 (a).
1.68. "Natick Mall Agreement" shall have the meaning set forth
in
Section 2.3(d).
1.69. "Net Disposition Proceeds" shall mean proceeds from any
event
that would be deemed a capital transaction in accordance with
generally accepted
accounting principles consistently applied, including without
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<PAGE>
limitation, sales of real or personal property, condemnations and
conveyances in
lieu thereof, damage recoveries, receipts of insurance proceeds
(other than rent
insurance proceeds), or borrowings, net of (i) the expenses or
capital
expenditures of the Company and its wholly owned Subsidiaries
associated with
such transaction (including the portion of any insurance proceeds
or
condemnation award applied to the restoration of the affected
property, and
payment or reservation for payment for the discharge of any
liability arising
pursuant to such transaction), (ii) amounts required (in the
Board's discretion
or, if contemplated in an approved Annual Business Plan, as set
forth in such
Annual Business Plan) to establish reserves and to pay current or
potential
expenses and liabilities of the Company or its Subsidiaries, (iii)
amounts used
or reserved (in the Board's discretion or, if contemplated in an
approved Annual
Business Plan, as set forth in such Annual Business Plan) to repay
indebtedness
of the Company or its Subsidiaries and (iv) amounts used or
reserved (in the
Board's discretion or, if contemplated in an approved Annual
Business Plan, as
set forth in such Annual Business Plan) to fund the estimated
equity
requirements for the Properties Currently Under Development and for
any
expansions or renovations of the Company Assets; provided that Net
Disposition
Proceeds shall include proceeds from the sale, refinancing or other
disposition
of a Company Asset held by a Subsidiary that is not wholly owned by
the Company
only to the extent distributed to the Company by such
Subsidiary.
1.70. "Net Taxable Income" for any taxable year shall mean either
(a),
the Company's "real estate investment trust taxable income" as
defined in
Section 857(b)(2) of the Code for such year, or (b) the Company's
real estate
investment trust taxable income (as determined by excluding net
capital gain and
computing the deduction for dividends paid without regard to
capital gains
dividends) and the excess of the Company's net capital gains over
the deduction
for dividends paid determined with reference to capital gains
dividends only
(all as defined in Section 857(b)(3) of the Code) for such year,
whichever would
produce a lower amount of federal income tax.
1.71. "Non-Defaulting Stockholder" shall have the meaning set forth
in
Section 7.4.
1.72. "Non-Funding Stockholder" shall have the meaning set forth
in
Section 2.5(c).
1.73. "Offer" shall have the meaning set forth in Section
8.1(c).
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<PAGE>
1.74. "Offer Effective Date" shall have the meaning set forth
in
Section 8.1(c).
1.75. "Operating Cash Flow" for any given period of time means
the
excess, if any, of (i) the Receipts for such period of time minus
(ii) the
Expenses for such period of time.
1.76. "Organic Change" shall have the meaning set forth in
Section
5.7.
1.77. "Person" shall mean an individual, corporation,
partnership,
limited liability company, trust, unincorporated organization,
government or any
agency or political subdivision thereof or any other entity that
may be treated
as a person under applicable law.
1.78. "Plan Asset Regulations" shall have the meaning set forth
in
Section 4.4(b).
1.79. "Planned Expansion or Renovation Programs" shall mean the
expansion or renovation programs for certain of the Company's
Assets as more
particularly described on Schedule II hereto.
1.80. "Properties Currently Under Development" shall mean those
certain Company Assets listed on Schedule III hereto.
1.81. "Property Manager" shall mean GGP, General Growth
Management,
Inc., a Delaware corporation, or another Affiliate of GGP
designated by GGP to
act as the property manager for the Company or one or more of the
Subsidiaries
pursuant to Section.3.6(b).
1.82. "Proportionate Share" shall mean, with respect to any
Stockholder or any number of shares of Common Stock being exchanged
pursuant to
Section 5.1(a), a fraction, the numerator of which is the total
number of shares
of Common Stock owned by such Stockholder or being so exchanged, as
the case may
be, and the denominator of which is the total number of shares of
Common Stock
owned by all of the Stockholders.
1.83. "Receipts" shall mean for any given period of time, a sum
equal
to the aggregate of all cash amounts actually received by or
unconditionally
made available to the Company or the Company's wholly-owned
Subsidiaries from or
in respect of all sources, including without limitation:
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<PAGE>
(a) all cash actually received by the Company from
Subsidiaries that are not wholly-owned by the Company;
(b) all rents, percentage rent, rent settlements, expense
reimbursements and other charges received from tenants and
other
occupants of the Company's properties;
(c) proceeds of rent insurance and business interruption
insurance;
(d) all utility or other deposits returned to the Company;
(e) interest, if any, earned on tenant's security deposits
or escrows to the extent unconditionally retained and security
deposits to the extent applied pursuant to the provisions of
the
applicable leases;
(f) the amount of any net reduction of Cash Reserves, other
than to pay Expenses;
(g) any Special Reserve amounts used to pay Expenses; and
(h) any income items (as defined in accordance with GAAP)
received by the Company from any other source and not included
in
(a) through (g) above.
