EXHIBIT 10.21
AMENDMENT TO OPERATING AGREEMENT
Amendment to Operating Agreement, dated November 22, 2002 (the
"Amendment"), among GGP Limited Partnership, a Delaware limited partnership
("GGPLP"), The Comptroller of the State of New York as Trustee of the Common
Retirement Fund, a fund established pursuant to NY Retirement and Social
Security Law Section 422, in the custody of the Comptroller of the State of New
York ("NYSCRF" and, together with GGPLP, the "Members"), and GGP/Homart II
L.L.C., a Delaware limited liability company (the "Company").
RECITALS:
WHEREAS, the Members are all of the members of the Company;
WHEREAS, the Company and the Members have entered into that certain
Operating Agreement dated November 10, 1999, as amended (the "Existing Operating
Agreement"), relating to, among other things, the management of the Company and
the transfer of units of membership interest therein;
WHEREAS, the Company previously made certain loans to the Members,
including NYSCRF (such loans that have been made to NYSCRF, the "NYSCRF Existing
Loans");
WHEREAS, Glendale I Mall Associates, LLC, a Delaware limited liability
company ("Glendale LLC"), and certain subsidiaries of Glendale LLC (such
subsidiaries, together with Glendale I, the "Glendale Owners") are the owners of
the shopping center and office building located in Glendale, California and
commonly known as Glendale Galleria (the "Glendale Property");
WHEREAS, JSG, LLC, a Delaware limited liability company ("JSG"), owns a
17.2977% membership interest in Glendale LLC (the "JSG Membership Interest"),
Connecticut General Life Insurance Company, a Connecticut corporation
("Connecticut"), owns a 43.1737% membership interest in Glendale LLC (the
"Connecticut Membership Interest") and New York State Teachers' Retirement
System, a public pension system created and existing pursuant to Article 11 of
the Education Law of the State of New York and having the powers and privileges
of a corporation pursuant to Section 502 thereof ("NYSTRS" and, together with
Connecticut, the "Selling Members"), owns a 39.5286% membership interest in
Glendale LLC (the "NYSTRS Membership Interest" and, together with the
Connecticut Membership Interest and the JSG Membership Interest, the "Membership
Interests");
WHEREAS, the Glendale Owners previously obtained a mortgage loan in the
original principal amount of $170,000,000 from German American Capital
Corporation (the "Existing Mortgage Loan");
WHEREAS, GGPLP, JSG and the Selling Members entered into that certain
Contribution and Sale Agreement dated October 18, 2002 (as the same may be
amended from time to time, the "Contribution and Sale Agreement"), pursuant to
which GGPLP agreed to (a) acquire the JSG Membership Interest in exchange for
the issuance of Series C Preferred Units of limited partnership in GGPLP (the
"Series C Preferred Units"), (b) purchase the Membership Interests of the
Selling Members for the cash consideration specified therein and (c) repay the
Existing Mortgage Loan in full;
WHEREAS, pursuant to the Contribution and Sale Agreement, GGPLP and JSG
agreed to, at the closing of the transactions contemplated thereby (the
"Closing"), enter into a Pledge Agreement substantially in the form attached
thereto (the "JSG Pledge Agreement") and certain documents relating to the
issuance of the Series C Preferred Units as described in Section 1.2 thereof
(collectively, the "Series C Preferred Units Documents"), including without
limitation a Tax Matters Agreement substantially in the form attached thereto
(the "Tax Matters Agreement");
WHEREAS, the parties hereto intend that the cash purchase price to be paid
pursuant to the Contribution and Sale Agreement and the repayment of the
Existing Mortgage Loan be funded from the proceeds of a new mortgage loan on the
Glendale Property (the "New Mortgage Loan") and certain other financing (but any
such financing shall require the approval of the Board of Directors of the
Company as provided in the Existing Operating Agreement);
WHEREAS, the parties hereto desire that (a) GGPLP contribute to the capital
of the Company (i) all of the right, title and interest of GGPLP under the
Contribution and Sale Agreement that relates to the acquisition of the
Membership Interests of the Selling Members and (ii) following the acquisition
of the JSG Membership Interest pursuant to the Contribution and Sale Agreement,
all of the right, title and interest of GGPLP in and to the JSG Membership
Interest and that (b) NYSCRF make an additional capital contribution to the
Company in an amount equal to the aggregate base liquidation preference of the
Series C Preferred Units issued by GGPLP pursuant to the Contribution and Sale
Agreement (which is estimated to be approximately $42.4 million) as provided
herein; and
WHEREAS, the parties desire that the Company amend the Existing Operating
Agreement as hereinafter set forth to reflect their understandings regarding the
foregoing.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
1. Definitions. Capitalized terms used herein without definition shall have
the meanings set forth in the Existing Operating Agreement.
