Exhibit 10.5

 

EXECUTION VERSION

 

STANDSTILL AGREEMENT

 

This Standstill Agreement (this “Agreement”) is dated as of November 9, 2010
(the “Effective Date”), by and between General Growth Properties, Inc., a
Delaware corporation (the “Company”), and The Fairholme Fund, a series of
Fairholme Funds, Inc., a Maryland corporation (“Investor”).

 

WHEREAS, Investor has entered into that certain Amended and Restated Stock
Purchase Agreement, effective as of March 31, 2010 (the “Investment Agreement”),
that contemplates, among other things, the purchase by Investor of shares of
Common Stock subject to the terms and conditions contained therein;

 

WHEREAS, the transactions contemplated by the Investment Agreement are intended 
to assist the Company in its plans to recapitalize and emerge from bankruptcy
and is not intended to constitute a change of control of the Company or
otherwise give Investor the power to control the business and affairs of the
Company;

 

WHEREAS, as a material condition to the Company’s and Investor’s obligations to
consummate the transactions contemplated by the Investment Agreement, the
Company and Investor have agreed to execute this Agreement; and

 

WHEREAS, certain terms used in this Agreement are defined in Section 4.1.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

 

ARTICLE I

 

COMPANY RELATED PRINCIPLES

 

SECTION 1.1            Board of Directors.  So long as Investor, the Investor
Parties and the Subject Persons, collectively, shall Constructively Own more
than ten percent (10%) of the outstanding shares of Common Stock, none of
Investor or the Investor Parties shall take any action that is inconsistent with
its support for the following corporate governance principles:

 

(a)           A majority of the members of the Board shall be Independent
Directors, where “Independent Director” means a director who satisfies all
standards for independence promulgated by the New York Stock Exchange (or the
applicable exchange where shares of Common Stock are then listed);

 

(b)           the Board shall have a nominating committee, a majority of which
shall be Disinterested Directors;

 

(c)           in connection with any stockholder meeting or consent
solicitation, if Investor, the Investor Parties and the Subject Persons
collectively have voting control over a number of shares of Common Stock in
excess of 10% of the number of shares of Common Stock

 

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outstanding as of the applicable record date, then Investor shall, and shall
cause the other Investor Parties to, vote all shares of Common Stock over which
Investor and the other Investor Parties have voting control in excess of such
percentage in proportion to the Votes Cast; provided, however, that the number
of shares of Common Stock which shall be voted by the Investor and the other
Investor Parties in proportion to the Votes Cast shall be increased by the
number of shares of Common Stock that may be voted by the Subject Persons (up to
the number of shares of Common Stock over which the Investor and the Investor
Parties have voting control);

 

(d)           the Board shall consist of nine (9) members and not be increased
or reduced, unless approved by seventy-five percent (75%) of the Board;

 

(e)           any Change in Control (other than a transaction contemplated by
Section 2.1(b)(ii)) in which a Large Stockholder or its controlled Affiliate is
the acquiror or part of the acquiror group or is proposed to be directly or
indirectly combined with the Company must be approved by a majority of the
Disinterested Directors as if it were a Company Transaction involving such Large
Stockholder and by a majority of the voting power of the stockholders (other
than such Large Stockholder or its controlled Affiliates); and

 

(f)            any Change in Control (other than a transaction contemplated by
Section 2.2(b)(v)) in which any Large Stockholder or its controlled Affiliate
receives per share consideration in its capacity as a stockholder of the Company
in excess of that to be received by other stockholders, must be approved by a
majority of the Disinterested Directors as if it were a Company Transaction
involving such Large Stockholder and by a majority of the voting power of the
stockholders (other than such Large Stockholder or its controlled Affiliates).

 

The Company shall not waive any provisions similar to Sections 1.1(c), (e) or
(f) above for any Large Stockholder under any other agreement unless the Company
grants a similar waiver under this Agreement.

 

SECTION 1.2            Related Party Transactions.

 

(a)           Without the approval of a majority of the Disinterested Directors,
Investor shall not, and shall not permit any of the Investor Parties to, engage
in any Company Transaction.  “Company Transaction” means (i) any transaction or
series of related transactions, directly or indirectly, between the Company or
any Subsidiary of the Company, on the one hand, and any of the Investor Parties,
on the other hand, or (ii) without limiting the Company’s obligation to comply
with Sections 1.4 and 1.5 hereof, with respect to the purchase or sale of Common
Stock by any of the Investor Parties, any waiver of any limitation or
restriction with respect to such purchase or sale in the Charter or the
Transaction Documents, including any exemption from the Ownership Limit (as
defined in the Charter); provided, however, that none of the following shall
constitute a Company Transaction:

 

(i)    transactions expressly contemplated in the Transaction Documents;

 

(ii)   customary compensation arrangements (whether in the form of cash or
equity awards), expense reimbursement, director insurance coverage and/or
indemnification arrangements (and related advancement of expenses) in each case
for

 

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Board designees, or any use by such persons, for Company business purposes, of
aircraft, vehicles, property, equipment or other assets owned or customarily
provided to members of the Board by the Company or any of its Subsidiaries;

 

(iii)  any transaction or series of transactions if the same is in the Ordinary
Course of Business and does not involve payments by the Company in excess of
$5,000,000 in the aggregate for such transaction or series of transactions; and

 

(iv)  any transaction among the Company and/or its Subsidiaries and The Howard
Hughes Corporation and/or its Subsidiaries.