Notwithstanding the foregoing, Receipts shall not include (1)
any
amounts received by the Company on account of the issuance or sale
of any
securities, including without limitation the Stockholders'
Aggregate
Subscription, (2) any tenant's security deposit and interest
thereon, if any, as
long as the Company has a contingent legal obligation to return
that deposit or
such interest thereon, (3) any amounts included in the calculation
of Net
Disposition Proceeds, (4) any amounts received by the Company in
connection with
any of the Properties Currently Under Development or the Planned
Expansion or
Renovation Programs prior to completion of such properties,
expansions or
renovations and (5) any Special Reserve amounts other than those
referred to in
(g) above.
1.84. "Relevant Trade Area" shall have the meaning set forth in
Section 4.6(a).
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<PAGE>
1.85. "Reserve Amount" shall mean for any given period of time
an
amount or amounts to be held from Receipts after payment of
Expenses (other than
the Reserve Amount) as part of the Cash Reserves and which shall be
used for the
payment of capital improvements for the properties of the Company
and its
wholly-owned Subsidiaries (such as major repairs or replacements to
the roofs or
parking lots) or such other items as may be determined from time to
time by the
Board. Special Reserve amounts shall not be treated as Reserve
Amounts.
1.86.
"Response Notice" shall have the meaning set forth in Section
8.1(d).
1.87. "Rules" shall have the meaning set forth in Section
5.5(a).
1.88. "Serial Transferee" shall have the meaning set forth in
Section
6.4(b).
1.89. "Serial
Transferor" shall have the meaning set forth in Section
6.4(b).
1.90. "Significant Company Assets" shall mean those Company
Assets
specified on Exhibit C, and such other Company Assets as the Board
may designate
as such from time to time.
1.91. "Special Reserve" shall have the meaning set forth in
Section
4.5(d).
1.92. "Sublease" shall have the meaning set forth in Section
2.3(1).
1.93. "Subsidiaries" shall mean, from and after the Homart
Closing
Date, Homart Newco One, Inc., and any successor thereto and any
other direct or
indirect corporate, partnership or other subsidiary of the Company
whether or
not wholly owned by the Company and a "Subsidiary" shall mean any
one of them.
1.94. "Ten Day Average General Growth Share Closing Price" shall
mean
the average of the General Growth Share Closing Prices for each of
the ten
Trading Days immediately preceding (i) for purposes of Article V,
the date of
any Exchange Election Notice delivered by a Stockholder pursuant to
Section 5.1
hereof or (ii) for purposes of Section 4.7(c), the last day of the
period of any
report delivered to a Stockholder pursuant to such Section.
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<PAGE>
1.95. "33 Act" shall mean the Securities Act of 1933, as amended
from
time to time.
1.96. "Trading Day" shall mean a day on which the principal
national
securities exchange on which the GG Stock is listed or admitted to
trading is
open for the transaction of business or, if the GG Stock is not
listed or
admitted to trading on any national securities exchange, shall mean
any day
other than a Saturday, a Sunday or a day on which banking
institutions in the
State of New York are authorized or obligated by law or executive
order to
close.
1.97. "Transfer" shall mean to transfer, sell, assign, pledge,
hypothecate, give, create a security interest in or lien on, place
in trust
(voting or otherwise), transfer by operation of law (other than by
way of a
merger or consolidation of the Company) or in any other way
encumber or dispose
of, directly or indirectly and whether or not voluntarily, any
Common Stock.
1.98. "Transferee" shall have the meaning set forth in Section
6.1.
For all purposes of this Agreement, except as otherwise
expressly
provided or unless the context otherwise requires:
(a) the words "herein," "hereof" and "hereunder" and other words
of
similar import refer to this Agreement as a whole and not to any
particular
Article, Section or other subdivision;
(b) the words "including" and "include" and other words of
similar
import shall be deemed to be followed by the phrase "without
limitation"; and
(c) any capitalized term used in any Schedule to this Agreement
but
not defined in such Schedule shall have the meaning assigned to
such term in
this Agreement or in another Schedule to this Agreement.
ARTICLE II.
ACQUISITION OF SHARES; CLOSING
2.1. Issuance and Acquisition of Shares. Subject to the terms
and
conditions set forth herein, at the Closing, the Company shall sell
to each of
the Stockholders, and each of the Stockholders shall acquire from
the Company,
the number and class of shares of Common Stock set forth opposite
such
Stockholder's name on Schedule I hereto at a
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<PAGE>
purchase price of $25,000 per share and no other shares of capital
stock of the
Company shall be outstanding as of such date. The aggregate
purchase price to be
paid by each of the Stockholders at the Closing pursuant to this
Section 2.1 is
set forth opposite such Stockholder's name on such Schedule I and
is referred to
herein as such Stockholder's "Initial Subscription." GGP shall
receive a credit
against the purchase price for its Initial Subscription equal to
the amount of
the earnest money deposit (plus interest accrued thereon) applied
to the payment
of the purchase price under the Homart Stock Purchase
Agreement.
