UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
ý       Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended June 30, 2014
 
o          Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the Transition Period from                      to                     
 
COMMISSION FILE NUMBER 1-34948

GENERAL GROWTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
27-2963337
(State or other jurisdiction of
 
(I.R.S. Employer
incorporating or organization)
 
Identification Number)
110 N. Wacker Dr., Chicago, IL
 
60606
(Address of principal executive offices)
 
(Zip Code)
 
(312) 960-5000
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   ý Yes   o   No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   ý Yes   o No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
Large accelerated filer x
 
Accelerated filer o
 
 
 
Non-accelerated filer o  (Do not check if a smaller reporting company)
 
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   o  Yes  ý No
 
Indicate by checkmark whether  the Registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   ý Yes   o No

The number of shares of Common Stock, $.01 par value, outstanding on August 4, 2014 was 883,823,589.
 

Table of Contents

GENERAL GROWTH PROPERTIES, INC.
INDEX
 
 
PAGE
NUMBER
 
 
 
Part I
FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2
Table of Contents

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


3
Table of Contents

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
June 30,
2014
 
December 31,
2013
 
(Dollars in thousands, except share and per share amounts)
Assets:
 
 
 
Investment in real estate:
 

 
 

Land
$
4,297,767

 
$
4,320,597

Buildings and equipment
18,237,236

 
18,270,748

Less accumulated depreciation
(2,099,755
)
 
(1,884,861
)
Construction in progress
471,791

 
406,930

Net property and equipment
20,907,039

 
21,113,414

Investment in and loans to/from Unconsolidated Real Estate Affiliates
2,580,966

 
2,407,698

Net investment in real estate
23,488,005

 
23,521,112

Cash and cash equivalents
242,007

 
577,271

Accounts and notes receivable, net
594,011

 
478,899

Deferred expenses, net
179,120

 
189,452

Prepaid expenses and other assets
873,416

 
995,569

Total assets
$
25,376,559

 
$
25,762,303

 
 
 
 
Liabilities:
 

 
 
Mortgages, notes and loans payable
$
15,909,223

 
$
15,672,437

Investment in Unconsolidated Real Estate Affiliates
18,416

 
17,405

Accounts payable and accrued expenses
839,386

 
970,995

Dividend payable
140,440

 
134,476

Deferred tax liabilities
28,367

 
24,667

Tax indemnification liability
321,958

 
321,958

Junior subordinated notes
206,200

 
206,200

Total liabilities
17,463,990

 
17,348,138

 
 
 
 
Redeemable noncontrolling interests:
 

 
 

Preferred
145,811

 
131,881

Common
113,892

 
97,021

Total redeemable noncontrolling interests
259,703

 
228,902

 
 
 
 
Commitments and Contingencies
—

 
—

 
 
 
 
Equity:
 

 
 

Common stock: 11,000,000,000 shares authorized, $0.01 par value, 967,222,315 issued, 883,793,730 outstanding as of June 30, 2014, and 966,998,908 issued, 911,194,605 outstanding as of December 31, 2013
9,398

 
9,395

Preferred stock:
 
 
 
500,000,000 shares authorized, $.01 par value, 10,000,000 shares issued and outstanding as of June 30, 2014 and December 31, 2013
242,042

 
242,042

Additional paid-in capital
11,362,069

 
11,372,443

Retained earnings (accumulated deficit)
(2,888,099
)
 
(2,915,723
)
Accumulated other comprehensive loss
(30,913
)
 
(38,173
)
Common stock in treasury, at cost, 55,969,390 shares as of June 30, 2014 and 28,345,108 shares as of December 31, 2013
(1,122,664
)
 
(566,863
)
Total stockholders’ equity
7,571,833

 
8,103,121

Noncontrolling interests in consolidated real estate affiliates
81,033

 
82,142

Total equity
7,652,866

 
8,185,263

Total liabilities and equity
$
25,376,559

 
$
25,762,303

 

The accompanying notes are an integral part of these consolidated financial statements.

4
Table of Contents

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
(Dollars in thousands, except per share amounts)
Revenues:
 

 
 

 
 
 
 
Minimum rents
$
390,419

 
$
385,512

 
$
784,998

 
$
779,407

Tenant recoveries
185,382

 
173,782

 
367,201

 
357,856

Overage rents
5,388

 
6,372

 
15,209

 
17,721

Management fees and other corporate revenues
17,717

 
17,307

 
34,403

 
33,239

Other
18,717

 
16,570

 
44,380

 
35,573

Total revenues
617,623

 
599,543

 
1,246,191

 
1,223,796

Expenses:
 
 
 
 
 
 
 
Real estate taxes
58,816

 
52,372

 
116,173

 
119,538

Property maintenance costs
14,452

 
14,952

 
36,427

 
37,908

Marketing
4,961

 
5,764

 
10,765

 
12,268

Other property operating costs
82,980

 
84,469

 
169,882

 
170,244

Provision for doubtful accounts
2,732

 
629

 
4,973

 
2,383

Property management and other costs
40,107

 
41,558

 
85,071

 
81,897

General and administrative
28,232

 
13,124

 
39,831

 
24,057

Depreciation and amortization
177,430

 
188,038

 
351,201

 
379,745

Total expenses
409,710

 
400,906

 
814,323

 
828,040

Operating income
207,913

 
198,637

 
431,868

 
395,756

 
 
 
 
 
 
 
 
Interest and dividend income
4,856

 
298

 
11,147

 
889

Interest expense
(175,494
)
 
(186,902
)
 
(354,924
)
 
(377,417
)
Gain on foreign currency
3,772

 
—

 
8,955

 
—

Warrant liability adjustment
—

 
—

 
—

 
(40,546
)
Gains from changes in control of investment properties
—

 
219,784

 
—

 
219,784

Loss on extinguishment of debt
—

 
(27,159
)
 
—

 
(36,478
)
Income before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests
41,047

 
204,658

 
97,046

 
161,988

Provision for income taxes
(3,944
)
 
(1,382
)
 
(7,636
)
 
(1,523
)
Equity in income of Unconsolidated Real Estate Affiliates
19,320

 
13,987

 
26,477

 
27,181

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment
—

 
—

 
—

 
3,448

Income from continuing operations
56,423

 
217,263

 
115,887

 
191,094

Discontinued operations:
 
 
 
 
 
 
 
Income (loss) from discontinued operations, including gains (losses) on dispositions
120,666

 
(3,340
)
 
126,410

 
(11,803
)
Gain on extinguishment of debt
—

 
—

 
66,680

 
25,894

Discontinued operations, net
120,666


(3,340
)
 
193,090

 
14,091

Net income
177,089

 
213,923

 
308,977

 
205,185

Allocation to noncontrolling interests
(3,365
)
 
(4,548
)
 
(7,217
)
 
(7,336
)
Net income attributable to General Growth Properties, Inc.
173,724

 
209,375

 
301,760

 
197,849

Preferred stock dividends
(3,984
)
 
(3,984
)
 
(7,968
)
 
(6,109
)
Net income attributable to common stockholders
$
169,740

 
$
205,391

 
$
293,792

 
$
191,740

 
 
 
 
 
 
 
 
Basic Earnings Per Share:
 
 
 
 
 
 
 
Continuing operations
$
0.06

 
$
0.22

 
$
0.11

 
$
0.19

Discontinued operations
0.14

 
—

 
0.22

 
0.01

Total basic earnings per share
$
0.20

 
$
0.22

 
$
0.33

 
$
0.20

 
 
 
 
 
 
 

Diluted Earnings Per Share:
 
 
 
 
 
 
 
Continuing operations
$
0.05

 
$
0.21

 
$
0.11

 
$
0.19

Discontinued operations
0.13

 
—

 
0.20

 
0.01

Total diluted earnings per share
$
0.18

 
$
0.21

 
$
0.31

 
$
0.20

Dividends declared per share
$
0.15

 
$
0.12

 
$
0.30

 
$
0.24


5
Table of Contents

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)
 
 
 
 
 
 
 
 
Comprehensive Income, Net:
 

 
 

 
 
 
 
Net income
$
177,089

 
$
213,923

 
$
308,977

 
$
205,185

Other comprehensive income
 
 
 
 
 
 
 
Net unrealized gains on financial instruments
(33
)
 
—

 
(33
)
 
—

Foreign currency translation
3,194

 
(60,575
)
 
7,145

 
(50,927
)
Unrealized gains on available-for-sale securities
—

 
682

 
—

 
931

Other comprehensive income (loss)
3,161

 
(59,893
)
 
7,112

 
(49,996
)
Comprehensive income
180,250

 
154,030

 
316,089

 
155,189

Comprehensive income allocated to noncontrolling interests
(3,202
)
 
(4,154
)
 
(7,069
)
 
(6,996
)
Comprehensive income attributable to General Growth Properties, Inc.
177,048

 
149,876

 
309,020

 
148,193

Preferred stock dividends
(3,984
)
 
(3,984
)
 
(7,968
)
 
(6,109
)
Comprehensive income, net, attributable to common stockholders
$
173,064

 
$
145,892

 
$
301,052

 
$
142,084


The accompanying notes are an integral part of these consolidated financial statements.

6
Table of Contents

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
 
Common
Stock
 
Preferred
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
(Accumulated
Deficit)
 
Accumulated 
Other
Comprehensive
Income (Loss)
 
Common
Stock in
Treasury
 
Noncontrolling
Interests in
Consolidated 
Real Estate 
Affiliates
 
Total
Equity
 
(Dollars in thousands, except for share amounts)
Balance at January 1, 2013
$
9,392

 
$
—

 
$
10,432,447

 
$
(2,732,787
)
 
$
(87,354
)
 
$
—

 
$
83,322

 
$
7,705,020

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income


 


 


 
197,849

 


 


 
1,270

 
199,119

Issuance of Preferred Stock, net of issuance costs


 
242,042

 
—

 


 


 


 


 
242,042

Distributions to noncontrolling interests in consolidated Real Estate Affiliates


 


 


 


 


 


 
(1,646
)
 
(1,646
)
Restricted stock grants, net (11,818 common shares)
—

 
—

 
4,766

 


 


 


 


 
4,766

Employee stock purchase program (84,774 common shares)
—

 


 
1,670

 


 


 


 


 
1,670

Stock option grants, net of forfeitures (290,438 common shares)
3

 


 
27,162

 


 


 


 


 
27,165

Cash dividends reinvested (DRIP) in stock (14,050 common shares)
—

 
—

 
293

 


 


 


 


 
293

Other comprehensive loss


 


 


 


 
(49,656
)
 


 


 
(49,656
)
Cash distributions declared ($0.24 per share)


 


 


 
(225,504
)
 


 


 


 
(225,504
)
Cash distributions on Preferred Stock


 


 


 
(6,109
)
 


 


 


 
(6,109
)
Fair value adjustment for noncontrolling interest in GGPOP


 


 
(589
)
 


 


 


 


 
(589
)
Common stock warrants


 


 
895,513

 


 


 


 


 
895,513

 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2013
$
9,395

 
$
242,042

 
$
11,361,262

 
$
(2,766,551
)
 
$
(137,010
)
 
$
—

 
$
82,946

 
$
8,792,084

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2014
$
9,395

 
$
242,042

 
$
11,372,443

 
$
(2,915,723
)
 
$
(38,173
)
 
$
(566,863
)
 
$
82,142

 
$
8,185,263

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income


 


 


 
301,760

 


 


 
1,115

 
302,875

Distributions to noncontrolling interests in consolidated Real Estate Affiliates


 


 


 


 


 


 
(2,224
)
 
(2,224
)
Restricted stock grants, net (31,112 common shares)
1

 
—

 
1,397

 


 


 


 


 
1,398

Employee stock purchase program (96,781 common shares)
1

 


 
1,970

 


 


 


 


 
1,971

Stock option grants, net of forfeitures (83,724 common shares)
1

 


 
13,600

 


 


 


 


 
13,601

Treasury stock purchases (27,624,282 common shares)


 


 


 


 


 
(555,801
)
 


 
(555,801
)

7
Table of Contents

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Cash dividends reinvested (DRIP) in stock (11,790 common shares)
—

 
—

 
252

 


 


 


 


 
252

Other comprehensive income


 


 


 


 
7,260

 


 


 
7,260

Cash distributions declared ($0.30 per share)


 


 


 
(266,168
)
 


 


 


 
(266,168
)
Cash distributions on Preferred stock


 


 


 
(7,968
)
 


 


 


 
(7,968
)
Fair value adjustment for noncontrolling interest in GGPOP and other


 


 
(27,593
)
 


 


 


 


 
(27,593
)
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
Balance at June 30, 2014
$
9,398

 
$
242,042

 
$
11,362,069

 
$
(2,888,099
)
 
$
(30,913
)
 
$
(1,122,664
)
 
$
81,033

 
$
7,652,866


The accompanying notes are an integral part of these consolidated financial statements.


8
Table of Contents

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Six Months Ended June 30,
 
2014
 
2013
 
(Dollars in thousands)
Cash Flows provided by Operating Activities:
 

 
 

Net income
$
308,977

 
$
205,185

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Equity in income of Unconsolidated Real Estate Affiliates
(26,477
)
 
(27,181
)
Equity in income of Unconsolidated Real Estate Affiliates - gain on investment, net
—

 
(3,448
)
Distributions received from Unconsolidated Real Estate Affiliates
19,224

 
30,238

Provision for doubtful accounts
4,910

 
2,587

Depreciation and amortization
352,454

 
387,230

Amortization/write-off of deferred finance costs
5,643

 
4,291

Accretion/write-off of debt market rate adjustments
12,648

 
5,445

Amortization of intangibles other than in-place leases
44,810

 
40,858

Straight-line rent amortization
(25,317
)
 
(25,207
)
Deferred income taxes
3,570

 
(1,682
)
Litigation loss
17,854

 
—

(Gain) loss on dispositions, net
(122,154
)
 
765

Gains from changes in control of investment properties
—

 
(219,784
)
Gain on extinguishment of debt
(66,680
)
 
(25,894
)
Provisions for impairment
—

 
4,975

Gain on foreign currency
(8,955
)
 
—

Warrant liability adjustment
—

 
40,546

Net changes:
 

 
 

Accounts and notes receivable
(618
)
 
14,122

Prepaid expenses and other assets
25,750

 
7,406

Deferred expenses
(4,206
)
 
(30,471
)
Restricted cash
(2,593
)
 
3,377

Accounts payable and accrued expenses
(8,203
)
 
(110,512
)
Other, net
13,627

 
11,046

Net cash provided by operating activities
544,264

 
313,892

 
 
 
 
Cash Flows (used in) provided by Investing Activities:
 

 
 

Acquisition of real estate and property additions
(247,586
)
 
(63,313
)
Development of real estate and property improvements
(272,719
)
 
(175,667
)
Proceeds from sales of investment properties
206,346

 
419,976

Contributions to Unconsolidated Real Estate Affiliates
(81,617
)
 
(58,607
)
Distributions received from Unconsolidated Real Estate Affiliates in excess of income
44,961

 
101,434

Decrease in restricted cash
2,635

 
4,632

Net cash (used in) provided by investing activities
(347,980
)

228,455

 
 
 
 
Cash Flows used in Financing Activities:
 

 
 

Proceeds from refinancing/issuance of mortgages, notes and loans payable
1,751,346

 
3,662,622

Principal payments on mortgages, notes and loans payable
(1,448,244
)
 
(3,532,036
)
Deferred finance costs
(10,176
)
 
(8,864
)
Net proceeds from issuance of Preferred stock
—

 
242,042

Purchase of Warrants
—

 
(633,229
)
Common stock purchases
(555,801
)
 
—

Cash distributions paid to common stockholders
(260,126
)
 
(216,004
)
Cash distributions paid to preferred stockholders
(7,968
)
 
(2,125
)
Cash redemptions paid to holders of common units
—

 
(4,756
)
Other, net
(579
)
 
30,106

Net cash used in financing activities
(531,548
)
 
(462,244
)
 
 
 
 
Net change in cash and cash equivalents
(335,264
)
 
80,103

Cash and cash equivalents at beginning of period
577,271

 
624,815


9
Table of Contents

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued
(UNAUDITED)
 
Six Months Ended June 30,
 
2014
 
2013
 
(Dollars in thousands)
Cash and cash equivalents at end of period
$
242,007

 
$
704,918

 
 
 
 
Supplemental Disclosure of Cash Flow Information:
 

 
 

Interest paid
$
344,398

 
$
485,407

Interest capitalized
8,543

 
3,878

Income taxes paid
2,934

 
4,601

Accrued capital expenditures included in accounts payable and accrued expenses
63,178

 
68,627

Non-Cash Transactions:
 
 
 
Gain on investment in Unconsolidated Real Estate Affiliates
—

 
3,448

Amendment of warrant agreement
—

 
895,513

Non-Cash Sale of Property
 
 
 
Assets
21,426

 
71,881

Liabilities and equity
(21,426
)
 
(71,881
)
Non-Cash Sale of The Grand Canal Shoppes and The Shoppes at The Palazzo:
 
 
 
Assets
—

 
544,435

Liabilities and equity
—

 
(544,435
)

The accompanying notes are an integral part of these consolidated financial statements.


10
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)



NOTE 1                                                  ORGANIZATION
 
Readers of this Quarterly Report should refer to the Company’s (as defined below) audited consolidated financial statements for the year ended December 31, 2013 which are included in the Company’s Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2013 (Commission File No. 1-34948), as certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been omitted from this Quarterly Report.  In the opinion of management, all adjustments necessary for a fair presentation (which include only normal recurring adjustments) have been included in this Quarterly Report.  Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report.
 
General
 
General Growth Properties, Inc. (“GGP” or the “Company”), a Delaware corporation, was organized in July 2010 and is a self-administered and self-managed real estate investment trust, referred to as a “REIT”.  In these notes, the terms “we,” “us” and “our” refer to GGP and its subsidiaries.
 
GGP, through its subsidiaries and affiliates, is an owner and operator of retail properties. As of June 30, 2014 , we are the owner, either entirely or with joint venture partners of 120 regional malls.  In addition to regional malls, as of June 30, 2014 , we owned 12 strip/other retail properties, as well as six stand-alone office buildings.
 
Substantially all of our business is conducted through GGP Operating Partnership, LP (“GGPOP”), GGP Nimbus, LP (“GGPN”) and GGP Limited Partnership (“GGPLP”, and together with GGPN, the “Operating Partnerships"), subsidiaries of GGP.  The Operating Partnerships own an interest in the properties that are part of the consolidated financial statements of GGP.  As of June 30, 2014 , GGP held approximately a 99% common equity ownership (without giving effect to the potential conversion of the Preferred Units, as defined below) of the Operating Partnerships, while the remaining 1% was held by limited partners and certain previous contributors of properties to the Operating Partnerships or their predecessors.
 
GGPOP is the general partner of, and owns a 1.5% equity interest in, each Operating Partnership. GGPOP has common units of limited partnership (“Common Units”), which are redeemable for cash or, at our option, shares of GGP common stock.  It also has preferred units of limited partnership interest (“Preferred Units”), of which, certain Preferred Units can be converted into Common Units and then redeemed for cash or, at our option, shares of GGP common stock (“Convertible Preferred Units”)
( Note 10 ).
 
In addition to holding ownership interests in various joint ventures, the Operating Partnerships generally conduct their operations through General Growth Management, Inc. (“GGMI”), General Growth Services, Inc. (“GGSI”), and GGP REIT Services, LLC (“GGPRS”).  GGMI and GGSI are taxable REIT subsidiaries (“TRS”s), which provide management, leasing, tenant coordination, business development, marketing, strategic partnership and other services for a majority of our Unconsolidated Real Estate Affiliates (defined below) and for substantially all of our Consolidated Properties, as defined below.  GGSI also serves as a contractor to GGMI for these services. GGPRS generally provides financial, accounting, tax, legal, development, and other services to our Consolidated Properties.

 We refer to our ownership interests in properties in which we own a majority or controlling interest and, as a result, are consolidated under accounting principles generally accepted in the United States of America (“GAAP”) as the “Consolidated Properties.”  We also own interests in certain properties through joint venture entities in which we own a noncontrolling interest (“Unconsolidated Real Estate Affiliates”) and we refer to those properties as the “Unconsolidated Properties.”
 
NOTE 2                          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation and Basis of Presentation
 
The accompanying consolidated financial statements include the accounts of GGP, our subsidiaries and joint ventures in which we have a controlling interest. For consolidated joint ventures, the noncontrolling partner’s share of the assets, liabilities and operations of the joint ventures (generally computed as the joint venture partner’s ownership percentage) is included in

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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


noncontrolling interests in consolidated real estate affiliates as permanent equity of the Company. Intercompany balances and transactions have been eliminated.
 
We operate in a single reportable segment which includes the operation, development and management of retail and other rental properties, primarily regional malls.  Our portfolio is targeted to a range of market sizes and consumer tastes.  Each of our operating properties is considered a separate operating segment, as each property earns revenues and incurs expenses, individual operating results are reviewed and discrete financial information is available.  We do not distinguish or group our consolidated operations based on geography, size or type. Our operating properties have similar economic characteristics and provide similar products and services to our tenants. Further, all material operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues.  As a result, the Company’s operating properties are aggregated into a single reportable segment.
 
Reclassifications
 
Certain prior period amounts included in the Consolidated Statements of Comprehensive Income and related footnotes associated with properties we have disposed of have been reclassified to discontinued operations for all periods presented. Additionally, $18.4 million of accrued interest related to the Tax indemnification liability ( Note 16 ) was reclassified from Accounts payable and accrued expenses to Tax indemnification liability in our Consolidated Balance Sheets presented as of December 31, 2013, as presented herein.
 
Properties
 
Real estate assets are stated at cost less any provisions for impairments.  Expenditures for significant betterments and improvements are capitalized.  Maintenance and repairs are charged to expense when incurred.  Construction and improvement costs incurred in connection with the development of new properties or the redevelopment of existing properties are capitalized.  Real estate taxes, interest costs, and internal costs associated with leasing and development overhead incurred during construction periods are capitalized.  Capitalization is based on qualified expenditures and interest rates.  Capitalized real estate taxes, interest costs, and internal costs associated with leasing and development overhead are amortized over lives which are consistent with the related assets.
 
Pre-development costs, which generally include legal and professional fees and other third-party costs directly related to the construction assets, are capitalized as part of the property being developed.  In the event a development is no longer deemed to be probable of occurring, the capitalized costs are expensed (see also our impairment policies in this note below).
 
We periodically review the estimated useful lives of our properties, and may adjust them as necessary.  The estimated useful lives of our properties range from 10 - 45 years.
 
Depreciation or amortization expense is computed using the straight-line method based upon the following estimated useful lives:
 
Years
Buildings and improvements
10 - 45
Equipment and fixtures
3 - 20
Tenant improvements
Shorter of useful life or applicable lease term
 
Acquisitions of Operating Properties
 
Acquisitions of properties are accounted for utilizing the acquisition method of accounting and, accordingly, the results of operations of acquired properties have been included in the results of operations from the respective dates of acquisition.  Estimates of future cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, buildings and improvements, equipment, assumed debt liabilities and identifiable intangible assets and liabilities such as amounts related to in-place tenant leases, acquired above and below-market tenant and ground leases, and tenant relationships.
 

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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


Identifiable intangible assets and liabilities are calculated for above-market and below-market tenant and ground leases where we are either the lessor or the lessee. The difference between the contractual rental rates and our estimate of market rental rates is measured over a period equal to the remaining non-cancelable term of the leases, including significantly below-market renewal options for which exercise of the renewal option appears to be reasonably assured.  The remaining term of leases with renewal options at terms significantly below market reflect the assumed exercise of such below-market renewal options and assume the amortization period would coincide with the extended lease term.
 
The gross asset balances of the in-place value of tenant leases are included in buildings and equipment in our Consolidated Balance Sheets.
 
Gross Asset
 
Accumulated
Amortization
 
Net Carrying
Amount
 
 
 
 
 
 
As of June 30, 2014
 

 
 

 
 

Tenant leases:
 

 
 

 
 

In-place value
$
696,009

 
$
(384,689
)
 
$
311,320

 
 
 
 
 
 
As of December 31, 2013
 
 
 
 
 
Tenant leases:
 
 
 
 
 
In-place value
$
797,311

 
$
(420,370
)
 
$
376,941

 
The above-market tenant leases and below-market ground leases are included in Prepaid expenses and other assets ( Note 14 ); the below-market tenant leases, above-market ground leases and above-market headquarters office lease are included in Accounts payable and accrued expenses ( Note 15 ) in our Consolidated Balance Sheets.
 
Amortization/accretion of all intangibles, including the intangibles in Note 14 and Note 15 , had the following effects on our Income (loss) from continuing operations:
 
Three Months Ended June 30,
 
Six months ended June 30,
 
2014
 
2013
 
2014
 
2013
Amortization/accretion effect on continuing operations
$
(53,301
)
 
$
(57,538
)
 
$
(105,780
)
 
$
(125,520
)
 
Future amortization/accretion of all intangibles, including the intangibles in Note 14 and Note 15 , is estimated to decrease results from continuing operations as follows:
Year
 
Amount
2014 Remaining
 
$
83,756

2015
 
141,551

2016
 
109,824

2017
 
82,224

2018
 
54,049

 
Management Fees and Other Corporate Revenues
 
Management fees and other corporate revenues primarily represent management and leasing fees, development fees, financing fees, and fees for other ancillary services performed for the benefit of certain of the Unconsolidated Real Estate Affiliates.  Management fees are reported at 100% of the revenue earned from the joint venture in Management fees and other corporate revenues on our Consolidated Statements of Comprehensive Income.  Our share of the management fee expense incurred by the Unconsolidated Real Estate Affiliates is reported within Equity in income of Unconsolidated Real Estate Affiliates on our Consolidated Statements of Comprehensive Income and in Property management and other costs in the Condensed Combined Statements of Income in Note 6 .  The following table summarizes the management fees from affiliates and our share of the management fee expense:


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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Management fees from affiliates
$
17,717

 
$
17,281

 
$
34,403

 
$
33,139

Management fee expense
(6,571
)
 
(6,146
)
 
(13,248
)
 
(12,117
)
Net management fees from affiliates
$
11,146

 
$
11,135


$
21,155


$
21,022

 
Impairment
 
Operating properties
 
We regularly review our consolidated properties for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment indicators are assessed separately for each property and include, but are not limited to, significant decreases in real estate property net operating income, significant decreases in occupancy percentage, debt maturities, management’s intent with respect to the properties and prevailing market conditions.
 
If an indicator of potential impairment exists, the property is tested for recoverability by comparing its carrying amount to the estimated future undiscounted cash flows. Although the carrying amount may exceed the estimated fair value of certain properties, a real estate asset is only considered to be impaired when its carrying amount cannot be recovered through estimated future undiscounted cash flows.  To the extent an impairment provision is determined to be necessary, the excess of the carrying amount of the property over its estimated fair value is expensed to operations.  In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset group.  The adjusted carrying amount, which represents the new cost basis of the property, is depreciated over the remaining useful life of the property.
 
Although we may market a property for sale, there can be no assurance that the transaction will be complete until the sale is finalized.  However, GAAP requires us to utilize the Company’s expected holding period of our properties when assessing recoverability.  If we cannot recover the carrying value of these properties within the planned holding period, we will estimate the fair values of the assets and record impairment charges for properties when the estimated fair value is less than their carrying value.
 
Impairment indicators for pre-development costs, which are typically costs incurred during the beginning stages of a potential development and construction in progress, are assessed by project and include, but are not limited to, significant changes in the Company’s plans with respect to the project, significant changes in projected completion dates, tenant demand, anticipated revenues or cash flows, development costs, market factors and sustainability of development projects.
 
Impairment charges are recorded in the Consolidated Statements of Comprehensive Income when the carrying value of a property is not recoverable and it exceeds the estimated fair value of the property, which can occur in accounting periods preceding disposition and / or in the period of disposition.
 
There were no provisions for impairment for the three and six months ended June 30, 2014 and 2013 , included in continuing operations of our Consolidated Statements of Comprehensive Income. There was no provision for impairment for the three and six months ended June 30, 2014 , in Discontinued operations in our Consolidated Statements of Comprehensive Income. During the six months ended June 30, 2013 , we recorded $5.0 million of impairment charges in Discontinued operations, net in our Consolidated Statements of Comprehensive Income, which was incurred as a result of the sale of two operating properties. One of the operating properties was previously transferred to a special servicer, and was sold in a lender-directed sale in full satisfaction of the related debt. This resulted in the recognition of a gain on extinguishment of debt of $25.9 million ( Note 4 ). The other operating property related to a regional mall where the sales price of the property was lower than its carrying value.
 
Investment in Unconsolidated Real Estate Affiliates
 
A series of operating losses of an investee or other factors may indicate that an other-than-temporary decline in value of our investment in an Unconsolidated Real Estate Affiliate has occurred. The investment in each of the Unconsolidated Real Estate Affiliates is evaluated for valuation declines below the carrying amount.  Accordingly, in addition to the property-specific

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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


impairment analysis that we perform for such joint ventures (as part of our operating property impairment process described above), we also considered whether there were other-than-temporary declines with respect to the carrying values of our Unconsolidated Real Estate Affiliates. No impairments related to our investments in Unconsolidated Real Estate Affiliates were recognized for the three and six months ended June 30, 2014 , and 2013 .
 
Fair Value Measurements ( Note 5 )
 
The accounting principles for fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers include:
 
•
Level 1 - defined as observable inputs such as quoted prices for identical assets or liabilities in active markets;
•
Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
•
Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
 
The impairment section above includes a discussion of all impairments recognized during the three and six months ended June 30, 2014 , and 2013 , which were based on Level 2 inputs.  Note 5 includes a discussion of properties measured at fair value on a non-recurring basis using Level 2 and Level 3 inputs and the fair value of debt, which is estimated on a recurring basis using Level 2 and Level 3 inputs.  Note 9 includes a discussion of our outstanding Warrants, which were measured at fair value using Level 3 inputs until the Warrant agreement was amended on March 28, 2013.  Note 10 includes a discussion of certain redeemable noncontrolling interests that are measured at fair value using Level 1 inputs.
 
Recently Issued Accounting Pronouncements
 
Effective January 1, 2015 with early adoption permitted January 1, 2014 the definition of discontinued operations has been revised to limit what qualifies for this classification and presentation to disposals of components of a company that represent strategic shifts that have (or will have) a major effect on the company’s operations and financial results. Required expanded disclosures for disposals or disposal groups that qualify for discontinued operations are intended to provide users of financial statements with enhanced information about the assets, liabilities, revenues and expenses of such discontinued operations. In addition, in accordance with this pronouncement, companies are required to disclose the pretax profit or loss of an individually significant component that does not qualify for discontinued operations treatment. Pursuant to its terms, we have elected to adopt this pronouncement effective January 1, 2015. This definition will be applied prospectively after the adoption and is anticipated to substantially reduce the number of transactions, going forward, that qualify for discontinued operations as compared to historical results.

Effective January 1, 2017, companies will be required to apply a five-step model in accounting for revenue arising from contracts with customers. The core principle of the revenue model is that a company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease contracts will be excluded from this revenue recognition criteria; however, the sale of real estate will be required to follow the new model. Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject to this pronouncement. The Company is evaluating the potential impact of this pronouncement on its consolidated financial statements.
 
Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, estimates and assumptions have been made with respect to fair values of assets and liabilities for purposes of applying the acquisition method of accounting, the useful lives of assets, capitalization of development and leasing costs, provision for income taxes, recoverable amounts of receivables and deferred taxes, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to acquisitions, impairment of long-lived assets, litigation related accruals and disclosures, and fair value of debt. Actual results could differ from these and other estimates.

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Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


NOTE 3                       ACQUISITIONS AND JOINT VENTURE ACTIVITY

On June 27, 2014, we contributed $106.6 million to a joint venture that acquired acquired 685 5 th Avenue in New York, New York for a gross purchase price of $521.4 million with $340.0 million in gross property-level financing. The property comprises approximately 25,000 square feet of retail space and 115,000 square feet of office space. We have a 50% interest in the joint venture and account for the joint venture under the equity method of accounting because we share control over major decisions with our joint venture partner. The property will be accounted for as an Unconsolidated Real Estate Affiliate, and is recorded within Investment in and loans to/from Unconsolidated Real Estate Affiliates on our Consolidated Balance Sheets ( Note 6 ). In connection with the acquisition we provided an $85.3 million loan to our joint venture partner ( Note 13 ).

On June 28, 2013, we acquired the remaining 50% interest in Quail Springs Mall in Oklahoma City, Oklahoma, from our joint venture partner, for total consideration of $90.5 million , which included $55.5 million of cash and the assumption of the remaining 50% of debt. The investment property was previously recorded under the equity method of accounting and is now consolidated. The acquisition resulted in a remeasurement of the net assets acquired to fair value and as such, we recorded Gains from changes in control of investment properties of $19.8 million for the three and six months ended June 30, 2013 , as the fair value of the net assets acquired was greater than our investment in the Unconsolidated Real Estate Affiliate and the cash paid to acquire our joint venture partner’s interest. The table below summarizes the gain calculation:

Total fair value of net assets acquired
$
110,893

Previous investment in Quail Springs Mall
(35,610
)
Cash paid to acquire our joint venture partners' interest
(55,507
)
Gains from changes in control of investment properties
$
19,776


The following table summarizes the allocation of the purchase price to the net assets acquired at the date of acquisition. These allocations were based on the relative fair values of the assets acquired and liabilities assumed.

Investment in real estate, including intangible assets and liabilities
$
186,627

Fair value of debt
(77,204
)
Net working capital
1,470

Net assets acquired
$
110,893


On May 16, 2013, we formed a joint venture with TIAA-CREF Global Investments, LLC (‘‘TIAACREF’’) that holds 100% of The Grand Canal Shoppes and The Shoppes at The Palazzo in Las Vegas, Nevada. We received $411.5 million in cash, net of debt assumed of $311.9 million , and TIAACREF received a 49.9% economic interest in the joint venture. We recorded Gains from changes in control of investment properties of $200.0 million on our Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 , as a result of this transaction. We are the general partner, however we account for the joint venture under the equity method of accounting because we share control over major decisions with TIAACREF and TIAACREF has substantive participating rights. The table below summarizes the gain calculation:

Cash received from our joint venture partner
$
411,476

Proportionate share of previous investment in The Grand Canal Shoppes and The Shoppes at The Palazzo
(211,468
)
Gains from changes in control of investment properties
$
200,008





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Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


NOTE 4                          DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF OPERATING PROPERTIES
 
All of our dispositions of consolidated operating properties for which there is no continuing involvement, for all periods presented, are included in discontinued operations in our Consolidated Statements of Comprehensive Income and are summarized in the table below.  Gains on disposition and gains on debt extinguishment are recorded in the Consolidated Statements of Comprehensive Income in the period the property is disposed.
 
During the six months ended June 30, 2014 , one property, which was previously transferred to a special servicer, was sold in a lender-directed sale in full satisfaction of the debt. This resulted in a gain on extinguishment of debt of $66.7 million and a reduction of property-level debt of $79.0 million . Additionally, we sold one asset for $210.0 million , which resulted in a gain of $117.5 million . We used the net proceeds from this transaction to repay debt of $100.9 million .
 
During the six months ended June 30, 2013 , we sold our interests in three assets totaling approximately 2 million square feet of gross leasable area (“GLA”), which reduced our property level debt by $121.2 million . One property, which was previously transferred to a servicer, was sold in a lender-directed sale in full satisfaction of the debt.  This resulted in a gain on extinguishment of debt of $25.9 million .
 
The following table summarizes the operations of the properties included in discontinued operations.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
Retail and other revenue
$
2,707

 
$
14,176

 
$
7,075

 
$
28,928

Total revenues
2,707

 
14,176


7,075


28,928

Retail and other operating expenses
(507
)
 
10,817

 
1,835

 
22,475

Provisions for impairment
—

 
—

 
—

 
4,975

Total expenses
(507
)
 
10,817


1,835


27,450

Operating income
3,214


3,359


5,240


1,478

Interest expense, net
(9
)
 
(6,257
)
 
(984
)
 
(12,516
)
Gains (losses) on dispositions
117,461

 
(442
)
 
122,154

 
(765
)
Net income (loss) from operations
120,666

 
(3,340
)

126,410


(11,803
)
Gain on debt extinguishment
—

 
—

 
66,680

 
25,894

Net income from discontinued operations
$
120,666

 
$
(3,340
)

$
193,090


$
14,091


NOTE 5                          FAIR VALUE
 
Nonrecurring Fair Value of Operating Properties
 
We estimate fair value relating to impairment assessments based upon discounted cash flow and direct capitalization models that include all projected cash inflows and outflows over a specific holding period, or the negotiated sales price, if applicable.  Such projected cash flows are comprised of contractual rental revenues and forecasted rental revenues and expenses based upon market conditions and expectations for growth. Capitalization rates and discount rates utilized in these models are based on a reasonable range of current market rates for each property analyzed.  Based upon these inputs, we determined that our valuations of properties using a discounted cash flow or a direct capitalization model were classified within Level 3 of the fair value hierarchy.  For our properties for which the estimated fair value was based on negotiated sales prices, we determined that our valuation was classified within Level 2 of the fair value hierarchy.
 
Disclosure of Fair Value of Financial Instruments
 
The fair values of our financial instruments approximate their carrying amount in our consolidated financial statements except for debt.  Management’s estimates of fair value are presented below for our debt as of June 30, 2014 and December 31, 2013 .


17
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


 
 
June 30, 2014
 
December 31, 2013
 
 
Carrying Amount (1)
 
Estimated Fair
Value
 
Carrying Amount (1)
 
Estimated Fair
Value
Fixed-rate debt
 
$
13,711,131

 
$
14,388,366

 
$
13,919,820

 
$
13,957,952

Variable-rate debt
 
2,198,092

 
2,239,661

 
1,752,617

 
1,787,139

 
 
$
15,909,223

 
$
16,628,027

 
$
15,672,437

 
$
15,745,091

 
(1) Includes market rate adjustments of $19.1 million and $0.9 million as of June 30, 2014 and December 31, 2013 , respectively.
 
The fair value of our Junior Subordinated Notes approximates their carrying amount as of June 30, 2014 and December 31, 2013 .  We estimated the fair value of mortgages, notes and other loans payable using Level 2 and Level 3 inputs based on recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current London Interbank Offered Rate (“ LIBOR ”), U.S. treasury obligation interest rates and on the discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and assume that the debt is outstanding through maturity. We have utilized market information as available or present value techniques to estimate the amounts required to be disclosed.  Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist in specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation.


18
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


NOTE 6                          UNCONSOLIDATED REAL ESTATE AFFILIATES

The following is summarized financial information for all of our Unconsolidated Real Estate Affiliates.
 
June 30, 2014
 
December 31, 2013
Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates
 

 
 

Assets:
 

 
 

Land
$
1,055,127

 
$
1,046,354

Buildings and equipment
9,280,708

 
8,670,976

Less accumulated depreciation
(2,432,538
)
 
(2,301,054
)
Construction in progress
59,640

 
46,339

Net property and equipment
7,962,937

 
7,462,615

Cash and cash equivalents
298,870

 
260,405

Accounts and notes receivable, net
170,099

 
187,533

Deferred expenses, net
268,424

 
254,949

Prepaid expenses and other assets
203,975

 
147,182

Total assets
$
8,904,305

 
$
8,312,684

 
 
 
 
Liabilities and Owners’ Equity:
\

 
 

Mortgages, notes and loans payable
$
6,838,981

 
$
6,503,686

Accounts payable, accrued expenses and other liabilities
322,671

 
324,620

Cumulative effect of foreign currency translation (“CFCT”)
(17,036
)
 
(22,896
)
Owners’ equity, excluding CFCT
1,759,689

 
1,507,274

Total liabilities and owners’ equity
$
8,904,305

 
$
8,312,684

 
 
 
 
Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:
 

 
 

Owners’ equity
$
1,742,653

 
$
1,484,378

Less: joint venture partners’ equity
(889,809
)
 
(760,804
)
Plus: excess investment/basis differences
1,709,706

 
1,666,719

Investment in and loans to/from Unconsolidated Real Estate Affiliates, net
$
2,562,550

 
$
2,390,293

 
 
 
 
Reconciliation - Investment In and Loans To/From Unconsolidated Real Estate Affiliates:
 

 
 

Asset - Investment in and loans to/from Unconsolidated Real Estate Affiliates
$
2,580,966

 
$
2,407,698

Liability - Investment in Unconsolidated Real Estate Affiliates
(18,416
)
 
(17,405
)
Investment in and loans to/from Unconsolidated Real Estate Affiliates, net
$
2,562,550

 
$
2,390,293


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Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates
 
 

 
 

 
 
 
 
Revenues:
 
 

 
 

 
 
 
 
Minimum rents
 
$
212,735

 
$
186,713

 
$
398,543

 
$
367,398

Tenant recoveries
 
87,434

 
83,159

 
174,896

 
159,288

Overage rents
 
4,244

 
3,514

 
9,098

 
8,423

Other
 
7,341

 
7,982

 
19,076

 
14,872

Total revenues
 
311,754

 
281,368

 
601,613

 
549,981

 
 
 
 
 
 
 
 
 
Expenses:
 
 

 
 

 
 
 
 
Real estate taxes
 
27,003

 
26,094

 
54,686

 
51,609

Property maintenance costs
 
8,304

 
7,638

 
20,006

 
16,261

Marketing
 
3,223

 
3,388

 
6,790

 
6,529

Other property operating costs
 
40,846

 
39,317

 
82,783

 
75,260

Provision for doubtful accounts
 
227

 
(159
)
 
1,043

 
1,262

Property management and other costs (1)
 
13,990

 
12,686

 
28,193

 
25,125

General and administrative
 
5,326

 
594

 
5,810

 
1,174

Depreciation and amortization
 
76,952

 
68,527

 
152,657

 
133,711

Total expenses
 
175,871

 
158,085

 
351,968

 
310,931

Operating income
 
135,883

 
123,283

 
249,645

 
239,050

 
 
 
 
 
 
 
 
 
Interest income
 
1,301

 
311

 
2,848

 
566

Interest expense
 
(73,523
)
 
(69,713
)
 
(146,395
)
 
(135,503
)
Provision for income taxes
 
(91
)
 
(132
)
 
(279
)
 
(288
)
Income from continuing operations
 
63,570

 
53,749

 
105,819

 
103,825

Net income from disposed investment
 
—

 
6,319

 
—

 
18,111

Allocation to noncontrolling interests
 
(13
)
 
(8
)
 
(17
)
 
33

Net income attributable to the ventures
 
$
63,557

 
$
60,060

 
$
105,802

 
$
121,969

 
 
 
 
 
 
 
 
 
Equity In Income of Unconsolidated Real Estate Affiliates:
 
 

 
 

 
 
 
 
Net income attributable to the ventures
 
$
63,557

 
$
60,060

 
$
105,802

 
$
121,969

Joint venture partners’ share of income
 
(34,011
)
 
(33,082
)
 
(58,224
)
 
(67,741
)
Amortization of capital or basis differences
 
(10,226
)
 
(12,991
)
 
(21,101
)
 
(27,047
)
Equity in income of Unconsolidated Real Estate Affiliates
 
$
19,320

 
$
13,987

 
$
26,477

 
$
27,181

 
(1) Includes management fees charged to the unconsolidated joint ventures by GGMI and GGSI.
 
The Unconsolidated Real Estate Affiliates represents our investments in real estate joint ventures that are not consolidated. We hold interests in 21 domestic joint ventures, comprising 31 regional malls and six strip/other retail centers, and one joint venture in Brazil. Generally, we share in the profits and losses, cash flows and other matters relating to our investments in Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages.  We manage most of the properties owned by these joint ventures.  As we have joint control of these ventures with our venture partners, we account for these joint ventures under the equity method.

Unconsolidated Mortgages, Notes and Loans Payable, and Retained Debt
 
Our proportionate share of the mortgages, notes and loans payable of the unconsolidated joint ventures was $3.4 billion as of June 30, 2014 and $3.2 billion as of December 31, 2013 , including Retained Debt (as defined below).  There can be no assurance that the Unconsolidated Properties will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions by us and/or our partners will be sufficient to repay such loans.

We have debt obligations in excess of our pro rata share of the debt for one of our Unconsolidated Real Estate Affiliates (“Retained Debt”). This Retained Debt represents distributed debt proceeds of the Unconsolidated Real Estate Affiliates in excess of our pro rata share of the non-recourse mortgage indebtedness.  The proceeds of the Retained Debt which were distributed to us are included as a reduction in our investment in Unconsolidated Real Estate Affiliates.  We had retained debt of $89.9 million at one property as of June 30, 2014 , and $90.6 million as of December 31, 2013 .  We are obligated to contribute

20
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


funds on an ongoing basis, as needed, to our Unconsolidated Real Estate Affiliates in amounts sufficient to pay debt service on such Retained Debt.  If we do not contribute such funds, our distributions from such Unconsolidated Real Estate Affiliates, or our interest in, could be reduced to the extent of such deficiencies.  As of June 30, 2014 , we do not anticipate an inability to perform on our obligations with respect to Retained Debt.

NOTE 7                          MORTGAGES, NOTES AND LOANS PAYABLE
 
Mortgages, notes and loans payable and the weighted-average interest rates are summarized as follows:
 
 
June 30, 2014 (1)
 
Weighted-Average
Interest Rate (2)
 
December 31, 2013 (3)
 
Weighted-Average
Interest Rate (2)
 
 
 
 
 
 
 
 
 
Fixed-rate debt:
 
 

 
 

 
 

 
 

Collateralized mortgages, notes and loans payable (4)
 
$
13,701,402

 
4.53
%
 
$
13,907,029

 
4.55
%
Corporate and other unsecured loans
 
9,729

 
4.41
%
 
12,791

 
4.41
%
Total fixed-rate debt
 
13,711,131

 
4.53
%
 
13,919,820

 
4.55
%
Variable-rate debt:
 
 

 
 

 
 

 
 

Collateralized mortgages, notes and loans payable (4)
 
2,116,292

 
2.46
%
 
1,700,817

 
2.61
%
Revolving credit facility
 
81,800

 
1.73
%
 
51,800

 
1.74
%
Total variable-rate debt
 
2,198,092

 
2.43
%
 
1,752,617

 
2.59
%
 
 
 
 
 
 
 
 
 
Total Mortgages, notes and loans payable
 
$
15,909,223

 
4.24
%
 
$
15,672,437

 
4.33
%
 
 
 
 
 
 
 
 
 
Junior Subordinated Notes
 
$
206,200

 
1.67
%
 
$
206,200

 
1.69
%
 
(1) Includes net $19.1 million of debt market rate adjustments.
(2) Represents the weighted-average interest rates on our contractual principal balances.
(3) Includes net $0.9 million of debt market rate adjustments.
(4) Properties provide mortgage collateral as guarantors.  $101.7 million of the fixed-rate balance and $1.4 billion of the variable-rate balance is cross-collateralized.
 
Collateralized Mortgages, Notes and Loans Payable
 
As of June 30, 2014 , $21.4 billion of land, buildings and equipment (before accumulated depreciation) and construction in progress have been pledged as collateral for our mortgages, notes and loans payable. Certain of these consolidated secured loans, representing $1.5 billion of debt, are cross-collateralized with other properties.  Although a majority of the $15.8 billion of fixed and variable rate collateralized mortgages, notes and loans payable are non-recourse, $1.7 billion of such mortgages, notes and loans payable are recourse to the Company as guarantees on secured financings.  In addition, certain mortgage loans contain other credit enhancement provisions which have been provided by GGP.  Certain mortgages, notes and loans payable may be prepaid but are generally subject to a prepayment penalty equal to a yield-maintenance premium, defeasance or a percentage of the loan balance.
 
During the six months ended June 30, 2014 , we refinanced consolidated mortgage notes totaling $1.0 billion related to six properties and generated net proceeds of $308.4 million .  The prior loans had a weighted-average term-to-maturity of 1.7 years , and a weighted-average interest rate of 4.8% .  The new loans have a weighted-average term-to-maturity of 7.3 years , and a weighted-average interest rate of 3.6% . In addition to these loans, we also obtained a $450.0 million construction loan at Ala Moana Center with an interest rate of LIBOR plus 1.9% . As of June 30, 2014, the Company has drawn $153.8 million under this loan.
 

21
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


Corporate and Other Unsecured Loans
 
We have certain unsecured debt obligations, the terms of which are described below:
 
 
June 30, 2014 (2)
 
Weighted-Average
Interest Rate
 
December 31, 2013 (3)
 
Weighted-Average
Interest Rate
Unsecured debt:
 
 

 
 

 
 

 
 

HHC Note (1)
 
$
9,993

 
4.41
%
 
$
13,179

 
4.41
%
Revolving credit facility
 
81,800

 
1.73
%
 
51,800

 
1.74
%
Total unsecured debt
 
$
91,793

 
2.02
%
 
$
64,979

 
2.28
%
 
(1) Matures in December 2015.
(2) Excludes a market rate discount of $0.3 million that decreases the total amount that appears outstanding in our Consolidated Balance Sheets.  The market rate discount amortizes as an addition to interest expense over the life of the loan.
(3) Excludes a market rate discount of $0.4 million that decreases the total amount that appears outstanding in our Consolidated Balance Sheets.  The market rate discount amortizes as an addition to interest expense over the life of the loan.
 
Our revolving credit facility (the “Facility”) as amended on October 23, 2013, provides for revolving loans of up to $1.0 billion .  The Facility has an uncommitted accordion feature for a total facility of up to $1.5 billion .  The Facility is scheduled to mature in October 2018 and is unsecured.  Borrowings under the Facility bear interest at a rate equal to LIBOR plus 132.5 to 195 basis points, which is determined by the Company’s leverage level.  The Facility contains certain restrictive covenants which limit material changes in the nature of our business conducted, including but not limited to, mergers, dissolutions or liquidations, dispositions of assets, liens, incurrence of additional indebtedness, dividends, transactions with affiliates, prepayment of subordinated debt, negative pledges and changes in fiscal periods. In addition, we are required not to exceed a maximum net debt-to-value ratio, a maximum leverage ratio and a minimum net cash interest coverage ratio; we are not aware of any instances of non-compliance with such covenants as of June 30, 2014 . $81.8 million was outstanding on the Facility, as of June 30, 2014 and was repaid in full subsequent to quarter end ( Note 18 ).
 
Junior Subordinated Notes
 
GGP Capital Trust I, a Delaware statutory trust (the “Trust”) and a wholly-owned subsidiary of GGPN, completed a private placement of $200.0 million of trust preferred securities (“TRUPS”) in 2006.  The Trust also issued $6.2 million of Common Securities to GGPOP.  The Trust used the proceeds from the sale of the TRUPS and Common Securities to purchase $206.2 million of floating rate Junior Subordinated Notes of GGPOP due 2036.  Distributions on the TRUPS are equal to LIBOR plus 1.45% .  Distributions are cumulative and accrue from the date of original issuance.  The TRUPS mature on April 30, 2036, but may be redeemed beginning on April 30, 2011 if the Trust exercises its right to redeem a like amount of Junior Subordinated Notes.  The Junior Subordinated Notes bear interest at LIBOR plus 1.45% and are fully recourse to the Company. Though the Trust currently is a wholly-owned subsidiary of GGPN, we are not the primary beneficiary of the Trust and, accordingly, it is not consolidated for accounting purposes.  We have recorded the Junior Subordinated Notes as a liability and our common equity interest in the Trust as prepaid expenses and other assets in our Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013 .
 
Letters of Credit and Surety Bonds
 
We had outstanding letters of credit and surety bonds of $24.3 million as of June 30, 2014 and $19.4 million as of December 31, 2013 . These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.
 
We are not aware of any instances of non-compliance with our financial covenants related to our mortgages, notes and loans payable as of June 30, 2014 .
 

22
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


NOTE 8                          INCOME TAXES
 
We have elected to be taxed as a REIT under the Internal Revenue Code.  We intend to maintain REIT status.  To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including requirements to distribute at least 90% of our taxable ordinary income and to either distribute taxable capital gains to stockholders, or pay corporate income tax on the undistributed capital gains.  In addition, the Company is required to meet certain asset and income tests.
 
As a REIT, we will generally not be subject to corporate level Federal income tax on taxable income we distribute currently to our stockholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years.  Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income or property, and to Federal income and excise taxes on our undistributed taxable income.  Generally, we are currently open to audit by the Internal Revenue Service for the years ended December 31, 2010 through 2013 and are open to audit by state taxing authorities for the years ended December 31, 2009 through 2013.
 
Based on our assessment of the expected outcome of existing examinations or examinations that may commence, or as a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits, excluding accrued interest, for tax positions taken regarding previously filed tax returns will change from those recorded at June 30, 2014 , although such change is not expected to have a material effect on our consolidated financial position, results of operations or liquidity.

NOTE 9                          WARRANTS
 
Pursuant to the terms of the Investment Agreements, the Plan Sponsors and Blackstone were issued 120,000,000 warrants (the “Warrants”) to purchase common stock of GGP with an initial weighted average exercise price of $10.63 .  Each Warrant was originally recorded as a liability, as the holders of the Warrants could have required GGP to settle such Warrants in cash upon certain changes of control events.  The Warrants were fully vested upon issuance.  Each Warrant has a term of seven years and expires on November 9, 2017.  Below is a summary of the Warrants initially received by the Plan Sponsors and Blackstone.
 
Initial Warrant Holder
 
 Number of Warrants
 
Initial Exercise Price
Brookfield
 
57,500,000

 
$
10.75

Blackstone - B (2)
 
2,500,000

 
10.75

Fairholme (2)
 
41,070,000

 
10.50

Pershing Square (1)
 
16,430,000

 
10.50

Blackstone - A (2)
 
2,500,000

 
10.50

 
 
120,000,000

 
 

 
(1) On December 31, 2012, the Pershing Square Warrants were purchased by the Brookfield; Brookfield owns or manages on behalf of third parties, all outstanding Warrants.
(2) On January 28, 2013, the Fairholme and Blackstone Warrants (A and B) were purchased by GGPOP.
 
The Brookfield Warrants and the Blackstone Warrants (A and B) were immediately exercisable, while the Fairholme Warrants and the Pershing Square Warrants were exercisable (for the initial 6.5  years from the issuance) only upon 90  days prior notice, but there is no obligation to exercise at any point from the end of the 90 day notification period through maturity.
 
The exercise prices of the Warrants are subject to adjustment for future dividends, stock dividends, distribution of assets, stock splits or reverse splits of our common stock or certain other events.  In accordance with the agreement, these calculations adjust both the exercise price and the number of shares issuable for the 120,000,000 Warrants that were initially issued to the Plan Sponsors.  During 2013 and 2014 , the number of shares issuable upon exercise of the outstanding Warrants changed as follows:
 

23
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


 
 
 
 
Exercise Price
Record Date
 
Issuable Shares (1)
 
 Brookfield and Blackstone - B
 
Fairholme, Pershing Square and Blackstone - A
April 16, 2013
 
83,443,178

 
$
9.53

 
$
9.30

July 16, 2013
 
83,945,892

 
9.47

 
9.25

October 15, 2013
 
84,507,750

 
9.41

 
9.19

December 13, 2013
 
85,084,392

 
9.34

 
9.12

April 15, 2014
 
85,668,428

 
9.28

 
9.06

 
(1) Issuable shares as of April 16, 2013 exclude the Fairholme and Blackstone A and B Warrants purchased and exercised by GGPOP (Note 11).
 
The Fairholme and Blackstone A and B Warrants were purchased and subsequently exercised by GGPOP.  As of June 30, 2014 , Brookfield owns or manages on behalf of third parties all of the remaining Warrants. Brookfield has the option for 57,500,000 Warrants to either full share settle (i.e. deliver cash for the exercise price of the Warrants in the amount of approximately $618 million in exchange for approximately 67,000,000 shares of common stock) or net share settle.  The remaining 16,430,000 Warrants owned or managed by Brookfield must be net share settled.  As of June 30, 2014 , the remaining Warrants are exercisable into approximately 52 million common shares of the Company, at a weighted-average exercise price of approximately $9.23 per share.  Due to their ownership of Warrants, Brookfield’s potential ownership of the Company may change as a result of payments of dividends and changes in our stock price.
 
On March 28, 2013, we amended the Warrant agreement to replace the right of Warrant holders to receive cash from the Company under a change of control to the right to, instead, receive shares of the Company, changing the method of settlement. This amendment results in the classification of the Warrants as a component of permanent equity on our Consolidated Balance Sheets. Prior to the amendment, the Warrants were classified as a liability, due to the cash settlement feature, and marked to fair value, with changes in fair value recognized in earnings. As a result of the amendment, the fair value was determined as of March 28, 2013 with the change in fair value recognized in our Consolidated Statements of Comprehensive Income and the determined fair value was reclassified to equity.
 
The estimated fair value of the Warrants was $895.5 million as of March 28, 2013.  The fair value of the Warrants was estimated using the Black Scholes option pricing model using our stock price, the Warrant term, and Level 3 inputs ( Note 2 ).  As discussed above, the modification of the warrant agreement resulted in the classification of the Warrants as equity as of March 28, 2013.  From December 31, 2012 through March 28, 2013, changes in the fair value of the Warrants were recognized in earnings.  An increase in GGP’s common stock price or in the expected volatility of the Warrants would increase the fair value; whereas, a decrease in GGP’s common stock price or an increase in the lack of marketability would decrease the fair value.
 
The following table summarizes the change in fair value of the Warrants which is measured on a recurring basis using Level 3 inputs:
 
Six Months Ended June 30, 2013
Balance as of January 1,
$
1,488,196

Warrant liability adjustment
40,546

Purchase of Warrants by GGPOP
(633,229
)
Reclassification to equity
(895,513
)
Balance as of June 30,
$
—

 

24
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


The following table summarizes the estimated fair value of the Warrants and significant observable and unobservable inputs used in the valuation as of March 28, 2013:
 
March 28, 2013
Fair value of Warrants
$
895,513

 
 
Observable Inputs
 
GGP stock price per share
$
19.88

Warrant term
4.62

 
 
Unobservable Inputs
 
Expected volatility
30
%
Range of values considered
(15% - 65%)

 
 
Discount for lack of marketability
3
%
Range of values considered
(3% - 7%)


NOTE 10                          EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
 
Allocation to Noncontrolling Interests
 
Noncontrolling interests consists of the redeemable interests related to common and preferred GGPOP units and the noncontrolling interest in our consolidated joint ventures.  The following table reflects the activity included in the allocation to noncontrolling interests.
 
 
Three months ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Distributions to preferred GGPOP units
 
$
(2,232
)
 
$
(2,336
)
 
$
(4,464
)
 
$
(4,671
)
Net income allocation to noncontrolling interests in GGPOP from continuing operations (common units)
 
(973
)
 
(1,479
)
 
(1,637
)
 
(1,395
)
Net income allocated to noncontrolling interest in consolidated real estate affiliates
 
(160
)
 
(733
)
 
(1,116
)
 
(1,270
)
Allocation to noncontrolling interests
 
(3,365
)
 
(4,548
)
 
(7,217
)
 
(7,336
)
Other comprehensive loss allocated to noncontrolling interests
 
163

 
394

 
148

 
340

Comprehensive income allocated to noncontrolling interests
 
$
(3,202
)
 
$
(4,154
)
 
$
(7,069
)
 
$
(6,996
)
 
Redeemable Noncontrolling Interests
 
The minority interest related to the Common and Preferred Units of GGPOP are presented as redeemable noncontrolling interests in our Consolidated Balance Sheets since it is possible we could be required, under certain events outside of our control, to redeem the securities for cash by the holders of the securities.
 
The Common and Preferred Units of GGPOP are recorded at the greater of the carrying amount adjusted for the noncontrolling interest’s share of the allocation of income or loss (and its share of other comprehensive income or loss) and dividends or their redemption value (i.e. fair value) as of each measurement date.  The excess of the fair value over the carrying amount from period to period is recorded within Additional paid-in capital in our Consolidated Balance Sheets.  Allocation to noncontrolling interests is presented as an adjustment to net income to arrive at Net income (loss) attributable to General Growth Properties, Inc.
 

25
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


The common redeemable noncontrolling interests have been recorded at fair value for all periods presented.  One tranche of preferred redeemable noncontrolling interests has been recorded at fair value, while the other tranches of preferred redeemable noncontrolling interests have been recorded at carrying value.
 
Generally, the holders of the Common Units share in any distributions by GGPOP with our common stockholders.  However, the GGPOP operating partnership agreement permits distributions solely to GGP if such distributions were required to allow GGP to comply with the REIT distribution requirements or to avoid the imposition of excise tax.  Under certain circumstances, the conversion rate for each Common Unit is required to be adjusted to give effect to stock distributions.  If the holders had requested redemption of the Common Units as of June 30, 2014 , the aggregate amount of cash we would have paid would have been $145.8 million .
 