 

(b)           Following the Closing (as such term is defined in the Investment
Agreement), any decisions by the Company regarding material amendments or
modifications of the Plan (as such term is defined in the Investment Agreement)
or waivers of the Company’s material rights under the Plan, shall require the
approval of the majority of Disinterested Directors to the extent such
amendment, modification or waiver relates to any Investor Party’s rights or
obligations.

 

SECTION 1.3          No Other Voting Restrictions.  For the avoidance of doubt,
except as restricted herein or by applicable Law, Investor and the other
Investor Parties and the Subject Persons may vote the Common Stock that they
Beneficially Own in their sole and absolute discretion.

 

SECTION 1.4          Amendment of the Charter.  The Company hereby agrees that
following the Closing Date, without the consent of Investor, the Company shall
not amend (or propose to amend) the provisions of the Charter in a manner or
take any other action that would:  (a) change the restriction on Beneficial
Ownership (as such term is defined in the Charter) of the outstanding capital
stock of the Company to a level other than 9.9%; (b) change the restriction on
Constructive Ownership (as such term is defined in the Charter) of the
outstanding capital stock of the Company to a level other than 9.9%; or (c)
change any waiver from the restrictions set forth in the foregoing clauses (a)
and (b) granted to Investor or any Investor Party or Subject Person in any
manner adverse to Investor or any Investor Party or any Subject Person.  For the
avoidance of doubt, nothing in this Section 1.4 shall affect the Board’s
discretion to grant to third parties any waivers from the restrictions on
Beneficial Ownership or Constructive Ownership (as each term is defined in the
Charter) in accordance with the terms of the Charter.

 

SECTION 1.5          Waiver of Ownership Limited in the Charter.  The Company
and the Board shall take all appropriate and necessary action to ensure that the
ownership limitations set forth in the Charter shall be waived with respect to
Investor, the Investor Parties, any Subject Person any Investor Investment
Advisor and any Person (other than a transferee under Section 2.2(b)(vi) unless
such transferee executes a Transferee Agreement) to whom Investor, any Investor
Party, any Subject Person or any Investor Investment Advisor has transferred any
of the Common Stock or Warrants in accordance with the terms of this Agreement
and the Investment Agreement, provided, insofar as the waiver relates to
Investor, an Investor Party, a Subject Person, an Investor Investment Advisor or
a transferee, as the case may be, who Beneficially Owns or Constructively Owns
(as each term is defined in the Charter) (or would, following such transfer,
Beneficially Own or Constructively Own (as each term is defined in the Charter))

 

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interests in excess of the Stock Ownership Limit or the Constructive Ownership
Limit (as each term is defined in the Charter), that the Company has been
provided with a certificate containing the representations and covenants set
forth on Exhibit D to the Investment Agreement (or, to the extent necessitated
by the organizational structure of the party providing such certificate, a
certificate substantially similar to such Exhibit D) from such Investor,
Investor Party, Subject Person, Investor Investment Advisor or transferee, or in
the case of a transferee, a certificate containing the representations and
covenants set forth on Exhibit D to the Investment Agreement (or, to the extent
necessitated by the organizational structure of the party providing such
certificate, a certificate substantially similar to Exhibit D) as modified to
allow such transferee to own stock or other equity interests in a tenant of the
Company or its Subsidiaries to the extent such ownership would not result in (i)
the Company or any of its REIT Subsidiaries other than GGP-Natick Trust or GGP
Ivanhoe, Inc. recognizing more than $1 million of “related party rent” in any
year or (ii) GGP Natick Trust or GGP Ivanhoe, Inc. recognizing more than
$100,000 of “related party rent” in any year.  The parties hereto agree that the
Company may, in the discretion of the Board, grant to third parties any other
waivers from restrictions set forth in the Charter.

 

ARTICLE II

 

INVESTOR RELATED COVENANTS

 

SECTION 2.1            Ownership Limitations.

 

