<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of the Securities Act
of 1934
Date of Report (Date of Earliest Event Reported)
July 21, 1998
GENERAL GROWTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11656 42-1283895
-------- ------- ----------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
110 N. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 960-5000
--------------
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
<PAGE> 2
ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN.
The registrant hereby amends its Current Report on Form 8-K dated August 5, 1998
as follows:
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are the financial statements, proforma financial information and
exhibits filed as a part of this report:
(a) Financial Statements of Businesses acquired.
The financial statements of Altamonte Mall as listed in the accompanying Index
to Financial Statements and Proforma Financial Information are filed as part of
this Current Report on Form 8-K/A.
(b) Proforma Financial Information.
The proforma financial information of General Growth Properties, Inc. (the
"Company") listed in the accompanying Index to Financial Statements and Proforma
Financial Information is filed as part of this Current Report on Form 8-K/A.
(c) Exhibits.
See Exhibit Index attached hereto and incorporated herein by reference.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Bernard Freibaum
------------------------
Bernard Freibaum
Executive Vice President and
Chief Financial Officer
Date: September 29, 1998
3
<PAGE> 4
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER NAME NUMBER
- ------ ---- ------
2.1 Contribution and Exchange Agreement dated as of July 10, 1998
(the "Contribution Agreement") among Nashland Associates, HRE
Altamonte, Inc., Altamonte Springs Mall L.P., and GGP Limited
Partnership.*
2.2 Redemption Rights Agreement, dated as of July 21, 1998 among
Nashland Associates, HRE Altamonte, Inc., General Growth
Properties, Inc., and GGP Limited Partnership.
23. Consent of Independent Accountants.
* Previously filed by the Company in its Current Report on Form 8-K dated August
5, 1998.
4
<PAGE> 5
INDEX TO FINANCIAL STATEMENTS AND
PROFORMA FINANCIAL INFORMATION
The following financial information is presented in accordance with Rule
3-14 of Regulation S-X of the Securities and Exchange Commission.
Accordingly, such historical information has been audited only for the
property's most recent fiscal year as the transactions relating to the
acquisition of the property (as described in the registrant's Current
Report on Form 8-K dated August 5, 1998) are not with related parties and
the registrant, after reasonable inquiry, is not aware of any material
factors related to the property not otherwise disclosed that would cause
the reported financial information to not be necessarily indicative of
future operating results. In addition, as the property will be directly
owned by entities that elect to be treated as REITs for Federal income
tax purposes, a presentation of estimated taxable operating results is
not applicable.
ALTAMONTE MALL
- --------------
Independent Auditors' Report.........................................F-2
Statements of Excess of Revenues over Specific Operating
Expenses for the Year Ended December 31, 1997 and for the
Six Months Ended June 30,1998 (Unaudited)............................F-3
Notes to Statements of Excess of Revenues over Specific
Operating Expenses...................................................F-4
GENERAL GROWTH PROPERTIES, INC.
- -------------------------------
Proforma Condensed Consolidated Statement of Operations
for the Year Ended December 31,1997 (Unaudited)......................F-6
Notes to Proforma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1997 (Unaudited)..........F-7
Proforma Condensed Consolidated Statement of Operations for
the Six Months Ended June 30, 1998 (Unaudited)......................F-10
Notes to Proforma Condensed Consolidated Statement of
Operations for the Six Months Ended June 30, 1998 (Unaudited).......F-11
Proforma Condensed Consolidated Balance Sheet as of
June 30, 1998 (Unaudited)...........................................F-13
F-1
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
General Growth Properties, Inc.:
We have audited the accompanying statement of excess of revenues over specific
operating expenses for Altamonte Mall (the "Property") for the year ended
December 31, 1997. This financial statement is the responsibility of the
management of the Property. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of excess of revenues over specific operating expenses. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Property
after acquisition by General Growth Properties, Inc. The accompanying financial
statement was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, and is not intended to be
a complete presentation of the Property's revenues and expenses.
In our opinion, the statement referred to above presents fairly, in all material
respects, the excess of revenues over specific operating expenses of Altamonte
Mall for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
New York, New York
September 21, 1998
F-2
<PAGE> 7
ALTAMONTE MALL
STATEMENTS OF EXCESS OF REVENUES OVER
SPECIFIC OPERATING EXPENSES (NOTE 2)
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
For the Six
For the Year Months Ended
Ended Jun3 30, 1998
December 31, 1997 (Unaudited)
----------------- -------------
<S> <C> <C>
Revenues:
Minimum and percentage rent $11,226,307 $5,880,222
Tenant reimbursable charges 4,813,562 2,657,084
Interest and other income 1,280,201 375,841
----------- ----------
Total revenues 17,320,070 8,913,147
----------- ----------
Expenses:
Operating expenses 3,324,748 1,863,889
Real estate taxes 1,652,550 850,880
General and administrative expenses 284,024 179,124
Bad debt expense 199,453 105,393
----------- ----------
Total expenses 5,460,775 2,999,286
----------- ----------
Excess of revenues over specific
operating expenses $11,859,295 $5,913,861
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 8
ALTAMONTE MALL
NOTES TO STATEMENTS OF EXCESS OF REVENUES OVER
SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31,1997 AND
FOR THE SIX MONTHS ENDED JUNE 30,1998 (UNAUDITED)
1. DESCRIPTION OF PROPERTY AND SIGNIFICANT ACCOUNTING POLICIES
Description of Property
- -----------------------
Altamonte Mall ("Altamonte") is a 1.1 million square foot regional shopping
center located in suburban Orlando, Florida. The regional shopping center was
opened in August 1974. At December 31, 1997, occupancy at the regional shopping
center was 86%.
Revenue Recognition
- -------------------
Minimum rents are recognized on a straight-line basis over the terms of the
related leases. Tenant recoveries and other rents which are provided for in the
leases are recognized as income when earned and their amounts can be reasonably
estimated.
Minimum rents recognized on a straight-line basis were $330,816 more than
the contractual amounts due in 1997.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. BASIS OF ACCOUNTING
-------------------
The accompanying statements of excess of revenues over specific operating
expenses are presented on the accrual basis. These statements have been
prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, the statements exclude certain historical expenses not comparable
to the operations of Altamonte after acquisition such as depreciation,
amortization, and management fees.
F-4
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3. LEASES
------
Minimum future rental revenue from noncancelable leases in effect at of December
31, 1997, is as follows:
<TABLE>
<CAPTION>
For the year ending
December 31:
------------
<S> <C>
1998 $10,326,662
1999 9,573,434
2000 9,055,919
2001 8,198,639
2002 7,454,539
Thereafter 24,469,060
-----------
$69,078,253
===========
</TABLE>
Future minimum rentals do not include amounts for renewal periods, amounts may
be received from tenants for recoveries for certain operating costs, or
percentage rents.
4. UNAUDITED INFORMATION
---------------------
The financial statement for the six-month period ended June 30, 1998 is
unaudited. In management's opinion, such financial statement includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation. The results of operations for the six-month period are not
necessarily indicative of results for a full year.
F-5
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<TABLE>
<CAPTION>
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
Historical 1998 Fiscal
General Growth Fiscal ProForma Acquisitions 1997
Properties, 1997 ProForma Fiscal Prior to ProForma ProForma
Inc.(1) Acquisitions Adjustments 1997 (1) June 30(2) Adjustments As Reported
-------------- ------------ ------------ -------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 291,147 $ 14,427 $ -- $ 305,574 $ 126,764 $ -- $ 432,338
Expenses:
Property operating 106,369 5,818 -- 112,187 51,982 -- 164,169
Management fees 3,308 252 (46) (a) 3,514 1,001 (1) (a) 4,514
Depreciation and
amortization 48,509 -- 2,077 (b) 50,586 -- 25,528 (b) 76,314
---------- --------- -------- ---------- ---------- ---------- ---------
Total Expenses 158,186 6,070 2,031 166,287 52,983 25,527 244,797
---------- --------- -------- ---------- ---------- ---------- ---------
Operating Income 132,961 8,357 (2,031) 139,287 73,781 (25,527) 187,541
Interest expense, net (70,252) -- (8,459) (c) (78,711) -- (63,604) (c) (142,315)
</TABLE>
<TABLE>
<CAPTION>
ProForma
Fiscal 1997
Altamonte ProForma for Current
Acquisition Adjustments 8-K/A
----------- --------------- -----------
<S> <C> <C> <C>
Total revenues
Expenses: $ 17,320 $ -- $ 449,658
Property operating
Management fees 5,461 -- 169,630
Depreciation and -- 100 (a) 4,614
amortization
-- 3,803 (b) 79,917
Total Expenses ----------- --------- -----------
5,461 3,903 254,161
Operating Income ----------- --------- -----------
Interest expense, net 11,859 (3,903) 195,497
-- 3,494 (c) (138,821)
</TABLE>
<TABLE>
Historical 1998 Fiscal
General Growth Fiscal ProForma Acquisitions 1997
Properties, 1997 ProForma Fiscal Prior to ProForma ProForma
Inc.(1) Acquisitions Adjustments 1997 (1) June 30(2) Adjustments As Reported
-------------- ------------ ----------- -------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity in net income/(loss)
unconsolidated
affiliates:
GGP/Homart, Inc. 16,506 -- -- 16,506 -- -- 16,506
Property Joint Ventures 3,032 391 -- 3,423 927 2,506 6,856
General Growth
Management, Inc. (194) -- -- (194) 3,405 -- 3,211
--------- -------- --------- --------- --------- --------- ----------
Income before
minority interest 82,053 8,748 (10,490) 80,311 78,113 (86,625) 71,799
Minority interest in
Operating Partnership (29,398) -- 37 (d) (29,361) -- 10,755 (d) (18,606)
--------- -------- --------- --------- --------- --------- ----------
Net income 52,655 8,748 (10,453) 50,950 78,113 (75,870) 53,193
Convertible preferred
stock dividends(3) -- -- -- -- -- (21,750) (21,750)
--------- -------- --------- --------- --------- --------- ----------
Net income available
to common stockholders $ 52,655 $ 8,748 $ (10,453) $ 50,950 $ 78,113 $(97,620) $ 31,443
========= ======== ========= ========= ========= ========= ==========
Weighted average shares
outstanding - basic 32,623
Weighted average shares
outstanding - diluted 32,840
Earnings per share - basic $0.96
Earnings per share - diluted $0.96
</TABLE>
<TABLE>
<CAPTION>
ProForma
Fiscal 1997
Altamonte ProForma for Current
Acquisition Adjustments 8-K/A
----------- --------------- -----------
<S> <C> <C> <C>
Equity in net income/(loss)
unconsolidated
affiliates:
GGP/Homart, Inc. -- -- 16,506
Property Joint Ventures -- (2,506) (e) 4,350
General Growth
Management, Inc. -- -- 3,211
------- --------- --------
Income before
minority interest 11,859 (2,915) 80,743
Minority interest in
Operating Partnership -- (4,656) (d) (23,262)
------- --------- --------
Net income 11,859 (7,571) 57,481
Convertible preferred
stock dividends(3) -- (2,719) (e) (24,469)
------- --------- --------
Net income available
to common stockholders $11,859 $(10,290) $ 33,012
======= ========= ========
Weighted average shares
outstanding - basic 32,623
Weighted average shares
outstanding - diluted 32,840
Earnings per share - basic $ 1.01
Earnings per share - diluted $ 1.01
</TABLE>
(1) Amounts are from the statements and footnotes included in the Company's
1997 Form 10-K except that the non-recurring gain on sale of a portion of
the CenterMark stock and the extraordinary item are excluded.
