-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qyyn7Y+gsWcajrQIV+PKLrQCsIlL2xfG6rVT+LWFqqhfaL5jvAMrjnUd2kcrFF+C hCrTTy4sqACFN03hY/baUQ== 0000950137-99-004289.txt : 19991125 0000950137-99-004289.hdr.sgml : 19991125 ACCESSION NUMBER: 0000950137-99-004289 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19991110 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL GROWTH PROPERTIES INC CENTRAL INDEX KEY: 0000895648 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 421283895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11656 FILM NUMBER: 99764392 BUSINESS ADDRESS: STREET 1: 110 N WACKER DRIVE STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129605000 MAIL ADDRESS: STREET 1: 110 N WACKER DRIVE STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported) NOVEMBER 10, 1999 General Growth Properties, Inc. (Exact name of registrant as specified in its charter) Delaware 1-11656 42-1283895 (State or other (Commission I.R.S. Employer jurisdiction of File Number) Identification Number) incorporation)
110 N. Wacker Drive, Chicago, Illinois 60606 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (312) 960-5000 N/A (Former name or former address, if changed since last report.) 2 Item 2. Acquisition or Disposition of Assets GGP Ivanhoe III, Inc. Effective as of September 28, 1999, GGP Ivanhoe III, Inc. ("GGP Ivanhoe III") acquired Oak View Mall in Omaha, Nebraska from Oak View Mall Corporation, an unrelated third party. GGP Ivanhoe III is owned 51% by GGP Limited Partnership, a Delaware limited partnership (the "Operating Partnership"), and 49% by an affiliate of Ivanhoe, Inc. of Montreal, Quebec, Canada ("Ivanhoe"). The general partner of the Operating Partnership is General Growth Properties, Inc., a Delaware corporation (the "Company"), which holds an approximate 72% general partnership interest in the Operating Partnership. During October 1999, Eastridge Shopping Center L.L.C. ("Eastridge LLC"), all of the interests in which are owned by the Company and the Operating Partnership, entered into an agreement to acquire the Eastridge Mall in San Jose, California from The Equitable Life Assurance Society of the United States, an unrelated third party. The Company and Ivanhoe agreed that the interests in Eastridge LLC will be assigned to GGP Ivanhoe III prior to the closing of the acquisition. The aggregate purchase price for the Oak View Mall and the Eastridge Mall properties is expected to be approximately $160 million, financed by capital contributions from the Operating Partnership and Ivanhoe, a new $83 million long-term mortgage loan and certain short-term floating rate financing. The $83 million long-term mortgage loan, which is collateralized by the Oak View Mall, has a term of ten years, bears interest at 7.71% per annum and requires monthly principal and interest payments based upon a 30-year amortization schedule. The Operating Partnership's capital contribution with respect to the Oak View acquisition was, and with respect to the proposed Eastridge acquisition is expected to be, funded primarily from proceeds from the Company's line of credit facility. The closing of the Eastridge Mall acquisition and the assignment of the interests in Eastridge LLC to GGP Ivanhoe III are subject to certain closing conditions and there can be no assurance that this acquisition and/or assignment will be completed on these or on any other terms. Oak View Mall, which opened in 1991, is a two-level enclosed regional mall containing approximately 868,000 square feet of gross leasable area. The mall's anchor tenants are Dillard's, Younkers, JCPenney and Sears. The mall shop space is currently approximately 95% occupied. Eastridge Mall was originally developed in 1970 and remodeled in 1982, 1988 and 1995. It is a two-level enclosed regional mall containing approximately 1.5 million square feet of gross leasable area. The mall's anchor tenants are Macy's, JCPenney and Sears. The mall shop space is currently approximately 76% occupied. 3 Baybrook Mall On October 28, 1999, the Company acquired the Baybrook Mall, an enclosed regional mall in Houston, Texas from RREEF USA Fund-III, an unrelated third party. The aggregate purchase price was approximately $133 million (subject to prorations and certain adjustments), which was paid with the proceeds from a 10-year, $95 million mortgage loan collateralized by the property and proceeds of other new secured financing recently obtained by the Company. The mortgage loan bears interest at 7.71% per annum and provides for monthly payments of principal and interest based upon a 30-year amortization schedule. Baybrook Mall was originally developed in 1978 and was extensively remodeled in 1995. It contains approximately 1.1 million square feet of gross leasable area, including 342,000 square feet of mall shop space. Sears, Montgomery Ward, two Dillard's stores and Mervyn's anchor the center which is currently approximately 95% occupied. GGP/Homart II On November 10, 1999, the Operating Partnership, together with the Comptroller of the State of New York as Trustee of the New York State Common Retirement Fund ("NYSCRF" and, together with the Operating Partnership, the "Members"), the Operating Partnership's joint venture partner in GGP/Homart,Inc., a previously formed joint venture, formed GGP/Homart II L.L.C., a Delaware limited liability company ("GGP/Homart II"). GGP Homart II is owned equally by the Operating Partnership and NYSCRF. In connection with the formation of GGP/Homart II, the Operating Partnership contributed to the joint venture its 100% interests in Stonebriar Centre in Frisco (Dallas), Texas (currently under construction), Altamonte Mall in Altamonte Springs (Orlando), Florida, Natick Mall in Natick (Boston), Massachusetts and Northbrook Court in Northbrook (Chicago), Illinois; and NYSCRF contributed its 100% interests in Alderwood Mall in Lynnwood (Seattle), Washington; Carolina Place in Charlotte, North Carolina; and Montclair Plaza in Los Angeles, California. The three operating malls contributed by NYSCRF average approximately 1.2 million square feet. Anchor stores at these malls include Nordstrom's (2), Macy's, Dillard's, Bon Marche, Sears (3), JCPenney (3), May Company (2) and Belk and the occupancy at these centers currently average approximately 93.8%. In connection with the transactions described above, the Operating Partnership and NYSCRF entered into an Operating Agreement (the "Operating Agreement"). The Operating Agreement provides that the Members share profits, losses and cash flow in accordance with their respective ownership percentages, which currently are 50%. Under the Operating Agreement, the Operating Partnership is to manage the business of GGP/Homart II. However, certain major decisions, such as the decision to sell or finance a 4 property and the approval of operating budgets, require the approval of the GGP/Homart II Board of Directors, which is composed of three representatives of each Member, and Board actions require the approval of at least one representative of each Member. The Operating Partnership and its affiliates also are to provide property management, leasing, development and certain other services to GGP/Homart II. Additionally, the Operating Agreement contains provisions relating to the transfer of GGP/Homart II membership interests. Each Member may transfer its membership interest to certain accredited investors (in the case of a transfer by NYSCRF, other than persons engaged in competitive businesses). If a Member maintains certain minimum ownership levels, it is entitled to retain its right to elect directors and other management rights and, if NYSCRF transfers certain minimum ownership levels to a transferee, such transferee may acquire the right to elect directors. Finally, the Members have certain put, dissolution and buy-sell rights under the Operating Agreement, which generally are exercisable on or after the third anniversary of the closing date. Pursuant to the put right, NYSCRF may require the Operating Partnership, at the Operating Partnership's election, to (a) purchase NYSCRF's membership interest in GGP/Homart II for a purchase price, payable in cash and/or by delivery of shares of the Company's common stock, $.10 par value (the "Common Stock"), equal to NYSCRF's proportionate share of the agreed or appraised value (net of liabilities) of the GGP/Homart II properties (the "Dissolution Value"), or (b) use commercially reasonable best efforts to market and sell the GGP/Homart II properties. Pursuant to the dissolution right, NYSCRF may require the Operating Partnership, at the Operating Partnership's election, to (a) purchase NYSCRF's membership interest in GGP/Homart II for a cash purchase price equal to that described above or (b) distribute certain GGP/Homart II properties to NYSCRF in exchange for its membership interest in GGP/Homart II. Pursuant to the buy-sell right, the Operating Partnership may require NYSCRF, at NYSCRF's election, to (a) purchase the Operating Partnership's membership interest in GGP/Homart II or (b) sell NYSCRF's membership interest in GGP/Homart II to the Operating Partnership, in either case for a cash purchase price specified by the Operating Partnership. In connection with the formation of GGP/Homart II, the Company amended its shareholder rights plan (the "Plan"), as set forth in the Rights Agreement, dated as of November 18, 1998 (the "Rights Agreement"), between the Company and Norwest Bank Minnesota, N.A., to permit potential issuances of shares of Common Stock to NYSCRF pursuant to the Operating Agreement without NYSCRF becoming an "Acquiring Person" (as defined) under the Plan. By a separate agreement with NYSCRF, the Company agreed to amend the Rights Agreement in certain instances in connection with transfers of shares of Common Stock issued upon exercise of the put right described above and/or the exchange rights contained in the GGP/Homart Stockholders Agreement and/or the issuance of such shares of Common Stock. The amendment to the Rights Agreement also provides that, if the Rights (as defined in the Rights Agreement) become exercisable, Rights will be 5 issued to holders of units of limited partnership in the Operating Partnership. This amendment was adopted in order to avoid unfair economic dilution of limited partners, enhance the effectiveness of the Plan, maintain the economic equivalence of the shares of Common Stock and units of limited partnership and comply with contractual rights of holders of units of limited partnership. The agreed upon value of the properties contributed to GGP/Homart II by NYSCRF was approximately $460 million. Such amount was also the approximate agreed upon value of the properties contributed by the Operating Partnership to GGP/Homart II, which constitutes the disposition a "significant" amount of assets under the rules and regulations promulgated by the Securities and Exchange Commission. The contribution of properties by NYSCRF to GGP/Homart II when taken together with the individually insignificant acquisitions of Oak View Mall and Baybrook Mall, and the proposed acquisition of Eastridge Mall, are deemed (notwithstanding the fact that each of these transactions is unrelated to the others) to constitute the acquisition of a "significant" amount of assets under rules and regulations promulgated by the Securities and Exchange Commission. Accordingly, these transactions are required to be reported on this Current Report on Form 8-K. 6 Item 7. Financial Statements and Exhibits. (a), (b) The requisite financial information with respect to the acquisitions and dispositions described herein will be filed under cover of Form 8-K/A as soon as practicable, and in any event not later than 60 days after the date by which this Form 8-K is required to be filed. (c) See Exhibit Index attached hereto and incorporated herein by reference. 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: November 23, 1999 7 EXHIBIT INDEX ------------- Exhibit Name Page Number ------ Number 2.1 Agreement of Purchase and Sale, dated as of July 27, 1999, among Oak View Mall Corporation, a Delaware corporation, and Oak View Mall, L.L.C., a Delaware limited liability company* 2.2 Agreement of Purchase and Sale, dated as of July 22, 1999 between General Growth Properties, Inc., a Delaware corporation (the "Company"), and RREEF USA Fund-III, a California group trust.* 2.3 Operating Agreement, dated November 10, 1999, between GGP Limited Partnership, a Delaware limited partnership, The Comptroller of the State of New York as Trustee of the Common Retirement Fund ("NYSCRF"), and GGP/Homart II L.L.C. a Delaware limited liability company ("GGP/Homart II").* 2.5 Contribution Agreement dated November 10, 1999, by and between GGP Limited Partnership, a Delaware limited partnership (the "Operating Partnership"), and GGP/Homart II (Altamonte Springs Mall)** 2.6 Contribution Agreement dated November 10, 1999, by and between the Operating Partnership and GGP/Homart II (Northbrook Court)** 2.7 Contribution Agreement dated November 10, 1999, by and between the Operating Partnership and GGP/Homart II (Natick Trust)** 2.8 Contribution Agreement dated November 10, 1999, by and between the Operating Partnership and GGP/Homart II (Stonebriar Centre)** 2.9 Contribution Agreement dated November 10, 1999, by and between NYSCRF and GGP/Homart II (Carolina Place)** 2.10 Contribution Agreement dated November 10, 1999, by and between NYSCRF and GGP/Homart II (Alderwood Mall)** 2.11 Contribution Agreement dated November 10, 1999, by and between NYSCRF and GGP/Homart II (Montclair Plaza)** 2.12 Purchase and Sale Agreement, dated as of October 13, 1999 between The Equitable Life Assurance Society of the United States, the Operating Partnership and East Ridge Shopping Center L.L.C.** 4.1 First Amendment to Rights Agreement, dated as of November 10,1999, between the Company and Norwest Bank, Minnesota, N.A. 4.2 Letter Agreement concerning Shareholder Rights Plan, dated November 10, 1999, between the Operating Partnership and NYSCRF. 8 * In accordance with Rule 601(b)(2) of Regulation S-K, the exhibits to this agreement and the related disclosure schedules have not been filed. The Company agrees to furnish supplementally a copy of any such omitted exhibit or disclosure schedule to the Securities and Exchange Commission upon request. ** To be filed by amendment EX-2.1 2 AMENDMENT OF PURCHASE & SALE, DATED AS OF 7/27/99 1 EXHIBIT 2.1 AGREEMENT OF PURCHASE AND SALE OAK VIEW MALL BY AND BETWEEN OAK VIEW MALL CORPORATION, A DELAWARE CORPORATION, SELLER AND OAK VIEW MALL L.L.C., A DELAWARE LIMITED LIABILITY COMPANY, PURCHASER DATED: JULY 27, 1999 AGREEMENT OF PURCHASE AND SALE Oak View Mall Omaha, Nebraska THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made and entered into this 27th day of July, 1999 by and between OAK VIEW MALL CORPORATION, a Delaware corporation ("Seller"), having an address of c/o Heitman Capital Management LLC, 180 North LaSalle Street, Suite 3600, Chicago, Illinois 60601-6789, Attention: Howard J. Edelman; facsimile number (312) 541-6738, and OAK VIEW MALL L.L.C., a Delaware limited liability company ("Purchaser"), having an address of c/o General Growth Properties, Inc., 110 North Wacker Drive, Chicago, Illinois 60606, Attention: Mr. Joel Bayer; facsimile number (312) 960-5475. RECITALS Seller is the owner of certain parcels of real estate in Omaha, Nebraska, legally described on Exhibit A attached hereto, and all buildings, improvements, fixtures and installations thereon (excluding, however, the buildings, improvements, fixtures and installations on the Outlot Property, as defined below, which are owned by the lessees thereof). Such parcels, buildings, improvements, fixtures and installations owned by Seller, together with any and all easements, rights-of-way, licenses and appurtenances thereto are hereinafter collectively referred to as the "Real Property." The Real Property contains approximately 399,000 leasable square feet and includes: (A) approximately 249,600 square feet of space for in-line mall stores, (B) a building leased for an approximately 149,400 square feet "Younkers" store, and (C) two parcels of land ground leased for a Village Inn restaurant and a Lone Star restaurant, respectively (the "Outlot Property"). The Real Property is part of an enclosed regional shopping mall, consisting of: (1) the Real Property and (2) the buildings 2 and adjoining parking areas owned by third parties and currently operated as "Dillard's," "JC Penney" and "Sears" stores, respectively (the operators thereof being hereinafter collectively referred to as the "Anchor Property Operators"). Subject to and on the terms and provisions of and for the considerations set forth in this Agreement, Seller has agreed to sell, and Purchaser has agreed to buy, the Property. NOW, THEREFORE, the parties hereto hereby agree as follows: Definitions. As used in this Agreement, the following terms have the following meanings: Closing. The closing of the purchase and sale transaction contemplated herein. Closing Date. As agreed between Seller and Purchaser, but no later than September 14, 1999; provided, however, that Purchaser shall have the one-time right (the "Extension Right") to extend the Closing Date to a Monday, Tuesday, Wednesday or Thursday not later than September 28, 1999 by giving written notice to Seller of such extension not later than 10:00 a.m. (Chicago time) September 7, 1999 and by depositing with the Escrow Company or Seller , as the case may be, the Additional Earnest Money as described in Section 2.2 below. Due Diligence Period. The period commencing on July 6, 1999 and ending at 5:00 p.m. (Chicago time) on August 16, 1999. Earnest Money Note. Shall have the meaning set forth in Section 2.2 below. Escrow Company. Near North National Title Corporation, as agent for Chicago Title Insurance Company. Extension Right. Shall have the meaning set forth in the definition of "Closing Date" above. Intangible Personal Property. All logos, designs, tradenames, trademarks, service marks, copyrights and other intellectual property used by Seller in connection with the ownership and operation of the Property or any part thereof, and the goodwill of the business appurtenant thereto, excluding, however, the name of "Oak View Mall Corporation" when used alone or in conjunction with other names. 3 Property. Collectively, the Real Property, the Tangible Personal Property, the Intangible Personal Property, the Service Contracts and the Lease Documents (as hereinafter defined). Proposal. The form of a "Proposal" whether an "Existing Proposal" as defined in Section 5.8 herein or a "New Proposal" as defined in Section 15(a)(vi) hereof, which shall contain a description of the economic terms (including all Leasing Costs (as hereinafter defined)) of any proposed lease, amendment or cancellation along with any financial information on the tenant in Seller's possession. Service Contracts. All written: (i) service, maintenance, operating, repair, supply, purchase, consulting, professional service, advertising, promotion, public relations and other contracts and commitments (excluding the Leases, any recorded documents and agreements and any property management and leasing agreements) in any way relating to the Property or any part thereof which shall survive the Closing hereunder and (ii) equipment leases and all rights and options of Seller thereunder, including rights to renew or extend the term or purchase the leased equipment, relating to equipment or property located in or upon the Real Property or used in connection therewith which shall survive the Closing hereunder, in each case under (i) and (ii) above as identified on Schedule 2. Tangible Personal Property. Subject to the limitations set forth in Section 3.2(g) hereof, all machinery, equipment, fixtures, furnishings, plans, specifications, warranties and other tangible personal property and related equipment situated in or upon or used in connection with the operation or maintenance of the Real Property or any part thereof and all replacements, additions or accessories thereto between the date hereof and the Closing Date, including the items identified and described on Exhibit A of Exhibit J, but excluding: (i) personal property owned by the property manager or by tenants under the Leases, (ii) personal property demised by any equipment leases (if any) described on Schedule 2, and (iii) proprietary software (but including hard copies of all data, reports, statements and other information relating to the ownership, operation, maintenance or management of the Property, and including computer maintenance programs). A list of all such Tangible Personal Property is identified and described on Exhibit A of Exhibit J. Title Company. Near North National Title Corporation, as agent for Chicago Title Insurance Company. Sale; Purchase Price. 4 Subject to the terms and provisions hereof, Seller agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller the Property. The total purchase price (hereinafter called the "Purchase Price") to be paid by Purchaser to Seller for the Property shall be One Hundred Twelve Million and no/100 Dollars ($112,000,000.00). The Purchase Price shall be payable in the following manner: EARNEST MONEY. Purchaser shall, within two (2) business days after the full execution and delivery of this Agreement by Purchaser and Seller, deposit with the Escrow Company, as escrow agent, the amount (the "Initial Earnest Money") of Two Million and 00/100 Dollars ($2,000,000.00), and, in the event that Purchaser elects to exercise the Extension Right, Purchaser shall, concurrently with the delivery of the notice to Seller exercising such right, deposit with the Escrow Company the additional sum (the "Additional Earnest Money") of Ten Million and 00/100 Dollars ($10,000,000.00) (the Initial Earnest Money and, if applicable, the Additional Earnest Money being hereinafter collectively called the "Earnest Money"), which Earnest Money shall be in the form of a wire transfer of immediately available United States of America funds (except as otherwise provided below). The Earnest Money shall be held and disbursed by the Escrow Company acting as escrow agent pursuant to the Earnest Money Escrow Agreement in the form of Exhibit B attached hereto which the parties have executed simultaneously with this Agreement and subject to the terms of this Agreement. The Earnest Money shall be invested in a federally issued or insured interest bearing instrument with any interest accruing thereon to be paid or credited to Purchaser. If the sale hereunder is consummated in accordance with the terms hereof, the Earnest Money and any interest thereon shall be applied to the Purchase Price to be paid by Purchaser at the Closing. In the event of a default hereunder by Purchaser or Seller, the Earnest Money shall be applied as provided herein. If this Agreement is terminated in accordance with the terms of this Agreement and Purchaser is entitled to the Earnest Money, the Earnest Money and all interest accrued thereon shall be immediately returned to Purchaser. Notwithstanding the foregoing, at Purchaser's option, in lieu of depositing with the Escrow Company cash for the Additional Earnest Money, Purchaser may deliver to Seller a promissory note from Purchaser's affiliate, General Growth Properties, Inc., in the form of Exhibit C attached hereto (the "Earnest Money Note"). In the event that Purchaser elects to deliver the Earnest Money Note instead of depositing cash, all references in this Agreement to the "Earnest Money" shall be deemed to include the Initial Earnest Money and the Earnest Money Note, except that (i) at Closing, the Earnest Money Note shall be returned to Purchaser and shall not be credited against the Purchase Price and (ii) in the event of Purchaser's default, Seller shall have the right to immediately collect the full amount of the Earnest Money Note and retain such amount, together with the Initial Earnest Money, as liquidated damages in 5 accordance with the provisions of Section 17(b) below, and Purchaser agrees to assist Seller in effecting such collection. CASH BALANCE. Provided all conditions to Closing have either been satisfied or waived pursuant hereto, Purchaser shall pay the balance of the Purchase Price, subject to the prorations and credits described in Section 5 below, in cash (the "Cash Balance") by wire transfer of immediately available United States of America funds to the Title Company for payment to Seller, in accordance with the terms and conditions of this Agreement so that the funds are unconditionally available for immediate disbursement to the Seller no later than 12:00 noon (Chicago, Illinois time) on the Closing Date. Conditions Precedent. In the event any of the conditions set forth in Sections 3.2(b), 3.3, 3.4 or 3.5 below shall not have been fulfilled, accepted or deemed accepted or waived as provided herein on or before the applicable dates specified herein, Purchaser (or Seller, without respect to Section 3.5) shall have the right to terminate this Agreement by giving written notice thereof to Seller (or Purchaser, with respect to Section 3.5) on or before the respective dates specified herein, and thereupon all Earnest Money and all interest accrued thereon shall be refunded to Purchaser and neither party shall have any further rights or obligations hereunder, except for the Surviving Obligations (as hereinafter defined). Seller's Deliveries. Seller has delivered or made available to Purchaser complete copies of the following items pertaining to the Property which are in Seller's actual possession or in the possession of Seller's Property Manager: all leases, licenses, concessions, occupancy agreements, and amendments thereto encumbering the Property, all of which are listed on Schedule 1 (the "Lease Documents"), together with the reciprocal easement and operating agreement with the Anchor Property Operators, as amended and supplemented (the "REOA"); all Service Contracts; year-to-date operating statement for the Property for the current year and year-end operating statements for the prior two (2) years; copies of the real estate tax bills for the current year and two (2) prior years; all existing environmental reports; the existing owner's title policy; 6 the existing survey (the "Existing Survey"); existing plans and specifications; year-to-date sales reports for the Property for the current year and year-end sales reports for the prior two (2) years; and 1999 budget. Seller shall provide to Purchaser any documents described in this Section 3.1 and first coming into Seller's possession or produced by Seller after the initial delivery and continue to provide the same during the pendency of this Agreement. In the event this Agreement terminates for any reason, Purchaser shall immediately return to Seller all information delivered by Seller or Seller's agent(s) to Purchaser or Purchaser's agent(s). The foregoing provision shall survive termination of this Agreement. Due Diligence. Purchaser and its representatives shall be permitted to enter upon the Property at any reasonable time and from time to time before the Closing Date to examine, inspect and investigate the Property as well as all other records and other documentation provided by Seller or located at the Property (collectively, "Due Diligence"). The Due Diligence shall be subject to the terms, conditions and limitations set forth in this Section 3.2 and Purchaser's conduct thereof shall be in strict compliance with its covenants and agreements contained herein. Purchaser shall have a right to enter upon the Property for the purpose of conducting its Due Diligence provided that in each such instance (i) Purchaser notifies Seller of its intent to enter the Property to conduct its Due Diligence not less than forty-eight (48) hours prior to such entry; (ii) the date and approximate time period are scheduled with Seller; and (iii) Purchaser is in full compliance with the insurance requirements set forth in Section 3.2(f) hereof. At Seller's election, a representative of Seller shall be present during any entry by Purchaser or its representatives upon the Property for conducting its Due Diligence. Purchaser shall use reasonable efforts to ensure that neither it nor any of its representatives interfere with the tenants or ongoing operations occurring at the Property. Purchaser shall not cause or permit any mechanic liens, materialmen's liens or other liens to be filed against the Property as a result of its Due Diligence. Purchaser shall have until the expiration of the Due Diligence Period to conduct its Due Diligence and, in Purchaser's sole discretion, to determine whether the Property is acceptable to Purchaser. Purchaser may, for any or no reason, terminate this Agreement by giving written notice of 7 termination to Seller on or before the expiration of the Due Diligence Period. If Purchaser does not timely give notice of termination as aforesaid, Purchaser shall be deemed to have elected to purchase the Property in accordance with the terms and conditions of this Agreement, the condition precedent set forth in this Section 3.2(b) shall be deemed satisfied and this Agreement shall continue in full force and effect. In the event of such termination, the Earnest Money and all interest accrued thereon shall be returned to Purchaser and neither party shall have any further obligations to the other party hereunder, except for the Surviving Obligations. Without intending to limit the reasons or discretion given to Purchaser to terminate this Agreement pursuant to this Section 3.2(b), Purchaser may terminate this Agreement before the end of the Due Diligence Period in accordance with this Section 3.2(b) in the event that Purchaser does not obtain its internal approvals from the requisite parties. Purchaser shall, at least thirty-one (31) days prior to the Closing Date, notify Seller in writing requesting termination of any or all of the Service Contracts, which are noted on Schedule 2 as being terminable upon thirty (30) days notice, that Purchaser does not elect to assume. If Purchaser does not timely give notice requesting termination of a Service Contract, Purchaser shall be deemed to have accepted the assumption of such Service Contract. Purchaser shall assume all other Service Contracts listed on Schedule 2. Seller shall assign to Purchaser all of its right, title and interest in and to all benefits under the Service Contracts assumed by Purchaser, including all income payable from and after the Closing Date under the Service Contract with Outdoor Systems Advertising. In the event Purchaser timely elects not to assume a Service Contract, Seller shall terminate such Service Contract prior to the Closing Date and pay all costs, fees and penalties in connection therewith. Purchaser shall have the right to conduct, at its sole cost and expense, any inspections, studies or tests that Purchaser deems appropriate in determining the condition of the Property, provided, however, Purchaser is not permitted to perform any intrusive testing, including, without limitation, a Phase II environmental assessment or boring, without (i) submitting to Seller the scope and inspections for such testing; and (ii) obtaining the prior written consent of Seller for such testing, which consent shall not be unreasonably withheld, denied or delayed, except in connection with ground water testing, in which case Seller may withhold its consent in its sole and absolute discretion. Purchaser agrees and covenants with Seller that prior to the Closing Date Purchaser shall not disclose to any third party (other than affiliates, investors, lenders, employees, agents, accountants, attorneys and other professionals and consultants in connection with the transaction contemplated herein) without Seller's prior written consent, unless Purchaser is obligated by law to make such disclosure, any of the reports or any other documentation or information obtained by Purchaser which relates to the Property or Seller in any way, all of which shall be used by Purchaser and its agents solely in connection 8 with the transaction contemplated hereby. In the event that this Agreement is terminated, Purchaser agrees that all such information will be held in strict confidence for not less than three years, subject to any legal obligation to make such disclosure. Purchaser agrees to indemnify, protect, defend and hold Seller and its partners, trustees, beneficiaries, shareholders, members, managers, advisors and other agents and their respective partners, trustees, beneficiaries, employees, officers, directors and shareholders (the "Seller Indemnified Parties") harmless from and against any and all direct and actual (and excluding compensatory, punitive and consequential) liabilities, demands, actions, suits, losses, costs, damages, claims and expenses (including, without limitation reasonable attorneys' fees, court costs and litigation expenses) made, brought, sought or incurred by any of the Seller Indemnified Parties relating to any inspection activities of Purchaser (including activities of any of Purchaser's employees, consultants, contractors or other agents) directly or indirectly arising out of, caused (in whole or in part) by or in connection with the Property, including, without limitation, mechanics' liens, damage to the Property, injury to persons or property resulting from such activities in connection therewith. In the event that the Property is disturbed or altered in any way as a result of such activities, Purchaser shall promptly restore the Property to its condition existing prior to the commencement of such activities which disturb or alter the Property. Furthermore, Purchaser agrees to maintain and cause any of its representatives or agents conducting any Due Diligence to maintain and have in effect commercial general liability insurance with (i) limits of not less than One Million and 00/100 Dollars ($1,000,000.00) for personal injury, including bodily injury and death, and property damage, (ii) such insurance shall name Oak View Mall Corporation, Heitman Capital Management LLC ("HCM") and Urban Retail Properties Co. and their respective trustees, beneficiaries, shareholders, members, employees, officers, and directors as additional insured parties and (iii) waiver of subrogation. Purchaser shall deliver to Seller a copy of the certificate of insurance effectuating the insurance required hereunder prior to the commencement of such activities which certificate shall provide that such insurance shall not be terminated or modified without at least thirty (30) days' prior written notice to Seller. Purchaser acknowledges and agrees that it shall have no right to review, inspect or obtain any of the following: (i) internal memoranda, correspondence, analyses, documents or reports prepared by or for Seller or an affiliate of Seller in connection with (A) this Agreement (B) the transaction contemplated by this Agreement, (C) the acquisition of the Property by Seller (other than environmental reports, if any) or (D) any prior or current contemplated reorganization of Seller and certain affiliated funds (ii) communications between Seller and HCM, and (iii) appraisals, assessments or other valuations of the Property in the possession of Seller or HCM. 9 Prior to the Closing, Purchaser may initiate oral communications with any tenant regarding new leases, renegotiating current lease terms or renewal lease terms. In no event shall Seller be obligated for any assurances given to tenants by Purchaser regarding such communications and Purchaser shall indemnify and hold Seller harmless from same. Sections 3.2(e) and 3.2(f) and such other provisions in this Agreement designated as surviving termination shall survive any termination of this Agreement (collectively, the "Surviving Obligations"). Title and Survey. Seller previously has, at Seller's sole cost and expense, delivered to Purchaser for Purchaser's review a commitment for a standard ALTA owner's title insurance policy, along with a copy of each instrument listed as an exception thereon (the "Title Commitment") on the Real Property issued by the Title Company and the Existing Survey. The standard ALTA form owners's title insurance policy insuring Purchaser or its permitted assignee as fee owner of the Real Property in the amount of the Purchase Price, endorsed as required under this Section 3.3 and subject only to the Permitted Exceptions (as hereinafter defined) is hereinafter referred to as the "Title Policy". Seller, at its sole cost and expense, shall deliver to Purchaser for Purchaser's review an update to the Existing Survey certified to Purchaser and the Title Company which shall comply with the most recent minimum standard detail requirements for ALTA/ACSM Land Surveys and contain Table A Optional Items 1, 2, 3, 4, 6, 7(a), 7(b)(1), 8, 9, 10, 11, 13, 14, 15 and 16 (the "Updated Survey"). During the Due Diligence Period, Purchaser shall have the right to obtain, at Seller's cost and expense, those endorsements to the Title Commitment listed in Exhibit D attached hereto, to the extent the Title Company is willing to issue same. Purchaser shall have until the date which is seven (7) business days after receipt of the last to be delivered of the Title Commitment and Updated Survey (such date being referred to as the "Title Review Date") for examination of the Title Commitment and Updated Survey and the making of any objections thereto, said objections to be made in writing and delivered to Seller on or before the Title Review Date. If Purchaser shall fail to make any objections on or before the Title Review Date, Purchaser shall be deemed to have accepted all exceptions to the Title Commitment and the form and substance of the Updated Survey and all matters shown thereon; all such exceptions and matters and any exceptions or matters caused by or through Purchaser shall be included in the term "Permitted Exceptions" as used herein. If any objections to the Title Commitment or Updated Survey are made on or before the Title Review Date, then Seller shall have the right, but not the obligation (except as otherwise expressly described below), to cure (by removal, endorsement or otherwise) such objections on or before the Closing Date. If any such objections are not cured by Seller by the scheduled Closing Date, then Purchaser may as its only option, elect to either: (y) waive such objection(s) and consummate the transaction contemplated by this Agreement without adjustment to the Purchase Price other than a reduction equal to the amount of any cure for any objection Seller is required to cure 10 pursuant to the immediately succeeding sentence if Seller fails to so cure any such objection; or (z) terminate this Agreement, in which event the Earnest Money and all interest accrued thereon shall be returned to Purchaser and neither party shall have any further obligations to the other party except for the Surviving Obligations. Notwithstanding the foregoing, Seller, at its cost, shall be obligated to cure or otherwise remove by Closing all mortgages, deeds of trust, judgment liens, mechanics' and materialmens' liens and other liens and encumbrances of a definite amount against the Property and which were created by Seller for Seller's account (other than liens for taxes and assessments which are not delinquent) and shall bond over any such liens created by tenant(s) whether or not Purchaser objects thereto. With respect to any such liens created by tenants of the Property, Seller shall enforce its lease provisions against such tenant (s) and either require such tenant(s) to cure (i.e., satisfy such liens) or provide whatever coverage is necessary to the Title Company to insure over such liens. It is hereby understood and agreed by the parties that with respect to the foregoing tenant liens, after the Closing, Seller shall retain all rights and remedies (with the exception of eviction proceedings or the termination of such lease) to enforce the terms of the applicable lease in connection with same. Tenant and Anchor Estoppels. Seller shall have delivered to Purchaser, no later than seven (7) days prior to the Closing Date, (i) estoppel certificates from Sears, Dillard's, J.C. Penney and Younker's , substantially in the form of Exhibit E attached hereto with respect to Sears, Dillard's and J.C. Penney, and substantially in the form of Exhibit F attached hereto with respect to Younker's, or in the form of estoppel customarily given by such third parties (the "Anchor Estoppels") and (ii) estoppel certificates, in the form of Exhibit G attached hereto or in the form of estoppel required under such tenant's lease, from a sufficient number of tenants such that there are executed estoppels representing at least seventy-five percent (75%) of the square footage of the Property currently leased to tenants (excluding Younkers, but including the ground lessees of the buildings on the Outlot Property), and without material modification (the "Tenant Estoppels"). The Tenant Estoppels and Anchor Estoppels shall be collectively referred to as the "Necessary Estoppels." For purposes of the foregoing, a tenant shall not be considered leasing the Property if the term of its lease is month-to-month or expires within six (6) months after the Closing Date, or is occupying the Property under a specialty license agreement. It is hereby understood and agreed that in order for a Tenant Estoppel to be acceptable to Purchaser, the Tenant Estoppel must not be in material conflict with the information contained in each of the Tenant Estoppels prepared by Seller and approved by Purchaser (it being understood that Purchaser shall have two (2) business days to approve of the Tenant Estoppels after receipt therefrom by Seller) and must not specify any material defaults of Seller, as landlord. Notwithstanding the preceding sentence, the Tenant Estoppel shall nevertheless be deemed acceptable if the only conflict with the information contained therein is that the Tenant Estoppel does not include the proposed "SNDA language" (i.e. the language specifically intended to benefit a proposed lender financing the 11 Property). Seller shall not be in default under this Agreement or have any liability to Purchaser if Seller is unable to obtain any of the Necessary Estoppels. In the event the Necessary Estoppels are not delivered as provided in this Section 3.4, Purchaser shall have the right to terminate this Agreement in accordance with the provisions of this Section by written notice given not less than 2 business days prior to the Closing Date, in which event all Earnest Money and all interest accrued thereon shall be refunded to Purchaser and neither party shall have any further rights or obligations hereunder, except for the Surviving Obligations. Transaction Approval. The obligations of Seller under this Agreement are contingent upon the approval of this Agreement by its Investment Committee. Not later than the last day of the Due Diligence Period, Seller shall deliver written notice of such approval or disapproval to Purchaser. If no such notice is delivered, then Seller shall be deemed to have disapproved this Agreement. Closing; Conditions; Deliveries. Time, Place and Manner of Closing. The Closing shall be held on the Closing Date in the offices of the Title Company or at any location mutually acceptable to the parties. Condition to Parties' Obligation to Close. In addition to all other conditions set forth in this Agreement, the obligation of Seller, on the one hand, and Purchaser, on the other hand, to consummate the transaction contemplated hereunder shall be contingent upon the following: The other party's representations and warranties contained herein shall be true and correct in all material respects as of the date of this Agreement and the Closing Date; As of the Closing Date, the other party shall have performed its obligations hereunder in all material respects and all deliveries to be made at Closing by such other party have been tendered; As of the Closing Date, there shall exist no pending action, suit or proceeding with respect to the other party before or by any court or administrative agency which seeks to restrain or prohibit, or to obtain damages or a discovery order with respect to, this Agreement or the consummation of the transactions contemplated hereby; and At the Closing, Purchaser shall have received the Title Policy or an initialed mark-up of the Title Commitment in the form described in Section 4.3(d) below. 12 Deliveries. On the Closing Date, each party shall execute and deliver to the other and/or the Escrow Company the following documents: Seller shall deliver to Purchaser and/or the Escrow Company: a special warranty deed (the "Deed") to the Property in recordable form, duly executed by Seller and acknowledged and in substantially the same form as set forth in Exhibit I attached hereto, conveying to Purchaser title to the Real Property, subject to the Permitted Exceptions; a bill of sale duly executed by Seller and in substantially the same form as set forth in Exhibit J attached hereto, conveying to Purchaser title to the Personal Property (as defined therein); an assignment to Purchaser of the Lease Documents duly executed by Seller and in substantially the same form as set forth in Exhibit K attached hereto, together with an assignment of leases in recordable form with respect to those Lease Documents which are of record, duly executed and acknowledged by Seller; an assignment duly executed by Seller and in substantially the same form as set forth in Exhibit L attached hereto whereby Seller assigns to Purchaser (a) the Service Contracts, (b) other third party construction, leasing or other agreements, the obligation under which are to be assumed by Purchaser pursuant to Section 5.8 or other applicable provisions hereof, and (c) all licenses and permits affecting the Property (to the extent freely assignable); an assignment duly executed by Seller and in substantially the same form as set forth in Exhibit H attached hereto whereby Seller assigns to Purchaser the REOA and any agreements with the owners of the outlots currently occupied by Chili's, Applebee's, Blockbuster and Clarkson Medical Group (the "Outlot Owners"); a non-foreign transferor certification pursuant to Section 1445 of the Internal Revenue Code and any similar provisions of applicable state law, in substantially the same form as set forth on Exhibit M attached hereto (the "Affidavit"); a certified resolution of Seller certifying that Seller has the legal power, right and authority to consummate the sale of the Property and indicating the names of persons with authority to sign on behalf of Seller; originals of the Lease Documents, Service Contracts and keys to the Property; 13 all documents reasonably requested by the Title Company in order to enable Purchaser to obtain requested endorsements to the Title Policy, including, without limitation, such instruments as shall be required by the Title Company to insure title to the Property but only provided that such documents do not expose Seller to any expense or liability not already expressly provided in this Agreement; evidence of termination of all Service Contracts requested to be terminated by Purchaser pursuant to Section 3.2(c) hereof, including, without limitation, the property management agreement with Urban Retail Properties Co.; an affidavit (but not an indemnity) satisfactory to the Title Company sufficient to cause the removal of any exceptions from any title policy to be issued to Purchaser for unfiled mechanics' and materialmens' liens and rights of parties in possession other than tenants; a written certificate executed on behalf of Seller and addressed to Purchaser to the effect that all of the representations and warranties of Seller herein contained in Section 6 are true and correct in all material respects as of the Closing Date (as the same may have been updated as provided in said Section 6); and a personal undertaking regarding gap coverage. Purchaser shall deliver to Seller or the Escrow Company: the Cash Balance, by wire transfer, as provided in Section 2.2 hereof; an assumption duly executed by the Purchaser of the assignments described in Sections 4.3(a)(iii), (iv) and (v); and a certified resolution of Purchaser certifying that Purchaser has the legal power, right and authority to consummate the purchase of the Property. Seller and Purchaser shall jointly deliver to the Escrow Company: A closing statement; All transfer declarations or similar documentation required by law; 14 Letters to the tenants of the Property in the form of Exhibit N attached hereto; and letters to the Anchor Property Operators in the form of Exhibit N-1 attached hereto; and Notices in substantially the form of Exhibit O attached hereto to the other party to each Service Contract assumed by Purchaser pursuant to Section 3.2(c) of this Agreement, together with other notices, in form reasonably acceptable to the parties hereto, to third parties under other agreements being assigned pursuant to this Agreement. The Escrow Company shall deliver to Purchaser the Title Policy or an initialed mark-up of the Title Commitment, extending the effective date to the Closing Date, insuring Purchaser as owner of the Real Property, and removing all exceptions other than Permitted Exceptions. Permitted Termination. So long as a party is not in default hereunder, if any condition to such party's obligation to proceed with the Closing hereunder has not been satisfied or waived as of the Closing Date or such earlier date as provided herein, such party may, in its sole discretion, terminate this Agreement by delivering written notice to the other party before the Closing Date, or such earlier date required hereunder, and the Earnest Money and all interest accrued thereon shall thereupon be immediately returned to Purchaser, or elect to close, notwithstanding the non-satisfaction of such condition, in which event such party shall be deemed to have waived any such condition. Prorations. All items of income and expense shall be paid, prorated or adjusted as of the close of business on the day prior to the Closing Date (the "Proration Date") in the manner hereinafter set forth: Purchaser shall be credited with: (i) the amount of (A) all rents and (B) all expense contributions, real estate tax contributions, and other reimbursements from tenants, Anchor Property Operators and Outlot Owners ("Third Party Contributions") received by Seller and attributable to any month commencing after the Closing Date; (ii) all unapplied cash security deposits held by Seller and which were made by tenants under all leases of the Real Property in effect as of the Closing Date; and (iii) all prepaid security deposits for leases whose terms have not commenced as of the Closing Date. All rents and Third Party Contributions for the month of Closing shall be prorated between Purchaser and Seller based upon their respective days of ownership for such month in which the Closing occurs. Neither Purchaser nor Seller shall receive credit at Closing for any payments of rental or other obligations due but not paid as of the Proration Date. At the time of the final calculation and collection from tenants, Anchor Property Operators and Outlot Owners of Third Party Contributions for 1999, whether in the nature of a reconciliation payment or full payment, in arrears, there shall be a reproration 15 between Purchaser and Seller as to the Third Party Contributions. Such reproration shall not be made on the basis of a per diem method of allocation, but shall instead be apportioned between Seller and Purchaser on the basis of the relative share of actual expenses in question incurred by Seller and Purchaser during the calendar year in question. Purchaser agrees to prepare the calendar year 1999 reconciliation for expenses for the Property pursuant to the terms and conditions hereof. Seller covenants to provide Purchaser with any information necessary to finalize such calculation. Purchaser covenants to promptly bill tenants for amounts due from tenants attributable to periods prior to Closing and diligently pursue collections from tenants for a period of six (6) months after such billing, and, as collected to timely deliver to Seller reproration amounts due Seller within fifteen (15) days after the end of each month in which Purchaser receives such money. Percentage rent shall be prorated between Purchaser and Seller by utilizing the percentage rent payable for such lease year based upon the actual days of ownership of the Property. There shall be no adjustment for percentage rent payments until after the receipt of any percentage rent payments made by the respective tenants, and only after completion of the applicable lease year for each tenant. Any amounts received from tenants, Anchor Property Operators and Outlot Owners after Closing shall be applied on a case by case basis in the following order: (i) first on account of any amount then due and payable to Purchaser from such tenant(s), Anchor Property Operator(s) and/or Outlot Owner(s); (ii) next, on account of any amount due Seller from such tenant(s), Anchor Property Operator(s) and/or Outlot Owner(s) for the period up to and including the Proration Date and (iii) finally, any balance then remaining to Purchaser. Seller retains the right to pursue its remedies against tenants, Anchor Property Operators and Outlot Owners after Closing for any delinquent payments or other amounts owed to Seller, except for actions or proceedings affecting possession or landlord liens. However, Seller will not exercise any such rights or remedies unless such delinquent amounts have not been collected by Purchaser and paid to Seller within three (3) months after the Closing Date. Any money due to Seller shall be remitted to Seller within fifteen (15) days after the end of each month in which Purchaser receives such money. Any amounts received by Seller after the Closing Date for any period after the Proration Date shall be remitted to Purchaser within fifteen (15) days after the end of the month following first receipt of such amounts. Operating expenses, including, without limitation, permits, licenses, membership dues, and any other prepaid expenses, shall be prorated between Purchaser and Seller based upon the actual days of their respective ownership of the Property utilizing the actual expenses or reasonable estimates. 16 Real estate taxes due and payable in the year in which the closing occurs (based on delinquency dates) shall be prorated between Seller and Purchaser based upon the actual days of ownership of the parties for the year in which Closing occurs (i.e. the taxes to be prorated are those set forth in the tax bill issued in December, 1998 and delinquent after April and August, 1999). Except for utilities billed directly to tenants, utilities shall be prorated as of the Proration Date based upon estimates using the prior month's actual invoices. Purchaser shall be responsible for and pay for all "Leasing Costs" which shall include: (a) the cost of all tenant improvements, (b) all leasing commissions, (c) all space planning costs, (d) all legal costs, and (e) any and all concessions, that are due and payable as a result of leases made pursuant to any New Proposal which Purchaser approved, or is deemed to have approved as provided in Section 15 of this Agreement. Although Purchaser has approved the existing leasing proposals listed on Schedule 4 attached hereto (the "Existing Proposals"), Purchaser shall not be obligated to pay any Leasing Costs that may be due and payable as a result of the Existing Proposals. In the event Purchaser hereafter approves a New Proposal regarding a termination of the lease with Footaction, then Purchaser shall be entitled to any termination fee payable under such New Proposal. All insurance policies and property management agreements shall be terminated, at Seller's sole cost and expense, as of the Closing Date and there shall be no proration with respect to these items. All other items which are customarily prorated in transactions similar to the transaction contemplated hereby and which were not heretofore dealt with, will be prorated as of the Proration Date. Seller and Purchaser intend that credits and charges with respect to all proration items for all days preceding the Proration Date shall be allocated to Seller, and credits and charges with respect to such items for all days including and after the Proration Date shall be allocated to Purchaser. Seller and Purchaser hereby agree that any adjustments, apportionments and payments otherwise required to be made as of the Proration Date may to the extent necessary or desirable be estimated by Purchaser and Seller based on the most recent available data, and, as soon as practicable and if necessary from time to time after the Closing Date, additional adjustment, apportionments and payments shall be made to adjust for any differences between the actual apportionment or adjustment and the amount thereof estimated as of the Proration Date. Any errors or omissions in computing apportionments at the Closing shall be corrected promptly after their discovery. All reconciliations shall be completed no later than September 30, 2000, and Purchaser agrees to complete all annual reconciliations and send out bills therefor within 120 days after the end of the applicable billing period. In the event any prorations or computations made under this Section are based on 17 estimates or prove to be incorrect, then either party shall be entitled to an adjustment to correct the same, provided that it makes written demand on the party from whom it is entitled to such adjustment within one hundred and eighty days after the end of the current calendar year except for Third Party Contributions and percentage rent not yet collected. Purchaser shall indemnify and hold Seller harmless from and against any and all liabilities, losses, damages, claims and costs (including reasonable attorneys' fees, court costs and litigation expenses) (i) in connection with Purchaser's assumption of responsibility for the Leasing Costs as provided in Section 5.8 herein, including but not limited to any and all obligations under third party contracts assumed by Purchaser as provided by Sections 4.3 (b)(ii) hereof; and (ii) for which Purchaser received credits pursuant to this Section 5. The indemnity set forth in the immediately preceding sentence and the covenants contained in this Section 5 shall survive Closing. Seller's Representations, Warranties and Covenants. Seller hereby represents, warrants and covenants as follows: Power. Seller has the legal power, right and authority to enter into this Agreement and the instruments referenced herein and to consummate the transactions contemplated hereby. Requisite Action. Except as otherwise contemplated under Section 3.5 above, all requisite action (corporate, trust, partnership or otherwise) has been taken by Seller in connection with entering into this Agreement and the instruments referenced herein and the consummation of the transactions contemplated hereby. Except as otherwise contemplated under Section 3.5 above, no consent of any partner, shareholder, member, creditor, investor, judicial or administrative body, authority or other party is required which has not been obtained to permit Seller to enter into this Agreement and consummate the transaction contemplated hereby. Authority. The individuals executing this Agreement and the instruments referenced herein on behalf of Seller have the legal power, right and actual authority to bind Seller to the terms and conditions hereof and thereof. Validity. This Agreement and all documents required hereby to be executed by Seller are and shall be valid, legally binding obligations of and enforceable against Seller in accordance with their terms. Conflicts. None of the execution and delivery of this Agreement and documents referenced herein, the incurrence of the obligations set forth herein, the consummation of the transactions herein contemplated or referenced herein conflicts with or results in the material breach of any terms, conditions or provisions of or constitutes a default under, any bond, note, or other evidence of 18 indebtedness or any contract, lease or other agreements or instruments to which Seller is a party. Leases. attached hereto as Schedule 1 (the "Lease Schedule") is a true, correct and complete list of all leases, licenses and other agreements to occupy any portion of the Real Property, together with all amendments thereof and supplements thereto, which shall be updated by Seller prior to Closing, if necessary, including the addition thereto of any such agreements executed after the date of this Agreement through the Closing Date (all such items, together with such leases that Seller may enter into after the date hereof in accordance with Section 15(b) hereof, if any, are collectively referred to herein as the "Leases"), and there are no tenants, persons or entities occupying space in the Property other than pursuant to the Leases (except for any subleases or concession agreements not disclosed to Seller); the copies of the Leases delivered by Seller to Purchaser pursuant to Section 3.1 hereof constitute all of the Leases relating to the Property as of the date hereof and are complete in all material respects; and Except for commissions for which Purchaser is responsible pursuant to Section 5.8 hereof, there are no leasing commissions or other commissions presently due and unpaid with respect to any Lease (or if there are any, they shall be paid in full prior to Closing). Service Contracts. Attached hereto as Schedule 2 is a complete and accurate list of the Service Contracts, as of the date of this Agreement which shall be updated by Seller prior to Closing, if necessary including the addition thereto of any such agreements executed after the date of this Agreement through the Closing Date. A true and complete copy of each Service Contract, together with any amendments or supplements thereto, has been delivered or made available to Purchaser. Such documents constitute the entire agreement between Seller and each party to the Service Contracts. Notices. Seller has not received any written notice that the Property, and all present uses and operation thereof, are in violation of any applicable federal, state or local laws, rules, codes or regulations, including, without limitation, any applicable zoning or land-use laws. Litigation. Except as set forth on Schedule 3, no litigation, action or proceeding is pending, nor to the best of the Seller's knowledge has been filed, or threatened in writing, affecting the Property or Seller's ability to consummate the transaction contemplated by this Agreement. Schedule 3 shall be updated by Seller prior to Closing, if necessary. 