(a)           Except as provided in Section 2.1(b), Investor agrees that it
(together with the other Investor Parties) shall not acquire Economic Ownership
of shares of Common Stock that would result in the Investor Parties and the
Subject Persons in the aggregate Economically Owning a percentage of the
then-outstanding Common Stock on a Fully Diluted Basis that is greater than the
Ownership Cap.  In furtherance of the foregoing, if the Subject Persons acquire
Economic Ownership of Common Stock such that the Investor Parties and the
Subject Persons in the aggregate Economically Own a percentage of the
then-outstanding Common Stock on a Fully Diluted Basis that is greater than the
Ownership Cap, Investor shall, and shall cause the Investor Parties to, promptly
dispose of Common Stock in an orderly fashion in a manner designed so as to not
materially adversely affect the trading market for Common Stock such that,
following such disposition, the Investor Parties and the Subject Persons in the
aggregate no longer Economically Own a percentage of the then-outstanding Common
Stock on a Fully Diluted Basis that is greater than the Ownership Cap.  For the
avoidance of doubt, no Person shall be in violation of this Section 2.1 as a
result of (i) any acquisition by the Company of any Common Stock; (ii) any
change in the percentage of the Investor Parties’ or Subject Persons’ Economic
Ownership of Common Stock that results from a change in the aggregate number of
shares of Common Stock outstanding; or (iii) any change in the number of shares
of Common Stock Economically Owned by the Investor Parties or Subject Persons as
a result of any anti-dilution adjustments to any Equity Securities (as defined
in the Investment Agreement) Economically Owned by any Investor Party or any
Subject Person.

 

(b)           Notwithstanding Section 2.1(a), any of the Investor Parties may
acquire Economic Ownership of shares of Common Stock that would result in the
Investor Parties and the Subject Persons (taken as a whole) having Economic
Ownership of a percentage of the then-

 

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outstanding Common Stock on a Fully Diluted Basis that is greater than the
Ownership Cap under any of the following circumstances:

 

(i)    acquisitions of shares pursuant to any pro rata stock dividend or stock
distribution effected by the Company and approved by a majority of the
Independent Directors; or

 

(ii)   if such acquisition is pursuant to a tender offer or exchange offer, in
each case that includes an offer for all outstanding shares of Common Stock
owned by the Target Stockholders, or a merger, consolidation, binding share
exchange or similar transaction pursuant to an agreement with the Company, so
long as in each case (A) such offer, merger, consolidation, binding share
exchange or similar transaction is approved by a majority of the Disinterested
Directors or by a special committee comprised of Disinterested Directors (such
tender offer or exchange offer, an “Approved Offer”, and such merger,
consolidation, binding share exchange or similar transaction, an “Approved
Merger”), and (B) in any such Approved Offer, a majority of the Target Shares
are tendered into such Approved Offer and not withdrawn prior to the final
expiration of such Approved Offer, or in such Approved Merger, a majority of the
Target Shares that are voted (in person or by proxy) on the related transaction
proposal are voted in favor of such proposal.  As used in this Section
2.1(b)(ii):  “Target Shares” means the then-outstanding shares of Common Stock
not owned by the Investor Parties and the Subject Persons; and “Target
Stockholders” means the stockholders of the Company other than the Investor
Parties and the Subject Persons.

 

(c)           The limitation set forth in Section 2.1(a) may only be waived by
the Company if a majority of the Disinterested Directors consent thereto.

 

SECTION 2.2            Transfer Restrictions.

 

(a)           Subject to Section 2.2(b), unless approved by a majority of the
Independent Directors, Investor shall not, and shall not permit any of the
Investor Parties to, sell or otherwise transfer or agree to transfer (each of
the foregoing, a “Transfer”), directly or indirectly, any shares of Common Stock
that are held directly or indirectly by Investor or any of the other Investor
Parties if, immediately after giving effect to such Transfer, the Person that
acquires such Common Stock (other than any underwriter acting in such capacity
in an underwritten public offering of such shares) would, together with its
Affiliates, to the actual knowledge (“Knowledge”) of the transferor Beneficially
Own more than ten percent (10%) of the then-outstanding Common Stock.  A
transferor shall be deemed to have Knowledge of any transferee’s Beneficial
Ownership of Common Stock if the transferor has actual knowledge of the identity
of the transferee and such Beneficial Ownership has been, at the time of the
agreement to transfer, publicly disclosed in accordance with Section 13 of the
Exchange Act.

 

(b)           The limitations in Section 2.2(a) shall not apply, and any
Investor Party may Transfer freely:

 

(i)    to any Person (including any Affiliate of Investor) if such Person (A)
has executed and delivered to the Company a Transferee Agreement (as defined
below),

 

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and (B) has provided the Company with a certificate containing the
representations set forth on Exhibit D of the Investment Agreement (or, to the
extent necessitated by the organizational structure of the party providing such
certificate, a certificate substantially similar to such Exhibit D) as modified
to allow such Transferee to own stock or other equity interests in a tenant of
the Company or its Subsidiaries to the extent such ownership would not result in
(i) the Company or any of its REIT Subsidiaries other than GGP-Natick Trust or
GGP Ivanhoe, Inc. recognizing more than $1 million of “related party rent” each
year or (ii) GGP-Natick Trust or GGP Ivanhoe, Inc. recognizing more than
$100,000 of “related party rent” each year;

 

(ii)   to one or more underwriters or initial purchasers acting in their
capacity as such in a manner not intended to circumvent the restrictions
contained in 2.2(a);

 

(iii)  in a sale in the public market, in accordance with Rule 144, including
the volume and manner of sale limitations set forth therein;

 

