<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 1-12558
DeBARTOLO REALTY CORPORATION
(Exact Name of registrant as specified in its charter)
OHIO 34-1754014
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7655 Market Street Youngstown, Ohio 44513
(Address of principal executive offices) (Zip Code)
(330) 758-7292
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of Common Stock, $.01 par value, at May 10,
1996 was 55,493,524.
Page 1 of 20
<PAGE> 2
DEBARTOLO REALTY CORPORATION
FORM 10-Q
TABLE OF CONTENTS
-----------------
PART 1 FINANCIAL INFORMATION PAGE NUMBER
-----------
ITEM 1: FINANCIAL INFORMATION 3
DEBARTOLO REALTY CORPORATION, CONSOLIDATED
BALANCE SHEETS AS OF MARCH 31, 1996 AND
DECEMBER 31, 1995 4
DEBARTOLO REALTY CORPORATION, CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND 1995 5
DEBARTOLO REALTY CORPORATION, CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND 1995 6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 12
PART II OTHER INFORMATION 17
Page 2 of 20
<PAGE> 3
DEBARTOLO REALTY CORPORATION
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in conjunction with the rules and regulations of the Securities
and Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
solely of normal recurring matters) necessary for a fair presentation of the
consolidated financial statements for these interim periods have been included.
The results for the interim period ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the full fiscal year. These
financial statements should be read in conjunction with the DeBartolo Realty
Corporation December 31, 1995 audited consolidated financial statements and
notes thereto included in its annual report on Form 10-K for the year ended
December 31, 1995 filed with the Securities and Exchange Commission and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Page 3 of 20
<PAGE> 4
DEBARTOLO REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AS OF AS OF
MARCH 31, 1996 DECEMBER 31, 1995
(UNAUDITED) (AUDITED)
-------------- -----------------
<S> <C> <C>
ASSETS:
Investment properties (Note 4) ..................................... $1,947,324 $1,793,663
Less accumulated depreciation .................................. 616,817 574,338
---------- ----------
1,330,507 1,219,325
Cash and cash equivalents .......................................... 7,373 25,851
Restricted Cash..................................................... 14,885 13,910
Short term investments ............................................. 4,875 14,057
Accounts receivable, less allowance for doubtful accounts
of $9,506 and $10,070 in 1996 and 1995 ......................... 42,137 39,103
Investments in and advances to nonconsolidated joint
ventures (Notes 4 and 5) ....................................... 82,170 116,725
Minority interest in capital deficits of consolidated joint ventures 33,866 25,496
Deferred charges and prepaid expenses .............................. 85,101 77,103
---------- ----------
$1,600,914 $1,531,570
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Mortgages and notes payable (Note 4) ........................... $1,470,274 1,348,573
Accounts payable and accrued expenses .......................... 44,203 38,810
Dividends and distributions payable ............................ 28,255 28,225
Deficits in nonconsolidated joint ventures (Notes 4 and 5) ..... 36,436 71,147
---------- ----------
1,579,168 1,486,755
---------- ----------
Commitments and contingencies ...................................... -- --
Limited Partners' interest in Operating Partnership ................ 8,295 17,142
Shareholders' Equity:
Preferred Stock, $.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding .............. -- --
Common Stock, $.01 par value, 175,000,000 shares
authorized, 55,491,478 shares in 1996,
55,329,162 shares in 1995, issued and outstanding ......... 555 553
Additional paid-in capital ..................................... 12,896 27,120
Accumulated surplus ............................................ -- --
---------- ----------
Total Shareholders' Equity ................................ 13,451 27,673
---------- ----------
$1,600,914 $1,531,570
========== ==========
</TABLE>
See accompanying notes
Page 4 of 20
<PAGE> 5
DEBARTOLO REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
-------- --------
<S> <C> <C>
REVENUES:
Minimum rents ............................................ $ 56,554 $ 53,234
Tenant recoveries ........................................ 23,040 19,754
Percentage rents ......................................... 2,794 2,965
Other .................................................... 6,038 3,276
-------- --------
Total revenues ........................... 88,426 79,229
-------- --------
EXPENSES:
Shopping Center Expenses:
Property operating ................................... 9,854 8,579
Repairs and maintenance .............................. 8,172 6,177
Real estate taxes .................................... 8,783 8,483
Advertising & promotion .............................. 1,996 1,348
Management expenses .................................. 2,122 1,397
Provision for doubtful accounts ...................... 598 614
Ground leases ........................................ 706 569
Other ................................................ 873 1,037
-------- --------
Total shopping center expenses ........... 33,104 28,204
Deferred stock compensation expense ...................... 53 53
Interest expense ......................................... 29,524 30,873
Depreciation and amortization ............................ 15,525 14,160
-------- --------
78,206 73,290
-------- --------
Gain on sale of assets ................................... -- 3,761
Income from nonconsolidated joint ventures (Notes 4 and 5) 3,481 1,755
Minority partners' interest in consolidated joint ventures 65 284
-------- --------
Income before extraordinary item ......... 13,766 11,739
Extraordinary item (Note 4) .............................. 9,191 --
-------- --------
Income before Limited Partners' interest . 22,957 11,739
Limited Partners' interest in the Operating Partnership .. (8,762) (4,842)
-------- --------
Net income ............................... $ 14,195 $ 6,897
======== ========
EARNINGS PER COMMON SHARE AND COMMON
EQUIVALENT SHARE (NOTE 6):
Income before extraordinary item ................. $ 0.15 $ 0.14
Extraordinary item ............................... 0.10 --
-------- --------
Net income ....................................... $ 0.25 $ 0.14
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING (000'S) .............. 55,610 48,982
======== ========
</TABLE>
See accompanying notes
Page 5 of 20
<PAGE> 6
DEBARTOLO REALTY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
--------- --------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income ....................................................................... $ 14,195 $ 6,897
Adjustments to reconcile net income to net cash provided by Operating Activities:
Amortization of formation costs .............................................. 2,397 3,531
Amortization of interest rate protection agreements and deferred loan costs .. 164 778
Gain on sale of assets ....................................................... -- (3,761)
Depreciation and amortization ................................................ 15,525 14,160
Extraordinary item ........................................................... (9,191) --
Deferred stock compensation expense .......................................... 53 53
Minority partners' interests in consolidated joint ventures .................. (65) (284)
Limited Partners' interest in the Operating Partnership ...................... 8,762 4,842
Income from nonconsolidated joint ventures ................................... (3,481) (1,755)
(Increase) decrease in restricted cash ....................................... (975) 3,223
Decrease (increase) in short term investments ................................ 9,182 (1,488)
(Increase) decrease in accounts receivable ................................... (169) 6,783
Increase in prepaid expenses and other ....................................... (2,792) (3,968)
(Decrease) increase in accounts payable and accrued expenses ................. (1,568) 281
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES .................................... 32,037 29,292
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment properties ........................................... (14,510) (11,066)
Cash paid for tenant allowances .............................................. (1,121) (486)
Additions to deferred charges for lease costs and other ...................... (1,152) (635)
Distributions from nonconsolidated joint ventures ............................ 5,067 5,297
Advances to and investments in nonconsolidated joint ventures ................ (6,455) (150)
Net proceeds from sale of assets ............................................. 307 3,750
--------- --------
NET CASH USED IN INVESTING ACTIVITIES ........................................ (17,864) (3,290)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt ............................................... 997 263
Scheduled principal payments on mortgages .................................... (1,635) (1,589)
Other payments on debt ....................................................... (298) --
Proceeds from dividend reinvestment plan ..................................... 25 --
Loan costs paid .............................................................. (285) (123)
Minority partner distributions ............................................... (620) (127)
Distributions to Limited Partners ............................................ (10,796) (10,763)
Dividends paid ............................................................... (17,429) (15,330)
Decrease (increase) in affiliate receivables ................................. (2,610) 1,553
--------- --------
NET CASH USED IN FINANCING ACTIVITIES ........................................ (32,651) (26,116)
--------- --------
NET (DECREASE) INCREASE IN CASH .............................................. (18,478) (114)
CASH AND CASH EQUIVALENTS:
Beginning of period .......................................................... 25,851 38,899
--------- --------
End of period ................................................................ $ 7,373 $ 38,785
========= ========
SUPPLEMENTAL INFORMATION:
Interest Paid ................................................................ $ 22,776 $ 25,044
========= ========
SUPPLEMENTAL SCHEDULE OF NON-CASH AND FINANCING ACTIVITIES:
Step-up in connection with acquisition of additional interest in joint venture $ 7,296 $ --
========= ========
Historical cost basis of net investment properties consolidated as a result of
acquisitions of additional interests in joint ventures ................... $ 121,245 $ --
========= ========
Mortgages on those properties consolidated as a result of acquisitions of
additional interests in joint ventures ................................... $ 136,009 $ --
========= ========
Historical cost basis of net investment property disposed .................... $ (4,040) $ --
========= ========
Mortgage extinguishment relating to property disposition ..................... $ (13,372) $ --
========= ========
Acquisition of certain businesses of Property Manager ........................ $ 4,020 $ --
========= ========
</TABLE>
Page 6 of 20
<PAGE> 7
DEBARTOLO REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
See accompanying notes
NOTE 1 - ORGANIZATION AND OWNERSHIP
DeBartolo Realty Corporation, (together with its subsidiaries and operating
affiliates, sometimes referred to as the "Company"), is an Ohio corporation
which operates as a self-administered and self-managed real estate investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended. Through its
majority-owned managing general partnership interest in DeBartolo Realty
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership")
and indirectly, interests in DeBartolo Capital Partnership, a Delaware general
partnership, the Company is engaged in the ownership, development, management,
leasing, acquisition and expansion of super-regional and regional malls and
community shopping centers.
The Company was formed to continue and expand the shopping mall ownership,
management and development business of The Edward J. DeBartolo Corporation
("EJDC") in a portfolio which, as of March 31, 1996, consisted of 50
super-regional and regional malls (the "DeBartolo Malls"), 11 community centers
and land held for future development (collectively, the "DeBartolo Properties").
The Company completed its initial public offering of securities (the "IPO") in
April, 1994. At March 31, 1996, the Company was the sole general partner of and
owned a 61.9% interest in the Operating Partnership. As of March 31, 1996, EJDC
and certain affiliates (collectively, the "DeBartolo Group") and certain current
and former employees of EJDC, along with JCP Realty, Inc. ("JCP"), own the
remaining 38.1% interest in the Operating Partnership.
In addition, the Operating Partnership owns 100% of the non-voting preferred
stock and a non-controlling common stock interest (5%) in DeBartolo Properties
Management, Inc. (the "Property Manager") which provides certain architectural,
design, construction and other services to substantially all of the DeBartolo
Properties, as well as, certain other regional malls and community shopping
centers owned by third parties.
Page 7 of 20
<PAGE> 8
DEBARTOLO REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 2 - BASIS OF PRESENTATION
The financial statements of the Company are presented on a consolidated basis.
Properties which are controlled through majority ownership have been
consolidated and all significant intercompany transactions and accounts have
been eliminated. Properties where the Company owns less than a majority interest
have been accounted for under the equity method. One property, which is owned 2%
by the Operating Partnership, is accounted for under the cost method.
The Operating Partnership owns 5% of the voting common stock and all of the
nonvoting preferred stock of the Property Manager. The Company accounts for the
investment in the Property Manager under the equity method.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
NOTE 3 - RESTRICTED CASH
Cash is restricted primarily for renovations and redevelopment of the 17
DeBartolo Properties in connection with a securitized commercial pass-through
certificate issuance simultaneously with the IPO.
NOTE 4 - MERGERS, ACQUISITIONS AND DISPOSITIONS
The Company entered into an Agreement and Plan of Merger, dated as of March 26,
1996 (the "Agreement"), among Simon Property Group, Inc., a Maryland corporation
("SPG"), its merger subsidiary and the Company, pursuant to which the Company
agreed to merge with the merger subsidiary. The Agreement provides for the
exchange of all outstanding Company common stock for SPG common stock, $0.0001
par value (the "SPG Common Stock"), at an exchange ratio of 0.68 shares of SPG
Common Stock for each share of Company common stock. The merger is subject to
the approval of shareholders of both SPG and the Company and other conditions.
Upon effectiveness of the merger, SPG will be renamed Simon DeBartolo Group,
Inc.
During January, 1996, the Property Manager acquired partnership interests of
33 1/3% and 25% in two joint ventures, respectively, from an unrelated joint
venture partner. As a result, the Company effectively owns 65% and 74% of these
joint ventures and includes the financial position and results of operations and
cash flows of these joint ventures in its consolidated financial statements.
Effective March 31, 1996, the Company acquired an additional 10% partnership
interest in Miami International Mall. As a result, the Company owns 60% of this
joint venture which is now included in the Company's March 31, 1996 consolidated
balance sheet.
The Company transferred ownership of one property to its lender, as of March 1,
1996, fully satisfying the property's mortgage note payable. This property no
longer met the Company's criteria for its ongoing strategic plan. The Company
has recognized an extraordinary gain on this transaction of $9.2 million. The
Operating Partnership's share of this property's net income (loss) for 1993,
1994 and 1995 was $9, ($760) and ($513), respectively. The Operating
Partnership's share of this property's cash generated before debt payments and
capital expenditures ("FFO") for 1993, 1994 and 1995 was $512, ($237) and $48,
respectively.
Effective January 1, 1996, the Company acquired the management, leasing and
certain other operating divisions of the Property Manager. The operating results
of these divisions are included in the Company's consolidated financial
statements net of eliminated intercompany transactions. The Property Manager
continues to provide
Page 8 of 20
<PAGE> 9
DEBARTOLO REALTY CORPORATION
NOTES TO CONSOLIDATED STATEMENTS
(DOLLARS IN THOUSANDS)
architectural, engineering and construction services for the Company.
NOTE 5 - INVESTMENT IN NONCONSOLIDATED JOINT VENTURES
As a result of the above-discussed acquisitions, the combined Balance Sheet of
the nonconsolidated joint ventures includes the financial position of nine joint
ventures at March 31, 1996 and twelve joint ventures at December 31, 1995. Three
joint ventures, in which the Company acquired additional partnership interests
during the first quarter of 1996, are included in the Company's consolidated
Balance Sheet at March 31, 1996 (see Note 4 above).
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
BALANCE SHEETS
Investment properties (net) $ 498,042 $ 599,234
Other assets 36,411 43,094
--------- ---------
Total assets 534,453 642,328
--------- ---------
Mortgages and notes payable 447,657 584,495
Other liabilities 39,405 90,549
--------- ---------
Total liabilities 487,062 675,044
--------- ---------
Accumulated equity (deficit) 47,391 (32,716)
Less: Outside partners' equity 37,526 180
Advances to nonconsolidated joint ventures 35,869 78,474
--------- ---------
Net surplus in nonconsolidated joint ventures $ 45,734 $ 45,578
========= =========
Net surplus (deficits) in nonconsolidated joint ventures
is presented in the accompanying consolidated balance
sheets as follows:
Investments in nonconsolidated joint ventures $ 46,301 $ 38,251
Advances to nonconsolidated joint ventures 35,869 78,474
--------- ---------
Total investments in and advances to
nonconsolidated joint ventures 82,170 116,725
Deficits in nonconsolidated joint ventures (36,436) (71,147)
--------- ---------
$ 45,734 $ 45,578
========= =========
</TABLE>
Page 9 of 20
<PAGE> 10
DEBARTOLO REALTY CORPORATION
NOTES TO CONSOLIDATED STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 5 - INVESTMENT IN NONCONSOLIDATED JOINT VENTURES (CONTINUED)
The combined statements of operations for the nonconsolidated joint ventures
include the operating results of ten joint ventures in 1996 and twelve joint
ventures in 1995. The operating results of two joint ventures, in which the
Company acquired additional partnership interest in January 1996, are included
in the Company's consolidated operating statement. The operating results of one
joint venture, in which the Company acquired additional partnership interest
effective March 31, 1996, are included in the combined statement of operations
below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
------- -------
<S> <C> <C>
STATEMENTS OF OPERATIONS
Revenues:
Minimum rents $21,652 $22,330
Tenant recoveries 10,315 11,040
Percentage rents 1,349 1,505
Other 1,847 2,131
------- -------
Total revenues 35,163 37,006
------- -------
Expenses:
Shopping Center Expenses:
Property operating 3,302 3,504
Repairs and maintenance 2,843 2,910
Real estate taxes 4,380 4,746
Advertising and promotion 965 754
Management fees to affiliate 1,222 1,263
Provision for doubtful accounts 314 296
Ground leases -- 30
Other 342 467
------- -------
13,368 13,970
Interest expense 10,925 14,124
Depreciation and amortization 5,336 5,877
------- -------
29,629 33,971
------- -------
Net income $ 5,534 $ 3,035
======= =======
DeBartolo Realty Corporation's share of:
Revenues less shopping center expenses $ 9,893 $ 9,760
Interest expense 3,814 4,930
Depreciation, amortization and other 2,598 3,075
------- -------
Net income $ 3,481 $ 1,755
======= =======
</TABLE>
Page 10 of 20
<PAGE> 11
DEBARTOLO REALTY CORPORATION
NOTES TO CONSOLIDATED STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 6 - EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENT
Earnings per share and common share equivalent is based on the weighted average
number of common stock and common stock equivalents outstanding during the first
quarter of 1996. Common stock awarded but not yet issued under the deferred
stock plan (42,400 shares) and the Company's long-term incentive plan (80,400
shares) have been considered common stock equivalents for the entire first
quarter 1996.
NOTE 7 - DIVIDENDS
The Company declared a dividend of $0.315 per share on February 7, 1996 for the
period of January 1, 1996 through March 31, 1996, payable on April 22, 1996 to
shareholders of record on March 29, 1996. On April 3, 1996, the Company declared
a second quarter dividend of $0.315 per share, payable July 22, 1996 to
shareholders of record on June 30, 1996.
Page 11 of 20
<PAGE> 12
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with the accompanying consolidated and
combined financial statements and the notes thereto.
GENERAL BACKGROUND
The following discussion is based primarily on the consolidated financial
statements of the Company for the three months ended March 31, 1996 and
1995.
As used in this quarterly report on Form 10-Q, the term "Mall Store" means
stores (other than Anchors) that are typically specialty retailers and
lease space in shopping centers. "Anchor" generally refers to a department
store or other large retail store in excess of 60,000 square feet. The term
"Mall GLA" refers to the total gross leasable area of Mall Stores only.
RESULTS OF OPERATIONS
During the first quarter of 1996, the Company acquired additional
partnership interests of 33 1/3% and 25% in two of its then nonconsolidated
joint ventures ("Property Transactions"). As a result of these
transactions, the Company is now accounting for these properties using the
consolidated method of accounting whereas in 1995 the Company used the
equity method of accounting.
COMPARISON OF COMBINED THREE MONTHS ENDED MARCH 31, 1996
TO THREE MONTHS ENDED MARCH 31, 1995
REVENUES: Total revenues increased $9.2 million or 11.6% to $88.4 million
in 1996 from $79.2 million in 1995. Of this increase, $3.5 million is
attributable to the Property Transactions. Minimum rents increased $3.3
million or 6.2% in 1996 of which $2.3 million is the result of the Property
Transactions. The remaining increase of $1.0 million is due to a $0.7
million increase in specialty leasing and a $0.3 million increase in
minimum rents reflecting continued improvements in rental rates for
reletting Mall Store space and rents from specialty anchors on space that
was leased subsequent to the first quarter of 1995. Minimum rents include
specialty leasing revenues of $2.6 million in 1996 and $1.9 million in
1995.
Tenant recoveries increased $3.3 million or 16.6% of which $1.0 million is
attributable to the Property Transactions. The remaining increase of $2.3
million is attributable to increased recoverable expenses. Other revenues
increased $2.8 million primarily due to (i) $0.8 million increase in lease
cancellation income, (ii) $0.6 million settlement of previously disputed
phone commission income, (iii) a $0.7 million gain on sale of peripheral
land, and (iv) $0.4 million increase in advertising revenues.
Effective January 1, 1996, the Company acquired the management, leasing and
certain other operating divisions of the Property Manager. As a result, the
Company's other revenues include $0.3 million of management revenues and
net profits of leasing and other activities relating to third party
contracts and outside interests in joint ventures.
Page 12 of 20
<PAGE> 13
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SHOPPING CENTER EXPENSES: Shopping center expenses increased $4.9 million
or 17.4% in 1996 of which $1.5 million is attributable to the Property
Transactions. Property operating expenses and repairs and maintenance
increased $3.3 million in 1996 of which $0.8 million is attributable to the
Property Transactions. The remaining $2.5 million increase is due to a $1.1
million increase in snow removal costs and a $0.8 million increase in other
shopping center operating expenses. Substantially all of this increase has
been recovered from tenants. The 1996 increase in real estate taxes of $0.3
million or 3.5% is attributable to the Property Transactions. Advertising
and promotion expenses increased $0.7 million in 1996 of which $0.1 million
is applicable to the Property Transactions. The remaining $0.6 million
increase is partially offset by a $0.4 million increase in advertising
contributions from tenants.