(2) Includes the results of MEPC operations for the fiscal year ended September
30, 1997.
(3) Proforma earnings have been reduced by the proforma dividends on the 7.25%
Preferred Convertible Stock, Series A.
The accompanying notes are an integral part of the Proforma Condensed
Consolidated Statement of Operations. For alphabetical references, please refer
to Note 3--Proforma Adjustments.
F-6
<PAGE> 11
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited proforma condensed consolidated statement of operations is
presented as if (i) the sale of CenterMark Properties, Inc. ("CenterMark") and
the acquisitions made in 1997 (Market Place Mall, Century Plaza Shopping Center,
Town East Mall, Southlake Mall, Eden Prairie Mall, GGP/Ivanhoe Portfolio Malls
and Valley Hills Mall), (ii) the acquisitions made prior to June 30, 1998
(Southwest Plaza, Northbrook Court, the MEPC Portfolio and the USPPI Portfolio -
all as previously reported in the Company's Form 8-K/A dated June 2, 1998) and
the acquisitions made after June 30, 1998 through July 21, 1998 (Altamonte Mall)
and (iii) the Company's use of the net proceeds of the June 4, 1998 public
offering of depository shares of 7.25% Preferred Income Equity Redeemable Stock
(the "Offering" or "Convertible Preferred Stock") to fund the acquisitions and
for other working capital purposes, had all occurred on January 1, 1997. In
management's opinion, all adjustments necessary to reflect these transactions
have been included. Such proforma statement of operations is based upon the
historical information of General Growth Properties, Inc. excluding the
non-recurring gain on sale of a portion of CenterMark stock and extraordinary
item and the historical information of each of the above-mentioned entities for
the year ended December 31, 1997. The MEPC Portfolio information reflects the
results of operations for the fiscal year ended September 30, 1997. This
unaudited proforma statement of operations is not necessarily indicative of what
actual results of General Growth Properties, Inc. would have been assuming such
transactions had been completed as of January 1, 1997 nor does it purport to
represent the results of operations for future periods.
NOTE 2 ACQUISITIONS/DISPOSITIONS
On June 28, 1996, Westfield U.S. Investments, Pty. Limited exercised its option
to acquire the remaining 30% of the outstanding CenterMark stock from General
Growth Properties, Inc. (the "Company") in two transactions. The first payment
in the amount of $87,000 was received on July 1, 1996, and the second payment in
the amount of $130,500 was received on January 2, 1997. As described above, the
gain on this transaction has been excluded from the continuing operations of the
Company and its pro forma operations for the year ended December 31, 1997.
On March 31, 1997, the Company acquired a 100% interest in Market Place Mall for
a cash purchase price of approximately $70,000 which was funded by an unsecured
short-term facility. Market Place Mall is located in Champaign, Illinois.
During the second quarter of 1997, the Company also acquired a 100% ownership
interest in three properties, Century Plaza Shopping Center, Southlake Mall,
Eden Prairie Mall and a 50% interest in Town East Mall. Century Plaza Shopping
Center located in Birmingham, Alabama was acquired on May 1, 1997 for $31,800 in
cash. Southlake Mall was acquired on June 19, 1997, for a purchase price of
$67,000. The purchase price consisted of $45,100 of mortgage debt assumption,
$11,500 (353,537 units) of newly issued Operating Partnership Units, and $10,400
in cash. Southlake Mall is located in Atlanta, Georgia. The aggregate
consideration paid for
F-7
<PAGE> 12
Eden Prairie Center located in Minneapolis, Minnesota was $19,900. It included
the assumption of a $16,800 mortgage, the payment of $1,100 in cash and the
assumption of $2,000 in short-term liabilities.
On June 11, 1997, the Company acquired a 50% interest in Town East Mall, located
in Mesquite, Texas for $56,500. The consideration included approximately
$27,500 in cash, the assumption of approximately $27,900 of mortgage
indebtedness and the assumption of $1,100 in net current liabilities.
On September 17, 1997, GGP/Ivanhoe, Inc. ("GGP/Ivanhoe") acquired the Oaks Mall
in Gainesville, Florida and Westroads Mall in Omaha, Nebraska. The purchase
price for the two properties was approximately $206,000 of which $125,000 was
financed through property level indebtedness. The Company owns 51% of the
ownership interest in GGP/Ivanhoe. Ivanhoe, Inc. of Montreal, Quebec, Canada
owns the remaining 49% ownership interest in GGP/Ivanhoe.
On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest
in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook,
Illinois, respectively. The aggregate purchase price for Southwest Plaza and
Northbrook Court was approximatley $261,000.
On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC
plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC")
through the purchase of the stock of the three U.S. subsidiaries of MEPC that
directly or indirectly own the MEPC Portfolio. The Company acquired the MEPC
Portfolio for approximately $871,000 (less certain adjustments), aproximately
$830,000 of which was borrowed. After repayment of approximately $217,000 of
such acquisition financing from the Offering, the MEPC Portfolio is currently
secured by a 6.7% one year $550,000 loan and an approximately $63,000 one year
floating rate loan bearing interest at LIBOR plus 90 basis points. The MEPC
Portfolio consists of 100% ownership of eight enclosed mall shopping centers;
the Apache Mall in Rochester, Minnesota, the Boulevard Mall in Las Vegas,
Nevada, the Cumberland Mall in Atlanta, Georgia, the McCreless Mall in San
Antonio, Texas, the Northridge Fashion Center in Northridge (Los Angeles),
California, the Regency Square Mall in Jacksonville, Florida, the Riverlands
Shopping Center in LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield,
California.
On May 14, 1998, the Company entered into a definitive merger agreement to
acquire U.S. Prime Property, Inc. ("USPPI"), a private REIT. On July 23, 1998,
effective as of June 30, 1998, the Company acquired through a merger, USPPI.
The Company also reached agreement with a joint venture partner pursuant to
which the joint venture partner acquired 49% of the common stock acquired
pursuant to the merger agreement and the Company retained the remainder of the
common stock. The newly merged entity ("GGP Ivanhoe II") will continue to
operate as a private REIT and
F-8
<PAGE> 13
will be accounted for by the Company on the equity method. The aggregate
consideration paid pursuant to the merger agreement was approximately $625,000
(less certain adjustments, including a credit of approximately $64,000 for
outstanding mortgage indebtedness and accrued interest thereon). GGP Ivanhoe
II obtained a $392,000 interim loan bearing interest at LIBOR plus 90 basis
points and due July 1, 1999, and the balance of the consideration paid was
represented by equity from the Company and the venture partner in proportion to
their respective stock ownership. Pursuant to the purchase and venture
agreements, the Company was obligated to contribute approximately $91,290 to
GGP Ivanhoe II of which approximately $18,800 was contributed on June 30, 1998
and the remaining approximately $72,490 (less certain interest and other
credits) was contributed in mid-July, 1998. The Company's capital
contributions were funded primarily from its line of credit facility. GGP
Ivanhoe II owns: the Landmark Mall in Alexandria, Virginia; the Mayfair Mall
and adjacent office buildings in Wauwatosa, Wisconsin; the Meadows Mall in Las
Vegas, Nevada; the Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in
Savannah, Georgia; and the Park City Center in Lancaster, Pennsylvania.
On July 21, 1998 the Company acquired a 100% ownership interest in the
Altamonte Mall in Altamonte Springs (Orlando), Florida. The purchase price
consisted of approximately $141,000 (3,683,143 units) of newly issued units of
limited partnership of GGP Limited Partnership, an affiliate of the Company and
approximately $28,000 in cash funded from the Company's credit facility.
NOTE 3 PROFORMA ADJUSTMENTS
(a) Management Fees
The management fee adjustment represents the difference in management costs
charged and/or allocated to the properties by the previous owners and the new
rates charged by General Growth Management, Inc. ("GGMI"), an affiliate of the
Company.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts related
to the periods from January 1, 1997 to the dates of acquisition for the 1997
acquisitions and for the entire year of 1997 for the acquisitions made in 1998.
(c) Interest Expense
Interest expense increased due to a combination of debt assumption and increased
borrowings. In connection with the acquisitions described above, the Company
assumed approximately $127,000 of mortgage debt bearing interest at the weighted
average rate of 8.50%. The Company also issued approximately $1,028,000 of
secured and unsecured borrowings to fund the cash portion of the acquisitions.
The proforma interest expense on new borrowings was calculated using an interest
rate of 6.65% for acquisitions prior to June 30, 1998 and 6.61% for the
Altamonte Mall acquisition.
