LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...

Plan of distributionUnited States of AmericaThe Units have not been and will not be registered under the Securities Act, or any state securities laws,and may not be offered, sold, pledged or transferred within the United States, except in certaintransactions exempt from the registration requirements of the Securities Act. The Units are beingoffered and sold only outside the United States in accordance with Regulation S under the SecuritiesAct. Terms used but not defined in this section shall bear the meanings given to them under Regulation S.In addition, each subscriber of or purchaser of Units or any interest therein, including in the secondarymarket, who is a U.S. person for US federal income tax purposes will be deemed to have made thefollowing representations:• We understand and acknowledge that LMIR Trust may be classified as a “passive foreign investmentcompany” (“PFIC”) for the current taxable year and for future taxable years due to the nature of itsincome and activities and operations. A non-U.S. corporation will be considered a PFIC for any taxableyear if either (i) at least 75% of its gross income is passive income, or (ii) at least 50% of the value of itsassets is attributable to assets that produce or are held for the production of passive income. In thisregard, rental income, which constitutes LMIR Trust’s main income, is generally considered passiveunless it meets certain criteria to be considered active rents. We understand that a portion of LMIRTrust’s rental income would likely not be considered active rents, and thus, LMIR Trust may beconsidered a PFIC. A separate determination must be made as to the PFIC status each year;• We understand that, if LMIR Trust is a PFIC either currently or in any future taxable year during which wehold Units, we will be subject to special tax rules with respect to any “excess distribution” that we receiveand any gain we realize from a sale or other disposition of the Units, unless we make a “mark-to-market”election or a “qualified electing fund” election described below. Distributions we receive in a taxable yearthat are greater than 125% of the average annual distributions we received during the shorter of thethree preceding taxable years or our holding period for the Units will be treated as an excess distribution.We are aware that under these special tax rules:1. The excess distribution or gain will be allocated rateably over our holding period for the Units;2. The amount allocated to the current taxable year and any taxable year prior to the first taxable yearin which LMIR Trust became a PFIC will be treated as ordinary income;3. The amount allocated to each other year will be subject to the highest tax rate in effect for that yearand the interest charge generally applicable to underpayments of tax will be imposed on theresulting tax attributable to each such year; and4. The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution”cannot be offset by any net operating losses for such years, and gains (but not losses) realised onthe sale of the Units cannot be treated as capital, even if we hold the Units as capital assets;• We understand that if we are a U.S. holder of “marketable stock” (as defined below) in a PFIC, we maymake a mark-to-market election for such stock to elect out of the tax treatment discussed above. If wemake a mark-to-market election for the Units, we will include in income each year an amount equal to theexcess, if any, of the fair market value of the Units as of the close of our taxable year over our adjustedbasis in such Units. We further understand that we are allowed a deduction for the excess, if any, of theadjusted basis of the Units over their fair market value as of the close of the taxable year. However,deductions are allowed only to the extent of any net mark-to-market gains on the Units included in ourincome for prior taxable years. We are aware that amounts included in our income under amark-to-market election, as well as gain on the actual sale or other disposition of the Units, aretreated as ordinary income. Ordinary loss treatment also applies to the deductible portion of anymark-to-market loss on the Units, as well as to any loss realised on the actual sale or disposition of theUnits, to the extent that the amount of such loss does not exceed the net mark-to-market gainspreviously included for such Units. Accordingly, we understand that our basis in the Units will be adjustedto reflect any such income or loss amounts. We further understand that if we make a validmark-to-market election with respect to the Units, the tax rules that apply to distributions bycorporations which are not PFICs would apply to distributions by LMIR Trust;263