19 Employees. Seller has no employees. Any individuals retained by Seller's property manager for various projects at the Property are deemed employees of Seller's property manager. Condemnation. There are no pending, or to Seller's knowledge, threatened condemnation proceedings affecting the Property. Environmental Condition. Seller has no knowledge of any violation of Environmental Laws related to the Property or the presence or release (other than as permitted by law) of Hazardous Materials on or from the Property except as disclosed in the environmental reports, studies and other information relating to the environmental condition of the Property delivered by Seller to Purchaser or made available for Purchaser's review. Neither Seller nor Seller's agents have received any written notice from a governmental agency that Seller or the Property is not in compliance with any Environmental Laws. The term "Environmental Laws" means the Resource Conservation and Recovery Act and the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA") and other federal laws governing the environment as in effect on the date of this Agreement together with their implementing regulations and guidelines as of the date of this Agreement, and all state, regional, county, municipal and other local laws, regulations and ordinances that are equivalent or similar to the federal laws recited above or that purport to regulate Hazardous Materials in effect as of the date of this Agreement. "HAZARDOUS MATERIALS" means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as currently in effect as of the date of this Agreement, (ii) petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) friable asbestos, (vi) flammable explosives, (vii) infectious materials, or (viii) radioactive materials. Tax Proceedings. No application or proceeding is pending with respect to a reduction or an increase of real estate taxes for the Property that has been filed by or on behalf of Seller. There are no tax refund proceedings relating to the Property which are currently pending that have been filed by or on behalf of Seller. REOA and Outlot Documents. Schedule 5 attached hereto lists all of the documents comprising the REOA. There are no unrecorded agreements between Seller and the Outlot Owners. The copies of such documents delivered by Seller to Purchaser constitute all of such documents relating to the Property as of the date hereof and are complete in all material respects. Indemnity. Seller shall indemnify, defend and hold Purchaser and Purchaser's shareholders, officers, directors, members, partners, employees, representatives, and agents, and their respective successors and assigns (collectively, the "Purchaser Indemnified Parties") harmless from and against any 20 and all claims, actions, judgments, liabilities, liens, damages, penalties, fines, costs and reasonable attorneys' fees, foreseen or unforeseen, asserted against, imposed on or suffered or incurred by Purchaser (or the Property) directly or indirectly arising out of or in connection with (a) any breach of the warranties, representations and covenants set forth in this Section 6, (b) the breach or non-fulfillment by Seller of any of the covenants or agreements of Seller under this Agreement (c) claims made by any tenant under the Lease Documents, any Anchor Property Operators under the REOA, any Outlot Owner under its agreement with the owner of the Property or by any party under those Service Contracts assigned to Purchaser, that relate to any actions or events first occurring, or obligations first accruing, prior to the Closing Date, or (d) any event, occurrence or accident at any time prior to the Closing Date relating to the Property. The warranties and representations set forth in this Section 6 shall be deemed remade as of Closing and updated if necessary, and said warranties and representations as so remade and updated, and the indemnity obligation set forth herein shall survive Closing, provided that any claim by Purchaser based upon a misrepresentation or breach of any warranty or representation or indemnity obligation under this Section 6 shall be deemed waived unless Purchaser has delivered to Seller written notice of such claim prior to the date which is one year after the Closing Date, and (ii) filed suit within four (4) months after delivery to Seller of any such notice of claim. As used in this Section 6, the term "to Seller's knowledge" "actual knowledge" or "best of Sellers knowledge" or words of similar import (i) shall mean and apply to the actual knowledge of Larry Glickman, Howard J. Edelman and Elizabeth Asbjornson, and not to any other parties, (ii) shall mean the actual knowledge of such individuals, without any investigation or inquiry of any kind, and (iii) shall not mean such individuals are charged with knowledge of the acts, omissions and/or knowledge of Seller's agents or employees. Notwithstanding anything contained in this Agreement to the contrary, Seller shall have no liability for breaches of any representations, warranties and certifications (the "Representations") which are made by Seller herein or in any of the documents or instruments required to be delivered by Seller hereunder if any one or more of Joel Bayer and Tad Wefel (collectively, "Purchaser's Representatives") had actual knowledge of such breach by Seller (including, without limitation, actual knowledge gained by any of Purchaser's Representatives in the course of Purchaser's Due Diligence as to a fact or circumstance which, by its nature, indicates that a Representation was or has become untrue or inaccurate) at Closing where Purchaser elects to proceed to close the transaction contemplated by this Agreement, and Purchaser shall not otherwise have the right to bring any lawsuit or other legal action against Seller, nor pursue any other remedies against Seller, as a result of the breach of such Representation caused thereby, but Purchaser's sole right shall be to terminate this Agreement in which event, the Earnest Money and all interest accrued thereon shall be returned to Purchaser. Purchaser covenants that Purchaser's 21 Representatives shall make due inquiry of all individuals and agents of Purchaser reviewing the deliveries set forth in Section 3.1 hereof and conducting the Due Diligence. Purchase As-Is. EXCEPT FOR THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN SECTION 6 OF THIS AGREEMENT, PURCHASER ACKNOWLEDGES TO AND AGREES WITH SELLER THAT PURCHASER IS PURCHASING THE PROPERTY IN ITS "AS-IS, WHERE IS" CONDITION "WITH ALL FAULTS" AS OF THE CLOSING DATE AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY WARRANTIES, REPRESENTATIONS OR GUARANTEES, EITHER EXPRESS OR IMPLIED, AS TO ITS CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY, OR ANY OTHER WARRANTY OF ANY KIND, NATURE, OR TYPE WHATSOEVER FROM OR ON BEHALF OF SELLER, EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6. EXCEPT FOR THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN SECTION 6 OF THIS AGREEMENT, SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR IMPLIED, CONCERNING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, STRUCTURAL INTEGRITY, SOIL AND GEOLOGY; (B) THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THEREON, INCLUDING THE POSSIBILITIES FOR FUTURE DEVELOPMENT OF THE PROPERTY; (D) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (F) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; (G) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (H) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, UNDER, OR ADJACENT TO THE PROPERTY OR ANY OTHER ENVIRONMENTAL MATTER OR CONDITION OF THE PROPERTY; (I) WHETHER THE PROPERTY IS YEAR 2000 COMPLIANT; OR (J) ANY OTHER MATTER WITH RESPECT TO THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN SECTION 6 OF THIS AGREEMENT, ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER 22 BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON EXCEPT FOR THE EXPRESS REPRESENTATIONS SET FORTH IN SECTION 6 OF THIS AGREEMENT. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT PURCHASER IS A SOPHISTICATED AND EXPERIENCED PURCHASER OF PROPERTIES SUCH AS THE PROPERTY AND HAS BEEN DULY REPRESENTED BY COUNSEL IN CONNECTION WITH THE NEGOTIATION OF THIS AGREEMENT. EXCEPT AS MAY OTHERWISE BE PROVIDED HEREIN, SELLER HAS MADE NO AGREEMENT TO ALTER, REPAIR OR IMPROVE ANY OF THE PROPERTY. Purchaser's Representations, Warranties and Covenants. Purchaser hereby represents, warrants and covenants as follows: Power. Purchaser has the legal power, right and authority to enter into this Agreement and the instruments referenced herein and to consummate the transactions contemplated hereby. Requisite Action. Except as otherwise contemplated under Section 3.2(b), all requisite action (corporate, trust, partnership or otherwise) has been taken by Purchaser in connection with entering into this Agreement and the instruments referenced herein and the consummation of the transactions contemplated hereby. Except as otherwise contemplated under Section 3.2(b), no consent of any partner, shareholder, member, creditor, investor, judicial or administrative body, authority or other party is required which has not been obtained or shall not be obtained prior to the Closing Date to permit Purchaser to enter into this Agreement and consummate the transaction contemplated hereby. Authority. The individuals executing this Agreement and the instruments referenced herein on behalf of Purchaser have the legal power, right and actual authority to bind Purchaser to the terms and conditions hereof and thereof. Validity. This Agreement and all documents required hereby to be executed by Purchaser are and shall be valid, legally binding obligations of and enforceable against Purchaser in accordance with their terms. Conflicts. Neither the execution and delivery of this Agreement and documents referenced herein, nor the incurrence of the obligations set forth herein, nor the consummation of the transactions herein contemplated, nor referenced herein conflict with or result in the material breach of any terms, conditions or provisions of or constitute a default under, any bond, note, or other evidence of indebtedness or any contract, lease or other agreements or instruments to which Purchaser is a party. 23 Litigation. There is no action, suit or proceeding pending or, to the best of Purchaser's knowledge, threatened against Purchaser in any court or by or before any other governmental agency or instrumentality which would materially and adversely affect the ability of Purchaser to carry out the transactions contemplated by this Agreement. Indemnity. Purchaser shall indemnify, protect and hold the Seller Indemnified Parties harmless from and against any and all claims, actions, judgments, liabilities, liens, damages, penalties, fines, costs and reasonable attorneys' fees, foreseen or unforeseen, asserted against, imposed on or suffered or incurred by Seller directly or indirectly arising out of or in connection with (a) any breach of the warranties, representations and covenants set forth in this Section 8; (b) claims made by any tenant under the Lease Documents, any Anchor Property Operators under the REOA, any Outlot Owner under its agreement with the owner of the Property or by any party under those Service Contracts assigned to Purchaser, that relate to any actions or events first occurring, or obligations first accruing, on or subsequent to the Closing Date; (c) the breach or non-fulfillment by Purchaser of any of the covenants or agreements of Purchaser under this Agreement or the documents delivered in connection with this Agreement; or (d) any event, occurrence or accident at any time subsequent to the Closing Date relating to the Property. The warranties, representations and indemnities set forth in this Section 8 shall be deemed remade as of Closing and shall survive Closing, and said warranties and representations as so remade, and the indemnity obligation set forth in herein shall be deemed waived unless Seller has given Purchaser written notice of any such claim prior to the date which is one year from the Closing Date. Closing Costs. Seller shall pay the following expenses: (i) the costs to obtain a standard ALTA owner's title insurance policy with the endorsements described in Exhibit D; (ii) the costs to obtain the Existing and Updated Surveys; (iii) 50% of all closing escrow fees, including "New York Style" closing fees for the transaction described herein; (iv) all recording fees for releasing mortgages and other security instruments to clear title; (v) Seller's legal fees and expenses; (vi) all transfer taxes; and (vii) all costs and expenses incurred in connection with the transfer of any transferable permits, warranties or licenses in connection with the ownership or operation of the Property. Purchaser shall pay the following expenses: (a) the costs for any title reinsurance; (b) the costs to obtain any modifications to the Updated Survey; (c) 50% of all closing escrow fees, including "New York Style" closing fees for the transaction described herein; (d) the fee for the recording of the Deed; (e) all costs and expenses associated with Purchaser's financing, if any; (f) all recording fees for the deed and Purchaser's mortgage and other security instruments; and (g) Purchaser's legal fees and expenses. The provisions of this Section 9 shall survive Closing or any termination of this Agreement. 24 Commissions. Seller shall be solely responsible for the payment of any commission owing to Eastdil Realty Company, L.L.C. with respect to the purchase and sale transaction described herein. Seller and Purchaser each warrant and represent to the other that (other than Eastdil Realty Company, L.L.C.) neither has had any dealings with any broker, agent, or finder relating to the sale of the Property or the transactions contemplated hereby, and each agrees to indemnify and hold the other harmless against any claim for brokerage commissions, compensation or fees by any broker, agent, or finder in connection the sale of the Property or the transactions contemplated hereby resulting from the acts of the indemnifying party. The provisions of this Section 10 shall survive Closing or any termination of this Agreement. New York Style Closing. It is contemplated that the transaction shall be closed by means of a so-called New York Style Closing, with the concurrent delivery of the documents of title, transfer of interest, delivery of the Title Policy or marked-up title commitment described in Section 4.3(d) and the payment of the Purchase Price. Seller and Purchaser agree that disbursement of the Purchase Price, as adjusted by the prorations, shall not be conditioned upon the recording of the Deed, but rather, upon the issuance of an irrevocable commitment by the Title Company to issue the Title Policy. Seller and Purchaser shall each provide any undertaking to the Title Company necessary to accommodate the New York Style Closing. Attorneys' Fees and Costs. In the event suit or action is instituted to interpret or enforce the terms of this Agreement, or in connection with any arbitration or mediation of any dispute, the prevailing party shall be entitled to recover from the other party such sum as the court, arbitrator or mediator may adjudge reasonable as such party's costs and attorney's fees, including such costs and fees as are incurred in any trial, on any appeal, in any bankruptcy proceeding (including the adjudication of issues peculiar to bankruptcy law) and in any petition for review. Each party shall also have the right to recover its reasonable costs and attorney's fees incurred in collecting any sum or debt owed to it by the other party, with or without litigation, if such sum or debt is not paid within fifteen (15) days following written demand therefor. Notice. All notices, demands, deliveries and communications (a "Notice") under this Agreement shall be delivered or sent by: (i) first class, registered or certified mail, postage prepaid, return receipt requested, (ii) nationally recognized overnight carrier, (iii) facsimile with original Notice sent via overnight delivery, or (iv) reputable personal messenger delivery service, addressed, in each case, to the address of the party in question set forth in the first paragraph of this Agreement and copies to the parties designated below or to such other address as either party may designate by Notice pursuant to this Section 13. Notices shall be deemed given (w) three business days after being mailed as provided in clause (i) above, (x) one business day after delivery to the overnight carrier as provided in clause (ii) above, (y) on the day of the transmission of the facsimile 25 so long as it is received in its entirety by 5:00 pm (Chicago, Illinois time) on such day and the original of such Notice is received the next business day via overnight mail as provided in clause (iii) above or (z) the day of delivery, if sent by personal delivery services as provided in clause (iv) above. Notices to Seller copy to: Schwartz, Cooper, Greenberger & Krauss 180 N. LaSalle Street Suite 2700 Chicago, Illinois 60601 ATTN: David B. Berzon, Esq. facsimile no. (312) 782-8416 Notices to Purchaser copy to: Neal, Gerber & Eisenberg Two North LaSalle Street 21st Floor Chicago, Illinois 60602 ATTN: Reuben C. Warshawsky, Esq. facsimile no. (312) 269-1747 Fire or Other Casualty; Condemnation. If the Property or any part thereof is damaged by fire or other casualty prior to the Closing Date which would cost in excess of Five Hundred Thousand and no/100 Dollars ($500,000.00) to repair (as determined by an insurance adjuster selected by the insurance carriers), Purchaser may terminate this Agreement by written notice to Seller given on or before the earlier of (i) twenty (20) days following such casualty or (ii) the Closing Date. In the event of such termination, this Agreement shall be of no further force and effect and, except for the Surviving Obligations, neither party shall thereafter have any further obligation under this Agreement, and Seller shall direct the Escrow Company to promptly return all Earnest Money to Purchaser. If Purchaser does not elect to terminate this Agreement or the cost of repair is determined by said adjuster to be less than Five Hundred Thousand and no/100 Dollars ($500,000.00) then the Closing shall take place as herein provided without abatement of the Purchase Price, and Seller shall assign and transfer to Purchaser on the Closing Date, without warranty or recourse, all of Seller's right, title and interest to the balance of insurance proceeds paid or payable to Seller on account of such fire or casualty remaining after reimbursement to Seller for the total amount of all costs and expenses incurred by Seller in connection therewith including but not limited to making emergency repairs, securing the Property and complying with applicable governmental requirements. Seller shall pay to Purchaser the amount of the deductible of any of Seller's applicable insurance policies. 26 If any material portion of the Property is taken in eminent domain proceedings prior to Closing, Purchaser may terminate this Agreement by notice to Seller given on or before the earlier of (i) twenty (20) days after such taking or (ii) the Closing Date, and, in the event of such termination, this Agreement shall be of no further force and effect and, except for the Surviving Obligations, neither party shall thereafter have any further obligation under this Agreement, and Seller shall direct the Escrow Company to promptly return all Earnest Money to Purchaser. If Purchaser does not so elect to terminate or if the taking is not material, then the Closing shall take place as herein provided without abatement of the Purchase Price, and Seller shall deliver or assign to Purchaser on the Closing Date, without warranty or recourse, all of Seller's right, title and interest in and to all condemnation awards paid or payable to Seller. Operations After Date of This Agreement. Seller covenants and agrees with Purchaser that: after the date hereof through the Closing, Seller will (except as specifically provided to the contrary herein): Refrain from transferring any of the Property or creating on the Property any easements, liens, mortgages, encumbrances, or other interests which will survive Closing or permitting any changes to the zoning classification of the Land; Refrain from entering into or amending any contracts, or other agreements (excluding leases) regarding the Property (other than contracts in the ordinary and usual course of business and which are cancelable by the owner of the Property without penalty within thirty (30) days after giving notice thereof); Continue to operate, maintain, and repair the Property in a manner consistent with Seller's current practices; Comply with all of the material terms of the Lease Documents; Refrain from offering the Property for sale or joint-venture or negotiating or acting upon any offers, or applying for any financing of the same; and Deliver to Purchaser copies of all Lease Documents entered into after the date hereof and copies of all Proposals entered into after this date (the "New Proposals"). after the date hereof through the Closing, Seller shall not, without the prior written consent of Purchaser, which consent shall not be unreasonably 27 withheld, conditioned or delayed (except where such consent is deemed granted as provided in this Agreement) (i) amend or modify any Lease Documents, the REOA or Service Contracts (except as otherwise permitted hereunder) or enter into any extensions or expansions thereunder; provided, however, that Seller shall be permitted to enter into, and Purchaser shall be deemed to have approved and consented to, and to have agreed to pay any Leasing Costs associated with, any lease agreement or amendment that is required pursuant to an existing Lease or memorializes the exercise of an existing right or option under an existing Lease; (ii) cancel any of such Lease Documents, the REOA or Service Contracts, or (iii) execute any new leases, operating agreements or service contracts (except as otherwise permitted hereunder). Purchaser shall have five (5) business days from its receipt of any New Proposal to notify Seller in writing of its approval or rejection of any such New Proposal. If no such notice is received by Seller within such period then Purchaser shall be deemed to have approved any such New Proposal. Seller shall have the right to execute lease documents evidencing an Existing Proposal or a New Proposal approved or deemed approved by Purchaser as provided in this Agreement provided Seller's standard lease form is utilized without material modifications. Assignment. Purchaser shall not assign this Agreement without Seller's prior written consent which consent may be withheld for any reason or no reason; provided, however, that Purchaser shall have the right to assign this Agreement without Seller's consent to an affiliate of Seller provided that the conditions set forth in clauses (i) and (ii) below are satisfied in advance of such assignment. Subject to the previous sentence, this Agreement shall apply to, inure to the benefit of and be binding upon and enforceable against the parties hereto and their respective successors and assigns. Sellerys consent to any such assignment shall be conditioned upon Seller's receipt of the following not less than five (5) business days prior to the Closing Date: (i) a duly executed express assumption of all of the duties and obligations of Purchaser by the proposed assignee in a form acceptable to Seller, and (ii) an ERISA certificate, in the form of Exhibit H attached hereto and the content of which is satisfactory to Seller. Remedies. IN THE EVENT THAT SELLER SHALL FAIL TO CONSUMMATE THIS AGREEMENT AND SUCH FAILURE IS NOT A RESULT OF PURCHASER'S DEFAULT OR A TERMINATION OF THIS AGREEMENT BY PURCHASER OR SELLER PURSUANT TO A RIGHT TO DO SO UNDER THE PROVISIONS HEREOF, PURCHASER, IN THE CASE WHERE SUCH FAILURE IS BASED UPON A BREACH BY SELLER ("SELLER'S DEFAULT"), SHALL ONLY BE ENTITLED TO SEEK AT ITS ELECTION, EITHER: (A) THE REMEDY OF SPECIFIC PERFORMANCE IN WHICH EVENT PURCHASER SHALL BE ENTITLED TO RECORD A LIS PENDENS OR NOTICE OF PENDENCY OF ACTION AGAINST THE PROPERTY, OR (B) TERMINATION OF THIS AGREEMENT AND ACTUAL, DIRECT DAMAGES IN AN AMOUNT NOT TO 28 EXCEED $2,000,000 IN THE AGGREGATE FOR ALL RECOURSE OF PURCHASER UNDER THE PURCHASE DOCUMENTS (AS DEFINED IN SECTION 19 HEREOF) IN ADDITION TO THE RETURN TO PURCHASER OF THE EARNEST MONEY, PROVIDED THAT THIS PROVISION SHALL NOT LIMIT PURCHASER'S RIGHTS TO PURSUE AND RECOVER ON A CLAIM WITH RESPECT TO ANY SURVIVING OBLIGATIONS. IN NO EVENT SHALL SELLER BE LIABLE TO PURCHASER FOR ANY PUNITIVE, SPECULATIVE OR CONSEQUENTIAL DAMAGES. PURCHASER SHALL (A) NOTIFY SELLER OF ITS ELECTION TO SEEK THE REMEDY OF SPECIFIC PERFORMANCE ON OR BEFORE THE DATE WHICH IS FORTY FIVE (45) DAYS AFTER THE DATE OF A SELLER'S DEFAULT AND (B) INSTITUTE PROCEEDINGS SEEKING SUCH REMEDY ON OR BEFORE THE DATE WHICH IS SIXTY (60) DAYS AFTER THE DATE OF PURCHASER'S NOTICE. PURCHASER SHALL BE DEEMED TO HAVE WAIVED ITS ELECTION TO SEEK THE REMEDY OF SPECIFIC PERFORMANCE IF PURCHASER DOES NOT (x) NOTIFY SELLER OF SUCH ELECTION AS PROVIDED IN SECTION 17(a)(ii) (A) HEREINABOVE , OR (y) INSTITUTE PROCEEDINGS, SEEKING SUCH REMEDY AS PROVIDED IN SECTION 17(a)(ii)(B) HEREINABOVE. IN THE EVENT THAT PURCHASER SHOULD FAIL TO CONSUMMATE THIS AGREEMENT FOR ANY REASON, EXCEPT SELLER'S DEFAULT OR THE TERMINATION OF THIS AGREEMENT BY PURCHASER OR SELLER PURSUANT TO A RIGHT TO DO SO UNDER THE TERMS AND PROVISIONS HEREOF, THEN SELLER, AS ITS SOLE AND EXCLUSIVE REMEDY MAY TERMINATE THIS AGREEMENT BY NOTIFYING PURCHASER THEREOF AND RECEIVE AND RETAIN THE EARNEST MONEY AS LIQUIDATED DAMAGES, PROVIDED THAT THIS PROVISION SHALL NOT LIMIT SELLER'S RIGHT TO PURSUE AND RECOVER ON A CLAIM WITH RESPECT TO ANY SURVIVING OBLIGATIONS. THE PARTIES AGREE THAT SELLER WILL SUFFER DAMAGES IN THE EVENT OF PURCHASER'S DEFAULT ON ITS OBLIGATIONS. ALTHOUGH THE AMOUNT OF SUCH DAMAGES IS DIFFICULT OR IMPOSSIBLE TO DETERMINE, THE PARTIES AGREE THAT THE AMOUNT OF THE EARNEST MONEY IS A REASONABLE ESTIMATE OF SELLER'S LOSS IN THE EVENT OF PURCHASER'S DEFAULT. THUS, SELLER SHALL ACCEPT AND RETAIN THE EARNEST MONEY AS LIQUIDATED DAMAGES BUT NOT AS A PENALTY. EXCEPT AS OTHERWISE SET FORTH IN THIS SECTION 17(b), SUCH LIQUIDATED DAMAGES SHALL CONSTITUTE SELLER'S SOLE AND EXCLUSIVE REMEDY. SELLER AND PURCHASER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THE FOREGOING LIQUIDATED 29 DAMAGES PROVISION AND BY THEIR SIGNATURES IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS. SELLER: PURCHASER: OAK VIEW MALL CORPORATION, OAK VIEW MALL L.L.C., a Delaware corporation a Delaware limited liability company By: ______________________________ By: GENERAL GROWTH OAK VIEW Howard J. Edelman, Vice President MALL, INC.,a Delaware corporation, a member By: _________________________________ Name: _________________________________ Title: _________________________________ By: GGP LIMITED PARTNERSHIP, a Delaware limited partnership, a member By: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, its general partner By: ____________________________ Name: ____________________________ Title: ____________________________ Miscellaneous. Entire Agreement. This Agreement, together with the exhibits attached hereto, constitute the entire agreement of the parties hereto regarding the purchase and sale of the Property, and all prior agreements, understandings, representations and statements, oral or written, are hereby merged herein. In the event of a conflict between the terms of this Agreement and any prior written agreements, the terms of this Agreement shall prevail. This Agreement may only 30 be amended or modified by an instrument in writing, signed by the party intended to be bound thereby. Time. All parties hereto agree that time is of the essence in this transaction. If the time for performance of any obligation hereunder shall fall on a Saturday, Sunday or holiday (national, in the State of Illinois or the state in which the Property is located) such that the obligation hereby can not be performed, the time for performance shall be extended to the next such succeeding day where performance is possible. Counterpart Execution. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF ILLINOIS AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. Publicity. Seller and Purchaser hereby covenant and agree that, at all times after the date of execution hereof and continuing after the Closing, unless consented to in writing by the other party, no press release or other public disclosure concerning this transaction shall be made, and each party agrees to use best efforts to prevent disclosure of this transaction. Recordation. Purchaser shall not record this Agreement or a memorandum or other notice thereof in any public office without the express written consent of Seller. A breach by Purchaser of this covenant shall constitute a material default by Purchaser under this Agreement. Benefit. This Agreement is for the benefit of Purchaser and Seller, and except as provided in the indemnities granted by Purchaser in this Agreement and in the Purchase Documents (as defined in Section 19) with respect to the Indemnified Parties listed therein, no other person or entity will be entitled to rely on this Agreement, receive any benefit from it or enforce any provisions of it against Purchaser or Seller. Section Headings. The Section headings contained in this Agreement are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several Sections hereof. Further Assurances. Purchaser and Seller agree to execute all documents and instruments reasonably required in order to consummate the purchase and sale herein contemplated. 31 Severability. If any portion of this Agreement is held to be unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect. Waiver of Trial by Jury. Seller and Purchaser, to the extent they may legally do so, hereby expressly waive any right to trial by jury of any claim, demand, action, cause of action, or proceeding arising under or with respect to this Agreement, or in any way connected with, or related to, or incidental to, the dealings of the parties hereto with respect to this Agreement or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and irrespective of whether sounding in contract, tort, or otherwise. To the extent they may legally do so, Seller and Purchaser hereby agree that any such claim, demand, action, cause of action, or proceeding shall be decided by a court trial without a jury and that any party hereto may file an original counterpart or a copy of this Section with any court as written evidence of the consent of the other party or parties hereto to waiver of its or their right to trial by jury. Independent Counsel. Purchaser and Seller each acknowledge that: (a) they have been represented by independent counsel in connection with this Agreement; (b) they have executed this Agreement with the advice of such counsel; and (c) this Agreement is the result of negotiations between the parties hereto and the advice and assistance of their respective counsel. The fact that this Agreement was prepared by Seller's counsel as a matter of convenience shall have no import or significance. Any uncertainty or ambiguity in this Agreement shall not be construed against Seller because Seller's counsel prepared this Agreement in its final form. Governmental Approvals. Nothing contained in this Agreement shall be construed as authorizing Purchaser to apply for a zoning change, variance, subdivision maps, lot line adjustment, or other discretionary governmental act, approval or permit with respect to the Property prior to the Closing, and Purchaser agrees not to do so. Purchaser agrees not to submit any reports, studies or other documents, including, without limitation, plans and specifications, impact statements for water, sewage, drainage or traffic, environmental review forms, or energy conservation checklists to any governmental agency, or any amendment or modification to any such instruments or documents prior to the Closing. Purchaser's obligation to purchase the Property shall not be subject to or conditioned upon Purchaser's obtaining any variances, zoning amendments, subdivision maps, lot line adjustment or other discretionary governmental act, approval or permit. No Waiver. No covenant, term or condition of this Agreement other than as expressly set forth herein shall be deemed to have been waived by Seller or Purchaser unless such waiver is in writing and executed by Seller or Purchaser, as the case may be. 32 Discharge and Survival. The delivery of the Deed by Seller, and the acceptance thereof by Purchaser shall be deemed to be the full performance and discharge of every covenant and obligation on the part of Seller to be performed hereunder, except the obligations hereunder that expressly survive Closing. No action shall be commenced after the Closing on any covenant or obligation, except the obligations hereunder that expressly survive Closing. Exculpation of Seller and Related Parties. Notwithstanding anything to the contrary contained in this Agreement or in any exhibits attached hereto or in any documents executed or to be executed in connection herewith (collectively, including this Agreement, said exhibits and any such document, the "Purchase Documents"), it is expressly understood and agreed by and between the parties hereto that from and after the Closing: (i) the recourse of Purchaser or its successors or assigns against Seller with respect to the alleged breach by or on the part of Seller of any representation, warranty, covenant, undertaking, indemnity or agreement contained in any of the Purchase Documents (collectively, "Seller's Undertakings") shall (x) be deemed waived unless Purchaser has delivered to Seller written notice that Purchaser is seeking recourse under Seller's Undertakings after the Closing Date but prior to the date that is one year after the Closing Date and Purchaser has filed suit with respect to same within sixteen (16) months after the Closing Date, and (y) be limited to an amount not to exceed $2,000,000 in the aggregate of all recourse of Purchaser under the Purchase Documents; and (ii) no personal liability or personal responsibility of any sort with respect to any of Seller's Undertakings or any alleged breach thereof is assumed by, or shall at any time be asserted or enforceable against, Seller or HCM, or against any of their respective shareholders, directors, officers, employees, agents, constituent partners, members, beneficiaries, trustees or representatives except as provided in (i) above with respect to Seller. Exculpation of Purchaser and Related Parties. Notwithstanding anything to the contrary contained in this Agreement or in any exhibits attached hereto or in any of the other Purchase Documents, it is expressly understood and agreed by and between the parties hereto that from and after the Closing: (i) the recourse of Seller against Purchaser with respect to the alleged breach by or on the part of Purchaser of any representation, warranty, covenant, undertaking, indemnity or agreement contained in any of the Purchase Documents (collectively, "Purchaser's Undertakings") shall (x) be deemed waived unless Seller has delivered to Purchaser written notice that Seller is seeking recourse under Purchaser's Undertakings after the Closing Date but prior to the date that is one year after the Closing Date and Seller has filed suit with respect to same within sixteen (16) months after the Closing Date, and (y) be limited to an amount not to exceed $2,000,000 in the aggregate of all recourse of Seller under the Purchase Documents; and (ii) no personal liability or personal responsibility of any sort with respect to any of Purchaser's Undertakings or any alleged breach thereof is assumed by, or shall at any time be asserted or enforceable against, 33 Purchaser or against any of its members or their respective shareholders, directors, officers, employees, agents, constituent partners, members, beneficiaries, trustees or representatives except as provided in (i) above with respect to Purchaser; provided, however, that the foregoing exculpation shall not apply with respect to breaches by Purchaser of its representations and warranties contained in Sections 8.1, 8.2, 8.3 and 8.4 hereof, for which Purchaser shall remain fully liable without limitation. IN WITNESS WHEREOF, the parties hereto have caused these presents to be made as of the day and year first above stated. SELLER: PURCHASER: OAK VIEW MALL CORPORATION, OAK VIEW MALL L.L.C., a Delaware corporation a Delaware limited liability company By: /s/ HOWARD J. EDELMAN By: GENERAL GROWTH OAK VIEW --------------------------------- MALL, INC.,a Delaware Howard J. Edelman, Vice President corporation, a member By: /s/ JOHN BUCKSBAUM ------------------------------ Name: John Bucksbaum ---------------------------- Title: Chief Executive Officer --------------------------- By: GGP LIMITED PARTNERSHIP, a Delaware limited partnership, a member By: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, its general partner By: /s/ JOHN BUCKSBAUM --------------------------- Name: John Bucksbaum ------------------------- Title: Chief Executive Officer ------------------------ EX-2.2 3 AMENDMENT OF PURCHASE & SALE, DATED AS OF 7/22/99 1 EXHIBIT 2.2 AGREEMENT OF PURCHASE AND SALE (Baybrook Mall) GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, hereinafter referred to as "Purchaser," agrees to purchase, and RREEF USA FUND-III, a California group trust, hereinafter referred to as "Seller," agrees to sell, the "Property" (as hereinafter defined). 1. Property; Purchase Price. 1.1 As used herein, the term "Property" shall mean (a) the Real Property, (b) the Personalty, (c) the rights and interests of Seller in, to and under all Leases, (d) the rights and interests of Seller in, to and under the REA, and (e) the rights and interests of Seller in, to and under the Contracts to the extent assignable. 1.1.1 As used herein, the term "Land" shall mean those certain parcels of real estate described on EXHIBIT A, situated in the City of Houston, County of Harris, State of Texas, aggregating approximately 29.6 acres. 1.1.2 As used herein, the term "Improvements" shall mean improvements, structures, fixtures, facilities, installations, machinery and equipment, in, on, over or under the Land, including the foundations and footings therefor, elevators, plumbing, air conditioning, heating, ventilating, mechanical, electrical and utility systems (except to the extent owned by a utility company), signs and light fixtures (except to the extent of trade fixtures and equipment owned by tenants under the Leases), doors, windows, fences, parking lots, walks and walkways and each and every other type of physical improvement to the extent owned, in whole or in part, by Seller, located at, on or affixed to the Land, to the full extent such items constitute or are or can or may be construed as realty under the laws of the State of Texas. 1.1.3 As used herein, the term "Real Property" shall mean the Land and the Improvements, together with all of the estate, right, title and interest of Seller therein, and in and to (a) any land lying in the beds of any streets, roads or avenues, open or proposed, public or private, in front of or adjoining the Land to the center lines thereof, and in and to any awards to be made in lieu thereof and in and to any unpaid awards for damage to the foregoing by reason of the change of grade of any such streets, roads or avenues; (b) all easements, rights, licenses, privileges, rights-of-way, strips and gores, hereditaments and such other real property rights and interests appurtenant to the foregoing (including all rights of Seller under the REA); and (c) all mineral rights, development rights, air rights and the like. 1.1.4 As used herein, the term "Leases" shall mean those leases, tenancies, concessions, licenses and occupancy agreements currently in effect and to which Seller or any of its predecessors in title is a party affecting or relating to the Property which are listed on the Disclosure Schedule (as defined in Section 5.1 hereof) together with any additions thereto, modifications thereof or substitutions therefor hereafter entered into in accordance with the provisions of this Agreement. 2 1.1.5 As used herein, the term "Contracts" shall mean the service, maintenance and other contracts and concessions that are currently in effect and to which Seller is a party respecting the use, maintenance, development, sale or operation of the Property or any portion thereof (but excluding this Agreement, the Leases and the REA) which are listed on the Disclosure Schedule, together with any additions thereto, modifications thereof or substitutions therefor hereafter entered into in accordance with the provisions of this Agreement. 1.1.6 As used herein, the term "Personalty" shall mean all of the personal property, both tangible and intangible, owned by Seller (but not RREEF Management Company) and located in or upon or used in connection with the operation and maintenance of the Property, including machinery; equipment; building supplies and materials; consumables; inventories; names, logos, trademarks, trade names and copyrights (but not the name "RREEF"); all assignable licenses, permits and certificates of occupancy; all assignable guarantees or warranties (including performance bonds obtained by, or for the benefit of, Seller, pertaining to the ownership, construction or development of the Real Property or any part thereof); the Books and Records; computer and peripheral equipment; computer software and data contained in hard drives and on diskette; advertising materials; and telephone exchange numbers. 1.1.7 As used herein, the term "Books and Records" shall mean all records, books of account and papers of Seller (other than Seller's internal correspondence and memos) relating to the construction, ownership and operations of the Property, including architect's drawings, blue prints and as-built plans, maintenance logs, copies of warranties and guaranties, licenses and permits, instruction books, employee manuals, records and correspondence relating to insurance claims, financial statements, operating budgets, paper and electronic media copies of data and other information relating to the Property available from personal computers, structural, mechanical, geotechnical or other engineering studies, soil test reports, environmental reports, underground storage tank reports, feasibility studies, appraisals, ADA surveys or reports, OSHA asbestos surveys, marketing studies, mall documents and compilations, lease summaries and originals and/or copies of Leases, the REA and the Contracts and correspondence related thereto, located either at the Property or the office of Seller's property manager. 1.1.8 As used herein, the term "REA" shall mean that certain Construction, Operation and Reciprocal Easement Agreement dated September 28, 1976 by and between Homart Development Co., Sears, Roebuck and Co., Montgomery Ward Development Corporation, Allied Stores of Teas, Inc., and Alstores Realty Corporation as amended and restated by that certain Restate Construction, Operation and Reciprocal Easement Agreement dated May 21, 1985 among Homart Development Co. ("Homart"), Sears, Roebuck and Co., Gabeward Properties Corporation, Montgomery Ward & Co. Incorporated, Mervyn's, R.H. Macy & Co., Allied Stores East Inc. and Alstores Realty Corporation as supplemented and/or amended by that certain Supplement to Operating Agreement by and between Homart Development Co. and Mervyn's dated May 21, 1985, that certain Supplement to Operating Agreement by and between Homart Development Co. and Montgomery Ward Development Corporation dated September 28, 1976, that certain Supplement to Restated REA by and between Homart Development Co. and 2 3 Alstores Realty Corporation and Allied Stores of Texas, Inc. dated September 28, 1976, that certain Supplement to Restated REA by and between Homart Development Co. and R.H. Macy & Co. Inc. dated May 21, 1985, and that certain Agreement by and between Homart Development Co. and Sears, Roebuck & Co. dated September 28, 1976, as amended by that certain Amendment to Supplement to Operating Agreement by and between Homart Development Co. and Sears, Roebuck & Co. dated October 1, 1985, together with any additions thereto, modifications thereof or substitutions therefor hereafter entered into in accordance with the provisions of this Agreement. 1.2 The purchase price for the Property ("Purchase Price") shall be One Hundred Thirty Three Million and No/100 Dollars ($133,000,000.00), payable by wire transfer of current funds at Closing as defined in Paragraph 7.1 and subject to prorations and adjustments hereinafter set forth. 1.3 Assumption of Liabilities. 1.3.1 At the Closing, Purchaser shall assume (a) the liabilities and obligations of Seller arising from and after the Closing Date under or in respect of the Leases (including any obligation to refund any Security Deposits), the REA and the assignable Contracts (with the liability of Purchaser being limited to the same extent, if any, as Seller's liability is limited thereunder) but only to the extent such liabilities and obligations do not arise out of any transaction, event, circumstance, action, failure to act or occurrence of any sort or type which occurred, existed or was taken prior to the Closing Date and (b) other liabilities and obligations herein described to the extent Purchaser has received proration credit therefor. All of the obligations to be assumed by Purchaser pursuant to this Paragraph 1.3.1 are hereinafter referred to as the "Assumed Liabilities". 1.3.2 Except as otherwise herein expressly provided, Purchaser is not assuming and shall not by virtue of the consummation of the transactions set forth herein be deemed to have assumed any liabilities or obligations of Seller existing as of or accruing prior to the Closing Date, whether or not the same relate to the Property or were incurred in connection with the ownership, use, management or operation thereof by Seller or by its agents (collectively, "Seller's Liabilities"). Without limiting the foregoing, Seller's Liabilities shall include all federal, state and local taxes of whatever kind and nature (other than real estate taxes and assessments on real property to the extent Purchaser has received credit hereunder), liabilities relating to any employees, employee benefit plans or collective bargaining agreements of Seller, including severance pay obligations. 2. Deposit. 2.1 Within one (1) business day after the expiration of the Review Period (as defined in Paragraph 3.3), provided this Agreement has not been terminated, Purchaser will deposit the amount of Three Million and No/100 Dollars ($3,000,000.00) (the "Deposit") with Chicago Title Insurance Company ("Escrow Holder") as earnest money to secure Purchaser's 3 4 performance hereunder. The Deposit may be invested at the direction of Purchaser in United States Treasury Obligations with the approval of Seller, which approval shall not be unreasonably withheld. All investment income earned from the investment of the Deposit, less investment fees, if any, will be added to and become a part of the Deposit and will be applied toward the Purchase Price if Closing is completed in accordance with this Agreement; otherwise all interest will be paid to the party entitled to the Deposit. The escrow instructions to Escrow Holder will be in the form of Schedule 2.1 attached hereto (the "Escrow Instructions"). 2.2 Concurrently with the execution hereof, Purchaser shall pay to Seller an amount equal to One Hundred and No/100 Dollars ($100.00) which shall be deemed "non-refundable option money" given by Purchaser to Seller as good and valuable consideration for the rights and obligations of the parties under this Agreement. At Closing, such amount shall be credited against the Purchase Price. 3. Review of the Property. 3.1 From and after the Effective Date (as defined in Paragraph 8.23), Seller agrees to provide Purchaser and its agents or consultants with access to the Property to inspect each and every part thereof to determine its present condition and to conduct such physical and environmental studies (including a mechanical and roof study and environmental assessment) as it deems appropriate. 3.2 Within the three (3) business days after the Effective Date Seller will deliver to Purchaser, or make copies available to Purchaser at the Property, all to the extent in the possession of Seller or its managing agent: 3.2.1 a copy of any existing occupancy and equipment leases, service contracts and maintenance or other contracts pertaining to the operations of the Property that will survive Closing, copies of Seller's insurance policies with respect to the Property, copies of all real estate tax bills for the years 1997, 1998, and year-to-date for 1999, and unaudited financial statements for the Property for the years 1997, 1998, and unaudited financial statements for the Property for the year-to-date for 1999. 3.2.2 a copy of any environmental reports relating to the Property prepared by third party consultants. 3.2.3 a copy of all current franchises, business or other licenses, bonds, permits, certificates, authorizations and other evidences of consent, approval, authorization or permission relating to or affecting the Property of or from any person, including any governmental authority, held by Seller, including any pending applications. 3.2.4 a copy of all material third party warranties and guaranties, if any, which are in effect with respect to the Property. 4 5 3.2.5 all other Books and Records that Purchaser requests. 3.3 Purchaser has until the close of business on August 9, 1999 (the "Review Period"), to determine in its sole discretion whether all matters relating to the Property (including, without limitation, title and survey, which are governed by Paragraph 4), are acceptable. If Purchaser concludes that any matter relating to the Property is not acceptable, Purchaser will so notify Seller (the "Termination Notice") prior to the expiration of the Review Period (which notice shall contain a copy of Purchaser's roof/structural report and other reports or studies obtained in connection with Purchaser's due diligence and a statement as to the matters found unacceptable to Purchaser in its sole discretion). However, the foregoing will not be construed to limit or qualify Purchaser's absolute right to terminate this Agreement if it determines that all matters relating to the Property are not acceptable by the end of the Review Period. Upon timely delivery of the Termination Notice, this Agreement will terminate without liability on the part of Seller or Purchaser, other than Purchaser's indemnity contained in Paragraph 8.14 hereof and the obligation to deliver to Seller a copy of any environmental report obtained by Purchaser if requested by Seller within ten (10) days after receipt of the Termination Notice. In the event that Purchaser does not timely so notify Seller, Purchaser will be deemed to have concluded that all matters relating to the Property are acceptable and to have elected to proceed with the transaction upon the terms and conditions contained herein without regard to this Paragraph 3.3. Prior to the expiration of the Review Period, Purchaser shall notify Seller which, if any, Contracts it does not desire to assume and at Closing, such Contracts shall not be assigned to Purchaser. 3.4 Purchaser agrees that any information obtained by Purchaser or its authorized agents in the conduct of its due diligence will be treated as confidential pursuant to Paragraph 8.16. 4. Title and Survey. Upon its execution of this Agreement, Seller agrees to order at Seller's sole cost and expense (and upon receipt, to promptly deliver copies to Purchaser): (i) a commitment for a Texas Land Title Association Owner's title insurance policy with respect to the Property from Chicago Title Insurance Company (the "Title Insurer") in the amount of the Purchase Price; (ii) copies of all documents relating to title exceptions referred to therein; and (iii) a plat of survey of the Property made in accordance with Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (1997) pursuant to the accuracy standards of an Urban Survey and which survey shall contain Table A Optional Survey Responsibilities and Specifications 1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11 and 13; shall show the boundaries of each of the Land parcels; shall disclose whether or not the Land comprises a single parcel of land with no strips, gores or gaps within its boundaries; shall disclose any encroachments of any Improvements located primarily on the Land onto adjoining premises and public ways (and whether or not a valid easement for the benefit of the Real Property exists and is in place with respect to each such encroachment) or onto or over setback or building lines located on the Real Property or of improvements located primarily on adjoining premises onto any portion of the Land (and whether or not a valid easement for the benefit of the adjoining premises shall exist and be in place with respect to each such encroachment); shall locate all easements created by recorded instruments (to the extent plottable) or visible on the Real Property and shall disclose 5 6 any encroachment by any of the Improvements, or any other structures located on the Land, in violation of any such easements; shall contain a legal description of the Land; shall show the location of any adjacent public streets, disclosing access, if any, to the Land therefrom; shall show building line(s) and side yard line(s), if any; shall show the configuration and number of parking spaces on the Land; shall show the area of the Land; shall state whether the Land is located in an area designated by HUD as having special flood risks; and shall contain a certificate of the surveyor attesting to the accuracy of the survey and its conformity to the requirements of the aforesaid Minimum Standard Detail Requirements, which certificate shall be directed to Seller, Purchaser and the Title Insurer, and to such other persons having an interest in the Property which Purchaser may designate. Within ten (10) business days following Purchaser's receipt of the last of said commitment, documents and survey, Purchaser agrees to notify Seller in writing of any objection Purchaser may have to any exceptions reported in the title report or any matter shown on the plat of survey (the "Unacceptable Exceptions"). All other exceptions and survey matters raised therein will be deemed acceptable to Purchaser. If Purchaser fails to give such notice to Seller, the survey and all of the exceptions in the title commitment will be deemed acceptable to Purchaser. Seller will have ten (10) days after receipt of Purchaser's notice within which to notify Purchaser whether Seller elects to either (a) eliminate or induce the Title Insurer to insure around (subject to Purchaser's consent, not to be unreasonably withheld) the Unacceptable Exceptions or (b) terminate this Agreement. If Seller agrees to eliminate or induce to the Title Insurer to insure around (with Purchaser's consent) all of the Unacceptable Exceptions, Seller will be obligated to do so at its cost on or prior to Closing. If Seller elects to terminate this Agreement, neither party will have any further rights or obligations hereunder, except as provided in Paragraph 8.14 and the Deposit shall be returned to Purchaser. If Seller fails to give any timely notice, Seller will be deemed to have elected to terminate this Agreement. If any other recorded exception to title is discovered after the commitment is delivered to Purchaser, and Purchaser does not elect to waive such exception upon the first to occur of (a) the Closing or (b) seven (7) days after being notified of such exception and to proceed with the consummation of the Closing, Seller will have fifteen (15) days after the expiration of said seven (7) day period (and Closing will be delayed if necessary, so that it occurs not earlier than twenty-two (22) days after Purchaser is notified of such exception) after notifying Purchaser of such discovery in which to use commercially reasonable efforts to eliminate or to induce the Title Insurer to insure around (subject to Purchaser's approval, not to be unreasonably withheld) such exception, and if such exception is not eliminated or insured around as aforesaid within said 15-day period, Purchaser may either: (1) terminate this Agreement, in which event the Deposit will be returned to Purchaser and neither party will have any further rights or obligations hereunder except as provided in Paragraph 8.14, or (2) close the sale subject to such exception without deduction or setoff as to the Purchase Price. Seller agrees that it will pay off at Closing (and not induce the Title Insurer to insure around) title exceptions representing monetary liens of a definite or ascertainable amount voluntarily granted by Seller. In using commercially reasonable efforts to eliminate or to induce the Title Insurer to insure around Unacceptable Exceptions, Seller will not be required to litigate or to expend more than $25,000 in the aggregate. Ad valorem real estate taxes not yet due and payable and all title and survey matters which are not Unacceptable Exceptions are hereinafter referred to as Acceptable Exceptions. 6 7 5. Representations and Warranties. 5.1 Representations and Warranties of Seller. As used in this Paragraph 5.1 and elsewhere in this Agreement, the phrase "to the knowledge of Seller" or phrases of similar import mean and are limited to the actual knowledge of Seller's disposition manager (Mr. Mark Carlson), Seller's asset manager having responsibility for the Property (Mr. Jay Jehle) and Seller's local manager having ongoing management responsibility with respect to the Property (Mr. John Pew), and not to any constructive knowledge of any of the foregoing individuals or of Seller or any investment advisor to Seller, any entity that is a partner in such investment advisor, or any affiliates of any thereof, or to any officer, agent, representative, or employee of Seller or such investment advisor, any such constituent partner, or any such affiliate. In addition, as used in this Paragraph 5.1 and elsewhere in this Agreement, Seller's receipt of any written notice shall mean the actual receipt of any written notice by Mr. Carlson, Mr. Pew, or Mr. Jehle. Seller hereby warrants and represents to Purchaser (with such representations and warranties to be re-made as of Closing pursuant to Paragraph 7.15.9) as follows: 5.1.1 Pending Proceedings. With the exception of the items set forth in Schedule 5.1 (the "Disclosure Schedule"), Seller has received no written notice of special assessments, condemnation, real estate tax, environmental, zoning or other land use regulation proceedings, either pending or planned to be instituted, with respect to the Property or any part thereof. For purposes of the foregoing, Seller shall have knowledge of any pending proceeding only if Seller has been served in connection therewith; Seller shall have knowledge of any proceeding "planned to be instituted" only if Seller has received written notice of such fact. 5.1.2 Status of Seller and Closing Documents. Subject to Paragraph 8.13, this Agreement has been, and all the documents to be delivered by Seller to Purchaser at Closing are or will be, duly authorized, executed, and delivered by Seller, will be sufficient to convey insurable title, are legal, valid, and binding obligations of Seller, are enforceable in accordance with their respective terms, and do not violate any provisions of any agreement to which Seller or the Property is subject or bound. Seller is duly organized and validly existing or duly qualified to transact business in the State in which the Property is located, with full power and authority to execute, deliver and perform this Agreement. 