November 25, 1996
U.S. Securities and Exchange Commission
Operations Center, Stop 0-7
6432 General Green Way
Alexandria, Virginia 22312
Re: Urban Shopping Centers, Inc.
Commission File No. 1-12278
Form 8-K
Gentlemen:
Transmitted, for the above-captioned registrant is the
electronically filed executed copy of registrant's current report
on Form 8-K dated November 25, 1996.
Thank you.
Very truly yours,
URBAN SHOPPING CENTERS, INC.
By: ADAM S. METZ
Executive Vice President, Chief Financial
Officer, Director of Acquisitions and
Chief Accounting Officer
ASM/gd
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 25, 1996
URBAN SHOPPING CENTERS, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-12278 36-3886885
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
900 North Michigan Avenue, 60611
Chicago, Illinois (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (312) 915-2000
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
Urban Shopping Centers, Inc. (Urban) recently reached an
agreement in principle to purchase Old Orchard Shopping Center
(Old Orchard) from an affiliate of the Zell Merrill Lynch Real
Estate Opportunity Partners Limited Partnership II and an
affiliate of JMB Realty Corporation in a transaction valued at
$106.1 million in cash and securities and subject to $160.0
million of existing liabilities. Completion of the acquisition
is subject to the completion of customary due diligence review
and other customary closing conditions. Assuming all reviews are
satisfactory, the acquisition is expected to close by December
31, 1996.
Old Orchard is located in the northern suburbs of Chicago at
the intersection of Interstate 94 (Edens Expressway) and Old
Orchard Road. The 1.7 million square foot outdoor center first
opened in 1956 and was originally developed by the predecessor to
Urban. Urban's management affiliate, Urban Retail Properties
Co., completely redeveloped the property for the current owners
in 1994 and 1995. The redevelopment included the expansion and
renovation of existing anchors, the addition of two new anchors
(Nordstrom and Bloomingdale's), the renovation, expansion and
retenanting of the mall stores and the construction of two new
multi-level parking decks.
Old Orchard is currently anchored by Bloomingdale's (200,000
square feet), Lord & Taylor (115,000 square feet), Marshall
Field's which owns their own store (444,248 square feet),
Nordstrom (200,000 square feet) and Saks Fifth Avenue (104,469
square feet). The center also contains approximately 600,000
square feet of specialty shops and restaurants, a seven screen
Cineplex Odeon theater complex and approximately 60,000 square
feet of office space. The mall shop occupancy is currently 88%.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
URBAN SHOPPING CENTERS, INC.
By: ADAM S. METZ
Executive Vice President, Chief
Financial Officer, Treasurer,
Director of Acquisitions and Chief
Accounting Officer
Date: November 25, 1996
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
Listed below are the financial statements, pro forma
financial information and exhibits which are included herein:
a. Financial Statements.
Statements of Operations for Old Orchard
Shopping Center for the nine months ended
September 30, 1996 (unaudited) and the years ended
December 31, 1995, 1994 and 1993, with Independent
Auditors' Report thereon
b. Pro Forma Financial Information.
Pro Forma Condensed Consolidated Balance
Sheet as of September 30, 1996 (unaudited)
Pro Forma Condensed Consolidated Statement of
Operations for the nine months ended September 30,
1996 (unaudited)
Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1995
(unaudited)
c. Exhibits.
1.1 Form of Purchase Agreement dated November 21, 1996
10.1 Urban Shopping Centers Incentive Unit Program
23.1 Independent Auditors' Consent
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Urban Shopping Centers, Inc.:
We have audited the accompanying Statements of Operations of
Old Orchard Shopping Center (Old Orchard) for the years ended
December 31, 1995, 1994 and 1993. These Statements are the
responsibility of management. Our responsibility is to express
an opinion on the Statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audits to obtain reasonable assurance about
whether the Statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the Statements. We believe that our audits
provide a reasonable basis for our opinion.
As explained in Note 1, the accompanying Statements were
prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission.
The presentation is not intended to be a complete presentation of
Old Orchard's revenues and expenses.
In our opinion, the Statements referred to above present
fairly, in all material respects, certain revenues and expenses
of Old Orchard for the years ended December 31, 1995, 1994 and
1993, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Chicago, Illinois
November 21, 1996
<TABLE>
URBAN SHOPPING CENTERS, INC.
OLD ORCHARD SHOPPING CENTER
STATEMENTS OF OPERATIONS (NOTE 1)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED) AND THE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
($000's omitted)
<CAPTION>
Nine
Months
Ended
September 30,
1996 Year Ended December 31,
------------ ------------------------------------------
(Unaudited) 1995 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Shopping center and
office revenues:
Minimum rents $ 13,319 $ 13,529 $ 4,810 $ 4,168
Percentage rents 557 1,129 804 1,053
Recoveries from
tenants 8,158 7,473 3,475 2,437
Other 1,099 698 221 87
------------ ------------ ------------ ------------
23,133 22,829 9,310 7,745
Interest income 514 682 178 --
------------ ------------ ------------ ------------
23,647 23,511 9,488 7,745
------------ ------------ ------------ ------------
Expenses:
Shopping center and
office expenses:
Real estate taxes 4,650 3,675 3,030 2,354
Utilities 1,064 1,267 506 701
Repairs and
maintenance 2,279 2,147 1,710 1,450
Advertising 458 959 -- --
Other operating 1,073 2,358 1,576 1,143
------------ ------------ ------------ ------------
9,524 10,406 6,822 5,648
Mortgage interest 9,648 8,890 2,164 1,003
------------ ------------ ------------ ------------
19,172 19,296 8,986 6,651
------------ ------------ ------------ ------------
Operating income $ 4,475 $ 4,215 $ 502 $ 1,094
============ ============ ============ ============
<FN>
See accompanying notes to statements of operations.
</TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
($000's omitted)
(1) BASIS OF PRESENTATION
The accompanying historical statements of operations for Old
Orchard Shopping Center (Old Orchard) are presented in conformity
with Rule 3-14 of the Securities and Exchange Commission. The
statements of operations are not representative of the actual
operations for the nine months ended September 30, 1996 and the
years ended December 31, 1995, 1994 and 1993, as certain revenues
and expenses, which may not be comparable to the revenues and
expenses expected to be incurred in the future operations have
been excluded. Revenues and expenses excluded consist of income
from the 1993 bankruptcy settlement with Federated Department
Stores, Inc., interest income on short-term investments,
management fees, and depreciation and amortization. Interest
income reflected in the accompanying historical statements of
operations represents interest on two notes receivable
anticipated to be acquired upon acquisition of Old Orchard by
Urban Shopping Centers, Inc. (Urban).
In 1994 and 1995, the property was extensively redeveloped
by Urban Retail Properties Co. (the Management Company) for the
current owners. The redevelopment included the expansion and
renovation of existing anchors, the addition of two new anchors,
the renovation, expansion and retenanting of the mall stores and
the construction of two new multi-level parking decks. The
average mall shop occupancy for the nine months ended September
30, 1996 and the years ended December 31, 1995, 1994 and 1993,
was approximately 88%, 85%, 35% and 45%, respectively.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Property
Repair and maintenance expenses are charged to operations as
incurred. Significant betterments and improvements are
capitalized and depreciated over their estimated useful lives.
Revenue Recognition
Minimum rent is recognized on a straight-line basis over the
terms of the related leases.
Income Taxes
Old Orchard will be owned by Urban through Urban Shopping
Centers, L.P. Urban operates as a real estate investment trust
(REIT) and under the provision of the Internal Revenue Code, a
REIT will generally not be subject to Federal and state income
taxes.
Use of Estimates
The preparation of statements of operations in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
URBAN SHOPPING CENTERS, INC.
NOTES TO STATEMENTS OF OPERATIONS - CONTINUED
(3) MORTGAGE NOTES PAYABLE
Urban anticipates assuming outstanding debt of approximately
$160,000 in connection with the acquisition of Old Orchard. The
debt consists of three notes (i) two $52,500 notes which required
monthly interest payments through October 1, 1996 and require
monthly principal and interest payments from November 1, 1996
through maturity of September 16, 2000, at an interest rate of
9.09% and (ii) a $55,000 note which required monthly interest
payments through October 1, 1996 and requires monthly principal
and interest payments from November 1, 1996 through maturity of
September 16, 2000, at an interest rate of 7.45%. These loans
were issued in 1994 in connection with the renovation of Old
Orchard and as of September 30, 1996 the outstanding amount on
the loans, in the aggregate, was $149,865, of which $105,000
relates to the two $52,500 notes and $44,865 relates to the
$55,000 note. Balances outstanding at December 31, 1995, 1994
and 1993 were $148,014, $79,161 and $23,478, respectively.
Mortgage interest in the accompanying statements of operations is
net of amounts capitalized of $840, $1,312 and $571 for the years
ended December 31, 1995, 1994 and 1993, respectively.
(4) LEASES
Management has determined that all leases relating to Old
Orchard are properly classified as operating leases; therefore,
rental income is reported when earned. Leases with tenants range
in term from one to 48 years and generally provide for fixed
minimum rents and reimbursement of operating costs. In addition,
leases with shopping center tenants provide for additional rent
based upon percentages of tenant sales volumes. One anchor
tenant, Marshall Field's, owns their own store.
Minimum lease payments to be received in the years 1996 to
2000, and thereafter, under the above lease agreements are
$15,054, $14,847, $14,638, $14,688, $14,627, and $87,088,
respectively.
URBAN SHOPPING CENTERS, INC.
PRO FORMA FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
The following unaudited pro forma condensed consolidated
financial statements for Urban Shopping Centers, Inc. (Urban)
reflect the anticipated acquisition by Urban of Old Orchard
Shopping Center (Old Orchard). The pro forma condensed
consolidated financial statements have been prepared based upon
certain pro forma adjustments to the historical financial
statements of Urban.
The accompanying unaudited pro forma condensed consolidated
balance sheet as of September 30, 1996 has been prepared as if
Old Orchard had been acquired as of the balance sheet date.
The accompanying unaudited pro forma condensed consolidated
statements of operations for the nine months ended September 30,
1996 and for the year ended December 31, 1995 have been prepared
as if the Old Orchard acquisition had occurred as of January 1,
1995.
The unaudited pro forma condensed consolidated financial
statements do not purport to be indicative of the results which
would actually have been obtained had the transactions described
above been completed on the dates indicated or which may be
obtained in the future. The unaudited pro forma condensed
consolidated financial statements should be read in conjunction
with the statements of operations for Old Orchard included
herein.
