Second Amended Operating Agreement of GGPLP LLC

SECOND AMENDED AND RESTATED


OPERATING AGREEMENT


OF


GGPLP L.L.C.
TABLE OF CONTENTS


PAGE ARTICLE I Definitions; Etc........................................... 1


1.1 Definitions................................................... 1


1.2 Exhibits, Etc................................................. 15


1.3 Pronouns and Headings......................................... 16


ARTICLE II Continuation............................................... 16


2.1 Continuation.................................................. 16


2.2 Name.......................................................... 16


2.3 Character of the Business..................................... 16


2.4 Location of the Principal Place of Business................... 17


2.5 Registered Agent and Registered Office........................ 17


ARTICLE III Term....................................................... 17


3.1 Commencement.................................................. 17


3.2 Dissolution................................................... 17


ARTICLE IV Classes of Units........................................... 17


4.1 Common Units.................................................. 17


4.2 Preferred Units............................................... 18


4.3 Establishment of Series A Preferred Units..................... 18


4.4 No Third Party Beneficiary.................................... 32


4.5 No Interest; No Return; No Withdrawal......................... 33


4.6 No Other Capital Contributions................................ 33


4.7 Establishment and Issuance of Series B Preferred Units........ 33


ARTICLE V Allocations and Other Tax and Accounting Matters........... 33


5.1 Allocations................................................... 33


5.2 Distributions................................................. 33


5.3 Books of Account.............................................. 34


5.4 Reports....................................................... 34


5.5 Tax Elections and Returns..................................... 34


5.6 Tax Matters Member............................................ 34


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TABLE OF CONTENTS


(continued)
PAGE
5.7 Withholding................................................... 34


ARTICLE VI Rights, Duties and Restrictions of the Managing Member..... 35


6.1 Expenditures by Company....................................... 35


6.2 Powers and Duties of Managing Member.......................... 35


6.3 Proscriptions................................................. 38


6.4 Title Holder.................................................. 38


6.5 Compensation of the Managing Member........................... 38


6.6 Waiver and Indemnification.................................... 38


6.7 Operation in Accordance with REIT Requirements................ 39


6.8 Duties and Conflicts.......................................... 39


ARTICLE VII Dissolution, Liquidation and Winding-Up.................... 40


7.1 Accounting.................................................... 40


7.2 Distribution on Dissolution................................... 40


7.3 Timing Requirements........................................... 40


7.4 Sale of Company Assets........................................ 41


7.5 Distributions in Kind......................................... 41


7.6 Documentation of Liquidation.................................. 41


7.7 Negative Capital Accounts..................................... 41


ARTICLE VIII Transfer of Units.......................................... 41


8.1 Managing Member Transfer...................................... 41


8.2 Transfers by Other Members.................................... 42


8.3 Restrictions on Transfer...................................... 42


8.4 Bankruptcy of a Member........................................ 43


ARTICLE IX Arbitration of Disputes.................................... 43


9.1 Arbitration................................................... 43


9.2 Procedures.................................................... 43


9.3 Binding Character............................................. 44


9.4 Exclusivity................................................... 44


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(continued)
PAGE
9.5 No Alteration of Agreement.................................... 44


ARTICLE X General Provisions......................................... 45


10.1 Notices....................................................... 45


10.2 Successors.................................................... 45


10.3 Effect and Interpretation..................................... 45


10.4 Counterparts.................................................. 45


10.5 Members Not Agents............................................ 45


10.6 Entire Understanding; Etc..................................... 45


10.7 Amendments.................................................... 45


10.8 Severability.................................................. 45


10.9 Trust Provision............................................... 45


10.10 Issuance of Certificates Representing Units................... 46


10.11 Specific Performance.......................................... 46


10.12 Power of Attorney............................................. 46


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B-1
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
GGPLP L.L.C.


THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT is made and entered into this 17th day of April, 2002, by and among the undersigned parties.