5.1.3 Non-Foreign Status. Seller is not a "foreign person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, and that Seller will furnish to Purchaser, prior to Closing, an affidavit in form satisfactory to Purchaser confirming the same. 5.1.4 Compliance with Laws. With the exception of the items set forth in the Disclosure Schedule, Seller has received no governmental notice, not heretofore corrected, alleging, that the Property or its current uses are in violation of any zoning, building, health, traffic, environmental, flood control or all other applicable rules, regulations, codes, ordinances, or statutes of any local, state and federal authorities and any other governmental authority 7 8 (collectively, the "Laws") asserting jurisdiction over the Property, including without limitation the Americans with Disabilities Act. 5.1.5 Service Contracts. The Disclosure Schedule contains a true and complete list of all Contracts, including all modifications thereof. To Seller's knowledge, (i) there have been no material defaults by any party to a Contract which have not heretofore been cured and (ii) there has been no material default (without giving effect to any notice and cure rights) by Seller under any Contract or any written claim received by Seller of any such default by any party thereto, which has not heretofore been cured except as set forth on the Disclosure Schedule. A true and complete copy of each Contract, together with any amendments or supplements thereto, has been delivered or made available to Purchaser. Such documents constitute the entire agreement between Seller and each party to the Contracts and Seller has not entered into any oral promises or agreements amending or modifying the same. 5.1.6 No Default. The execution and delivery of this Agreement, and consummation of the transaction described in this Agreement, does not and will not constitute a default under any contract, lease, or agreement to which Seller is a party or by which Seller is bound. 5.1.7 No Suits. Except as set forth in the Disclosure Schedule and except for personal injury or property damage actions for which there is adequate insurance coverage and where the insurance carrier has accepted the tender of the defense without reservation, to Seller's knowledge, there is no action, suit, investigation, arbitration or proceeding pending or threatened against or affecting the Property or any portion thereof, or relating to or arising out of the ownership, management or operation of the Property, in any court or before or by any federal, state, or municipal department, commission, board, bureau or agency or other governmental instrumentality. 5.1.8 Environmental Condition. Each of the following representations contained in this Paragraph 5.1.8 is wholly qualified and limited by (a) any matters disclosed in any materials made available or delivered to Purchaser by Seller pursuant to Paragraph 3 above or otherwise, (b) any matters disclosed in any environmental reports or studies obtained by Purchaser, and (c) any other matters of which Purchaser has actual knowledge. Subject to the foregoing, Seller represents: 5.1.8.1 With the exception of items listed in the Disclosure Schedule, and except (i) in amounts customarily found in retail uses and in the other uses for which the Property is used and (ii) in compliance with applicable law, to Seller's knowledge, Seller has not released, generated or handled Hazardous Materials on the Property and Seller has no knowledge of any release, generation or handling of Hazardous Materials on the Property by any tenants or prior owners of such property or the incorporation of Hazardous Materials by the tenants in any improvements on the Property during the time Seller owned the Property or the existence of any underground storage tanks on the Property. For the purposes hereof, "Hazardous Material" means any substance, chemical, waste or other material which is listed, defined or 8 9 otherwise identified as "hazardous" or "toxic" under any federal, state, local or administrative agency ordinance or law, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.ss. 9601 et seq. and the Resource Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901 et seq., or any regulation, order, rule or requirement adopted hereunder, as well as any formaldehyde, urea, polychlorinated biphenyls, petroleum, petroleum product or by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture thereof, radon, asbestos, and "source", "special nuclear" and "by-product" material as defined in the Atomic Energy Act of 1985, 42 U.S.C. ss.ss. 3011 et seq. 5.1.8.2 With the exception of items listed in the Disclosure Schedule, to Seller's knowledge, Seller has not received any summons, citation, directive, letter or other communication, written or oral, from the United States Environmental Protection Agency or the State environmental protection agency having jurisdiction over the Property. 5.1.9 Options. Seller has granted no options or rights of first refusal to acquire any interest in the Property not set forth in the Leases delivered to Purchaser or in documents of record disclosed in the title commitment. 5.1.10 Leases. (a) The Disclosure Schedule contains a rent roll of the Property (the "Rent Roll") as of July 31, 1999 showing the identification of each rentable space in the Property, whether leased or not, and for each such space, the name of the Tenant, the expiration date of the current term of the Lease, the minimum or fixed monthly rent payable, space location number, commencement date, square footage, percentage rent rate and sales breakpoint for computing percentage rent. Seller shall deliver an updated Rent Roll to Purchaser fifteen (15) days prior to the Closing Date. To Seller's knowledge, all information therein is accurate in all material respects as of its date. Except as set forth to the contrary on the Disclosure Schedule, no Tenant has paid any rent in advance except for the current month. (b) The Disclosure Schedule contains a schedule of Fixed and Other Tenant Charge Arrearages, together with any other delinquencies in Rent, showing amounts payable as of the Effective Date by each party, which schedule sets forth separately and certifies the items of Rents with respect to which each such party is in arrears, the amount of each item and the period of such arrearage. (c) The Disclosure Schedule contains a complete and correct list of all existing Leases and modifications thereof and supplements thereto regardless of whether the terms thereof have commenced, setting forth with respect to each (i) the date thereof and of each modification thereof and supplement thereto and (ii) the names of the parties thereto (including the name of the current assignee, if 9 10 any, but only if and to the extent Seller has actual notice of any such assignment). A true and complete copy of each Lease, together with each written modification thereof and supplement thereto, has heretofore been furnished to Purchaser for inspection. Each such Lease constitutes the entire agreement between Seller and each party thereto, and Seller has not made any oral promises or agreements amending or modifying the same. (d) To Seller's knowledge, each of the Leases is valid and subsisting and in full force and effect, and no Rents or other payments or deposits are held by Seller or Seller's agent, except any security deposits and Rents prepaid for the current month. As of the Closing Date, no Rents due under, or any other interest in, any of the Leases will be assigned to any party other than Purchaser, or otherwise pledged or encumbered in any way. (e) Except as set forth on the Disclosure Schedule, no Tenant has made any written claim which has been received by Seller or, to Seller's knowledge, has any other claim, whether or not in writing (i) that Seller has defaulted in performing any of its obligations under any of the Leases which has not heretofore been cured, (ii) that any condition exists which with the passage of time or giving of notice, or both, would constitute any such default, (iii) that such Tenant is entitled to any reduction in, refund of, or counterclaim or offset against, or is otherwise disputing, any Rents or other charges paid, payable or to become payable by such Tenant, or (iv) that such Tenant is entitled to cancel its Lease or to be relieved of its operating covenants thereunder. (f) With the exception of delinquencies in the payment of Rents which are set forth on the Disclosure Schedule, to Seller's knowledge no material default exists under any of the Leases on the part of the Tenant thereto. (g) There are no rent abatements or other tenant concessions or inducements, including lease assumptions or buy-outs, applicable to any of the Leases or any rights to extend or renew any of such Leases except as set forth on the Disclosure Schedule. There are no options or rights to renew, extend or terminate the Leases, except as set forth on the Disclosure Schedule. Seller has not granted any rights, options or rights of first refusal of any kind to any Tenant, which are currently in effect, to purchase or to otherwise acquire the Property or any part thereof or interest therein. To Seller's knowledge, all of the improvements to be constructed by the landlord under each of the Leases, or as required under any collateral agreement, plans or specifications related to the Leases, have been fully completed and paid for. 5.1.11 Leasing Commissions. To Seller's knowledge, all leasing commissions due and payable as of the date hereof by Seller have been paid or will have been paid on or before Closing. 10 11 5.1.12 Deferred Taxes. Seller has received no written notice of any so-called "greenbelt," "roll-back" or other deferred taxes, the payment of which become retroactive to any period of Seller's ownership of the Property or any time prior thereto, pursuant to a change in zoning, use or ownership. 5.1.13 REA. The REA constitutes the only reciprocal easement agreements or operating agreements encumbering the Property. A true and complete copy of the REA has heretofore been furnished to Purchaser, together with each written modification thereof and supplement thereto. The REA constitutes the entire agreement between Seller and each party thereto, and Seller has not made any oral promises or agreements amending or modifying the same. 5.1.13.1 To Seller's knowledge, the REA is valid and in full force and effect, and no Rents or other payments or deposits are held by Seller or Seller's agent, except the Rents prepaid for the current month. As of the Closing Date, no Rents due to Seller under, or any other interest of Seller in, the REA will be assigned to any party other than Purchaser, or otherwise pledged or encumbered in any way. 5.1.13.2 Except as set forth on the Disclosure Schedule, none of the parties to the REA has made any written claim which has been received by Seller nor, to Seller's knowledge, has any other claim, whether or not in writing (a) that Seller has defaulted in performing any of its obligations under any of the REAs which has not heretofore been cured, (b) that any condition exists which with the passage of time or giving of notice, or both, would constitute any such default, (c) that such party is entitled to any reduction in, refund of, or counterclaim or offset against, or is otherwise disputing, any charges paid, payable or to become payable by such party, (d) that such party is entitled to cancel its REA or to be relieved of its operating covenants thereunder, or (e) that there is a violation of any of the covenants, conditions or restrictions contained in such REA. 5.1.13.3 With the exception of delinquencies in the payments which are set forth on the Disclosure Schedule, to Seller's knowledge, no material default exists under the REA on the part of the parties thereto. Seller is not in default under the REA. 5.1.14 Permits. Seller has not received any written notice of violation from any federal, state or municipal entity that has not been cured or otherwise resolved to the satisfaction of such governmental entity. 5.1.15 Promotional Fund. Except as set forth on the Disclosure Schedule, Seller is under no obligation to make contributions or otherwise provide assistance to any promotional association or promotional fund. 5.1.16 Taxes. Copies of current real estate tax bills with respect to the Property, other than tax bills sent to Tenants who have the obligation to pay such taxes to the collecting authority, have been delivered or made available to Purchaser. No portion of the 11 12 Property comprises part of a tax parcel which includes property other than property comprising all or a portion of the Property. 5.1.17 Violation of Agreement. Seller has not received written notice that there is any uncured violation of any restriction, condition or agreement contained in any easement, restrictive covenant or any similar instrument or agreement affecting the Property or any portion thereof. 5.1.18 Approvals. No approval, consent, waiver, filing, registration or qualification with any third party, including any governmental bodies, agencies or instrumentalities is required to be made, obtained or given for the execution, delivery and performance of this Agreement or any of the closing documents by Seller. 5.1.19 Insurance. To Seller's knowledge, Seller has not performed, permitted or suffered any act or omission which would cause the insurance coverage provided in Seller's policies of insurance to be reduced, cancelled, denied or disputed and Seller has not received any written notice or request from any insurance company or Board of Fire Underwriters (or organization exercising functions similar thereto) cancelling or threatening to cancel any of said policies or denying or disputing coverage thereunder. 5.1.20 Bankruptcy. Except as set forth in the Disclosure Schedule, Seller has received no written notice that any of the Tenants now occupying any of the Property or having a current Lease affecting the Property or any Party to the REA is the subject of any bankruptcy, reorganization, insolvency or similar proceedings or has ceased or reduced or intends to cease or reduce operations at the Property (other than temporarily due to casualty, remodeling, renovation or similar cause). 5.1.21 Cessation. Except as set forth in the Disclosure Schedule, Seller has received no written notice that any of the Tenants now occupying any of the Property or having a current Lease affecting the Property, or any Party to any REA has ceased or reduced or intends to cease or reduce operations at the Property. 5.1.22 Employees. Seller has no employees. There are no collective bargaining or union agreements with respect to the employees at Property. Seller does not maintain or sponsor any employee benefit plan, including any plans subject to the Employer Retirement Income Security Act of 1974, as amended. There are no pending claims or, to Seller's knowledge, any threatened claim against Seller by any employee whose employment related to the Property. 5.1.23 Documents. All of the Books and Records that have been delivered or made available to Purchaser by or on behalf of Seller, are true, correct and complete copies of what they purport to be and have not been modified or amended, except as specifically noted therein. 12 13 5.1.24 Brokerage. To Seller's knowledge, there are no lease brokerage agreements, leasing commission agreements or other agreements providing for payments of any amounts for leasing activities or procuring tenants with respect to the Property other than as disclosed in the Leases, the Contracts or the Disclosure Schedule. 5.2 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller as follows: 5.2.1 Status of Purchaser and Closing Documents. This Agreement has been, and all the documents to be delivered by Purchaser to Seller at Closing will be duly authorized, executed, and are or will be legal, valid, and binding obligations of Purchaser, are or will be enforceable in accordance with their respective terms, and do not and will not at Closing violate any provisions of any agreement to which Purchaser is subject. 5.2.2 ERISA. The following representations and warranties with respect to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the Internal Revenue Code of 1986, as amended ("Code") are required to ensure that the purchase of the Property by Purchaser from Seller will not, in and of itself, violate either Section 406(a)(1)(A) through (F) of ERISA or Section 4975(c)(1)(A) through (E) of the Code. Notwithstanding anything contained herein to the contrary, the representations and warranties contained in this Paragraph 5.2.2 shall survive the Closing. Accordingly, Purchaser hereby represents and warrants the following: 5.2.2.1 Following the sale of the Property, the Property will not be a "plan asset", within the meaning of Department of Labor Regulation Section 2510.3-101, with respect to any "employee benefit plan", within the meaning of Section 3(3) of ERISA, which is subject to ERISA. 5.2.2.2 The Purchaser, or a Parent of the Purchaser, is not an administrator, officer, trustee, custodian or other fiduciary with respect to any employee benefit plans, counsel to any employee benefit plans, or an employee of any employee benefit plans. "Parent" means a person who, directly or indirectly, owns 50% or more of the (i) combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock, in the case of a corporation, (ii) capital interests or profits interests, in the case of a partnership, or (iii) beneficial interests, in the case of a trust or unincorporated enterprise. 5.2.2.3 The Purchaser or a Parent of the Purchaser is not providing any services to any employee benefit plans. 5.2.2.4 The Purchaser or a Parent or a Subsidiary of the Purchaser is not an employer any of whose employees are covered under any employee benefit plans. "Subsidiary" means an entity in which a person owns, directly or indirectly, 50% or more of (i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock, in the case of a corporation, (ii) the capital interest or profits 13 14 interests, in the case of a partnership, or (iii) the beneficial interests, in the case of a trust or estate. 5.2.2.5 The Purchaser, or a Parent or a Subsidiary of the Purchaser, is not an employee organization, any of whose members are covered by any employee benefit plans. 5.2.2.6 The Purchaser is not a 10% shareholder, partner or joint venturer, directly or indirectly, of any employee benefit plans or of (i) a service provider to any employee benefit plans, (ii) an employer any of whose employees are covered under any employee benefit plans, (iii) an employee organization any of whose members are covered by any employee benefit plans, (iv) the Parent of an entity described in clauses (ii) or (iii) of this paragraph, or (v) a Subsidiary of a fiduciary with respect to any employee benefit plans, or a Subsidiary of an entity described in clauses (i), (ii), (iii) or (iv) of this paragraph. 5.3 Limitations. Each of the representations and warranties of Seller contained in Section 5.1: (i) is made as of the date of this Agreement; (ii) will be deemed to be remade by Seller, and to be true in all material respects, as of the date of Closing, subject to other matters expressly permitted in this Agreement or otherwise specifically approved in writing by Purchaser; and (iii) will survive for a period of twelve (12) months after the Closing Date, as defined in Paragraph 7.1. Any claim that Purchaser may have at any time against Seller for a breach of any such representation or warranty, whether known or unknown, which is not asserted by notice from Purchaser to Seller within such twelve (12) month period will not be valid or effective, and Seller will have no liability with respect thereto, nor will Seller have any liability to Purchaser for a breach of any representation or warranty unless the valid claims for all such breaches collectively aggregate more than One Hundred Fifty and No/100 Dollars ($150,000.00), in which event the full amount of such valid claims shall be actionable, up to the aggregate amount of $3,000,000.00. Seller hereby covenants that until the later of (A) twelve (12) months following the Closing Date, or (B) the date that any breach of a representation or warranty properly raised by Purchaser within such twelve (12) month period is resolved, Seller shall at all times retain not less than $3,000,000 of the Purchase Price in reserve to satisfy its post-Closing obligations hereunder. The continued accuracy in all material respects of the aforesaid representations and warranties is a condition precedent to Purchaser's obligation to close. If any of said representations and warranties is not correct in all material respects at the time the same is made or as of Closing, and Seller had no knowledge of such inaccuracy when the representation or warranty was made, or when remade at Closing, or if such warranty or representation becomes inaccurate on or prior to Closing other than by reason of Seller's default hereunder, Purchaser may, upon being notified of such occurrence on or prior to Closing either (a) terminate this Agreement without liability on the part of Seller or Purchaser, other than Purchaser's indemnity contained in Paragraph 8.14 and the Deposit will be returned to Purchaser, or (b) waive such matter and proceed to Closing, by notice to Seller given within ten (10) days after Purchaser is notified of such occurrence, but in no event later than Closing. If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing. If any of said representations and warranties are not correct 14 15 in all material respects at the time the same is made or as of Closing, and Seller had knowledge of such inaccuracy when the representation or warranty was made, or, by its default hereunder caused the representation or warranty to be inaccurate when remade at Closing, Purchaser may either (x) terminate this Agreement subject to its obligations under Paragraph 8.14, receive a return of the Deposit and recover from Seller all of Purchaser's actual, reasonable out-of-pocket costs incurred in connection with its review of the Property and negotiation of this transaction or (y) waive the breach and its rights under clause (x) and proceed to Closing, by notice to Seller given within ten (10) days after Purchaser is notified of such occurrence, but in no event later than Closing. If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing. 5.4 Condition of Property. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HAS NOT MADE AND DOES NOT HEREBY MAKE ANY REPRESENTATIONS, WARRANTIES OR OTHER STATEMENTS AS TO THE CONDITION OF THE PROPERTY AND PURCHASER ACKNOWLEDGES THAT AT CLOSING IT IS PURCHASING THE PROPERTY ON AN "AS IS, WHERE IS" BASIS AND WITHOUT RELYING ON ANY REPRESENTATIONS AND WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, ITS AGENTS OR BROKERS AS TO ANY MATTERS CONCERNING THE PROPERTY, EXCEPT AS SET FORTH IN THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE OR ARE MADE AND NO RESPONSIBILITY HAS BEEN OR IS ASSUMED BY SELLER OR BY ANY PARTNER, OFFICER, PERSON, FIRM, AGENT OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AS TO THE CONDITION OR REPAIR OF THE PROPERTY OR THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL THEREOF OR AS TO ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE CONDITION, REPAIR, VALUE, EXPENSE OF OPERATION OR INCOME POTENTIAL OF THE PROPERTY OR ANY PORTION THEREOF. THE PARTIES AGREE THAT ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THEM OR THEIR RESPECTIVE AGENTS OR REPRESENTATIVES WITH RESPECT TO THE SALE OF THE PROPERTY ARE MERGED IN THIS AGREEMENT AND THE SCHEDULES AND EXHIBITS HERETO ANNEXED, WHICH ALONE FULLY AND COMPLETELY EXPRESS THEIR AGREEMENT, AND THAT THIS AGREEMENT HAS BEEN ENTERED INTO AFTER FULL INVESTIGATION, OR WITH THE PARTIES SATISFIED WITH THE OPPORTUNITY AFFORDED FOR INVESTIGATION, NEITHER PARTY RELYING UPON ANY STATEMENT OR REPRESENTATION BY THE OTHER UNLESS SUCH STATEMENT OR REPRESENTATION IS SPECIFICALLY EMBODIED IN THIS AGREEMENT OR THE EXHIBITS ANNEXED HERETO. PURCHASER ACKNOWLEDGES THAT SELLER HAS REQUESTED PURCHASER TO INSPECT FULLY THE PROPERTY AND INVESTIGATE ALL MATTERS RELEVANT THERETO AND, WITH RESPECT TO THE CONDITION OF THE PROPERTY, TO RELY SOLELY UPON THE RESULTS OF PURCHASER'S OWN INSPECTIONS OR OTHER INFORMATION OBTAINED OR OTHERWISE AVAILABLE TO PURCHASER, RATHER THAN ANY INFORMATION THAT MAY HAVE BEEN PROVIDED BY SELLER TO PURCHASER. 6. Closing Conditions. Purchaser's obligation to proceed to Closing is conditioned upon Seller's performance of the following obligations and satisfaction of the following conditions, in addition to all of its other obligations and conditions contained in this Agreement, provided that Purchaser may in its sole discretion elect to waive failure by Seller to perform any particular obligation. 15 16 6.1 The Title Insurer is prepared to issue at Closing a policy of title insurance dated the Closing Date insuring Purchaser as holding fee simple title to the Property being conveyed, subject only to Acceptable Exceptions, and affirmatively insuring as a part of Schedule A to such title policy Purchaser's rights under the REA or other appurtenant easements that benefit the Real Property and containing such endorsements requested by Purchaser which are available in the State of Texas. 6.2 Seller has delivered to Purchaser not later than the date of Closing, estoppel letters substantially in the form of Schedule 6.2 ("Required Estoppel Form") or in form otherwise reasonably acceptable to Purchaser, prepared by Seller and addressed to Purchaser, from at least 85% of the tenants of the Property, measured by square footage. All estoppel letters must be dated not more than forty-five (45) days prior to the date of Closing. An estoppel letter form, even though not in the Required Estoppel Form, will be deemed reasonably acceptable to Purchaser if said letter is in favor of Purchaser and its lender and contains the following information: confirming rent, security deposit, square footage and termination date; that no rent has been paid more than one month in advance; that the lease is in full force and effect and that a true and correct copy of the lease with all amendments and modifications is attached; and that all work to be performed by Landlord has been performed and that the tenant has no knowledge of any Landlord default. 6.2.1 Seller has delivered to Purchaser not later than the date of Closing, estoppel letters substantially in the form of Schedule 6.2.1 ("REA Estoppel Form") or in form otherwise reasonably acceptable to Purchaser, or the form, if any, provided in the REA, prepared by Seller and addressed to Purchaser, from all parties to the REA. All estoppel letters must be dated not more than forty-five (45) days prior to the date of Closing. 6.2.2 If Seller is unable to obtain the requisite estoppel letters as described above, Seller may (but is not required to) substitute for any unsigned tenant (but not an REA) estoppel letter an estoppel letter in the Required Estoppel Form, which may be completed, executed and delivered by Seller and warranted and represented by Seller, provided that such substituted estoppel letters will not collectively represent in excess of 15% of all of the tenants, measured by square footage. Seller's representations and warranties in the certificates will survive the Closing subject to the limitations of Paragraph 5.3. In the event that, following the Closing Date, Seller obtains an estoppel letter complying with the requirements of Paragraph 6.2 with respect to any Lease for which Seller delivered a substituted estoppel letter, Seller will deliver such estoppel letter to Purchaser and, upon such delivery, Seller will be automatically released from any liability or obligation under the substituted estoppel letter previously delivered by Seller with respect to such Lease. 6.2.3 If Seller is unable to obtain and deliver sufficient estoppel certificates as required under Paragraphs 6.2 or 6.2.1, or if the letters received under Paragraphs 6.2 or 6.2.1 or substituted estoppels permitted under Paragraph 6.2.2 contain information or omissions unacceptable to Purchaser in its reasonable discretion, then Seller will not be in default by reason thereof, but Purchaser shall, by notice given to Seller before the Closing, elect either 16 17 (i) to waive said conditions and proceed with the Closing or (ii) to terminate this Agreement, and receive a refund of the Deposit. If Purchaser elects to terminate this Agreement, neither party will have any further rights or obligations hereunder except as provided in Paragraph 8.14. 6.3 All of Seller's representations and warranties made pursuant to Paragraph 5.1 remain true and correct in all material respects. 6.4 Seller has delivered all of the documents and other items required pursuant to Paragraph 7.15 and has performed all other covenants, undertakings and obligations required by this Agreement, to be performed or complied with by Seller at or prior to Closing. 6.5 At Closing, there shall be no litigation, including any arbitration, investigation or other proceeding, pending by or before any court, arbitrator or governmental or regulatory official, body or authority nor any decree, order or injunction issued by any such court, arbitrator or governmental or regulatory official, body or authority and remaining in effect which does or is likely to prevent or hinder the timely consummation of the Closing or materially adversely affect the Property which is not fully covered by insurance or which seeks to enjoin the Closing of this transaction. 6.6 The Board of Directors of Purchaser shall have approved this Agreement and the transaction set forth herein on or before the expiration of the Review Period. In the event Purchaser does not provide Seller with written notice prior to the expiration of the Review Period that such Board of Directors has not approved this Agreement and the transaction set forth herein, such Board of Directors shall be deemed to have approved the same and this contingency shall be waived. 6.7 Seller shall have obtained from each of the parties to the Contracts whose consent to the assignment of their Contract is required a consent to the transfer or assignment of such Contract from Seller to Purchaser. 6.8 If, under applicable law, any notification may be required to be given to, or a clearance may be required to be obtained from, any state or local taxing authorities in order to permit the transfer of the Property as herein contemplated without a Lien attaching to the assets transferred or liability being incurred by Purchaser for any state or local taxes required to be paid or collected by Seller relating to periods prior to the Closing Date, Seller shall have obtained appropriate clearances or releases (and/or statements that no clearances or releases are required) from the applicable taxing authorities or, if not available, Seller shall deposit with Purchaser the amount as directed by the applicable taxing authorities (such clearances or releases or directions, the "Releases/Directions"), and Purchaser shall hold such amount until it receives the release or clearance therefor, whereupon Purchaser shall pay to Seller such amount; provided, however, if the delivery of a clearance or release is subject to a demand for payment of all or a portion of the amount held to any taxing authority, Purchaser shall be authorized and directed to pay such sums in accordance with the demand and to pay the balance, if any, to Seller. Seller shall be responsible for payment of all rental, transaction privilege, business privilege, and similar 17 18 taxes, imposed by any state or local taxing authority upon Seller's receipt of Rents prior to Closing. Purchaser shall be responsible for payment of all such taxes based on Rents which it receives after Closing. 7. Closing. 7.1 Closing of Sale. Subject to the satisfaction of all Closing conditions, the purchase and sale contemplated herein shall close (herein referred to as the "Closing") at the office of the Title Insurer, or as otherwise mutually agreed, not later than September 8, 1999 (the "Closing Date"), time being of the essence. At Closing, Seller will deliver to Purchaser a Special Warranty Deed ("Deed") in the form of Schedule 7.15.1 and other closing documents required hereunder and Purchaser will cause payment of the Purchase Price, plus or minus prorations and adjustments, to be made to Seller by wire transfer. The sale (payment of the Purchase Price and delivery of the Deed) may, at Purchaser's option to be exercised by notice to Seller at least five (5) days prior to the Closing Date, be closed through a "New York Style" escrow with the Title Insurer in accordance with the general provisions of the usual form of escrow agreement used in similar transactions by such Title Insurer with special provisions inserted as may be required to conform with this Agreement. Seller will provide the Title Insurer with a form of "Gap Indemnity" required by the Title Insurer to effectuate such Closing. 7.2 Prorations. Subject to the other provisions of Paragraphs 7.3 through 7.12, the items pertaining to the Property that are identified in Paragraphs 7.2 through 7.12 shall be prorated between the parties on a per diem basis (employing the actual number of calendar days in the period involved and a 365-day year) so that credits and charges with respect to such items for all days preceding the Closing Date shall be allocated to Seller, and credits and charges with respect to such items for all days including and after the Closing Date shall be allocated to Purchaser; provided, however, that Seller shall receive the Purchase Price in good funds by 2:00 p.m. Chicago time on the day of Closing, failing which all prorations shall be made as of the next business day. Each payment received shall be attributed to the most recent period for which such a payment is due. The parties shall make final adjusting payments as provided in Paragraph 7.11 hereof. All prorations not specifically agreed to herein shall be made in accordance with customary industry practice. The provisions of Paragraphs 7.2 through 7.12 shall survive the Closing for a period of twelve (12) months. 7.3 Items to be Prorated 7.3 Items to be Prorated. The following items shall be prorated between Purchaser and Seller as of 11:59 p.m. Central Standard Time on the day immediately preceding the Closing Date: 7.3.1 real property taxes and assessments (or installments thereof) based on the most recent tax bills except those required to be paid directly to the entity imposing the same by those Tenants who are not more than 30 days' delinquent in all of their Lease payment obligations on the Closing Date; 18 19 7.3.2 water rents and charges, if any, except those required to be paid directly to the entity imposing the same by Tenants (who are not more than 30 days' delinquent in all of their Lease payment obligations on the Closing Date); 7.3.3 sewer taxes and rents, if any, except those required to be paid directly to the entity imposing the same by Tenants (who are not more than 30 days' delinquent in all of their Lease payment obligations on the Closing Date); 7.3.4 actually accrued interest, if any, required to be paid to a Party on Security Deposits; 7.3.5 amounts, if any, payable by Seller or owed to Seller under the REA; 7.3.6 annual permit, license and inspection fees, memberships, subscriptions, and dues, if any, on the basis of the fiscal year for which levied, if the rights with respect thereto continue for the benefit of Purchaser following the Closing; 7.3.7 fuel oil and liquid propane gas, if any, at the cost per gallon or cubic foot most recently charged to Seller with respect to the Property, based on the supplier's measurements thereof, plus sales taxes thereon; 7.3.8 deposits, if any, on account with any utility company servicing the Property; 7.3.9 deposits on account with any municipality having jurisdiction over the Property (other than deposits which are in the nature of security for the performance of work); 7.3.10 amounts paid or payable by or to Seller to or from merchants and other associations for promotional funds and other similar contributions or payments; 7.3.11 Rents in the amounts currently payable to the extent any items of Rents are not already prorated pursuant to this Paragraph 7.3; 7.3.12 amounts paid or payable by Seller under the Contracts to be assumed by Purchaser; 7.3.13 Purchaser shall receive a credit from Seller at Closing for the funds held by Seller with respect to outstanding gift certificates or, to the extent required by law, the accounts holding the proceeds of such certificates shall be assigned to Purchaser (provided, in each instance, the amount of the credit or balance in the accounts shall equal or exceed the outstanding balance of all unredeemed gift certificates); and 19 20 7.3.14 all other items customarily apportioned in connection with the sale of similar properties similarly located. Seller shall cooperate with Purchaser in the transfer of electricity, gas, water and other utility services from Seller's name to the name of Purchaser as of the Closing Date. 7.4 Installment Payment of Assessments. In furtherance of Section 7.3, if any real property assessment affects the Property at the Closing and such real property assessment is payable in installments (whether at the election of Seller or otherwise), the installment relating to, or payable over, the Applicable Closing Fiscal Period shall be apportioned between Seller and Purchaser as of 11:59 p.m. Central Standard Time on the day immediately preceding the Closing Date, and the remaining installments shall be the obligation of Purchaser. 7.5 Adjustable Tenant Charges 7.5.1 Notwithstanding anything to the contrary contained herein, no adjustments or apportionments shall be made with respect to the expense items listed in Section 7.3 hereof (other than real estate taxes and assessments, as to which adjustment shall be made as set forth in Section 7.3) for the Applicable Closing Fiscal Period or any prior fiscal period to the extent such expense items are payable or reimbursable from funds collected as Adjustable Tenant Charges. Seller shall be responsible for the payment of all such expenses incurred by it, and Purchaser shall be responsible for the payment of all such expenses incurred by it (including real estate taxes and assessments for which Purchaser has received credit under Section 7.3). 7.5.2 At the Closing, Seller shall assign to Purchaser any amounts required to be paid as Adjustable Tenant Charges by Tenants which were actually received by Seller and were unapplied and due and payable on or before, but remain unpaid on, the Closing Date, and there shall be no adjustment hereunder with respect thereto. At the Closing, Seller shall deliver to Purchaser a true and correct statement setting forth in reasonable detail and certifying the amount of Adjustable Tenant Charges collected and expenditures for such items of expense (and any credits for real estate taxes) made by Seller for the portion of the Applicable Closing Fiscal Period which precedes the Closing Date and for any prior fiscal period. 7.5.3 Any amounts collected by Purchaser after the Closing Date which relate to Adjustable Tenant Charges payable with respect to any fiscal period ending prior to the Applicable Closing Fiscal Period shall be remitted to Seller. Within one hundred eighty (180) days following the end of the Applicable Closing Fiscal Period and from time to time thereafter as amounts are received by Purchaser from Parties, the aggregate amount of Adjustable Tenant Charges, if any, collected and retained by Purchaser and Seller with respect to the Applicable Closing Fiscal Period shall be apportioned and adjusted such that the total amount of such Adjustable Tenant Charges received by Purchaser, on the one hand, and Seller, on the other hand, shall be in the same proportion as the amount of the expense items to which such Adjustable Tenant Charges relate which each has borne (including real estate taxes or assessments for which either party has received credit under Section 7.3), and, to the extent that either shall have 20 21 received a greater share of the payments with respect to Adjustable Tenant Charges, such party or parties shall promptly settle such excess with the other. 7.6 Fixed and Other Tenant Charge Arrearages Subject to the provisions of Section 7.8.3, Fixed and Other Tenant Charge Arrearages (which, for purposes of this Section 7.6, shall include any real estate taxes or special assessments or other amounts otherwise required to be paid by a Party directly to the taxing authority but actually paid by Seller to the taxing authority with respect to the amount of the taxes or special assessments actually paid), if and when collected, shall be paid to Purchaser as to Fixed and Other Tenant Charge Arrearages which relate to periods from and after the Closing Date, and to Seller with respect to all other Fixed and Other Tenant Charge Arrearages. 7.7 Sales Based Tenant Charges 7.7 Sales Based Tenant Charges. Sales Based Tenant Charges which are payable with respect to any period prior to the Closing Date or which have been accrued prior to the Closing Date shall not be apportioned as of the Closing Date. In lieu thereof, such amounts shall be apportioned, after the Closing Date, so that the amount thereof under each of the Leases to which Seller shall be entitled, as finally determined, shall be the entire amount thereof with respect to any fiscal period ending prior to the Closing Date, and, for the Applicable Closing Fiscal Period, an amount which bears the same ratio to the total Sales Based Tenant Charges as the number of days in the Applicable Closing Fiscal Period which have elapsed prior to the Closing Date bears to the total number of days in the Applicable Closing Fiscal Period. 7.8 Application of Rent Receipts. Notwithstanding anything to the contrary contained herein, in determining the adjustments and apportionments pursuant to Sections 7.5, 7.6 and 7.7, the following shall apply: 7.8.1 Payments of Rents (other than Rents collected pursuant to Section 7.10.2) shall be deemed to have been made by a Party first to the payment of Fixed and Other Tenant Charges (other than charges for Tenant Services), second to the payment of Sales Based Tenant Charges, third to the payment of charges for Tenant Services (and designated as such in the Lease), fourth to the payment of Adjustable Tenant Charges, and last to the payment of all other items of Rent payable by such Party. 7.8.2 Any amounts collected by Purchaser as Sales Based Tenant Charges and Adjustable Tenant Charges, within each category, shall be deemed to have been paid by the Party, first, on account of amounts then due Purchaser for periods after the Applicable Closing Fiscal Period, next, on account of amounts then due for the Applicable Closing Fiscal Period and, next, on account of amounts then due for all fiscal years prior to the Applicable Closing Fiscal Period. 7.8.3 If Purchaser shall receive any Fixed and Other Tenant Charges after the Closing Date from a Party who is delinquent as of the Closing Date in the payment of Fixed and Other Tenant Charges payable under its Lease or the REA, as the case may be, such Fixed and Other Tenant Charges shall be deemed to have been paid by the Party, first, on account of 21 22 amounts owing to Purchaser, next, on account of Fixed and Other Tenant Charge Arrearages due to Seller (after reduction for amounts collected pursuant to Section 7.10.2), and the balance remaining thereafter shall be retained by Purchaser. 7.8.4 Notwithstanding anything to the contrary contained in this Section 7.8, a payment of Rent shall be applied to the payment of the item or items of Rent designated by the party making such payment or to which such payment otherwise clearly relates in the good faith judgment of Purchaser. 7.9 Security and Utility Deposits 7.9 Security and Utility Deposits. At the Closing, Seller shall furnish Purchaser with a schedule setting forth and certifying, as of the Closing Date, the unapplied and unreturned portion of any security deposits which have been deposited with Seller or its agents by any existing Tenants (the "Security Deposits") and the amount of any deposits on account with any utility company servicing the Property that will continue for the benefit of Purchaser following Closing ("Utility Deposits") (currently $0), and Purchaser shall receive a credit against the Purchase Price payable at Closing in the amount of the Security Deposits, together with all interest, if any, accrued thereon and required to be paid to Tenants. Purchaser shall reimburse Seller at Closing for the amount of the Utility Deposits. 7.10 Collection of Rents. 7.10.1 Purchaser shall use reasonable efforts to collect the Fixed and Other Tenant Charge Arrearages, Adjustable Tenant Charges, Sales Based Tenant Charges and other Rents which are payable with respect to the Applicable Closing Fiscal Period and any prior fiscal period for a period of six (6) months after Closing, but Purchaser shall not be required to retain a collection agency, commence litigation or file proofs of claim or commence an adversary proceeding in a bankruptcy case, or terminate Leases or the REA in connection with such collection efforts. Purchaser shall not waive or settle any claims for any such amounts in whole or in part to the extent such amounts, if collected, would be payable to Seller hereunder other than in accordance with the policies of Purchaser from time to time as to Rent delinquencies generally. Collection costs shall be charged against amounts collected and charged to the parties hereto in the proportion in which each is entitled to the proceeds of such collection. Purchaser shall provide to Seller semi-annual reports after Closing with respect to the collection by Purchaser after Closing of any such amounts which are payable with respect to the Applicable Closing Fiscal Period and any prior fiscal year. 7.10.2 Seller shall have the right to seek collection of any Fixed and Other Tenant Charge Arrearages owed to it and not collected by or on behalf of it within six months following the Closing Date; provided, however, that in seeking to collect any such Fixed and Other Tenant Charge Arrearages, Seller shall not be entitled to terminate any Lease or either of the REA or otherwise seek any remedy which could materially affect or impact the Property or the ownership or operation thereof other than a money judgment against the delinquent Party. Purchaser shall not be required to join in any such actions or proceedings commenced by Seller unless the provisions of any law, rule or regulation at the time in effect shall require that such actions or proceedings be brought by and/or in the name of Purchaser, in which event Purchaser shall join and cooperate in such 22 23 actions or proceedings or permit the same to be brought by Seller in Purchaser's name but Seller shall pay all costs and expenses relating thereto, including Purchaser's reasonable legal fees in reviewing pleadings and other materials filed in connection with such litigation. 7.10.3 Notwithstanding anything to the contrary contained herein, Purchaser shall have the right at any time on or after the Closing, and whether or not its joinder shall be required as a matter of law, to join in, or to be substituted for Seller in, any proceedings for the eviction of Tenants and/or the collection of Rent which may have been instituted by Seller either prior to or after the Closing, if the Tenant in question is still in possession of the premises covered by its Lease and if, in connection therewith, Purchaser intends to seek eviction of such Tenant, cancellation of the Lease or repossession of the premises. If Purchaser joins in, or is substituted for Seller as plaintiff in any such litigation, Purchaser shall, thereafter, assume sole liability for all costs and expenses of such litigation, including legal fees and expenses, as may thereafter be incurred (except as provided below) and shall thereafter control all aspects of such proceedings, except that Purchaser shall not be entitled to waive, reduce or otherwise compromise any claims for Rent relating to any period prior to Closing other than in accordance with the policies of Purchaser from time to time as to Rent deficiencies generally. Seller in any event may, at its option, continue to participate in such litigation. In any event, Seller shall reimburse Purchaser for a pro rata portion of its costs and expenses of such collection in proportion to, but in no event in an amount greater than, the amount, if any, actually received by Seller after Closing as a result of such proceedings; provided, however, Seller shall be entitled to a credit for legal fees and expenses incurred by Seller prior to the intervention by Purchaser in connection with the proceedings previously instituted by Seller in connection with such collection efforts. 7.11 Settlement of Adjustments 7.11.1 Seller and Purchaser acknowledge that it may be difficult to calculate, as of the day immediately preceding the Closing Date, certain of the adjustments, apportionments and payments to be made pursuant to Paragraphs 7.2 through 7.12 hereof. Accordingly, Seller and Purchaser hereby agree that any adjustments, apportionments and payments otherwise required to be made as of the Closing Date may to the extent necessary or desirable be estimated by Purchaser and Seller based on the most recent available data, and, as soon as practicable and if necessary from time to time after the Closing Date, additional adjustments, apportionments and payments shall be made to adjust for any differences between the actual apportionment or adjustment and the amount thereof estimated as of the Closing Date. Any errors or omissions in computing apportionments at the Closing shall be corrected promptly after their discovery. An adjustment shall be made after Closing in favor of Seller for real estate taxes credited to Purchaser pursuant to Section 7.3 upon the payment of such real estate taxes by a Tenant or Tenants who are required to pay such taxes directly to the entity imposing the same. 23 24 7.11.2 Except for amounts expressly required to be settled by assignment of accounts or deposits pursuant to the above provisions, net prorations and adjustments made pursuant to Paragraphs 7.2 through 7.12 as of the Closing Date and determined as provided in subsection (a) above shall be settled in cash. From time to time after the Closing as further adjustments are made as herein provided, settlement thereon between Seller and Purchaser shall be made in cash. 7.11.3 Purchaser, upon reasonable advance notice, shall provide Seller with access to its books and records, including back-up calculations and information, relating to the calculation of the adjustments required to be made pursuant to Paragraphs 7.2 through 7.12. 7.11.4 Notwithstanding anything to the contrary contained herein, a final determination of the amounts owing under Paragraphs 7.2 through 7.12 shall be made as of the date that is twelve (12) months after the Closing Date, and the amounts determined as of such date to be owing settled in cash no later than ten (10) days thereafter. No further adjustments or payments shall be required to be made under Paragraphs 7.2 through 7.12 thereafter (except with respect to legal proceedings for or bankruptcy claims in respect of the collection of Rent which are pending on such date or legal proceedings or bankruptcy claims brought by Seller under Section 7.10.2). 7.12 Definitions. As used herein, the following terms shall have the following meanings: "Adjustable Tenant Charges" shall mean common or mall area maintenance (exterior and interior) charges, real estate taxes and assessments, property insurance charges and HVAC charges to the extent denominated as such in the Leases and the REA. "Applicable Closing Fiscal Period" shall mean, with respect to any item which is prorated hereunder, the calendar year (or other fiscal period for which such item is determined or assessed) during which the Closing Date occurs. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Fixed and Other Tenant Charges" shall mean Rent other than Adjustable Tenant Charges, Sales Based Tenant Charges and Advertising and Promotional Contributions. "Fixed and Other Tenant Charge Arrearages" shall mean Fixed and Other Tenant Charges due and payable prior to but unpaid as of the Closing Date. "GAAS" shall mean Generally Accepted Auditing Standards as promulgated by the Auditing Standards Division of the American Institute of Certified Public Accountants from time to time. 24 25 "Party" shall mean a party to the REA or a Contract (or the successor or assignee thereof) or a Tenant under a Lease, in each case other than Seller or its predecessors in title with respect to the Property. "Regulations" shall mean the final, temporary or proposed Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Rents" shall mean fixed, minimum, additional, percentage and overage rents, common area maintenance charges, advertising and promotional fees, insurance charges, rubbish removal charges, sprinkler charges, shoppers aid charges, water charges, utility charges, HVAC charges, amounts payable with respect to real estate and other taxes, and other amounts payable by any Party under the Leases and the REA. "Sales Based Tenant Charges" shall mean Rent consisting of overage or percentage rent. "Security Deposits" shall have the meaning set forth in Paragraph 7.9. "Tenants" shall mean tenants, concessionaires, licensees and/or occupants under the Leases. "Tenant Services" shall mean all services supplied by or on behalf of Seller to Tenants for which Tenants are separately charged, other than services in the nature of common area maintenance. "Utility Deposits" shall have the meaning set forth in Paragraph 7.9. 7.13 Closing Costs. Purchaser agrees to pay (i) one-half (1/2) of the Title Insurer's escrow and/or closing fees (including any payment to the closing officer of the Title Insurer as may be the local custom at the Closing), and (ii) all costs of Purchaser's physical inspections of the Property (environmental, engineering) and other due diligence activities. Seller agrees to pay (i) one-half (1/2) of the Title Insurer's escrow and/or closing fees (including any payment to the closing officer of the Title Insurer as may be the local custom at the closing), (ii) all recording fees with respect to clearing Seller's title, (iii) the cost of any endorsements to the title policy required by Purchaser, including extended coverage, (iv) all recording fees and taxes with respect to the Deed, (v) the cost of the title commitment and policy and (vi) the cost of the survey. Except as otherwise provided in Paragraph 8.9, each party is responsible for its own attorneys' and other professional fees. All other closing costs shall be allocated in accordance with the prevailing local custom. 7.14 Possession. Subject to the rights of Tenants pursuant to Leases of the Property delivered to Purchaser, Seller will deliver possession of the Property and of any conveyed personal property to the Purchaser on the date of Closing and Seller will thereupon deliver to Purchaser the originals of all Leases and the REA, all correspondence with tenants, 25 26 tenant/lease files, operating statements, plans and specifications, supplies and advertising materials, booklets, keys, and other items used in connection with operation of the Property and all other Books and Records. 7.15 Seller's Closing Documents. As part of the Closing, Seller will deliver to Purchaser: 7.15.1 the Deed, in the form of Schedule 7.15.1; 7.15.2 an affidavit in customary form that Seller is not a "foreign person" within the meaning of Section 1445(e) of the Internal Revenue Code of 1986, in the form of Schedule 7.15.2; 7.15.3 such affidavits as are customarily required by Title Insurer in connection with issuance of the owner's title insurance policy, including a mechanics' lien and judgment affidavit; 7.15.4 an assignment of Leases in the form of Schedule 7.15.4 ("Lease Assignment"); 7.15.5 an assignment of Contracts (except with respect to those Contracts which Purchaser has elected not to assume pursuant to Paragraph 3.3) and warranties in the form of Schedule 7.15.5 ("Contracts Assignment"); 7.15.6 an assignment of intangibles in the form of Schedule 7.15.6 ("Intangibles Assignment"); 7.15.7 letters, in form to be supplied by Purchaser, to the Tenants at the Property, instructing the Tenants to pay rent to Purchaser and to recognize Purchaser as landlord under their leases; 7.15.8 a bill of sale conveying all Personalty, if any, in the form of Schedule 7.15.8; 7.15.9 a "bring down certificate" stating that Seller's representations and warranties are true and correct as of the Closing Date, in the form of Schedule 7.15.9 (it being expressly agreed that Seller shall not be deemed to be in default under this Agreement if Seller is unable to deliver the "bring down certificate" by reason of a change in facts or circumstances for which Seller is not at fault, provided that such failure to be in default shall not affect Purchaser's right to terminate this Agreement); 7.15.10 estoppel certificates, to the extent obtained pursuant to Paragraphs 6.2 and 6.2.1 hereof; 26 27 7.15.11 an assignment of the REA in the form of Schedule 7.15.11 (the "REA Assignment"); 7.15.12 an updated Rent Roll; 7.15.13 written notices (a) to the Parties to the REA advising the of the change of ownership and directing them to pay all charges under the REA as directed by Purchaser; and (b) to each party to each of the Contracts advising of the transfer and assignment of Seller's interest in the Contracts to Purchaser and directing that future inquiries be made directly to Purchaser; 7.15.14 the Releases/Directions; 7.15.15 a search report dated not more than ten (10)days before Closing of the Secretary of State records, county recorder records, local court records (federal, state, county and municipal) and such other official public records with respect to the Property that would disclose the present of any liens, bankruptcy proceedings, lis pendens or other matters affecting the Property or Seller showing no matters other than Acceptable Exceptions or matters to be released at Closing; 7.15.16 a signed termination agreement with any manager or leasing agent for the Property, together with appropriate lien waivers; 7.15.17 evidence as Title Insurer may reasonably request of Seller's organization and authority to enter into and consummate all of the transactions contemplated in this Agreement; and 7.15.18 all other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 7.16 Purchaser's Closing Documents. As part of the Closing, Purchaser will deliver to Seller: 7.16.1 good federal funds in an amount equal to the Purchase Price, less the Deposit and interest thereon and plus or minus prorations as provided herein and plus funds sufficient to pay Purchaser's closing costs hereunder; 7.16.2 such affidavits as are customarily required by Title Insurer in connection with issuance of the owner's title insurance policy; 7.16.3 executed counterpart of the Lease Assignment; 7.16.4 executed counterpart of the Contracts Assignment; 27 28 7.16.5 executed counterpart of the Intangibles Assignment; 7.16.6 executed counterpart of the REA Assignment; and 7.16.7 all other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 7.17 Joint Deliveries. At the Closing, Seller and Purchaser will execute and deliver to each other the following documents in proper form: 7.17.1 Closing Statement; 7.17.2 City, county and state transfer tax declarations or similar instruments; and 7.17.3 All other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 8. Miscellaneous. 8.1 Modifications. This Agreement can be amended only in writing signed by both of the parties. 