(iv)  in any Merger Transaction (other than a transaction contemplated by
Section 2.2(b)(v) below) or transaction contemplated by clause (iii) of the
definition of Change of Control (A) in which (in either case) no Investor Party
or Subject Person is the acquiror or part of the acquiring group or is proposed
to be combined with the Company and (B) that has been approved by the Board and
a majority of the stockholders (it being understood that this clause (iv) does
not affect the agreement of the parties under Sections 1.1(e) and (f));

 

(v)   in connection with a tender or exchange offer that (A) is not solicited by
any Investor Party (unless such transaction was approved in accordance with
Section 2.1(b)(ii)) or Subject Person and in which all holders of Common Stock
are offered the opportunity to sell shares of Common Stock and (B) complies with
applicable securities laws, including Rule 14d-10 promulgated under the Exchange
Act; and

 

(vi)  in connection with any bona fide mortgage, encumbrance, pledge or
hypothecation of capital stock to a financial institution in connection with any
bona fide loan.

 

(c)           No Transfer under Section 2.2(b)(i) shall be valid unless and
until a Transferee Agreement has been executed by the Transferee and delivered
to the Company.  For the purpose of this Agreement a “Transferee Agreement”
executed by a Transferee means an agreement substantially in the form of this
Agreement or in such other form as is reasonably satisfactory to the Company
except that:

 

(i)    notwithstanding Section 1.1(c), in connection with any stockholder
meeting or consent solicitation relating to (A) the election of members of the
Board, such Transferee may vote the shares of Common Stock that it Beneficially
Owns in favor of one director candidate in its sole and absolute discretion and
regarding any other director candidates in such election must vote in proportion
to Votes Cast, and (B) any other

 

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matter, such Transferee may vote the shares of Common Stock that it Beneficially
Owns in its sole and absolute discretion;

 

(ii)   “Investor” shall be defined to mean such Transferee; and

 

(iii)  any obligation on the part of Investor hereunder to cause the Investor
Parties to take any action or refrain from taking any action shall only apply to
the Investor Parties controlled by the Transferee and the Transferee Agreement
shall provide that the Transferee shall use all reasonable efforts to cause
Affiliates that the Transferee does not control to take or refrain from taking
the action that it is otherwise required to cause under this Agreement.

 

ARTICLE III

 

TERMINATION

 

SECTION 3.1            Termination of Agreement.  This Agreement may be
terminated as follows (the date of such termination, the “Termination Date”)

 

(a)           if Investor and the Company mutually agree to terminate this
Agreement, but only if the Disinterested Directors have approved such
termination;

 

(b)           upon five (5) days notice by the Investor, at any time after (i)
the Other Stockholders Constructively Own more than seventy percent (70%) of the
then-outstanding Common Stock and (ii) the Investor Parties and the Subject
Persons in the aggregate Constructively Own less than fifteen percent (15%) of
the then-outstanding Common Stock on a Fully Diluted Basis;

 

(c)           without any further action by the parties hereto, if Investor and
the Investor Parties and the Subject Persons in the aggregate Constructively Own
less than ten percent (10%) of the then-outstanding Common Stock on a Fully
Diluted Basis;

 

(d)           without any other action by the parties hereto, upon the
consummation of a Change of Control not involving Investor, any Investor Party
or any Subject Person as a purchaser of any direct or indirect interest in the
Company or any of its assets or properties; provided that the Investor Parties
shall not have violated this Agreement in connection with any transaction under
this clause; and

 

(e)           without any other action by the parties hereto, upon the
consummation of: (i) a sale of all or substantially all of the assets the
Company and its Subsidiaries (determined on a consolidated basis), in one
transaction or series of related transactions; or (ii) the acquisition (by
purchase, merger or otherwise) by any Person or Group of Beneficial Ownership of
voting securities of the Company entitling such Person or Group to exercise
ninety percent (90%) or more of the total voting power of all outstanding
securities entitled to vote generally in elections of directors of the Company;
provided that the Investor Parties shall not have violated this Agreement in
connection with any transaction under the preceding clauses (i) and (ii).

 

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SECTION 3.2            Procedure upon Termination.  In the event of termination
pursuant to Section 3.1, this Agreement shall terminate on the Termination Date
without further action by Investor and the Company.

 

SECTION 3.3            Effect of Termination.  In the event that this Agreement
is validly terminated as provided in this Article III, then each of the parties
hereto shall be relieved of their duties and obligations arising under this
Agreement after the date of such termination and such termination shall be
without liability to the other party; provided, however, that Article V shall
survive any such termination and shall be enforceable hereunder; provided
further, however, that nothing in this Section 3.3 shall relieve any party
hereto of any liability for a breach of a representation, warranty or covenant
in this Agreement prior to the Termination Date.

 

ARTICLE IV

 

DEFINITIONS

 

SECTION 4.1            Defined Terms.  For purposes of this Agreement, the
following terms, when used in this Agreement with initial capital letters, shall
have the respective meanings set forth in this Agreement:

 

(a)        “Affiliate” of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person. 
For the purposes of this Agreement, “control” means the possession, directly or
indirectly, of the power to direct the management and policies of a Person
whether through the ownership of voting securities, contract or otherwise.