<TABLE>
URBAN SHOPPING CENTERS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
($000's omitted, except share amounts)
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Assets
Investment properties, net of
accumulated depreciation $ 571,543 $ 258,800 (a) $ 830,343
Investments in unconsolidated
partnerships and the
Management Company 29,230 29,230
Cash, cash equivalents and
short-term investments 4,548 (2,450)(b) 2,098
Interest, rents and other
receivables 10,251 7,600 (c) 17,851
Deferred expenses and other
assets 11,515 11,515
------------ ------------ ------------
$ 627,087 $ 263,950 $ 891,037
============ ============ ============
Liabilities and Stockholders'
Equity
Liabilities:
Mortgage notes payable $ 281,705 $ 160,000 (d) $ 441,705
Land sale-leaseback proceeds 75,000 75,000
Deferred lease accrual 15,667 15,667
Accounts payable and other
liabilities 23,681 23,681
Investments in unconsolidated
partnerships 36,925 36,925
Commitments and contingencies
------------ ------------ ------------
Total liabilities 432,978 160,000 592,978
Minority interest 67,638 42,644 (e) 110,282
URBAN SHOPPING CENTERS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET - CONTINUED
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ ------------
Stockholders' equity:
Common stock, $.01 par value,
140,000,000 shares authorized,
13,447,292 and 16,447,292
historical and pro forma
shares, respectively, issued
and outstanding 134 30 (f) 164
Unit voting stock, $.01 par
value, 5,000,000 shares
authorized, 301,633 and
344,058 historical and pro
forma shares, respectively,
issued and outstanding 3 -- 3
Additional paid-in capital 259,258 61,276 (g) 320,534
Retained earnings (deficit) (132,924) (132,924)
------------ ------------ ------------
Total stockholders' equity 126,471 61,306 187,777
------------ ------------ ------------
$ 627,087 $ 263,950 $ 891,037
============ ============ ============
<FN>
See accompanying notes to pro forma financial statements.
</TABLE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
($000's omitted, except share amounts)
<CAPTION>
Pro Forma
Historical Adjustments(h) Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Shopping center and office
revenues:
Minimum rents $ 44,918 $ 13,319 $ 58,237
Percentage rents 2,752 557 3,309
Recoveries from tenants 20,188 8,158 28,346
Other 1,405 1,099 2,504
------------ ------------ ------------
69,263 23,133 92,396
Interest income 1,301 514 1,815
------------ ------------ ------------
70,564 23,647 94,211
------------ ------------ ------------
Expenses:
Shopping center and office
expenses 23,064 9,524 (i) 32,588
Mortgage and other interest
and ground rent 13,759 10,214 (j) 23,973
Depreciation, amortization and
write-off of assets 16,068 5,870 (k) 21,938
General and administrative 2,034 2,034
------------ ------------ ------------
54,925 25,608 80,533
------------ ------------ ------------
URBAN SHOPPING CENTERS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
Pro Forma
Historical Adjustments(h) Pro Forma
------------ ------------ ------------
Operating income (loss) 15,639 (1,961) 13,678
Income from unconsolidated
partnerships and the
Management Company 1,991 1,991
------------ ------------ ------------
Income (loss) before other
gains and minority interest 17,630 (1,961) 15,669
Other gains 1,328 1,328
Minority interest (6,727) 418 (l) (6,309)
------------ ------------ ------------
Net income (loss) $ 12,231 $ (1,543) $ 10,688
============ ============ ============
Net income per common and
unit voting stock $ 0.89 $ 0.64
============ ============
Weighted average common
and unit voting stock
outstanding 13,742,708 16,785,133
============ ============
<FN>
See accompanying notes to pro forma financial statements.
</TABLE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
($000's omitted, except share amounts)
Pro Forma
Historical Adjustments(h) Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Shopping center and office
revenues:
Minimum rents $ 57,683 $ 13,529 $ 71,212
Percentage rents 3,414 1,129 4,543
Recoveries from tenants 24,972 7,473 32,445
Other 2,971 698 3,669
------------ ------------ ------------
89,040 22,829 111,869
Interest income 2,587 682 3,269
------------ ------------ ------------
91,627 23,511 115,138
------------ ------------ ------------
Expenses:
Shopping center and office
expenses 30,655 10,406 (i) 41,061
Mortgage and other interest
and ground rent 18,905 9,645 (j) 28,550
Depreciation, amortization and
write-off of assets 19,915 5,479 (k) 25,394
General and administrative 2,428 2,428
------------ ------------ ------------
71,903 25,530 97,433
------------ ------------ ------------
URBAN SHOPPING CENTERS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
Pro Forma
Historical Adjustments(h) Pro Forma
------------ ------------ ------------
Operating income (loss) 19,724 (2,019) 17,705
Income from unconsolidated
partnerships and the
Management Company 4,375 4,375
------------ ------------ ------------
Income (loss) before other
gains, minority interest
and extraordinary loss 24,099 (2,019) 22,080
Other gains 4,496 4,496
Minority interest (9,951) 497 (l) (9,454)
------------ ------------ ------------
Income (loss) before
extraordinary loss $ 18,644 $ (1,522) $ 17,122
============ ============ ============
Income before extraordinary
loss per common and unit
voting stock $ 1.36 $ 1.02
============ ============
Weighted average common
and unit voting stock
outstanding 13,742,259 16,784,684
============ ============
<FN>
See accompanying notes to pro forma financial statements.
</TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
($000's omitted, except share amounts)
(a) The pro forma adjustment reflects Urban's anticipated
acquisition of Old Orchard, including closing costs, as if
it occurred on September 30, 1996.
(b) The pro forma adjustment reflects the use of working capital
to fund, in part, the pro forma acquisition of Old Orchard.
(c) The pro forma adjustment reflects Urban's anticipated
acquisition of two notes receivable in connection with the
acquisition of Old Orchard.
(d) The pro forma adjustment reflects the anticipated assumption
of Old Orchard's approximately $160,000 in mortgage notes
payable upon purchase .
(e) The pro forma adjustment reflects (i) the anticipated
issuance of $28,000 of convertible preferred operating
partnership units in connection with the acquisition of Old
Orchard and (ii) the reallocation of minority interest and
stockholders' equity in connection with the issuance of
common and unit voting stock. The preferred units have an
anticipated distribution rate of 7.0% and a conversion price
of $27.50 per unit to operating partnership units which in
turn are convertible to common stock. The preferred units
have a perpetual term with a seven year lock-out period.
After seven years the units are callable only in the form of
a common stock payment.
(f) The pro forma adjustment reflects the par value of 3,000,000
shares of common stock anticipated to be issued at $25.50
per share in connection with the acquisition of Old Orchard.
(g) The pro forma adjustment reflects (i) the excess of net
proceeds over par value from the issuance of 3,000,000
shares of common stock at $25.50 per share and 42,425 shares
of unit voting common stock at $26.75 per share and (ii) the
reallocation of minority interest and stockholders' equity
in connection with the issuance of common and unit voting
stock.
(h) The pro forma adjustments reflect, unless otherwise noted,
certain historical revenues and expenses for Old Orchard.
Interest income represents interest on the two notes
receivable discussed in note (c) above.
(i) The pro forma adjustment excludes management fees due to the
anticipated management by Urban Shopping Centers, L.P. As a
result these fees are eliminated in consolidation.
(j) The pro forma adjustment reflects (i) interest expense on
the differential between Old Orchard's $160,000 mortgage
notes payable anticipated to be assumed upon purchase and
the September 30, 1996, current outstanding balance of
$149,865 and (ii) the historical interest expense for Old
Orchard. Reference is made to Note 3 of Notes to Statements
of Operations included herein for a further discussion of
historical interest expense.
(k) The pro forma adjustment reflects the depreciation expense
resulting from the acquisition of Old Orchard, assuming an
asset life of 30 years and buildings and improvements of
$234,800. During 1995, depreciation expense was provided
only on assets in operation.
URBAN SHOPPING CENTERS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
CONTINUED
SEPTEMBER 30, 1996 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
($000's omitted, except share amounts)
(l) The pro forma adjustment reflects (i) the adjustment for the
operating partnership unit holders' share of pro forma
income before extraordinary items and (ii) the distribution
on the preferred units at a rate of 7.0%.
3,000,000 Shares
URBAN SHOPPING CENTERS, INC.
(a Maryland corporation)
Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
November 21, 1996
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Urban Shopping Centers, Inc., a Maryland corporation
(the "Company"), proposes to sell 3,000,000 shares (the "Firm
Stock") of the Company's common stock, par value $.01 per share
(the "Common Stock"), to Lehman Brothers Inc. (the "Underwrit-
er"). In addition, the Company proposes to grant to the Under-
writer an option to purchase up to an additional 300,000 shares
of the Common Stock on the terms and for the purposes set forth
in Section 2 (the "Option Stock"). The Firm Stock and the Option
Stock, if purchased, are hereinafter collectively called the
"Stock." This is to confirm the agreement concerning the pur-
chase of the Stock from the Company by the Underwriter.
1. Representations, Warranties and Agreements of the
Company. The Company represents and warrants to the Underwriter
as of the date hereof as follows:
(a) A registration statement on Form S-3 (No. 333-334)
and an amendment thereto with respect to its (1) series preferred
stock, par value $.01 per share (the "Preferred Stock"), (2)
depositary shares representing entitlement to all rights and
preferences of a fraction of a share of Preferred Stock of a
specified series (the "Depositary Shares"), (3) Common Stock, (4)
warrants to purchase Preferred Stock ("Preferred Stock Warrants")
and warrants to purchase Common Stock ("Common Stock Warrants"
and, together with the Preferred Stock Warrants, the "Stock
Warrants") and (5) stockholder purchase rights entitling stock-
holders to subscribe for and purchase the Preferred Stock,
Depositary Shares, Common Stock and Stock Warrants ("Rights") of
the Company (the "Shelf Securities") to be issued from time to
time have (i) been prepared by the Company in conformity in all
material respects with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, (ii) been
filed with the Commission under the Securities Act and (iii)
become effective under the Securities Act. Copies of such
registration statement and the amendment thereto have been
delivered by the Company to you. As used in this Agreement,
"Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amend-
ment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time. The
registration statement as amended to the date of this Agreement
is hereinafter referred to as the "Registration Statement" and
the related prospectus covering the Shelf Securities in the form
first used to confirm sales of the Stock is hereinafter referred
to as the "Basic Prospectus." The Basic Prospectus as supple-
mented by the prospectus supplement specifically relating to the
Stock in the form first filed pursuant to Rule 424 under the
Securities Act is hereinafter referred to as the "Prospectus."
Any reference in this Agreement to the Registration Statement,
the Basic Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act which
were filed under the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") on or before the date of this
Agreement or the Prospectus, as the case may be; and any refer-
ence to "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed under
the Exchange Act after the date of this Agreement or the Prospec-
tus, as the case may be, which are deemed to be incorporated by
reference therein. The Commission has not issued any order
preventing or suspending the use of the Prospectus.