2.2. Closing. The closing of the purchase and sale of the Common
Stock
to be issued by the Company pursuant to Section 2.1 hereof (the
"Closing") shall
take place on a date to be designated in writing to the
Stockholders by GGP,
which date shall be no earlier than three (3) business days prior
to the
scheduled Homart Closing Date (the "Closing Date"). The Closing
shall take place
at the offices of Sullivan & Cromwell, 250 Park Avenue, New
York, New York, or
at such other place or places as the parties hereto may agree in
writing. At the
Closing, the Company shall deliver to each Stockholder certificates
evidencing
the number and class of shares of Common Stock to be issued to such
Stockholder,
all registered in the name of such Stockholder, against payment to
the Company
by wire transfer of immediately available federal (same day) funds
in the amount
of the Initial Subscription set forth opposite such Stockholder's
name on
Schedule I hereto. The Stockholders hereby agree that the funds
paid to the
Company pursuant to this Section 2.1 shall be invested by the
Company in an
interest bearing account at Chemical Bank in New York City until
the Homart
Closing Date, at which time such funds shall be used in the manner
contemplated
by this Agreement.
2.3. Conditions to Stockholders' Obligations. The obligation of
each
Stockholder to acquire the shares of Common Stock to be acquired by
it as set
forth herein at the Closing is subject to the satisfaction on or
prior to the
Closing Date of the following conditions:
(a) The Certificate of Incorporation and By-laws of the Company
in
effect on the Closing Date shall be in the form of Exhibits D and
E,
hereto, respectively.
(b) The Homart Stock Purchase Agreement shall be in full force
and
effect, shall not have been amended or modified in any material
respect
without the prior written consent of the Class B Stockholder
(which
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<PAGE>
consent shall not be unreasonably withheld), and no unwithdrawn
notice of
any
breach (anticipatory or otherwise) thereunder shall have been given
by
any
party to another party thereunder.
(c) The conditions precedent to the closing of the transactions
contemplated by the Homart Stock Purchase Agreement shall have
been
fulfilled or waived, or shall be reasonably likely to be fulfilled
or
waived, so that the Homart Closing Date shall be reasonably likely
to occur
within three (3) business days of the Closing Date, and, if any
material
condition precedent to the Company's obligations under the Homart
Stock
Purchase Agreement shall have been waived, the Class B Stockholder
shall
have
consented in writing to such waiver, which consent shall not be
unreasonably withheld.
(d) GGP shall have entered into a definitive agreement with the
Company with respect to the Natick Mall, substantially in the form
of
Exhibit F hereto (the "Natick Mall Agreement").
(e) The Property Manager shall have entered into a definitive
agreement with the Company with respect to the acquisition by the
Property
Manager upon the Homart Closing Date of certain employees and
management
related assets and operations, substantially in the form of Exhibit
G
hereto (the "Management Transfer Agreement").
(f) The Company shall have obtained a commitment from Wells
Fargo
Bank
for a first mortgage credit facility in an amount not less than
$170
million, such credit facility to be secured by the properties
listed on
Schedule IV hereto and scheduled to close on the Homart Closing
Date, on
terms and conditions reasonably satisfactory to the Class B
Stockholder
(the
"Wells Fargo Financing Commitment").
(g) The Company shall have obtained commitments from certain
lenders listed on Schedule V hereto to expand their existing
loan
facilities that are secured by certain properties listed on
Schedule V to
amounts no less than the amounts set forth on Schedule V for such
lender
and
corresponding property, and scheduled to close on the Homart
Closing
Date, on terms and conditions reasonably satisfactory to the Class
B
Stockholder (the "Loan
Expansion Commitments", and together with the Wells
Fargo Financing Commitment, the "Financing Commitment").
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<PAGE>
(h) The Company shall have obtained written consents from
lenders
that
have outstanding loans secured by certain of the properties to
the
transactions contemplated in the Homart Stock Purchase Agreement on
terms
and
conditions reasonably satisfactory to the Class B Stockholder
(the
"Existing Lender
Arrangements"), or such consents shall not be required,
from
the lenders under existing indebtedness encumbering the
properties
identified on Schedule VI.
(i) The Company's representations and warranties contained
herein
shall have been true and correct in all material respects when made
and
shall be true and correct in all material respects on the Closing
Date and
the
Company shall have complied with all of its covenants and
agreements to
be
performed by the Company on or before the Closing Date.
(j) Each Stockholder shall have funded its Initial Subscription
hereunder unless either (1) GGP shall have funded any shortfall or
(2)
replacement funds shall have been obtained on terms and
conditions
reasonably acceptable to each Stockholder that is not in breach of
its
obligation to fund its Initial Subscription.
