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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1997
REGISTRATION NO. 333-_____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GENERAL GROWTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 42-1283895
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 WEST MONROE STREET -- SUITE 3100
CHICAGO, ILLINOIS 60603
(312) 551-5000
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
MR. MATTHEW BUCKSBAUM
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
GENERAL GROWTH PROPERTIES, INC.
55 WEST MONROE STREET -- SUITE 3100
CHICAGO, ILLINOIS 60603
(312) 551-5000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
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with copies to:
MARSHALL E. EISENBERG, ESQ.
NEAL, GERBER & EISENBERG
TWO NORTH LASALLE STREET
CHICAGO, ILLINOIS 60602
(312) 269-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED
MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Common Stock, par value $.10 per share $53,284,375 $15,719
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) for the purpose of computing the amount of
registration fee based upon the average of the high and low prices of the
Common Stock as reported on the New York Stock Exchange on December 2,
1997.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 5, 1997
PROSPECTUS
1,445,000 SHARES
GENERAL GROWTH PROPERTIES, INC.
COMMON STOCK
(PAR VALUE $.10 PER SHARE)
This Prospectus relates to the issuance by General Growth Properties,
Inc., a Delaware corporation (the "Company"), of up to 1,445,000 shares (the
"Redemption Shares") of common stock, par value $.10 per share (the "Common
Stock"), of the Company if and to the extent that the holders of up to
1,445,000 limited partnership units (the "Units") in GGP Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"), of which the
Company is the sole general partner, tender such Units for redemption and the
Company elects to deliver Redemption Shares. The Company currently owns a
65.5% interest in the Operating Partnership. Such Units were issued in
connection with the December 1996 transaction pursuant to which the partners
(the "Contributors") of partnerships owning the Lakeview Square Mall in Battle
Creek, Michigan, the Lansing Mall in Lansing, Michigan and the Westwood Mall in
Jackson, Michigan (collectively, the "Malls") contributed their partnership
interests in such partnerships to the Operating Partnership in exchange for
Units (the "Forbes-Cohen Transaction"). In connection with the Forbes-Cohen
Transaction, the Company, the Operating Partnership and the Contributors
entered into the Redemption Rights Agreement, dated December 6, 1996 (the
"Redemption Rights Agreement"), which sets forth the terms and conditions under
which the Units received by the Contributors may be redeemed for cash, or, at
the election of the Company, in its sole and absolute discretion, Redemption
Shares or cash. The Company has registered the Redemption Shares under the
Securities Act of 1933, as amended (the "Securities Act"), as required under
the terms of the Redemption Rights Agreement, to provide the holders of the
Redemption Shares with freely tradeable securities, but the registration of
such shares does not necessarily mean that any of such shares will be issued by
the Company upon redemption of Units or offered or sold by the holders thereof.
The Company will not receive any cash proceeds from the issuance of the
Redemption Shares to holders of Units tendered for redemption; however, it will
acquire Units in the Operating Partnership in exchange for Redemption Shares
that the Company may issue to holders of Units pursuant to this Prospectus.
With each such acquisition, the Company's interest in the Operating Partnership
will increase.
The Company's Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "GGP". The last reported sale price of the Common
Stock on the NYSE on December 2, 1997, was $36 7/8 per share.
The Redemption Shares are subject to certain restrictions on ownership
designed to preserve the Company's status as a real estate investment trust
("REIT") for Federal income tax purposes. See "Description of Common Stock."
SEE "REDEMPTION OF UNITS -- TAX CONSEQUENCES OF REDEMPTION" AND
"-- POTENTIAL CHANGE IN INVESTMENT UPON REDEMPTION OF UNITS"
FOR A DISCUSSION OF CERTAIN POTENTIALLY
MATERIAL CONSEQUENCES ASSOCIATED WITH A REDEMPTION OF UNITS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is ______________, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 and at the Commission's regional offices at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Room of the Commission, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
Such materials also may be accessed electronically by means of the Commission's
home page on the Internet at http://www.sec.gov. The Company's Common Stock is
listed on the NYSE and such reports, proxy statements and other information
also can be inspected at the offices of the NYSE, 20 Broad Street, 17th Floor,
New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act, with respect to
the shares of Common Stock offered hereby. This Prospectus, which constitutes
a part of the Registration Statement, does not contain all of the information
set forth in the Registration Statement, certain items of which are contained
in schedules and exhibits to the Registration Statement as permitted by the
rules and regulations of the Commission. Statements made in this Prospectus as
to the contents of any contract, agreement or other document referred to are
not necessarily complete. With respect to each such contract, agreement or
other document filed as an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference. Items and information omitted from this Prospectus but contained in
the Registration Statement may be inspected and copied at the Public Reference
Room of the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated in this Prospectus by reference and are
made a part hereof:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1996 (the "Company 10-K");
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997, and September 30, 1997;
3. Current Report on Form 8-K dated January 16, 1997, as amended by
Form 8-K/A dated February 18, 1997;
4. Current Report on Form 8-K dated July 2, 1997, as amended by Form
8-K/A dated August 28, 1997;
5. Current Report on Form 8-K dated August 18, 1997;
6. The portions of the Company's Proxy Statement for its 1997 Annual
Meeting of Stockholders that have been incorporated by reference into the
Company's 10-K; and
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7. The description of the Company's Common Stock which is contained
in the Registration Statement on Form 8-A filed by the Company with the
Commission on January 12, 1993, pursuant to Section 12(b) of the Exchange
Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act from the date of this Prospectus and prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained herein or in any document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for the purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part of this Prospectus, except as so modified or
superseded. The Company will provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon
written or oral request of such person, a copy of any or all of the information
that has been incorporated by reference in this Prospectus (excluding exhibits
to such information which are not specifically incorporated by reference into
such information). Requests for such information should be directed to General
Growth Properties, Inc., 55 West Monroe Street -- Suite 3100, Chicago, Illinois
60603, Attention: Director of Investor Relations, Telephone (312) 551-5000.
THE COMPANY
The Company is a self-managed real estate investment trust which, through
its general partnership interest in the Operating Partnership and its interest
in GGP/Homart, Inc. ("GGP/Homart"), owns, operates, acquires and develops
enclosed mall shopping centers located throughout the United States. The
Company and the Operating Partnership together own, directly or indirectly,
100% of 35 enclosed mall shopping centers, approximately 50% of four other
enclosed mall shopping centers and 100% of one property under development
containing an aggregate of approximately 30.1 million square feet of gross
retail space, including anchors, freestanding stores and mall tenant areas
("GLA"). In addition, the Company, through the Operating Partnership's
ownership of stock in GGP/Homart, owns a 38.2% interest in substantially all of
the regional mall assets and liabilities formerly owned by a subsidiary of
Sears, Roebuck & Co. GGP/Homart currently owns interests in 25 shopping
centers which contain approximately 22.1 million square feet of GLA.
In order to maintain its qualification as a real estate investment trust
(a "REIT") for federal income tax purposes, the Company is required to
distribute at least 95% of its taxable income each year.
The Company is incorporated under the laws of the State of Delaware. Its
principal executive offices are located at 55 West Monroe Street -- Suite 3100,
Chicago, Illinois 60603, and its telephone number is (312) 551-5000.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Redemption Shares to holders of Units tendered for redemption; however, the
Company will acquire Units from such holders and thereby increase its interest
in the Operating Partnership.
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CAPITAL STOCK
The authorized capital stock of the Company consists of 210,000,000 shares
of Common Stock, par value $.10 per share, and 5,000,000 shares of Preferred
Stock, par value $100 per share (collectively, the "Capital Stock"). As of
December 3, 1997, 35,617,231 shares of the Company's Common Stock were issued
and outstanding and none of the Company's Preferred Stock was issued and
outstanding. In addition, as of such date there were outstanding 18,779,701
Units, each of which may be redeemed by the holder thereof for cash or, at the
election of the Company, one share of Common Stock. The Board of Directors is
authorized to provide for the issuance of shares of Preferred Stock in one or
more series, to establish the number of shares in each series and to fix the
designation, powers, preferences and rights of each such series and the
qualifications, limitations or restrictions thereof. The Company's Common
Stock is listed on the NYSE under the symbol "GGP". The following summary
description of the Capital Stock of the Company does not purport to be complete
and is qualified by reference to the Company's Amended and Restated Certificate
of Incorporation, as amended (the "Certificate"), and the certificate of
designation which will be filed with the Commission in connection with any
offering of Preferred Stock.
DESCRIPTION OF COMMON STOCK
The holders of the Company's Common Stock are entitled to one vote per
share on all matters voted on by stockholders, including elections of
directors, and, except as otherwise required by law or provided in any
resolution adopted by the Board of Directors with respect to any series of
Preferred Stock establishing the designation, powers, preferences and rights of
such series and the qualifications, limitations and restrictions thereof, the
holders of such shares exclusively possess all voting power. The Certificate
does not provide for cumulative voting in the election of directors. Subject
to any preferential rights of any outstanding series of Preferred Stock, the
holders of Common Stock are entitled to such dividends as may be declared from
time to time by the Board of Directors from funds legally available therefor,
and upon liquidation are entitled to receive pro rata all assets of the Company
available for distribution to such holders. All shares of Common Stock offered
hereby, upon issuance to holders of Units tendered for redemption, will be
fully paid and nonassessable and the holders thereof will not have preemptive
rights.
RESTRICTIONS ON TRANSFER
For the Company to remain qualified as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"), not more than 50% in value of its
outstanding Capital Stock may be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities) at any
time during the last half of a taxable year. The Capital Stock must be
beneficially owned (without regard to any rules of attribution of ownership) by
100 or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year and certain percentages
of the Company's gross income must be from particular activities. Accordingly,
the Certificate contains provisions, subject to certain exceptions, which limit
the number of shares of Capital Stock that may be owned by any stockholder (the
"Ownership Limit").