As described in the Prospectus, as of the date hereof
and as of any Delivery Date (as hereinafter defined), (i) the
Company does and will own a general partnership interest in, and
will be the sole general partner of, Urban Shopping Centers,
L.P., an Illinois limited partnership (the "Operating Partner-
ship"), and (ii) the Operating Partnership does and will own the
Properties (as defined in the Prospectus, but only including
interests owned directly or indirectly by the Company, the
Operating Partnership or the Property Partnerships) or interests
in each of the partnerships (collectively, the "Property Partner-
ships") that currently own the Properties and all of the pre-
ferred stock of Urban Retail Properties Co., a Delaware corpora-
tion (the "Management Company"). For purposes of this Agreement,
the Property Partnerships, any direct wholly-owned subsidiary (a
"REIT Subsidiary") of the Company, and the Management Company are
collectively referred to as the "Subsidiaries." All references
to properties or assets of the Company, the Operating Partnership
or the Subsidiaries include, without limitation, their interests
in the Properties, unless otherwise noted.
(b) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material re-
spects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commis-
sion thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and will not contain
an untrue statement of a material fact or omit to state a materi-
al fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that no
representation or warranty is made as to any statements or omis-
sions made in reliance upon and in conformity with written
information furnished to the Company by you specifically for
inclusion therein.
(c) The Registration Statement conforms, and the Pro-
spectus and any further amendments or supplements to the Regis-
tration Statement or the Prospectus will conform, when they
become effective or are filed with the Commission, as the case
may be, in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will
not, as of the applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or supplement
thereto) contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or neces-
sary to make the statements therein not misleading; provided,
however, that no representation or warranty is made as to any
statements or omissions made in reliance upon and in conformity
with written information furnished to the Company by you specifi-
cally for inclusion therein.
(d) KPMG Peat Marwick LLP, the accounting firm that
certified the financial statements and supporting schedules
included in the Registration Statement, are independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(e) The financial statements (including the notes
thereto) included or incorporated by reference in the Registra-
tion Statement and the Prospectus present fairly the financial
position of the respective entity or entities presented therein
as at the dates indicated and the results of their operations for
the respective periods specified; except as otherwise stated in
the Registration Statement, said financial statements have been
prepared in conformity with generally accepted accounting prin-
ciples applied on a consistent basis. The supporting schedules
included in the Registration Statement present fairly the infor-
mation required to be stated therein. The financial information
and data included or incorporated by reference in the Registra-
tion Statement and the Prospectus present fairly the information
included or incorporated by reference therein and have been pre-
pared on a basis consistent with that of the financial statements
included or incorporated by reference in the Registration State-
ment and the Prospectus and the books and records of the respec-
tive entities presented therein. Pro forma financial information
included or incorporated by reference in the Prospectus has been
prepared in accordance with the applicable requirements of the
Securities Act, the Rules and Regulations and AICPA guidelines
with respect to pro forma financial information and includes or
incorporates by reference all adjustments necessary to present
fairly the pro forma financial position of the respective entity
or entities presented therein at the respective dates indicated
and the results of their operations for the respective periods
specified.
(f) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except
as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in
the earnings, assets, business affairs or business prospects of
the Company, the Operating Partnership, the Management Company or
the Properties taken as a whole, whether or not arising in the
ordinary course of business, (B) there have been no transactions
entered into by the Company, the Operating Partnership or any of
the Subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and the
Operating Partnership, taken as a whole, (C) there has been no
material casualty loss or material condemnation or other material
adverse event with respect to any Property, (D) there has been no
dividend or distribution of any kind declared, paid or made by
the Company or the Management Company on any class of their
capital stock or by the Operating Partnership with respect to its
partnership interests other than a $105,000 dividend paid by the
Management Company on November 15, 1996, and (E) there has been
no change in the capital stock of the Company or the Management
Company or in the partnership interests of the Operating Partner-
ship, or any material increase in the indebtedness of the Compa-
ny, the Operating Partnership or the Subsidiaries.
(g) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Maryland with corporate power and authority to
own, lease and operate its properties and to conduct the business
in which it is engaged or proposes to engage as described in the
Prospectus and to enter into and perform its obligations under
this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise,
or the earnings, assets, business affairs or business prospects
of the Company.
(h) The Operating Partnership has been duly formed and
is validly existing as a limited partnership in good standing
under the Illinois Revised Uniform Limited Partnership Act (the
"Illinois Act") with partnership power and authority to own,
lease and operate its properties and to conduct the business in
which it is engaged or proposes to engage as described in the
Prospectus. The Operating Partnership is duly qualified or
registered as a foreign partnership and is in good standing in
each jurisdiction in which such qualification or registration is
required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to
so qualify or register would not have a material adverse effect
on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Operating
Partnership.
(i) The Management Company has been duly organized and
is validly existing as a corporation in good standing under the
laws of the State of Delaware with corporate power and authority
to own, lease and operate its properties and to conduct the
business in which it is engaged or proposes to engage as de-
scribed in the Prospectus. The Management Company is duly
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to
so qualify would not have a material adverse effect on the condi-
tion, financial or otherwise, or the earnings, assets, business
affairs or business prospects of the Management Company. All of
the issued and outstanding capital stock of the Management
Company has been duly authorized for issuance by the Management
Company and validly issued and is fully paid and nonassessable
and owned as described in the Prospectus, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(j) Each of the Property Partnerships is validly
existing as a limited or general partnership, as the case may be,
in good standing in the case of limited partnerships, under the
laws of its jurisdiction of organization with partnership power
and authority to own, lease and operate its properties and to
conduct the business in which it is engaged or proposes to engage
as described in the Prospectus. All of the partnership interests
of each Property Partnership owned directly or indirectly by the
Company or the Operating Partnership as described in the Prospec-
tus have been duly authorized for issuance and validly issued and
are fully paid and owned in the percentage amounts set forth in
the Prospectus by the Operating Partnership, directly or through
subsidiaries, in each case free and clear of any security inter-
est, mortgage, pledge, lien, encumbrance, claim, equity or
capital call, except as described in the Prospectus. Each of the
partnership agreements of the Property Partnerships is in full
force and effect.
(k) The authorized capital stock of the Company is as
set forth in the Prospectus under the heading "Capital Stock of
the Company," and the issued and outstanding capital stock of the
Company is as set forth in the financial statements included or
incorporated by reference in the Prospectus (except for subse-
quent issuances, if any, pursuant to this Agreement, pursuant to
employee benefit plans referred to in the Prospectus, pursuant to
the exchange of shares of Unit Voting Stock, par value $.01 per
share (the "Unit Voting Stock"), of the Company or partnership
interests ("Units") in the Operating Partnership as described in
the Prospectus or as otherwise described in the Prospectus). The
shares of issued and outstanding Common Stock have been duly
authorized and validly issued and are fully paid and nonassess-
able; the Stock has been duly authorized for issuance and sale to
the Underwriter pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against
payment of the consideration set forth herein, will be validly
issued and fully paid and nonassessable; the Company has duly
reserved a sufficient number of shares of Common Stock for
issuance upon exchange of outstanding shares of Unit Voting Stock
and Units; the terms of the Common Stock are accurately described
in all material respects in the Prospectus; and the issuance of
the Stock is not subject to preemptive or other similar rights.
(l) The Units issued to the Company have been duly
authorized for issuance by the Operating Partnership and validly
issued and are fully paid and nonassessable and owned by the
Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity. 21,157,492 Units are
issued and outstanding. The Company is the sole general partner
of the Operating Partnership and, as of the date of this Agree-
ment, is the holder of 13,783,891 Units, or approximately sixty-
five and two/tenths percent (65.2%) of the issued and outstanding
Units.
(m) Except as disclosed in the Prospectus, and except
as any of the following, either individually or in the aggregate,
would not result in any material adverse change (a "Material
Adverse Change") in the condition, financial or otherwise, or in
the earnings, assets or business prospects of the Company and the
Operating Partnership, taken as a whole, or which would not
materially impair the consummation of the transactions contem-
plated by this Agreement (together with a Material Adverse
Change, a "Material Adverse Effect"): (A) none of the Company,
the Operating Partnership or any Subsidiary is in violation of
its charter, bylaws, certificate of limited partnership, partner-
ship agreement or other governing document, as the case may be,
and none of such entities is in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which such entity is a party
or by which such entity may be bound or affected, or to which any
of the property or assets of such entity is subject; and (B) the
execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated
herein and compliance by the Company with its obligations
hereunder have been duly authorized by all necessary corporate
action and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company, the Operating Partnership or any of the Subsidiaries
pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which such entity is a party
or by which such entity may be bound or affected, or to which any
of the property or assets of such entity is subject, nor will
such action result in any violation of the charter, by-laws,
certificate of limited partnership, partnership agreement or
other governing document, as the case may be, of such entity or
any applicable law, administrative regulation or administrative
or court decree.
(n) No labor dispute, material to the Company, with
the employees of the Company, the Operating Partnership or any of
the Subsidiaries exists or, to the knowledge of the Company, is
imminent.
(o) There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign,
now pending, or, to the knowledge of the Company, threatened
against or affecting the Company, the Operating Partnership or
any of the Subsidiaries which is required to be disclosed in the
Registration Statement (other than as disclosed therein) or
which, if determined adversely, would result in a Material
Adverse Effect; all pending legal or governmental proceedings to
which the Company, the Operating Partnership or any of the
Subsidiaries is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not
material; and there are no contracts or documents of the Company,
the Operating Partnership or any of the Subsidiaries which are
required to be filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations which have not
been so filed.
(p) The Company, the Operating Partnership and the
Subsidiaries own or possess, or can acquire on reasonable terms,
the trademarks, service marks and trade names (collectively, the
"Proprietary Rights") presently employed by them in connection
with the business now engaged by them or proposed to be engaged
by them as described in the Prospectus, and neither the Company,
the Operating Partnership nor any of the Subsidiaries has re-
ceived any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Proprietary Rights, or of any facts which would render any of the
Proprietary Rights invalid or inadequate to protect the interest
of the Company, the Operating Partnership or any of the Subsid-
iaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would
result in any Material Adverse Change.
(q) Commencing with the Company's taxable year ending
December 31, 1993, the Company has been organized in conformity
with the requirements for qualification as a real estate invest-
ment trust (a "REIT") under the Internal Revenue Code of 1986, as
amended (the "Code"), and its proposed method of operation will
enable it to continue to satisfy the requirements for taxation as
a REIT under the Code.
(r) No authorization, approval or consent of any court
or governmental authority or agency is necessary in connection
with the offering, issuance or sale of the Stock hereunder,
except such as may be required under the Securities Act or the
Rules and Regulations or state securities laws and except such as
have been obtained.
(s) Each of the Company, the Operating Partnership,
and the Subsidiaries possesses such certificates, authorities or
permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct in all materi-
al respects the business now operated by them or proposed to be
operated by them as described in the Prospectus, and none of such
entities has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a
Material Adverse Change.