(k) The Company shall have prepared, and NYSCRF shall have
approved, an operating and capital budget for fiscal year 1996.
(l) The Company and GGP Management, Inc. shall have entered
into
a
Sublease Agreement (the "Sublease"), substantially in the form of
Exhibit
H
hereto.
(m) Each Stockholder shall have received a certificate signed
on
behalf of GGP by the chief executive officer of the general partner
in GGP
to
the effect that (1) all of the conditions set forth in this Section
2.3
(other than those set forth in clauses (f), (g) and (h) have
been
satisfied, (2) the Homart Closing Date is reasonably likely to
occur within
three (3) business days of the Closing and (3) the conditions set
forth in
Sections 2.3 (f), (g) and (h) will be satisfied on or prior to the
Homart
Closing Date.
(n) Each Stockholder shall have received an opinion of counsel
to
the
Company with respect to the incorporation and good standing of
the
Company and the authorization and issuance of the Common Stock
being
delivered on the Closing
Date.
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<PAGE>
2.4. Merger of Homart Newco One, Inc. into the Company: Issuance
of
Preferred Stock. (a) The Stockholders hereby acknowledge and agree
that promptly
following the Homart Closing Date, the Company will cause Homart
Newco One, Inc.
to be merged into the Company.
(b) The Stockholders also hereby acknowledge and agree that
promptly
after the Homart Closing Date the Company will issue up to one
hundred twenty
(120) shares of its preferred stock in the manner and having such
terms as shall
be determined by the Board.
2.5. Termination. (a) Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may be terminated at
any time before
the Closing:
(i) by the mutual written consent of GGP and NYSCRF; or
(ii) by GGP or NYSCRF if the Closing shall not have occurred
on or before January 31, 1996.
(b) In the event of termination pursuant to this Section 2.5,
this
Agreement shall become null and void and of no further force or
effect, with no
liability on the part of any party hereto, or their directors,
officers, agents,
representatives or stockholders, except for the liability of a
party for breach
of this Agreement and except as provided in clause (c) below.
(c) If this Agreement shall be terminated pursuant to Section
2.5(a)(ii) because (1) the condition set forth in Section 2.3 (j)
has not been
satisfied due to the breach by any Stockholder (a "Non-Funding
Stockholder") of
its obligation to fund its Initial Subscription pursuant to Section
2.1 or (2)
the conditions set forth in Sections 2.3(d), (e), (i) and (1) have
not been
satisfied due to the failure by GGP or its Affiliate to satisfy
such conditions,
then, in addition to any other remedy available at law or in
equity, (A) in the
case of clause (1) above, any Non-Funding Stockholder shall not,
and each
Non-Funding Stockholder agrees not to, and (B) in the case of
clause (2) above,
neither GGP nor any of its Affiliates shall, and each of GGP and
its Affiliates
agree not to, acquire, directly or indirectly, all or any portion
of the Homart
Assets for a period of eighteen (18) months following the date this
Agreement is
so terminated. Nothing in the foregoing shall be deemed to preclude
or limit any
other Stockholder, other than a Non-Funding Stockholder, in the
case of clause
(1), or GGP and its Affiliates, in the case of clause (2), from
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acquiring all or any portion of the Homart Assets if this Agreement
shall be
terminated as described in the preceding sentence.
ARTICLE III.
GOVERNANCE; BOARD OF DIRECTORS
3.1. Action by Stockholders to Effectuate this Agreement. Each
Stockholder agrees to take all actions necessary to carry out and
effectuate the
provisions of this Agreement, including to vote its shares of
Common Stock (to
the extent it has voting rights) in a manner consistent with this
Agreement and
to cause any director elected by it (if it has the right to elect
directors) to
take such actions as are required to be taken by this
Agreement.
3.2. Classes of Common Stock: Number of Directors: Voting
Rights.
(a) The Stockholders hereby acknowledge and agree that, except
as
otherwise provided herein, (i) the Company shall have three classes
of Common
Stock: Class A Common Stock, Class B Common Stock and Class C
Common Stock, (ii)
the shares of Class A Common Stock and Class B Common Stock shall
have voting
rights and shall each be voted as a separate class, with each share
of Common
Stock entitled to one vote per share and all resolutions of the
Class to be
adopted by a vote of a majority of the shares of the Class voted,
(iii) the
shares of Class C Common Stock shall have no voting rights except
as may be set
forth in this Agreement and except as may be required under the
GCL
notwithstanding a provision to the contrary in this Agreement or
the Company's
Certificate of Incorporation, any such voting rights to be
exercised as a
separate class, with each share of Class C Common Stock entitled to
one vote per
share, (iv) the Board of Directors of the Company shall consist of
six
directors, (v) the shares of Class A Common Stock shall have the
right to elect
three directors to the Board (the "Class A Directors"), with such
directors to
be elected by a majority of the shares voted, and (vi) the shares
of Class B
Common Stock shall have the right to elect three directors to the
Board (the
"Class B Directors"), with such directors to be elected by a
majority of the
shares voted; provided, however, that if any holder of Class A
Common Stock or
Class B Common Stock shall be a Defaulting Stockholder, all of the
shares of
such Class, whether or not held by the Defaulting Stockholder,
shall
automatically become shares of Class C Common Stock. The
Stockholders agree
that, so long as both Class A Common Stock and Class B Common Stock
is
outstanding, the Class A Directors shall
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have the right and authority to designate all of the officers and
directors of
the Subsidiaries, subject to the approval of the Class B Directors,
which
approval shall not be unreasonably withheld.