 

(b)        “Beneficial Ownership” by a Person of any securities means
“beneficial ownership” as used for purposes of Rule 13d-3 adopted by the SEC
under the Exchange Act; provided, however, to the extent the term “Beneficial
Ownership” is used in connection with any obligation on the part of an Investor
Party to vote, or direct the vote, of shares of Common Stock, “Beneficial
Ownership” by a Person of any securities shall be deemed to refer solely to
those securities with respect to which such Person possesses the power to vote
or direct the vote.  The term “Beneficially Own” shall have a correlative
meaning.

 

(c)        “Board” means the Board of Directors of the Company.

 

(d)        “Brookfield Standstill Agreement” means the Standstill Agreement,
dated as of the date hereof, by and between the Company, REP Investments LLC and
the other parties named therein.

 

(e)        “Business Day” means any day other than (i) a Saturday, (ii) a
Sunday, or (iii) any day on which commercial banks in New York, New York are
required or authorized to close by law or executive order.

 

(f)         “Change of Control” means any transaction involving (i) a Merger
Transaction, (ii) a sale of all or substantially all of the assets the Company
and its Subsidiaries (determined on a consolidated basis), in one transaction or
series of related

 

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transactions, or (iii) the consolidation, merger, amalgamation, reorganization
(other than pursuant to the Plan contemplated by the Investment Agreement) of
the Company or a similar transaction in which the Company is combined with
another Person, unless shares of Common Stock held by holders who are not
affiliated with the Company or any entity acquiring the Company remain unchanged
or are exchanged for, converted into or constitute solely (except to the extent
of applicable appraisal rights or cash received in lieu of fractional shares)
the right to receive as consideration Public Stock and the Persons or Group who
beneficially own the outstanding Common Stock of the Company immediately before
consummation of the transaction beneficially own more than 50% (by voting power)
of the outstanding voting stock of the combined or surviving entity or new
parent immediately thereafter.

 

(g)        “Charter” means the Amended and Restated Certificate of Incorporation
of the Company effective as of the date hereof.

 

(h)        “Common Stock”  means the common stock, par value $0.01 per share, of
the Company, as authorized by the Charter as of the Effective Date, and any
successor security as provided by Section 5.11.

 

(i)         “Constructive Ownership” of securities by a Person on any date means
(A) with respect to Common Stock issuable upon exercise of a Warrant, an
interest that would constitute Beneficial Ownership of such Common Stock had the
holder of such Warrant delivered the notice contemplated by Section 3.2 of the
Warrant Agreement (if applicable) at least 90 days prior to, and had such
Warrant been validly exercised on, such date and (B) with respect to any other
securities, including Common Stock (other than Common Stock issuable upon
exercise of the Warrants), Beneficial Ownership of such securities.  The term
“Constructively Own” shall have a correlative meaning.

 

(j)         “Disinterested Director” means (i) with respect to a Company
Transaction or potential Company Transaction, a director who (A) is not
Affiliated with, and was not nominated by, any Investor Party or any Subject
Person that is a participant in such transaction or potential transaction and
(B) who has no personal financial interest in the transaction (other than the
same interest, if a stockholder of the Company, as the other stockholders of the
Company) and (ii) with respect to any matter other than a Company Transaction, a
director who is not Affiliated with, and was not nominated by, any Investor
Party or any Subject Person.

 

(k)        “Economic Ownership” by a Person of any securities includes ownership
by any Person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has (i) Constructive Ownership or (ii)
economic interest in such security as a result of any cash-settled total return
swap transaction or any other swap, other derivative or “synthetic” ownership
arrangement (in which case the number of securities with respect to which such
Person has Economic Ownership shall be determined by the Company in it
reasonable judgment based on such Person’s equivalent net long position);
provided, however, that for purposes of determining Economic Ownership, a Person
shall be deemed to be the Economic Owner of any securities which may be acquired
by such Person pursuant to any agreement, arrangement or understanding

 

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or upon the exercise of conversion rights, exchange rights, warrants or options,
or otherwise (irrespective of whether the right to acquire such securities is
exercisable immediately or only after the giving of notice or the passage of
time, including the giving of notice or the passage of time in excess of sixty
(60) days, the satisfaction of any conditions, the occurrence of any event or
any combination of the foregoing), in each case, without duplication of any
securities included pursuant to sub-clauses (i) or (ii) above.  For purposes of
this Agreement, a Person shall be deemed to be the Economic Owner of any
securities Economically Owned by any Group of which such Person is or becomes a
member.  The term “Economically Own” shall have a correlative meaning.

 

(l)         “Exchange Act” means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
SEC promulgated thereunder, all as the same may be amended and shall be in
effect from time to time.