GGPOP issued Convertible Preferred Units that are convertible into Common Units of GGPOP at the rates below (subject to adjustment).  The holder may convert the Convertible Preferred Units into Common Units of GGPOP at any time, subject to certain restrictions.  The Common Units are convertible into common stock at approximately a one -to- one ratio at the current stock price.
 
 
Number of Common Units for each Preferred Unit
 
Number of Contractual Convertible Preferred Units Outstanding as of June 30, 2014
 
Converted Basis to Common Units Outstanding as of June 30, 2014
 
Conversion Price
 
Redemption Value
Series B (1)
 
3.00000

 
1,279,632

 
3,991,540

 
$
16.66670

 
94,041

Series D
 
1.50821

 
532,750

 
803,499

 
33.15188

 
26,637

Series E
 
1.29836

 
502,658

 
652,631

 
38.51000

 
25,133

 
 
 

 
 

 
 

 
 

 
$
145,811

 
(1) The conversion price of Series B preferred units is lower than the GGP June 30, 2014 closing common stock price of $23.56 ; therefore, the June 30, 2014 common stock price of $23.56 , and an additional conversion rate of 1.0397624 shares is used to calculate the Series B redemption value.
 
The following table reflects the activity of the redeemable noncontrolling interests for the six months ended June 30, 2014 , and 2013 .
Balance at January 1, 2013
$
268,219

Net income
1,395

Distributions
(1,511
)
Redemption of GGPOP units
(3,328
)
Other comprehensive loss
(340
)
Fair value adjustment for noncontrolling interests in GGPOP
(839
)
Balance at June 30, 2013
$
263,596

 
 
Balance at January 1, 2014
$
228,902

Net income
1,637

Distributions
(1,450
)
Other comprehensive loss
(148
)
Fair value adjustment for noncontrolling interests in GGPOP
30,762

Balance at June 30, 2014
$
259,703

 

26
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


Common Stock Dividend
 
Our Board of Directors declared common stock dividends during 2014 and 2013 as follows:
 
Declaration Date
 
Record Date
 
Payment Date
 
Dividend Per Share
2014
 
 
 
 
 
 
May 15
 
July 15
 
July 31, 2014
 
$
0.15

February 26
 
April 15
 
April 30, 2014
 
0.15

2013
 
 
 
 
 
 
October 28
 
December 13
 
January 2, 2014
 
$
0.14

July 29
 
October 15
 
October 29, 2013
 
0.13

May 10
 
July 16
 
July 30, 2013
 
0.12

February 4
 
April 16
 
April 30, 2013
 
0.12

 
Our Dividend Reinvestment Plan (“DRIP”) provides eligible holders of GGP’s common stock with a convenient method of increasing their investment in the Company by reinvesting all or a portion of cash dividends in additional shares of common stock.  Eligible stockholders who enroll in the DRIP on or before the four th business day preceding the record date for a dividend payment will be able to have that dividend reinvested.  As a result of the DRIP elections, 11,790 shares were issued during the six months ended June 30, 2014 and 14,050 shares were issued during the six months ended June 30, 2013 .
 
Preferred Stock
 
On February 13, 2013, we issued, in a public offering, 10,000,000  shares of 6.375% Series A Cumulative Perpetual Preferred Stock (the “Preferred Stock”) at a price of $25.00 per share, resulting in net proceeds of $242.0 million after issuance costs.  The Preferred Stock is recorded net of issuance costs within equity on our Consolidated Balance Sheets, and accrues a quarterly dividend at an annual rate of 6.375% .  The dividend is paid in arrears in preference to dividends on our common stock, and reduces net income available to common stockholders, and therefore, earnings per share.
 
The Preferred Stock does not have a stated maturity date but we may redeem the Preferred Stock after February 12, 2018, for $25.00 per share plus all accrued and unpaid dividends.  We may redeem the Preferred Stock prior to February 12, 2018, in limited circumstances that preserve ownership limits and/or our status as a REIT, as well as during certain circumstances surrounding a change of control.  Upon certain circumstances surrounding a change of control, holders of Preferred Stock may elect to convert each share of their Preferred Stock into a number of shares of GGP common stock equivalent to $25.00 plus accrued and unpaid dividends, but not to exceed a cap of 2.4679 common shares (subject to certain adjustments related to GGP common share splits, subdivisions, or combinations).
 
Our Board of Directors declared preferred stock dividends during 2014 and 2013 as follows:
Declaration Date
 
Record Date
 
Payment Date
 
Dividend Per Share
2014
 
 
 
 
 
 
May 15
 
June 16
 
July 1, 2014
 
$
0.3984

February 26
 
March 17
 
April 1, 2014
 
0.3984

2013
 
 
 
 
 
 
October 28
 
December 13
 
January 2, 2014
 
$
0.3984

July 29
 
September 13
 
October 1, 2013
 
0.3984

May 10
 
June 14
 
July 1, 2013
 
0.3984

March 4
 
March 15
 
April 1, 2013
 
0.2125



27
Table of Contents
GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


NOTE 11                   EARNINGS PER SHARE
 
Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding.  Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all potentially dilutive common shares.  The dilutive effect of the Warrants are computed using the “if-converted” method and the dilutive effect of options and their equivalents (including fixed awards and nonvested stock issued under stock-based compensation plans), is computed using the “treasury” method.
 
Information related to our EPS calculations is summarized as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Numerators - Basic and Diluted:
 
 

 
 

 
 
 
 
Income from continuing operations
 
$
56,423

 
$
217,263

 
$
115,887

 
$
191,094

Preferred Stock dividends
 
(3,984
)
 
(3,984
)
 
(7,968
)
 
(6,109
)
Allocation to noncontrolling interests
 
(2,687
)
 
(4,551
)
 
(6,175
)
 
(7,208
)
Income from continuing operations - attributable to common stockholders
 
49,752

 
208,728

 
101,744

 
177,777

 
 
 
 
 
 
 
 


Discontinued operations
 
120,666

 
(3,340
)
 
193,090

 
14,091

Allocation to noncontrolling interests
 
(678
)
 
3

 
(1,042
)
 
(128
)
Discontinued operations - net of noncontrolling interests
 
119,988

 
(3,337
)
 
192,048

 
13,963

 
 
 
 
 
 
 
 
 
Net income
 
177,089

 
213,923

 
308,977

 
205,185

Preferred Stock dividends
 
(3,984
)
 
(3,984
)
 
(7,968
)
 
(6,109
)
Allocation to noncontrolling interests
 
(3,365
)
 
(4,548
)
 
(7,217
)
 
(7,336
)
Net income attributable to common stockholders
 
$
169,740

 
$
205,391

 
$
293,792

 
$
191,740

 
 
 
 
 
 
 
 
 
Denominators:
 
 

 
 

 
 
 
 
Weighted-average number of common shares outstanding - basic
 
883,763

 
939,434

 
889,975

 
939,353

Effect of dilutive securities
 
56,962

 
50,027

 
54,408

 
3,552

Weighted-average number of common shares outstanding - diluted
 
940,725

 
989,461

 
944,383

 
942,905

 
 
 
 
 
 
 
 
 
Anti-dilutive Securities:
 
 

 
 

 
 
 
 
Effect of Preferred Units
 
5,506

 
5,526

 
5,506

 
5,526

Effect of Common Units
 
4,834

 
6,417

 
4,834

 
6,495

Effect of Stock Options
 
—

 
—

 
—

 
—

Effect of Warrants
 
—

 
—

 
—

 
48,173

 
 
10,340

 
11,943

 
10,340

 
60,194

 
For the three and six months ended June 30, 2014 , dilutive options and potentially dilutive shares related to the Warrants are included in the denominator of EPS. For the three and six months ended June 30, 2013 , options are included in the denominator of diluted EPS. Warrants were dilutive for the three months ended June 30, 2013 , but were anti-dilutive for the six months ended June 30, 2013 , and as such, their effect has not been included in the calculation of diluted net loss per share. 

Outstanding Common Units have been excluded from the diluted EPS calculation for all periods presented because including such Common Units would also require that the share of GGPOP income attributable to such Common Units be added back to net income therefore resulting in no effect on EPS. Outstanding Preferred Units have been excluded from the diluted EPS calculation for all periods presented because including the Preferred Units would also require that the Preferred Unit dividend be added back to the net income, resulting in them being anti-dilutive.
 
During the year ended December 31, 2013, GGPOP repurchased 28,345,108 shares of GGP’s common stock for $566.9 million . These shares are presented as Common stock in treasury, at cost, on our Consolidated Balance Sheets.  Accordingly, these

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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


shares have been excluded from the calculation of EPS.  In addition, GGPOP was issued 27,459,195 shares of GGP common stock on March 26, 2013, as a result of GGPOP’s purchase and subsequent exercising of the Fairholme and Blackstone A and B Warrants.  These shares are presented as issued, but not outstanding on our Consolidated Balance Sheets.  Accordingly, these shares have been excluded from the calculation of EPS.
 
On February 10, 2014, GGPOP repurchased 27,624,282 shares of GGP’s common stock for $555.8 million . These shares are presented as Common stock in treasury, at cost, on our Consolidated Balance Sheets.  Accordingly, these shares have been excluded from the calculation of EPS.
 
On May 1, 2014, the shares of GGP common stock owned by GGPOP were contributed to GGPN, and as a result of these transactions, GGPN owns an aggregate of 83,428,585 shares of GGP common stock as of June 30, 2014 , of which 55,969,390 are shown as treasury stock and 27,459,195 are shown as issued, but not outstanding on our Consolidated Balance Sheets.

NOTE 12                   STOCK-BASED COMPENSATION PLANS
 
The General Growth Properties, Inc. 2010 Equity Plan (the ‘‘Equity Plan’’) reserved for issuance of 4% of outstanding shares on a fully diluted basis. The Equity Plan provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, other stock-based awards and performance-based compensation (collectively, the ‘‘Awards’’). Directors, officers and other employees of GGP’s and its subsidiaries and affiliates are eligible for the Awards.  The Equity Plan is not subject to the Employee Retirement Income Security Act of 1974, as amended. No participant may be granted more than 4,000,000 shares, or the equivalent dollar value of such shares, in any year. Options granted under the Equity Plan will be designated as either nonqualified stock options or incentive stock options. An option granted as an incentive stock option will, to the extent it fails to qualify as an incentive stock option, be treated as a nonqualified option. The exercise price of an option may not be less than the fair value of a share of GGP’s common stock on the date of grant. The term of each option will be determined prior to the date of grant, but may not exceed 10 years .
 
Compensation expense related to stock-based compensation plans for the three months ended June 30, 2014 , and 2013 is summarized in the following table:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Stock options - Property management and other costs
$
1,792

 
$
1,106

 
$
3,997

 
$
2,335

Stock options - General and administrative
3,574

 
2,278

 
8,270

 
4,278

Restricted stock - Property management and other costs
446

 
389

 
867

 
814

Restricted stock - General and administrative
279

 
1,977

 
555

 
3,954

Total
$
6,091

 
$
5,750

 
$
13,689

 
$
11,381

 
The following tables summarize stock option activity for the Equity Plan for GGP for the three months ended June 30, 2014 , and 2013 :
 
2014
 
2013
 
Shares
 
Weighted Average
Exercise
Price
 
Shares
 
Weighted Average
Exercise
Price
Stock options Outstanding at January 1,
21,565,281

 
$
17.28

 
9,692,499

 
$
13.59

Granted
50,000

 
22.41

 
5,901,108

 
19.24

Exercised
(83,724
)
 
15.78

 
(285,491
)
 
14.29

Forfeited
(244,346
)
 
19.06

 
(211,510
)
 
15.25

Expired
(8,102
)
 
14.39

 
(14,279
)
 
14.13

Stock options Outstanding at June 30,
21,279,109

 
$
17.28

 
15,082,327

 
$
15.76

 
There was no significant restricted stock activity for the three months ended June 30, 2014 , and 2013 .

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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


 
NOTE 13                   ACCOUNTS AND NOTES RECEIVABLE, NET
 
The following table summarizes the significant components of Accounts and notes receivable, net.
 
 
 
June 30, 2014
 
December 31, 2013
Trade receivables
 
$
113,811

 
$
123,522

Notes receivable
 
278,728

 
179,559

Straight-line rent receivable
 
214,033

 
190,332

Other accounts receivable
 
4,944

 
3,377

Total Accounts and notes receivable
 
611,516

 
496,790

Provision for doubtful accounts
 
(17,505
)
 
(17,891
)
Total Accounts and notes receivable, net
 
$
594,011

 
$
478,899


Notes receivable includes a $156.4 million note receivable issued to Rique Empreendimentos e Participacoes Ltda. (“Rique”) in conjunction with our sale of Aliansce Shopping Centers, S.A. (“Aliansce”) to Rique and Canada Pension Plan Investment Board on September 30, 2013.  The note receivable is denominated in Brazilian Reais, bears interest at an effective interest rate of approximately 14% , is collateralized by shares of common stock in Aliansce, and requires annual principal and interest payments over the 5 years term.  We recognize the impact of changes in the exchange rate on the note receivable as Gain or loss on foreign currency in our Consolidated Statements of Comprehensive Income.

Also included within notes receivable is an $85.3 million note receivable from our joint venture partner related to the acquisition of 685 5th Avenue in New York City ( Note 3 ). The note receivable bears interest at an interest rate of 7.5% , is collateralized by our partner's ownership interest in the joint venture, and matures on June 27, 2024.

NOTE 14                   PREPAID EXPENSES AND OTHER ASSETS
 
The following table summarizes the significant components of Prepaid expenses and other assets.
 
June 30, 2014
 
December 31, 2013
 
Gross Asset
 
Accumulated
Amortization
 
Balance
 
Gross Asset
 
Accumulated
Amortization
 
Balance
Intangible assets:
 

 
 

 
 

 
 

 
 

 
 

Above-market tenant leases, net
940,441

 
(485,654
)
 
$
454,787

 
1,022,398

 
(478,998
)
 
$
543,400

Below-market ground leases, net
163,179

 
(15,720
)
 
$
147,459

 
164,017

 
(13,597
)
 
$
150,420

Real estate tax stabilization agreement, net
111,506

 
(22,990
)
 
$
88,516

 
111,506

 
(19,834
)
 
$
91,672

Total intangible assets
$
1,215,126


$
(524,364
)
 
$
690,762

 
$
1,297,921


$
(512,429
)
 
$
785,492

 
 
 
 
 
 
 
 
 
 
 
 
Remaining Prepaid expenses and other assets:
 

 
 

 
 

 
 

 
 

 
 

Security and escrow deposits
 

 
 

 
99,426

 
 
 
 
 
145,999

Prepaid expenses
 

 
 

 
53,620

 
 
 
 
 
23,283

Other non-tenant receivables
 

 
 

 
17,445

 
 
 
 
 
25,988

Deferred tax, net of valuation allowances
 

 
 

 
2,576

 
 
 
 
 
906

Other
 

 
 

 
9,587

 
 
 
 
 
13,901

Total remaining Prepaid expenses and other assets
 

 
 

 
182,654

 
 

 
 

 
210,077

Total Prepaid expenses and other assets
 

 
 

 
$
873,416

 
 

 
 

 
$
995,569

 

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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


NOTE 15                   ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
The following table summarizes the significant components of Accounts payable and accrued expenses.
 
 
June 30, 2014
 
December 31, 2013
 
Gross Liability
 
Accumulated
Accretion
 
Balance
 
Gross Liability
 
Accumulated
Accretion
 
Balance
Intangible liabilities:
 

 
 

 
 

 
 

 
 

 
 

Below-market tenant leases, net
571,131

 
(267,553
)
 
$
303,578

 
622,710

 
(271,215
)
 
$
351,495

Above-market headquarters office leases, net
15,267

 
(5,999
)
 
$
9,268

 
15,268

 
(5,130
)
 
$
10,138

Above-market ground leases, net
9,127

 
(1,339
)
 
$
7,788

 
9,756

 
(1,181
)
 
$
8,575

Total intangible liabilities
$
595,525


$
(274,891
)
 
$
320,634

 
$
647,734


$
(277,526
)
 
$
370,208

 
 
 
 
 
 
 
 
 
 
 
 
Remaining Accounts payable and accrued expenses:
 

 
 

 
 

 
 

 
 

 
 

Accrued interest
 

 
 

 
54,326

 
 

 
 

 
58,777

Accounts payable and accrued expenses
 

 
 

 
91,936

 
 

 
 

 
102,246

Accrued real estate taxes
 

 
 

 
94,524

 
 

 
 

 
92,663

Deferred gains/income
 

 
 

 
91,149

 
 

 
 

 
115,354

Accrued payroll and other employee liabilities
 

 
 

 
40,282

 
 

 
 

 
34,006

Construction payable
 

 
 

 
63,180

 
 

 
 

 
103,988

Tenant and other deposits
 

 
 

 
21,991

 
 

 
 

 
21,434

Insurance reserve liability
 

 
 

 
17,137

 
 

 
 

 
16,643

Capital lease obligations
 

 
 

 
12,392

 
 

 
 

 
12,703

Conditional asset retirement obligation liability
 

 
 

 
9,153

 
 

 
 

 
10,424

Uncertain tax position liability
 

 
 

 
7,077

 
 

 
 

 
5,536

Other
 

 
 

 
15,605

 
 

 
 

 
27,013

Total remaining Accounts payable and accrued expenses
 

 
 

 
518,752

 
 

 
 

 
600,787

Total Accounts payable and accrued expenses
 

 
 

 
$
839,386

 
 

 
 

 
$
970,995

 
NOTE 16                   LITIGATION
 
In the normal course of business, from time to time, we are involved in legal proceedings relating to the ownership and operations of our properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material effect on our consolidated financial position, results of operations or liquidity.
 
Urban Litigation
 
In October 2004, certain limited partners (the "Urban Plaintiffs") of Urban Shopping Centers, L.P. ("Urban") filed a lawsuit against Urban's general partner, Head Acquisition, L.P. ("Head"), as well as The Rouse Company, LP ("TRCLP"), Simon Property Group, Inc., Westfield America, Inc., and various of their affiliates, including Head's general partners (collectively, the "Urban Defendants"), in Circuit Court in Cook County, Illinois. GGP, GGPOP and other affiliates were later included as Urban Defendants. The lawsuit alleged, among other things, that the Urban Defendants breached the Urban partnership agreement, unjustly enriched themselves through misappropriation of partnership opportunities, failed to grow the partnership, breached their fiduciary duties, and tortiously interfered with several contractual relationships. The plaintiffs sought relief in the form of unspecified monetary damages and equitable relief requiring, among other things, the Urban Defendants, including GGP, Inc.

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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


and its affiliates, to engage in certain future transactions through the Urban Partnership.  On May 19, 2014 the Company settled the litigation and recorded a loss of $17.9 million , which is included in General and administrative expense in our Consolidated Statements of Comprehensive Income. The Company invested $60.0 million in Urban and contributed, at fair value, a 5.6% interest in three assets in exchange for preferred equity interests. The Company has no obligation to engage in future activity through Urban other than transactions associated with partnership assets.
 
Tax Indemnification Liability
 
Pursuant to the Investment Agreements, the Company has indemnified HHC from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses to which HHC and its subsidiaries become subject, in each case solely to the extent directly attributable to MPC Taxes (as defined in the Investment Agreements) in an amount up to $303.8 million .  Under certain circumstances, the Company agreed to be responsible for interest or penalties attributable to such MPC Taxes in excess of the $303.8 million .  The IRS disagrees with the method used to report gains for income tax purposes that are the subject of the MPC taxes.  As a result of this disagreement, The Howard Hughes Company, LLC and Howard Hughes Properties, Inc. filed petitions in the United States Tax Court on May 6, 2011, contesting this liability for the 2007 and 2008 years and a trial was held in early November 2012.  The Tax Court rendered its opinion on June 2, 2014, in favor of the IRS. The Company is in the process of evaluating its course of action, but regardless of whether or not the Company decides to appeal, the Company may pay approximately $202 million in tax and related interest in accordance with the Investment Agreements in the third or fourth quarter of 2014. The Internal Revenue Service has opened an audit for these two taxpayers for 2009 through 2011 with respect to MPC Taxes; however, the Company does not expect any material taxes or interest or penalties to be due for these years based on a change to the method outlined by the Tax Court.

The Company has accrued approximately $322 million related to the tax indemnification liability on our Consolidated Balance Sheets as of June 30, 2014 , and December 31, 2013 .  As a result of the Company's consideration of the risks associated with this matter, including the timing of recognition of indemnified and non-indemnified income by HHC, the use of specific deductions, and the ultimate amount of indemnified income recognized, as well as discussions with counsel, the Company believes that the aggregate liability recorded of approximately $322 million represents management’s best estimate of our liability as of June 30, 2014 , and that the probability that the Company will incur a loss in excess of this amount is remote. 


NOTE 17                   COMMITMENTS AND CONTINGENCIES
 
We lease land or buildings at certain properties from third parties. The leases generally provide us with a right of first refusal in the event of a proposed sale of the property by the landlord. Rental payments are expensed as incurred and have, to the extent applicable, been straight-lined over the term of the lease. The following is a summary of our contractual rental expense as presented in our Consolidated Statements of Comprehensive Income:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
(Dollars in thousands)
Contractual rent expense, including participation rent
 
$
3,193

 
$
3,679

 
$
6,452

 
$
6,957

Contractual rent expense, including participation rent and excluding amortization of above and below-market ground leases and straight-line rent
 
2,039

 
2,456

 
4,142

 
4,512

 
See Note 16 for our obligations related to uncertain tax positions and for disclosure of additional contingencies.



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GENERAL GROWTH PROPERTIES, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(Unaudited)


NOTE 18 SUBSEQUENT EVENTS

On August 1, 2014, we amended our $1.4 billion corporate loan secured by cross-collateralized mortgages on 14 properties.  This amendment lowered the interest rate on the loan from LIBOR plus 2.50% to LIBOR plus 1.75% .  The loan matures on April 26, 2016, and then after, has two one-year maturity date extension options.

During July, 2014, we obtained a $100 million loan at one property with an interest rate of LIBOR plus 2.50% . In addition, we repaid $81.8 million on our Facility. No amounts remain drawn on the Facility.

ITEM 2   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references to numbered Notes are to specific footnotes to our consolidated financial statements included in this Quarterly Report and whose descriptions are incorporated into the applicable response by reference.  The following discussion should be read in conjunction with such consolidated financial statements and related Notes.  Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) have the same meanings as in such Notes.

Overview
 
Our primary business is to be an owner and operator of best-in-class retail properties that provide an outstanding environment and experience for our communities, retailers, employees, consumers and shareholders.  Our properties are predominantly located in the United States.  As of June 30, 2014 , we are the owner, either entirely or with joint venture partners, of 120 regional malls comprising approximately 126 million square feet of GLA.
 
We provide management and other services to substantially all of our properties, including properties which we own through joint venture arrangements and which are unconsolidated for GAAP purposes.  Our management operating philosophies and strategies are the same whether the properties are consolidated or unconsolidated.
 
We seek to increase long-term Company NOI (as defined below) growth through proactive management and leasing of our properties.  Our leasing strategy is to identify and provide the right stores to have appropriate merchandise mix. We believe that the most significant operating factor affecting incremental cash flow and Company NOI is increased rents earned from tenants at our properties.  These rental revenue increases are primarily achieved by:
 
•
increasing permanent occupancy;
•
increasing rental revenues by leasing at higher rents than those expiring; and
•
increasing tenant sales, which allow us to obtain higher rents, and in which we participate through overage rent.
 
Since June 30, 2013 , our total occupancy has risen, but more importantly the level of long-term, or “permanent” occupancy, has increased from 89.1% as of June 30, 2013 to 90.8% as of June 30, 2014 . During this same period, we have seen an increase in rents between the rent paid on expiring leases and the rent commencing under new leases, on a suite-to-suite basis. On a suite-to-suite basis, the leases commencing occupancy in 2014 exhibited initial rents that were 14.4% higher than the final rents paid on expiring leases.
 
We may recycle capital by strategically disposing assets and opportunistically investing in high quality retail properties. Controlling operating expenses by leveraging our scale to maximize synergies is a critical component to Company NOI growth.
 
We have identified approximately $2.2 billion of income producing redevelopment projects within our portfolio, over 80% of which is being invested into Class A malls. We currently expect to achieve returns of approximately 12% on projects that have opened and 8-10% on projects under construction or in our pipeline, which average 9-11% for all projects (first year stabilized cash on cost return) as they commence operations.
 
We believe our long-term strategy can provide our shareholders with a competitive risk-adjusted total return comprised of dividends and share price appreciation.

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Table of Contents


Financial Overview
 
Our Company NOI (as defined below) increased 4.5% from $1,047.1 million for the six months ended June 30, 2013 to $1,094.1 million for the six months ended June 30, 2014 .  Operating income increased 9.1% from $395.8 million for the six months ended June 30, 2013 to $431.9 million for the six months ended June 30, 2014 . Our Company FFO (as defined below) increased 13.7% from $518.7 million for the six months ended June 30, 2013 to $590.0 million for the six months ended June 30, 2014 . Net income (loss) attributable to General Growth Properties, Inc. increased from $197.8 million for the six months ended June 30, 2013 to $301.8 million for the six months ended June 30, 2014 .

See Non-GAAP Supplemental Financial Measures below for a discussion of Company NOI and Company FFO, along with a reconciliation to the comparable GAAP measures, Operating income and Net income (loss) attributable to General Growth Properties, Inc.

Operating Metrics
 
Same Store Operating Metrics
 
The following table summarizes selected operating metrics for our same store portfolio.
 
June 30, 2014 (1)
 
June 30, 2013 (1)
 
% Change
In-Place Rents per square foot (2)
 

 
 

 
 

Consolidated Properties
$
67.93

 
$
66.01

 
2.91
 %
Unconsolidated Properties
79.94

 
79.67

 
0.34
 %
Total
$
71.43

 
$
69.84

 
2.28
 %
 
 
 
 
 
 
Percentage Leased
 
 
 
 
 
Consolidated Properties
96.2
%
 
95.6
%
 
60 bps

Unconsolidated Properties
97.0
%
 
96.5
%
 
50 bps

Total
96.5
%
 
95.9
%
 
60 bps

 
 
 
 
 
 
Tenant Sales per square foot (3)
 
 
 
 
 
Consolidated Properties
$
517

 
$
520

 
(0.58
)%
Unconsolidated Properties
696

 
664

 
4.82
 %
Total
$
563

 
$
560

 
0.54
 %
 
 
 
 
 
 
Tenant Sales Volume (All Less Anchors) (3)
 
 
 
 
 
Consolidated Properties
$
13,390

 
$
13,277

 
0.85
 %
Unconsolidated Properties
6,655

 
6,165

 
7.95
 %
Total
$
20,045

 
$
19,442

 
3.10
 %
 
 
 
 
 
 
 
(1) Metrics exclude one asset that is being de-leased in preparation for redevelopment.
(2) Represents average rent over the term consisting of base minimum rent and common area costs.
(3) Tenant Sales <10K SF is presented as sales per square foot in dollars, and Tenant Sales Volume (All Less Anchors) is presented as total sales volume in millions of dollars.
 
Lease Spread Metrics
 
The following table summarizes new and renewal leases that were scheduled to commence in 2014 and 2015 compared to expiring leases for the prior tenant in the same suite, for leases where the downtime between new and previous tenant was less than 24 months.

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Table of Contents

 
Number
of Leases
 
Square
Feet
 
Term/Years
 
Initial Rent Per
Square Foot(1)
 
Expiring Rent Per
Square Foot(2)
 
Initial Rent
Spread
 
% Change
Commencement 2014
1,314

 
3,893,234

 
6.3
 
$
62.93

 
$
55.02

 
$
7.91

 
14.4
%
Commencement 2015
115

 
425,030

 
7.0
 
73.51

 
62.17

 
11.34

 
18.2
%
Total 2014/2015
1,429

 
4,318,264

 
6.4
 
$
63.97

 
$
55.72

 
$
8.25

 
14.8
%
 
(1) Represents initial rent over the term consisting of base minimum rent and common area costs.
(2) Represents expiring rent at end of lease consisting of base minimum rent and common area costs.
 
Results of Operations
 
Three months ended June 30, 2014 and 2013
 
The following table is a breakout of the components of minimum rents:
 
Three Months Ended June 30,
 
 
 
 
 
2014
 
2013
 
$ Change
 
% Change
 
(Dollars in thousands)
 
 
 
 
Components of Minimum rents:
 

 
 

 
 

 
 

Base minimum rents
$
395,272

 
$
387,182

 
$
8,090

 
2.1
%
Lease termination income
2,993

 
2,179

 
814

 
37.4

Straight-line rent
13,653

 
11,457

 
2,196

 
19.2

Above and below-market tenant leases, net
(21,499
)
 
(15,306
)
 
(6,193
)
 
40.5

Total Minimum rents
$
390,419

 
$
385,512

 
$
4,907

 
1.3
%

Base minimum rents increased $8.1 million primarily due to increases in occupancy and rent between June 30, 2013 and June 30, 2014 , the acquisition of an additional 50% of Quail Springs Mall during the second quarter of 2013, and the acquisition of two operating properties during the fourth quarter of 2013. These increases in occupancy and rents and these acquisitions resulted in an additional $17.0 million of Base minimum rents during the three months ended June 30, 2014 . These increases were partially offset by our contribution of The Grand Canal Shoppes and the Shoppes at the Palazzo into a joint venture that was formed with TIAACREF during the second quarter of 2013, which resulted in $8.9 million less base minimum rents in the second quarter of 2014 compared to the second quarter of 2013.
 
Tenant recoveries increased $11.6 million primarily due to higher real estate tax recoveries in the second quarter of 2014, which were driven by increased real estate tax expense.

Real estate taxes increased $6.4 million primarily due to prior year refunds and lower than expected assessments at various properties during 2013.

General and administrative expense increased $15.1 million primarily due to the $17.9 million loss from the settlement of litigation in the second quarter of 2014 ( Note 16 ).
 
Interest and dividend income increased $4.6 million primarily due to $2.9 million of interest income from the note receivable recorded in conjunction with the sale of Aliansce ( Note 13 ).
 
Interest expense decreased $11.4 million primarily due to our contribution of The Grand Canal Shoppes and the Shoppes at the Palazzo into a joint venture that was formed with TIAACREF during the second quarter of 2013, the redemption of $608.7 million of 6.75% unsecured corporate bonds due November 9, 2015 during the second quarter of 2013, and an increase in capitalized interest primarily related to Ala Moana.
 
The Gain from change in control of investment properties of $219.8 million in 2013 relates to our contribution of The Grand Canal Shoppes and the Shoppes at the Palazzo into a joint venture that was formed with TIAACREF of $200 million, and the

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purchase of our partner’s interest in Quail Springs Mall, previously held in a joint venture, of $19.8 million, during the second quarter of 2013.
 
Loss on extinguishment of debt of $27.2 million in 2013 represents fees incurred for the early payoff of debt.  We expensed $20.5 million of fees as a result of the early redemption of the $608.7 million of 6.75% unsecured corporate bonds due November 9, 2015. In addition, we expensed $6.6 million in financing fees resulting from the refinancing of the $1.5 billion secured corporate loan.

Equity in income of Unconsolidated Real Estate affiliates increased $5.3 million primarily due to our contribution of The Grand Canal Shoppes and the Shoppes at the Palazzo into a joint venture that was formed with TIAACREF during the second quarter of 2013, which was partially offset by transaction costs associated with the formation of two joint ventures during the second quarter of 2014.

Discontinued operations, net for the three months ended June 30, 2014, is primarily comprised of a $117.5 million gain related to the sale of one property (Note 4).
 
Six months ended June 30, 2014 and 2013
 
The following table is a breakout of the components of minimum rents:
 
Six Months Ended June 30,
 
 
 
 
 
2014
 
2013
 
$ Change
 
% Change
 
(Dollars in thousands)
 
 
 
 
Components of Minimum rents:
 

 
 

 
 

 
 

Base minimum rents
$
791,660

 
$
782,181

 
$
9,479

 
1.2
%
Lease termination income
7,191

 
6,787

 
404

 
6.0

Straight-line rent
25,221

 
24,806

 
415

 
1.7

Above and below-market tenant leases, net
(39,074
)
 
(34,367
)
 
(4,707
)
 
13.7

Total Minimum rents
$
784,998

 
$
779,407

 
$
5,591

 
0.7
%

Base minimum rents increased $9.5 million primarily due to increases in occupancy and rent between June 30, 2013 and June 30, 2014 , the acquisition of an additional 50% of Quail Springs Mall during the second quarter of 2013, and the acquisition of two operating properties during the fourth quarter of 2013. These increases in occupancy and rents and these acquisitions resulted in an additional $35.8 million of Base minimum rents during the six months ended June 30, 2014 . These increases were partially offset by our contribution of The Grand Canal Shoppes and the Shoppes at the Palazzo into a joint venture that was formed with TIAACREF during the second quarter of 2013, which resulted in $26.3 million less base minimum rents during the six months ended June 30, 2014 compared to the six months ended June 30, 2013 .

Other revenue increased by $8.8 million primarily due to a settlement related to land sold to a municipality in the first quarter of 2014.

General and administrative expenses increased $15.8 million primarily due to the $17.9 million loss from the settlement of litigation in the second quarter of 2014 ( Note 16 ).

Interest and dividend income increased $10.3 million primarily due to $8.2 million of interest income received from the note receivable recorded in conjunction with the sale of Aliansce ( Note 13 ).
 
Interest expense decreased $22.5 million primarily due to our contribution of The Grand Canal Shoppes and the Shoppes at the Palazzo into a joint venture that was formed with TIAACREF during the second quarter of 2013, the 2013 redemption of $700.5 million of unsecured corporate bonds, and an increase in capitalized interest primarily related to Ala Moana.
 
The Gain on foreign currency represents foreign exchange gain on the note receivable denominated in Brazilian Reais recorded in conjunction with the sale of Aliansce ( Note 13 ).

The Warrant liability adjustment for the six months ended June 30, 2013 represents the non-cash income or expense recognized as a result of the change in the fair value of the Warrant liability. We incurred a net Warrant liability adjustment of $40.5 million during the first quarter of 2013. This adjustment reflects our purchase of the Warrants from Fairholme and Blackstone, as the amount paid exceeded the liability by approximately $55 million. This was partially offset by the revaluation of the remaining

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Warrants as of March 28, 2013. As of March 28, 2013, an amendment to the Warrant agreement changed the classification of the Warrants owned by Brookfield from a liability to a component of permanent equity. As a result, the Warrants have not been revalued after March 28, 2013. Refer to Note 9 for a discussion of transactions related to the Warrants.

The Gain from change in control of investment properties of $219.8 million in 2013 relates to our contribution of The Grand Canal Shoppes and The Shoppes at the Palazzo into a joint venture, of $200 million, and the purchase of our partner’s interest in Quail Springs Mall, previously held in a joint venture, of $19.8 million.

Loss on extinguishment of debt of $36.5 million in 2013 represents fees incurred for the early payoff of debt.  We expensed $20.5 million of fees as a result of the early redemption of the $608.7 million of 6.75% unsecured corporate bonds due November 9, 2015. In addition, we expensed $6.6 million in financing fees resulting from the refinancing of the $1.5 billion secured corporate loan, $3.6 million as a result of the early redemption of $91.8 million of 5.38% unsecured corporate bonds due November 26, 2013, and $5.8 million as a result of the early payoff of mortgage debt at one operating property.

Discontinued operations, net for the six months ended June 30, 2014 is primarily comprised of a $117.5 million gain related to the sale of one property, and a $66.7 million Gain on extinguishment of debt related to a lender-directed sale of one property that was previously transferred to a special servicer. Discontinued operations, net for the six months ended June 30, 2013 is comprised of a $25.9 million Gain on extinguishment of debt related to a lender-directed sale of one property that was previously transferred to a special servicer (Note 4).

Liquidity and Capital Resources
 
Our primary source of cash is from the ownership and management of our properties.  We may also raise cash from refinancings or borrowings under our revolving credit facility.  Our primary uses of cash include payment of operating expenses and capital, working capital, debt service, reinvestment in and redevelopment of properties, tenant allowances and dividends.
 
We anticipate maintaining financial flexibility by managing our future maturities, amortization of debt, cross collateralizations and corporate guarantees, improving operations and providing the necessary capital to fund growth.  We believe that we currently have sufficient liquidity to satisfy all of our commitments in the form of $242.0 million of consolidated unrestricted cash and $918.2 million of available credit under our credit facility as of June 30, 2014 , as well as anticipated cash provided by operations.
 
Our key financing and capital raising objectives include:
 
• to refinance our maturing debt and certain debt that is prepayable without penalty,
• to manage future debt maturities coming due in any one year; and
• to reduce the amount of debt that is recourse to us.
 
We may also raise capital through public or private issuances of debt securities, preferred stock, common stock, common units of GGPOP or other capital raising activities.
 
We executed the following refinancing and capital transactions (at our proportionate share):
 
• acquired 27.6 million of GGP common shares held by Pershing Square Capital Management, L.P. at $20.12 per share for a total price of approximately $556 million, funded by a draw on our Facility;
 
• completed $1.2 billion of secured financings, lowering the average interest rate 130 basis points from 4.8% to 3.5% , lengthening our average term-to-maturity from 1.7 years to 7.1 years, and generating net proceeds of $502.4 million ; and

• amended our $1.4 billion corporate loan secured by cross-collateralized mortgages on 14 properties, lowering the interest rate from LIBOR plus 2.50% to LIBOR plus 1.75%, thus reducing our annual interest expense by $10.4 million.  The loan matures on April 26, 2016, and then after, has two one-year maturity date extension options.

During the six months ended June 30, 2014, the Tax Court entered an adverse opinion in our ongoing tax indemnification litigation. As a result, we may pay approximately $202 million in tax and related interest in the third or fourth quarter of 2014 (Note 16).

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As of June 30, 2014 , we have $2.0 billion of debt pre-payable without penalty.  We may pursue opportunities to refinance this debt at lower interest rates and longer maturities.
 
As a result of our financing efforts in 2014, we have reduced the amount of debt due in the next three years from $1.9 billion to $1.1 billion , representing 6.2% of our total debt at maturity.  The maximum amount due in any one of the next ten years is no more than $3.0 billion or approximately 16.7% of our total debt at maturity. In 2022, the $3.0 billion of debt maturing includes $1.4 billion for Ala Moana.
 
As of June 30, 2014 , our proportionate share of total debt aggregated $19.3 billion .  Our total debt includes our consolidated debt of $16.1 billion , of which $15.8 billion is secured and $215.9 million is corporate unsecured, and $81.8 million is outstanding on the Facility. Our total debt also includes $3.3 billion of our share of the secured debt of our Unconsolidated Real Estate Affiliates. Of our proportionate share of total debt, $2.0 billion is recourse to the Company or its subsidiaries (including the Facility) due to guarantees or other security provisions for the benefit of the note holder.
 
The following table illustrates the scheduled payments for our proportionate share of total debt as of June 30, 2014 .  The $206.2 million of Junior Subordinated Notes are due in 2036, but we may redeem them any time after April 30, 2011 (Note 7).  As we do not expect to redeem the notes prior to maturity, they are included in the consolidated debt maturing subsequent to 2018.
 
Consolidated(1)
 
Unconsolidated(1)
 
(Dollars in thousands)
2014
$
75,534

 
$
13,339

2015
513,537

 
199,841

2016
719,114

 
27,194

2017
863,066

 
334,054

2018
1,913,556

 
232,072

Subsequent
11,892,741

 
2,555,968

 
$
15,977,548

 
$
3,362,468

 
(1) Excludes $19.1 million of adjustments related to special improvement district liabilities and debt market rate adjustment.
 
We generally believe that we will be able to extend the maturity date, repay or refinance the consolidated debt that is scheduled to mature in 2014.  We also believe that the joint ventures will be able to refinance the debt of our Unconsolidated Real Estate Affiliates upon maturity; however there can be no assurance that we will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions by us and/or our partners will be sufficient to repay such loans.

Acquisitions and Joint Venture Activity

From time-to-time we may acquire whole or partial interests in high-quality retail properties that are consistent with our strategy of owning and operating best-in-class retail properties. Such assets provide long-term embedded growth or potential redevelopment opportunities.

On June 27, 2014, we contributed $106.6 million to a joint venture that acquired acquired 685 5 th Avenue in New York, New York for a gross purchase price of $521.4 million with $340.0 million in gross property-level financing. The property comprises approximately 25,000 square feet of retail space and 115,000 square feet of office space. We have a 50% interest in the joint venture and account for the joint venture under the equity method of accounting because we share control over major decisions with our joint venture partner, which has substantive participating rights. The property will be accounted for as an Unconsolidated Real Estate Affiliate, and is recorded within Investment in and loans to/from Unconsolidated Real Estate Affiliates on our Consolidated Balance Sheets (Note 6). In connection with the acquisition, we provided an $85.3 million loan to our joint venture partner (Note 13).

The Company also entered into an agreement to acquire a 50% interest in approximately 58,000 square feet of retail space at 530 5th Avenue in New York City for a gross purchase price of approximately $295 million (approximately $147.5 million at our proportionate share). The acquisition is expected to close in the second half of 2014.


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The Company also entered into an agreement to acquire a 50% interest in 218 West 57th Street in New York City for a gross purchase price of $81.5 million ($40.8 million at our proportionate share). The property comprises approximately 35,000 square feet of retail space. The acquisition is expected to close in mid-2016.

Warrants and Brookfield Investor Ownership
 
Brookfield owns or manages on behalf of third parties all of the Company’s remaining outstanding Warrants (Note 9), which are exercisable into approximately 52 million common shares of the Company at a weighted-average exercise price of $9.23 per share, assuming net share settlement. The Warrants will continue to adjust for dividends paid by the Company.
 
As of February 18, 2014, Brookfield’s potential ownership of the Company (assuming full share settlement of the Warrants) is 40.9%, which is stated in their Form 13D filed on the same date.  If Brookfield held or managed this same ownership through the maturity date of the Warrants, assuming:  (a) GGP’s common stock price increased $10 per share and (b) the Warrants were adjusted for the impact of regular dividends, we estimate that their ownership would be 39.8% of the Company under net share settlement, and 41.3% of the company under full share settlement.

Redevelopments
 
We are currently redeveloping several consolidated and unconsolidated properties primarily to convert large-scale anchor boxes into smaller leasable areas and to create new in-line retail space and new restaurant venues.  The execution of these redevelopment projects within our portfolio was identified as providing compelling risk-adjusted returns on investment.
 
We have identified approximately $2.2 billion of income producing redevelopment projects within our portfolio, over 80% of which is being invested into Class A malls.  We plan to fund these redevelopments with available cash flow, construction financing, and proceeds from debt refinancings.  We continue to evaluate a number of other redevelopment projects to further enhance the quality of our assets.  We currently expect to achieve returns that average 9-11% for all projects (cash on cost, first year stabilized).  Expected returns are based on the completion of current and future redevelopment projects, and the success of the leasing and asset management plans in place for each project. Expected returns are subject to a number of variables, risks, and uncertainties including those disclosed within Item 1A of our Annual Report. We also refer the reader to our disclosure related to forward-looking statements, below. The following table illustrates our planned redevelopments:

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Property
Description
 
Ownership %
 
GGP’s Total
Projected Share
of Cost
 
GGP’s
Investment to
Date (1)
 
Expected 
Return
on Investment (2)
 
Expected
Project
Opening
Major Development Summary (in millions, at share unless otherwise noted)
 
 
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Open
 
 
 
 
 

 
 

 
 
 
 
Northridge
Northridge, CA
The Sports Authority, Yardhouse and Plaza
 
100%
 
$
12.2

 
$
11.3

 
14%
 
Open
 
 
 
 
 
 
 
 
 
 
 
 
Fashion Show
Las Vegas, NV
Addition of Macy's Men's and inline
 
100%
 
34.8

 
32.0

 
23%
 
Open
 
 
 
 
 
 
 
 
 
 
 
 
Oakwood Center
Gretna, LA
West wing redevelopment and Dick's Sporting Goods
 
100%
 
19.0

 
15.3

 
9%
 
Open
 
 
 
 
 
 
 
 
 
 
 
 
Glendale Galleria (3)
Glendale, CA
Addition of Bloomingdale's, remerchandising, business development and renovation
 
50%
 
51.7

 
49.1

 
12%
 
Open
 
 
 
 
 
 
 
 
 
 
 
 
The Mall in Columbia
Columbia, MD
Lifestyle expansion
 
100%
 
23.6

 
17.7

 
12%
 
Open
 
 
 
 
 
 
 
 
 
 
 
 
Oakbrook Center
Oakbrook, IL
Conversion of former anchor space into Container Store, Pirch and inline
 
48%
 
15.0

 
12.8

 
10%
 
Open
 
 
 
 
 
 
 
 
 
 
 
 
Other Projects
Various Malls
Redevelopment projects at various malls
 
N/A
 
169.3

 
147.2

 
10%
 
Open
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Open Projects
 
 
 
$
325.6

 
$
285.4

 
12%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Under Construction
 
 
 
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Woodlands (3)
Woodlands, TX
Addition of Nordstrom in former Sears box
 
100%
 
$
44.7

 
$
36.1

 
7-9%
 
Q3 2014
 
 
 
 
 
 
 
 
 
 
 
 
Mayfair Mall (3)
Wauwatosa, WI
Nordstrom
 
100%
 
72.3

 
11.0

 
6-8%
 
Q3 2015
 
 
 
 
 
 
 
 
 
 
 
 
Ridgedale Center (3)
Minnetonka, MN
Nordstrom, Macy's Expansion, New Inline GLA and renovation
 
100%
 
106.2

 
31.0

 
8-9%
 
Q3 2015
 
 
 
 
 
 
 
 
 
 
 
 
Southwest Plaza
Littleton, CO
Redevelopment
 
100%
 
72.6

 
5.1

 
9-10%
 
Q4 2015
 
 
 
 
 
 
 
 
 
 
 
 
Ala Moana Center (3)
Honolulu, HI
Demolish existing Sears store and expand mall, adding anchor, box and inline tenants, reconfigure center court
 
100%
 
573.2

 
294.3

 
9-10%
 
Q4 2015
 
 
 
 
 
 
 
 
 
 
 
 
Baybrook Mall
Friendswood, TX
Total Projects Under Construction
 
53%
 
76.3

 
17.5

 
9-10%
 
Q4 2015
 
 
 
 
 
 
 
 
 
 
 
 
Other Projects
Various Malls
Expansion
 
N/A
 
192.1

 
62.4

 
8-9%
 
Various
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Projects Under Construction
 
 
 
$
1,137.4

 
$
457.4

 
8-10%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projects in Pipeline
 
 
 
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staten Island Mall
Staten Island, NY
Expansion
 
100%
 
156.1

 
2.4

 
10-11%
 
TBD
 
 
 
 
 
 
 
 
 
 
 
 
New Mall Development
Norwalk, CT
Ground up mall development
 
100%
 
285.0

 
36.8

 
8-10%
 
TBD
 
 
 
 
 
 
 
 
 
 
 
 
Ala Moana Center Honolulu, HI
Nordstrom box repositioning
 
100%
 
85.0

 
—

 
9-10%
 
TBD
 
 
 
 
 
 
 
 
 
 
 
 
Other Projects
Various Malls
Redevelopment projects at various malls
 
N/A
 
194.4

 
6.5

 
9-10%
 
TBD
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Projects in Pipeline
 
 
 
$
720.5

 
$
45.7

 
8-10%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Development Summary
 
 
 
$
2,183.5

 
$
788.5

 
9-11%
 
 
 
(1) Projected costs and investments to date exclude capitalized interest and internal overhead.
(2) Return on investment represents first year stabilized cash on cost return, based upon budgeted assumptions.  Actual costs may vary.
(3) Project ROI includes income related to uplift on existing space.

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Our investment in these projects for the three months ended June 30, 2014 has increased from December 31, 2013 , in conjunction with the applicable development plan and as projects near completion. The completion of the project at Glendale Galleria and the continued progression of the redevelopment projects at Ala Moana Center and Ridgedale Center resulted in increases to GGP’s investment to date.

Capital Expenditures, Capitalized Interest and Overhead (at share)
 
The following table illustrates our capital expenditures, capitalized interest, and internal costs associated with leasing and development overhead, which primarily relate to ordinary capital projects at our operating properties.  In addition, we incurred tenant allowances and capitalized leasing costs for our operating properties as outlined below.  Capitalized interest and internal costs associated with development and leasing overhead are based on qualified expenditures and interest rates and are amortized over lives which are consistent with the related asset.
 
 
Six Months Ended June 30,
 
 
2014
 
2013
 
 
(Dollars in thousands)
Capital expenditures (1)
 
$
68,818

 
$
58,168

Tenant allowances (2)
 
61,584

 
70,385

Capitalized interest and capitalized overhead
 
31,112

 
29,188

Total
 
$
161,514

 
$
157,741

 
 
(1) Reflects only non-tenant operating capital expenditures.
(2) Tenant allowances paid on 2.3 million square feet.
 
The increase in Capital expenditures is primarily driven by refurbishment projects that improve the quality of our properties.
 
Common Stock Dividends
 
Our Board of Directors declared common stock dividends during 2014 and 2013 as follows:
Declaration Date
Record Date
Payment Date
Dividend Per Share
2014
 
 
 
May 15
July 15
July 31, 2014
$
0.15

February 26
April 15
April 30, 2014
0.15

2013
 
 
 
October 28
December 13
January 2, 2014
$
0.14

July 29
October 15
October 29, 2013
0.13

May 10
July 16
July 30, 2013
0.12

February 4
April 16
April 30, 2013
0.12


Preferred Stock Dividends
 
On February 13, 2013, we issued, under a public offering, 10,000,000 shares of 6.375% Series A Cumulative Stock at a price of $25.00 per share.  Our Board of Directors declared preferred stock dividends during 2014 and 2013 as follows:
Declaration Date
Record Date
Payment Date
Dividend Per Share
2014
 
 
 
May 15
June 16
July 1, 2014
$
0.3984

February 26
March 17
April 1, 2014
0.3984

2013
 
 
 
October 28
December 13
January 2, 2014
$
0.3984

July 29
September 13
October 1, 2013
0.3984

May 10
June 14
July 1, 2013
0.3984

March 4
March 15
April 1, 2013
0.2125


41


Summary of Cash Flows
 
Cash Flows from Operating Activities
 
Net cash provided by operating activities was $544.3 million for the six months ended June 30, 2014 and $313.9 million for the six months ended June 30, 2013 .  Significant changes in the components of net cash provided by operating activities include:

•
in 2014 , a decrease in interest costs primarily as a result of the of the redemption of unsecured corporate bonds; and
•
in 2013 , a decrease in Accounts payable and accrued expenses primarily attributable to a settlement with the 2006 Lenders.
 
Cash Flows from Investing Activities
 
Net cash (used in) provided by investing activities was $(348.0) million for the six months ended June 30, 2014 and $228.5 million for the six months ended June 30, 2013 .  Significant components of net cash used in investing activities include:
 
•
in 2014 , development of real estate and property improvements, $(272.7) million ;
•
in 2013 , development of real estate and property improvements, $(175.7) million ; and
•
in 2013 , distributions received from our Unconsolidated Real Estate Affiliates in excess of income, $101.4 million .
 
Cash Flows from Financing Activities
 
Net cash (used in) provided by financing activities was $(531.5) million for the six months ended June 30, 2014 and $(462.2) million for the six months ended June 30, 2013 .  Significant components of net cash used in financing activities include:
 
•
in 2014 , proceeds from the refinancing or issuance of mortgages, notes, and loans payable, of $1,751 million net of principal payments of $(1,448) million ;
•
in 2014 , the acquisition of 27.6 million shares of our common stock $(555.8) million ;
•
in 2014 , cash distributions paid to common stockholders of $(260.1) million ;
•
in 2013 , proceeds from the refinancing or issuance of mortgages, notes, and loans payable of $3,663 million , net of principal payments of $(3,532) million ;
•
in 2013 , proceeds from the issuance of preferred stock, $242.0 million ;
•
in 2013 , purchase of the Fairholme and Blackstone Warrants $(633.2) million ( Note 9 ); and
•
in 2013 , cash distributions paid to common stockholders of $(216.0) million .

Seasonality
 
Although we have a year-long temporary leasing program, occupancies for short-term tenants and, therefore, rental income recognized, are higher during fourth quarter of the year.  In addition, the majority of our tenants have December or January lease years for purposes of calculating annual overage rent amounts.  Accordingly, overage rent thresholds are most commonly achieved in the fourth quarter.  As a result, revenue production is generally highest in the fourth quarter of each year.

 
Critical Accounting Policies
 
Our discussion and analysis of financial condition and results of operations is based on our consolidated interim financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
 
A disclosure of our critical accounting policies which affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements is included in our Annual Report on Form 10-K for the year ended December 31, 2013 in Management’s Discussion and Analysis of Financial Condition and Results of Operations.


42

REIT Requirements
 
In order to remain qualified as a REIT for federal income tax purposes, we must distribute or pay tax on 100% of our capital gains and distribute at least 90% of our ordinary taxable income to stockholders.  See Note 8 to the consolidated financial statements for more detail on our ability to remain qualified as a REIT.
 
Refer also to the accounting policies discussed in Note 2.
 
Recently Issued Accounting Pronouncements
 
Refer to Note 2 for a discussion of the revised definition of discontinued operations and a recently-issued revenue recognition pronouncement. We have elected to adopt the revised definition of discontinued operations prospectively on January 1, 2015, pursuant to the pronouncement’s terms. The recently-issued revenue recognition pronouncement is effective January 1, 2017, and we are evaluating its impact on our consolidated financial statements.
 
Non-GAAP Supplemental Financial Measures and Definitions
 
Net Operating Income (“NOI”) and Company NOI
 
The Company defines NOI as income from property operations after operating expenses have been deducted, but prior to deducting financing, administrative and income tax expenses.  NOI has been reflected on a proportionate basis (at the Company’s ownership share).  Other REITs may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.  The Company considers NOI a helpful supplemental measure of its operating performance because it is a direct measure of the actual results of our properties.  Because NOI excludes general and administrative expenses, interest expense, retail investment property impairment or non-recoverable development costs, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests, provision for income taxes, discontinued operations, preferred stock dividends, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs.
 
The Company also considers Company NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI certain non-cash and non-comparable items such as straight-line rent and intangible asset and liability amortization, which are a result of our emergence, acquisition accounting and other capital contribution or restructuring events. However, due to the exclusions noted, Company NOI should only be used as an alternative measure of the Company’s financial performance.  We present Company NOI and Company FFO (as defined below), as we believe certain investors and other users of our financial information use these measures of the Company’s historical operating performance.

Funds From Operations (“FFO”) and Company FFO
 
The Company determines FFO based upon the definition set forth by National Association of Real Estate Investment Trusts (“NAREIT”).  The Company determines FFO to be our share of consolidated net income (loss) computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding cumulative effects of accounting changes, excluding gains and losses from the sales of, or any impairment charges related to, previously depreciated operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon our economic ownership interest, and all determined on a consistent basis in accordance with GAAP.  As with our presentation of NOI, FFO has been reflected on a proportionate basis.
 
We consider FFO a helpful supplemental measure of the operating performance for equity REITs and a complement to GAAP measures because it is a recognized measure of performance by the real estate industry.  FFO facilitates an understanding of the operating performance of our properties between periods because it does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life.  Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company’s operating performance.
 
As with our presentation of Company NOI, the Company also considers Company FFO to be a helpful supplemental measure of the operating performance for equity REITs because it excludes from FFO certain items that are non-cash and certain non-comparable items such as our Company NOI adjustments, and FFO items such as mark-to-market adjustments on debt and gains on the extinguishment of debt, Warrant liability adjustment, and interest expense on debt repaid or settled all which are a result of our emergence, acquisition accounting and other capital contribution or restructuring events.

43


Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
 
The Company presents NOI and FFO as they are financial measures widely used in the REIT industry.  In order to provide a better understanding of the relationship between our non-GAAP financial measures of NOI, Company NOI, FFO and Company FFO, reconciliations have been provided as follows: a reconciliation of GAAP operating income to NOI and Company NOI and a reconciliation of net income (loss) attributable to General Growth Properties, Inc. to FFO and Company FFO.  None of our non-GAAP financial measures represents cash flow from operating activities in accordance with GAAP, none should be considered as an alternative to GAAP net income (loss) attributable to General Growth Properties, Inc. and none are necessarily indicative of cash available to fund cash needs.  In addition, the Company has presented such financial measures on a consolidated and unconsolidated basis (at the Company’s ownership share) as the Company believes that given the significance of the Company’s operations that are owned through investments accounted for on the equity method of accounting, the detail of the operations of the Company’s unconsolidated properties provides important insights into the income and FFO produced by such investments for the Company as a whole.
 
The following tables reconcile operating income to NOI and Company NOI (dollars in thousands) for the three and six months ended June 30, 2014 and 2013 :
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Operating income
 
$
207,913

 
$
198,637

 
$
431,868

 
$
395,756

 
 
 
 
 
 
 
 
 
Management fees and other corporate revenues
 
(17,717
)
 
(17,307
)
 
(34,403
)
 
(33,239
)
Property management and other costs
 
40,107

 
41,558

 
85,071

 
81,897

General and administrative
 
28,232

 
13,124

 
39,831

 
24,057

Depreciation and amortization
 
177,430

 
188,038

 
351,201

 
379,745

Loss on sales of investment properties
 
44

 
—

 
44

 
—

Noncontrolling interest in NOI of Consolidated Properties and other
 
(5,176
)
 
(3,715
)
 
(8,976
)
 
(7,216
)
NOI of unconsolidated properties
 
110,591

 
97,836

 
204,702

 
187,212

Total NOI adjustments
 
333,511


319,534


637,470


632,456

Proportionate NOI
 
541,424


518,171


1,069,338


1,028,212

Company NOI adjustments:
 
 
 
 
 
 
 
 
Straight-line rent
 
(21,184
)
 
(15,523
)
 
(30,681
)
 
(31,918
)
Above and below-market leases amortization, net
 
25,753

 
20,704

 
49,885

 
44,866

Real estate tax stabilization agreement
 
1,401

 
1,578

 
2,979

 
3,156

Amortization of below-market ground leases
 
1,274

 
1,388

 
2,595

 
2,764

Total Company NOI adjustments
 
7,244


8,147


24,778


18,868

Company NOI
 
$
548,668


$
526,318


$
1,094,116


$
1,047,080


44


The following tables reconcile Net income (loss) attributable to common stockholders to FFO and Company FFO for the three and six months ended June 30, 2014 and 2013 :
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
Net income attributable to General Growth Properties, Inc.
173,724

 
209,375

 
301,760

 
197,849

 
 
 
 
 
 
 
 
Depreciation and amortization of capitalized real estate costs
220,367

 
229,321

 
438,070

 
459,631

Gains on sales of investment properties
(117,417
)
 
440

 
(123,716
)
 
(2,683
)
Gains from changes in control of investment properties
—

 
(219,784
)
 
—

 
(219,784
)
Noncontrolling interests in depreciation of Consolidated Properties
(2,266
)
 
(1,788
)
 
(3,928
)
 
(3,557
)
Provision for impairment excluded from FFO of discontinued operations
—

 
—

 
—

 
4,975

Redeemable noncontrolling interests
973

 
1,483

 
1,637

 
1,403

Depreciation and amortization of discontinued operations
524

 
7,242

 
1,252

 
9,828

Preferred Stock dividends
(3,984
)
 
(3,984
)
 
(7,968
)
 
(6,109
)
Total FFO adjustments
98,197


12,930


305,347


243,704

Proportionate FFO
271,921


222,305


607,107


441,553

Company FFO Adjustments:
 
 
 
 
 
 
 
Straight-line rent
(21,184
)
 
(15,523
)
 
(30,681
)
 
(31,918
)
Above and below-market leases amortization, net
25,753

 
20,704

 
49,885

 
44,866

Real estate tax stabilization agreement
1,401

 
1,578

 
2,979

 
3,156

Amortization of below-market ground leases
1,274

 
1,388

 
2,595

 
2,764

General and Administrative
17,854

 
—

 
17,854

 
—

Interest Income
(75
)
 
—

 
(75
)
 
—

Interest expense (1)
2,866

 
5,190

 
11,494

 
1,823

Gain on foreign currency
(3,772
)
 
—

 
(8,955
)
 
—

Warrant liability adjustment
—

 
—

 
—

 
40,546

Loss on extinguishment of debt
—

 
27,159

 
—

 
36,478

Provision for income taxes
1,492

 
—

 
3,542

 
—

FFO from discontinued operations
23

 
3,399

 
(65,771
)
 
(20,529
)
Company FFO
$
297,553


$
266,200


$
589,974


$
518,739

 
(1) Interest expense adjustments include default interest, mark-to-market adjustments on debt, write-off of mark-to-market adjustments on extinguished debt, debt extinguishment expenses and losses on extinguished debt.