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2. Additional Capital Contributions.
(a) Additional Capital Contributions by GGPLP.
(i) Concurrently herewith, GGPLP shall contribute to the capital of
the Company all of the right, title and interest of GGPLP under the
Contribution and Sale Agreement that relates to the acquisition of the
Membership Interests of the Selling Members, and the Company shall assume
all of the obligations of GGPLP under the Contribution and Sale Agreement
that relate to the acquisition of the Membership Interests of the Selling
Members (including without limitation the obligation to pay the entire
xxxxxxx money deposit due thereunder), pursuant to an Assignment and
Assumption Agreement substantially in the form attached hereto as Exhibit
A. The Company may further assign the right to acquire all or a portion of
such Membership Interests to one or more wholly-owned Subsidiaries
(including GGP-Natick Trust, which is treated as wholly-owned), and, upon
any assignment to any such Subsidiary of the right to acquire all or a
portion of such Membership Interests, such Subsidiary shall assume the
liabilities of the Company under the Contribution and Sale Agreement that
relate thereto. In addition, the parties acknowledge that Glendale LLC may
make a distribution of a portion of the proceeds of the New Mortgage Loan
at Closing, and GGPLP (as the holder of the JSG Membership Interest) hereby
directs that its share of any such distribution be paid to the Company (and
GGPLP shall be deemed to have made a capital contribution to the Company of
such amount).
(ii) Immediately following the Closing, GGPLP shall contribute to the
capital of the Company all of the right, title and interest of GGPLP in and
to the JSG Membership Interest pursuant to an Assignment of Membership
Interest in substantially the form attached hereto as Exhibit B (the
capital contribution described in this paragraph, the "JSG Membership
Interest Contribution"). Except as provided in Sections 2(a)(iv) and 5
hereof, (A) GGPLP shall retain all of the right, title and interest of
GGPLP under the Contribution and Sale Agreement that relates to the
acquisition of the JSG Membership Interest and all right, title and
interest of GGPLP under the Series C Preferred Units Documents and the JSG
Pledge Agreement and (B) the Company is not assuming and shall not be
required to assume any obligations of GGPLP under the Contribution and Sale
Agreement that relate to the acquisition of the JSG Membership Interest or
any obligations of GGPLP under the JSG Pledge Agreement or the Series C
Preferred Units Documents.
(iii) No additional Units shall be issued to GGPLP on account of the
Capital Contributions referred to in this Section 2. Subject to adjustment
in accordance with Section 2(a)(iv) hereof, the Capital Account of GGPLP
shall be increased on account of the Capital Contributions referred to in
Sections 2(a)(i) and (ii) hereof by an amount equal to the
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aggregate base liquidation preference of the Series C Preferred Units
issued by GGPLP pursuant to the Contribution and Sale Agreement.
(iv) Upon receipt by GGPLP of any cash amount from JSG under the
Contribution and Sale Agreement or the JSG Pledge Agreement following
Closing (other than any amount arising from a Series C Preferred Units
Matter, as defined below), GGPLP promptly shall pay such amount to the
Company (and such payment shall not increase the Capital Account of GGPLP).