In 1996, management expenses totaling $2.1 million are substantially
comprised of salaries and other general and administrative expenses
relating to the management of the Company's portfolio. In 1995, these
expenses were management fees charged to the 49 consolidated properties,
primarily by the Property Manager.
INTEREST EXPENSE: Interest expense decreased $1.3 million or 4.4% in 1996
including a $2.0 million increase resulting from the Property Transactions.
The remaining $3.3 million decrease is caused by debt paydowns with the
proceeds of the 1995 follow-on public stock offering and a reduction in
amortization of interest rate protection agreements resulting from a 1995
interest rate swap agreement.
JOINT VENTURES: Net income of the nonconsolidated joint ventures increased
$2.5 million to $5.5 million in 1996 from $3.0 million in 1995 primarily
due to the change in accounting for two joint ventures from the equity
method to the consolidated method. Revenues of the nonconsolidated joint
ventures decreased $1.8 million to $35.2 million in 1996 from $37.0 million
in 1995 of which $3.5 million of the decrease was due to the Property
Transactions. The remaining $1.7 million increase is due to (i) a $0.4
million increase in minimum rents, (ii) a $0.3 million increase in
specialty leasing revenues, (iii) a $0.7 million increase in revenues from
lessees' cancellation of leases, and (iv) a $0.2 million increase in tenant
recoveries.
Shopping center expenses decreased $.6 million to $13.4 million in 1996 of
which $1.5 million is resulting from the Property Transactions. The
remaining $0.9 million increase is due to (i) a $0.5 million increase in
property operating and repairs and maintenance expenses resulting from
increased snow removal and other shopping center operating expenses, and
(ii) a $0.3 million increase in advertising expenses.
The Operating Partnership's share of income from nonconsolidated joint
ventures increased $1.7 million primarily due to the impact of the Property
Transactions.
INCOME BEFORE LIMITED PARTNERS' INTEREST: The 1995 gain on sale of assets
represents a gain from the sale of a partnership interest in a mall
development site acquired from the DeBartolo Group and simultaneously sold
to a third party.
Extraordinary items recognized in the first quarter of 1996 represents a
gain of $9.2 million from the disposition of one shopping center and the
related extinguishment of debt.
Net income (loss) before limited partners' interest increased $11.3 million
to $23.0 million for the first quarter 1996 from $11.7 million for the
first quarter 1995 as the result of the above-mentioned fluctuations.
Page 13 of 20
<PAGE> 14
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INVESTING ACTIVITIES: Net cash used in investing activities of $17.9
million, as shown in the consolidated statement of cash flows, for the
three months ended March 31, 1996 are primarily comprised of additions to
investment properties and tenant allowances of $15.6 million (see "capital
expenditures") and net contributions to nonconsolidated joint ventures of
$1.4 million. Net cash used in investing activities totaled $3.3 million
for the three months ended March 31, 1995, principally comprised of (i)
additions to investment properties totaling $9.1 million and (ii) $2.5
million related to the buyback of underproductive space at Lafayette Square
and Glen Burnie Mall. These investments were offset by (i) net proceeds
from the sale of a partnership interest in a mall site located in
Strongsville, Ohio totaling $3.8 million in the first quarter 1995 and (ii)
distributions received from nonconsolidated joint ventures of $5.3 million.
FINANCING ACTIVITIES: Net cash used in financing activities for the three
months ended March 31, 1996 and 1995 totaled $32.7 and $26.1 million,
respectively, principally comprised of dividends and distributions to the
Company's shareholders and limited partners in the Operating Partnership.
PORTFOLIO LEASING AND SALES TRENDS
RENTAL RATES: During the first quarter 1996, new leases commenced on
179,563 square feet of space in DeBartolo Malls at an average initial rent
of $26.55. Included in the 1996 lease commencements are leases to mall shop
tenants on 154,686 square feet of previously leased space at average
initial minimum rents of $27.02 which represents a 13.0% increase over the
average expiring rents of $23.91 for this space.
LEASED AREA: Leased mall area increased to 84.2% as of March 31, 1996, from
84.0% at March 31, 1995. During first quarter 1996, 106,000 square feet of
underproductive space was recovered. Of that space, 74,000 square feet was
due to bankruptcies, with the balance due to lease cancellations. As a
result, although the impact from bankruptcies continues, the Company was
able to offset these losses with leasing activity throughout the portfolio.
MALL STORE SALES: Total Mall Store Sales are an important factor
contributing to the level of revenues generated by the DeBartolo Malls
because such sales ultimately influence the total occupancy cost a tenant
can pay. Total Mall Store Sales measure a mall portfolio's ability to
generate sales over its total square footage and may be affected by
occupancy. Total Mall Store sales of DeBartolo Malls, including Large Space
Users (defined as theaters, drug stores, variety stores, cafeterias and
other large stores), increased 3.7% to $612.3 million for the three months
ended March 31, 1996 from $590.2 million for the three months ended March
31, 1995. Comparable Mall Store sales increased 10.6% for the first quarter
of 1996 versus the same period in 1995.
CASH GENERATED BEFORE DEBT PAYMENTS AND CAPITAL EXPENDITURES
Management believes that cash generated before debt repayments and capital
expenditures (commonly referred to as funds from operations) provides an
important indicator of the financial performance of the Company. Cash generated
before debt repayments and capital expenditures is defined as net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of property (other than adjacent land located at
DeBartolo Properties after April 21, 1994), plus depreciation of real property
and certain amortization and other non-cash items, and after adjustments for
unconsolidated partnerships and joint ventures. Accordingly, management expects
that cash generated before debt repayments and capital expenditures will be the
most significant factor considered by the Board of Directors in determining the
amount of cash dividends the Company will make to shareholders.
Page 14 of 20
<PAGE> 15
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CASH GENERATED BEFORE DEBT PAYMENTS AND CAPITAL EXPENDITURES (CONTINUED)
The following shows cash generated before debt repayments and capital
expenditures:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
---------------------------------------------------
MARCH 31, 1996 (1) MARCH 31, 1995 (1)
---------------------- ----------------------
<S> <C> <C> <C> <C>
Income before extraordinary items and Limited
Partners' Interest in the Operating Partnership $ 13.8 $ 11.7
Adjustments for non-cash items:
Depreciation, amortization and other (2) $ 19.8 $ 20.7
Deferred stock expense and other 0.1 19.9 (0.2) 20.5
--------- --------- --------- --------
33.7 32.2
Other adjustments:
Gain on sale of assets (3) -- (3.8)
--------- ---------
Cash generated before debt repayments and
capital expenditures $ 33.7 $ 28.4
========= =========
Company's share of cash generated before debt
repayments and capital expenditures $ 20.8 $ 16.7
========= =========
Cash generated before debt repayments and
capital expenditures per common share (4) $ 0.38 $ 0.34
========= =========
</TABLE>
(1) The calculation of cash generated before debt payments and capital
expenditures has been revised to adopt the National Association of Real
Estate Investment Trust's revised definition. The cash generated before
debt payments and capital expenditures for the first quarter 1995 has been
restated to $28.4 million from $28.7 million to conform with the 1996
calculation and presentation. Adjustments include (i) $0.2 million for
depreciation of furniture, fixtures and equipment, (ii) $0.1 million for
amortization of deferred loan costs and (iii) $0.7 million for the
amortization of interest rate protection agreements, and (iv) an adjustment
of $0.7 million to include straight-line rent accruals. The Company's share
of cash generated before debt payments and capital expenditures was
restated to $16.7 million from $16.9 million and the per share amount was
restated to $0.34 from $0.35 as a result of the above adjustments.
(2) The depreciation, amortization and other is comprised of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
--------------------------------------------------------------- 1995
CONSOLIDATED NONCONSOLIDATED COMPANY'S COMPANY'S
PROPERTIES PROPERTIES TOTAL SHARE SHARE
-------------- ----------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Depreciation of building and
improvements and
amortization of deferred
leasing expenses $ 15.3 $ 5.2 $ 20.5 $ 17.4 $ 16.8
Amortization of formation
costs 2.4 0.1 2.5 2.4 3.9
-------------- ----------------- ---------- ------------ ------------
$ 17.7 $ 5.3 $ 23.0 $ 19.8 $ 20.7
============== ================= ========== ============ ============
</TABLE>
(3) The 1995 adjustment represents a gain on the sale of a partnership interest
in a mall development site acquired from the DeBartolo Group and
simultaneously sold to a third party.
Page 15 of 20
<PAGE> 16
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(4) Based on weighted average shares of common stock outstanding of 55,405,083
at March 31, 1996 and 48,762,159 at March 31, 1995 including 96,006 shares
of common stock issued in April, 1995 under the Company's stock incentive
plan.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL. As of March 31, 1996, the Company's total capital availability was
approximately $289 million. Of the $289 million, approximately $28.2 million
is reserved for dividends and distributions payable in April, 1996. The
Company's unused borrowing capacity was approximately $264 million including
$90 million of contractual borrowing commitments, subject to customary
lender approval rights, for capital expenditures on properties securing the
respective mortgages.
FINANCINGS AND REFINANCINGS. In April, 1996 the Company expanded its
revolving credit facility to $150 million and total availability increased
to $140 million of which $55 million is outstanding at March 31, 1996. This
facility is secured by three properties and carries an interest rate of
LIBOR plus 175 basis points.
Effective March 29, 1996, the Company finalized a joint venture agreement
with a financial institution and closed a $52 million construction loan with
a group of banks for the development of Indian River Mall and a
complementary power center. The Company owns 50% of this joint venture.
DEBT. The Company's pro rata share of debt is approximately $1.568 billion
which includes the Company's pro rata share of debt applicable to the
nonconsolidated joint ventures of $186.0 million. The Company's pro rata
share of total floating rate debt is $275.2 million and is subject to the
below-mentioned interest rate swaps and interest rate caps.
The Company has an interest rate swap agreement to pay LIBOR at (i) 4.75% on
approximately $218 million of debt through April 1997 and (ii) 5.71% on
$87.2 million of debt from May 1997 through April 2001. The Company has an
interest rate cap agreement which limits interest on $87.2 million of debt
to no more than LIBOR of 8.44% for the period May 1996 through March 2001.
Loans maturing during 1996 total $151.1 million for three consolidated
properties and $25.9 million for two nonconsolidated joint ventures. The
Company expects to refinance $137.7 million relating to two of the
consolidated properties and has conveyed ownership of a third property to
its lender effective as of March 1, 1996, thereby fully satisfying the
outstanding balance of $13.4 million. The Company has extended or
anticipates extending the maturity dates relating to the mortgages of the
two nonconsolidated joint ventures.
CAPITAL EXPENDITURES
The Company continued to implement its $500 million strategic redevelopment,
renovation and remerchandising program which will ultimately impact 34 of
the Company's 50 super-regional and regional malls.
During the first quarter of 1996, the Company invested $32.0 million ($22.1
million Operating Partnership's share) including $14.5 million for
consolidated properties in its development program. The Company is
progressing on the construction of Indian River Mall incurring first
quarter 1996 costs of $6.1 million. Construction commenced on mall
renovations and food court additions at Chautauqua Mall and Lafayette
Square. Expansions at Summit Mall and University Park Mall are nearing
completion with grand re-openings scheduled for the fall of 1996.
Burlington Coat Factory at Randall Park Mall opened in April, 1996. At
The Florida Mall, work on the new Saks Fifth Avenue
Page 16 of 20
<PAGE> 17
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
store is proceeding on target for its fall 1996 opening.
Tenant allowances for consolidated properties paid during the first quarter
of 1996 totaled $1.1 million compared to $0.5 million during the same period
in 1995.
Page 17 of 20
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
Neither the Company nor any of the DeBartolo Properties is currently a party to
any material pending legal proceedings nor, to management's knowledge, is any
material legal proceeding currently contemplated by governmental authorities
against the Company or the DeBartolo Properties. The entities that own DeBartolo
Properties are parties to a variety of routine litigation arising in the
ordinary course of business. Most of such proceedings are covered by liability
insurance. All of such proceedings, taken together, are not expected to have a
material adverse effect on the Company's operating or financial results.
ITEM 6: EXHIBITS AND REPORTS
(a) Exhibits
2 - Agreement and Plan of Merger dated as of March 26, 1996
27 - Financial Data Schedule
(b) Reports on Form 8-K
One Form 8-K was filed during the current period, on March 26, 1996. Under Item
5 - Other Events, the Company reported that it had reached an agreement in
principle to merge with Simon Property Group, Inc.
Page 18 of 20
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DeBARTOLO REALTY CORPORATION
Date: May 15, 1996 /s/ James R. Giuliano, III
----------------------------------------------
Name: James R. Giuliano, III
Title: Senior Vice President and Chief
Financial Officer
(Principal Financial Officer and
Authorized Officer of the Registrant)
Page 19 of 20
<PAGE> 20
INDEX TO EXHIBITS
-----------------
EXHIBIT NO. DESCRIPTION
- - - ----------- -----------
2 Agreement and Plan of Merger
dated as of March 26, 1996
27 Financial Data Schedule
Page 20 of 20
<PAGE> 1
FINAL EXECUTION COPY
--------------------
________________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
Dated as of March 26, 1996,
Among
SIMON PROPERTY GROUP, INC.,
DAY ACQUISITION CORP.
And
DeBARTOLO REALTY CORPORATION
<PAGE> 2
2
________________________________________________________________________________
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
The Merger
<S> <C> <C>
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . 4
SECTION 1.5 Charter and Code of Regulations. . . . . . . . . . . . . . 4
SECTION 1.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
Effect of the Merger on the Capital Stock
of the Constituent Corporations;
Exchange of Certificates
SECTION 2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . 4
(a) Cancellation of Treasury Stock . . . . . . . . . . . . . . . 4
(b) Conversion of Common Stock . . . . . . . . . . . . . . . . . 4
(c) Conversion of Shares of Common Stock
of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) Dissenting Shares . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . 6
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Parent To Provide Merger Consideration . . . . . . . . . . . 6
(c) Exchange Procedure . . . . . . . . . . . . . . . . . . . . . 6
(d) Record Dates; Distributions with Respect
to Unexchanged Shares . . . . . . . . . . . . . . . . . . . 7
(e) No Further Ownership Rights in Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) No Liability . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) No Fractional Shares . . . . . . . . . . . . . . . . . . . . 9
(h) Withholding Rights . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
ARTICLE III
Representations and Warranties
<S> <C> <C>
SECTION 3.1 Representations and Warranties of
the Company . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Organization, Standing and Corporate
Power of the Company . . . . . . . . . . . . . . . . . . . . 10
(b) Company Subsidiaries and Joint
Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . 11
(d) Authority; Noncontravention; Consents . . . . . . . . . . . 13
(e) SEC Documents; Financial Statements;
Undisclosed Liabilities . . . . .. . . . . . . . . . . . . . 15
(f) Absence of Certain Changes or Events . . . . . . . . . . . . 16
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) Absence of Changes in Benefit Plans;
ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . 18
(i) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(j) No Payments to Employees, Officers or
Directors . . . . . . . . . . . . . . . . . . . . . . . . . 20
(k) Brokers; Schedule of Fees and Expenses . . . . . . . . . . . 20
(l) Compliance with Laws . . . . . . . . . . . . . . . . . . . . 21
(m) Contracts; Debt Instruments . . . . . . . . . . . . . . . . 21
(n) Opinion of Financial Advisor . . . . . . . . . . . . . . . . 22
(o) State Takeover Statutes . . . . . . . . . . . . . . . . . . 22
(p) Registration Statement . . . . . . . . . . . . . . . . . . . 22
(q) Parent Stock . . . . . . . . . . . . . . . . . . . . . . . . 23
(r) Vote Required . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.2 Representations and Warranties
of Parent and Sub . . . . . . . . . . . . . . . . . . . . . 23
(a) Organization, Standing and Corporate
Power of Parent and Sub . . . . . . . . . . . . . . . . . . 23
(b) Other Parent Subsidiaries and Parent
Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . 24
(d) Authority; Noncontravention; Consents . . . . . . . . . . . 26
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(e) SEC Documents; Financial Statements;
Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 28
(f) Absence of Certain Changes or Events . . . . . . . . . . . . 29
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 30
(h) Absence of Changes in Benefit Plans;
ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . 31
(i) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(j) No Payments to Employees, Officers or
Directors . . . . . . . . . . . . . . . . . . . . . . . . . 32
(k) Brokers; Schedule of Fees and Expenses . . . . . . . . . . . 33
(l) Compliance with Laws . . . . . . . . . . . . . . . . . . . . 33
(m) Contracts; Debt Instruments . . . . . . . . . . . . . . . . 33
(n) Opinion of Financial Advisor . . . . . . . . . . . . . . . . 34
(o) State Statutes . . . . . . . . . . . . . . . . . . . . . . . 34
(p) Interim Operations of Sub. . . . . . . . . . . . . . . . . . 34
(q) Registration Statement . . . . . . . . . . . . . . . . . . . 34
(r) Vote Required . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IV
Covenants
SECTION 4.1 Conduct of Business by the Company . . . . . . . . . . . . . 35
SECTION 4.2 Conduct of Business by Parent . . . . . . . . . . . . . . . 39
SECTION 4.3 Other Actions . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE V
Additional Covenants
SECTION 5.1 Preparation of the Registration Statement
and the Proxy Statement; Shareholders
Meeting and Parent Stockholders
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.2 Access to Information;
Confidentiality . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.3 Best Efforts; Notification . . . . . . . . . . . . . . . . . 45
SECTION 5.4 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.5 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.6 Amendment of Parent's Charter
and By-Laws . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
iii
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 5.7 No Solicitation of Transactions by
the Company . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.8 Public Announcements . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.9 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.10 Letters of Accountants . . . . . . . . . . . . . . . . . . . 50
SECTION 5.11 Transfer and Gains Taxes . . . . . . . . . . . . . . . . . . 51
SECTION 5.12 Benefit Plans and Other Employee
Arrangements . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.13 Private Placement of Common Stock
of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 5.14 Indemnification; Directors' and
Officers' Insurance . . . . . . . . . . . . . . . . . . . . 54
SECTION 5.15 Related Agreements . . . . . . . . . . . . . . . . . . . . . 56
SECTION 5.16 Special Tax Distributions to the
Company Reinvested . . . . . . . . . . . . . . . . . . . . 56
SECTION 5.17 Amendment of Parent Operating
Partnership Agreement . . . . . . . . . . . . . . . . . . . 56
SECTION 5.18 Additional Parent Agreements . . . . . . . . . . . . . . . 57
ARTICLE VI
Conditions Precedent
SECTION 6.1 Conditions to Each Party's Obligation
To Effect the Merger . . . . . . . . . . . . . . . . . . . . 57
(a) Shareholder Approval . . . . . . . . . . . . . . . . . . . . 57
(b) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(c) Listing of Shares . . . . . . . . . . . . . . . . . . . . . 57
(d) Registration Statement . . . . . . . . . . . . . . . . . . . 57
(e) No Injunctions or Restraints . . . . . . . . . . . . . . . . 58
(f) Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . . 58
(g) Related Transactions . . . . . . . . . . . . . . . . . . . . 58
(h) Certain Actions and Consents . . . . . . . . . . . . . . . . 58
(i) EJDC Lender Consents . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.2 Conditions to Obligations of Parent
and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(a) Representations and Warranties . . . . . . . . . . . . . . . 59
(b) Performance of Obligations of
</TABLE>
iv
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