(t) (A) The Operating Partnership or the Property
Partnerships have good and marketable title or good and indefea-
sible title (or such substantially equivalent quality of title as
provided by the applicable title insurance policy) to each of the
Properties and good and marketable title to the improvements
thereon (in each case with title insurance thereon); (B) all
leases under which the Operating Partnership or the applicable
Property Partnerships leases any Property as lessee are in full
force and effect, and neither the Operating Partnership nor any
Property Partnership is in default in any material respect of any
of the terms or provisions of any of such leases and no claim has
been asserted by anyone adverse to the Operating Partnership's or
any such Property Partnership's rights as lessee under any of
such leases, or affecting or questioning the Operating Partnersh-
ip's or any such Property Partnership's right to the continued
possession or use of the Properties under any such leases or
asserting a default under any such leases, and the Company has no
knowledge of any such leases which have not been renewed or are
subject to termination, except as would not result in a Material
Adverse Change; (C) all liens, charges or encumbrances on or
affecting any of the Properties or the other property and assets
of the Company, the Operating Partnership or any of the Subsid-
iaries which are required to be disclosed in the Prospectus are
disclosed therein; (D) neither the Operating Partnership, any
Property Partnership nor, to the knowledge of the Company, any
tenant of any of the Properties is in default under any of the
leases pursuant to which the Operating Partnership or any Proper-
ty Partnership, as lessor, leases its Property, and the Company
has no knowledge of any event which, but for the passage of time
or the giving of notice, or both, would constitute a default
under any of such leases, other than defaults that, individually
or in the aggregate, would not result in a Material Adverse
Change; (E) except as described in the Prospectus, no tenant
under any of the leases pursuant to which any Property Partner-
ship, as lessor, leases its Property has an option or right of
first refusal to purchase the premises demised under such lease
which is required to be described in the Prospectus; (F) each of
the Properties complies with all applicable codes, laws and regu-
lations (including without limitation, building and zoning codes,
laws and regulations and laws relating to access to such Proper-
ties), except if and to the extent disclosed in the Prospectus or
except for such failures to comply that, individually or in the
aggregate, would not have a Material Adverse Effect; and (G) the
Company has no knowledge of any pending or threatened condemna-
tion proceedings, zoning change, or other proceeding or action
that will in any manner affect the size of, use of, improvements
or construction on or access to the Properties, except such
proceedings or actions that, individually or in the aggregate,
would not have a Material Adverse Effect.
(u) (A) Except as disclosed in the Prospectus, each of
the Company, the Operating Partnership, the Management Company,
any Property Partnership which is controlled by the Operating
Partnership or the Company (and which is listed on Schedule A
hereto) (the "Controlled Subsidiaries") and, to the knowledge of
the Company, each Property Partnership which is not controlled by
the Operating Partnership or the Company (and which is listed on
Schedule B hereto) (the "Non-Controlled Subsidiaries") has
complied and is in compliance in all material respects with all
Environmental Statutes (as hereinafter defined).
(B) Neither the Company, the Operating Partner-
ship, the Management Company, any Controlled Subsidiary,
nor, to the knowledge of the Company, any Non-Controlled
Subsidiary, intends to use the properties or assets de-
scribed in the Prospectus or any such other real property
for the purpose of handling, burying, storing, retaining,
refining, transporting, processing, manufacturing, gener-
ating, producing, spilling, seeping, leaking, escaping,
leaching, pumping, pouring, emitting, emptying, discharging,
injecting, dumping, transferring or otherwise disposing of
or dealing with Hazardous Materials, except for materials
utilized in the ordinary course of business of the Proper-
ties, provided such use would not, in the ordinary course of
business, give rise to liability under any Environmental
Statute.
(C) Except as disclosed in the Prospectus, nei-
ther the Company, the Operating Partnership, the Management
Company, any Controlled Subsidiary, nor, to the knowledge of
the Company, any Non-Controlled Subsidiary, knows of any
seepage, leak, escape, leach, discharge, injection, release,
emission, spill, pumping, pouring, emptying or dumping of
Hazardous Materials into waters on or adjacent to the prop-
erties described in the Prospectus or any other real proper-
ty owned or occupied by any such party, or onto lands from
which Hazardous Materials might seep, flow or drain into
such waters, except such as would not, individually or in
the aggregate, have a Material Adverse Effect.
(D) Except as disclosed in the Prospectus, nei-
ther the Company, the Operating Partnership, the Management
Company, any Controlled Subsidiary, nor, to the knowledge of
the Company, any Non-Controlled Subsidiary, has received any
notice of, or has any knowledge of, any occurrence or cir-
cumstance that, with notice or passage of time or both,
would give rise to a claim under or pursuant to any federal,
state or local environmental statute or regulation or under
common law, pertaining to Hazardous Materials on or origi-
nating from any properties or assets described in the Pro-
spectus or any other real property owned or occupied by any
such party or arising out of the conduct of any such party,
including without limitation pursuant to any Environmental
Statute, except such as would not, individually or in the
aggregate, have a Material Adverse Effect.
(E) Neither the properties described in the
Prospectus nor any other land owned by the Company, the
Operating Partnership or any of the Subsidiaries is included
or, to the best knowledge of the Company, proposed for
inclusion on the National Priorities List issued pursuant to
CERCLA (as hereinafter defined) by the United States Envi-
ronmental Protection Agency (the "EPA") or on the inventory
of other potential "Problem" sites issued by the EPA and has
not otherwise been publicly identified by the EPA as a
potential CERCLA site or included or, to the best knowledge
of the Company, proposed for inclusion on any list or inven-
tory issued pursuant to any other Environmental Statute or
issued by any other Governmental Authority (as hereinafter
defined).
As used herein, "Hazardous Material" shall include
without limitation any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, toxic
substances or related materials, asbestos or any hazardous
material as defined by any federal, state or local environ-
mental law, ordinance, rule or regulation, including without
limitation the Comprehensive Environmental Response, Compen-
sation and Liability Act of 1980, as amended, 42 U.S.C.
9601 et seq. ("CERCLA"), the Hazardous Materials Transporta-
tion Act, as amended, 49 U.S.C. 1801 et seq., the Re-
source Conservation and Recovery Act, as amended, 42 U.S.C.
9601 et seq., the Emergency Planning and Community Right-
-to-Know Act of 1986, 42 U.S.C. 11001 et seq., the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
136 et seq., the Clean Air Act, 42 U.S.C. 7401 et
seq., the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. 1251 et seq., the Safe Drinking Water
Act, 42 U.S.C. 300f to 300j-11, and the Occupational
Safety and Health Act, 29 U.S.C. 651 et seq., as any of
the above statutes may be amended from time to time, and in
the regulations adopted and publications promulgated pursu-
ant to each of the foregoing (individually, an "Environ-
mental Statute") or by any federal, state or local govern-
mental authority having or claiming jurisdiction over the
properties and assets described in the Prospectus (a "Gov-
ernmental Authority").
(v) This Agreement has been duly executed and deliv-
ered by the Company.
(w) Neither the Company nor the Operating Partnership
is, or at any Delivery Date will be, required to be registered
under the Investment Company Act of 1940, as amended (the "1940
Act").
(x) There are no persons with registration or other
similar rights to have any securities of the Company registered
pursuant to the Registration Statement, except as have been
waived.
(y) The Company has complied and will comply with all
of the provisions of Florida H.B. 1771, codified as Section
517.075 of the Florida statutes, and all regulations promulgated
thereunder relating to issuers doing business with Cuba.
Any certificate signed by any officer of the Company
and delivered to the Underwriter or to counsel for the Underwrit-
er shall be deemed a representation and warranty by the Company
to the Underwriter as to the matters covered thereby.
2. Purchase of the Stock by the Underwriter. On the basis
of the representations and warranties contained in, and subject
to the terms and conditions of, this Agreement, the Company
agrees to sell 3,000,000 shares of the Firm Stock to the Under-
writer and the Underwriter agrees to purchase 3,000,000 shares of
the Firm Stock.
In addition, the Company grants to the Underwriter an
option to purchase up to 300,000 shares of the Option Stock.
Such option is granted solely for the purpose of covering over-
allotments in the sale of the Firm Stock and is exercisable as
provided in Section 4 hereof. The price of both the Firm Stock
and any Option Stock shall be $25.00 per share.
The Company shall not be obligated to deliver any of
the Stock to be delivered on the First Delivery Date or the
Second Delivery Date (as hereinafter defined), as the case may
be, except upon payment for all the Stock to be purchased on such
Delivery Date as provided herein.
3. Offering of Stock by the Underwriter. The Underwriter
proposes to offer the Firm Stock for sale upon the terms and
conditions set forth in the Prospectus.
4. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the office of Lehman
Brothers Inc., Three World Financial Center, New York, New York
10285, at 10:00 A.M., New York City time, on the third full
business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between
the Underwriter and the Company. This date and time are some-
times referred to as the "First Delivery Date." On the First
Delivery Date, the Company shall deliver or cause to be delivered
certificates representing the Firm Stock to the Underwriter for
the account of the Underwriter against payment to or upon the
order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agree-
ment is a further condition of the obligation of the Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in
such names and in such denominations as the Underwriter shall
request in writing not less than two full business days prior to
the First Delivery Date. For the purpose of expediting the
checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm
Stock available for inspection by the Underwriter in New York,
New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the
date of this Agreement (or, if such thirtieth day shall be a
Saturday, Sunday or holiday, on the next business day) the option
granted in Section 2 may be exercised by written notice being
given to the Company by the Underwriter. Such notice shall set
forth the aggregate number of shares of the Option Stock as to
which the option is being exercised, the names in which the
shares of the Option Stock are to be registered, the denomina-
tions in which the shares of the Option Stock are to be issued
and the date and time, as determined by the Underwriter, when the
shares of Option Stock are to be delivered; provided, however,
that this date and time shall not be earlier than the First
Delivery Date nor earlier than the second business day after the
date on which the option shall have been exercised nor later than
the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of the Option
Stock are delivered are sometimes referred to as the "Second
Delivery Date" and the First Delivery Date and the Second Deliv-
ery Date are sometimes each referred to as a "Delivery Date."
Delivery of and payment for the Option Stock shall be
made at the place specified in the first sentence of the first
paragraph of this Section 4 (or at such other place as shall be
determined by agreement between the Underwriter and the Company)
at 10:00 A.M., New York City time, on the Second Delivery Date.
On the Second Delivery Date, the Company shall deliver or cause
to be delivered the certificates representing the Option Stock to
the Underwriter for the account of the Underwriter against
payment to or upon the order of the Company of the purchase price
by wire transfer in immediately available funds. Time shall be
of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obliga-
tion of the Underwriter hereunder. Upon delivery, the Option
Stock shall be registered in such names and in such denominations
as the Underwriter shall request in the aforesaid written notice.