8.2 Casualty and Condemnation. Seller agrees to keep its customary replacement cost insurance covering the Property in effect until the Closing. If between the Effective Date and the Closing a "Substantial Taking" or a "Substantial Casualty" occurs, Purchaser may (i) terminate this Agreement or (ii) elect to accept the Property in its then condition, in which event Seller will pay or assign to Purchaser at Closing all proceeds of insurance (plus the applicable deductible) or condemnation awards payable to Seller by reason of such damage or condemnation. In the event Purchaser makes neither election by the earlier of (a) Closing or (b) ten (10) days after being advised of such casualty or condemnation, Purchaser will be deemed to have elected to accept the Property in its then condition. In the event of any other damage to the Property, Seller may either repair the damage or give Purchaser a reduction in the Purchase Price equal to the cost of repairing such damage, as certified by an architect or contractor selected by Seller and reasonably acceptable to Purchaser. In the event of any damage where Purchaser does not have the right to terminate and Seller elects to repair such damage, the Closing Date shall be delayed for the number of days (not to exceed 60 days) required to repair the damage, which Seller agrees to do promptly in accordance with all Laws and in a good and workmanlike manner. "Substantial Casualty" or "Substantial Taking" shall mean a casualty or taking, as the case may be, where: (a) the condemnation award, or the proceeds payable under the applicable policy or policies of casualty insurance maintained by Seller, are insufficient by more than $100,000 to fully repair the damage caused by such casualty or taking, unless Seller shall (at its sole option and without any obligation to do so) grant to Purchaser a credit equal to such deficiency; or (b) a REA party shall, by reason of such casualty 28 29 or taking, either terminate its obligations under the REA, or cease operating at the Property (other than temporarily due to such damage and destruction, remodeling, renovation or any similar cause), or cease operating at the Property under the name under which it was operating immediately prior to such taking and casualty (as permitted by the provisions of such REA) or have the right to do any of the foregoing (unless such right shall have expired or been waived); or (c) the estimated time for repair or restoration shall exceed three (3) months; or (d) in the case of a taking, a taking with respect to such portion of the Real Property as, when so taken would, in the reasonable opinion of Purchaser, leave remaining a balance of the Real Property, which, due either to the area taken or the location of the part taken would not, under applicable zoning laws, building regulations and economic conditions then prevailing or otherwise, readily accommodate a new or restructured building or buildings of a type and size generally similar to the building or buildings existing on the date hereof, or would result in inadequate parking or lack of reasonable access to public roads. 8.3 Time of Essence. Time (including, without limitation, the date specified as the Closing Date) is of the essence of this Agreement. 8.4 Notices. All notices required or permitted hereunder must be in writing and shall be served on the parties at the following address: If to Purchaser: General Growth Properties, Inc. 110 North Wacker Chicago, Illinois 60606 Attn: Mr. Joel Bayer Telephone: 312/960-5000 Facsimile: 312/960-5475 with a copy to: Neal, Gerber & Eisenberg Two North LaSalle Street 22nd Floor Chicago, Illinois 60602 Attn:Marshall E. Eisenberg, Esq. Telephone: 312/269-8020 Facsimile: 312/269-1747 If to Seller: RREEF USA Fund-III c/o The RREEF Funds 101 California Street 26th Floor San Francisco, California 94111 Attn: Mr. Mark Carlson Telephone: 415/781-3300 Facsimile: 415/391-9015 29 30 with a copy to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Suite 2500 Chicago, Illinois 60611 Attn: Anthony R. Licata, Esq. Telephone: 312/527-4000 Facsimile: 312/527-9285 Any such notices may be sent by (a) certified mail, return receipt requested, in which case notice will be deemed delivered three (3) business days after deposit, postage prepaid in the U.S. mail or (b) a nationally recognized overnight courier, in which case notice will be deemed delivered one business day after deposit with such courier if overnight courier is specified or (c) facsimile transmission, in which case notice will be deemed delivered upon electronic verification that transmission to recipient was completed, provided that notices sent by facsimile transmission on a day other than a business day shall be deemed given on the first business day following the date of transmission or (d) personal delivery. The above addresses and facsimile numbers may be changed by notice to the other party; provided that no notice of a change of address or facsimile number will be effective until actual receipt of such notice. 8.5 Parties Bound. Neither party may assign this Agreement without the prior written consent of the other, and any such prohibited assignment shall be void; provided that Purchaser may assign this Agreement without Seller's consent to an Affiliate; provided that the assignee satisfies the representations and warranties set forth in Paragraph 5.2.2. Subject to the foregoing, this Agreement is binding upon and inures to the benefit of the respective legal representatives, successors, assigns, heirs, and devisees of the parties. For the purposes of this Paragraph, the term "Affiliate" means (a) an entity that directly or indirectly controls, is controlled by or is under common control with the Purchaser or (b) an entity at least a majority of whose economic interest is owned by Purchaser; and the term "control" means the power to direct the management of such entity through voting rights, ownership or contractual obligations. 8.6 Governing Law. The performance and interpretation of this Agreement is controlled by the law of the State in which the Property is located. 8.7 Continuation Until Closing, Leasing. 8.7.1 Between the Effective Date and the Closing, Seller agrees to keep and perform all of the obligations to be performed by landlord under any Leases and Laws. Seller agrees to operate the Property in the same manner as before the making of this Agreement, the same as though Seller were retaining the Property. Seller agrees not to convey any of the Property, nor to grant any liens or easements with respect thereto. 8.7.2 From and after the date hereof, Seller agrees not to permit or consent to any new leases, amendments, extensions, renewals (other than pursuant to tenant 30 31 renewal options, if any), assignments of Leases or subleases without first submitting them to Purchaser for Purchaser's approval, which approval Purchaser agrees not to unreasonably withhold. Purchaser will have five (5) days to notify Seller of its disapproval of such leases, amendments, extensions, renewals, assignments or subleases, and in the event that Purchaser does not so notify Seller, the leases, amendments, extensions, renewals, or subleases, as the case may be, will be deemed approved. Notwithstanding the foregoing, Seller may continue its ongoing operations with respect to seasonal cart and kiosk rentals and promotions without Purchaser's approval. 8.7.3 With respect to any new Lease or Lease modification entered into by Seller after the Effective Date, other than those set forth on Schedule 8.7.3 (which schedule sets forth pending Leases, the rents from which have been underwritten by Purchaser in the calculation of the Purchase Price), by the terms of which Seller obligates itself to perform or performs or pays or contracts for any tenant improvement work or additional landlord work required pursuant to such Lease, or pays or contracts for any leasing commissions or grants any free rent period or other financial concessions, then such expenses and/or free rent or other concessions, and all other third-party costs incurred (including reasonable attorneys' fees) in connection with such Lease, will be a credit to Seller at Closing to the extent Seller paid such amounts prior to Closing, but only to the extent Purchaser pre-approved such amounts; otherwise Purchaser agrees to assume liability for the payment and performance of such obligations in accordance with the terms thereof, but only to the extent Purchaser pre-approved such amounts. 8.7.4 From the date hereof until the Closing, Seller shall (a) use reasonable best efforts to maintain, for the benefit of Purchaser following the Closing, the goodwill of Tenants, prospective tenants, vendors and other parties having business relations with Seller; (b) pay its debts (or in good faith contest the same) and perform its obligations as they become due; (c) maintain the Property in the same manner and condition that exists on the date hereof, as such condition shall be altered by reason of casualty, taking and/or normal wear and tear; and (d) without the express written consent of Purchaser, not (i) enter into a new reciprocal easement or similar agreement or amend or modify, consent to the assignment of or waive any material right under the REA, (ii) make any alterations to the Property or enter into any new contracts or extend or renew or cancel any Contract relating to capital expenditures, (iii) enter into any other new contracts or extend, renew or cancel, consent to the assignment of or waive any material right under any other Contract, except for contracts executed in the ordinary and usual course and business and in accordance with part practices and policies which can be terminated without penalty or payment upon not more than thirty (30) days prior notice, and (iv) otherwise take any action which could or would render inaccurate any of the representations or warranties made by Seller in this Agreement. 8.8 Brokers. Seller and Purchaser each (i) represents and warrants to the other that it has not dealt with any broker or finder in connection with the transaction contemplated by this Agreement other than the parties, if any, to be paid a commission as specified in Paragraph 8.11, and (ii) agrees to defend, indemnify and hold the other harmless from and against 31 32 any losses, damages, costs, or expenses (including reasonable attorneys' fees) incurred by such other party due to a breach of the foregoing warranty by the indemnifying party. 8.9 Attorneys' Fees. Notwithstanding any limitation on remedies or amounts recoverable set forth elsewhere herein, if any action is brought by either party against the other party, the party in whose favor final judgment is entered will be entitled to recover court costs incurred and reasonable attorneys' fees at trial, upon appeal and on any petition for review. 8.10 Remedies for Non-Performance. Purchaser's remedies regarding breach of warranty or representation by Seller are governed by Paragraph 5.3 hereof. In the event of any other default by Seller hereunder, Purchaser may either (i) terminate this Agreement without liability to either party, subject to performance of Purchaser's indemnities set forth in Paragraph 8.14 and elsewhere in this Agreement, and receive back the Deposit together with Purchaser's actual out-of-pocket costs incurred in investigating the Property and negotiating this transaction, or (ii) sue for specific performance. If said sale is not consummated because of a default under this Agreement on the part of Purchaser, the Deposit will be paid to and retained by Seller as Seller's sole and exclusive remedy. Seller and Purchaser acknowledge that the Deposit is a reasonable forecast of just compensation for the harm that could be caused by Purchaser's default and that the harm suffered by Seller is difficult or impossible to accurately ascertain or predict. 8.11 Brokers Commission. Seller agrees to pay the brokerage commission due Cushman & Wakefield, Inc. pursuant to a separate agreement. 8.12 Survival of Representations and Warranties, Covenants. Seller's representations and warranties contained herein and not specifically described in Paragraph 5.1 and claims, damages or injury for the breach thereof will survive the Closing for a period of twelve (12) months. Purchaser must give Seller notice of any claim it may have against Seller for any such breach within twelve (12) months after the date of Closing. Any claim which Purchaser may have which is not asserted within the twelve (12) month period will not be valid or effective and Seller will have no liability with respect thereto. All covenants hereunder which, by their terms, are intended to survive Closing will survive Closing hereunder. 8.13 Seller's Investment Committee Approval. Seller will have fourteen (14) days after the Effective Date to obtain approval of this transaction by its investment committee. If such approval is not obtained and Seller notifies Purchaser within an additional three (3) days, this Agreement will terminate without further liability except as described in Paragraph 8.14; otherwise, this Agreement will continue in full force and effect and Seller will be deemed to have waived this provision. 8.14 Entry and Indemnity. In connection with any entry by Purchaser, or its agents, employees or contractors (collectively "Purchaser's Agents") onto the Property, Purchaser shall give Seller reasonable advance notice of such entry and shall conduct such entry and any inspections in connection therewith so as to minimize, to the greatest extent possible, interference with Seller's business and the business of Seller's tenants and otherwise in a manner reasonably 32 33 acceptable to Seller. Without limiting the foregoing, prior to any entry to perform any on-site testing, Purchaser shall give Seller notice thereof, including the identity of the company or persons who will perform such testing and the proposed scope of the testing. Seller shall approve or disapprove the scope and methodology of such proposed testing within two (2) business days after receipt of such notice, such approval not to be unreasonably withheld; Seller's failure to notify Purchaser of its approval or disapproval shall be deemed to be Seller's disapproval thereof. If Purchaser or Purchaser's Agents take any sample from the Property in connection with any such approved testing, upon Seller's request, Purchaser shall provide to Seller a portion of such sample being tested to allow Seller, if it so chooses, to perform its own testing. Seller or its representative may be present to observe any testing or other inspection performed on the Property. Upon Seller's request, Purchaser shall promptly deliver to Seller copies of any reports relating to any testing or other inspection of the Property performed by Purchaser or Purchaser's Agents. Purchaser shall maintain, and shall assure that its contractors maintain, public liability and property damage insurance in amounts (public liability in a combined single limit of not less than $5,000,000.00) and in form and substance adequate to insure against all liability of Purchaser and Purchaser's Agents arising out of any entry or inspections of the Property pursuant to the provisions hereof, and Purchaser shall provide Seller with evidence of such insurance coverage upon request by Seller including evidence that Seller is an additional insured on the public liability policy. Purchaser shall indemnify, defend and hold Seller harmless from and against any costs, damages, liabilities, losses, expenses, liens or claims (including, without limitation, reasonable attorney's fees) arising out of or relating to any entry on the Property by Purchaser and Purchaser's Agents in the course of performing the inspections, testings or inquiries provided for in this Agreement, including without limitation damage to the Property or release of hazardous substances or materials onto the Property, excluding, however, any costs incurred by Seller in supervising Purchaser's testing or any matters relating to Purchaser's discovery of Hazardous Materials on the Property. The foregoing indemnity shall survive beyond the Closing, or if the sale is not consummated, beyond the termination of this Agreement. Nothing in this Paragraph 8.14 shall be construed to limit or impair Purchaser's absolute right to terminate under Paragraph 3. 8.15 Release. Except to the extent of the representations and warranties of Seller expressly set forth in this Agreement, but otherwise notwithstanding any other provision of this Agreement to the contrary, Purchaser, on behalf of itself and its successors and assigns, waives its right to recover from, and forever releases and discharges, Seller, Seller's affiliates, Seller's investment manager, the partners, trustees, shareholders, directors, officers, employees and agents of each of them, and their respective heirs, successors, personal representatives and assigns (collectively, the "Seller Related Parties"), from any and all demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, without limitation, attorneys' fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, which may arise on account of or in any way be connected with the physical condition of the Property or any law or regulation applicable thereto, including any environmental law, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et seq.), the Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section 33 34 6901 et seq.), the Clean Water Act (33 U.S.C. Section 466 et seq.), the Safe Drinking Water Act (14 U.S.C. Sections 1401-1450), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), and the Toxic Substance Control Act (15 U.S.C. Sections 2601-2629). 8.16 Confidential Information. Purchaser hereby acknowledges and agrees that all information furnished by Seller to Purchaser or obtained by Purchaser in the course of Purchaser's investigation of the Property, or in any way arising from or relating to any and all studies or entries upon the Property or in any way relating to Seller and the transactions contemplated by the parties shall be treated as confidential by Purchaser and Purchaser's Agents, exclusive of information known to Purchaser prior to the date hereof or in the public domain. Purchaser understands, acknowledges and agrees not to disclose, prior to the Closing, any of the contents or information contained in any information provided by Seller, exclusive of information known to Purchaser prior to the date hereof or in the public domain, any reports or studies made in connection with Purchaser's investigation of the Property or results thereof, in any form whatsoever (including, but not limited to, any oral information received by Purchaser during the course of Purchaser's inspection of the Property), to any party other than Seller, Seller's agents or representatives, Purchaser's Agents (inclusive for purposes of this paragraph of Purchaser's members, directors, officers, employees, representatives, attorneys, consultants, partners or potential equity investors or lenders) Purchaser's assignees or the agents of such assignees, without the prior express written consent of Seller (which consent shall not be unreasonably withheld or delayed), except as may be required by law or court order. If such publication or disclosure is arguably or allegedly required by law, but an exemption from such requirement may be available (as for example, in connection with certain SEC filings), the parties seeking to make such publication or disclosure shall use all reasonable efforts to obtain such exemption or otherwise avoid the necessity of such publication or disclosure. Without limiting the generality of the foregoing, any press release or other public disclosure regarding this Agreement or any transactions contemplated herein, other than those required by law (as to which the parties shall cooperate in good faith), and the wording of same, must be approved in advance by both parties, such approval not to be unreasonably withheld or delayed, Seller acknowledging that Purchaser shall issue a press release with respect to this transaction concurrently with the execution hereof. The parties acknowledge that the transaction described herein is of a confidential nature and shall not be disclosed prior to Closing except to consultants, investors, lenders, advisors, and affiliates, or as required by law. No party will make any public disclosure of the specific terms of this Agreement prior to Closing, except as required by law. In connection with the negotiation of this Agreement and the preparation for the consummation of the transactions contemplated hereby, each party acknowledges that it will have access to confidential information relating to the other party. Each party shall treat such information as confidential, preserve the confidentiality thereof, and not duplicate or use such information, except to advisors, consultants, investors, lenders and affiliates in connection with the transactions contemplated hereby, exclusive of information known to Purchaser prior to the date hereof or in the public domain. In the event of the termination of this Agreement for any reason whatsoever, Purchaser will return to Seller, at Seller's request, all documents, work papers, and other material (including all copies thereof) obtained from Seller in connection with the transactions contemplated hereby, and each party shall use its best efforts, including instructing its employees and others who have had access to 34 35 such information, to keep confidential and not to use any such information, exclusive of information known to Purchaser prior to the date hereof or in the public domain. The provisions of this Paragraph 8.16 will survive the Closing or, if the purchase and sale is not consummated, any termination of this Agreement, and will not be subject to the limitation set forth in Paragraph 8.12. 8.17 Indemnification. 8.17.1 From and after the Closing, Seller shall indemnify, defend and hold harmless Purchaser and its shareholders, directors, officers, members, partners, employees, representatives and agents, and their respective successors and assigns (collectively, the "Indemnified Purchaser Persons") from and against any Losses incurred or suffered by any Indemnified Purchaser Person that results from, relates to or arises out of (a) the breach or inaccuracy of any representation or warranty made by Seller in this Agreement or the Seller Closing Documents, subject to the limitations set forth in Paragraph 5.3, (b) the breach or non-fulfillment by Seller of any of the covenants or agreements of Seller under this Agreement or the closing documents executed by Seller, (c) claims made by any Tenant under any Lease, any Party to the REA under the REA, or by any Party under those Contracts assigned to Purchaser, that relate to any actions or events first occurring, or obligations first accruing, prior to the Closing Date, (d) any event, occurrence or accident at any time prior to the Closing Date relating to the Property, or (e) Seller's Liabilities. As used herein, the term "Losses" shall mean with respect to any obligation to indemnify Seller, the Indemnified Seller Persons, Purchaser or the Indemnified Purchaser Persons, any and all claims, actions, suits, demands, losses, damages, liabilities, obligations, judgments, settlements, awards, penalties, costs or expenses, including reasonable attorneys' fees and expenses. Any recovery for claims that Purchaser may have against Seller pursuant to this Paragraph 8.17.1 shall be limited to the aggregate amount of $3,000,000.00. Any claim that Purchaser may have at any time against Seller pursuant to this Paragraph 8.17.1, whether known or unknown, which is not asserted by notice from Purchaser to Seller within twelve (12) months after the Closing Date will not be valid or effective, and Seller will have no liability with respect thereto. 8.17.2 From and after the Closing, Purchaser shall indemnify, defend and hold harmless Seller and its shareholders, directors, officers, members, partners employees and agents, and their respective successors and assigns (collectively the "Indemnified Seller Persons") from and against any Losses incurred or suffered by any Indemnified Seller Person that results from, relates to or arises out of (a) the breach or inaccuracy of any representation or warranty made by Purchaser in this Agreement or the closing documents executed by Purchaser, (b) the breach or non-fulfillment by Purchaser of any of the covenants or agreements of Purchaser under this Agreement or the Purchaser Closing Documents, or (c) the Assumed Liabilities. 8.17.3 The indemnified party (the "Indemnified Party") shall give the indemnifying party (the "Indemnifying Party") prompt notice of any Losses incurred (or likely to be incurred) by the Indemnified Party with respect to any claim or assertion of claims by a third party ("Third Party Claim") for which indemnification is available hereunder and the 35 36 Indemnifying Party may (a) prior to the commencement of any proceedings in connection with such Losses, undertake the negotiation of any resolution of the dispute relating to such Losses, including any settlement or release, or (b) undertake the defense of any proceeding (including any alternative dispute resolution proceeding) regarding such Losses by selecting legal counsel who shall be reasonably acceptable to the Indemnified Party. 8.17.4 Provided the Indemnifying Party shall have undertaken the Indemnified Party's defense of a Third Party Claim with legal counsel reasonably acceptable to the Indemnified Party, and shall have so notified the Indemnified Party, the Indemnified Party shall be entitled to participate at its own expense in the aforesaid negotiation or defense of any claim relating to such Losses (subject to reimbursement to the limited extent provided in Paragraph 8.17.7), but such negotiations or defense shall be controlled by counsel to the Indemnifying Party. 8.17.5 The Indemnifying Party shall not be liable for payments relating to the resolution of any dispute or any settlement of any litigation or proceeding effected without the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. The Indemnifying Party shall not, without the Indemnified Party's written consent, resolve any dispute or settle or compromise any claim regarding Losses from a Third Party Claim or consent to entry of any judgment which would impose an injunction or other equitable relief upon the Indemnified Party or which does not include as an unconditional term thereof the release by the claimant or the plaintiff of the Indemnified Party from all liability in respect of any such Losses. 8.17.6 Each party hereto agrees to give the other party prompt notice of any Losses (or possible Losses) asserted against it which might be Losses for which indemnity could be sought against the other party, but the failure to give such notice shall not release the Indemnifying Party of its obligations under this Paragraph 8.17, expect to the extent of the actual harm suffered thereby. 8.17.7 In the event the Indemnifying Party fails to timely undertake negotiation of any dispute or defend, contest or otherwise protect against any claim or suit with respect to a Third Party Claim, and to so notify the Indemnified Party, the Indemnified Party may, but will not be obligated to, defend, contest or otherwise protect against the same, and make any compromise or settlement thereof and recover the entire costs thereof from the Indemnifying Party, including reasonable attorneys' and experts' fees, disbursements and all amounts paid as a result of such claim or suit or the compromise or settlement thereof; provided, however, that if the Indemnifying Party undertakes negotiation of any dispute and the defense of such matter in accordance with and subject to the above terms of this Paragraph 8.17, the Indemnified Party shall not be entitled to recover from the Indemnifying Party for its costs incurred thereafter in connection therewith other than the reasonable costs of investigation undertaken by the Indemnified Party and reasonable costs of providing assistance. The Indemnified Party shall cooperate and provide such assistance as the Indemnifying Party may reasonably request in connection with the negotiation of any dispute and the defense of the matter subject to 36 37 indemnification and the Indemnifying Party shall reimburse the Indemnified Party's reasonable costs incurred thereafter in connection with such cooperation and assistance. 8.18 Calculation of Time Periods. Unless otherwise specified, in computing any period of time described herein, the day of the act or event, after which the designated period of time begins to run, is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday (i.e., a day on which federally chartered banks are not open for business in Chicago, Illinois). The last day of any period of time described herein shall be deemed to end at 5 p.m. Chicago, Illinois time on the last day of such period of time. All days other than Saturdays, Sundays and legal holidays in which national banks are closed in Chicago, Illinois are business days hereunder. 8.19 Entire Agreement. This Agreement and any other document to be furnished pursuant to the provisions hereof embody the entire agreement and understanding of the parties hereto as to the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings other than those expressly set forth or referred to in such documents. This Agreement and such documents supersede all prior agreements and understandings among the parties with respect to the subject matter hereof. 8.20 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, or affecting the validity or enforceability of any of the remaining terms or provisions of this Agreement. 8.21 Facsimile Signatures. Executed facsimile copies of this Agreement or any amendments hereto shall be binding upon the parties, and facsimile signatures appearing hereon or on any amendments hereto shall be deemed to be original signatures. 8.22 Further Assurances. In addition to the acts and deeds recited herein and contemplated to be performed, executed and/or delivered by Seller to Purchaser at Closing, Seller agrees to perform, execute and deliver, but without any obligation to incur any additional material liability or expense, on or after the Closing any further deliveries and assurances as may be reasonably necessary to consummate the transactions contemplated hereby or to further perfect the conveyance, transfer and assignment of the Property to Purchaser. 8.23 Effective Date. Delivery by a party of a copy of the fully-executed Agreement by facsimile transmission, followed by a manually-signed copy thereof delivered the next business day after transmission of such copy, shall constitute acceptance by such party as of the date of the facsimile transmission. The date on which a fully-executed copy of this Agreement is delivered by both Seller and Purchaser as provided in the preceding sentence is referred to herein as the "Effective Date". 37 38 8.24 Exculpation Clause. The obligations of Seller contained herein are intended to be binding only on the property of the trust party to this Agreement of Purchase and Sale and the proceeds thereof and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the shareholders, directors, officers, employees or agents of Seller or any affiliates thereof, or any trustees, investment managers, any general partners thereof, or any employees or agents of the trustees or investment managers. All documents to be executed by Seller shall also contain the foregoing exculpation. 8.25 Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. 8.26 Assistance Following Closing. From and after the Closing, Seller shall provide reasonable assistance to Purchaser in connection with the preparation of financial statements and bills and the adjustment of losses and claims and the enforcement or settlement of any such claims. Without limiting the foregoing, Seller shall, upon the request of Purchaser from time to time, provide signed representation letters with respect to revenues and expenses of Seller if required under GAAS to enable Purchaser's accountants to render an opinion on Purchaser's financial statements. 38 39 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth below. SELLER: RREEF USA FUND-III, a California group trust By: RREEF AMERICA L.L.C., a Delaware limited liability company Its: Investment Manager By: /s/ A. JAY JEHLE ---------------------------------------- Name: A. Jay Jehle Title: Vice President Dated: July 22, 1999 ------------------------------------------- PURCHASER: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation By: /s/ JOEL BAYER ---------------------------------------- Name: Joel Bayer -------------------------------- Title: Senior V.P. ------------------------------- Dated: July 22, 1999 ------------------------------------------- 39 40 EX-2.3 4 OPERATING AGREEMENT, DATED 11/10/99 1 EXHIBIT 2.3 OPERATING AGREEMENT OF GGP/HOMART II L.L.C. 2 OPERATING AGREEMENT OF GGP/HOMART II L.L.C. Table of Contents
Page ARTICLE I DEFINED TERMS.................................................1 1.1 Definitions.....................................................................................1 ARTICLE II FORMATION OF COMPANY.............................................21 2.1 Formation of Company...........................................................................21 2.2 Name...........................................................................................21 2.3 Principal Place of Business....................................................................21 2.4 Purpose and Business of the Company............................................................21 2.5 Classes of Units...............................................................................22 2.6 Term...........................................................................................22 2.7 Nature of the Company..........................................................................22 2.8 Members' Names and Addresses; Classification...................................................22 2.9 Registered Office and Registered Agent.........................................................22 2.10 Organization Certificates......................................................................23 2.11 Concurrent Transactions........................................................................23 2.12 Restrictions on Other Agreements...............................................................23 ARTICLE III COMPANY CAPITAL...............................................24 3.1 Initial Contributions of Members...............................................................24 3.2 No Additional Capital Contributions............................................................24 3.3 Withdrawal; Return of Capital; Interest........................................................24 3.4 Priority.......................................................................................24 3.5 Development Project Funding/Acquisition Financing; Etc.........................................24 ARTICLE IV ALLOCATION OF COMPANY ITEMS.........................................25 4.1 Maintenance of Capital Accounts................................................................25 4.2 Net Income and Net Loss........................................................................25 4.3 Special Allocations............................................................................26 4.4 Curative Allocations...........................................................................27 4.5 Tax Allocations................................................................................27 4.6 Allocations Subsequent to Assignment...........................................................28
i 3 ARTICLE V COMPANY DISTRIBUTIONS............................................29 ARTICLE VI ACCOUNTING MATTERS..............................................30 6.1 Fiscal Year; Designation of Auditors...........................................................30 6.2 Books and Records..............................................................................30 6.3 Reports and Statements.........................................................................31 6.4 Tax Matters Member.............................................................................33 6.5 Tax Elections and Returns......................................................................33 6.6 Interim Accounting.............................................................................33 ARTICLE VII GOVERNANCE; BOARD OF DIRECTORS........................................34 7.1 Action by Members to Effectuate this Agreement.................................................34 7.2 Board..........................................................................................34 7.3 Officers; Management; Rights in the Event of Cause.............................................35 7.4 Chairman of the Board..........................................................................39 7.5 Committees.....................................................................................39 7.6 Certificate of Formation; By-Laws..............................................................40 7.7 Actions by Board...............................................................................40 7.8 Meetings of the Board..........................................................................46 7.9 Conduct of Business............................................................................46 7.10 Other Activities of Members....................................................................48 7.11 Right of Public to Rely on Authority of the Members............................................49 7.12 Standard of Care...............................................................................50 7.13 Waiver and Indemnification.....................................................................50 ARTICLE VIII TRANSFERS OF COMPANY UNITS..........................................51 8.1 Certain Restrictions...........................................................................51 8.2 Compliance with Securities Laws................................................................52 8.3 Transfer of Ownership Interests in Affiliates..................................................52 8.4 Transfers of Units by Members..................................................................52 8.5 Certain Prohibited Transfers of Units by Members...............................................56 8.6 Expenses of Transfer...........................................................................58 8.7 Indemnification by Transferor..................................................................58 8.8 Acceptance of Prior Acts.......................................................................59 8.10 Certain Conditions to Transfer.................................................................59 8.11 Dissolution of Company upon Transfer...........................................................60 8.12 Effect of Initiation of Certain Procedures.....................................................60 ARTICLE IX PUT OPTION..................................................60 9.1 Put Option.....................................................................................60 9.2 Exercise.......................................................................................60 9.3 Dissolution Value of the Company...............................................................61 9.4 Right of Offerors to Withdraw Put Notice.......................................................62 9.5 Option of Class A Members......................................................................62 9.6 Purchase of Offerors' Units....................................................................62 9.7 Sale of Company................................................................................66 9.8 Priority.......................................................................................69
ii 4 ARTICLE X BUY-SELL RIGHT............................................... 69 10.1 Buy-Sell Right................................................................................ 69 10.2 Exercise...................................................................................... 69 10.3 Option of Class B Members..................................................................... 70 10.4 Purchase Price; Payment of Purchase Price; Closing............................................ 70 10.5 Priority...................................................................................... 72 ARTICLE XI................................................. 73 SPECIAL DISSOLUTION RIGHT......................................... 73 11.1 Special Dissolution Right..................................................................... 73 11.2 Exercise...................................................................................... 73 11.3 Dissolution Value of the Company.............................................................. 73 11.4 Right to Withdraw Dissolution Commencement Notice............................................. 73 11.5 Option of Class A Members..................................................................... 73 11.6 Purchase of Class B Members' Units............................................................ 74 11.7 Distribution of Properties.................................................................... 76 11.8 Priority...................................................................................... 80 ARTICLE XII DISSOLUTION AND TERMINATION........................................ 80 12.1 Dissolution................................................................................... 80 12.2 Accounting.................................................................................... 81 12.3 Winding-Up.................................................................................... 81 12.4 Liquidating Distribution...................................................................... 81 12.5 Distributions in Accordance with Capital Accounts............................................. 82 12.6 Negative Capital Accounts..................................................................... 82 12.7 Distributions in Kind......................................................................... 82 12.8 No Redemption................................................................................. 82 12.9 Governance.................................................................................... 82 12.10 Return of Capital............................................................................. 83 ARTICLE XIII MATTERS RELATING TO RETAINED DEBT..................................... 83 13.1 Payment of Retained Debt...................................................................... 83 13.2 Failure to Make Payments in Respect of Retained Debt.......................................... 83 13.3 Indemnification............................................................................... 84 13.4 Security Interest............................................................................. 84 13.5 Other Matters Relating to Retained Debt....................................................... 86 ARTICLE XIV ADDITIONAL CAPITAL CONTRIBUTIONS...................................... 87 14.1 Additional Capital Contributions.............................................................. 87 14.2 Failure to Make Additional Capital Contributions.............................................. 88 ARTICLE XV MISCELLANEOUS............................................... 88 15.1 Injunctive Relief............................................................................. 88 15.2 Successors and Assigns........................................................................ 89 15.3 Amendment; Waiver............................................................................. 89
iii 5 15.4 Representations by Members.................................................................... 89 15.5 Notices....................................................................................... 90 15.6 Further Assurances............................................................................ 91 15.7 Confidentiality............................................................................... 91 15.8 APPLICABLE LAW................................................................................ 91 15.9 Headings...................................................................................... 91 15.10 Entire Agreement.............................................................................. 91 15.11 Severability.................................................................................. 92 15.12 Counterparts.................................................................................. 92 15.13 Arbitration................................................................................... 92 15.14 Consent to Jurisdiction....................................................................... 93 15.15 Waiver of Partition........................................................................... 93 15.16 Brokerage..................................................................................... 93 15.17 Company Name.................................................................................. 94 15.18 Litigation; No Dissolution.................................................................... 94 15.19 Ownership of Company Property................................................................. 94 15.20 Time of the Essence........................................................................... 95 15.21 Status Reports................................................................................ 95 15.22 Disposition of Documents...................................................................... 95 15.23 Calculation of Days........................................................................... 96 15.24 Attorneys..................................................................................... 96
iv 6 EXHIBIT/SCHEDULE LIST Exhibit A [INTENTIONALLY DELETED] Exhibit B [INTENTIONALLY DELETED] Exhibit C Stonebriar Development Budget Exhibit D [INTENTIONALLY DELETED] Exhibit E Relevant Trade Areas Schedule I Names of Members Schedule II Policies and Procedures Schedule III Excluded Costs and Expenses Schedule IV Management Fees and Reimbursements Schedule V Current Properties Schedule VI GGPLP Retained Debt Schedule VII NYSCRF Retained Debt 7 OPERATING AGREEMENT OF GGP/HOMART II L.L.C. Operating Agreement, dated November 10, 1999, between GGP Limited Partnership, a Delaware limited partnership ("GGPLP"), The Comptroller of the State of New York as Trustee of the Common Retirement Fund ("NYSCRF" and, together with GGPLP, the "Members") and GGP/Homart II L.L.C., a Delaware limited liability company (the "Company"). W I T N E S S E T H: A. The Members have formed the Company and own all of the issued and outstanding Units (as defined below). B. Each of the Members desires to promote the interests of the Company and the mutual interests of the Members by establishing herein certain terms and conditions upon which the Units will be held, including provisions relating to election of members of the board of directors of the Company, governance of the Company, dissolution of the Company, the transfer of Units and other matters contained herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: ARTICLE I DEFINED TERMS 1.1 DEFINITIONS. As used in this Agreement, the following terms shall have the respective meanings indicated below: "Act" shall mean the Delaware Limited Liability Company Act, as amended from time to time. "Accredited Investor" shall mean any institutional accredited investor as defined in Rule 501(a) (1), (2), (3) or (7) under the 33 Act or as defined under Rule 501(a) (8) under the 33 Act (if all of the equity owners of such investor are Persons defined in Rule 501(a) (1), (2), (3) or (7) under the 33 Act); provided that such institutional accredited investor has total assets in excess of $200,000,000. "Adjusted Capital Account Deficit" shall mean, with respect to any Member, the deficit balance, if any, in such Member's Capital 8 Account as of the end of any relevant Fiscal Year, after giving effect to the following adjustments: (a) credit to such Capital Account any amounts which such Member is obligated or treated as obligated to restore with respect to any deficit balance in such Capital Account pursuant to Regulations Section 1.704-1(b)(2)(ii)(c), or is deemed to be obligated to restore with respect to any deficit balance pursuant to the penultimate sentences of Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5); and (b) debit to such Capital Account the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the requirements of the alternate test for economic effect contained in Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. "Affected Gain" shall have the meaning set forth in Section 4.5(b). "Affiliate" shall mean, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term "Affiliated" has a meaning correlative to the foregoing. As used herein, the term "control" shall mean either (i) having (directly or indirectly through one or more intermediaries) the exclusive power to direct the management and policies of a Person or (ii) having both (A) at least fifty percent (50%) of the economic interest in a Person and (B) at least fifty percent (50%) of the voting rights with respect to such Person with the full right to exercise such vote, and the term "controlled" has a meaning correlative to the foregoing. Notwithstanding the foregoing, General Growth Management, Inc., any successor thereto and any other Person shall be deemed to be Affiliates of GGPLP, provided that GG Properties or GGPLP, directly or indirectly, is entitled to receive at least seventy-five percent (75%) of all dividends or other distributions made by such Person. "Agreement" shall mean this Operating Agreement, as originally executed and as amended, modified, supplemented or restated from time to time, as the context requires. "Alderwood Mall" shall mean the property commonly known as Alderwood Mall, Seattle, Washington, as more particularly described in the Alderwood Mall Contribution Agreement. "Alderwood Mall Contribution Agreement" shall mean that certain Contribution Agreement dated concurrently herewith pursuant 2 9 to which NYSCRF causes the equity interests in the Alderwood Mall Owner to be conveyed to the Company. "Alderwood Mall Owner" shall mean Alderwood Mall L.L.C., a Delaware limited liability company. "Altamonte Entities" shall mean Altamonte Springs Mall L.L.C., Altamonte Springs Mall, L.P. and Altamonte Springs Mall II, L.P. "Altamonte Mall Contribution Agreement" shall mean that certain Contribution Agreement dated concurrently herewith pursuant to which GGPLP conveys and/or causes to be conveyed to the Company all of the equity interests in and to the Altamonte Entities, which Altamonte Entities own, in the aggregate, one hundred percent (100%) of the Altamonte Mall Owner which in turn owns one hundred percent (100%) of the Altamonte Mall. "Altamonte Mall" shall mean the property commonly known as Altamonte Mall, Altamonte Springs, Florida, as more particularly described in the Altamonte Mall Contribution Agreement. "Altamonte Mall Owner" shall mean Altamonte Mall Venture, a Florida general partnership. "Annual Business Plan" shall have the meaning set forth in Section 7.7(c). "Antitrust Division" shall have the meaning set forth in Section 9.6. "Appraiser" shall mean an independent member of the Appraisal Institute, who shall have a national practice, shall have at least ten years' standing and established experience in appraising properties similar to the Properties and shall not have been employed by either of the Members within the previous three (3) years of the date such Appraiser is appointed; provided, however, that neither Member shall be deemed to have employed an Appraiser merely because a lender to such Member or such Member's Affiliate hired such Appraiser even if such Member or Affiliate paid the fee for such Appraiser. "Bankruptcy Event" shall mean, with respect to a Member, the occurrence of any of the following events: (a) the making by it of an assignment for the benefit of its creditors, (b) the filing by it of a voluntary petition in bankruptcy, (c) an adjudication that it is bankrupt or insolvent unless such adjudication is stayed or dismissed within 60 days, or the entry against it of an order for relief in any bankruptcy or insolvency proceeding unless such order is stayed or dismissed within 120 days, (d) the filing by it of a petition or an answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, (e) the filing 3 10 by it of an answer or other pleading admitting or failing to contest the material allegations of the petition filed against it in any proceeding of the nature described in the preceding clause (d), (f) its seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of it or of all or any substantial part of its properties, or (g) 120 days after the commencement of any proceeding against it seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, if the proceeding has not been stayed or dismissed, or if within 120 days after the appointment without its consent or acquiescence of a trustee, receiver or liquidator of it or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 120 days after the expiration of any such stay, the appointment is not vacated. "Benefit Plan Investor" shall have the meaning set forth in the Plan Asset Regulations. "Board" or "Board of Directors" shall mean the Board of Directors of the Company in office at the applicable time, as elected in accordance with the provisions hereof and the By-Laws. "Board Members" shall have the meaning set forth in Section 7.2(a). "Buy-Sell Designated Values" shall have the meaning set forth in Section 10.2. "Buy-Sell Notice" shall have the meaning set forth in Section 10.2. "Buy-Sell Purchase Price" shall have the meaning set forth in Section 10.4(a). "Buy-Sell Response Notice" shall have the meaning set forth in Section 10.3. "Buy-Sell Right" shall have the meaning set forth in Section 10.1. "Capital Account(s)" shall mean, with respect to any Member, the separate "book" account which the Company shall establish and maintain for such Member in accordance with Section 704(b) of the Code and Section 1.704-1(b)(2)(iv) of the Regulations and such other provisions of Section 1.704-1(b) of the Regulations that must be complied with in order for the Capital Accounts to be determined in accordance with the provisions of said Regulations. In furtherance of the foregoing, the Capital Accounts shall be maintained in compliance with Section 1.704-1(b)(2)(iv) of the Regulations, and the provisions hereof shall be interpreted and applied in a manner consistent therewith. 4 11 "Capital Contribution" shall mean, with respect to any Member, the amount of money and the Fair Market Value of any property other than money contributed to the Company (net of liabilities, other than Retained Debt, that are assumed by the Company or to which such property is subject). The Fair Market Value of the property being contributed to the Company pursuant to the Contribution Agreements is equal to the "Contribution Amounts" set forth and defined in the Contribution Agreements. "Carolina Place" shall mean the property commonly known as Carolina Place, Charlotte, North Carolina, more particularly described in the Carolina Place Contribution Agreement. "Carolina Place Contribution Agreement" shall mean that certain Contribution Agreement dated concurrently herewith pursuant to which NYSCRF causes the equity interests in the Carolina Place Owner to be conveyed to the Company. "Carolina Place Owner" shall mean Carolina Place L.L.C., a Delaware limited liability company. "Cash Reserves" shall mean the aggregate amount of all Reserve Amounts. "Cause" shall have the meaning set forth in Section 7.3(d). "Certificate of Formation" shall mean the Company's Certificate of Formation, as the same may be amended and/or restated from time to time. "Change of Control""Change of Control" shall mean, (a) with respect to GGPLP, GG Properties or any successor (that would not otherwise result in a Change of Control) ceasing to be the sole general partner of GGPLP, (b) with respect to GG Properties, any of the following: (i) any Person, other than the Bucksbaum Family or any Member or any Affiliate of any Member (including by reason of the application of Article IX), becoming the beneficial owner of (x) more than 25% of the GG Stock (assuming for such calculation that the Bucksbaum Family has converted all of their operating partnership units in GGPLP into GG Stock) and (y) more than 110% of the GG Stock beneficially owned by the Bucksbaum Family (assuming the Bucksbaum Family has converted all of their operating partnership units in GGPLP into GG Stock); (ii) the sale or transfer (other than by way of merger or any other transaction in which GG Properties' stockholders receive interests in a successor entity) of all or substantially all of GG Properties' interests in its properties in a single transaction or a series of related transactions; (iii) the merger of GGPLP or GG Properties and another Person and, within eighteen (18) months after such merger, a majority of the Persons who were officers (holding a position of executive vice president or higher or having the responsibilities of any such positions) of GG Properties 90 days prior to such merger are no longer employed 5 12 by GG Properties or the survivor in the merger (for reasons other than death or disability) in the same or a senior position, or with the same or more senior responsibilities, as prior to the merger; (iv) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the board of directors of GG Properties (together with any new directors whose election or nomination for election was approved by a vote of a majority of the directors (or by a nominating committee of the board of directors) then still in office, who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of GG Properties or its successor by merger or otherwise then in office or (c) the taking of any action, including the filing of a petition, with respect to (x) an assignment for the benefit of creditors of GGPLP or GG Properties, (y) the bankruptcy, insolvency, reorganization, dissolution or any similar occurrence of GGPLP or GG Properties or (z) a liquidation or any other similar occurrence, that might result in the termination of GGPLP or GG Properties (other than in connection with a merger or other transaction in which GG Properties' stockholders receive interests in a successor entity) which action, if taken by someone other than GGPLP or GG Properties has not been discharged within sixty (60) days. For purposes of this paragraph, the term "Bucksbaum Family" shall mean Matthew Bucksbaum, his spouse, children, descendants and trusts for the benefit of any of them and the spouse, children, descendants and estate of Martin Bucksbaum and any trusts for the benefit of any of them. "Class A Board Members" shall have the meaning set forth in Section 7.2(a). "Class A Members" shall mean the holders of Class A Units. "Class A Minimum Investment" shall have the meaning set forth in Section 8.4(a)(ii). "Class A Units" shall have the meaning set forth in Section 2.5 hereof. "Class B Board Members" shall have the meaning set forth in Section 7.2(a). "Class B Members" shall mean the holders of Class B Units. "Class B Minimum Investment" shall have the meaning set forth in Section 8.4(b)(ii). "Class B Units" shall have the meaning set forth in Section 2.5 hereof. 6 13 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any corresponding provisions of succeeding law. "Commission" shall mean the Securities and Exchange Commission or any successor thereto. "Company" shall have the meaning set forth in the preamble. "Company Assets" shall mean all right, title and interest of the Company and the Subsidiaries in and to all or any portion of the assets and property, whether tangible or intangible and whether real, personal or mixed, of the Company and the Subsidiaries including any direct or indirect interests therein, and any property (real or personal) or estate or direct or indirect interests therein acquired in exchange therefor or in connection therewith. "Company FFO" shall mean, with respect to any period, the funds from operations of the Company as calculated in the manner that "Company FFO" is calculated pursuant to the Stockholders Agreement. "Company Minimum Gain" shall have the meaning set forth in Sections 1.704-2(b)(2) and (d)(1) of the Regulations. "Contributed Entities" shall mean the Altamonte Entities, the Natick Entities, the Northbrook Entities, the Stonebriar Entities, the Alderwood Mall Owner and the Carolina Mall Owner. "Contribution Agreements" shall mean the Alderwood Mall Contribution Agreement, the Altamonte Mall Contribution Agreement, the Carolina Place Contribution Agreement, the Montclair Plaza Contribution Agreement, the Natick Mall Contribution Agreement, the Northbrook Court Contribution Agreement and the Stonebriar Development Project Contribution Agreement. "Contribution Default Amount" shall have the meaning set forth in Section 14.2. "Contribution Defaulting Member" shall have the meaning set forth in Section 14.2. "Contribution Default Loan" shall have the meaning set forth in Section 14.2. "Contribution Default Notice" shall have the meaning set forth in Section 14.2. "Contribution Non-Defaulting Member" shall have the meaning set forth in Section 14.2. 