The Ownership Limit provides that, subject to certain exceptions specified
in the Certificate, no stockholder (other than Martin Bucksbaum, Matthew
Bucksbaum, their families and related trusts (collectively, the "Bucksbaums")
and the International Business Machines Retirement Plan (the "IBM Retirement
Plan")) may own, or be deemed to own by virtue of the applicable attribution
provisions of the Code, more than the Ownership Limit. The Ownership Limit was
originally set at 6.5% of the outstanding Capital Stock, and was increased to
7.5% of the value of the outstanding Capital Stock as a result of legislation
passed in 1993. The Board of Directors is authorized to further increase the
Ownership Limit to not more than 9.8%. The Bucksbaums and the IBM Retirement
Plan are each permitted by the Certificate to exceed the Ownership Limit and
each of them currently exceeds such limit and may continue to do so. The
Ownership Limit provides that
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the Bucksbaums may acquire additional shares pursuant to certain rights granted
to them in connection with the Company's initial public offering or from other
sources so long as the acquisition does not result in the five largest
beneficial owners of Capital Stock holding more than 50% of the outstanding
Capital Stock. The Ownership Limit restricts the IBM Retirement Plan from
acquiring additional shares of Capital Stock so long as it exceeds the
Ownership Limit, except through stock splits or other pro rata transactions
that do not increase its percentage interest in the Company. The Board of
Directors may waive the Ownership Limit if presented with satisfactory evidence
that such ownership will not jeopardize the Company's status as a REIT. As a
condition of such waiver, the Board of Directors may require opinions of
counsel satisfactory to it and/or an undertaking from the applicant with
respect to preserving the REIT status of the Company. The Ownership Limit will
not apply if the Board of Directors and the holders of Capital Stock determine
that it is no longer in the best interests of the Company to attempt to
qualify, or to continue to qualify, as a REIT. If shares of Common Stock in
excess of the Ownership Limit, or shares which would cause the Company to be
beneficially owned by fewer than 100 persons, are issued or transferred to any
person, such issuance or transfer shall be null and void and the intended
transferee will acquire no rights to such shares.
The Certificate further provides that upon a transfer or other event that
results in a person owning (either directly or by virtue of the applicable
attribution rules) Capital Stock in excess of the applicable Ownership Limit
("Excess Shares"), such person (a "Prohibited Owner") will not acquire or
retain any rights or beneficial economic interest in such Excess Shares.
Rather, the Excess Shares will be automatically transferred to a person or
entity unaffiliated with and designated by the Company to serve as trustee (the
"Trustee") of a trust for the exclusive benefit of a charitable beneficiary
(the "Beneficiary") to be designated by the Company within five (5) days after
the discovery of the transaction which created the Excess Shares. The Trustee
shall have the exclusive right to designate a person who may acquire the Excess
Shares without violating the applicable ownership restrictions (a "Permitted
Transferee") to acquire all of the shares held by the Trust. The Permitted
Transferee must pay the Trustee an amount equal to the fair market value
(determined at the time of transfer to the Permitted Transferee) for the Excess
Shares. The Trustee shall pay to the Prohibited Owner the lesser of: a) the
value of the shares at the time they became Excess Shares and b) the price
received by the Trustee from the sale of the Excess Shares to the Permitted
Transferee. The excess of: a) the sale proceeds from the transfer to the
Permitted Transferee over b) the amount paid to the Prohibited Owner, if any,
in addition to any dividends paid with respect to the Excess Shares will be
distributed to the Beneficiary.
The Ownership Limit will not be automatically removed even if the REIT
provisions of the Code are changed so as to no longer contain any ownership
concentration limitation or if the ownership concentration limitation is
increased. Except as otherwise described above, any change in the Ownership
Limit would require an amendment to the Certificate. Amendments to the
Certificate require the affirmative vote of holders owning a majority of the
outstanding Capital Stock. In addition to preserving the Company's status as a
REIT, the Ownership Limit may have the effect of precluding an acquisition of
control of the Company without the approval of the Board of Directors.
All certificates representing Capital Stock will bear a legend referring
to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions
of the Code, more than 7.5% of the outstanding Capital Stock must file an
affidavit with the Company containing the information specified in the
Certificate within 30 days after January 1 of each year. In addition, each
stockholder shall upon demand be required to disclose to the Company in writing
such information with respect to the direct, indirect and constructive
ownership of shares as the Board of Directors deems necessary to comply with
the provisions of the Code applicable to a REIT or to comply with the
requirements of any taxing authority or governmental agency. United States
Treasury Regulations (the "Regulations") currently require that the Company
annually send written statements requesting information as to the actual
ownership of the Capital Stock from each record holder of more than 1% of the
Company's outstanding Capital Stock. Depending upon the number of record
holders of the Capital Stock, the reporting threshold required by the
Regulations can fall as low as .5%. Record holders that
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fail to submit a written statement in response to the request required by the
Regulations are required to attach to their federal income tax returns
specified information regarding the actual ownership of shares of Capital Stock
of which they are the record holder.
LIMITATION OF LIABILITY OF DIRECTORS
The Certificate provides that a director will not be personally liable for
monetary damages to the Company or its stockholders for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for paying a dividend or approving a stock repurchase
in violation of Section 174 of the Delaware General Corporation Law ("DGCL") or
(iv) for any transaction from which the director derived an improper personal
benefit.
While the Certificate provides directors with protection from awards for
monetary damages for breaches of their duty of care, it does not eliminate such
duty. Accordingly, the Certificate will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care. The provisions of the Certificate described
above apply to an officer of the Company only if he or she is a director of the
Company and is acting in his or her capacity as director, and do not apply to
officers of the Company who are not directors.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each of its
officers and directors. The indemnification agreements require, among other
things, that the Company indemnify its officers and directors to the fullest
extent permitted by law, and advance to the officers and directors all related
expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. The Company must also indemnify and advance
all expenses incurred by officers and directors seeking to enforce their rights
under the indemnification agreements, and cover officers and directors under
the Company's directors' and officers' liability insurance. Although the form
of the indemnification agreement offers substantially the same scope of
coverage afforded by provisions in the Company's Certificate and Bylaws, it
provides greater assurance to directors and officers that indemnification will
be available, because, as a contract, it cannot be modified unilaterally in the
future by the Board of Directors or by stockholders to eliminate the rights it
provides.
DELAWARE ANTI-TAKEOVER STATUTE
The Company is a Delaware corporation and is subject to Section 203 of the
DGCL. In general, Section 203 prevents an "interested stockholder" (defined
generally as a person owning 15% or more of the Company's outstanding voting
stock) from engaging in a "business combination" (as defined in Section 203)
with the Company for three years following the date that person becomes an
interested stockholder unless (a) before that person became an interested
stockholder, the Company's Board of Directors approved the transaction in which
the interested stockholder became an interested stockholder or approved the
business combination, (b) upon completion of the transaction that resulted in
the interested stockholder's becoming an interested stockholder, the interested
stockholder owns at least 85% of the Company's voting stock outstanding at the
time the transaction commenced (excluding 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
subject to the plan will be tendered in a tender or exchange offer), or (c)
following the transaction in which that person became an interested
stockholder, the business combination is approved by the Company's Board of
Directors and authorized at a meeting of stockholders by the affirmative vote
of the holders of at least two-thirds of the Company's outstanding voting stock
not owned by the interested stockholder.
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Under Section 203, these restrictions also do not apply to certain
business combinations proposed by an interested stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the Company and a person who was not an interested stockholder during
the previous three years or who became an interested stockholder with the
approval of a majority of the Company's directors, if that extraordinary
transaction is approved or not opposed by a majority of the directors who were
directors before any person became an interested stockholder in the previous
three years or who were recommended for election or elected to succeed such
directors by a majority of such directors then in office.
DESCRIPTION OF UNITS
The following summary description of Units is qualified by reference to
the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (the "Partnership Agreement"), as amended, and the Rights Agreement
(as hereinafter defined) which have been previously filed with the Commission
as exhibits to the Company's periodic reports, and the foregoing are
incorporated herein by reference.
MANAGEMENT AND OPERATIONS
The Operating Partnership is a Delaware limited partnership which is,
pursuant to the Partnership Agreement, required to be operated in a manner that
will enable the Company to continue to satisfy the requirements for being
classified as a REIT and to avoid any Federal income tax liability. The
Partnership Agreement provides that the net operating cash revenues of the
Operating Partnership, as well as net sales and refinancing proceeds, will be
distributed from time to time as determined by the Company, in its capacity as
the sole general partner of the Operating Partnership (but not less frequently
than quarterly), pro rata in accordance with the partners' percentage
interests.
Generally, pursuant to the Partnership Agreement, the Company, as the sole
general partner of the Operating Partnership, has exclusive and complete
responsibility and discretion in the management and control of the Operating
Partnership, and the holders of Units (the "Limited Partners") have no
authority to transact business for, or participate in the management activities
or decisions of, the Operating Partnership. However, certain decisions,
including those to amend the Partnership Agreement (other than in connection
with the admission of additional Limited Partners) or terminate the Partnership
Agreement, to make a general assignment for the benefit of creditors, to take
title to any property other than in the name of the Operating Partnership or a
subsidiary partnership, to institute any proceeding for bankruptcy or to be
dissolved would require the consent of a majority in interest of the Limited
Partners. In addition, without the written consent of a Limited Partner, the
Partnership Agreement may not be amended to materially adversely affect such
Limited Partner's rights to distributions or allocations except in connection
with the admission of additional Limited Partners or unless such amendment
affects the existing Limited Partners who are Bucksbaums in the same manner on
a Unit-for-Unit basis.