Forward-Looking Statements
 
Certain statements made in this section or elsewhere in this report may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statement are based on reasonable assumption, it can give no assurance that its expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to, the Company’s ability to refinance, extend, restructure or repay near and intermediate term debt, its indebtedness, its ability to raise capital through equity issuances, asset sales or the incurrence of new debt, retail and credit market conditions, impairments, its liquidity demands, and economic conditions. The Company discusses these and other risks and uncertainties in its annual and quarterly periodic reports filed with the Securities and Exchange Commission. The Company may update that discussion in its periodic reports, but otherwise takes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

  ITEM 3                            QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

45
Table of Contents

 
There have been no significant changes in the market risks described in our Annual Report on Form 10-K for the year ended December 31, 2013.
 
ITEM 4                            MINE SAFETY DISCLOSURES
 
Not applicable.
 
ITEM 5                            CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)).

Based on that evaluation, the CEO and the CFO have concluded that our disclosure controls and procedures are effective.
 
Internal Control over Financial Reporting
 
There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II                   OTHER INFORMATION

ITEM 1                       LEGAL PROCEEDINGS
 
In the normal course of business, from time to time, we are involved in legal proceedings relating to the ownership and operations of our properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material effect on our consolidated financial position, results of operations or liquidity.
 
Urban Litigation
 
In October 2004, certain limited partners (the "Urban Plaintiffs") of Urban Shopping Centers, L.P. ("Urban") filed a lawsuit against Urban's general partner, Head Acquisition, L.P. ("Head"), as well as The Rouse Company, LP ("TRCLP"), Simon Property Group, Inc., Westfield America, Inc., and various of their affiliates, including Head's general partners (collectively, the "Urban Defendants"), in Circuit Court in Cook County, Illinois. GGP, GGPOP and other affiliates were later included as Urban Defendants. The lawsuit alleged, among other things, that the Urban Defendants breached the Urban partnership agreement, unjustly enriched themselves through misappropriation of partnership opportunities, failed to grow the partnership, breached their fiduciary duties, and tortiously interfered with several contractual relationships. The plaintiffs sought relief in the form of unspecified monetary damages and equitable relief requiring, among other things, the Urban Defendants, including GGP, Inc. and its affiliates, to engage in certain future transactions through the Urban Partnership.  On May 19, 2014 the Company settled
the litigation and recorded a loss of $17.9 million, which is included in General and administrative expense in our Consolidated Statements of Comprehensive Income. The Company invested $60.0 million in Urban and contributed, at fair value, a 5.6% interest in three assets in exchange for preferred equity interests. The Company has no obligation to engage in future activity through Urban other than transactions associated with partnership assets.
 
Tax Indemnification Liability
 
Pursuant to the Investment Agreements, the Company has indemnified HHC from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses to which HHC and its subsidiaries become subject, in each case solely to the extent directly attributable to MPC Taxes (as defined in the Investment Agreements) in an amount up to $303.8 million .  Under certain circumstances, the Company agreed to be responsible for interest or penalties attributable to such MPC Taxes in excess of the $303.8 million .  The IRS disagrees with the method used to report gains for income tax purposes that are the subject of the MPC taxes.  As a result of this disagreement, The Howard Hughes Company, LLC and Howard Hughes Properties, Inc. filed petitions in the United States Tax Court on May 6, 2011, contesting this liability for the 2007 and 2008 years and a trial was held in early November 2012.  The Tax Court rendered its opinion on June 2, 2014, in favor of the IRS. The Company is in the process of evaluating its course of action, but regardless of whether the Company decides to appeal or

46
Table of Contents

not, the Company may pay approximately $202 million in tax and related interest in accordance with the Investment Agreements in the third or fourth quarter of 2014. The Internal Revenue Service has opened an audit for these 2 taxpayers for 2009 through 2011 with respect to MPC Taxes; however, the Company does not expect any material taxes or interest or penalties to be due for these years based on a change to the method outlined by the Tax Court.

The Company has accrued approximately $322 million related to the tax indemnification liability on our Consolidated Balance Sheets as of June 30, 2014 , and December 31, 2013 .  As a result of the Company's consideration of the risks associated with this matter, including the timing of recognition of indemnified and non-indemnified income by HHC, the use of specific deductions, and the ultimate amount of indemnified income recognized, as well as discussions with counsel, the Company believes that the aggregate liability recorded of approximately $322 million represents management’s best estimate of our liability as of June 30, 2014 , and that the probability that the Company will incur a loss in excess of this amount is remote. 


ITEM 1A   RISK FACTORS
 
There are no material changes to the risk factors previously disclosed in our Annual Report.
 
ITEM 2   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
The following table provides the information with respect to the stock repurchases made by GGP during the six months ended June 30, 2014 .
 
Period
Total Number of
Shares Purchased (1)
 
Average Price
Paid per Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
 
Maximum Number or
Approximate Dollar Value
of Shares that May Yet be
Purchased Under the Plans
or Programs
February (February 10, 2014)
27,624,282

 
$
20.12

 
—

 
$
117,558,939.06

Total
27,624,282

 
$
20.12

 
—

 
$
117,558,939.06

 
(1) The Company’s stock repurchase program, approved by our Board of Directors on August 8, 2011, authorizes the purchase of up to $250 million of the Company’s common stock. The Company’s stock repurchase program has no fixed expiration date.  On February 10, 2014, the Company repurchased 27,624,282 shares of common stock from affiliates of Pershing Square Capital Management, L.P., at $20.12 per share in a privately negotiated transaction approved by our Board of Directors.

ITEM 3                  DEFAULTS UPON SENIOR SECURITIES
 
None
 
ITEM 5                  OTHER INFORMATION
 
None



47
Table of Contents

ITEM 6                  EXHIBITS
 
10.1

 
Stock Purchase Agreement dated February 10, 2014 by and among General Growth Properties, Inc., GGP Limited Partnership, Pershing Square, L.P., Pershing Square II, L.P., PSRH, Inc. and Pershing Square Holdings, Ltd. (previously filed as Exhibit 10.1 to New GGP’s Current Report on Form 8-K dated February 10, 2014, which was filed with the SEC on February 10, 2014).
 
 
 
10.2

 
Fourth Amended and Restated Agreement of Limited Partnership of GGP Operating Partnership, LP (f/k/a GGP Limited Partnership) dated May 1, 2014
 
 
 
10.3

 
Second Amended and Restated Employee Stock Purchase Plan dated May 15, 2014
 
 
 
10.4

 
Amendment dated April 30, 2014 to the Third Amended and Restated Credit Agreement, dated October 23, 2013
 
 
 
10.5

 
Second Amendment dated August 1, 2014 to the Loan Agreement dated April 26, 2013
 
 
 
31.1

 
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
31.2

 
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.1

 
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.2

 
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
101

 
The following financial information from General Growth Properties, Inc.’s. Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, has been filed with the SEC on August 6, 2014, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Comprehensive Income, (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements.
 
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant has not filed debt instruments relating to long-term debt that is not registered and for which the total amount of securities authorized thereunder does not exceed 10% of total assets of the registrant and its subsidiaries on a consolidated basis as of June 30, 2014. The registrant agrees to furnish a copy of such agreements to the SEC upon request.


48
Table of Contents

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
GENERAL GROWTH PROPERTIES, INC.
 
(Registrant)
 
 
 
 
Date: August 6, 2014
By:
/s/ Michael Berman
 
 
Michael Berman
 
 
Chief Financial Officer
 
 
(on behalf of the Registrant)


49

EXHIBIT INDEX
 
10.1
 
Stock Purchase Agreement, dated February 10, 2014, by and among General Growth Properties, Inc., GGP Limited Partnership, Pershing Square, L.P., Pershing Square II, L.P., PSRH, Inc. and Pershing Square Holdings, Ltd. (previously filed as Exhibit 10.1 to New GGP’s Current Report on Form 8-K dated February 10, 2014, which was filed with the SEC on February 10, 2014).
 
 
 
10.2
 
Fourth Amended and Restated Agreement of Limited Partnership of GGP Operating Partnership, LP (f/k/a GGP Limited Partnership) dated May 1, 2014
 
 
 
10.3
 
Second Amended and Restated Employee Stock Purchase Plan dated May 15, 2014
 
 
 
10.4
 
Amendment dated April 30, 2014 to the Third Amended and Restated Credit Agreement, dated October 23, 2013
 
 
 
10.5
 
Second Amendment dated August 1, 2014 to the Loan Agreement dated April 26, 2013
 
 
 
31.1
 
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
31.2
 
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.1
 
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of   2002.
 
 
 
32.2
 
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
101
 
The following financial information from General Growth Properties, Inc.’s. Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, has been filed with the SEC on August 6, 2014, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statement of Comprehensive Income, (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements.




50
Exhibit 10.2

FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP OPERATING PARTNERSHIP, LP





TABLE OF CONTENTS

Page



ARTICLE I Definitions; Etc.....................................................................................
1
1.1
Definitions.........................................................................................      1
1.2
Exhibits, Etc...................................................................................... 17
ARTICLE II Continuation.........................................................................................
17
2.1
Continuation......................................................................................      17
2.2
Name.................................................................................................      17
2.3
Character of the Business..................................................................      18
2.4
Location of the Principal Place of Business......................................      18
2.5
Registered Agent and Registered Office........................................... 18
ARTICLE III Term....................................................................................................
18
3.1
Commencement.................................................................................      18
3.2
Dissolution.........................................................................................      18
ARTICLE IV Contributions to Capital......................................................................
19
4.1
General Partner Capital Contribution................................................      19
4.2
Limited Partner Capital Contributions...............................................      19
4.3
Additional Funds................................................................................      19
4.4
Stock Plans.........................................................................................      21
4.5
No Third Party Beneficiary................................................................      21
4.6
No Interest; No Return.......................................................................      22
4.7
Preferred Units...................................................................................      22
ARTICLE V Allocations and Other Tax and Accounting Matters...............................................................................................      22
5.1
Allocations.........................................................................................      22
5.2
Distributions With Respect to Common Units and LTIP Units...................................................................................................      22
5.3
Books of Account...............................................................................      23
5.4
Reports...............................................................................................      24
5.5
Audits.................................................................................................      24
5.6
Tax Elections and Returns.................................................................      24
5.7
Tax Matters Partner............................................................................      24
5.8
Withholding.......................................................................................      24

i

TABLE OF CONTENTS
(continued)
Page


5.9
Distributions with Respect to Preferred Units...................................      25
5.10
Redemption of Common Units..........................................................      26
ARTICLE VI Rights, Duties and Restrictions of the General Partner.......................
26
6.1
Expenditures by Partnership..............................................................      26
6.2
Powers and Duties of General Partner...............................................      26
6.3
[Intentionally Omitted].....................................................................      29
6.4
[Intentionally Omitted]......................................................................      29
6.5
Public REIT Participation..................................................................      29
6.6
Proscriptions......................................................................................      29
6.7
Additional Partners............................................................................      29
6.8
Title Holder........................................................................................      29
6.9
Compensation of the General Partner................................................      30
6.10
Waiver and Indemnification...............................................................      30
6.11
[Intentionally Omitted]......................................................................      30
6.12
Operation in Accordance with REIT Requirements..........................      30
ARTICLE VII Dissolution, Liquidation and Winding-Up........................................
31
7.1
Accounting........................................................................................      31
7.2
Distribution on Dissolution................................................................      31
7.3
Timing Requirements.........................................................................      32
7.4
Sale of Partnership Assets..................................................................      32
7.5
Distributions in Kind.........................................................................      32
7.6
Documentation of Liquidation...........................................................      32
7.7
Liability of the Liquidating Trustee...................................................      32
7.8
Liquidation Preference of Preferred Units.........................................      33
7.9
Negative Capital Accounts.................................................................      33
ARTICLE VIII Transfer of Units...............................................................................
35
8.1
General Partner Transfer....................................................................      35
8.2
Transfers by Limited Partners      ............................................................ 35
8.3
Issuance of Additional Common Units..............................................      36
8.4
Restrictions on Transfer.....................................................................      36
8.5
Issuance of LTIP Units.......................................................................      37
ARTICLE IX Rights and Obligations of the Limited Partners..................................
38

ii

TABLE OF CONTENTS
(continued)
Page


9.1
No Participation in Management.......................................................      38
9.2
Bankruptcy of a Limited Partner........................................................      38
9.3
No Withdrawal...................................................................................      38
9.4
Duties and Conflicts...........................................................................      38
ARTICLE X [Intentionally Omitted].........................................................................
39
ARTICLE XI [Intentionally Omitted].......................................................................
39
ARTICLE XII Arbitration of Disputes......................................................................
39
12.1
Arbitration..........................................................................................      39
12.2
Procedures..........................................................................................      39
12.3
Binding Character..............................................................................      40
12.4
Exclusivity..........................................................................................      40
12.5
No Alteration of Agreement...............................................................      40
ARTICLE XIII General Provisions...........................................................................
40
13.1
Notices...............................................................................................      40
13.2
Successors..........................................................................................      41
13.3
Effect and Interpretation....................................................................      41
13.4
Counterparts.......................................................................................      41
13.5
Partners Not Agents...........................................................................      41
13.6
Entire Understanding; Etc..................................................................      41
13.7
Amendments......................................................................................      41
13.8
Severability........................................................................................      42
13.9
Trust Provision...................................................................................      42
13.10
Pronouns and Headings......................................................................      42
13.11
Assurances.........................................................................................      42
13.12
Issuance of Certificates......................................................................      42
13.13
November 20, 2003 Division of Common Units..............................      42
13.14
Performance by the Public REIT.......................................................      43


iii

 

FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP OPERATING PARTNERSHIP, LP
THIS FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is made and entered into this 1st day of May, 2014, by and among the undersigned parties.
W I T N E S S E T H :
WHEREAS, a Delaware limited partnership known as GGP Operating Partnership, LP (the “ Partnership ”), which was formerly known as GGP Limited Partnership until it changed its name as of the date hereof, exists pursuant to that certain Third Amended and Restated Agreement of Limited Partnership dated as of November 9, 2010, as amended by that certain First Amendment thereto dated as of June 12, 2012, that certain Second Amendment thereto dated as of November 30, 2012, that certain Third Amendment thereto dated as of February 13, 2013, that certain Fourth Amendment thereto dated as of April 30, 2013, that certain Fifth Amendment thereto dated as of September 5, 2013, that certain Sixth Amendment thereto dated as of November 12, 2013, that certain Seventh Amendment thereto dated as of May 1, 2014, that certain Eighth Amendment thereto dated as of May 1, 2014 and that certain Ninth Amendment thereto dated as of May 1, 2014 (collectively, the “ Third Restated Partnership Agreement ”), and the Delaware Revised Uniform Limited Partnership Act;
WHEREAS, GGP Real Estate Holding II, Inc., a Delaware corporation, is the General Partner of the Partnership;
WHEREAS, the General Partner and a Majority-in-Interest of the Limited Partners of the Partnership desire to amend and restate the Third Restated Partnership Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, do hereby amend and restate the Third Restated Partnership Agreement to read as follows:
ARTICLE I

Definitions; Etc.
1.1      Definitions. Except as otherwise herein expressly provided, the following terms and phrases shall have the meanings set forth below:
“ Accountants ” shall mean the firm or firms of independent certified public accountants selected by the General Partner on behalf of the Partnership and the Property


 

Partnerships to audit the books and records of the Partnership and the Property Partnerships and to prepare statements and reports in connection therewith.
“ Acquisition Cost ” shall have the meaning set forth in Section 4.1 hereof.
“ Act ” shall mean the Revised Uniform Limited Partnership Act as enacted in the State of Delaware, and as the same may hereafter be amended from time to time.
“ Additional Units ” shall have the meaning set forth in Section 8.3 hereof.
“ Additional Partner ” shall have the meaning set forth in Section 8.3 hereof.
“ Adjusted Capital Account Deficit ” shall mean, with respect to any Limited Partner, the deficit balance, if any, in such Partner’s Capital Account as of the end of any relevant fiscal year and after giving effect to the following adjustments:
(a)      credit to such Capital Account any amounts which such Partner is obligated or treated as obligated to restore with respect to any deficit balance in such Capital Account pursuant to Section 1.704-1(b)(2)(ii)(c) of the Regulations, or is deemed to be obligated to restore with respect to any deficit balance pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
(b)      debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the requirements of the alternate test for economic effect contained in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.
“ Administrative Expenses ” shall mean (i) all administrative and operating costs and expenses incurred by the Partnership, (ii) all administrative, operating and other costs and expenses incurred by the Property Partnerships, (iii) those administrative costs and expenses of the Affiliate Entities and the REIT Entities, including salaries paid to officers of the Public REIT and accounting and legal expenses undertaken by the General Partner on behalf or for the benefit of the Partnership, Nimbus or GGP LP and (iv) to the extent not included in clause (iii) above, REIT Expenses.
“ Affiliate ” shall mean, with respect to any Partner (or as to any other Person the affiliates of whom are relevant for purposes of any of the provisions of this Agreement), (i) any member of the Immediate Family of such Partner; (ii) any trustee or beneficiary of a Partner; (iii) any legal representative, successor, or assignee of such Partner or any Person referred to in the preceding clauses (i) and (ii); (iv) any trustee of any trust for the benefit of such Partner or any Person referred to in the preceding clauses (i) through (iii); or (v) any Entity which directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Partner or any Person referred to in the preceding clauses (i) through (iv).

    

 

“ Affiliate Entities ” shall mean GGP Limited Partnership II, a Delaware limited partnership, and GGP, LLC, a Delaware limited liability company.
“ Aggregate Protected Amount ” shall mean, with respect to the Obligated Partners, as a group, the aggregate amount of the Protected Amounts, if any, of the Obligated Partners, as determined on the date in question.
“ Agreement ” shall mean this Fourth Amended and Restated Agreement of Limited Partnership, as originally executed and as amended, modified, supplemented or restated from time to time, as the context requires.
“ AO LTIP Unit ” shall mean a Unit which is designated as an Appreciation Only LTIP Unit in the relevant Vesting Agreement or other documentation pursuant to which such LTIP Unit is granted or issued, having the rights, powers, privileges, restrictions, qualifications and limitations set forth in Schedule H hereto or in this Partnership Agreement in respect of the Holder, as well as the relevant Vesting Agreement or other documentation pursuant to which such AO LTIP Unit is granted or issued.

“ AO LTIP Fraction ” shall mean, with respect to an AO LTIP Unit that is issued, the fraction designated in the relevant Vesting Agreement or other documentation pursuant to which such AO LTIP Unit is granted as the AO LTIP Fraction for such AO LTIP Unit.

“ Audited Financial Statements ” shall mean financial statements (balance sheet, statement of income, statement of partners’ equity and statement of cash flows) prepared in accordance with generally accepted accounting principles and accompanied by an independent auditor’s report containing (i) an opinion containing no material qualification, and (ii) no explanatory paragraph disclosing information relating to material uncertainties (except as to litigation) or going concern issues.
“ Bankruptcy ” shall mean, with respect to any Partner or the Partnership, (i) the commencement by such Partner or the Partnership of any proceeding seeking relief under any provision or chapter of the federal Bankruptcy Code or any other federal or state law relating to insolvency, bankruptcy or reorganization, (ii) an adjudication that such Partner or the Partnership is insolvent or bankrupt, (iii) the entry of an order for relief under the federal Bankruptcy Code with respect to such Partner or the Partnership, (iv) the filing of any such petition or the commencement of any such case or proceeding against such Partner or the Partnership, unless such petition and the case or proceeding initiated thereby are dismissed within ninety (90) days from the date of such filing, (v) the filing of an answer by such Partner or the Partnership admitting the allegations of any such petition, (vi) the appointment of a trustee, receiver or custodian for all or substantially all of the assets of such Partner or the Partnership unless such appointment is vacated or dismissed within ninety (90) days from the date of such appointment but not less than five (5) days before the proposed sale of any assets of such Partner or the Partnership, (vii) the insolvency of such Partner or the Partnership or the execution by such Partner or the Partnership of a general assignment for the benefit of creditors, (viii) the convening by such Partner or the Partnership of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or

    

 

composition of its debts, (ix) the failure of such Partner or the Partnership to pay its debts as they mature, (x) the levy, attachment, execution or other seizure of substantially all of the assets of such Partner or the Partnership where such seizure is not discharged within thirty (30) days thereafter, or (xi) the admission by such Partner or the Partnership in writing of its inability to pay its debts as they mature or that it is generally not paying its debts as they become due.
“ Bankruptcy Cases ” shall mean those voluntary petitions filed on April 16, 2009 by the General Partner and the Partnership for relief under title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York.
“ Book-Up Target ” for an LTIP Unit shall mean (i) initially, the Common Unit Economic Balance as determined on the date such LTIP Unit was granted assuming the Gross Asset Values of the Partnership’s assets are adjusted pursuant to subsection (b) of the definition of Gross Asset Value at such time, and (ii) thereafter, as of any determination date, the remaining amount required to be allocated to such LTIP Unit for the Economic Capital Account Balance, to the extent attributable to such LTIP Unit, to be equal to the Common Unit Economic Balance as of such date. Notwithstanding the foregoing, the Book-Up Target shall be zero for any LTIP Unit for which the Economic Capital Account Balance attributable to such LTIP Unit has at any time reached an amount equal to the Common Unit Economic Balance determined as of such time.

“ Bucksbaum Limited Partners ” shall mean M.B. Capital Partners III and its successors and assigns.
“ Bucksbaum Rights Agreement ” shall mean that certain Rights Agreement dated as of July 27, 1993, among the General Partner and certain predecessors of the Bucksbaum Limited Partners.
“ Capital Account ” shall mean, with respect to any Partner, the separate “book” account which the Partnership shall establish and maintain for such Partner 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. In the event that any Units are transferred in accordance with the terms of this Agreement, the Capital Account, at the time of the transfer, of the transferor attributable to the transferred Units shall carry over to the transferee.
“ Capital Contribution ” shall mean, with respect to any Partner, the amount of money and the initial Gross Asset Value of any property other than money contributed to the Partnership with respect to the Units held by such Partner (net of liabilities to which such property is subject).
“ Certificate ” shall mean the Certificate of Limited Partnership establishing the Partnership, as filed with the office of the Delaware Secretary of State, as it may be amended from time to time in accordance with the terms of this Agreement and the Act.

    

 

“ Charter ” shall mean the corporate charter of the Public REIT, as filed with the office of the Delaware Secretary of State, as it may be amended from time to time.
“ Closing Price ” on any day shall mean the average of the intra-day high and low for such day 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 Common 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 Common Stock is listed or admitted to trading or, if the Common 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 OTC Markets Group, Inc. or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Common 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 Common Stock as such person is selected from time to time by the Board of Directors of the Public REIT.
“ Code ” shall mean the Internal Revenue Code of 1986, as amended.
“ Common Stock ” shall mean the shares of common stock of the Public REIT.
“ Common Unit Economic Balance ” shall mean (i) the Capital Account balance of the Company Group, plus the amount of the Company Group’s share of any Minimum Gain Attributable to Partner Nonrecourse Debt or Partnership Minimum Gain, in either case to the extent attributable to the Company Group’s ownership of Common Units and computed on a hypothetical basis after taking into account all allocations through the date on which any allocation is made under Exhibit B to the Partnership Agreement, divided by (ii) the number of the Company Group’s Common Units.
“ Common Unitholder ” shall mean any Person that holds Common Units and is named as a Partner in Exhibit A to the Partnership Agreement, as such Exhibit may be amended from time to time, to the extent applicable to the holding of such Common Units.
“ Common Units ” shall mean all Units other than Preferred Units and LTIP Units.
“ Company ” shall mean General Growth Properties, Inc., a Delaware corporation whose shares of common stock are listed on the New York Stock Exchange, that is the successor registrant to old General Growth Properties, Inc. and files reports under the Securities Exchange Act of 1934 in lieu of old General Growth Properties, Inc.
“ Company Group ” shall mean the Company and its direct or indirect subsidiaries.
“ Consent of the Limited Partners ” shall mean the written consent of a Majority‑in-Interest of the Limited Partners (or other specified group of Limited Partners), which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and may be

    

 

given or withheld by a Majority-in-Interest of the Limited Partners (or such specified group of Limited Partners), unless otherwise expressly provided herein, in their sole and absolute discretion.
“ Contributed Funds ” shall have the meaning set forth in Section 4.3(c) hereof.
“ Contributed Property ” shall have the meaning set forth in Section 4.1 hereof.
“ Contribution Agreements ” shall mean all contribution and other agreements executed by the Partnership and/or the General Partner in connection with the issuance of Units.
“ Control ” shall mean the ability, whether by the direct or indirect ownership of shares or other equity interests by contract or otherwise, to elect a majority of the directors of a corporation, to select the managing partner of a partnership, or otherwise to select, or have the power to remove and then select, a majority of those persons exercising governing authority over an Entity. In the case of a limited partnership, the sole general partner, all of the general partners to the extent each has equal management control and authority, or the managing general partner or managing general partners thereof shall be deemed to have control of such partnership and, in the case of a trust, any trustee thereof or any Person having the right to select any such trustee shall be deemed to have control of such trust.
“ Conversion Factor ” shall mean 0.96175818. The Conversion Factor shall be adjusted in the event that the Public REIT, (i) declares or pays a dividend on its outstanding shares of Common Stock in shares of Common Stock or makes a distribution to all holders of its outstanding shares of Common Stock in shares of Common Stock, (ii) subdivides its outstanding shares of Common Stock, or (iii) combines its outstanding shares of Common Stock into a smaller number of shares. The Conversion Factor shall be adjusted by multiplying the Conversion Factor (as in effect immediately prior to such adjustment) by a fraction, the numerator of which shall be the actual number of shares of Common Stock issued and outstanding on the record date for such dividend, distribution, subdivision or combination (determined without the below assumption), and the denominator of which shall be the number of shares of Common Stock issued and outstanding on the record date for such dividend, distribution, subdivision or combination (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time). Any adjustment to the Conversion Factor shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. Notwithstanding the foregoing, the Conversion Factor shall not be adjusted in connection with the events described above if, in connection with such event, the Partnership makes a distribution per Common Unit of an equivalent number of Common Units and/or shares of Common Stock or effects an equivalent subdivision or combination of all outstanding Common Units, as applicable.
“ Current Per Share Market Price ” shall mean, as of any date, the average of the Closing Price for the five consecutive Trading Days ending on such date or the average of the Closing Price for any other period of Trading Days that the Public REIT deems appropriate with respect to any transaction or other event for which “Current Per Share Market Price” is determined

    

 

(other than a redemption pursuant to any Rights Agreement unless otherwise provided therein); provided, however, that the Closing Price for any Trading Day or Trading Days that are included in any calculation of Current Per Share Market Price shall be adjusted to take into account any stock split, dividend, subdivision, combination and the like if Public REIT deems such adjustment to be appropriate.
“ Demand Notice ” shall have the meaning set forth in Section 12.2 hereof.
“ Depreciation ” shall mean, with respect to any asset of the Partnership for any fiscal year or other period, the depreciation, depletion or amortization, as the case may be, allowed or allowable for federal income tax purposes in respect of such asset for such fiscal year or other period; provided, however, that if there is a difference between the Gross Asset Value and the adjusted tax basis of such asset, Depreciation shall mean “book depreciation, depletion or amortization” as determined under Section 1.704-1(b)(2)(iv)(g)(3) of the Regulations.
“ Economic Capital Account Balance ” with respect to a Partner shall mean an amount equal to its Capital Account balance, plus the amount of its share of any Minimum Gain Attributable to Partner Nonrecourse Debt or Partnership Minimum Gain.
“ Eligible AO LTIP Unit ” shall mean, as of the date any Liquidating Gain is being allocated, an AO LTIP Unit if the Common Unit Economic Balance as of such date (taking into account allocations to be made on such date) exceeds the Common Unit Economic Balance as of the date of issuance of the AO LTIP Unit, as adjusted for any LTIP Unit Adjustment Events, as defined in Schedule H.

“ Eligible FV LTIP Unit ” shall mean a FV LTIP Unit that has a Book-Up Target of zero (0).

“ Entity ” shall mean any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association or other entity.
“ Exercise Notice ” shall have the meaning set forth in the Bucksbaum Rights Agreement.
“ Foreign Owner ” shall mean a foreign person or a person that is directly or indirectly owned, in whole or in part by a foreign person as determined in accordance with Section 897(h)(4) of the Code and the Regulations promulgated thereunder.
“ Funding Date ” shall mean the date of consummation of any Funding Loan, offering of shares of Common Stock or other transaction pursuant to which the REIT Entities or the Affiliate Entities raise Required Funds.
“ Funding Loan Proceeds ” shall mean the net cash proceeds received by the REIT Entities or the Affiliate Entities in connection with any Funding Loan, after deduction of all costs and expenses incurred by the REIT Entities or the Affiliate Entities in connection with such Funding Loan.

    

 

“ Funding Loan(s) ” shall mean any borrowing or refinancing of borrowings by or on behalf of the REIT Entities or the Affiliate Entities from any lender for the purpose of advancing the Funding Loan Proceeds to the Partnership as a loan pursuant to Section 4.3(a) hereof.
“ FV LTIP Unit ” shall mean a Unit which is designated as a Full Value LTIP Unit in the relevant Vesting Agreement or other documentation pursuant to which such LTIP Unit is granted or issued, having the rights, powers, privileges, restrictions, qualifications and limitations set forth in Schedule H hereto or in this Amendment in respect of the Holder, as well as the relevant Vesting Agreement or other documentation pursuant to which such FV LTIP Unit is granted or issued.

“ FV LTIP Fraction ” shall mean, with respect to an FV LTIP Unit that is issued, one (1) unless a fraction is specifically designated in the relevant Vesting Agreement or other documentation pursuant to which such FV LTIP Unit is granted as the FV LTIP Fraction for such FV LTIP Unit.

“ FV LTIP Full Participation Date ” shall mean, for an FV LTIP Unit that is issued, such date as is specified in the relevant Vesting Agreement or other documentation pursuant to which such FV LTIP Unit is granted as the FV LTIP Full Participation Date for such LTIP Unit or, if no such date is so specified, the date of issuance of such FV LTIP Unit.

“ General Partner ” shall mean GGP Real Estate Holding II, Inc., a Delaware corporation, its duly admitted successors and assigns and any other Person who is a general partner of the Partnership at the time of reference thereto.
“ GGP LP ” shall mean GGP Limited Partnership, a Delaware limited partnership, which was formerly known as GGP Cumulus, LP until it changed its name as of the date hereof.
“ Gross Asset Value ” shall mean, with respect to any asset of the Partnership, such asset’s adjusted basis for federal income tax purposes except as follows:

(a) the initial Gross Asset Value of (i) the assets contributed by each Partner to the Partnership prior to the date hereof is the gross fair market value of such contributed assets as indicated in the books and records of the Partnership as of the date hereof, and (ii) any asset hereafter contributed by a Partner, other than money, is the gross fair market value thereof as reasonably determined by the General Partner using such reasonable method of valuation as the General Partner may adopt; provided that the gross fair market value of any such assets hereafter contributed by the General Partner shall be the Acquisition Cost thereof (without reduction for any borrowings incurred by the General Partner in connection with the acquisition of such assets and assumed by the Partnership or, if such assumption was not possible, with respect to which borrowings the Partnership obligates itself to make payments to the General Partner in a like amount and on like terms);


    

 

(b) if the General Partner reasonably determines that an adjustment is necessary or appropriate to reflect the relative economic interests of the Partners, the Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the General Partner, as of the following times:

(i)      a Capital Contribution (other than a de minimis Capital Contribution) to the Partnership by a new or existing Partner as consideration for Units;
(ii)      the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for the redemption of Units;
(iii)      the liquidation of the Partnership within the meaning of section 1.704-1(b)(2)(ii) (g) of the Regulations; and
(iv)      the issuance of any interests in the Partnership as consideration for the provision of services to or for the benefit of the Partnership;
(c)      the Gross Asset Values of Partnership assets distributed to any Partner shall be the gross fair market values of such assets (taking Section 7701(g) of the Code into account) as reasonably determined by the General Partner as of the date of distribution; and
(d)      the Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations (See Exhibit B); provided, however, that Gross Asset Values shall not be adjusted pursuant to this paragraph to the extent that the General Partner reasonably determines that an adjustment pursuant to paragraph (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken into account with respect to the Partnership’s assets for purposes of computing Net Income and Net Loss. Any adjustment to the Gross Asset Values of Partnership property shall require an adjustment to the Partners’ Capital Accounts; as for the manner in which such adjustments are allocated to the Capital Accounts, see paragraph (c) of the definition of Net Income and Net Loss in the case of adjustment by Depreciation, and paragraph (d) of said definition in all other cases.
    
“ Holder ” shall mean either a Partner or a permitted assignee or transferee owning a Unit.


    

 

“ Immediate Family ” shall mean with respect to any Person, such Person’s spouse, parents, parents-in-law, descendants, nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law and children-in-law.
“ Indirect Owner ” shall mean, in the case of an Obligated Partner that is an entity that is classified as a partnership or disregarded entity for federal income tax purposes, any person owning an equity interest in such Obligated Partner, and, in the case of any Indirect Owner that itself is an entity that is classified as a partnership or disregarded entity for federal income tax purposes, any person owning an equity interest in such entity.
“ Third Restated Partnership Agreement ” shall have the meaning set forth in the preliminary recitals hereto.
“ Lien ” shall mean any liens, security interests, mortgages, deeds of trust, charges, claims, encumbrances, pledges, options, rights of first offer or first refusal and any other rights or interests of others of any kind or nature, actual or contingent, or other similar encumbrances of any nature whatsoever.
“ Limited Partners ” shall mean the Persons listed under the caption “Limited Partners” on Exhibit A hereto, their permitted successors or assigns or any Person who, at the time of reference thereto, is a limited partner of the Partnership.
“ Liquidating Gains ” shall mean any Net Income realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership (including upon the occurrence of any event of liquidation of the Partnership), including but not limited to Net Income realized in connection with an adjustment to the book value of Partnership assets under clause (b) of the definition of Gross Asset Value.

“ Liquidating Losses ” shall mean any Net Loss realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership (including upon the occurrence of any event of liquidation of the Partnership), including but not limited to Net Loss realized in connection with an adjustment to the book value of Partnership assets under clause (b) of the definition of Gross Asset Value.

“ Liquidating Trustee ” shall mean such individual or Entity as is selected as the Liquidating Trustee hereunder by the General Partner, which individual or Entity may include an Affiliate of the General Partner, provided such Liquidating Trustee agrees in writing to be bound by the terms of this Agreement. The Liquidating Trustee shall be empowered to give and receive notices, reports and payments in connection with the dissolution, liquidation and/or winding-up of the Partnership and shall hold and exercise such other rights and powers as are necessary or required to permit all parties to deal with the Liquidating Trustee in connection with the dissolution, liquidation and/or winding-up of the Partnership.
“ LTIP Unit ” shall mean any AO LTIP Units, FV LTIP Units or other class or series of Units issued in accordance with Section 8.5 that is designated as “LTIP Units,” in each case

    

 

having the rights, powers, privileges, restrictions, qualifications and limitations set forth in Schedule H hereto or in this Amendment in respect of the LTIP Unit Limited Partner, as well as the relevant Vesting Agreement or other documentation pursuant to which such LTIP Unit is granted or issued.

“ LTIP Unit Limited Partner ” shall mean any Person that holds LTIP Units or Common Units resulting from a conversion of LTIP Units and is named as an LTIP Unit Limited Partner in Exhibit A to the Partnership Agreement, as such Exhibit may be amended from time to time, to the extent applicable to the holding of such LTIP Units.

“ Majority-in-Interest of the Limited Partners ” shall mean Limited Partner(s) (or specified group of Limited Partners) who hold in the aggregate more than fifty percent (50%) of the Percentage Interests then allocable to and held by the Limited Partners (or such specified group of Limited Partners), as a class (excluding any Units held by the General Partner or any other Affiliate of the General Partner other than the Limited Partners as at April 1, 1998, their Affiliates and their successors and assigns, who shall not be excluded). In addition, Common Units that result from a conversion of LTIP Units and that are held by an officer, director or employee of the Partnership, the General Partner, the Public REIT or any Affiliate of any of the foregoing shall be excluded.
“ Management Agreement ” shall mean a property management agreement with respect to the property management of certain Properties entered into (a) with respect to any Property in which the Partnership directly holds or acquires ownership of a fee or leasehold interest, between the Partnership, as owner, and the Property Manager, or such other property manager as the General Partner shall engage, as manager, and (b) with respect to all Properties other than those described in (a) above, between each Property Partnership, as owner, and the Property Manager, or such other property manager as the General Partner shall engage, as such agreement may be amended, modified or supplemented from time to time.
“ Minimum Gain Attributable to Partner Nonrecourse Debt ” shall mean “partner nonrecourse debt minimum gain” as determined in accordance with Regulation Section 1.704-2(i)(2).
“ Net Financing Proceeds ” shall mean the cash proceeds received by the Partnership in connection with any borrowing or refinancing of borrowing by or on behalf of the Partnership or by or on behalf of any Property Partnership (whether or not secured), after deduction of all costs and expenses incurred by the Partnership or the Property Partnership in connection with such borrowing, and after deduction of that portion of such proceeds used to repay any other indebtedness of the Partnership or Property Partnerships, or any interest or premium thereon.
“ Net Income or Net Loss ” shall mean, for each fiscal year or other applicable period, an amount equal to the Partnership’s net income or loss for such year or period as determined for federal income tax purposes by the Accountants, determined 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) by including as an item of gross income any tax-exempt income received by the

    

 

Partnership (b) by treating as a deductible expense any expenditure of the Partnership described in Section 705(a)(2)(B) of the Code (including amounts paid or incurred to organize the Partnership (unless an election is made pursuant to Code Section 709(b)) or to promote the sale of interests in the Partnership and by treating deductions for any losses incurred in connection with the sale or exchange of Partnership property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code as expenditures described in Section 705(a)(2)(B) of the Code); (c) in lieu of depreciation, depletion, amortization, and other cost recovery deductions taken into account in computing total income or loss, there shall be taken into account Depreciation; (d) gain or loss resulting from any disposition of Partnership property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of such property rather than its adjusted tax basis; and (e) in the event of an adjustment of the Gross Asset Value of any Partnership asset which requires that the Capital Accounts of the Partnership be adjusted pursuant to Regulations Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such adjustment is to be taken into account as additional Net Income or Net Loss pursuant to Exhibit B.
“ Net Operating Cash Flow ” shall mean, with respect to any fiscal period of the Partnership, the excess, if any, of “Receipts” over “Expenditures.” For purposes hereof, the term “Receipts” means the sum of all cash receipts of the Partnership from all sources for such period, including Net Sale Proceeds and Net Financing Proceeds but excluding Capital Contributions, and including any amounts held as reserves as of the last day of such period which the General Partner reasonably deems to be in excess of necessary reserves as determined below. The term “Expenditures” means the sum of (a) all cash expenses or expenditures of the Partnership for such period, (b) the amount of all payments of principal and interest on account of any indebtedness of the Partnership including payments of principal and interest on account of REIT Loans, or amounts due on such indebtedness during such period (in the case of clauses (a) and (b), excluding expenses or expenditures paid from previously established reserves or deducted in computing Net Financing Proceeds or Net Sales Proceeds), and (c) such additional cash reserves as of the last day of such period as the General Partner deems necessary for any capital or operating expenditure permitted hereunder.
“ Net Sale Proceeds ” means the cash proceeds received by the Partnership in connection with a sale of any asset by or on behalf of the Partnership or by or on behalf of a Property Partnership after deduction of any costs or expenses incurred by the Partnership or a Property Partnership, or payable specifically out of the proceeds of such sale (including, without limitation, any repayment of any indebtedness required to be repaid as a result of such sale or which the General Partner elects to repay out of the proceeds of such sale, together with accrued interest and premium, if any, thereon and any sales commissions or other costs and expenses due and payable to any Person in connection with a sale, including to a Partner or its Affiliates).
“ New Securities ” shall mean any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares or other shares of capital stock of the Public REIT.
“ Nimbus ” shall mean GGP Nimbus, LP, a Delaware limited partnership.

    

 

“ Nonrecourse Deductions ” shall have the meaning set forth in Sections 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.
“ Obligated Partner ” shall mean that or those Limited Partners listed as Obligated Partners on Exhibit C attached hereto and made a part hereof, as such Exhibit may be amended from time to time by the General Partner, whether by express amendment to this Agreement or by execution of a written instrument by and between any additional Obligated Partner being directly affected thereby and the General Partner acting on behalf of the Partnership and without the prior consent of the Limited Partners (other than the Obligated Partners being affected thereby).
“ Offered Units ” shall have the meaning set forth in the Bucksbaum Rights Agreement.
“ Operating Income ” shall mean Net Income determined without taking into account any Liquidating Gains and Liquidating Losses.

“ Operating Loss ” shall mean Net Loss determined without taking into account any Liquidating Gains and Liquidating Losses.

“ Partner Nonrecourse Debt ” shall mean a liability as defined in Regulations Section 1.704-2(b)(4).
“ Partner Nonrecourse Deductions ” shall have the meaning set forth in Section 1.704-2(i)(2) of the Regulations.
“ Partners ” shall mean the General Partner and the Limited Partners, their duly admitted successors or assigns or any Person who is a partner of the Partnership at the time of reference thereto.
“ Partnership ” shall have the meaning set forth in the preliminary recitals hereto.
“ Partnership Minimum Gain ” shall have the meaning set forth in Section 1.704-2(b)(2) of the Regulations.
“ Partnership Record Date ” shall mean the record date established by the General Partner for a distribution of Net Operating Cash Flow pursuant to Section 5.2 hereof, which record date shall be the same as the record date established by the Public REIT for the distribution to its stockholders of some or all of its indirect share of such distribution.
“ Percentage Interest ” with respect to a Partner shall mean the fraction, expressed as a percentage, the numerator of which is the sum of such Partner’s Common Units, FV LTIP Units and AO LTIP Units, and the denominator of which is the sum of the total number of Common Units, FV LTIP Units and AO LTIP Units issued and outstanding at such time; provided that (i) each AO

    

 

LTIP Unit prior to conversion into a Common Unit shall be treated as a fraction of an LTIP Unit equal to the AO LTIP Fraction for that AO LTIP Unit for purposes of both the numerator and denominator, and (ii) prior to the earlier to occur of (A) the FV LTIP Full Participation Date of an FV LTIP Unit or (B) the date of conversion of an FV LTIP Unit into a Common Unit, each FV LTIP Unit shall be treated as a fraction of an LTIP Unit equal to the FV LTIP Fraction for that FV LTIP Unit for purposes of both the numerator and denominator. Any holder of Preferred Units shall have a 0% Percentage Interest in respect to such Preferred Units. The Percentage Interest of each Partner is set forth opposite its name on Exhibit A to the Partnership Agreement.
“ Person ” shall mean any individual or Entity.
“ Precontribution Gain ” shall have the meaning set forth in Exhibit B.
“ Preferred Units ” shall mean the Series B Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units, Series H Preferred Units and Series I Preferred Units and any other series of preferred units of limited partnership interest in the Partnership that are established and issued from time to time in accordance with the terms hereof.
“ Prime Rate ” shall mean the prime rate announced from time to time by Wells Fargo Bank, N.A. or any successor thereof.
“ Property ” shall mean any Shopping Center Project in which the Partnership or any Property Partnership, directly or indirectly, acquires ownership of a fee or leasehold interest.
“ Property Manager ” shall mean General Growth Management, Inc., a Delaware corporation, or its permitted successors or assigns.
“ Property Partnership ” shall mean and include any partnership, limited liability company or other Entity in which the Partnership directly or indirectly is or becomes a partner, member or other equity participant and which has been or is formed for the purpose of directly or indirectly acquiring, developing or owning a Property or a proposed Property, including, without limitation, Nimbus and GGP LP.
“ Property Partnership Interests ” shall mean and include the interest of the Partnership as a partner, member or other equity participant in any Property Partnership.
“ Protected Amount ” shall mean, with respect to any Obligated Partner, the amount set forth opposite the name of such Obligated Partner on Exhibit C hereto and made a part hereof as such Exhibit may be amended from time to time by an amendment to the Partnership Agreement or by execution of a written instrument by and between any Obligated Partners being affected thereby and the General Partner, acting on behalf of the Partnership and without the prior consent of the Limited Partners (other than the Obligated Partners being affected thereby); provided, however; that, in the case of an Obligated Partner that is an entity that is classified as a partnership or disregarded entity for federal income tax purposes, upon the date nine months after the death of any Indirect Owner in such Obligated Partner, or upon a fully taxable sale or exchange of all of an

    

 

Indirect Owner’s equity interest in such Obligated Partner ( i.e. , a sale or exchange in which the transferee’s basis in the Indirect Owner’s equity interest in the Obligated Partner is not determined, in whole or in part, by reference to the Indirect Owner’s basis in the Obligated Partner), the Protected Amount of such Obligated Partner shall be reduced to the extent of the Indirect Owner’s allocable share of the Obligated Partner’s Protected Amount. The principles of the preceding sentence shall apply in the same manner in the case of any Indirect Owner that itself is an entity that is classified as a partnership or disregarded entity for federal income tax purposes.
“ Public REIT ” shall mean (a) the Company or (b) any Person in the future whose securities are publicly traded and holds directly or indirectly substantially all of the ownership interests of the Partnership currently owned directly or indirectly by the Company.
“ Public REIT Distribution Record Date ” shall have the meaning set forth in Section 5.2(a) hereof.
“ Qualified Individual ” shall have the meaning set forth in Section 12.2 hereof.
“ Recourse Liabilities ” shall mean, as of the date of determination, the amount of indebtedness of the Partnership on that date other than Nonrecourse Liabilities and Partner Nonrecourse Debt.
“ 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).
“ Regulatory Allocations ” shall have the meaning set forth in Exhibit B.
“ REIT ” shall mean a real estate investment trust as defined in Section 856 of the Code.
“ REIT Entities ” shall mean the Public REIT, GGP Real Estate Holding I, Inc., a Delaware corporation, and GGP Real Estate Holding II, Inc., a Delaware corporation.
“ REIT Expenses ” shall mean (i) costs and expenses relating to the formation and continuity of existence of the Public REIT and its subsidiaries (which subsidiaries shall, for purposes of this definition, be included within the definition of Public REIT), including taxes, fees and assessments associated therewith, any and all costs, expenses or fees payable to any director or trustee of the Public REIT or such subsidiaries, (ii) costs and expenses relating to any offer or registration of securities by the Public REIT and all statements, reports, fees and expenses incidental thereto, including underwriting discounts and selling commissions applicable to any such offer of securities, (iii) costs and expenses associated with the preparation and filing of any periodic reports by the Public REIT under federal, state or local laws or regulations, including filings with the SEC, (iv) costs and expenses associated with compliance by the Public REIT with laws, rules and regulations promulgated by any regulatory body, including the SEC, and (v) all other operating or administrative costs of the Public REIT incurred in the ordinary course of its business on behalf of the Partnership.

    

 

“ REIT Loan ” shall have the meaning set forth in Section 4.3(b) hereof.
“ REIT Requirements ” shall have the meaning set forth in Section 5.2 hereof.
“ REIT Share ” shall mean a share of common stock of the Public REIT.
“ Requesting Party ” shall have the meaning set forth in Section 12.2 hereof.
“ Required Funds ” shall have the meaning set forth in Section 4.3 hereof.
“ Responding Party ” shall have the meaning set forth in Section 12.2 hereof.
“ Rights ” shall mean “Rights,” “Redemption Rights” or other similar rights as defined in the Rights Agreements.
“ Rights Agreements ” shall mean the Bucksbaum Rights Agreement and those certain Redemption Rights Agreements entered into before, on or after the date hereof by the Partnership, the General Partner and certain other Persons in connection with the issuance of Units to such other Persons, as the same may be amended from time to time.
“ Securities Act ” shall mean the Securities Act of 1933, as amended.
“ SEC ” shall mean the United States Securities and Exchange Commission.
“ Section 704 (c) Tax Items ” shall have the meaning set forth in Exhibit B.
“ Series B Preferred Units ” shall mean the series of preferred units of the Partnership designated as 8.5% Series B Cumulative Convertible Preferred Units having such designations, preferences and other rights described in Schedule A.
“ Series D Preferred Units ” shall mean the series of preferred units of the Partnership designated as 6.5% Series D Cumulative Convertible Preferred Units having such designations, preferences and other rights described in Schedule B.
“ Series E Preferred Units ” shall mean the series of preferred units of the Partnership designated as 7% Series E Cumulative Convertible Preferred Units having such designations, preferences and other rights described in Schedule C.
“ Series F Preferred Units ” shall mean the series of preferred units of the Partnership designated as Series F Cumulative Preferred Units having such designations, preferences and other rights described in Schedule D.
“ Series G Preferred Units ” shall mean the series of preferred units of the Partnership designated as 6.375% Series G Cumulative Redeemable Preferred Units having such designations, preferences and other rights described in Schedule E.

    

 

“ Series H Preferred Units ” shall mean the series of preferred units of the Partnership designated as Series H Preferred Units having such designations, preferences and other rights described in Schedule F.
“ Series I Preferred Units ” shall mean the series of preferred units of the Partnership designated as Series I Preferred Units having such designations, preferences and other rights described in Schedule G.
“ Shopping Center Project ” shall mean any shopping center, including construction and improvement activities undertaken with respect thereto and off-site improvements, on-site improvements, structures, buildings and/or related parking and other facilities.
“ Stock Incentive Plan ” means the General Partner’s 1993 Stock Incentive Plan, as amended, 1998 Incentive Stock Plan, as amended, and 2003 Incentive Stock Plan, as amended.
“ Stock Plans ” shall mean the Stock Incentive Plan and the other option, stock purchase and/or dividend reinvestment plans of the Public REIT, General Partner or the Partnership that are in effect from time to time.
“ Substituted Limited Partner ” shall have the meaning set forth in Section 8.2 hereof.
“ Tax Items ” shall have the meaning set forth in Exhibit B.
“ Trading Day ” shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common 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.
“ Units ” shall mean the partnership units in the Partnership established and issued from time to time in accordance with the terms hereof, including without limitation Common Units, Preferred Units and LTIP Units. The number and designation of all Units held by each Partner is set forth opposite such Partner’s name on Exhibit A.
“ Unvested LTIP Units ” shall have the meaning set forth in Section 1.2 of Schedule H hereto.

“ Vested LTIP Units ” shall have the meaning set forth in Section 1.2 of Schedule H hereto.

“ Vesting Agreement ” shall have the meaning set forth in Section 1.2 of Schedule H hereto.

1.2      Exhibits, Etc.. References to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of the Exhibits or Schedules attached to this Agreement, and references to an “Article” or a

    

 

“Section” are, unless otherwise specified, to one of the Articles or Sections of this Agreement. Each Exhibit and Schedule attached hereto and referred to herein is hereby incorporated herein by reference.
ARTICLE II     

Continuation
2.1      Continuation. The parties hereto do hereby continue the Partnership as a limited partnership pursuant to the provisions of the Act, and all other pertinent laws of the State of Delaware, for the purposes and upon the terms and conditions hereinafter set forth. The Partners agree that the rights and liabilities of the Partners shall be as provided in the Act except as otherwise herein expressly provided. The General Partner shall cause such notices, instruments, documents or certificates as may be required by applicable law or which may be necessary to enable the Partnership to conduct its business and to own its properties in the Partnership name to be filed or recorded in all appropriate public offices.
2.2      Name. The business of the Partnership shall continue to be conducted under the name of “GGP Operating Partnership, LP” or such other name as the General Partner may select and all transactions of the Partnership, to the extent permitted by applicable law, shall be carried on and completed in such name.
2.3      Character of the Business. The purpose of the Partnership shall be to acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange and otherwise dispose of or deal with Properties; to acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange and otherwise dispose of or deal with real and personal property of all kinds; to exercise all of the powers of a partner, member or other equity participant in Property Partnerships; to acquire, own, deal with and dispose of Property Partnership Interests; to undertake such other activities as may be necessary, advisable, desirable or convenient to the business of the Partnership, and to engage in such other ancillary activities as shall be necessary or desirable to effectuate the foregoing purposes. The Partnership shall have all powers necessary or desirable to accomplish the purposes enumerated. In connection with and without limiting the foregoing, but subject to all of the terms, covenants, conditions and limitations contained in this Agreement and any other agreement entered into by the Partnership, the Partnership shall have full power and authority, directly or through its interest in Property Partnerships, to enter into, perform and carry out contracts of any kind, to borrow money and to issue evidences of indebtedness, whether or not secured by mortgage, trust deed, pledge or other lien, and, directly or indirectly to acquire and construct additional Properties necessary or useful in connection with its business.
2.4      Location of the Principal Place of Business. The location of the principal place of business of the Partnership shall be at 110 North Wacker Drive, Chicago, Illinois 60606, or at such other location as shall be selected by the General Partner from time to time in its sole discretion.
2.5      Registered Agent and Registered Office. The Registered Agent of the Partnership shall be Prentice-Hall Corporation System, Inc. or such other Person as the General Partner may select in its sole

    

 

discretion. The Registered Office of the Partnership shall be 32 Loockerman Square, Suite L-100, Dover, Delaware 19901 or such other location as the General Partner may select in its sole and absolute discretion.
ARTICLE III     

Term
3.1      Commencement. The Partnership heretofore commenced business as a limited partnership upon the filing of the Certificate with the Secretary of State of the State of Delaware.
3.2      Dissolution. The Partnership shall continue until dissolved upon the occurrence of the earliest of the following events:
(a)      The dissolution, termination, retirement or Bankruptcy of the General Partner unless the Partnership is continued as provided in Section 8.1 hereof; provided, however, none of the foregoing shall be deemed to have occurred on account of liquidation of the General Partner into one or more subsidiaries of the Public REIT or one of more subsidiaries thereof; and provided, further, that no event of dissolution shall have been deemed to occur by virtue of the Bankruptcy Cases;
(b)      The election to dissolve the Partnership made in writing by the General Partner with the Consent of the Limited Partners;
(c)      The sale or other disposition of all or substantially all the assets of the Partnership unless the General Partner elects to continue the Partnership business; or
(d)      Dissolution required by operation of law.
ARTICLE IV     

Contributions to Capital
4.1      General Partner Capital Contribution. The General Partner (or its predecessor in interest) has contributed to the Partnership as its Capital Contribution the cash and property reflected in the Partnership’s books and records as having been contributed by it. The gross fair market value of any property contributed by the General Partner to the Partnership (“Contributed Property”) after the date hereof, other than money, shall be the acquisition cost of such Contributed Property (the “Acquisition Cost”). The Acquisition Cost also shall include any costs and expenses incurred by the General Partner in connection with such acquisition or contribution; provided, however, that in the event the Acquisition Cost of Contributed Property is financed by any borrowings by the REIT Entities or Affiliate Entities, the Partnership shall assume any such obligations concurrently with the contribution of such property to the Partnership or, if impossible, shall obligate itself to the General Partner in an amount and on terms equal to such indebtedness, and the Acquisition Cost shall be reduced appropriately. If the General Partner contributes Contributed Property to the Partnership, the General Partner shall be deemed to have contributed to the Partnership as

    

 

Contributed Funds pursuant to Section 4.3(a)(ii) hereof an amount equal to the Acquisition Cost of such Contributed Property.
4.2      Limited Partner Capital Contributions. Each Limited Partner has heretofore contributed, or is deemed to have contributed, as its Capital Contribution to the capital of the Partnership, the property reflected in the Partnership’s books and records as having been contributed by it.
4.3      Additional Funds.
(a)      If the General Partner determines that funds are required or desired for any proper Partnership purpose, including, without limitation, in order to contribute additional funds to Nimbus or GGP LP, in excess of the funds anticipated to be available (all of such funds, the “Required Funds”) and the General Partner is not able or does not deem it advisable to cause the Partnership to borrow such funds, then:
(i)      the REIT Entities or the Affiliate Entities may enter into a Funding Loan to borrow all or any portion of the Required Funds; or
(ii)      the REIT Entities or the Affiliate Entities may raise all or any portion of the Required Funds by undertaking any of the following:
(A)      the Public REIT issues shares of its Common Stock;
(B)      the Public REIT issues other securities (including debt securities other than notes issued in connection with a Funding Loan);
(C)      the REIT Entities (other than the Public REIT) or Affiliate Entities issue new equity interests or securities (including debt securities other than notes issued in connection with a Funding Loan) to any Person not under the Control of, or not wholly owned, directly or indirectly, by, the Public REIT, provided that the Public REIT shall cause the other REIT Entities and the Affiliate Entities to restrict such issuances to equity interests or securities having substantially similar terms to the Series F Preferred Units; or
(D)      the Public REIT, directly or indirectly, sells any previously issued equity interests or securities in the other REIT Entities or the Affiliate Entities.
(b)      To the extent the REIT Entities or the Affiliate Entities borrow all or any portion of the Required Funds by entering into a Funding Loan pursuant to Section 4.3(a)(i), such borrowing entity shall, on the Funding Date, lend (the “REIT Loan”) to the Partnership the Funding Loan Proceeds on the same terms and conditions, including interest rate, repayment schedule and costs and expenses, as shall be applicable with respect to or incurred in

    

 

connection with the Funding Loan, or contribute such amounts as preferred equity on substantially identical economic terms.
(c)      To the extent that the Required Funds are raised pursuant to Section 4.3(a)(ii), the General Partner shall, on the Funding Date, contribute to the Partnership, either directly or indirectly (i.e., through an Affiliate), as an additional Capital Contribution the amount of the Required Funds so raised (“Contributed Funds”). In the event the General Partner and/or an Affiliate of the General Partner advances Required Funds to the Partnership as Contributed Funds pursuant to this subparagraph (c), the Partnership shall assume and pay (or reflect on its books as additional Contributed Funds) the expenses (including any applicable underwriting discounts) incurred by the REIT Entities or the Affiliate Entities in connection with raising such Contributed Funds through a public offering of its securities or otherwise; provided that, to the extent such Required Funds are contributed to Nimbus and/or GGP LP, as applicable, shall assume and pay (or reflect on its books as additional contributions) such expenses.
(d)      Effective on each Funding Date, and without the consent of any other Partner, the Partnership shall issue to the General Partner and/or an Affiliate of the General Partner, as applicable, with respect to Contributed Funds relating to:
(i)      an issuance by the Public REIT of Common Stock, the number of additional Common Units equal to the product of (x) the number of shares of Common Stock issued by the Public REIT in connection with obtaining such Contributed Funds, and (y) the Conversion Factor;
(ii)      an issuance by the Public REIT of other equity interests or securities (including debt securities other than notes issued in connection with a Funding Loan), Preferred Units with terms that are equivalent to the terms of such other equity interests or securities, which Preferred Units shall, in the case of an issuance of debt securities, include an adjustment factor to ensure equivalency with any debt securities issued upon refinancing of such obligations;
(iii)      an issuance by the other REIT Entities or the Affiliate Entities of equity interests or securities (including debt securities other than notes issued in connection with a Funding Loan) to any Person not under the Control of, or not wholly owned, directly or indirectly, by, the Public REIT, the number of Series F Preferred Units equal to a fraction, the numerator of which shall be the liquidation value of such equity securities and the denominator of which shall be $1000; or
(iv)      a sale, directly or indirectly, by the Public REIT of equity interests or securities in the other REIT Entities or the Affiliate Entities, the number of

    

 

additional Common Units equal to (x) the Conversion Factor multiplied by (y) the quotient of (1) the sale price of such equity interests divided by (2) the Current Per Share Market Price in respect of such transaction.
The General Partner shall be authorized on behalf of each of the Partners to amend this Agreement to reflect the issuance of Units in accordance with Sections 4.3 and 4.4 in the event that the General Partner deems such amendment to be desirable.
4.4      Stock Plans. If at any time or from time to time options granted in connection with the Stock Incentive Plan or any other Stock Plans are exercised in accordance with the terms thereof or shares of Common Stock are otherwise issued pursuant to any of the Stock Plans:
(a)      the Public REIT, General Partner and/or an Affiliate of the General Partner, as applicable, shall, as soon as practicable after such exercise, purchase or other issuance, contribute or cause to be contributed to the capital of the Partnership an amount equal to the exercise price or other purchase price paid to the Public REIT, General Partner and/or Affiliate of the General Partner, as applicable, by the exercising or purchasing party in connection with such exercise or issuance; and
(b)      the Partnership shall issue to the General Partner and/or Affiliate of the General Partner, as applicable, with respect to any exercise of options or purchase of shares of Common Stock pursuant to the Stock Plans, the number of additional Common Units equal to the product of (i) the number of shares of Common Stock issued by the Public REIT in connection with such exercise, purchase or issuance, multiplied by (ii) the Conversion Factor.
4.5      No Third Party Beneficiary. No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to, secure any debt or other obligation of the Partnership or of any of the Partners.
4.6      No Interest; No Return. No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s Capital Account. Except as provided herein or by law, no Partner shall have any right to demand or receive the return of its Capital Contribution from the Partnership.
4.7      Preferred Units. The Series B Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units, Series H Preferred Units, and Series I Preferred Units have been established and have the rights, preferences, limitations and qualifications as are described in Schedule A, Schedule B, Schedule C, Schedule D, Schedule E, Schedule F, and Schedule G, respectively, in addition to the applicable rights and preferences contained herein.