 

(m)       “Fair Market Value” means, with respect to each share of Public
Stock,  the average of the daily volume weighted average prices per share of
such Public Stock for the ten consecutive trading days immediately preceding the
day as of which Fair Market Value is being determined, as reported on the New
York Stock Exchange, or if such shares are not listed on the New York Stock
Exchange, as reported by the principal U.S. national or regional securities
exchange or quotation system on which such shares are then listed or quoted;
provided, however, that in the absence of such listing or quotations, the Fair
Market Value of such shares shall be the fair market value per share as
determined by an Independent Financial Expert appointed for such purpose, using
one or more valuation methods that the Independent Financial Expert in its best
professional judgment determines to be most appropriate, assuming such shares
are fully distributed and are to be sold in an arm’s-length transaction and
there was no compulsion on the part of any party to such sale to buy or sell and
taking into account all relevant factors.

 

(n)        “Fully Diluted Basis” means all outstanding shares of the Common
Stock assuming the exercise of all outstanding Share Equivalents, without regard
to any restrictions or conditions with respect to the exercisability of such
Share Equivalents.

 

(o)        “Governmental Entity” means any (i) nation, region, state, province,
county, city, town, village, district or other jurisdiction, (ii) federal,
state, local, municipal, foreign or other government, (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, court or tribunal, or other entity), (iv) multinational
organization or body or (v) body entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature or any other self-regulatory organizations.

 

(p)        “Group” has the meaning assigned to it in Section 13(d)(3) of the
Exchange Act and Rule 13d-5 thereunder.

 

(q)        “Independent Financial Expert” means a nationally recognized
financial advisory firm approved by a majority of the Disinterested Directors.

 

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(r)         “Investor Investment Advisor” means any independently operated
business unit of any Affiliate of Investor that holds shares of Common Stock (i)
in trust for the benefit of persons other than any Investor Party or Subject
Person, (ii) in mutual funds, open- or closed-end investment funds or other
pooled investment vehicles sponsored, managed or advised or subadvised by such
Investor Investment Advisor, (iii) as agent and not principal, or (iv) in any
other case where such Investor Investment Advisor is disaggregated from Investor
for the purposes of Section 13(d) of the Exchange Act; provided, however, that
(A) in each case, such shares of Common Stock were acquired in the ordinary
course of business of the Investor Investment Advisor’s respective investment
management or securities business and not with the intent or purpose on the part
of Investor or the Investor Parties or the Subject Persons of influencing
control of the Company or avoiding the provisions of this Agreement and (B)
where appropriate, “Chinese walls” or other informational barriers and other
procedures have been established.  For avoidance of doubt, for purposes of this
Agreement shares of Common Stock or other securities of the Company held by an
Investor Investment Advisor shall not be deemed to be Beneficially Owned or
Constructively Owned by Investor or the Investor Parties or the Subject Persons.

 

(s)        “Investor Parties” means Investor and its controlled Affiliates;
provided, however, that none of the Company, or any Subsidiary of the Company
shall be deemed to be an Investor Party.

 

(t)         “Large Stockholder” means a Person that is the Beneficial Owner of
more than ten percent (10%) of the outstanding shares of Common Stock on a Fully
Diluted Basis.

 

(u)        “Law” means any statutes, laws (including common law), rules,
ordinances, regulations, codes, orders, judgments, decisions, injunctions,
writs, decrees, applicable to the Company, Common Stock or Investor Parties.

 

(v)        “Merger Transaction” means any transaction involving the acquisition
(by purchase, merger or otherwise) by any Person or Group of Beneficial
Ownership of voting securities of the Company entitling such Person or Group to
exercise a majority of the total voting power of all outstanding securities
entitled to vote generally in elections of directors of the Company.

 

(w)       “Ordinary Course of Business” means the ordinary and usual course of
day-to-day operations of the business of the Company consistent with past
practice.

 

(x)        “Other Stockholder” means, as of the date of the action in question,
any Person not Affiliated with Brookfield Asset Management, Inc., Fairholme
Capital Management LLC, Pershing Capital Management L.P., any transferee who is
a party to a transferee agreement under the Brookfield Standstill Agreement, the
Pershing Square Standstill Agreement or this Agreement or any of their
respective Affiliates.

 

(y)        “Ownership Cap” means the lower of (i) thirty percent (30%) of the
then-outstanding Common Stock on a Fully Diluted Basis and (ii) the sum of five
percent

 

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(5%) and the percentage of the outstanding Common Stock on a Fully Diluted Basis
that the Investor Parties and the Subject Persons collectively Economically Own
as of the Effective Date.

 

(z)        “Pershing Square Standstill Agreement” means the Standstill
Agreement, dated as of the date hereof, among the Company and Pershing Square
Capital Management, L.P., on behalf of Pershing Square, L.P., Pershing Square
II, L.P., Pershing Square International, Ltd., and Pershing Square International
V, Ltd.

 

(aa)      “Person” means an individual, a group (including a “group” under
Section 13(d) of the Exchange Act), a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a Governmental Entity or any
department, agency or political subdivision thereof.

 

(bb)     “Public Stock” means common stock listed on a recognized U.S. national
securities exchange with an aggregate market capitalization (held by
non-Affiliates of the issuer) in excess of $1 billion in Fair Market Value.

 

(cc)      “Rule 144” means Rule 144 promulgated by the SEC under the Securities
Act, or any successor rule or regulation hereafter adopted by the SEC, as the
same may be amended and shall be in effect from time to time.