the Company . . . . . . . . . . . . . . . . . . . . . . . 59
(c) Material Adverse Change . . . . . . . . . . . . . . . . . . 59
(d) Opinions Relating to REIT and
Partnership Status . . . . . . . . . . . . . . . . . . . . 60
(e) Other Tax Opinion . . . . . . . . . . . . . . . . . . . . . 60
(f) Consents . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.3 Conditions to Obligation of
the Company . . . . . . . . . . . . . . . . . . . . . . . . 61
(a) Representations and Warranties . . . . . . . . . . . . . . 61
(b) Performance of Obligations of each
of Parent and Sub . . . . . . . . . . . . . . . . . . . . . 61
(c) Material Adverse Change . . . . . . . . . . . . . . . . . . 62
(d) Opinion Relating to REIT Status . . . . . . . . . . . . . . 62
(e) Other Tax Opinion . . . . . . . . . . . . . . . . . . . . . 62
(f) Consents . . . . . . . . . . . . . . . . . . . . . . . . . 62
(g) The Investment Company Act Opinion . . . . . . . . . . . . 62
ARTICLE VII
Board Actions
SECTION 7.1 Board Actions . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.3 Effect of Termination . . . . . . . . . . . . . . . . . . . 68
SECTION 8.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
v
<PAGE> 8
<TABLE>
<CAPTION>
Page
----
ARTICLE IX
General Provisions
<S> <C> <C>
SECTION 9.1 Nonsurvival of Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.3 Certain Definitions . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.6 Entire Agreement; No Third-Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.9 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
vi
<PAGE> 9
<TABLE>
<CAPTION>
Schedules
<S> <C>
A Holder of Common Stock Delivering Proxies to Parent
B Holder of Parent Stock Delivering Proxies to the Company
C Parent Principals
D Company Principals
E [Intentionally Omitted]
F [Intentionally Omitted]
Exhibits
A Form of Contribution Agreement
B [Intentionally Omitted]
C [Intentionally Omitted]
D Form of Resale Agreement with Affiliates
E-1 Form of Amended and Restated Charter of Parent
E-2 Alternative Form of Amended and Restated Charter of
Parent
F-1 Form of Amended and Restated By-laws of Parent
F-2 Alternative Form of Amended and Restated By-laws of
Parent
G [Intentionally Omitted]
H Form of Severance Plan
I Form of Amended and Restated Agreement of Limited
Partnership of the Operating Partnership
J [Intentionally Omitted]
K Form of Registration Rights Agreement
L Form of letters and certificates with respect to
tax opinions of Willkie Farr & Gallagher
M Form of letters and certificate with respect to
tax opinion of Paul, Weiss, Rifkind, Wharton & Garrison
N Form of opinion of Paul, Weiss, Rifkind, Wharton &
Garrison relating to the Investment Company Act of 1940
</TABLE>
vii
<PAGE> 10
Index of Defined Terms
In
Agreement and Plan of Merger
----------------------------
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
"affiliate" 9.3
"Agreement" Title
"Amended and Restated Operating
Partnership Agreement" 6.1(g)
"Amended and Restated Parent Operating
Partnership Agreement" 6.1(g)
"Antitrust Authorizations" 5.3(a)
"Average Closing Price" 8.1(j)
"Base Amount" 8.2(b)
"Break-Up Expenses" 8.2(b)
"Break-Up Fee" 8.2(b)
"Break-Up Fee Tax Opinion" 8.2(b)
"Certificate of Merger" 1.3
"Certificates" 2.2(c)
"Class B Stock" Recital (e)
"Class C Stock" 5.6(a)
"Closing Date" 1.2
"Code" Recital (d)
"Committee" 5.12(b)(iv)
"Common Stock" Recital (b)
"Company" Title
"Company Benefit Plans" 3.1(h)(i)
"Company Disclosure Letter" 9.3
"Company Employee Stock Awards" 3.1(c)
"Company Filed SEC Documents" 3.1(f)
"Company Interests" 9.3
"Company Joint Venture" 9.3
"Company Partnership Interests" 3.1(f)
"Company Principals" Recital (f)
"Company SEC Documents" 3.1(e)
"Company Shareholder Approvals" 3.1(d)
"Company Shareholders Meeting" 5.1(b)
"Company Stock-Related Awards" 3.1(c)
"Company Subsidiary" 9.3
"Competing Transaction" 5.7
"Confidentiality Agreement" 5.2
"Contribution Agreement" Recital (h)
</TABLE>
viii
<PAGE> 11
<TABLE>
<S> <C>
"Dissenting Shares" 2.1(d)
"Economic Losses" 6.2(a)
"Effective Time" 1.3
"EJDC" 9.3
"Employee Exchange Rights Holders" 3.1(m)(iii)
"ERISA" 3.1(h)(ii)
"Excess Common Stock" 3.1(c)
"Excess Parent Shares" 2.2(g)(ii)
"Excess Stock" 3.1(c)
"Exchange Act" 3.1(d)
"Exchange Agent" 2.2(a)
"Exchange Fund" 2.2(b)
"Exchange Rights Agreement" 4.1(a)
"Exchange Trust" 2.2(g)(ii)
"Expense Fee Base Amount" 8.2(b)
"FFO" 5.12(b)(iv)
"Financial Statement Date" 3.1(f)
"Financing Partnership" 9.3
"GAAP" 3.1(e)
"Governmental Entity" 3.1(d)
"HSR Act" 3.1(d)
"indebtedness" 3.1(m)(ii)
"Indemnified Liabilities" 5.14(a)
"Indemnified Parties" 5.14(a)
"Indemnifying Parties" 5.14(a)
"knowledge" 9.3
"Laws" 3.1(d)
"Liens" 3.1(b)(i)
"Majority Company Joint Venture" 9.3
"Management Company" 9.3
"Material Adverse Change" 3.1(f)
"Material Adverse Effect" 3.1(a)
"Merger" Recital (b)
"Merger Consideration" 2.1(b)
"Merrill Lynch" 3.2(k)
"MGCL" 3.1(q)
"Minority Company Joint Venture" 9.3
"Morgan Stanley" 3.1(k)
"NYSE" 2.2(g)(ii)
"Ohio Statute" 1.1
"Operating Partnership" 9.3
"Operating Partnership Agreement" 3.1(c)
"Parent" Title
</TABLE>
ix
<PAGE> 12
<TABLE>
<S> <C>
"Parent Benefit Plans" 3.2(h)(i)
"Parent Common Stock" Recital (e)
"Parent Disclosure Letter" 9.3
"Parent Employee Options" 3.2(c)
"Parent Excess Stock" 3.2(c)
"Parent Filed SEC Documents" 3.2(f)
"Parent Financial Statement Date" 3.2(f)
"Parent Interests" 9.3
"Parent Joint Venture" 9.3
"Parent Management Company" 9.3
"Parent Material Adverse Change" 3.2(f)
"Parent Material Adverse Effect" 3.2(a)
"Parent Operating Partnership" 9.3
"Parent Operating Partnership Agreement" 3.2(c)
"Parent Options" 3.2(c)
"Parent Preferred Stock" 3.2(c)
"Parent Principals" Recital (f)
"Parent SEC Documents" 3.2(e)
"Parent Stock" Recital (e)
"Parent Stockholder Approvals" 3.2(d)
"Parent Stockholders Meeting" 5.1(c)
"Parent Subsidiary" 9.3
"Parent Units" 3.2(c)
"person" 9.3
"Preferred Stock" 3.1(c)
"Proxy Statement" 3.1(d)
"Qualifying Income" 8.2(b)
"Registration Statement" 3.2(d)
"REIT" 3.1(i)(ii)
"REIT Requirements" 8.2(b)
"Required Vote" 5.6(a)
"SEC" 3.1(d)
"Shareholder Approvals" 3.2(d)
"Securities Act" 3.1(e)
"Stay Bonus" 5.12(b)(iii)
"Stock Incentive Plan" 5.12(b)(i)
"Stock Options" 5.12(b)(i)
"Stock Purchase Agreement" Recital (g)
"Stockholders Agreement" Recital (f)
"Sub" Title
"Sub Common Stock" 3.2(c)
"Subsidiary" 9.3
"Superior Competing Transaction" 7.1(c)
</TABLE>
x
<PAGE> 13
<TABLE>
<S> <C>
"Surviving Corporation" 1.1
"Takeover Statute" 5.3(a)
"taxes" 3.1(i)(i)
"Termination Agreement Recital(g)
"Termination Fee" 8.2(c)
"Termination Fee Base Amount" 8.2(c)
"Termination Fee Tax Opinion" 8.2(c)
"Transactions" Recital (h)
"Transfer and Gains Taxes" 5.11
"Unconsolidated Company Financial 3.1(e)
Statements"
"Unconsolidated Parent Financial 3.2(e)
Statements"
"Wholly-Owned Company Joint Venture" 9.3
"Wholly-Owned Parent Joint Venture" 9.3
</TABLE>
xi
<PAGE> 14
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") dated as of
March 26, 1996, among SIMON PROPERTY GROUP, INC., a Maryland
corporation ("PARENT"), DAY ACQUISITION CORP., an Ohio
corporation and a direct subsidiary of Parent ("SUB"), and
DeBARTOLO REALTY CORPORATION, an Ohio corporation (the
"COMPANY").
RECITALS
--------
(a) Certain terms used herein shall have the meanings assigned to them in
Section 9.3.
(b) The respective Boards of Directors of Parent, Sub and
the Company have approved the merger of Sub, Parent's direct subsidiary, with
and into the Company as set forth below (the "MERGER"), upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding share of common stock, par value $.01 per share, of the Company
(the "COMMON STOCK") will be converted into the right to receive the Merger
Consideration (as defined below).
(c) Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
(d) For federal income tax purposes it is intended that
the Merger qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE").
(e) As a condition to the willingness of each of Parent
and the Company to enter into this Agreement, the holder of Common Stock listed
on SCHEDULE A hereto delivered to Parent a proxy to vote its shares of Common
Stock in favor of the Merger and the approval and adoption of this
<PAGE> 15
2
Agreement and the holders of common stock, par value $.0001, of Parent (the
"PARENT COMMON STOCK") and the holders of Class B common stock, par value
$.0001 per share, of Parent (the "CLASS B STOCK" and together with the Parent
Common Stock, the "PARENT STOCK") listed on SCHEDULE B hereto have delivered to
the Company a proxy to vote their shares of Parent Stock in favor of the Merger
and the approval and adoption of this Agreement.
(f) Simultaneously with the execution of this Agreement,
the persons listed on SCHEDULE C hereto (the "PARENT PRINCIPALS") and the
persons listed on SCHEDULE D hereto (the "COMPANY PRINCIPALS") have executed a
Stockholders Agreement (the "STOCKHOLDERS AGREEMENT"), providing for, among
other things, agreement of the Parent Principals and the Company Principals to
vote their respective shares of Parent Stock and Common Stock in favor of the
Merger at the Parent Stockholders Meeting (as defined below) and the Company
Shareholders Meeting (as defined below), respectively, and subject to
consummation of the Merger, to provide certain other agreements among Parent,
the Parent Principals and the Company Principals.
(g) Simultaneously with the execution of this Agreement,
(i) the Parent Management Company (as defined below) and EJDC (as defined
below), have executed a Stock Purchase Agreement (the "STOCK PURCHASE
AGREEMENT") providing for the sale by EJDC of 95% of the issued and outstanding
voting stock of the Management Company to the Parent Management Company
simultaneously with the completion of the other Transactions (as defined
below), and (ii) the Company, the Operating Partnership (as defined below) and
certain limited partners of the Operating Partnership have entered into an
agreement (the "TERMINATION AGREEMENT") providing for the termination upon
completion of the other Transactions of certain agreements establishing rights
of such limited partners and of a noncompetition agreement affecting certain
Company Principals.
(h) The transactions contemplated under this Agreement,
the Stockholders Agreement, the Stock Purchase Agreement, the Contribution
Agreement substantially in the form of EXHIBIT A hereto (the "CONTRIBUTION
AGREEMENT")
<PAGE> 16
3
among each of the Parent Principals, Parent and the Operating Partnership, the
Termination Agreement, this Agreement, subject to the provisions of Section
5.6, the purchase of Class C Common Stock of the Parent pursuant to a
subscription agreement to be entered into pursuant thereto, and the other
documents and agreements contemplated hereby, including, without limitation,
the Merger, shall be referred to collectively in this Agreement as the
"TRANSACTIONS."
(i) In connection with the transactions contemplated by
the Contribution Agreement, the Operating Partnership Agreement (as defined
below) and the Parent Operating Partnership Agreement (as defined below) shall
be amended and restated, effective as of the Effective Time. Parent shall
enter into a Registration Rights Agreement, effective as of the Effective Time,
in the form attached as EXHIBIT K with certain holders (after giving effect to
the Merger) of the Parent Common Stock and units of limited partnership
interest in the Operating Partnership.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I
The Merger
----------
SECTION 1.1 THE MERGER. Upon the terms and subject to
the conditions set forth in this Agreement, and in accordance with the General
Corporation Law of Ohio, Chapter 1701 of the Ohio Revised Code (the "OHIO
STATUTE"), Sub shall be merged with and into the Company at the Effective Time.
Following the Merger, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the Ohio Statute. At the election of Parent, any other
direct subsidiary of Parent acceptable to the Company in its reasonable
judgment may be substituted for Sub as a constituent corporation in the Merger.
In such event, the parties agree to execute an
<PAGE> 17
4
appropriate amendment to this Agreement in order to reflect such substitution.
SECTION 1.2 CLOSING. The closing of the Merger will take
place at 10:00 a.m. on a date to be specified by the parties, which (subject to
satisfaction or waiver of the conditions set forth in Sections 6.2 and 6.3)
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Section 6.1 (the "CLOSING DATE"), at the offices of
Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York, unless another
date or place is agreed to in writing by the parties hereto.
SECTION 1.3 EFFECTIVE TIME. As soon as practicable
following the satisfaction or waiver of the conditions set forth in Article VI,
the parties shall file a certificate of merger or other appropriate documents
(the "CERTIFICATE OF MERGER") executed in accordance with Section 1701.81 of
the Ohio Statute and shall make all other filings or recordings required under
the Ohio Statute. The Merger shall become effective at such time as the
Certificate of Merger has been duly filed with the Secretary of State of the
State of Ohio, or at such other time as Parent and the Company shall agree
should be specified in the Certificate of Merger (the time the Merger becomes
effective being the "EFFECTIVE TIME"), it being understood that the parties
shall cause the Effective Time to occur on the Closing Date.
SECTION 1.4 EFFECTS OF THE MERGER. The Merger shall have
the effects set forth in the Ohio Statute.
SECTION 1.5 CHARTER AND CODE OF REGULATIONS. The Amended
and Restated Articles of Incorporation and Code of Regulations of the Company
as in effect at the Effective Time shall be the Articles of Incorporation and
Code of Regulations of the Surviving Corporation; PROVIDED that each of such
Articles of Incorporation and Code of Regulations shall be amended and restated
immediately following the Effective Time in forms reasonably acceptable to each
of the Company and Parent.
<PAGE> 18
5
SECTION 1.6 DIRECTORS. The directors of the Company at
the Effective Time shall be the directors of the Surviving Corporation, who
shall be the same individuals who are directors of Parent immediately following
the Effective Time, until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may be.
SECTION 1.7 OFFICERS. The officers of the Company at the
Effective Time shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 2.1 EFFECT ON CAPITAL STOCK. By virtue of the
Merger and without any action on the part of the holder of any shares of Common
Stock or the holder of any shares of capital stock of Parent or Sub:
(a) CANCELLATION OF TREASURY STOCK. As of the
Effective Time, each share of capital stock of the Company that is owned by the
Company or any Company Subsidiary (as defined below) or Wholly-Owned Company
Joint Venture (as defined below) shall automatically be canceled and retired
and all rights with respect thereto shall cease to exist, and no consideration
shall be delivered in exchange therefor.
(b) CONVERSION OF COMMON STOCK. Upon the
Effective Time, each issued and outstanding share of Common Stock (other than
shares to be canceled in accordance with Section 2.1(a)) shall be converted
into the right to receive from Parent sixty-eight one hundredths (.68) of a
fully paid and nonassessable share of Parent Common Stock. As of the Effective
Time, all such shares of Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and all rights with respect thereto shall
cease
<PAGE> 19
6
to exist, and each holder of a certificate representing any such shares of
Common Stock shall cease to have any rights with respect thereto, except the
right to receive, upon surrender of such certificate in accordance with Section
2.2(c), certificates representing the shares of Parent Common Stock required to
be delivered under this Section 2.1(b) and any cash in lieu of fractional
shares of Parent Common Stock to be issued or paid in consideration therefor
upon surrender of such certificate (the "MERGER CONSIDERATION") and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(d), in each case, without interest and less any required
withholding taxes. Notwithstanding the foregoing, the parties understand that
the rights of each shareholder of the Company under this Section 2.1(b) are
subject to Article NINTH of the Charter of Parent; provided that Parent hereby
agrees to provide at the Effective Time waivers of such provision upon
certification of sufficient facts in the reasonable judgment of Parent's Board
of Directors to indicate that the ownership limit provisions set forth in
Section 856(a)(6) of the Code will not be violated upon the granting of such
waivers.
(c) CONVERSION OF SHARES OF COMMON STOCK OF SUB.
Immediately prior to the Effective Time Sub shall have issued and outstanding
1,100.11 shares of common stock, and as of the Effective Time such shares or
fractions thereof shall be converted, at the rate of 1,000 shares of the
Surviving Corporation for each whole share of Sub, and a proportionate number
of shares of the Surviving Corporation for each fractional share of Sub, into
and become a total of 1,100,110 validly issued, fully paid and non-assessable
shares of common stock, par value $.01 per share, of the Surviving Corporation.
(d) DISSENTING SHARES. Notwithstanding Section
2.1(b), shares of Common Stock outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger and who has
delivered to the Company a written demand for the fair cash value of his shares
of Common Stock (the "DISSENTING SHARES") in accordance with the Ohio Statute
shall not be converted into a right to receive the Merger Consideration,
<PAGE> 20
7
unless the holder's rights have terminated under Section 1701.85(D) of the Ohio
Statute. Dissenting shares shall be treated in accordance with Section 1701.85
of the Ohio Statute. If after the Effective Time such holder's rights shall
terminate in accordance with Section 1701.85(D) of the Ohio Statute, such
shares of Common Stock shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger Consideration. The Company
shall give Parent prompt notice of any demands received by the Company for the
exercise of dissenter's rights with respect to shares of Common Stock, and
Parent shall have the right to participate in all negotiations and proceedings
with respect to such demands. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to, or settle or offer
to settle, any such demands.
SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time,
Parent shall appoint The First National Bank of Chicago or another bank or
trust company reasonably acceptable to the Company to act as exchange agent
(the "EXCHANGE AGENT") for the exchange of the Merger Consideration upon
surrender of certificates representing issued and outstanding Common Stock.
(b) PARENT TO PROVIDE MERGER CONSIDERATION.
Parent shall provide to the Exchange Agent on or before the Effective Time, for
the benefit of the holders of Common Stock, shares of Parent Common Stock
issuable, cash payable in respect of dividends pursuant to Section 2.2(d)(i)
and cash payable in lieu of fractional shares pursuant to Section 2.2(g)
(collectively, the "EXCHANGE FUND") in exchange for the issued and outstanding
shares of Common Stock pursuant to Section 2.1.
(c) EXCHANGE PROCEDURE. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates which immediately prior to
the Effective Time represented outstanding shares of Common Stock (the
"CERTIFICATES") whose shares were converted into the right
<PAGE> 21
8
to receive the Merger Consideration pursuant to Section 2.1, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration into which the shares of Common Stock theretofore represented by
such Certificate shall have been converted pursuant to Section 2.1 and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(d), and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Common Stock which is not registered
in the transfer records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is registered if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment either shall pay any transfer
or other taxes required by reason of such payment being made to a person other
than the registered holder of such Certificate or establish to the satisfaction
of Parent that such tax or taxes have been paid or are not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration, without interest, into
which the shares of Common Stock theretofore represented by such Certificate
shall have been converted pursuant to Section 2.1 and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(d). No
interest will be paid or will accrue on the Merger Consideration upon the
surrender of any Certificate or on any cash payable pursuant to Section 2.2(d)
or Section 2.2(g).
<PAGE> 22
9
(d) RECORD DATES; DISTRIBUTIONS WITH RESPECT TO
UNEXCHANGED SHARES.
(i) Each of Parent and the Company shall
declare a dividend to their respective shareholders, the record date for which
shall be the close of business on the last business day prior to the Effective
Time. The dividend of each shall be equal to such party's most recent
quarterly dividend rate, multiplied by the number of days elapsed since the
last dividend record date through and including the Effective Time, and divided
by 90. The dividends payable hereunder to holders of Common Stock shall be
paid upon presentation of the certificates of Common Stock for exchange in
accordance with this Article II.
(ii) No dividends or other distributions
with respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock represented thereby, and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
2.2(g), in each case until the surrender of such Certificate in accordance with
this Article II. Subject to the effect of applicable escheat laws, following
surrender of any such Certificate there shall be paid to the holder of such
Certificate, without interest, (i) at the time of such surrender, the amount of
any cash payable in lieu of any fractional share of Parent Common Stock to
which such holder is entitled pursuant to Section 2.2(g) and (ii) if such
Certificate is exchangeable for one or more whole shares of Parent Common
Stock, (x) at the time of such surrender the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Parent Common Stock and (y) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares of
Parent Common Stock.
(e) NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK.