    

 

ARTICLE V     

Allocations and Other Tax and Accounting Matters
5.1      Allocations. The Net Income, Net Loss and/or other Partnership items shall be allocated pursuant to the provisions of Exhibit B hereto.
5.2      Distributions With Respect to Common Units and LTIP Units.
(b)      Subject to the terms of the Preferred Units and after giving effect to the same, the General Partner shall, from time to time as determined by the General Partner (but in any event not less frequently than quarterly), cause the Partnership to distribute all or a portion of the remaining Net Operating Cash Flow to the holders of Common Units, FV LTIP Units and AO LTIP Units on the relevant Partnership Record Date in such amounts as the General Partner shall determine; provided, however, that except as provided herein, all such distributions of Net Operating Cash Flow shall be made pro rata in accordance with the Partners’ then Percentage Interests. Notwithstanding the foregoing; the General Partner shall cause the Partnership to make a distribution to holders of Common Units (other than the General Partner and its Affiliates) as of any record date established by the Public REIT for any dividend by the Public REIT to the holders of Common Stock (the “ Public REIT Distribution Record Date ”) in an amount per Common Unit at least equal to the quotient obtained by dividing (A) the amount of such dividend per share of Common Stock payable by the Public REIT with respect to such Public REIT Distribution Record Date by (B) the Conversion Factor, and shall cause a corresponding distribution to be made to holders of FV LTIP Units and AO LTIP Units based on their respective Percentage Interests. Any such distribution shall be paid no later than the date on which the corresponding dividend is paid by the Public REIT to the holders of Common Stock. If there is insufficient Net Operating Cash Flow to make an equal distribution to the General Partner and its Affiliates in respect of each of their Common Units, then the distributions to the General Partner and its Affiliates in respect of their Common Units shall be limited to such remaining Net Operating Cash Flow. Notwithstanding the foregoing, distributions of Net Sales Proceeds and Net Financing Proceeds to a Partner in respect of an AO LTIP Unit shall not exceed the amount of net gain previously allocated or allocable in respect of such Unit with respect to the asset or assets disposed of or that are subject to the applicable financing. Amounts that otherwise would have been distributed to an AO LTIP Unit but for the preceding sentence shall be distributed to the Partners in accordance with their Percentage Interests, except that for this purpose all AO LTIP Units that are not eligible to participate in the distribution as a result of the preceding sentence shall be excluded from both the numerator and denominator in calculating Percentage Interests. Notwithstanding anything to the contrary contained herein, the General Partner shall use its best efforts to cause the Partnership to distribute sufficient amounts to enable the REIT Entities to pay shareholder dividends that will (i) satisfy the requirements for qualifying as a REIT under the Code and Regulations (“ REIT Requirements ”), and (ii) avoid any federal income or excise tax liability of the REIT Entities.

    

 

(c)      In no event may a Limited Partner receive a distribution of Net Operating Cash Flow in respect of a Unit that such Partner has exchanged for Common Stock pursuant to a Rights Agreement on or prior to the relevant Partnership Record Date; rather, all such distributions shall be made to the General Partner. Upon the receipt by the General Partner of each Exercise Notice pursuant to which one or more Limited Partners exercise Rights in accordance with the provisions of the Bucksbaum Rights Agreement, the General Partner shall, unless the Public REIT is required or elects only to issue Common Stock to such exercising Limited Partners, cause the Partnership to distribute to the Partners, pro rata in accordance with their Percentage Interests on the date of delivery of such Exercise Notice, all (or such lesser portion as the General Partner shall reasonably determine to be prudent under the circumstances) of Net Operating Cash Flow, which distribution shall be made prior to the closing of the purchase and sale of the Offered Units specified in such Exercise Notice.
5.3      Books of Account. At all times during the continuance of the Partnership, the General Partner shall maintain or cause to be maintained full, true, complete and correct books of account in accordance with generally accepted accounting principles wherein shall be entered particulars of all monies, goods or effects belonging to or owing to or by the Partnership, or paid, received, sold or purchased in the course of the Partnership’s business, and all of such other transactions, matters and things relating to the business of the Partnership as are usually entered in books of account kept by persons engaged in a business of a like kind and character. In addition, the Partnership shall keep all records as required to be kept pursuant to the Act. The books and records of account shall be kept at the principal office of the Partnership, and each Partner shall at all reasonable times have access to such books and records and the right to inspect the same.
5.4      Reports. The Public REIT shall cause to be submitted to the Limited Partners, promptly upon receipt of the same from the Accountants and in no event later than April 1 of each year, copies of Audited Financial Statements prepared on a consolidated basis for the Public REIT and the Partnership together with their consolidated subsidiaries, together with the reports thereon, and all supplementary schedules and information, prepared by the Accountants. The Public REIT shall also cause to be prepared such reports and/or information as are necessary for the REIT Entities to determine their qualification as a REIT and their compliance with REIT Requirements.
5.5      Audits. Not less frequently than annually, the books and records of the Partnership shall be audited by the Accountants. The General Partner shall, unless determined otherwise by the General Partner, engage the Accountants to audit the books and records of the Property Partnerships.
5.6      Tax Elections and Returns.
(a)      All elections required or permitted to be made by the Partnership under any applicable tax law shall be made by the General Partner in its sole discretion, including without limitation an election on behalf of the Partnership pursuant to Section 754 of the Code to adjust the basis of the Partnership property in the case of transfers of Units, and the General Partner shall not be required to make any such election.
(b)      The General Partner shall cause the Accountants to prepare and file all state and federal tax returns on a timely basis. The General Partner shall be responsible for

    

 

preparing and filing all federal and state tax returns for the Partnership and furnishing copies thereof to the Partners, together with required Partnership schedules showing allocations of tax items and copies of the tax returns of all Property Partnerships, all within the period of time prescribed by law or by the provisions hereof.
5.7      Tax Matters Partner. The General Partner is hereby designated as the Tax Matters Partner within the meaning of Section 6231(a)(7) of the Code for the Partnership; provided, however, in exercising its authority as Tax Matters Partner it shall be limited by the provisions of this Agreement affecting tax aspects of the Partnership.
5.8      Withholding. Each Partner hereby authorizes the Partnership to withhold or pay on behalf of or with respect to such Partner any amount of federal, state, local or foreign taxes that the General Partner determines the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Partner pursuant to this Agreement, including without limitation any taxes required to be withheld or paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. To the extent any withholding payment is made from funds withheld upon a distribution, the amount of such withholding payment will be treated as distributed to such Partners for all purposes of this Agreement. Any amount paid on behalf of or with respect to a partner, with respect to any distribution to a Partner on which the Partnership did not withhold or with respect to any Partner’s allocable share of income of the Partnership, shall constitute a loan by the Partnership to such Partner, which loan shall be due within fifteen (15) days after repayment is demanded of such Partner and shall be repaid through withholding of subsequent distributions to such Partner. Nothing in this Section 5.8 shall create any obligation on the General Partner to advance funds to the Partnership or to borrow funds in order to make payments on account of any liability of the Partnership under a withholding tax act. Any amounts payable by a Limited Partner hereunder shall bear interest at the lesser of (a) the Prime Rate and (b) the maximum lawful rate of interest on such obligation, such interest to accrue from the date such amount is due (i.e., fifteen (15) days after demand) until such amount is paid in full. To the extent the payment or accrual of withholding tax results in a federal, state or local tax credit to the Partnership, such credit shall be allocated to the Partner to whose distribution the tax is attributable.
5.9      Distributions with Respect to Preferred Units.
(a)      The holders of Series B Preferred Units are entitled to quarterly, cumulative partnership distributions when, if and as declared, in an amount equal to the greater of (i) $1.0625 per Series B Preferred Unit and (ii) the amount of regular quarterly cash distributions upon the number of Common Units into which such Series B Preferred Unit is then convertible, as more particularly described in Schedule A.
(b)      The holders of Series D Preferred Units are entitled to quarterly, cumulative partnership distributions when, if and as declared, in an amount equal to the greater of (i) $0.8125 per Series D Preferred Unit and (ii) the amount of regular quarterly cash distributions upon the number of Common Units into which such Series D Preferred Unit is then convertible, as more particularly described in Schedule B.
(c)      The holders of Series E Preferred Units are entitled to quarterly, cumulative partnership distributions when, if and as declared, in an amount equal to the greater of

    

 

(i) $0.875 per Series E Preferred Unit and (ii) the amount of regular quarterly cash distributions upon the number of Common Units into which such Series E Preferred Unit is then convertible, as more particularly described in Schedule C.
(d)      The holders of Series F Preferred Units are entitled to quarterly, cumulative partnership distributions when, if and as declared, in an amount equal to $25 per Series F Preferred Unit, as more particularly described in Schedule D.
(e)      The holders of Series G Preferred Units are entitled to quarterly, cumulative partnership distributions when, if and as declared, in an amount equal to $0.3984375 per Series E Preferred Unit, as more particularly described in Schedule E.
(f)      The holders of Series H Preferred Units are entitled to monthly, cumulative partnership distributions when, if and as declared, in an amount calculated at the applicable per annum rate applied to the $1,000 liquidation preference per Series H Preferred Unit, as more particularly described in Schedule F.
(g)      The holders of Series I Preferred Units are entitled to monthly, cumulative partnership distributions when, if and as declared, in an amount calculated at the applicable per annum rate applied to the $1,000 liquidation preference per Series I Preferred Unit, as more particularly described in Schedule G.
5.10      Redemption of Common Units. In the event that Nimbus or GGP LP distributes shares of Common Stock to the holders of its common units (or effectuates a pro rata redemption of its common units in exchange for shares of Common Stock) and a portion of such shares are directly or indirectly received by the Public REIT and thereby canceled, then the General Partner shall have the right, without the consent of any other Partners, to cause the Partnership to redeem Common Units from all holders on a pro rata basis in exchange for any or all shares of Common Stock that the Partnership receives in such distribution. The redemption price paid by the Partnership shall be a number of shares of Common Stock equal to the quotient of (A) the number of Common Units redeemed divided by (B) the Conversion Factor. Any such redemption shall be pro rata from all holders of Common Units based on the number of Common Units held by each holder, provided that the General Partner may make such adjustments as are necessary in order to avoid being required to transfer fractions of a share of Common Stock in connection with any such redemption.
ARTICLE VI     

Rights, Duties and Restrictions of the General Partner
6.1      Expenditures by Partnership. The General Partner is hereby authorized to pay compensation for accounting, administrative, legal, technical, management and other services rendered to the Partnership. All of the aforesaid expenditures shall be made on behalf of the Partnership and the General Partner shall be entitled to reimbursement by the Partnership for any expenditures incurred by it on behalf of the Partnership which shall be made other than out of the funds of the Partnership. The General Partner and the Public REIT agree to cause the Property Partnerships to reimburse the Partnership for all such expenditures and to assume, and pay when due, all Administrative Expenses.

    

 

6.2      Powers and Duties of General Partner. The General Partner shall be responsible for the management of the Partnership’s business and affairs. Except as otherwise herein expressly provided, the General Partner shall have, and is hereby granted, full and complete power, authority and discretion to take such action for and on behalf of the Partnership and in its name as the General Partner shall, in its sole and absolute discretion, deem necessary or appropriate to carry out the purposes for which the Partnership was organized. Except as otherwise expressly provided herein, the General Partner shall have the right, power and authority:
(c)      To manage, control, invest, reinvest, acquire by purchase, lease or otherwise, sell, contract to purchase or sell, grant, obtain, or exercise options to purchase, options to sell or conversion rights, assign, transfer, convey, deliver, endorse, exchange, pledge, mortgage, abandon, improve, repair, maintain, insure, lease for any term and otherwise deal with any and all property of whatsoever kind and nature, and wheresoever situated, in furtherance of the purposes of the Partnership;
(d)      To acquire, directly or indirectly, interests in real estate of any kind and of any type, and any and all kinds of interests therein, and to determine the manner in which title thereto is to be held; to manage, insure against loss, protect and subdivide any of the real estate interests therein or parts thereof; to improve, develop or redevelop any such real estate; to participate in the ownership and development of any property; to dedicate for public use, to vacate any subdivisions or parts thereof, to resubdivide, to contract to sell, to grant options to purchase or lease, to sell on any terms; to convey, to mortgage, pledge or otherwise encumber said property, or any part thereof; to lease said property or any part thereof from time to time, upon any terms and for any period of time, and to renew or extend leases, to amend, change or modify the terms and provisions of any leases and to grant options to lease and options to renew leases and options to purchase; to partition or to exchange said real property, or any part thereof, for other real or personal property; to grant easements or charges of any kind; to release, convey or assign any right, title or interest in or about or easement appurtenant to said property or any part thereof; to construct and reconstruct, remodel, alter, repair, add to or take from buildings on said premises; to insure any Person having an interest in or responsibility for the care, management or repair of such property; to direct the trustee of any land trust to mortgage, lease, convey or contract to convey the real estate held in such land trust or to execute and deliver deeds, mortgages, notes and any and all documents pertaining to the property subject to such land trust or in any matter regarding such trust; to execute assignments of all or any part of the beneficial interest in such land trust;
(e)      To employ, engage or contract with or dismiss from employment or engagement Persons to the extent deemed necessary by the General Partner for the operation and management of the Partnership business, including but not limited to, the engagement of the Property Manager pursuant to the Management Agreements and the employment or engagement of other contractors, subcontractors, engineers, architects, surveyors, mechanics, consultants, accountants, attorneys, insurance brokers, real estate brokers and others;

    

 

(f)      To enter into contracts on behalf of the Partnership;
(g)      To borrow money, procure loans and advances from any Person for Partnership purposes, and to apply for and secure, from any Person, credit or accommodations; to contract liabilities and obligations, direct or contingent and of every kind and nature with or without security; and to repay, discharge, settle, adjust, compromise or liquidate any such loan, advance, credit, obligation or liability;
(h)      To pledge, hypothecate, mortgage, assign, deposit, deliver, enter into sale and leaseback arrangements or otherwise give as security or as additional or substitute security, or for sale or other disposition any and all Partnership property, tangible or intangible, including, but not limited to, real estate and beneficial interests in land trusts, and to make substitutions thereof, and to receive any proceeds thereof upon the release or surrender thereof; to sign, execute and deliver any and all assignments, deeds and other contracts and instruments in writing; to authorize, give, make, procure, accept and receive moneys, payments, property, notices, demands, vouchers, receipts, releases, compromises and adjustments; to waive notices, demands, protests and authorize and execute waivers of every kind and nature; to enter into, make, execute, deliver and receive written agreements, undertakings and instruments of every kind and nature; to give oral instructions and make oral agreements; and generally to do any and all other acts and things incidental to any of the foregoing or with reference, to any dealings or transactions which any attorney may deem necessary, proper or advisable;
(i)      To acquire and enter into any contract of insurance which the General Partner deems necessary or appropriate for the protection of the Partnership, for the conservation of the Partnership’s assets or for any purpose convenient or beneficial to the Partnership;
(j)      To conduct any and all banking transactions on behalf of the Partnership; to adjust and settle checking, savings and other accounts with such institutions as the General Partner shall deem appropriate; to draw, sign, execute, accept, endorse, guarantee, deliver, receive and pay any checks, drafts, bills of exchange, acceptances, notes, obligations, undertakings and other instruments for or relating to the payment of money in, into or from any account in the Partnership’s name; to execute, procure, consent to and authorize extensions and renewals of the same; to make deposits and withdraw the same and to negotiate or discount commercial paper, acceptances, negotiable instruments, bills of exchange and dollar drafts;
(k)      To demand, sue for, receive and otherwise take steps to collect or recover all debts, rents, proceeds, interests, dividends, goods, chattels, income from property, damages and all other property, to which the Partnership may be entitled or which are or may become due the Partnership from any Person; to commence, prosecute or enforce, or to defend, answer or oppose, contest and abandon all legal proceedings in which the Partnership is or may hereafter be interested; and to settle, compromise or submit to arbitration any accounts, debts, claims, disputes and matters which may arise between the Partnership and any other Person and to grant an extension of time for the payment or satisfaction thereof on any terms, with or without security;

    

 

(l)      To make arrangements for financing, including the taking of all action deemed necessary or appropriate by the General Partner to cause any approved loans to be closed;
(m)      To take all reasonable measures necessary to insure compliance by the Partnership with applicable arrangements, and other contractual obligations and arrangements entered into by the Partnership from time to time in accordance with the provisions of this Agreement, including periodic reports as required to lenders and using all due diligence to insure that the Partnership is in compliance with its contractual obligations;
(n)      To maintain the Partnership’s books and records; and
(o)      To prepare and deliver, or cause to be prepared and delivered by the Partnership’s Accountants, all financial and other reports with respect to the operations of the Partnership, and preparation and filing of all federal and state tax returns and reports.
Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.
6.3      [Intentionally Omitted] .
6.4      [Intentionally Omitted] .
6.5      Public REIT Participation. The Public REIT agrees that all business activities of the Public REIT, the Affiliate Entities and the other REIT Entities, including activities pertaining to the acquisition, development and ownership of Properties, shall be conducted through the Partnership, Nimbus or GGP LP (other than the Public REIT’s, Affiliate Entities’ or the other REIT Entities’ direct or indirect interest of not more than one percent (1%) in Property Partnerships not owned through the Partnership). Without the Consent of the Limited Partners, the Public REIT shall not, directly or indirectly, and shall cause the Affiliate Entities and/or the other REIT Entities not to directly or indirectly, participate in or otherwise acquire any interest in any real or personal property unless the Partnership, Nimbus and/or GGP LP participate in, or otherwise acquire an interest in, such real or personal property at least to the extent of 99 times such proposed participation by the Public REIT, the Affiliate Entities and/or the other REIT Entities, as applicable. The Public REIT agrees and agrees on behalf of the Affiliate Entities and the other REIT Entities that all borrowings for the purpose of making distributions to its stockholders will be incurred by the Partnership or the Property Partnerships and the proceeds of such indebtedness will be included as Net Financing Proceeds hereunder.

    

 

6.6      Proscriptions. The General Partner shall not have the authority to:
(a)      Do any act in contravention of this Agreement or which would make it impossible to carry on the ordinary business of the Partnership;
(b)      Possess any Partnership property or assign rights in specific Partnership property for other than Partnership purposes; or
(c)      Do any act in contravention of applicable law.
Nothing herein contained shall impose any obligation on any Person or firm doing business with the Partnership to inquire as to whether or not the General Partner has properly exercised its authority in executing any contract, lease, mortgage, deed or other instrument or document on behalf of the Partnership, and any such third Person shall be fully protected in relying upon such authority.
6.7      Additional Partners. Additional Partners may be admitted to the Partnership only as provided in Section 8.3 hereof.
6.8      Title Holder. To the extent allowable under applicable law, title to all or any part of the properties of the Partnership may be held in the name of the Partnership or any other individual, corporation, partnership, trust or otherwise, the beneficial interest in which shall at all times be vested in the Partnership. Any such title holder shall perform any and all of its respective functions to the extent and upon such terms and conditions as may be determined from time to time by the General Partner.
6.9      Compensation of the General Partner. The General Partner shall not be entitled to any compensation for services rendered to the Partnership solely in its capacity as General Partner except with respect to reimbursement for those costs and expenses constituting Administrative Expenses.
6.10      Waiver and Indemnification.
(a)      Neither the General Partner nor any Person acting on its behalf pursuant hereto, shall be liable, responsible or accountable in damages or otherwise to the Partnership or to any Partner for any acts or omissions performed or omitted to be performed by them within the scope of the authority conferred upon the General Partner by this Agreement and the Act, provided that the General Partner’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 Partnership and, provided further, that the General Partner or such other Person shall not be guilty of fraud, misconduct or gross negligence. The Partnership shall, and hereby does, indemnify and hold harmless the General Partner and its Affiliates and any individual acting on their behalf from any loss, damage, claim or liability, including, but not limited to, reasonable attorneys’ fees and expenses, incurred by them by reason of any act performed by them in accordance with the standards set forth above or in enforcing the provisions of this indemnity; provided, however, no Partner shall have any personal liability with respect to the foregoing indemnification, any such indemnification to be satisfied solely out of the assets of the Partnership.

    

 

(b)      Any Person entitled to indemnification under this Agreement shall be entitled to receive, upon application therefor, advances to cover the costs of defending any proceeding against such Person; provided, however, that such advances shall be repaid to the Partnership, without interest, if such Person is found by a court of competent jurisdiction upon entry of a final judgment not be entitled to such indemnification, all rights of the indemnitee hereunder shall survive the dissolution of the Partnership; provided, however, that a claim for indemnification under this Agreement must be made by or on behalf of the Person seeking indemnification prior to the time the Partnership is liquidated hereunder. The indemnification rights contained in this Agreement shall be cumulative of, and in addition to, any and all rights, remedies and recourse to which the person seeking indemnification shall be entitled, whether at law or at equity. Indemnification pursuant to this Agreement shall be made solely and entirely from the assets of the Partnership and no Partner shall be liable therefor.
6.11      [Intentionally Omitted]
6.12      Operation in Accordance with REIT Requirements. The Partners acknowledge and agree that the Partnership shall be operated in a manner that will enable the REIT Entities to (a) satisfy the REIT Requirements and (b) avoid the imposition of any federal income or excise tax liability. The Partnership shall avoid taking any action, or permitting any Property Partnership to take any action, which would result in the REIT Entities ceasing to satisfy the REIT Requirements or would result in the imposition of any federal income or excise tax liability on the REIT Entities. The determination as to whether the Partnership has operated in the manner prescribed in this Section 6.12 shall be made without regard to any action or inaction of the General Partner with respect to distributions and the timing thereof.
ARTICLE VII     

Dissolution, Liquidation and Winding-Up
7.1      Accounting. In the event of the dissolution, liquidation and winding-up of the Partnership, a proper accounting (which shall be certified) shall be made of the Capital Account of each Partner and of the Net Income or Net Losses of the Partnership from the date of the last previous accounting to the date of dissolution. Financial statements presenting such accounting shall include a report of a certified public accountant selected by the Liquidating Trustee.
7.2      Distribution on Dissolution. In the event of the dissolution and liquidation of the Partnership for any reason, the assets of the Partnership shall be liquidated for distribution in the following rank and order:
(a)      Payment of creditors of the Partnership (other than Partners) in the order of priority as provided by law;
(b)      Establishment of reserves as provided by the General Partner to provide for contingent liabilities, if any;

    

 

(c)      Payment of debts of the Partnership to any Partner, in the order of priority provided by law;
(d)      Payment to the holders of Preferred Units in accordance with the terms thereof (as referenced in Section 7.8 hereof); and
(e)      To the Partners holding Common Units or LTIP Units in proportion to the Common Units and LTIP Units held by each such Partner. Notwithstanding anything to the contrary in this Section 7.2(e) or elsewhere in this Agreement, (i) distributions to a Partner in respect of a FV LTIP Unit or an AO LTIP Unit shall be limited to the Partner’s Economic Capital Account Balance attributable to such Unit as of the date of liquidation (and after taking into account any allocations pursuant to the liquidation) and (ii) amounts that otherwise would have been distributed to such LTIP Units shall be distributed to the Partners holding Common Units or LTIP Units in proportion to the Common Units and LTIP Units held by them (excluding for this purpose all LTIP Units that are not eligible to participate in any further distributions as a result of the foregoing clause (i) of this Section 7.2(e)).
Whenever the Liquidating Trustee reasonably determines that any reserves established pursuant to paragraph (b) above are in excess of the reasonable requirements of the Partnership, the amount determined to be excess shall be distributed to the Partners in accordance with the above provisions.
7.3      Timing Requirements. In the event that the Partnership is “liquidated” within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and all distributions to the Partners pursuant to Sections 7.2(d) and 7.2(e) hereof shall be made no later than the later to occur of (i) the last day of the taxable year of the Partnership in which such liquidation occurs or (ii) ninety (90) days after the date of such liquidation.
7.4      Sale of Partnership Assets. In the event of the liquidation of the Partnership in accordance with the terms of this Agreement, the Liquidating Trustee may sell Partnership or Property Partnership property if the Liquidating Trustee has in good faith solicited bids from unrelated third parties and obtained independent appraisals before making any such sale; provided, however, all sales, leases, encumbrances or transfers of Partnership assets shall be made by the Liquidating Trustee solely on an “arm’s-length” basis, at the best price and on the best terms and conditions as the Liquidating Trustee in good faith believes are reasonably available at the time and under the circumstances and on a non-recourse basis to the Limited Partners. The liquidation of the Partnership shall not be deemed finally terminated until the Partnership shall have received cash payments in full with respect to obligations such as notes, installment sale contracts or other similar receivables received by the Partnership in connection with the sale of Partnership assets and all obligations of the Partnership have been satisfied or assumed by the General Partner. The Liquidating Trustee shall continue to act to enforce all of the rights of the Partnership pursuant to any such obligations until paid in full.
7.5      Distributions in Kind. In the event that it becomes necessary to make a distribution of Partnership property in kind, the General Partner may, with the Consent of the Limited Partners, transfer and convey such property to the distributees as tenants in common, subject to any liabilities attached

    

 

thereto, so as to vest in them undivided interests in the whole of such property in proportion to their respective rights to share in the proceeds of the sale of such property (other than as a creditor) in accordance with the provisions of Section 7.2 hereof. Notwithstanding the foregoing, the Partnership may make distributions with respect to Common Units or LTIP Units in the form of Common Stock and/or Common Units without the Consent of the Limited Partners.
7.6      Documentation of Liquidation. Upon the completion of the dissolution and liquidation of the Partnership, the Partnership shall terminate and the Liquidating Trustee shall have the authority to execute and record any and all documents or instruments required to effect the dissolution, liquidation and termination of the partnership.
7.7      Liability of the Liquidating Trustee. The Liquidating Trustee shall be indemnified and held harmless by the Partnership from and against any and all claims, demands, liabilities, costs, damages and causes of action of any nature whatsoever arising out of or incidental to the Liquidating Trustee’s taking of any action authorized under or within the scope of this Agreement; provided, however, that the Liquidating Trustee shall not be entitled to indemnification, and shall not be held harmless, where the claim, demand, liability, cost, damage or cause of action at issue arose out of:
(h)      A matter entirely unrelated to the Liquidating Trustee’s action or conduct pursuant to the provisions of this Agreement; or
(i)      The proven misconduct or negligence of the Liquidating Trustee.
7.8      Liquidation Preference of Preferred Units. With respect to liquidation of the Partnership:
(a)      The holders of Series B Preferred Units shall have the rights and preferences described in Schedule A.
(b)      The holders of Series D Preferred Units shall have the rights and preferences described in Schedule B.
(c)      The holders of Series E Preferred Units shall have the rights and preferences described in Schedule C.
(d)      The holders of Series F Preferred Units shall have the rights and preferences described in Schedule D.
(e)      The holders of Series G Preferred Units shall have the rights and preferences described in Schedule E.
(f)      The holders of Series H Preferred Units shall have the rights and preferences described in Schedule F.
(g)      The holders of Series I Preferred Units shall have the rights and preferences described in Schedule G.
7.9      Negative Capital Accounts.

    

 

(c)      Except as provided in the next sentence and Section 7.9(b), no Partner shall be liable to the Partnership or to any other partner for any deficit or negative balance which may exist in its Capital Account. Upon liquidation of any Obligated Partner’s interest in the Partnership, whether pursuant to a liquidation of the Partnership or by means of a distribution to the Obligated Partner by the Partnership, if such Obligated Partner has a deficit balance in its Capital Account, after giving effect to all contributions, distributions, allocations and adjustments to Capital Accounts for all periods, each such Obligated Partner shall contribute to the capital of the Partnership an amount equal to its respective deficit balance. Each Obligated Partner having such an obligation to restore a deficit Capital Account shall satisfy such obligation by the end of the fiscal year of liquidation (or, if later, within ninety (90) days following the liquidation and dissolution of the Partnership) or distribution to such Obligated Partner, as the case may be. Any such contribution by an Obligated Partner shall be used to make payments to creditors of the Partnership and such Obligated Partners (i) shall not be subrogated to the rights of any such creditor against the General Partner, the Partnership, another Partner or any Person related thereto, and (ii) hereby waive any right to reimbursement, contribution or similar right to which such Obligated Partners might otherwise be entitled as a result of the performance of their obligations under this Agreement.
(d)      Notwithstanding any other provision of this Agreement, an Obligated Partner other than Koury Corporation shall cease to be an Obligated Partner upon the earlier of (i) nine months after the death of such Obligated Partner or (ii) six months after (A) any date after the third anniversary date of the date of the Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of GGP Limited Partnership dated as of April 1, 1998, which is selected by the Obligated Partner as the date upon which such Obligated Partner’s obligation hereunder shall terminate (and for which notice of such date shall be given at least 60 days prior to such selected date) or (B) an exchange of all of such Obligated Partner’s remaining Units for shares of Common Stock or preferred stock of the Public REIT (pursuant to a Rights Agreement) or in an otherwise taxable sale or exchange of all of such Obligated Partner’s Units provided that at the time of or during such six-month period following such event set forth in (ii)(A) or (B), there has not been: (X) an entry of decree or order for relief in respect of the Partnership by a court having jurisdiction over a substantial part of the Partnership’s assets, or the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar Official) of the Partnership or of any substantial part of its property, ordering the winding up or liquidation of the Partnership’s affairs, in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law; or (Y) the commencement against the Partnership of an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law; or (Z) the commencement by the Partnership of a voluntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or the consent by it to the entry of an order for relief in an involuntary case under any such law or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, custodian,

    

 

trustee, sequestrator (or other similar official) of the Partnership or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the failure of the Partnership generally to pay its debts as such debts become due or the taking of any action in furtherance of any of the foregoing. Following the passage of the six-month period after the event set forth in clause (ii)(A) or (B) of this paragraph, an Obligated Partner shall cease to be an Obligated Partner at the first time, if any, that all of the conditions set forth in (X) through (Z) above are no longer in existence.
(e)      Notwithstanding any other provision of this Agreement, Koury Corporation shall cease to be an Obligated Partner immediately upon the earlier of (i) any date which is selected by Koury Corporation as the date upon which its status as an Obligated Partner hereunder shall terminate (and for which notice of such selected date shall be given at least 60 days prior to such selected date, but only if such selected date is not earlier than the first anniversary date of the last day of the Partnership’s most recent completed tax year in which Koury Corporation’s Protected Amount increased), (ii) an exchange of all of Koury Corporation’s remaining Units for shares of Common Stock of the Public REIT (pursuant to a Rights Agreement) or in an otherwise taxable sale, or exchange of all of such Obligated Partner’s Units; or (iii) the Partnership’s termination, for a Partnership purposes, of Koury Corporation’s status as an Obligated Partner on any date that follows March 5, 2017.
ARTICLE VIII     

Transfer of Units
8.1      General Partner Transfer. The General Partner shall not withdraw from the Partnership and shall not sell, assign, pledge, encumber or otherwise dispose of all or any portion of its Units, either to a new General Partner or a Limited Partner, except by operation of law, without the Consent of the Limited Partners. Upon any transfer of Units to a new General Partner in accordance with the provisions of this Section 8.1, the transferee General Partner shall become vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner, once such transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Units so acquired. It is a condition to any transfer of Units to a new General Partner otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor General Partner under this Agreement with respect to such transferred Units and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor General Partner are assumed by a successor corporation by operation of law) shall relieve the transferor General Partner of its obligations under this Agreement without the Consent of the Limited Partners, in their reasonable discretion. In the event the General Partner withdraws from the Partnership in violation of this Agreement or otherwise, or dissolves or terminates or upon the Bankruptcy of the General Partner, a Majority-in-Interest of the Limited Partners may elect to continue the Partnership business by selecting a substitute general partner. Notwithstanding the foregoing, the General Partner shall be permitted at any time, and from time to time, to transfer its

    

 

Units to the Public REIT or one or more subsidiaries thereof without the Consent of the Limited Partners; provided, however, that such transfer shall not materially change the proportionate direct or indirect ownership in the Partnership by the Public REIT; provided further, such new General Partner shall be under the Control of the Public REIT.
8.2      Transfers by Limited Partners. Each Limited Partner shall, subject to the provisions of this Section 8.2 and Section 8.4 hereof, have the right to transfer all or a portion of its Units to any Person, whether or not in connection with the exercise of the Rights. It is a condition to any transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such transferred Units and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the General Partner in its reasonable discretion. Upon such transfer, the transferee shall be admitted as a substituted limited partner as such term is defined in the Act (the “Substituted Limited Partner”) and shall succeed to all of the rights of the transferor Limited Partner under this Agreement in the place and stead of such transferor Limited Partner; provided, however, that notwithstanding the foregoing, any transferee of any transferred Units, to the extent such transferee is entitled to exercise Rights under the Rights Agreement, shall be subject to any and all ownership limitations contained in the Charter which may limit or restrict such transferee’s ability to exercise the Rights. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary transfer, by operation of law or otherwise, shall have rights hereunder, other than to receive such portion of the distributions made by the Partnership as are allocable to the Units transferred.
8.3      Issuance of Additional Common Units. At any time without the consent of any Partner, but subject to the provisions of Section 8.4 hereof, the General Partner may, upon its determination that the issuance of additional Units (“Additional Units”) is in the best interests of the Partnership, cause the Partnership to issue Additional Units to and admit as a Limited Partner in the Partnership, any Person (the “Additional Partner”) in exchange for such consideration as the General Partner deems appropriate, including, without limitation, the contribution by such Person of cash and/or property desirable to further the purposes of the Partnership under Section 2.3 hereof or past or future services rendered by such Person to or for the benefit of the Partnership. The General Partner may admit an Additional Partner to the Partnership upon such terms as it deems appropriate. The General Partner shall be authorized on behalf of each of the Partners to amend this Agreement to reflect the admission of any Additional Partner in accordance with the provisions of this Section 8.3 in the event that the General Partner deems such amendment to be desirable, and the General Partner promptly shall deliver a copy of such amendment to each Limited Partner. Notwithstanding anything contained herein to the contrary, an Additional Partner that acquires Additional Units pursuant to this Section 8.3 shall not acquire any interest in and may not exercise or otherwise participate in any Rights pursuant to the Rights Agreements unless they are expressly granted such rights.
8.4      Restrictions on Transfer. In addition to any other restrictions on transfer herein contained, in no event may any transfer or assignment of Units by any Partner be made (i) to any Person who lacks the legal right, power or capacity to own Units; (ii) in violation of any provision of any mortgage

    

 

or trust deed (or the note or bond secured thereby) constituting a Lien against a Property or any part thereof, or other instrument, document or agreement to which the Partnership or any Property Partnership is a party or otherwise bound; (iii) in violation of applicable law; (iv) of any component portion of a Unit, such as the Capital Account, or rights to Net Operating Cash Flow, separate and apart from all other components of such Unit (other than such assignments of the right to receive distributions as the General Partner shall approve in writing which approval the General Partner may withhold in its sole discretion); (v) in the event such transfer would cause the REIT Entities to cease to comply with the REIT Requirements; (vi) if such transfer would, in the opinion of counsel to the Partnership, cause the Partnership to cease to be classified as a partnership for federal income tax purposes; (vii) if such transfer would, in the opinion of counsel to the Partnership, cause any assets of the Partnership to constitute assets of a benefit plan investor pursuant to 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of the Employee Retirement Income Security Act of 1974, as amended or (viii) if such transfer is effectuated through an “established securities market” or “secondary market” (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code or such transfer causes the Partnership to become a “publicly traded partnership” as such term is defined in Section 7704(b) of the Code. Notwithstanding anything in this Agreement to the contrary:
(d)      no Limited Partner admitted to the Partnership after June 29, 1998 may sell, assign or otherwise transfer its Units or other interest in the Partnership or any portion thereof to any Foreign Owner (and no interest in such Limited Partner or any Person that directly or indirectly owns an interest in such Limited Partner may be transferred if such Limited Partner shall become a Foreign Owner as the result of such transfer) without the prior written consent of the General Partner (which consent may be given or withheld in the sole discretion of the General Partner); and
(e)      no other Limited Partner may sell, assign or otherwise transfer its Units or other interest in the Partnership or any portion thereof to any Foreign Owner (and no interest in such Limited Partner or any Person that directly or indirectly owns an interest in such Limited Partner may be transferred if such Limited Partner shall become a Foreign Owner as the result of such transfer) without providing written notice of the same to the General Partner. Any such written notice shall be received by the General Partner at least thirty days prior to any such sale, assignment or other transfer.
Any sale, assignment or other transfer of Units or other interests in the Partnership made in violation of this Agreement (including without limitation any sale, assignment or other transfer of Units made without giving the notice described above at the time described above) shall be null and void ab initio .
8.5      Issuance of LTIP Units. The General Partner, in its sole and absolute discretion, is hereby authorized without the approval of the Limited Partners or any other Person to cause the Partnership from time to time to issue to any Person providing services to or for the benefit of the Partnership, which may include Partners, LTIP Units in one or more classes, or one or more series of any of such classes, with such designations, preferences, and relative, participating, optional or other special rights, powers and duties as shall be determined by the General Partner in its sole and absolute discretion

    

 

subject to the Act and Delaware law, including, without limitation, (i) the rights of each such class or series of Units to an allocation of Net Income or Net Loss (or items thereof) to each such class or series of Units; (ii) the rights of each such class or series of Units to share in Partnership distributions; (iii) the rights of each such class or series of Units upon dissolution and liquidation of the Partnership; and (iv) the right to vote, if any, of each such class or series of Units; provided that (A) LTIP Units of any series (other than AO LTIP Units and FV LTIP Units) shall not disproportionately affect any one Common Unitholder or group of Common Unitholders, and (B) no such additional Units or other partnership interests shall be issued to the General Partner or the Public REIT or any direct or indirect wholly or partly-owned subsidiary of the Public REIT, unless, in the case of clause (B), the additional partnership interests are issued in connection with the grant, award or issuance of REIT Shares or New Securities that have designations, preferences and other rights such that the economic interests attributable to such REIT Shares or New Securities are substantially similar to the designations, preferences and other rights of the additional partnership interests issued to the General Partner or the Public REIT or any direct or indirect wholly or partly-owned subsidiary of the Public REIT (as appropriate). Upon the issuance of any LTIP Units by the Partnership, the General Partner shall cause one or more of the Property Partnerships to issue additional interests to the Partnership on terms that are, in the aggregate, substantially similar to the applicable LTIP Units so that the Partnership will receive additional distributions and other rights in respect of the Property Partnerships equivalent to those to which the recipient of the LTIP Units is entitled in respect of the Partnership. The General Partner’s determination that the consideration is adequate shall be conclusive insofar as the adequacy of consideration relates to whether the partnership interests are validly issued and paid. The General Partner shall be authorized on behalf of each of the Partners to amend this Agreement to reflect the admission of any Additional Partner in accordance with the provisions of this Section 8.5 in the event that the General Partner deems such amendment to be desirable. The provisions of Section 13.12 of this Partnership Agreement shall apply to the issuance of LTIP Units.

ARTICLE IX     

Rights and Obligations of the Limited Partners
9.1      No Participation in Management. Except as expressly permitted hereunder, the Limited Partners shall not take part in the management of the Partnership’s business, transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership.
9.2      Bankruptcy of a Limited Partner. The Bankruptcy of any Limited Partner shall not cause a dissolution of Partnership, but the rights of such Limited Partner to share in the Net Income or Net Losses of the Partnership and, to receive distributions of Partnership funds shall, on the happening of such event, devolve on its successors or assigns, subject to the terms and conditions of this Agreement, and the Partnership shall continue as a limited partnership. However, in no event shall such assignee(s) become a Substituted Limited Partner without the consent of the General Partner.
9.3      No Withdrawal. No Limited Partner may withdraw from the Partnership without the prior written consent of the General Partner, other than as expressly provided in this Agreement.

    

 

9.4      Duties and Conflicts. The General Partner recognizes that the Limited Partners and their Affiliates have or may hereafter have other business interests, activities and investments, some of which may be in conflict or competition with the business of the Partnership, and that such Persons are entitled to carry on such other business interests, activities and investments. The Limited Partners and their Affiliates may engage in or possess an interest in any other business or venture of any kind, independently or with others, on their own behalf or on behalf of other entities with which they are affiliated or associated, and such persons may engage in any activities, whether or not competitive with the Partnership, without any obligation to offer any interest in such activities to the Partnership or to any Partner. Neither the Partnership nor any Partner shall have any right, by virtue of this Agreement, in or to such activities, or the income or profits derived therefrom, and the pursuit of such activities, even if competitive with the business of the Partnership, shall not be deemed wrongful or improper.
ARTICLE X      [Intentionally Omitted]
ARTICLE XI      [Intentionally Omitted]
ARTICLE XII     

Arbitration of Disputes
12.1      Arbitration. Notwithstanding anything to the contrary contained in this Agreement, all claims, disputes and controversies between the parties hereto (including, without limitation, any claims, disputes and controversies between the Partnership and any one or more of the Partners and any claims, disputes and controversies between any one or more Partners) arising out of or in connection with this Agreement or the Partnership relating to the validity, construction, performance, breach, enforcement or termination thereof, or otherwise, shall be resolved by binding arbitration in New York, New York, in accordance with this Article XII and, to the extent not inconsistent herewith, the Expedited Procedures and Commercial Arbitration Rules of the Arbitration Association.
12.2      Procedures. Any arbitration called for by this Article XII shall be conducted in accordance with the following procedures:
(j)      The Partnership or any Partner (the “ Requesting Party ”) may demand arbitration pursuant to Section 12.1 hereof at any time by giving written notice of such demand (the “ Demand Notice ”) to all other Partners and (if the Requesting Party is not the Partnership) to the Partnership which Demand Notice shall describe in reasonable detail the nature of the claim, dispute or controversy.
(k)      Within fifteen (15) days after the giving of a Demand Notice, the Requesting Party, on the one hand, and each of the other Partners and/or the Partnership against whom the claim has been made or with respect to which a dispute has arisen (collectively, the “ Responding Party ”), on the other hand, shall select and designate in writing to the other party one reputable, disinterested individual (a “ Qualified Individual ”) willing to act as an arbitrator of the claim, dispute or controversy in question. Each of the

    

 

Requesting Party and the Responding Party shall use their best efforts to select a present or former partner of a nationally known accounting firm having no affiliation with any of the parties as their respective Qualified Individual. Within fifteen (15) days after the foregoing selections have been made, the arbitrators so selected shall only select a present or former partner of a nationally known accounting firm having no affiliation with any of the parties as the third Qualified Individual willing to act as an arbitrator of the claim, dispute or controversy in question. In the event that the two arbitrators initially selected are unable to agree on a third arbitrator within the second fifteen (15) day period referred to above, then, on the application of either party, the American Arbitration Association shall promptly select and appoint a present or former partner of a nationally known accounting firm having no affiliation with any of the parties as the Qualified Individual to act as the third arbitrator. The three arbitrators selected pursuant to this subsection (b) shall constitute the arbitration panel for the arbitration in question.
(l)      The presentations of the parties hereto in the arbitration proceeding shall be commenced and completed within sixty (60) days after the selection of the arbitration panel pursuant to subsection (b) above, and the arbitration panel shall render its decision in writing within thirty (30) days after the completion of such presentations. Any decision concurred in by any two (2) of the arbitrators shall constitute the decision of the arbitration panel, and unanimity shall not be required.
(m)      The arbitration panel shall have the discretion to include in its decision a direction that all or part of the attorneys’ fees and costs of any party or parties and/or the costs of such arbitration be paid by any other party or parties. On the application of a party before or after the initial decision of the arbitration panel, and proof of its attorneys’ fees and costs, the arbitration panel shall order the other party to make any payments directed pursuant to the preceding sentence.
12.3      Binding Character. Any decision rendered by the arbitration panel pursuant to this Article XII shall be final and binding on the parties hereto, and judgment thereon may be entered by any state or federal court of competent jurisdiction.
12.4      Exclusivity. Arbitration shall be the exclusive method available for resolution of claims, disputes and controversies described in Section 12.1 hereof, and the Partnership and its Partners stipulate that the provisions hereof shall be a complete defense to any suit, action, or proceeding in any court or before any administrative or arbitration tribunal with respect to any such claim, controversy or dispute. The provisions of this Article XII shall survive the dissolution of the Partnership.
12.5      No Alteration of Agreement. Nothing contained herein shall be deemed to give the arbitrators any authority, power or right to alter, change, amend, modify, add to or subtract from any of the provisions of this Agreement.
ARTICLE XIII     

General Provisions

    

 

13.1      Notices. All notices, offers or other communications required or permitted to be given pursuant to this Agreement shall be in writing and may be personally served, telecopied or sent by United States mail and shall be deemed to have been given when delivered in person, upon receipt of telecopy or three business days after deposit in United States mail, registered or certified, postage prepaid, and properly addressed, by or to the appropriate party. For purposes of this Section 13.1, the addresses of the parties hereto shall be as set forth in the books and records of the Partnership. The address of any party hereto may be changed by a notice in writing given in accordance with the provisions hereof. Notwithstanding anything to the contrary herein, no provision of this Agreement requiring notice of any event prior to the occurrence thereof shall apply to stock splits, subdivisions, dividends, combinations or any other similar event occurring after the date hereof.
13.2      Successors. This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of all Partners, and their legal representatives, heirs, successors and permitted assigns, except as expressly herein otherwise provided.
13.3      Effect and Interpretation. This Agreement shall be governed by and construed in conformity with the laws of the State of Delaware (without regard to its conflicts of law principles).
13.4      Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument.
13.5      Partners Not Agents. Nothing contained herein shall be construed to constitute any Partner the agent of another Partner, except as specifically provided herein, or in any manner to limit the Partners in the carrying on of their own respective businesses or activities.
13.6      Entire Understanding; Etc.. This Agreement, together with any and all Contribution Agreements and Rights Agreements, constitutes the entire agreement and understanding among the Partners and supersedes any prior understandings and/or written or oral agreements among them respecting the subject matter within (including without limitation the Third Restated Partnership Agreement except for the consents, approvals, waivers, representations and warranties given therein, and the agreements by Partners to be bound by the provisions thereof, as the same is amended hereby, which shall continue in full force and effect).
13.7      Amendments. Except as set forth below or in Schedules A-H, the General Partner may amend this Agreement in any respect without the consent of any Partner. Notwithstanding the foregoing, without the Consent of the Limited Partners, the General Partner may not amend this Agreement: (a) to enlarge the obligation of any Partner to make contributions to the capital of the Partnership, as provided for in Article IV above; (b) to modify the Limited Partners’ rights to allocations and distributions set forth herein, except (i) to set forth or amend the designations, rights, powers, duties and preferences of any Additional Units, or reflect the issuance of Additional Units, pursuant to Section 8.3, (ii) to reflect the transfer or redemption of Units, (iii) to amend the designations, rights, powers, duties and preferences of any Units other than Common Units, (iv) to reflect a change that is of an inconsequential nature or does not adversely affect the rights of the Limited Partners hereunder or to cure any ambiguity or correct any provision in this Agreement not inconsistent with law or with other provisions, or (v) as required by law; (c) to amend Sections 2.1, 3.2, 4.3, 6.5, 6.6 or 7.5 or Article VIII; or (d) to amend this sentence. Notwithstanding anything to

    

 

the contrary contained herein, (i) without the written consent of a Limited Partner, this Agreement may not be amended to convert such Limited Partner’s partnership interest in the Partnership to a general partnership interest (or otherwise adversely affect such Limited Partner’s limited liability) and (ii) without the written consent of a Limited Partner holding Common Units, this Agreement may not be amended to materially adversely affect such Limited Partner’s rights to distributions or allocations in respect of such Common Units except in connection with the admission of Additional Partners or unless such amendment affects the Bucksbaum Limited Partners in the same manner on a Unit-for-Unit basis. The immediately preceding sentence of this Section 13.7 may not be amended to modify the approval rights of a Partner without such Partner’s consent.
13.8      Severability. If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid by a court of competent jurisdiction, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it is held invalid by such court, shall not be affected thereby.
13.9      Trust Provision. This Agreement, to the extent executed by the trustee of a trust, is executed by such trustee solely as trustee and not in a separate capacity. Nothing herein contained shall create any liability on, or require the performance of any covenant by any such trustee individually, nor shall anything contained herein subject the individual personal property of any trustee to any liability.
13.10      Pronouns and Headings. As used herein, all pronouns shall include the masculine, feminine and neuter, and all defined terms shall include the singular and plural thereof wherever the context and facts require such construction. The headings, titles and subtitles herein are inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. Any references in this Agreement to “including” shall be deemed to mean “including without limitation.”
13.11      Assurances. Each of the Partners shall hereafter execute and deliver such further instruments and do such further acts and things as may be required or useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms hereof.
13.12      Issuance of Certificates. The General Partner may, in its sole discretion, issue a certificate setting forth the name of any Partner and the number of Units owned by such Partner and, in such event, the General Partner shall establish such rules and regulations relating to issuances and reissuances of certificates upon transfer of Units, the division of Units among multiple certificates and the loss, theft, destruction or mutilation of certificates as the General Partner reasonably deems appropriate. Notwithstanding anything to the contrary contained herein or in any certificate, (a) no certificate issued by the Partnership shall constitute a certificated security under Article 8 of the Uniform Commercial Code or an instrument, (b) the issuance or existence of certificates shall not create any rights on the part of the holders of such certificates or other Persons that would not exist if such certificates had not been issued, (c) the Partnership shall have no liability to holders of certificates or other persons that it would not have had if it had not issued such certificates, and (d) only those Persons shown on the Partnership’s book and records as the registered owner of any particular Unit shall have any rights as a Limited Partner or otherwise with respect thereto.

    

 

13.13      November 20, 2003 Division of Common Units. On November 20, 2003, (a) GGP, Inc., the entity to which the General Partner is successor, effected a three for one split of its common stock (the “Stock Split”) and the Partnership effected a three for one split of the Common Units, such that each Common Unit then outstanding was deemed to be three Common Units, so that, as of such time, each holder of record of Common Units, automatically and without further action, was deemed to be the holder of two additional Common Units for each Common Unit held immediately prior to such time (the “Unit Split”) and (b) there was no adjustment of the Conversion Factor on account of the Stock Split; provided, however, that for Common Units issued and outstanding on or prior to November 20, 2003 (the “Legacy Units”), (x) if the rights under any Specified Rights Agreement (as defined below) are exercised as to one or more Legacy Units, then, effective immediately prior to the redemption or purchase of such Legacy Units pursuant to such Specified Rights Agreement, the Unit Split shall be completely reversed as to such Legacy Units and each such Legacy Unit, automatically and without further action, shall be deemed to be one-third of a Common Unit and (y) if such Legacy Units are transferred to the General Partner (rather than the Partnership) pursuant to such Specified Rights Agreement, then, effective immediately following such transfer, the Unit Split shall be completely reinstated as to such Legacy Units and each such Legacy Unit, automatically and without further action, shall be deemed to be three Common Units. For purposes hereof, a “Specified Rights Agreement” is any Rights Agreement pursuant to which the “Conversion Factor” (or the equivalent) referred to therein is adjusted as the result of the Stock Split and such adjustment is not completely reversed as a result of the Unit Split. The purpose of the proviso contained in the first sentence of this paragraph is to ensure that there are not duplicative adjustments with respect to any Legacy Units on account of the Stock Split, and this Section 13.3 shall be interpreted and applied consistently therewith.
13.14      Performance by the Public REIT. The Public REIT shall cause the General Partner and the Affiliates of the General Partner to fulfill their obligations, as applicable, under this Agreement.




    

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed as of the date and year first above written.
GENERAL PARTNER :

GGP REAL ESTATE HOLDING II, INC.,
a Delaware corporation


By:      /s/ Michael B. McVickar    
Michael B. McVickar
Authorized Signatory




SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

 


Solely for the limited purpose set forth in Sections 4.3, 4.4, 5.4, 5.10, 6.1, 6.5, 8.1 and 13.14.
PUBLIC REIT :

GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation

By:     /s/ Stacie L. Herron        
    Stacie L. Herron
Authorized Signatory




SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

 

SCHEDULE A
1. Definitions . As used in this Schedule A, the following terms shall have the meanings set forth below, unless the context otherwise requires:
“ Distribution Period ” shall mean the quarterly period that is then the dividend period with respect to the Common Stock or, if no such dividend period is established, the calendar quarter shall be the Dividend Period; provided that (a) the initial distribution period shall commence on July 10, 2002 and end on and include September 30, 2002 and (b) the distribution period in which the final liquidation payment is made pursuant to Section 7.2 of the Fourth Amended and Restated Agreement of Limited Partnership shall commence on the first day following the immediately preceding Distribution Period and end on the date of such final liquidation payment.
“ Distribution Payment Date ” shall mean, with respect to any Distribution Period, the payment date for the distribution declared by the Public REIT on its shares of Common Stock for such Distribution Period or, if no such distribution payment date is established, the last business day of such Distribution Period.
“ Fair Market Value ” shall mean the average of the daily Closing Price during the five consecutive Trading Days selected by the General Partner commencing not more than 20 Trading Days before, and ending not later than, the day in question with respect to the issuance or distribution requiring such computation.
“ Fifteenth Anniversary Date ” shall mean July 10, 2017.
1.      Designation and Number; Etc . The Series B Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Fourth Amended and Restated Agreement of Limited Partnership to the extent applicable). The authorized number of Series B Preferred Units shall be 1,426,392.6660. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule A and any other provision of the Fourth Amended and Restated Agreement of Limited Partnership, the provisions of this Schedule A shall control. For purposes of this Amendment, the rights of the Series B Preferred Units shall be construed to include their rights under the Redemption Rights Agreement (Common Units) and Redemption Rights Agreement (Series B Preferred Units).
2.      Rank . The Series B Preferred Units shall, with respect to the payment of distributions and the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, rank as follows:
(a)      senior to all classes or series of Common Units and to all Units the terms of which provide that such Units shall rank junior to such Series B Preferred Units;

    

 

(b)      on a parity with the Series D Preferred Units, the Series E Preferred Units and each other series of Preferred Units issued by the Partnership which does not provide by its express terms that it ranks junior in right of payment to the Series B Preferred Units with respect to payment of distributions or amounts upon liquidation, dissolution or winding-up; and
(c)      junior to any class or series of Preferred Units issued by the Partnership that ranks senior to the Series B Preferred Units in accordance with Section 4 of this Schedule A.
3.      Voting .
(a)      Holders of Series B Preferred Units shall not have any voting rights, except as provided by applicable law and as described below in this Section 4.
(b)      So long as any Series B Preferred Units remain outstanding, the Partnership shall not, without the affirmative vote or consent of the holders of at least a majority of the Series B Preferred Units outstanding at the time, given in person or by proxy, either in writing or at a meeting (such series voting separately as a class), (i) authorize, create, issue or increase the authorized or issued amount of, any class or series of partnership interests in the Partnership ranking prior to the Series B Preferred Units with respect to the payment of distributions or the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership or reclassify any Common Units into such partnership interests, or create, authorize or issue any obligation or security convertible or exchangeable into or evidencing the right to purchase any such partnership interests; or (ii) amend, alter or repeal the provisions of the Partnership Agreement, whether by merger or consolidation or otherwise (an “ Event ”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series B Preferred Units or the holders thereof. Notwithstanding anything to the contrary contained herein, none of the following shall be deemed to materially and adversely affect any such right, preference, privilege or voting power or otherwise require the vote or consent of the holders of the Series B Preferred Units: (X) the occurrence of any Event so long as either (1) the Partnership is the surviving entity, such entity is the principal direct subsidiary of a publicly traded REIT whose common equity is traded on the New York Stock Exchange and the Series B Preferred Units remain outstanding with the terms thereof materially unchanged or (2) interests in an entity having substantially the same rights and terms as the Series B Preferred Units are substituted for the Series B Preferred Units and such entity is the principal direct subsidiary of a publicly traded REIT whose common equity is traded on the New York Stock Exchange, (Y) any increase in the amount of the authorized Preferred Units or Common Units or the creation or issuance of any other series or class of Preferred Units or Common Units or any increase in the amount of Common Units or any other series of Preferred Units, in each case ranking on a parity with or junior to the Series B Preferred Units with respect to payment of distributions and the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership and (Z) the dissolution, liquidation and/or winding-up of the Partnership.

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The foregoing voting provisions shall not apply if at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series B Preferred Units shall have been converted or redeemed.
For purposes of the foregoing provisions of this Section 4, each Series B Preferred Unit shall have one (1) vote. Except as otherwise required by applicable law or as set forth herein, the Series B Preferred Units shall not have any voting rights or powers and the consent of the holders thereof shall not be required for the taking of any action.
4.      Distributions .
(a)      With respect to each Distribution Period and subject to the rights of the holders of Preferred Units ranking senior to or on parity with the Series B Preferred Units, the holders of Series B Preferred Units shall be entitled to receive, when, as and if declared by the General Partner, out of assets of the Partnership legally available for the payment of distributions, quarterly cumulative cash distributions in an amount per Series B Preferred Unit equal to the greater of (i) $1.0625 and (ii) the amount of the regular quarterly cash distribution for such Distribution Period upon the number of Common Units (or portion thereof) into which such Series B Preferred Unit is then convertible in accordance with Section 7 of this Schedule A (but, with respect to any Distribution Period ending after the Fifteenth Anniversary Date, no amount shall be paid in respect of clause (ii) of this paragraph in respect of the portion of such Distribution Period occurring after the Fifteenth Anniversary Date). Notwithstanding anything to the contrary contained herein, the amount of distributions described under each of clause (i) and (ii) of this paragraph for the initial Distribution Period, or any other period shorter than a full Distribution Period, shall be prorated and computed on the basis of twelve 30-day months and a 360-day year. The distributions upon the Series B Preferred Units for each Distribution Period shall, if and to the extent declared or authorized by the General Partner on behalf of the Partnership, be paid in arrears (without interest or other amount) on the Distribution Payment Date with respect thereto, and, if not paid on such date, shall accumulate, whether or not there are funds legally available for the payment thereof and whether or not such distributions are declared or authorized. The record date for distributions upon the Series B Preferred Units for any Distribution Period shall be the same as the record date for the distributions upon the Common Units for such Distribution Period (or, if no such record is set for the Common Units, the fifteenth day of the calendar month in which the applicable Distribution Payment Date falls). Accumulated and unpaid distributions for any past Distribution Periods to be declared and paid at any time, without reference to any Distribution Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the General Partner. Any distribution payment made upon the Series B Preferred Units shall first be credited against the earliest accumulated but unpaid distributions due with respect to such Units which remains payable. No interest, or sum of money in lieu of interest, shall be owing or payable in respect of any distribution

A-3

 

payment or payments on the Series B Preferred Units, whether or not in arrears, including, without limitation, any distribution payment that is deferred pursuant to Section 5(g) of this Schedule A.
(b)      No distribution on the Series B Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as the terms and provisions of any agreement of the Partnership, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. Notwithstanding the foregoing, distributions on the Series B Preferred Units shall accumulate whether or not any of the foregoing restrictions exist.
(c)      Except as provided in Section 5(d) of this Schedule A, so long as any Series B Preferred Units are outstanding, (i) no distributions (other than in Common Units or other Units ranking junior to the Series B Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership) shall be declared or paid or set apart for payment upon the Common Units or any other class or series of partnership interests in the Partnership or Units ranking, as to payment of distributions or amounts distributable upon liquidation, dissolution or winding-up of the Partnership, on a parity with or junior to the Series B Preferred Units, for any period and (ii) no Common Units or other Units ranking junior to or on a parity with the Series B Preferred Units as to payment of distributions or amounts upon liquidation, dissolution or winding-up of the Partnership, shall be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange for other Units ranking junior to the Series B Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership or by redemptions pursuant to Rights Agreements) unless, in the case of either clause (i) or (ii), full cumulative distributions have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series B Preferred Units for all Distribution Periods ending on or prior to the distribution payment date for the Common Units or such other class or series of Unit or the date of such redemption, purchase or other acquisition.
(d)      When distributions are not paid in full (or a sum sufficient for such full payment is not set apart for such payment) upon the Series B Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series B Preferred Units, all distributions declared upon the Series B Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series B Preferred Units shall be declared pro rata so that the amount of distributions declared per Unit of Series B Preferred Units and such other partnership interests in the Partnership or Units shall in all cases bear to each other the same ratio that accrued distributions per Unit on the Series B Preferred Units and such other partnership interests in the Partnership or Units (which shall not include any

A-4

 

accumulation in respect of unpaid distributions for prior distribution periods if such Units do not have cumulative distributions) bear to each other.
(e)      Holders of Series B Preferred Units shall not be entitled to any distributions, whether payable in cash, property or Units, in excess of the cumulative distributions described in Section 5(a) above.
(f)      Distributions with respect to the Series B Preferred Units are intended to qualify as permitted distributions of cash that are not treated as a disguised sale within the meaning of Treasury Regulation §1.707-4 and the provisions of this Schedule A shall be construed and applied consistently with such Treasury Regulations.
(g)      Notwithstanding anything to the contrary contained herein (but subject to the last sentence of Section 5(a) hereof), if the distributions with respect to the Series B Preferred Units made on or prior to the second anniversary of the issuance of the Series B Preferred Units would result in any holder of Series B Preferred Units receiving, an annual return on such holder’s “unreturned capital” (as defined for purposes of Treasury Regulation Section 1.707-4(a)) for a fiscal year (treating the fiscal year in which such second anniversary occurs as ending on such date) in excess of the Safe Harbor Rate (as defined below), then the distributions to such holder in excess of such Safe Harbor Rate will be deferred, will cumulate and will be paid, if and to the extent declared or authorized by the General Partner on behalf of the Partnership and subject, to the provisions of Section 5(b) hereof, on the earlier to occur of (i) the disposition of the Series B Preferred Units to which such deferred distributions relate in a transaction in which the disposing holder recognizes taxable gain thereon or (ii) the first distribution payment date with respect to the Series B Preferred Units following the second anniversary of the issuance of the Series B Preferred Units. For purposes of the foregoing, the “Safe Harbor Rate” shall equal 150% of the highest applicable federal rate, based on annual compounding, in effect for purposes of Section 1274(d) of the Code at any time between the date of the issuance of the Series B Preferred Units and the date on which the relevant distribution payment is made. Notwithstanding anything to the contrary contained herein, any distributions that are deferred under this Section 5(g) shall be deemed to have been paid in full for purposes of Sections 5(c) and (d) of this Schedule A until the end of the Distribution Period during which they are to be paid as provided above.
(h)      For any quarterly period, any amounts paid with respect to the Series B Preferred Units in excess of the amount that would have been paid with respect to such Units for such period had they been converted into Common Units in accordance with the terms of Section 7 of this Schedule A are intended to constitute guaranteed payments within the meaning of Section 707(c) of the Code and shall not be treated as distributions for purposes of allocating Net Income and Net Loss or otherwise maintaining Capital Accounts.
5.      Liquidation Preference .