(b) If at any time shares of either Class A Common Stock or Class
B
Common Stock (but not both) shall be outstanding, then (i) the
Board of
Directors shall consist of seven directors, at least a majority of
which shall
be comprised of Persons independent of the holder or holders of the
Electing
Class; (ii) the remaining class of Common Stock entitled to vote
for directors
(the "Electing Class") shall be entitled to elect six of the
directors of the
Company with such directors to be elected by a majority of the
shares of the
Electing Class; and (iii) the holders of Class C Common Stock shall
be entitled
to elect one director with such director to be elected by a
majority of the
outstanding shares of Class C Common Stock voting for this purpose
as a Class,
with each share of Class C Common Stock entitled to one vote per
share. For
purposes of this Agreement, (1) if the Class A Common Stock is the
Electing
Class, a Person shall be deemed to be independent if such Person is
not an
Affiliate or employee of GG Properties, GGP or any of their
successors or any of
their Affiliates, provided, however, that no director shall be
deemed not to
qualify as independent solely because such director is a director
of GG
Properties, (2) if the Class B Common Stock is the Electing Class,
a Person
shall be deemed to be independent if such Person is not an
Affiliate or
employee of any holder of Class B Common Stock or any of its
Affiliates, (3) so
long as there is an Electing Class, a director elected by the
holders of Class C
Common Stock shall be deemed an independent director and (4) if
there is no
Electing Class, a Person shall be deemed to be independent if such
Person is not
an Affiliate or employee of any holder of Class C Common Stock or
any of its
Affiliates.
(c) If at any time the shares of neither Class A Common Stock
nor
Class B Common Stock shall be outstanding, then (i) the Board of
Directors shall
consist of seven directors, at least a majority of which shall be
comprised of
Persons independent of the holder or holders of the Class C Common
Stock and
(ii) the shares of Class C Common Stock shall be entitled to equal
voting rights
and powers and shall be voted together as a single class with
respect to all
matters on which stockholders may be entitled to vote (including
the election of
directors), with each share of Class C Common Stock entitled to one
vote per
share.
(d) Directors on the Board shall not receive compensation unless
such
directors are independent directors
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elected pursuant to clause (b) or (c) above in which case such
independent
directors may be paid reasonable and customary compensation as
determined by the
Board. Directors shall be entitled to indemnification from the
Company as
provided in the Company's Certificate of Incorporation and
By-laws.
3.3. Initial Directors. To carry out the provisions of Section
3.2,
simultaneously with, or immediately following the Closing, GGP, as
the sole
Class A Stockholder, and NYSCRF, as the sole Class B Stockholder,
hereby elects
the following designated persons as Class A Directors and Class B
Directors,
respectively, to serve until the first annual meeting of the
Stockholders and
until each such director's successor has been elected and qualified
to be
effective as of the Closing Date.
Class A Directors Matthew Bucksbaum
Robert A. Michaels
John Bucksbaum
Class B Directors Alan C. Sullivan
Martin S. Levine
Frank L. Sullivan, Jr.
3.4. Subsequent Election of Directors. (a) Except as otherwise
provided herein, meetings of any class of stockholders entitled to
vote for the
election of directors' may be convened for the purpose of electing
the directors
of such class, or for the removal or replacement of such directors,
or such
election, removal or replacement may be accomplished by written
consent of
stockholders of the class in lieu of a meeting or otherwise.
(b) Any Class A Director shall also be a director or an
executive
officer of GG Properties holding the office of executive vice
president or
higher.
3.5. Removal and Replacement of Directors. The Stockholders
agree
that, except as otherwise provided herein, no director may be
removed from
office except by a vote of the shares of the class of Common Stock
which elected
such director. The Stockholders also agree that the shares of the
class of
Common Stock which elected such director shall have the exclusive
right, with or
without cause, to vote for the removal of such director from the
Board and to
nominate and elect a replacement director therefor.