TRANSFERABILITY OF INTERESTS
The Partnership Agreement provides that the Company may not voluntarily
withdraw from the Operating Partnership, or transfer or assign its interest in
the Operating Partnership, without the consent of a majority in interest of the
Limited Partners. Subject to the terms of a pledge agreement executed and
delivered in connection with the consummation of the Forbes-Cohen Transaction,
which prohibits the sale, assignment or other transfer of certain of the Units
received by Contributors unless collateral is substituted therefor, the
Contributors, as Limited Partners, may, at any time following the first
anniversary of the Closing Date, transfer their interests in the Operating
Partnership to a transferee, provided that such transferee assumes all
obligations of the transferor Limited Partner and provided further that such
transfer does not cause a termination of the Operating Partnership for Federal
income tax purposes, does not cause the Company to cease to comply with
requirements under the
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Code for qualification as a REIT and satisfies certain other general
requirements specified in the Partnership Agreement.
BUCKSBAUM RIGHTS
Pursuant to the terms of the Rights Agreement, dated as of July 27, 1993
(the "Rights Agreement"), the Bucksbaums currently hold certain rights (the
"Bucksbaum Rights") granted to them in connection with the Company's initial
public offering, which enable them to convert a portion of their interest in
the Operating Partnership into shares of Common Stock (the "Exchange
Component") and to sell their remaining partnership interest to the Company
(the "Sale Component"). The Exchange Component enables the Bucksbaums to
exchange a portion of their interest in the Operating Partnership for shares of
Common Stock until they own up to 25% of the outstanding Common Stock. The
Sale Component enables the Bucksbaums to sell all or a portion of their
remaining interest in the Operating Partnership to the Company for cash or
Common Stock, or a combination thereof, at the Company's election. The Sale
Component can only be exercised if the Bucksbaums already own 25% or more of
the outstanding Common Stock.
The Bucksbaum Rights may be exercised by the Bucksbaums from time to time
(although only once during any calendar year), in whole or in part, subject to
the limitations that in any calendar year the Sale Component may be exercised
only with respect to one-fourth of the percentage interest in the Partnership
held by the Bucksbaums immediately after the Exchange Component is fully
exercised.
The Bucksbaum Rights expire on April 16, 2023 if not exercised prior to
that date.
CAPITAL CONTRIBUTIONS
The Partnership Agreement provides that if the Operating Partnership
requires additional funds at any time or from time to time in excess of funds
available to the Operating Partnership from borrowings or capital
contributions, the Company may borrow such funds from a financial institution
or other lender and lend such funds to the Operating Partnership on the same
terms and conditions as are applicable to the Company's borrowing of such
funds. As an alternative to borrowing funds required by the Operating
Partnership and after having used reasonable efforts to borrow such funds, the
Company may contribute the amount of such required funds as an additional
capital contribution to the Operating Partnership. If the Company so
contributes additional capital to the Operating Partnership, the Company's
partnership interest in the Operating Partnership will be increased on a
proportionate basis based upon the amount of such additional capital
contributions and the value of the Operating Partnership at the time of such
contributions. Conversely, the partnership interests of the Limited Partners
will be decreased on a proportionate basis in the event of additional capital
contributions by the Company.
TAX MATTERS
Pursuant to the Partnership Agreement, the Company is the tax matters
partner of the Operating Partnership and, as such, has authority to make tax
elections under the Code on behalf of the Operating Partnership.
The net income or net loss of the Operating Partnership will generally be
allocated to the Company and the Limited Partners in accordance with their
percentage interests, subject to compliance with the provisions of Sections
704(b) and 704(c) of the Code and the regulations promulgated thereunder.
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DUTIES AND CONFLICTS
The Partnership Agreement provides that all business activities of the
Company, including all activities pertaining to the acquisition and operation
of shopping center properties, must be conducted through the Operating
Partnership (excluding direct interests of up to 1% in subsidiary partnerships
of the Operating Partnership that are owned by the Company or subsidiaries
thereof). The Partnership Agreement prohibits the Company from borrowing for
the purpose of making a distribution to stockholders except if it arranges such
borrowing through the Operating Partnership.
Pursuant to the Partnership Agreement, the Bucksbaums cannot acquire
interests in shopping center properties or vacant land suitable for development
as a shopping center for a specified period of time. The Partnership Agreement
permits the Bucksbaums to own less than 5% of any publicly traded entity which
invests in retail malls, provided that neither Matthew Bucksbaum nor John
Bucksbaum is actively involved in the management of such entity by virtue of
any such investment.
TERM
The Operating Partnership will continue in full force and effect until
December 31, 2050, or until sooner dissolved upon the withdrawal, bankruptcy,
dissolution or termination of the Company (unless a majority in interest of the
Limited Partners elect to continue the Operating Partnership), the election of
the Company and a majority in interest of the Limited Partners, or the sale or
other disposition of all or substantially all the assets of the Operating
Partnership.
REDEMPTION OF UNITS
GENERAL
Each Limited Partner who is a party to the Redemption Rights Agreement or
a permitted assignee thereunder may, subject to certain limitations, require
that the Operating Partnership redeem such Limited Partner's Units, by
delivering a notice to the Operating Partnership. Such rights are described in
the Redemption Rights Agreement which was executed and delivered in connection
with the Forbes-Cohen Transaction. The summary of the terms of the Redemption
Rights Agreement set forth below does not purport to be complete and is subject
to and qualified by reference to the Redemption Rights Agreement. Subject to
the rights of the Company described in the next paragraph, upon redemption,
such Limited Partner will receive, with respect to each Unit tendered, cash in
an amount equal to the market value of one share of Common Stock of the Company
(subject to certain anti-dilution adjustments). The market value of the Common
Stock for this purpose will be equal to the average of the closing trading
price of the Company's Common Stock on the NYSE (or substitute information, if
no such closing price is available) for the five consecutive trading days
ending on the date on which a redemption notice is received by the Operating
Partnership (or, if such date is not a business day, the first business day
thereafter).
In lieu of the Operating Partnership redeeming Units tendered for
redemption, the Company, as the sole general partner of the Operating
Partnership, has the right, in its sole and absolute discretion, to elect to
assume directly and satisfy the redemption right of a Limited Partner by paying
to the redeeming Limited Partner, with respect to each Unit tendered, either
(a) the cash amount described in the preceding paragraph or (b) one share of
Common Stock of the Company (subject to certain anti-dilution adjustments).
The Company anticipates that it generally will elect to directly assume and
satisfy any redemption right exercised by such a Limited Partner through the
issuance of shares of Common Stock (the Redemption Shares) pursuant to this
Prospectus, whereupon the Company will acquire the Units being redeemed and
will become the owner of such Units. However, there can be no assurance that
the Company will make such election in any particular case. With each
exchange of
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Units for shares of Common Stock or cash, the Company's ownership interest in
the Operating Partnership will increase. Such an acquisition by the Company
will be treated as a sale by the redeeming Limited Partner of such Units to the
Company for Federal income tax purposes. See "--Tax Consequences of
Redemption" below. Upon redemption, such Limited Partner's right to receive
distributions with respect to the Units redeemed will cease (but if such right
is exchanged for Redemption Shares, the Limited Partner will have rights as a
stockholder of the Company from the time of its acquisition of the Redemption
Shares), and if all of its Units are redeemed, such Limited Partner will have
withdrawn as a partner of the Operating Partnership and will no longer be a
party to the Partnership Agreement.
Each such Limited Partner must notify the Operating Partnership of such
Limited Partner's desire to require the Operating Partnership to redeem Units
by sending a notice in accordance with the terms of the Redemption Rights
Agreement. A Limited Partner must request the redemption of at least 1000
Units (or all of the Units held by such holder, if such Limited Partner owns
fewer than 1000 Units). The redemption will occur within 30 days following the
Operating Partnership's receipt of the notice and related documentation
required by the Redemption Rights Agreement, except that no redemption can
occur if the delivery of Redemption Shares would be prohibited under the
provisions of the Certificate designed to protect the Company's qualification
as a REIT.
TAX CONSEQUENCES OF REDEMPTION
The following discussion summarizes certain Federal income tax
considerations that may be relevant to a Limited Partner who exercises such
Limited Partner's right to require the redemption of such Limited Partner's
Units in accordance with the terms of the Redemption Rights Agreement. (The
right of a Limited Partner to require the redemption of Units in accordance
with the terms of the Redemption Rights Agreement is referred to as the
"Redemption Right.") Because the specific tax consequences to a Limited
Partner exercising such Limited Partner's Redemption Right will depend upon the
specific circumstances of that Limited Partner, each Limited Partner
considering exercising the Redemption Right is strongly urged to consult such
Limited Partner's own tax advisor regarding the specific Federal, state, and
local tax consequences to such Limited Partner of the exercise of the
Redemption Right.
TAX TREATMENT OF REDEMPTION OF UNITS
THE EXERCISE BY A LIMITED PARTNER OF SUCH LIMITED PARTNER'S RIGHT TO
REQUIRE THE REDEMPTION OF ALL OR A PORTION OF SUCH LIMITED PARTNER'S UNITS
PURSUANT TO THE REDEMPTION RIGHTS AGREEMENT WILL BE TREATED FOR FEDERAL INCOME
TAX PURPOSES AS A SALE OF SUCH UNITS BY THE LIMITED PARTNER. SUCH A SALE WILL
BE FULLY TAXABLE TO THE REDEEMING LIMITED PARTNER. It is possible that the
amount of gain recognized (or even the tax liability resulting from such gain)
could exceed the amount of cash or the value of other property (i.e.,
Redemption Shares) received upon such disposition. In addition, the ability of
a Limited Partner to sell a substantial number of Redemption Shares in order to
raise cash to pay tax liabilities associated with redemption of Units may be
adversely affected by fluctuations in the market price for the Common Stock,
and the price the Limited Partner receives for such shares may not equal the
value of such Limited Partner's Units at the time of redemption.