 

(dd)     “SEC” means the Securities and Exchange Commission or any other federal
agency then administering the Exchange Act, the Securities Act and other federal
securities laws.

 

(ee)      “Securities Act” means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC promulgated
thereunder, all as the same may be amended and shall be in effect from time to
time.

 

(ff)       “Share Equivalent” means any stock, warrants, rights, calls, options
or other securities exchangeable or exercisable for, or convertible into, shares
of Common Stock.

 

(gg)     “Subject Persons” means, collectively, non-controlled Affiliates of the
Investor, including, for the avoidance of doubt, Fairholme Focused Income Fund
and any other mutual fund registered under the Investment Company Act of 1940,
as amended, managed by Fairholme Capital Management L.L.C. other than the
Investor, but not any Investor Investment Advisor.

 

(hh)     “Subsidiary” means, with respect to a Person, any corporation, limited
liability company, partnership, trust or other entity of which such Person owns
(either alone, directly, or indirectly through, or together with, one or more of
its Subsidiaries) 50% or more of the equity interests the holder of which is
generally entitled to vote for the election of the board of directors or
governing body of such corporation, limited liability company, partnership,
trust or other entity.

 

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(ii)        “Transaction Documents” means, individually or collectively, the
Investment Agreement or the Warrant.

 

(jj)        “Transferee” means any proposed transferee of securities pursuant to
Sections 2.2(b)(i) or 2.2(b)(vi).

 

(kk)      “Votes Cast” means the aggregate number of shares of Common Stock that
are properly voted for or against any action to be taken by stockholders,
excluding any shares if the holder of such shares is contractually required to
vote in proportion of the total number of votes cast pursuant to this Agreement,
the Brookfield Standstill Agreement, the Pershing Square Standstill Agreement or
any transferee agreement executed hereunder or thereunder.

 

(ll)        “Warrant Agreement” means that certain Warrant Agreement, dated as
of the date hereof, by and between the Company and Mellon Investor Services LLC.

 

(mm)    “Warrants” means the New Warrants (as defined in the Investment
Agreement).

 

ARTICLE V

 

MISCELLANEOUS

 

SECTION 5.1            Notices. All notices and other communications in
connection with this Agreement shall be in writing and shall be considered given
if given in the manner, and be deemed given at times, as follows:  (a) on the
date delivered, if personally delivered; (b) on the day of transmission if sent
via facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission;
or (c) on the next Business Day after being sent by recognized overnight mail
service specifying next business day delivery, in each case with delivery
charges pre-paid and addressed to the following addresses:

 

 

If to Investor, to:

 

 

 

 

 

Fairholme Capital Management, LLC

 

 

4400 Biscayne Boulevard, 9th Floor

 

 

Miami, Florida  33137

 

 

Attention:

Charles M. Fernandez

 

Facsimile:

(305) 358-8002

 

 

 

 

with copies (which shall not constitute notice) to:

 

 

 

 

 

Sullivan & Cromwell LLP

 

 

125 Broad Street

 

 

New York, New York  10004

 

 

Attention:

Andrew G. Dietderich, Esq.

 

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Alan J. Sinsheimer, Esq.

 

Facsimile:

(212) 558-3588

 

 

 

 

Greenberg Traurig, LLP

 

 

401 East Las Olas Boulevard, Suite 2000

 

 

Fort Lauderdale, Florida  33301

 

 

Attention:

Bruce I. March, Esq.

 

 

Matthew M. Robbins, Esq.

 

Facsimile:

(954) 765-1477

 

 

 

 

Herrick, Feinstein, LLP

 

 

2 Park Avenue

 

 

New York, NY  10016

 

 

Attention:

Joshua J. Angel, Esq.

 

 

John Rogers, Esq.

 

Facsimile:

(212) 592-1500

 

 

 

 

 

 

 

If to Company, to:

 

 

 

 

 

General Growth Properties, Inc.

 

 

110 N. Wacker Drive

 

 

Chicago, IL 60606

 

 

Attention:

General Counsel

 

Facsimile:

(312) 960-5485

 

 

 

 

with a copy (which shall not constitute notice) to:

 

 

 

 

 

Weil, Gotshal & Manges LLP

 

 

767 Fifth Avenue

 

 

New York, NY 10153

 

 

Attention:

Frederick S. Green, Esq.

 

 

Malcolm E. Landau, Esq.

 

Facsimile:

(212) 310-8007

 

SECTION 5.2            Assignment; No Third Party Beneficiaries.  Neither this
Agreement nor any of the rights, interests or obligations under this Agreement
may be assigned by any party without the prior written consent of the other
party.  This Agreement (including the documents and instruments referred to in
this Agreement) is not intended to and does not confer upon any person other
than the parties hereto any rights or remedies under this Agreement.

 

SECTION 5.3            Prior Negotiations; Entire Agreement.  This Agreement
(including the exhibits hereto and the documents and instruments referred to in
this Agreement) constitutes the entire agreement of the parties hereto and
supersedes all prior agreements, arrangements or understandings, whether written
or oral, between the parties hereto with respect to the subject matter of this
Agreement.