3.6. Officers; Management; Dissolution in the Event of Cause.
(a)
Subject to the last sentence of Section
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3.2(a), the officers of the Company and the Subsidiaries shall
consist of the
Persons designated by the Board, and such Persons shall serve in
the offices
designated by the Board until their respective successors are duly
appointed by
the Board. Provided both Class A Common Stock and Class B Common
Stock is
outstanding, the Class A Stockholders and the Class B Stockholders
agree to
cause the Class A Directors and Class B Directors, if any, to
designate the
Chief Executive Officer, President, Chief Operating Officer, Chief
Financial
Officer, Treasurer and Secretary of GG Properties to serve ex
officio as the
Chief Executive Officer, President, Chief Operating Officer, Chief
Financial
Officer, Treasurer and Secretary of the Company and of the
Subsidiaries (the
"General Growth Officers"). So long as the General Growth Officers
are officers
of the Company, the Class A Stockholders and the Class B
Stockholders agree to
cause the Class A Directors and Class B Directors to designate
certain persons
identified by any of the General Growth Officers as vice
presidents, assistant
treasurers or assistant secretaries of the Company and/or its
Subsidiaries.
(b) The officers of the Company or of any Subsidiary shall be
authorized to manage the business and affairs of the Company and
its
Subsidiaries subject to the direction and supervision of the Board.
The General
Growth Officers, so long as they shall serve as the management of
the Company,
shall manage the Company and each of the properties owned by the
Company and its
Subsidiaries in a manner substantially consistent with their
management of GGP
and GG Properties. Without in any way limiting the generality of
the foregoing,
the officers of the Company shall manage the day to day operations
of the
Company's properties and those of its Subsidiaries in accordance
with the
policies and other matters set forth on Schedule VII. All costs and
expenses
incurred in connection with the management of the Company and the
ownership,
operation, management and development of the Company's properties
and those of
its Subsidiaries shall be paid by the Company, or if paid by GGP or
any of its
Affiliates, the Company shall reimburse GGP or its Affiliate
therefor; provided,
however, that for so long as the General Growth Officers are the
officers of the
Company, the costs and expenses listed on Schedule IX hereto shall
be paid by
GGP or its Affiliates and shall not be charged to the Company or
paid from
Company assets. So long as the General Growth Officers are the
officers of the
Company, the Company shall pay to GGP or its Affiliates (as
provided below) the
fees and reimbursable amounts in the amounts and in the manner set
forth on
Schedule X. Unless otherwise approved by the Board, and except as
may otherwise
be provided in this Agreement, no
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other fee or compensation shall be paid by the Company to GGP, GG
Properties or
any of their Affiliates in connection with the management of the
Company, its
properties and the properties of its Subsidiaries. So long as the
General Growth
Officers are the officers of the Company, the General Growth
Officers shall be
authorized to enter into one or more agreements with GGP and any of
its
Affiliates to delegate all or any portion of the managerial
responsibilities of
the General Growth Officers to such entities; provided that, (i)
the General
Growth Officers shall not be relieved of their obligation to manage
the Company
or any other obligation or responsibility under this Agreement by
reason of such
delegation, (ii) the Company shall not incur any additional cost by
reason of
such delegation and (iii) GGP and any such Affiliate shall be
obligated to carry
out their delegated managerial responsibilities in accordance with
the policies
set forth on Schedule VII to the extent applicable. Any such
agreement entered
into by the Company and GGP or any of its Affiliates may provide
that all or any
portion of the fees and reimbursable amounts set forth on Schedule
X be paid to
an Affiliate of GGP, rather than to GGP, and may contain customary
indemnities
from the Company to GGP and such Affiliate against claims, losses,
liabilities,
costs and expenses arising out of the operation or management of
the Company's
properties, other than such claims, losses, liabilities, costs and
expenses
caused by the gross negligence or wilful misconduct of GGP or such
Affiliate.
Any such agreement shall be terminable by the Company immediately
following the
General Growth Officers ceasing to serve as the Company's
management or
otherwise as required to effectuate the terms of this Agreement.
Unless
otherwise approved by the Board, the Company and its wholly-owned
Subsidiaries
shall not have any employees.
(c) The Class B Directors shall have the right, in their sole
discretion, to cause the Company to distribute certain of the
Company's
properties to the Distributee in the manner described in Section
8.1(f) in the
event that Cause exists. If the Class B Directors elect to so cause
the Company
to distribute certain of its properties, (i) the Class B
Stockholders shall be
considered the Offeror and the Class A and Class C Stockholders
shall be
considered the Offeree for purposes of Section 8.1(f), (ii) the
first
distribution of properties shall occur as soon as practicable in
the tax year in
which the election is made and (iii) notwithstanding anything to
the contrary in
Section 8.1(f), the Offeror shall have the right to select the
first property.
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<PAGE>
(d) For purposes of this Agreement, "Cause" shall mean, (i) the
failure of the General Growth Officers to submit an Annual Business
Plan to the
Board as provided in Section 3.10(c) hereof, (ii) the failure of
the General
Growth Officers to obtain prior Board approval (as part of an
approved Annual
Business Plan or otherwise) for any of the matters enumerated in
Section
3.10(d), (iii) the General Growth Officers taking or causing the
Company to take
any action materially in contravention of an approved Annual
Business Plan, (iv)
a wilful and material violation by GGP or GG Properties of the
provisions of
Section 4.6 hereof or (v) the engaging by any General Growth
Officer, GGP, GG
Properties, the Property Manager, if any, or the Development
Manager, if any, in
wilful misconduct, including, without limitation, fraud,
embezzlement or theft,
which is demonstrably and materially injurious to the Company;
provided that
Cause shall not be deemed to exist until the procedures set forth
in Section
3.6(e) have been complied with.