If the Company assumes and performs the redemption obligation, the
Redemption Rights Agreement provides that the redemption will be treated by the
Company, the Operating Partnership and the redeeming Limited Partner as a sale
of Units by such Limited Partner to the Company at the time of such redemption.
In that event, such sale will be fully taxable to the redeeming Limited
Partner and such redeeming Limited Partner will be treated as realizing for tax
purposes an amount equal to the sum of the cash or the value of the Common
Stock received in the exchange plus the amount of Operating Partnership
nonrecourse liabilities allocable to the
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redeemed Units at the time of the redemption. The determination of the amount
of gain or loss is discussed more fully below.
If the Company does not elect to assume the obligation to redeem a Limited
Partner's Units, the Operating Partnership will redeem such Units for cash. If
the Operating Partnership redeems Units for cash that the Company contributes
to the Operating Partnership to effect such redemption, the redemption likely
would be treated for tax purposes as a sale of such Units to the Company in a
fully taxable transaction, although the matter is not free from doubt. In that
event, the redeeming Limited Partner would be treated as realizing an amount
equal to the sum of the cash received in the exchange plus the amount of
Operating Partnership nonrecourse liabilities allocable to the redeemed Units
at the time of the redemption. The determination of the amount of gain or loss
in the event of sale treatment is discussed more fully below.
If, instead, the Operating Partnership chooses to redeem a Limited
Partner's Units for cash that is not contributed by the Company to effect the
redemption, the tax consequences would be the same as described in the previous
paragraph, except that if the Operating Partnership redeems less than all of a
Limited Partner's Units, the Limited Partner would not be permitted to
recognize any loss occurring on the transaction and would recognize taxable
gain only to the extent that the cash, plus the share of Operating Partnership
nonrecourse liabilities allocable to the redeemed Units, exceeded the Limited
Partner's adjusted basis in all of such Limited Partner's Units immediately
before the redemption.
TAX TREATMENT OF DISPOSITION OF UNITS BY LIMITED PARTNERS GENERALLY
If a Unit is redeemed in a manner that is treated as a sale of the Unit,
the determination of gain or loss from the sale will be based on the difference
between the amount considered realized for tax purposes and the tax basis in
such Unit. See "Basis of Units" below. Upon the sale of a Unit, the "amount
realized" will be measured by the sum of the cash and fair market value of
other property (i.e., Redemption Shares) received plus the portion of the
Operating Partnership's nonrecourse liabilities allocable to the Unit sold. To
the extent that the amount of cash or property received plus the allocable
share of the Operating Partnership's nonrecourse liabilities exceeds the
Limited Partner's basis for the Unit sold, such Limited Partner will recognize
gain. It is possible that the amount of gain recognized or even the tax
liability resulting from such gain could exceed the amount of cash and the
value of any other property (i.e., Redemption Shares) received upon such sale.
Except as described below, any gain recognized upon a sale or other
disposition of Units will be treated as gain attributable to the sale or
disposition of a capital asset. To the extent, however, that the amount
realized upon the sale of a Unit attributable to a Limited Partner's share of
"unrealized receivables" of the Operating Partnership (as defined in Section
751 of the Code) exceeds the basis attributable to those assets, such excess
will be treated as ordinary income. Unrealized receivables include, to the
extent not previously included in Operating Partnership income, any rights to
payment for services rendered or to be rendered. Unrealized receivables also
include amounts that would be subject to recapture as ordinary income if the
Operating Partnership had sold its assets at their fair market value at the
time of the transfer of a Unit.
BASIS OF UNITS
In general, a Limited Partner who was deemed at the time of the
Forbes-Cohen Transaction to have received its Units upon liquidation of a
partnership had an initial tax basis in its Units ("Initial Basis") equal to
its basis in its partnership interest at the time of such liquidation.
Similarly, in general, a Limited Partner who at the time of the Forbes-Cohen
Transaction contributed a partnership interest in exchange for its Units had an
Initial Basis in the Units equal to its basis in the contributed partnership
interest. A Limited Partner's Initial Basis in its Units generally is
increased by (a) such Limited Partner's share of Operating Partnership taxable
income and (b) increases in its share of liabilities of the Operating
Partnership (including any increase in its share of liabilities occurring in
connection with the Forbes-Cohen Transaction). Generally, such Limited
Partner's basis
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in its Units is decreased (but not below zero) by (i) its share of Operating
Partnership distributions, (ii) decreases in its share of liabilities of the
Operating Partnership (including any decrease in its share of liabilities
occurring in connection with the Forbes-Cohen Transaction), (iii) its share of
losses of the Operating Partnership, and (iv) its share of nondeductible
expenditures of the Operating Partnership that are not chargeable to capital.
POTENTIAL APPLICATION OF THE DISGUISED SALE REGULATIONS TO A REDEMPTION OF
UNITS
There is a possibility that a redemption of Units issued in the
Forbes-Cohen Transaction might cause the original transfer of property to the
Operating Partnership in exchange for Units in connection with the Forbes-Cohen
Transaction to be treated as a "disguised sale" of property. The Code and the
Treasury Regulations thereunder (the "Disguised Sale Regulations") generally
provide that, unless one of the prescribed exceptions is applicable, a
partner's contribution of property to a partnership and a simultaneous or
subsequent transfer of money or other consideration (including the assumption
of or taking subject to a liability) from the partnership to the partner will
be presumed to be a sale, in whole or in part, of such property by the partner
to the partnership. The Disguised Sale Regulations also provide, however, that
if two years have passed between the transfer of money or other consideration
and the contribution of property, the transactions will not be presumed to be a
sale unless the facts and circumstances clearly establish that the transfers
constitute a sale. There can be no assurance that the Internal Revenue Service
("IRS") might not seek to contend that the Disguised Sale Regulations apply
here. The IRS could contend that the Forbes-Cohen Transaction itself was
taxable as a disguised sale under the Disguised Sale Regulations. Any gain
recognized thereby may be eligible for installment sale reporting under Section
453 of the Code, subject to certain limitations.
POTENTIAL CHANGE IN INVESTMENT UPON REDEMPTION OF UNITS
If a Limited Partner exercises the right to require the redemption of such
Limited Partner's Units pursuant to the Redemption Rights Agreement, such
Limited Partner may receive cash or Redemption Shares in exchange for such
Units. If a Limited Partner receives cash, the Limited Partner will no longer
have any interest in the Operating Partnership or the Company and will not
benefit from any subsequent increases in the share price of the Common Stock
and will not receive any future distributions from the Operating Partnership or
the Company (unless the Limited Partner currently owns or acquires in the
future additional Units or shares of Common Stock). If a Limited Partner
receives Redemption Shares, the Limited Partner will become a stockholder of
the Company rather than a holder of Units in the Operating Partnership.
ALTHOUGH THE NATURE OF AN INVESTMENT IN SHARES OF COMMON STOCK IS SUBSTANTIALLY
EQUIVALENT ECONOMICALLY TO AN INVESTMENT IN UNITS IN THE OPERATING PARTNERSHIP,
THERE ARE SOME DIFFERENCES BETWEEN OWNERSHIP OF UNITS AND OWNERSHIP OF COMMON
STOCK RELATING TO, AMONG OTHER THINGS, FORM OF ORGANIZATION, PERMITTED
INVESTMENTS, POLICIES AND RESTRICTIONS, MANAGEMENT STRUCTURE, COMPENSATION AND
FEES, INVESTOR RIGHTS AND FEDERAL INCOME TAXATION, SOME OF WHICH MAY BE
MATERIAL TO INVESTORS. See "Comparison of Ownership of Units and Shares of
Common Stock."
REGISTRATION OF SHARES
The Company has registered the Redemption Shares under the Securities Act
to satisfy its registration obligations under the Redemption Rights Agreement.
Under the Redemption Rights Agreement, the Company is required to prepare and
file with the Commission such amendments and supplements to the Registration
Statement (of which this Prospectus is a part) and to this Prospectus, as may
be necessary to keep the Registration Statement effective, generally during the
term in which the Registration Rights exist for the Redemption Shares, as
discussed below, and to comply with the provisions of the Securities Act. See
"Plan of Distribution."
Pursuant to the Redemption Rights Agreement, the Company has agreed to pay
all expenses of effecting the expenses of effecting the above-described
registration of the Redemption Shares under the Securities Act prior to
December 6, 2002.
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The Limited Partners who are parties to the Redemption Rights Agreement have
agreed severally, in proportion to the number of Units held by them at such
time in relation to the total number of shares of Common Stock covered by the
Registration Statement, to reimburse the Company for registration expenses
which are incurred thereafter.
If the Company does not maintain the above-described registration
statement in accordance with the terms of the Redemption Rights Agreement, the
Company generally shall not have the right to deliver shares of Common Stock
(i.e., Redemption Shares) in consideration for tendered Units during the time
when such registration statement is not so effective.
COMPARISON OF OWNERSHIP OF UNITS AND SHARES OF COMMON STOCK
Although the nature of an investment in shares of Common Stock of the
Company is substantially equivalent economically to an investment in Units in
the Operating Partnership, there are certain differences between ownership of
Units and ownership of shares of Common Stock, some of which may be material to
investors.
The information below highlights a number of the significant differences
between the Operating Partnership and the Company and compares certain legal
rights associated with the ownership of Units and Common Stock. These
comparisons are intended to assist Limited Partners of the Operating
Partnership in understanding how their investment will be changed if their
Units are redeemed for Common Stock. THIS DISCUSSION IS SUMMARY IN NATURE AND
DOES NOT CONSTITUTE A COMPLETE DISCUSSION OF THESE MATTERS, AND HOLDERS OF
UNITS SHOULD CAREFULLY REVIEW THE BALANCE OF THIS PROSPECTUS AND THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART FOR ADDITIONAL
IMPORTANT INFORMATION ABOUT THE COMPANY.