W I T N E S S E T H:


WHEREAS, a Delaware limited liability company known as GGPLP L.L.C. (the "Company") exists pursuant to the Delaware Limited Liability Company Act and that certain Amended and Restated Operating Agreement dated as of May 25, 2000 (the "Original Agreement"), among GGP Limited Partnership, a Delaware limited partnership (the "Operating Partnership"), GGP American Properties Inc., a Delaware corporation, Caledonian Holding Company, Inc., a Delaware corporation, Goldman Sachs 2000 Exchange Place Fund, L.P. (the "GS 2000 Exchange Fund"), and General Growth Properties, Inc., a Delaware corporation ("GGPI");


WHEREAS, the GS 2000 Exchange Fund has previously assigned its preferred units of membership interest in the Company to GSEP 2000 Realty Corp., a Delaware corporation (the "GS 2000 REIT");


WHEREAS, concurrently herewith, GSEP 2002 Realty Corp., a Delaware corporation (the "GS 2002 REIT"), is contributing $50,000,000 to the capital of the Company and, in exchange therefor, the Company is issuing to the GS 2002 REIT Series B Preferred Units (as defined below); and


WHEREAS, the parties hereto, being all of the existing members of the Company and the GS 2002 REIT, desire to amend and restate the Original Agreement in its entirety to reflect such capital contribution, to effect the creation and issuance of the Series B Preferred Units and to reflect the transfer referred to in the second recital hereof and the other understandings among the parties hereto in respect of the Company.


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 Original Agreement to read in its entirety 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 (such definitions to be equally applicable to the singular and plural forms of the terms so defined):


1
"Accountants" shall mean the firm or firms of independent certified public accountants selected by the Managing Member on behalf of the Company and the Property Partnerships.


"Act" shall mean the Limited Liability Company Act as enacted in the State of Delaware, as the same has been amended and as the same may hereafter be amended from time to time.


"Adjusted Capital Account Deficit" shall mean, with respect to any Member, the deficit balance, if any, in such Member'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 Member
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


"Adjusted Consolidated Tangible Net Worth" shall mean, as of the time of determination, the Consolidated Tangible Net Worth at such time less any Reserve Amount at such time.


"Administrative Expenses" shall mean (i) all administrative and operating costs and expenses incurred by the Company, (ii) all administrative, operating and other costs and expenses incurred by the Property Partnerships, which expenses are being assumed by the Company pursuant to Section 6.1, (iii) a pro rata portion (as determined in the reasonable judgment of the Managing Member) of administrative costs and expenses of the Managing Member and GGPI, including salaries paid to officers of the Managing Member and GGPI and accounting and legal expenses undertaken by the Managing Member and GGPI on behalf or for the benefit of the Company, and (iv) to the extent not included in clause (iii) above, a pro rata portion (as determined in the reasonable discretion of the Managing Member) of REIT Expenses.


"Affiliate" shall mean, with respect to any Member (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 Member; (ii) any trustee or beneficiary of a Member; (iii) any legal representative, successor, or assignee of such Member or any Person referred to in the preceding clauses (i) and (ii); (iv) any trustee of any trust for the benefit of such Member or any Person referred to in the preceding clauses (i) through (iii); or (v) any Person which directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Member or any Person referred to in the preceding clauses (i) through (iv).


2
"Agreement" shall mean this Amended and Restated Operating Agreement, as originally executed and as amended, modified, supplemented or restated from time to time, as the context requires.


"Approved Replacement Property" means, with respect to a Property being sold, conveyed, transferred or otherwise disposed of, a real estate asset with a fair market value of at least 90% of the fair market value of the Property being sold, conveyed, transferred or disposed of.