For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspec-
tion by the Underwriter in New York, New York, not later than
2:00 P.M., New York City time, on the business day prior to the
Second Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form reasonably
approved by the Underwriter and to file such Prospectus pursuant
to Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day follow-
ing the execution and delivery of this Agreement; to make no
further amendment or supplement to the Registration Statement or
to the Prospectus except as permitted herein; to advise the
Underwriter, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or
any amended Prospectus has been filed and to furnish the Under-
writer with copies thereof; to advise the Underwriter, promptly
after it receives notice thereof, of the issuance by the Commis-
sion of any stop order or of any order preventing or suspending
the use of the Prospectus, of the suspension of the qualification
of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supple-
menting of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any
stop order or of any order preventing or suspending the use of
the Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to the Underwriter and to
counsel for the Underwriter a signed copy of the Registration
Statement as originally filed with the Commission, and each
amendment thereto filed with the Commission, including all
consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriter such number
of the following documents as the Underwriter shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto
(in each case excluding exhibits other than this Agreement and
the computation of per share earnings) and (ii) the Prospectus
and any amended or supplemented Prospectus; and, if the delivery
of a prospectus is required at any time prior to the expiration
of nine months after the Effective Time in connection with the
offering or sale of the Stock and if at such time any event shall
have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary in
the reasonable opinion of counsel for the Underwriter during such
same period to amend or supplement the Prospectus or to file
under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Securities Act or the
Exchange Act, to file, upon the request of the Underwriter, such
document and to prepare and furnish without charge to the Under-
writer and to any dealer in securities as many copies as the
Underwriter may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance, and
in case the Underwriter is required to deliver a prospectus in
connection with sales of any of the Stock at any time nine months
or more after the Effective Time, upon the Underwriter's request
but at its expense, to prepare and deliver to the Underwriter as
many copies as the Underwriter may reasonably request of an
amended or supplemented Prospectus complying with Section 10(a)-
(3) of the Securities Act;
(d) To file promptly with the Commission any amendment
to the Registration Statement or the Prospectus or any supplement
to the Prospectus that may, in the reasonable judgment of the
Company or the Underwriter, be required by the Securities Act or
requested by the Commission;
(e) Prior to filing with the Commission (i) any amend-
ment to the Registration Statement or supplement to the Prospec-
tus, any document incorporated by reference in the Prospectus or
(ii) any Prospectus pursuant to Rule 424 of the Rules and Regula-
tions, to furnish a copy thereof to the Underwriter and counsel
for the Underwriter and obtain consent of the Underwriter to the
filing, which consent shall not be unreasonably withheld;
(f) As soon as practicable after the Effective Date,
but in any event not later than 60 days after the end of its
fiscal quarter in which the first anniversary date of the Effec-
tive Date occurs, to make generally available to the Company's
security holders and to deliver to the Underwriter an earning
statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and
the Rules and Regulations (including, at the option of the
Company, Rule 158);
(g) For a period of five years following the Effective
Date, to furnish to the Underwriter copies of all materials
furnished by the Company to its shareholders and all public
reports and all reports and financial statements furnished by the
Company to the principal national securities exchange upon which
the Common Stock may be listed pursuant to requirements of or
agreements with such exchange or to the Commission pursuant to
the Exchange Act or any rule or regulation of the Commission
thereunder;
(h) Promptly from time to time to take such action as
the Underwriter may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions
as the Underwriter may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock; except that in no event shall the
Company be obligated in connection therewith to take any action
that would subject it to income taxation in such jurisdiction, to
qualify as a foreign corporation in such jurisdiction, or to exe-
cute a general consent to service of process;
(i) For a period of 90 days from the date of the Pro-
spectus, not to offer for sale, sell or otherwise dispose of,
directly or indirectly, any shares of Common Stock (other than
the Stock, or Common Stock issuable pursuant to the Company's
existing employee benefit and director plans or to redeem Units
and/or Unit Voting Stock), or sell or grant options, rights or
warrants with respect to any shares of Common Stock (other than
the grant of options or other rights with respect to Common Stock
pursuant to the Company's existing employee benefit and director
plans or the issuance of Units and/or Unit Voting Stock in
connection with the acquisition of property, directly or indi-
rectly, by the Operating Partnership), otherwise than in accor-
dance with this Agreement or as contemplated in the Prospectus,
without the prior written consent of the Underwriter, which
consent shall not be unreasonably withheld;
(j) To file promptly all reports and any definitive
proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of
the Stock.
(k) To use its reasonable best efforts to meet the
requirements to qualify, effective for the fiscal year ending
December 31, 1996, as a REIT under the Code;
(l) To apply the net proceeds from the sale of the
Stock being sold by the Company as set forth in the Prospectus;
and
(m) To take such steps as shall be necessary to ensure
that neither the Company nor any subsidiary shall become an
"investment company" within the meaning of such term under the
1940 Act and the rules and regulations of the Commission thereun-
der.
6. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the
Stock and any stock transfer taxes, stamp duties and similar
taxes payable in that connection; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto;
(c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effec-
tive amendments thereto (including, in each case, exhibits), the
Prospectus and any amendment or supplement to the Prospectus, all
as provided in this Agreement; (d) the costs of printing, repro-
ducing and distributing this Agreement (and related agreements)
and all other agreements, memoranda, correspondence and other
documents printed, distributed or delivered in connection with
the offering of the Stock; (e) any applicable listing or other
fees; (f) the fees and expenses of qualifying the Stock under the
securities laws of the several jurisdictions as provided in
Section 5(h) and of preparing, printing and distributing a Blue
Sky Memorandum (including related fees and expenses of counsel
for the Underwriter); and (g) all other costs and expenses
incident to the performance of the obligations of the Company
under this Agreement; provided that, except as provided in this
Section 6, Section 8 and Section 10, the Underwriter shall pay
its own costs and expenses, including the costs and expenses of
counsel for the Underwriter, any transfer taxes on the Stock
which the Underwriter may sell and the expenses of advertising
any offering of the Stock made by the Underwriter.
7. Conditions of Underwriter's Obligations. The obliga-
tions of the Underwriter hereunder are subject to the accuracy,
when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by
the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Prospectus shall have been timely filed with
the Commission in accordance with Section 5(a); no stop order
suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commis-
sion; and any request of the Commission for inclusion of addi-
tional information in the Registration Statement or the Prospec-
tus or otherwise shall have been complied with.
(b) The Underwriter shall not have discovered and dis-
closed to the Company on or prior to such Delivery Date that the
Registration Statement or the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact which,
in the reasonable opinion of Skadden, Arps, Slate, Meagher & Flom
(Illinois), counsel for the Underwriter, is material or omits to
state a fact which, in the reasonable opinion of such counsel, is
material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agree-
ment, the Stock, the Registration Statement and the Prospectus,
and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory
in all material respects to counsel for the Underwriter, and the
Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to
pass upon such matters.
(d) Mayer, Brown & Platt shall have furnished to the
Underwriter their written opinion, as counsel to the Company,
addressed to the Underwriter and dated such Delivery Date, in
form and substance reasonably satisfactory to the Underwriter, to
the effect that:
(A) The Company has been
duly incorporated and is validly existing as
a corporation in good standing under the laws
of the State of Maryland.
(B) The Company has
corporate power and authority to own, lease
and operate its properties and to conduct the
business in which it is engaged or proposes
to engage as described in the Prospectus and
to enter into and perform its obligations
under this Agreement.
(C) The Company is duly
qualified as a foreign corporation to trans-
act business and is in good standing in each
jurisdiction in which such qualification is
required, except where the failure to so
qualify would not have a Material Adverse
Effect (such counsel being entitled to rely
in respect of matters of fact upon certif-
icates of public officials or officers of the
Company).
(D) The description of
the authorized capital stock of the Company
set forth in the Prospectus under the caption
"Capital Stock of the Company" is true and
correct in all material respects, and the
shares of issued and outstanding Common Stock
have been duly authorized and validly issued
and are fully paid and nonassessable.
(E) The Stock has been
duly authorized for issuance and sale to the
Underwriter pursuant to this Agreement and,
when issued and delivered by the Company
pursuant to this Agreement against payment of
the consideration set forth herein, will be
validly issued and fully paid and nonassess-
able.
(F) The issuance of the
Stock is not subject to preemptive or other
similar rights arising by operation of law,
under the charter or by-laws of the Company
or, to such counsel's knowledge, otherwise.
(G) The Operating Part-
nership has been duly formed and is validly
existing as a limited partnership in good
standing under the Illinois Act (such counsel
being entitled to rely in respect of matters
of fact upon certificates of public officials
or officers of the Company). The Operating
Partnership has partnership power and author-
ity to own, lease and operate its properties
and to conduct the business in which it is
engaged or proposes to engage as described in
the Prospectus. The Operating Partnership is
duly qualified or registered as a foreign
partnership and is in good standing in each
jurisdiction in which such qualification or
registration is required, except where the
failure to so qualify or register would not
result in a Material Adverse Change (such
counsel being entitled to rely in respect of
matters of fact upon certificates of public
officials or officers of the Company). The
Company is the sole general partner of the
Operating Partnership and is the holder of
______ Units, or approximately ____% of the
_______ issued and outstanding Units (such
counsel to supply the appropriate numbers and
percentages as of such Delivery Date). The
Units issued to the Company have been duly
authorized for issuance by the Operating
Partnership and validly issued and are fully
paid and nonassessable.
(H) Each of the Property
Partnerships is validly existing as a limited
or general partnership, as the case may be,
in good standing in the case of limited part-
nerships, under the laws of its jurisdiction
of organization, with partnership power and
authority to own, lease and operate its prop-
erties and to conduct the business in which
it is engaged or proposes to engage as de-
scribed in the Prospectus (such counsel being
entitled to rely in respect of matters of
fact upon certificates of public officials or
officers of the Company). All of the part-
nership interests of each Property Partner-
ship owned directly or indirectly by the
Company or the Operating Partnership as de-
scribed in the Prospectus have been duly
authorized for issuance and validly issued
and are fully paid and owned in the percent-
age amounts set forth in the Prospectus by
the Operating Partnership, directly or
through subsidiaries, in each case free and
clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity,
except as described in the Prospectus. Each
of the partnership agreements of the Property
Partnerships is in full force and effect.
(I) The Management Com-
pany has been duly organized and is validly
existing as a corporation in good standing
under the laws of the State of Delaware (such
counsel being entitled to rely in respect of
matters of fact upon certificates of public
officials or officers of the Company). The
Management Company has corporate power and
authority to own, lease and operate its prop-
erties and to conduct the business in which
it is engaged or proposes to engage as de-
scribed in the Prospectus. All of the issued
and outstanding capital stock of the Manage-
ment Company has been duly authorized and
validly issued and is fully paid and nonas-
sessable and owned as described in the Pro-
spectus, free and clear of any security in-
terest, mortgage, pledge, lien, encumbrance,
claim or equity.