F-9
<PAGE> 14
(d) Minority Interest
The proforma income statement has been adjusted to reflect the allocation of
earnings to the minority interest.
(e) Modifications to Previously Reported Proforma Information
Certain additional proforma adjustments were made to modify the fiscal 1997
proforma as reported to reflect revised interest expense assumptions on
acquisitions made prior to June 30, 1998 and to reflect the final amounts
raised in the Offering.
F-10
<PAGE> 15
<TABLE>
<CAPTION>
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
Historical 1998
General Growth Acquisitions June 30 Total
Properties, Prior to ProForma ProForma Altamonte ProForma ProForma
Inc.(1) June 30 Adjustments As Reported(1) Acquisition Adjustments Combined
-------------- ------------ ----------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 169,065 $ 50,656 $ -- $ 219,721 $ 8,913 $ -- $228,634
Expenses:
Property operating 57,830 20,406 -- 78,236 2,999 -- 81,235
Management fees 1,860 330 63 (a) 2,253 -- 50 (a) 2,303
Depreciation & amortization 29,099 -- 9,984 (b) 39,083 -- 1,901 (b) 40,984
---------- --------- --------- --------- --------- --------- --------
Total Expenses 88,789 20,736 10,047 119,572 2,999 1,951 124,522
---------- --------- --------- --------- --------- --------- --------
Operating Income 80,276 29,920 (10,047) 100,149 5,914 (1,951) 104,112
Interest expense, net (40,971) -- (22,953) (c) (63,924) -- (925) (c) (64,849)
Equity in unconsolidated
affiliates:
GGP/Homart, Inc. 8,336 -- -- 8,336 -- -- 8,336
Property Joint Ventures 1,634 (110) -- 1,524 -- 41 (e) 1,565
General Growth
Management, Inc. (9,260) 1,697 -- (7,563) -- -- (7,563)
---------- --------- --------- --------- --------- --------- --------
Income before
minority interest 40,015 31,507 (33,000) 38,522 5,914 (2,835) 41,601
Minority interest in
Operating Partnership (13,419) -- 4,251 (d) (9,168) -- (2,275) (d) (11,443)
---------- --------- --------- --------- --------- --------- --------
Net income 26,596 31,507 (28,749) 29,354 5,914 (5,110) 30,158
Convertible preferred
stock dividends(2) (1,199) -- (11,035) (12,234) -- -- (12,234)
---------- --------- ----------- --------- --------- --------- --------
Net income available
to common stockholders $ 25,397 $ 31,507 $ (39,784) $ 17,120 $ 5,914 $ (5,110) $ 17,924
========== ========= =========== ========= ========= ========= ========
Weighted average shares
outstanding - basic 35,783 35,783
Weighted average shares
outstanding - diluted 35,996 35,996
Earnings per share - basic $ 0.48 $ 0.50
Earnings per share - diluted $ 0.48 $ 0.50
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-Q for the
quarter ended June 30, 1998.
(2) ProFroma earnings have been reduced by proforma dividends on the 7.25%
Convertible Preferred Stock.
The accompanying notes are an integral part of the Proforma Condensed
Consolidated Statement of Operations.
For alphabetical references, please refer to Note 3--Proforma Adjustments.
F-11
<PAGE> 16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited condensed consolidated statement of operations is presented as if
(i) the acquisitions made prior to June 30,1998 (Southwest Plaza, Northbrook
Court, the MEPC Portfolio and the USPPI Portfolio - all as previously reported
in the Company's Form 8-K/A dated June 2, 1998) and the acquisitions made after
June 30, 1998 through July 21, 1998 (Altamonte Mall) and (ii) the Company's use
of the net proceeds of the June 4, 1998 public offering of depository shares of
7.25% preferred income equity redeemable stock (the "Offering" or "Convertible
Preferred Stock") to fund the acquisitions and for other working capital
purposes, had all occurred on January 1, 1998. In management's opinion, all
adjustments necessary to reflect these transactions have been included. Such
proforma statement of operations is based upon the historical information of
General Growth Properties, Inc. and the historical information of each of the
above-mentioned entities for the six months ended June 30, 1998. This unaudited
proforma statement of operations is not necessarily indicative of what actual
results of General Growth Properties, Inc. would have been assuming such
transactions had been completed as of January 1, 1998 nor does it purport to
represent the results of operations for future periods.
NOTE 2 ACQUISITIONS
On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest
in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook,
Illinois, respectively. The aggregate purchase price for Southwest Plaza and
Northbrook Court was approximatley $261,000.
On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC
plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC")
through the purchase of the stock of the three U.S. subsidiaries of MEPC that
directly or indirectly own the MEPC Portfolio. The Company acquired the MEPC
Portfolio for approximately $871,000 (less certain adjustments), aproximately
$830,000 of which was borrowed. After repayment of approximately $217,000 of
such acquisition financing from the Offering, the MEPC Portfolio is currently
secured by a 6.7% one year $550,000 loan and an approximately $63,000 one year
floating rate loan bearing interest at LIBOR plus 90 basis points. The MEPC
Portfolio consists of 100% ownership of eight enclosed mall shopping centers;
the Apache Mall in Rochester, Minnesota, the Boulevard Mall in Las Vegas,
Nevada, the Cumberland Mall in Atlanta, Georgia, the McCreless Mall in San
Antonio, Texas, the Northridge Fashion Center in Northridge (Los Angeles),
California, the Regency Square Mall in Jacksonville, Florida, the Riverlands
Shopping Center in LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield,
California.
F-12
<PAGE> 17
On May 14, 1998, the Company entered into a definitive merger agreement to
acquire U.S. Prime Property, Inc. ("USPPI"), a private REIT. On July 23, 1998,
effective as of June 30, 1998, the Company acquired through a merger, USPPI.
The Company also reached agreement with a joint venture partner pursuant to
which the joint venture partner acquired 49% of the common stock acquired
pursuant to the merger agreement and the Company retained the remainder of the
common stock. The newly merged entity ("GGP Ivanhoe II") will continue to
operate as a private REIT and will be accounted for by the Company on the
equity method. The aggregate consideration paid pursuant to the merger
agreement was approximately $625,000 (less certain adjustments, including a
credit of approximately $64,000 for outstanding mortgage indebtedness and
accrued interest thereon). GGP Ivanhoe II obtained a $392,000 interim loan
bearing interest at LIBOR plus 90 basis points and due July 1, 1999, and the
balance of the consideration paid was represented by equity from the Company
and the venture partner in proportion to their respective stock ownership.
Pursuant to the purchase and venture agreements, the Company was obligated to
contribute approximately $91,290 to GGP Ivanhoe II of which approximately
$18,800 was contributed on June 30, 1998 and the remaining approximately
$72,490 (less certain interest and other credits) was contributed in
mid-July, 1998. The Company's capital contributions were funded primarily from
its line of credit facility as described in Note 6. GGP Ivanhoe II owns: the
Landmark Mall in Alexandria, Virginia; the Mayfair Mall and adjacent office
buildings in Wauwatosa, Wisconsin; the Meadows Mall in Las Vegas, Nevada; the
Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in Savannah, Georgia;
and the Park City Center in Lancaster, Pennsylvania.
On July 21, 1998 the Company acquired a 100% ownership interest in the Altamonte
Mall in Altamonte Springs (Orlando), Florida. The purchase price consisted of
approximately $141,000 (3,683,143 units) of newly issued units of limited
partnership of GGP Limited Partnership, an affiliate of the Company and
approximately $28,000 in cash funded from the Company's credit facility.
NOTE 3 PROFORMA ADJUSTMENTS
(a) Management Fees
The management fee adjustment represents the difference in management costs
charged and/or allocated to the properties by the previous owners and the new
rates charged by General Growth Management, Inc.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts related
to the months ended June 30, 1998 for the acquisitions made in 1998.
F-13
<PAGE> 18
(c) Interest Expense
Interest expense increased due to a combination of debt assumption and increased
borrowings. In connection with the acquisitions described above, the Company
assumed $49 million of mortgage debt bearing interest at the weighted average
rate of 9.25%. The Company also issued approximately $843 million of secured
and unsecured borrowings to fund the cash portion of the acquisitions. The
proforma interest expense on new borrowings was calculated using an interest
rate of 6.65% for acquisitions prior to June 30, 1998 and 6.61% for the
Altamonte Mall acquisition.
(d) Minority Interest
The proforma income statement has been adjusted to reflect the allocation of
earnings to the minority interest.
(e) Modifications to Previously Reported Proforma Information
Reflects revised interest expense assumptions on acquisitions made prior to June
30, 1998.
F-14
<PAGE> 19
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(DOLLARS IN THOUSANDS--UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
GENERAL GROWTH
PROPERTIES, PROFORMA JUNE 30, 1998
INC.(1) ADJUSTMENTS PROFORMA
------- ----------- --------
<S> <C> <C> <C>
ASSETS
- ------
Investment in real estate
Land $ 312,452 $ 16,900 (a) $ 329,352
Buildings and equipment 2,657,295 152,100 (a) 2,809,395
Less accumulated depreciation (259,214) -- (259,214)
Developments in progress 102,569 -- 102,569
----------- -------- -----------
Net property and equipment 2,813,102 169,000 2,982,102
Investment in GGP/Homart 205,221 -- 205,221
Investment in Property Joint Ventures 108,915 -- 108,915
----------- -------- -----------
Net investment in real estate 3,127,238 169,000 3,296,238
Cash and cash equivalents 29,913 -- 29,913
Tenant accounts receivable, net 41,913 -- 41,913
Deferred expenses, net 51,960 -- 51,960
Investment in and note
receivable from GGMI 83,725 -- 83,725
Mortgage note receivable 50,061 -- 50,061
Prepaid expenses and other assets 10,079 -- 10,079
----------- -------- -----------
Total Assets $ 3,394,889 $169,000 $ 3,563,889
=========== ======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Mortgage notes and other debt payable $ 2,140,895 $ 28,000 (b) $ 2,168,895
Distributions payable 25,860 -- 25,860
Accounts payable and accrued expenses 138,690 -- 138,690
----------- -------- -----------
Total Liabilities 2,305,445 28,000 2,333,445
Minority interest in Operating Partnership 262,519 84,507 (c) 347,026
Commitments and Contingencies
Convertible preferred stock 337,500 -- 337,500
Stockholder's equity
Common stock 3,590 -- 3,590
Additional paid-in capital 738,352 56,493 (c) 794,845
Retained earnings (deficit) (249,477) -- (249,477)
Note receivable - common stock (3,040) -- (3,040)
----------- -------- -----------
Total stockholders' equity 489,425 -- 489,425
----------- -------- -----------
Total Liabilities and Equity $ 3,394,889 169,000 $ 3,563,889
=========== ======== ===========
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-Q for the
quarter ended June 30, 1998.