All Merger Consideration paid upon the surrender of Certificates in accordance
with the terms of this Article II
<PAGE> 23
10
(and any cash paid pursuant to Section 2.2(g)) shall be deemed to have been
paid in full satisfaction of all rights pertaining to the shares of Common
Stock theretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay, without interest, any dividends or
make any other distributions with a record date prior to the Effective Time
which may have been declared or made by the Company on such shares of Common
Stock in accordance with the terms of this Agreement or prior to the date of
this Agreement and which remain unpaid at the Effective Time and have not been
paid prior to such surrender, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
shares of Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article II.
(f) NO LIABILITY. None of Parent, Sub, the
Company or the Exchange Agent shall be liable to any person in respect of any
Merger Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any portion of the Exchange Fund
delivered to the Exchange Agent pursuant to this Agreement that remains
unclaimed for six months after the Effective Time shall be redelivered by the
Exchange Agent to Parent, upon demand, and any holders of Certificates who have
not theretofore complied with Section 2.2(c) shall thereafter look only to
Parent for delivery of the Merger Consideration, subject to applicable escheat
and other similar laws.
(g) NO FRACTIONAL SHARES.
(i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote, to receive dividends or to any
other rights of a stockholder of Parent.
<PAGE> 24
11
(ii) Notwithstanding any other provision
of this Agreement, each holder of shares of Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, from the Exchange Agent in accordance
with the provisions of this Section 2.2(g), a cash payment in lieu of such
fractional shares of Parent Common Stock, as applicable, representing such
holder's proportionate interest, if any, in the net proceeds from the sale by
the Exchange Agent in one or more transactions (which sale transactions shall
be made at such times, in such manner and on such terms as the Exchange Agent
shall determine in its reasonable discretion) on behalf of all such holders of
the aggregate of the fractional shares of Parent Common Stock, as applicable,
which would otherwise have been issued (the "EXCESS PARENT SHARES"). The sale
of the Excess Parent Shares by the Exchange Agent shall be executed on the New
York Stock Exchange (the "NYSE") through one or more member firms of the NYSE
and shall be executed in round lots to the extent practicable. Until the net
proceeds of such sale or sales have been distributed to the holders of
Certificates, the Exchange Agent will hold such proceeds in trust (the
"EXCHANGE TRUST") for the holders of Certificates. Parent shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with this sale of the Excess Parent Shares. As soon as practicable
after the determination of the amount of cash, if any, to be paid to holders of
Certificates Stock in lieu of any fractional shares of Parent Common Stock, as
applicable, the Exchange Agent shall make available such amounts to such
holders of Certificates without interest.
(h) WITHHOLDING RIGHTS. Parent or the Exchange
Agent shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of shares of Common
Stock such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are
so withheld
<PAGE> 25
12
by Parent or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Common Stock in respect of which such deduction and withholding was made by
Parent or the Exchange Agent.
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY. The Company represents and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER OF
THE COMPANY. The Company is a corporation duly organized and validly existing
under the laws of Ohio and has the requisite corporate power and authority to
carry on its business as now being conducted. The Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not have a material adverse effect on the business,
properties, assets, financial condition or results of operations of the Company
and the Company Subsidiaries and Company Joint Ventures (as defined below) (but
only to the extent of the Company Interests (as defined below) with respect to
the Company Joint Ventures) taken as a whole (a "MATERIAL ADVERSE EFFECT").
The Company has delivered to Parent complete and correct copies of its Articles
of Incorporation and Code of Regulations, as amended to the date of this
Agreement.
(b) COMPANY SUBSIDIARIES AND JOINT VENTURES.
(i) SCHEDULE 3.1(B)(I) to the Company
Disclosure Letter (as defined below) sets forth each Company Subsidiary and the
ownership interest therein of the Company. Except as set forth in SCHEDULE
3.1(B)(I) to the Company Disclosure Letter, (A) all the outstanding shares of
<PAGE> 26
13
capital stock of each Company Subsidiary that is a corporation have been
validly issued and are fully paid and nonassessable, are owned by the Company,
by another Company Subsidiary or by the Company and another Company Subsidiary,
free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "LIENS") and
(B) all equity interests in each Company Subsidiary that is a partnership,
joint venture, limited liability company or trust are owned by the Company, by
another Company Subsidiary or by the Company and another Company Subsidiary
free and clear of all Liens. Except for the capital stock of or other equity
interests in the Company Subsidiaries and except for the ownership interests in
the Company Joint Ventures, the Company does not own, directly or indirectly,
any capital stock or other ownership interest, with a fair market value as of
the date of this Agreement greater that $5,000,000 in any person. Each Company
Subsidiary that is a corporation is duly incorporated and validly existing
under the laws of its jurisdiction of incorporation and has the requisite
corporate power and authority to carry on its business as now being conducted
and each Company Subsidiary that is a partnership, limited liability company or
trust is duly organized and validly existing under the laws of its jurisdiction
of organization and has the requisite power and authority to carry on its
business as now being conducted. Each Company Subsidiary is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not have a Material Adverse Effect.
(ii) SCHEDULE 3.1(B)(II) to the Company
Disclosure Letter lists each Company Joint Venture and identifies which of such
Company Joint Ventures are Majority Company Joint Ventures. Each Majority
Company Joint Venture (as defined below), and to the knowledge of the Company,
each Minority Company Joint Venture (as defined below) has made all filings
required by and is in compliance with all Laws (as defined below) necessary to
do business in each jurisdiction in which the nature of its business or the
<PAGE> 27
14
ownership or the leasing of its properties makes such filings or compliance
necessary, other than such jurisdictions where the failure to have so filed or
to be in such compliance, individually or in the aggregate, would not have a
Material Adverse Effect. SCHEDULE 3.1(B)(II) lists, as of the date hereof,
each partner, joint venturer or other person having a direct ownership
interest, other than the Company or a Company Subsidiary or Company Joint
Venture, in the Majority Company Joint Ventures and, to the knowledge of the
Company, in the Minority Company Joint Ventures.
(c) CAPITAL STRUCTURE. The authorized capital
stock of the Company consists of 175,000,000 shares of Common Stock; 10,000,000
shares of preferred stock, par value $.01 per share (the "PREFERRED STOCK"), in
two classes: 5,000,000 shares of voting Preferred Stock and 5,000,000 shares
of non-voting Preferred Stock; 1,750,000 shares of excess common stock, par
value $.01 per share ("EXCESS COMMON STOCK"); and 100,000 shares of excess
Preferred Stock, par value $.01 per share (together with the Excess Common
Stock, the "EXCESS STOCK"). On the date hereof (i) 55,491,479 shares of Common
Stock and no shares of Preferred Stock or Excess Stock were issued and
outstanding, (ii) no shares of Common Stock, Preferred Stock or Excess Stock
were held by the Company in its treasury, (iii) 2,896,452 shares of Common
Stock were available for issuance under the Company's 1994 Stock Incentive Plan
pursuant to awards granted to employees of the Company (the "COMPANY EMPLOYEE
STOCK AWARDS"), (iv) 13,000 shares of Common Stock were reserved for issuance
upon exercise of outstanding stock options to purchase shares of Common Stock
granted to directors of the Company (together with the Company Employee Stock
Awards, the "COMPANY STOCK-RELATED AWARDS") and (v) 34,100,367 shares of Common
Stock were reserved for issuance upon the exchange of Company Partnership
Interests (as defined below) for shares of Common Stock pursuant to the
Exchange Rights Agreement (as defined below). On the date of this Agreement,
except as set forth above in this Section 3.1(c) or as required pursuant to the
Exchange Rights Agreement, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
There are no outstanding stock appreciation rights relating to the
<PAGE> 28
15
capital stock of the Company. All outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which shareholders of the Company may vote. Except (A) for the Company
Stock-Related Awards, the Company Partnership Interests (which, subject to
certain restrictions, may be exchanged by such limited partners for shares of
Common Stock), (B) as required pursuant to rights of first refusal or rights of
first offer, "buy-sell" provisions, anti-dilution provisions or pro-rata
funding obligations set forth in the terms of any partnership or joint venture
agreement governing any of the Company Joint Ventures existing on the date of
this Agreement, (C) as set forth in SCHEDULE 3.1(C) to the Company Disclosure
Letter, (D) as otherwise permitted under Section 4.1, (E) as required under the
Fourth Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, as amended through the date hereof (the "OPERATING PARTNERSHIP
AGREEMENT") and (F) as contemplated under the Company's dividend reinvestment
plan, as of the date of this Agreement there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any Company Subsidiary or
Majority Company Joint Venture or, to the knowledge of the Company, any
Minority Company Joint Venture is a party or by which such entity is bound,
obligating the Company or any Company Subsidiary or Majority Company Joint
Venture or, to the knowledge of the Company, any Minority Company Joint Venture
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock, voting securities or other ownership interests of the
Company or any Company Subsidiary or Majority Company Joint Venture or, to the
knowledge of the Company, any Minority Company Joint Venture or obligating the
Company or any Company Subsidiary or Majority Company Joint Venture or, to the
knowledge of the Company, any Minority Company Joint Venture to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking (other than to the Company, a
Company Subsidiary
<PAGE> 29
16
or a Wholly-Owned Company Joint Venture). Except (x) as required pursuant to
rights of first refusal or rights of first offer, "buy-sell" provisions,
anti-dilution provisions or pro-rata funding obligations set forth in the terms
of any partnership or joint venture agreement governing any of the Company
Joint Ventures existing on the date of this Agreement, (y) as set forth on
SCHEDULE 3.1(C) to the Company Disclosure Letter and (z) as required under the
Operating Partnership Agreement, the Exchange Rights Agreement and the Cash
Tender Agreement (as defined in the Termination Agreement), there are no
outstanding contractual obligations of the Company or any Company Subsidiary or
Majority Company Joint Venture or, to the knowledge of the Company, any
Minority Company Joint Venture to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any capital stock, voting securities
or other ownership interests in any Company Subsidiary or Majority Company
Joint Venture or, to the knowledge of the Company, any Minority Company Joint
Venture or make any material investment (in the form of a loan, capital
contribution or otherwise) in any person (other than a Company Subsidiary or a
Wholly-Owned Company Joint Venture).
(d) AUTHORITY; NONCONTRAVENTION; CONSENTS. The
Company has the requisite corporate power and authority to enter into this
Agreement and, subject to approval of this Agreement by the vote of the holders
of the Common Stock required to approve this Agreement and the transactions
contemplated hereby (the "COMPANY SHAREHOLDER APPROVALS"), to consummate the
transactions contemplated by this Agreement to which the Company is a party.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
to which the Company is a party have been duly authorized by all necessary
corporate action on the part of the Company, subject to approval of this
Agreement pursuant to the Company Shareholder Approvals. This Agreement has
been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms. Except as set forth in SCHEDULE 3.1(D) to the
Company Disclosure Letter, the execution and delivery of this Agreement by the
Company do
<PAGE> 30
17
not, and the consummation of the transactions contemplated by this Agreement to
which the Company is a party and compliance by the Company with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of the Company or any Company Subsidiary or
Majority Company Joint Venture or, to the knowledge of the Company, any
Minority Company Joint Venture, under, (i) the Amended and Restated Articles of
Incorporation or Code of Regulations of the Company or the comparable charter
or organizational documents or partnership or similar agreement (as the case
may be) of any Company Subsidiary or Majority Company Joint Venture or, to the
knowledge of the Company, any Minority Company Joint Venture, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, reciprocal easement
agreement, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any Company Subsidiary or Majority
Company Joint Venture or their respective properties or assets or, to the
knowledge of the Company, to any Minority Company Joint Venture or its
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation (collectively, "LAWS") applicable
to the Company or any Company Subsidiary or Majority Company Joint Venture or,
to the knowledge of the Company, any Minority Company Joint Venture, or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a Material Adverse Effect
or (y) prevent the consummation of the Transactions. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
federal, state or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency, domestic or
foreign (a "GOVERNMENTAL ENTITY"), is required by or with respect to the
Company or any Company Subsidiary or any Majority Company Joint Venture or, to
the
<PAGE> 31
18
knowledge of the Company, any Minority Company Joint Venture in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated by this Agreement, except for
(i) the filing by any person in connection with any of the Transactions of a
premerger notification and report form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (ii) the filing with the
Securities and Exchange Commission (the "SEC") of (x) a joint proxy statement
relating to the approval by the Company's shareholders and Parent's
stockholders of the transactions contemplated by this Agreement (as amended or
supplemented from time to time, the "PROXY STATEMENT") and (y) such reports
under Section 13(a) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Ohio, (iv)
such filings as may be required in connection with the payment of any Transfer
and Gains Taxes (as defined below) and (v) such other consents, approvals,
orders, authorizations, registrations, declarations and filings as are set
forth in SCHEDULE 3.1(D) to the Company Disclosure Letter or (A) as may be
required under (x) the laws of any foreign country in which the Company or any
Company Subsidiary or Company Joint Venture conducts any business or owns any
property or assets, (y) federal, state, local or foreign environmental laws or
(z) the "blue sky" laws of various states or (B) which, if not obtained or
made, would not prevent or delay in any material respect the consummation of
any of the transactions contemplated by this Agreement or otherwise prevent the
Company from performing its obligations under this Agreement in any material
respect or have, individually or in the aggregate, a Material Adverse Effect.
(e) SEC DOCUMENTS; FINANCIAL STATEMENTS;
UNDISCLOSED LIABILITIES. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since April 21,
1994 (the "COMPANY SEC DOCUMENTS"). All of the Company SEC Documents (other
than preliminary material), as of their respective filing dates, complied in
all material respects with all applicable
<PAGE> 32
19
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and the Exchange Act and, in each case, the rules and regulations promulgated
thereunder applicable to such Company SEC Documents. None of the Company SEC
Documents at the time of filing contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
such statements have been modified or superseded by later Filed Company SEC
Documents. The consolidated financial statements of the Company included in
the Company SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly presented, in accordance with the applicable requirements of GAAP,
the consolidated financial position of the Company as of the dates thereof and
the consolidated results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). To the knowledge of the Company, the audited financial
statements of the unconsolidated Company Subsidiaries and Company Joint
Ventures previously delivered to Parent (the "UNCONSOLIDATED COMPANY FINANCIAL
STATEMENTS") have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly presented, in accordance with the applicable requirements
of GAAP, the financial position of such Company Subsidiaries and Company Joint
Ventures, taken as a whole, as of the dates thereof and the results of their
respective operations and cash flows for the periods then ended. Except as set
forth in the Company Filed SEC Documents (as defined below), in the
Unconsolidated Company Financial Statements, in SCHEDULE 3.1(E) to the Company
Disclosure Letter or as permitted by Section 4.1 (for the purposes of this
sentence, as if Section 4.1 had been in effect since December 31, 1995),
neither the Company nor any
<PAGE> 33
20
Company Subsidiary or Majority Company Joint Venture or, to the knowledge of
the Company, any Minority Company Joint Venture has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of the Company
or, to the knowledge of the Company, of any unconsolidated Company Subsidiary
or Company Joint Venture or in the notes thereto and which, individually or in
the aggregate, would have a Material Adverse Effect.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as disclosed in the Company SEC Documents filed and publicly available prior to
the date of this Agreement or in the draft Annual Report of the Company on Form
10-K for the year ended December 31, 1995 previously delivered to Parent
(referred to collectively as the "COMPANY FILED SEC DOCUMENTS") or in SCHEDULE
3.1(F) to the Company Disclosure Letter, since the date of the most recent
financial statements included in the Company Filed SEC Documents (the
"FINANCIAL STATEMENT DATE") and to the date of this Agreement, the Company, the
Company Subsidiaries, the Majority Company Joint Ventures and, to the knowledge
of the Company, the Minority Company Joint Ventures have conducted their
business only in the ordinary course and there has not been (i) any material
adverse change in the business, financial condition or results of operations of
the Company and the Company Subsidiaries and Company Joint Ventures (but only
to the extent of the Company Interests with respect to the Company Joint
Ventures) taken as a whole, that have resulted or would result, individually or
in the aggregate, in an Economic Loss (as defined below) of $58,000,000 or
more, without giving effect to a general decline in the U.S. economy or an
adverse change in the financial condition of specialty retail tenants or
department stores (a "MATERIAL ADVERSE CHANGE"), nor has there been any
occurrence or circumstance that with the passage of time would reasonably be
expected to result in a Material Adverse Change, (ii) except for regular
quarterly (x) dividends (in the case of the Company) not in excess of $.315 per
share of Common Stock and (y) distributions (in the case of the Operating
Partnership) not in excess of $.315 in respect of that percentage of interests
in the Operating Partnership ("COMPANY PARTNERSHIP INTERESTS") exchangeable for
one share
<PAGE> 34
21
of Common Stock under the Exchange Rights Agreement, as the case may be, in
each case with customary record and payment dates, any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of the Company's capital stock or any Company
Partnership Interests, other than the dividend required to be paid pursuant to
Section 2.2(d)(i) (and the corresponding Operating Partnership distribution)
and any special tax distributions required to be paid by the Operating
Partnership pursuant to the Operating Partnership Agreement, (iii) any split,
combination or reclassification of any of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for, or giving the right to acquire
by exchange or exercise, shares of its capital stock or any issuance of an
ownership interest in, any Company Subsidiary or Majority Company Joint Venture
or, to the knowledge of the Company, any Minority Company Joint Venture, except
(A) as required pursuant to rights of first refusal or rights of first offer,
"buy-sell" provisions, anti-dilution provisions or pro-rata funding obligations
set forth in the terms of any partnership or joint venture agreement governing
any of the Company Joint Ventures existing on the date of this Agreement and
(B) as permitted by Section 4.1, (iv) any damage, destruction or loss, whether
or not covered by insurance, that has or would have a Material Adverse Effect
or (v) any change in accounting methods, principles or practices by the Company
or any Company Subsidiary or Majority Company Joint Venture or, to the
knowledge of the Company, any Minority Company Joint Venture materially
affecting its assets, liabilities or business, except insofar as may have been
disclosed in the Company Filed SEC Documents or required by a change in GAAP.
(g) LITIGATION. Except as disclosed in the
Company Filed SEC Documents or in SCHEDULE 3.1(G) to the Company Disclosure
Letter, and other than personal injury and other routine tort litigation
arising from the ordinary course of operations of the Company, the Company
Subsidiaries and Company Joint Ventures (i) which are covered by adequate
insurance or (ii) for which all material costs and liabilities arising
therefrom are reimbursable pursuant to common area maintenance agreements,
there is no
<PAGE> 35
22
suit, action or proceeding pending or, to the knowledge of the Company,
threatened in writing against or affecting the Company or any Company
Subsidiary or Majority Company Joint Venture or, to the knowledge of the
Company, any Minority Company Joint Venture that, individually or in the
aggregate, could reasonably be expected to (A) have a Material Adverse Effect
or (B) prevent the consummation of any of the Transactions, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Company Subsidiary or
Majority Company Joint Venture or, to the knowledge of the Company, any
Minority Company Joint Venture having, or which, insofar as reasonably can be
foreseen, in the future would have, any such effect.
(h) ABSENCE OF CHANGES IN BENEFIT PLANS; ERISA
COMPLIANCE.
(i) Except as disclosed in the Company
Filed SEC Documents or in SCHEDULE 3.1(H)(I) to the Company Disclosure Letter
and except as permitted by Section 4.1 (for the purpose of this sentence, as if
Section 4.1 had been in effect since December 31, 1995), since the date of the
most recent audited financial statements included in the Company Filed SEC
Documents, there has not been any adoption or amendment in any material respect
by the Company or any Company Subsidiary or Majority Company Joint Venture or,
to the knowledge of the Company, any Minority Company Joint Venture of any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other employee benefit plan, arrangement or understanding (whether or not
legally binding) providing benefits to any current or former employee, officer
or director of the Company, any Company Subsidiary, any Majority Company Joint
Venture or, to the knowledge of the Company, any Minority Company Joint Venture
or any person affiliated with the Company under Section 414(b), (c), (m) or (o)
of the Code (collectively, "COMPANY BENEFIT PLANS").
(ii) Except as described in the Company
Filed SEC Documents or in SCHEDULE 3.1(H)(II) to the Company
<PAGE> 36
23
Disclosure Letter or as would not have a Material Adverse Effect, (A) all
Company Benefit Plans of the Company, the Company Subsidiaries and the Majority
Company Joint Ventures and, to the knowledge of the Company, of the Minority
Company Joint Ventures, including any such plan that is an "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), are in compliance with all applicable
requirements of law, including ERISA and the Code, and (B) neither the Company
nor any Company Subsidiary or Majority Company Joint Venture or, to the
knowledge of the Company, any Minority Company Joint Venture has any
liabilities or obligations with respect to any such Company Benefit Plan,
whether accrued, contingent or otherwise, nor to the knowledge of the Company
are any such liabilities or obligations expected to be incurred. Except as set
forth in SCHEDULE 3.1(H)(II) to the Company Disclosure Letter, the execution
of, and performance of the transactions contemplated in, this Agreement will
not (either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any Company Benefit Plan of the Company, a
Company Subsidiary or a Majority Company Joint Venture and, to the knowledge of
the Company, of a Minority Company Joint Venture, policy, arrangement or
agreement or any trust or loan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits with
respect to any employee or director. The only severance agreements or
severance policies applicable to the Company or the Company Subsidiaries or
Majority Company Joint Ventures or, to the knowledge of the Company, to the
Minority Company Joint Ventures are the agreement and policies specifically
referred to in SCHEDULE 3.1(H)(II) to the Company Disclosure Letter and the
severance program referred to in Section 5.12(c).