(e) If the Class B Stockholders or Class B Directors believe that
an
event giving rise to Cause has occurred, the Class B Stockholders
or Class B
Directors shall deliver a notice (the "Cause Notice") to the
General Growth
Officers setting forth with particularity the event giving rise to
Cause and the
applicable clause of Section 3.6(d). If the event giving rise to
Cause is one
enumerated in Section 3.6(d)(i), (ii) or (iii), the General Growth
Officers
shall have fifteen (15) days from the date of the delivery of such
notice to
cure the action or failure to act (or if such action or failure to
act, or
consequence of such action or failure to act, is curable but is of
such a nature
that it cannot be cured within such fifteen (15) day period, the
General Growth
Officers shall commence such cure and proceed diligently to
complete the curing
thereof as promptly as practicable). The General Growth Officers
shall promptly,
and, in any event, by the end of the fifteen (15) day cure period,
notify (the
"Cure Notice") the Class B Stockholders and the Class B Directors
that either
(i) the event giving rise to Cause has been cured and specifying
the actions
taken with respect thereof or (ii) the event giving rise to Cause
is curable but
cannot be cured within fifteen (15) days and specifying the actions
that have
been taken and will be taken in respect thereof. Unless the Class B
Stockholders
or Class B Directors reasonably object in writing to the Cure
Notice within ten
(10) days of delivery thereof, the event giving rise to Cause shall
be deemed to
be cured. If GGP wishes to contest the existence of Cause, the
General Growth
Officers shall within ten (10) days of receipt of the Cause Notice,
or, if the
Class B Stockholders or Class B Directors have reasonably objected
to the Cure
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<PAGE>
Notice, the Class B Stockholders or Class B Directors shall within
ten (10) days
of receipt of the Cure Notice, submit the existence of Cause to
arbitration
pursuant to Section 11.5 hereof. If the question of Cause has been
submitted to
arbitration, Cause shall not be deemed to have occurred unless and
until the
arbitrators have reached a final decision that Cause exists. If the
General
Growth Officers neither submit the question of Cause to arbitration
nor deliver
a Cure Notice within the fifteen (15) day period following the date
of the
delivery of the Cause Notice, then Cause shall be deemed to exist
on the day
immediately following such fifteen (15) day period. During any
arbitration
proceeding, the General Growth Officers shall use all diligent and
good faith
efforts to act or cease from acting in the manner that is the
subject of the
dispute. Arbitration costs shall be charged to the losing
party.
3.7. Chairman of the Board. So long as the General Growth Officers
are
officers of the Company, and provided both Class A Common Stock and
Class B
Common Stock is outstanding or the holders of the Class A Common
Stock are the
Electing Class, the Class A Stockholders and the Class B
Stockholders agree to
cause the Class A Directors and Class B Directors to designate as
the Chairman
of the Board of Directors of the Company and the Subsidiaries the
director
elected by the Class A Common Stock who holds the most senior
position at GG
Properties (the "General Growth Chairman").
3.8. Committees. (a) The Board shall have the power to create
committees, including an executive committee and an audit
committee, and to
delegate to such committees such powers and authority as the Board
may determine
and as may then be permitted by the Company's Certificate of
Incorporation and
By-Laws and the GCL; provided, however, that so long as the Board
is comprised
of both Class A Directors and Class B Directors, any committee
established by
the Board shall have at least one member designated by the Class A
Directors and
at least one member designated by the Class B Directors unless the
Board
determines otherwise.
(b) The Class A Directors shall be exclusively entitled to
designate,
remove and replace the Class A committee members and the Class B
Directors shall
be exclusively entitled to designate, remove and replace the Class
B committee
members.
3.9. Certificate of Incorporation; By-Laws. Each Stockholder
shall
vote all Common Stock over which it may have voting power and shall
take all
other actions necessary and appropriate to ensure that the
Company's Certificate
of
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<PAGE>
Incorporation and By-Laws do not at any time conflict with the
provisions of
this Agreement and shall not vote to approve (or consent to the
approval of) any
amendment to the Company's Certificate of Incorporation or By-Laws
which would
be inconsistent with this Agreement.
3.10. Actions by Directors. (a) At such times as both Class A
Common
Stock and Class B Common Stock shall be outstanding, at all
meetings of the
Board a quorum shall exist for the transaction of business if at
least two (2)
Class A Directors and two (2) Class B Directors are present. At
such times as
both Class A Common Stock and Class B Common Stock shall be
outstanding, at all
meetings of any committee of the Board a quorum shall exist for the
transaction
of business if at least one member designated by the Class A
Directors and one
member designated by the Class B Directors are present, unless the
Board shall
determine otherwise. At all other times (i.e., when the Board is
constituted
pursuant to Section 3.2(b) or 3.2(c)) a quorum shall exist for the
transaction
of business if at least a majority of directors or committee
members are
present.