(J) This Agreement has
been duly authorized, executed and delivered
by the Company.
(K) Commencing with the
Company's taxable year ending December 31,
1993, the Company has been organized in con-
formity with the requirements for qualifi-
cation as a REIT under the Code, and its pro-
posed method of operation described in the
Prospectus and as represented by the manage-
ment of the Company will enable it to contin-
ue to satisfy the requirements for taxation
as a REIT under the Code.
(L) Neither the Company
nor the Operating Partnership is, or at any
Delivery Date will be, required to be regis-
tered under the 1940 Act.
(M) The Registration
Statement has been declared effective under
the Securities Act, and to such counsel's
knowledge, no stop order suspending the ef-
fectiveness of the Registration Statement has
been issued under the Securities Act or pro-
ceedings therefor initiated or threatened by
the Commission.
(N) At the time the
Registration Statement became effective and
at any Delivery Date, the Registration State-
ment (other than the financial statements and
supporting schedules included therein, as to
which no opinion need be rendered) complied
as to form in all material respects with the
requirements of the Securities Act and the
Rules and Regulations.
(O) The terms of the
Common Stock are accurately described in all
material respects in the Prospectus, and the
form of certificate used to evidence the
Common Stock is in due and proper form and
complies with all applicable statutory re-
quirements.
(P) To such counsel's
knowledge, there are no legal or governmental
proceedings pending or threatened which are
required to be disclosed in the Registration
Statement, other than those disclosed there-
in, and all pending legal or governmental
proceedings to which the Company, the Operat-
ing Partnership or any of the Subsidiaries is
a party or to which any of their property is
subject which are not described in the Regis-
tration Statement, including ordinary routine
litigation incidental to the business, are,
considered in the aggregate, not material.
(Q) The information in
the Prospectus under the captions "Capital
Stock of the Company," "Description of Common
Stock," "Description of Preferred Stock,"
"Description of Depositary Shares," "Descrip-
tion of Stock Warrants," "Description of
Rights," "Certain Provisions of Maryland Law
and of the Company's Articles of Incorpora-
tion and Bylaws," "Federal Income Tax Consid-
erations" and "Certain United States Tax
Considerations for Non-U.S. Stockholders," to
the extent that it constitutes matters of law
or legal conclusions, has been reviewed by
such counsel and is correct in all material
respects.
(R) To such counsel's
knowledge, there are no contracts, indentu-
res, mortgages, loan agreements, notes, leas-
es or other instruments or documents which
are required to be described or referred to
in the Registration Statement or to be filed
as exhibits thereto by the Securities Act or
the Rules and Regulations, other than those
described or referred to therein or filed as
exhibits thereto, and the descriptions there-
of or references thereto are correct in all
material respects.
(S) No authorization,
approval, consent or order of any court or
governmental authority or agency or, to such
counsel's knowledge, any other third party,
is required in connection with the offering,
issuance or sale of the Stock to the Under-
writer, except such as may be required under
the Securities Act or the Rules and Regula-
tions or state securities laws and real es-
tate syndication laws of any state or other
jurisdiction and except for such as have been
obtained; and, to such counsel's knowledge,
the execution, delivery and performance of
this Agreement and the consummation of the
transactions contemplated herein by the Com-
pany, the Operating Partnership and the Sub-
sidiaries, as applicable, will not conflict
with or constitute a breach of, or default
under, or result in the creation or imposi-
tion of any lien, charge or encumbrance upon
any property or assets of any such entity
pursuant to any contract, indenture, mort-
gage, loan agreement, note, lease or other
instrument to which such entity is a party or
by which such entity may be bound, or to
which any of the property or assets of such
entity is subject, except for conflicts,
breaches, defaults, liens, charges or encum-
brances which, individually or in the aggre-
gate, would not have a Material Adverse Ef-
fect, nor will such action result in any
violation of the charter, by-laws, certif-
icate of limited partnership, partnership
agreement or other governing document, as the
case may be, of such entity or any applicable
law, administrative regulation or administra-
tive or court decree, except for violations
which, individually or in the aggregate,
would not have a Material Adverse Effect.
(T) To such counsel's
knowledge, there are no persons with regis-
tration or other similar rights to have any
securities of the Company registered pursuant
to the Registration Statement, except as have
been waived.
(U) The Operating Part-
nership will be treated for Federal income
tax purposes as a partnership, and not as an
association taxable as a corporation.
The opinion described in Paragraph (K) above may be based on
assumptions relating to the organization and operation of the
partnerships in which the Operating Partnership will hold an
interest and of the Subsidiaries, and may be conditioned upon
representations made by the Company as to certain factual matters
relating to the Company's organization and intended or expected
manner or operation, and the opinion in Paragraph (U) above may
be based upon representations of the Company and may assume that
the Operating Partnership will not constitute a "publicly traded
partnership" within the meaning of Section 7704(b) of the Code.
(e) Michael Hilborn, Senior Vice President and General
Counsel of the Company, shall have furnished to the Underwriter
his written opinion, addressed to the Underwriter and dated such
Delivery Date, in form and substance reasonably satisfactory to
the Underwriter, to the effect that:
(A) To such counsel's
knowledge, each of the Property Partnerships
is duly qualified as a foreign partnership
and is in good standing in each jurisdiction
in which such qualification is required,
whether by reason of the ownership or leasing
of property or the conduct of business, ex-
cept where the failure to so qualify or reg-
ister would not have a material adverse ef-
fect on the condition, financial or other-
wise, or the earnings, assets, business af-
fairs or business prospects of such entity or
any Property.
(B) To such counsel's
knowledge, the Management Company is duly
qualified as a foreign corporation to trans-
act business and is in good standing in each
jurisdiction in which such qualification is
required, except where the failure to so
qualify would not have a material adverse
effect on the condition, financial or other-
wise, or the earnings, assets, business af-
fairs or business prospects of the Management
Company or any Property.
(f) The Underwriter shall have received from Skadden,
Arps, Slate, Meagher & Flom (Illinois), counsel for the Under-
writer, such opinion or opinions, dated such Delivery Date, with
respect to the issuance and sale of the Stock, the Registration
Statement, the Prospectus and other related matters as the
Underwriter may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such
matters.
(g) In giving their opinions required by subsections
(7)(d) and (7)(f), respectively, of this Section 7, Mayer, Brown
& Platt and Skadden, Arps, Slate, Meagher & Flom (Illinois) shall
each additionally state that nothing has come to their attention
that would lead them to believe that the Registration Statement
(except for financial statements and schedules and other finan-
cial or statistical data included therein, as to which counsel
need make no statement), at the time it became effective or at
the applicable Delivery Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus (except for financial state-
ments and schedules and other financial or statistical data
included therein, as to which counsel need make no statement), at
the applicable Delivery Date, included or includes an untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(h) At the time of execution of this Agreement, the
Underwriter shall have received from KPMG Peat Marwick LLP a
letter, in form and substance satisfactory to the Underwriter,
addressed to the Underwriter and dated the date hereof (i)
confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accoun-
tants under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date hereof (or, with respect to matters
involving changes or developments since the respective dates as
of which specified financial information is given in the Prospec-
tus, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect
to the financial information and other matters ordinarily covered
by accountants' "comfort letters" to underwriters in connection
with registered public offerings.
(i) With respect to the letter of KPMG Peat Marwick
LLP referred to in the preceding paragraph and delivered to the
Underwriter concurrently with the execution of this Agreement
(the "initial letter"), as of the Delivery Date the Company shall
have furnished to the Underwriter a letter (the "bring-down
letter") of such accountants, addressed to the Underwriter and
dated such Delivery Date (i) confirming that they are independent
public accountants within the meaning of the Securities Act and
are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-
X of the Commission, (ii) stating, as of the date of the bring-
down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date
not more than five days prior to the date of the bring-down
letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to the Underwrit-
er a certificate, dated such Delivery Date, of (i) its Chairman
of the Board, its President or a Vice President and (ii) its
chief financial officer stating that:
(i) The representations, warran-
ties and agreements of the Company in Section 1 are
true and correct as of such Delivery Date; the Company
has complied with all its agreements contained herein;
and the conditions set forth in Sections 7(a) and 7(k)
have been fulfilled;
(ii) No stop order suspending the
effectiveness of the Registration Statement has been
issued and, to the best of each such officers' knowl-
edge, no proceeding for that purpose is pending or
threatened by the Commission;
(iii) All filings required by
Rule 424(b) of the Rules and Regulations have been
made; and
(iv) They have carefully examined
the Registration Statement and the Prospectus and, in
their opinion (A) as of the Effective Date, the Regis-
tration Statement and Prospectus did not include any
untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or
necessary to make the statements therein not mislead-
ing, and (B) since the Effective Date no event has
occurred which should have been set forth in a sup-
plement or amendment to the Registration Statement or
the Prospectus which has not been so set forth.
(k) (i) Neither the Company nor any of its subsidiar-
ies shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business from fire,
explosion, flood, earthquake or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus or (ii) since such date there
shall not have been any change in the stock, partnership inter-
ests or long-term debt of the Company or any of its subsidiaries
or any Material Adverse Change, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is, in the judgment of the
Underwriter, so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the deliv-
ery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock Ex-
change or the American Stock Exchange or in the over-the-counter
market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange
or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared
by Federal or state authorities, (iii) the United States shall
have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there
shall have been a declaration of a national emergency or war by
the United States or (iv) there shall have occurred such a
material adverse change in general economic, political or finan-
cial conditions (or the effect of international conditions on the
financial markets in the United States shall be such) as to make
it, in the judgment of the Underwriter, impractical or inadvis-
able to proceed with the public offering or delivery of the Stock
being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(m) The New York Stock Exchange, Inc. shall have ap-
proved the Stock for listing, subject only to official notice of
issuance.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compli-
ance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Underwriter.
The Company shall furnish to the Underwriter conformed copies of
such opinions, certificates, letters and other documents in such
number as the Underwriter shall reasonably request. If any of
the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement, the Agreement
and all of the obligations of the Underwriter hereunder may be
cancelled at, or at any time prior to, each Delivery Date, by the
Underwriter. Any such cancellation shall be without liability of
the Underwriter to the Company. Notice of such cancellation
shall be given the Company in writing, or by facsimile or tele-
phone and confirmed in writing.
8. Indemnification and Contribution
(a) The Company shall indemnify and hold harmless the
Underwriter, its officers and employees, and each person, if any,
who controls the Underwriter within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, joint
or several, or any action in respect thereof (including, but not
limited to, any loss, claim, damage, liability or action relating
to purchases and sales of Stock), to which the Underwriter, such
officer or employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact re-
quired to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse the Underwriter and
each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by the
Underwriter, or any such officer, employee or controlling person
in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action
as such expenses are incurred; provided, however, that the Compa-
ny shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration State-
ment or the Prospectus or in any such amendment or supplement in
reliance upon and in conformity with written information concern-
ing the Underwriter furnished to the Company by or on behalf of
the Underwriter specifically for inclusion therein. The forego-
ing indemnity agreement is in addition to any liability which the
Company may otherwise have to the Underwriter or to any officer,
employee or controlling person of the Underwriter.