(i) TAXES.
(i) Each of the Company and each Company
Subsidiary and Majority Company Joint Venture and, to the knowledge of the
Company, each Minority Company Joint Venture has filed all tax returns and
reports required to be
<PAGE> 37
24
filed by it (after giving effect to any filing extension properly granted by a
Governmental Entity having authority to do so) and has paid (or the Company has
paid on its behalf) all taxes required to be paid by it, and the most recent
financial statements contained in the Company Filed SEC Documents reflect an
adequate reserve for all material taxes payable by the Company (and by those
Company Subsidiaries and Company Joint Ventures whose financial statements are
contained therein) for all taxable periods and portions thereof through the
date of such financial statements. Since the Financial Statement Date, the
Company has incurred no liability for taxes under Sections 857(b), 860(c) or
4981 of the Code, and neither the Company nor any Company Subsidiary or
Majority Company Joint Venture or, to the knowledge of the Company, any
Minority Company Joint Venture has incurred any liability for taxes other than
in the ordinary course of business. Except as set forth in SCHEDULE 3.1(I)(I)
to the Company Disclosure Letter, to the knowledge of the Company, no event has
occurred, and no condition or circumstance exists, which presents a material
risk that any material tax described in the preceding sentence will be imposed
upon the Company. To the knowledge of the Company, no deficiencies for any
taxes have been proposed, asserted or assessed against the Company or any of
the Company Subsidiaries, and no requests for waivers of the time to assess any
such taxes are pending. As used in this Agreement, "TAXES" shall include all
federal, state, local and foreign income, property, sales, excise and other
taxes, tariffs or governmental charges of any nature whatsoever, together with
penalties, interest or additions to tax with respect thereto.
(ii) The Company (i) for all taxable
years commencing with 1994 through the most recent December 31, has been
subject to taxation as a real estate investment trust (a "REIT") within the
meaning of the Code and has satisfied all requirements to qualify as a REIT for
such years, (ii) has operated, and intends to continue to operate, in such a
manner as to qualify as a REIT for the tax year ending December 31, 1996, and
(iii) has not taken or omitted to take any action which could result in a
challenge to its status as a REIT, and to the Company's knowledge, no such
challenge is pending or threatened. Each
<PAGE> 38
25
Company Joint Venture, the Operating Partnership, the Financing Partnership (as
defined below) and each other Company Subsidiary which is a partnership, joint
venture or limited liability company has been during and since 1994 and
continues to be treated for federal income tax purposes as a partnership and
not as a corporation or an association taxable as a corporation.
(j) NO PAYMENTS TO EMPLOYEES, OFFICERS OR
DIRECTORS. Except as set forth on SCHEDULE 3.1(J) to the Company Disclosure
Letter or as otherwise specifically provided for in this Agreement, there is no
employment or severance contract, or other agreement requiring payments to be
made on a change of control or otherwise as a result of the consummation of any
of the Transactions, with respect to any employee, officer or director of the
Company or any Company Subsidiary or Majority Company Joint Venture or, to the
knowledge of the Company, any Minority Company Joint Venture.
(k) BROKERS; SCHEDULE OF FEES AND EXPENSES. No
broker, investment banker, financial advisor or other person, other than Morgan
Stanley & Co. Incorporated ("MORGAN STANLEY") and The Blackstone Group, L.P.,
the fees and expenses of which have previously been disclosed to Parent and
will be paid by the Company, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company or any
Company Subsidiary.
(l) COMPLIANCE WITH LAWS. To the knowledge of
the Company, except as disclosed in the Company Filed SEC Documents and except
as set forth in SCHEDULE 3.1(L) to the Company Disclosure Letter, neither the
Company nor any of the Company Subsidiaries or Majority Company Joint Ventures
or, to the knowledge of the Company, any Minority Company Joint Ventures has
violated or failed to comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental Entity applicable to its
business, properties or operations, except for violations and failures to
comply that would not, individually or in
<PAGE> 39
26
the aggregate, reasonably be expected to result in a Material Adverse Effect.
(m) CONTRACTS; DEBT INSTRUMENTS.
(i) To the knowledge of the Company,
neither the Company nor any Company Subsidiary or Company Joint Venture is in
violation of or in default under, in any material respect (nor does there exist
any condition which upon the passage of time or the giving of notice or both
would cause such a violation of or default under), any material loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other material contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties
or assets is bound, except as set forth in SCHEDULE 3.1(M)(I) to the Company
Disclosure Letter and except for violations or defaults that would not,
individually or in the aggregate, result in a Material Adverse Effect.
(ii) Except for any of the following
expressly identified in the Company Filed SEC Documents and except as permitted
by Section 4.1, SCHEDULE 3.1(M)(II) to the Company Disclosure Letter sets forth
(x) a list of all loan or credit agreements, notes, bonds, mortgages,
indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of the Company Subsidiaries or the Majority
Company Joint Ventures or, to the knowledge of the Company, of the Minority
Company Joint Ventures, other than indebtedness payable to the Company, a
Company Subsidiary or a Wholly-Owned Company Joint Venture or to any
third-party partner or joint venturer in any Company Joint Venture, in an
aggregate principal amount in excess of $2,000,000 per item is outstanding or
may be incurred and (y) the respective principal amounts outstanding thereunder
on February 29, 1996. For purposes of this Section 3.1(m)(ii) and Section
3.2(m)(ii), "INDEBTEDNESS" shall mean, with respect to any person, without
duplication, (A) all indebtedness of such person for borrowed money, whether
secured or unsecured, (B) all obligations of such person under conditional sale
or other title retention agreements relating to property purchased by
<PAGE> 40
27
such person, (C) all capitalized lease obligations of such person, (D) all
obligations of such person under interest rate or currency hedging transactions
(valued at the termination value thereof) and (E) all guarantees of such person
of any such indebtedness of any other person.
(iii) The Termination Agreement shall, as
of the Effective Time, have the effect of (i) terminating all rights of any
party under each of the Registration Rights Agreement and the Cash Tender
Agreement and (ii) waiving the rights of all parties to the Exchange Rights
Agreement that are also parties to the Termination Agreement. All parties to
the Exchange Rights Agreement are parties to the Termination Agreement other
than JCP Realty, Inc. and certain present and former employees (and their
heirs, successors and assigns) (the "EMPLOYEE EXCHANGE RIGHTS HOLDERS") of EJDC
and its affiliates, the Company or a Company Subsidiary or a Company Joint
Venture, which Employee Exchange Rights Holders own, in the aggregate, less
than one percent of the interests in the Operating Partnership.
(n) OPINION OF FINANCIAL ADVISOR. The Company
has received the opinion of Morgan Stanley, dated March 25, 1996, satisfactory
to the Company, a signed version of which has been provided to Parent and Sub,
to the effect that the Merger Consideration provided for in this Agreement in
connection with the exchange of Parent Common Stock for Common Stock is fair to
the shareholders of the Company from a financial point of view.
(o) STATE TAKEOVER STATUTES. No Takeover Statute
(as defined below) of the State of Ohio, including, without limitation, Section
1701.831 of the Ohio Statute, Chapter 1704 of the Ohio Revised Code and
Sections 1707.041 and 1707.043 of the Ohio Revised Code applies or purports to
apply to the Merger, this Agreement, any of the Transactions, the Company or
any of its equity securities.
(p) REGISTRATION STATEMENT. The information
furnished to Parent or Sub by the Company for inclusion in the Registration
Statement will not, as of the effective date of the Registration Statement,
contain an untrue
<PAGE> 41
28
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(q) PARENT STOCK. The Company is not an
"interested stockholder" of Parent pursuant to the Maryland "Business
Combination" statute at Sections 3-601 et seq. of the Maryland General
Corporation Law (the "MGCL").
(r) VOTE REQUIRED. The affirmative vote of at
least two-thirds of the outstanding shares of Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary
(under applicable law or otherwise) to approve this Agreement and the
transactions contemplated hereby.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND
SUB. Each of Parent and Sub represents and warrants to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER OF
PARENT AND SUB. Each of Parent and Sub is a corporation duly organized and
validly existing under the laws of its jurisdiction of incorporation and has
the requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed, individually or in the aggregate,
would not have a material adverse effect on the business, properties, assets,
financial condition or results of operations of Parent and the Parent
Subsidiaries and Parent Joint Ventures (but only to the extent of the Parent
Interests (as defined below) with respect to Parent Joint Ventures), taken as a
whole (a "PARENT MATERIAL ADVERSE EFFECT"). Each of Parent and Sub has
delivered to the Company complete and correct copies of its Charter or Articles
of Incorporation and By-laws or Code of Regulations (as the case may be), as
amended or supplemented to the date of this Agreement.
<PAGE> 42
29
(b) OTHER PARENT SUBSIDIARIES AND PARENT JOINT
VENTURES.
(i) SCHEDULE 3.2(B)(I) to the Parent
Disclosure Letter sets forth each Parent Subsidiary (as defined below)(other
than Sub) and the ownership interest therein of Parent. Except as set forth in
SCHEDULE 3.2(B)(I) to the Parent Disclosure Letter, (A) all the outstanding
shares of capital stock of each Parent Subsidiary that is a corporation have
been validly issued and are fully paid and nonassessable and are owned by
Parent, by another Parent Subsidiary or by Parent and another Parent
Subsidiary, free and clear of all Liens and (B) all equity interests in each
Parent Subsidiary that is a partnership, joint venture, limited liability
company or trust are owned by Parent, by another Parent Subsidiary or by Parent
and another Parent Subsidiary free and clear of all Liens. Except for the
capital stock of or other equity interests in the Parent Subsidiaries and
except for the ownership interests in the Parent Joint Ventures (as defined
below), Parent does not own, directly or indirectly, any capital stock or other
ownership interest, with a fair market value as of the date of this Agreement
greater than $5,000,000 in any person. Each Parent Subsidiary (other than Sub)
that is a corporation is duly incorporated and validly existing under the laws
of its jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted and each Parent
Subsidiary that is a partnership, limited liability company or trust is duly
organized and validly existing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its business
as now being conducted. Each Parent Subsidiary (other than Sub) is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
individually or in the aggregate, would not have a Parent Material Adverse
Effect.
(ii) SCHEDULE 3.2(B)(II) to the Parent
Disclosure Letter lists each Parent Joint Venture. Each
<PAGE> 43
30
Parent Joint Venture has made all filings required by and is in compliance with
all Laws necessary to do business in each jurisdiction in which the nature of
its business or the ownership or the leasing of its properties makes such
filings or compliance necessary, other than such jurisdictions where the
failure to have so filed or to be in such compliance, individually or in the
aggregate, would not have a Parent Material Adverse Effect. SCHEDULE
3.2(B)(II) lists, as of the date hereof, each partner, joint venturer or other
person having a direct ownership interest, other than Parent or a Parent
Subsidiary or Parent Joint Venture, in the Parent Joint Ventures.
(c) CAPITAL STRUCTURE. The authorized capital
stock of Parent consists of 246,000,000 shares of Parent Common Stock;
12,000,000 shares of Class B Stock; 4,000,000 shares of Series A Convertible
Preferred Stock, par value $.0001 per share (the "PARENT PREFERRED STOCK"); and
150,000,000 shares of Excess Stock, par value $.0001 per share (the "PARENT
EXCESS STOCK"). On the date hereof, (i) 55,360,225 shares of Parent Common
Stock, 3,200,000 shares of Class B Stock, 4,000,000 shares of Parent Preferred
Stock and no shares of Parent Excess Stock were issued and outstanding, (ii) no
shares of Parent Stock or Parent Preferred Stock were held by Parent, (iii)
1,496,728 shares of Parent Common Stock were reserved for issuance upon
exercise of outstanding stock options to purchase shares of Parent Common Stock
granted to Parent employees ("PARENT EMPLOYEE OPTIONS"), (iv) 55,000 shares of
Parent Common Stock were reserved for issuance upon exercise of outstanding
stock options to purchase shares of Parent Common Stock granted to Parent
directors (together with the Parent Employee Options, the "PARENT OPTIONS") and
(v) 37,282,628 shares of Parent Common Stock were reserved for issuance upon
exchange of Parent Units (as defined below) for shares of Parent Common Stock
pursuant to the Second Amended and Restated Agreement of Limited Partnership or
the Parent Operating Partnership (the "PARENT OPERATING PARTNERSHIP
AGREEMENT"). On the date of this Agreement, except as set forth in this
Section 3.2(c), no shares of capital stock or other voting securities of Parent
were issued, reserved for issuance or outstanding. There are no outstanding
stock appreciation rights relating to the
<PAGE> 44
31
capital stock of Parent. All outstanding shares of capital stock of Parent
are, and all shares which may be issued pursuant to this Agreement will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of Parent may vote. Except (A) for the Parent Options and shares
of Class B Stock and Parent Preferred Stock (each of which is exchangeable for
shares of Parent Common Stock), units ("PARENT UNITS") of partnership interest
held by limited partners in the Parent Operating Partnership (as defined below)
(which, subject to certain restrictions, may be put to Parent in exchange for
cash or Parent Common Stock at Parent's election), (B) for such outstanding
rights to acquire Parent Units as are disclosed in SCHEDULE 3.2(C) to the
Parent Disclosure Letter, (C) as required pursuant to rights of first refusal
or rights of first offer, "buy-sell" provisions, anti-dilution provisions or
pro-rata funding obligations set forth in the terms of any partnership or joint
venture agreement governing any of the Parent Joint Ventures existing on the
date of this Agreement, (D) as set forth in SCHEDULE 3.2(C) to the Parent
Disclosure Letter, (E) as otherwise permitted under Section 4.2, (F) as
required under the Parent Operating Partnership Agreement and (G) as
contemplated under Parent's dividend reinvestment plan, as of the date of this
Agreement there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Parent or any Parent Subsidiary or Parent Joint Venture is a party or by
which such entity is bound, obligating Parent or any Parent Subsidiary or
Parent Joint Venture to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock, voting securities or
other ownership interests of Parent or of any Parent Subsidiary or Parent Joint
Venture or obligating Parent or any Parent Subsidiary or Parent Joint Venture
to issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking (other than to Parent
or a Parent Subsidiary or a Wholly-Owned Parent Joint Venture). Except (x) as
required
<PAGE> 45
32
pursuant to rights of first refusal or rights of first offer, "buy-sell"
provisions, anti-dilution provisions or pro-rata funding obligations set forth
in the terms of any partnership or joint venture agreement governing any of the
Company Joint Ventures existing on the date of this Agreement,(y) as set forth
on SCHEDULE 3.2(C) to the Parent Disclosure Letter and (z) as required under
the Partnership Agreement, there are no outstanding contractual obligations of
Parent or any Parent Subsidiary or Parent Joint Venture to repurchase, redeem
or otherwise acquire any shares of capital stock or other ownership interests
in any Parent Subsidiary or Parent Joint Venture or make any material
investment (in the form of a loan, capital contribution or otherwise) in any
person (other than a Parent Subsidiary or a Wholly-Owned Parent Joint Venture).
The authorized capital stock of Sub consists of 1,500 shares of common stock,
without par value (the "SUB COMMON STOCK"). As of the date of this Agreement,
all of the issued and outstanding shares of Sub Common Stock are owned by
Parent. Immediately prior to the Effective Time, 1,100.11 shares of Sub Common
Stock shall be issued and outstanding, (i) 1,100 shares of which shall be owned
by Parent, (ii) 110 fractional shares, equal to .001 share, of which shall be
owned by 110 individuals, and (iii) all of which shares shall be duly
authorized, validly issued, fully paid and nonassessable.
(d) AUTHORITY; NONCONTRAVENTION; CONSENTS. Each
of Parent and Sub has the requisite corporate power and authority to enter into
this Agreement, and subject to approval of this Agreement by the vote of the
holders of the Parent Stock required to approve this Agreement and the
transactions contemplated hereby (including, without limitation, the issuance
of Parent Common Stock in connection with the Merger and the approval of an
Amended and Restated Charter of Parent in the form of EXHIBIT E-1 or EXHIBIT
E-2, as the case may be, as contemplated by Section 5.6 and the approval of an
Amended and Restated By-laws of Parent in the form of EXHIBIT F-1, as
contemplated by and to the extent required under Section 5.6(a)) (the "PARENT
STOCKHOLDER APPROVALS" and, together with the Company Shareholder Approvals,
the "SHAREHOLDER APPROVALS") to consummate the transactions contemplated by
this Agreement to which Parent
<PAGE> 46
33
or Sub (as the case may be) is a party. The execution and delivery of this
Agreement by each of Parent and Sub and the consummation by each of Parent and
Sub of the transactions contemplated by this Agreement to which Parent or Sub
(as the case may be) is a party have been duly authorized by all necessary
corporate action on the part of each of Parent and Sub, subject to approval of
this Agreement pursuant to the Parent Stockholder Approvals. This Agreement
has been duly executed and delivered by each of Parent and Sub and constitutes
a valid and binding obligation of each of Parent and Sub, enforceable against
each of Parent and Sub in accordance with its terms. Except as set forth in
SCHEDULE 3.2(D) to the Parent Disclosure Letter, the execution and delivery of
this Agreement by each of Parent and Sub do not, and the consummation of the
transactions contemplated by this Agreement to which Parent or Sub (as the case
may be) is a party and compliance by each of Parent and Sub with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of Parent, Sub or any other Parent Subsidiary
or any Parent Joint Venture under, (i) the Charter or Articles of Incorporation
or By-laws or Code of Regulations (as the case may be) of Parent and Sub or the
comparable charter or organizational documents or partnership or similar
agreement (as the case may be) of any other Parent Subsidiary or any Parent
Joint Venture each as amended or supplemented to the date of this Agreement,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, reciprocal
easement agreement, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent, Sub or any other Parent Subsidiary
or any Parent Joint Venture or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any Laws applicable to Parent, Sub or any other Parent
Subsidiary or any Parent Joint Venture or their respective properties or
assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the
<PAGE> 47
34
aggregate would not (x) have a Parent Material Adverse Effect or (y) prevent
the consummation of the Transactions. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent, Sub, any other Parent
Subsidiary or any Parent Joint Venture in connection with the execution and
delivery of this Agreement or the consummation by Parent or Sub, as the case
may be, of any of the transactions contemplated by this Agreement, except for
(i) the filing by any person in connection with any of the Transactions of a
premerger notification and report form under the HSR Act, (ii) the filing with
the SEC of (x) the Proxy Statement and a registration statement on Form S-4 (or
other appropriate form) in connection with the registration of the Parent
Common Stock constituting the Merger Consideration (the "REGISTRATION
STATEMENT") and (y) such reports under Section 13(a) of the Exchange Act as may
be required in connection with this Agreement and the transactions contemplated
by this Agreement, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Ohio, (iv) such filings as may be required
in connection with the payment of any Transfer and Gains Taxes and (v) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings as are set forth in SCHEDULE 3.2(D) to the Parent Disclosure Letter
or (A) as may be required under (x) the laws of any foreign country in which
Parent or any Parent Subsidiary or Parent Joint Venture conducts any business
or owns any property or assets, (y) federal, state, local or foreign
environmental laws or (z) the "blue sky" laws of various states or (B) which,
if not obtained or made, would not prevent or delay in any material respect the
consummation of any of the transactions contemplated by this Agreement or
otherwise prevent Parent or Sub from performing their respective obligations
under this Agreement in any material respect or have, individually or in the
aggregate, a Parent Material Adverse Effect.