F-15
<PAGE> 20
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1998
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited condensed consolidated balance sheet is presented as if the
acquisition of Altamonte Mall had occurred on June 30, 1998. In management's
opinion, all adjustments necessary to reflect this transaction have been
included.
NOTE 2 PROFORMA ADJUSTMENTS
(a) Investment in Real Estate
Asset additions are as follows:
Property Acquisition - Altamonte Mall $169,000
========
Allocated to:
Land $ 16,900
Buildings and equipment 152,100
--------
$169,000
========
(b) Mortgage Notes and other Debt Payable
Debt incurred was as follows:
Altamonte Mall $ 28,000
========
(c) Minority Interest
Operating Partnership Units issued for a portion
of the Altamonte Mall Acquisition cost $141,000
Adjustment to minority interest for additional
stockholders' equity as determined by the relationship
of the units to common stock at June 30, 1998 (56,493)
--------
$ 84,507
========
F-16
<PAGE> 1
EXHIBIT 2.2
REDEMPTION RIGHTS AGREEMENT
Redemption Rights Agreement, dated as of July 21, 1998 (this
"Agreement"), among GGP Limited Partnership, a Delaware limited partnership (the
"Partnership"), General Growth Properties, Inc., a Delaware corporation (the
"General Partner"), Nashland Associates, a Tennessee general partnership
("Nashland") and HRE Altamonte, Inc., a Delaware corporation ("HRE", and each of
HRE and Nashland a "Contributing Partner").
R E C I T A L S
WHEREAS, concurrently herewith, each Contributing Partner is being
admitted as a limited partner of the Partnership, the general partner of which
is the General Partner;
WHEREAS, shares of common stock, $.10 par value per share, of the
General Partner (the "Common Stock") are listed on the New York Stock Exchange;
and
WHEREAS, the parties desire to set forth herein the terms and
conditions upon which each Contributing Partner may cause the Partnership to
redeem its limited partnership units in the Partnership.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Acts" shall mean the Securities Act and the Exchange Act,
collectively.
"Affiliates" shall mean "affiliates" as defined pursuant to the
Securities Act and the regulations promulgated thereunder.
"Business Day" shall mean any day upon which commercial banks are open
for business in Chicago, Illinois.
1
<PAGE> 2
"Cash Purchase Price" shall mean, with respect to any redeemed or
purchased Units, an amount of cash equal to the value of the Share Purchase
Price (computed as of the Computation Date and equal to the Current Per Share
Market Price on such Computation Date multiplied by the number of Shares) that
would be payable with respect to such Units assuming the Share Purchase Price
were paid in full satisfaction of the Purchase Price of such Units. In the event
that the Share Purchase Price includes securities other than Shares, then the
value of such other securities shall be determined by the General Partner acting
in good faith on the basis of the closing prices of securities if listed on a
nationally recognized exchange and otherwise on the basis of such quotations and
other information as the General Partner considers, in its reasonable judgment,
appropriate.
"Certificate of Incorporation" shall mean the Certificate of
Incorporation of the General Partner, as the same may be amended from time to
time.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor code.
"Common Stock" shall have the meaning set forth in the recitals.
"Computation Date" shall mean the date on which the applicable Notice
is received by the Partnership or, if such date is not a Business Day, the first
Business Day thereafter.
"Contribution Agreement" shall mean that certain Contribution and
Exchange Agreement dated as of July 10, 1998, among the Partnership, Altamonte
Springs Mall, L.P., Nashland and HRE as the same has been and may hereafter be
amended from time to time, pursuant to which this Agreement is being executed.
"Conversion Factor" shall mean 100%, provided that such factor shall be
adjusted in accordance with Section 6(a).
"Current Per Share Market Price" shall have the meaning set forth in
the Partnership Agreement.
2
<PAGE> 3
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute.
"Exchange Act Reporting Company" shall mean any corporation or other
entity which is subject to the reporting requirements of the Exchange Act.
"Expiration Date" shall mean the earlier of (a) December 31, 2045 and
(b) the date upon which all Units have been redeemed or purchased in
accordance with the terms hereof.
"Holders" shall have the meaning set forth in the preamble of
Exhibit B.
"Liens" shall have the meaning set forth in the Contribution Agreement.
"Major Transaction Event" shall mean, with respect to the General
Partner, (a) a reclassification, capital reorganization or other similar change
regarding or affecting outstanding Shares (other than a change addressed in
Section 6(a)); (b) a merger or consolidation of the General Partner with one or
more other corporations or entities, other than a merger pursuant to which the
General Partner is the surviving corporation and the outstanding Shares are not
affected, (c) a sale, lease or exchange of all or substantially all of the
General Partner's assets or (d) the liquidation, dissolution or winding up of
the General Partner.
"Notice" shall have the meaning set forth in Section 3.2.
"Partnership Agreement" shall mean that certain Second Amended and
Restated Agreement of Limited Partnership of the Partnership, dated April 1,
1998 and as the same has been and may be further amended.
"Person" shall mean any natural person, corporation, partnership,
association, limited liability company, trust or other entity.
"Purchase Price" shall mean the Cash Purchase Price or the Share
Purchase Price, or a combination thereof.
3
<PAGE> 4
"Redemption Rights" shall have the meaning set forth in Section 2.
"Registrable Securities" shall have the meaning set forth in Section
1.01 of Exhibit B.
"Registration Expenses" shall mean all expenses incident to the General
Partner's performance of or compliance with the registration requirements set
forth in this Agreement (including in Exhibit B), including without limitation
(a) the fees, disbursements and expenses of the General Partner's counsel and
accountants in connection with the registration of Shares and other Registrable
Securities; (b) all expenses in connection with the preparation and printing of
the registration statement or statements, any preliminary or final prospectus,
any other offering documents and amendments and supplements thereto; (c) the
cost of printing or producing any blue sky or legal investment memoranda or
other documents in connection with the offering, sale or delivery of the Shares
and other Registrable Securities; (d) all expenses in connection with the
qualification of the Shares and other Registrable Securities under state
securities laws; (e) the fees and expenses incurred in connection with the
listing of the Shares and other Registrable Securities on each securities
exchange on which securities of the same class are then listed and (f) all SEC,
stock exchange and National Association of Securities Dealers, Inc. registration
and filing fees. Notwithstanding the foregoing, Registration Expenses shall not
include (and the General Partner will pay) any costs incurred by the Partnership
or the General Partner in preparing any document that is incorporated by
reference in a registration statement, or any professional fee or other
expenses, that would have been incurred apart from the obligation of the General
Partner hereunder to file a registration statement.
"Registration Rights" shall have the meaning set forth in Section 4.1.
"REIT" shall mean real estate investment trust as such term is defined
under the Code.
"REIT Requirements" shall have the meaning set forth in the Partnership
Agreement, as the same may change from time
4
<PAGE> 5
to time.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor statute.
"Share Purchase Price" shall mean, with respect to the exercise of any
Redemption Rights and subject to the provisions of Section 6(c), a number of
Shares equal to the product of (a) the number of Units being redeemed or
purchased multiplied by (b) the Conversion Factor; provided, however, that, in
the event the General Partner, after the date of this Agreement, issues to all
holders of Shares rights, options, warrants or convertible or exchangeable
securities entitling the stockholders to subscribe for or purchase Shares (other
than rights referred to in Section 6(b)) or any other securities or property,
then the Share Purchase Price also shall include such rights, options, warrants
or convertible or exchangeable securities that a holder of that number of Shares
would have been entitled to receive.
"Shares" shall mean shares of the Common Stock.
"Unitholder" shall mean the Person who at the time in question holds
one or more Units in accordance with the Partnership Agreement, as the same may
be amended from time to time.
"Units" shall mean the limited partnership units in the Partnership
issued to the Contributing Partners pursuant to the Contribution Agreement.
2. Grant of Redemption Rights.
(a) Upon the terms and subject to the conditions contained herein, the
Partnership does hereby grant to each Contributing Partner, and each
Contributing Partner does hereby accept, the right, but without obligation on
the part of such Contributing Partner, to require the Partnership to redeem from
time to time part or all of the Units of such Contributing Partner for the Cash
Purchase Price ("Redemption Rights").
5
<PAGE> 6
(b) Notwithstanding the provisions of Section 2(a), the General Partner
may, in its sole and absolute discretion, assume the obligation of the
Partnership with respect to and satisfy each Contributing Partner's exercise of
a Redemption Right by paying to such Contributing Partner, at the General
Partner's election (which may be exercised in the General Partner's sole
discretion), either the Cash Purchase Price or the Share Purchase Price (or a
combination thereof) with respect to the Units for which such Contributing
Partner exercised its Redemption Rights. If the General Partner assumes such
obligations of the Partnership with respect to the exercise by a Contributing
Partner of a Redemption Right as to certain Units and makes the required
payment, then the Partnership shall have no obligation to pay any amount to such
Contributing Partner with respect to the exercise of a Redemption Right for such
Units, and any Units purchased shall be owned by the General Partner for all
purposes.