FORM OF ORGANIZATION AND ASSETS OWNED
The Operating Partnership is organized as a Delaware limited partnership.
The Company is a Delaware corporation. The Company has elected to be taxed as
a REIT under the Code, and intends to maintain its qualification as a REIT.
LENGTH OF INVESTMENT
The Operating Partnership has a stated termination date of December 31,
2050, although it may be terminated earlier under certain circumstances. The
Company has a perpetual term and intends to continue its operations for an
indefinite time period.
ADDITIONAL EQUITY
The Operating Partnership is authorized to issue additional Units from
time to time, as determined by the Company as its general partner, in exchange
for contributions of cash or property to the Operating Partnership. The
Operating Partnership may issue additional Units to the Company, as long as
such Units are issued in connection with a comparable issuance of shares of
capital stock of the Company and proceeds raised in connection with the
issuance of such shares are contributed by the Company to the Operating
Partnership.
The Board of Directors of the Company may authorize the issuance, in its
discretion, of additional equity securities consisting of Common Stock or
Preferred Stock; provided, that the total number of shares issued does not
exceed the number of authorized shares of capital stock set forth in the
Certificate. As long as the Operating
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Partnership is in existence, the proceeds of all equity capital raised by the
Company will be contributed to the Operating Partnership in exchange for Units
in the Operating Partnership.
MANAGEMENT AND CONTROL
Generally, pursuant to the Partnership Agreement, the Company, as the sole
general partner of the Operating Partnership, has exclusive and complete
responsibility and discretion in the management and control of the Operating
Partnership, and the Limited Partners have no authority to transact business
for, or participate in the management activities or decisions of, the Operating
Partnership. However, certain decisions, including those to amend the
Partnership Agreement (other than in connection with the admission of
additional Limited Partners) or terminate the Partnership Agreement, to make a
general assignment for the benefit of creditors, to take title to any property
other than in the name of the Operating Partnership or a subsidiary
partnership, to institute any proceeding for bankruptcy or to be dissolved
would require the consent of a majority in interest of the Limited Partners.
In addition, without the written consent of a Limited Partner, the Partnership
Agreement may not be amended to materially adversely affect such Limited
Partner's rights to distributions or allocations except in connection with the
admission of additional Limited Partners or unless such amendment affects the
existing Limited Partners who are Bucksbaums in the same manner on a
Unit-for-Unit basis.
The Board of Directors of the Company has exclusive control over the
Company's business and affairs subject only to the restrictions in the
Certificate and Bylaws and the Partnership Agreement. At each annual meeting
of the stockholders, the successors of the class of directors whose terms
expire at that meeting will be elected. The policies adopted by the Board of
Directors may be altered or eliminated without a vote of the stockholders.
Accordingly, except for their vote in the elections of directors, stockholders
have no control over the ordinary business policies of the Company. The Board
of Directors cannot change the Company's policy of maintaining its status as a
REIT, however, without the approval of holders of a majority of the outstanding
shares of capital stock entitled to vote on such matter.
FIDUCIARY DUTIES
Under Delaware law, the general partner of the Operating Partnership is
accountable to the Operating Partnership as a fiduciary and, consequently, is
required to exercise good faith in all of its dealings with respect to
partnership affairs. The Partnership Agreement provides, however, that the
general partner is not liable for monetary damages for losses sustained or
liabilities incurred as a result of the general partner's acts or omissions,
provided that the general partner has acted in good faith and in the belief
that any such act or omission was in the best interests of the Operating
Partnership and, provided further, that the general partner was not guilty of
fraud, misconduct or gross negligence.
Under Delaware law, the Company's directors must perform their duties in
good faith, in a manner that they reasonably believe to be in the best
interests of the Company and with the care of an ordinarily prudent person in a
like position. Directors of the Company who act in such a manner generally
will not be liable to the Company or its stockholders for monetary damages
arising from their activities.
MANAGEMENT LIABILITY AND INDEMNIFICATION
As a matter of Delaware law, the general partner has liability for the
payment of the obligations and debts of the Operating Partnership unless
limitations upon such liability are stated in the document or instrument
evidencing the obligation. Under the Partnership Agreement, the Operating
Partnership has agreed to indemnify the general partner and its "affiliates,"
as defined in the Partnership Agreement, and any individual acting on their
behalf, from and against all losses, damages, claims or liabilities, including,
but not limited to, reasonable attorneys' fees and expenses, incurred in
connection with any actions relating to the operations of the Operating
Partnership in which the general partner, its affiliates, or any individual
acting on their behalf is involved, to the
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fullest extent permitted by Delaware law (including any procedures set forth
therein regarding advancement of expenses to such indemnified party).
The Certificate provides that a director of the Company will not be
personally liable for monetary damages to the Company or its stockholders for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) for paying a dividend or approving a stock
repurchase in violation of Section 174 of the DGCL or (iv) for any transaction
from which the director derived an improper personal benefit.
The Company has entered into indemnification agreements with each of its
officers and directors. The indemnification agreements require, among other
things, that the Company indemnify its officers and directors to the fullest
extent permitted by law, and advance to the officers and directors all related
expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. The Company must also indemnify and advance
all expenses incurred by officers and directors seeking to enforce their rights
under the indemnification agreements, and cover officers and directors under
the Company's directors' and officers' liability insurance. Although the form
of the indemnification agreement offers substantially the same scope of
coverage afforded by provisions in the Company's Certificate and Bylaws, it
provides greater assurance to directors and officers that indemnification will
be available, because, as a contract, it cannot be modified unilaterally in the
future by the Board of Directors or by stockholders to eliminate the rights it
provides.
ANTITAKEOVER PROVISIONS
Except in limited circumstances, the general partner of the Operating
Partnership has exclusive management power over the business and affairs of the
Operating Partnership. The general partner may not voluntarily withdraw from
the Operating Partnership, or transfer or assign its interest in the Operating
Partnership, without the consent of a majority in interest of the Limited
Partners, and other than as expressly provided in the Partnership Agreement, no
Limited Partner may withdraw from the Operating Partnership without the prior
written consent of the general partner.
The Certificate and Bylaws of the Company contain a number of provisions
that may have the effect of delaying or discouraging an unsolicited proposal
for the acquisition of the Company or the removal of incumbent management.
These provisions include, among others: (1) a staggered Board of Directors;
(2) authorized capital stock that may be issued as Preferred Stock in the
discretion of the Board of Directors, with superior voting rights to the Common
Stock; (3) a requirement that directors may be removed only for cause and only
by a vote of holders of at least 75% of the outstanding Common Stock; and (4)
provisions designed to avoid concentration of share ownership in a manner that
would jeopardize the Company's status as a REIT under the Code. In addition,
the Company is subject to Section 203 of the DGCL which provides that, subject
to certain exceptions, no Delaware corporation may engage in any "business
combination" with an "interested stockholder" for a period of three years
following the date that such stockholder became an interested stockholder
unless prior to such date, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder.
VOTING RIGHTS
Under the Partnership Agreement, the Limited Partners have voting rights
only with respect to certain limited matters, including dissolution of the
Operating Partnership, amendments to the Partnership Agreement (other than to
reflect the admission of additional Limited Partners), making a general
assignment for the benefit of creditors, taking title to any personal or real
property other than in the name of the Operating Partnership or a subsidiary
partnership, and instituting any proceeding for bankruptcy on behalf of the
Operating Partnership. All matters submitted to a vote of Limited Partners
require the affirmative vote of a majority in interest of the
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Limited Partners. Otherwise, all decisions relating to the operation and
management of the Operating Partnership are made by the Company, as general
partner.
The Company is managed and controlled by a Board of Directors consisting
of three classes having staggered terms of office. One class of directors is
elected by the stockholders at each annual meeting of the Company. Delaware
law requires that certain major corporate transactions, including most
amendments to a corporation's certificate of incorporation, may not be
consummated without the approval of stockholders. All shares of Common Stock
have one vote, and the Company's Certificate permits the Board of Directors to
classify and issue Preferred Stock in one or more series having voting power
which may differ from that of the Common Stock.
AMENDMENT OF THE PARTNERSHIP AGREEMENT OR THE CERTIFICATE OF INCORPORATION
The general partner of the Operating Partnership may not, without the
written consent of a majority in interest of the Limited Partners, amend or
modify the Partnership Agreement other than to reflect the admission of
additional Limited Partners.
Amendments to the Company's Certificate must be approved by a majority of
the Board of Directors and by the vote of at least majority of the votes
entitled to be cast at a meeting of stockholders.
VOTE REQUIRED TO DISSOLVE THE OPERATING PARTNERSHIP OR THE COMPANY
The general partner of the Operating Partnership may elect to dissolve the
Partnership upon making a written election to that effect with the written
consent of a majority in interest of the Limited Partners.
Under Delaware law, the Board of Directors must obtain approval of holders
of at least a majority of the outstanding capital stock in order to dissolve
the Company.
COMPENSATION, FEES AND DISTRIBUTIONS
The general partner does not receive any compensation for its services as
general partner of the Operating Partnership. As a partner in the Operating
Partnership, however, the general partner has the right to receive allocations
and distributions from the Operating Partnership, pro rata in accordance with
its percentage interest in the Operating Partnership. In addition, the
Operating Partnership reimburses the general partner for all expenses incurred
relating to the ongoing operation of the Operating Partnership.
The directors and officers of the Company receive compensation for their
services.
LIABILITY OF INVESTORS
Under the Partnership Agreement and applicable state law, the liability of
the Limited Partners for the Operating Partnership's debts and obligations is
generally limited to the amount of their investment the Operating Partnership.
Under Delaware law, stockholders are not personally liable for the debts
or obligations of the Company.
POTENTIAL DILUTION OF RIGHTS
The general partner of the Operating Partnership is authorized to cause
the Operating Partnership to issue additional Units from time to time in
exchange for contributions of cash or property to the Operating Partnership.