"Bankruptcy" shall mean, with respect to any Member or the Company, (i) the commencement by such Member or the Company 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 Member or the Company is insolvent or bankrupt; (iii) the entry of an order for relief under the federal Bankruptcy Code with respect to such Member or the Company, (iv) the filing of any such petition or the commencement of any such case or proceeding against such Member or the Company, 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 Member or the Company 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 Member or the Company 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 Member or the Company, (vii) the insolvency of such Member or the Company or the execution by such Member or the Company of a general assignment for the benefit of creditors, (viii) the convening by such Member or the Company 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 Member or the Company to pay its debts as they mature, (x) the levy, attachment, execution or other seizure of substantially all of the assets of such Member or the Company where such seizure is not discharged within thirty (30) days thereafter, or (xi) the admission by such Member or the Company 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.


"Business Day" shall mean a day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.


"Capital Account" shall mean, with respect to any Member, the separate "book" account which the Company shall establish and maintain for such Member in accordance with Section 704(b) of the Code and Section 1.704-1(b)(2)(iv) of the Regulations and such other provisions of Section 1.704-1(b) of the Regulations that must be complied with in order for the Capital Accounts to be determined in accordance with the provisions of said Regulations. In furtherance of the foregoing, the Capital Accounts shall be maintained in compliance with Section 1.704-1(b)(2)(iv) of the Regulations; and the provisions hereof shall be interpreted and applied in a manner consistent therewith. 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.


3
"Capital Contribution" shall mean, with respect to any Member, the amount of money and the initial Gross Asset Value of any property other than money contributed to the Company with respect to the Units held by such Member (net of liabilities to which such property is subject).


"Certificate" shall mean the Certificate of Formation establishing the Company, 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 certificate of incorporation of GGPI, as filed with the office of the Delaware Secretary of State, as it may be amended from time to time.


"Closing Price" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Shares are 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 Shares are listed or admitted to trading or, if the Common Shares are 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 the National Association of Securities Dealers, Inc. Automated Quotations System 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 Shares are 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 Shares as such person is selected from time to time by the Board of Directors of GGPI.


"Code" shall mean the Internal Revenue Code of 1986, as amended.


"Common Shares" shall mean the shares of the common stock, par value $.10 per share, of GGPI.


"Common Unit Record Date" shall mean the record date established by the Managing Member for a distribution of Net Operating Cash Flow pursuant to Section 5.2.


"Common Units" shall mean all Units other than Preferred Units.


"Company" shall have the meaning set forth in the preliminary recitals hereto.


"Consent of the Holders of Common Units" shall mean the written consent of the holders of a Majority-In-Interest of the Common Units, 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 the holders of a Majority-In-Interest of the Common Units, unless otherwise expressly provided herein, in their sole and absolute discretion.


"Consolidated Group" means the Company and all Subsidiaries.


4
"Consolidated Group Pro Rata Share" shall mean, with respect to any Investment Affiliate, the percentage of the aggregate equity ownership interests held by the Consolidated Group in such Investment Affiliate, determined by calculating the greater of (i) the percentage of the issued and outstanding stock, partnership interests or membership interests in such Investment Affiliate held by the Consolidated Group in the aggregate and (ii) the percentage of the total book value of such Investment Affiliate that would be received by the Consolidated Group in the aggregate upon liquidation of such Investment Affiliate after repayment in full of all Indebtedness of such Investment Affiliate.


"Consolidated Interest Expense" shall mean, for any period, without duplication, the sum of (a) the amount of interest expense, determined in accordance with GAAP, of the Consolidated Group for such period related to Consolidated Outstanding Indebtedness for such period plus (b) the Consolidated Group Pro Rata Share of any interest expense, determined in accordance with GAAP, of any Investment Affiliate, for such period, whether recourse or non-recourse (in the case of each of clause (a) or (b), excluding prepayment fees, premiums or penalties and net of amortization of deferred costs associated with new financings or refinancings of existing Indebtedness).