 

14

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SECTION 5.4            Governing Law; Venue.  THIS AGREEMENT, AND ALL CLAIMS OR
CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT
OF OR RELATE TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF
THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF DELAWARE.  BOTH PARTIES HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF, AND VENUE IN, DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS.

 

SECTION 5.5            Counterparts.  This Agreement may be executed in any
number of counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
of the parties hereto, and delivered to the other party (including via facsimile
or other electronic transmission), it being understood that each party need not
sign the same counterpart.

 

SECTION 5.6            Expenses.  Except as otherwise provided in this
Agreement, Investor and the Company shall each bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby.

 

SECTION 5.7            Waivers and Amendments.  Subject to Section 5.2, this
Agreement may be amended, modified, superseded, cancelled, renewed or extended,
and the terms and conditions of this Agreement may be waived, only by a written
instrument signed by Investor and the Company (with the approval of a majority
of the Disinterested Directors) or, in the case of a waiver, by the party
waiving compliance, and subject, to the extent required, to the approval of the
Bankruptcy Court.  No delay on the part of any party in exercising any right,
power or privilege pursuant to this Agreement shall operate as a waiver thereof,
nor shall any waiver on the part of any party of any right, power or privilege
pursuant to this Agreement, nor shall any single or partial exercise of any
right, power or privilege pursuant to this Agreement, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
pursuant to this Agreement.  The rights and remedies provided pursuant to this
Agreement are cumulative and are not exclusive of any rights or remedies which
any party otherwise may have at law or in equity.

 

SECTION 5.8            Construction.

 

(a)        The headings in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.

 

(b)        Unless the context otherwise requires, as used in this Agreement: 
(i) “or” shall mean “and/or”; (ii) “including” and its variants mean “including,
without limitation” and its variants; (iii) words defined in the singular have
the parallel meaning in the plural and vice versa; (iv) references to “written”
or “in writing” include in visual electronic form; (v) words of one gender shall
be construed to apply to each gender; and (vi) the terms “Article” and “Section”
refer to the specified Article or Section of this Agreement.

 

15

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SECTION 5.9            Severability.  If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any law or
public policy, all other terms or provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.  Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties hereto as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.

 

SECTION 5.10          Equitable Relief.  It is hereby acknowledged that
irreparable harm would occur in the event that any of the provisions of this
Agreement were not performed fully by the parties hereto in accordance with the
terms specified herein, and that monetary damages are an inadequate remedy for
breach of this Agreement because of the difficulty of ascertaining and
quantifying the amount of damage that will be suffered by the parties hereto
relying hereon in the event that the undertakings and provisions contained in
this Agreement were breached or violated.  Accordingly, each party hereto hereby
agrees that each other party hereto shall be entitled to an injunction or
injunctions to restrain, enjoin and prevent breaches of the undertakings and
provisions hereof and to enforce specifically the undertakings and provisions
hereof in any court of the United States or any state having jurisdiction over
the matter; it being understood that such remedies shall be in addition to, and
not in lieu of, any other rights and remedies available at law or in equity.

 

SECTION 5.11          Successor Securities.  The provisions of this Agreement
pertaining to shares of Common Stock shall apply to all shares of Common Stock
Beneficially Owned by any Investor Party and any voting equity securities of the
Company, regardless of class, series, designation or par value, that are issued
as a dividend on or in any other distribution in respect of, or as a result of a
reclassification (including a change in par value) in respect of, shares of
Common Stock or other shares of the Company which, as provided by this section,
are considered as shares of Common Stock for purposes of this Agreement and
shall also apply to any voting equity security issued by any company that
succeeds, by merger, consolidation, a share exchange, a reorganization of the
Company or any similar transaction, to all or substantially all the business of
the Company, or to the ownership thereof, if such security was issued in
exchange for or otherwise as consideration for or in respect of shares of Common
Stock (or other shares considered as shares of Common Stock, as provided by this
definition) in connection with such succession transaction.

 

SECTION 5.12          Voting Procedures.  If, in connection with any stockholder
meeting or consent solicitation, Investor or the Investor Parties are required
under the terms of this Agreement to vote in proportion to Votes Cast, then the
parties shall cooperate to determine appropriate procedures and mechanics to
facilitate such proportionate voting.

 

** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

 

16

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
and delivered by each of them or their respective officers thereunto duly
authorized, all as of the date first written above.

 

 

 

GENERAL GROWTH PROPERTIES, INC.

 

 

 

 

 

By:

/s/ Thomas H. Nolan, Jr.

 

 

Name: Thomas H. Nolan, Jr.

 

 

Title: President and Chief Operating Officer

 

[Signature Page to Fairholme Standstill Agreement]

 

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FAIRHOLME FUNDS, INC.

 

On behalf of its series The Fairholme Fund

 

 

 

By:

/s/ Bruce R. Berkowitz

 

Name:

Bruce R. Berkowitz

 

Title:

President

 

[Signature Page to Fairholme Standstill Agreement]

 

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