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The Company's Board of Directors may issue, in its discretion, additional
shares of Common Stock and has the authority to issue from the authorized
Capital Stock a variety of other equity securities of the Company with such
powers, preferences and rights as the Board of Directors may designate at the
time of issuance. The issuance of additional shares of either Common Stock or
other similar equity securities may result in the dilution of the interests of
the stockholders.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
TO HOLDERS OF COMMON STOCK
This section is a summary of certain Federal income tax matters of general
application pertaining to REITs and their stockholders under the Code. The
discussion is based on current law and does not purport to deal with all
aspects of Federal income taxation that may be relevant to investors subject to
special treatment under Federal income tax laws, such as investors subject to
the Employee Retirement Income Security Act of 1974, as amended, other tax
exempt investors, dealers in securities or foreign persons. The provisions of
the Code pertaining to REITs are highly technical and complex and sometimes
involve mixed questions of fact and law. In addition, this section does not
discuss foreign, state or local taxation. Limited Partners who are considering
exercising their redemption rights should consult, and must depend on, their
own tax advisors regarding the Federal, state, local, foreign and other tax
consequences of holding and disposing of the Redemption Shares.
In the opinion of Neal, Gerber & Eisenberg, tax counsel to the Company,
the Company has been organized and operated in a manner that has enabled it to
qualify as a REIT under Sections 856 through 859 of the Code, and its proposed
method of operation will enable it to continue to so qualify. No assurance can
be given, however, that the Company will so qualify or continue to so qualify.
The Company's ability to qualify as a REIT under the requirements of the Code
and the regulations promulgated thereunder is dependent upon actual operating
results.
To qualify as a REIT under the Code for a taxable year, the Company must
meet certain organizational and operational requirements, which generally
require it to be a passive investor in operating real estate and to avoid
excessive concentration of ownership of its stock. First, its principal
activities must be real estate related. Generally, at least 75% of the value
of the total assets of the Company at the end of each calendar quarter must
consist of real estate assets, cash or governmental securities. The Company
may not own more than 10% of the outstanding voting securities of any
corporation; shares of qualified REITs and of certain wholly owned subsidiaries
are exempt from this prohibition. Additionally, in 1997, gross income from the
sale or other disposition of stock and securities held for less than one year,
the sale or other disposition of real property held for less than four years
and from certain other sources must constitute less than 30% of the gross
income for each taxable year of a REIT. For each taxable year, at least 75% of
a REIT's gross income must be derived from specified real estate sources and
95% must be derived from such real estate sources plus certain other permitted
sources. Real estate income for purposes of these requirements includes gains
from the sale of real property not held primarily for sale to customers in the
ordinary course of business, dividends on REIT shares, interest on loans
secured by mortgages on real property, certain rents from real property and
income from foreclosure property. For rents to qualify, they may not be based
on the income or profits of any person, except that they may be based on a
percentage or percentages of gross income or receipts, and, subject to certain
limited exceptions, the REIT may not manage the property or furnish services to
residents except through an independent contractor which is paid an
arms'-length fee and from which the REIT derives no income.
For the Company to remain qualified as a REIT, no more than 50% in value
of the outstanding Capital Stock, including in some circumstances stock into
which outstanding securities might be converted, may be owned actually or
constructively by five or fewer individuals (as defined in the Code to include
certain entities) at any time during the last half of the Company's taxable
year. Accordingly, the Certificate of Incorporation of the
-17-
<PAGE> 19
Company, as amended, contains provisions restricting the acquisition of shares
of Capital Stock. See "Description of Common Stock -- Restrictions on
Transfer" in the accompanying Prospectus.
So long as the Company qualifies for taxation as a REIT and distributes at
least 95% of the sum of (a) its REIT taxable income (as computed without regard
to net capital gains or the dividends-paid deduction) and (b) its net income
(after tax) from foreclosure property for its taxable year to its stockholders
annually, the Company itself will not be subject to Federal income tax on that
portion of such income distributed to stockholders. The Company will be taxed
at regular corporate rates on all income not distributed to stockholders. The
Company's policy is to distribute at least 95% of the sum of its REIT taxable
income and net income from foreclosure property. REITs may also incur taxes
for certain other activities or to the extent distributions do not satisfy
certain other requirements.
In the case of a REIT which is a partner in a partnership, such as the
Company, Treasury Regulations provide that the REIT will be deemed to own its
proportionate share of the assets of the partnership and will be deemed to earn
the income of the partnership attributable to such share. In addition, for
purposes of satisfying the asset and income tests described above, the
character of the gross income and assets in the hands of the partnership
remains the same when allocated to the REIT. Accordingly, the Company's
proportionate share of the assets, liabilities and items of income of the
Operating Partnership will be treated as assets, liabilities, and items of
income of the Company for purposes of qualifying as a REIT.
Failure of the Company to qualify during any taxable year as a REIT could,
unless certain relief provisions were available, have a material adverse effect
upon investors. If disqualified for taxation as a REIT for a taxable year, the
Company would also be disqualified for taxation as a REIT for the next four
taxable years, unless the failure was due to reasonable cause rather than
willful neglect and certain other conditions are met. The Company would be
subject to Federal income tax at corporate rates on all of its taxable income
and would not be able to deduct the dividends paid, which could result in a
discontinuation of or substantial reduction in dividends to stockholders.
Dividends would also be subject to the regular tax rules applicable to
dividends received by stockholders of corporations. Should the failure to
qualify be determined to have occurred retroactively in an earlier tax year of
the Company, the imposition of a substantial Federal income tax liability on
the Company attributable to such nonqualifying tax years may adversely affect
the Company's ability to pay dividends. In the event that the Company fails to
meet certain income tests of the tax law, it may, generally, nonetheless retain
its qualification as a REIT if it pays a 100% tax on the amount by which it
failed to meet the income tests so long as its failure was due to reasonable
cause and not willful neglect. Any such taxes would adversely affect the
Company's ability to pay dividends.
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
As long as the Company qualifies as a REIT, distributions made to its
taxable domestic stockholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends) will be taxable to such
stockholders as ordinary income. Corporate stockholders will not be entitled
to the dividends-received deduction with respect to distributions by the
Company. Distributions that are designated as capital gain dividends will be
taxable to stockholders as mid-term or as long-term capital gains (to the
extent they do not exceed the Company's actual net capital gain for the taxable
year) without regard to the period for which the stockholder has held its
stock. However, corporate stockholders may be required to treat up to 20% of
certain capital gain dividends as ordinary income. Distributions by the
Company in excess of its current and accumulated earnings and profits will not
be taxable to a stockholder to the extent that such distributions do not exceed
the adjusted basis of the stockholder's shares, but rather, will be a
nontaxable reduction in a stockholder's adjusted basis in such shares to the
extent thereof and thereafter will be taxed as capital gain.
Any dividend declared by the Company in October, November or December of
any year payable to a stockholder of record on a specified date in any such
month will be treated as both paid by the Company and
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<PAGE> 20
received by the stockholder on December 31, of such year, provided that the
dividend is actually paid by the Company during January of the following
calendar year.
Stockholders may not include in their individual income tax returns any
net operating losses or capital losses of the Company. Instead, such losses
would be carried over by the Company for potential offset against its future
income (subject to certain limitations). Taxable distributions from the
Company and gain from the disposition of the Capital Stock will not be treated
as passive activity income and, therefore, stockholders generally will not be
able to apply any "passive activity losses" (such as losses from certain types
of limited partnerships in which the stockholder is a limited partner) against
such income. In addition, taxable distributions from the Company and gain from
the disposition of Capital Stock generally will be treated as investment income
for purposes of the investment interest limitations. The Company will notify
the stockholders after the close of the Company's taxable year as to the
portions of the distributions attributable to that year that constitute
ordinary income, return of capital, and capital gain. In general, any gain or
loss realized upon a taxable disposition of the Capital Stock by a stockholder
who is not a dealer in securities will be treated as mid-term capital gain or
loss if the Capital Stock has been held for more than one year but not more
than 18 months, as long-term capital gain if held for more than 18 months and
otherwise as short-term capital gain or loss. However, any loss upon a sale or
exchange of Capital Stock by a stockholder who has held such stock for six
months or less (after applying certain holding period rules) will be treated as
a mid-term or long-term capital loss to the extent of distributions from the
Company required to be treated by such stockholder as mid-term or long-term
capital gain, as the case may be. All or a portion of any loss realized upon a
taxable disposition of the Capital Stock may be disallowed if other shares of
the Capital Stock are purchased within 30 days before or after the disposition.
BACKUP WITHHOLDING
The Company will report to its domestic stockholders and to the IRS the
amount of dividends paid during each calendar year, and the amount of tax
withheld, if any. Under the backup withholding rules, a stockholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
unless such holder: (a) is a corporation or comes within certain other exempt
categories and when required demonstrates this fact, or (b) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A stockholder that does not provide the Company with a
correct taxpayer identification number may also be subject to penalties imposed
by the IRS. Any amount paid as backup withholding will be creditable against
the stockholder's income tax liability. In addition, the Company may be
required to withhold a portion of capital gain distributions to any
stockholders that fail to certify their non-foreign status to the Company. See
- --"Taxation of Foreign Stockholders."
TAXATION OF PENSION TRUSTS
One of the requirements for the Company to qualify as a REIT for Federal
income tax purposes is that, during the last half of each taxable year, not
more than 50% in value of the Company's Capital Stock can be owned by five or
fewer individuals (as defined in the Code to include certain entities). For
purposes of the "five or fewer" test described above, beneficiaries of a
domestic pension trust that owns shares in the Company generally will be
treated as owning such shares in proportion to their actuarial interests in the
trust. In addition, amounts distributed by the Company to a tax-exempt pension
trust generally do not constitute "unrelated business taxable income" ("UBTI")
to such trust unless the trust owns more than ten percent of the Capital Stock,
in which case a portion of such amounts distributed may be treated as UBTI.