(b) The Underwriter shall indemnify and hold harmless
the Company, its officers, employees and directors, the Company's
officers who signed the Registration Statement and each person,
if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to
which the Company or any such director, officer or controlling
person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue state-
ment or omission or alleged omission was made in reliance upon
and in conformity with written information concerning the Under-
writer furnished to the Company by or on behalf of the Underwrit-
er specifically for inclusion therein, and shall reimburse the
Company and any such director, officer or controlling person for
any legal or other expenses reasonably incurred by the Company or
any such director, officer or controlling person in connection
with investigating or defending or preparing to defend against
any such loss, claim, damage, liability or action as such expens-
es are incurred. The foregoing indemnity agreement is in addi-
tion to any liability which the Underwriter may otherwise have to
the Company or any such director, officer or controlling person.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of any claim or the commencement
of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the claim
or the commencement of that action; provided, however, that the
failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except
to the extent it has been materially prejudiced by such failure
and, provided, further, that the failure to notify the indemnify-
ing party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemni-
fied party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein
and, to the extent that it wishes, jointly with any other simi-
larly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action,
the indemnifying party shall not be liable to the indemnified
party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation;
provided, however, that the Underwriter shall have the right to
employ counsel to represent jointly the Underwriter and its
officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity
may be sought by the Underwriter against the Company under this
Section 8 if, in the reasonable judgment of the Underwriter, it
is advisable for the Underwriter and those officers, employees
and controlling persons to be jointly represented by separate
counsel, and in that event the fees and expenses of such separate
counsel (but not more that one firm, in addition to any local
counsel, shall be reimbursed hereunder) shall be paid by the
Company. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall
not be unreasonably withheld), settle or compromise or consent to
the entry of any judgment with respect to any pending or threat-
ened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit
or proceeding, or (ii) be liable for any settlement of any such
action effected without its written consent (which consent shall
not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or
judgment.
(d) If the indemnification provided for in this
Section 8 shall for any reason be unavailable to or insufficient
to hold harmless an indemnified party under Section 8(a) or 8(b)
in respect of any loss, claim, damage or liability, or any action
in respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriter on the other from the
offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriter on the
other with respect to the statements or omissions which resulted
in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and
the Underwriter on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds
from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company, on the one
hand, and the total underwriting discounts and commissions
received by the Underwriter with respect to the shares of the
Stock purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the
Stock under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault
shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied
by the Company or the Underwriter, the intent of the parties and
their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company
and the Underwriter agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be deter-
mined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations re-
ferred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d)
shall be deemed to include, for purposes of this Section 8(d),
any legal or other expenses reasonably incurred by such indemni-
fied party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section
8(d), the Underwriter shall not be required to contribute any
amount in excess of the amount by which the total price at which
the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which the
Underwriter has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) The Underwriter confirms and the Company acknowl-
edges that the statements with respect to the public offering of
the Stock by the Underwriter set forth on the cover page of, the
legend concerning over-allotments on the inside front cover page
of and the third paragraph under the caption "Underwriting" in,
the Prospectus are correct and constitute the only information
concerning the Underwriter furnished in writing to the Company by
or on behalf of the Underwriter specifically for inclusion in the
Registration Statement and the Prospectus.
9. Termination. The obligations of the Underwriter
hereunder may be terminated by the Underwriter by notice given to
and received by the Company prior to delivery of and payment for
the Firm Stock, if, prior to that time, any of the events de-
scribed in Sections 7(k) or 7(l) shall have occurred or if the
Underwriter shall decline to purchase the Stock for any reason
permitted under this Agreement.
10. Reimbursement of Underwriter's Expenses. If the Company
shall fail to tender the Stock for delivery to the Underwriter by
reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed, or
because any other condition of the Underwriter's obligations
hereunder required to be fulfilled by the Company is not ful-
filled, the Company will reimburse the Underwriter for all
reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel) incurred by the Underwriter in connec-
tion with this Agreement and the proposed purchase of the Stock,
and upon demand the Company shall pay the full amount thereof to
the Underwriter.
11. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriter, shall be delivered or sent
by mail, telex or facsimile transmission to Lehman Brothers Inc.
at Three World Financial Center, New York, New York 10285-1100,
Attention: Syndicate Registration Department (Fax: 212-528-
8822);
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to it at 900 North Michigan
Avenue, Suite 1500, Chicago, Illinois 60611, Attention: Presi-
dent.
Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof.
12. Persons Entitled to Benefit of Agreement. This Agree-
ment shall inure to the benefit of and be binding upon the
Underwriter, the Company and their respective successors. This
Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the represen-
tations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control the Under-
writer within the meaning of Section 15 of the Securities Act and
(B) the indemnity agreement of the Underwriter contained in Sec-
tion 8(b) of this Agreement shall be deemed to be for the benefit
of directors of the Company, officers of the Company who have
signed the Registration Statement and any person controlling the
Company within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this
Section 12, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision contained
herein.
13. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriter
contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Stock and shall remain in full
force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
14. Definition of the Terms "Business Day" and "Subsid-
iary". For purposes of this Agreement, (a) "business day" means
any day on which the New York Stock Exchange, Inc. is open for
trading and (b) "subsidiary" has the meaning set forth in Rule
405 of the Rules and Regulations.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
16. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart,
the executed counterparts shall each be deemed to be an original
but all such counterparts shall together constitute one and the
same instrument.
17. Headings. The headings herein are inserted for conve-
nience of reference only and are not intended to be part of, or
to affect the meaning or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between
the Company and the Underwriter, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
URBAN SHOPPING CENTERS, INC.
By: /s/ Michael Hilborn
----------------------------
Name: Michael Hilborn
Title: Senior Vice President
Accepted:
LEHMAN BROTHERS INC.
By: /s/ Michael J. DeMarco
-------------------------
Name: Michael J. DeMarco
Title: Senior Vice President
Schedule A
Property Partnerships Controlled by the Operating
- -------------------------------------------------
Partnership or the Company
- --------------------------
Brandon Convenience Center Partners, Ltd.
Brandon Shopping Center Partners, Ltd.
Citrus Park Ventures
OakBrook Urban Venture L.P.
Penn Square Mall Limited Partnership
Santa Ana Venture
Sawmill Place Plaza Associates
Wolfchase Galleria Limited Partnership
Schedule B
Property Partnerships Not Controlled by the Operating
- ------------------------------------------------------
Partnership or the Company
- --------------------------
Coral-CS/LTD Associates
Valencia Town Center Associates, L.P.
Water Tower Joint Venture
West Dade County Associates
URBAN SHOPPING CENTERS
INCENTIVE UNIT PROGRAM
ARTICLE 1
BACKGROUND AND PURPOSE OF PROGRAM
1.1 BACKGROUND. Urban Shopping Centers, Inc., a Maryland
corporation (the "REIT"), is the general partner of Urban
Shopping Centers, L.P. (the "Partnership"), an Illinois limited
partnership. The Partnership owns all of the preferred stock of
Urban Retail Properties Co. (the "Management Company"), a
Delaware corporation. The REIT, the Partnership, and the
Management Company are each referred to individually as an
"Affiliated Company," and collectively as the "Affiliated
Companies."
1.2 PURPOSE. The purpose of the Program is to further the
long-term growth in Funds Available For Distribution ("FAD") of
the REIT by offering long-term incentives to those key employees
of the Partnership and Management Company who will be largely
responsible for such growth.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. Capitalized terms shall have the
following meanings:
(a) "Affiliated Company" and "Affiliated Companies" are
defined at Section 1.1.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committees" means the REIT Committee and the
Management Committee (individually, each referred to as a
Committee).
(d) "Conversion Right" means the right described in Section
4.2.5.1 of the Second Amended and Restated Agreement of Limited
Partnership of Urban Shopping Centers, L.P. providing for the
exchange of Units for Shares.
(e) "Determination Date" means the date on which the REIT
Committee determines if the Incentive Units for a specific
Program Year have been earned (and therefore become Earned
Incentive Units), which date shall be no later than March 31
following the close of such Program Year.
(f) "Director" means a member of the Board of Directors of
the REIT.
(g) "Earned Incentive Unit" means an Incentive Unit that is
earned in accordance with subsection 4.1.
(h) "Effective Date" means January 1, 1996.
(i) "Employer" means the Affiliated Company for whom an
individual provides or is expected to provide services as an
employee or otherwise, and for which services the individual is
awarded the opportunity to earn Incentive Units under the
Program.
(j) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(k) "FAD" is defined at Section 1.2.
(i) "Incentive Unit" means the right to receive a Unit upon
the satisfaction of the performance targets described in
subsection 4.2 and the vesting requirements described in
subsection 4.3.
(l) "Management Company" is defined at Section 1.1.
(m) "Management Company Committee" means the Board of
Directors of the Management Company, or a committee appointed by
the Board of Directors of the Management Company, for the purpose
of awarding Incentive Units under the Program and exercising
certain administrative responsibilities with respect to the
Program.
(n) "Participant" means an employee of the Partnership or
Management Company who has been awarded Incentive Units by the
applicable Committee.
(o) "Partnership" is defined at Section 1.1.
(p) "Program" means the Urban Shopping Centers Incentive
Unit Program, as set forth herein and as it may be amended from
time to time.
(q) "Program Year" means each of calendar years 1996, 1997,
1998 and 1999.
(r) "REIT" is defined at Section 1.1.
(s) "REIT Committee" means the committee appointed by the
Board of Directors of the REIT consisting of two or more
Directors, at least a majority of whom are "Disinterested
Directors" as defined in the REIT's articles of incorporation,
and each of whom is a "non-employee director" within the meaning
of Rule 16b-3.
(t) "Rule 16b-3" means Rule 16b-3 promulgated under section
16 of the Exchange Act.
(u) "Shares" means shares of common stock, $0.01 value per
share, of the REIT.
(v) "Units" means units of limited partnership interests in
the Partnership.
2.2 CONSTRUCTION. Whenever the context so admits, the
singular or plural number, and the masculine, feminine or neuter
gender shall each be deemed to include the other.
ARTICLE 3
ADMINISTRATION
3.1 AUTHORITY OF COMMITTEES AS TO GRANTS OF INCENTIVE
UNITS.
(a) The REIT Committee shall have sole and exclusive
authority to grant Incentive Units to persons who, at the time of
grant, perform services for the Partnership, or who are officers,
directors or other persons subject to section 16(a) of the
Exchange Act with respect to the REIT, and to determine the
number of Incentive Units to be awarded to any such person.