7 14 "CMBS Financing" shall mean the financing, which is anticipated to close on or before November 30, 1999, pursuant to which the Northbrook Court Owner, the Alderwood Mall Owner and Carolina Place Owner and certain subsidiaries of GGP/Homart will issue collateralized mortgage-backed securities. "Defaulting Member" shall mean a Contribution Defaulting Member or Retained Debt Defaulting Member. "Default Loan" shall mean a Contribution Default Loan or Retained Debt Default Loan. "Development Manager" shall mean, for so long as GGPLP is a Member, GGPLP, General Growth Management, Inc. or another Affiliate of GG Properties (in each case, so long as the same is an Affiliate of GGPLP or GG Properties) designated by GGPLP to act as the development manager of the Company or one or more of its Subsidiaries pursuant to Section 7.3(b). "Dissolution Commencement Notice" shall have the meaning set forth in Section 11.1. "Dissolution Commencement Notice Effective Date" shall have the meaning set forth in Section 11.4. "Dissolution Right" shall have the meaning set forth in Section 11.1. "Dissolution Value of a Property" shall have the meaning set forth in Section 11.7(b). "Dissolution Value of the Company" shall have the meaning set forth in Section 9.3. "Electing Class" shall have the meaning set forth in Section 8.4(c)(i). "Entity" shall mean a corporation, partnership, limited liability company, trust, business trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "ERISA" shall have the meaning set forth in Section 7.9(c). "Event" shall have the meaning set forth in Section 9.7. "Expenditures" for a given period of time shall mean a sum equal to the aggregate of expenses, charges, costs and other amounts actually paid or required to be paid during such period of time in connection with the business of the Company or the properties owned by the Company or any wholly-owned Subsidiary in accordance with the terms hereof, including: 8 15 (a) expenditures, costs, fees and charges in connection with the ownership, operation, management or leasing of the properties of the Company or any wholly-owned Subsidiary, including all fees and reimbursement amounts payable pursuant to Section 7.3; (b) expenditures, costs and charges in connection with the repair, maintenance, replacement, alteration or addition or capital improvement to any property owned by the Company or a wholly-owned Subsidiary, including any casualty or condemnation losses to the extent that such losses are not reimbursed during such period by any third party responsible therefor or through insurance maintained by the Company or any wholly-owned Subsidiary; (c) all payments of scheduled amortization of principal, interest, points or fees on, or hedging costs associated with, the mortgage loans or other loans to the Company or its wholly-owned Subsidiaries, including upon any refinancing thereof; (d) all sales, payroll, real estate, personal property, occupancy and other excise, income, franchise, property, privilege or similar taxes and assessments imposed upon the Company, any wholly-owned Subsidiary, or any of their properties; (e) utility costs and deposits and other costs and deposits required to obtain or lease any service or equipment relating to the Company, any property owned by the Company or a wholly-owned Subsidiary; (f) leasing commissions and expenditures required to be made in connection with any lease covering space in or at any property owned by the Company or a wholly-owned Subsidiary, including tenant improvements, tenant allowances and payments, costs incurred in connection with assuming a tenant's lease obligations with respect to other real property and costs incurred in connection with the exercise of a right to "take-back" space in a property owned by the Company or a wholly-owned Subsidiary; (g) the Reserve Amount; (h) the fees and expenses of investment bankers, attorneys, accountants, architects, engineers, appraisers and other professionals retained by or on behalf of the Company or its wholly-owned Subsidiaries in accordance with the terms hereof; (i) the transfer taxes, title insurance premiums, survey costs, attorneys fees, costs of environmental reports and 9 16 other costs and expenses to be paid by the Company pursuant to the Contribution Agreements; and (j) all other costs and expenses of the Company and the wholly-owned Subsidiaries incurred in accordance with this Agreement or as determined by the Board. Notwithstanding the foregoing, there shall be excluded from Expenditures: (1) all non-cash items such as depreciation and amortization; (2) amounts distributed to the Members pursuant to this Agreement; (3) all payments and expenses taken into account in determining Net Disposition Proceeds; (4) any expenditure, cost or charge enumerated in clauses (a) through (i) above incurred in connection with the development of the Stonebriar Development Project in accordance with the Stonebriar Development Plan to the extent of the additional Capital Contributions that are made pursuant to Article XIV; (5) all payments of principal, interest and other amounts in respect of the Retained Debt; and (6) any expenditure, cost or charge enumerated in clauses (a) through (j) above (other than clause (g)) to the extent such expenditure, cost or charge was paid from Cash Reserves. "Fair Market Value" shall mean, with respect to a particular asset or interest, the price at which informed and willing parties dealing at arm's length value and under no compulsion to sell or purchase would agree to purchase or sell such asset or interest, taking into account, among other things, the anticipated cash flow, taxable income or taxable loss attributable to the asset or interest in question. In the case of any asset other than a marketable security and unless the method of determining Fair Market Value is otherwise provided herein, the Fair Market Value shall be determined by agreement of the Members. In the case of any marketable security at any date and unless the method of determining Fair Market Value is otherwise provided herein, the Fair Market Value of such security shall equal the closing sale price of such security on the business day (on which any national securities exchange is open for the normal transaction of business) next preceding such date, as appearing in any published list of any national securities exchange or in the National Market List of the National Association of Securities Dealers, Inc., or, if there is 10 17 no such closing sale price of such security, the final price of such security at face value quoted on such business day by a financial institution of recognized standing which regularly deals in securities of such type. "Financing Documents" shall mean any loan agreement, security agreement, mortgage, deed of trust, indenture, bond, note, tax debenture or other instrument or agreement, in each case as amended, relating to indebtedness of the Company or any Subsidiary for borrowed money, an obligation which is represented by one or more securities issued by the Company or any Subsidiary or any tax increment financing of the Company or any Subsidiary. "FTC" shall have the meaning set forth in Section 9.6. "Funding Notice" shall have the meaning set forth in Section 14.1. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time. "General Growth Officers" shall have the meaning set forth in Section 7.3. "General Growth Share Closing Price" on any date shall mean, with respect to the GG Stock, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the GG Stock is not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the GG Stock is listed or admitted to trading or, if the GG Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the GG Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the GG Stock as such person is selected from time to time by the Board of Directors of GG Properties. "GG Stock" shall mean the common stock, par value $.10 per share, of GG Properties. "GGP/Homart" shall mean GGP/Homart, Inc., a Delaware corporation. 11 18 "GGPLP" shall mean GGP Limited Partnership, a Delaware limited partnership. "GGPLP Retained Debt" shall mean the debt described on Schedule VI. "GG Properties" shall mean General Growth Properties, Inc., a Delaware corporation or any successor thereof. "HSR" shall have the meaning set forth in Section 9.6. "Independent Board Members" shall have the meaning set forth in Section 8.4(c)(i). "Initial Properties" shall mean Alderwood Mall, Altamonte Mall, Carolina Place, Montclair Plaza, Natick Mall, Northbrook Court and the Stonebriar Development Project. "Investment Company Act" shall mean the Investment Company Act of 1940, as the same may be amended from time to time. "IRS" shall mean the Internal Revenue Service. "Key Documents" all Financing Documents, partnership agreements, limited liability company agreements or other joint venture agreements to which the Company (or its Subsidiaries) is a party or by which the Company (or its Subsidiaries) is bound, management agreements to which the Company (or its Subsidiaries) is a party or by which the Company (or its Subsidiaries) is bound, reciprocal easement agreements (including supplemental agreements) to which the Company (or its Subsidiaries) is a party or by which the Company (or its Subsidiaries) is bound, each lease for space in a Property of more than 10,000 square feet service agreements relating to the operation of the Properties, all material permits and licenses relating to the Properties and all material easements and other recorded and unrecorded material agreements relating to the Properties or to which the Company (or its Subsidiaries) is a party or by which the Company (or its Subsidiaries) is bound, in each case as amended. "Letter of Intent" shall have the meaning set forth in Section 9.7. "Lien" shall mean any mortgage, deed of trust, security interest, lien, pledge, claim or other encumbrance. "Liquidating Member" shall mean GGPLP (as long as it is a Member) or such other Person as may be selected by the Board. "Member Nonrecourse Deductions" shall have the meaning set forth in Section 1.704-2(i)(2) of the Regulations. 12 19 "Members" shall mean GGPLP and NYSCRF and their duly admitted successors or assigns (in each case, for so long as such Person remains a Member of the Company) and any other Person who is a member of the Company at the time of reference thereto (and, prior to such time, has been admitted as a member of the Company in accordance with the terms hereof). "Minimum Gain Attributable to Member Nonrecourse Debt" shall mean "partner nonrecourse debt minimum gain" as determined in accordance with Regulation Section 1.704-2(i)(2). "Montclair Plaza" shall mean the property commonly known as Montclair Plaza, Los Angeles, California, more particularly described in the Montclair Plaza Contribution Agreement. "Montclair Plaza Contribution Agreement" shall mean that certain Contribution Agreement dated concurrently herewith pursuant to which NYSCRF is causing Montclair Plaza Owner to convey to the Company Montclair Plaza and certain other property described therein. "Montclair Plaza Owner" shall mean Acquiport Five Corporation, a Delaware corporation. "Natick Entities" shall mean Natick Trust, General Growth Properties - Natick Limited Partnership and General Growth Properties - Natick II, Inc. "Natick Mall" shall mean the property commonly known as Natick Mall, Natick, Massachusetts, as more particularly described in the Natick Mall Contribution Agreement. "Natick Mall Contribution Agreement" shall mean that certain Contribution Agreement dated concurrently herewith pursuant to which GGPLP conveys or causes to be conveyed to the Company all of the equity interests in the Natick Entities, which Natick Entities own one hundred percent (100%) of the Natick Owner which in turn owns one hundred percent (100%) of the Natick Mall. "Natick Mall Owner" shall mean GGP-Natick Trust, a Massachusetts business trust. "Natick Trust" shall mean GGP-Natick Trust, a Massachusetts business trust. "Net Disposition Proceeds" shall mean the excess of (a) the proceeds received by the Company or any wholly-owned Subsidiary (including amounts received by the Company or any wholly-owned Subsidiary from non-wholly owned Subsidiaries) from any event that would be deemed a capital transaction in accordance with GAAP consistently applied, including sales of real or personal property or interests therein (other than the sale of personal property in 13 20 the ordinary course of business), condemnations and conveyances in lieu thereof, damage recoveries, receipts of insurance proceeds (other than rent insurance proceeds, the proceeds of which shall not be included in the calculation of Net Disposition Proceeds), and borrowings (other than short-term unsecured borrowings, the proceeds of which shall not be included in the calculation of Net Disposition Proceeds), over (b) the sum of (i) the expenses or capital expenditures of the Company or such wholly-owned Subsidiary associated with such transaction (including title, survey, appraisal, recording, escrow, transfer tax and other similar costs, brokerage expense and attorneys and other professional fees, the portion of any insurance proceeds or condemnation award applied to the restoration of the affected property and payment or reservation for payment for the discharge of any liability arising pursuant to such transaction), (ii) amounts required (in the Board's discretion or, if contemplated in an approved Annual Business Plan, as set forth in such Annual Business Plan) to establish reserves and to pay current or potential expenses and liabilities of the Company and the Subsidiaries, (iii) amounts used or reserved (in the Board's discretion or, if contemplated in an approved Annual Business Plan, as set forth in such Annual Business Plan) to repay indebtedness of the Company and the Subsidiaries or any other liability of the Company or any Subsidiary in connection with such event and (iv) amounts used or reserved (in the Board's discretion or, if contemplated in an approved Annual Business Plan, as set forth in such Annual Business Plan) to fund the estimated equity requirements for any expansions or renovations of the Company Assets (but the amounts described in clauses (a) and (b) shall not include the proceeds of any permitted replacement or refinancing of Retained Debt, the additional Capital Contributions made pursuant to Article XIV or any payments of principal, interest and other amounts in respect of Retained Debt). "Net Income" or "Net Loss" shall mean, for each Fiscal Year or other applicable period, an amount equal to the Company's taxable income or loss for such year or period, determined by the Company accountants in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a) of the Code shall be included in taxable income or loss), with the following adjustments: (a) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss shall be added to such taxable income or loss; (b) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B) expenditures under Section 704(b) of the Code or Section 1.704-1(b)(2)(iv)(i) of the Regulations and not 14 21 otherwise taken into account in computing Net Income or Net Loss shall be subtracted from such taxable income or loss; (c) gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the book value of such property (as the same may be restated or otherwise adjusted pursuant to Regulation Section 1.704-1(b)(2)(iv)) rather than its adjusted tax basis; (d) in lieu of the depreciation, depletion, amortization and other cost recovery deductions taken into account in computing taxable income or loss, there shall be taken into account depreciation as determined under Regulation Section 1.704-1(b)(2)(iv)(g)(3); and (e) in the event the book value of any Company asset is restated and/or adjusted pursuant the aforesaid Regulation Sections, the amount of such adjustment shall be taken into account as additional Net Income or Net Loss, as the case may be. "Net Sales Price" shall have the meaning set forth in Section 11.7. "Non-Defaulting Member" shall mean a Contribution Non-Defaulting Member or Retained Debt Non-Defaulting Member. "Nonrecourse Deductions" shall have the meaning set forth in Section 1.704-2(b)(1) and (c) of the Regulations. "Nonrecourse Liabilities" shall have the meaning set forth in Section 1.704-2(b)(3) of the Regulations. "Northbrook Court" shall mean the property commonly known as Northbrook Court, Northbrook, Illinois as more particularly described in the Northbrook Court Contribution Agreement. "Northbrook Court Contribution Agreement" shall mean that certain Contribution Agreement dated concurrently herewith pursuant to which GGPLP conveys or causes to be conveyed to the Company all of the equity interests in the Northbrook Entities, which Northbrook Entities own, in the aggregate, one hundred percent (100%) of the Northbrook Court Owner which in turn owns one hundred percent (100%) of Northbrook Court. "Northbrook Court Owner" shall mean Westcoast Estates, a California general partnership. "Northbrook Entities" shall mean Northbrook Court L.L.C., Northbrook Court I L.L.C. and Northbrook Court II L.L.C. 15 22 "NYSCRF" shall mean the Comptroller of the State of New York as Trustee of the Common Retirement Fund. "NYSCRF Malls" shall mean Alderwood Mall, Carolina Place and Montclair Plaza. "NYSCRF Retained Debt" shall mean the debt described on Schedule VII. "Offerees" shall have the meaning set forth in Section 9.1. "Offerors" shall have the meaning set forth in Section 9.1. "Operating Cash Flow" for any given period of time means the excess, if any, of (i) the Receipts for such period of time over (ii) the Expenditures for such period of time. "Other Assets" shall mean, as of any date, the book value of the cash and receivables (net of contra accounts) of the Company and its Subsidiaries calculated in accordance with GAAP consistently applied. "Permissible Transferee" shall have the meaning set forth in section 8.4(b)(iii). "Person" shall mean an individual or Entity. "Plan Asset Regulations" shall have the meaning set forth in Section 7.9(c). "Prime" shall mean the prime rate as announced from time to time by Wells Fargo Bank, N.A. "Property Manager" shall mean, for so long as GGPLP is a Member, GGPLP, General Growth Management, Inc. or another Affiliate of GG Properties (in each case, so long as the same is an Affiliate of GGPLP or GG Properties) designated by GGPLP to act as the property manager for the Company or one or more of its Subsidiaries pursuant to Section 7.3(b). "Properties" shall mean the Initial Properties and the Company's direct or indirect interest in any of the foregoing and any additional shopping center or other real estate properties or direct or indirect interests therein acquired (directly or indirectly) by the Company from time to time. "Proportionate Share" shall mean, with respect to any Member (unless otherwise provided herein) at any time, a fraction, the numerator of which is the total number of Units owned by such Member at such time and the denominator of which is the total number of Units owned by all of the Members at such time. 16 23 "Proposed Value" shall have the meaning set forth in Section 9.2. "Put Notice" shall have the meaning set forth in Section 9.2. "Put Notice Effective Date" shall have the meaning set forth in Section 9.4. "Put Option" shall have the meaning set forth in Section 9.1. "Put Purchase Price" shall have the meaning set forth in Section 9.6. "Put Response Notice" shall have the meaning set forth in Section 9.5. "Receipts" shall mean for any given period of time, a sum equal to the aggregate of all cash amounts actually received by or unconditionally made available to the Company or any wholly-owned Subsidiary from or in respect of all sources, including: (a) all cash actually received by the Company or any wholly-owned Subsidiary from Subsidiaries that are not wholly-owned by the Company; (b) all rents, percentage rent, rent settlements, expense reimbursements and other charges received from tenants and other occupants of the Company Assets; (c) proceeds of rent insurance and business interruption insurance; (d) all utility or other deposits returned to the Company or any wholly-owned Subsidiary (including by any non-wholly owned Subsidiary); (e) interest, if any, earned on tenant's security deposits or escrows to the extent unconditionally retained and security deposits to the extent applied pursuant to the provisions of the applicable leases; (f) the amount of any net reduction of Cash Reserves, other than to pay Expenditures; (g) any income items (as defined in accordance with GAAP) received by the Company from any other source and not included in (a) through (f) above. Notwithstanding the foregoing, Receipts shall not include (1) any amounts received by the Company and/or the Subsidiaries on account of the issuance or sale by the Company and/or the Subsidiaries of any securities, (2) any tenant's security deposit 17 24 and interest thereon, if any, as long as the Company or any Subsidiary has a contingent legal obligation to return that deposit or such interest thereon, (3) any amounts included in the calculation of Net Disposition Proceeds, (4) any amounts received in respect of a permitted refinancing or replacement of the Retained Debt and (5) any additional Capital Contribution made pursuant to Article XIV. "Regulations" means the proposed, temporary and final regulations promulgated by the Treasury Department pursuant to the Code, as amended from time to time. "Required Funds Amount" shall have the meaning set forth in Section 14.1. "Reserve Amount" shall mean for any given period of time an amount or amounts to be held from Receipts after payment of Expenditures (other than the Reserve Amount) as determined by the Board and which shall be used (in amounts and in a manner determined by the Board) for the payment of capital improvements for the properties of the Company and its Subsidiaries (such as major repairs or replacements to the roofs or parking lots) or such other items as may be determined from time to time by the Board. "Retained Debt" shall mean the GGPLP Retained Debt and the NYSCRF Retained Debt, collectively. "Retained Debt Default Amount" shall have the meaning set forth in Section 13.2. "Retained Debt Defaulting Member" shall have the meaning set forth in Section 13.2. "Retained Debt Default Loan" shall have the meaning set forth in Section 13.2. "Retained Debt Default Notice" shall have the meaning set forth in Section 13.2. "Retained Debt Loan Documents" shall mean the notes, mortgages and other loan documents evidencing, securing or otherwise relating to the Retained Debt. "Retained Debt Non-Defaulting Member" shall have the meaning set forth in Section 13.2. "Rules" shall have the meaning set forth in Section 9.6. "Sale Notice" shall have the meaning set forth in Section 10.2. 18 25 "Sale Property" shall have the meaning set forth in Section 10.1. "Second Cure Notice" shall have the meaning set forth in Section 7.3(c). "Section 704(c) Tax Items" shall have the meaning set forth in Section 4.5(c). "Serial Transferee" shall have the meaning set forth in Section 8.4(b)(iii). "Serial Transferor" shall have the meaning set forth in Section 8.4(b)(iii). "Stockholders Agreement" shall mean that certain Stockholders Agreement dated as of December 20, 1995, among GGPLP, NYSCRF, GGP/Homart and the other parties thereto, as amended. "Stonebriar Development Plan" shall have the meaning set forth in Section 7.7(e). "Stonebriar Development Project Contribution Agreement" shall mean that certain Contribution Agreement dated concurrently herewith pursuant to which GGPLP conveys or causes to be conveyed to the Company all of the equity interests in the Stonebriar Entities, which Stonebriar Entities own one hundred percent (100%) of the Stonebriar Mall Owner which in turn owns one hundred percent (100%) of the Stonebriar Development Project. "Stonebriar Development Project" shall mean the regional shopping center to be known as Stonebriar Mall and developed on the land located in Frisco, Texas and that is owned by the Stonebriar Mall Owner, as such land is more particularly described in the Stonebriar Development Project Contribution Agreement. "Stonebriar Entities" shall mean Stonebriar Mall L.L.C. and Stonebriar Mall Limited Partnership. "Stonebriar Grand Opening" shall mean the "grand opening" of the Stonebriar Development Project. "Stonebriar Mall Owner" shall mean Stonebriar Mall Limited Partnership, a Delaware limited partnership. "Subsidiaries" shall mean any direct or indirect corporate, partnership, limited liability company, trust or other subsidiary of the Company, whether or not wholly owned by the Company, and a "Subsidiary" shall mean any one of them. "Tax Items" shall have the meaning set forth in Section 4.5(a). 19 26 "Tax Matters Member" shall have the meaning set forth in Section 6.4. "Tax Payment" shall have the meaning set forth in Article V. "Ten Day Average General Growth Closing Price" shall mean, with respect to any purchase and sale pursuant to Article IX, the average of the General Growth Share Closing Prices for each of the ten Trading Days following the date the Put Response Notice is given. "33 Act" shall mean the Securities Act of 1933, as amended. "Trading Day" shall mean a day on which the principal national securities exchange on which the GG Stock is listed or admitted to trading is open for the transaction of business or, if the GG Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean to transfer, sell, assign, pledge, hypothecate, give, create a security interest in or lien on, place in trust (voting or otherwise), transfer by operation of law (other than by way of a merger or consolidation of the Company) or in any other way encumber or dispose of, directly or indirectly and whether or not voluntarily, any Units. "Transferee" shall have the meaning set forth in Section 8.1. "Trigger Date" shall mean the earlier of (a) the third anniversary of the date hereof, (b) the date a Change of Control occurs, (c) the date of the determination that Cause has occurred pursuant to Section 7.3(d) and (e) and (d) that date that the Class A Members no longer owns the Class A Minimum Investment. "UBTI" shall have the meaning set forth in Section 7.9. "Units" shall mean units of membership interest in the Company, including (except as otherwise expressly provided herein) the rights to allocations, distributions, management, approval and participation provided herein. "Value" shall have the meaning set forth in Section 9.3. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; 20 27 (b) the words "including" and "include" and other words of similar import shall be deemed to be followed by the phrase "without limitation"; and (c) any capitalized term used in any Schedule to this Agreement but not defined in such Schedule shall have the meaning assigned to such term in this Agreement or in another Schedule to this Agreement. ARTICLE II FORMATION OF COMPANY 2.1 FORMATION OF COMPANY. The Company was formed as a limited liability Company under the Act on August 6, 1999 by the filing of the Certificate of Formation with the Secretary of State of the State of Delaware on August 6, 1999. The parties hereby ratify the execution and filing thereof by the authorized person (within the meaning of the Act) identified therein. It is the intention of the Members that the provisions of this Agreement govern their relations and their respective liabilities and obligations. Accordingly, to the extent permitted by law, in the event of any conflict between any provisions contained in this Agreement and any provision in the Act, the terms and provisions of this Agreement shall control. With respect to any matter not governed by this Agreement, the provisions of the Act shall control. 2.2 NAME. The business of the Company shall be conducted under the name "GGP/HOMART II L.L.C." or such other name or names as are designated by the management of the Company from time to time. All transactions of the Company, to the extent permitted by applicable law, shall be carried on and completed in the name of the Company or such other name or names as shall be designated by the management of the Company in writing from time to time. The Members shall cause to be executed, filed and published on behalf of the Company such assumed or fictitious name certificates as may be required by law to be filed or published. 2.3 PRINCIPAL PLACE OF BUSINESS. The location of the Company's principal place of business shall be at 110 North Wacker Drive, Chicago, Illinois 60606 or such other place in the United States as is designated by the management of the Company from time to time. 2.4 PURPOSE AND BUSINESS OF THE COMPANY. The purpose of the Company shall be to acquire, hold, own, operate, sell, finance, transfer, encumber, exchange and otherwise dispose of or deal with the equity interests in the Contributed Entities and, directly or indirectly, to acquire, develop, redevelop, hold, own, sell, finance, transfer, encumber, exchange, and otherwise dispose of or deal with the Properties (including the acquisition and development 21 28 of land or properties adjacent to the Properties) and such other properties and assets as shall be determined by the Board. The Company shall have all powers necessary or desirable to accomplish the purposes enumerated. The Company shall not, directly or indirectly, acquire any other assets or businesses (other than in connection with the Properties, including the acquisition and development of land or properties adjacent to the Properties) except with approval of the Board. The name and funds of the Company shall be used only for Company purposes. 2.5 CLASSES OF UNITS. There shall be, initially, two classes of Units, consisting of Class A Units ("Class A Units") and Class B Units (the "Class B Units"), which shall have the rights and be subject to the limitations contained herein. 2.6 TERM. The Company shall commence business on the date hereof and shall continue its business indefinitely until its termination as hereinafter provided. 2.7 NATURE OF THE COMPANY. It is intended that the Company be a limited liability company meeting the definition of "partnership" contained in Section 7701 of the Code and the regulations issued thereunder. Except for purposes of the Code, the Members specifically intend and agree that the Company shall not be a partnership (including, a limited partnership) or any other kind of venture or Person, but a limited liability company under and pursuant to the Act. The Company's Certificate of Formation, this Agreement and the relationships created thereby and hereby and arising therefrom shall not be construed to establish a partnership as among the Members or any other Person or to constitute any Member a partner in the Company or a partner of any other Member or Person. All rights, liabilities and obligations of the Members, both as among themselves and as to Persons not parties to this Agreement, shall be as provided in the Act, except to such extent as may be otherwise expressly provided herein. 2.8 MEMBERS' NAMES AND ADDRESSES; CLASSIFICATION. The name and mailing address of each Member and the number and classification of Units owned by such Member is listed on Schedule I attached hereto. 2.9 REGISTERED OFFICE AND REGISTERED AGENT. The address of the registered office of the Company in the State of Delaware is c/o Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805-1297. The name of its registered agent at such address is Corporation Service Company. The Company's management may at any time and from time to time change such office or agent by taking such actions as are required by the Act to change the same, including executing and filing an amendment to the Certificate of Formation. 22 29 2.10 ORGANIZATION CERTIFICATES. The Members shall cause to be executed, filed and/or published: (a) any and all such amendments or supplements to the Company's Certificate of Formation as from time to time may be required by the Act; and (b) all such further certificates, notices, statements or other instruments as may be required by law for the formation, qualification or operation of a limited liability company in all jurisdictions where the Company may elect to do business or otherwise necessary to carry out the purposes of this Agreement. GGPLP shall be an authorized person of the Company for purposes of any filings under the Act and shall be authorized to execute and deliver on behalf of the Company any certificates, notices, statements or other instruments required under the Act to be executed and filed by the Company. 2.11 CONCURRENT TRANSACTIONS. The Members acknowledge and agree that, concurrently with the execution and delivery hereof: (a) The Company and GGPLP are entering into the Altamonte Mall Contribution Agreement, the Northbrook Court Contribution Agreement, the Natick Mall Contribution Agreement and the Stonebriar Development Project Contribution Agreement; (b) The Company and NYSCRF (and/or Subsidiaries thereof) are entering into the Alderwood Mall Contribution Agreement, the Carolina Place Contribution Agreement and the Montclair Plaza Contribution Agreement; and (c) The Company and certain of the Contributed Entities are entering into modification agreements with respect to certain indebtedness secured by Company Assets, if required by the lenders thereunder. The Members, by execution of this Agreement, hereby authorize, approve and consent to (i) the Company entering into and consummating the transactions described in the Contribution Agreements and (ii) the Company's acquisition of the equity interests in the Contributed Entities and/or the Properties on the terms set forth in the Contribution Agreements. 2.12 RESTRICTIONS ON OTHER AGREEMENTS. No Member shall grant any proxy or enter into or agree to be bound by any voting trust with respect to the Units, nor shall any Member enter into any agreement or arrangements of any kind (including agreements or arrangements with respect to the acquisition, disposition or voting of Units) with any Person with respect to the Units, in either case on terms inconsistent with the provisions of this Agreement. 23 30 ARTICLE III COMPANY CAPITAL 3.1 INITIAL CONTRIBUTIONS OF MEMBERS (a) Concurrently herewith and as their Capital Contributions to the Company, the Members are conveying or causing to be conveyed to the Company and/or its Subsidiaries all of the equity interests in the Contributed Entities and/or their respective rights, title and interest in the Initial Properties in accordance with the terms of the Contribution Agreements. (b) The Members acknowledge and agree that immediately after taking into account the Capital Contributions described in Section 3.1(a), GGPLP will have a positive Capital Account balance of $462,000,000.00 and NYSCRF will have a positive Capital Account balance of $462,000,000.00. Such Capital Accounts are being computed without reduction for the Retained Debt. 3.2 NO ADDITIONAL CAPITAL CONTRIBUTIONS. Except as expressly required by Section 3.1 or Article XIII, no Member shall have any obligation to make any additional Capital Contribution to the Company or to advance any funds thereto. 3.3 WITHDRAWAL; RETURN OF CAPITAL; INTEREST. No Member shall be entitled to withdraw any part of its Capital Contribution(s) or otherwise withdraw from the Company, or shall be entitled to any distributions from the Company, except as specifically provided herein. No Member shall be entitled to interest on any Capital Contribution to the Company. 3.4 PRIORITY. Except as otherwise expressly provided herein, there shall be no priority among the Members as to the return of Capital Contributions or withdrawals from or distributions of the Company. 3.5 DEVELOPMENT PROJECT FUNDING/ACQUISITION FINANCING; ETC. It is the intention of the Members that development of the Stonebriar Development Project be funded as provided in the other sections of this Agreement, including Article XIV, and the cost of acquiring new properties be funded through such sources of financing as shall be determined by the Board. The Members agree that (a) in calculating the Net Disposition Proceeds from the CMBS Financing (which financing requires Board approval as provided herein), the proceeds from such financing shall be reduced only for the costs and expenses associated with such financing and the repayment of the existing debt on Northbrook Court (and not by any of the other items specified in the definition of "Net Disposition Proceeds") and (ii) the Net Disposition Proceeds from such financing shall be distributed to the Members concurrently with the consummation of such financing and otherwise as provided in Article V. 24 31 ARTICLE IV ALLOCATION OF COMPANY ITEMS 4.1 MAINTENANCE OF CAPITAL ACCOUNTS. A separate Capital Account shall be maintained for each Member. Without limiting the foregoing, the Capital Account of each Member shall be (a) credited with the Member's Capital Contribution(s) plus the amount of Net Income allocated or specially allocated to such Member pursuant to this Agreement and (ii) debited with the sum of (i) the amount of Net Loss allocated or specially allocated to such Member pursuant to the provisions of this Agreement and all money and the Fair Market Value of any property paid or distributed by the Company to such Member pursuant to the terms hereof. Any reference in this Agreement to the Capital Account of a Member shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time in accordance herewith. 4.2 NET INCOME AND NET LOSS (a) Allocation of Net Income. After giving effect to the allocations set forth in Sections 4.3 and 4.4, Net Income for any Fiscal Year or other applicable period (including the period ending on the date on which there is a withdrawal of any Member or a partial withdrawal of the capital of any Member or the period ending on the date immediately preceding the date on which an additional Capital Contribution is made to the Company by a Member in accordance with the terms hereof) shall be allocated among the Members in accordance with their Proportionate Shares at such time. (b) Allocation of Net Loss. After giving effect to the allocations set forth in Sections 4.3 and 4.4, Net Loss for any Fiscal Year or other applicable period (including the period ending on the date on which there is a withdrawal of any Member or a partial withdrawal of the capital of any Member or the period ending on the date immediately preceding the date on which an additional Capital Contribution is made to the Company by a Member in accordance with the terms hereof) shall be allocated between the Members in accordance with their Proportionate Shares at such time. Notwithstanding anything to the contrary contained herein, the interest expense and/or other deductions and items of income relating to the Retained Debt of each Member shall remain at all times the expense and/or income of such Member and shall not be taken into account in calculating Net Income or Net Loss. 25 32 4.3 SPECIAL ALLOCATIONS. Notwithstanding any provisions of Section 4.2 to the contrary, the following special allocations shall be made in the following order: (a) Minimum Gain Chargeback (Nonrecourse Liabilities) . Notwithstanding anything to the contrary contained in this Article IV, if there is a net decrease in Company Minimum Gain for any Fiscal Year (except as a result of conversion or refinancing of Company Nonrecourse Liabilities, certain capital contributions or revaluation of the Company property, all as further outlined in subsections (d)(2), (f)(2), or (f)(3) of Regulations Section 1.704-2), each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Member's share of the net decrease in the Company Minimum Gain. The items to be so allocated shall be determined in accordance with Regulations Section 1.702-2(f). This section is intended to comply with the minimum gain chargeback requirement in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this section shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. (b) Minimum Gain Attributable to Member Nonrecourse Debt. After giving effect to Section 4.3(a), if there is a net decrease in Minimum Gain Attributable To Member Nonrecourse Debt (other than due to the conversion, refinancing, or other change in the debt instrument attributable to such Company Nonrecourse Liabilities causing it to become partially or wholly nonrecourse, certain capital contributions or revaluations of the Company property as further outlined in Regulations Section 1.704-2(i)(4)), each Member shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent years) in an amount equal to that Member's share of the net decrease in such Minimum Gain Attributable To Member Nonrecourse Debt. The items to be so allocated shall be determined in accordance with Regulations Section 1.702-2(i). This section is intended to comply with the minimum gain chargeback requirement in said section of the Regulation and shall be interpreted consistently therewith. Allocations pursuant to this section shall be made in proportion to the respective amount required to be allocated to each Member pursuant thereto. (c) Qualified Income Offset. In the event that any Member unexpectedly receives any adjustments, allocations or distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Member has an Adjusted Capital Account Deficit, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate the Adjusted Capital 26 33 Account Deficit as quickly as possible. This Section 4.3(c) is intended to constitute a "qualified income offset" under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. (d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or other applicable period shall be allocated to the Members in accordance with their respective Proportionate Shares. (e) Member Nonrecourse Deductions. Member Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated to the Member that bears the economic risk of loss for the debt (i.e., the partner nonrecourse debt) in respect of which such Member Nonrecourse Deductions are attributable (as determined under Regulation Sections 1.704-2(b)(4) and (i)(1)). (f) Section 754 Basis Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Sections 732, 734 or 743 of the Code is required, to be taken into account in determining Capital Accounts in accordance with Regulations Section 1.704-1(b)(2)(iv)(m), the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. 4.4 CURATIVE ALLOCATIONS. The allocations set forth in Sections 4.3(a), 4.3(b), 4.3(d) and 4.3(e) (the "Regulatory Allocations") are intended to comply with certain requirements of Regulations Section 1.704-1(b). Notwithstanding any provisions of Sections 4.2 and 4.3 to the contrary (other than the Regulatory Allocations), the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the cumulative net amount of allocations of Company items under Sections 4.2, 4.3 and 4.4 shall be equal to the net amount that would have been allocated had the Regulatory Allocations not occurred. This Section 4.4 is intended to minimize to the extent possible and to the extent necessary any economic distortions which may result from application of the Regulatory Allocations and shall be interpreted in a manner consistent therewith. 4.5 TAX ALLOCATIONS. (a) Generally. Subject to Sections 4.5(b) and 4.5(c), tax items of income, gain, loss, deduction and credit (collectively, "Tax Items") shall be allocated among the 27 34 Members on the same basis as the respective book items. Each Member shall provide to the Company information regarding the tax basis, depreciable lives and depreciation methods of or used for the assets directly and indirectly conveyed by it to the Company. (b) Sections 1245/1250 Recapture. If any portion of gain from the sale of property is treated as gain which is ordinary income by virtue of the application of Code Sections 1245 or 1250 ("Affected Gain"), then (A) such Affected Gain shall be allocated among the Members in the same proportion that the depreciation and amortization deductions giving rise to the Affected Gain were allocated and (B) other Tax Items of gain of the same character that would have been recognized, but for the application of Code Sections 1245 and/or 1250, shall be allocated away from those Members who are allocated Affected Gain pursuant to Clause (A) so that, to the extent possible, the other Members are allocated the same amount, and type, of capital gain that would have been allocated to them had Code Sections 1245 and/or 1250 not applied. For purposes hereof, in order to determine the proportionate allocations of depreciation and amortization deductions for each Fiscal Year or other applicable period, such deductions shall be deemed allocated on the same basis as Net Income and Net Loss for such respective period. (c) Allocations Respecting Section 704(c) and Revaluations. Notwithstanding Section 4.5(b), Tax Items with respect to Company property that are subject to Code Section 704(c) and/or Regulation Section 1.704-3 (collectively "Section 704(c) Tax Items") shall, to the extent so required, be allocated in accordance with said Code section and/or Regulation Section 1.704-3, as the case may be. The Members are authorized to specially allocate Tax Items consistent with the principles of Regulation Section 1.704-3. 4.6 ALLOCATIONS SUBSEQUENT TO ASSIGNMENT. To the extent permitted by the Code, Net Income or Net Loss and other items attributable to Units acquired by reason of an assignment from a Member shall be allocated or adjusted between the assignor and the assignee based upon either (a) the length of time in any fiscal period of the Company during which the assigned Units were owned by each of them, determined with reference to the effective date of the assignment, or (b) an interim closing of the Company's books (at assignor's sole expense), such manner of allocation or adjustment to be determined by the assignor, with the consent of the Board, which consent shall not be unreasonably withheld. 28 35 ARTICLE V COMPANY DISTRIBUTIONS Unless the Board otherwise determines, the Company shall distribute to the Members on a quarterly basis (but a monthly basis during such period when there is Retained Debt outstanding) an amount equal to the lesser of (a) the Operating Cash Flow for such quarter or month, as the case may be, and (b) eighty percent of Company FFO for such quarter or month, as the case may be, and the Company shall distribute any Net Disposition Proceeds as soon as practicable after the occurrence (but in no event later than 45 days thereafter) of the event giving rise thereto. Subject to the provisions of the third, fourth and fifth to last sentences of this Article V, any such distributions shall be paid to the Members pro rata in accordance with their Proportionate Shares. If the annual audited report of the Company shall show that there was any over-distribution or under-distribution of Operating Cash Flow to either of the Members with respect to such year, then such Member shall, within 30 days after receipt of such audited report and a written demand for the repayment of any over-distribution referenced therein, repay the over-distribution or the Company shall, within 30 days after receipt of such audited report, pay the under-distribution to the Members, as the case may be. To the extent that any taxes or withholding taxes are due on behalf of or with respect to any Member and the Company is required by law to withhold or to make such tax payments ("Tax Payments"), the Company shall withhold such amounts and make such Tax Payments as so required. Each Tax Payment made on behalf of or with respect to a Member (but not any Tax Payment made by or required to be withheld by a Subsidiary with respect to income allocable to or distributions to be made to the Company) shall be deemed a distribution of Operating Cash Flow in such amount to such Member to the extent such Tax Payment was not attributable to an event giving rise to Net Disposition Proceeds (and shall reduce distributions of Operating Cash Flow and Net Disposition Proceeds that are made concurrently or thereafter to such Member), and to the extent such Tax Payment is attributable to an event giving rise to Net Disposition Proceeds, it shall be deemed a distribution of Net Disposition Proceeds to such Member (and shall reduce distributions of Net Disposition Proceeds and Operating Cash Flow that are made concurrently or thereafter to such Member), and any such deemed distribution shall be deemed to have been paid to the Member on the earlier of the date when the corresponding Tax Payment is made by the Company or the date that the distributions, if any, giving rise to the obligation to make such Tax Payment were made. The Company is hereby directed to deduct the amount of any Default Loans that are due and payable from any distributions to be made to the Defaulting Member pursuant to this Article V and pay such amounts to the Non-Defaulting Member (and such deducted amounts shall be deemed to be distributions made to such Defaulting Member). In the event that the Company pays any principal, interest or other amount in respect of the Retained Debt of either 29 36 Member at the request of such Member (which the Company shall be obligated to do to the extent of such Member's share of Company distributions that are then due and payable), the Company shall deduct the amount of such principal, interest or other payment from any distributions to be made to such Member pursuant to this Article V (and such deducted amounts shall be deemed to be distributions made to such Member). Notwithstanding anything to the contrary contained herein, no distribution of Operating Cash Flow or Net Disposition Proceeds shall be made hereunder if such distribution would cause the Company to breach any covenant contained in, or be in default under, any Financing Document or other agreement binding upon the Company. The distributions made in accordance with this Article V shall not require Board approval. ARTICLE VI ACCOUNTING MATTERS 6.1 FISCAL YEAR; DESIGNATION OF AUDITORS. The Company's fiscal year shall be the calendar year. The Company's auditors shall be selected by the Board; provided, however, that (a) until the Board determines otherwise, the Company's auditors shall be Ernst & Young LLP, (b) the Company's auditors shall be a "Big Five" certified public accounting firm (or any successor to any such firm) or other reputable firm as shall be selected by the Board and (c) unless the Board determines otherwise, the Company's auditors shall not be the auditors of GGPLP or GG Properties. 6.2 BOOKS AND RECORDS. The Company shall maintain or cause to be maintained at the principal place of business of the Company full, true, complete and correct books of account of the Company. The books of account shall contain particulars of all monies, goods or effects belonging to or owing to or by the Company or paid, received, sold or purchased in the course of the Company's business, and all of such other transactions, matters and things relating to the business of the Company as are usually entered in books of accounts kept by persons engaged in a business of a like kind and character. In addition, the Company shall keep all records required to be kept pursuant to the Act. Each Member shall, at reasonable times, have free access thereto for the purpose of inspecting or copying same. Any records maintained by the Company in the regular course of its business, including its Unit ledger, books of account and minute books, if any, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Company shall so convert any records so kept upon the request of any person entitled to inspect the same. 30 37 6.3 REPORTS AND STATEMENTS. (a) Not later than 45 days after the end of each fiscal quarter (other than the fourth quarter), the Company shall prepare (or cause to be prepared) and mail to each Member an unaudited report (prepared in accordance with GAAP except for the absence of footnotes) setting forth as of the end of such fiscal quarter: (i) a consolidated balance sheet of the Company and the Subsidiaries; and (ii) a consolidated income statement of the Company and its Subsidiaries for such fiscal quarter. (b) Not later than 90 days after the end of each fiscal year, the Company shall prepare (or cause to be prepared) and shall mail to each Member, a report (prepared in accordance with GAAP) setting forth as of the end of such fiscal year: (i) a consolidated balance sheet of the Company and the Subsidiaries (which will include appropriate footnote disclosure) (and a consolidated balance sheet prepared on a fair market value basis provided NYSCRF has provided the fair market value of the Properties to be used in preparing such balance sheet at least 30 days prior to the date it is due and NYSCRF shall pay the cost of auditing such balance sheet (which cost, notwithstanding anything to the contrary contained herein, shall not be a Company Expenditure); (ii) an consolidated income statement of the Company and the Subsidiaries for such fiscal year; (iii) a consolidated statement of cash flows of the Company and the Subsidiaries for such fiscal year; and (iv) a statement of changes in Members' Capital Accounts for such fiscal year. The annual financial statements referred to in item (b) above shall be accompanied by a report of the Company's independent certified public accountants stating that an audit of such financial statements has been made in accordance with generally accepted auditing standards, stating the opinion of the accountants in respect of the financial statements and the accounting principles and practices reflected therein and as to the consistency of the application of the accounting principles, and identifying any matters to which the accountants take exception and stating, to the extent practicable, the effect of each such exception on such financial statements. The Company shall provide to any Member such 31 38 supporting schedules and other data as may from time to time be reasonably requested by such Member relating to the presentation of the Company's financial statements. (c) Not later than 45 days after the end of each of the first three fiscal quarters of each fiscal year, the Company shall prepare (or cause to be prepared) and mail to each Member a report setting forth in reasonable detail a calculation of the Company's Operating Cash Flow and Net Disposition Proceeds for the immediately preceding quarter together with a comparison of the (i) Operating Cash Flow for the same fiscal quarter in the prior year, (ii) budgeted Operating Cash Flow for the quarter, based upon the Annual Business Plan approved by the Board covering such fiscal quarter and (iii) a status report of the Company's activities during such fiscal quarter substantially in the form of the quarterly status reports delivered in connection with GGP/Homart. (d) Not later than 90 days after the end of each fiscal year, the Company shall prepare (or cause to be prepared) and mail to each Member a report setting forth in reasonable detail a calculation of the Company's Operating Cash Flow and Net Disposition Proceeds for the immediately preceding fiscal year together with a comparison of the (i) Operating Cash Flow for the prior fiscal year and (ii) budgeted Operating Cash Flow for the fiscal year, based upon the Annual Business Plan approved by the Board for such prior fiscal year. (e) Concurrently with each distribution of Operating Cash Flow pursuant to Article V, the Company shall deliver to each Member a report setting forth in reasonable detail a calculation of such Member's Proportionate Share of the Company's Operating Cash Flow for the immediately preceding quarter and the amount of the distribution for such period. (f) Concurrently with each distribution of Net Disposition Proceeds, the Company shall deliver to each Member a report setting forth in reasonable detail a description of the transaction or transactions giving rise to the Net Disposition Proceeds, a calculation of the Net Disposition Proceeds, the Member's Proportionate Share of such Net Disposition Proceeds and the amount of the Net Disposition Proceeds being distributed to such Member. (g) The Company shall prepare and deliver to each Member the reports set forth in Schedule II. (h) The Company shall prepare and deliver to each Member such other reports as any Member shall reasonably require. 32 39 6.4 TAX MATTERS MEMBER. GGPLP is hereby designated as the Tax Matters Member for the Company, which has the meaning of "tax matters partner" under Section 6231(a)(7) of the Code; provided, however, (i) in exercising its authority as Tax Matters Member, GGPLP shall be limited by the provisions of this Agreement affecting tax aspects of the Company; (ii) the Tax Matters Member shall consult in good faith with the Board regarding the filing of a Code Section 6227(b) administrative adjustment request with respect to the Company before filing such request, it being understood, however, that the provisions hereof shall not be construed to limit the ability of any Member, to file an administrative adjustment request on its own behalf pursuant to Section 6227(a) of the Code; (iii) the Tax Matters Member shall consult in good faith with the Board regarding the filing of a petition for judicial review of an administrative adjustment request under Section 6228 of the Code, or a petition for judicial review of a final partnership administrative judgment under Section 6226 of the Code relating to the Company before filing such petition; (iv) the Tax Matters Member shall give prompt notice to the other Members of the receipt of any written notice that the Internal Revenue Service or any state or local taxing authority intends to examine Company income tax returns for any year, receipt of written notice of the beginning of an administrative proceeding at the Company level relating to the Company under Section 6223 of the Code, receipt of written notice of the final Company administrative adjustment relating to the Company pursuant to Section 6223 of the Code, and receipt of any request from the Internal Revenue Service for waiver of any applicable statute of limitations with respect to the filing of any tax return by the Company; and (v) the Tax Matters Member shall promptly notify the other Members if the Tax Matters Member does not intend to file for judicial review with respect to the Company. 6.5 TAX ELECTIONS AND RETURNS. The Tax Matters Member GGPLP shall, from time to time, make such tax elections on behalf of the Company as it deems necessary or desirable in its discretion to carry out the business of the Company or the purposes of this Agreement, including elections under Section 754 of the Code. The Tax Matters Member shall cause the Company accountants to prepare and file federal, state and local tax returns for the Company on a timely basis, and shall furnish copies thereof to the Members with required partnership schedules showing allocations of book and tax items. 6.6 INTERIM ACCOUNTING. The Tax Matters Member may cause the books of account of the Company to be closed on an interim basis when the Board deems such closing necessary or appropriate under the circumstances, including a transfer of Units causing a termination of the Company for tax purposes. 33 40 ARTICLE VII GOVERNANCE; BOARD OF DIRECTORS 7.1 ACTION BY MEMBERS TO EFFECTUATE THIS AGREEMENT. Each Member agrees to take all actions necessary to carry out and effectuate the provisions of this Agreement, including to vote in a manner consistent with this Agreement and to cause any Board Member elected by it to take such actions as are required to be taken by this Agreement. 7.2 BOARD. (a) Except as otherwise expressly set forth herein, the Board of Directors of the Company shall consist of six members, and the holders of Class A Units (by majority vote) shall have the right from time to time at their election to designate three members to the Board (the "Class A Board Members"), and the holders of Class B Units (by majority vote) shall have the right from time to time at their election to designate three members to the Board (the "Class B Board Members" and, together with the Class A Board Members, the "Board Members"). (b) Members of the Board (other than Independent Board Members) shall not receive compensation for serving as members as the Board. Independent Board Members may be paid reasonable and customary compensation as determined by the Board. If he or she elects, a Board member shall be entitled to the reasonable reimbursement of his or her actual out-of-pocket expenses in attending Board meetings. (c) To carry out the provisions of this Section 7.2, GGPLP, as the sole Class A Member, and NYSCRF, as the sole Class B Member, hereby elect the following designated persons as the initial Class A Board Members and the initial Class B Board Members, respectively: Class A Board Members Matthew Bucksbaum John Bucksbaum Robert A. Michaels Class B Board Members Marjorie Tsang Yvonne D. Nelson Frank L. Sullivan, Jr. (d) Subject to Section 7.2(e), either the Class A Member or Class B Member may, by delivering written notice to the other, remove any Board Member designated by it and fill any vacancy in one or more of its Board Member positions. No Board Member otherwise may be removed and no vacancy otherwise may be filled. 