Upon the surrender by JSG from time to time of any Series C Preferred Units
in satisfaction of any amount owing by JSG to GGPLP pursuant to the
Contribution and Sale Agreement or the JSG Pledge Agreement (other than any
amount arising from a Series C Preferred Units Matter), the Capital Account
of GGPLP shall be reduced by an amount equal to the aggregate base
liquidation preference of such Series C Preferred Units. In the event that
GGPLP is required to pay any amount pursuant to the Contribution and Sale
Agreement following Closing (other than any amount arising from a Series C
Preferred Units Matter), the Company promptly shall reimburse GGPLP
therefor (and the Capital Account of GGPLP shall not be reduced on account
thereof). For purposes hereof, a "Series C Preferred Units Matter" shall
mean (A) any right or obligation under the Contribution and Sale Agreement
that arises solely because the consideration for the JSG Membership
Interest consists of Series C Preferred Units rather than cash and (B) any
right or obligation under the Series C Preferred Units Documents.
(v) GGPLP promptly shall provide to NYSCRF such documents and
information as NYSCRF shall reasonably request in order to verify the
amount of the aggregate base liquidation preference referred to above and
any adjustments thereto.
(b) Additional Capital Contribution by NYSCRF.
(i) Subject to the occurrence of the Closing, NYSCRF shall contribute
to the capital of the Company cash in an amount equal to the aggregate base
liquidation preference of the Series C Preferred Units issued by GGPLP
pursuant to the Contribution and Sale Agreement (the "NYSCRF Contribution
Amount"), together with interest on the outstanding balance thereof at a
rate per annum equal to 7% (compounded quarterly), on or before the
earliest to occur of (A) the dissolution of the Company, (B) the sale of
all or substantially all of the assets of the Company and/or its
Subsidiaries and (C) the Transfer by NYSCRF of all or any part of its Units
to GGPLP (or any assignee thereof), the Company or any other Person (and
the payment of the unpaid NYSCRF Contribution Amount and all accrued and
unpaid interest thereon shall be a condition to any such Transfer). In
addition, NYSCRF shall pay accrued and unpaid interest on the NYSCRF
Contribution Amount to the extent of any distributions paid to NYSCRF by
the Company (other than distributions
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that are applied to the payment of the NYSCRF Existing Loans), and, if
directed by NYSCRF in writing, the Company shall withhold such
distributions and apply them to the payment of the principal amount of the
NYSCRF Contribution Amount and/or accrued and unpaid interest thereon.
Notwithstanding the foregoing, the NYSCRF Contribution Amount shall be
reduced by the amount of any reduction in the Capital Account of GGPLP
pursuant to Section 2(a)(iv) hereof.
(ii) Payments with respect to this Section 2(b) shall be applied first
against accrued and unpaid interest, if any, and then against principal.
(iii) NYSCRF may, at any time and from time to time and without
premium or penalty, prepay all or a portion of the NYSCRF Contribution
Amount.
(iv) NYSCRF waives its right to any setoff or reduction with respect
to its obligation to pay the amounts to be paid by it under this Section
2(b) based on any claim that NYSCRF has against the Company or the other
Members.
(v) No additional Units shall be issued to NYSCRF on account of the
payment of any amount pursuant to this Section 2(b). The Capital Account of
NYSCRF shall be increased by the amount of each payment (other than
interest) made pursuant to this Section 2(b).
(vi) To secure payment of the obligations of NYSCRF described in this
Section 2(b) (collectively, the "NYSCRF Contribution Obligations"), NYSCRF
hereby grants to GGPLP a security interest in the Units owned by NYSCRF on
the date hereof, any Units hereafter acquired by NYSCRF, any and all rights
of NYSCRF in respect of such Units, any distributions of cash or property
in respect of the such Units and any and all other proceeds of any of the
foregoing (such Units and other collateral, collectively, the
"Collateral"). The terms of Section 13.4 of the Existing Operating
Agreement shall apply to the security interest granted herein, and, in the
event that NYSCRF fails to pay any amount owing in respect of the NYSCRF
Contribution Obligations, NYSCRF shall be deemed to be a Defaulting Member
and GGPLP (or its assignee) shall be deemed to be a Non-Defaulting Member
for purposes of such section and the other provisions of the Existing
Operating Agreement.