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(a)      In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, before any payment or distribution of the assets of the Partnership (whether capital or surplus) shall be made to or set apart for the holders of Common Units or any other partnership interests in the Partnership or Units ranking junior to the Series B Preferred Units as to the distribution of assets upon the liquidation, dissolution or winding-up of the Partnership, the holders of the Series B Preferred Units shall, with respect to each such Unit, be entitled to receive, out of the assets of the Partnership available for distribution to Partners after payment or provision for payment of all debts and other liabilities of the Partnership, an amount equal to the greater of (i) $50.00, plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution and (ii) the amount that a holder of such Series B Preferred Unit would have received upon final distribution in respect of the number of Common Units into which such Series B Preferred Unit was convertible immediately prior to such date of final distribution (but no amount shall be paid in respect of the foregoing clause (ii) after the Fifteenth Anniversary Date) if, upon any such voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of the Series B Preferred Units are insufficient to pay in full the preferential amount aforesaid on the Series B Preferred Units and liquidating payments on any other Units or partnership interests in the Partnership of any class or series ranking, as to payment of distributions and amounts upon the liquidation, dissolution or winding-up of the Partnership, on a parity with the Series B Preferred Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series B Preferred Units and any such other Units or partnership interests in the Partnership ratably in accordance with the respective amounts that would be payable on such Series B Preferred Units and such other Units or partnership interests in the Partnership if all amounts payable thereon were paid in full. For the purposes of this Section 6, none of (i) a consolidation or merger of the Partnership with or into another entity, (ii) a merger of another entity with or into the Partnership or (iii) a sale, lease or conveyance of all or substantially all of the Partnership’s assets, properties or business shall be deemed to be a liquidation, dissolution or winding-up of the Partnership.
(b)      Written notice of such liquidation, dissolution or winding-up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series B Preferred Units at the respective addresses of such holders as the same shall appear on the transfer records of the Partnership.
(c)      After payment of the full amount of liquidating distributions to which they are entitled as provided in Section 6(a) of this Schedule A, the holders of Series B Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.

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6.      Conversion . Holders of Series B Preferred Units shall have the right to convert all or a portion of such Units into Common Units, as follows:
(a)      A holder of Series B Preferred Units shall have the right, at such holder’s option, at any time (subject to the proviso contained in the immediately succeeding sentence), to convert any whole number of Series B Preferred Units, in whole or in part, into Common Units. Each Series B Preferred Unit shall be convertible into the number of Common Units determined by dividing (i) the $50.00 face amount per Unit, plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the end of the last Distribution Period (but without duplication of the distributions, if any, which the holder of such Series B Preferred Unit is entitled to receive for such last Distribution Period pursuant to the third paragraph of Section 7(b) of this Schedule A or in respect of the Common Units into which such Series B Preferred Unit is converted) by (ii) a conversion price of $16.6667 per Common Unit (equivalent to a conversion rate of three Common Units for each Series B Preferred Unit), subject to adjustment as described in Section 7(c) hereof (the “ Conversion Price ”); provided , however , that the right to convert Series B Preferred Units may not be exercised after the Fifteenth Anniversary Date. No fractional Common Units will be issued upon any conversion of Series B Preferred Units. Instead, the number of Common Units to be issued upon each conversion shall be rounded to the nearest whole number of Common Units.
(b)      To exercise the conversion right, the holder of each Series B Preferred Unit to be converted shall execute and deliver to the General Partner, at the principal office of the Partnership, a written notice (the “Conversion Notice”) indicating that the holder thereof elects to convert such Series B Preferred Unit. Unless the Units issuable on conversion are to be issued in the same name as the name in which such Series B Preferred Unit is registered, each Series B Preferred Unit surrendered for conversion shall be accompanied by instruments of transfer, in form reasonably satisfactory to the Partnership, duly executed by the holder or such holder’s duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Partnership demonstrating that such taxes have been paid).
As promptly as practicable after delivery of the Conversion Notice as aforesaid, the Partnership shall amend the Partnership Agreement to reflect the conversion and the issuance of Common Units issuable upon the conversion of such Series B Preferred Units in accordance with the provisions of this Section 7. In addition, the Partnership shall deliver to the holder at its address as reflected on the records of the Partnership, a copy of such amendment.
A holder of Series B Preferred Units at the close of business on the record date for any Distribution Period shall be entitled to receive the distribution payable on such Units on the corresponding Distribution Payment Date notwithstanding the conversion of such Series B Preferred Units following such record date and prior to such Distribution Payment Date and shall have no right to receive any distribution for such Distribution Period in respect of the Common Units into

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which such Series B Preferred Units were converted. Except as provided herein, the Partnership shall make no payment or allowance for unpaid distributions, whether or not in arrears, on converted Series B Preferred Units or for distributions on the Common Units that are issued upon such conversion.
Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the Conversion Notice is received by the Partnership as aforesaid, and the person or persons in whose name or names any Common Units shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of such Units at such time on such date, and such conversion shall be at the Conversion Price in effect at such time and on such date unless the transfer books of the Partnership shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such Units have been surrendered and such notice received by the Partnership.
(c)      The Conversion Price shall be adjusted from time to time as follows:
(i)      If the Partnership shall, after the date on which the Series B Preferred Units are first issued (the “ Issue Date ”), (A) pay or make a distribution to holders of its partnership interests or Units in Common Units, (B) subdivide its outstanding Common Units into a greater number of Units or distribute Common Units to the holders thereof, (C) combine its outstanding Common Units into a smaller number of Units or (D) issue any partnership interests or Units by reclassification of its Common Units, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of holders entitled to receive such distribution or at the opening of business on the day next following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any Series B Preferred Unit thereafter surrendered for conversion shall be entitled to receive the number of Common Units or other partnership interests or securities that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such Series B Preferred Unit been converted immediately prior to the record date in the case of a distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subsection (i) shall become effective immediately after the opening of business on the day next following the record date (except as provided in subsection (g) below) in the case of a distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification.

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(ii)      If the Partnership shall issue after the Issue Date rights, options or warrants to all holders of Common Units entitling them to subscribe for or purchase Common Units (or securities convertible into or exchangeable for Common Units) at a price per Unit less than the Fair Market Value per Common Unit on the record date for the determination of holders of Common Units entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the opening of business on the day following the date fixed for such determination by (II) a fraction, the numerator of which shall be the sum of (A) the number of Common Units outstanding at the close of business on the date fixed for such determination and (B) the number of Common Units that the aggregate proceeds to the Partnership from the exercise of such rights, options or warrants for Common Units would purchase at such Fair Market Value, and the denominator of which shall be the sum of (A) the number of Common Units outstanding at the close of business on the date fixed for such determination and (B) the number of additional Common Units offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in subsection (g) below). In determining whether any-rights, options or warrants entitle the holders of Common Units to subscribe for or purchase Common Units at less than the Fair Market Value, there shall be taken into account any consideration received by the Partnership upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of the General Partner.
(iii)      If the Partnership shall distribute after the Issue Date to all holders of Common Units any other securities or evidences of its indebtedness or assets (excluding those rights, options and warrants referred to in and treated under subsection (ii) above, and excluding distributions paid exclusively in cash) (any of the foregoing being hereinafter in this subsection (iii) called the “Securities”), then in each case the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of holders of Common Units entitled to receive such distribution by (II) a fraction, the numerator of which shall be the Fair Market Value per Common Unit on the record date mentioned below less the then fair market value (as determined in good faith by the Board of the General Partner) of the portion of the Securities so distributed applicable to the Common Unit, and the denominator of which shall be the Fair Market Value per

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Common Unit on the record date mentioned below. Such adjustment shall become effective immediately at the opening of business on the business day next following (except as provided in subsection (g) below) the record date for the determination of holders of Common Units entitled to receive such distribution. For the purposes of this subsection (iii), a distribution in the form of a Security, which is distributed not only to the holders of the Common Units on the date fixed for the determination of holders of Common Units entitled to such distribution of such Security, but also is distributed with each Common Unit delivered to a person converting a Series B Preferred Unit after such determination date, shall not require an adjustment of the Conversion Price pursuant to this subsection (iii); provided that on the date, if any, on which a person converting a Series B Preferred Unit would no longer be entitled to receive such Security with a Common Unit, a distribution of such Securities shall be deemed to have occurred, and the Conversion Price shall be adjusted as provided in this subsection (iii) (and such day shall be deemed to be “the date fixed for the determination of the holders of Common Units entitled to receive such distribution” and “the record date” within the meaning of the two preceding sentences).
(iv)      No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided , however , that any adjustments that by reason of this subsection (iv) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided , further , that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this subsection (iv)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Common Units. Notwithstanding any other provisions of this Section 7, the Partnership shall not be required to make any adjustment to the Conversion Price for the issuance of any Common Units pursuant to any plan providing for the reinvestment of distributions or interest payable on securities of the Partnership and the investment of additional optional amounts in Common Units under such plan. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a Unit (with .05 of a Unit being rounded upward), as the case may be. Anything in this subsection (c) to the contrary notwithstanding, the Partnership shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this subsection (c), as it in its discretion shall determine to be advisable in order that any Unit distributions, subdivision of Units, reclassification or combination of Units, distribution of rights, options or warrants to purchase Units or securities, or a distribution consisting of other assets (other than cash distributions) hereafter made

A-10

 

by the Partnership to its holders of Units shall not be taxable but any such adjustment shall not adversely affect the value of the Series B Preferred Units.
(d)      If the Partnership shall be a party to any transaction (including, without limitation, a merger, consolidation, self tender offer for all or substantially all of the Common Units, sale of all or substantially all of the Partnership’s assets or recapitalization of the Common Units and excluding any transaction as to which subsection (c)(i) of this Section 7 applies) (each of the foregoing being referred to herein as a “ Transaction ”), in each case as a result of which Common Units shall be converted into the right to receive other partnership interests, shares, stock, securities or other property (including cash or any combination thereof), each Series B Preferred Unit which is not converted into the right to receive other partnership interests, shares, stock, securities or other property in connection with such Transaction shall thereafter be convertible into the kind and amount of shares, stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of Common Units into which one Series B Preferred Unit was convertible immediately prior to such Transaction, assuming such holder of Common Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “ Constituent Person ”), or an affiliate of a Constituent Person. The Partnership shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this subsection (d), and it shall not consent or agree to the occurrence of any Transaction until the Partnership has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series B Preferred Units that will contain provisions enabling the holders of Series B Preferred Units that remain outstanding after such Transaction to convert into the consideration received by holders of Common Units at the Conversion Price in effect immediately prior to such Transaction (with the holder having the option to elect the type of consideration if a choice was offered in the Transaction). The provisions of this subsection (d) shall similarly apply to successive Transactions.
(e)      If:
(i)      the Partnership shall declare a distribution on the Common Units (other than a cash distribution) or there shall be a reclassification, subdivision or combination of Common Units; or
(ii)      the Partnership shall authorize the granting to the holders of the Common Units of rights, options or warrants to subscribe for or purchase any Units of any class or any other rights, options or warrants; or
(iii)      there shall be any reclassification of the Common Units or any consolidation or merger to which the Partnership is a party and for which approval of any partners of the Partnership is required, involving the conversion or exchange

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of Common Units into securities or other property, or a self tender offer by the Partnership for all or substantially all of the Common Units, or the sale or transfer of all or substantially all of the assets of the Partnership as an entirety; or
(iv)      there shall occur the voluntary or involuntary liquidation, dissolution or winding-up of the Partnership;
then the Partnership shall cause to be mailed to the holders of the Series B Preferred Units at their addresses as shown on the records of the Partnership, as promptly as possible a notice stating (A) the date on which a record is to be taken for the purpose of such distribution of rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Units of record to be entitled to such distribution of rights, options or warrants are to be determined or (B) the date on which such reclassification, subdivision, combination, consolidation, merger, sale, transfer, liquidation, dissolution or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Units of record shall be entitled to exchange their Common Units for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding-up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.
(f)      Whenever the Conversion Price is adjusted as herein provided, the Partnership shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to the holder of each Series B Preferred Unit at such holder’s last address as shown on the records of the Partnership.
(g)      In any case in which subsection (c) of this Section 7 provides that an adjustment shall become effective on the date next following the record date for an event, the Partnership may defer until the occurrence of such event issuing to the holder of any Series B Preferred Unit converted after such record date and before the occurrence of such event the additional Common Units issuable upon such conversion by reason of the adjustment required by such event over and above the Common Units issuable upon such conversion before giving effect to such adjustment.
(h)      For purposes of this Section 7, the number of Common Units at any time outstanding shall not include any Common Units then owned or held by or for the account of the Partnership. The Partnership shall not make any distribution on Common Units held in the treasury of the Partnership.
(i)      If any action or transaction would require adjustment of the Conversion Price pursuant to more than one subsection of this Section 7, only one adjustment shall be made, and such adjustment shall be the amount of adjustment that has the highest absolute value.

A-12

 

(j)      If the Partnership shall take any action affecting the Common Units, other than action described in this Section 7, that in the reasonable judgment of the General Partner would materially and adversely affect the conversion rights of the holders of the Series B Preferred Units, the Conversion Price for the Series B Preferred Units may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the General Partner determines to be equitable in the circumstances.
(k)      The Partnership covenants that Common Units issued upon conversion of the Series B Preferred Units shall be validly issued, fully paid and nonassessable and the holder thereof shall be entitled to rights of a holder of Common Units specified in the Partnership Agreement. Prior to the delivery of any securities that the Partnership shall be obligated to deliver upon conversion of the Series B Preferred Units, the Partnership shall endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof, by any governmental authority.
(l)      The Partnership will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Common Units or other securities or property on conversion of the Series B Preferred Units pursuant hereto; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of Common Units or other securities or property in a name other than that of the holder of the Series B Preferred Units to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Partnership the amount of any such tax or established, to the reasonable satisfaction of the Partnership, that such tax has been paid.
(m)      Notwithstanding anything to the contrary contained herein, the adjustment provisions contained in this Section 7 shall be applied so that there is no duplication of adjustments made pursuant to any other document.




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SCHEDULE B
1.      Definitions . As used in this Schedule B, the following terms shall have the meanings set forth below, unless the context otherwise requires:
“ Common Unit Value ” shall mean, with respect to any trading day, the trading price of a share of Common Stock (calculated based on the average of the intra-day high and low and subject to adjustment in the event that the exchange ratio between Common Units and shares of Common Stock is not one-to-one or other adjustments if the kind or amount of securities into which Common Units can be converted or exchanged (as provided in the Redemption Rights Agreement, dated the date hereof) changes after the date hereof).
“ Distribution Payment Date ” shall mean, with respect to any Distribution Period, the payment date for the distribution declared by the General Partner on its Common Units for such Distribution Period or, if no such distribution payment date is established, the last business day of the first full month following such Distribution Period.
“ Distribution Period ” shall mean the quarterly period that is then the distribution period with respect to the Common Units or, if no such distribution period is established, the calendar quarter shall be the Distribution Period; provided that (a) the initial Distribution Period shall commence on December 11, 2003 and end on and include December 31, 2003 and (b) the Distribution Period in which the final liquidation payment is made pursuant to Section 7.2 of the Fourth Amended and Restated Agreement of Limited Partnership shall commence on the first day following the immediately preceding Distribution Period and end on the date of such final liquidation payment.
“ Fair Market Value ” shall mean the average of the daily Closing Price during the ten consecutive Trading Days ending on the business day immediately preceding the day in question with respect to the issuance or distribution requiring such computation (subject to appropriate adjustment in the event that the exchange ratio between Common Units and shares of Common Stock is not one-to-one).
“ Relevant Distribution Periods ” shall mean (i) each of the three (3) consecutive Distribution Periods the last of which ends during the 90-day period referred to in the last paragraph of Section 7(b) and (ii) the next immediately following Distribution Period after the third Distribution Period described in clause (i) above.
“ Tenth Anniversary Date ” shall mean December 11, 2013.
2.      Designation and Number; Etc . The Series D Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in


 

addition to the rights, preferences, limitations and qualifications contained in the Fourth Amended and Restated Agreement of Limited Partnership to the extent applicable). The authorized number of Series D Preferred Units shall be 532,749.6574. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule B and any other provision of the Fourth Amended and Restated Agreement of Limited Partnership, the provisions of this Schedule B shall control.
3.      Rank . The Series D Preferred Units shall, with respect to the payment of distributions and the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, rank as follows:
(c)      senior to all classes or series of Common Units and to all Units the terms of which provide that such Units shall rank junior to the Series D Preferred Units;
(d)      on a parity with the Series B Preferred Units, Series E Preferred Units and each other series of Preferred Units issued by the Partnership which does not provide by its express terms that it ranks junior or senior in right of payments to the Series D Preferred Units with respect to payment of distributions or amounts upon liquidation, dissolution or winding-up; and
(e)      junior to any class or series of Preferred Units issued by the Partnership that ranks senior to the Series D Preferred Units and has been approved in accordance with Section 4 of this Schedule B.
4.      Voting .
(i)      Holders of Series D Preferred Units shall not have any voting rights, except as required by applicable law or as described below in this Section 4.
(j)      So long as any Series D Preferred Units remain outstanding, the Partnership shall not, without the affirmative vote or consent of the holders of at least a majority of the Series D Preferred Units outstanding at the time, given in person or by proxy, either in voting or at a meeting (such series voting separately as a class), (i) authorize, create, issue or increase the authorized or issued amount of, any class or series of partnership interests in the Partnership ranking senior to the Series B Preferred Units with respect to the payment of distributions or the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership or reclassify any Common Units into such partnership interests, or create, authorize or issue any obligation or security convertible or exchangeable into or evidencing the right to purchase any such partnership interests; or (ii) amend, alter or repeal the provisions of the Partnership Agreement, whether by merger or consolidation or otherwise (an “Event”), so as to negate the provisions of clause (i) or (ii) of this paragraph or so as to materially and adversely affect any special right, preference, privilege or voting power of the Series D Preferred Units or the holders thereof that is contained in this Schedule B. Notwithstanding anything to the contrary contained herein, each of the following shall be deemed not to (i) materially and adversely affect any such special right, preference, privilege or voting

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power or (ii) otherwise require the vote or consent of the holders of the Series D Preferred Units: (X) the occurrence of any merger, consolidation, entity conversion, unit exchange, recapitalization of the Common Units or other business combination or reorganization, so long as either (1) the Partnership is the surviving entity and the Series D Preferred Units remain outstanding with the terms thereof materially unchanged or (2) if the Partnership is not the surviving entity in such transaction, interests in an entity having substantially the same rights and terms with respect to rights to distributions, voting, redemption and conversion as the Series D Preferred Units are exchanged or substituted for the Series D Preferred Units without any income, gain or loss expected to be recognized by the holder upon the exchange or substitution for federal income tax purposes (and with the terms of the Common Units or such other securities for which the Series D Preferred Units (or the substitute or exchanged security therefor) are convertible or redeemable materially the same with respect to rights to distributions, voting and redemption), (Y) any increase in the amount of the authorized Preferred Units or Common Units or the creation or issuance of any other series or class of Preferred Units or Common Units or any increase in the amount of Common Units or any other series of Preferred Units, in each case so long as such Units rank on a parity with or junior to the Series D Preferred Units with respect to payment of distributions and the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership and (Z) the dissolution, liquidation and/or winding up of the Partnership.
The foregoing voting provisions shall not apply if at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series D Preferred Units shall have been converted or redeemed.
For purposes of the foregoing provisions of this Section 4, each Series D Preferred Unit shall have one (1) vote.
Except as otherwise required by applicable law or as set forth herein, the Series D Preferred Units shall not have any voting right or powers and the consent of the holders thereof shall not be required for the taking of any action.
5.      Distributions .
(d)      With respect to each Distribution Period and subject to the rights of the holders of Preferred Units ranking senior to or on parity with the Series D Preferred Units, the holders of Series D Preferred Units shall be entitled to receive, when, as and if declared by the General Partner, out of assets of the Partnership legally available for the payment of distributions, quarterly cumulative cash distributions in an amount per Series D Preferred Unit equal to the greater of (i) $0.8125 (the “Base Quarterly Distribution”) and (ii) the amount of the regular quarterly cash distribution for such Distribution Period upon the number of Common Units (or portion thereof) into which such Series D Preferred Unit is then convertible in accordance with Section 7 of this Schedule B. Notwithstanding anything to the contrary contained herein, the amount of distributions described under each of clause

B-3

 

(i) and (ii) of this paragraph for the initial Distribution Period, or any other Period shorter than a full Distribution Period, shall be prorated and computed on the basis of twelve 30-day months and a 360-day year. Such distributions shall with respect to each Series D Preferred Unit, accrue from its issue date, whether or not in, or with respect to, any Distribution Period or Periods (A) the distributions described above are declared, (B) the Partnership is contractually prohibited from paying such distributions or (C) there shall be assets of the Partners legally available for the payment of such distributions. The distributions upon the Series D Preferred Units for each Distribution Period shall, if and to the extent declared or authorized by the General Partner on behalf of the Partnership, be paid in arrears (without interest or other amount) on the Distribution Payment Date with respect thereto, and, if not paid on such date, shall accumulate, whether or not in, or with respect to, any Distribution Period or Periods (X) the distributions are declared, (Y) the Partnership is contractually prohibited from paying such distributions or (Z) there shall be assets of the Partnership legally available for the payment of such distributions. The record date for distributions upon the Series D Preferred Units for any Distribution Period shall be the same as the record date, for the distributions upon the Common Units for such Distribution Period (or, if no such record date is set for the Common Units, the fifteenth day of the calendar month in which the applicable Distribution Payment Date falls if prior to such Distribution Payment Date otherwise, the fifteenth day of the immediately preceding calendar month). Accumulated and unpaid distributions for any past Distribution Periods may be declared and paid at any time, without reference to any Distribution Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the General Partner. Any distribution payment made upon the Series D Preferred Units shall first be credited against the earliest accrued but unpaid distributions due with respect to such Units which remains payable. No interest, or sum of money in lieu of interest, shall be owing or payable in respect of any distribution payment or payments on the Series D Preferred Units, whether or not in arrears.
(e)      No distribution on the Series D Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as the terms and provisions of any bona fide agreement of the Partnership, including any agreement relating to bona fide indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, of a default thereunder, or if such declaration or payment shall be restricted or prohibited by law (and such failure to pay distributions on the Series D Preferred Units shall prohibit other distributions by the Partnership as described in Sections 5(c) or (d) of this Schedule B). Notwithstanding the foregoing, distributions on the Series D Preferred Units shall accumulate as provided herein whether or not any of the foregoing restrictions exist.
(f)      Except as provided in Section 5(d) of this Schedule B, so long as any Series D Preferred Units are outstanding, (i) no distributions (other than in Common Units or other Units ranking junior to the Series D Preferred Units as to payment of distributions and amounts upon liquidation, dissolution

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or winding-up of the Partnership) shall be declared or paid or set apart for payment upon the Common Units or any other class or series of partnership interests in the Partnership or Units ranking, as to payment of distributions or amounts distributable upon liquidation, dissolution or winding-up of the Partnership, on a parity with or junior to the Series D Preferred Units, for any period and (ii) no Common Units or other Units ranking junior to, or on a parity with the Series D Preferred Units as to payment of distributions or amounts upon liquidation, dissolution or winding-up of the Partnership shall be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange for other Units ranking junior to the Series D Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership or by redemptions pursuant to Rights Agreements) unless, in the case of either clause (i) or (ii), full cumulative distributions have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series D Preferred Units for all Distribution Periods ending on or prior to the distribution payment date for the Common Units or such other class or series of Unit or the date of such redemption, purchase or other acquisition.
(g)      When distributions are not paid in full (or a sum sufficient for such full payment is not set apart for such payment) upon the Series D Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series D Preferred Units, all distributions declared upon the Series D Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series D Preferred Units shall be declared pro rata so that the amount of distributions declared per Unit of Series D Preferred Units and such other partnership interests in the Partnership or Units shall in all cases bear to each other the same ratio that accrued and unpaid distributions per Unit on the Series D Preferred Units and such other partnership interests in the Partnership or Units (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such Units do not have cumulative distributions) bear to each other.
(h)      Holders of Series D Preferred Units shall not be entitled to any distributions, whether payable in cash, property or Units, in excess of the cumulative distributions described in Section 5(a) above.
(i)      For any quarterly period, any amounts paid with respect to the Series D Preferred Units in excess of the amount that would have been paid with respect to such Units for such period had they been converted into Common Units in accordance with the terms of Section 7 of this Schedule B are intended to constitute guaranteed payments within the meaning of Section 707(c) of the Code and shall not be treated as distributions for purposes of allocating Net Income and Net Loss or otherwise maintaining Capital Accounts.
6.      Liquidation Preference .

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(n)      In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, before any payment or distribution of the assets of the Partnership (whether capital or surplus) shall be made to or set apart for the holders of Common Units or any other partnership interests in the Partnership or Units ranking junior to the Series D Preferred Units as to the distribution of assets upon the liquidation, dissolution or winding-up of the Partnership, the holders of the Series D Preferred Units shall, with respect to each such Unit, be entitled to receive, out of the assets of the Partnership available for distribution to Partners after payment or provision for payment of all debts and other liabilities of the Partnership and subject to the rights of the holders of any series of Preferred Units ranking senior to or on parity with the Series D Preferred Units with respect to payment of amounts upon liquidation, dissolution or winding-up of the Partnership, an amount equal to $50, plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution (including all accumulated and unpaid distributions). If upon any such voluntary or involuntary dissolution or winding-up of the Partnership, the assets of the Partnership, or proceeds thereof distributable among the holders of the Series D Preferred Units are insufficient to pay in full the preferential amount aforesaid on the Series D Preferred Units and liquidating payment on any other Units or partnership interests in the Partnership of any class or series ranking as to payment of distributions and amounts upon the liquidation, dissolution or winding-up of the Partnership, on a parity with the Series D Preferred Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series D Preferred Units and any such other Units or partnership interests in the Partnership ratably in accordance with the respective amounts that would be payable on such Series D Preferred Units and such other Units or partnership interests in the Partnership if all amounts payable thereon were paid in full. For the purposes of this Section 6, none of (i) a consolidation or merger of the Partnership with or into another entity, (ii) a merger of another entity with or into the Partnership or (iii) a sale, lease or conveyance of all or substantially all of the Partnership’s assets, properties or business shall be deemed to be a liquidation, dissolution or winding-up of the Partnership.
(o)      Written notice of such liquidation, dissolution or winding-up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series D Preferred Units at the respective addresses of such holders as the same shall appear on the transfer records of the Partnership.
(p)      After payment of the full amount of liquidating distributions to which they are entitled as provided in Section 6(a) of this Schedule B, the holders of Series D Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.
7.      Conversion . Holders of Series D Preferred Units shall have the right to convert all or a portion of such Units into Common Units, as follows:

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(a)      A holder of Series D Preferred Units shall have the right at such holder’s option, at any time, to convert any whole number of Series D Preferred Units into fully paid and non-assessable Common Units; provided, however, that the conversion right may not be exercised at any one time by a holder of Series D Preferred Units with respect to less than 1,000 Series D Preferred Units (or all the Series D Preferred Units then owned by such holder if such holder owns less than 1,000 Series D Preferred Units). Each Series D Preferred Unit shall be convertible into the number of Common Units determined by dividing (i) the $50 base liquidation preference per Series D Preferred Unit plus, an amount equal to all accumulated and unpaid distributions (whether or not earned or declared) with respect thereto by (ii) a conversion price of $33.151875 per Common Unit (equivalent to an initial conversion rate of 1.508210 Common Units for each Series D Preferred Unit), subject to adjustment as described in Section 7(c) hereof (the “Conversion Price”).
(b)      To exercise the conversion right, the holder of each Series D Preferred Unit to be converted shall execute and deliver to the General Partner, at the principal office of the Partnership, a written notice (the “Conversion Notice”) indicating that the holder thereof elects to convert such Series D Preferred Unit and containing representations and warranties of such holder that (i) such holder has good and marketable title to such Series D Preferred Unit, free and clear of all liens, claims and encumbrances, (ii) such holder is an accredited investor as defined in Regulation D under the Securities Act of 1933, as amended, and has such knowledge and experience in financial and business matters such that such holder is capable of evaluating the merits and risks of receiving and owning the Common Units that may be issued to it in exchange for such Series D Preferred Unit, (iii) such holder is able to bear the economic risk of such ownership and (iv) such Common Units to be acquired by such holder pursuant to this Agreement would be acquired by such holder for its own account, for investment purposes only and not with a view to, and with no present intention of, selling or distributing the same in violation of federal or state securities laws. Unless the Units issuable on conversion are to be issued in the same name as the name in which such Series D Preferred Unit is registered, each Series D Preferred Unit surrendered for conversion shall be accompanied by instruments of transfer, in form reasonably satisfactory to the Partnership, duly executed by the holder or such holder’s duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Partnership demonstrating that such taxes have been paid).
As promptly as practicable after delivery of the Conversion Notice as aforesaid, the Partnership shall amend the Partnership Agreement to reflect the conversion and the issuance of Common Units issuable upon the conversion of such Series D Preferred Units in accordance with the provisions of this Section 7. In addition, the Partnership shall deliver to the holder at its address as reflected on the records of the Partnership, a copy of such amendment.
A holder of Series D Preferred Units at the close of business on the record date for any Distribution Period shall be entitled to receive the distribution payable on such Units on the

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corresponding Distribution Payment Date notwithstanding the conversion of such Series D Preferred Units following such record date and prior to such Distribution Payment Date and shall have no right to receive any distribution for such Distribution Period in respect of the Common Units into which such Series D Preferred Units were converted. Except as provided herein, the Partnership shall make no payment or allowance for unpaid distributions, whether or not in arrears, on converted Series D Preferred Units or for distributions on the Common Units that are issued upon such conversion in the event that a holder of Series D Preferred Units converts its Series D Preferred Units into Common Units on or prior to the record date for the initial Distribution Period, the distribution for such Distribution Period in respect of such Common Units shall be prorated and computed on the basis of twelve 30-day months and a 360-day year.
Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the Conversion Notice is received by the Partnership as aforesaid, and the person or persons in whose name or names any Common Units shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of such Units at such time on such date and such conversion shall be at the Conversion Price in effect at such time and on such date unless the transfer books of the Partnership shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day, on which such transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such Units have been surrendered and such notice received by the Partnership.
Notwithstanding anything to the contrary contained herein, all holders of Preferred Units shall be deemed to have delivered a Conversion Notice (and therefore exercised their conversion rights effective as of the time specified in the next sentence) as to all Series D Preferred Units if (a) with respect to any period of 90 consecutive calendar days following the Tenth Anniversary Date, the Common Unit Value exceeds on each trading day during such 90-day period the Conversion Price then in effect and (b) the amount of the distribution (as calculated in accordance with Section 5(a)(ii) of this Schedule B) for each of the four (4) Relevant Distribution Periods upon the number of Common Units (or portion thereof) into which a Series D Preferred Unit is then convertible in accordance with this Section 7 exceeds the Base Quarterly Distribution. The forced conversion referred to in this paragraph shall be effective at the close of business on the Distribution Payment Date for the last Relevant Distribution Period.
(c)      The Conversion Price shall be adjusted from time to time as follows:
(i)      If the Partnership shall, after the date on which the Series D Preferred Unit are first issued (the “Issue Date”), (A) pay or make a distribution to holders of its partnership interests or Units in Common Units, (B) subdivide its outstanding Common Units into a greater number of Units or distribute Common

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Units to the holders thereof, (C) combine its outstanding Common Units into a smaller number of Units, or (D) issue any partnership interests or Units by reclassification of its Common Units, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of holders entitled to receive such distribution or at the opening of business on the day next following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any Series D Preferred Unit thereafter surrendered for conversion shall be entitled to receive the number of Common Units or other partnership interests or securities that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such Series Preferred Unit been converted immediately prior to the close of business on the record date in the case of a distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subsection (i) shall become effective immediately after the opening of business on the day next following the record date (except as provided in subsection (g) below) in the case of a distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification.
(ii)      If the Partnership shall issue after the Issue Date rights, options or warrants to all holders of Common Units entitling them to subscribe for or purchase Common Units (or securities convertible into or exchangeable for Common Units) at a price per unit less than the Fair Market Value per Common Unit on the record date for the determination of holders of Common Units entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the close of business on the date fixed for such determination by (II) a fraction, the numerator of which shall be the sum of (A) the number of Common Units outstanding at the close of business on the date fixed for such determination and (B) the number of Common Units that the aggregate proceeds to the Partnership from the exercise of such rights, options or warrants for Common Units would purchase at such Fair Market Value, and the denominator of which shall be the sum of (A) the number of Common Units outstanding at the close of business on the date fixed for such determination and (B) the number of additional Common Units offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in

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subsection (g) below). In determining whether any rights, options or warrants entitle the holders of Common Units to subscribe for or purchase Common Units at less than the Fair Market Value, there shall be taken into account any consideration received by the Partnership upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of the General Partner.
(iii)      If the Partnership shall distribute after the Issue Date to all holders of Common Units any other securities or evidences of its indebtedness or assets (excluding those rights, options, warrants, securities and other assets referred to in and treated under subsection (i) or (ii) above, and excluding distributions paid exclusively in cash) (any of the foregoing being hereinafter in this subsection (iii) called the “Securities”), then in each case the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of holders of Common Units entitled to receive such distribution by (II) a fraction, the numerator of which shall be the Fair Market Value per Common Unit on the record date mentioned below less the then fair market value (as determined in good faith by the Board of the General Partner) of the portion of the Securities so distributed applicable to one Common Unit, and the denominator of which shall be the Fair Market Value per Common Unit on the record date mentioned below. Such adjustment shall become effective immediately at the opening of business on the business day next following (except as provided in subsection (g) below) the record date for the determination of holders of Common Units entitled to receive such distribution. For the purposes of this subsection (iii), a distribution in the form of a Security, which is distributed not only to the holders of the Common Units on the date fixed for the determination of holders of Common Units entitled to such distribution of such Security, but also is distributed with each Common Unit delivered to a person converting a Series D Preferred Unit after such determination date (together with distributions thereon paid to the holders of Common Units prior thereto), shall not require an adjustment of the Conversion Price pursuant to this subsection (iii); provided that on the date, if any, on which a person converting a Series D Preferred Unit would no longer be entitled to receive such Security with a Common Unit, a distribution of such Securities shall be deemed to have occurred, and the Conversion Price shall be adjusted as provided in this subsection (iii) (and such day shall be deemed to be “the date fixed for the determination of the holders of Common Units entitled to receive such distribution” and “the record date” within the meaning of the two preceding sentences).

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(iv)      Notwithstanding the foregoing, no adjustment shall be made pursuant to the preceding clauses (i) and (iii) that would result in an increase in the Conversion Price. No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided, however, that any adjustments that by reason of this subsection (iv) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this subsection (iv)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Common Units. Notwithstanding any other provisions of this Section 7, the Partnership shall not be required to make any adjustment to the Conversion Price for the issuance of (i) any Common Units pursuant to any plan providing for the reinvestment of distributions or interest payable on securities of the Partnership and the investment of additional optional amounts in Common Units under such plan or (ii) any options, rights or Common Units pursuant to or on account of any unit or stock option, unit or stock purchase or any unit or stock-based compensation plan maintained by the Partnership or the General Partner. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a Unit (with .05 of a Unit being rounded upward), as the case may be.
(d)      If the Partnership shall be a party to any transaction (including, without limitation, a merger, consolidation, entity conversion, unit exchange, self tender offer for all or substantially all of the Common Units, sale of all or substantially all of the Partnership’s assets or recapitalization of the Common Units or other business combination or reorganization and excluding any transaction as to which subsection (c)(i) of this Section 7 applies) (each of the foregoing being referred to herein as a “Transaction”), in each case as a result of which Common Units shall be exchanged for or converted into partnership interests, shares, stock, securities or other property (including cash or any combination thereof), each Series D Preferred Unit which is not converted into the right to receive partnership interests, shares, stock, securities or other property in connection with such Transaction (and thus remains outstanding) shall thereafter be convertible into the kind and amount of partnership interests, shares, stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of Common Units into which one Series D Preferred Unit (including all distributions (whether or not earned or declared) accumulated and unpaid thereon) was convertible immediately prior to such Transaction, assuming such holder of Common Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “Constituent Person”), or an affiliate of a Constituent Person. In the event that holders of Common Units have the opportunity

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to elect the form or type of consideration to be received upon consummation of the Transaction, prior to such transaction the General Partner shall give prompt written notice to each Series D Preferred Unit holder of such election, and each Series D Preferred Unit holder shall also have the right to elect by written notice to the General Partner, the form or type of consideration to be received upon conversion of each Series D Preferred Unit held by such holder following consummation of such Transaction. If a holder of Series D Preferred Units fails to make such an election, such holder (and any of its transferees) shall receive upon conversion of each Series D Preferred Unit held by such holder (or by any of its transferees) the same consideration that a holder of that number of Common Units into which one Series D Preferred Unit was convertible immediately prior to such Transaction would receive if such Common Unit holder failed to make such an election. The Partnership shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this subsection (d), and it shall not consent or agree to the occurrence of any Transaction until the Partnership has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series D Preferred Units that will contain provisions enabling the holders of Series D Preferred Units that remain outstanding after such Transaction to convert into the consideration received by holders of Common Units at the Conversion Price in effect immediately prior to such Transaction (with the holder having the option to elect the type of consideration if a choice is offered in the Transaction as specified above). The provisions of this subsection (d) shall similarly apply to successive Transactions.
(e)      If:
(i)      the Partnership shall authorize the granting to the holders of the Common Units of rights, options or warrants to subscribe for or purchase any Units of any class or any other rights, options or warrants; or
(ii)      there shall be any reclassification of the Common Units (other than as described in clause (c)(i) of this Section 7) or any consolidation or merger to which the Partnership is a party and for which approval of any partners of the Partnership is required, involving the conversion or exchange of Common Units into securities or other property, or a unit exchange involving the conversion or exchange of Common Units into securities or other property, a self tender offer by the Partnership for all or substantially all of the Common Units, or the sale or transfer of all or substantially all of the assets of the Partnership as an entirety, or
(iii)      there shall occur the voluntary or involuntary liquidation, dissolution or winding-up of the Partnership;
then the Partnership shall cause to be mailed to the holders of the Series D Preferred Units at their addresses as shown on the records of the Partnership, as promptly as possible a notice stating (A) the date on which a record is to be taken for the purpose of such distribution of rights,

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options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Units of record to be entitled to such distribution of rights, options or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Units of record shall be entitled to exchange their Common Units for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding-up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.
(f)      Whenever the Conversion Price is adjusted as herein provided, the Partnership shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to the holder of each Series D Preferred Unit at such holder’s last address as shown on the records of the Partnership.
(g)      In any case in which subsection (c) of this Section 7 provides that an adjustment shall become effective on the date next following the record date for an event, the Partnership may defer until the occurrence of such event issuing to the holder of any Series D Preferred Unit converted after such record date and before the occurrence of such event the additional Common Units issuable upon such conversion by reason of the adjustment required by such event over and above the Common Units issuable upon such conversion before giving effect to such adjustment.
(h)      For purposes of this Section 7, the number of Common Units at any time outstanding shall not include any Common Units then owned or held by or for the account of the Partnership. The Partnership shall not make any distribution on Common Units held in the treasury of the Partnership.
(i)      If any action or transaction would require adjustment of the Conversion Price pursuant to more than one subsection of this Section 3, only one adjustment shall be made, and such adjustment shall be the amount of adjustment that has the highest absolute value.
(j)      If the Partnership shall take any action affecting the Common Units, other than action described in this Section 7, that in the reasonable judgment of the Partnership would materially affect the conversion rights of the holders of the Series D Preferred Units, the Conversion Price for the Series D Preferred Units may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the General Partner, determines to be equitable in the circumstances.
(k)      The Partnership covenants that Common Units issued upon conversion of the Series D Preferred Units shall be validly issued, fully paid and non-assessable and the holder thereof shall be entitled to rights of a holder of Common Units specified in the Partnership Agreement. Prior to the delivery of any securities that the Partnership shall be obligated to deliver upon conversion of the Series D

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Preferred Units, the Partnership shall endeavor to comply with federal and state laws and regulations in respect thereof.
(l)      The Partnership will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Common Units or other securities or property on conversion of the Series D Preferred Units, pursuant hereto; provided, however, that the Company, shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of Common Units or other securities or property in a name other than that of the holder of the Series D Preferred Units to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Partnership the amount of any such tax or established, to the reasonable satisfaction of the Partnership, that such tax has been paid.
(m)      Notwithstanding anything to the contrary contained herein, (i) the adjustment provisions contained in this Section 7 shall be applied so that there is no duplication of adjustments made pursuant to any other document and (ii) no adjustment under any provision hereof shall be made on account of (A) the stock split approved by the stockholders of the General Partner on November 20, 2003 or (B) the split of the Common Units that occurred on November 20, 2003.




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SCHEDULE C
1.      Definitions . As used in this Schedule C, the following terms shall have the meanings set forth below, unless the context otherwise requires:
“ Common Unit Value ” shall mean, with respect to any trading day, the value of a Common Unit, which shall equal the trading price of a share of Common Stock (calculated based on the average of the intra-day high and low and subject to adjustment in the event that the exchange ratio between Common Units and shares of Common Stock is not one-to-one or other adjustments if the kind or amount of securities into which Common Units can be converted or exchanged (as provided in the Redemption Rights Agreement, dated the date hereof) changes after the date hereof).
“ Distribution Payment Date ” shall mean, with respect to any Distribution Period, the payment date for the distribution declared by the General Partner on its Common Units for such Distribution Period or, if no such distribution payment date is established, the last business day of the first full month following such Distribution Period.
“ Distribution Period ” shall mean the quarterly period that is then the distribution period with respect to the Common Units or, if no such distribution period is established, the calendar quarter shall be the Distribution Period; provided that (a) the initial Distribution Period shall commence on March 5, 2004 and end on and include March 31, 2004 and (b) the Distribution Period in which the final liquidation payment is made pursuant to Section 7.2 of the Fourth Amended and Restated Agreement of Limited Partnership, as amended, shall commence on the first day following the immediately preceding Distribution Period and end on the date of such final liquidation payment.
“ Fair Market Value ” shall mean, as of any day, the average of the Common Unit Value for the ten consecutive Trading Days ending on the business day immediately preceding the day in question with respect to the issuance or distribution requiring such computation.
“ Relevant Distribution Periods ” shall mean (i) each of the three (3) consecutive Distribution Periods the last of which ends during the 90-day period referred to in the last paragraph of Section 7(b) and (ii) the next immediately following Distribution Period after the third Distribution Period described in clause (i) above.
“ Tenth Anniversary Date ” shall mean March 5, 2014.
2.      Designation and Number; Etc . The Series E Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Fourth Amended and Restated Agreement of Limited Partnership to the extent applicable). The authorized number of Series E Preferred Units shall be 502,657.8128. Notwithstanding anything to the contrary


 

contained herein, in the event of a conflict between the provisions of this Schedule C and any other provision of the Fourth Amended and Restated Agreement of Limited Partnership, the provisions of this Schedule C shall control.
3.      Rank. The Series E Preferred Units shall, with respect to the payment of distributions and the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, rank as follows:
(a)      senior to all classes or series of Common Units and to all Units the terms of which provide that such Units shall rank junior to the Series E Preferred Units;
(b)      on a parity with the Series B Preferred Units, Series D Preferred Units and each other series of Preferred Units issued by the Partnership which does not provide by its express terms that it ranks junior or senior in right of payment to the Series E Preferred Units with respect to payment of distributions or amounts upon liquidation, dissolution or winding-up; and
(c)      junior to any class or series of Preferred Units issued by the Partnership that ranks senior to the Series E Preferred Units and has been approved in accordance with Section 4 of this Schedule C.
4.      Voting .
(a)      Holders of Series E Preferred Units shall not have any voting rights, except as described below in this Section 4.
(b)      So long as any Series E Preferred Units remain outstanding, the Partnership shall not, without the affirmative vote or consent of the holders of at least a majority of the Series E Preferred Units outstanding at the time, given in person or by proxy, either in writing or at a meeting (such series voting separately as a class), (i) authorize, create, issue or increase the authorized or issued amount of any class or series of partnership interests in the Partnership ranking senior to the Series E Preferred Units with respect to the payment of distributions or the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership or reclassify any Common Units or other Preferred Units into such partnership interests, or create, authorize or issue any obligation or security convertible or exchangeable into or evidencing the right to purchase any such partnership interests; or (ii) amend, alter or repeal the provisions of the Fourth Amended and Restated Agreement of Limited Partnership, as amended, whether by merger or consolidation or otherwise (an “Event”), so as to (A) negate the provisions of clause (i) or (ii) of this paragraph, (B) materially and adversely affect the right of the holders of Series E Preferred Units to transfer such Units unless the amendment also applies to the holders of all other Units, (C) give the holders of any partnership interest a right to the payment of distributions from the Partnership or a right to the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up

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of the Partnership that ranks senior to the Series E Preferred Units or (D) materially and adversely affect any right, preference, privilege or voting power of the Series E Preferred Units or the holders thereof contained in this Schedule C. Notwithstanding anything to the contrary contained herein, each of the following shall be deemed not to (i) materially and adversely affect any such right, preference, privilege or voting power or (ii) otherwise require the vote or consent of the holders of the Series E Preferred Units: (X) the occurrence of any merger, consolidation, entity conversion, unit exchange, recapitalization of the Common Units or other business combination or reorganization, so long as either (1) the Partnership is the surviving entity and the Series E Preferred Units remain outstanding with the terms thereof materially unchanged (including without limitation the terms with respect to distributions, voting, redemption and conversion), or (2) if the Partnership is not the surviving entity in such transaction, interests in an entity having substantially the same rights and terms (including without limitation rights to distributions, voting, redemption and conversion) as the Series E Preferred Units are exchanged or substituted for the Series E Preferred Units (and with the terms of the Common Units or such other securities for which the Series E Preferred Units (or the substitute or exchanged security therefor) are convertible or redeemable materially the same with respect to rights to distributions, voting and redemption), (Y) any increase in the amount of the authorized Preferred Units or Common Units or the creation or issuance of any other series or class of Preferred Units or Common Units or any increase in the amount of Common Units or any other series of Preferred Units, in each case so long as such Units rank on a parity with or junior to the Series E Preferred Units with respect to the payment of distributions and the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership and (Z) a sale or other disposition of all or substantially all of the Partnership’s assets (by merger or otherwise) if, in connection with such transaction, the holders of Series E Preferred Units have the opportunity to surrender all of the issued and outstanding Series E Preferred Units in exchange for a cash payment equal to the amount that such holders would be entitled to receive in respect thereof upon a liquidation, dissolution or winding-up of the Partnership (such surrender and payment to be made contemporaneously with the closing of such transaction) and any resulting dissolution, liquidation and/or winding-up of the Partnership.
The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series E Preferred Units shall have been converted or redeemed.
For purposes of the foregoing provisions of this Section 4, each Series E Preferred Unit shall have one (l) vote.
Except as otherwise required by applicable law or as set forth herein, the Series E Preferred Units shall not have any voting rights or powers and the consent of the holders thereof shall not be required for the taking of any action.

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5.      Distributions .
(a)      With respect to each Distribution Period and subject to the rights of the holders of Preferred Units ranking senior to or on parity with the Series E Preferred Units, the holders of Series E Preferred Units shall be entitled to receive, when, as and if declared by the General Partner, out of assets of the Partnership legally available for the payment of the distributions, quarterly cumulative cash distributions in an amount per Series E Preferred Unit equal to the greater of (i) $0.875 (the “Base Quarterly Distribution”) and (ii) the amount of the regular quarterly cash distribution paid for such Distribution Period upon the number of Common Units (or portion thereof) into which such Series E Preferred Unit is then convertible in accordance with Section 7 of this Schedule C. Notwithstanding anything to the contrary contained herein, the amount of distributions described under each of clause (i) and (ii) of this paragraph for the initial Distribution Period, or any other period shorter than a full Distribution Period, shall be prorated and computed based on the actual number of days in such Distribution Period relative to the actual number of days in the calendar quarter of which the Distribution Period is a part. Such distributions shall, with respect to each Series E Preferred Unit, accrue from its issue date, whether or not in, or with respect to, any Distribution Period or Periods (A) the distributions described above are declared, (B) the Partnership is contractually prohibited from paying such distributions or (C) there shall be assets of the Partnership legally available for the payment of such distributions. The distributions upon the Series E Preferred Units for each Distribution Period shall, if and to the extent declared or authorized by the General Partner on behalf of the Partnership, be paid in arrears (without interest or other amount) on the Distribution Payment Date with respect thereto, and, if not paid on such date, shall accumulate, whether or not in, or with respect to, any Distribution Period or Periods (X) the distributions are declared, (Y) the Partnership is contractually prohibited from paying such distributions or (Z) there shall be assets of the Partnership legally available for the payment of such distributions (and shall not constitute accumulated distributions prior to such date). The record date for distributions upon the Series E Preferred Units for any Distribution Period shall be the same as the record date for the distributions upon the Common Units for such Distribution Period (or, if no such record date is set for the Common Units, the fifteenth day of the calendar month in which the applicable Distribution Payment Date falls if prior to such Distribution Payment Date; otherwise, the fifteenth day of the immediately preceding calendar month). Accumulated and unpaid distributions for any past Distribution Periods may be declared and paid at any time, without reference to any Distribution Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the General Partner. Any distribution payment made upon the Series E Preferred Units shall first be credited against the earliest accrued but unpaid distributions due with respect to such Units which remains payable. No interest, or sum of money in lieu of interest, shall be owing or payable in respect of any distribution payment or payments on the Series E Preferred Units, whether or not in arrears.

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(b)      No distribution on the Series E Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as and to the extent that the terms and provisions of any bona fide agreement of the Partnership, including any agreement relating to bona fide indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or to the extent that such declaration of payment shall be restricted or prohibited by law (and such failure to pay distributions on the Series E Preferred Units shall prohibit other distributions by the Partnership as described in Sections 5(c) or (d) of this Schedule C). Notwithstanding the foregoing, distributions on the Series E Preferred Units shall accumulate as provided herein whether or not any of the foregoing restrictions exist.
(c)      Except as provided in Section 5(d) of this Schedule C, so long as any Series E Preferred Units are outstanding, (i) no cash or non-cash distributions (other than in Common Units or other Units ranking junior to the Series E Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership) shall be declared or paid or set apart for payment upon the Common Units or any other class or series of partnership interests in the Partnership or Units ranking, as to payment of distributions or amounts distributable upon liquidation, dissolution or winding-up of the Partnership, on a parity with or junior to the Series E Preferred Units, for any period and (ii) no Common Units or other Units ranking junior to or on a parity with the Series E Preferred Units as to payment of distributions or amounts upon liquidation, dissolution or winding-up of the Partnership shall be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange for other Units ranking junior to the Series E Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership or by redemptions pursuant to Rights Agreements) unless, in the case of either clause (i) or (ii), full cumulative distributions have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment in the next 30 days on the Series E Preferred Units for all Distribution Periods ending on or prior to the distribution payment date for the Common Units or such other class or series of Unit or the date of such redemption, purchase or other acquisition.
(d)      When distributions are not paid in full (or a sum sufficient for such full payment is not set apart for such payment in the next 30 days) upon the Series E Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series E Preferred Units, all distributions declared upon the Series E Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series E Preferred Units shall be declared or paid pro rata so that the amount of distributions declared per Unit of Series E Preferred Units and such other partnership interests in the Partnership or Units shall in all cases bear to each other the same ratio that accrued and unpaid distributions per Unit on the Series E Preferred Units and such other partnership interests in the

C-5

 

Partnership or Units (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such Units do not have cumulative distributions) bear to each other.
(e)      Except as set forth in Section 6 of this Schedule C, holders of Series E Preferred Units shall not be entitled to any distributions, whether payable in cash, property or Units, in excess of the cumulative distributions described in Section 5(a) of this Schedule C.
(f)      Distributions with respect to the Series E Preferred Units are intended to qualify as permitted distributions of cash that are not treated as a disguised sale within the meaning of Treasury Regulation §1.707-4 and the provisions of this Schedule C shall be construed and applied consistently with such Treasury Regulations.
6.      Liquidation Preference .
(a)      In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, before any payment or distribution of the assets of the Partnership (whether capital or surplus) shall be made to or set apart for the holders of Common Units or any other partnership interests in the Partnership or Units ranking junior to the Series E Preferred Units as to the distribution of assets upon the liquidation, dissolution or winding-up of the Partnership, the holders of the Series E Preferred Units shall, with respect to each such Unit, be entitled to receive, out of the assets of the Partnership available for distribution to Partners after payment or provision for payment of all debts and other liabilities of the Partnership and subject to the rights of the holders of any series of Preferred Units ranking senior to or on parity with the Series E Preferred Units with respect to payment of amounts upon liquidation, dissolution or winding-up of the Partnership, an amount equal to the greater of (i) $50, plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution (including all accumulated and unpaid distributions) and (ii) the amount that a holder of such Series E Preferred Unit would have received upon final distribution in respect of the number of Common Units into which such Series E Preferred Unit (including all accumulated and unpaid distributions (whether or not earned or declared) with respect thereto) was convertible immediately prior to such date of final distribution. If, upon any such voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of the Series E Preferred Units are insufficient to pay in full the preferential amount aforesaid on the Series E Preferred Units and liquidating payments on any other Units or partnership interests in the Partnership of any class or series ranking, as to payment of distributions and amounts upon the liquidation, dissolution or winding-up of the Partnership, on a parity with the Series E Preferred Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series E Preferred Units and any such other Units or partnership interests in the Partnership ratably in accordance with the respective amounts that would be payable on such Series E Preferred Units and such other Units or partnership interests in the Partnership if all amounts payable thereon were

C-6

 

paid in full. For the purposes of this Section 6, none of (i) a consolidation or merger of the Partnership with or into another entity, (ii) a merger of another entity with or into the Partnership or (iii) a sale, lease or conveyance of all or substantially all of the Partnership’s assets, properties or business shall be deemed to be a liquidation, dissolution or winding-up of the Partnership (unless all or substantially all of the proceeds thereof are distributed by the Partnership, in which case a liquidation, dissolution or winding-up of the Partnership shall be deemed to have occurred).
(b)      Written notice of such liquidation, dissolution or winding-up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series E Preferred Units at the respective addresses of such holders as the same shall appear on the transfer records of the Partnership.
(c)      After payment of the full amount of liquidating distributions to which they are entitled as provided in Section 6(a) of this Schedule C, the holders of Series E Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.
7.      Conversion . Holders of Series E Preferred Units shall have the right to convert all or a portion of such Units into Common Units, as follows:
(a)      A holder of Series E Preferred Units shall have the right, at such holder’s option, at any time, to convert any whole number of Series E Preferred Units into fully paid and non-assessable Common Units; provided, however, that the conversion right may not be exercised at any one time by a holder of Series E Preferred Units with respect to less than 1,000 Series E Preferred Units (or all the Series E Preferred Units then owned by such holder if such holder owns less than 1,000 Series E Preferred Units). Each Series E Preferred Unit shall be convertible into the number of Common Units determined by dividing (i) the $50 base liquidation preference per Series E Preferred Unit, plus an amount equal to all accumulated and unpaid distributions (whether or not earned or declared) with respect thereto by (ii) a conversion price of $38.51 per Common Unit (equivalent to an initial conversion rate of 1.298364 Common Units for each Series E Preferred Unit), subject to adjustment as described in Section 7(c) hereof (the “Conversion Price”).
(b)      To exercise the conversion right, the holder of each Series E Preferred Unit to be converted shall execute and deliver to the General Partner, at the principal office of the Partnership, a written notice (the “Conversion Notice”) indicating that the holder thereof elects to convert such Series E Preferred Unit and containing representations and warranties of such holder that (i) such holder has good and marketable title to such Series E Preferred Unit, free and clear of all liens, claims and encumbrances, (ii) such holder is an accredited investor as defined in Regulation D under the Securities Act of 1933, as amended, and has such knowledge and experience in financial and business matters such that such holder is capable of evaluating the merits and risks of receiving

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and owning the Common Units that may be issued to it in exchange for such Series E Preferred Unit, (iii) such holder is able to bear the economic risk of such ownership and (iv) such Common Units to be acquired by such holder pursuant to this Agreement would be acquired by such holder for its own account, for investment purposes only and not with a view to, and with no present intention of, selling or distributing the same in violation of federal or state securities laws. Unless the Units issuable on conversion are to be issued in the same name as the name in which such Series E Preferred Unit is registered, each Series E Preferred Unit surrendered for conversion shall be accompanied by instruments of transfer, in form reasonably satisfactory to the Partnership, duly executed by the holder or such holder’s duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Partnership demonstrating that such taxes have been paid).
As promptly as practicable after delivery of the Conversion Notice as aforesaid, the Partnership shall amend the Partnership Agreement to reflect the conversion and the issuance of Common Units issuable upon the conversion of such Series E Preferred Units in accordance with the provisions of this Section 7. In addition, the Partnership shall deliver to the holder at its address as reflected on the records of the Partnership, a copy of such amendment.
A holder of Series E Preferred Units at the close of business on the record date for any Distribution Period shall be entitled to receive the distribution payable on such Units on the corresponding Distribution Payment Date notwithstanding the conversion of such Series E Preferred Units following such record date and prior to such Distribution Payment Date and shall have no right to receive any distribution for such Distribution Period in respect of the Common Units into which such Series E Preferred Units were converted. Except as provided herein, the Partnership shall make no payment or allowance for unpaid distributions, whether or not in arrears, on converted Series E Preferred Units or for distributions on the Common Units that are issued upon such conversion. In the event that a holder of Series E Preferred Units converts its Series E Preferred Units into Common Units on or prior to the record date for the initial Distribution Period, the distribution for such Distribution Period in respect of such Common Units shall be prorated and computed on the basis of twelve 30-day months and a 360-day year.
Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the Conversion Notice is received by the Partnership as aforesaid, and the person or persons, in whose name or names any Common Units shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of such Units at such time on such date, and such conversion shall be at the Conversion Price in effect at such time and on such date unless the transfer books of the Partnership shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record immediately prior to the close of business on the next succeeding day on which such transfer books are open,

C-8

 

but such conversion shall be at the Conversion Price in effect on the date on which such Units have been surrendered and such notice received by the Partnership.
Notwithstanding anything to the contrary contained herein, all holders of Series E Preferred Units shall be deemed to have delivered a Conversion Notice (and therefore exercised their conversion rights effective as of the time specified in the next sentence) as to all Series E Preferred Units if (a) with respect to any period of 90 consecutive calendar days following the Tenth Anniversary Date, the Common Unit Value exceeds on each trading day during such 90-day period the Conversion Price then in effect and (b) the amount of the distribution (as calculated in accordance with Section 5(a)(ii) of this Schedule C) for each of the four (4) Relevant Distribution Periods upon the number of Common Units (or portion thereof) into which a Series E Preferred Unit is then convertible in accordance with this Section 7 exceeds the Base Quarterly Distribution. The forced conversion referred to in this paragraph shall be effective at the close of business on the Distribution Payment Date for the last Relevant Distribution Period.
(c)      The Conversion Price shall be adjusted from time to time as-follows:
1.      If the Partnership shall, after the date on which the Series E Preferred Units are first issued (the “Issue Date”), (A) pay or make a distribution to holders of its partnership interests Units in Common Units, (B) subdivide its outstanding Common Units into a greater number of Units or distribute Common Units to the holders thereof, (C) combine its outstanding Common Units into a smaller number of Units, or (D) issue any partnership interests or Units by reclassification of its Common Units, the Conversion Price shall be adjusted so that the conversion rights of the holder of any Series E Preferred Unit are not diluted or expanded thereby.
2.      If the Partnership shall issue after the Issue Date rights, options or warrants to all holders of Common Units entitling them to subscribe for or purchase Common Units (or securities convertible into or exchangeable for Common Units) at a price per Unit less than the Fair Market Value on the record date for the determination of holders of Common Units entitled to receive such rights, options or warrants, then the Conversion Price shall be adjusted to equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to adjustment by (II) a fraction, the numerator of which shall be the sum of (A) the number of Common Units outstanding at the close of business on the date fixed for such determination and (B) the number of Common Units that the aggregate proceeds to the Partnership from the exercise of such rights, options or warrants for Common Units would purchase at a price per Unit equal to the Fair Market Value, and the denominator of which shall be the sum of (A) the number of Common Units outstanding at the close of business on the date fixed for such determination and (B) the number of additional Common Units offered for subscription or purchase pursuant to such rights, options or warrants. In

C-9

 

determining whether any rights, options or warrants entitle the holder of Common Units to subscribe for or purchase Common Units at a price per Unit less than the Fair Market Value, there shall be taken into account any consideration received by the Partnership upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of the General Partner.
3.      If the Partnership shall distribute after the Issue Date to all holders of Common Units any other securities or evidences of its indebtedness or assets (excluding those rights, options, warrants, securities and other assets referred to in and treated under subsection (i) or (ii) above, and excluding distributions paid exclusively in cash) (any of the foregoing being hereinafter in this subsection (iii) called the “Securities”), then in each case the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the adjustment by (II) a fraction, the numerator of which shall be the Fair Market Value on the record date for the determination of holders of Common Units entitled to receive such distribution less the then fair market value (as determined in good faith by the General Partner) of the portion of the Securities so distributed applicable to one Common Unit, and the denominator of which shall be the Fair Market Value on the record date mentioned above. For the purposes of this subsection (iii), a distribution in the form of a Security, which is distributed not only to the holders of the Common Units on the date fixed for the determination of holders of Common Units entitled to such distribution of such Security, but also is distributed with each Common Unit delivered to a person converting a Series E Preferred Unit after such determination date (together with distributions thereon paid to the holders of Common Units prior thereto), shall not require an adjustment of the Conversion Price pursuant to this subsection (iii); provided that on the date, if any, on which a person converting a Series E Preferred Unit would no longer be entitled to receive such Security with a Common Unit, a distribution of such Securities shall be deemed to have occurred, and the Conversion Price shall be adjusted as provided in this subsection (iii) (and such day shall be deemed to be “the date fixed for the determination of the holders of Common Units entitled to receive such distribution” and “the record date” within the meaning of the preceding sentence).
4.      Notwithstanding the foregoing, no adjustment shall be made pursuant to the preceding clauses (ii) and (iii) that would result in an increase in the Conversion Price. No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided, however, that any adjustments that by reason of this subsection (iv) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this subsection (iv)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Common Units.