(c) If the General Partner shall assume the obligations of the
Partnership with respect to and satisfy a Redemption Right, the Partnership, the
Contributing Partner and the General Partner each shall treat the transaction
between the General Partner and the Contributing Partner as a sale of the
Contributing Partner's Units (or a portion thereof) to the General Partner for
federal income tax purposes.
(d) Upon the redemption or purchase of part or all of a Contributing
Partner's Units and the payment of the Purchase Price with respect thereto, such
Person shall he deemed withdrawn as a Partner in the Partnership to the extent
of the Units redeemed or purchased and shall have no further rights or
obligations under this Agreement with respect to such redeemed or purchased
Units; provided, however, that such Contributing Partner's rights under this
Agreement with regard to any other Units will continue in full force and effect.
(e) No fractional Shares shall be issued hereunder. In lieu of
fractional Shares, the General Partner shall pay cash based on the Current Per
Share Market Price on the relevant Computation Date.
6
<PAGE> 7
3. Exercise of Redemption Rights.
3.1 Time for Exercise of Redemption Rights. Each Contributing Partner
may exercise its Redemption Rights in whole or in part and at any time and from
time to time on or after the first anniversary of the date hereof but prior to
the Expiration Date; provided, however, that the Redemption Rights may not be
exercised at any one time by any Contributing Partner with respect to less than
1,000 Units (or all the Units then owned by a Contributing Partner if such
Contributing Partner owns less than 1,000 Units) or in the event that such
exercise of Redemption Rights (or the assignment of Units or delivery of either
the Cash Purchase Price or the Share Purchase Price with respect thereto)
violates the terms of the Partnership Agreement or applicable law. Once given, a
Notice shall be irrevocable subject to the payment of the Purchase Price for the
Units specified therein in accordance with the terms hereof.
3.2 Method of Exercise. The Redemption Rights shall be exercised by
written notice (the "Notice") to the Partnership in the form of Exhibit A
specifying the number of Units to be redeemed and the name or names (with
address) in which any Shares issuable upon such exercise shall be registered if
different than the Contributing Partner.
3.3 Closing. The closing of the redemption or purchase and sale
pursuant to an exercise of the Redemption Rights shall occur within 30 days
following the giving of the Notice. Each Contributing Partner shall execute such
documents as the General Partner may reasonably require in connection with the
closing of such redemption or purchase and sale.
3.4 Payment of Cash or Issuance of Shares. At the closing of the
redemption or purchase and sale of Units pursuant to an exercise of Redemption
Rights, the Partnership shall deliver to the redeeming Contributing Partner the
Cash Purchase Price by check or, in the event that the General Partner has
assumed the obligations of the Partnership with respect to such exercise of
Redemption Rights, the General Partner shall deliver to the Partnership, at the
election of the General Partner, which may be exercised in the General Partner's
sole discretion, either (a) the Cash Purchase Price by check or
7
<PAGE> 8
(b) certificates representing the Shares and any other securities constituting
the Share Purchase Price, together with cash in lieu of the issuance of any
fraction of a Share as provided in Section 2(e), or a combination thereof.
4. Matters Relating to Shares.
4.1 Registration. (a) The General Partner shall (i) prepare, file and
use its reasonable efforts to cause to become effective on or before the
ninetieth day following the first anniversary of the date hereof a registration
statement, which may be on Form S-3, under the Securities Act relating to the
issuance to each Unitholder of the Shares to be issued upon exercise of such
Unitholder's Redemption Rights assuming full satisfaction of such Redemption
Rights by delivery of Shares and (ii) prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act;
provided that if a Unitholder first exercises its Redemption Rights with respect
to any of its Units prior to the date such registration statement becomes
effective under the Securities Act and the General Partner elects pursuant to
Section 2(b) to satisfy such Unitholder's exercise of its Redemption Rights by
paying the Share Purchase Price, the General Partner shall not be obligated to
register pursuant to this Section 4.1(a) the issuance to such Unitholder of any
Shares.
(b) The General Partner shall pay all Registration Expenses incurred
prior to the sixth anniversary of the date hereof with respect to filing and
keeping effective any registration statement required by Section 4.1(a) through
such date, and the Unitholders shall reimburse the General Partner for
Registration Expenses (or a pro rata portion of the Registration Expenses based
on the number of Shares issuable to such Unitholders pursuant to such
registration statement upon full exercise of the Redemption Rights of such
Unitholders relative to the total number of Shares issuable pursuant to such
registration statement) which are incurred after the sixth anniversary of the
date hereof in respect of maintaining effective (but not the initial filing and
causing to become effective of) such registration statement; provided, however,
that Unitholders shall not be
8
<PAGE> 9
required to reimburse any costs (i) of preparing any documents filed with the
SEC that are incorporated by reference in such registration statement or (ii)
that become necessary because the General Partner is unable to use Form S-3 (or
any equivalent short form that relies on incorporation by reference) for the
reason that the General Partner has failed to comply on a timely basis with any
requirement of the Acts or Form S-3. The reimbursement of such expenses by the
Unitholders shall be paid upon demand.
(c) Notwithstanding anything to the contrary contained herein, the
General Partner shall have no obligation to keep any registration statement
filed pursuant to this Section 4.1(a) effective after the Expiration Date or if
the status of the General Partner (or its successor) as an Exchange Act
Reporting Company is terminated or all of the Unitholders notify the General
Partner in writing that the General Partner no longer need keep such
registration statement effective.
(d) The Holders (as defined in Exhibit B) shall have the registration
rights (the "Registration Rights") set forth on Exhibit B.
4.2 Reservation of Shares. At all times while the Redemption Rights are
outstanding, the General Partner shall reserve for issuance such number of
Shares as may be necessary to enable the General Partner to issue Shares in full
satisfaction of all Redemption Rights which are from time to time outstanding
(assuming no limitations as to the ownership of such Shares under the
Certificate of Incorporation which relate to compliance with the REIT
Requirements and that the General Partner elected to pay the Share Purchase
Price with respect to all such Redemption Rights).
4.3 Fully Paid and Non-Assessable. All Shares which may be issued upon
exercise of the Redemption Rights shall be duly and validly issued and fully
paid and non-assessable.
5. Transfer and Other Taxes. In the event that any state or local
property transfer or other similar tax is payable as the result of or in
connection with any exercise of the Redemption Rights by a Contributing Partner,
such
9
<PAGE> 10
Contributing Partner shall pay such tax, and no Shares shall be issued pursuant
hereto until such Contributor Partner has paid to the General Partner or the
Partnership, as the case may be, the amount of such tax or has provided
evidence, in form reasonably satisfactory to the General Partner or the
Partnership, as the case may be, as to the payment thereof.
6. Anti-Dilution and Adjustment Provisions.
(a) The Conversion Factor shall be adjusted in the event that the
General Partner (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares, or (iii) combines its
outstanding Shares into a smaller number of Shares. The Conversion Factor shall
be adjusted by multiplying the Conversion Factor by a fraction, the numerator of
which shall be the number of Shares issued and outstanding on the record date
for such dividend, distribution, subdivision or combination (assuming for such
purposes that such dividend, distribution, subdivision or combination has
occurred as of such time) and the denominator of which shall be the actual
number of Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination. Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) If at any time the General Partner grants to its stockholders any
right to subscribe pro rata for additional securities of the General Partner,
whether Common Stock or other classifications, or for any other securities or
interests that a Contributing Partner would have been entitled to subscribe for
if, immediately prior to such grant, such Contributing Partner had exercised its
Redemption Rights and received the Share Purchase Price in payment thereof, in
lieu of any adjustment under any other subsection of this Section 6 or other
provision of this Agreement, then the General Partner also shall grant to each
Contributing Partner the same subscription rights that such Contributing Partner
would be entitled to if such Contributing Partner had exercised its Redemption
Rights in full and received the Share Purchase Price in satisfaction
10
<PAGE> 11
thereof prior to such grant.
(c) Upon the occurrence of a Major Transaction Event where at least
one-half of the value (as determined in good faith by the General Partner) of
the consideration received by the stockholders of the General Partner in
connection with such Major Transaction Event is in the form of securities in a
successor entity, the General Partner shall cause effective provision to be made
so that, upon exercise of the Redemption Rights and payment of the Purchase
Price at any time following such Major Transaction Event by means of the Share
Purchase Price, Unitholders shall have the right to acquire, in lieu of the
Shares which otherwise would have been issued to each Contributing Partner, the
kind and amount of shares of stock and other securities and property (and the
provisions contained in Section 4.1 shall apply anew to the extent that such
securities are of a class of securities of the General Partner or its successor
that are registered under the Exchange Act) and interests as would be issued or
payable with respect to or in exchange for the number of Shares constituting the
Share Purchase Price as if such Redemption Rights had been exercised and the
General Partner had satisfied the Redemption Rights by delivery of the Share
Purchase Price immediately before such Major Transaction Event.
(d) In the event of any other Major Transaction Event, tender offer for
at least 40% of the then outstanding Shares, or merger or consolidation of the
General Partner which requires the approval of the General Partner's
shareholders (which is not a Major Transaction Event), each Unitholder shall be
entitled to exercise the Redemption Rights in full prior to the consummation of
such Major Transaction Event or other event, and, with respect to any Shares
acquired upon exercise thereof, shall be entitled to all of the rights of the
other holders of Shares with respect to any distribution by the General Partner
(or the other party to such Major Transaction Event or other event) in
connection with such Major Transaction Event or other event. If not exercised
within forty-five days after written notice from the General Partner of such
Major Transaction Event or such shorter period between the date of such notice
and the effective date of such Major Transaction Event, the Redemption Rights
shall terminate at the expiration of such period, but the Redemption Rights
shall
11
<PAGE> 12
be revived if such Major Transaction Event is not consummated.
(e) The Partnership shall give written notice of any Major Transaction
Event to each Contributing Partner promptly after such Major Transaction Event
is announced to the public.
(f) The provisions of this Section 6 shall apply to successive events
that may occur from time to time but only shall apply to a particular event if
it occurs prior to the exercise in full of the Redemption Rights or the
liquidation of the Partnership. Nothing contained herein shall prevent or
otherwise limit the liquidation of the Partnership pursuant to the Partnership
Agreement.