34 41 (e) Notwithstanding anything to the contrary contained herein, every Class A Board Member shall also be an executive officer of GG Properties holding the office of executive vice president or higher, including Chairman of the Board. (f) Except as expressly provided herein, no Member shall have any right to approve any action of or have any voice in the management of the Company, and no Member shall have authority to bind or otherwise act for the Company. (g) Subject to the provisions of Section 7.3(a), the Members agree that so long as GGPLP holds more than the Class A Minimum Investment, the Class A Board Members shall have the right and authority to designate and remove all of the officers and directors or trustees of the Subsidiaries, subject to the approval of the Class B Board Members, which approval shall not be unreasonably withheld. 7.3 OFFICERS; MANAGEMENT; RIGHTS IN THE EVENT OF CAUSE. (a) Subject to the provisions of Sections 7.2(g) and 7.3(b), the officers of the Company and the Subsidiaries (to the extent the Subsidiaries have officers) shall consist of the Persons designated by the Board in the manner provided herein for Board actions, and such Persons shall serve in the offices designated by the Board until their respective successors are duly appointed by the Board, they resign, die or are removed (which the Board may do with or without cause in the manner provided herein for Board actions). Officers of the Company may not be removed except as expressly provided herein. (b) So long as GGPLP holds more than the Class A Minimum Investment and provided both the Class A Member and Class B Member are entitled to designate Board Members in accordance with the provisions of this Agreement, the Members agree to cause the Class A Board Members and Class B Board Members to (i) designate the Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, Treasurer and Secretary of GG Properties to serve ex officio as the Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, Treasurer and Secretary of the Company and of the Subsidiaries (to the extent that the Subsidiaries have officers) (the "General Growth Officers") (and to remove any such Person who no longer is serving in such capacity as an officer of General Growth) and (ii) designate certain persons identified by any of the General Growth Officers as vice presidents, assistant treasurers or assistant secretaries of the Company and/or its Subsidiaries (and remove any such Person that is designated to be removed by the General Growth Officers). Notwithstanding anything to the contrary contained herein and unless and to the extent the Board otherwise 35 42 determines, from and after the date on which GGPLP no longer holds the Class A Minimum Investment, the Members agree that the General Growth Officers shall no longer be the officers of the Company, they shall no longer manage the Company or the Properties, they shall no longer be entitled to the fees set forth in the Schedules attached hereto (except as expressly provided therein) and the officers shall be selected by the Board as reconstituted pursuant to Section 8.4(c). (c) Subject to Section 7.7 hereof, the officers of the Company and the Subsidiaries shall be authorized to manage the business and affairs of the Company and the Subsidiaries in accordance with all Key Documents, legal requirements and the terms hereof; and, subject to the foregoing, the officers of the Company and the Subsidiaries shall have the right to take all actions on behalf of the Company and the Subsidiaries. The General Growth Officers, so long as they shall serve as the management of the Company, shall manage the day to day operations of the Company and each of the Properties in a manner substantially consistent with the management of GGPLP and GG Properties. Without in any way limiting the generality of the foregoing, the officers of the Company and the Subsidiaries shall manage the day to day operations of the Properties in accordance with the policies and other matters set forth on Schedule II. All costs and expenses incurred in connection with the management of the Company and the Subsidiaries and the ownership, operation, management and development of the Properties shall be paid by the Company and the Subsidiaries, or if paid by GGPLP or any of its Affiliates, the Company and the Subsidiaries shall reimburse GGPLP or its Affiliates therefor to the extent such costs and expenses were incurred by reason of acts which (i) are for or on behalf of the Company, (ii) within the scope of the authority granted hereunder and (iii) did not constitute gross negligence or willful misconduct on the part of GGPLP or its Affiliates; provided, however, that for so long as the General Growth Officers are the officers of the Company, the costs and expenses of the Company and the Subsidiaries listed on Schedule III shall be paid by GGPLP or its Affiliates and shall not be reimbursed to GGPLP or its Affiliates or charged to the Company or the Subsidiaries or paid from Company Assets. So long as the General Growth Officers are the officers of the Company, the Company and/or the Subsidiaries shall pay to GGPLP and its Affiliates (as provided below) the fees and reimbursable amounts with respect to the Company Assets in the amounts and in the manner set forth on Schedule IV. Unless otherwise approved by the Board, and except as may otherwise be provided in this Agreement, no other fee or compensation shall be paid by the Company and/or the Subsidiaries to GGPLP, GG Properties or any of their Affiliates in connection with the management of the Company and/or the Subsidiaries and the Company Assets. So long as 36 43 the General Growth Officers are the officers of the Company, the Company and its Subsidiaries shall be authorized to enter into one or more agreements with GGPLP and any of its Affiliates to delegate all or any portion of the managerial responsibilities of the General Growth Officers to such entities; provided that, (i) the General Growth Officers shall not be relieved of their obligation to manage the Company or any other obligation or responsibility under this Agreement by reason of such delegation, (ii) the Company shall not incur any additional cost by reason of such delegation and (iii) GGPLP and any such Affiliate shall be obligated to carry out their delegated managerial responsibilities in accordance with the policies set forth on Schedule II to the extent applicable and (iv) and Board shall not lose any rights provided hereunder. Any such agreement entered into by the Company and/or its Subsidiaries, on the one hand, and GGPLP and/or any of its Affiliates, on the other hand, may provide that all or any portion of the fees and reimbursable amounts set forth on Schedule IV shall be paid to an Affiliate of GGPLP, rather than to GGPLP, and may contain customary indemnities from the Company and its Subsidiaries to GGPLP and such Affiliate against claims, losses, liabilities, costs and expenses arising out of the operation or management of Company Assets to the extent such management was within the scope of the authority expressly granted to GGPLP or such Affiliate hereunder or thereunder, other than claims, losses, liabilities, costs and expenses caused by the gross negligence or willful misconduct of GGPLP or such Affiliate and shall also contain customary indemnities by GGPLP or such Affiliate to the Company with respect to GGPLP's or such Affiliate's gross negligence or willful misconduct. Any such agreement shall be terminable by the Class B Board Members, in their sole discretion, immediately following the General Growth Officers ceasing to serve as the Company's management, GGPLP ceasing to own the Class A Minimum Investment or the Development Manager or the Property Manager ceasing by operation of law or otherwise to be GGPLP, GG Properties or an Affiliate of GGPLP or GG Properties (and otherwise are only terminable as expressly provided herein). Unless otherwise provided herein or approved by the Board, the Company shall not have any employees. Notwithstanding anything to the contrary contained herein, the Company shall (and shall cause the Subsidiaries to) continue to engage the existing property manager(s) for Carolina Place and Montclair Plaza through December 31, 1999 pursuant to the existing management agreement(s) for such Properties, and the Company and the Subsidiaries shall not commence paying GGPLP and/or its Affiliates the property management fees for Montclair Plaza and Carolina Place (which fees are set forth in Section 1 of Schedule IV) until January 1, 2000. 37 44 (d) The Class B Members shall have the right, in their sole discretion, to exercise the rights under Article IX or XI hereof in the event that Cause exists. (e) For purposes of this Agreement, "Cause" shall mean, (i) the failure of the General Growth Officers to submit an Annual Business Plan to the Board as provided in Section 7.7(c) hereof, (ii) the failure of the General Growth Officers to obtain prior Board approval (as part of an approved Annual Business Plan or otherwise) for any of the matters enumerated in Section 7.7(d) hereof (unless Board approval is not required pursuant to the provisions of this Agreement), (iii) the General Growth Officers taking or causing the Company to take any action materially in contravention of an approved Annual Business Plan (other than actions otherwise permitted hereunder), (iv) a willful and material violation by GGPLP or GG Properties of the provisions of Section 7.10 hereof or (v) the engaging by any General Growth Officers, GGPLP, GG Properties, or the Property Manager, if any, in willful misconduct, including fraud, embezzlement or theft which is demonstrably and materially injurious to the Company; provided that Cause shall not be deemed to exist until the procedures set forth in Section 7.3(f) below have been complied with. (f) If the Class B Member or Class B Board Members believe that an event giving rise to Cause has occurred, the Class B Members or Class B Board Members shall deliver a notice (the "Cause Notice") to the General Growth Officers setting forth with particularity the event giving rise to Cause and the applicable clause of Section 7.3(e). If the event giving rise to Cause is one enumerated in Section 7.3(e) (i), (ii) or (iii), the General Growth Officers shall have fifteen (15) days from the date of the delivery of such notice to cure the action or failure to act (or if such action or failure to act, or consequence of such action or failure to act, is curable but is of such a nature that it cannot be cured within such fifteen (15) day period, the General Growth Officers shall commence such cure and proceed diligently to Complete the curing thereof as promptly as practicable). The General Growth Officers shall promptly, and, in any event, by the end of the fifteen (15) day cure period, notify (the "Cure Notice") the Class B Member or any Class B Board Member that either (i) the event giving rise to Cause has been cured and specifying the actions taken in respect thereof or (ii) the event giving rise to Cause is curable but cannot be cured within fifteen (15) days and specifying the actions that have been taken and will be taken in respect thereof, in which case upon such cure the General Growth Officers will deliver a second notice stating that the event giving rise to Cause has been cured and specifying the actions that have been taken in respect thereof (the "Second Cure Notice"). Unless the Class B Member or such Class B Board Member reasonably objects in 38 45 writing to the Cure Notice or the Second Cure Notice, as the case may be, within ten (10) days of delivery thereof, the event giving rise to Cause (to the extent such Cure Notice or Second Cure Notice states that the events giving rise to Cause have been cured) shall be deemed to be cured. If GGPLP wishes to contest the existence of Cause, the General Growth Officers shall within ten (10) days of receipt of the Cause Notice, or, if the Class B Member or such Class B Board Member has reasonably objected to the Cure Notice or the Second Cure Notice, as the case may be, the Class B Member or any Class B Board Member shall within ten (10) days of receipt of the Cure Notice or the Second Cure Notice, as the case may be, submit the existence of Cause to arbitration pursuant to Section 11.13 hereof. If the question of Cause or the cure thereof has been submitted to arbitration, Cause shall not be deemed to have occurred unless and until the arbitrators have reached a final decision that Cause exists or has not been cured. If the General Growth Officers neither submit the question of Cause to arbitration nor deliver a Cure Notice within the fifteen (15) day period following the date of the delivery of the Cause Notice, then Cause shall be deemed to exist on the day immediately following such fifteen (15) day period. During any arbitration proceeding, the General Growth Officers shall use all diligent and good faith efforts to act or cease from acting in the manner that is the subject of the dispute. Arbitration costs shall be charged to the losing party. (g) As to the allocation among the officers of the rights, powers, authority and duties of the officers as a group hereunder, each officer shall have the rights, powers, authority and duties as generally pertains to his or her office or as may be specified by the Chief Executive Officer or the President of the Company unless otherwise provided herein. The Secretary shall have the duty to record the proceedings of the meetings of the Board and any committees in a book to be kept for that purpose. The Board may require any officer, agent or employee to give security for the faithful performance of his or her duties. 7.4 CHAIRMAN OF THE BOARD. So long as the General Growth Officers are the officers of the Company, the Members agree to cause the Class A Board Members and Class B Board Members to designate as the Chairman of the Board and the Subsidiaries the Board Member elected by GGPLP who holds the most senior position at GG Properties (the "General Growth Chairman"). 7.5 COMMITTEES. The Board shall have the power to create committees, including an executive committee and an audit committee, to designate, remove and replace committee members and to delegate to such committees such powers and authority as the Board may determine and as may then be permitted by the Company's Certificate of Formation and the Act; provided, however, that so 39 46 long as the Class A Member and Class B Member are entitled to designate Board Members in accordance with the provisions of this Agreement, (i) any committee established by the Board shall have at least one member designated by the Class A Board Members and at least one member designated by the Class B Board Members unless the Board determines otherwise and (ii) subject to Section 7.2(e), the Class A Board Members shall be exclusively entitled to designate, remove and replace the Class A committee members and the Class B Board Members shall be exclusively entitled to designate, remove and replace the Class B committee members. Except as provided herein and unless the Board otherwise provides, each committee may adopt, amend or repeal rules for the conduct of its business that are consistent with the terms hereof. Each committee shall otherwise conduct its business in the same manner as the Board conducts its business pursuant to this Agreement. 7.6. CERTIFICATE OF FORMATION; BY-LAWS. Each Member shall take all other actions necessary and appropriate to ensure that the Company's Certificate of Formation and By-Laws do not at any time conflict with the provisions of this Agreement or any Key Document and shall not consent to or approve of any amendment to the Certificate of Formation or By-Laws which would be inconsistent with this Agreement or any Key Document. 7.7 ACTIONS BY BOARD. (a) Actions by Directors. (a) Except as otherwise provided herein, at such times as both Class A Units and Class B Units shall be outstanding, at all meetings of the Board a quorum shall exist for the transaction of business if at least two (2) Class A Board Members and two (2) Class B Board Members are present. At such times as both Class A Units and Class B Units shall be outstanding, at all meetings of any committee of the Board a quorum shall exist for the transaction of business if at least one member designated by the Class A Board Members and one member designated by the Class B Board Members are present, unless the Board shall determine otherwise. At all other times (i.e., when the Board is constituted pursuant to Section 8.4(c)), a quorum shall exist for the transaction of business if at least a majority of Board or committee members are present. Actions of the Board or any committee thereof may be taken at meetings or by written consent, and any written consent shall be filed with the minutes of proceedings of the Board or the appropriate committee thereof. Attendance at any meeting may be by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each another. In case at any meeting of the Board or a committee thereof a quorum shall not be present, the members of the Board or such committee present may adjourn the meeting from time to time until a quorum shall be present. 40 47 (b) When action is to be taken by vote of the Board or any committee thereof and except as otherwise provided herein, each member of the Board or such committee shall be accorded one vote. Except as otherwise provided herein (including Section 7.2 and Section 8.4(c) hereof), each and every corporate action taken by vote of the Board or any committee thereof shall be authorized only by the affirmative vote of the majority of the Board or committee members, as the case may be, present at a duly constituted meeting at which a quorum is present and acting throughout; provided that, at such times as both Class A Units and Class B Units shall be /outstanding and entitled to elect Board Members pursuant to this Agreement, at least one Class A Board Member and one Class B Board Member (in the case of Board meetings), or one Class A committee member and one Class B committee member (in the case of committee meetings), has voted in favor of such action. (c) On or before December 15 of each year, commencing December 15, 2000, for each Property that is operating, is then under construction or development or is in the planning stage, the General Growth Officers will cause to be prepared and submitted to the Board for approval a proposed annual business plan (including an annual capital budget and operating budget and leasing guidelines to permit the execution of leases on behalf of the Company and its Subsidiaries without specific Board approval, which shall include figures for minimum square foot base rental, maximum tenant improvement allowances, maximum obligations on lease take-overs and any other leasing criteria proposed by the General Growth Officers) for the following fiscal year, such plan to be substantially in the form of the "Annual Business Plans" for 1999 delivered pursuant to the Stockholders Agreement (unless otherwise provided herein) or otherwise approved by the Board (each, an "Annual Business Plan") (and the General Growth Officers will cause to be prepared and submitted to the Board for approval a proposed Annual Business Plan for 2000 within 60 days following the date hereof). The proposed Annual Business Plan also shall itemize each transaction or matter requiring approval of the Board pursuant to Section 7.7(d) below. The General Growth Officers also shall cause the Board to be provided with quarterly updates to the Annual Business Plans. A meeting of the Board to consider an Annual Business Plan for approval shall, unless the Board otherwise determines, be held no sooner than 45 days following submission of the proposed Annual Business Plan to the Board and no later than 75 days following submission thereof. Prior to such meeting, the General Growth Officers shall make available to the Class B Board Members and their representatives and advisors such backup information with respect to the Annual Business Plan as the Class B Board Members shall reasonably request and shall be reasonably 41 48 available to consult with the Class B Board Members regarding the details of the Annual Business Plan. If the Board shall consider for adoption a proposed Annual Business Plan for any year and shall fail to adopt it in its entirety because of disagreement as to one or more items although the Board shall agree on other items, then the Board shall adopt as the Annual Business Plan for such year such proposed Annual Business Plan exclusive of the items as to which there is disagreement, provided, however, that if there is disagreement over any item of expenditure in such Annual Business Plan that is nondiscretionary, then the Board shall adopt such Annual Business Plan as it relates to such nondiscretionary item of expenditure, and provided further, however, that if there is disagreement over any discretionary item of operating expenditure in such Annual Business Plan, then the Board shall adopt such Annual Business Plan including such discretionary item of operating expenditure in an amount equal to the amount reasonably proposed for such operating expenditure item by the General Growth Officers (and, in the event that the Annual Business Plan otherwise has not been approved for any year, the General Growth Officers may cause the Company to make discretionary operating expenditures in such amounts as they reasonably deem appropriate and to expend funds for nondiscretionary items until such Annual Business Plan is approved). Although the General Growth Officers shall use reasonable efforts to include all nondiscretionary items in the Annual Business Plan, expenditures for nondiscretionary items shall not be limited by amounts set forth in an approved Annual Business Plan. "Nondiscretionary items" shall mean items that must be paid by the Company to avoid a material adverse effect on the business, operations or value of the assets of the Company and/or its Subsidiaries. Without limiting the generality of the foregoing, the Members acknowledge and agree that nondiscretionary items include the minimum amount of funds needed to (i) pay and perform when due all of the obligations of the Company and/or its Subsidiaries under any notes, mortgages and other instruments to which the Company or any Subsidiary is or shall be a party or by which the Company and/or its Subsidiaries or its or their assets are bound in connection with any financing, (ii) pay when due real estate and other taxes affecting the Company and/or its Subsidiaries and insurance premiums for the Company and/or Subsidiary assets and the Company and/or its Subsidiaries, and (iii) comply with all laws now or hereafter in force which shall be applicable to all or any part of the assets of the Company and/or its Subsidiaries and the operation and management thereof (including the making of capital expenditures required for such compliance) if the failure to comply would (A) expose the Company, any Subsidiary, any Member or any employee, agent, officer, director, trustee or contractor of the Company and/or any Subsidiary, any Member, GG Properties, the Development Manager or the Property Manager 42 49 to the risk of criminal prosecution, (B) entitle any enforcing entity to take any action which could materially and adversely affect the business, operation or value of the Company and/or its Subsidiaries or (C) invalidate or impair any of the insurance maintained by the Company and/or its Subsidiaries. (d) Notwithstanding anything to the contrary contained herein, the following matters will require approval of the Board (either as part of an approved Annual Business Plan or by separate Board action) unless any such matters have been specifically approved pursuant to this Agreement (including Articles VIII, IX, X or XI) or otherwise: (i) The purchase or other acquisition by the Company and/or its Subsidiaries of any material asset or property or any direct or indirect interest therein, but excluding purchase options where the cost of the option does not exceed $500,000; (ii) the sale, transfer, assignment, exchange or other disposition by the Company or any of its Subsidiaries of any Property or any direct or indirect interests therein or any part thereof; (iii) the development, redevelopment or expansion by the Company or any Subsidiary of the Properties; (iv) the incurrence by the Company or any Subsidiary of any indebtedness for borrowed money, whether secured or unsecured, or the refinancing of any indebtedness for borrowed money, whether secured or unsecured (including any capital lease obligation) in excess of $500,000 in the aggregate in any fiscal year (excluding indebtedness for borrowed money that has been approved by the Board); (v) the pledge, encumbrance or subjecting to liens or mortgages by the Company or any Subsidiary of any Property in connection with a financing or refinancing; (vi) with respect to each "Major Expense Category" (as so denominated in the Annual Business Plan), the expenditure by the Company and/or any Subsidiary of amounts in excess of those set forth in an approved Annual Business Plan, unless (A) the aggregate of all such amounts (excluding nondiscretionary items and emergency expenditures referred to below in excess of the amount budgeted therefor) do not exceed 105% of the total expenditures set forth in such Annual Business Plan for such Major Expense Category (but the amount of the fees 43 50 identified on Schedule IV may not be increased) or (B) such amounts are nondiscretionary items (as defined in Section 7.7(c)) or otherwise are required, in the reasonable judgment of the Company's management, to be expended because of an emergency involving an immediate threat to the health, safety or condition of persons or property and the Company's management is hereby authorized to spend such amounts without further Board action (but only such amounts as are required to alleviate such immediate threat); (vii) the merger, consolidation, reorganization or other similar transaction involving the Company or any Subsidiary with or into another Person, in any such case, whether in a single transaction or a series of related transactions; (viii) except as provided in 7.7(d)(xiv), any Company or Subsidiary transaction or agreement (or amendment or modification to any transaction or agreement) with, involving or benefitting GGPLP, GG Properties, or an Affiliate of GGPLP or GG Properties; (ix) other than a dissolution pursuant to Article XI, the taking of any action, including the filing of a petition, with respect to (x) an assignment for the benefit of creditors of the Company or any Subsidiary, (y) the bankruptcy, insolvency, reorganization, dissolution or any similar occurrence of the Company or any Subsidiary or (z) a liquidation or any other similar occurrence, that might result in the termination of the Company or any Subsidiary; (x) the admission of additional Members or the issuance, grant or entry into an agreement or arrangement providing for options, warrants or other rights, interests or securities convertible into or exchangeable for any equity interests in the Company or any Subsidiary; (xi) except as otherwise expressly provided herein (including the provisions of Article V), the determination of the amount and timing of distributions of Net Disposition Proceeds and Operating Cash Flow; (xii) the determination of Reserve Amounts for any fiscal year; (xiii) the establishment of the Company's policy with respect to the appropriate levels of debt capitalization of the Company; 44 51 (xiv) the consent to any amendments or supplements to, or the making of elections or grant of waivers of conditions or the enforcement of rights under, any Contribution Agreement, provided, however, that in connection with any Board resolutions with respect to such matters and so long as the Class A Member and Class B Member are entitled to designate Board Members in accordance with the provisions of this Agreement, (A) the Class B Board Members shall have the exclusive right to vote (and the Class A Board Members shall not have the right to vote and the vote of the Class A Board Members shall not be required) for the approval of any such action that relates to the obligations of GGPLP and its Affiliates under any Contribution Agreement and (B) the Class A Board Members shall have the exclusive right to vote (and the Class B Board Members shall not have the right to vote and the vote of the Class Board Members shall not be required) for the approval of any such action that relates to the obligations of NYSCRF or its Affiliates under any Contribution Agreement; (xv) the engagement, retention or termination by the Company of any property or development manager for the Properties other than GGPLP, GG Properties, or any of their Affiliates; (xvi) the engagement or retention by the Company of any financial advisor or investment banking firm for any major capital transaction or any legal counsel for any material litigation; (xvii) the amendment of any of the policies set forth in Schedule II or any of the fees or other matters set forth in Schedule IV, in each case as they relate to the Company or any Subsidiary; (xviii) the adoption, modification or deviation from (A) an approved Annual Business Plan (except as permitted hereunder, including as specified in Section 7.7(d)(vi)) and (B) any development budget, including the Stonebriar Development Plan. (xix) any action not in furtherance of the Company's purpose set forth in Section 2.4. (e) The Members hereby approve, and the Company shall be authorized to undertake, (i) the development and leasing of the Stonebriar Development Project and the expenditure of funds in connection therewith pursuant to the development plan and budget attached hereto as Exhibit C (such development plan and budget, as the same may be modified in accordance with the terms of this Agreement, the "Stonebriar Development Plan") 45 52 and (ii) the operation of the Company Assets (other than the Stonebriar Development Project) and the expenditure of funds and/or incurrence of indebtedness in connection therewith pursuant to the existing 1999 business plans for the Company Assets for remainder of 1999 (and each such plan shall be deemed to be an Annual Business Plan hereunder). 7.8 MEETINGS OF THE BOARD. (a) The Board shall meet not less frequently than three times per year, at such times as the Board may determine, and, if so determined, no notice need be given. Any failure to so meet shall not give rise to any presumption or inference that the Members shall have any liability for the obligations of the Company. (b) In addition, the Board shall meet upon the request of any Board Member conveyed in writing to each other Board Member, at a time no fewer than two (2) and no more than twenty-one (21) business days after such notice is given, and at the Company's principal offices or such other place as is determined by the Board. (c) Meetings of the Board shall be presided over by the Chairman of the Board or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the President, or in their absence by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary, an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the Board shall choose a person to act as Secretary. (d) Whenever notice is required to be given to the Board members under any provision of this Agreement, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board or members of a committee of the Board need be specified in any written waiver of notice. 7.9 CONDUCT OF BUSINESS. (a) To the extent consistent with the other provisions of this Agreement, the Company and its Subsidiaries shall 46 53 endeavor to conduct their affairs in a manner that will not cause the Company or any Subsidiary to be deemed to be, and will not make any investment which could cause it to become, an "investment company" for purposes of the Investment Company Act. (b) The Company and its Subsidiaries shall operate in a manner that will enable GG Properties and Natick Trust to (i) satisfy the requirements for qualifying as a real estate investment trust under the Code and (ii) avoid any federal income or excise tax liability. The foregoing is not intended to, and shall not, alter the relative distributions payable to the Members as set forth in Article V although it may affect the overall amount of distributions made in any year. (c) The Company shall at all times, commencing with the date of its formation, qualify, and each Member shall cause the Company to operate in a manner so that it will at all times qualify as an "operating company" under Pension and Welfare Benefits Administration Regulation ss. 2510.3-101 (the "Plan Asset Regulations") issued by the Department of Labor under Title I of the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time ("ERISA") as long as equity participation by Benefit Plan Investors (as defined in the Plan Asset Regulations) is "significant," as defined therein. (d) The Company and each of its Subsidiaries shall operate its business and structure its investments in a manner necessary to avoid the realization of any "unrelated business taxable income" within the meaning of Section 512 of the Code ("UBTI") to any Member, or the realization of income that would be UBTI were a Member subject to the provisions of Section 511 through 514 of the Code regardless of its actual status thereunder, unless the Board otherwise approves. Without limiting the generality of the foregoing and without Board approval, the Company and each Subsidiary shall not knowingly, and each Member shall not knowingly, take any action to cause the Company or any Subsidiary to (i) incur any indebtedness other than (A) indebtedness that is incurred to acquire or improve real property within the meaning of Section 514(c)(9)(A) of the Code and that is not described in Section 514(c)(9)(B)(ii) of the Code, or (B) other indebtedness that will not give rise to UBTI to any Member or will not give rise to income that would be UBTI if a Member were subject to the provisions of Sections 511 through 514 of the Code regardless of its actual status thereunder (provided that nothing contained in this Section 7.9(d)(i) shall prohibit the financing or refinancing of Properties, including the consummation of the CMBS Financing, and the distribution of all or a portion of the proceeds thereof), (ii) guarantee the obligations of others unless such guarantee does not cause the 47 54 obligation guaranteed to become a "recourse liability" within the meaning of Treasury Regulation Section 1.752-1(a)), or (iii) incur any indebtedness that would be included as a "partner non-recourse debt" as set forth in Treasury Regulations Section 1.704-2(b)(4) (provided that nothing contained in Section 7.9(d)(ii) or (iii) shall prohibit guarantees or indebtedness that is "partner non-recourse debt" (as defined above) merely because of guarantees by any of the Company, the Subsidiaries, GGP/Homart and/or the subsidiaries of GGP/Homart of obligations of any of the others or because any such person is otherwise liable for the obligations of any of the others). In furtherance of the foregoing and not in limitation thereof and without Board approval, the Company shall not knowingly, after making due inquiry (i) enter into any lease with, or borrow any amounts for the acquisition or improvement of any property (or any portion thereof) from, any person described in Section 514(c)(9)(B)(iii) or (v) of the Code; or (ii) enter into any lease or other arrangement with respect to any Property or any portion thereof if such lease or arrangement would result in (A) the payment of rent or any other amount to the landlord which depends in whole or in part on the income or profits derived by any person (including a tenant or a subtenant) from any portion of such Property (other than an amount based upon a fixed percentage of the receipts or sales of the tenant and, if any, the subtenants), (B) an obligation of the landlord to furnish or render any service not customarily furnished or rendered in connection with the rental of space for occupancy, as determined under Section 512(b) of the Code and any applicable Treasury regulations or (C) any portion of the Company's income (or loss) otherwise being UBTI. In the event that NYSCRF determines, in its reasonable judgment, that (i) as the result of any change in applicable statute, regulation or administrative or judicial interpretation thereof (including private letter rulings, technical advice memoranda and other similar pronouncements), any lease would cause the Company to have UBTI or (ii) any other arrangement entered into with respect to a Property or any portion thereof would cause the Company to have UBTI, the parties hereto agree to use their reasonable efforts (without any obligation to pay any amount or incur any obligation) to reform such lease or other arrangement, or to take any other action necessary or appropriate, to prevent the Company from having any UBTI. 7.10 OTHER ACTIVITIES OF MEMBERS. (a) Neither GGPLP nor GG Properties nor any of their Affiliates shall, directly or indirectly, as an owner, managing or general partner, majority or controlling stockholder, consultant, joint venturer, manager or otherwise, acquire, develop, redevelop, improve, construct or manage any regional shopping mall project, that is, in any such case, 48 55 located within the trade area (as shown in red on the maps attached hereto as Exhibit E) of any of the mall shopping centers listed on Exhibit E hereto (the "Relevant Trade Area"); provided, however, that nothing herein shall prohibit or restrict GGPLP or GG Properties or any of their Affiliates from owning, operating, developing, improving, expanding or managing any of the mall shopping centers owned (in whole or in part), operated, being developed or managed, directly or indirectly, by any of them on the date hereof and listed on Schedule V hereto. (b) Notwithstanding anything to the contrary in Section 7.10(a), neither GGPLP nor GG Properties shall be in breach of Section 7.10(a) if, in connection with the acquisition of a portfolio of three or more regional shopping malls or management contracts therefor, GGPLP, GG Properties or any of their Affiliates acquires directly or indirectly, or becomes the property manager or development manager for, any regional shopping mall project that is located within the Relevant Trade Area (the "Competing Asset"); provided GGPLP, GG Properties or such Affiliate terminates any management position with respect to such Competing Asset as soon as possible but no later than within one year after acquiring the same. (c) Subject to Section 7.10(a) and (b), each Member and its Affiliates may engage or invest in any other activity or venture or possess any direct or indirect interest therein independently or with others. None of the Members, the Company or any other Person employed by, related to or in any way affiliated with any Member or the Company shall have any duty or obligation to disclose or offer to the Company or any of the Members, or obtain for the benefit of the Company or any of the Members, any such other activity or venture or interest therein. None of the Company, the Members, the creditors of the Company or any other person having any interest in the Company shall have (i) any claim, right or cause of action against any of the Members or any other Person employed by, related to or in any way affiliated with, any of the Members by reason of any direct or indirect investment or other participation, whether active or passive, in any such activity or venture therein or (ii) any right to any such activity or venture or interest therein or the income or profits derived therefrom. 7.11 RIGHT OF PUBLIC TO RELY ON AUTHORITY OF THE MEMBERS. Nothing herein contained shall impose any obligations on any Person or firm doing business with the Company to inquire as to whether or not a Member or a General Growth Officer has exceeded its authority in executing any contract, lease, mortgage, deed or other instrument on behalf of the Company, and any such third person shall be fully protected in relying upon such authority. 49 56 7.12 STANDARD OF CARE. Subject to the other provisions hereof (including Section 7.13), each of the Board Members and officers shall discharge his or her duties in that capacity in good faith, with the care that a director or officer, as the case may be, of a Delaware corporation would be required to exercise and in a manner he or she believes to be in the best interests of the Company. 7.13 WAIVER AND INDEMNIFICATION. (a) Notwithstanding anything to the contrary contained in this Agreement (including Section 7.12 and the Schedules attached hereto), neither the Members nor any Person acting on their behalf pursuant hereto (including the Board Members and General Growth Officers), shall be liable, responsible or accountable in damages or otherwise to the Company, any Subsidiary or to any Member for any acts or omissions performed or omitted to be performed by them (or any Person acting on their behalf, including the Board Members and the General Growth Officers) in connection with the management of the Company and/or the Subsidiaries and within the scope of the authority conferred upon them by this Agreement, the Board and/or the Act, provided that the Member's or such other Person's conduct or omission to act was taken in good faith and in the belief that such conduct or omission was in the best interests of the Company and/or the Subsidiaries and, provided further, that the Member or such other Person shall not be guilty of intentional misconduct or gross negligence. The Company shall, and hereby does, indemnify and hold harmless the Members and their Affiliates and any individual acting on their behalf (including the Board Members and the General Growth Officers) from any loss, damage, claims or liability, including reasonable attorneys' fees and expenses, incurred by them (i) by reason of any act performed by them or any Person acting on their behalf (including the Board Members and the General Growth Officers) in connection with the management of the Company and/or its Subsidiaries and/or any predecessors or successors thereof or thereto and in accordance with the standards set forth above or (ii) in enforcing the provisions of this indemnity. For purposes of this 7.13, the term "General Growth Officers" shall include the officers, directors and trustees of the Subsidiaries. (b) Any Person entitled to indemnification under this Agreement shall be entitled to receive, upon application therefor (such application to include (i) a written affirmation of such person's good faith belief that he or she met the standard of conduct necessary for entitlement to indemnification by the Company and (ii) his or her written agreement to immediately repay such amount if it should ultimately be determined that he or she has not met such standard), advances to cover the reasonable costs of defending any proceeding against such Person; provided, however, that 50 57 such advances shall be immediately repaid to the Company, without interest, if such Person is found by a court of competent jurisdiction upon entry of a final judgment not to be entitled to such indemnification. (c) The indemnity obligations under this Section 7.13 shall be in addition to any liability which the Company otherwise may have to any Person entitled to receive indemnification under this Agreement, shall extend upon the same terms and conditions to the stockholders, officers, directors, partners, employees and controlling Persons of any such Person, and shall be binding upon and inure to the benefit of any successors, assigns, heirs, and personal representatives of the Company, any Member, and any such other Person. The foregoing provisions shall survive any termination of this Agreement or dissolution of the Company. (d) The Company and the other Members shall be indemnified and held harmless by each Member from and against any and all claims, demands, liabilities, costs, damages, expenses (including reasonable attorneys' fees and disbursements) and causes of action of any nature whatsoever arising out of or incidental to the fraud, willful misconduct or gross negligence of such Member or any Affiliate of such Member. ARTICLE VIII TRANSFERS OF COMPANY UNITS 8.1 CERTAIN RESTRICTIONS. No Member shall, directly or indirectly, Transfer any Units to any Person (any such Person in whose favor a Transfer of Units is made, and all subsequent permitted transferees of any such Person being referred to collectively as "Transferees" and individually as a "Transferee"), unless approved by the Board or unless such Transfer is made pursuant to this Article VIII or Article IX, X or XI hereof; provided, however, that nothing in this Agreement shall restrict the Transfer of any ownership interest in any Member unless such Member's assets consist substantially of its membership interest in the Company, in which case the Transfer shall be deemed a Transfer of Units. Each Member hereby agrees that it will not Transfer all or any portion of its Units except as permitted by this Agreement, that the Company shall not reflect on its books any Transfer of Units to any Person except in accordance with this Agreement, and that any Transfer of Units not permitted by the provisions of this Agreement shall be null and void ab initio. 8.2 COMPLIANCE WITH SECURITIES LAWS. Notwithstanding anything to the contrary contained herein, no Member shall Transfer any Units, and the Company shall not reflect on its books any Transfer of Units, unless (a) the Transfer is pursuant to an 51 58 effective registration statement under the 33 Act and under any applicable state securities or blue sky laws or (b) such Member shall have furnished the Company with evidence reasonably satisfactory to the Company that no such registration is required. A written opinion of counsel of recognized standing to the effect set forth in clause (b) of the preceding sentence shall satisfy the requirements of such clause. 8.3 TRANSFER OF OWNERSHIP INTERESTS IN AFFILIATES. Each Member hereby agrees that the transfer by such Member of any ownership interest or right of exclusive control, if applicable, in any Person that is its Affiliate if (i) such Person or an Affiliate of such Person that is controlled by such Person owns Units and (ii) such Transfer would result in such Person no longer being an Affiliate of such Member, shall be deemed a Transfer of Units owned by such Person; provided, however that this Section 8.3 shall in no way limit the transfer of ownership interests or the right of exclusive control in GG Properties or GGPLP. 8.4. TRANSFERS OF UNITS BY MEMBERS. (a)(i) Except as otherwise provided in this Section 8.4(a), a holder of Class A Units shall not Transfer all or any portion of its Class A Units without the prior approval of the Board. (1) Any holder of Class A Units shall have the right, without the approval of the Board (but subject to the provisions of Sections 8.2, 8.5-8.8 and 8.10 hereof), to Transfer all or any portion of its Class A Units or any direct or indirect interest therein to one or more of its Affiliates (and such Affiliate or Affiliates shall have all rights of the Transferor hereunder and shall be admitted as a Class A Member in lieu of such Class A Member with respect to the Class A Units so transferred). (2) Any holder of Class A Units shall have the right, without the approval of the Board and from and after (but in no event sooner than) the later of the third anniversary of the date hereof and the Stonebriar Grand Opening (but subject to the provisions of Sections 8.2, 8.5-8.8 and 8.10 hereof), to Transfer all or any portion of its Units to one or more Accredited Investors or to another Member; provided that any such Transferee shall not have (and, subject to Section 8.4(a)(ii), the Transferor shall retain) the right to designate Class A Board Members but otherwise shall have all rights of the Transferor hereunder and shall be admitted as a Class A Member in lieu of such Class A Member with respect to the Class A Units so transferred. 52 59 (ii) If at any time the aggregate Proportionate Share of GGPLP and its Affiliates is not at least twenty-six percent (26%) (the "Class A Minimum Investment"), then the Class A Members shall immediately thereafter cease to be entitled to elect Class A Board Members in accordance with the provisions of Article VII hereof, all of the Board Members (including Class A Board Members and Class B Board Members) shall be deemed to have resigned as of such time and the provisions of Section 8.4 (c) shall apply. (b) (i) Except as otherwise provided in this Section 8.4(b), a holder of Class B Units shall not Transfer all or any portion of its Class B Units without the prior approval of the Board. (1) Any holder of Class B Units shall have the right, without the approval of the Board (but subject to the provisions of Sections 8.2, 8.5-8.8 and 8.10 hereof), to Transfer all or any portion of its Class B Units or any direct or indirect interest therein to one or more of its Affiliates (and such Affiliate or Affiliates shall have all rights of the Transferor hereunder and shall be admitted as a Class B Member in lieu of such Class B Member with respect to the Class B Units so transferred). (2) Any holder of Class B Units shall have the right, without the approval of the Board and from and after (but in no event sooner than) the Trigger Date (but subject to the provisions of Sections 8.2, 8.5-8.8 and 8.10 hereof), to Transfer all or any portion of its Class B Units to one or more Accredited Investors or to another Member, provided that, subject to Section 8.4(b)(ii) and (iii), any such Transferee shall not have (and the Transferor shall retain) the right to designate Class B Board Members but otherwise shall have all rights of the Transferor hereunder and shall be admitted as a Class B Member in lieu of such Class B Member with respect to the Class B Units so transferred. (ii) If at any time the aggregate Proportionate Share of NYSCRF and its Affiliates is not at least twenty-six percent (26%) (the "Class B Minimum Investment"), then the Class B Members thereafter shall immediately cease to be entitled to elect Class B Board Members in accordance with the provisions of Article VII hereof, all of the Board Members (including Class A Board Members and Class B Board Members) shall be deemed to 53 60 have resigned as of such time and the provisions of Section 8.4 (c) shall apply. (iii) Notwithstanding anything to the contrary in Section 8.4(b)(ii), the following shall apply: (1) if all or a portion of the outstanding Class B Units are Transferred pursuant to Section 8.4(b)(i)(2) to one Person or one group of Affiliated Persons not formed for the purpose of acquiring such Units (a "Permissible Transferee"), and the Class B Units so Transferred represent at least the Class B Minimum Investment, then such Permissible Transferee shall continue to be entitled to designate Class B Board Members in accordance with the provisions of Article VII and the provisions of Section 7.7 hereof as to approval of Board actions by at least one Class A Board Member and one Class B Board Member shall continue to apply. (2) If (A) all or a portion of the outstanding Class B Units are Transferred pursuant to Section 8.4(b)(i)(2) to a Person not formed for the purpose of acquiring such Class B Units (a "Serial Transferee") by a transferor (a "Serial Transferor") such that the Serial Transferor no longer has the right to designate Class B Board Members pursuant to Section 8.4(b)(ii) and (2) the Serial Transferee by virtue of such transfer, and any previous Transfers of Class B Units by the Serial Transferor to the Serial Transferee, then owns Class B Units at least equal to the Class B Minimum Investment, then the Serial Transferee thereafter shall have the right to designate Class B Board Members in accordance with the provisions of Article VII and the provisions of Section 7.7 hereof as to approval of Board actions by at least one Class A Board Member and one Class B Board Member shall apply. (c) Notwithstanding anything to the contrary contained herein: (i) In the event either the Class A Members or Class B Members (but not both) shall cease to be entitled to elect Board Members in accordance with Article VII hereof as provided in Sections 8.4(a) and (b) above, then (A) the Board shall consist of seven directors, at least a majority of which shall be comprised of Persons independent of the holder or holders of the Electing Class (each, an 54 61 "Independent Board Member"); (B) the holder or holders of the other class of Units (the "Electing Class") shall be entitled to elect six of the Board Members with such Board Members to be elected by the holders of a majority of the Units of the Electing Class, with each Unit of the Electing Class entitled to one vote; (C) the holders of Units of the non-Electing Class shall be entitled to elect one Board Member, with such Board Member to be elected by the holders of a majority of the outstanding Units of the non-Electing Class voting for this purpose as a class, with each Unit of such non-Electing Class entitled to one vote and (D) each and every corporate action taken by vote of the Board or any committee thereof in accordance with the terms hereof shall be authorized only by the affirmative vote of the majority of Board members or committee members, as the case may be, present at a duly constituted meeting at which quorum is present and acting throughout. For purposes of this Agreement, (1) a Person shall be deemed to be an Independent Board Member if such Person is not an Affiliate or employee of any holder of Class A Units or Class B Units, as the case may be, or any of its Affiliates (and, if the Class A Members are the Electing Class, a Person shall be deemed to be an Independent Board Member if such Person is not an Affiliate, director or employee of GG Properties, GGPLP or any of their successors or any of their Affiliates, (2) so long as there is an Electing Class, a Board Member elected by the holders of Units of the non-Electing Class shall be deemed an Independent Board Member and (3) if there is no Electing Class, a Person shall be deemed to be an Independent Board Member if such Person is not an Affiliate, director or employee of any holder of Units or any of its Affiliates. (ii) in the event both the Class A Members and Class B Members shall cease to be entitled to elect Board Members in accordance with Article VII hereof as provided in Sections 8.4(a) and (b) above, (A) the Board shall consist of seven Board Members, at least a majority of which shall be comprised of Independent Board Members, (B) the Units shall be entitled to equal voting rights and powers and shall be voted together as a single class with respect to all matters on which Members may be entitled to vote (including the election of Board Members), with each Unit entitled to one vote, and (C) the approval of a majority of the Board Members 55 62 shall be required to approve an action of the Board or Committee to the extent the same is required hereunder. (d) The Company shall be entitled to treat the record owner of any Unit as the absolute owner thereof in all respects, and shall incur no liability to any purported Transferee of a Unit for distributions of money or other property in good faith made to the record owner of such Unit until all conditions of any Transfer are satisfied in accordance herewith and an instrument effecting such Transfer is received by the Members and is recorded on the books of the Company. 8.5 CERTAIN PROHIBITED TRANSFERS OF UNITS BY MEMBERS (a) Notwithstanding any other provision of this Agreement to the contrary, no Transfer of all or any portion of any Member's Units shall be made if such Transfer would result in: (i) the Company being required to register, [or seek an exemption from registration], as an investment company under the Investment Company Act; (ii) GG Properties failing to qualify as a real estate investment trust under the Code; (iii) an adverse effect for income tax purposes on the Company or any of the continuing Members (other than a constructive termination of the Company pursuant to Code Section 708(b)(1)(B); provided that, at the election of the non-Transferring Member, the Transfer shall be structured to avoid a termination of the Company for Federal income tax purposes, including a delayed purchase of up to 1% membership interest of the Transferring Member); (iv) the Company or its Subsidiaries being subject to materially increased regulatory burdens; (v) a material violation or default under any Key Document of the Company or any of its Subsidiaries; or (vi) a violation of any applicable statute, law, ordinance, rule or regulation of any federal, state or local governmental bodies, agencies or subdivisions having jurisdiction over the Company and its assets. (b) Notwithstanding any other provision of this Agreement to the contrary, without the prior written approval 56 63 of the Class A Board Members, which approval may be given or withheld in the Class A Board Members sole discretion, no Transfer of all or any portion of any Member's Units shall be made to any Person whose principal business is the development or management of regional shopping malls other than any Person that is an insurance company, a pension fund, an investment company registered under the Investment Company Act, an investment advisor registered under the Investment Advisors Act of 1940, as amended, acting in its capacity as an investment advisor, or a fiduciary under ERISA acting in such capacity. (c) Each Member may in its discretion require as a condition of any Transfer permitted under this Article VIII, the delivery of a written opinion of responsible counsel (who may be counsel for the Company), reasonably satisfactory in form and substance to such Member, to the effect that such Transfer would not result in any of the consequences set forth in the clauses of Section 8.5(a) and shall cover such other matters as such Member may reasonably require. In addition, a Person to whom a Transfer may be made pursuant to this Article VIII may also be required, in the discretion of each Member, and as a condition precedent to such Transfer, to make certain reasonable and customary representations, warranties and covenants. The Company shall cooperate with any Member making a Transfer by providing promptly such records and other factual information as may be reasonably requested with respect to any proposed Transfer provided that such Member and any prospective transferee that receives such records and information shall agree in writing to maintain the confidentiality thereof. (d) Notwithstanding anything in this Agreement to the contrary (including the other sections of this Article VIII), in no event shall any Units be Transferred to a Person who is the subject of any pending bankruptcy proceedings or to a Person who is a minor or who otherwise lacks legal capacity, and any attempt to effect a Transfer to such a Person shall be void and of no effect and shall not bind the Company. (e) Notwithstanding anything to the contrary contained in this Agreement (including the other sections of this Article VIII), any Transfer by a Member of its Units, whether direct or indirect, shall be made in full compliance with (i) all applicable statutes, laws, ordinances, rules and regulations of all federal, state and local governmental bodies, agencies and subdivisions having jurisdiction over the Company and its assets and (ii) all Key Documents, so that the operation of the Company can continue without interruption and without material violation of any applicable law or any of such instruments. In the event that any filing, application, approval or consent is required in connection with any such 57 64 Transfer, whether by any governmental entity or other third-party, the Member making such Transfer shall promptly make such filing or application or obtain such approval or consent, at its sole expense, and shall reimburse the other Member for any costs or expenses (including reasonable attorneys' fees and disbursements) incurred by such non-Transferring Member in connection with any filing, application, approval or consent. In the event the Member making a Transfer shall fail to comply with its obligations hereunder, the other Member, upon 10 business days prior written notice to the Transferring Member, may do so at the sole cost and expense of the Transferring Member and adjourn the closing for such periods of time as are necessary, and all reasonable amounts so incurred by such other Member, including accounting, attorneys and other professional fees, shall be payable by the Transferring Member within 10 days after demand therefor. (f) Notwithstanding anything to the contrary contained in this Agreement (including the other sections of this Article VIII), each Member and each Transferee of all or any part of any Units (i) shall at all times maintain an office or agency for the service of process in the United States of America, which shall also be its address for delivery of notices hereunder or (ii) shall be a citizen or national of the United States. (g) If any Person acquires all or any part of the Units of a Member in violation of this Article VIII or any other provision hereof, whether by operation of law, judicial proceeding or other manner not expressly permitted hereunder, such Person shall have no rights under this Agreement with respect to the Units so acquired. 