"Consolidated Outstanding Indebtedness" shall mean, as of any date of determination, without duplication, the sum of (a) all Indebtedness of the Consolidated Group outstanding at such date, determined on a consolidated basis in accordance with GAAP, plus (b) the applicable Consolidated Group Pro Rata Share of any Indebtedness of each Investment Affiliate outstanding at such date other than Indebtedness of such Investment Affiliate to a member of the Consolidated Group, less (c) with respect to each Subsidiary in which the Company does not directly or indirectly hold a 100% ownership interest, a percentage of any Indebtedness of such Subsidiary which is included under clause (a) of this definition and which is not guaranteed by the Company equal to the percentage ownership interest in such consolidated Subsidiary which is not held directly or indirectly by the Company on such date. Notwithstanding anything to the contrary contained herein, Parent Indebtedness shall not be included in the calculation of Consolidated Outstanding Indebtedness.


"Consolidated Tangible Net Worth" shall mean, as of any date of determination, the excess, without duplication, of (a) the total fair market value of the assets (including cash and cash equivalents) of the Consolidated Group and the applicable Consolidated Group Pro Rata Shares of the assets of the Investment Affiliates as of such date over (b) Consolidated Outstanding Indebtedness as of such date; provided, that for purposes of this definition, the determination of total assets shall exclude (a) all assets which in accordance with GAAP should be classified as intangible assets (such as goodwill, patents, trademarks, copyrights, franchises, unamortized debt discount, capitalized research and development costs, capitalized software costs and organization costs), (b) cash held in a sinking or other similar fund established for the purpose of redemption or other retirement of capital stock and (c) to the extent not already deducted from total assets, reserves for depreciation, depletion, obsolescence or amortization of properties and other reserves or appropriations of retained earnings which have been established or which a prudent owner and operator should establish in connection with the business of operating and maintaining the Company properties. For purposes of the calculation of Consolidated Tangible Net Worth, (a) the fair market value of income producing real property


5 shall be the quotient of four times the Net Operating Income of such property for the most recently completed calendar quarter divided by an 8.25% capitalization rate, (b) the fair market value of any raw land, vacant out-parcel or real estate under construction shall equal the aggregate sums expended therefor (including without limitation land acquisition costs) (provided, however, that (i) the fair market value of the land portion of those assets which are listed on Schedule 1 to the Term Loan Agreement shall be as set forth on such Schedule 1 and (ii) no amount shall be included under this clause (b) with respect to real estate under construction if the Company has included income therefrom in the calculation of Net Operating Income unless the construction in question involves renovation or expansion of a property that is otherwise completed, open for business and operational, the construction in question will not materially interrupt, limit or impair such ongoing business and operations and the inclusion of such income in the calculation of Net Operating Income and such costs and/or other amounts under this clause (b) is not duplicative) and (c) the fair market value of any other asset shall be the lesser of cost and fair market value (as determined in good faith by the Managing Member) thereof.


"Control" shall have the meaning provided in the regulations promulgated under the Securities Exchange Act of 1934, as amended.


"Current Per Share Market Price" shall mean, as of any date, the average of the Closing Price for the twenty consecutive Trading Days ending on such date.


"Demand Notice" shall have the meaning set forth in Section 9.2.


"Depreciation" shall mean, with respect to any asset of the Company 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.


"Entity" shall mean any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association or other entity.


"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time (or any corresponding provisions of succeeding laws).


"Event" shall have the meaning set forth in Section 4.3(c).


"Excess Units" shall have the meaning set forth in Section 4.3(g)(i)(F).


"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.


"Fixed Charges" shall mean, for any period (without duplication), the sum of (a) Consolidated Interest Expense for such period plus (b) the aggregate of all scheduled principal


6 payments on Consolidated Outstanding Indebtedness during such period (excluding balloon, bullet or similar payments of principal due upon the stated maturity of Indebtedness) plus (c) the aggregate of all dividends paid or accrued on any shares of Preferred Stock issued by members of the Consolidated Group and the Consolidated Group Pro Rata Share of all dividends paid or accrued on any shares of Preferred Stock issued by Investment Affiliates (provided that dividends paid or accrued on shares of Preferred Stock owned by the Company or any Subsidiary that is 100% owned by the Company shall be exclu ...