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Notwithstanding any other provisions of this Section 7, the Partnership shall not be required to make any adjustment to the Conversion Price for the issuance of (i) any Common Units on account of any plan providing for the reinvestment of distributions or interest payable on securities of the Partnership or the General Partner and the investment of additional optional amounts under such plan or (ii) any options, rights or Common Units pursuant to or on account of any unit or stock option, unit or stock purchase or any unit or stock-based compensation plan maintained by the Partnership or the General Partner. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a Unit (with .05 of a Unit being rounded upward), as the case may be.
(d)      If the Partnership shall be a party to any transaction (including, without limitation, a merger, consolidation, entity conversion, unit exchange, self tender offer for all or substantially all of the Common Units, sale of all or substantially all of the Partnership’s assets or recapitalization of the Common Units or other business combination or reorganization and excluding any transaction as to which subsection (c)(i) of this Section 7 applies) (each of the foregoing being referred to herein as a “Transaction”), in each case as a result of which Common Units shall be exchanged for or converted into partnership interests, shares, stock, securities or other properties (including cash or any combination thereof), each Series E Preferred Unit which is not converted into the right to receive partnership interests, shares, stock, securities or other property in connection with such Transaction (and thus remains outstanding) shall thereafter be convertible into the kind and amount of partnership interests, shares, stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of Common Units into which one Series E Preferred Unit (including all distributions (whether or not earned or declared) accumulated and unpaid thereon) was convertible immediately prior to such Transaction, assuming such holder of Common Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “Constituent Person”), or an affiliate of a Constituent Person. In the event that holders of Common Units have the opportunity to elect the form or type of consideration to be received upon consummation of the Transaction, prior to such transaction the General Partner shall give prompt written notice to each Series E Preferred Unit holder of such election, and each Series E Preferred Unit holder shall also have the right to elect, by written notice to the General Partner, the form or type or consideration to be received upon conversion of each Series E Preferred Unit held by such holder following consummation of such Transaction. If a holder of Series E Preferred Units fails to make such an election, such holder (and any of its transferees) shall receive upon conversion of each Series E Preferred Unit held by such holder (or by any of its transferees) the same consideration that a holder of that number of Common Units into which one Series E Preferred Unit was convertible immediately prior to such Transaction would receive if such Common Unit holder failed to make

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such an election. The Partnership shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this subsection (d), and it shall not consent or agree to the occurrence of any Transaction until the Partnership has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series E Preferred Units that will contain provisions enabling the holders of Series E Preferred Units that remain outstanding after such Transaction to convert into the consideration received by holders of Common Units at the Conversion Price in effect immediately prior to such Transaction (with the holder having the option to elect the type of consideration if a choice is offered in the Transaction as specified above). The provisions of this subsection (d) shall similarly apply to successive Transactions.
(e)      If:
1.      the Partnership shall declare a distribution on the Common Units (other than a regular quarterly cash distribution or a distribution in Common Units); or
2.      the Partnership shall authorize the granting to the holders of the Common Units of rights, options or warrants to subscribe for or purchase any Units of any class or any other rights, options or warrants; or
3.      there shall be any reclassification of the Common Units (other than a distribution in Common Units or a subdivision or combination of Common Units) or any consolidation or merger to which the Partnership is a party and for which approval of any partners of the Partnership is required, involving the conversion or exchange of Common Units into securities or other property, or a unit exchange involving the conversion or exchange of Common Units into securities or other property, a self tender offer by the Partnership for all or substantially all of the Common Units, or the sale or transfer of all or substantially all of the assets of the Partnership as an entirety; or
4.      there shall occur the voluntary or involuntary liquidation, dissolution or winding-up of the Partnership;
then the Partnership shall cause to be mailed to the holders of the Series E Preferred Units at their addresses as shown on the records of the Partnership, as promptly as possible a prior notice stating (A) the date on which a record is to be taken for the purpose of such distribution or grant, or, if a record is not to be taken, the date as of which the holders of Common Units of record to be entitled to such distribution or grant are to be determined or (B) the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Units of record shall be entitled to exchange their Common Units for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, liquidation,

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dissolution or winding-up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.
(f)      Whenever the Conversion Price is adjusted as herein provided, the Partnership shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and shall mail such notice of such adjustment of the Conversion Price to the holder of each Series E Preferred Unit at such holder’s last address as shown on the records of the Partnership.
(g)      Any adjustment to the Conversion Price pursuant to subsection (c) of this Section 7 with respect to any event shall become effective at such time as is necessary to prevent dilution or expansion of the conversion rights on account of such event.
(h)      For purposes of this Section 7, the number of Common Units at any time outstanding shall not include any Common Units then owned or held by or for the account of the Partnership. The Partnership shall not make any distribution on Common Units held in the treasury of the Partnership.
(i)      If any action or transaction would require adjustment of the Conversion Price pursuant to more than one subsection of this Section 7, only one adjustment shall be made, and such adjustment shall be the amount of adjustment that results in the lowest absolute value of the Conversion Price.
(j)      If the Partnership shall take any action affecting the Common Units, other than action described in this Section 7, that in the reasonable judgment of the Partnership would materially affect the conversion rights of the holders of the Series E Preferred Units, the Conversion Price for the Series E Preferred Units may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the General Partner, determines to be equitable in the circumstances.
(k)      The Partnership covenants that Common Units issued upon conversion of the Series E Preferred Units shall be validly issued, fully paid and non-assessable and the holder thereof shall be entitled to rights of a holder of Common Units specified in the Partnership Agreement. Prior to the delivery of any securities that the Partnership shall be obligated to deliver upon conversion of the Series E Preferred Units, the Partnership shall endeavor to comply with all federal and state laws and regulations in respect thereof.
(l)      The Partnership will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Common Units or other securities or property on conversion of the Series E Preferred Units pursuant hereto; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of Common Units or other securities or property in a name other than that of the holder of the Series E Preferred Units to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Partnership the amount

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of any such tax or established, to the reasonable satisfaction of the Partnership, that such tax has been paid.
(m)      Notwithstanding anything to the contrary contained herein, the adjustment provisions contained in this Section 7 shall be applied so that there is no duplication of adjustments made pursuant to any other document.




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SCHEDULE D
1.      Definitions . As used in this Schedule D, the following terms shall have the meanings set forth below, unless the context otherwise requires:
“ Distribution Payment Date ” shall mean, with respect to any Distribution Period, the payment date for the distribution declared by the General Partner on its Common Units for such Distribution Period or, if no such distribution payment date is established, the last business day of the first full month following such Distribution Period.
“ Distribution Period ” shall mean the quarterly period that is then the distribution period with respect to the Common Units or, if no such distribution period is established, the calendar quarter shall be the Distribution Period; provided that the Distribution Period in which the final liquidation payment is made pursuant to Section 7.2 of the Fourth Amended and Restated Agreement of Limited Partnership, as amended, shall commence on the first day following the immediately preceding Distribution Period and end on the date of such final liquidation payment.
2.      Designation and Number; Etc . The Series F Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Fourth Amended and Restated Agreement of Limited Partnership to the extent applicable). The authorized number of Series F Preferred Units shall be 1,000, which number may be increased from time to time by the General Partner in accordance with the Fourth Amended and Restated Agreement of Limited Partnership, as amended. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule D and any other provision of the Fourth Amended and Restated Agreement of Limited Partnership, the provisions of this Schedule D shall control.
3.      Rank. The Series F Preferred Units shall, with respect to the payment of distributions and the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, rank as follows:
(d)      senior to all classes or series of Common Units and to all Units the terms of which provide that such Units shall rank junior to the Series F Preferred Units;
(e)      on a parity with the Series B Preferred Units, Series D Preferred Units, Series E Preferred Units and each other series of Preferred Units issued by the Partnership which does not provide by its express terms that it ranks junior or senior in right of payment to the Series F Preferred Units with respect to payment of distributions or amounts upon liquidation, dissolution or winding-up; and


 

(f)      junior to any class or series of Preferred Units issued by the Partnership that ranks senior to the Series F Preferred Units.
4.      Voting . Holders of Series F Preferred Units shall not have any voting rights, except as required by law.
5.      Distributions .
(g)      With respect to each Distribution Period and subject to the rights of the holders of Preferred Units ranking senior to or on parity with the Series F Preferred Units, the holders of Series F Preferred Units shall be entitled to receive, when, as and if declared by the General Partner, out of assets of the Partnership legally available for the payment of the distributions, quarterly cumulative cash distributions in an amount per Series F Preferred Unit equal to $25. Notwithstanding anything to the contrary contained herein, the amount of distributions described under this paragraph for the initial Distribution Period, or any other period shorter than a full Distribution Period, shall be prorated and computed based on the actual number of days in such Distribution Period relative to the actual number of days in the calendar quarter of which the Distribution Period is a part. Such distributions shall, with respect to each Series F Preferred Unit, accrue from its issue date, whether or not in, or with respect to, any Distribution Period or Periods (A) the distributions described above are declared, (B) the Partnership is contractually prohibited from paying such distributions or (C) there shall be assets of the Partnership legally available for the payment of such distributions. The distributions upon the Series F Preferred Units for each Distribution Period shall, if and to the extent declared or authorized by the General Partner on behalf of the Partnership, be paid in arrears (without interest or other amount) on the Distribution Payment Date with respect thereto, and, if not paid on such date, shall accumulate, whether or not in, or with respect to, any Distribution Period or Periods (X) the distributions are declared, (Y) the Partnership is contractually prohibited from paying such distributions or (Z) there shall be assets of the Partnership legally available for the payment of such distributions (and shall not constitute accumulated distributions prior to such date). The record date for distributions upon the Series F Preferred Units for any Distribution Period shall be the same as the record date for the distributions upon the Common Units for such Distribution Period (or, if no such record date is set for the Common Units, the fifteenth day of the calendar month in which the applicable Distribution Payment Date falls if prior to such Distribution Payment Date; otherwise, the fifteenth day of the immediately preceding calendar month). Accumulated and unpaid distributions for any past Distribution Periods may be declared and paid at any time, without reference to any Distribution Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the General Partner. Any distribution payment made upon the Series F Preferred Units shall first be credited against the earliest accrued but unpaid distributions due with respect to such Units which remains payable. No interest, or sum of money in lieu of interest, shall be owing or payable in respect of any distribution payment or payments on the Series F Preferred Units, whether or not in arrears.

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(h)      No distribution on the Series F Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as and to the extent that the terms and provisions of any bona fide agreement of the Partnership, including any agreement relating to bona fide indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or to the extent that such declaration of payment shall be restricted or prohibited by law (and such failure to pay distributions on the Series F Preferred Units shall prohibit other distributions by the Partnership as described in Sections 5(c) or (d) of this Schedule D). Notwithstanding the foregoing, distributions on the Series F Preferred Units shall accumulate as provided herein whether or not any of the foregoing restrictions exist.
(i)      Except as provided in Section 5(d) of this Schedule C, so long as any Series F Preferred Units are outstanding, (i) no cash or non-cash distributions (other than in Common Units or other Units ranking junior to the Series F Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership) shall be declared or paid or set apart for payment upon the Common Units or any other class or series of partnership interests in the Partnership or Units ranking, as to payment of distributions or amounts distributable upon liquidation, dissolution or winding-up of the Partnership, on a parity with or junior to the Series F Preferred Units, for any period and (ii) no Common Units or other Units ranking junior to or on a parity with the Series F Preferred Units as to payment of distributions or amounts upon liquidation, dissolution or winding-up of the Partnership shall be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange for other Units ranking junior to the Series F Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership or by redemptions pursuant to Rights Agreements) unless, in the case of either clause (i) or (ii), full cumulative distributions have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment in the next 30 days on the Series F Preferred Units for all Distribution Periods ending on or prior to the distribution payment date for the Common Units or such other class or series of Unit or the date of such redemption, purchase or other acquisition.
(j)      When distributions are not paid in full (or a sum sufficient for such full payment is not set apart for such payment in the next 30 days) upon the Series F Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series F Preferred Units, all distributions declared upon the Series F Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series F Preferred Units shall be declared or paid pro rata so that the amount of distributions declared per Unit of Series F Preferred Units and such other partnership interests in the Partnership or Units shall in all cases bear to each other the same ratio that accrued and unpaid distributions per Unit on the Series F Preferred Units and such other partnership interests in the

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Partnership or Units (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such Units do not have cumulative distributions) bear to each other.
(k)      Except as set forth in Section 6 of this Schedule D, holders of Series F Preferred Units shall not be entitled to any distributions, whether payable in cash, property or Units, in excess of the cumulative distributions described in Section 5(a) of this Schedule D.
(l)      Distributions with respect to the Series F Preferred Units are intended to qualify as permitted distributions of cash that are not treated as a disguised sale within the meaning of Treasury Regulation §1.707-4 and the provisions of this Schedule D shall be construed and applied consistently with such Treasury Regulations.
6.      Liquidation Preference .
(d)      In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, before any payment or distribution of the assets of the Partnership (whether capital or surplus) shall be made to or set apart for the holders of Common Units or any other partnership interests in the Partnership or Units ranking junior to the Series F Preferred Units as to the distribution of assets upon the liquidation, dissolution or winding-up of the Partnership, the holders of the Series F Preferred Units shall, with respect to each such Unit, be entitled to receive, out of the assets of the Partnership available for distribution to Partners after payment or provision for payment of all debts and other liabilities of the Partnership and subject to the rights of the holders of any series of Preferred Units ranking senior to or on parity with the Series F Preferred Units with respect to payment of amounts upon liquidation, dissolution or winding-up of the Partnership, an amount equal to $1000, plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution (including all accumulated and unpaid distributions). If, upon any such voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of the Series F Preferred Units are insufficient to pay in full the preferential amount aforesaid on the Series F Preferred Units and liquidating payments on any other Units or partnership interests in the Partnership of any class or series ranking, as to payment of distributions and amounts upon the liquidation, dissolution or winding-up of the Partnership, on a parity with the Series F Preferred Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series F Preferred Units and any such other Units or partnership interests in the Partnership ratably in accordance with the respective amounts that would be payable on such Series F Preferred Units and such other Units or partnership interests in the Partnership if all amounts payable thereon were paid in full. For the purposes of this Section 6, none of (i) a consolidation or merger of the Partnership with or into another entity, (ii) a merger of another entity with or into the Partnership or (iii) a sale, lease or conveyance of all or substantially all of the Partnership’s assets, properties or business shall be deemed to be a liquidation, dissolution or winding-up of the Partnership (unless all or substantially

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all of the proceeds thereof are distributed by the Partnership, in which case a liquidation, dissolution or winding-up of the Partnership shall be deemed to have occurred).
(e)      Written notice of such liquidation, dissolution or winding-up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series F Preferred Units at the respective addresses of such holders as the same shall appear on the transfer records of the Partnership.
(f)      After payment of the full amount of liquidating distributions to which they are entitled as provided in Section 6(a) of this Schedule D, the holders of Series F Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.
7.      Redemption .
Notwithstanding anything to the contrary contained in this Schedule D or the Fourth Amended and Restated Agreement of Limited Partnership, other than preferences in favor of the Series B Preferred Units, Series D Preferred Units and Series E Preferred Units, the Partnership may, from time to time and at any time, redeem any or all of the Series F Preferred Units for an amount equal to $1000, plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of such redemption (including all accumulated and unpaid distributions).




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SCHEDULE E
1.      Definitions . As used in this Schedule E, the following terms shall have the meanings set forth below, unless the context otherwise requires:
“ Distribution Payment Date ” shall mean, with respect to any distribution period, the first day of January, April, July and October of each year, or, if not a business day, the next succeeding business day (provided no interest, additional distributions or other sums shall accrue or accumulate on the amount so payable for the period from and after the Distribution Payment Date to the next succeeding business day).
2.      Designation and Number; Etc . The Series G Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Fourth Amended and Restated Agreement of Limited Partnership to the extent applicable). The authorized number of Series G Preferred Units shall be 11,500,000. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule E and any other provision of the Fourth Amended and Restated Agreement of Limited Partnership, the provisions of this Schedule E shall control.
3.      Rank. The Series G Preferred Units shall, with respect to the payment of distributions and the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, rank as follows:
(g)      senior to all classes or series of Common Units and to all Units the terms of which provide that such Units shall rank junior to the Series G Preferred Units;
(h)      on a parity with the Series B Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units and each other series of Preferred Units issued by the Partnership which does not provide by its express terms that it ranks junior or senior in right of payment to the Series G Preferred Units with respect to payment of distributions or amounts upon liquidation, dissolution or winding-up; and
(i)      junior to any class or series of Preferred Units issued by the Partnership that ranks senior to the Series G Preferred Units.
4.      Voting . The Partnership shall not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding Units of the Series G Preferred Units voting separately as a class:
(c)      authorize, create or increase the authorized or issued amount of any class or series of partnership interests of the Partnership ranking senior to the Series G Preferred


 

Units with respect to the payment of distributions or rights upon liquidation, dissolution or winding up of the Partnership, or reclassify any authorized partnership interests into, or create, authorize or issue any obligation or interest convertible into, exchangeable for or evidencing the right to purchase, any such senior partnership interests; or
(d)      amend, alter or repeal the provisions of these Series G Preferred Units, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series G Preferred Units or the holders thereof.
For purposes of this Section 4, each Series G Preferred Unit shall have one (1) vote. Notwithstanding anything to the contrary contained herein, the foregoing voting provisions shall not apply if, prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series G Preferred Units shall have been converted or redeemed. Except as provided herein, the holders of Series G Preferred Units shall not have any voting or consent rights or other rights to participate in the management of the Partnership or to receive notices of meetings.
5.      Distributions .
(m)      Subject to the rights of the holders of Preferred Units ranking senior to or on parity with the Series G Preferred Units, the holders of Series G Preferred Units shall be entitled to receive on each Distribution Payment Date, out of assets of the Partnership legally available for the payment of the distributions, quarterly cumulative cash distributions at the rate of 6.375% per year of the $25.00 liquidation preference per Unit, which is equivalent to $1.59375 per Unit of Series G Preferred Unit per year. Distributions on the Series G Preferred Units shall only be paid when, as and if declared by the General Partner, however, distributions shall accumulate whether or not so declared.
(n)      Distributions on the Series G Preferred Units shall accrue and be cumulative from, and including, the date of original issuance and shall be payable (when, as and if declared by the General Partner) quarterly in arrears on each Distribution Payment Date of each year. The initial distribution on the Series G Preferred Units, which shall be paid on April 1, 2013 if declared by the General Partner, shall be for less than a full quarter and shall be in the amount of $0.2125 per Series G Preferred Unit. The amount of this initial distribution has been prorated and computed, and the Partnership will prorate and compute any other distribution payable for a partial distribution period, on the basis of a 360-day year consisting of twelve 30-day months. Distributions payable on the Series G Preferred Units for each full distribution period shall be computed by dividing the annual distribution rate by four.

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(o)      The Partnership shall pay distributions to holders of record at the close of business on the applicable distribution record date. The record date for distributions upon the Series G Preferred Units shall be the fifteenth day of the calendar month immediately preceding the calendar month in which the related Distribution Payment Date falls, or such other date that the General Partner shall designate for the payment of distributions that is not more than 30 nor less than 10 day prior to the applicable Distribution Payment Date.
(p)      No distribution on the Series G Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as and to the extent that the terms and provisions of any bona fide agreement of the Partnership, including any agreement relating to bona fide indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or to the extent that such declaration of payment shall be restricted or prohibited by law (and such failure to pay distributions on the Series G Preferred Units shall prohibit other distributions by the Partnership as described in this Schedule E).
(q)      Distributions on the Series G Preferred Units shall accrue and accumulate, however, whether the Partnership has earnings, whether there are funds legally available for the payment of distributions and whether such distributions are declared by the General Partner.
(r)      Except as provided in Section 5(g) of this Schedule E, so long as any Series G Preferred Units are outstanding, (i) no cash or non-cash distributions (other than in Common Units or other Units ranking junior to the Series G Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership) shall be declared or paid or set apart for payment upon the Common Units or any other class or series of partnership interests in the Partnership or Units ranking, as to payment of distributions or amounts distributable upon liquidation, dissolution or winding-up of the Partnership, on a parity with or junior to the Series G Preferred Units, for any period and (ii) no Common Units or other Units ranking junior to or on a parity with the Series G Preferred Units as to payment of distributions or amounts upon liquidation, dissolution or winding-up of the Partnership shall be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange for other Units ranking junior to the Series G Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership or by redemptions pursuant to Rights Agreements) unless, in the case of either clause (i) or (ii), full cumulative distributions have been or contemporaneously

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are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment in the next 30 days on the Series G Preferred Units for all distribution periods ending on or prior to the Distribution Payment Date for the Common Units or such other class or series of Unit or the date of such redemption, purchase or other acquisition.
(s)      When distributions are not paid in full (or a sum sufficient for such full payment is not set apart for such payment in the next 30 days) upon the Series G Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series G Preferred Units, all distributions declared upon the Series G Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series G Preferred Units shall be declared or paid pro rata so that the amount of distributions declared per Unit of Series G Preferred Units and such other partnership interests in the Partnership shall in all cases bear to each other the same ratio that accrued and unpaid distributions per Unit on the Series G Preferred Units and such other partnership interests in the Partnership (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such Units do not have cumulative distributions) bear to each other.
(t)      No interest shall be payable in respect of any distribution payment on the Series G Preferred Unit that may be in arrears. Holders of the Series G Preferred Units shall not be entitled to any distribution, whether payable in cash, property, or stock, in excess of the full cumulative distributions on the Series G Preferred Unit to which they are entitled. Any distribution payment made on Series G Preferred Units shall first be credited against the earliest accumulated but unpaid distribution due with respect to such Units that remains payable.
(u)      If, for any taxable year, the Partnership elects to designate as “capital gain dividends” (as defined in Section 857 of the Internal Revenue Code of 1986, as amended, or any successor revenue code or section) any portion of the total distributions (as determined for Federal income tax purposes) paid or made available for the year to holders of all partnership interests of the Partnership (the “Capital Gains Amount”), then the portion of the Capital Gains Amount that shall be allocable to holders of the Series G Preferred Unit shall be in the same portion that the total distributions paid or made available to the holders of the Series G Preferred Unit for the year bears to the total distributions for the year made with respect to all partnership interests in the Partnership.
(v)      Distributions with respect to the Series G Preferred Units are intended to qualify as permitted distributions of cash that are not treated as a disguised sale within

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the meaning of Treasury Regulation §1.707-4 and the provisions of this Schedule E shall be construed and applied consistently with such Treasury Regulations.
6.      Liquidation Preference .
(g)      In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, before any payment or distribution of the assets of the Partnership (whether capital or surplus) shall be made to or set apart for the holders of Common Units or any other partnership interests in the Partnership or Units ranking junior to the Series G Preferred Units as to the distribution of assets upon the liquidation, dissolution or winding-up of the Partnership, the holders of the Series G Preferred Units shall, with respect to each such Unit, be entitled to receive, out of the assets of the Partnership available for distribution to Partners after payment or provision for payment of all debts and other liabilities of the Partnership and subject to the rights of the holders of any series of Preferred Units ranking senior to or on parity with the Series G Preferred Units with respect to payment of amounts upon liquidation, dissolution or winding-up of the Partnership, an amount equal to $25.00 (or property having a fair market value as determined by the General Partner valued at $25.00 per Series G Preferred Unit), plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution (including all accumulated and unpaid distributions).
(h)      If, upon any such voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of the Series G Preferred Units are insufficient to pay in full the preferential amount aforesaid on the Series G Preferred Units and liquidating payments on any other Units or partnership interests in the Partnership of any class or series ranking, as to payment of distributions and amounts upon the liquidation, dissolution or winding-up of the Partnership, on a parity with the Series G Preferred Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series G Preferred Units and any such other Units or partnership interests in the Partnership ratably in accordance with the respective amounts that would be payable on such Series G Preferred Units and such other Units or partnership interests in the Partnership if all amounts payable thereon were paid in full.
(i)      Written notice of such liquidation, dissolution or winding-up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series G Preferred Units at the respective

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addresses of such holders as the same shall appear on the transfer records of the Partnership.
(j)      After payment of the full amount of liquidating distributions to which they are entitled as provided in Section 6(a) of this Schedule E, the holders of Series G Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.
(k)      For the purposes of this Section 6, none of (i) a consolidation or merger of the Partnership with or into another entity, (ii) a merger of another entity with or into the Partnership or (iii) a sale, lease or conveyance of all or substantially all of the Partnership’s assets, properties or business shall be deemed to be a liquidation, dissolution or winding-up of the Partnership (unless all or substantially all of the proceeds thereof are distributed by the Partnership, in which case a liquidation, dissolution or winding-up of the Partnership shall be deemed to have occurred).
7.      Redemption .
(n)      Optional Redemption . Except with respect to a Special Optional Redemption (as defined in Section 7(b) below) and a REIT Qualification Optional Redemption (as defined in Section 7(c) below), the Partnership may not redeem the Series G Preferred Units prior to February 13, 2018. On or after February 13, 2018, the Partnership, at its option, upon giving the notice described in paragraph 7(d) below, may redeem the Series G Preferred Units, in whole at any time or in part from time to time, for cash, at a redemption price of $25.00 per Unit, plus all accumulated and unpaid distributions (whether or not declared) to, but not including, the date of redemption (such redemption, an “Optional Redemption”).
(o)      Special Optional Redemption .
(i)      Upon the occurrence of a Change of Control (as defined below), the Partnership may, at its option, redeem the Series G Preferred Units, in whole or in part within 120 days after the first date on which such Change of Control occurred, for cash, at a redemption price of $25.00 per Unit, plus all accumulated and unpaid distributions (whether or not declared) to, but not including, the date of redemption (such redemption, a “Special Optional Redemption”).
(ii)      A “Change of Control” occurs when, after the initial delivery of the Series G Preferred Units, the following have occurred and are continuing:
(1)    the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities Exchange Act, of 1934, as amended (the “Exchange Act”), of beneficial

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ownership (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of the Public REIT’s stock entitling that person to exercise more than 50% of the total voting power of the Public REIT’s stock entitled to vote generally in the election of the Public REIT’s directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and
(2)    following the closing of any transaction referred to in the immediately preceding paragraph (1), neither the Public REIT nor the acquiring or surviving entity has a class of common securities (or American Depositary Receipts (“ADRs”) representing such securities) listed on the New York Stock Exchange (“NYSE”), the NYSE MKT or the NASDAQ Stock Market (“NASDAQ”) or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE MKT or NASDAQ.
(p)      REIT Qualification Optional Redemption . If the Public REIT is required to redeem a holder’s Series A Preferred Stock to prevent a violation of the Stock Ownership Limit (as defined in the Article XIV of the Public REIT’s certificate of incorporation), then the Partnership may, at its option, redeem the Series G Preferred Units of such holder, in the same amount as required by the Public REIT to comply with the Stock Ownership Limit, for cash at a redemption price of $25.00 per Unit, plus all accumulated and unpaid distributions (whether or not declared), to, but not including, the date of redemption (such redemption, a “REIT Qualification Optional Redemption”).
(q)      Redemption Procedures .
(i)      If the Partnership elects to redeem the Series G Preferred Units as described above, the Partnership shall provide to each record holder of the Series G Preferred Units a notice of redemption not fewer than 30 days nor more than 60 days before the redemption date. The Partnership shall send the notice to the address shown on the books and records of the Partnership. A failure to give notice of redemption or any defect in the notice or in its provision shall not affect the validity of the redemption of any Series G Preferred Units, except as to the holder to whom notice was defective. Each notice shall state the following:
(1) the redemption date;

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(2) the redemption price and accumulated and unpaid distributions payable on the redemption date;
(3) the number of Units of Series G Preferred Units to be redeemed;
(4) the place or places where the certificates, if any, representing Units of Series G Preferred Units are to be surrendered for payment of the redemption price;
(5) procedures for surrendering non-certificated Units of Series G Preferred Units for payment of the redemption price;
(6) that distributions on the Units of Series G Preferred Units to be redeemed will cease to accrue and accumulate on such redemption date (unless the Corporation defaults in payment of the redemption price and all accumulated and unpaid dividends);
(7) that payment of the redemption price and any accumulated and unpaid distributions will be made upon presentation and surrender of such Series G Preferred Units;
(8) in the case of a Special Optional Redemption, that the Series G Preferred Unit is being redeemed pursuant to the special optional redemption right in connection with the occurrence of a Change of Control and a brief description of the transaction or transactions constituting such Change of Control.
(ii)      If the Partnership redeems fewer than all of the Units of the Series G Preferred Units, the Partnership shall determine the number of Units to be redeemed. In such circumstances, the Units of the Series G Preferred Units to be redeemed shall be selected pro rata or in another equitable manner determined by the Partnership.
(iii)      If the Partnership has given a notice of redemption and has irrevocably set aside sufficient funds for the redemption in trust for the benefit of the holders of the Series G Preferred Units called for redemption, then from and after the redemption date (unless the Partnership defaults in payment of the redemption price and all accumulated and unpaid distributions), those Series G Preferred Units shall be treated as no longer being outstanding, no further distributions shall accrue or accumulate and all other rights of the holders of those Units of Series G Preferred Units shall terminate. The holders of those Series G Preferred Units shall retain their right to receive the redemption price for their Units and any accumulated and unpaid distributions through, but not including, the redemption date, without interest.
(iv)      If a redemption date falls after a distribution record date and prior to the corresponding Distribution Payment Date, the holders of Series G Preferred Units at the close of business on a distribution record date shall be entitled to receive the distribution payable with respect to the Series G Preferred Units on the corresponding

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payment date notwithstanding the redemption of the Series G Preferred Units between such record date and the corresponding payment date or the default in the payment of the distribution due. Except as provided above, the Partnership will make no payment or allowance for unpaid distributions, whether or not in arrears, on Series G Preferred Units to be redeemed.
(v)      Notwithstanding the foregoing, unless full cumulative distributions on all Units of the Series G Preferred Units have been or contemporaneously are declared and paid or declared and a sufficient sum set apart for payment for all past distribution periods and the then current distributions period, the Partnership may not:
(1)     redeem any Units of the Series G Preferred Units or any class or series of partnership interests of the Partnership ranking junior to or on parity with the Series G Preferred Units as to distribution rights or rights upon liquidation, dissolution or winding up unless the Partnership simultaneously redeems all Units of the Series G Preferred Units; or
(2)     purchase or otherwise acquire directly or indirectly any of the Series G Preferred Units or any other partnership interests of the Partnership ranking junior to or on parity with the Series G Preferred Units as to distribution rights or rights upon liquidation, dissolution or winding up, except by exchange for Units of partnership interests ranking junior to the Series G Preferred Units as to dividend rights and rights upon liquidation, dissolution or winding up;
provided, however, that the foregoing shall not prevent the redemption, purchase or acquisition by the Partnership of any partnership interests of the Partnership to the extent necessary to preserve the Partnership’s REIT status.
(r)      Notwithstanding the foregoing, if the Partnership has provided or provides irrevocable notice of redemption with respect to the Series G Preferred Units (whether pursuant to an Optional Redemption, REIT Qualification Optional Redemption or Special Optional Redemption), the holders of Series G Preferred Unit shall not have the conversion right described in subsection Section 8 below with respect to the Series G Preferred Units called for redemption (unless the Partnership defaults in the payment of the redemption price and accumulated and unpaid distributions).
8.      Conversion Rights . Holders of Series G Preferred Units shall have the right to convert all or a portion of such Units into Common Units, as follows:

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(a)      Upon the occurrence of a Change of Control, a holder of Series G Preferred Units shall have the right (unless, prior to the Change of Control Conversion Date (as defined in Section 8(e) below), the Partnership has provided or provides irrevocable notice of its election to redeem the Series G Preferred Units as described in Section 7 above, in which case such holder will only have the right with respect to the Units of Series G Preferred Units not called for redemption (unless the Partnership defaults in the payment of the redemption price and accumulated and unpaid distributions in which case such holder will again have a conversion right with respect to the Units of Series G Preferred Units subject to such default in payment)) to convert any whole number of Series G Preferred Units held by such holder (the “ Change of Control Conversion Right ”) into Common Units. Each Series G Preferred Unit shall be convertible on the Change of Control Conversion Date into the number of Common Units equal to the lesser of (i) the quotient obtained by dividing (A) the product of (y) the $25.00 per Unit liquidation preference amount, plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to, but not including, the Change of Control Conversion Date (unless the Change of control Conversion Date is after a record date for a Series G Preferred Unit distribution payment and prior to the corresponding Series G Preferred Unit distribution payment date, in which case no additional amount for such accumulated and unpaid distribution will be included in this sum) and (z) the Conversion Factor (as then in effect and as defined in the Partnership Agreement) by (B) the Common Stock Price (such quotient, the “Conversion Rate”); or (ii) 2.4679 (the “Unit Cap”), subject to certain adjustments described below. No fractional Common Units will be issued upon any conversion of Series G Preferred Units. Instead, the number of Common Units to be issued upon each conversion shall be rounded to the nearest whole number of Common Units.
(b)      The Unit Cap is subject to pro rata adjustments from time to time:
(i)      If the Partnership shall, after the date on which the Series G Preferred Units are first issued, (i) pay or make a distribution of Common Units to holders of partnership interests or Units, (ii) subdivide its outstanding Common Units into a greater number of Units or distribute Common Units to the holders thereof, (iii) combine its outstanding Common Units into a smaller number of Units or (iv) issue any partnership interests or Units by reclassification of its Common Units (each, an “ Adjustment Event ”), then upon such Adjustment Event, the Unit Cap shall be adjusted. The adjusted Unit Cap shall be the product obtained by multiplying (i) the Unit Cap in effect immediately prior to such Adjustment Event by (ii) a fraction, the numerator of which is the number of Common Units outstanding after giving effect to such Adjustment Event and the denominator of which is the number of Common Units outstanding immediately prior to such Adjustment Event. The

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adjustment provided by this Section 9(c) shall adjust the Unit Cap upon an Adjustment Event so that the holder of any Series G Preferred Unit thereafter surrendered for conversion shall be entitled to receive the number of Common Units or other partnership interests or securities that such holder would have owned or have been entitled to receive after the happening of any of the Adjustment Events described above had such Series G Preferred Unit been converted immediately prior to the record date in the case of a distribution or the effective date in the case of a subdivision, combination or reclassification.
(ii)      For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of Common Units issuable in connection with the exercise of the Change of Control Conversion Right shall not exceed 24,679,000 Common (the “Exchange Cap”). The Exchange Cap is subject to pro rata adjustments for any Adjustment Event on the same basis as the corresponding adjustments to the Unit Cap.
(c)      Within fifteen (15) days following the occurrence of a Change of Control, the Partnership shall provide to the holders of the Series G Preferred Units a notice of occurrence of the Change of Control the describes the resulting Change of Control Conversion Right. This notice shall state the following:
(v)      the events constituting the Change of Control;
(vi)      the date of the Change of Control;
(vii)      the last date on which the holders of Series G Preferred Units may exercise their Change of Control Conversion Right;
(viii)      the method and period for calculating the Common Stock Price;
(ix)      the Change of Control Date;
(x)      that if, prior to the Change of Control Conversion Date, the Partnership has provided or provides irrevocable notice of the election to redeem all or any portion of the Series G Preferred Units, holders will not be able to convert Series G Preferred Units designated for redemption and such Units will be redeemed on the related redemption date, even if such Units have already been tendered for conversion pursuant to the Change of Control Conversion Right (unless the Partnership defaults in payment of the redemption price and all accumulated and unpaid dividends);
(xi)      the procedures that the holders of the Series G Preferred Units must follow to exercise the Change of Control Conversion Right; and

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(xii)      the last date on which holders of Series G Preferred Units may withdraw Units surrendered for conversion and the procedures such holders must follow to effect such a withdrawal.
(d)      To exercise the Change of Control Conversion Right, the holders of the Series G Preferred Units shall be required to deliver, on or before the close of business on the Change of Control Conversion Date, a conversion notice to the Partnership stating the relevant Change of Control Conversion Date, the number of Units of Series G Preferred Units to be converted, and that the Series G Preferred Units are to be converted pursuant to the applicable provisions of the Series G Preferred Units.
(e)      The “Change of Control Conversion Date” is the date the Series G Preferred Units are to be converted, which shall be a business day that is no fewer than 20 days nor more than 35 days after the date on which the Partnership provides the notice described above to the holders of the Series G Preferred Units.
(f)      The “Common Stock Price” shall be (i) if the consideration to be received in the Change of Control by the holders of the common stock of the Public REIT is solely cash, the amount of cash consideration per share of common stock of the Public REIT or (ii) if the consideration to be received in the Change of Control by holders of common stock of the Public REIT is other than solely cash, the average of the closing sale prices per share of common stock of the Public REIT for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control as reported on the principal U.S. securities exchange on which the common stock of the Public REIT is then traded.
(g)      Holders of Series G Preferred Units may withdraw any notice of exercise of a Change of Control Conversion Right (in whole or in part) by a written notice of withdrawal delivered to the Partnership prior to the close of business on the business day prior to the Change of Control Conversion Date. The notice must state the number of withdrawn Units of Series G Preferred Units and the number of Units of Series G Preferred Units, if any, that remain subject to the conversion notice.
(h)      Units of Series G Preferred Units as to which the Change of Control Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn shall be converted into the Common Units in accordance with the Change of Control Conversion Right on the Change of Control Conversion Date, unless prior to the Change of Control Conversion Date the Partnership has provided or provides notice of the election to redeem such Series G Preferred Units pursuant to Section 7 above, in which case the holders of Series G Preferred Units shall not have the conversion right with respect to the Units of Series G Preferred Units so called for redemption (unless

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the Partnership defaults in the payment of the redemption price and accumulated and unpaid dividends). If the Partnership elects to redeem Series G Preferred Units that would otherwise be converted into the Common Units on a Change of Control Conversion Date, such Series G Preferred Units shall not be so converted and the holders of such Units shall be entitled to receive on the applicable redemption date $25.00 per Unit, plus any accumulated and unpaid dividends thereon to, but not including, the redemption date, in accordance with the provisions of Section 7 above.
(i)      In connection with the exercise of any Change of Control Conversion Right, the Partnership shall comply with all federal and state securities laws and stock exchange rules in connection with any conversion of Series G Preferred Units into Common Units or other property.




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SCHEDULE F
1.      Definitions . As used in this Schedule F, the following terms shall have the meanings set forth below, unless the context otherwise requires:
“ Applicable Margin ” means, at any date of determination, a percentage per annum determined by reference to the Loan-to-Value Ratio as set forth below:
Pricing Level
Loan-to-Value Ratio
Applicable Margin for Base Rate Units
Applicable Margin for LIBOR Units
I
≤ 65%
1.50%
2.50%
II
> 65%
1.75%
2.75%

The Applicable Margin for each Base Rate Unit shall be determined by reference to the Loan-to-Value Ratio in effect from time to time and the Applicable Margin for each LIBOR Unit shall be determined by reference to the Loan-to-Value Ratio in effect on the first day of such distribution period.
“ Base Rate ” shall mean, with respect to any day, a rate per annum equal to the highest of (a) the Federal Funds Rate for such day plus ½ of 1% per annum, (b) the Prime Rate for such day, and (c) the one-month LIBOR Rate plus 1% per annum. Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect at the time of such change in the Base Rate.
“ Base Rate Unit ” shall mean Series H Preferred Units that generate monthly distributions based upon the Base Rate.
“ Default Rate ” shall mean a rate per annum that is equal to the lesser of (a) maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the note issued by General Growth Properties, Inc., as borrower under the Loan Agreement, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan, or (b) the applicable distribution rate with respect to such Series H Preferred Unit plus 2%.
“ Distribution Payment Date ” shall mean, with respect to any Distribution Period, the first day of each month of each year, or, if not a business day, the next succeeding business day.
“ Distribution Period ” means, with respect to any LIBOR Unit, a period of seven (7) days, or one (1), two (2), three (3) or six (6) months, commencing on the date such LIBOR Unit is issued, on the day such LIBOR Unit is converted from a Base Rate Unit or on the last day of the immediately preceding Distribution Period for such Unit and ending on the day which corresponds numerically to such date seven (7) days, or one (1), two (2), three (3) or six (6) months thereafter, as applicable, provided that (i) each Distribution Period of one (1), two (2), three (3) or six (6) months that


 

commences on the last business day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last business day of the appropriate subsequent calendar month; (ii) each Distribution Period that would otherwise end on a day that is not a business day shall end on the next succeeding business day, provided that if the Maturity Date would otherwise fall on a day that is not a business day, the Maturity Date shall be the immediately preceding business day; provided further that, other than with respect to Distribution Periods of seven days, if said next succeeding business day falls in a new calendar month, such Distribution Period shall end on the immediately preceding business day; (iii) unless the Distribution Period for a LIBOR Unit is seven (7) days, no Libor Unit shall have a Distribution Period of less than one month and, if the Distribution Period for any LIBOR Unit would otherwise be a shorter period, such Unit shall bear interest at the Base Rate plus the Applicable Margin for Base Rate Units; (iv) in no event shall any Distribution Period extend beyond the Maturity Date; and (v) with respect to the Distribution Payment Date occurring in May, 2013, the Distribution Period shall be the period commencing on April 26 and ending on May 1, 2013.
“ Federal Funds Rate ” means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the business day next succeeding such day, provided that (a) if such day is not a business day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding business day as so published on the next succeeding business day, and (b) if no such rate is so published on such next succeeding business day, the Federal Funds Rate for such day shall be the rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) representing the average of the quotations at approximately 10:00 a.m. (New York City time) on such day on such transactions received by U.S. Bank National Association from three Federal funds brokers of recognized standing selected by U.S. Bank National Association in its sole discretion.
“ Prime Rate ” means from time to time, the rate of interest established by U.S. Bank National Association as its prime commercial lending rate.
“ LIBOR Unit ” shall mean Series H Preferred Units that generate monthly distributions at the LIBOR Rate.
“ LIBOR Rate ” shall mean, with respect to any LIBOR Unit and a particular Distribution Period, (i) for the first Distribution Period (i.e., ending May 1, 2013), 2.6875% per annum and (ii) for each Distribution Period thereafter, the LIBOR rate taken from Reuters Screen LIBOR01 page or any successor thereto, which shall be that LIBOR rate in effect two New York Banking Days prior to such Distribution Period, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation, such rate rounded up to the nearest one-sixteenth percent; provided that the LIBOR Rate shall never be less than zero. The term “ New York Banking Day ” means any date (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.
“ Loan Agreement ” shall mean the Loan Agreement dated as of April 26, 2013 in the principal sum of $1,500,000,000 by and among General Growth Properties, Inc., as borrower, U.S. Bank National Association, as administrative agent, RBC Capital Markets and U.S. Bank National

F-2

 

Association, as joint lead arrangers and bookrunners, and those property guarantors and lenders listed on the signature pages therein. The “ Loan ” shall mean the loans to be made to General Growth Properties, Inc., as borrower, under the Loan Agreement.
“ Loan-to-Value Ratio ” shall mean the ratio, as of a particular date, calculated in accordance with the Loan Agreement.
“ Maturity Date ” shall mean April 26, 2016; provided, however, holders of Series H Preferred Units may extend the Maturity Date for two (2) successive terms (the “ Extension Option ”) of one (1) year each (each, an “ Extension Period ”) to (y) April 26, 2017 if the first Extension Option is exercised and (z) April 26, 2018 if the second Extension Option is exercised.
2.      Designation and Number; Etc . The Series H Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Fourth Amended and Restated Agreement of Limited Partnership to the extent applicable). The authorized number of Series H Preferred Units shall be 1,500,000. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule F and any other provision of the Fourth Amended and Restated Agreement of Limited Partnership, the provisions of this Schedule F shall control.
3.      Rank. The Series H Preferred Units shall, with respect to the payment of distributions and the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, rank as follows:
(j)      senior to all classes or series of Common Units and to all Units the terms of which provide that such Units shall rank junior to the Series H Preferred Units;
(k)      on a parity with the Series B Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and each other series of Preferred Units issued by the Partnership which does not provide by its express terms that it ranks junior or senior in right of payment to the Series H Preferred Units with respect to payment of distributions or amounts upon liquidation, dissolution or winding-up; and
(l)      junior to any class or series of Preferred Units issued by the Partnership that ranks senior to the Series H Preferred Units.
4.      Voting . The Partnership shall not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding Series H Preferred Units voting separately as a class:

F-3

 

(e)      authorize, create or increase the authorized or issued amount of any class or series of partnership interests of the Partnership ranking senior to the Series H Preferred Units with respect to the payment of distributions or rights upon liquidation, dissolution or winding up of the Partnership, or reclassify any authorized partnership interests into, or create, authorize or issue any obligation or interest convertible into, exchangeable for or evidencing the right to purchase, any such senior partnership interests; or
(f)      amend, alter or repeal the provisions of these Series H Preferred Units, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series H Preferred Units or the holders thereof.
For purposes of this Section 4, each Series H Preferred Unit shall have one (1) vote. Notwithstanding anything to the contrary contained herein, the foregoing voting provisions shall not apply if, prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series H Preferred Units shall have been redeemed. Except as provided herein, the holders of Series H Preferred Units shall not have any voting or consent rights or other rights to participate in the management of the Partnership or to receive notices of meetings.
5.      Unit Type Conversions . The Series H Preferred Units are distinguished by “Type.” The “Type” of Unit refers to whether such Unit is a Base Rate Unit or a LIBOR Unit, each of which constitutes a Type of Series H Preferred Unit. The holders of Series H Preferred Units shall have the right to convert Units of one Type into Units of another Type at any time or from time to time. Unit holders shall designate the Type of Series H Preferred Unit being acquired at the time of issuance, and such Type shall continue unless such holder directs the Partnership to convert such Type into another Type. Absent instructions from a Unit holder to select the duration of any Distribution Period for any LIBOR Unit, such Unit shall continue as a LIBOR Unit with a Distribution Period of one (1) month on the last day of the then-current Distribution Period for such Unit or, if outstanding as a Base Rate Unit, shall remain as a Base Rate Unit.
6.      Distributions .
(a)      Regular Distributions . Subject to the rights of the holders of Preferred Units ranking senior to or on parity with the Series H Preferred Units, the holders of Series H Preferred Units shall be entitled to receive on each Distribution Payment Date, out of assets of the Partnership legally available for the payment of the distributions, monthly cumulative cash distributions at the following rates per annum on the $1,000 liquidation preference per Series H Preferred Unit:

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(i)      during such periods as the Series H Preferred Units are Base Rate Units, the Base Rate plus the Applicable Margin; and
(ii)      during such periods as the Series H Preferred Units are LIBOR Units, the LIBOR Rate for such period plus the Applicable Margin.
Notwithstanding anything to the contrary contained herein, after the Maturity Date and during any period when an Event of Default exists (as such term is defined in the Loan Agreement), the holders of Series H Preferred Units shall be entitled to receive on each Distribution Payment Date, cash distributions at the applicable Default Rate on $1,000 liquidation preference per Unit and all distributions thereon not paid when due. In addition to any distributions due under this Section 6 , the Partnership shall pay to holders of Series H Preferred Units a late payment premium in the amount of two percent (2%) of any payments of distributions made two days after the Distribution Payment Date.
(b)      Distributions on the Series H Preferred Units shall only be paid when, as and if declared by the General Partner, however, distributions shall accumulate whether or not so declared.
(c)      Distributions on the Series H Preferred Units shall accrue and be cumulative from, and including, the date of original issuance and shall be payable (when, as and if declared by the General Partner) monthly in arrears on each Distribution Payment Date. The initial distribution on the Series H Preferred Units, which shall be paid on May 1, 2013 if declared by the General Partner, shall be for less than a full month and shall be in the amount of $559,895.83 per Series H Preferred Unit. Distributions payable on the Series H Preferred Units shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which such Distribution is payable.
(d)      The Partnership shall pay distributions to holders of record at the close of business on the applicable distribution record date. The record date for distributions upon the Series H Preferred Units shall be the business day immediately preceding the related Distribution Payment Date, or such other date that the General Partner shall designate that is not more than 30 days prior to the applicable Distribution Payment Date.
(e)      No distribution on the Series H Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as and to the extent that the terms and provisions of any bona fide agreement of the Partnership, including any agreement relating to bona fide indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or to the extent

F-5

 

that such declaration of payment shall be restricted or prohibited by law (and such failure to pay distributions on the Series H Preferred Units shall prohibit other distributions by the Partnership as described in this Schedule F).
(f)      Distributions on the Series H Preferred Units shall accrue and accumulate, however, whether the Partnership has earnings, whether there are funds legally available for the payment of distributions and whether such distributions are declared by the General Partner.
(g)      Except as provided in Section 6(h) of this Schedule F, so long as any Series H Preferred Units are outstanding, (i) no cash or non-cash distributions (other than in Common Units or other Units ranking junior to the Series H Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership) shall be declared or paid or set apart for payment upon the Common Units or any other class or series of partnership interests in the Partnership or Units ranking, as to payment of distributions or amounts distributable upon liquidation, dissolution or winding-up of the Partnership, on a parity with or junior to the Series H Preferred Units, for any period and (ii) no Common Units or other Units ranking junior to or on a parity with the Series H Preferred Units as to payment of distributions or amounts upon liquidation, dissolution or winding-up of the Partnership shall be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange for other Units ranking junior to the Series H Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership or by redemptions pursuant to any redemption rights agreements) unless, in the case of either clause (i) or (ii), full cumulative distributions have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment.
(h)      When distributions are not paid in full (or a sum sufficient for such full payment is not set apart for such payment) upon the Series H Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series H Preferred Units, all distributions declared upon the Series H Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series H Preferred Units shall be declared or paid pro rata so that the amount of distributions declared per Unit of Series H Preferred Units and such other partnership interests in the Partnership shall in all cases bear to each other the same ratio that accrued and unpaid distributions per Unit on the Series H Preferred Units and such other partnership interests in the Partnership (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such Units do not have cumulative distributions) bear to each other.

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(i)      Any distribution payment made on Series H Preferred Units shall first be credited against the earliest accumulated but unpaid distribution due with respect to such Units that remains payable.
(j)      If, for any taxable year, the Partnership elects to designate as “capital gain dividends” (as defined in Section 857 of the Internal Revenue Code of 1986, as amended, or any successor revenue code or section) any portion of the total distributions (as determined for Federal income tax purposes) paid or made available for the year to holders of all partnership interests of the Partnership (the “Capital Gains Amount”), then the portion of the Capital Gains Amount that shall be allocable to holders of the Series H Preferred Units shall be in the same portion that the total distributions paid or made available to the holders of the Series H Preferred Units for the year bears to the total distributions for the year made with respect to all partnership interests in the Partnership.
(k)      Distributions with respect to the Series H Preferred Units are intended to qualify as permitted distributions of cash that are not treated as a disguised sale within the meaning of Treasury Regulation §1.707-4 and the provisions of this Schedule F shall be construed and applied consistently with such Treasury Regulations.
7.      Liquidation Preference .
(a)      In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, before any payment or distribution of the assets of the Partnership (whether capital or surplus) shall be made to or set apart for the holders of Common Units or any other partnership interests in the Partnership or Units ranking junior to the Series H Preferred Units as to the distribution of assets upon the liquidation, dissolution or winding-up of the Partnership, the holders of the Series H Preferred Units shall, with respect to each such Unit, be entitled to receive, out of the assets of the Partnership available for distribution to Partners after payment or provision for payment of all debts and other liabilities of the Partnership and subject to the rights of the holders of any series of Preferred Units ranking senior to or on parity with the Series H Preferred Units with respect to payment of amounts upon liquidation, dissolution or winding-up of the Partnership, an amount equal to $1,000.00 (or property having a fair market value as determined by the General Partner valued at $1,000.00 per Series H Preferred Unit), plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution (including all accumulated and unpaid distributions).
(b)      If, upon any such voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of the Series H Preferred Units are insufficient to pay in full the preferential amount aforesaid on the Series H Preferred Units and liquidating payments on any other

F-7

 

Units or partnership interests in the Partnership of any class or series ranking, as to payment of distributions and amounts upon the liquidation, dissolution or winding-up of the Partnership, on a parity with the Series H Preferred Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series H Preferred Units and any such other Units or partnership interests in the Partnership ratably in accordance with the respective amounts that would be payable on such Series H Preferred Units and such other Units or partnership interests in the Partnership if all amounts payable thereon were paid in full.
(c)      Written notice of such liquidation, dissolution or winding-up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series H Preferred Units at the respective addresses of such holders as the same shall appear on the transfer records of the Partnership.
(d)      After payment of the full amount of liquidating distributions to which they are entitled as provided in Section 7(a) of this Schedule F, the holders of Series H Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.
(e)      For the purposes of this Section 7, none of (i) a consolidation or merger of the Partnership with or into another entity, (ii) a merger of another entity with or into the Partnership or (iii) a sale, lease or conveyance of all or substantially all of the Partnership’s assets, properties or business shall be deemed to be a liquidation, dissolution or winding-up of the Partnership (unless all or substantially all of the proceeds thereof are distributed by the Partnership, in which case a liquidation, dissolution or winding-up of the Partnership shall be deemed to have occurred).
8.      Redemption .
(j)      Mandatory Redemptions .
(i)      Extension Period Redemptions. On each Distribution Payment Date during each Extension Period, the Partnership shall redeem a number of Series H Preferred Units equal to the quotient obtained by dividing (y) the Extension Period Redemption Payment by (z) the liquidation value of $1,000 per Series H Preferred Unit. The Extension Period Redemption Payment shall be an amount calculated by the Partnership equal to the constant monthly principal payments required to fully amortize, over a term of thirty (30) years, the a loan in an amount equal to the then outstanding principal amount of the Loan, assuming a debt constant of 7.58%

F-8

 

(calculated based on an annual interest rate of 6.5% and such thirty (30) year amortization schedule).
(ii)      On the Maturity Date, the Partnership shall redeem the Series H Preferred Units at a redemption price equal to the $1,000 liquidation value of such Units, plus all accumulated and unpaid distributions.
(k)      Optional Redemption . The holders of the Series H Preferred Units shall have the right to redeem the Series H Preferred Units, in whole or in part, for cash, at a redemption price of the $1,000 liquidation value of such Units, plus all accumulated and unpaid distributions and a redemption fee, which shall be an amount equal to the applicable “Prepayment Premium” that would be payable pursuant to the terms of the Loan Agreement in the event the Loan were repaid prior to its maturity date.
9.      Purpose . The Series H Preferred Units are issued by the Partnership in accordance with, and pursuant to, Section 4(d)(ii) of the Fourth Amended and Restated Agreement of Limited Partnership of GGP Operating Partnership, LP, and as a direct result of the Unit holders’ contribution of Loan proceeds to the Partnership. Accordingly, the terms set forth on this Exhibit F are intended to be equivalent to the terms of the Note issued by General Growth Properties, Inc., as borrower, under the Loan Agreement. To the extent that the terms herein do not provide such equivalency, whether through omission or otherwise, the Partnership shall be authorized, notwithstanding any provision herein to the contrary, to make such adjustments to the provisions of this Exhibit F and the Series H Preferred Units.