8.6 EXPENSES OF TRANSFER. The transferring Member agrees that it will pay all reasonable expenses, including reasonable attorneys' fees actually incurred by the Company in connection with any Transfer of its Units. 8.7 INDEMNIFICATION BY TRANSFEROR. In the event that the Company or any non-transferring Member becomes involved in any capacity in any action, proceeding, or investigation brought by or against any Person (including any Member) in connection with any Transfer by a Member of its Units (other than a Transfer pursuant to Article IX, X or XI hereof), the transferring Member will periodically reimburse each of the Company and any non-transferring Member for its reasonable legal and other expenses (including the reasonable cost of any investigation and preparation) incurred in connection therewith. To the fullest extent permitted by law, the transferring Member also will indemnify the Company and any non-transferring Member against any losses, claims, damages, or liabilities to which any of them may become subject directly as a 58 65 result of such Transfer. The reimbursement and indemnity obligations of the transferring Member under this paragraph shall be in addition to any liability which the transferring Member may otherwise have, shall extend upon the same terms and conditions to the Members, stockholders, directors, officers, employees, and controlling Persons of the Company and any non-transferring Member, and shall be binding upon and inure to the benefit of any successors, assigns, heirs, and personal representatives of the Company, any non-transferring Member, and any such Persons. The foregoing provisions shall survive any termination of this Agreement or dissolution of the Company. 8.8 ACCEPTANCE OF PRIOR ACTS. Any Person who becomes a Member accepts, ratifies and agrees to be bound by all actions duly taken pursuant to the terms and provisions of this Agreement by the Company and the Members prior to the date it became a Member and, without limiting the generality of the foregoing, specifically ratifies and approves all agreements and other instruments as may have been executed and delivered on behalf of the Company prior to said date and which are in force and effect on said date. 8.9 SUBSTITUTED MEMBERS. Except as otherwise expressly provided herein (including Section 8.4), the Transferee of all or part of the Units of any Member may be substituted as a Member with respect to the Units Transferred, and shall thereupon be entitled to the rights of a Member with respect to such Units, only upon satisfaction of the following conditions and the other conditions specified in this Article VIII: (a) the Transferor grants the Transferee the right to be admitted as a Member; and (b) each of the Members consents to such substitution; provided, however, that the determination to give or withhold consent to any substitution shall be and remain wholly within the absolute discretion of the Members whose consent may be required; 8.10 CERTAIN CONDITIONS TO TRANSFER. As a condition precedent to any Transfer under this Article VIII, each Transferee shall have executed and delivered to the Company and each other Member, an instrument in form reasonably satisfactory to each Member confirming that such Transferee agrees to be bound by the terms of this Agreement (including this Article VIII) and shall have submitted to the Company such evidence as a Member may reasonably request to demonstrate that such Transfer is a permitted transfer under this Article VIII. 8.11 DISSOLUTION OF COMPANY UPON TRANSFER. In the event of a transfer of Units pursuant to this Article VIII, such transfer shall not cause a dissolution of the Company under applicable law. 59 66 8.12 EFFECT OF INITIATION OF CERTAIN PROCEDURES. Notwithstanding anything to the contrary contained herein, once the Class A Members or the Class B Members, as the case may be, shall have initiated the procedures set forth in any of Articles VIII, IX, X or XI, the other Members may not initiate procedures under any of Articles VIII, IX, X or XI until all of the rights under Articles VIII, IX, X or XI then being exercised shall have been fully exercised, exhausted or extinguished. ARTICLE IX PUT OPTION 9.1 PUT OPTION. The Class B Members (acting by majority vote) ("Offerors") shall have the right, but not the obligation (the "Put Option"), to require the Class A Members (the "Offerees") to, at the Class A Members' election, purchase all (but not less than all) of the Units of the Offerors or to market and sell the Company Units or the Properties (or indirect interests therein) upon the terms and subject to the conditions contained herein. Any action by the Offerors hereunder shall for all purposes hereunder bind and be deemed to include all other Offerors hereunder, and any action by the Offerees hereunder shall for all purposes hereunder bind and be deemed to include all other Offerees hereunder. 9.2 EXERCISE. The Put Option is exercisable only by delivery of written notice (the "Put Notice") to the Offerees at any time from and after (but in no event sooner than) the Trigger Date. The Put Notice shall specify that the provisions of this Article IX are being invoked and set forth the proposed Fair Market Value of each Property (the "Proposed Value") as reasonably determined by the Offerors as though no Retained Debt exists. In addition, as a condition precedent to the exercise of the Put Option and the closing of the transactions contemplated thereby, each Offeror must be an Accredited Investor and, as of the date of the Put Notice and the date of such closing, shall represent, warrant and covenant to and for the benefit of Offerees that it is an Accredited Investor, that it is acquiring any shares of GG Stock to be issued to it pursuant to this Article IX for its own account, for investment and not with a view to resale or distribution thereof (other than pursuant to the registration statement described in Section 9.6) and that it will not Transfer all or any portion of such shares in any manner which could violate or cause GG Properties to violate applicable federal or state securities laws. 9.3 DISSOLUTION VALUE OF THE COMPANY. (a) The "Dissolution Value of the Company" shall be the Value of the Properties as determined pursuant to Section 9.3(b) plus the book value of the Other Assets as of the closing date, calculated in accordance with GAAP, less the amount of the liabilities of the Company as of the closing 60 67 date (excluding Retained Debt, which for this purpose is not a Liability and is to be paid in accordance with Section 13.1), calculated in accordance with GAAP to the extent the same shall remain liabilities of the Company after closing (the "Liabilities"). The determination of the Accountants as to the Other Assets and the Liabilities shall be binding absent manifest error. (b) The value of a Property ("Value") shall be the Proposed Value specified in the Put Notice unless the Offerees provide written notice to the Offerors within 45 days following the delivery of the Put Notice designating a different Proposed Value. In the event that the Offerors and the Offerees after using commercially reasonable efforts to do so do not agree on the Fair Market Value of any Property (any such agreed upon Fair Market Value being the Value) within ten (10) days thereafter, the Offerees, on the one hand, and the Offerors, on the other hand, shall each designate an Appraiser. If the Offerees, on the one hand, or the Offerors, on the other hand, fail to select an Appraiser within 10 days following the end of such ten (10) day period, the party failing to designate an Appraiser shall forfeit its right to select an Appraiser, and the Appraiser designated by the other party shall alone make the determinations to be made by the Appraisers herein. Within ten (10) days thereafter, the Appraisers designated by the Offerors and the Offerees shall collectively select a third Appraiser. If no third Appraiser is selected within such time period or if neither the Offerors nor Offerees select an Appraiser in a timely manner, the Appraisal Institute shall select an Appraiser upon the request of either the Offerors or the Offerees. Within thirty (30) days of the selection of the last Appraiser to be selected in accordance with the terms hereof, the Appraisers or Appraiser, as the case may be, shall (by majority vote) select as the Value of each Property the Proposed Value which they believe is closest to the Fair Market Value of such Property (and the Appraisers may select no amount other than the Proposed Value designated by either the Offerors or the Offerees as the Value of such Property), and deliver written notice of the same to the Members. (c) Except as provided in Section 9.4, the fees and expenses of the Appraisers shall be borne (i) by the Offerors if the difference between the Offerors' Proposed Values for all Properties and the Values of the Properties as finally determined pursuant to this Article IX is greater than the difference between the Offerees' Proposed Values for all Properties and the Values of the Properties as finally determined pursuant to this Article IX, (ii) by the Offerees if the first such difference is less than the second and (iii) otherwise equally by the Offerors and the Offerees. 61 68 9.4 RIGHT OF OFFERORS TO WITHDRAW PUT NOTICE. Upon receipt of written notice of the determination of the Value of all Properties in accordance with Section 9.3 hereof, the Offerors (by majority vote) shall have sixty (60) days to withdraw, by written notice to the Offerees, the Put Notice in the event the aggregate Value of all Properties is less than Offerors' aggregate Proposed Values for all Properties. If within such sixty (60) day period, the Offerors shall not have withdrawn the Put Notice, the Put Notice shall become effective. The last day of such sixty (60) day period (or, where the Offerors have no right to withdraw, the date upon which the Members have received written notice of the Value of all Properties) is referred to herein as the "Put Notice Effective Date". In the event of the withdrawal of the Put Notice, the Offerors shall pay all costs and expenses of all Appraisers, the Offerors may not again deliver a Put Notice until the last day of the eighteenth full calendar month following the withdrawal of the Put Notice and the Offerors shall have no right to again withdraw a Put Notice if a Put Notice is given thereafter. 9.5 OPTION OF CLASS A MEMBERS. Upon the Put Notice Effective Date, the Offerees shall have the right to either (a) purchase all of the Offerors' Units for a purchase price and upon the other terms provided in Section 9.6 hereof or (b) elect to market and sell the Company Units or the Properties (or indirect interests therein) in accordance with Section 9.7 hereof. The Offerees may exercise such right by written notice to the Offerors, delivered within sixty (60) days after the Put Notice Effective Date, of its election (each such notice, a "Put Response Notice"). If the Class A Members shall not deliver a Put Response Notice within such sixty (60) day period, the Class A Members shall be deemed to have elected the alternative set forth in clause (b) above. 9.6 PURCHASE OF OFFERORS' UNITS. If the Offerees elect to purchase all of the Offerors' Units pursuant to Section 9.5 above, the following shall apply: (a) The purchase price for the Offerors' Units (the "Put Purchase Price") shall equal the product of the aggregate Proportionate Shares of the Offerors multiplied by the Dissolution Value of the Company. (b) The Put Purchase Price shall be paid in cash; provided, however, that GG Properties shall have the right, but not the obligation (exercisable by delivering notice to Offerors within sixty (60) days following the Put Notice Effective Date), to acquire all or part of the Offerors' Units upon the terms provided herein. If GG Properties exercises such right, any references herein to Offerees shall be deemed to include GG Properties, the Put Purchase Price in respect of such Units shall be paid by delivery, in accordance with the terms hereof, of a number of shares of GG Stock equal to the quotient of such Put Purchase Price divided by the Ten Day 62 69 Average General Growth Share Price. Neither Offerors nor Offerees shall buy or sell or induce any Person to buy or sell (including without limitation short sell) any shares of Common Stock during the ten Trading Days following the date the Put Response Notice is given. (c) The closing of the purchase and sale of the Offerors' Units shall take place at the offices of counsel to the Offerees and shall occur on the date that is not later than one hundred eighty (180) days following the date the Put Response Notice is given (but, in the case where GG Properties has elected to purchase the Offeror's Units, 10 business days following the date the Put Response Notice is given) unless the Members shall have agreed upon a different date in writing. At such closing, (i) the Offerors shall deliver to the Offerees reasonable and customary instruments of transfer sufficient to Transfer to the Offerees the Offerors' Units, free and clear of any Liens other than Liens created by, through or under the Offerees or Liens created in connection with Company financing (such instruments to contain surviving representations and warranties concerning due organization or formation, due authorization, execution and delivery and the absence of Liens (other than as permitted hereby) and no other representations and warranties), (ii) the Offerees shall deliver to the Offerors the Put Purchase Price in immediately available funds and/or by delivery of a certificate or certificates representing shares of GG Stock, as the case may be, equal in the aggregate to the Put Purchase Price, (iii) each of the Offerors and the Offerees shall (and shall cause their respective Affiliates to) take such other actions as shall be reasonably requested by the others to consummate the purchase and sale of the Offerors' Units as contemplated by this Article IX (including, if required, delivering notices to tenants relating to the sale and purchase, using commercially reasonable efforts (without being obligated to pay any amount or incur any obligation) to obtain tenant, lender, ground lessor or joint venturer consents and executing and delivering all amendments to fictitious name, limited liability company or similar certificates necessary to effect the withdrawal of the Offerors from the Company and, if applicable, the termination of the Company), (iv) the Offerors shall discharge of record all Liens, if any, affecting the Offerors' Units other than Liens permitted hereby (and, if the Offerors fail to do so, the Offerees may use any portion of the Put Purchase Price to pay and discharge any such Liens (other than Liens permitted hereby) and any related expenses and may adjourn the closing for such reasonable period not to exceed 30 days as may be necessary for such purpose), (v) the Offerees shall deliver to the Offerors an executed agreement indemnifying the Offerors against claims with respect to the Company arising from and after the closing and (vi) the portion of the Put Purchase Price attributable to the Other 63 70 Assets and/or the Liabilities may (notwithstanding anything to the contrary contained herein) be estimated at closing and adjusted between the parties within ninety (90) days thereafter based on the final determination of the Other Assets and the Liabilities. (d) The Offerors and the Offerees will bear pro rata in accordance with their Proportionate Shares all transfer costs (including any transfer, deed, stamp or other similar taxes, recording fees and, subject to the terms of Section 13.1, prepayment penalties). At the election of the Offerees, the purchase and sale will be structured to avoid a termination of the Company for Federal income tax purposes (including a delayed purchase of up to a 1% membership interest of Offerors). If the Offerees or Offerors shall default in closing the purchase and sale to the Offerors, then the non-defaulting Members may pursue their remedies at law or in equity (including an action for specific performance). If a material casualty or condemnation shall occur prior to the closing date, then the Offerees shall have the right, upon written notice, to terminate their obligations to purchase Offerors' Units. If a casualty loss shall occur which is not material and the closing shall occur, the Offerees shall be entitled to receive the entire net proceeds of any insurance paid or payable in connection therewith (other than proceeds of rent insurance with respect to the period up to the date of sale, which shall be shared by the Members as other items are shared as provided herein). For purposes of this Section 9.6(d), a material casualty or condemnation shall be one which results in damage or a loss in an amount greater than five percent (5%) of the Value of the Properties as determined in accordance with this Article IX. (e) If any purchase pursuant to this Article IX is subject to the premerger notification and reporting requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR"), and the rules and regulations thereunder (the "Rules"), then the Offerors and the Offerees shall use their respective reasonable best efforts to (i) duly file with the Federal Trade Commission ("FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division"), no later than the thirtieth (30th) day after the date the Put Response Notice is given, fully completed premerger notification and report forms which include a request for early termination of the waiting period pursuant to Section 7A(b)(2) of HSR and Rule 803.11 thereunder, and (ii) respond in a timely manner to all oral or written requests from the FTC or the Antitrust Division for additional information or documentary materials. Notwithstanding the foregoing, Offerees shall not be obligated to contest any action or decision taken by the FTC or the Antitrust Division challenging the consummation of the 64 71 acquisition of the Offerors' Units by the Offerees or otherwise agree to the imposition of any material restriction on the business or the operations of the Offerees or any of the Offerees' Affiliates. The filing fees incurred in connection with the premerger notification and report forms shall be borne by Offerors. If the Offerors and the Offerees have complied with the provisions of the immediately preceding paragraph but the applicable waiting period under HSR with respect to the purchase of the Offerors' Units pursuant to this Article IX has not expired or been terminated by the closing date set forth in this Section 9.5, then, notwithstanding anything to the contrary in this Section 9.5, the closing date shall be extended to the fifth business day after all applicable waiting periods under HSR have expired or been terminated. From and after the original closing date set forth in this Section 9.5, the Offerors and the Offerees shall continue to use their respective reasonable best efforts to cause the applicable waiting period under HSR to be terminated. (f) To the extent required to enable Offerees to publicly distribute any GG Stock received by them pursuant to this Article IX, GG Properties shall prepare and file with the Commission promptly following the closing of the purchase and sale pursuant to which such GG Stock was issued a shelf registration statement under the 33 Act registering such GG Stock. GG Properties shall maintain the effectiveness of such shelf registration statement with respect to such GG Stock, and shall include the Offerors as selling stockholders with respect to such shelf registration statement, to the extent the public distribution of such GG Stock would otherwise be prohibited under the 33 Act. All expenses of such shelf registration of GG Stock required by this Section 9.6 (g) shall be paid by GG Properties (but the Offerors shall be responsible for all brokerage fees and underwriting commissions). Upon the happening of any event during the period such registration statement is effective which in the judgment of GG Properties makes any statement made in such registration statement or the prospectus constituting a part thereof untrue in any material respect or which requires the making of any changes in such registration statement or prospectus in order to make the statements therein not misleading (an "Event"), GG Properties promptly shall prepare and file a supplement or post-effective amendment to such registration statement or prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the shares of GG Stock, such prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not 65 72 misleading; provided, however, that the obligation to prepare and file any such supplement or post-effective amendment or other document shall be suspended if GG Properties, relying upon advice of counsel, determines that disclosure of any information required to be included therein would be adverse to its interests. Upon receipt of a notice from GG Properties of the happening of any Event, Offerees shall forthwith discontinue disposition of securities pursuant to such registration statement until Offerors' receipt of the copies of a supplemented or amended prospectus. If requested by Offerors that are selling such GG Stock with a value of $50,000,000.00 or more pursuant to an underwritten offering, GG Properties will reasonably cooperate with Offerors in connection with such underwritten offering, including, upon request, entering into and performing its obligations under a customary underwriting agreement (which may include representations, warranties and indemnities customarily given by GG Properties to its underwriters) with the underwriters of such offering; provided that GG Properties shall have the right to select the lead or managing underwriter for such offering (such underwriter to be either Goldman, Sachs & Co. or one of the top three lead underwriters of REIT equity securities for the immediately preceding completed calendar year) and Offerors shall reimburse GG Properties for all reasonable attorneys' fees incurred by GG Properties in connection with such underwritten offering. (g) After the date of the Put Response Notice until the closing of the purchase of the Offerors' Units by the Offerees pursuant to this Section 9.6, the transferring Members shall retain all rights with respect to their Units, including the right to select Board Members and to receive distributions paid or made with respect to such Units. 9.7 SALE OF COMPANY (a) In the event that the Offerees elect (or are deemed to have elected) to market and sell the Company Units or the Properties (or indirect interests therein) pursuant to Section 9.5(b) hereof, the Offerees shall use commercially reasonable best efforts for a period of 90 days after such election (or deemed election) to market the Company Units or the Properties (and/or the direct or indirect interests therein) for sale to one or more bona-fide third party purchasers in one or more arms-length transactions in accordance with the provisions of this Section 9.7; and, upon execution of a letter of intent (a "Letter of Intent") with one or more of such purchasers and subject to the provision of Section 9.7(c) and the other provisions of this Article IX, Offerors shall use commercially reasonable best efforts to sell or cause the sale of the Company Units, the Properties or the direct or indirect interests therein to such purchaser or purchasers in accordance with the terms of such Letter of Intent and the provisions of this Section 9.7. 66 73 (b) In the event that one or more Letters of Intent for the sale of the Company Units, the Properties and/or the direct or indirect interests therein are not fully executed and delivered within ninety (90) days following the election (or deemed election) of the Offerees pursuant to Section 9.5(b), the Offerors thereafter shall have the right for an additional ninety days to direct the marketing of the Company Units, the Properties and/or the direct or indirect interests therein to one or more bona fide third party purchasers in one or more arms-length transactions in accordance with the provisions of this Section 9.7; and, upon execution of a Letter of Intent with one or more of such purchasers and subject to the provisions of Section 9.7(c) and the other provisions of this Article IX, to sell or cause the sale of the Company Units, the Properties or the direct or indirect interests to such purchaser or purchasers in accordance with the terms of such Letter of Intent and the provisions of this Section 9.7. The rights of the purchaser or purchasers of Company Units and/or Properties (or direct or indirect interests therein) under any Letter of Intent shall be subject to the rights of the Offerees under Section 9.7(d) hereof. (c) Unless otherwise approved by the Board, the sales price (net of credits and prorations) for the Company Units or Properties (or direct or indirect interests therein) payable by a bona-fide third party purchaser pursuant to this Section 9.7 (the "Net Sales Price") shall be no less than 95% of the Dissolution Value of the Company (for purposes of this Section 9.7, the Dissolution Value of the Company shall be calculated without reduction for Retained Debt or other Liabilities to the extent that the selling Members directly or indirectly remain responsible to pay such other Liabilities following the purchase and sale other than by reduction of the purchase price) and shall be payable and paid in cash. No sale of the Units or Properties (or indirect interests therein) may be consummated unless a Letter of Intent substantially reflecting the terms of this Section 9.7, including Section 9.7(d), has been executed with respect thereto within either of the 90-day periods described above and no sale may be consummated later than six months following such 90-day period (unless the delay was due to the bad faith of Offerees). (d) In the event that the Net Sales Price for the Company Units or Properties (or direct or indirect interests therein) based on the purchase price set forth in a fully-signed Letter of Intent is less than the Dissolution Value of the Company but at least 95% of the Dissolution Value of the Company, the Offerees shall have the right, exercisable by delivery of written notice to the Offerors within 30 days 67 74 from the date of Offerees' receipt of such fully signed Letter of Intent, to purchase the Offerors' Units for a purchase price equal to the product of the Proportionate Share of the Offerors multiplied by the Net Sales Price and otherwise on the terms, provisions and conditions as are contained in such Letter of Intent. If the Offerees exercise such right in accordance with the foregoing provisions, the Offerees shall be bound to purchase the Units of the Offerors in accordance with such Letter of Intent (as modified in this Section 9.7) and the Offerors shall be bound to sell their Units to Offerees on such terms. In the event that the Offerees deliver written notice of rejection to the Offerors or in the event that the Offerees fail to exercise their right as to the Offerors' Units in the manner required by this Section 9.7, the Offerors shall be free to cause (and to cause the Company and its Subsidiaries to cause) the sale of the Company Units or Properties (or the direct or indirect interests therein) to the purchaser or purchasers identified in such Letter of Intent upon terms not materially more favorable to the purchaser or purchasers than the terms contained in such Letter of Intent. In the event the terms of the sale of Company Units or Properties (or direct or indirect interests therein) become materially more favorable to the purchaser or purchasers, no sale, transfer, assignment or conveyance of the Company Units or Properties (or interests therein) may be made unless the provisions of this Section 9.7(d) are again complied with. Upon the sale of the Properties, the rights of GGPLP, GG Properties and its Affiliates as to property and other management thereof (and any agreements in respect thereof) shall terminate. (e) In connection with the marketing and sale of the Company Units or the Properties (or direct or indirect interests therein) pursuant to this Section 9.7, (i) the Offerors or the Offerees, as the case may be, shall cause the Company to engage an investment banker or other broker that is reasonably satisfactory to the others and on customary terms (including the payment of customary fees and the making of customary representations, warranties and indemnities) to assist in the sale of the Company Units or Properties (or direct or indirect interests therein) (and the fees of such Person shall be borne by the Members pro rata in accordance with their Proportionate Shares), and (ii) each of Offerors and the Offerees shall (and shall cause each of its respective Affiliates to) execute and deliver such documents and take such other actions as the others shall reasonably request in order to consummate the transactions contemplated by this Section 9.7, including making or granting such representations, warranties and indemnities as are reasonable and customary in similar transactions and executing and delivering such instruments of conveyance as may be reasonably required to convey the Units or the Properties (or direct or indirect interests therein) in accordance with this Section 9.7. 68 75 (f) Notwithstanding anything to the contrary contained herein, if the Members cause the sale of Company Units or the Properties (or interests therein) to be sold to a bona fide third party purchaser or purchasers in accordance with the terms hereof, at the closing of such sale, such third party purchaser shall pay to the Members or the Company (or its Subsidiary, as appropriate), in immediately available funds, the entire purchase price to be paid for the same (and, if paid to the Company or any Subsidiary, such purchase price shall be distributed to the Members in accordance with the distribution provisions set forth in Article V with respect to Net Disposition Proceeds). 9.8 PRIORITY. Notwithstanding anything to the contrary contained herein, from and after the delivery of a Put Notice, the Class A Members shall not have the right to Transfer their Units pursuant to Article VIII or deliver a Buy-Sell Notice pursuant to Article X hereof and the Class B Members shall not have the right to deliver a Dissolution Commencement Notice pursuant to Article XI hereof or Transfer their Units unless the Put Notice shall have been withdrawn pursuant to the provisions of Section 9.4 hereof or the provisions of this Article IX otherwise have been carried out. ARTICLE X BUY-SELL RIGHT 10.1 BUY-SELL RIGHT. The Class A Members (acting by majority vote) shall have the right (the "Buy-Sell Right") to require the Class B Members to, at the Class B Members' sole election, sell all of their Units to the Class A Members or purchase all of the Class A Member's Units upon the terms contained herein. Any action by the Class A Members hereunder shall for all purposes hereunder bind and be deemed to include all other Class A Members hereunder, and any action by the Class B Members hereunder shall for all purposes hereunder bind and be deemed to include all other Class B Members hereunder. 10.2 EXERCISE. The Buy-Sell Right is exercisable only by delivery of written notice (the "Buy-Sell Notice") to the Class B Members at any time from and after (but in no event sooner than) the later of the third anniversary of the date hereof and the Stonebriar Grand Opening. The Buy-Sell Notice shall specify that the provisions of this Article X are being invoked and shall contain a value designated by the Class A Members for all of the Properties (the "Buy-Sell Designated Values"). 10.3 OPTION OF CLASS B MEMBERS. Upon receipt of the Buy-Sell Notice, the Class B Members (acting by majority vote) shall have 69 76 the right to either (a) purchase all of the Class A Members' Units or (b) sell all of the Class B Members' Units to the Class A Members, in each case upon the terms contained herein. The Class B Members may exercise such right by written notice to the Class A Members, delivered within sixty (60) days after the Buy-Sell Notice is given, of its election (each such notice, a "Buy-Sell Response Notice"). If the Class B Members shall not deliver a Buy-Sell Response Notice within such sixty (60) day period, the Class B Members shall be deemed to have elected the alternative set forth in clause (b) above. After the date of the Buy-Sell Response Notice until the closing of the purchase by the Transferee Members pursuant to this Article X, the Transferring Members shall retain all rights and obligations with respect to their Units, including the right to select Board Members and to receive distributions paid or made with respect to such Units. 10.4 PURCHASE PRICE; PAYMENT OF PURCHASE PRICE; CLOSING. (a) The purchase price for the Units of the Transferring Members (the "Buy-Sell Purchase Price") shall equal the product of the Dissolution Value of the Company (calculated using the Buy-Sell Designated Values as the Values of the Properties) multiplied by the Proportionate Share of the Transferring Members, and the Buy-Sell Purchase Price shall be paid in cash. (b) The closing of the purchase and sale of Units pursuant to the Buy-Sell Right shall take place at the offices of counsel to the Class B Members and shall occur on the date that is no sooner than thirty (30) days and no later than one hundred eighty (180) days after the Buy-Sell Response Notice (or, where no Buy-Sell Response Notice is given, the last day for giving the Buy-Sell Response Notice) unless the Members shall have agreed upon a different date in writing. At such closing, (i) the Transferring Members shall deliver to the Transferee Members reasonable and customary instruments of transfer sufficient to Transfer to the Transferee Members the Units of the Transferring Members, free and clear of any Liens other than Liens created by, through or under the Transferee Members or Liens created in connection with Company financing (such instruments to contain surviving representations and warranties concerning due organization or formation, due authorization, execution and delivery and the absence of Liens (other than as permitted hereby) and no other representations and warranties), (ii) the Transferee Members shall deliver to the Transferring Members the Buy-Sell Purchase Price in immediately available funds (iii) each of the Members shall take and shall cause their respective Affiliates to take such other actions as shall be reasonably requested by the others to consummate the purchase and sale of Units as contemplated by this Article X (including, if required, delivering notices to tenants relating to the sale and purchase, using 70 77 commercially reasonable efforts (without being obligated to pay any amount or incur any obligation) to obtain tenant, lender, ground lessor or joint venturer consents and executing and delivering all amendments to fictitious name, limited liability company or similar certificates necessary to effect the withdrawal of the Transferring Members from the Company and, if applicable, the termination of the Company), (iv) the Transferring Members shall discharge of record all Liens affecting the Transferee Members' Units, if any, other than Liens permitted hereby (and, if the Transferring Members fail to do so, the Transferee Members may use any portion of the Buy-Sell Purchase Price to pay and discharge any such Liens (other than Liens permitted hereby) and any related expenses and may adjourn the closing for such reasonable period not to exceed 30 days as may be necessary for such purpose), (v) the Transferee Members shall deliver to the Transferring Members an executed agreement indemnifying the Transferring Members against claims with respect to the Company arising from and after the closing and (vi) the portion of the Buy-Sell Purchase Price attributable to the Other Assets and/or the Liabilities may (notwithstanding anything to the contrary contained herein) be estimated at closing and adjusted between the parties within 90 days thereafter based on the final determination of the Other Assets and the Liabilities. (c) The Transferring Members and the Transferee Members will bear pro rata in accordance with their Proportionate Shares all transfer costs (including any transfer, deed, stamp or other similar taxes, recording fees and, subject to the terms of Article XIII, prepayment penalties). At the election of the Transferee Member, the purchase and sale will be structured to avoid a termination of the Company for Federal income tax purposes (including a delayed purchase of up to a 1% membership interest of Transferring Members). If the Transferee Members or the Transferring Members shall default in closing the purchase and sale to the Transferee Members, then the non-defaulting Members may pursue their remedies at law or in equity (including an action for specific performance). If a material casualty or condemnation shall occur prior to the closing date, then the Transferee Members shall have the right, upon written notice, to terminate their obligations to purchase Transferring Members' Units. If a casualty loss shall occur which is not material and the closing shall occur, the Transferee Members shall be entitled to receive the entire net proceeds of any insurance paid or payable in connection therewith (other than proceeds of rent insurance with respect to the period up to the date of sale, which shall be shared by the Members as other items are shared as provided herein). For purposes of this Section 10.4(c), a material casualty or condemnation shall be one which results in damage or a loss in an amount greater than five percent (5%) of the Buy-Sell Designated Values. 71 78 (d) If any purchase pursuant to this Article X is subject to the premerger notification and reporting requirements of HSR and the Rules, then the Members shall use their respective reasonable best efforts to (i) duly file with the FTC and the Antitrust Division, no later than the thirtieth (30th) day after the date the Buy-Sell Response Notice is given (or, where no Buy-Sell Response Notice is given, the last day for giving the Buy-Sell Response Notice), fully completed premerger notification and report forms which include a request for early termination of the waiting period pursuant to Section 7A(b)(2) of HSR and Rule 803.11 thereunder, and (ii) respond in a timely manner to all oral or written requests from the FTC or the Antitrust Division for additional information or documentary materials. Notwithstanding the foregoing, the Transferee Members shall not be obligated to contest any action or decision taken by the FTC or the Antitrust Division challenging the consummation of the acquisition of the Transferring Members' Units by the Transferee Members or otherwise agree to the imposition of any material restriction on the business or the operations of the Transferee Members or any of their Affiliates. The filing fees incurred in connection with the premerger notification and report forms shall be borne by the Class A Members. If the Members have complied with the provisions of the immediately preceding paragraph but the applicable waiting period under HSR with respect to the purchase of the Transferring Members' Units pursuant to this Article X has not expired or been terminated by the closing date set forth in this Section 10.4, then, notwithstanding anything to the contrary in this Section 10.4, the closing date shall be extended to the fifth business day after all applicable waiting periods under HSR have expired or been terminated. From and after the original closing date set forth in this Section 10.4, the Members shall continue to use their respective reasonable best efforts to cause the applicable waiting period under HSR to be terminated. 10.5 PRIORITY. Notwithstanding anything to the contrary contained herein, from and after the delivery of a Buy-Sell Notice, the Class B Members shall not have the right to Transfer their Units pursuant to Article VIII or deliver a Put Notice pursuant to Article IX hereof or a Dissolution Commencement Notice pursuant to Article XI hereof. ARTICLE XI SPECIAL DISSOLUTION RIGHT 11.1 SPECIAL DISSOLUTION RIGHT. The Class B Members (acting by majority vote) shall have the right (the "Dissolution Right") to require that, at the Class A Members' election, (a) certain Company 72 79 Properties be distributed to the Class B Members or (b) the Class A Members' purchase all of the Class B Members' Units upon the terms contained herein. Any action by the Class A Members hereunder shall for all purposes hereunder bind and be deemed to include all other Class A Members hereunder, and any action by the Class B Members hereunder shall for all purposes hereunder bind and be deemed to include all other Class B Members hereunder. 11.2 EXERCISE. The Dissolution Right is only exercisable by delivering a written notice (the "Dissolution Commencement Notice") to the Class A Members from and after (but in no event sooner than) the Trigger Date. The Dissolution Commencement Notice shall specify that the provisions of this Article XI are being invoked and include Proposed Values for the Company Properties. 11.3 DISSOLUTION VALUE OF THE COMPANY. Upon receipt of a Dissolution Commencement Notice, the Dissolution Value of the Company shall be determined in the manner specified in Section 9.3. 11.4 RIGHT TO WITHDRAW DISSOLUTION COMMENCEMENT NOTICE. Upon determination of the Value of the all Properties as provided above, the Class B Members (by majority vote) shall have sixty (60) days to withdraw, by written notice to the Class A Members, the Dissolution Commencement Notice in the event the aggregate Value of all Properties is less than the Class B Members' aggregate Proposed Values for all Properties. If within such sixty (60) day period the Class B Members shall not have withdrawn the Dissolution Commencement Notice, the Dissolution Commencement Notice shall become effective. The last day of such sixty (60) day period (or, where the Class B Members have no right to withdraw, the date upon which the Members have received written notice of the Value of all Properties) is referred to herein as the "Dissolution Commencement Notice Effective Date". In the event of a withdrawal of the Dissolution Commencement Notice, the Class B Members shall pay all costs and expenses of all Appraisers, the Class B Members may not again deliver a Dissolution Commencement Notice until the last day of the eighteenth full calendar month following the withdrawal of the Dissolution Commencement Notice and the Class B Members shall have no right to again withdraw a Dissolution Commencement Notice if a Dissolution Commencement Notice is given thereafter. 11.5 OPTION OF CLASS A MEMBERS. Upon the Dissolution Notice Effective Date, the Class A Members shall have the right to either (a) purchase all of Class B Members' Units or (b) elect to distribute certain of Properties, in each case in accordance with the provisions hereof. The Class A Members may exercise such right by written notice to the Class B Members, delivered within sixty (60) days after the Dissolution Notice Effective Date, of its election (each such notice, a "Dissolution Response Notice"). If the Class A Members shall not deliver a Dissolution Response Notice within such sixty (60) days period, the Class A Members shall be deemed to have elected the alternative set forth in clause (b) above. 73 80 11.6 PURCHASE OF CLASS B MEMBERS' UNITS. If the Class A Members elect to purchase all of the Class B Members' Units pursuant to Section 11.5 above, the following shall apply: (a) The purchase price for the Class B Members' Units (the "Dissolution Purchase Price") shall equal the product of the aggregate Proportionate Shares of the Class B Members multiplied by the Dissolution Value of the Company, and the Dissolution Purchase Price shall be paid in cash. (b) The closing of the purchase and sale of the Class B Members' Units shall take place at the offices of counsel to the Class A Members and shall occur on the date that is no later than one hundred eighty (180) days after the Dissolution Response Notice is given unless the Members shall have agreed upon a different date in writing. At such closing, (i) the Class B Members shall deliver to the Class A Members reasonable and customary instruments of transfer sufficient to Transfer to the Class A Members the Units of the Class B Members, free and clear of any Liens other than Liens created by, through or under the Class A Members or Liens created in connection with Company financing (such instruments to contain surviving representations and warranties concerning due organization or formation, due authorization, execution and delivery and the absence of Liens (other than as permitted hereby) and no other representations and warranties), (ii) the Class A Members shall deliver to the Class B Members the Dissolution Purchase Price in immediately available funds (iii) each of the Members shall take and shall cause their respective Affiliates to take such other actions as shall be reasonably requested by the others to consummate the purchase and sale of Units as contemplated by this Article XI (including, if required, delivering notices to tenants relating to the sale and purchase, using commercially reasonable efforts (without being obligated to pay any amount or incur any obligation) to obtain tenant, lender, ground lessor or joint venturer consents and executing and delivering all amendments to fictitious name, limited liability company or similar certificates necessary to effect the withdrawal of the Class B Members from the Company and, if applicable, the termination of the Company), (iv) the Class B Members shall discharge of record all Liens affecting the Class B Members' Units, if any, other than Liens permitted hereby (and, if the Class B Members fail to do so, the Class A Members may use any portion of the Dissolution Purchase Price to pay and discharge any such Liens (other than Liens permitted hereby) and any related expenses and may adjourn the closing for such reasonable period not to exceed 30 days as may be necessary for such purpose), (v) the Class A Members shall deliver to 74 81 the Class B Members an executed agreement indemnifying the Class B Members against claims with respect to the Company arising from and after the closing and (vi) the portion of the Dissolution Purchase Price attributable to the Other Assets and/or the Liabilities may (notwithstanding anything to the contrary contained herein) be estimated at closing and adjusted between the parties within ninety (90) days thereafter based on the final determination of the Other Assets and the Liabilities. (c) The Class A Members and the Class B Members will bear pro rata in accordance with their Proportionate Shares all transfer costs (including any transfer, deed, stamp or other similar taxes, recording fees and, subject to the terms of Article XIII, prepayment penalties). At the election of the Class A Members, the purchase and sale will be structured to avoid a termination of the Company for Federal income tax purposes (including a delayed purchase of up to a 1% membership interest of Class B Members). If the Class A Members or the Class B Members shall default in closing the purchase and sale to the Class A Members, then the non-defaulting Members may pursue their remedies at law or in equity (including an action for specific performance). If a material casualty or condemnation shall occur prior to the closing date, then the Class A Members shall have the right, upon written notice, to terminate their obligations to purchase the Class B Members' Units. If a casualty loss shall occur which is not material and the closing shall occur, the Class A Members shall be entitled to receive the entire net proceeds of any insurance paid or payable in connection therewith (other than proceeds of rent insurance relating to the period up to the date of sale, which shall be shared by the Members as other items are shared as provided herein). For purposes of this Section 11.6(c), a material casualty or condemnation shall be one which results in damage or a loss in an amount greater than five percent (5%) of the Dissolution Purchase Price. (d) If any purchase pursuant to this Article XI is subject to the premerger notification and reporting requirements of HSR and the Rules, then the Members shall use their respective reasonable best efforts to (i) duly file with the FTC and the Antitrust Division, no later than the thirtieth (30th) day after the date the Dissolution Response Notice is given, fully completed premerger notification and report forms which include a request for early termination of the waiting period pursuant to Section 7A(b)(2) of HSR and Rule 803.11 thereunder, and (ii) respond in a timely manner to all oral or written requests from the FTC or the Antitrust Division for additional information or documentary materials. Notwithstanding the foregoing, the Class A Members shall not be obligated to contest any action or decision taken by the 75 82 FTC or the Antitrust Division challenging the consummation of the acquisition of the Class B Members' Units by the Class A Members or otherwise agree to the imposition of any material restriction on the business or the operations of the Class A Members or any of their Affiliates. The filing fees incurred in connection with the premerger notification and report forms shall be borne by the Class B Members. If the Members have complied with the provisions of the immediately preceding paragraph but the applicable waiting period under HSR with respect to the purchase of the Class B Members' Units pursuant to this Article XI has not expired or been terminated by the closing date set forth in this Section 11.6, then, notwithstanding anything to the contrary in this Section 11.6, the closing date shall be extended to the fifth business day after all applicable waiting periods under HSR have expired or been terminated. From and after the original closing date set forth in this Section 11.6, the Members shall continue to use their respective reasonable best efforts to cause the applicable waiting period under HSR to be terminated. (e) After the date of the Dissolution Response Notice until the closing of the purchase of the Class B Members' Units by the Class A Members pursuant to this Article XI, the Class B Members shall retain all rights with respect to their Units, including the right to select Board Members and to receive distributions paid or made with respect to such Units. 11.7 DISTRIBUTION OF PROPERTIES. (a) If the Class A Members elect to distribute certain of the Company's Properties or the Company's direct or indirect interests therein (together with associated liabilities) pursuant to Section 11.5 hereof, the Company's Properties (together with associated liabilities) shall be divided among the Class A Members, on the one hand, and the Class B Members, on the other hand, by having each select Properties on an alternating one-by-one basis (with the Class B Members being entitled to the first selection) until either the Class A Members or the Class B Members have selected Properties having a Dissolution Value equal to their Proportionate Share of the Dissolution Value of all of the Company's Properties with any remaining Properties going to the other party or parties. (b) The "Dissolution Value of a Property" shall be the Value of the Property, determined in accordance with Section 9.3 above, plus the book value of the Other Assets as of the date of distribution (including Cash Reserves and other non-operating assets) that are attributable or allocable to such Property less the Liabilities as of the date of distribution (including corporate level liabilities) that are associated with or allocable to such 76 83 Property (excluding Retained Debt, which for this purpose is not a Liability and is to be paid in accordance with Section 13.1). The determination of the Accountants as to the Other Assets and the Liabilities (and the allocation thereof among the Properties) shall be binding. (c) All Properties selected by the Class B Members or any direct or indirect interests therein (together with associated liabilities) will be distributed to the Class B Members in exchange for all of their Units, and the Class B Members shall thereafter no longer be Members of the Company and such Properties shall no longer be owned by the Company or any Affiliate thereof for any purpose, including with respect to governance, distributions, valuation or management (and the other Properties shall continue to be owned by the Company and its Subsidiaries and the Class A Members shall continue to own their Units in the Company). Upon distribution of Properties to the Class B Members, any management agreements between GGPLP, GG Properties or any Affiliate of either of them shall terminate without further action except for the provisions thereof which expressly survive the termination thereof. During the period prior to the distribution, the risk of casualty, damage or condemnation or other adverse change with respect to any Property to be distributed to the Class B Members shall be borne by the Class B Members and with respect to any Property to be retained by the Company shall be borne by the Company, provided, however, that any insurance proceeds payable with respect thereto (other than proceeds of rent insurance relating to the period up to the date of sale, which shall be shared by the Members as other items are shared as provided herein) shall, with respect to a Property to be distributed to the Class B Members, be paid to the Class B Members, and with respect to a Property to be retained by the Company, be paid to the Company. Notwithstanding anything to the contrary contained herein, the equity interests in the Entities directly or indirectly owning the Properties that otherwise are to be distributed to the Class B Members may be distributed to the Class B Members in lieu of the distribution of such Properties to the Class B Members. (d) The closing of the distribution of the Properties to be distributed to the Class B Members (together with associated or allocable liabilities) shall take place at the offices of the counsel to the Class A Members and shall occur on a date that is no less than 30 days and no more than 180 days after the date on which such Properties to be distributed were selected unless the Members shall have agreed upon a different date in writing. At such closing, (i) the Members (or their respective Affiliates) shall cause the Company to deliver to the Class B Members (or their designees) reasonable and customary instruments of transfer sufficient to Transfer to the Class B Members (or their designees) the Properties selected by the Class B Members for distribution (or the Company's direct or indirect interests therein), any personal, intangible or tangible property related thereto and the Company's 77 84 (or its Subsidiaries') interest in all of the leases, contracts and other third party agreements relating to the operation and maintenance of such Properties (such instruments to contain surviving representations and warranties concerning due organization or formation and due authorization, execution and delivery and no other representations and warranties), (ii) the Class B Members shall deliver to the Class A Members reasonable and customary instruments of transfer and assumption sufficient to Transfer to the Class A Members the Class B Members' Units, free and clear of any Liens other than Liens created by, through or under the Class A Members or Liens created in connection with Company financing, and sufficient to effect the assumption by the Class B Members of all liabilities associated with or allocable to the Properties directly or indirectly distributed to them (such instruments to contain surviving representations and warranties concerning due organization or formation, due authorization, execution and delivery and the absence of Liens (other than as permitted hereby) and no other representations and warranties), (iii) the Class B Members shall discharge of record all Liens and encumbrances affecting the Class B Members' Units if any other than as permitted hereby, and (iv) each of the Members shall take and shall cause their respective Affiliates to take such other actions as shall be reasonably requested by the others to consummate the transactions as contemplated by this Article XI (including the execution and delivery of all amendments to fictitious name, limited liability company or similar certificates necessary to effect the withdrawal of the Class B Members from the Company and, if applicable, the termination of the Company). The Class A Members, on the one hand, and the Class B Members, on the other hand, will bear pro rata in accordance with their Proportionate Shares all transfer costs (including any transfer, deed, stamp or other similar taxes, recording fees, title insurance premiums, costs of surveys and, subject to the terms of Article XIII, any prepayment penalties and other amounts payable to lenders (other than prepayment penalties and other amounts payable in respect of Retained Debt). In connection with the distributions pursuant to this Article XI, the Class B Members shall have the right to receive title insurance policies and surveys reflecting such distributions and otherwise reflecting the condition of title and survey matters as of the closing date for the Properties distributed to them and the Class A Members shall have the right to receive title insurance policies and surveys reflecting such distributions and otherwise reflecting the condition of title and survey matters as of the closing date for the other Properties. (e) The Class B Members shall indemnify the Company and the Class A Members against any losses, claims, damages or liabilities arising out of or relating to the Properties (and associated liabilities) distributed to the Class B Members (other than losses, claims, damages or liabilities that were created and known by the Class A Members and not disclosed to Class B Members). The Company and the Class A Members shall indemnify the Class B Members against 78 85 any losses, claims, damages or liabilities (other than losses, claims, damages or liabilities that were created and known by the Class B Members and not disclosed to the Class A Members) arising out of or relating to the Properties (and associated liabilities) retained by the Company or distributed to the Class A Member. (f) Each of the Members will and shall cause its respective Affiliates to cooperate with the others to facilitate the distribution of Properties contemplated by this Section 11.7, including with respect to (i) delivering required notices to tenants relating to the distribution, (ii) using commercially reasonable efforts (without being obligated to pay any amount or incur any obligation) to obtain tenant, lender, ground lessor or joint venturer consents, if required, (iii) using commercially reasonable efforts (without being obligated to pay any amounts or incur any obligation) to eliminate any cross-collateralized or cross-defaulted financings between the properties selected by the Class B Members, on the one hand, and the other Properties, on the other hand, including by agreeing to encumber properties not designated for transfer. If the Class A Members or the Class B Members shall default in closing the distributions contemplated by this Article XI, then the non-defaulting Members may pursue their remedies at law or in equity (including an action for specific performance). (g) If as a result of the selection process described above, one party shall be entitled to Properties that have an aggregate Dissolution Value (based on the Dissolution Value of the Properties obtained pursuant to this Section 11.7) in excess of such party's Proportionate Share of the Dissolution Value of all of the Company's Properties, then such party shall pay a cash adjustment to the other party. Such cash adjustment shall be paid on the date the distribution of Properties is made. (h) If at the time a distribution of Properties is to be made and subject to the obligations of the Members hereunder to repay certain of the Retained Debt, a Property (an "Impaired Property") cannot be distributed due to an inability to remove it from a cross-collateralized or cross-defaulted pool, the inability to obtain a necessary consent or any other similar matter, then such Property shall be retained by the Company and the Members shall reselect the Properties that remain in the Company and that were selected after the Impaired Property was selected, on an alternating one-by-one basis. 