(g) Whenever the Conversion Factor is adjusted as herein provided, the
General Partner shall compute the adjusted Conversion Factor in accordance with
this Section 6 and shall prepare a certificate signed by the chief financial
officer of the General Partner setting forth the adjusted Conversion Factor and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed at the offices of the General Partner.
(h) Notwithstanding anything above to the contrary, the Unitholders
will be entitled to adjustments to protect against dilution and the deferral of
receipt of benefits, and to receive rights, preferences and privileges in
connection with a Major Transaction Event, that are not less favorable than the
adjustments, rights, preferences and privileges received by any other holder of
the same class of limited partnership units in the Partnership.
12
<PAGE> 13
7. Miscellaneous Provisions.
7.1 Notices. All notices or other communications given pursuant to this
Agreement, including without limitation any Notice, shall be sent to the party
to whom or to which such notice is being sent, by certified or registered mail,
return receipt requested, commercial overnight delivery service, facsimile or
delivered by hand with receipt acknowledged in writing and otherwise as set
forth in this Section 7.1. All notices (a) shall be deemed given when received
or, if mailed as described above, after 5 Business Days or, if sent by
facsimile, upon receipt of confirmed answer back and (b) may be given either by
a party or by such party's attorneys. For purposes of this Section 7.1, the
addresses of the parties shall be, in the case of the Partnership and the
General Partner, 110 North Wacker Drive, Chicago, Illinois 60606, facsimile
number (312) 960-5475, Attention: Matthew Bucksbaum and Bernard Freibaum (with a
copy to Neal, Gerber & Eisenberg, Two North LaSalle Street, Suite 2200, Chicago,
Illinois 60602, Attn: Marshall E. Eisenberg), and, in the case of the
Contributing Partners, as set forth on the records of the Partnership. The
address of any party may be changed by a notice in writing given in accordance
with the provisions hereof.
7.2 Assignment. The rights of each Contributing Partner hereunder
(including the Redemption Rights and the Registration Rights) shall
automatically devolve upon and inure to the benefit of any Person (i) to which
Units are transferred in accordance with the Partnership Agreement, as amended
from time to time, and the Contribution Agreement, and (ii) which delivers to
the Partnership a written instrument, in form reasonably satisfactory to the
Partnership, pursuant to which such Person agrees to be bound by the terms
hereof. In addition, a transferee of Registrable Securities who acquires such
Registrable Securities from a Holder in a transaction other than pursuant to an
effective registration statement under the Securities Act may become a Holder
for purposes of Exhibit B and have Registration Rights with respect to such
Registrable Securities by (i) taking and holding the record ownership of such
Registrable Securities, (ii) notifying the General Partner in writing of such
transfer and (iii) providing the General Partner with all information concerning
such transferee that is necessary to amend or
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<PAGE> 14
supplement the applicable registration statement and/or prospectus of the
General Partner, whereupon such transferee shall be conclusively deemed to have
agreed to be bound by and entitled to the benefit of all the terms and
provisions of this Agreement relating to Registration Rights. Subject to the
provisions of Section 6, the General Partner may assign this Agreement without
the consent of the Contributing Partners, provided that no such assignment shall
relieve the General Partner of its obligations under this Agreement.
7.3 Amendments and Waivers. (a) Subject to Section 7.3(b), the
provisions of this Agreement (including the provisions of this sentence) may not
be amended, modified, supplemented or waived, nor may consent to departures
therefrom be given, without the written consent of the General Partner and a
majority-in-interest of the Unitholders; provided, however, that no amendment,
modification, supplement or waiver of, or consent to the departure from, such
provisions of this Agreement, which has the purpose or effect of reducing,
impairing or adversely affecting the right of any Unitholder, shall be effective
as against any such Person unless consented to in writing by such Person. Notice
of any such amendment, modification, supplement, waiver or consent adopted in
accordance with this Section 7.3(a) shall be provided by the General Partner to
each Unitholder at least thirty (30) days prior to the effective date of such
amendment, modification, supplement, waiver or consent.
(b) Exhibit B of this Agreement, together with Section 4.1(d), Section
7.1, the last two sentences of Section 7.2, this Section 7.3(b) and Sections
7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 and 7.11, may not be amended, modified,
supplemented or waived, nor may consent to departures therefrom be given,
without the written consent of the General Partner and a majority-in-interest of
the Holders (as defined in Exhibit B) (aggregating holders of Units and Shares
into a single class for the purpose of such computation); provided, however,
that no amendment, modification, supplement or waiver of, or consent to the
departure from, Exhibit B or such other provisions of this Agreement, which has
the purpose or effect of reducing, impairing or adversely affecting the right of
any Holder, shall be effective as against any such Holder unless
14
<PAGE> 15
consented to in writing by such Holder. Notice of any such amendment,
modification, supplement, waiver or consent adopted in accordance with this
Section 7.3(b) shall be provided by the General Partner to each Holder at least
thirty (30) days prior to the effective date of such amendment, modification,
supplement, waiver or consent.
7.4 Specific Performance. The parties hereto agree that the obligations
imposed on them in this Agreement are special, unique and of an extraordinary
character, and that in the event of breach by any party damages would not be an
adequate remedy, and each of the other parties shall be entitled to specific
performance and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity; and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief.
7.5 Binding Effect. Except as otherwise set forth herein, this
Agreement shall be binding upon, and inure to the benefit of, the parties and
their successors and permitted assigns.
7.6 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware (without regard to its conflicts of law principles).
7.7 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which shall constitute one document.
7.8 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
prior written or oral understandings and/or agreements among them with respect
thereto.
7.9 Pronouns; Headings; Etc. As used herein, all pronouns shall include
the masculine, feminine and neuter, and all terms shall include the singular and
plural thereof wherever the context and facts require such construction. The
headings herein are inserted for convenience of reference only and are to be
ignored in any construction of the provisions hereof. Any references in this
Agreement to
15
<PAGE> 16
a "Section" or "Exhibit" shall refer to a Section or Exhibit of this Agreement
unless otherwise specified.
7.10 Survival. The representations, warranties and covenants contained
herein or made pursuant hereto shall survive the execution and delivery of this
Agreement and the issuance of Shares pursuant hereto.
7.11 Further Assurances. Each of the parties shall hereafter execute
and deliver such other instruments and documents and do such further acts and
things as may be required or useful to carry out the purposes of this Agreement.
16
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
CONTRIBUTING PARTNERS:
NASHLAND ASSOCIATES,
a Tennessee general partnership
By: O'Connor Realty Investors II,
L.P., its managing partner,
By: J.W. O'Connor & Co.
Incorporated, its managing
general partner,
By: _______________________
Name: _________________
Title: ________________
HRE ALTAMONTE, INC., a Delaware
corporation,
By:______________________
Name:_________________
Title:________________
PARTNERSHIP:
GGP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: General Growth Properties, Inc.
a Delaware corporation
By:________________________
Its_____________________
GENERAL PARTNER:
General Growth Properties, Inc.
a Delaware corporation
By:______________________________
Its___________________________
17
<PAGE> 18
EXHIBIT A
Notice of Redemption
The undersigned hereby irrevocably (i) exercises its
Redemption Rights as to ______________ units of limited partnership interest
(the "Units") in GGP Limited Partnership (the "Partnership") in accordance with
the terms of that certain Redemption Rights Agreement, dated July 21, 1998 (the
"Agreement"), among the Partnership, General Growth Properties, Inc. (the
"General Partner"), and the other parties thereto, (ii) transfers and surrenders
such Units and all right, title and interest of the undersigned therein to the
party, which shall be either the Partnership or the General Partner, that shall
purchase or redeem such Units pursuant to the Agreement, and (iii) directs that
the Cash Purchase Price or Share Purchase Price payable upon exercise of the
Redemption Right be delivered to the address specified below and, if the Share
Purchase Price is to be delivered, the Shares shall be registered or placed in
the name(s) and at the address(es) specified below.
The undersigned hereby represents, warrants, certifies and agrees (i)
that the undersigned has unencumbered title to the Units, free and clear of all
Liens, (ii) that the undersigned has the full right, power and authority to
transfer and surrender the Units as provided herein and such transfer and
surrender has been authorized by all necessary action, and (iii) that the
undersigned has obtained the consent or approval of all persons or entities, if
any, having the right to consent to or approve such transfer and surrender.
Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement.
Dated:____________________________
Name:______________________________
(Signature of Limited Partner)
(Street Address)
A-1
<PAGE> 19
(City) (State) (Zip Code)
Signature Guaranteed by
If Shares are to be issued, issue to:
Please insert social security or identifying number:
A-2
<PAGE> 20
EXHIBIT B
Registration Rights
Capitalized terms used in this Exhibit B and not otherwise
defined herein shall have the meanings ascribed to such terms in the Agreement.
References to an "Article" or a "Section" in this Exhibit B shall refer to an
Article or Section of this Exhibit B unless otherwise specified.
ARTICLE I
Shelf Registration Statement;
Underwritten Offerings
SECTION 1.01. Shelf Registration Statement. (a) Not later than
10 business days after any Holder (as hereinafter defined) delivers written
notice to the General Partner requesting registration of Registrable Securities
(as hereinafter defined), the General Partner shall amend an existing
registration statement or file a new registration statement (the "Registration
Statement") under the Securities Act with the SEC covering resales of such
Registrable Securities and shall use its best efforts to cause the Registration
Statement to become effective under the Securities Act as soon as practicable
after filing; provided that in no event shall the General Partner be obligated
to use its best efforts to cause the Registration Statement to become effective
as of a date prior to the 120th day following the first anniversary of the date
hereof. The Registration Statement (i) shall be available for the sale of
Registrable Securities in accordance with the intended method or methods of
distribution by the Selling Holders (as hereinafter defined) and (ii) shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith. Notwithstanding anything in this Section 1.01 to the contrary,
the General Partner shall not be obligated to register for resale Registrable
Securities the resale of which is already registered pursuant to a registration
statement then currently effective under the Securities Act. The term "Holder"
shall mean each Contributing Partner and any other person who hereafter joins in
and is made a party
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to this Agreement pursuant to Section 7.2 of this Agreement that then holds
Units or Registrable Securities. The term "Selling Holder" shall mean a holder
of Registrable Securities (or Units redeemable for Registrable Securities) the
public sale of which have been registered under the Securities Act pursuant to
the Registration Statement. The General Partner agrees that it shall deliver to
the Selling Holders for their review and comments copies of the Registration
Statement and any amendments and supplements thereto (other than post-effective
amendments) prior to the filing thereof with the SEC.