TAXATION OF FOREIGN STOCKHOLDERS
The rules governing United States Federal income taxation of nonresident
alien individuals, foreign corporations, foreign partnerships and other
foreign stockholders (collectively, "Non-U.S. Stockholders") are complex and
no attempt will be made herein to provide more than a summary of such rules.
Prospective Non-
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<PAGE> 21
U.S. Stockholders should consult with their own tax advisors to determine the
impact of Federal, state and local income tax laws with regard to an investment
in the Capital Stock, including any reporting requirements. It is currently
anticipated that the Company will qualify as a "domestically controlled REIT"
(i.e., a REIT in which at all times during a specified testing period less than
50% of the value of the stock is owned directly or indirectly by Non-U.S.
Stockholders) and therefore gain from the sale of Capital Stock by a Non-U.S.
Stockholder will not be subject to United States taxation unless such gain is
treated as "effectively connected" with the Non-U.S. Stockholder's United
States trade or business.
Distributions that are not attributable to gain from the sale or exchange
by the Company of United States real property interests (and are not designated
as capital gain dividends) will be treated as dividends taxed as ordinary
income to the extent that they are made out of current or accumulated earnings
and profits of the Company. Such distributions generally will be subject to a
United States withholding tax equal to 30% of the gross amount of the
distribution, subject to reduction or elimination under an applicable tax
treaty. However, if dividends from the investment in the shares are treated as
"effectively connected" with the Non-U.S. Stockholder's conduct of a United
States trade or business, such dividends will be subject to regular U.S. income
taxation (foreign corporations may also be subject to the 30% branch profits
tax). The Company expects to withhold United States income tax at the rate of
30% on the amount of any such dividends made to a Non-U.S. Stockholder unless:
(1) a lower treaty rate applies and the Non-U.S. Stockholder files certain
information evidencing its entitlement to such lower treaty rate, or (2) the
Non-U.S. Stockholder files an IRS Form 4224 with the Company claiming that the
distribution is "effectively connected income". Distributions which exceed
current and accumulated earnings and profits of the Company will not be taxable
to the extent that they do not exceed the adjusted basis of a stockholder's
shares, but rather will reduce (but not below zero) the adjusted basis of such
shares. To the extent that such distributions exceed the adjusted basis of a
Non-U.S. Stockholder's shares, they generally will give rise to United States
tax liability if the Non-U.S. Stockholder would otherwise be subject to tax on
gain from the sale or disposition of his shares in the Company, as described
above. If it cannot be determined at the time a distribution is made whether
or not such distribution will be in excess of current and accumulated earnings
and profits, the distributions will be subject to withholding at the same rate
as dividends. However, amounts thus withheld are refundable if it is
subsequently determined that such distribution was, in fact, in excess of
current and accumulated earnings and profits of the Company.
Distributions by the Company to a Non-U.S. Stockholder that are
attributable to gain from sales or exchanges by the Company of a United States
real property interest are subject to income and withholding tax under the
provisions of the Foreign Investment in Real Property Tax Act of 1980, as
amended ("FIRPTA"). Under FIRPTA, those distributions, if any, which are
treated as gain recognized from the sale of a United States real property
interest, are taxed as income "effectively connected" with a United States
business. Non-U.S. Stockholders would thus be taxed at the normal capital gain
rates applicable to U.S. stockholders (subject to the applicable alternative
minimum tax and a special alternative minimum tax for nonresident alien
individuals). Also, distributions subject to FIRPTA may be subject to a 30%
branch profits tax in the hands of a foreign corporate stockholder not entitled
to treaty exemption. The Company will withhold 35% of any distribution to a
Non-U.S. Stockholder that could be designated by the Company as a capital gain
dividend. This amount is creditable against the Non-U.S. Stockholder's FIRPTA
tax liability. A refund may be available if the amount exceeds the Non-U.S.
Stockholder's FIRPTA tax liability.
PLAN OF DISTRIBUTION
This Prospectus relates to the issuance by the Company of up to 1,445,000
Redemption Shares if and to the extent that holders of Units acquired pursuant
to the Forbes-Cohen Transaction tender such Units for redemption in accordance
with the terms of the Redemption Rights Agreement and the Company, in its sole
and absolute discretion, elects to issue Redemption Shares in consideration for
such Units. The Company has registered the Redemption Shares for sale to
provide the holders thereof with freely tradeable securities, but
-20-
<PAGE> 22
registration of such shares does not necessarily mean that any of such shares
will be issued by the Company upon redemption of Units or offered or sold by
the holders thereof.
The Company will not receive any cash proceeds from the issuance of the
Redemption Shares to holders of Units tendered for redemption; however, it will
acquire one Unit (subject to certain anti-dilution adjustments) in exchange for
each Redemption Share that the Company issues to holders of Units pursuant to
this Prospectus and thereby increasing its share in the Operating Partnership.
Consequently, with each redemption by the Company, the Company's interest in
the Operating Partnership will increase.
The Redemption Shares will be listed on the NYSE, subject to official
notice of issuance.
LEGAL MATTERS
The validity of the Redemption Shares offered hereby will be passed upon
for the Company by Neal, Gerber & Eisenberg.
EXPERTS
The consolidated financial statements and schedule of the Company as of
December 31, 1996 and 1995 and for the three years in the period ended December
31, 1996 have been incorporated by reference herein from the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, and the combined
statement of revenues and certain expenses of the Lansing Mall, the Westwood
Mall and the Lakeview Mall for the year ended December 31, 1995 has been
incorporated by reference herein from the Company's Current Report on Form
8-K/A, as amended, dated February 18, 1997 in reliance upon the reports of
Coopers & Lybrand L.L.P., independent accountants, and upon the authority of
that firm as experts in accounting and auditing.
The statement of revenues and certain expenses of Park Mall for the year
ended December 31, 1995 has been incorporated by reference herein from the
Company's Current Report on Form 8-K/A, as amended, dated February 18, 1997 in
reliance upon the report of Addison, Roberts & Ludwig, P.C., independent
auditors, and upon the authority of that firm as experts in accounting and
auditing.
The statement of revenues and certain expenses of Market Place Shopping
Center for the year ended December 31, 1996 has been incorporated by reference
herein from the Company's Current Report on Form 8-K/A dated August 28, 1997 in
reliance upon the report of Shepard Schwartz & Harris LLP, independent
accountants, and upon the authority of that firm as experts in accounting and
auditing.
The statement of revenues and certain expenses of Southlake Mall for the
year ended December 31, 1996 has been incorporated by reference herein from the
Company's Current Report on Form 8-K/A dated August 28, 1997 in reliance upon
the report of KPMG Peat Marwick LLP, independent accountants, and upon the
authority of that firm as experts in accounting and auditing.
-21-
<PAGE> 23
===============================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY BROKER, DEALER OR AGENT. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................... 2
Incorporation of Certain Documents
by Reference........................................................... 2
The Company............................................................. 3
Use of Proceeds......................................................... 3
Capital Stock........................................................... 4
Description of Common Stock............................................. 4
Description of Units.................................................... 7
Redemption of Units..................................................... 9
Comparison of Ownership of Units and
Shares of Common Stock................................................. 13
Certain Federal Income Tax Considerations
to Holders of Common Stock............................................. 17
Plan of Distribution.................................................... 20
Legal Matters........................................................... 21
Experts................................................................. 21
</TABLE>
===============================================================================
1,445,000 SHARES
GENERAL GROWTH
PROPERTIES, INC.
COMMON STOCK
---------------
PROSPECTUS
---------------
___________, 1997
===============================================================================
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of securities being registered, other than discounts,
concessions and brokerage commissions.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee.......................................... 15,719
Blue sky fees and expenses.................................... 250*
Legal fees and expenses....................................... 5,000*
Accounting fees and expenses.................................. 2,500*
Miscellaneous (including NYSE listing fees)................... 2,531*
------
Total..................................................... 26,000*
</TABLE>
- --------------
* Estimated
The Company will bear all of the foregoing expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation. In its Certificate of
Incorporation, the Company has adopted (a) the provisions of Section 102(b)(7)
of the Delaware General Corporation Law ("DGCL"), which enables a corporation
in its certificate of incorporation or an amendment thereto to eliminate or
limit the personal liability of a director for monetary damages for breach of
the director's fiduciary duty, except (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the DGCL (providing for
liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions) or (iv) for any transaction from which a director
derived an improper personal benefit and (b) the provisions of Section 145 of
the DGCL, which provide that a corporation may indemnify any persons, including
officers and directors, who are, or are threatened to be made, parties to any
threatened, pending or completed legal action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that such person was an
officer, director, employee or agent of the corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided such officer, director, employee or agent acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interest and, with respect to criminal proceedings, had
no reasonable cause to believe that his conduct was unlawful. A Delaware
corporation may indemnify officers or directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to
be liable to the corporation. Where an officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against expenses (including attorneys' fees)
that such officer or director actually and reasonably incurred.
The Company has entered into indemnification agreements with each of its
officers and directors. The indemnification agreements, among other things,
require the indemnification of the Company's officers and directors to the
fullest extent permitted by law, and require that the Company advance to the
officers and directors all related expenses, subject to reimbursement if it is
subsequently determined that indemnification is not
II-1
<PAGE> 25
permitted. Such indemnification agreements also provide for the
indemnification and advance of all expenses incurred by officers and directors
seeking to enforce their rights under the indemnification agreements, and
require the Company to cover officers and directors under the Company's
directors' and officers' liability insurance. Although the indemnification
agreements offer substantially the same scope of coverage afforded by
provisions in the Certificate and the Bylaws, such agreements provide greater
assurance to directors and officers that indemnification will be available,
because, as a contract, it cannot be modified unilaterally in the future by the
Board of Directors or by the stockholders to eliminate the rights they provide.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
<S> <C>
4.1 Specimen certificate representing Common Stock (incorporated
by reference to the Company's Registration Statement on
Form S-11 (File No. 33-56640), filed on April 6, 1993).