(b) When action is to be taken by vote of the Board or any
committee
thereof, each member of the Board or such committee shall be
accorded one vote.
Except for the selection of officers of the Company and officers
and directors
of the Subsidiaries as described in Section 2.2(e) above, each and
every
corporate action taken by vote of the Board or any committee
thereof shall be
authorized only by the affirmative vote of the majority of
directors or
committee members, as the case may be, present at a duly
constituted meeting at
which a quorum is present and acting throughout; provided that at
such times as
both the Class A Common Stock and Class B Common Stock shall be
outstanding and
entitled to elect directors of the Company pursuant to this
Agreement, at least
one Class A Director and one Class B Director (in the case of Board
meetings),
or one Class A committee member and one Class B committee member
(in the case of
committee meetings), has voted in favor of such action.
(c) On or before March 1, 1996 and on or before September 15th of
each
year, commencing September 15, 1996, for each Company Asset that is
operating,
is then under construction or development or is in the planning
stage, the
General Growth Officers will cause to be prepared and submitted to
the Board for
approval a proposed annual business plan (including an annual
capital budget and
operating budget and leasing guidelines to permit the execution of
leases on
behalf of the Company and the
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<PAGE>
Subsidiaries without specific Board approval, which shall include
figures for
minimum square foot base rental, maximum tenant improvement
allowances, maximum
obligations on lease take-overs and any other leasing criteria
proposed by the
General Growth Officers), such plan to be substantially in the form
of the
template attached hereto as Exhibit I (each, an "Annual Business
Plan"). The
proposed Annual Business Plan shall also itemize each transaction
or matter
requiring approval of the Board pursuant to Section 3.10(d) (viii)
below. The
General Growth Officers will also cause the Board to be provided
with quarterly
updates to the Annual Business Plans. A meeting of the Board to
consider an
Annual Business Plan for approval shall, unless the Board otherwise
determines,
be held no sooner than 45 days following submission of the proposed
Annual
Business Plan to the Board but in all cases shall be held prior to
commencement
of the fiscal year to which the Annual Business Plan relates (other
than with
respect to the Annual Business Plan for fiscal year 1996). Prior to
such
meeting, the General Growth Officers shall make available to the
Class B
Directors and their representatives and advisors such backup
information with
respect to the Annual Business Plan as the Class B Directors shall
reasonably
request and shall be reasonably available to consult with the Class
B Directors
regarding the details of the Annual Business Plan. If the Board
shall consider
for adoption a proposed Annual Business Plan for any Company Asset
for any year
and shall fail to adopt it in its entirety because of disagreement
as to one or
more items although the Board shall agree on other items, then the
Board shall
adopt as the Annual Business Plan for such year such proposed
Annual Business
Plan exclusive of the items as to which there is disagreement,
provided,
however, that if there is disagreement over any item of operating
expense in
such Annual Business Plan that is nondiscretionary, then the Board
shall adopt
such Annual Business Plan as it relates to such nondiscretionary
item of
operating expense, and provided further, however, that if there is
disagreement
over any discretionary item of operating expense in such Annual
Business Plan,
then the Board shall adopt such Annual Business Plan including
such
discretionary item of operating expense in an amount equal to the
amount
reasonably proposed for such operating expense item by management
of the
Company. Expenditures for nondiscretionary items shall not be
limited by amounts
set forth in an approved Annual Business Plan. "Nondiscretionary
items" shall
mean items that must be paid by the Company to avoid a material
adverse effect
on the business, operations or value of the Company's assets.
Without limiting
the generality of the foregoing, the Stockholders acknowledge and
agree that
nondiscretionary items include the minimum amount of funds needed
to (i) pay
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<PAGE>
and perform when due all of the Company's obligations under any
notes, mortgages
and other instruments to which the Company is or shall be a party
or by which it
or its assets are bound in connection with any financing, (ii) pay
when due real
estate and other taxes affecting the Company Assets and insurance
premiums for
the Company Assets and the Company, and (iii) comply with all laws
now or
hereafter in force which shall be applicable to all or any part of
the Company
Assets and the operation and management thereof (including the
making of capital
expenditures required for such compliance) if the failure to comply
would (A)
expose the Company, any Stockholder or any employee, agent,
officer, director,
or contractor of the Company to the risk of criminal prosecution,
(B) entitle
any enforcing entity to take any action which could materially and
adversely
affect the business, operation or value of the Company or (C)
invalidate or
impair any of the insurance maintained by the Company. Until the
Annual Business
Plan for fiscal year 1996 has been prepared for and approved by the
Board, the
Company shall be operate