(b) The Management Company Committee shall have sole and
exclusive authority to grant Incentive Units to persons who, at
the time of grant, perform services for the Management Company
[and are not officers, directors or other persons subject to
Section 16(a) of the Exchange Act with respect to the REIT, and
to determine the number of Incentive Units to be awarded to any
such person.
3.2 AUTHORITY OF REIT COMMITTEE. Subject to the provisions
of the Program, the REIT Committee shall have the authority to
(a) manage and control the operation of the Program, (b)
interpret and construe the provisions of the Program, and
prescribe, amend and rescind rules and regulations relating to
the Program, (c) make awards of Incentive Units under the Program
to the class of persons described in paragraph 3.1(a) in such
amounts as it deems appropriate, (d) correct any defect or
omission and reconcile any inconsistency in the Program or in any
award hereunder, and (e) make all other determinations and take
all other actions as it deems necessary or desirable for the
implementation and administration of the Program. The
determination of the REIT Committee on matters within its
authority shall be conclusive and binding on the Affiliated
Companies and all other persons.
3.3 AUTHORITY OF MANAGEMENT COMPANY COMMITTEE. Subject to
the provisions of the Program, the Management Company Committee
shall have the authority to make awards of Incentive Units under
the Program to the class of persons described in paragraph
3.1(b),and to correct any defect or omission and reconcile any
inconsistency in the grant of any such awards.
3.4 GENERAL PROVISIONS. All actions of either Committee
shall be taken by majority vote of its members or by unanimous
written consent. The determination of each Committee on matters
within its authority shall be final, conclusive and binding on
the Affiliated Companies and all other persons.
SECTION 4
INCENTIVE UNIT AWARDS
4.1 EARNING OF INCENTIVE UNITS. Each Participant who is
awarded an allocation of Incentive Units as of the Effective
Date, shall have the opportunity to earn the number of Incentive
Units awarded to such Participant in accordance with the
following schedule:
Percentage of Award
Program Year that may be Earned
------------ -------------------
1996 25%
1997 25%
1998 25%
1999 25%
Such Incentive Units shall be earned with respect to any Program
Year only if both the Annual Performance Target (as described in
subsection 4.2) and Cumulative Performance Target (as described
in subsection 4.2) are achieved with respect to such Program Year
or, if not so achieved, such Incentive Units may be earned in a
subsequent Program Year if the Cumulative Performance Target is
achieved with respect to such subsequent Program Year. A
Participant who commences participation in the Program after the
initial Program Year shall have the opportunity to earn the
number of Incentive Units awarded to such Participant equally
over the number of Program Years ending after the Participant
commences participation in the Program.
On the Determination Date with respect to a Program Year, the
REIT Committee shall determine the number, if any, of Incentive
Units that have become Earned Incentive Units in accordance with
this subsection 4.1.
4.2 PERFORMANCE TARGETS. The percentage of Incentive Units
which may be earned in any Program Year in accordance with
subsection 4.1, shall be determined based on the Annual
Performance Targets and Cumulative Performance Targets set forth
in the following table:
Annual Cumulative
FAD Performance Performance
Program Year Goal Target* Target**
- ------------ ---- ------ ------
Base Year (1995) 2.22
----
1996 2.38 7.0% 7.0%
1997 2.54 7.0 14.6
1998 2.72 7.0 22.3
1999 2.91 7.0 30.9
* Denotes target percentage increase in FAD over prior year.
** Denotes target cumulative percentage increase in FAD over
base year of 1995.
The Annual and Cumulative Performance Targets set forth above
shall be subject to adjustment by the REIT Committee to the
extent that the REIT Committee determines, in it sole discretion,
that such adjustment is necessary or desirable.
4.3 RESTRICTED PERIOD WITH RESPECT TO EARNED INCENTIVE
UNITS. During the Restricted Period (as defined in subsection
4.5) with respect to Earned Incentive Units, the Participant
shall be entitled to a payment as of each distribution date with
respect to Units equal to the Participant's number of Earned
Incentive Units as of the record date of such distribution,
multiplied by the distribution amount per Unit payable as of such
distribution date.
As soon as practicable after the end of the Restricted
Period with respect to any Earned Incentive Unit, a Unit shall be
transferred to the Participant and the Participant shall have no
further right to any payments under this subsection 4.3 with
respect to such Earned Incentive Unit.
4.4 FORFEITURES. Unless the Committee determines
otherwise, if a Participant's employment with the Affiliated
Companies terminates for any reason other than death or
disability prior to the last day of the Restricted Period with
respect to any Earned Incentive Unit, the Participant shall
immediately forfeit and thereafter shall have no further rights
with respect to such Earned Incentive Unit. Upon a Participant's
termination of employment for any reason (including death or
disability), any Incentive Units awarded to such Participant that
have not yet been earned in accordance with subsection 4.1, shall
immediately be forfeited and the Participant shall have no rights
with respect thereto.
4.5 RESTRICTED PERIOD. The "Restricted Period" with
respect to any Earned Incentive Units for any Program Year, shall
be the period beginning on the Determination Date for such
Program Year and ending on the date such Earned Incentive Units
become vested. Subject to subsection 4.4 and the provisions of
the next sentence, 1/3 of the Earned Incentive Units for any
Program Year shall become vested on the first January 1
immediately following the Determination Date for such Program
Year, another 1/3 of such Earned Incentive Units shall become
vested on the second January 1 following such Determination Date,
and the final 1/3 of such Earned Incentive Units shall become
vested on the third January 1 following such Determination Date.
If a Participant's employment with the Affiliated Companies
terminates by reason of death or disability, any Earned Incentive
Units shall immediately become vested in full.
ARTICLE 5
UNITS SUBJECT TO AWARDS
5.1 NUMBER OF UNITS SUBJECT TO AWARDS. Subject to
adjustment in accordance with the provisions of subsection 5.3,
the aggregate number of Units which may be issued under the
Program may not exceed 525,000 Units. If, and to the extent
that, any awards granted under the Program terminate, expire or
are forfeited, the number of Units subject to the terminated,
expired or forfeited award shall again be available for awards
under the Program.
5.2 RESERVATION AND CHARACTER OF SHARES. There shall be
reserved by the REIT at all times for exchange pursuant to a
Conversion Right for a Unit awarded under the Program an
aggregate number of Shares equal to the maximum number of Units
which may are subject to award under the Program. Shares
delivered in connection with Conversion Rights exercised as to
Units received under the Program may be acquired from authorized
but unissued Shares or issued Shares held in the REIT's treasury,
or both. Units delivered under the Program may be acquired from
the Partnership without regard to whether the Partnership has
previously set aside such Units for issuance under the Program.
5.3 ADJUSTMENT. In the event that the REIT Committee shall
determine that any dividend or other distribution (whether in the
form of cash, Shares, Units, other securities, or other
property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares, Units or other
securities, the issuance of warrants or other rights to purchase
Shares, Units or other securities, or other similar corporate or
partnership transaction or event affects the Units with respect
to which awards may be issued under the Program, such that an
adjustment is determined by the REIT Committee to be appropriate
in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the
Program, then the REIT Committee shall, in such manner as it may
deem equitable, adjust any or all of (i) the number and type of
Units that thereafter may be made the subject of awards under the
Program, and (ii) the number and type of any Incentive Units
subject to awards under the Program which have not yet been
earned or vested.
SECTION 6
MISCELLANEOUS
6.1 NO RIGHTS OF OWNER UNTIL ISSUANCE. No person receiving
an award of Incentive Units under the Program shall have any of
the rights of a partner in the Partnership with respect to the
Units made subject to such award until such Incentive Units have
become earned and vested and a Unit shall have been transferred
to such person.
6.2 TAX WITHHOLDING. The Employer of a Participant shall
notify the Participant of any income tax withholding requirements
arising as a result of an award under the Program. The Employer
shall have the right to require the Participant to pay such
withholding taxes and, unless provided otherwise by the
applicable Committee, the Participant may request that Units be
withheld to satisfy such withholding. If the Participant shall
fail to make such tax payments as are required, the Employer
shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to such
Participant or to take such other action as may be necessary to
satisfy such withholding obligations, including, but not limited
to, withholding of Units sufficient to satisfy the Employer's tax
withholding obligations.
6.3 NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the
Program nor any award hereunder shall confer upon any employee or
other individual the right to continue in the employment or
service of any of the Affiliated Companies or affect any right
that the Employer may have to terminate the employment or service
of (or to demote or to exclude from future awards under the
Program) any such employee or other individual, with or without
cause, at any time.
6.4 SEVERABILITY. If any provision of the Program shall be
held unlawful or otherwise invalid or unenforceable in whole or
in part, such unlawfulness, invalidity or unenforceability shall
not affect any other provision of the Program or part thereof,
each of which remain in full force and effect. If the making of
any payment or the provision of any other benefit required under
the Program shall be held unlawful or otherwise invalid or
unenforceable, such unlawfulness, invalidity or unenforceability
shall not prevent any other payment or benefit from being made or
provided under the Program, and if the making of any payment in
full or the provision of any other benefit required under the
Program in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or
unenforceability shall not prevent such payment or benefit from
being made or provided in part, to the extent that it would not
be unlawful, invalid or unenforceable, and the maximum payment or
benefit that would not be unlawful, invalid or unenforceable
shall be made or provided under the Program.
6.5 GOVERNING LAW. The Program and all determinations made
and actions taken thereunder, to the extent not otherwise
governed by the Code or the laws of the United States, shall be
governed by the internal laws of the State of Maryland and
construed accordingly.
SECTION 7
AMENDMENT AND TERMINATION
The Board of Directors of the REIT may, at any time and in
any manner, amend, suspend or terminate the Program or any award
outstanding under the Program; provided however, no such
amendment or termination shall materially adversely alter or
impair the rights of Participants with respect to awards
previously made under the Program without the consent of the
Participant.
IN WITNESS WHEREOF, the foregoing Program is hereby adopted
this 31st day of October, 1996, effective as of the 1st day of
January, 1996.
Urban Shopping Centers, Inc.
By: /s/ Michael Hilborn
------------------------
Urban Shopping Centers, L.P.
By: Urban Shopping Centers, Inc.
general partner
By: /s/ Michael Hilborn
------------------------
Urban Retail Properties Co.
By: /s/ Michael Hilborn
------------------------
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
Urban Shopping Centers, Inc.:
We consent to incorporation by reference in the registration statements
(Nos. 333-334 and 33-96388) on Forms S-3 and S-8 of Urban Shopping Centers,
Inc. of our report dated November 21, 1996, relating to the statements of
operations of Old Orchard Shopping Center for the years ended December 31,
1995, 1994 and 1993, which report appears in this Form 8-K of Urban Shopping
Centers, Inc.
KPMG PEAT MARWICK LLP
Chicago, Illinois
November 21, 1996