(e) SEC DOCUMENTS; FINANCIAL STATEMENTS;
UNDISCLOSED LIABILITIES. Parent has filed all required reports, schedules,
forms, statements and other documents with the SEC since December 20, 1993 (the
"PARENT SEC DOCUMENTS"). All of the Parent SEC Documents (other than
<PAGE> 48
35
preliminary material), as of their respective filing dates, complied in all
material respects with all applicable requirements of the Securities Act and
the Exchange Act and, in each case, the rules and regulations promulgated
thereunder. None of the Parent SEC Documents at the time of filing contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by later Filed Parent SEC Documents. The consolidated financial
statements of Parent included in the Parent SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
presented, in accordance with the applicable requirements of GAAP, the
consolidated financial position of Parent and the Parent Subsidiaries and
Parent Joint Ventures, taken as a whole, as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). To the knowledge of Parent, the audited financial statements of
the unconsolidated Parent Subsidiaries and Parent Joint Ventures previously
delivered to the Company (the "UNCONSOLIDATED PARENT FINANCIAL STATEMENTS")
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly presented, in accordance with the applicable requirements of GAAP, the
financial position of such Parent Subsidiaries and Parent Joint Ventures, taken
as a whole, as of the dates thereof and the results of their respective
operations and cash flows for the periods then ended. Except as set forth in
the Parent Filed SEC Documents (as defined below), in the Unconsolidated Parent
Financial Statements, in SCHEDULE 3.2(E) to the Parent Disclosure Letter or as
permitted by Section 4.2 (for the purpose of this sentence, as if Section 4.2
had been in effect since
<PAGE> 49
36
December 31, 1995), neither Parent nor any Parent Subsidiary or Parent Joint
Venture has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of Parent or, to the knowledge of Parent, of any
unconsolidated Parent Subsidiary or Parent Joint Venture or in the notes
thereto and which, individually or in the aggregate, would have a Parent
Material Adverse Effect.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as disclosed in the Parent SEC Documents filed and publicly available prior to
the date of this Agreement (referred to collectively as the "PARENT FILED SEC
DOCUMENTS") or in SCHEDULE 3.2(F) to the Parent Disclosure Letter, since the
date of the most recent financial statements included in the Parent Filed SEC
Documents (the "PARENT FINANCIAL STATEMENT DATE") to the date of this
Agreement, Parent, the Parent Subsidiaries and the Parent Joint Ventures have
conducted their business only in the ordinary course and there has not been (i)
any material adverse change in the business, financial condition or results of
operations of Parent and the Parent Subsidiaries and Parent Joint Ventures (but
only to the extent of the Parent Interests with respect to Parent Joint
Ventures) taken as a whole, without giving effect to a general decline in the
U.S. economy or an adverse change in the financial condition of specialty
retail tenants or department stores (a "PARENT MATERIAL ADVERSE CHANGE"), nor
has there been any occurrence or circumstance that with the passage of time
would reasonably be expected to result in a Parent Material Adverse Change,
(ii) except for regular quarterly dividends (in the case of Parent) and
distributions (in the case of the Parent Operating Partnership) (in each case
in an amount determined in a manner consistent with past practice but in no
event in excess of 104 percent of the most recent previously paid dividend or
distribution, as the case may be, with customary record and payment dates, any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to any of Parent's capital stock or
any Parent Units, other than the dividend required to be paid pursuant to
Section 2.2(d)(i) (and the corresponding Parent Operating
<PAGE> 50
37
Partnership distribution), (iii) any split, combination or reclassification of
any of Parent's capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for, or giving the right to acquire by exchange or exercise, shares of its
capital stock or any issuance of an ownership interest in any Parent Subsidiary
or any Parent Joint Venture, except (A) as required pursuant to rights of first
refusal or rights of first offer, "buy-sell" provisions, anti-dilution
provisions or pro-rata funding obligations set forth in the terms of any
partnership or joint venture agreement governing any of the Parent Joint
Ventures existing on the date of this Agreement and (B) as permitted by Section
4.2, (iv) any damage, destruction or loss, whether or not covered by insurance,
that has or would have a Parent Material Adverse Effect or (v) any change in
accounting methods, principles or practices by Parent or any Parent Subsidiary
or Parent Joint Venture materially affecting its assets, liabilities or
business, except insofar as may have been disclosed in the Parent Filed SEC
Documents or required by a change in GAAP.
(g) LITIGATION. Except as disclosed in the
Parent Filed SEC Documents or in SCHEDULE 3.2(G) of the Parent Disclosure
Letter, and other than personal injury and other routine tort litigation
arising from the ordinary course of operations of Parent, the Parent
Subsidiaries and the Parent Joint Ventures (i) which are covered by adequate
insurance or (ii) for which all material costs and liabilities arising
therefrom are reimbursable pursuant to common area maintenance agreements,
there is no suit, action or proceeding pending or, to the knowledge of Parent,
threatened in writing against or affecting Parent or any Parent Subsidiary or
Parent Joint Venture that, individually or in the aggregate, could reasonably
be expected to (A) have a Parent Material Adverse Effect or (B) prevent the
consummation of any of the Transactions, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Parent or any Parent Subsidiary or Parent Joint Venture having, or
which, insofar as reasonably can be foreseen, in the future would have any such
effect.
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38
(h) ABSENCE OF CHANGES IN BENEFIT PLANS; ERISA
COMPLIANCE.
(i) Except as disclosed in the Parent
Filed SEC Documents or in SCHEDULE 3.2(H)(I) to the Parent Disclosure Letter
and except as permitted by Section 4.2 (for the purpose of this sentence, as if
Section 4.2 had been in effect since December 31, 1995), since the date of the
most recent audited financial statements included in the Parent Filed SEC
Documents, there has not been any adoption or amendment in any material respect
by Parent or any Parent Subsidiary or Parent Joint Venture of any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or other
employee benefit plan, arrangement or understanding (whether or not legally
binding) providing benefits to any current or former employee, officer or
director of Parent, any Parent Subsidiary, any Parent Joint Venture or any
person affiliated with Parent under Section 414(b), (c), (m) or (o) of the Code
(collectively, "PARENT BENEFIT PLANS").
(ii) Except as described in the Parent
Filed SEC Documents or in SCHEDULE 3.2(H)(II) to the Parent Disclosure Letter
or as would not have a Parent Material Adverse Effect, (a) all Parent Benefit
Plans, including any such plan that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, are in compliance with all applicable requirements of
law, including ERISA and the Code, and (B) neither Parent nor any Parent
Subsidiary or Parent Joint Venture has any liabilities or obligations with
respect to any such Parent Benefit Plans, whether accrued, contingent or
otherwise, nor to the knowledge of Parent are any such liabilities or
obligations expected to be incurred. Except as set forth in SCHEDULE
3.2(H)(II) to the Parent Disclosure Letter, the execution of, and performance
of the transactions contemplated in, this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Parent Benefit Plan, policy, arrangement or agreement or any trust or
loan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness,
<PAGE> 52
39
vesting, distribution, increase in benefits or obligation to fund benefits with
respect to any employee or director. The only severance agreements or
severance policies applicable to Parent or Parent Subsidiaries or Parent Joint
Ventures are the agreement and policies specifically referred to in SCHEDULE
3.2(H)(II) to the Parent Disclosure Letter and the severance program referred
to in Section 5.12(c).
(i) TAXES.
(i) Except as set forth in SCHEDULE
3.2(I)(I) to the Parent Disclosure Letter, each of Parent and each Parent
Subsidiary and Parent Joint Venture has filed all tax returns and reports
required to be filed by it (after giving effect to any filing extension
properly granted by a Governmental Entity having authority to do so) and has
paid (or Parent has paid on its behalf) all taxes required to be paid by it,
and the most recent financial statements contained in the Parent Filed SEC
Documents reflect an adequate reserve for all material taxes payable by Parent
(and by those Parent Subsidiaries and Parent Joint Ventures whose financial
statements are contained therein) for all taxable periods and portions thereof
through the date of such financial statements. Since the Parent Financial
Statement Date, Parent has incurred no liability for taxes under Sections
857(b), 860(c) or 4981 of the Code, and neither Parent nor any Parent
Subsidiary or Parent Joint Venture has incurred any liability for taxes other
than in the ordinary course of business. To the knowledge of Parent, no event
has occurred, and no condition or circumstance exists, which presents a
material risk that any material tax described in the preceding sentence will be
imposed upon Parent. To the knowledge of Parent, no deficiencies for any taxes
have been proposed, asserted or assessed against Parent or any of the Parent
Subsidiaries, and no requests for waivers of the time to assess any such taxes
are pending.
(ii) Parent (i) for all taxable years
commencing with 1994 through the most recent December 31, has been subject to
taxation as a REIT within the meaning of the Code and has satisfied all
requirements to qualify as a REIT for such years, (ii) has operated, and
intends to
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40
continue to operate, in such a manner as to qualify as a REIT for the tax year
ending December 31, 1996, and (iii) has not taken or omitted to take any action
which could result in a challenge to its status as a REIT, and to Parent's
knowledge, no such challenge is pending or threatened. Each Parent Joint
Venture, the Parent Operating Partnership (as defined below) and each other
Parent Subsidiary which is a partnership, joint venture or limited liability
company has been treated during and since 1994 and continues to be treated for
federal income tax purposes as a partnership and not as a corporation or as an
association taxable as a corporation.
(j) NO PAYMENTS TO EMPLOYEES, OFFICERS OR
DIRECTORS. Except as set forth in SCHEDULE 3.2(J) to the Parent Disclosure
Letter or as otherwise specifically provided for in this Agreement, there is no
employment or severance contract, or other agreement requiring payments to be
made on a change of control or otherwise as a result of the consummation of any
of the Transactions, with respect to any employee, officer or director of
Parent or any Parent Subsidiary or Parent Joint Venture.
(k) BROKERS; SCHEDULE OF FEES AND EXPENSES. No
broker, investment banker, financial advisor or other person, other than
Merrill Lynch & Co. ("MERRILL LYNCH"), the fees and expenses of which have
previously been disclosed to the Company and will be paid by Parent, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of Parent or Sub or any other Parent Subsidiary.
(l) COMPLIANCE WITH LAWS. To the knowledge of
Parent, except as disclosed in the Parent Filed SEC Documents, neither Parent
nor any of the Parent Subsidiaries or Parent Joint Ventures has violated or
failed to comply with any statute, law, ordinance, regulation, rule, judgment,
decree or order of any Governmental Entity applicable to its business,
properties or operations, except for violations and failures to comply that
would not, individually or in the aggregate, reasonably be expected to result
in a Parent Material Adverse Effect.
<PAGE> 54
41
(m) CONTRACTS; DEBT INSTRUMENTS.
(i) To the knowledge of Parent, neither
Parent nor any Parent Subsidiary or Parent Joint Venture is in violation of or
in default under, in any material respect (nor does there exist any condition
which upon the passage of time or the giving of notice or both would cause such
a violation of or default under), any material loan or credit agreement, note,
bond, mortgage, indenture, lease, permit, concession, franchise, license or any
other material contract, agreement, arrangement or understanding, to which it
is a party or by which it or any of its properties or assets is bound, except
as set forth in SCHEDULE 3.2(M)(I) to the Parent Disclosure Letter and except
for violations or defaults that would not, individually or in the aggregate,
result in a Parent Material Adverse Effect.
(ii) Except for any of the following
expressly identified in the most recent financial statements contained in the
Parent Filed SEC Documents and except as permitted by Section 4.2, SCHEDULE
3.2(M)(II) to the Parent Disclosure Letter sets forth (x) a list of all loan or
credit agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of Parent or any of the Parent
Subsidiaries or the Parent Joint Ventures, other than indebtedness payable to
Parent, a Parent Subsidiary or a Wholly-Owned Parent Joint Venture or to any
third-party partner or joint venturer in any Parent Joint Venture, in an
aggregate principal amount in excess of $2,000,000 per item is outstanding or
may be incurred and (y) the respective principal amounts outstanding thereunder
on February 29, 1996.
(n) OPINION OF FINANCIAL ADVISOR. Parent has
received the opinion of Merrill Lynch, dated March 25, 1996, satisfactory to
Parent, a signed version of which has been provided to the Company, to the
effect that the exchange ratio provided for in this Agreement in connection
with the exchange of Parent Common Stock for Common Stock in the Merger is fair
to Parent and the stockholders of Parent from a financial point of view.
<PAGE> 55
42
(o) STATE STATUTES. Parent has taken all action
necessary to exempt transactions with the Company and its affiliates from the
operation of the Maryland "Business Combination" statute at Sections 3-601 et
seq. of the MGCL and the Maryland "control share" statute at Sections 3-701 et
seq. of the MGCL.
(p) INTERIM OPERATIONS OF SUB. Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated by this
Agreement.
(q) REGISTRATION STATEMENT. The Registration
Statement will conform, in all material respects to the requirements of the
Securities Act and the rules and regulations of the SEC thereunder and will
not, as of the effective date of the Registration Statement, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished to
Parent or Sub by the Company in writing for inclusion in the Registration
Statement.
(r) VOTE REQUIRED. The affirmative vote of the
holders of (i) a majority of the shares of Parent Stock and Parent Preferred
Stock voting together as a single class present in person or represented by
proxy at the Parent Stockholders Meeting (provided that the shares so present
or represented constitute a majority of the shares of Parent Stock and Parent
Preferred Stock) is the only vote of the holders of any class or series of
Parent's capital stock necessary to approve the issuance of Parent Common Stock
in connection with the Merger; (ii) at least (x) 80% of the votes entitled to
be cast by the holders of shares of Parent's capital stock voting together as
single class and (y) at least a majority of the outstanding shares of Class B
Stock are the only votes of the holders of any class or
<PAGE> 56
43
series of Parent's capital stock necessary (under applicable law or otherwise)
to approve the adoption of the Amended and Restated Charter and By-laws of
Parent in the forms of EXHIBIT E-1 and EXHIBIT F-1, as contemplated by Section
5.6(a); and (iii) a majority of the votes entitled to be cast by the holders of
the Parent Stock and the Parent Preferred Stock voting together as a single
class to approve the adoption (if necessary under Section 5.6) of the Amended
and Restated Charter of Parent in the form of EXHIBIT E-2 as contemplated by
Section 5.6(b).
ARTICLE IV
Covenants
---------
SECTION 4.1 CONDUCT OF BUSINESS BY THE COMPANY. During
the period from the date of this Agreement to the Effective Time, the Company
shall, and shall cause the Company Subsidiaries and Majority Company Joint
Ventures each to and shall, where the Company or a Company Subsidiary has the
contractual right to do so, use commercially reasonable efforts to cause all
Minority Company Joint Ventures each to, carry on its businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use commercially reasonable
efforts to preserve intact its current business organization, goodwill and
ongoing businesses. Without limiting the generality of the foregoing, the
following additional restrictions shall apply: During the period from the date
of this Agreement to the Effective Time, except as set forth in SCHEDULE 4.1 to
the Company Disclosure Letter, the Company shall not and shall cause the
Company Subsidiaries and Majority Company Joint Ventures not to (and not to
authorize or commit or agree to) and shall, where the Company or a Company
Subsidiary has the contractual right to do so, use commercially reasonable
efforts to cause all Minority Company Joint Ventures not to (and not to
authorize or commit or agree to):
(i) except for (x) regular quarterly dividends (in
the case of the Company) not in excess of
<PAGE> 57
44
$.315 per share of Common Stock and (y) distributions (in the case of the
Operating Partnership) not in excess of $.315 in respect of that percentage of
Company Partnership Interests exchangeable for one share of Common Stock under
the Exchange Rights Agreement, as the case may be, in each case with customary
record and payment dates, declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of the Company's capital stock, any
Company Partnership Interests or partnership interests or stock in any Company
Subsidiary that is not directly or indirectly wholly-owned by the Company,
other than the dividend required to be paid pursuant to Section 2.2(d)(i) (and
the corresponding Operating Partnership distribution) and any special tax
distributions required to be paid by the Operating Partnership pursuant to the
Operating Partnership Agreement, (ii) except in connection with the
Transactions as required under the Exchange Rights Agreement or, with respect
to Company Joint Ventures, as otherwise permitted by Section 4.1(e), split,
combine or reclassify any capital stock, Company Partnership Interests or other
partnership interests or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of such
capital stock or partnership interests or (iii) except as required (A) under
the Exchange Rights Agreement, dated as of April 21, 1994, among the Company,
the Operating Partnership and the persons listed on SCHEDULE A thereto and
certain other persons owning limited partnership interests in the Operating
Partnership (the "EXCHANGE RIGHTS AGREEMENT"), and (B) except as contemplated
under or required pursuant to "buy-sell" provisions set forth in the terms of
any partnership or joint venture agreement governing any Company Joint Venture
existing on the date of this Agreement and subject to Section 4.1(e), purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
Company Partnership Interests or partnership interests in the Financing
Partnership or any options, warrants or rights to acquire, or security
convertible into, shares of such capital stock or such Company Partnership
Interests or partnership interests;
(b) except as contemplated under or required
pursuant to the Exchange Rights Agreement, the Company's dividend reinvestment
plan, Section 4.1(e), the exercise of
<PAGE> 58
45
stock options outstanding on the date of this Agreement and rights of first
refusal or rights of first offer, "buy-sell" provisions or anti- dilution
provisions or pro-rata funding obligations set forth in the terms of any
partnership or joint venture agreement governing any of the Company Joint
Ventures existing on the date of this Agreement, issue, deliver or sell, or
grant any option or other right in respect of, any shares of capital stock, any
other voting securities (including Company Partnership Interests or other
partnership interests) of the Company or any Company Subsidiary or Company
Joint Venture or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities except to the Company, a Company Subsidiary or a Wholly-Owned
Company Joint Venture;
(c) except as otherwise contemplated by this
Agreement, amend the articles or certificate of incorporation, by- laws, code
of regulations, partnership agreement or other comparable charter or
organizational documents of the Company or any Company Subsidiary or Majority
Company Joint Venture or where the Company has the necessary contractual power,
any Minority Company Joint Venture;
(d) in the case of the Company or the Operating
Partnership, merge or consolidate with any person;
(e) (x) in a transaction involving capital,
securities or other assets or indebtedness of the Company, a Company
Subsidiary, a Company Joint Venture (but only to the extent of the Company
Interests with respect to Company Joint Ventures) or any combination thereof in
excess of $10,000,000, without providing to Parent reasonable prior written
notice of and an opportunity to consult in connection with such transaction or
(y) in a transaction involving capital, securities, other assets or
indebtedness of the Company, a Company Subsidiary or Company Joint Venture (but
only to the extent of the Company Interests with respect to Company Joint
Ventures) or any combination thereof in excess of $20,000,000, without
obtaining the prior written consent of Parent, which consent shall not
unreasonably be withheld or delayed: (i) acquire or agree to acquire by merging
or consolidating with, or by
<PAGE> 59
46
purchasing all or a substantial portion of the equity securities or assets of,
or by any other manner, any business or any corporation, partnership, limited
liability company, joint venture, association, business trust or other business
organization or division thereof or interest therein or any assets; (ii)
mortgage or otherwise encumber or subject to any Lien or sell, lease or
otherwise dispose of any of its material properties or assets or assign or
encumber the right to receive income, dividends, distributions and the like;
(iii) make or agree to make any new capital expenditures, except in accordance
with budgets relating to the Company, the Company Subsidiaries and the Company
Joint Ventures that have been previously delivered to Parent; or (iv) incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, prepay or refinance any
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person;
(f) engage in any transactions of the types
described in clauses (i), (ii), (iii) and (iv) of paragraph (e) above, whether
or not related, involving, in the aggregate, capital, securities or other
assets or indebtedness of the Company, a Company Subsidiary, a Company Joint
Venture (but only to the extent of the Company Interests with respect to a
Company Joint Venture) or any combination thereof in excess of $150,000,000,
without obtaining the prior written consent of Parent, which consent shall not
unreasonably be withheld or delayed;
(g) make any tax election (unless required by law
or necessary to preserve the Company's status as a REIT or the status of the
Operating Partnership, the Financing Partnership or any Company Joint Venture
as a partnership for federal tax purposes);
<PAGE> 60
47
(h) (i) change in any material manner any of its
methods, principles or practices of accounting in effect at the Financial
Statement Date, or (ii) make or rescind any express or deemed election relating
to taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, except in
the case of settlements or compromises relating to taxes on real property in an
amount not to exceed, individually or in the aggregate $5,000,000, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of its federal income tax
return for the taxable year ending December 31, 1995, except, in the case of
clause (i), as may be required by the SEC, applicable law or GAAP;
(i) except as provided in this Agreement, adopt
any new employee benefit plan, incentive plan, severance plan, stock option or
similar plan, grant new stock appreciation rights or amend any existing plan or
rights, except such changes as are required by law or which are not more
favorable to participants than provisions presently in effect;
(j) settle any shareholder derivative or class
action claims arising out of or in connection with any of the Transactions; and
(k) enter into or amend or otherwise modify any
agreement or arrangement with persons that are affiliates or, as of the date
hereof, are officers, directors or employees of the Company or any Company
Subsidiary or Company Joint Venture not approved by a majority of the
"independent" members of the Board of Directors of the Company.