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SCHEDULE G
1.      Definitions . As used in this Schedule G, the following terms shall have the meanings set forth below, unless the context otherwise requires:
“ Default Rate ” shall mean a rate per annum that is equal to the lesser of (a) maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the note issued by General Growth Properties, Inc., as borrower under the Loan Agreement, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan, or (b) the applicable distribution rate with respect to such Series I Preferred Unit plus 2%.
“ Distribution Payment Date ” shall mean the first day of each month of each year, or, if not a business day, the next succeeding business day (provided no interest, additional distributions or other sums shall accrue or accumulate on the amount so payable for the period from and after the Distribution Payment Date to the next succeeding business day).
“ LIBOR Rate ” shall mean the LIBOR rate taken from Reuters Screen LIBOR01 page or any successor thereto, which shall be that LIBOR rate in effect two New York Banking Days prior to the first day of each calendar month, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation, such rate rounded up to the nearest one-sixteenth percent; provided that the LIBOR Rate shall never be less than zero. The term “ New York Banking Day ” means any date (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.
“ Loan Agreement ” shall mean the Loan Agreement dated as of September 5, 2013 in the principal sum of $100,000,000 by and among General Growth Properties, Inc., as borrower, Columbia Mall L.L.C., as guarantor, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as lead arranger and bookrunner. The “ Loan ” shall mean the loans to be made to General Growth Properties, Inc., as borrower, under the Loan Agreement.
“ Maturity Date ” shall mean September 5, 2018.
2.      Designation and Number; Etc . The Series I Preferred Units have been established and shall have such rights, preferences, limitations and qualifications as are described herein (in addition to the rights, preferences, limitations and qualifications contained in the Fourth Amended and Restated Agreement of Limited Partnership to the extent applicable). The authorized number of Series I Preferred Units shall be 100,000. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the provisions of this Schedule G and any other provision of the Fourth Amended and Restated Agreement of Limited Partnership, the provisions of this Schedule G shall control.


 

3.      Rank. The Series I Preferred Units shall, with respect to the payment of distributions and the distribution of amounts upon voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, rank as follows:
(m)      senior to all classes or series of Common Units and to all Units the terms of which provide that such Units shall rank junior to the Series I Preferred Units;
(n)      on a parity with the Series B Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units, Series H Preferred Units and each other series of Preferred Units issued by the Partnership which does not provide by its express terms that it ranks junior or senior in right of payment to the Series I Preferred Units with respect to payment of distributions or amounts upon liquidation, dissolution or winding-up; and
(o)      junior to any class or series of Preferred Units issued by the Partnership that ranks senior to the Series I Preferred Units.
4.      Voting . The Partnership shall not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding Series I Preferred Units voting separately as a class:
(g)      authorize, create or increase the authorized or issued amount of any class or series of partnership interests of the Partnership ranking senior to the Series I Preferred Units with respect to the payment of distributions or rights upon liquidation, dissolution or winding up of the Partnership, or reclassify any authorized partnership interests into, or create, authorize or issue any obligation or interest convertible into, exchangeable for or evidencing the right to purchase, any such senior partnership interests; or
(h)      amend, alter or repeal the provisions of these Series I Preferred Units, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series I Preferred Units or the holders thereof.
For purposes of this Section 4, each Series I Preferred Unit shall have one (1) vote. Notwithstanding anything to the contrary contained herein, the foregoing voting provisions shall not apply if, prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series I Preferred Units shall have been redeemed. Except as provided herein, the holders of Series I Preferred Units shall not have any voting or consent rights or other rights to participate in the management of the Partnership or to receive notices of meetings.

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5.      Distributions .
(a)      Regular Distributions . Subject to the rights of the holders of Preferred Units ranking senior to or on parity with the Series I Preferred Units, the holders of Series I Preferred Units shall be entitled to receive on each Distribution Payment Date, out of assets of the Partnership legally available for the payment of the distributions, monthly cumulative cash distributions at the LIBOR Rate on the $1,000 liquidation preference per Series I Preferred Unit. Notwithstanding anything to the contrary contained herein, after the Maturity Date and during any period when an Event of Default exists (as such term is defined in the Loan Agreement), the holders of Series I Preferred Units shall be entitled to receive on each Distribution Payment Date, cash distributions at the applicable Default Rate on $1,000 liquidation preference per Unit and all distributions thereon not paid when due. In addition to any distributions due under this Section 5 , the Partnership shall pay to holders of Series I Preferred Units a late payment premium in the amount of two percent (2%) of any payments of distributions made two days after the Distribution Payment Date.
(b)      Distributions on the Series I Preferred Units shall only be paid when, as and if declared by the General Partner, however, distributions shall accumulate whether or not so declared.
(c)      Distributions on the Series I Preferred Units shall accrue and be cumulative from, and including, the date of original issuance and shall be payable (when, as and if declared by the General Partner) monthly in arrears on each Distribution Payment Date. The initial distribution on the Series I Preferred Units, which shall be paid on October 1, 2013 if declared by the General Partner, shall be for less than a full month and shall be in the amount of approximately $1.3961 per Series I Preferred Unit. Distributions payable on the Series I Preferred Units shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which such Distribution is payable.
(d)      The Partnership shall pay distributions to holders of record at the close of business on the applicable distribution record date. The record date for distributions upon the Series I Preferred Units shall be the business day immediately preceding the related Distribution Payment Date, or such other date that the General Partner shall designate that is not more than 30 days prior to the applicable Distribution Payment Date.
(e)      No distribution on the Series I Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as and to the extent that the terms and provisions of any bona fide agreement of the Partnership, including any agreement relating to bona fide indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment

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would constitute a breach thereof, or a default thereunder, or to the extent that such declaration of payment shall be restricted or prohibited by law (and such failure to pay distributions on the Series I Preferred Units shall prohibit other distributions by the Partnership as described in this Schedule G).
(f)      Distributions on the Series I Preferred Units shall accrue and accumulate, however, whether the Partnership has earnings, whether there are funds legally available for the payment of distributions and whether such distributions are declared by the General Partner.
(g)      Except as provided in Section 5(h) of this Schedule G, so long as any Series I Preferred Units are outstanding, (i) no cash or non-cash distributions (other than in Common Units or other Units ranking junior to the Series I Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership) shall be declared or paid or set apart for payment upon the Common Units or any other class or series of partnership interests in the Partnership or Units ranking, as to payment of distributions or amounts distributable upon liquidation, dissolution or winding-up of the Partnership, on a parity with or junior to the Series I Preferred Units, for any period and (ii) no Common Units or other Units ranking junior to or on a parity with the Series I Preferred Units as to payment of distributions or amounts upon liquidation, dissolution or winding-up of the Partnership shall be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange for other Units ranking junior to the Series I Preferred Units as to payment of distributions and amounts upon liquidation, dissolution or winding-up of the Partnership or by redemptions pursuant to any redemption rights agreements) unless, in the case of either clause (i) or (ii), full cumulative distributions have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment.
(h)      When distributions are not paid in full (or a sum sufficient for such full payment is not set apart for such payment) upon the Series I Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series I Preferred Units, all distributions declared upon the Series I Preferred Units and any other partnership interests in the Partnership or Units ranking on a parity as to payment of distributions with the Series I Preferred Units shall be declared or paid pro rata so that the amount of distributions declared per Unit of Series I Preferred Units and such other partnership interests in the Partnership shall in all cases bear to each other the same ratio that accrued and unpaid distributions per Unit on the Series I Preferred Units and such other partnership interests in the Partnership (which shall not include any

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accumulation in respect of unpaid distributions for prior distribution periods if such Units do not have cumulative distributions) bear to each other.
(i)      Any distribution payment made on Series I Preferred Units shall first be credited against the earliest accumulated but unpaid distribution due with respect to such Units that remains payable.
(j)      If, for any taxable year, the Partnership elects to designate as “capital gain dividends” (as defined in Section 857 of the Internal Revenue Code of 1986, as amended, or any successor revenue code or section) any portion of the total distributions (as determined for Federal income tax purposes) paid or made available for the year to holders of all partnership interests of the Partnership (the “Capital Gains Amount”), then the portion of the Capital Gains Amount that shall be allocable to holders of the Series I Preferred Units shall be in the same portion that the total distributions paid or made available to the holders of the Series I Preferred Units for the year bears to the total distributions for the year made with respect to all partnership interests in the Partnership.
(k)      Distributions with respect to the Series I Preferred Units are intended to qualify as permitted distributions of cash that are not treated as a disguised sale within the meaning of Treasury Regulation §1.707-4 and the provisions of this Schedule G shall be construed and applied consistently with such Treasury Regulations.

6.      Liquidation Preference .
(a)      In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, before any payment or distribution of the assets of the Partnership (whether capital or surplus) shall be made to or set apart for the holders of Common Units or any other partnership interests in the Partnership or Units ranking junior to the Series I Preferred Units as to the distribution of assets upon the liquidation, dissolution or winding-up of the Partnership, the holders of the Series I Preferred Units shall, with respect to each such Unit, be entitled to receive, out of the assets of the Partnership available for distribution to Partners after payment or provision for payment of all debts and other liabilities of the Partnership and subject to the rights of the holders of any series of Preferred Units ranking senior to or on parity with the Series I Preferred Units with respect to payment of amounts upon liquidation, dissolution or winding-up of the Partnership, an amount equal to $1,000.00 (or property having a fair market value as determined by the General Partner valued at $1,000.00 per Series I Preferred Unit), plus an amount equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution (including all accumulated and unpaid distributions).

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(b)      If, upon any such voluntary or involuntary liquidation, dissolution or winding-up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of the Series I Preferred Units are insufficient to pay in full the preferential amount aforesaid on the Series I Preferred Units and liquidating payments on any other Units or partnership interests in the Partnership of any class or series ranking, as to payment of distributions and amounts upon the liquidation, dissolution or winding-up of the Partnership, on a parity with the Series I Preferred Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series I Preferred Units and any such other Units or partnership interests in the Partnership ratably in accordance with the respective amounts that would be payable on such Series I Preferred Units and such other Units or partnership interests in the Partnership if all amounts payable thereon were paid in full.
(c)      Written notice of such liquidation, dissolution or winding-up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series H Preferred Units at the respective addresses of such holders as the same shall appear on the transfer records of the Partnership.
(d)      After payment of the full amount of liquidating distributions to which they are entitled as provided in Section 6(a) of this Schedule G, the holders of Series I Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.
(e)      For the purposes of this Section 6, none of (i) a consolidation or merger of the Partnership with or into another entity, (ii) a merger of another entity with or into the Partnership or (iii) a sale, lease or conveyance of all or substantially all of the Partnership’s assets, properties or business shall be deemed to be a liquidation, dissolution or winding-up of the Partnership (unless all or substantially all of the proceeds thereof are distributed by the Partnership, in which case a liquidation, dissolution or winding-up of the Partnership shall be deemed to have occurred).
7.      Redemption .
(s)      Mandatory Redemptions . On the Maturity Date, the Partnership shall redeem the Series I Preferred Units at a redemption price equal to the $1,000 liquidation value of such Units, plus all accumulated and unpaid distributions.
(t)      Optional Redemption . At any time prior to the Maturity Date, the holders of the Series I Preferred Units shall have the right to redeem the Series I Preferred Units, in whole or in part, for cash, at a redemption price of the $1,000 liquidation value of such Units, plus all accumulated and unpaid distributions.

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8.      Purpose . The Series I Preferred Units are issued by the Partnership in accordance with, and pursuant to, Section 4(d)(ii) of the Fourth Amended and Restated Agreement of Limited Partnership of GGP Operating Partnership, LP, as amended, and as a direct result of the Unit holders’ contribution of Loan proceeds to the Partnership. Accordingly, the terms set forth on this Schedule G are intended to be equivalent to the terms of the Note issued by General Growth Properties, Inc., as borrower, under the Loan Agreement. To the extent that the terms herein do not provide such equivalency, whether through omission or otherwise, the Partnership shall be authorized, notwithstanding any provision herein to the contrary, to make such adjustments to the provisions of this Schedule G and the Series I Preferred Units.


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SCHEDULE H

1.1      Designation . A class of Partnership Units in the Partnership designated as “ LTIP Units ” is hereby established. LTIP Units are intended to qualify as “profits interests” in the Partnership. Two initial series of LTIP Units designated as “ AO LTIP Units ” and “ FV LTIP Units ,” respectively, are hereby established. The number of LTIP Units, AO LTIP Units and FV LTIP Units that may be issued by the Partnership shall not be limited.

1.2      Vesting . LTIP Units may, in the sole discretion of the General Partner, be issued subject to vesting, forfeiture and additional restrictions on transfer pursuant to the terms of an award, vesting or other similar agreement (a “ Vesting Agreement ”). The terms of any Vesting Agreement may be modified by the General Partner from time to time in its sole discretion, subject to any restrictions on amendment imposed by the relevant Vesting Agreement or by the terms of any Stock Plan pursuant to which the LTIP Units are issued, if applicable. LTIP Units that have vested and are no longer subject to forfeiture under the terms of a Vesting Agreement are referred to as “ Vested LTIP Units; ” all other LTIP Units are referred to as “ Unvested LTIP Units .”

1.3      Forfeiture or Transfer of Unvested LTIP Units . Unless otherwise specified in the relevant Vesting Agreement, upon the occurrence of any event specified in a Vesting Agreement resulting in either the forfeiture of any LTIP Units or the repurchase thereof by the Partnership at a specified purchase price, then, upon the occurrence of the circumstances resulting in such forfeiture or repurchase by the Partnership, the relevant LTIP Units shall immediately, and without any further action, be treated as cancelled and no longer outstanding for any purpose or as transferred to the Partnership. Unless otherwise specified in the relevant Vesting Agreement, no consideration or other payment shall be due with respect to any LTIP Units that have been forfeited, other than any distributions declared with a record date prior to the effective date of the forfeiture.

1.4      Legend . Any certificate evidencing an LTIP Unit shall bear an appropriate legend indicating that additional terms, conditions and restrictions on transfer, including without limitation provisions set forth in the Vesting Agreement, apply to the LTIP Unit.

1.7.     Adjustments . If an LTIP Unit Adjustment Event (as defined below) occurs, then the General Partner shall make a corresponding adjustment to the LTIP Units to maintain the same correspondence between Common Units and LTIP Units as existed prior to such LTIP Unit Adjustment Event. The following shall be “ LTIP Unit Adjustment Events :” (A) the Partnership makes a distribution on all outstanding Common Units in Units, (B) the Partnership subdivides the outstanding Common Units into a greater number of Units or combines the outstanding Common Units into a smaller number of Units, or (C) the Partnership issues any Units in exchange for its outstanding Common Units by way of a reclassification or recapitalization. If more than one LTIP Unit Adjustment Event occurs, the adjustment to the LTIP Units need be made only once using a single formula that takes into account each and every LTIP Unit Adjustment Event as if all LTIP Unit Adjustment Events occurred simultaneously. If the Partnership takes an action affecting the Common Units other than actions specifically described above as LTIP Unit Adjustment Events and in the opinion of the General Partner such action would require an adjustment to the LTIP Units to maintain the correspondence between Common Units and LTIP Units as it existed prior to such


 

action, the General Partner shall make such adjustment to the LTIP Units, to the extent permitted by law and by the terms of any Vesting Agreement or plan pursuant to which the LTIP Units have been issued , in such manner and at such time as the General Partner, in its sole discretion, may determine to be appropriate under the circumstances to maintain such correspondence. If an adjustment is made to the LTIP Units as herein provided, the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth such adjustment and a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after filing such certificate, the Partnership shall mail a notice to each holder of LTIP Units setting forth the adjustment to his or her LTIP Units and the effective date of such adjustment.

1.8      Right to Convert LTIP Units into Common Units .

(a)     A holder of LTIP Units shall have the right (the “ LTIP Unit Conversion Right ”), at his or her option, at any time to convert all or a portion of his or her Vested LTIP Units as follows:

(1)     an AO LTIP Unit that that has become a Vested LTIP Unit may be converted into a number (or fraction thereof) of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7 equal to the AO LTIP Conversion Factor (as defined below); and

(2)     a FV LTIP Unit that that has become a Vested LTIP Unit may be converted into a number (or fraction thereof) of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7 equal to the FV LTIP Conversion Factor (as defined below).

“ AO LTIP Conversion Factor ” shall mean the quotient of (i) the excess of the Common Unit Economic Balance as of the date of conversion (assuming for this purpose the Gross Asset Values of the Partnership’s assets are adjusted pursuant to subsection (b) of the definition of Gross Asset Value as of the conversion date) over the AO LTIP Unit Participation Threshold (as defined below) for such Vested AO LTIP Unit, divided by (ii) the Common Unit Economic Balance as of the date of conversion (assuming for this purpose the Gross Asset Values of the Partnership’s assets are adjusted pursuant to subsection (b) of the definition of Gross Asset Value as of the conversion date).

“ AO LTIP Unit Participation Threshold ” shall mean, for each AO LTIP Unit, the amount specified as such in the relevant Vesting Agreement or other documentation pursuant to which such AO LTIP Unit is granted. The AO LTIP Unit Participation Threshold of an AO LTIP Unit is intended to be the Common Unit Economic Balance as of the date of issuance of such AO LTIP Unit, assuming the Gross Asset Values of the Partnership’s assets are adjusted pursuant to subsection (b) of the definition of Gross Asset Value at such time.


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Holders of LTIP Units shall not have the right to convert Unvested LTIP Units into Common Units until they become Vested LTIP Units; provided , however , that when a holder of LTIP Units is notified of the expected occurrence of an event that will cause his or her Unvested LTIP Units to become Vested LTIP Units, such Person may give the Partnership an LTIP Unit Conversion Notice conditioned upon and effective as of the time of vesting, and such LTIP Unit Conversion Notice, unless subsequently revoked by the holder of the LTIP Units, shall be accepted by the Partnership subject to such condition.

“ FV LTIP Conversion Factor ” shall mean the quotient of (i) the Economic Capital Account Balance attributable to the FV LTIP Unit being converted as of the date of conversion, divided by (ii) the Common Unit Economic Balance as of the date of conversion, provided that if the Economic Capital Account Balance attributable to an FV LTIP Unit has at any time reached an amount equal to the Common Unit Economic Balance determined as of such time, the FV LTIP Conversion Factor for such FV LTIP Unit shall never exceed one (1).

(b)     In order to exercise his or her LTIP Unit Conversion Right, a Holder of LTIP Units shall deliver a notice (an “ LTIP Unit Conversion Notice ”) in the form attached as Exhibit X hereto not less than 10 nor more than 60 days prior to a date (the “ LTIP Unit Conversion Date ”) specified in such LTIP Unit Conversion Notice. Each holder of LTIP Units covenants and agrees with the Partnership that all Vested LTIP Units to be converted pursuant to this Section 1.8 shall be free and clear of all liens.

1.9     Forced Conversion by the Partnership into Common Units .

(a)     The Partnership may cause Vested LTIP Units to be converted (a “ LTIP Unit Forced Conversion ”) into Common Units as follows:

(1) at any time after the AO LTIP Unit Forced Conversion Date (as defined below), an AO LTIP Unit that has become a Vested LTIP Unit may be converted by the Partnership into a number (or fraction thereof) of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7 equal to the AO LTIP Conversion Factor (as defined above), subject to Section 1.12; and

(2) a FV LTIP Unit that that has become a Vested LTIP Unit and the Book-Up Target of which is zero may be converted into a number (or fraction thereof) of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7 equal to the FV LTIP Conversion Factor (as defined above), subject to Section 1.12;

“ AO LTIP Unit Forced Conversion Date ” shall mean, for each AO LTIP Unit, the date specified as such herein or in the relevant Vesting Agreement or other documentation pursuant to which such AO LTIP Unit is granted.

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(b)      In order to exercise its right to cause an LTIP Unit Forced Conversion, the Partnership shall deliver a notice (a “ LTIP Unit Forced Conversion Notice ”) in the form attached as Exhibit Y hereto to the applicable Holder not less than 10 nor more than 60 days prior to the LTIP Unit Conversion Date specified in such LTIP Unit Forced Conversion Notice. A Forced LTIP Unit Conversion Notice shall be provided in the manner in which notices are generally to be provided in accordance with the Partnership Agreement. Each holder of LTIP Units covenants and agrees with the Partnership that all Vested LTIP Units to be converted pursuant to this Section 1.9 shall be free and clear of all liens.

1.10      Conversion Procedures . Subject to any redemption of Common Units to be received upon the conversion of Vested LTIP Units pursuant to Section 1.13, a conversion of Vested LTIP Units for which the Holder thereof has given an LTIP Unit Conversion Notice or for which the Partnership has given a LTIP Unit Forced Conversion Notice shall occur automatically after the close of business on the applicable LTIP Unit Conversion Date without any action on the part of such Holder of LTIP Units, as of which time such Holder of LTIP Units shall be credited on the books and records of the Partnership with the issuance as of the opening of business on the next day of the number of Common Units issuable upon such conversion. After the conversion of LTIP Units as aforesaid, the Partnership shall deliver to such Holder of LTIP Units, upon his or her written request, a certificate of the General Partner certifying the number of Common Units and remaining LTIP Units, if any, held by such Person immediately after such conversion.

1.11      Treatment of Capital Account . For purposes of making future allocations under the Partnership Agreement, reference to a Partner’s portion of its Economic Capital Account Balance attributable to his or her LTIP Units shall exclude, after the date of conversion of any of its LTIP Units, the portion of such Partner’s Economic Capital Account Balance attributable to the converted LTIP Units.

1.12      Mandatory Conversion in Connection with a Capital Transaction .

(a)     If the Partnership, the General Partner or the Public REIT shall be a party to any transaction (including without limitation a merger, consolidation, unit exchange, self tender offer for all or substantially all Common Units or other business combination or reorganization, or sale of all or substantially all of the Partnership’s assets, but excluding any transaction which constitutes an LTIP Unit Adjustment Event) as a result of which Common Units shall be exchanged for or converted into the right, or the Holders of Common Units shall otherwise be entitled, to receive cash, securities or other property or any combination thereof (any such transaction being referred to herein as a “ Capital Transaction ”), then the General Partner shall, immediately prior to the Capital Transaction, exercise its right to cause an LTIP Unit Forced Conversion with respect to the maximum number of LTIP Units then eligible for conversion, taking into account any allocations that occur in connection with the

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Capital Transaction or that would occur in connection with the Capital Transaction if the assets of the Partnership were sold at the Capital Transaction price or, if applicable, at a value determined by the General Partner in good faith using the value attributed to the Common Units in the context of the Capital Transaction (in which case the LTIP Unit Conversion Date shall be the effective date of the Capital Transaction and the conversion shall occur immediately prior to the effectiveness of the Capital Transaction).

(b)     In anticipation of such LTIP Unit Forced Conversion and the consummation of the Capital Transaction, the Partnership shall use commercially reasonable efforts to cause each Holder of LTIP Units to be afforded the right to receive in connection with such Capital Transaction in consideration for the Common Units into which his or her LTIP Units will be converted the same kind and amount of cash, securities and other property (or any combination thereof) receivable upon the consummation of such Capital Transaction by a Holder of the same number of Common Units, assuming such Holder of Common Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “ Constituent Person ”), or an Affiliate of a Constituent Person. In the event that Holders of Common Units have the opportunity to elect the form or type of consideration to be received upon consummation of the Capital Transaction, prior to such Capital Transaction the General Partner shall give prompt written notice to each Holder of LTIP Units of such election, and shall use commercially reasonable efforts to afford such holders the right to elect, by written notice to the General Partner, the form or type of consideration to be received upon conversion of each LTIP Unit held by such Holder into Common Units in connection with such Capital Transaction. If a Holder of LTIP Units fails to make such an election, such Holder (and any of its transferees) shall receive upon conversion of each LTIP Unit held by him or her (or by any of his or her transferees) the same kind and amount of consideration that a Holder of a Common Unit would receive if such holder of Common Units failed to make such an election.

(c)     Subject to the rights of the Partnership and the General Partner under the relevant Vesting Agreement and the terms of any Stock Plan under which LTIP Units are issued, the Partnership shall use commercially reasonable efforts to (i) cause the terms of any Capital Transaction to be consistent with the provisions of this Section 1.12, and (ii) in the event LTIP Units are not converted into Common Units in connection with the Capital Transaction (including pursuant to Section 1.12(a) above), but subject to the rights of the General Partner and the Partnership set forth in Section 1.15(b)(ii) below to the extent that they can act without the consent of Holders of LTIP Units, enter into an agreement with the successor or purchasing entity, as the case may be, for the benefit of those Holders of LTIP Units whose LTIP Units will not be converted into Common Units in connection with the Capital Transaction that, to the extent compatible with the interests of the Common Unitholders and the shareholders of the Public REIT, (A) contains reasonable

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provisions designed to allow such Holders to subsequently convert their LTIP Units, if and when eligible for conversion, into securities as comparable as reasonably possible under the circumstances to the Common Units, and (B) preserves as far as reasonably possible under the circumstances the distribution, special allocation, conversion, and other rights of such Holders.

1.13      Redemption Right of LTIP Unit Limited Partners .

(a)     LTIP Units will not be redeemable at the option of the Partnership; provided, however, that the foregoing shall not prohibit the Partnership (i) from repurchasing LTIP Units from the Holder thereof if and to the extent that such Holder agrees to sell such LTIP Units or (ii) from exercising the right to cause a LTIP Unit Forced Conversion.

(b)     Except as otherwise set forth in the relevant Vesting Agreement or other separate agreement entered into between the Partnership and a LTIP Unit Limited Partner, and subject to the terms and conditions set forth herein or in the Partnership Agreement, on or at any time after the applicable LTIP Unit Conversion Date each LTIP Unit Limited Partner will have the right (the “ LTIP Unit Redemption Right ”) to require the Partnership to redeem all or a portion of the Common Units into which such LTIP Unit Limited Partner’s LTIP Units were converted (such Common Units being hereafter referred to as “ Tendered Units ”) in exchange for the Cash Amount (as defined below), unless the terms of this Agreement, the relevant Vesting Agreement or other separate agreement entered into between the Partnership and the LTIP Unit Limited Partner expressly provide that such Common Units are not entitled to the LTIP Unit Redemption Right. The term “ Cash Amount ” shall mean, with respect to Tendered Units, an amount of cash equal to the product of (i) the Current Per Share Market Price as of the date on which the Company receives the applicable LTIP Unit Redemption Notice (as defined below) multiplied by (ii) the number of Tendered Units, and then divided by (iii) the Conversion Factor. Any LTIP Unit Redemption Right shall be exercised pursuant to a LTIP Unit Redemption Notice (as defined below) delivered to the General Partner by the LTIP Unit Limited Partner who is exercising the right (the “ Tendering Partner ”). Any Common Units redeemed by the Partnership pursuant to this Section 1.13 shall be cancelled upon such redemption.

(c)     In order to exercise his or her LTIP Unit Redemption Right, a Tendering Partner shall deliver a notice (an “ LTIP Unit Redemption Notice ”) in the form attached as Exhibit Z hereto. Redemption and payment of the Cash Amount will occur within 30 days after receipt by the General Partner of a LTIP Unit Redemption Notice (the “ Specified LTIP Unit Redemption Date ”).

(d)     Notwithstanding the provisions of Section 1.13(c) above, if a holder of LTIP Units has delivered to the General Partner a LTIP Unit Redemption Notice then the Public REIT may, in its sole and absolute discretion, elect to assume and satisfy the

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Partnership’s redemption obligation and acquire some or all of the Tendered Units from the Tendering Partner in exchange for the REIT Shares Amount (as defined below) and, if the Public REIT so elects, the Tendering Partner shall sell such number of Tendered Units to the Public REIT in exchange for the REIT Shares Amount. In such event, the Tendering Partner shall have no right to cause the Partnership to redeem such Tendered Units for the Cash Amount. The term “ REIT Shares Amount ” shall mean, with respect to Tendered Units as of a particular date, a number of REIT Shares equal to the quotient of (x) the number of Tendered Units divided by (y) the Conversion Factor in effect on such date with respect to such Tendered Units. The Tendering Partner shall submit (i) such information, certification or affidavit as the Public REIT may reasonably require in connection with the application of any applicable ownership limit with respect to REIT Shares to any such acquisition and (ii) such written representations, investment letters, legal opinions or other instruments necessary, in the Public REIT’s view, to effect compliance with the Securities Act. The REIT Shares Amount, if applicable, shall be delivered as duly authorized, validly issued, fully paid and nonassessable REIT Shares and free of any pledge, lien, encumbrance or restriction, other than those provided in the Charter, the Securities Act, relevant state securities or blue sky laws and any applicable agreements with respect to such REIT Shares entered into by the Tendering Partner. Notwithstanding any delay in such delivery (but subject to Section 1.13(e)), the Tendering Partner shall be deemed the owner of such REIT Shares for all purposes, including without limitation, rights to vote or consent, and receive dividends, as of the Specified LTIP Unit Redemption Date. In addition, the REIT Shares for which the Tendered Units might be exchanged shall also bear all legends deemed necessary or appropriate by the Public REIT. Neither any Tendering Partner whose Tendered Units are acquired by the Public REIT pursuant to this Section 1.13(d), any Partner, any assignee or permitted transferee nor any other interested Person shall have any right to require or cause the Public REIT to register, qualify or list any REIT Shares owned or held by such Person with the SEC, with any state securities commissioner, department or agency, under the Securities Act or with any stock exchange, unless subject to a separate written agreement pursuant to which the Public REIT has granted registration or similar rights to any such Person.

(e)     Each Tendering Partner covenants and agrees with the General Partner that all Tendered Units shall be delivered to the General Partner free and clear of all liens, claims and encumbrances whatsoever and should any such liens, claims and/or encumbrances exist or arise with respect to such Tendered Units, the General Partner shall be under no obligation to acquire the same. Each Tendering Partner further agrees that, in the event any state or local property transfer tax is payable as a result of the transfer of its Tendered Units to the General Partner (or its designee), such Tendering Partner shall assume and pay such transfer tax.

(f)     Notwithstanding the provisions of Section 1.13(b), Section 1.13(c), Section 1.13(d) or any other provision of the Partnership Agreement, a Limited Partner (i) shall not be entitled to effect the LTIP Unit Redemption Right for cash or in exchange

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for REIT Shares to the extent the ownership of or right to acquire REIT Shares pursuant to such exchange by such Partner on the Specified Redemption Date could cause such Partner or any other Person to violate any of the restrictions on ownership and transfer of REIT Shares set forth in the Charter and (ii) shall have no rights under this Agreement to acquire REIT Shares which would otherwise be prohibited under the Charter. To the extent any attempted redemption or exchange for REIT Shares would be in violation of this Section 1.13(f), it shall be null and void ab initio and such Limited Partner shall not acquire any rights or economic interest in the cash otherwise payable upon such redemption or the REIT Shares otherwise issuable upon such exchange.

(g)     Notwithstanding anything herein to the contrary (but subject to Section 1.13(f)), with respect to any redemption or exchange for REIT Shares pursuant to this Section 1.13: (i) without the consent of the General Partner otherwise, each Tendering Partner may effect the Redemption Right only one time in each fiscal quarter; (ii) without the consent of the General Partner otherwise, each Tendering Partner may not effect the Redemption Right for fewer than 1,000 Common Units or, if the Tendering Partner holds fewer than 1,000 Common Units, all of the Common Units held by such Tendering Partner; (iii) without the consent of the General Partner otherwise, each Limited Partner may not effect the Redemption Right during the period after the record date established in accordance with the Partnership Agreement for the distribution of cash to Common Unitholders with respect to a distribution and before the record date established by the Public REIT for a distribution to its common stockholders of some or all of its portion of such distribution; (iv) the consummation of any redemption or exchange for REIT Shares shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and (v) each Tendering Partner shall continue to own all Common Units subject to any redemption or exchange for REIT Shares, and be treated as a Limited Partner with respect to such Common Units for all purposes of this Agreement, until such Common Units are either paid for by the Partnership pursuant to Section 1.13(b) or transferred to the Public REIT and paid for by the issuance of the REIT Shares, pursuant to Section 1.13(d) on the Specified Redemption Date. Until a Specified Redemption Date, the Tendering Partner shall have no rights as a stockholder of the Public REIT with respect to such Tendering Partner’s Common Units.

(h)     Notwithstanding anything herein to the contrary (but subject to Section 1.8), a Holder of LTIP Units may deliver a LTIP Unit Redemption Notice relating to Common Units that will be issued to such Holder upon conversion of LTIP Units into Common Units pursuant to Section 1.8 in advance of the LTIP Unit Conversion Date; provided , however , that the redemption of such Common Units by the Partnership shall in no event take place until the LTIP Unit Conversion Date. For clarity, it is noted that the objective of this Section 1.13(h) is to put a holder of LTIP Units in a position where, if he or she so wishes, the Common Units into which his or her Vested LTIP Units will be converted can be redeemed by the Partnership

H-8

 

simultaneously with such conversion, with the further consequence that, if the Public REIT elects to assume the Partnership’s redemption obligation with respect to such Common Units under Section 1.13(d) by delivering to such holder REIT Shares rather than cash, then such holder can have such REIT Shares issued to him or her simultaneously with the conversion of his or her Vested LTIP Units into Common Units. The General Partner shall cooperate with a Holder of LTIP Units to coordinate the timing of the different events described in the foregoing sentence.

1.14      Voting Rights . Except as provided in Section 1.15, holders of LTIP Units shall not have the right to vote on any matters submitted to a vote of the Limited Partners.

1.15     Special Approval Rights . Holders of LTIP Units shall only (a) have those voting rights required from time to time by non-waivable provisions of Delaware law, if any, and (b) have the limited voting rights expressly set forth in this Section 1.15. The General Partner and/or the Partnership shall not, without the affirmative vote of Holders of more than 50% of the then outstanding LTIP Units affected thereby, given in person or by proxy, either in writing or at a meeting (voting separately as a class), take any action that would materially and adversely alter, change, modify or amend, whether by merger, consolidation or otherwise, the rights, powers or privileges of such LTIP Units, subject to the following exceptions: (i) no separate consent of the Holders of LTIP Units will be required if and to the extent that any such alteration, change, modification or amendment would, in a ratable and proportional manner, alter, change, modify or amend the rights, powers or privileges of the Common Units; (ii) a merger, consolidation or other business combination or reorganization of the Partnership, the General Partner, the Public REIT or any of their Affiliates shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of the LTIP Units so long as either: (w) the LTIP Units that are then eligible for conversion are converted into Common Units immediately prior to the effectiveness of the transaction; or (x) the Holders of LTIP Units either will receive, or will have the right to elect to receive, for each LTIP Unit an amount of cash, securities, or other property equal to the amount of cash, securities or other property that would be paid in respect of such LTIP Unit had it been converted into a number of Common Units (or fraction of a Common Unit, as applicable under the terms of such LTIP Units) immediately prior to the transaction, but only if it was eligible to be so converted; (y) the LTIP Units remain outstanding with their terms materially unchanged; or (z) if the Partnership is not the surviving entity in such transaction, the LTIP Units are exchanged for a security of the surviving entity with terms that are materially the same with respect to rights to allocations, distributions, redemption, conversion and voting as the LTIP Units; (iii) any creation or issuance of Partnership Units (whether ranking junior to, on a parity with or senior to the LTIP Units in any respect), which either (x) does not require the consent of the Holders of Common Units or (y) is authorized by the Holders of Common Units shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of the LTIP Units; and (iv) any waiver by the Partnership of restrictions or limitations applicable to any outstanding LTIP Units with respect to any holder or holders thereof shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of the LTIP Units with respect to other holders. The foregoing voting provisions will not apply if, as of or prior to the time when the action with respect to which such vote would otherwise be required will be taken or be effective, all outstanding

H-9

 

LTIP Units shall have been converted and/or redeemed, or provision is made for such redemption and/or conversion to occur as of or prior to such time.

1.17      Limited Partners’ Rights to Transfer .

(a)     Subject to the terms of the relevant Vesting Agreement or other document pursuant to which LTIP Units are granted, except in connection with the exercise of a LTIP Unit Redemption Right pursuant to Section 1.13, a Limited Partner (other than the Company) may not transfer all or any portion of his or her LTIP Units without the prior written consent of the General Partner, which consent may be given or withheld in the General Partner’s sole and absolute discretion.

(b)     If a holder of LTIP Units is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Limited Partner’s estate shall have all of the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate and such power as the Incapacitated Limited Partner possessed to transfer all or any part of his, her or its partnership interest. “ Incapacity ” or “ Incapacitated ” means, (i) as to any LTIP Unit Limited Partner who is an individual, death, total physical disability or entry by a court of competent jurisdiction of an order adjudicating him or her incompetent to manage his or her Person or estate; (ii) as to any Partner that is an estate, the distribution by the fiduciary of the estate of its entire interest in the Partnership; (iii) as to any trustee of a trust which is a LTIP Unit Limited Partner, the termination of the trust (but not the substitution of a new trustee) or (iv) as to any LTIP Unit Limited Partner, the bankruptcy of such LTIP Unit Limited Partner.

H-10

 

EXHIBIT X

Notice of Election by Partner to Convert LTIP Units into Common Units

The undersigned holder of LTIP Units hereby irrevocably elects to convert the number of Vested LTIP Units in GGP Operating Partnership, LP (the “ Partnership ”) set forth below into Common Units in accordance with the terms of the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, as amended.

The undersigned hereby represents, warrants, and certifies that the undersigned: (a) has title to such LTIP Units, free and clear of the rights or interests of any other Person other than the Partnership; (b) has the full right, power, and authority to cause the conversion of such LTIP Units as provided herein; and (c) has obtained the consent or approval of all persons or entities, if any, having the right to consent or approve such conversion.

In accordance with the terms of the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, as amended, the holder of LTIP Units being converted is obligated, in the event any state or local property transfer tax is payable as a result of such conversion, to assume and pay such transfer tax.

Name of Holder:
 

Number of AO LTIP Units to be Converted:
Number of FV LTIP Units to be Converted:


 
(Signature of Holder: Sign Exact Name as Registered with Partnership)
 
 
(Street Address)
 
 
(City)
(State)
(Zip Code)

H-11

 

EXHIBIT Y

Notice of Election by Partnership to Force Conversion of LTIP Units into Common Units

GGP Operating Partnership, LP (the “ Partnership ”) hereby irrevocably elects to cause the number of LTIP Units held by the holder of LTIP Units set forth below to be converted into Common Units in accordance with the terms of the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, as amended.

To the extent that LTIP Units held by the holder are not free and clear of all liens, claims and encumbrances, or should any such liens, claims and/or encumbrances exist or arise with respect to such LTIP Units, the Common Units into which such LTIP Units are converted shall continue to be subject thereto.

In accordance with the terms of the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, as amended, the holder of LTIP Units being converted is obligated, in the event any state or local property transfer tax is payable as a result of such conversion, to assume and pay such transfer tax.

Name of Holder:
 
 

Number of AO LTIP Units to be Converted:
Number of FV LTIP Units to be Converted:
Conversion Date:





















H-12

 




EXHIBIT Z

Notice of Redemption

The undersigned Limited Partner hereby irrevocably (i) redeems Common Units in GGP Operating Partnership, LP in accordance with the terms of the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, as amended (the “ Agreement ”), and the LTIP Unit Redemption Right referred to in Schedule H thereof; (ii) surrenders such Common Units and all right, title and interest therein; and (iii) directs that the Cash Amount or REIT Shares Amount (as determined by the General Partner) deliverable upon exercise of the LTIP Unit Redemption Right be delivered to the address specified below, and if REIT Shares are to be delivered, such REIT Shares be registered or placed in the name(s) and at the address(es) specified below.

The undersigned hereby represents, warrants, and certifies that the undersigned (a) has marketable and unencumbered title to such Common Units, free and clear of the rights or interests of any other Person; (b) has the full right, power, and authority to redeem and surrender such Common Units as provided herein; and (c) has obtained the consent or approval of all Persons, if any, having the right to consent or approve such redemption and surrender.

In accordance with the terms of the Agreement, the holder of LTIP Units being redeemed is obligated, in the event any state or local property transfer tax is payable as a result of such redemption, to assume and pay such transfer tax.

All capitalized terms used herein and not otherwise defined shall have the same meaning ascribed to them respectively in the Agreement.

Dated:
 
 
 
 
Name of Limited Partner:
 
 
 
 
 
 

 
(Signature of Holder: Sign Exact Name as Registered with Partnership)
 
 
(Street Address)
 
 
(City)
(State)
(Zip Code)

H-13

 

If REIT Shares are to be issued, issue to:

Name:
 
 

Please insert social security or tax ID number:


H-14

 

[EXHIBIT A]
[List of Unit Holders]



 


EXHIBIT B
Allocations
1.      Allocation of Net Income and Net Loss.
(a)     Net Income . Except as otherwise provided herein, Operating Income and Liquidating Gain of the Partnership for each fiscal year or other applicable period shall be allocated as follows:
1.    First, Operating Income and Liquidating Gain shall be allocated to the General Partner to the extent the cumulative Operating Loss and Liquidating Loss allocated to the General Partner under subparagraph (b)(5) below exceeds the cumulative Operating Income and Liquidating Gain allocated to the General Partner under this subparagraph (a)(1), provided that the allocation under this subparagraph shall first be made out of Operating Income to the extent of available Operating Income as of the time any allocation is being made, and thereafter to the extent of any available Liquidating Gain as of such time;
2.      Second, Operating Income and Liquidating Gain shall be allocated to each Partner in proportion to and to the extent of the amount by which the cumulative Operating Loss and Liquidating Loss allocated to such Partner under subparagraph (b)(4) exceeds the cumulative Operating Income and Liquidating Gain allocated to such Partner under this subparagraph (a)(2), provided that the allocation under this subparagraph shall first be made out of Operating Income to the extent of available Operating Income as of the time any allocation is being made, and thereafter to the extent of any available Liquidating Gain as of such time;
3.      Third, Operating Income and Liquidating Gain shall be allocated to the General Partner until the cumulative Operating Income and Liquidating Gain allocated to the General Partner equals the cumulative Operating Loss and Liquidating Loss allocated to the General Partner under subparagraph (b)(3), provided that the allocation under this subparagraph shall first be made out of Operating Income to the extent of available Operating Income as of the time any allocation is being made, and thereafter to the extent of any available Liquidating Gain as of such time;
4.      Fourth, Operating Income shall be allocated to each holder of Preferred Units other than the Series D Preferred Units to the extent of and in proportion to the excess of (I) the cumulative amount of distributions made in respect of such Preferred Units, reduced by in the case of the Series B Preferred Units the cumulative Common Unit Reallocated Amounts, and increased by in the case of the Series B Preferred Units the cumulative Series


 

B Preferred Unit Reallocated Amounts, pursuant to the provisos below, over (II) the cumulative amount of Operating Income allocated to each holder of Preferred Units pursuant to this subparagraph (a)(4) and subparagraph (a)(6) for such period and all prior periods reduced by the cumulative amount of Operating Loss and Liquidating Loss allocated to such holder of Preferred Units pursuant to subparagraph (b)(2) below for all prior periods; provided, however, that in the event the cumulative Operating Income allocable to the holders of the Common Units and holders of LTIP Units pursuant to this subparagraph (a)(4) and subparagraph (a)(6) below for such period and all prior periods (before application of this proviso for such period) exceeds the cumulative distributions made to the holders of Common Units and holders of LTIP Units with respect to such Units for such period and all prior periods, the Series B Preferred Unit Reallocated Amount shall be reallocated pro rata to the holders of Series B Preferred Units;
5.    (i) Liquidating Gains shall first be allocated to the Partners holding FV LTIP Units until the Economic Capital Account Balances of such Partners, to the extent attributable to their ownership of FV LTIP Units, are equal to (1) the Common Unit Economic Balance, multiplied by (2) the number of their FV LTIP Units (with respect to each Partner holding FV LTIP Units, the “ Target Balance ”). For the avoidance of doubt, Liquidating Gains allocated with respect to a FV LTIP Unit pursuant to this subparagraph shall reduce (but not below zero) the Book-Up Target for such FV LTIP Unit. Any such allocations shall be made among the holders of FV LTIP Units in proportion to the aggregate amounts required to be allocated to each under this subparagraph (a)(5).

(ii) Liquidating Gain allocated to a Partner under this subparagraph will be attributed to specific FV LTIP Units of such Partner for purposes of determining (1) allocations under this Exhibit B , (2) the effect of the forfeiture or conversion of specific LTIP Units on such Partner’s Capital Account and (3) the ability of such Partner to convert specific LTIP Units into Common Units. Such Liquidating Gain will generally be attributed in the following order: (1) first, to Vested FV LTIP Units held for more than two years, (2) second, to Vested FV LTIP Units held for two years or less, (3) third, to Unvested FV LTIP Units that have remaining vesting conditions that only require continued employment or service to the Company, the Partnership, the General Partner or an Affiliate of either for a certain period of time (with such Liquidating Gains being attributed in order of vesting from soonest vesting to latest vesting), and (4) fourth, to other Unvested FV LTIP Units (with such Liquidating Gains being attributed in order of issuance from earliest issued to latest issued). Within each category, Liquidating Gain will be allocated seriatim (i.e., entirely to the first unit in a set, then entirely to the next unit in the set, and so on, until a full allocation is made to the last unit in the set) in the order of smallest Book-Up Target to largest Book-Up Target.

EX B-2

 


(iii) After giving effect to the special allocations set forth above, if, due to distributions with respect to Common Units in which the FV LTIP Units do not participate, forfeitures or otherwise, the Economic Capital Account Balance of any Partner attributable to such Partner’s FV LTIP Units exceeds the Target Balance, then Liquidating Losses shall be allocated to such Partner to eliminate the disparity; provided, however, that if Liquidating Losses are insufficient to completely eliminate all such disparities, such losses shall be allocated among FV LTIP Units in a manner reasonably determined by the General Partner.

(iv) The parties agree that the intent of this subparagraph is (1) to the extent possible to make the liquidation value associated with each FV LTIP Unit the same as the liquidation value of a Common Unit, and (2) to allow conversion of a FV LTIP Unit (assuming it is a Vested LTIP Unit) when sufficient Liquidating Gains have been allocated to such FV LTIP Unit pursuant to clause (i) above or Net Loss, Operating Loss and/or Liquidating Loss have been allocated to Common Units under Section 1(b) subparagraph 1 or this Exhibit B so that either a FV LTIP Unit’s initial Book-Up Target has been reduced to zero or the parity described in subclause (1) above has been achieved. The General Partner shall be permitted to interpret this Section and to amend this Agreement to the extent necessary and consistent with this intention.

(v) If a Partner forfeits any FV LTIP Units to which Liquidating Gain has previously been allocated under clause (i) above, (1) the portion of such Partner’s Capital Account attributable to such Liquidating Gain allocated to such forfeited LTIP Units will be re-allocated to that Partner’s remaining FV LTIP Units that were outstanding on the date of the initial allocation of such Liquidating Gain, using a methodology similar to that described in clause (ii) above as reasonably determined by the General Partner, to the extent necessary to cause such Partner’s Economic Capital Account Balance attributable to each such FV LTIP Unit to equal the Common Unit Economic Balance and (2) such Partner’s Capital Account will be reduced by the amount of any such Liquidating Gain not re-allocated pursuant to the foregoing subclause (1) above. Any such reductions in Capital Accounts pursuant to the foregoing subclause (2) shall be reallocated to the Common Units and LTIP Units pro rata, provided that the General Partner shall have the discretion to limit reallocations to LTIP Units in any manner the General Partner reasonably determines is necessary to prevent such LTIP Units from participating in Liquidating Gains realized prior to the issuance of such LTIP Units; and

6.    Thereafter, Operating Income to the holders of Common Units, FV LTIP Units and AO LTIP Units pro rata in accordance with their Percentage Interests and any remaining Liquidating Gain after the special allocation provided in Section 1(a) subparagraph 5 of this Exhibit B to the holders of Common Units, FV LTIP Units and Eligible AO LTIP Units in proportion to the Common Units, FV LTIP Units and Eligible AO LTIP Units held by such

EX B-3

 

Partners; provided however that: (i) in the event the cumulative distributions made to the holders of Common Units and LTIP Units with respect to such Units for such period and all prior periods exceed the cumulative Operating Income allocable to the holders of the Common Units and LTIP Units pursuant to subparagraph (a)(4) and this subparagraph (a)(6) for such period and all prior periods (before application of this proviso for such period), the Common Unit Reallocated Amount shall be reallocated to the holders of Common Units, FV LTIP Units and AO LTIP Units in accordance with their Percentage Interests; and (ii) Liquidating Gain allocable in respect of an Eligible AO LTIP Unit pursuant to this paragraph 6 shall not exceed the Eligible AO LTIP Units share of Liquidating Gain in excess of the amount necessary to cause the Common Unit Economic Balance to equal the Common Unit Economic Balance as of the date of issuance of the Eligible AO LTIP Unit, as adjusted for any LTIP Unit Adjustment Events.

The term “Common Unit Reallocated Amount” shall mean an amount equal to the difference between (I) the amount of Operating Income allocable to the Series B Preferred Units pursuant to subparagraph (a)(4) with respect to such fiscal year or other period, and (II) the product obtained by multiplying (A) the Percentage Interest represented by the Series B Preferred Units determined as if the Series B Preferred Units had been converted into Common Units, and (B) the sum of (i) the Operating Income allocable to the Series B Preferred Units pursuant to subparagraph (a)(4) with respect to such fiscal year or other period and (ii) the Operating Income allocable to the Common Units and LTIP Units pursuant to subparagraph (a)(6) with respect to such fiscal year or other period. For purposes of clarity, amounts specially allocated in respect of LTIP Units pursuant to Section 2(g) shall not be taken into account in clause (II)(B)(ii) of this definition. The Common Unit Reallocated Amount shall be calculated based on the amounts of Operating Income allocable under subparagraphs (a)(4) and (a)(6) prior to the application of the provisos contained in such subparagraphs with respect to such fiscal year or other period.
The term “Series B Preferred Unit Reallocated Amount” shall mean the difference between (I) the amount of Operating Income allocable to the Common Units and LTIP Units pursuant to subparagraph (a)(6) with respect to such fiscal year or other period, and (II) the product obtained by multiplying (A) the Percentage Interest represented by the Common Units (exclusive of the Common Units issuable in respect of the deemed conversion of the Series B Preferred Units as contemplated herein) and LTIP Units determined as if the Series B Preferred Units had been converted into Common Units, and (B) the sum of (i) Operating Income allocable to the Series B Preferred Units pursuant to subparagraph (a)(4) with respect to such fiscal year or other period and (ii) the Operating Income allocable to the Common Units and LTIP Units pursuant to this subparagraph (a)(6) with respect to such fiscal year or other period; provided, however, that to the extent the allocation of the Series B Preferred Unit Reallocated Amount to the holders of Series B Preferred Units would cause such holders on a cumulative basis to have been allocated Operating Income in excess of distributions, the Series B Preferred Unit Reallocated Amount shall be reduced by such excess. For

EX B-4

 

purposes of clarity, amounts specially allocated in respect of LTIP Units pursuant to Section 2(g) of this Exhibit B shall not be taken into account in clauses (I) and (II)(B) of this definition. The Series B Preferred Unit Reallocated Amount shall be calculated based on the amounts of Operating Income allocable pursuant to subparagraphs (a)(4) and (a)(6) prior to the application of the provisos contained in such subparagraphs with respect to such fiscal year or other period.

It is the intention of the parties that the application of subparagraphs (a)(4) and (a)(6) above will result in corresponding return of capital distributions (per Unit) to the Series B Preferred Units (on an as-converted basis) and Common Units and LTIP Units (based on their respective Percentage Interests) on a cumulative basis and shall be applied and interpreted consistently therewith.
In allocating Net Income for each fiscal year or period, for all purposes of this Section 1(a) (including for purposes of determining the “Percentage Interests” of the holders of both the Common Units and the Series D Preferred Units), the holders of the Series D Preferred Units shall be treated as though they held that number of Common Units into which their Series D Preferred Units were convertible, as determined from time to time during such fiscal year or period.
(b)     Net Loss . Except as otherwise provided herein, Operating Loss and Liquidating Loss of the Partnership for each fiscal year or other applicable period shall be allocated as follows:
1.    Subject to the prior application of Section 1(a)(5)(iii), first, Operating Loss shall be allocated to the holders of Common Units, Eligible FV LTIP Units and AO LTIP Units in proportion to their respective Percentage Interests, and Liquidating Loss shall be allocated to the holders of Common Units, Eligible FV LTIP Units and AO LTIP Units in proportion to the Common Units, Eligible FV LTIP Units and AO LTIP Units held by such Partners; provided that the Net Loss allocated in respect of a Common Unit, FV LTIP Unit or AO LTIP Unit pursuant to this Section 1(b)(1) shall not exceed the maximum amount of Net Loss that could be allocated in respect of such Unit without causing a holder of such Unit to have an Adjusted Capital Account Deficit determined as if the holder held only that Unit (and excluding for this purpose any increase in such Adjusted Capital Account Deficit for a holder’s actual obligation to fund a deficit Capital Account balance, including the obligation of an Obligated Partner to fund a deficit Capital Account balance pursuant to Section 7.8 hereof and also excluding for this purpose the balance of such holder’s Capital Account attributable to such holder’s Preferred Units, if any), provided further that (A) in the event the first proviso of this subparagraph 1 applies to limit an allocation of Net Loss in respect of an LTIP Unit, the Net Loss allocable to the LTIP Unit shall first be made out of Operating Loss to the extent the cumulative Operating Income in excess of cumulative Operating Loss allocated to that LTIP Unit exceeds cumulative distributions in respect of that LTIP Unit, and any remaining allocation of Net Loss to that LTIP Unit shall be made proportionately out of Operating Loss and Liquidating Loss, and (B) in the event the first proviso of this subparagraph 1 applies to limit an allocation of Net Loss in respect of a Common Unit, the Net Loss allocable to the Common Unit shall be made proportionately

EX B-5

 

out of Operating Loss and Liquidating Loss remaining after the allocation of Net Loss in respect of LTIP Units as provided in clause (A);

2.    Second, Operating Loss and Liquidating Loss shall be allocated proportionately to the holders of Preferred Units in proportion to each such holder’s Capital Account balance in such Preferred Units, provided that the aggregate Operating Loss and Liquidating Loss allocated to a holder of Preferred Units pursuant to this Section (b)(2) shall not exceed the maximum amount of aggregate Operating Loss and Liquidating Loss that can be allocated without causing any holder of Preferred Units to have an Adjusted Capital Account Deficit (excluding for this purpose any increase to such Adjusted Capital Account Deficit for a holder’s actual obligation to fund a deficit Capital Account balance, including the obligation of an Obligated Partner to fund a deficit Capital Account Balance pursuant to Section 7.8 hereof);

3.    Third, Operating Loss and Liquidating Loss shall be allocated proportionately to the General Partner, until the General Partner’s Adjusted Capital Account Deficit (excluding for this purpose any increase to such Adjusted Capital Account Deficit for the obligation of the General Partner to actually fund a deficit Capital Account balance, including any deemed obligation pursuant to Regulation Section 1.704-1(b)(2)(ii)(c)) equals the excess of (i) the amount of Recourse Liabilities over (ii) the Aggregate Protected Amount;

4.     Fourth, Operating Loss and Liquidating Loss shall be allocated proportionately to the Obligated Partners, in proportion to their respective Protected Amounts, until such time as the Obligated Partners have been allocated an aggregate amount of Operating Loss and Liquidating Loss pursuant to this subparagraph (b)(4) equal to the Aggregate Protected Amount; and

5.    Thereafter, Operating Loss and Liquidating Loss shall be allocated proportionately to the General Partner.

2.     Special Allocations .
Notwithstanding any provisions of paragraph 1 of this Exhibit B, the following special allocations shall be made in the following order:
(i)      Minimum Gain Chargeback (Nonrecourse Liabilities) . If there is a net decrease in Partnership Minimum Gain for any Partnership fiscal year (except as a result of conversion or refinancing of Partnership indebtedness, certain capital contributions or revaluation of the Partnership property as further outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Partner’s share of the net decrease in Partnership Minimum Gain. The items to be so allocated shall be determined in accordance with Regulation Section 1.704-2(f). This paragraph (a) is intended to comply with the minimum gain

EX B-6

 

chargeback requirement in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this paragraph (a) shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant hereto.
(j)      Minimum Gain Attributable to Partner Nonrecourse Debt . If there is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any fiscal year (other than due to the conversion, refinancing or other change in the debt instrument causing it to become partially or wholly nonrecourse, certain capital contributions, or certain revaluations of Partnership property as further outlined in Regulation Section 1.704-2(i)(4)), each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Partner’s share of the net decrease in the Minimum Gain Attributable to Partner Nonrecourse Debt. The items to be so allocated shall be determined in accordance with Regulation Section 1.704-2(i)(4) and (j)(2). This paragraph (b) is intended to comply with the minimum gain chargeback requirement with respect to Partner Nonrecourse Debt contained in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this paragraph (b) shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant hereto.
(k)      Qualified Income Offset . In the event a Limited Partner unexpectedly receives any adjustments, allocations or distributions described in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Limited Partner has an Adjusted Capital Account Deficit, items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly as possible. This paragraph (c) is intended to constitute a “qualified income offset” under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(l)      Partner Nonrecourse Deductions . Partner Nonrecourse Deductions for any fiscal year or other applicable period shall be specially allocated to the Partner that bears the economic risk of loss for the debt (i.e., the Partner Nonrecourse Debt) in respect of which such Partner Nonrecourse Deductions are attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1)).
(m)      Allocations With Respect to Preferred Unit Redemptions . After giving effect to the special allocations set forth above, Net Income of the Partnership shall be allocated to the holders of Preferred Units, at the time of redemption of such Preferred Units (other than in the case of a redemption occurring pursuant to a final liquidation of the Partnership), in an amount equal to the portion of any redemption distribution that exceeds the Liquidation Preference Amount (other than any accrued but unpaid distribution thereon) per Preferred Unit established for such Preferred Unit in the applicable Preferred Unit designation. The character of the items of Net Income allocated to the holders of Preferred Units pursuant to this subparagraph (e) shall proportionately reflect the

EX B-7

 

relative amounts of the items of Partnership income and gain as determined for federal income tax purposes under Section 703(a) of the Code.
(n)      Tax Treatment of Conversion of Preferred Units . Upon conversion of a Preferred Unit(s) into Common Unit(s), the Company will specially allocate to the converting Partner any Net Income or Net Loss attributable to an adjustment of Gross Asset Values under subparagraph (b) of the definition of “Gross Asset Value” until the portion of such Partner’s Capital Account attributable to each Common Unit received upon conversion equals the Capital Account attributable to a Common Unit at the time of conversion. To the extent that such allocation is insufficient to bring the portion of the Capital Account attributable to each Common Unit received upon conversion by the converting Partner to the Capital Account attributable to a Common Unit at the time of conversion, a portion of the Capital Account of the non-converting Partners will be shifted, pro rata in accordance with their relative Capital Account balances, to the converted Partner and such transaction shall be treated by the Partnership and the Converting Partner as a transaction defined in Section 721 of the Code.
(g)      Special Allocation to LTIP Units . Items of gross income of the Partnership shall be specially allocated to a Partner in an amount necessary to eliminate any Adjusted Capital Account Deficit attributable to an LTIP Unit of such Partner. Any such allocations shall be made first from items of income constituting Operating Income or Operating Loss, and only thereafter from items of income constituting Liquidating Gains or Liquidating Losses. For purposes of determining the amount of gross income that must be specially allocated under this Section, the Partnership shall initially allocate all items amongst the Partners in accordance with the provisions of this Agreement, and only if a Partner has an Adjusted Capital Account Deficit after such initial allocation shall a special allocation be made pursuant to this Section and only in an amount equal to the excess gross income allocation needed to eliminate such Adjusted Capital Account Deficit taking into account the remaining Net Income that will be allocated to such Partner after applying the other provisions of this Exhibit B .
(h)     Special Allocation upon Conversion of FV LTIP Units or AO LTIP Units . After a Partner’s conversion of an AO LTIP Unit into a fraction of a Common Unit, the Partnership will specially allocate Liquidating Gain and Liquidating Loss to the Partners until and in a manner that causes, as promptly as practicable, the portion of the Economic Capital Account Balance of the Partner converting the AO LTIP Unit that is attributable to the fraction of a Common Unit received upon the conversion to equal the Common Unit Economic Balance multiplied by a fraction equal to the fraction of the Common Unit issued in the conversion. After the conversion of an FV LTIP Unit into a Common Unit (or fraction thereof), the

EX B-8

 

Partnership will specially allocate Liquidating Gain and Liquidating Loss to the Partners until and in a manner that causes, as promptly as practicable, the portion of such Partner’s Economic Capital Account Balance attributable to the Common Unit (or fraction thereof) received upon conversion to equal the Common Unit Economic Balance (or in the case where a fractional Common Unit is received on conversion, the Common Unit Economic Balance multiplied by a fraction equal to the fraction of the Common Unit issued in the conversion).
(i)     Curative Allocations . The Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss, and deduction among the Partners so that, to the extent possible, the cumulative net amount of allocations of Partnership items under paragraphs 1 and 2 of this Exhibit B shall be equal to the net amount that would have been allocated to each Partner if the Regulatory Allocations had not occurred. This subparagraph (i) 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. For purposes hereof, “Regulatory Allocations” shall mean the allocations provided under subparagraphs 2(a) through (d).
3.     Tax Allocations .
(a)     Generally . Subject to paragraphs (b) and (c) hereof, items of income, gain, loss, deduction and credit to be allocated for income tax purposes (collectively, “Tax Items”) shall be allocated among the Partners on the same basis as their respective book items.
(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 Partners 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 Partners who are allocated Affected Gain pursuant to Clause (A) so that, to the extent possible, the other Partners 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.