(vii) Notwithstanding anything to the contrary contained herein,
NYSCRF shall have no personal liability for the performance of the NYSCRF
Contribution Obligations, all such personal liability being waived by the
parties hereto and recourse in respect of the NYSCRF Contribution
Obligations being limited to the Collateral. The foregoing limitations on
personal liability shall in no way impair or constitute a waiver of the
validity of the NYSCRF Contribution Obligations, or the Liens created in
favor of
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GGPLP pursuant hereto, or the right of GGPLP or its agent to foreclose
and/or enforce GGPLP's rights with respect to the Collateral. Nothing
herein shall be deemed to be a waiver of any right which GGPLP may have
under the United States Bankruptcy Code to file a claim for the full amount
of the NYSCRF Contribution Obligations or to require that all Collateral
shall continue to secure all NYSCRF Contribution Obligations. The
provisions set forth in this paragraph are not intended as a release or
discharge of the NYSCRF Contribution Obligations, but are intended as a
limitation, to the extent expressly provided in this paragraph, on GGPLP's
right to xxx for a deficiency or seek a personal judgment against NYSCRF
with respect to the NYSCRF Contribution Obligations.
3. Confirmation Relating to Certain Definitions. The parties hereto confirm
that, from and after the Closing, (a) the Glendale Property shall be a Company
Asset and a Property and (b) Glendale LLC and its subsidiaries shall be
Subsidiaries.
4. Amendment to Exhibit E of the Existing Operating Agreement. The trade
area maps in the form attached hereto as Exhibit C are hereby added to Exhibit E
of the Existing Operating Agreement. Notwithstanding anything to the contrary
contained in the Existing Operating Agreement, as amended hereby, GGPLP and/or
its Affiliates are permitted to provide property management, leasing and/or
development services for the property or properties listed on Exhibit D,
attached hereto and by this reference made a part hereof.
5. Other Matters Relating to Glendale Property.
(a) The Company shall reimburse GGPLP for the costs and expenses
incurred by GGPLP in connection with the transactions contemplated by the
Contribution and Sale Agreement and the financing thereof, including
without limitation the costs and expenses incurred in connection with the
acquisition of the JSG Membership Interest and the issuance of the Series C
Preferred Units.
(b) Following and subject to the occurrence of the JSG Membership
Interest Contribution, the Company shall (i) except as required to
consummate any Exit Transaction (as defined below), perform the obligations
of GGPLP contained in Section 2 of the Tax Matters Agreement to the extent
that they pertain to the Company or any Subsidiary, (ii) reimburse GGPLP
for any amount that is owing pursuant to Section 2 or 3 of the Tax Matters
Agreement on account of any breach of such Section 2 that is caused by the
Company or any Subsidiary thereof (other than a breach that directly
results from the consummation of any Exit Transaction), (iii) perform the
obligations of GGPLP contained in Section 4 of the Tax Matters Agreement to
the extent that they pertain to the Company or any Subsidiary thereof, (iv)
unless the Company or any Subsidiary ceases to own the Glendale Property as
the result of any Exit Transaction or GGPLP ceases to own a direct or
indirect interest in the Company, maintain (or, to the extent applicable,
cause its Subsidiaries to maintain) Qualified Non-Recourse Debt (as defined
in the Tax Matters
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Agreement) to the extent that the same is required to be maintained by
GGPLP pursuant to Section 5 of the Tax Matters Agreement, (v) cooperate
with GGPLP in offering Guarantee Opportunities (as defined in the Tax
Matters Agreement) pursuant to Sections 5 and 6 of the Tax Matters
Agreement (including without limitation by means of offering Guarantee
Opportunities with respect to debt of the Company and/or its Subsidiaries
to the extent that the Company and/or its Subsidiaries have debt available
to be guaranteed that satisfies the requirements of such Sections 5 and 6),
and (vi) reimburse GGPLP for any amount that is owing pursuant to Section 5
or 6 of the Tax Matters Agreement on account of a failure by the Company or
any Subsidiary thereof to comply with clause (iii), (iv) or (v) of this
Section 5(b). Notwithstanding anything to the contrary contained in the
Existing Operating Agreement or this Amendment, (x) the Value of a
Property, the Dissolution Value of the Company and the Dissolution Value of
a Property shall be determined without regard to the obligations contained
in clauses (i) and (ii) of this paragraph, (y) the Class B Members shall
reimburse GGPLP for an amount equal to the product of (1) the payments
actually made by GGPLP pursuant to the Tax Matters Agreement as a direct
result of the consummation of any Specified Exit Transaction multiplied by
(2) a fraction, the numerator of which is the total number of Units owned
by the Class B Members immediately prior to the consummation of such
Specified Exit Transaction and the denominator of which is the total number
of Units owned by all Members immediately prior to the consummation of such
Specified Exit Transaction and (z) all or any part of the Class B Units to
be acquired by GGPLP in any Exit Transaction may be acquired by a designee
of GGPLP. As used herein, an "Exit Transaction" shall mean any transaction
contemplated by Article IX, X or XI of the Existing Operating Agreement and
a "Specified Exit Transaction" shall mean any Exit Transaction described in
Section 9.7 of the Existing Operating Agreement, the purchase of the Units
of GGPLP in an Exit Transaction described in Article X of the Existing
Operating Agreement or any Exit Transaction described in Section 11.7 of
the Existing Operating Agreement.