(b) Once the Registration Statement becomes effective, the
General Partner shall keep the Registration Statement continuously effective and
available for resale of the Registrable Securities until the earliest to occur
of (i) the Expiration Date, (ii) the status of the General Partner (or its
successor) as an Exchange Act Reporting Company is terminated, (iii) all of the
Holders notify the General Partner in writing that the General Partner no longer
need keep the Registration Statement effective, (iv) the sale of all of the
Registrable Securities by the Holders, or (v) the date on which in the opinion
of counsel for the General Partner all of the Registrable Securities become
eligible for sale pursuant to Rule 144(k) under the Securities Act (such opinion
to be in writing and addressed to the Holders and such counsel to be reasonably
acceptable to the Holders). The Holders hereby agree that Neal, Gerber &
Eisenberg is acceptable counsel for the General Partner.
(c) The term "Registrable Securities" shall mean (i) any
Shares that have been or may be issued from time to time upon the exchange of
the Units (including any additional units of limited partnership interest of the
Partnership or any successor entity received in exchange for, or as a dividend
or distribution on account of the Units) pursuant to the Partnership Agreement
or this Agreement and other securities issued by the General Partner in exchange
for the Shares and (ii) any securities issued by the Partnership or the General
Partner as a dividend or distribution on account of Registrable Securities or
resulting from a subdivision of outstanding Registrable Securities into a
greater number of securities (by reclassification, stock split or otherwise);
provided that
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any securities issued pursuant to a registration statement effective under the
Securities Act at the time of their issuance shall not be Registrable
Securities.
SECTION 1.02. Underwritten Offering. (a) If any of the
Registrable Securities covered by the Registration Statement are to be sold in
an underwritten public offering, the Holder intending to pursue such
underwritten offering shall deliver a notice to the General Partner of such
intent, and within ten days after receipt of the notice of intent from such
Holder for an underwritten offering, the General Partner shall give written
notice (the "Offering Notice") of such notice of intent to all other Holders and
such other Holders shall be entitled to include in such an underwritten offering
all or part of their respective Registrable Securities by notice to the General
Partner for inclusion therein within 15 days after the Offering Notice is given.
All notices made pursuant to this Section 1.02(a) shall specify the aggregate
number of Registrable Securities to be included. The General Partner agrees to
cooperate with any such request for an underwritten offering and to take all
such other reasonable actions in connection therewith as provided in Section
2.01(l). If the board of directors of the General Partner shall determine in its
good faith judgment that a underwritten public offering proposed by a Holder
pursuant to this Section 1.02 would have a material adverse effect on the
General Partner and its stockholders, then the General Partner may elect to
delay or suspend such underwritten public offering for a period of not more than
45 days; provided that the General Partner shall not delay or suspend
underwritten public offerings pursuant to this Section 1.02 for an aggregate
period of more than 90 days during any 12 month period.
(b) In the case of any firm commitment underwritten offering,
if the managing underwriter or underwriters of such offering advise the General
Partner in writing that in its or their opinion the number of Registrable
Securities proposed to be sold in such offering exceeds the number of
Registrable Securities that can be sold in such offering without adversely
affecting the market for the Shares, the General Partner will include in such
offering the number of Registrable Securities that in the opinion of such
managing underwriter or underwriters can be sold without adversely affecting the
market for the Shares.
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<PAGE> 23
In such event, the number of Registrable Securities to be offered for the
account of each Holder requesting to include Registrable Securities in such
offering (including the Holder providing the initial Notice) shall be reduced
pro rata on the basis of the relative number of Registrable Securities requested
by each such Holder to be included in such offering to the extent necessary to
reduce the total number of Registrable Securities to be included in such
offering to the number recommended by such managing underwriter or underwriters.
(c) If any of the Registrable Securities covered by the
Registration Statement are to be sold in an underwritten offering, the Selling
Holders selling Registrable Securities pursuant to such offering shall have the
right to select the investment banker or investment bankers and manager or
managers that will underwrite the offering; provided, however, that such
investment bankers and managers must be from a nationally recognized investment
banking firm reasonably acceptable to the General Partner.
ARTICLE II
Registration Procedures
SECTION 2.01. Registration Procedures. During the time period that the
Registration Statement is required to be current, effective and available under
Section 1.01 above, the General Partner shall also at its expense:
(a) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus constituting a part
thereof, as amended or supplemented (the "Prospectus"), as may be necessary to
keep the Registration Statement effective and to comply with the provisions of
the Securities Act with respect to resales of Registrable Securities in
accordance with the intended method or methods of distribution by the Holders
whenever a Holder shall desire to sell or otherwise dispose of the same, or any
portion thereof, but in no event beyond the period during which the Registration
Statement is required to be kept in effect under Section 1.01 above; provided,
however, that if the General Partner shall furnish to each Holder a certificate
(a "Blackout Certificate") signed by
B-4
<PAGE> 24
the General Partner's chief executive officer stating that in the good faith
judgment of the board of directors of the General Partner it would have a
material adverse effect on the General Partner and its stockholders for the
Registration Statement to be amended or supplemented to include certain material
non-public information regarding the General Partner required to be included
therein, then the General Partner may defer such amending or supplementing for a
period of not more than 45 days and in such event each Selling Holder shall be
required to discontinue disposition of the Registrable Securities during such
period; but provided, further, that the General Partner shall not defer or
suspend the amendment or supplementation of the Registration Statement or
Prospectus pursuant to this Section 2.01(a) or Section 2.01(h) for an aggregate
period of more than 90 days during any 12 month period;
(b) furnish to each Selling Holder, without charge, such
number of authorized copies of the Prospectus, and any amendments or supplements
to the Prospectus, in conformity with the requirements of the Securities Act and
the Exchange Act, and such other documents as such Selling Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such Selling Holder, and the General Partner
hereby consents to the use of the Prospectus, such amendments or supplements and
such other documents in connection with the offering and sale of the Registrable
Securities;
(c) register or qualify the Registrable Securities under state
securities or blue sky laws of such jurisdictions as are reasonably required to
effect a sale thereof and do any and all other acts and things which may be
necessary or appropriate under such state securities or blue sky laws to enable
the Selling Holders to consummate the public sale or other disposition in such
jurisdictions of the Registrable Securities to be sold or otherwise disposed of
by such Selling Holders from time to time;
(d) before filing with the SEC any amendments or supplements
to the Registration Statement or the Prospectus, furnish copies of all such
documents proposed to be filed to the Holders holding Registrable Securities,
which shall have five business days to review and comment thereon; provided,
B-5
<PAGE> 25
however, that all such documents shall be subject to the approval of a Holder
insofar as they relate to information concerning such Holder (including, without
limitation, the proposed method of distribution of the Registrable Securities);
(e) notify the Selling Holders promptly (and, if requested by
a Selling Holder, confirm in writing) (i) when the Registration Statement has
become effective and when any post-effective amendments and supplements thereto
become effective, (ii) of any request by the SEC or any state securities
authority for amendments or supplements to the Registration Statement and the
Prospectus or for additional information, (iii) of the issuance by the SEC or
any state securities authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Securities or the
initiation of any proceeding for such purpose, and (v) of the happening of any
event during the period the Registration Statement is effective which results in
the Registration Statement, the Prospectus or any document incorporated therein
by reference containing an untrue statement of material fact or omitting to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(f) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
practicable time;
(g) cooperate with the Selling Holders to facilitate the
timely preparation and delivery of certificates evidencing the Registrable
Securities being sold, which certificates shall not bear any restrictive legends
provided the Registrable Securities evidenced thereby have been sold in a manner
permitted by the Prospectus;
(h) upon the occurrence of any event contemplated by Section
2.01(e)(v), promptly prepare and file a supplement or post-effective amendment
to the Registration Statement or the Prospectus or any document incorporated
therein by reference or file any other required document so
B-6
<PAGE> 26
that, as thereafter delivered to purchasers of the Registrable Securities, the
Prospectus will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that if the General
Partner shall furnish to each Selling Holder the Blackout Certificate provided
for in Section 2.01(a), the obligation to prepare and file any such supplement
or post-effective amendment shall be suspended in accordance with Section
2.01(a);
(i) use its reasonable efforts to cause the Registrable
Securities to be listed on any securities exchange on which securities of the
same class issued by the General Partner are then listed;
(j) make available for inspection by the Selling Holders and
any counsel, accountants or other representatives retained by such Selling
Holders, such financial and other records and pertinent corporate documents of
the General Partner and cause the officers, directors and employees of the
General Partner to supply such records, documents or information reasonably
requested by such Selling Holders, counsel, accountants or representatives in
connection with the preparation of the registration statement that are
reasonably required to order for such Selling Holders to establish their "due
diligence" defense against liabilities under Section 12(a)(2) of the Securities
Act; provided, however, that such records, documents or information are
confidential and shall not be disclosed by such Selling Holders, counsel,
accountants or representatives unless (i) such disclosure is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, or (ii) such
records, documents or information become generally available to the public other
than through a breach of the terms set forth in this Exhibit B;
(k) use its best efforts to make available to its security
holders, as soon as reasonably practicable, an earning statement covering at
least 12 months, commencing on the first day of the fiscal quarter next
succeeding each sale of the Registrable Securities pursuant to the Registration
Statement, in a manner which shall satisfy the provisions of Section 11(a) of
the Securities Act and
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Rule 158 thereunder; and
(l) if requested by a Selling Holder or any underwriters
engaged by such Selling Holder for purposes of distributing the Registrable
Securities, enter into such agreements (including an underwriting agreement in
form, scope and substance as is customary in underwritten offerings) and take
all such other reasonable actions in connection therewith (including those
reasonably requested by the underwriters or such Selling Holder) in order to
expedite or facilitate the disposition of such Registrable Securities, and in
such connection, (i) make such representations and warranties to the
underwriters with respect to the business of the General Partner and the
registration statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) obtain customary
opinions of counsel to the General Partner and updates thereof (which shall be
in form and substance reasonably satisfactory to such Selling Holder or to the
underwriters and their counsel, as the case may be), addressed to such Selling
Holder and, if applicable, each of the underwriters; (iii) obtain "cold comfort"
letters and updates thereof from the independent certified public accountants of
the General Partner, addressed to such Selling Holder and, if applicable, each
of the underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection with any
such offerings (in each case, to the extent permitted by applicable accounting
rules and guidelines); (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no less favorable
to the underwriters than those set forth in Article III hereof and cross
indemnification by the underwriters in form and substance as is customary in
connection with such offering, in favor of the General Partner or the Selling
Holders, as the case may be; (v) with respect to any underwritten offering in
excess of $40 million, make the General Partner's executive officers available
for a total of five business days to participate in "road show" presentations
(provided that in no event shall the General Partner be required to make its
executive officers available for more than one "road show" in any year
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with respect to offerings pursuant to this Agreement); and (vi) deliver such
documents and certificates as may be reasonably requested by the managing
underwriters and their counsel to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above of this Section
2.01(l) and to evidence compliance with any customary conditions contained in
the underwriting agreement entered into by the General Partner).