EX B-9

 

(c)     Allocations Respecting Section 704(c) and Revaluations; Curative Allocations Resulting from the Ceiling Rule . Notwithstanding paragraph (b) hereof, Tax Items with respect to Partnership property that is subject to Code Section 704(c) and/or Regulation Section 1.704-1(b)(2)(iv)(f) (collectively “Section 704(c) Tax Items”) shall be allocated in accordance with said Code section and/or Regulation Section 1.704-1(b)(4)(i), as the case may be. The allocation of Tax Items shall be in accordance with the “traditional method” set forth in Treas. Reg. §1.704-3(b)(1), unless otherwise determined by the General Partner, and shall be subject to the ceiling rule stated in Regulation Section 1.704-3(b)(1). The General Partner is authorized to specially allocate Tax Items (other than Section 704(c) Tax Items) to cure for the effect of the ceiling rule. The intent of this Section 3(c) is that each Partner who contributed to the capital of the Partnership a partnership interest in an existing Property Partnership will bear, through reduced allocations of depreciation and increased allocations of gain or other items, the tax detriments associated with any precontribution gain and this Section 3(c) shall be interpreted consistently with such intent.
4.     Allocations Upon Final Liquidation .
With respect to the fiscal year in which the final liquidation of the Partnership occurs in accordance with Section 7.2 of the Agreement, and notwithstanding any other provision of Sections 1, 2, or 3 hereof, items of Partnership income, gain, loss and deduction shall be specially allocated to the Preferred Units in a manner necessary to cause the Partners’ capital accounts attributable to their Preferred Units to equal the amounts that will be distributed in respect of the Preferred Units under Section 7.2. Any such allocations shall be made first from items of income constituting Operating Income or Operating Loss, and only thereafter from items of income constituting Liquidating Gains or Liquidating Losses.



EX B-10

 

EXHIBIT C
[Obligated Partners]


EX C-1

Exhibit 10.3

GENERAL GROWTH PROPERTIES, INC.
SECOND AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
(Effective as of May 15, 2014)
1. Purpose.
General Growth Properties, Inc., a Delaware corporation (the “Company”) sponsors this General Growth Properties, Inc. Employee Stock Purchase Plan, as set forth in this document, as the same may be amended from time to time (the “Plan”). The purpose of the Plan is to assist employees of GGPLP REIT Services, LLC, a Delaware limited liability company (“GGPRS”) and General Growth Services, Inc., a Delaware corporation (“GGSI”), and any other parent or subsidiary of the Company that is designated by the Committee as eligible for participation, in acquiring a stock ownership interest in the Company by providing employees a continuing opportunity to purchase shares of common stock of the Company (“Shares”), through periodic offerings under the Plan. The Plan is not intended to qualify as an “employee stock purchase plan” under section 423 of the Code.
2.      Definitions.
For purposes of the Plan:
(a)      “Account” means the non-interest bearing account that an Employer shall establish for its Eligible Employees who are Participants to which Participants’ payroll deductions pursuant to the Plan shall be credited.
(b)      “Agent” means the person or persons appointed in accordance with Paragraph 3(d).
(c)      “Authorization” means the authorization described in Paragraph 5(a) pursuant to which the Participant authorizes payroll deductions to the Account.
(d)      “Change-in-Control” means the occurrence of any of the following:
(i)
the acquisition by any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of the “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly of more than 50% of the then outstanding voting securities of the Company;
(ii)
the consummation of a merger or consolidation of the Company with or into any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted



into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or
(iii)
the consummation of a plan of complete liquidation of the Company or of the sale or disposition by the Company of all or substantially all of the Company’s assets.
(e)      “Code” means the Internal Revenue Code of 1986, as amended.
(f)      “Committee” means the committee described in Paragraph 3(a).
(g)      “Company” means General Growth Properties, Inc., a Delaware corporation.
(h)      “Compensation” means the total amount of compensation for services paid to a Participant during an Offering Period by an Employer that would be reportable on Internal Revenue Service Form W‑2, plus amounts that are not includible in income for federal income tax purposes that a Participant elects to contribute pursuant to a plan or an arrangement described in Code Sections 125(d) or 401(k).
(i)      “Date of Grant” means the first business day of an Offering Period.
(j)      “Eligible Employee” means any Employee of an Employer who meets the eligibility requirements of Paragraph 4.
(k)      “Employee” means each person in an employee-employer relationship with an Employer who is designated as an employee on the payroll of the Employer that employs the individual. Notwithstanding anything herein to the contrary, an individual is not an Employee during any period in which the individual is classified by an Employer as an independent contractor or as any other status in which the person is not treated as a common law employee of an Employer for purposes of withholding of taxes, regardless of whether the individual’s status is subsequently reclassified.
(l)      “Employer” means GGPRS, GGSI, and any other parent or subsidiary of the Company that is designated by the Committee as eligible for participation. All participating employers are referred to herein individually as an “Employer” and collectively, as the “Employers”.
(m)      “Fair Market Value” means, on any given date, the closing price of the Shares on the principal national securities exchange on which the Shares are listed on such date, or, if the Shares are not listed on any national securities exchange, the mean between the bid and ask prices of the Shares as reported on the New York Stock Exchange, or if the Shares are not so reported, the fair market value of the Shares as determined by the Committee in good faith. If there are no sales reports or bid or ask quotations, as the case may be, for a given date, the closest preceding date on which there were sales reports or bid or ask quotations shall be used.
(n)      “Investment Account” means the account established with the Agent for a Participant pursuant to Paragraph 9(a) to hold Shares acquired for a Participant pursuant to the Plan.

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(o)      “Offering Period” means each of the three-month periods commencing January 1, April 1, July 1, and October 1 or such other dates which may be determined by the Committee.
(p)      “Participant” means an Eligible Employee who makes an election to participate in the Plan in accordance with Paragraph 5.
(q)      “Plan” means the General Growth Properties, Inc. Employee Stock Purchase Plan, as set forth in this document, as the same may be amended from time to time.
(r)      “Purchase Date” means the last business day of an Offering Period.
(s)      “Purchase Price” means, with respect to any Offering Period, the lesser of:
(i)
eighty-five percent (85%) percent of the Fair Market Value of a Share on the Date of Grant of such Offering Period; or
(ii)
eighty-five percent (85%) percent of the Fair Market Value of a Share on the Purchase Date of such Offering Period.
(t)      “Shares” means shares of common stock of General Growth Properties, Inc.
(u)      “Withdrawal Election” means the notice described in Paragraph 8 which a Participant must deliver to an Employer upon withdrawal from the Plan.
3.      Administration.
(a)      The Compensation Committee of the Board of Directors of the Company or such other committee as shall be designated by the Board of Directors of the Company (the “Committee”) shall administer the Plan. The Committee, if other than the Compensation Committee, shall consist of two or more members of the Board of Directors appointed by the Board of Directors to administer the Plan. All Committee members shall serve, and may be removed, in accordance with the general rules applicable to the Committee.
(b)      For purposes of administration of the Plan, a majority of the members of the Committee (but not less than two) shall constitute a quorum, and any action taken by a majority of such members of the Committee present at any meeting at which a quorum is present, or any action approved in writing by all members of the Committee, shall be the action of the Committee.
(c)      Subject to the express provisions of the Plan, the Committee shall have full discretionary authority to interpret the Plan, to issue rules for administering the Plan, to change, alter, amend or rescind such rules, and to make all other determinations necessary or appropriate for the administration of the Plan. The Committee shall have the discretion to impose a holding period during which the sale of Shares acquired under the Plan is restricted for a period of time after purchase, provided that reasonable advance notice is given to Participants. All determinations, interpretations and constructions made by the Committee with respect to the Plan shall be final and conclusive. No member of the Board of Directors or the Committee shall be liable for any action,

3

determination or omission taken or made in good faith with respect to the Plan or any right granted hereunder.
(d)      The Committee or its delegate under Section 3(e) may engage an Agent to perform custodial and record keeping functions for the Plan, such as holding record title to the Participants’ Shares, maintaining an individual Investment Account for each such Participant and providing periodic account status reports to such Participants.
(e)      The Committee shall have full discretionary authority to delegate ministerial functions to the management of one or more of the Employers.
4.      Eligibility.
All Employees whose customary employment is more than 20 hours of work per week shall be eligible to participate in the Plan.
5.      Election to Participate .
(a)      Payroll Deduction Authorization. Each Eligible Employee may become a Participant by submitting a completed payroll deduction authorization in a form prepared by the Employer by which such Eligible Employee is employed (the “Authorization”) to such Employer during the calendar month preceding a Date of Grant and no later than five (5) business days before the applicable Date of Grant. An Eligible Employee’s Authorization shall give notice of such Eligible Employee’s election to participate in the Plan for the next following Offering Period and subsequent Offering Periods and shall specify a percentage of Compensation (ranging in whole number amounts from no less than 1% to no more than 10%) to be withheld through payroll deductions on each payday. All payroll deductions shall be made on an after-tax basis. The cash compensation payable to a Participant for an Offering Period shall be reduced each payday through a payroll deduction by the percentage amount specified in the Authorization, and such amount shall be credited to the Participant’s Account under the Plan. All funds credited to Accounts may be used by the Employer for any corporate purpose, subject to the Participant’s right to withdraw an amount equal to the balance accumulated in his or her Account as described in Paragraph 8. Funds credited to Accounts shall not be required to be segregated from the general funds of the Employer. Any Authorization shall remain in effect until the Eligible Employee amends the same pursuant to Paragraph 6, withdraws pursuant to Paragraph 8 or ceases to be an Eligible Employee pursuant to Paragraph 14.
(b)      No Interest on Funds in Accounts . No interest shall accrue for the benefit of or be paid to any Participant with respect to funds credited to any Account for such Participant.
6.      Deduction Changes.
A Participant may increase or decrease his or her payroll deduction by submitting a new Authorization to the Employer by which such Participant is employed. The change will become effective for payroll periods beginning in the next Offering Period. The new Authorization must be received by the Employer at least five (5) business days before the beginning of the next Offering Period to be effective.

4

7.      Limit on Purchase of Shares.
Each Participant may only purchase 3,000 Shares during any Offering Period. Additionally, no Participant shall be granted an option under the Plan to the extent that, immediately after the Date of Grant, such Participant would own capital stock of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company, the Employers or of any of their respective subsidiaries. Each Participant may contribute, in the aggregate, no more than $25,000 to purchase stock under all employee stock purchase plans maintained by the Company, the Employers and their parent and subsidiaries stock in each calendar year. For purposes of this Paragraph 7:
(i)
The right to purchase Shares accrues when the right (or any portion thereof) first becomes exercisable during the calendar year; and
(ii)
A right to purchase Shares that has accrued under one grant of rights under the Plan may not be carried over to any other grant of rights under the Plan or any other plan.
8.      Withdrawal of Funds .
Any Participant may withdraw from participation under the Plan at any time, except that no Participant may withdraw during the ten (10) days immediately preceding the Purchase Date of any Offering Period. A Participant who wishes to withdraw from the Plan must deliver a notice of withdrawal in a form prepared by the Employer by which such Participant is employed (the “Withdrawal Election”) to such Employer not later than ten (10) days prior to the Purchase Date during any Offering Period. Upon receipt of a Participant’s Withdrawal Election, the Employer shall pay to the Participant the amount of the balance in the Participant’s Account in cash in one lump sum within thirty (30) days, without interest thereon or deduction therefrom. Partial withdrawal shall not be permitted. Upon receipt of a Withdrawal Election, the Participant shall cease to participate in the Plan. Any such withdrawing Participant may again commence participation in the Plan in a subsequent Offering Period by submitting to the Employer an Authorization pursuant to Paragraph 5(a) hereof.
9.      Method of Purchase and Investment Accounts .
(a)      Purchase of Shares . Participants having funds credited to an Account on a Purchase Date shall be deemed, without any further action, to have authorized purchase of the number of whole Shares that the funds in such Account would purchase at the Purchase Price, subject to the limits:
(i)
on the aggregate number of Shares that may be made available for purchase to all Participants under the Plan pursuant to Paragraph 10; and
(ii)
on the number of Shares that may be made available for purchase to any individual Participant, as set forth in Paragraphs 5(a) and 7.

5

Shares will be purchased as set forth above if a Participant does not withdraw such funds at least ten (10) days prior to the Purchase Date as permitted by Paragraph 8. As soon as practicable after the Purchase Date, all Shares to be purchased shall be delivered to the Agent and shall thereafter be credited in book entry form to a separate Investment Account established by the Agent for each Participant. The Agent shall hold in its name or the name of its nominee all Shares purchased until such Shares are withdrawn or sold by a Participant pursuant to Paragraph 11. Fractional Shares may not be purchased under the Plan. Any funds remaining in the Account of a Participant after a Purchase Date shall be retained in the Account for the purchase of additional Shares in subsequent Offering Periods, subject to the Participant’s withdrawal rights under Paragraph 8. Until Shares are actually delivered to the Agent and credited in book entry form to a Participant’s Investment Account, such Participant shall have no rights of any kind in the Shares.
(b)      Dividends on Shares Held in Investment Accounts . All cash dividends paid with respect to the Shares credited to a Participant’s Investment Account shall, unless otherwise directed by the Participant, be credited to his or her Account and used to purchase additional Shares, subject to Participants’ withdrawal rights under Paragraph 8 and the other limits of the Plan. The additional Shares shall be purchased on the open market at the market price (and not at a discount) as soon as practicable after the dividends are paid.
(c)      Adjustment of Shares on Application of Aggregate Limits . If the total number of Shares that would be purchased pursuant to Paragraph 9(a) but for the limits described in Paragraph 9(a)(i) exceeds the number of Shares available for purchase under the Plan for a particular Offering Period, then the number of available Shares shall be allocated among the Investment Accounts of Participants in the ratio that the amount credited to a Participant’s Account as of the Purchase Date bears to the total amount credited to all Participants’ Accounts as of the Purchase Date. The cash balance not applied to the purchase of Shares shall be held in Participants’ Accounts subject to the terms and conditions of the Plan.
10.      Stock Subject to Plan .
Subject to adjustment in accordance with Section 20, the maximum number of Shares that may be issued pursuant to the Plan is 2,000,000 shares. At the option of the Company, the Shares delivered pursuant to the Plan may be authorized but previously unissued shares or treasury shares or shares purchased in the open market or privately negotiated transactions for purposes of the Plan. In addition, the Committee may impose such limitations as it deems appropriate on the number of Shares that shall be made available for purchase under the Plan with respect to any Offering Period.
11.      Withdrawal and Sale of Shares .
A Participant shall have the right to move all or a portion of the Shares credited to his or her Investment Account to another brokerage account of his or her choosing by notifying the Agent; provided, however , that no Participant may move Shares from his or her Investment Account until the earlier of: (i) first day of the twelfth (12th) month following the Date of Grant for the Shares for which the Participant is requesting a certificate or (ii) a Change-in-Control. A Participant shall have no right to sell or otherwise transfer Shares credited to his or her Investment Account until the

6

earlier of (i) the expiration of the twelve (12) month period described above or (ii) a Change-in-Control.
12.      [RESERVED] .
13.      Voting .
The Agent shall vote all Shares held in an Investment Account in accordance with the Participant’s instructions.
14.      Termination of Employment .
(a)      Any Participant (i) whose employment by an Employer is terminated for any reason (except death) on or before the last day of an Offering Period, or (ii) who ceases to be an Eligible Employee on or before the last day of an Offering Period, shall cease being a Participant as of the date of such termination of employment or cessation of eligibility. Upon such event, there shall be promptly refunded to such Participant the entire cash balance in such Participant’s Account without interest thereon or deduction therefrom.
(b)      If a Participant shall die on or before the last day of an Offering Period, no further payroll deductions shall be taken nor Shares purchased on behalf of the deceased Participant. Upon such death, there shall be promptly refunded to the executor or administrator of such deceased Participant the entire cash balance in such Participant’s Account without interest thereon or deduction therefrom.
(c)      For Participants subject to Section 14(a) or (b) above, all withdrawals or sales of Shares from such Participants’ Investment Accounts shall continue to be made pursuant to Section 11 above, and accordingly, any Shares credited to a Participant’s Investment Account shall not be available for withdrawal or sale until the twelfth (12th) month following the Date of Grant for the applicable Shares.
15.      Merger, Reorganization, Consolidation or Liquidation.
In the event of a merger, reorganization or consolidation in which the Company is not the surviving entity or the liquidation of all of the assets of the Company, either (a) the Board of Directors of the Company in its sole discretion may require that the surviving entity provide to each Participant rights that are equivalent to such Participant’s rights under the Plan, or (b) the Committee may cause the Offering Period to end on the date immediately prior to the consummation of such merger or other transaction.
16.      Governing Law; Compliance With Law.
This Plan shall be construed in accordance with the laws of the State of Delaware. Each Employer’s obligations hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental agency as may, in the opinion of counsel for such Employer, be required.

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17.      Assignment.
The purchase rights granted hereunder are not assignable or transferable by the Participants, other than by will or the laws of descent and distribution. Any attempted assignment, transfer or alienation not in compliance with the terms of the Plan shall be null and void for all purposes and respects.
18.      No Rights as Shareholder.
No Eligible Employee or Participant shall by reason of participation in this Plan have any rights of a shareholder of the Company until Shares are actually delivered to the Agent and credited to the Participant’s Investment Account under the Plan.
19.      No Right to Continued Employment.
Neither the Plan nor any right granted under the Plan shall confer upon any Eligible Employee or Participant any right to continuance of employment with any Employer, or interfere in any way with the right of an Employer to terminate the employment of such Participant.
20.      Adjustments in Case of Changes Affecting Shares.
In the event of a stock split, stock dividend, recapitalization or other subdivision, combination, or reclassification of the Shares, the maximum number of Shares that may be issued under the Plan as set forth in Paragraph 10 shall be adjusted proportionately, and such other adjustments shall be made as may be deemed equitable by the Committee. In the event of any other change affecting Shares, such adjustment, if any, shall be made as may be deemed equitable by the Committee to give proper effect to such event.
21.      Amendment of the Plan.
The Board of Directors of the Company or the Committee may at any time, or from time to time, amend the Plan in any respect. To the extent necessary to comply any applicable law, regulation or stock exchange rule, the Company shall obtain shareholder approval in such a manner and to such a degree as required.
22.      Termination of the Plan.
The Plan and all rights of Participants under any offering hereunder shall terminate when the maximum number of Shares available for sale under the Plan have been purchased, or, with respect to any Employer, at such earlier time as the Board of Directors of the Company or the Committee, in their discretion, choose to terminate the Plan with respect to such Employer. Upon termination of the Plan with respect to one or more of the Employers, all amounts in the Accounts of affected Participants shall be carried forward into the Participant’s Account under a successor plan, if any, or shall be promptly refunded without interest or deduction and all Shares credited to a Participant’s Investment Account shall be transferred to him or her or to another brokerage account of his or her choosing.

8

23.      Governmental Regulations.
(a)      Anything contained in the Plan to the contrary notwithstanding, the Company shall not be obligated to sell or deliver any Shares unless and until the Company is satisfied that such sale and delivery complies with (i) all applicable requirements of the governing body of the principal market in which such Shares are traded, (ii) all applicable provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder and (iii) all other laws or regulations by which the Company is bound or to which the Company is subject.
(b)      Each Employer may make such provisions as it may deem appropriate for the withholding of any taxes or payment of any taxes which it determines it may be required to withhold or pay in connection with any Shares. The obligation of the Company to deliver Shares under this Plan is conditioned upon the satisfaction of the provisions set forth in the preceding sentence.
24.      Repurchase of Shares.
The Company shall not be required to repurchase from any Participant any Shares which such Participant acquires under the Plan.

25.      Shareholder Approval.
The Plan is subject to approval by shareholders of the Company as required by applicable stock exchange rules. If such shareholder approval is not obtained at the first shareholders’ meeting at which the Plan is on the agenda, but in any event before the first Purchase Date under the Plan the Plan shall be canceled, any pending options shall be null and void and all payroll deductions shall be returned.



9
Exhibit 10.4
EXECUTION COPY

AMENDMENT NO. 1
Dated as of April 30, 2014
to
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 23, 2013
    THIS AMENDMENT NO. 1 (this “ Amendment ”) is made as of April 30, 2014 by and among GENERAL GROWTH PROPERTIES, INC., a Delaware corporation (“ Parent ”), GGP LIMITED PARTNERSHIP, a Delaware limited partnership (the “ Partnership ”), GGPLP REAL ESTATE 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLP RE Pledgor ”), GGPLPLLC 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLPLLC Pledgor ”), GGPLP L.L.C., a Delaware limited liability company (the “ LLC ”), GGPLP 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLP Pledgor ”) and 200 LAFAYETTE, LLC, a Delaware limited liability company (“ GGP Lafayette ” and, together with the Parent, the Partnership, GGPLP RE Pledgor, GGPLPLLC Pledgor, the LLC and GGPLP Pledgor, being referred to herein, individually or collectively, as the context shall require, as “ Borrower ” or “ Borrowers ”), and the other Loan Parties party hereto, the Lenders party hereto and Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “ Administrative Agent ”), under that certain Third Amended and Restated Credit Agreement, dated as of October 23, 2013, by and among the Borrowers, the Parent, the other Loan Parties party thereto, the Lenders from time to time party thereto and the Administrative Agent (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.
WHEREAS, the Borrowers have requested that the Lenders (including the Swingline Lender), each Issuing Bank and the Administrative Agent consent to the amendments to, and certain waivers in respect of, the Credit Agreement set forth herein;
WHEREAS, the Borrowers, the other Loan Parties, the Lenders party hereto, the Swingline Lender, each Issuing Bank and the Administrative Agent have agreed to such amendments and waivers on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, the other Loan Parties, the Lenders party hereto, the Swingline Lender, each Issuing Bank and the Administrative Agent, intending to be legally bound, hereby agree as follows:
1. Amendments to the Credit Agreement . Effective as of April 30, 2014, subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the Credit Agreement is hereby amended as follows:
(a)      The recitals to the Credit Agreement are amended to delete each reference to “GGP LLC” appearing therein and replace such reference with “GGPLP LLC”.

ACTIVE 200210837v.7

(b)      The definition of “Borrower” and “Borrowers” set forth in Section 1.01 of the Credit Agreement is amended and restated in its entirety as follows:
“ Borrower ” and “ Borrowers ” have the meaning set forth in the introductory paragraph hereof and shall include each Borrower’s respective successors and permitted assigns; provided , that from and after the GGP Lafayette Borrower Addition Date and until the GGP Lafayette Release Date, “Borrower” and “Borrowers” shall be deemed to include GGP Lafayette; provided , further , that (i) GGP Lafayette shall be released as a Borrower upon the GGP Lafayette Release Date and (ii) upon a Borrower Release Date applicable to any Borrower (other than the Parent, the Partnership and GGP Lafayette), such Borrower shall be automatically released from its obligations under the Loan Documents and shall cease to be Borrower hereunder; provided , further , that from and after the Amendment No. 1 Effective Date, “ Borrower ” and “ Borrowers ” shall be deemed to include GGP Cumulus and GGP Nimbus.
(c)      The definition of “Existing Credit Agreement” set forth in Section 1.01 of the Credit Agreement is amended to delete the reference to “GGP LLC” appearing therein and replace such reference with “GGPLP LLC”.
(d)      The definition of “GGP LLC” set forth in Section 1.01 of the Credit Agreement is amended and restated in its entirety as follows:
“ GGP LLC ” means GGP, LLC, a Delaware limited liability company.
(e)      The definition of “Parent Guarantors” set forth in Section 1.01 of the Credit Agreement is amended and restated in its entirety as follows:
“ Parent Guarantors ” means, collectively, the Parent, GGP LP II, GGP LLC (successor in interest to GGP, Inc., a Delaware corporation), GGP Real Estate Holding I, Inc., a Delaware corporation, and GGP Real Estate Holding II, Inc., a Delaware corporation.
(f)      Section 1.01 of the Credit Agreement is amended to include the following new definitions alphabetically therein:
“ Amendment No. 1 Effective Date ” means April 30, 2014.
“ GGP Cumulus ” means GGP Cumulus, LP, a Delaware limited partnership.
“ GGP Nimbus ” means GGP Nimbus, LP, a Delaware limited partnership.
“ GGPLP LLC ” has the meaning set forth in the introductory paragraph hereof and shall include such Person’s successors and permitted assigns.
“ Specified Reorganization ” shall mean the reorganization of the Loan Parties as set forth on Schedule 1.03, which reorganization shall be consummated and effective after the Amendment No. 1 Effective Date.”
(g)      Section 1.02 of the Credit Agreement is amended to include the following new clause (g) at the end thereof:


2

(g)    From and after the Amendment No. 1 Effective Date, each of GGP Cumulus and GGP Nimbus shall be a “Borrower” hereunder.
(h)      Schedule 1.03 attached hereto is added to the Credit Agreement as Schedule 1.03 thereunder.
(i)      Article 1 of the Credit Agreement is amended to include the following new Section 1.03 immediately after the end of Section 1.02 thereof:
Section 1.03     Specified Reorganization
After the Amendment No. 1 Effective Date, the Loan Parties will complete a series of transactions which will result in the name changes, formations, contributions, mergers and conversions of certain entities constituting the Specified Reorganization. Notwithstanding anything herein to the contrary, the parties hereto acknowledge and consent to the Specified Reorganization, which is more fully described in Schedule 1.03.
(j)      Section 9.02 of the Credit Agreement is amended to include the following new sentence at the end thereof:
Notwithstanding anything herein to the contrary, the foregoing shall not proscribe any Investment in connection with the Specified Reorganization.
(k)      Section 9.03 of the Credit Agreement is amended to include the following new sentence at the end thereof:
Notwithstanding anything herein to the contrary, the foregoing shall not proscribe any Restricted Junior Payment made in connection with the Specified Reorganization.
(l)      Clause (j) of Section 9.05 of the Credit Agreement is amended and restated in its entirety as follows:
(j)    transactions constituting Restricted Junior Payments permitted under Section 9.03 (including, without limitation, any transactions consummated in connection with the Specified Reorganization);
(m)      Section 9.06 of the Credit Agreement is amended (a) to delete the “and” appearing at the end of clause (v) thereof, (b) to delete the period (“.”) now appearing at the end of clause (vi) thereof and to substitute the following therefor: “; and”; and (c) to insert the following new clause (vii) at the end thereof:
(vii)     provided that GGP LLC shall have become a Guarantor on or prior to the Amendment No. 1 Effective Date, the Specified Reorganization may be consummated.
(n)      Section 9.08 of the Credit Agreement is amended to insert the following immediately prior to the period (“.”) now appearing at the end thereof:
; provided, however, that the Loan Parties may permit any of their respective Subsidiaries to amend any such organizational documents if such amendment is required to effectuate the transactions contemplated by the Specified Reorganization


3

(o)      It is acknowledged that immediately following the consummation of the Specified Reorganization, (i) GGP Cumulus shall change its name to “GGP Limited Partnership” and (ii) the Partnership shall change its name to “GGP Operating Partnership, LP”.
2.      Waiver . It is acknowledged that the first step of the Specified Reorganization was the dissolution of GGP, Inc. through the merger with and into GGP, LLC (the “ Initial Step ”) and that the Initial Step occurred prior to the Amendment No. 1 Effective Date. Effective as of the date of satisfaction or waiver of the conditions precedent set forth in Section 3 below, the Lenders party hereto hereby waive any Default or Event of Default arising (if any) under Section 10.01 of the Credit Agreement to the extent of any violation of Section 9.06 of the Credit Agreement or any other provision of the Credit Agreement as a result of the timing of the Initial Step. Such waiver shall be effective only in the specific instance and for the purpose for which given.
3.      Conditions of Effectiveness . The effectiveness of this Amendment is subject to the conditions precedent that:
(a)      the Administrative Agent shall have received counterpart signature pages of this Amendment duly executed by the Borrowers, each of the Lenders required pursuant to Section 12.07 of the Credit Agreement, the Swingline Lender, each Issuing Bank and the Administrative Agent;
(b)      the Administrative Agent shall have received counterparts of the Consent and Reaffirmation attached as Exhibit A hereto duly executed by the Guarantors (the “ Consent and Reaffirmation ”);
(c)      the Administrative Agent shall have received (i) counterparts of the Joinder Agreement attached as Exhibit B hereto duly executed by the existing Borrowers, GGP Cumulus, GGP Nimbus and the Administrative Agent (the “ Joinder ”) and (ii) a joinder to the Guaranty in the form attached thereto duly executed by GGP LLC (the “ Guaranty Joinder ”);
(d)      the Administrative Agent shall have received the instruments, certificates and documents set forth in Sections 5.01(v) through (x) and (xvii) of the Credit Agreement in respect of GGP Cumulus and GGP Nimbus, each in its capacity as a Borrower, and in respect of GGP LLC, in its capacity as a Guarantor, in each case dated as of the date of this Amendment, all in form and substance reasonably acceptable to the Administrative Agent;
(e)      to the extent any Note shall have been issued to any Lender on or prior to the date of this Amendment, replacement Notes executed by the Borrowers (including GGP Cumulus and GGP Nimbus); provided, however, that (i) such replacement Notes shall not be required unless and until such time as the relevant Lender has returned its original Note to the Administrative Agent (or its counsel) for concurrent cancellation with the issuance of such replacement Note (and the Partnership shall have received confirmation thereof) and (ii) to the extent such Notes have not been returned as described in clause (i), no such replacement Notes shall constitute a condition to the effectiveness of this Amendment; and
(f)      the Administrative Agent shall have received payment and/or reimbursement of the Administrative Agent’s and its affiliates actual reasonable and documented out-of-pocket costs and expenses (including, to the extent invoiced prior to the date of this Amendment, the actual reasonable and documented out-of-pocket fees and expenses of one counsel for the Administrative Agent, the Issuing Banks and the Lenders, taken as a whole (and, if necessary, one local counsel in any relevant


4

material jurisdiction to such Persons, taken as a whole)) in connection with this Amendment and the other Loan Documents.
4.      Representations and Warranties of GGP Cumulus, GGP Nimbus and the Borrowers . Each of GGP Cumulus, GGP Nimbus and each Borrower hereby represents and warrants as follows:
(a)      This Amendment and the Credit Agreement as amended hereby constitute legal, valid and binding obligation of such Person enforceable against such Person in accordance with its respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations (other than the payment of principal) contained herein or therein and as may be limited by equitable principles generally (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(b)      As of the date hereof and after giving effect to the terms of this Amendment, (i) no Default or Event of Default shall have occurred and be continuing and (ii) the representations and warranties of the Parent and the Borrowers set forth in the Credit Agreement, as amended hereby, are true and correct in all material respects as of the date hereof, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Agreement.
5.      Reference to and Effect on the Credit Agreement and the other Loan Documents .
(a)      Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.
(b)      Except as specifically amended by this Amendment and the Consent and Reaffirmation, the Joinder, the Guaranty Joinder, the Credit Agreement and the Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.
(c)      The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or the Loan Documents, except as otherwise expressly set forth herein.
(d)      Each of this Amendment, the Joinder, the Guaranty Joinder and the Consent and Reaffirmation shall constitute Loan Documents.
6.      Governing Law . This Amendment, and any claim, controversy, dispute or cause of action arising under or related hereto, and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York (including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), without reference to any other conflicts or choice of law principles thereof.
7.      Headings . The paragraph and section headings in this Amendment are provided for convenience of reference only and shall not affect its construction or interpretation.


5

8.      Counterparts . To facilitate execution, this Amendment may be executed in any number of counterparts as may be convenient or requisite (which may be effectively delivered by facsimile, in portable document format (“ PDF ”) or other similar electronic means). It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons requisite to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.
[ Signature Pages Follow ]



6



IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.
GENERAL GROWTH PROPERTIES, INC., as a Borrower


GGP LIMITED PARTNERSHIP, as a Borrower
By: GGP, LLC, its general partner
By: GGP Real Estate Holding II, Inc., its managing member


GGPLP REAL ESTATE 2010 LOAN PLEDGOR
HOLDING, LLC, as a Borrower


GGPLPLLC 2010 LOAN PLEDGOR
HOLDING, LLC, as a Borrower


GGPLP L.L.C., as a Borrower
By: GGP Limited Partnership, its managing
member
By: GGP, LLC, its general partner
By: GGP Real Estate Holding II, Inc., its managing member


GGPLP 2010 LOAN PLEDGOR HOLDING, LLC, as a Borrower


200 LAFAYETTE, LLC, as a Borrower
By: GGPLP Real Estate, Inc., a Delaware corporation, its sole member

By: /s/ Stacie L. Herron .
Name: Stacie L. Herron
Title: Authorized Signatory



Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually as a Lender, as the Swingline Lender, as an Issuing Bank and as Administrative Agent


By: /s/ Winita Lau ___________________________
Name: Winita Lau
Title: Vice President


Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender


By: /s/ J.T. Johnston Coe ________________
Name: J.T. Johnston Coe
Title: Managing Director


By: /s/ James Rolison _____________________
Name: James Rolison
Title: Managing Director












Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


ROYAL BANK OF CANADA, as a Lender


By: /s/ Brian Gross ___________
Name: Brian Gross
Title: Authorized Signatory












Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


BANK OF AMERICA, N.A., as a Lender


By: /s/ Cheryl Sneor __________________
Name: Cheryl Sneor
Title: Vice President


Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


BARCLAYS BANK PLC, as a Lender


By: /s/ Noam Azachi ___________________
Name: Noam Azachi
Title: Vice President

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


GOLDMAN SACHS BANK USA, as a Lender


By: /s/ Ashwin Ramakrishna ____________
Name: Ashwin Ramakrishna
Title: Authorized Signatory

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


MORGAN STANLEY BANK, N.A., as a Lender


By: /s/ Nick Zangari _____________________
Name: Nick Zangari
Title: Authorized Signatory

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


U.S. BANK NATIONAL ASSOCIATION, as a Lender


By: /s/ Dennis Redpath ____________________
Name: Dennis Redpath
Title: Senior Vice President

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


JPMORGAN CHASE BANK, N.A., as a Lender


By: /s/ Brendan Poe ____________________
Name: Brendan Poe
Title: Executive Director

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


UBS AG, STAMFORD BRANCH, as a Lender


By: /s/ Lana Gifas ___________________
Name: Lana Gifas
Title: Director


By: /s/ Jennifer Anderson ________________
Name: Jennifer Anderson
Title: Associate Director

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.



CITIBANK, N.A., as a Lender


By: /s/ John C. Rowland ______________
Name: John C. Rowland
Title: Vice President

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


RBS CITIZENS, N.A., as a Lender


By: /s/ Michael C. Browne _________________
Name: Michael C. Browne
Title: Vice President

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


TORONTO DOMINION (NEW YORK) LLC, as a Lender


By: /s/ Robyn Zeller __________________________
Name: Robyn Zeller
Title: Vice President

Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


PNC BANK, NATIONAL ASSOCIATION, as a Lender


By: /s/ Joel Dalson ________________________________
Name: Joel Dalson
Title: Senior Vice President




Signature Page to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.


EXHIBIT A
CONSENT AND REAFFIRMATION
Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 1 to the Third Amended and Restated Credit Agreement dated as of October 23, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) by and among by and among GENERAL GROWTH PROPERTIES, INC., a Delaware corporation (“Parent”), GGP LIMITED PARTNERSHIP, a Delaware limited partnership (the “ Partnership ”), GGPLP REAL ESTATE 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLP RE Pledgor ”), GGPLPLLC 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLPLLC Pledgor ”), GGPLP L.L.C., a Delaware limited liability company (the “ LLC ”) and GGPLP 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLP Pledgor ” and, together with the Parent, the Partnership, GGPLP RE Pledgor, GGPLPLLC Pledgor and the LLC, the “ Borrowers ”), and the other Loan Parties from time to time party thereto, the Lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “ Administrative Agent ”), which Amendment No. 1 is dated as of April [__], 2014 (the “ Amendment ”). Capitalized terms used in this Consent and Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement.
Without in any way establishing a course of dealing by the Administrative Agent or any Lender, each of the undersigned consents to the Amendment and reaffirms the terms and conditions of the Guaranty and any other Loan Document executed by it and acknowledges and agrees that the Guaranty and each Loan Document executed by the undersigned in connection with the Credit Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed. Furthermore, each of the undersigned acknowledge and agree that on and after the Amendment No. 1 Effective Date, each of GGP Cumulus and GGP Nimbus shall be a “Borrower” for all purposes of the Credit Agreement, the Guaranty and the other Loan Documents. All references to the Credit Agreement contained in the above‑referenced documents shall be a reference to the Credit Agreement as so modified by the Amendment and as the same may be amended, supplemented, restated or otherwise modified from time to time hereafter.
This Consent and Reaffirmation, and any claim, controversy, dispute or cause of action arising under or related hereto, and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York (including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), without reference to any other conflicts or choice of law principles thereof.
Dated: April 30, 2014
[ Signature Pages Follow ]






 
GENERAL GROWTH PROPERTIES, INC.

By:
     Name:
     Title:
 
GGP LIMITED PARTNERSHIP II
By: GGP, LLC, its general partner
By: GGP Real Estate Holding II, Inc., its managing member


By:
     Name:
     Title:



                                                                              GGP, LLC, successor in interest to GGP, Inc.
                                                                              
                                                                              By: GGP Real Estate Holding II, Inc., its managing member

                                                                                 By:
                                                                                 Name:
                                                                                  Title:
 
GGP REAL ESTATE HOLDING I, INC.


By:
     Name:
     Title:
 
GGP REAL ESTATE HOLDING I, INC.


By:
     Name:
     Title:

 

GGPLP REAL ESTATE, INC.


By:
     Name:
     Title: ____________________________


Signature Page to Consent and Reaffirmation to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.




WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent

By:___________________________
Name:
Title:
 
 


Signature Page to Consent and Reaffirmation to Amendment No. 1 to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al.




EXHIBIT B
JOINDER AGREEMENT
JOINDER AGREEMENT dated as of April 30, 2014, among GGP LIMITED PARTNERSHIP, a Delaware limited partnership (the “ Partnership ”), GGPLP REAL ESTATE 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLP RE Pledgor ”), GGPLPLLC 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLPLLC Pledgor ”), GGPLP L.L.C., a Delaware limited liability company (the “ LLC ”) and GGPLP 2010 LOAN PLEDGOR HOLDING, LLC, a Delaware limited liability company (“ GGPLP Pledgor ”), GENERAL GROWTH PROPERTIES, INC., a Delaware corporation (the “ Parent ”, and, together with the Partnership, GGPLP RE Pledgor, GGPLPLLC Pledgor, the LLC and GGPLP Pledgor, being referred to herein, individually or collectively, as the context shall require, as “ Existing Borrower ” or “ Existing Borrowers ”), GGP CUMULUS, LP, a Delaware limited partnership (“ GGP Cumulus ”), GGP NIMBUS, LP, a Delaware limited partnership (“ GGP Nimbus ” and collectively with GGP Cumulus, the “ New Borrowers ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the “ Administrative Agent ”).
Reference is hereby made to the Third Amended and Restated Credit Agreement dated as of October 23, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) by and among by and among the Existing Borrowers and the other Loan Parties from time to time party thereto, the Lenders from time to time party thereto and the Administrative Agent. Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Under the Credit Agreement, the Lenders have agreed, pursuant to the terms thereof and subject to the conditions therein set forth, to make Loans to the Existing Borrowers, and the Existing Borrowers desire that each of the New Borrowers become a Borrower. In addition, each New Borrower hereby authorizes the Partnership to act on its behalf as and to the extent provided for in the Credit Agreement.
Each of the Existing Borrowers and New Borrowers represents and warrants that the representations and warranties of the Loan Parties in the Credit Agreement relating to the New Borrowers and this Agreement are true and correct in all material respects on and as of the date hereof, other than representations given as of a particular date, in which case they shall be true and correct in all material respects as of that date, and except for changes in factual circumstances specifically and expressly permitted under the Credit Agreement. The Existing Borrowers agree that the co-borrower obligations contained in Section 3.11 of the Credit Agreement will apply to the Obligations of each New Borrower in its capacity as a Borrower. Upon execution of this Agreement by each of the Existing Borrowers, the New Borrowers and the Administrative Agent, each New Borrower shall be a party to the Credit Agreement as a “Borrower” for all purposes thereof, and each New Borrower hereby agrees to be bound by all provisions of the Credit Agreement applicable to such New Borrower in its capacity as a Borrower.
This Agreement, and any claim, controversy, dispute or cause of action arising under or related hereto, and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York (including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), without reference to any other conflicts or choice of law principles thereof.
To facilitate execution, this Agreement may be executed in any number of counterparts as may be convenient or requisite (which may be effectively delivered by facsimile, in portable document format (“ PDF ”) or other similar electronic means). It shall not be necessary that the signature of, or on




behalf of, each party, or that the signature of all persons requisite to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.
[ Signature Pages Follow ]

Signature Page to Joinder Agreement to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized officers as of the date first appearing above.

GGP LIMITED PARTNERSHIP
By: GGP, LLC, its general partner
By: GGP Real Estate Holding II, Inc., its managing member


By:    
Name:    
Title:    


GGPLP REAL ESTATE 2010 LOAN PLEDGOR
HOLDING, LLC


By:    
Name:    
Title:    


GGPLPLLC 2010 LOAN PLEDGOR
HOLDING, LLC


By:    
Name:    
Title:    


GGPLP L.L.C.
By: GGP Limited Partnership, its managing
member
By: GGP, LLC, its general partner
By: GGP Real Estate Holding II, Inc., its managing member


By:    
Name:    
Title:    


GGPLP 2010 LOAN PLEDGOR HOLDING, LLC


By:    
Name:    

Signature Page to Joinder Agreement to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al


Title:    
    

Signature Page to Joinder Agreement to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al


GENERAL GROWTH PROPERTIES, INC.


By:    
Name:    
Title:    


GGP CUMULUS, LP

By: ______________________________
Name:    
Title:    


GGP NIMBUS, LP

By: ______________________________
Name:    
Title:    

Signature Page to Joinder Agreement to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al


WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:                             
    Name: ___________________________
    Title: ___________________________


Signature Page to Joinder Agreement to
Third Amended and Restated Credit Agreement dated as of October 23, 2013
GGP Limited Partnership et al



SECOND AMENDMENT
TO
LOAN AGREEMENT
among
GENERAL GROWTH PROPERTIES, INC.,
as Borrower,
and
THE LENDERS PARTY HERETO,
as Lenders,
and
THE GUARANTORS PARTY HERETO,
as Guarantors,
and
U.S. BANK NATIONAL ASSOCIATION,
as Administrative Agent
and
RBC CAPITAL MARKETS∗ and U.S. BANK NATIONAL ASSOCIATION,
as Joint Lead Arrangers and Bookrunners

Date:    As of August 1, 2014





NYDOCS03/991730.11


SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (as amended, modified or supplemented from time to time, this “ Amendment ”) is dated as of August 1, 2014 among GENERAL GROWTH PROPERTIES, INC. , a Delaware corporation (“ Borrower ”); each of the lenders listed on the signature pages hereof (“ Lenders ”); each of the guarantors listed on the signature pages hereof; and U.S. BANK NATIONAL ASSOCIATION , as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “ Administrative Agent ”).
W I T N E S S E T H:
WHEREAS , Borrower, the guarantors listed on the signature pages thereof (“ Property Guarantors ”), Lenders, Administrative Agent, RBC Capital Markets and U.S. Bank National Association, as Joint Lead Arrangers and Bookrunners, and the other parties from time to time party thereto entered into a Loan Agreement dated as of April 26, 2013, as amended by that certain First Amendment to Loan Agreement dated as of July 23, 2013 (the “ First Amendment ”) (as so amended and as otherwise heretofore amended, supplemented or otherwise modified, the “ Loan Agreement ”);
WHEREAS , certain affiliates of Borrower from time to time party thereto (“ Top Tier Guarantors ” and, together with Property Guarantors, “ Guarantors ”) have entered into a Repayment Guaranty dated as of April 26, 2013 (as heretofore amended, supplemented or otherwise modified, the “ Repayment Guaranty ”); and
WHEREAS , the parties now desire to make certain amendments to the Loan Agreement as set forth herein;
NOW, THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1.
Definitions . Except as otherwise expressly provided for in this Amendment, capitalized terms used in this Amendment shall have the meanings assigned thereto in the Loan Agreement.
2.
Amendments to Loan Agreement .
2.1      Schedule 1 of the Loan Agreement is hereby deleted in its entirety and replaced with Schedule 1 attached to this Amendment.
2.2      The definition of “ Applicable Margin ” in Section 1.1 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:
“ Applicable Margin ” means, (a) with respect to Base Rate Loans, 75 basis points (0.75%) per annum; and (b) with respect to LIBOR Loans, 175 basis points (1.75%) per annum, provided, however, that for so long as a Strike Event Period is continuing and Borrower has elected the Strike Interest Rate Option in accordance with Section 9.26, the Applicable Margin shall be (i) with respect to Base Rate Loans, 225 basis points (2.25%) per annum; and (ii) with respect to LIBOR Loans, 325 basis points (3.25%) per annum.
2.3      The definition of “ Prepayment Premium ” in Section 1.1 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:
“ Prepayment Premium ” means an amount equal to (a) 1.00% of the amount prepaid during the period from the Closing Date of the Initial Advance through and including April 25, 2015 (including in connection with any prepayment made by Borrower pursuant to Section 9.26) and (b) zero ($0) with respect to any prepayment made at any time after April 25, 2015. Notwithstanding the foregoing, with respect to prepayments made in connection with the release

NYDOCS03/991730.11     2


of the Named Properties and Other Properties pursuant to Section 2.6, no Prepayment Premium shall be payable on the first $500,000,000 (in the aggregate) prepaid in connection with such prepayments, provided that a Prepayment Premium shall be payable in connection with any such prepayments in excess of $500,000,000 in the aggregate to the extent that such prepayments are permitted by the Required Lenders or permitted pursuant to Section 2.6(1)(a).
3.
Upfront Fee . Borrower agrees to pay an upfront fee (collectively, the “ Upfront Fee ”), to Administrative Agent, for the ratable benefit of the applicable Lenders, in an amount equal to (a) 0.10% of the Commitment of each incumbent Lender under the Loan Agreement that continues to be a Lender as of the Effective Date (the “ Existing Lenders ”) (as listed on Schedule 1 hereto) and that has delivered its signature page to this Amendment to Administrative Agent by 5:00 P.M. (New York City time) on July 30, 2014 and (b) 0.075% of the Commitment of each Existing Lender that delivers its signature page to this Amendment to Administrative Agent thereafter. The Upfront Fee shall be earned and due and payable in full, in cash, on the Effective Date and shall be non-refundable thereafter.
4.
Commitments .
(a)
Borrower and Guarantors hereby acknowledge and agree that as of the effective date of this Amendment and following satisfaction of all conditions thereto as provided herein, the amount of each Lender’s Commitment shall be the amount set forth on Schedule 1 attached hereto. If any Existing Lender is increasing its Commitment (an “ Increasing Lender ”) or if there is any Lender that is not an Existing Lender but that is becoming a Lender under the Loan Agreement and delivers its signature page to this Amendment to Administrative Agent (a “ New Lender ” and, together with the Increasing Lenders, the “ Subject Lenders ”), then each Subject Lender shall receive a Note based on its Commitment as set forth on Schedule 1 hereto, which Note, in the case of each Existing Lender, shall be a replacement for such Existing Lender’s existing Note and shall not be a novation or satisfaction of such indebtedness.
(b)
By its signature below, each Subject Lender hereby agrees to perform all obligations with respect to its respective Commitment as set forth in the Loan Agreement as amended by this Amendment, which obligations shall include, but shall not be limited to, the obligation to indemnify Administrative Agent as provided in the Loan Agreement.
(c)
On the effective date of this Amendment, (i) the outstanding principal balance of the Loans prior to the effectiveness of this Amendment shall be reallocated among the Lenders to the extent required to cause the outstanding principal amount of the Loans owed to each Lender to be equal to such Lender’s Commitment (as in effect after the effectiveness of this Amendment), and (ii) each Subject Lender shall advance the applicable funds to Administrative Agent and the funds so advanced shall be distributed among the Lenders whose Commitments are decreasing as necessary to accomplish the required reallocation of the outstanding Loans.
5.
Representations and Warranties . Borrower and each Guarantor hereby represent and warrant that:
(a)
The representations and warranties of Borrower and each Guarantor contained in each of the Loan Documents (as amended or supplemented to date, including pursuant to this Amendment) are true and correct in all material respects (except to the extent that any representation or warranty that is qualified by materiality shall be true and correct in all respects) as such representations and warranties may have changed based upon events or activities not prohibited by the Loan Agreement on and as of the Effective Date (as defined below), before and after giving effect to this Amendment, as though made on and as of such date. Borrower and each Guarantor further represent and warrant that the factual matters described herein are true and correct as of the date hereof.

NYDOCS03/991730.11     3


(b)
The execution, delivery and performance by each Loan Party of this Amendment: (1) have been duly authorized and do not require the consent or approval of any other party or Governmental Authority which has not been obtained; and (2) will not violate any law or result in the imposition of any Lien upon the assets of any Loan Party, except as contemplated by the Loan Documents.
(c)
This Amendment has been duly executed and delivered by or on behalf of each Loan Party and constitutes the legal, valid and binding obligations of each Loan Party, enforceable in accordance with its terms, subject to applicable Bankruptcy Law. This Amendment is not subject to any right of rescission, set off, counterclaim or defense by any Loan Party, including the defense of usury, nor would the operation of any of the terms of this Amendment, or the exercise of any right hereunder, render this Amendment or any of the other Loan Documents unenforceable, and no Loan Party has asserted any right of rescission, set off, counterclaim or defense with respect thereto.
(d)
As of the date of this Amendment and immediately after giving effect to this Amendment, no Potential Default or Event of Default has occurred and is continuing.
6.
Effectiveness of Amendment . This Amendment shall become effective as of the date first above written (the “ Effective Date ”) when, and only when, Administrative Agent shall have received each of the following, each in form and substance reasonably satisfactory to Administrative Agent:
(a)
counterparts of this Amendment executed by Borrower, each Guarantor, Administrative Agent and the Lenders (or, as to any of the Lenders, advice satisfactory to Administrative Agent that such Lender has executed this Amendment);
(b)
an opinion of counsel to Borrower and the Guarantors addressed to Administrative Agent and the Lenders covering such matters as Administrative Agent may reasonably request;
(c)
a Note duly executed by Borrower in favor of each Subject Lender, in the amount set forth next to such Lender’s name on Schedule 1 attached hereto;
(d)
evidence that Borrower shall have paid all fees due and payable with respect to this Amendment; and
(e)
Such other certificates, documents, instruments and agreements as Administrative Agent may reasonably request.
7.
Costs and Expenses . Borrower agrees to pay within five (5) Business Days of receipt of written demand from Administrative Agent all reasonable out-of-pocket costs and expenses of Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Amendment and any instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for Administrative Agent) in accordance with the terms of Section 12.5 of the Loan Agreement.
8.
Certain Definitions . On and after the Effective Date, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Loan Agreement, and each reference in the other Loan Documents to “the Loan Agreement”, “thereunder”, “thereof” or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement, as amended by this Amendment.
9.
Ratification . The Loan Agreement (as amended by this Amendment) and each of the other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Lender or Administrative Agent under

NYDOCS03/991730.11     4


the Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Loan Agreement or any of the other Loan Documents.
10.
Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.
11.
Guarantor Consent . By its signature below, each Guarantor, as a Top Tier Guarantor under the Repayment Guaranty or as a Property Guarantor under the Loan Agreement, as applicable, hereby consents to this Amendment and each prior amendment to any Loan Document and hereby confirms and agrees that notwithstanding the effectiveness of this Amendment and each such prior amendment, the Repayment Guaranty or its obligations as a Property Guarantor under the Loan Agreement, as applicable, is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects.
12.
Governing Law . This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
[ Balance of page intentionally left blank ]



NYDOCS03/991730.11     5


IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be executed by their respective officers thereunder duly authorized, as of the date first above written.
BORROWER:
GENERAL GROWTH PROPERTIES, INC., a Delaware corporation
By:
/s/ Stacie L. Herron    
Name: Stacie L. Herron
Title: Authorized Signatory

[Signature Page to Second Amendment]
NYDOCS03/991730


PROPERTY GUARANTORS:
COLUMBIANA CENTRE, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

FALLEN TIMBERS SHOPS, LLC, a Delaware limited
liability company

By:
/s/ Stacie L. Herron    
Authorized Signatory

GRAND TETON MALL, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

MAYFAIR MALL, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

MONDAWMIN BUSINESS TRUST, a Maryland business trust
By:
/s/ Stacie L. Herron    
Authorized Signatory

NORTH TOWN MALL, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

OAKWOOD HILLS MALL, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

[Signature Page to Second Amendment]
NYDOCS03/991730



OAKWOOD SHOPPING CENTER, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

PIONEER PLACE, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

PIONEER OFFICE, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

PDC-EASTRIDGE MALL, L.L.C., a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

PDC-RED CLIFFS MALL, L.L.C., a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

RED CLIFFS PLAZA, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

RIVER HILLS MALL, LLC, a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

[Signature Page to Second Amendment]
NYDOCS03/991730



SOONER FASHION MALL, L.L.C., a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

SOUTHWEST DENVER LAND, L.L.C., a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory

SOUTHWEST PLAZA, L.L.C., a Delaware limited liability company
By:
/s/ Stacie L. Herron    
Authorized Signatory


[Signature Page to Second Amendment]
NYDOCS03/991730



TOP TIER GUARANTORS:
GGP REAL ESTATE HOLDING I, INC.
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGP, LLC
By: GGP Real Estate Holding II, Inc., its managing
member
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGP REAL ESTATE HOLDING II, INC.
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGP LIMITED PARTNERSHIP II
By: GGP Real Estate Holding I, Inc., its general
partner
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGP OPERATING PARTNERSHIP, LP
(f/k/a GGP Limited Partnership)
By: GGP Real Estate Holding II, Inc., its general
partner
By:
/s/ Stacie L. Herron    
Authorized Signatory







[Signature Page to Second Amendment]
NYDOCS03/991730


GGPLP L.L.C.
By:
GGP Nimbus, LP, its managing member
By: GGP Operating Partnership, LP (f/k/a GGP Limited Partnership), its general partner
By: GGP Real Estate Holding II, Inc.,
its general partner
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGPLP REAL ESTATE, INC.
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGPLPLLC 2010 LOAN PLEDGOR HOLDING, LLC
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGPLP 2010 LOAN PLEDGOR HOLDING, LLC
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGPLP REAL ESTATE 2010 LOAN PLEDGOR HOLDING, LLC
By:
/s/ Stacie L. Herron    
Authorized Signatory

GGP LIMITED PARTNERSHIP (f/k/a GGP Cumulus, LP)
By:
GGP Operating Partnership, LP (f/k/a GGP Limited Partnership), its general partner
    
By: GGP Real Estate Holding II, Inc., its general partner
 
By:
/s/ Stacie L. Herron    
Authorized Signatory

[Signature Page to Second Amendment]
NYDOCS03/991730


GGP NIMBUS, LP
By:
GGP Operating Partnership, LP (f/k/a GGP Limited Partnership), its general partner
    
By: GGP Real Estate Holding II, Inc., its general partner
 
By:
/s/ Stacie L. Herron    
Authorized Signatory



[Signature Page to Second Amendment]
NYDOCS03/991730



ADMINISTRATIVE AGENT:
U.S. BANK NATIONAL ASSOCIATION, as Administrative Agent
By:
/s/ Dennis Redpath    
Name: Dennis Redpath
Title: Senior Vice President

[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
U.S. BANK NATIONAL ASSOCIATION
By:
/s/ Dennis Redpath    
Name: Dennis Redpath
Title: Senior Vice President


[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER :
ROYAL BANK OF CANADA
By:
/s/ Brian Gross    
Name: Brian Gross
Title: Authorized Signatory

[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER :
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
/s/Winita Lau    
Name: Winita Lau
Title: Vice President



[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER :
BANK OF AMERICA, N.A.
By:
/s/ Cheryl Sneor    
Name: Cheryl Sneor
Title: Vice President

[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
/s/ Susan E. Robbins    
Name: Susan E. Robbins
Title: Second Vice President

[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
AAREAL CAPITAL CORPORATION
By:
/s/ David C. Lee    
Name: David C. Lee
Title: Director
By:
/s/ Jennifer Hochberg    
Name: Jennifer Hochberg
Title: Counsel


[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
MORGAN STANLEY BANK, N.A.
By:
/s/ Gary P. Curwin    
Name: Gary P. Curwin
Title: Authorized Signatory


[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
MUFG UNION BANK, N.A.
formerly known as Union Bank, N.A.
By:
/s/ Donald Wattson    
Name: Donald Wattson
Title: Vice President

[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
PNC BANK, NATIONAL ASSOCIATION
By:
/s/ Joel Dalson    
Name: Joel Dalson
Title: Senior Vice President


[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
THE BANK OF NOVA SCOTIA
By:
/s/ Frank Ottavino    
Name: Frank Ottavino
Title: Director


[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
MANUFACTURERS AND TRADERS TRUST COMPANY
By:
/s/ Gregory J. Campanaro    
Name: Gregory J. Campanaro
Title: Vice President

 

 


[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
THE BANK OF NEW YORK MELLON
By:
/s/ Carol Murray    
Name: Carol Murray
Title: Managing Director


[Signature Page to Second Amendment]
NYDOCS03/991730


LENDER:
COMPASS BANK
By:
/s/ Brian Tuerff    
Name: Brian Tuerff
Title: Senior Vice President



[Signature Page to Second Amendment]
NYDOCS03/991730


Schedule 1
Commitments

LENDER
Pro Rata Percentage
Commitment
U.S. Bank National Association
23.333333330000%
$323,521,639.25
Royal Bank of Canada
13.666666670000%
$189,491,245.83
Wells Fargo Bank, National Association
11.666666670000%
$161,760,819.61
Bank of America, N.A.
8.333333334000%
$115,543,442.59
The Prudential Insurance Company of America
8.333333334000%
$115,543,442.59
Aareal Capital Corporation
3.545363834000%
$49,157,225.11
Aareal Bank AG
4.787969500000%
$66,386,217.48
Morgan Stanley Bank, N.A.
5.000000000000%
$69,326,065.55
MUFG Union Bank, N.A.
4.000000000000%
$55,460,852.44
PNC Bank National Association
4.299616055000%
$59,615,092.90
The Bank of Nova Scotia
2.666666666000%
$36,973,901.62
Manufacturers and Traders Trust Company
4.280998065000%
$59,356,950.50
The Bank of New York Mellon
3.919385878000%
$54,343,120.46
Compass Bank
2.166666667000%
$30,041,295.07
Total
100%
$1,386,521,311.00



NYDOCS03/991730.11     Sch. 1-1


Exhibit 31.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
 
I, Sandeep Mathrani, certify that:
 
1.                               I have reviewed this report on Form 10-Q of General Growth Properties, Inc.;
 
2.                               Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.                               Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.                               The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)                      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)                      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)                       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)                      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
5.                               The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Date: August 6, 2014
/s/ Sandeep Mathrani
 
Sandeep Mathrani
 
Chief Executive Officer





Exhibit 31.2
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
 
I, Michael Berman, certify that:
 
1.                               I have reviewed this report on Form 10-Q of General Growth Properties, Inc.;
 
2.                               Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.                               Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.                               The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)                      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)                      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)                       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)                      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
5.                               The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Date: August 6, 2014
/s/ Michael Berman
 
Michael Berman
 
Chief Financial Officer




Exhibit 32.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of General Growth Properties, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sandeep Mathrani, in my capacity as Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)          The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
 
(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
/s/ Sandeep Mathrani
 
Sandeep Mathrani
Chief Executive Officer
August 6, 2014





Exhibit 32.2
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of General Growth Properties, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Berman, in my capacity as Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)          The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
 
(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
/s/ Michael Berman
 
Michael Berman
Chief Financial Officer
August 6, 2014