11.8 PRIORITY. Notwithstanding anything to the contrary in Article VIII, X or XI, from and after the delivery of a Dissolution Commencement Notice by the Class B Members, the Class B Members shall not have the right to deliver a Put Notice pursuant to Article IX or Transfer their Units pursuant to Article VIII and the Class A Members shall not have the right to deliver a Buy-Sell Notice pursuant to Article X or Transfer their Units pursuant to 79 86 Article VIII unless the Class B Group has withdrawn such Dissolution Commencement Notice pursuant to Section 11.4. ARTICLE XII DISSOLUTION AND TERMINATION 12.1 DISSOLUTION. Unless otherwise expressly provided herein to the contrary, the Company shall continue in effect until dissolved and wound up upon the occurrence of any one or more of the following events: (a) the termination, dissolution, insolvency, bankruptcy or withdrawal of any Member (other than in connection with a valid transfer of Units in accordance with the terms hereof) unless the Board elects to continue the business of the Company; (b) the decision of the Board to dissolve the Company; (c) the sale of all or substantially all of the Company Assets and the receipt of all consideration therefor except that if non-monetary consideration is received upon such disposition, the Company shall not be dissolved pursuant to this clause until such consideration is converted into money or money equivalent; and (d) dissolution required by operation of law. Dissolution of the Company caused by a Member in contravention of this Agreement shall be a violation of this Agreement and the other Member shall have all rights and remedies provided under applicable law and, in addition thereto, the right to any and all damages at law or in equity resulting from such violation of this Agreement. To the extent permissible by law, whether or not the business of the Company is continued by the non-defaulting Member, such non-defaulting Member shall be permitted to withhold the defaulting Member's share of Company property the defaulting Member would otherwise be entitled to under this Article XII upon the winding-up and termination of the Company as collateral security for the obligations such defaulting Member may have to the non-defaulting Member in connection with the operation and dissolution of the Company. 12.2 ACCOUNTING. Upon the dissolution of the Company, a proper accounting shall be made of the assets and liabilities of the Company, including all Operating Cash Flow and Net Disposition Proceeds, and the Capital Account of each Member as of the date of dissolution and of the items of Net Income and Net Loss of the Company from the date of the last previous accounting to the date of dissolution. The financial statements and reports specified in Section 6.3 shall be prepared by the Liquidating Member and 80 87 distributed to each Member as though the date of dissolution were the last day of the then current fiscal year and shall reflect such accounting. The Liquidating Member shall also prepare a report (and deliver the same to each of the Members) setting forth in reasonable detail the manner and disposition of assets. 12.3 WINDING-UP. (a) Winding-Up. Upon the dissolution of the Company, the affairs of the Company thereafter shall be wound up and terminated as promptly as practicable in an orderly and businesslike and commercially reasonable manner, and the Members shall continue to share Net Income, Net Loss, Net Operating Cash Flow, Net Disposition Proceeds and other items of the Company during the winding-up period in accordance with the provisions of Articles IV and V hereof. Subject to the provisions of Article VII, the winding-up of the affairs of the Company and the distribution of its assets shall be conducted exclusively by the Liquidating Member in accordance with the provisions hereof. In considering the sale of any Company Assets, the Board may determine to defer the sale of all or any portion of the Company Assets if deemed necessary or appropriate to realize the Fair Market Value of any such Company Assets. (b) Termination. Upon the completion of the winding up of the Company and the distribution of all Company assets, the Company shall terminate and the Liquidating Member shall have the authority to execute and record any and all other documents required to effectuate the termination of the Company and the Members shall cooperate in the execution and delivery of any such reasonable documents required to effectuate the termination of the Company. 12.4 LIQUIDATING DISTRIBUTION. In the event of the dissolution of the Company for any reason, the Company assets shall be liquidated for distribution in the following rank and order: (a) first, to the payment and discharge of all the Company's debts and liabilities in the order of priority as provided by law; (b) second, to the establishment of any necessary reserves to provide for contingent liabilities or obligations of the Company as determined by the Board in its commercially reasonable judgment, if any; and (c) the balance, if any, to the Members pro rata in accordance with their respective positive Capital Accounts, after giving effect to all contributions, distributions and allocations for all periods, including the period during which such distributions occur. 81 88 12.5 DISTRIBUTIONS IN ACCORDANCE WITH CAPITAL ACCOUNTS. In the event the Company is "liquidated" within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g) (the "Liquidation Event"), distributions shall be in accordance with their respective positive Capital Accounts in compliance with Regulation Section 1.704-1(b)(2)(ii)(b)(2), such distributions to be made on or before a date (the "Final Liquidation Date") no later than the later to occur of (i) the last day of the taxable year of the Company in which the Liquidation Event occurs and (ii) ninety days after the date of such Liquidation Event. If the Board determines that the distributions will not be timely made as provided in foregoing paragraph (a), all of the assets and liabilities of the Company shall be distributed in trust with such person as may be selected by the Board, as trustee; the purpose of the trust is to allow the Company to comply with the timing requirements contained in foregoing paragraph (a). The trustee of said trust shall distribute the former Company assets (however constituted, enhanced or otherwise) as promptly as he deems proper and in the same manner as directed in this Section 12.5 (without regard to this sentence or the preceding sentence) and otherwise as required hereunder. The trust shall be terminated as soon as possible after the trust property is distributed to the beneficiaries thereof. 12.6 NEGATIVE CAPITAL ACCOUNTS. No Member shall have an obligation to the Company or any other Member to restore to zero any negative balance in its Capital Account. 12.7 DISTRIBUTIONS IN KIND. Company Assets may not be distributed in kind without the approval of the Board. 12.8 NO REDEMPTION. The Company may not acquire, by redemption or otherwise, any Units of any Member. 12.9 GOVERNANCE. Notwithstanding a dissolution of the Company, until the termination of the business of the Company, the affairs of the Members, as such, shall be continue to be governed by this Agreement. The Liquidating Member shall be subject to the same restrictions on transactions with related parties or involving conflicts of interest as applied prior to the dissolution of the Company, including the consent requirements set forth herein for any such transaction. 12.10 RETURN OF CAPITAL. No Member shall have any right to receive the return of its Capital Contribution or to seek or obtain partition of assets of the Company, other than as provided in this Agreement. 82 89 ARTICLE XIII MATTERS RELATING TO RETAINED DEBT 13.1 PAYMENT OF RETAINED DEBT. (a) Each Member's Capital Account, as of the date hereof, reflects the agreed upon value of the property contributed to the Company pursuant to the Contribution Agreements without regard to the existence of any Retained Debt. For income tax reporting and for all other purposes under this Agreement, the GGPLP Retained Debt and NYSCRF Retained Debt shall be treated as the indebtedness of GGPLP and NYSCRF, respectively. (b) Each Member shall pay the principal, interest and other amounts (including prepayment penalties) in respect of the Retained Debt of such Member as and when due and payable. (c) Each Member shall prepay and otherwise discharge the Retained Debt of such Member in respect of any Property (including payment of prepayment penalties) in the event that such Property (or any direct or indirect interest therein) is Transferred (other than to another Subsidiary), and each Member shall prepay and otherwise discharge all of the Retained Debt of such Member (including payment of prepayment penalties) in the event that the Company dissolves and is liquidated and wound-up or such Member Transfers all of its Units to the other Member or Members or other Person (other than an Affiliate of the Transferring Member) pursuant to this Agreement (unless the Transferee Person assumes responsibility for the obligations hereunder relating to such Retained Debt). A payment required to be made pursuant to this subsection (c) shall be made concurrent with or prior to the Transfer of Properties or Units to which such payment relates or the dissolution, liquidation and winding-up of the Company, as the case may be. (d) Each Member may, at any time and from time to time, prepay all or a portion of its Retained Debt. 13.2 FAILURE TO MAKE PAYMENTS IN RESPECT OF RETAINED DEBT. (a) If a Member determines that another Member has failed to pay any principal, interest or other amount required pursuant to this Article XIII, such Member shall send a written notice (the "Retained Debt Default Notice") to such other Member, notifying such other Member of its failure to make such payment, the amount of such payment, the date such payment was due, and requesting that such payment be paid immediately. (b) If a Member fails to make a payment of principal, interest or other amount required under this Article XIII within 15 days after receiving the Retained Debt Default Notice, then such Member shall be in default (the Member in default is referred to as a "Retained Debt Defaulting Member" and the amount that such Defaulting Member failed to 83 90 contribute is referred to as the "Retained Debt Default Amount") and the Members that are not Default Members (the "Retained Debt Non-Defaulting Members") may (i) pay (and hereby are granted a power of attorney to pay) the Retained Debt Default Amount (which shall be deemed to be a loan by the Retained Debt Non-Defaulting Members to the Retained Debt Defaulting Members) and/or (ii) pursue their other rights and remedies hereunder and, subject to the terms hereof, at law or in equity. Any such loan (a "Retained Debt Default Loan") shall bear interest at the per annum rate equal to Prime plus 4% and shall be payable on demand. The foregoing power of attorney and the power of attorney granted pursuant to Section 14.2(b) are special powers of attorney coupled with an interest, are irrevocable and shall survive the dissolution of each Member and shall survive the delivery of an assignment by a Member of the whole or any portion of its Units. 13.3 INDEMNIFICATION. In addition to the obligations pursuant to Section 13.1 hereof, each Member agrees to indemnify, defend (with counsel reasonably approved by the Company) and hold harmless the Company and the Subsidiaries, the direct or indirect directors, officers, members, partners, shareholders, employees, representatives and agents of the Company and the Subsidiaries and their successors and assigns (collectively, the "Indemnitees"), from and against any claims, actions, proceedings, judgments, obligations, damages, penalties, costs, expenses, liabilities of any kind or nature or losses, including sums paid in settlement of claims and reasonable attorneys' fees, paralegals' fees and expenses, court costs (including any such fees and expenses incurred in enforcing this Agreement or collecting any sums due hereunder), and fees of consultants and experts (collectively, the "Costs") that arise directly or indirectly from the Retained Debt of such Member (other than a Cost resulting from the breach by the Company or an Indemnitee of the provisions hereof). 13.4 SECURITY INTEREST. (a) Each Member hereby assigns and grants to the other Member a first priority lien upon, and a security interest in, all of the Units of such Member and all amounts, payments and proceeds distributable or payable to such Member by the Company, now or in the future, as collateral security for the payment and performance of such Member's obligations under this Article XIII and Article XIV. Each Member shall execute such confirmation and financing statements as the other Member shall reasonably request in order to perfect and maintain the perfection of the lien and security interest herein granted. Any transfer of the Units of a Member shall be subject to such lien and security interest. Unless either Member becomes a Defaulting Member, such Member shall remain entitled to receive distributions in accordance with Article V hereof and exercise all other rights in respect of its Units. 84 91 (b) If (and only if) either Member becomes a Defaulting Member and except as otherwise provided herein, all amounts, payments and proceeds which may become distributable or payable by the Company to such Defaulting Member shall be paid to the Non-Defaulting Members and shall become additional collateral hereunder. (c) This Agreement shall constitute a security agreement under the Uniform Commercial Code. If (and only if) a Member becomes a Defaulting Member, the Non-Defaulting Members may exercise any of the rights and remedies of a secured party under the Uniform Commercial Code with respect to the Units of the Defaulting Member, including the right to sell, assign and deliver such Units, or any part thereof, at public or private sale. At any such sale, the Non-Defaulting Members shall, subject to then applicable law, have the right to purchase the Units of the Defaulting Member or any part thereof, and may credit against the purchase price therefor all or any part of the amount owed to the Non-Defaulting Members by the Defaulting Member. Each Member recognizes that if it becomes a Defaulting Member, the Non-Defaulting Members may be unable to effect a public sale of all or a part of its Units because of certain prohibitions contained in the 33 Act and in applicable state securities laws and, therefore, may be compelled to resort to one or more private sales to a restricted group of offerees and purchasers who fulfill certain suitability standards and agree, among other things, to acquire the interest of the Defaulting Member for their own account, for investment and not with a view to distribution or resale. Each Member agrees that the Non-Defaulting Members shall have no obligation to delay the sale of such interest for the period of time necessary to permit the offering and sale of such interest to be registered for public sale under the 33 Act and applicable state securities laws, or to incur the expense of such registration. Each Member consents that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. Each Member agrees that written notice sent to the Defaulting Member ten (10) business days prior to the date of public sale of such Units or ten (10) business days prior to the date after which private sale or any other disposition of the Units of the Defaulting Member will be made shall constitute reasonable notice (all other notices, demands, or advertisements of any kind being hereby expressly waived), but notice given in any other reasonable manner or at any other reasonable time shall be sufficient. (d) The security interests granted and created under this Article shall have priority over all security interests granted to secure any loans made to such Member (which security interests to a lender shall only be made in accordance with and to the extent permitted by Article VIII 85 92 hereof). Any lender making a loan secured by a security interest in the collateral described in subsection (a) of this Section and/or in the Units of a Member, by its acceptance thereof, acknowledges and consents to the superior priority of the security interest granted by each Member to the other Members under this Agreement, regardless of the date on which the security interest held by such lender is perfected under the Uniform Commercial Code. (e) All Members agree that, notwithstanding anything to the contrary (including but not limited to any order of recording and/or priority of Form UCC-1 financing statements), the security interests of all Non-Defaulting Members that are granted and created pursuant to this Section shall be equal in priority, and that the security interest of one Non-Defaulting Member shall never be deemed to be inferior or superior, or subordinated or paramount, to the security interest of another Non-Defaulting Member; provided, however, that the Members agree that when more than one Non-Defaulting Member is entitled to all or any part of any amounts or proceeds arising out of or derived from any security interests granted and created under this Section 13.4 each Non-Defaulting Member shall share in the amounts and proceeds arising out of or derived from such security interests in the proportion that its Units bears to the aggregate total of all Non-Defaulting Members' Units similarly entitled. The Members agree that all Non-Defaulting Members shall, upon a Member's default, consult and cooperate with one another prior to taking, and throughout the course of, any action relating to the enforcement and/or foreclosure of any security interest created pursuant to this Section but that such cooperation shall not be deemed to require that a Non-Defaulting Member agree with any other Non-Defaulting Member's proposed action. 13.5 OTHER MATTERS RELATING TO RETAINED DEBT. (a) The Company shall cause the Subsidiaries to timely comply with all of the obligations of the Subsidiaries under the Retained Debt Loan Documents (other than the obligation to pay principal, interest and other amounts thereunder). (b) Notwithstanding anything to the contrary contained herein, each Member shall have the right to direct the Company and/or the Subsidiaries to amend or modify the Retained Debt Loan Documents or take other actions in respect of the Retained Debt of such Member (in each case, upon such terms as such Member deems appropriate) without the approval of the Board or the other Members, and the Company shall comply, and cause the Subsidiaries to comply, with any such directions; provided, however, that no Member shall have the right to increase the principal amount or extend the term of, or otherwise materially increase the obligations of the Company 86 93 and/or the Subsidiaries in respect of, the Retained Debt of such Member without Board approval (other than to extend or replace the Retained Debt for an additional three years). (c) Notwithstanding anything to the contrary contained herein, the Company shall not, and shall cause the Subsidiaries not to, amend or modify the Retained Debt Loan Documents or take other actions in respect of the Retained Debt of any Member, including prepayment of the Retained Debt, without the prior written consent of the Board and such Member. ARTICLE XIV ADDITIONAL CAPITAL CONTRIBUTIONS 14.1 ADDITIONAL CAPITAL CONTRIBUTIONS. (a) In the event that the Company officers determine that the funds of the Company and/or the Subsidiaries are insufficient at any time or from time to time to pay the costs of the construction of the Stonebriar Development Project in accordance with the Stonebriar Development Plan (or the costs of any other project that has been approved by the Board and as to which all Members have agreed to require additional Capital Contributions), the Company officers shall deliver to the Members a funding notice (each, a "Funding Notice") specifying the amount of the funds required at such time (each, a "Required Funds Amount") and such Member's Proportionate Share thereof. Each Member shall, within fifteen (15) days after a Funding Notice is given, pay its Proportionate Share of the applicable Required Funds Amount to the Company as an additional Capital Contribution. Such additional Capital Contributions shall be made in immediately available funds. (b) Each Member waives its right to any setoff or reduction with respect to its obligation to make additional Capital Contributions based on any claim that such Member has against the Company or the other Members. (c) No additional Units shall be issued to any Member on account of any additional Capital Contribution made by such Member pursuant to this Article XIV, but the Capital Account of such Member shall be increased on account of such Capital Contribution. 14.2 FAILURE TO MAKE ADDITIONAL CAPITAL CONTRIBUTIONS. (a) If a Member determines that another Member has failed to make an additional Capital Contribution required pursuant to this Article XIV, such Member shall send a written 87 94 notice (the "Contribution Default Notice") to such other Member, notifying such other Member of its failure to make such additional Capital Contribution, the amount of such additional Capital Contribution, the date such additional Capital Contribution was due, and requesting that such additional Capital Contribution be paid immediately. (b) If a Member fails to pay an additional Capital Contribution required under this Article XIV within 15 days after receiving the Contribution Default Notice then such Member shall be in default (the Member in default is referred to as a "Contribution Defaulting Member" and the amount that such Contribution Defaulting Member failed to contribute is referred to as the "Contribute Default Amount") and the Members that are not Contribution Defaulting Members (the "Contribution Non-Defaulting Members") may (i) pay (and hereby are granted a power of attorney to pay) the Contribution Default Amount (which shall be deemed to be a loan by the Contribution Non-Defaulting Members to the Contribution Defaulting Members) and/or (ii) pursue their other rights and remedies hereunder and, subject to the terms hereof, at law or in equity. Any such loan (a "Contribution Default Loan") shall bear interest at the per annum rate equal to Prime plus 4% and shall be payable on demand. ARTICLE XV MISCELLANEOUS 15.1 INJUNCTIVE RELIEF. Each party hereto acknowledges that it would be impossible to determine the amount of damages that would result from any breach of any of the provisions of this Agreement and that the remedy at law for any breach, or threatened breach, of any of such provisions would likely be inadequate and, accordingly, agrees that each other party shall, in addition to any other rights or remedies which it may have hereunder, at law or in equity, be entitled to seek such equitable and injunctive relief as may be available from any court of competent jurisdiction to compel specific performance of, or restrain any party from violating, any of such provisions. In connection with any action or proceeding for injunctive relief, each party hereto hereby waives the claim or defense that a remedy at law alone is adequate and agrees, to the maximum extent permitted by law, to have each provision of this Agreement specifically enforced against it, without the necessity of posting bond or other security against it, and consents to the entry of injunctive relief against it enjoining or restraining any breach or threatened breach of such provisions of this Agreement. 15.2 SUCCESSORS AND ASSIGNS. Subject to the provisions of Article VIII, all the terms and provisions of this Agreement shall be binding upon, shall inure solely to the benefit of and shall be enforceable by the parties hereto and their respective successors and assigns, and no such term or provision is for the benefit of, 88 95 or intended to create any obligations to or rights in, any other Person. If any Member shall acquire additional Units and if any Transferee of any Member shall acquire any Units, in each case in any manner, whether by a permitted Transfer, operation of law or otherwise, such Units shall be held subject to all of the terms of this Agreement, and by taking and holding such Units such Person shall be conclusively deemed to have agreed to be bound by and to comply with all of the terms and provisions of this Agreement. 15.3 AMENDMENT; WAIVER (a) Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the holders of a majority of the Units of each class of Units. (b) No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon breach thereof shall constitute a waiver of any such breach or of any other covenant, duty, agreement or condition, any such waiver being effective only if contained in a writing executed by the waiving party. 15.4 REPRESENTATIONS BY MEMBERS. (a) Each Member represents and warrants that (i) it has been duly authorized to execute, deliver and perform this Agreement and all other instruments executed and delivered on behalf of it in connection with the acquisition of its Units, (ii) the consummation of such transactions will not result in a breach or violation of, or a default under, its charter or by-laws, if such Member is a corporation, or its certificate of limited partnership or its partnership agreement, if such Member is a partnership, or its other organizational documents, if such Member is neither a corporation or partnership, or any existing agreement by which it or any of its properties is bound, (iii) this Agreement is a binding agreement on the part of such Member enforceable in accordance with its terms against such Member, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally or by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or law, (iv) no consent, waiver, approval or authorization of or notice to any other Person (including any governmental authority) is required to be made, obtained or given in connection with the execution and delivery of this Agreement except for those which have been heretofore obtained and (v) neither the execution nor delivery of this Agreement does or will violate, conflict with 89 96 or constitute a default under any term or provision of any judgment, decree, order, statute, injunction, rule or regulation of a governmental entity applicable to such Member or by which such Member or its assets are bound. (b) Each Member, by executing this Agreement, represents and warrants that it has acquired its Units for its own account, for investment and not with a view to resale or distribution thereof, that it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risk of an investment in the Units and is able to bear the economic risk of its investment and that it is fully aware that the Company and other Members are relying upon the truth and accuracy of this representation and warranty. Each Member agrees that it will not transfer, sell or dispose of all or any portion of, or offer to transfer, sell or dispose of all or any portion of its Units, or solicit offers from or otherwise approach or negotiate with any person or persons whomsoever regarding the purchase of all or any portion of its Units in any manner which could violate or cause the Company to violate applicable federal or state securities laws. 15.5 NOTICES. Except as otherwise provided in this Agreement, all notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, when delivered personally or by courier (including nationally recognized overnight courier), five days after being deposited in the United States mail, or when received by facsimile transmission if promptly confirmed by one of the foregoing means, at the address or facsimile transmission number set forth opposite such Member's name on Schedule I hereto (or, in the case of Persons who become parties hereto subsequently, at their last addresses or facsimile transmission numbers shown on the record books of the Company). Each party hereto, by notice given to each other party hereto in accordance with this Section 15.5, may change the address or facsimile transmission number to which such notice or other communications are to be sent to such party. 15.6 FURTHER ASSURANCES. Each party to this Agreement agrees to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments and documents and do all such other acts and things, as may be required by law or as, in the reasonable judgment of the Company management or any Member, may be necessary or advisable to carry out the intent and purpose of this Agreement. 15.7 CONFIDENTIALITY. The Members agree not to disclose or permit the disclosure (except by the Company, any Subsidiary or either of them as may be required in connection with the operation of the business of the Company or any Subsidiary) of any of the 90 97 terms of this Agreement or of any information relating to the assets or business of the Company or any Subsidiary, which the Members hereby acknowledge constitute non-public information, provided that such disclosure may be made (but only as and to the extent required) (a) to any person who is a partner, officer, director or employee of such Member or advisers or counsel to or accountants of such Member solely for their use and on a need-to-know basis, (b) with the prior consent of the Board, (c) pursuant to a subpoena or order issued by a court, arbitrator or governmental body, agency or official, (d) as required by applicable federal or state laws (including securities and freedom of information laws), (e) to any lender or prospective lender to, or investor in, such Member or (f) to any prospective purchaser of Units or any Property. In the event that a Member shall receive a request (or, in the case of NYSCRF, at such time a notice of such request is delivered to the representatives of NYSCRF who are responsible for the administration of its ownership of Units) to disclose any of the terms of this Agreement under subpoena or order, such Member shall (i) promptly notify the Board thereof, (ii) consult with the Board on the advisability of taking steps to resist or narrow such request and (iii) if disclosure is required or deemed advisable, cooperate with the Board in any attempt it may make to obtain an order or other assurance that confidential treatment will be accorded those terms of this Agreement that are disclosed. 15.8 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES). 15.9 HEADINGS. The descriptive headings of the several sections in this Agreement are for convenience only and do not constitute part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 15.10 ENTIRE AGREEMENT. This Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement between the parties hereto and supersedes all prior agreements and understandings, oral or written, between the parties hereto with respect to the subject matter hereof. 15.11 SEVERABILITY. Any provision of this Agreement that is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or lack of authorization without invalidating the remaining provisions hereof or affecting the validity, unenforceability or legality of such provision in any other jurisdiction. 91 98 15.12 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together constitute one and the same document. 15.13 ARBITRATION. Any claim arising out of an alleged breach of this Agreement and any claim that Cause exists pursuant to Section 7.3(d) and (e) shall be resolved by arbitration. Such arbitration shall be conducted in accordance with the following: (a) Each party shall have five (5) business days after written notice by another party of the commencement of arbitration proceedings hereunder to appoint an arbitrator who is on the approved panel of arbitrators of the American Arbitration Association and who was not employed by such Member within the previous 5 years. Each party shall immediately notify the other party of such appointment. The two arbitrators so appointed shall then select a third arbitrator within five (5) business days after the appointment of the second arbitrator to then constitute the Board of Arbitration. If any party shall fail to appoint an arbitrator within such five (5) business day period or, if the two arbitrators selected by the parties shall fail to make a selection of a third arbitrator within five (5) business days of their selection, then the American Arbitration Association shall appoint the arbitrator that was not selected by the failing party or shall appoint the third arbitrator, as the case may be, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The Board of Arbitration shall then proceed under such rules. (b) Following the designation of such Board of Arbitration, the parties, together with the members of the Board of Arbitrators, shall promptly undertake appropriate informal efforts to mediate and negotiate a solution to the matter covered by the original notice. (c) If a negotiated solution cannot be achieved within fourteen (14) days after the date on which the Board of Arbitration is constituted, then the Board of Arbitration shall notify the parties. The proceeding, upon such notification, will then become a compulsory arbitration to be conducted under the Commercial Arbitration Rules of the American Arbitration Association by the Board of Arbitration. These rules shall be subject to the following modifications: (i) discovery shall be permitted under the same standards provided for in the Federal Rules of Civil Procedure; (ii) the members of the Board of Arbitration shall interpret and apply the provisions of this Agreement; 92 99 (iii) the arbitration costs may be charged to the losing party or allocated between the parties as may be determined by the Board of Arbitration; and (iv) the proceedings will be held in Chicago, Illinois, unless the parties shall otherwise agree in writing. (d) In connection with the enforcement of the mediation and arbitration provisions of this Section 15.13, any agreement, decision or award shall be final and conclusive as to any such claim. 15.14 CONSENT TO JURISDICTION. In connection with any suit, claim, action or proceeding relating to the rights and obligations of the parties arising out of this Agreement: the Members hereby consent to the in personam jurisdiction of the United States federal courts and state courts located in New Castle County, Delaware; each such Person agrees that service in the manner set forth in Section 15.5 hereof shall be valid and sufficient for all purposes; and each such Person agrees to, and irrevocably waives any objection based on forum non conveniens or venue not to, appear in any United States federal court or state court located in New Castle County, Delaware. Each Member hereby irrevocably appoints the Company as agent for service of process with respect to any matters relating to the rights and obligations of the parties arising out of this Agreement. 15.15 WAIVER OF PARTITION. Each Member hereby irrevocably waives during the term of the Company any right that it may have to maintain any action for partition with respect to any Company property. 15.16 BROKERAGE (a) each Member hereby represents to the other that it has dealt with no broker or finder in connection with the execution and delivery of this Agreement, the Contribution Agreements, or any other agreements executed in connection with any of the foregoing (collectively, the "Transaction Documents") or the transactions contemplated hereby or thereby. (b) GGPLP shall indemnify, defend and hold harmless NYSCRF and the Company from and against any losses, liabilities, damages, costs and expenses (including reasonable counsel fees and disbursements) resulting from a breach of the foregoing representation by GGPLP or any claim that may be made by any broker, finder or other Person claiming to have dealt with GGPLP or any of its Affiliates in connection with this transaction, for a commission, fee or other compensation by reason of this transaction or any of the other transactions contemplated by this Agreement or the other Transaction Documents. 93 100 (c) NYSCRF shall indemnify, defend and hold harmless GGPLP and the Company from and against any losses, liabilities, damages, costs and expenses (including reasonable counsel fees and disbursements) resulting from a breach of the foregoing representation by NYSCRF or any claim that may be made by any broker, finder or other Person claiming to have dealt with NYSCRF or any of its Affiliates in connection with this transaction, for a commission, fee or other compensation by reason of this transaction or any of the other transactions contemplated by this Agreement or the other Transaction Documents. 15.17 COMPANY NAME. If, at any time, the Company name shall include the name of, or any trade name used by, a Member or any of its Affiliates, neither the Company nor any other Member shall acquire any right, title or interest in or to such name or trade name. 15.18 LITIGATION; NO DISSOLUTION. Subject to the provisions of 7.13 and the other provisions hereof, any Member shall be entitled to maintain, on its own behalf or on behalf of the Company, any action or proceeding against any other Member (including any action for damages, specific performance or declaratory relief) for or by reason of a default by such Member under this Agreement or any other agreement entered into pursuant to or in connection with this Agreement, notwithstanding that any or all of the parties to such proceeding may then be Members in the Company. The Company shall not dissolve by reason of the bringing of any such action or proceeding. 15.19 OWNERSHIP OF COMPANY PROPERTY. The interest of each Member in the Company shall be personal property for all purposes. All real and other property owned by the Company (or its Subsidiaries) shall be deemed owned by the Company (or its Subsidiaries) as Company (or its Subsidiaries') property. No Member, individually, shall have any direct ownership of such property and title to such property shall be held in the name of the Company (or its Affiliates). 15.20 TIME OF THE ESSENCE. Except as otherwise expressly provided in this Agreement (including Section 12.24), time shall be of the essence with respect to all time periods set forth in this Agreement. 15.21 STATUS REPORTS. Recognizing that each Member may find it necessary from time to time to establish to third parties, such as accountants, banks, mortgagees, prospective transferees of their Units, or the like, the then current status of certain matters, each Member shall, within ten (10) business days following the written request of another Member made from time to time, furnish a written statement on the status of the following: 94 101 (a) that this Agreement is unmodified and in full force and effect (or if there have been modifications, that the Agreement is in full force and effect as modified and identifying the documents effecting the modifications); and (b) stating whether or not to the best knowledge of such certifying Member (i) the other Members in the Company are in default in keeping, observing or performing any of the terms contained in this Agreement and, if in default, specifying each such default (limited to those defaults of which the certifying Member has knowledge), and (ii) there has occurred an event that with the passage of time or the giving of notice, or both, would ripen into a default hereunder on the part of such other Member (limited to those events of which the certifying Member has knowledge). Such statement may be relied upon by such other Member and any other Person for whom such statement is requested and shall act as a waiver of any claim by the Member furnishing such certificate to the extent such claim is based upon facts which are contrary to those asserted in the certificate, but no such statement shall operate as a waiver as to any default or other matter as to which the Member executing it did not have actual knowledge. Such certificate shall in no event subject the Member furnishing it to any liability whatsoever, notwithstanding the negligence or inadvertent failure of such Member to disclose correct or relevant information. 15.22 DISPOSITION OF DOCUMENTS. All documents and records of the Company, including all Key Documents, financial records, vouchers, canceled checks, and bank statements shall be delivered to GGPLP upon termination of the Company if GGPLP is then a Member, and otherwise to NYSCRF. Upon request of any Member, copies of all such documents and records shall be provided to such Member at such Member's cost. The Member holding such documents and records shall retain them for a period of at least six (6) years after the termination of the Company and shall make such records available to the other Member for inspection during such period. 15.23 CALCULATION OF DAYS. The provisions of this Agreement relative to number of days shall be deemed to refer to calendar days, unless otherwise specified. When the date for performance of any obligation of any Member falls on a non-business day, such obligation need not be performed until the next following business day. For purposes of this Agreement, a "business day" shall be deemed to mean any day other than Saturday, Sunday, or a day which is in New York, NY either a legal holiday or a day upon which banking institutions are authorized by law to remain closed for the entire day. 95 102 15.24 ATTORNEYS. The Members hereby agree that (a) any attorney which represented any of the Members in connection with the negotiation and execution of this Agreement shall not be disqualified from representing the Company and (b) any such attorney who has represented the Company shall not be disqualified thereafter from representing a Member in a dispute with another Member. 96 103 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above. GGP LIMITED PARTNERSHIP, a Delaware limited partnership By: General Growth Properties, Inc., a Delaware corporation, general partner By: /s/ Joel Bayer ------------------------------------- Name: Joel Bayer -------------------------------- Title: Vice President ------------------------------- THE COMPTROLLER OF THE STATE OF NEW YORK AS TRUSTEE OF THE COMMON RETIREMENT FUND By: ----------------------------------------- Name: -------------------------------- Title: ------------------------------- GGP/HOMART II L.L.C., a Delaware limited liability company By: /s/ Joel Bayer ---------------------------------------- Name: Joel Bayer ----------------------------------- Title: Vice President ---------------------------------- 97 104 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above. GGP LIMITED PARTNERSHIP, a Delaware limited partnership By: General Growth Properties, Inc., a Delaware corporation, general partner By: ------------------------------------- Name: -------------------------------- Title: ------------------------------- THE COMPTROLLER OF THE STATE OF NEW YORK AS TRUSTEE OF THE COMMON RETIREMENT FUND By: /s/ John E. Hull ----------------------------------------- John E. Hull Deputy Comptroller of Investments & Cash Management GGP/HOMART II L.L.C., a Delaware limited liability company By: ---------------------------------------- Name: ----------------------------------- Title: ---------------------------------- EX-4.1 5 FIRST AMENDMENT TO RIGHTS AGREEMENT 1 EXHIBIT 4.1 FIRST AMENDMENT TO RIGHTS AGREEMENT AMENDMENT (this "Amendment"), dated as of November 10, 1999, between General Growth Properties, Inc., a Delaware corporation (the "Company"), and Norwest Bank Minnesota, N.A. (the "Rights Agent"). WITNESSETH: WHEREAS, the Company and the Rights Agent entered into the Rights Agreement, dated as of November 18, 1998 (the "Rights Agreement"); WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may from time to time supplement or amend the Rights Agreement in accordance with the provisions of such Section; and WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the Company and its shareholders that the Rights Agreement be amended as provided herein prior to the Company entering into the Homart II Agreement (as defined below). NOW THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. Definitions. Capitalized terms used herein without definition shall have the meanings specified in the Rights Agreement. Section 2. Amendments. 2.1 Section 1 of the Rights Agreement shall be amended as follows: (a) The definition of "Acquiring Person" shall be amended by inserting a new clause in line 22 of such definition before the phrase "plus 1%", which new clause shall read in its entirety as follows: and upon the sale of all of the Class B Units of GGP/Homart II L.L.C., a Delaware limited liability company, Beneficially Owned by such Homart Holder in exchange for Common Shares pursuant to the terms of, and subject to the restrictions contained in, the Operating Agreement of GGP/Homart II L.L.C., as the same may be amended from time to time (the "Homart II Agreement"), to be entered into by and among GGP/Homart II L.L.C., GGP Limited Partnership, a Delaware limited partnership 2 (the "Partnership"), and the other parties to be listed on the signature pages thereof," (b) The definition of "Acquiring Person" shall be further amended by inserting a new sentence in line 28 before the word "Notwithstanding", which sentence shall read in its entirety as follows: For purposes of this Agreement, a Homart Holder will at all times be deemed to Beneficially Own the Common Shares issuable upon: the exchange of all of the shares of Class B Common Stock of GGP/Homart, Inc. Beneficially Owned by such Homart Holder for Common Shares pursuant to the Homart Agreement and the sale of all of the Class B Units of GGP/Homart II L.L.C. Beneficially Owned by such Homart Holder in exchange for Common Shares pursuant to the Homart II Agreement. (c) The definition of "Grandfathered Stockholders" shall be amended by deleting clause (ii) thereof and inserting a new clause (ii) which shall read in its entirety as follows: "(ii) the Comptroller of the State of New York as Trustee of the Common Retirement Fund and the Affiliates and Associates of such Trustee or Fund (each, a "Homart Holder")." 2.2 Section 3 of the Rights Agreement shall be amended by adding a subparagraph (d) thereto which shall read in its entirety as follows: (d) On the Distribution Date, proper provision shall be made by the Company in order to provide holders ("Unitholders"), other than the Company, of partnership units ("Units") of the Partnership, with such number of Rights, represented by Right Certificates, as would have been issued to such Unitholders upon receipt of Common Shares if such Unitholder's Units had been redeemed immediately prior to such Distribution Date and the purchase price therefor had been paid in the form of Common Shares pursuant to the terms and conditions of Redemption Rights Agreements or similar agreements among the Unitholders (or transferor Unitholders), the Company and/or the Partnership relating, inter alia, to the redemption or exchange of Units, and such Unitholders shall thereafter have all of the rights, privileges, benefits and obligations with respect to such Rights as are 2 3 provided for herein with respect to holders of Common Shares. Section 3. Governing Law. This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. Section 4. Counterparts. This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 5. Ratification. Except as expressly provided herein, this Amendment shall not by implication or otherwise alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Rights Agreement, all of which are ratified and confirmed in all respects and shall continue in full force and effect. 3 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and their respective corporate seals to be hereunder affixed and attested, all as of the day and year first above written. Attest: GENERAL GROWTH PROPERTIES, INC. /s/ Marshall E. Eisenberg By: /s/ Bernard Freibaum ___________________________________ _______________________________ Name: Marshall E. Eisenberg Name: Bernard Freibaum Title: Secretary Title: Executive Vice President Attest: NORWEST BANK MINNESOTA, N.A. /s/ Karri L. VanDell By: /s/ Kenneth P. Swanson ___________________________________ ________________________________ Name: Karri L. VanDell Name: Kenneth P. Swanson Title: Assistant Vice President Title: Vice President 4 EX-4.2 6 LETTER AGMT CONCERNING SHAREHOLDER RIGHTS PLAN 1 EXHIBIT 4.2 GENERAL GROWTH PROPERTIES, INC. GGP LIMITED PARTNERSHIP 110 North Wacker Drive Chicago, Illinois 60606 November 10, 1999 Comptroller of the State of New York as Trustee of the Common Retirement Fund 633 Third Avenue 31st Floor New York, New York 10017-6754 Agreement Concerning Shareholder Rights Plan Dear Sir/Madam: Reference is made to the following: 1. that certain Stockholders Agreement dated as of December 20, 1995, among GGP/Homart, Inc. ("GGP/Homart"), Comptroller of the State of New York as Trustee of the Common Retirement Fund ("NYSCRF"), GGP Limited Partnership ("GGPLP"), General Growth Properties, Inc., ("GGPI") and certain others (as the same has been and may be further amended from time to time, the "Stockholders Agreement"), pursuant to which, among other things, (a) GGP/Homart issued to NYSCRF shares of Class B Common Stock, $.01 par value, of GGP/Homart (together with any shares of Class C Common Stock of GGP/Homart received on conversion of such shares of Class B Common Stock, the "GGP/Homart Shares"), (b) NYSCRF has the right (the "Exchange Right") to exchange all or any portion of the GGP/Homart Shares for an amount determined as provided therein (the "Exchange Amount") and otherwise upon the terms and subject to the conditions contained therein and (c) GGPI has the option to pay the Exchange Amount in cash and/or by delivery of shares of its common stock, $.10 par value ("GGPI Shares"), upon the terms and subject to the conditions contained therein; 2. that certain Operating Agreement dated as of the date hereof, among GGP/Homart II L.L.C. ("GGP/Homart II"), NYSCRF and GGPLP (as the same may be amended from time to time, the "Operating Agreement"), pursuant to which, among other things, (a) GGP/Homart II issued to NYSCRF Class B units of membership interest (the "GGP/Homart Units" and, together with the GGP/Homart Shares, the "Venture Securities"), (b) NYSCRF has the right (the "Put Right" and, together 2 with the Exchange Right, the "Rights") to require GGPLP to purchase all or a portion of the GGP/Homart Units for an amount determined as provided therein (the "Put Purchase Price") and otherwise upon the terms and subject to the conditions contained therein and (c) GGPI has the option to purchase all or a portion of the GGP/Homart Units and pay the Put Purchase Price by delivery of GGPI Shares, upon the terms and subject to the conditions contained therein (the GGPI Shares that are issued from time to time in connection with an exercise of Rights, the "GGPI Rights Shares"); 3. that certain Rights Agreement dated as of November 18, 1998, between GGPI and Norwest Bank Minnesota, N.A., as amended by that certain Amendment to Rights Agreement dated the date hereof (as the same may be further amended from time to time, the "Rights Agreement"); and 4. that certain letter agreement dated the date hereof, between NYRSCF and GGPLP, specifying certain Persons whose principal business is deemed to be the development or management of regional shopping malls (as the same may be amended from time to time, the "Deemed Competitor Letter"). Capitalized terms used herein without definition shall have the meanings set forth in the Rights Agreement. 1. Matters Relating to Transfer of GGPI Shares. (a) Within 30 days following the receipt by GGPI of written notice of a proposed sale, conveyance, exchange or other transfer ("Transfer") of all or any portion of the GGPI Rights Shares, GGPI shall amend the Rights Agreement, if necessary, to permit the proposed transferee (the "Transferee"), together with its Affiliates and Associates, to Beneficially Own up to the number of GGPI Shares described in the last sentence of this Section 1(a) without the Transferee becoming an Acquiring Person under the Rights Agreement. Any such notice shall disclose the identity of the Transferor and proposed Transferee and contain a certification by the proposed Transferee of the number of GGPI Shares then Beneficially Owned by the proposed Transferee and its Affiliates and Associates. The number of GGPI Shares that the Transferee, together with its Affiliates and Associates, may Beneficially Own for purposes of the first sentence of this Section 1(a) is equal to the sum of (i) the number of GGPI Rights Shares, if any, previously Transferred to such Transferee in accordance with this agreement, (ii) the number of GGPI Rights Shares then proposed to be Transferred to such Transferee pursuant to this agreement and (iii) 1% of the number of GGPI Shares then issued and outstanding. 2 3 (b) Prior to any Transfer in connection with which the Rights Agreement has been amended as provided in Section 1(a) hereof, the proposed Transferee shall sign and deliver to GGPI and GGPLP (i) a standstill agreement in the form of Exhibit A, attached hereto and by this reference made a part hereof (a "Standstill Agreement"), and dated the date of the Transfer and (ii) an instrument in form reasonably satisfactory to GGPI and GGPLP, pursuant to which the Transferee agrees to be bound by the terms of this agreement (and upon execution and delivery of such instrument by the Transferee, the Transferee shall be entitled to the benefits of a holder of GGPI Rights Shares under this agreement). If such Transferee has previously signed and delivered to GGPI and GGPLP a Standstill Agreement, it shall deliver a new Standstill Agreement at such time. (c) Neither NYSCRF nor any Transferee which is bound by the terms of this agreement may Transfer any GGPI Shares (including the GGPI Rights Shares or any portion thereof) to any Person described in Section 8.5(b) of the Operating Agreement (as supplemented by the Deemed Competitor Letter) without the written consent of GGPI (which consent may be withheld in the sole and absolute discretion of GGPI), and any Transfer of GGPI Shares in violation of such restriction shall be null and void. 2. Matters Relating to Exercise of Rights and Transfer of Venture Securities. (a) Notwithstanding anything to the contrary contained in the Operating Agreement and the Stockholders Agreement and upon an exercise of Rights by any holder of Venture Securities (other than NYSCRF), GGPI may pay the applicable Exchange Amount or the Put Purchase Price by issuing GGPI Rights Shares but only to the extent that (i) the issuance of GGPI Rights Shares to such holder would not cause such holder to become an Acquiring Person under the Rights Agreement or (ii) GGPI has amended the Rights Agreement (which it may do or decline to do in its sole and absolute discretion) to permit such holder, together with its Affiliates and Associates, to Beneficially Own up to the number of GGPI Shares described in the third sentence of this Section without such holder becoming an Acquiring Person under the Rights Agreement. Notwithstanding anything to the contrary contained in the Operating Agreement and the Stockholders Agreement, GGPLP and/or GGPI may defer the closing of a cash purchase and sale of Venture Securities pursuant to an exercise of the Rights for an additional 150 days in the case of an exercise of the Exchange Right and an additional 90 days in the case of an exercise of the Put Right. The number of GGPI Shares which any holder, together with its Affiliates and Associates, may Beneficially Own for purposes of clause (ii) above shall be equal to the sum of (A) the number of GGPI Rights Shares proposed to be issued by GGPI in connection with an exercise of Rights and (B) the lesser of: (I) the number of GGPI Shares that were Beneficially Owned by such holder, together with its 3 4 Affiliates and Associates, on the date of the first acquisition of Venture Securities by such holder or any of its Affiliates or Associates and (II) the number of GGPI Shares that are Beneficially Owned by the holder and its Affiliates and Associates at the time of such exercise of Rights. Upon exercise of Rights by a holder of Venture Securities, such holder shall deliver to GGPI and GGPLP a certification of the number of GGPI Shares referred to in clauses (B)(I) and (B)(II) above. (b) In the event that the holder of any Venture Securities (other than NYSCRF) exercises Rights, GGPI pays all or a portion of the applicable Put Purchase Price and/or Exchange Amount by delivering GGPI Rights Shares and the Rights Agreement is amended as provided in Section 2(a) hereof, the holder shall sign and deliver to GGPLP and GGPI a Standstill Agreement dated the date the GGPI Rights Shares are issued. If such holder has previously signed and delivered to GGPI and GGPLP a Standstill Agreement, it shall deliver a new Standstill Agreement at such time. (c) Prior to any Transfer of Venture Securities, the proposed Transferee shall sign and deliver to GGPI and GGPLP an instrument in form reasonably satisfactory to GGPI and GGPLP, pursuant to which the Transferee agrees to be bound by the terms of this agreement (and upon execution and delivery of such instrument by the Transferee, the Transferee shall be entitled to the benefits of a holder of Venture Securities under this agreement), and any Transfer of Venture Securities in violation of such restriction shall be null and void. 3. Matters Relating to Amendment of Rights Agreement. GGPI shall not (a) amend clause (ii) of the definition of "Acquiring Person" contained in the Rights Agreement (as in effect on the date hereof) so as to materially and adversely affect NYSCRF without NYSCRF's consent, (b) further amend the Rights Agreement (as in effect on the date hereof) in any manner which is inconsistent with the terms of this agreement or (c) enter into any other agreement which is inconsistent with the terms of this agreement. 4. Matters Relating to Beneficial Ownerships of GGPI Rights Shares. For purposes of the Rights Agreement and/or this agreement and notwithstanding anything to the contrary contained therein or herein, a holder of Venture Securities (other than NYSCRF and its Affiliates and Associates) shall not be deemed to Beneficially Own the GGPI Shares issuable to it upon the exchange or sale of the Venture Securities Beneficially Owned by it solely by virtue of its ownership of such Venture Securities. 5. No Other Changes; Etc. Except as expressly set forth herein, the Stockholders Agreement and Operating Agreement shall remain in full force and effect. Nothing contained herein shall be deemed a waiver of the provisions of GGPI's Certificate of Incorporation, as amended. Any references to the Stockholders 4 5 Agreement in the Stockholders Agreement or elsewhere (except herein unless otherwise specified) shall be deemed to mean the Stockholders Agreement, as amended hereby, and any references to the Operating Agreement in the Operating Agreement or elsewhere (except herein unless otherwise specified) shall be deemed to mean the Operating Agreement, as amended hereby. Neither NYSCRF nor any Transferees shall enter into any transaction or take any other action for the purpose of directly or indirectly avoiding the restrictions contained in this agreement. The parties agree that the restrictions herein are reasonable and the result of arm's-length negotiations. 6. Counterparts. This agreement may be executed in one or more counterparts, each of which shall be an original and all of which together shall constitute one document. 7. Governing Law. The interpretation and performance of this agreement shall be governed under the laws of the State of Delaware (without regard to its conflict of laws rules). 8. Successors and Assigns. The terms of this agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 5 6 Please indicate your agreement with the foregoing by signing and returning the enclosed counterpart of this letter to the undersigned. Very truly yours, GGP LIMITED PARTNERSHIP, a Delaware limited partnership By: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, its general partner By: /s/ JOEL BAYER --------------------------- Name: Joel Bayer --------------------------- Title: Senior Vice President --------------------------- GENERAL GROWTH PROPERTIES,INC., a Delaware corporation By: /s/ JOEL BAYER --------------------------- Name: Joel Bayer --------------------------- Title: Senior Vice President --------------------------- Accepted and agreed to as of the date first above written COMPTROLLER OF THE STATE OF NEW YORK AS TRUSTEE OF THE COMMON RETIREMENT FUND By: /s/ JOHN E. HULL ---------------------- Name: John E. Hull ---------------------- Title: Deputy Comptroller ---------------------- 6 7 The undersigned, GGP/Homart, Inc. and GGP/Homart II L.L.C., do hereby accept and agree to the foregoing to the extent that the foregoing constitutes an amendment to the Stockholders Agreement and the Operating Agreement, respectively. GGP/HOMART, INC., a Delaware corporation By: /s/ JOEL BAYER ---------------------------- Name: Joel Bayer ---------------------------- Title: Senior Vice President ---------------------------- GGP/HOMART II L.L.C., a Delaware limited liability company By: /s/ JOEL BAYER ---------------------------- Name: Joel Bayer ---------------------------- Title: Senior Vice President ---------------------------- 7 -----END PRIVACY-ENHANCED MESSAGE-----