SECTION 4.2 CONDUCT OF BUSINESS BY PARENT. During the
period from the date of this Agreement to the Effective Time, Parent shall, and
shall cause the Parent Subsidiaries and the Parent Joint Ventures each to carry
on its businesses in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and, to the extent consistent
therewith, use commercially
<PAGE> 61
48
reasonable efforts to preserve intact its current business organization,
goodwill and ongoing businesses. Without limiting the generality of the
foregoing, the following additional restrictions shall apply: During the
period from the date of this Agreement to the Effective Time, except as set
forth in SCHEDULE 4.2 to the Parent Disclosure Letter, Parent shall not and
shall cause the Parent Subsidiaries and the Parent Joint Ventures not to (and
not to authorize or commit or agree to):
(i) except (x) in the case of Parent, for regular
quarterly dividends (in an amount determined in a manner consistent with
Parent's past practice but in no event in excess of 104 percent of the most
recent previously paid dividend or distribution, as the case may be), and (y)
in the case of the Parent Operating Partnership, for regular distributions to
the general and limited partners of the Parent Operating Partnership (in an
amount determined in a manner consistent with past practice but in no event in
excess of 104 percent of the most recent previously paid dividend or
distribution, as the case may be), in each case with customary record and
payment dates, declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of Parent's capital stock or the Parent Units
or partnership interests or stock in any Parent Subsidiary that is not directly
or indirectly wholly-owned by Parent, other than the dividend required to be
paid pursuant to Section 2.2(d)(i) (and the corresponding Parent Operating
Partnership distribution), (ii) except in connection with the Transactions, as
required under the Parent Operating Partnership Agreement or, with respect to
Parent Joint Ventures, as otherwise permitted by Section 4.2(e), split, combine
or reclassify any capital stock or partnership interests or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of such capital stock or partnership interests or (iii)
except (A) as contemplated under the exchange provisions of the Parent
Operating Partnership Agreement and (B) as contemplated under or required
pursuant to "buy-sell" provisions set forth in the terms of any partnership or
joint venture agreement governing any Parent Joint Venture existing on the date
of this Agreement and subject to Section 4.2(e), purchase,
<PAGE> 62
49
redeem or otherwise acquire any shares of capital stock of Parent or Parent
Units or any options, warrants or rights to acquire, or security convertible
into, shares of capital stock of Parent or such Parent Units;
(b) except (i) as contemplated under or required
pursuant to this Agreement, Parent's dividend reinvestment plan, the exercise
of stock options outstanding on the date hereof, Section 4.2(e), rights of
first refusal or rights of first offer, "buy-sell" provisions, anti-dilution
provisions or pro-rata funding obligations set forth in the terms of any
partnership or joint venture agreement governing any of the Parent Joint
Ventures existing on the date of this Agreement or (ii) for stock options
granted pursuant to existing employee and director stock option plans, issue,
deliver or sell, or grant any option or other right in respect of, any shares
of capital stock, any other voting securities (including Parent Units or other
partnership interests) of the Parent or any Parent Subsidiary or Parent Joint
Venture or any securities convertible into, or any rights, warrants or options
to acquire, any such shares, voting securities or convertible securities except
to Parent, a Parent Subsidiary or any Wholly-Owned Parent Joint Venture;
(c) except as otherwise contemplated by this
Agreement, amend the Charter, articles or certificate of incorporation,
by-laws, code of regulations, partnership agreement or other comparable charter
or organizational documents of Parent, any Parent Subsidiary or Parent Joint
Venture;
(d) in the case of Parent or the Parent Operating
Partnership, merge or consolidate with any person;
(e) in a transaction involving capital,
securities, other assets or indebtedness of Parent, a Parent Subsidiary or a
Parent Joint Venture (but only to the extent of the Parent Interests with
respect to Parent Joint Ventures) or any combination thereof in excess of
$89,400,000, without obtaining the prior written consent of the Company, which
consent shall not unreasonably be withheld or delayed: (i) acquire or agree to
acquire by
<PAGE> 63
50
merging or consolidating with, or by purchasing all or a substantial portion of
the equity securities or assets of, or by any other manner, any business or any
corporation, partnership, limited liability company, joint venture,
association, business trust or other business organization or division thereof
or interest therein or any assets; (ii) mortgage or otherwise encumber or
subject to any Lien or sell, lease or otherwise dispose of any of its material
properties or assets or assign or encumber the right to receive income,
dividends, distributions and the like; (iii) make or agree to make any new
capital expenditures, except in accordance with budgets relating to Parent,
Parent Subsidiaries and Parent Joint Ventures that have been previously
delivered to Parent; or (iv) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
Parent, guarantee any debt securities of another person, enter into any "keep
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, prepay or refinance any indebtedness or make any loans,
advances or capital contributions to, or investments in, any other person;
(f) engage in any transactions of the types
described in clauses (i), (ii), (iii) and (iv) of paragraph (e) above, whether
or not related, involving, in the aggregate, capital, securities or other
assets or obligations of Parent, a Parent Subsidiary, a Parent Joint Venture
(but only to the extent of the Parent Interests with respect to a Parent Joint
Venture) or any combination thereof in excess of $250,000,000, without
obtaining the prior written consent of the Company, which consent shall not
unreasonably be withheld or delayed;
(g) make any tax election (unless required by law
or necessary to preserve Parent's status as a REIT or the status of the Parent
Operating Partnership or any Parent Joint Venture as a partnership for federal
tax purposes);
(h) (i) change in any material manner any of its
methods, principles or practices of accounting in effect
<PAGE> 64
51
at the Parent Financial Statement Date, or (ii) make or rescind any express or
deemed election relating to taxes, settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, except in the case of settlements or compromises relating to
taxes on real property in an amount not to exceed, individually or in the
aggregate, $5,000,000, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the taxable year ending
December 31, 1995, except, in the case of clause (i), as may be required by the
SEC, applicable law or GAAP; and
(i) enter into or amend or otherwise modify any
agreement or arrangement with persons that are affiliates or, as of the date
hereof, are officers, directors or employees of Parent or any Parent Subsidiary
or Parent Joint Venture not approved by a majority of the "independent" members
of the Board of Directors of Parent.
SECTION 4.3 OTHER ACTIONS. Each of Company on the one
hand and Parent and Sub on the other hand shall not and shall cause its
respective subsidiaries and joint ventures not to take any action that would
result in (i) any of the representations and warranties of such party (without
giving effect to any "knowledge" qualification) set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties (without giving effect to any "knowledge"
qualification) that are not so qualified becoming untrue in any material
respect or (iii) except as contemplated by Section 7.1, any of the conditions
to the Merger set forth in Article VI not being satisfied.
ARTICLE V
Additional Covenants
--------------------
SECTION 5.1 PREPARATION OF THE REGISTRATION STATEMENT AND THE
PROXY STATEMENT; SHAREHOLDERS MEETING AND PARENT STOCKHOLDERS MEETING.
<PAGE> 65
52
(a) As soon as practicable following the date of
this Agreement, the Company and Parent shall prepare and file with the SEC a
preliminary Proxy Statement in form and substance satisfactory to each of
Parent and the Company and Parent shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use its best efforts to (i)
respond to any comments of the SEC and (ii) have the Registration Statement
declared effective under the Securities Act and the rules and regulations
promulgated thereunder as promptly as practicable after such filing and to keep
the Registration Statement effective as long as is necessary to consummate the
Merger. Each of the Company and Parent will use its best efforts to cause the
Proxy Statement to be mailed to the Company's shareholders or Parent's
stockholders, respectively, as promptly as practicable after the Registration
Statement is declared effective under the Securities Act ; PROVIDED, that
Parent shall not be obligated to cause the Proxy Statement to be mailed to its
stockholders until it shall have received from the lenders to EJDC reasonable
written assurance that the written consents necessary to satisfy the conditions
contained in Section 6.1(i) will be delivered on or prior to the Closing Date.
Each party will notify the other promptly of the receipt of any comments from
the SEC and of any request by the SEC for amendments or supplements to the
Registration Statement or the Proxy Statement or for additional information and
will supply the other with copies of all correspondence between such party or
any of its representatives and the SEC, with respect to the Registration
Statement or the Proxy Statement. The Registration Statement and the Proxy
Statement shall comply in all material respects with all applicable
requirements of law. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Registration Statement or the Proxy
Statement, Parent or the Company, as the case may be, shall promptly inform the
other of such occurrences and cooperate in filing with the SEC and/or mailing
to stockholders of Parent and the shareholders of the Company such amendment or
supplement. The Proxy Statement shall include the recommendations of the Board
of Directors of Parent in favor of the issuance of Parent Common Stock and such
other recommendations thereof required
<PAGE> 66
53
to be made under Section 5.6 in connection with the Merger and of the Board of
Directors of the Company in favor of the Merger, provided that the
recommendation of the Board of Directors of the Company may not be included or
may be withdrawn if the Board of Directors of the Company has accepted a
proposal for a Superior Competing Transaction (as defined below) in accordance
with the terms of Section 7.1. Parent shall also take any action required to
be taken under any applicable state securities or "blue sky" laws in connection
with the issuance of Parent Company Stock pursuant to the Merger, and the
Company shall furnish all information concerning the Company and the holders of
the Common Stock and rights to acquire Common Stock pursuant to the Company
Stock Related Plans as may be reasonably requested in connection with any such
action. Parent will use its best efforts to obtain, prior to the effective
date of the Registration Statement, all necessary state securities or "blue
sky" permits or approvals required to carry out the transactions contemplated
by this Agreement and will pay or cause a Parent Subsidiary to pay all expenses
incident thereto. In connection with the preparation of the Proxy Statement
and the Registration Statement, the Company shall use reasonable efforts to
cause to be delivered to Parent and Sub prior to the mailing of the Proxy
Statement to the Company's shareholders and the Parent's stockholders, the
opinion of Willkie Farr & Gallagher, dated the date of the Proxy Statement,
that (i) the Company was organized and has operated in conformity with the
requirements for qualification as a REIT within the meaning of the Code since
1994 and (ii) each Company Joint Venture, the Operating Partnership, the
Financing Partnership and each other Company Subsidiary that is a partnership,
joint venture or limited liability company has been during and since 1994, and
continues to be, treated as of such date, for federal income tax purposes, as a
partnership and not as a corporation or an association taxable as a
corporation.
(b) The Company will, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of its shareholders (the "COMPANY SHAREHOLDERS MEETING") for the
purpose of obtaining the Company Shareholder Approvals. The Company will,
<PAGE> 67
54
through its Board of Directors, recommend to its shareholders approval of this
Agreement and the transactions contemplated by this Agreement; PROVIDED that
prior to the Company Shareholder Meeting such recommendation may be withdrawn,
modified or amended to the extent that, as a result of the commencement or
receipt of a proposal with respect to a Superior Competing Transaction (as
defined below), the Board of Directors of the Company determines in good faith
that it is in compliance with Section 7.1(c).
(c) Parent will, as soon as practicable following
the date of this Agreement (but in no event sooner than 30 days following the
date the Proxy Statement is mailed to the stockholders of Parent), duly call,
give notice of, convene and hold a meeting of its stockholders (the "PARENT
STOCKHOLDERS MEETING") for the purpose of obtaining the Parent Stockholder
Approvals. Parent will, through its Board of Directors, recommend to its
stockholders approval of this Agreement and the transactions contemplated by
this Agreement, including, but not limited to, the requisite vote of such
stockholders approving the issuance of the Parent Common Stock in connection
with the Merger in accordance with the rules of the NYSE and the approval of
the Amended and Restated Charter of Parent as contemplated by Section 5.6(a)
(or if the Required Vote (as defined below) is not obtained by 5.6(b)) and the
Amended and Restated By-laws of Parent as contemplated by Section 5.6(a).
SECTION 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
Subject to the requirements of confidentiality agreements with third parties,
each of the Company and Parent shall, and shall cause each of its respective
subsidiaries (including in the case of the Company all Company Subsidiaries)
and use best efforts to cause each of its respective joint ventures to, afford
to the other party and to the officers, employees, accountants, counsel,
financial advisors and other representatives of such other party, reasonable
access during normal business hours during the period prior to the Effective
Time to all their respective properties, books, contracts, commitments,
personnel and records and, during such period, each of the Company and Parent
shall, and shall cause each of its
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55
respective subsidiaries (including in the case of the Company all Company
Subsidiaries) and majority-owned joint ventures to and shall use best efforts
to cause each of its other respective joint ventures to, furnish promptly to
the other party (a) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state securities laws and (b) all other information concerning its
business, properties and personnel as such other party may reasonably request.
Each of the Company and Parent will hold, and will cause its and its respective
subsidiaries' (including in the case of the Company all Company Subsidiaries)
and joint ventures' officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any nonpublic
information in confidence to the extent required by, and in accordance with,
and will comply the provisions of the letter agreement dated as of February 29,
1996, between the Company and Parent (the "CONFIDENTIALITY AGREEMENT").
SECTION 5.3 BEST EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to fulfill all conditions applicable to such party pursuant
to this Agreement and to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated hereby,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings under the HSR Act and
all other filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval, waiver or exemption
from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals, waivers or exemption from
non-governmental third parties; PROVIDED, HOWEVER, that if either party is
obliged to make expenditures, or incur
<PAGE> 69
56
costs, expenses or other liabilities to obtain the consent of any
non-Governmental Entity, it shall consult reasonably with the other party upon
reasonable notice prior to making payment of any such amount, and in no event
shall the Company make payment of any such amount in excess of $5,000,000 in
obtaining such consents without obtaining the prior written consent of Parent,
which consent shall not unreasonably be withheld or delayed; provided further
that no payments of any kind by the Company shall be made to obtain consents
from any lender, financier or other holder of indebtedness of EJDC (as defined
below) or any other Company Principal in such capacity, (iii) the defending of
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the Stockholders Agreement or the consummation of
the Transactions, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed,
and (iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by and to fully carry out the purposes
of, this Agreement; PROVIDED, HOWEVER, that a party shall not be obligated to
take any action pursuant to the foregoing if the taking of such action or the
obtaining of any waiver, consent, approval or exemption is reasonably likely to
result in the imposition of a condition or restriction of the type referred to
in Section 6.1(e). In the case of any actions or nonactions, waivers or
consents of any Governmental Entity required for consummation of the Merger and
the other Transactions under the HSR Act or any federal or state antitrust or
similar law ("ANTITRUST AUTHORIZATIONS"), the reasonable steps of Parent shall
be deemed to include reasonable efforts to obtain consent to such Antitrust
Authorizations by agreeing to hold separate orders or divestiture of real
property assets; provided that any such divestiture or hold separate agreement
(i) shall not require divesting or holding separate assets that generate more
than 35% of the aggregate earnings before interest, taxes, depreciation and
amortization, calculated in accordance with GAAP for the period of the most
recent twelve (12) months as determined at the time of calculation (or in the
case of any real property asset that shall not have been in existence for 12
months at the time of calculation, calculated for the entire period of such
asset's
<PAGE> 70
57
existence and annualized), of Parent and the Surviving Corporation, taken as a
whole, in a single metropolitan area, and (ii) shall be done in a tax efficient
manner, reasonably acceptable to the limited partners of the Operating
Partnership, so as to eliminate or render DE MINIMIS the taxes which would
otherwise be payable by such limited partners upon such divestiture or hold
separate agreement. Under no circumstances shall such reasonable steps include
any obligation by Parent to agree to hold separate or divest assets or portions
of assets in more than one metropolitan area. In connection with and without
limiting the foregoing, the Company and its Board of Directors shall (i) take
all reasonable action necessary so that no "fair price," "moratorium," "control
share acquisition" or any other anti-takeover statute or similar statute
enacted under state or federal laws of the United States or similar statute or
regulation (a "TAKEOVER STATUTE") becomes is or becomes applicable to the
Merger, this Agreement or any of the other Transactions and (ii) if any
Takeover Statute becomes applicable to the Merger, this Agreement or any other
Transaction, take all action necessary so that the Merger and the other
Transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Stockholders Agreement and otherwise to
minimize the effect of such Takeover Statute on the Merger and the other
Transactions.
(b) The Company shall give prompt notice to
Parent, and Parent or Sub shall give prompt notice to the Company, if (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; PROVIDED, HOWEVER, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
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(c) The Company shall request that the Employee
Exchange Rights Holders execute and deliver, or otherwise agree to be bound by,
the Termination Agreement in respect of the termination of the rights of the
Employee Exchange Rights Holders under the Exchange Rights Agreement as of the
Effective Time.
SECTION 5.4 AFFILIATES. Prior to the Closing Date, the
Company shall deliver to Parent a letter identifying all persons who are, at
the time this Agreement is submitted for approval to the shareholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its best efforts to cause each such
person to deliver to Parent on or prior to the Closing Date a written agreement
substantially in the form attached as EXHIBIT D hereto.
SECTION 5.5 TAX TREATMENT. Each of Parent and the
Company shall use its reasonable best efforts to cause the Merger to qualify as
a reorganization under the provisions of Sections 368(a)(1)(a) and 368(a)(2)(E)
of the Code and to obtain the opinions of counsel referred to in Sections
6.2(e) and 6.3(e).
SECTION 5.6 AMENDMENT OF PARENT'S CHARTER AND BY-LAWS.
(a) Parent shall propose and recommend to its
stockholders at the Parent Stockholders Meeting (and any postponement or
adjournment thereof) to adopt and approve, effective as of the Effective Time,
the amendment and restatement of Parent's Charter substantially in the form set
forth as EXHIBIT E-1 hereto and the amendment and restatement of Parent's
By-laws substantially in the form set forth as EXHIBIT F-1 hereto and shall use
best efforts (including postponement or adjournment of the Parent Stockholders
Meeting for a reasonable period of time and for a reasonable number of times)
to seek and solicit the requisite amount of stockholder votes for such adoption
and approval (the "REQUIRED VOTE")(including retention of proxy solicitors).
If such amendment and restatement is adopted and approved at the Parent
Stockholders Meeting (or at any such postponement or adjournment thereof)
Parent shall upon
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or immediately following the Effective Time issue the entire amount of Class C
Common Stock, par value $.0001 per share ("CLASS C STOCK"), authorized in such
Charter to EJDC for aggregate consideration of $100,000.
(b) If the Required Vote is not obtained at the
Parent Stockholders Meeting (or at any such postponement or adjournment
thereof) then:
(i) Parent shall propose and recommend to
its Stockholders at the Parent Stockholders Meeting (or a
postponement or adjournment thereof held prior to the Closing
Date) that Parent's Charter be amended in the form set forth
as EXHIBIT E-2 hereto, and Parent shall, through its Board of
Directors, adopt and approve the amendments of Parent's
By-Laws substantially in the form set forth as EXHIBIT F-2
hereto, each effective as of the Effective Time;
(ii) Parent shall propose and recommend to
its stockholders at the first annual stockholders meeting
after the Effective Time (and if the Required Vote is not
obtained at such meeting, at the second annual stockholders
meeting after the Effective Time) to adopt and approve the
amendment and restatement of the Charter and By-Laws
substantially to the effect of EXHIBITS E-1 AND F-1 hereto,
and shall use best efforts to seek and solicit the Required
Vote in such first meeting (or such second meeting, as the
case may be)(and shall retain proxy solicitors); PROVIDED,
that if at any time prior to such first meeting (or if the
Required Vote is not obtained at such first meeting, prior to
such second meeting) (x) the "Aggregate Assumed Equity
Interest in the Corporation" (as defined in the form of
Charter set forth in EXHIBIT E-1 hereto) of the "DeBartolo
Family Group" (as defined in such form of Charter) is for any
reason reduced to less than 5%, Parent shall be released from
its obligations under this Section 5.6(b)(ii); and (y) if the
Company Principals shall sell or transfer a portion of
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their Parent Common Stock (or prior to the Effective Time,
their Common Stock) or Parent Units (or prior to the Effective
Time, their Company Partnership Interests) so as to reduce
their "Aggregate Assumed Equity Interest in the Corporation"
(as defined in such Charter) to less than 50% of the
"DeBartolo Family Group Initial Aggregate Assumed Equity
Interest in the Corporation" (as defined in such Charter but
calculated as if the Effective Time occurred on the date of
this Agreement), Parent shall only be obligated to propose and
recommend an amended and restated charter providing for only
one director to be elected by holders of Class C Stock (but
substantially to the effect of EXHIBIT E-1 hereto in all other
respects). Upon such adoption and approval thereof, subject
to the other provisions of this clause (ii) of this Section
5.6(b), Parent shall issue the entire amount of Class C Stock
authorized in such Charter to EJDC for consideration equal to
$100,000.