SECTION 2.02. Registration Expenses. The General Partner shall
pay all Registration Expenses incurred prior to the sixth anniversary of the
date hereof with respect to the filing and keeping effective any Registration
Statement through such date, and the Selling Holders shall reimburse the General
Partner for Registration Expenses (or a pro rata portion of the Registration
Expenses based on the number of Shares of such Selling Holders registered for
resale pursuant to such Registration Statement relative to the total number of
Shares registered for resale pursuant to such registration statement) which are
incurred after the sixth anniversary of the date hereof in respect of
maintaining effective (but not the initial filing and causing to become
effective of) such Registration Statement; provided, however, that Selling
Holders shall not be required to reimburse any costs (i) of preparing any
documents filed with the SEC that are incorporated by reference in such
Registration Statement or (ii) that become necessary because the General Partner
is unable to use Form S-3 (or any equivalent short form that relies on
incorporation by reference) for the reason that the General Partner has failed
to comply on a timely basis with any requirement of the Acts or Form S-3. The
reimbursement of such expenses by the Selling Holders shall be paid upon demand;
provided, however, that the General Partner shall not be responsible for any
brokerage fees or underwriting commissions, if any, incurred by Holders in
connection with the resale of Registrable Securities, the fees and expenses of
any counsel retained by a Holder in connection with resales of the Registrable
Securities or transfer taxes, if any, relating to the sale or disposition of
Registrable Securities.
SECTION 2.03. Certain Other Obligations of the General
Partner. (a) The General Partner covenants that, so long as it is subject to the
reporting requirements of
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the Exchange Act, it will file the reports required to be filed by it under the
Exchange Act so as to enable any Holder to sell the Registrable Securities
pursuant to Rule 144 under the Securities Act.
(b) In connection with any sale, transfer or other disposition
by any Holder of any Registrable Securities pursuant to Rule 144 under the
Securities Act, the General Partner shall cooperate with such Holder to
facilitate the timely preparation and delivery of certificates evidencing the
Registrable Securities to be sold and not bearing any Securities Act legend, and
enable certificates for such Registrable Securities to be for such number of
shares and registered in such names as the selling Holders may reasonably
request. The General Partner's obligation set forth in the previous sentence
shall be subject to the delivery, if reasonably requested by the General Partner
or its transfer agent, by counsel to such Holder, in form and substance
reasonably satisfactory to the General Partner and its transfer agent, of an
opinion that such Securities Act legend need not appear on such certificate.
ARTICLE III
Indemnification
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SECTION 3.01. Indemnification by the General Partner. (a) The
General Partner hereby agrees to indemnify and hold harmless each Holder and
each person or entity, if any, which controls a Holder (within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act), and
their respective officers, directors, shareholders, members, partners, agents
and employees (each such person being sometimes hereinafter referred to as an
"Indemnified Holder"), from and against any and all losses, claims, damages,
costs and expenses (including reasonable attorneys' fees) to which such Holder
or each such person may become subject under the Securities Act or otherwise
that arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or by reason of any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and shall reimburse
each Indemnified Holder for any legal or other expenses reasonably incurred by
such Indemnified Holder in connection with investigating, preparing or defending
against any such loss, claim or damages as such expenses are incurred; provided,
however, that the indemnity provided pursuant to this Section 3.01 shall not
apply to any Holder with respect to any such losses, claims, damages, costs and
expenses (including reasonable attorneys' fees) that arise out of or are based
upon any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon information furnished in writing to the General
Partner by such Holder expressly for use therein. This indemnity will be in
addition to any liability which the General Partner may otherwise have. In
addition, upon request of a Holder, the General Partner shall enter into one or
more indemnification agreements with any broker or brokers engaged by such
Holder (provided that the General Partner shall not be required to enter into
such agreements with more than five brokers) to sell all or any portion of the
Registrable Securities, each such agreement to indemnify the broker in question
against the same losses, claims, damages, costs and expenses as such Holder is
indemnified against by the General Partner under this Section 3.01.
SECTION 3.02 Indemnification by the Holders. Each Holder
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selling shares pursuant to the Registration Statement (an "Indemnifying Holder")
severally agrees to indemnify and hold harmless the General Partner and the
other Selling Holders, and each of their respective directors, officers,
shareholders, employees and agents and each person or entity, if any, who
controls the General Partner or any other Selling Holder (within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act) to
the same extent as the foregoing indemnity from the General Partner to such
Indemnifying Holder, but only insofar as such loss, claim, damage, cost or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
any amendment thereto or the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with written information furnished to the
General Partner by such Selling Holder for use therein relating to the Selling
Holder's status as a selling security holder.
SECTION 3.03. Conduct of Indemnification Proceedings. Each
indemnified party shall give reasonably prompt notice to each indemnifying party
of any action or proceeding commenced against it in respect of which indemnity
may be sought hereunder, but failure to so notify an indemnifying party (i)
shall not relieve it from any liability which it may have under the indemnity
agreement provided in Sections 3.01 or 3.02 above, unless and to the extent it
did not otherwise learn of such action and the lack of notice by the indemnified
party materially prejudices the indemnifying party or results in the forfeiture
by the indemnifying party of substantial rights and defenses and (ii) shall not,
in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided under
Sections 3.01 or 3.02 above. After receipt of such notice, the indemnifying
party shall be entitled to participate in and, at its option, jointly with any
other indemnifying party so notified, to assume the defense of such action or
proceeding at such indemnifying party's own expense with counsel chosen by such
indemnifying party and approved by the indemnified party, which approval shall
not be unreasonably withheld; provided, however, that, if the
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defendants in any such action or proceeding include both the indemnified party
and the indemnifying party and the indemnified party reasonably determines, upon
advice of counsel, that a conflict of interest exists or that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, then the indemnified
party shall be entitled to one separate counsel, the reasonable fees and
expenses of which shall be paid by the indemnifying party. If the indemnifying
party does not assume the defense of any such action or proceeding, after having
received the notice referred to in the first sentence of this paragraph, the
indemnifying party will pay the reasonable fees and expenses of counsel (which
shall be limited to a single law firm in addition to any local counsel necessary
in connection with such action or proceeding) for the indemnified party. In such
event, however, the indemnifying party will not be liable for any settlement
effected without the written consent of such indemnifying party. If the
indemnifying party assumes the defense of any such action or proceeding in
accordance with this paragraph, such indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified party incurred thereafter
in connection with such action or proceeding except as set forth in the proviso
in the second sentence of this Section 3.03.
SECTION 3.04. Contribution. (a) In order to provide for just
and equitable contribution in circumstances in which the indemnity agreement
provided for in this Article III is for any reason held to be unenforceable
although applicable in accordance with its terms, the General Partner and the
Selling Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the General Partner and the Selling Holders, in such proportion as
is appropriate to reflect the relative fault of the General Partner on the one
hand and the Selling Holders on the other (in such proportions that the Selling
Holders are severally, not jointly, responsible for the balance), in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and the indemnified parties shall
be
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determined by reference to, among other things, whether the action in
question, including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such indemnifying party or the indemnified
parties, and the parties' relative intent, pledge, access to information and
opportunity to correct or prevent such action.
(b) The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 3.04 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in Section 3.04(a). Notwithstanding
the provisions of this Section 3.04, no Selling Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities of such Selling Holder were offered to the public
exceeds the amount of any damages which such Selling Holder would otherwise have
been required to pay by reason of such untrue statement or omission.
(c) Notwithstanding the foregoing, no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 3.04,
each Person, if any, who controls a Holder within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act and directors and
officers of a Holder shall have the same rights to contribution as such Holder,
and each director of the General Partner, each officer of the General Partner
who signed the Registration Statement and each Person, if any, who controls the
General Partner within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
General Partner.
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Exhibit 23
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent accountants, we hereby consent to the incorporation of our report
dated September 21, 1998 on the statement of the excess of revenues over
specific operating expenses for Altamonte Mall for the year ended December 31,
1997 included in this Form 8-K/A dated September 29, 1998, into the General
Growth Properties, Inc. Registration Statements on Forms S-3 (File Nos.
333-11067, 333-15907, 333-17021, 333-23035, 333-37247, 333-37383, 333-41603 and
333-58045) and Registration Statements on Forms S-8 (File Nos. 33-79372,
333-07241, 333-11237 and 333-28449).
Arthur Andersen LLP
New York, New York
September 21, 1998