(c) The Company shall indemnify, defend and hold harmless GGPLP from
and against any and all losses, claims, damages, debts, liabilities, costs
and expenses (including without limitation reasonable attorneys' fees),
whether known or unknown, liquidated or unliquidated, fixed or contingent
or direct or indirect and whether based on contract, tort, statute or other
legal theory of recovery ("Claims"), which relate to or arise out of the
Contribution and Sale Agreement or the transactions contemplated thereby;
provided, however, that the indemnity contained in this paragraph shall not
apply to a Claim to the extent that it arises out of (i) the gross
negligence or intentional misconduct of GGPLP, (ii) any action or omission
of GGPLP or the General Growth Officers in connection with the management
of the Company (for which indemnity is provided, if at all, by Section 7.13
of the Existing Operating Agreement and Section 10 of Schedule II, Part 2,
of the Existing Operating Agreement) or (iii) any Series C Preferred Units
Matter.
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(d) The pro forma for the Glendale Property operations that was
previously delivered to the Members be, and it hereby is, approved as the
Annual Business Plan for the Glendale Property for the remainder of 2002
(and no further approval thereof by the Board shall be required).
(e) Notwithstanding anything to the contrary contained in the Existing
Operating Agreement, as amended hereby, (i) the Company shall engage a
leasing agent (other than GGPLP or an Affiliate thereof) selected by the
General Growth Officers (and, if other than Xxxxx & Xxxxx, approved by the
Class B Directors, whose approval may not be unreasonably withheld) to
provide leasing services for the office building portion of the Glendale
Property upon such terms as the General Growth Officers deem to be
appropriate, (ii) the Company shall pay the fees and other compensation
thereof (but the fees and other compensation must be consistent with the
applicable Annual Business Plan or otherwise be permitted under Section
7.7(c) or Section 7.7(d)(iv) of the Existing Operating Agreement) and (iii)
GGPLP and its Affiliates shall not be required to provide such services or
be entitled to receive any fees pursuant to Section 2 of Schedule IV to the
Existing Operating Agreement on account thereof.
6. Counterparts. This Amendment may be executed in counterparts, each of
which shall constitute an original and all which together shall constitute the
same agreement.
7. Captions. The article and section headings appearing in this Amendment
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
8. Full Force and Effect; Etc. Except as expressly set forth herein, this
Amendment does not constitute a waiver or modification of any provision of the
Existing Operating Agreement. Except as expressly amended hereby, the Existing
Operating Agreement shall continue in full force and effect in accordance with
the provisions thereof on the date hereof. As used in the Existing Operating
Agreement (including without limitation the Exhibits and Schedules thereto), the
terms "the Agreement," "herein," "hereof," "hereinafter," "hereto" and words of
similar import, shall, unless the context otherwise requires, mean the Existing
Operating Agreement, as amended by this Amendment.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment on
the date first written above.
GGP LIMITED PARTNERSHIP, a Delaware
limited partnership
By: General Growth Properties, Inc.,
a Delaware corporation, its general
partner
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx, Executive Vice
President
THE COMPTROLLER OF THE STATE OF NEW YORK
AS TRUSTEE OF THE COMMON RETIREMENT FUND
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
Title: First Deputy Comptroller
GGP/HOMART II L.L.C., a Delaware limited
liability company
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx, Executive Vice
President
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