5.1 Opinion of Neal, Gerber & Eisenberg, counsel for the Company.
8.1 Tax Opinion of Neal, Gerber & Eisenberg, counsel for the
Company.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Addison, Roberts & Ludwig, P.C.
23.3 Consent of Shepard Schwartz & Harris LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of Neal, Gerber & Eisenberg (included in Exhibit 5.1
and Exhibit 8.1).
24.1 Powers of Attorney of certain officers and directors of the
Company (included on signature page).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in
the information set forth in the Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the Registration
Statement.
provided, however, that paragraphs (i) and (ii) do not apply if
the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to
II-2
<PAGE> 26
the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than insurance payments and the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon 430A and contained in a form of prospectus filed by
the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-3
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on December 4, 1997.
GENERAL GROWTH PROPERTIES, INC.
(Registrant)
By: /S/ MATTHEW BUCKSBAUM
--------------------------------------
Matthew Bucksbaum
Chairman of the Board and
Chief Executive Officer
We, the undersigned officers and directors of General Growth Properties,
Inc., hereby severally constitute Matthew Bucksbaum, Robert Michaels and
Bernard Freibaum, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, any and all amendments, including
post-effective amendments, to this registration statement, and generally to do
all such things in our name and behalf in such capacities to enable General
Growth Properties, Inc. to comply with the applicable provisions of the
Securities Act of 1933 and all requirements of the Securities and Exchange
Commission, and we hereby ratify and confirm our signatures as they may be
signed by our said attorneys, or any of them, to any and all such amendments.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below on December 4, 1997, by the
following persons in the capacities indicated:
Signature Title
--------- -----
/S/ MATTHEW BUCKSBAUM Chairman of the Board, Chief Executive Officer
--------------------- and Director (Principal Executive Officer)
Matthew Bucksbaum
/S/ ROBERT MICHAELS President and Director
---------------------
Robert Michaels
/S/ JOHN BUCKSBAUM Executive Vice President and Director
---------------------
John Bucksbaum
/S/ BERNARD FREIBAUM Executive Vice President and Chief Financial Officer
--------------------- (Principal Financial and Accounting Officer)
Bernard Freibaum
/S/ ANTHONY DOWNS Director
---------------------
Anthony Downs
II-4
<PAGE> 28
/S/ MORRIS MARK Director
---------------------
Morris Mark
/S/ BETH STEWART Director
---------------------
Beth Stewart
/S/ A. LORNE WEIL Director
---------------------
A. Lorne Weil
II-5
<PAGE> 29
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NUMBER
------- ----------- ------
<S> <C>
4.1 Specimen certificate representing Common Stock
(incorporated by reference to the Company's Registration
Statement on Form S-11 (File No. 33-56640), filed on April 6,
1993).
5.1 Opinion of Neal, Gerber & Eisenberg, counsel for the
Company.
8.1 Tax Opinion of Neal, Gerber & Eisenberg, counsel for the
Company.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Addison, Roberts & Ludwig, P.C.
23.3 Consent of Shepard Schwartz & Harris LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of Neal, Gerber & Eisenberg (included in
Exhibit 5.1 and Exhibit 8.1).
24.1 Powers of Attorney of certain officers and directors of
the Company (included on signature page).
</TABLE>
II-6
<PAGE> 1
EXHIBIT 5.1
December 4, 1997
General Growth Properties, Inc.
55 West Monroe Street, Suite 3100
Chicago, Illinois 60603
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to General Growth Properties, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of up to 1,445,000 shares of its common
stock, par value $.10 per share (the "Shares"), which are proposed to be issued
by the Company as described in the Company's Registration Statement on Form S-3
(the "Registration Statement") to be filed with the Securities and Exchange
Commission on or about December 5, 1997.
As such counsel, we have examined such documents and certificates of
officers of the Company as we deemed relevant and necessary as the basis for
the opinion hereafter expressed. In such examinations, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted
to us as originals and the conformity to original documents of all documents
submitted to us as conformed or photostatic copies.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized and, upon issuance as described in the Registration Statement,
will be duly and validly issued and fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising a part of the Registration
Statement.
Please be advised that Marshall E. Eisenberg, a partner in our firm, is
the Secretary of the Company and that certain partners of, and attorneys
associated with, our firm and members of their families, own shares of the
Company's Common Stock. No knowledge is to be imputed to this firm by virtue
of Mr. Eisenberg's position as Secretary of the Company.
Very truly yours,
/s/ NEAL, GERBER & EISENBERG
<PAGE> 1
EXHIBIT 8.1
NEAL, GERBER & EISENBERG
TWO NORTH LASALLE STREET
SUITE 2200
CHICAGO, IL 60602
(312) 269-8000
December 4, 1997
General Growth Properties, Inc.
120 North LaSalle Street
Suite 3100
Chicago, Illinois 60602
Gentlemen:
We are rendering the opinions contained herein in our capacity as tax
counsel to General Growth Properties, Inc., a Delaware corporation (the
"Company"). In so acting and in rendering the opinions expressed below, we
have examined and relied upon the originals, or copies certified or otherwise
identified to our satisfaction of such records, documents, agreements and
instruments as we have deemed necessary to the rendering of these opinions.
Based upon and subject to the assumptions noted below, we are of the
opinion that for federal income tax purposes under current law, (1) for the
period beginning April 15, 1993 and ending December 31, 1996, the Company has
been organized and operated in a manner that has enabled it to qualify as a
real estate investment trust under Sections 856 through 859 of the Internal
Revenue Code of 1986, as amended (the "Code"), and (2) the Company's proposed
method of operations will enable it to continue to so qualify in the future.
The opinions expressed herein are subject to the following qualifications
and assumptions:
1. We have relied upon certain representations from the management of the
Company as to certain matters of fact upon which the foregoing opinions are
based and we have no reason to believe that such reliance is not justified.
<PAGE> 2
General Growth Properties, Inc.
December 4, 1997
Page 2
2. The Company will, in the future, operate and remain organized in the
same manner that it has operated and been organized for the period from April
15, 1993 through December 31, 1996.
3. All documents submitted to us as originals and the originals of all
documents submitted to us as certified or photostatic copies are authentic, all
documents submitted to us as certified or photostatic copies conform to the
original documents and all signatures are genuine.
The opinions herein are given as of the date hereof, are based upon the
Code, regulations of the Department of the Treasury, published rulings and
procedures of the Internal Revenue Service, and judicial decisions, all as in
effect on the date hereof. These opinions are limited to the matters expressly
set forth herein and no opinions are to be implied or may be inferred beyond
the matters expressly so stated. We disclaim any obligation to update this
letter for events, whether legal or factual, occurring after the date hereof.
This letter is given solely for your benefit in connection with the
Company's Registration Statement on Form S-3 relating to the registration under
the Securities Act of 1933 of 1,445,000 shares of the Company's Common Stock,
par value $.10 per share (the "Common Stock"). Without our prior written
consent, this letter may not be used or relied upon by any other person or for
any other purpose.
Please be advised that Marshall E. Eisenberg, a partner in our firm, is
the Secretary of the Company and that certain partners of and attorneys
associated with our firm and members of their families own shares of Common
Stock. No knowledge is to be imputed to this firm by virtue of Mr. Eisenberg's
position as Secretary of the Company.
Very truly yours,
/s/ NEAL, GERBER & EISENBERG
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
General Growth Properties, Inc. on Form S-3 of our report dated February 11,
1997, on our audits of the consolidated financial statements and financial
statement schedule of General Growth Properties, Inc. as of December 31, 1996
and 1995, and for the three years in the period ended December 31, 1996,
included in Annual Report on Form 10-K for the fiscal year ended December 31,
1996, and of our report dated January 10, 1997 on our audits of the combined
statement of revenues and certain expenses of the Lansing Mall, the Westwood
Mall and the Lakeview Mall for the year ended December 31, 1995 which report is
included in Form 8-K/A, as amended, of General Growth Properties, Inc. dated
February 18, 1997. We also consent to the reference to our firm under the
caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Chicago, Illinois
December 5, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
General Growth Properties, Inc. on Form S-3 of our report dated July 19, 1996
on our audit of the Statement of Revenues and Certain Expenses of Park Mall for
the year ended December 31, 1995, which report is included in the Current
Report on Form 8-K/A dated February 18, 1997. We also consent to all
references to our firm included in or made a part of this Registration
Statement.
/s/ ADDISON, ROBERTS & LUDWIG, P.C.
Tucson, Arizona
December 5, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
General Growth Properties, Inc. on Form S-3 of our report dated February 19,
1997 on our audit of the Statements of Revenues and Certain Expenses of Market
Place Shopping Center for the year ended December 31, 1996, which report is
included in the Current Report on Form 8-K/A dated August 28, 1997. We also
consent to all references to our firm included in or made a part of this
Registration Statement.
/s/ SHEPARD, SCHWARTZ & HARRIS LLP
Chicago, Illinois
December 3, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
To Board of Directors
General Growth Properties, Inc.:
We consent to the incorporation by reference in the Registration Statement,
related to the registration of 1,445,000 shares of Common Stock, on Form S-3 of
General Growth Properties, Inc. of our report dated March 12, 1997, with respect
to the Statement of Revenues and Certain Expenses of Southlake Mall for the year
ended December 31, 1996, which report appears in the Current Report on Form
8-K/A of General Growth Properties, Inc. dated August 28, 1997. We also consent
to the reference to our firm under the caption "Experts."
/s/ KPMG PEAT MARWICK LLP
Atlanta, Georgia
December 4, 1997