SECTION 5.7 NO SOLICITATION OF TRANSACTIONS BY THE
COMPANY. Subject to Section 7.1, the Company shall not directly or indirectly,
through any officer, director, employee, agent, investment banker, financial
advisor, attorney, accountant, broker, finder or other representative,
initiate, solicit (including by way of furnishing non-public information or
assistance) any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Competing Transaction (as defined
below), or authorize or permit any of the officers, directors, employees or
agents of the Company or any attorney, investment banker, financial advisor,
attorney, accountant, broker, finder or other representative retained by the
Company to take any such action, and the Company shall notify Parent in writing
(as promptly as practicable) of all of the relevant details relating to all
inquiries and proposals which it or any Company Subsidiary or any Company
Joint Venture or any such officer, director, employee, agent, investment
banker, financial advisor, attorney, accountant, broker, finder or other
representative may receive relating to any of such matters and if such inquiry
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or proposal is in writing, the Company shall deliver to Parent a copy of such
inquiry or proposal. For purposes of this Agreement, "COMPETING TRANSACTION"
shall mean any of the following (other than the transactions contemplated by
this Agreement or a transaction with Parent or a Parent Subsidiary): (i) any
merger, consolidation, share exchange, business combination, or similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 40% or more of the assets of the Company and the Company
Interests taken as a whole, in a single transaction or series of related
transactions, excluding any bona fide financing transactions which do not,
individually or in the aggregate, have as a purpose or effect the sale or
transfer of control of such assets; (iii) any tender offer or exchange offer
for 40% or more of the outstanding shares of capital stock of the Company or
the filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcements of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
SECTION 5.8 PUBLIC ANNOUNCEMENTS. Parent and Sub on the
one hand and the Company on the other hand will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Transactions,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release to be issued with respect to the Transactions will be in
the form agreed to by the parties hereto prior to the execution of this
Agreement.
SECTION 5.9 LISTING. Parent will promptly prepare and
submit to the NYSE a supplemental listing application covering Parent Common
Stock issuable in the Merger. Prior to the Effective Time, Parent shall use
its best efforts to have NYSE approve for listing, upon official notice of
issuance, the Parent Common Stock to be issued in the Merger.
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SECTION 5.10 LETTERS OF ACCOUNTANTS.
(a) The Company shall use its reasonable best
efforts to cause to be delivered to Parent "comfort" letters of Ernst & Young
LLP, the Company's independent public accountants, dated and delivered the date
on which the Registration Statement shall become effective and as of the
Effective Time, and addressed to Parent, in form and substance reasonably
satisfactory to Parent and reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(b) Parent shall use its reasonable best efforts
to cause to be delivered to the Company "comfort" letters of Arthur Andersen
LLP, Parent's independent public accountants, dated the date on which the
Registration Statement shall become effective and as of the Effective Time, and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and reasonably customary in scope and substance for letters delivered
by independent public accountants in connection with transactions such as those
contemplated by this Agreement.
SECTION 5.11 TRANSFER AND GAINS TAXES. Parent and the
Company shall cooperate in the preparation, execution and filing of all
returns, questionnaires, applications or other documents regarding any real
property transfer or gains (including, without limitation, any New York State
Tax on Gains Derived from Certain Real Property Transfers and New York State
Real Estate Transfer Tax), sales, use, transfer, value added stock transfer and
stamp taxes, any transfer, recording, registration and other fees and any
similar taxes which become payable in connection with the Transactions
(together with any related interests, penalties or additions to tax, "TRANSFER
AND GAINS TAXES"). From and after the Effective Time, Parent shall cause the
Operating Partnership or the Parent Operating Partnership, as appropriate, to
pay or cause to be paid, without deduction or withholding from any amounts
payable to the holders of the Common Stock, all Transfer and Gains Taxes.
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SECTION 5.12 BENEFIT PLANS AND OTHER EMPLOYEE
ARRANGEMENTS.
(a) BENEFIT PLANS. After the Effective Time Parent
shall either (i) maintain or cause the Company (or its successors or assigns)
to maintain the Company Benefit Plans at benefit levels not materially less
favorable than those in effect on the date of this Agreement or (ii) provide or
cause the Company (or its successors or assigns) to provide benefits to
employees of the Company, the Company Subsidiaries and the Company Joint
Ventures that are not materially less favorable to such employees than those
provided under the Parent Benefit Plans (as they may be amended from time to
time) to similarly situated employees of Parent, the Parent Subsidiaries and
Parent Joint Ventures. With respect to any Parent Benefit Plan which is an
"employee benefit plan" as defined in Section 3(3) of ERISA, solely for
purposes of determining eligibility to participate, vesting, and entitlement to
benefits but not for purposes of accrual of pension benefits, service with the
Company, any Company Subsidiary or any Company Joint Ventures shall be treated
as service with Parent or the Parent Subsidiaries or Parent Joint Ventures (as
applicable); provided, however, that such service shall not be recognized to
the extent that such recognition would result in a duplication of benefits (or
is not otherwise recognized for such purposes under the Parent Benefit Plans).
With respect to the Company's Annual Bonus Plan, Parent shall cause the Company
to maintain such plan as in effect at the Effective Time for the remainder of
fiscal year 1996. For subsequent fiscal years, employees of the Company,
Company Subsidiaries and Company Joint Ventures shall participate in any annual
bonus plan maintained for similarly situated employees of Parent, Parent
Subsidiaries and Parent Joint Ventures on substantially the same basis as such
similarly situated employees.
(b) STOCK INCENTIVE PLAN.
(i) Immediately prior to or as of the
Effective Time and solely with respect to individuals employed by the Company
immediately prior to that date, the Company shall accelerate the vesting of
123,020 shares of
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Common Stock subject to earned deferred stock awards and 13,000 shares of
Common Stock subject to outstanding stock options ("STOCK OPTIONS") granted
under the Company's 1994 Stock Incentive Plan (the "STOCK INCENTIVE PLAN").
(ii) As of the Effective Time, each
outstanding Stock Option shall be assumed by Parent and shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Stock Option, the same number of shares of Parent Common
Stock as the holder of such Stock Option would have been entitled to receive
pursuant to the Merger had such holder exercised such Stock Option in full
immediately prior to the Effective Time at a price per share equal to the
aggregate exercise price for the shares subject to such Stock Option divided by
the number of full shares of Parent Common Stock deemed to be purchasable
pursuant to such Stock Option; PROVIDED, HOWEVER, that the number of shares of
Parent Common Stock that may be purchased upon exercise of such Stock Option
shall not include any fractional share and, upon the first such exercise of
such Stock Option, a cash payment shall be made for any fractional share
calculated in accordance with and in the manner provided for calculations as to
be paid in lieu of fractional shares as part of the Merger Consideration under
Section 2.2(g).
(iii) As of the Effective Time, Parent
shall grant deferred stock awards in respect of an aggregate of 404,250 shares
of Common Stock under the Stock Incentive Plan as an incentive "stay" bonus
(the "STAY BONUS") to be allocated among persons who participate in the Stock
Incentive Plan and who remain in the employ of the Company, a Company
Subsidiary or Company Joint Venture through the Effective Time. Such award
shall be converted into shares of Parent Common Stock in the same manner that
Common Stock shall be converted in connection with the Merger pursuant to
Section 2.1(b) of this Agreement. Shares awarded to participants pursuant to
the Stay Bonus shall vest in three equal installments on each of April 1, 1997,
August 1, 1997 and January 1, 1998, subject to earlier vesting as provided in
the severance program attached hereto as EXHIBIT H.
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(iv) As of the Effective Time, Parent
shall assume the Stock Incentive Plan, providing for issuance of Parent Common
Stock in lieu of Common Stock, which shall be converted in the same manner that
Common Stock is converted in connection with the Merger pursuant to Section
2.1(b) of this Agreement, and its Board of Directors shall appoint a committee
to administer the Plan (the "COMMITTEE"). With respect to unearned long-term
incentive deferred stock awards previously allocated to participants in the
Stock Incentive Plan for fiscal years 1996, 1997 and 1998, the Committee shall
establish new funds from operations ("FFO") growth targets for such awards,
based on the consolidated FFO of Parent and the Surviving Corporation, which
targets shall be the same as those applicable to restricted stock grants made
under the Parent Operating Partnership Employee Stock Plan and which shall be
$2.39 per share for 1996. The FFO growth targets for 1997 and 1998 shall be
set by the Committee but shall not exceed $2.58 per share for 1997, and $2.79
per share for 1998. In each case, FFO shall be calculated in a manner
consistent with that proposed by the National Association of Real Estate
Investment Trusts. As a condition to continued eligibility for such long-term
awards, a Stock Incentive Plan participant shall be required to enter into an
agreement with the Company and/or Parent, in form and substance reasonably
satisfactory to Parent, acknowledging the substitution of Parent Common Stock
in lieu of Common Stock, the establishment of such new FFO growth targets, and
such other terms not inconsistent with the terms of the Stock Incentive Plan as
the Committee deems reasonable.
(c) SEVERANCE PROGRAM. As of the Effective Time,
the Company shall adopt a severance program substantially in the form attached
hereto as EXHIBIT H, and Parent shall cause the Company (or its successors or
assigns) to maintain such severance program in accordance with the terms
thereof.
(d) COOPERATION. The Company and Parent shall
cooperate in good faith with respect to the effectuation of the covenants
described in subsections (b) and (c).
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SECTION 5.13 PRIVATE PLACEMENT OF COMMON STOCK OF SUB.
Each of Parent and Sub shall use its best efforts to cause 110 "accredited
investors" (as defined in Rule 501(a) under the Securities Act) to purchase, on
or prior to the Effective Date, a fractional share equal to .001 share of the
Sub Common Stock, at a purchase price of $1,000 per .001 share.
SECTION 5.14 INDEMNIFICATION; DIRECTORS' AND OFFICERS'
INSURANCE.
(a) The Company shall, and from and after the
Effective Time, Parent and the Surviving Corporation shall, indemnify, defend
and hold harmless each person who is now or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer or director
of the Company or any Company Subsidiary (the "INDEMNIFIED PARTIES") against
all losses, claims, damages, costs, expenses (including attorneys' fees and
expenses), liabilities or judgments or amounts that are paid in settlement of,
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld), or otherwise in connection with any threatened or
actual claim, action, suit proceeding or investigation with any threatened or
actual claim, action, suit, proceeding or investigation based on or arising out
of the fact that such person is or was a director or officer of the Company or
any Company Subsidiary at or prior to the Effective Time, whether asserted or
claimed prior to, or at or after, the Effective Time ("INDEMNIFIED
LIABILITIES"), including all Indemnified Liabilities based on, or arising out
of, or pertaining to this Agreement or the Transactions, in each case to the
full extent a corporation is permitted under the Ohio Statute to indemnify its
own directors or officers as the case may be (and Parent and the Surviving
Corporation, as the case may be, will pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law subject to the limitations set forth in the fourth
sentence of this Section 5.14(a)). Any Indemnified Parties proposing to assert
the right to be indemnified under this Section 5.14 shall, promptly after
receipt of notice of commencement of any action against such Indemnified
Parties in respect of which a claim is to be
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made under this Section 5.14 against the Company, and from and after the
Effective Time, Parent and the Surviving Corporation (collectively, the
"INDEMNIFYING PARTIES"), notify the Indemnifying Parties of the commencement of
such action, enclosing a copy of all papers served. If any such action is
brought against any of the Indemnified Parties and such Indemnified Parties
notify the Indemnifying Parties of its commencement, the Indemnifying Parties
will be entitled to participate in and, to the extent that they elect by
delivering written notice to such Indemnified Parties promptly after receiving
notice of the commencement of the action from the Indemnified Parties, to
assume the defense of the action and after notice from the Indemnifying Parties
to the Indemnified Parties of their election to assume the defense, the
Indemnifying Parties will not be liable to the Indemnified Parties for any
legal or other expenses except as provided below and except for the reasonable
costs of investigation subsequently incurred by the Indemnified Parties in
connection with the defense. If the Indemnifying Parties assume the defense,
the Indemnifying Parties shall have the right to settle such action without the
consent of the Indemnified Parties; PROVIDED, HOWEVER, that the Indemnifying
Parties shall be required to obtain such consent (which consent shall not be
unreasonably withheld) if the settlement includes any admission or wrongdoing
on the part of the Indemnified Parties or any decree or restriction on the
Indemnified Parties or their officers or directors; PROVIDED, FURTHER, that no
Indemnifying Parties, in the defense of any such action shall, except with the
consent of the Indemnified Parties (which consent shall not be unreasonably
withheld), consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Parties of a release from all liability with
respect to such action. The Indemnified Parties will have the right to employ
their own counsel in any such action, but the fees, expenses and other charges
of such counsel will be at the expense of such Indemnified Parties unless (i)
the employment of counsel by the Indemnified Parties has been authorized in
writing by the Indemnifying Parties, (ii) the Indemnified Parties have
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to them that are different
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from or in addition to those available to the Indemnifying Parties, (iii) a
conflict or potential conflict exists (based on advice of counsel to the
Indemnified Parties) between the Indemnified Parties and the Indemnifying
Parties (in which case the Indemnifying Parties will not have the right to
direct the defense of such action on behalf of the Indemnified Parties) or (iv)
the Indemnifying Parties have not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
Indemnifying Parties. It is understood that the Indemnifying Parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm admitted to practice in such
jurisdiction at any one time from all such Indemnified Parties unless (a) the
employment of more than one counsel has been authorized in writing by the
Indemnifying Parties, (b) any of the Indemnified Parties have reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to them that are different from or in addition to those available to
other Indemnified Parties or (c) a conflict or potential conflict exists (based
on advice of counsel to the Indemnified Parties) between any of the Indemnified
Parties and the other Indemnified Parties, in each case of which the
Indemnifying Parties shall be obligated to pay the reasonable fees and expenses
of such additional counsel or counsels. The Indemnifying Parties will not be
liable for any settlement of any action or claim effected without their written
consent (which consent shall not be unreasonably withheld).
(b) Parent shall obtain and maintain in effect at
the Effective Time and continuing until the sixth anniversary of the Effective
Time "run-off" directors and officers liability insurance with a coverage
amount of $15,000,000 and other terms and conditions comparable to Parent's
current directors and officers liability insurance policy covering the
directors and officers of the Company with respect to their service as such
prior to the Effective Time.
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(c) The provisions of this Section 5.14 are
intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party, his or her heirs and his or her personal representatives and
shall be binding on all successors and assigns of Parent, Sub, the Company and
the Surviving Corporation.
SECTION 5.15 RELATED AGREEMENTS. The Company hereby
agrees that it shall:
(a) at the Effective Time, in its capacity as
general partner of the Operating Partnership, execute and deliver one or more
Contribution Agreements, each substantially in the form attached hereto as
EXHIBIT A, with the holders of Parent Units and shall in such capacity satisfy
its obligations thereunder; and
(b) subject to the receipt of all necessary
consents from the limited partners of the Operating Partnership, in its
capacity as general partner of the Operating Partnership, execute and deliver
the Amended and Restated Operating Partnership Agreement (as defined below).
SECTION 5.16 SPECIAL TAX DISTRIBUTIONS TO THE COMPANY
REINVESTED. Prior to the Effective Time, the Company shall reinvest in or
contribute to the Operating Partnership the amount of any special tax
distributions paid by the Operating Partnership to the Company.
SECTION 5.17 AMENDMENT OF PARENT OPERATING PARTNERSHIP
AGREEMENT. The parties agree to negotiate in good faith to amend and restate
the Parent Operating Partnership Agreement (concurrently with the consummation
of the Merger) in a form reasonably acceptable to each of Parent and the
Company. Such amendment and restatement of the Parent Operating Partnership
Agreement shall provide, among other things, for special limited partnership
interests that will be acquired by the Operating Partnership pursuant to the
Contribution Agreement, upon effectiveness of the Merger, that will include the
following rights and powers: (a) the right to receive information concerning
any matter affecting the partnership; (b) the right to approve the acquisition,
disposition or encumbrance (other than as a
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result of operating leases or in the ordinary course of business) of
partnership real property; (c) the right to approve a merger, liquidation or
dissolution of the partnership and the sale of all or substantially all of its
assets; (d) the right to approve any borrowing or lending; (e) the right to
approve the admission of additional general or limited partners, the making of
additional capital contributions, the withdrawal of any part of a partner's
capital contribution and the transfer or assignment of any partnership
interest; and (f) the right to approve the making, modification or withdrawal
of tax elections.
SECTION 5.18 ADDITIONAL PARENT AGREEMENTS. The Parent
hereby agrees that it shall (i) at the Effective Time, execute and deliver the
Contribution Agreement substantially in the form attached hereto as EXHIBIT A
and satisfy its obligations thereunder and (ii) execute and deliver, at the
Effective Time, the Amended and Restated Operating Partnership Agreement (as
defined below).
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGER. The respective obligation of each party to effect the
Merger and to consummate the other Transactions contemplated to occur on the
Closing Date is subject to the satisfaction or waiver on or prior to the
Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall
have been approved and adopted by the Shareholder Approvals.
(b) HSR ACT. The waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired.
(c) LISTING OF SHARES. The NYSE shall have
approved for listing the Parent Common Stock to be issued in the Merger.
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(d) REGISTRATION STATEMENT. The Registration
Statement shall have become effective under the Securities Act and shall not be
the subject of any stop order or proceedings by the SEC seeking a stop order.
(e) NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger or any of the other Transactions
shall be in effect.
(f) BLUE SKY LAWS. Parent shall have received
all state securities or "blue sky" permits and other authorizations necessary
to issue the shares of Parent Common Stock comprising the Merger Consideration.
(g) RELATED TRANSACTIONS. The Stock Purchase
Agreement, the Stockholders Agreement and the Termination Agreement shall
remain in full force and effect and the respective transactions contemplated
thereby shall have been consummated prior to, or are being consummated
simultaneously with, the Merger. The Contribution Agreement shall have been
duly executed by the Company (in its capacity as general partner of the
Operating Partnership), Parent and each Parent Principal owning Parent Units,
shall remain in full force and effect and the transactions contemplated thereby
shall have been consummated simultaneously with the Merger. An Amended and
Restated Operating Partnership Agreement substantially in the form appended
hereto as EXHIBIT I (the "AMENDED AND RESTATED OPERATING PARTNERSHIP
AGREEMENT"), an Amended and Restated Parent Operating Partnership Agreement in
a form reasonably acceptable to each of Parent and the Company as provided in
and subject to Section 5.17 (the "AMENDED AND RESTATED PARENT OPERATING
PARTNERSHIP AGREEMENT") and a Registration Rights Agreement substantially in
the form appended hereto as EXHIBIT K shall each have been duly executed and
delivered by the parties thereto and shall remain in full force and effect.
(h) CERTAIN ACTIONS AND CONSENTS. All material
actions by or in respect of or filings with any
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Governmental Entity required for the consummation of the Transactions shall
have been obtained or made.
(i) EJDC LENDER CONSENTS. All material consents
and waivers of lenders to EJDC necessary in connection with the consummation of
the Transactions shall have been obtained.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB.
The obligations of Parent and Sub to effect the Merger and to consummate the
other Transactions contemplated to occur on the Closing Date are further
subject to the following conditions any one or more of which may be waived by
both Parent and Sub:
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company (without giving effect to any
"materiality" qualification or limitation) set forth in this Agreement shall be
true and correct as of the Closing Date, as though made on and as of the
Closing Date, except to the extent the representation or warranty is expressly
limited by its terms to another date, and Parent shall have received a
certificate (which certificate may be qualified by knowledge to the same extent
as such representations and warranties are so qualified) signed on behalf of
the Company by the chief executive officer or the chief financial officer of
the Company to such effect. This condition shall be deemed satisfied
notwithstanding any failure of a representation or warranty of the Company to
be true and correct as of the Closing Date (without giving effect to any
materiality qualification) if the aggregate amount of Economic Losses (as
defined below) that would reasonably be expected to arise as a result of the
failures of such representations and warranties to be true and correct as of
the Closing Date does not exceed $58,000,000 (such amount to be calculated by
counting in all cases from the first dollar of such Economic Losses without
giving effect to the $58,000,000 limitation set forth in Section 3.1(f)).
"ECONOMIC LOSSES" shall mean any and all net damage, net loss (including
diminution in the value of properties or assets), net liability or expense
suffered by the Company and the Company Interests taken as a whole, but shall
not include any claims, damages, loss, expense or
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other liability resulting from any class action or shareholders' derivative
lawsuits relating to the Transactions against the Company, if any, filed
subsequent to the date of this Agreement or any amounts paid or expenses
incurred by the Company in obtaining non-governmental third party consents, as
contemplated by Section 5.3 up to the amount of $5,000,000 provided therein.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY.
The Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Effective Time, and each of Parent and Sub shall have received a certificate
signed on behalf of the Company by the chief executive officer or the chief
financial officer of the Company to such effect.
(c) MATERIAL ADVERSE CHANGE. Since the date of
this Agreement, there has been no material adverse change in the business,
results of operations or financial condition of the Company and the Company
Subsidiaries and Company Joint Ventures (but only to the extent of the Company
Interests with respect to a Company Joint Venture) taken as a whole, that have
resulted or would result individually or in the aggregate, in Economic Losses
of $58,000,000 or more, without giving effect to a general decline in the U.S.
economy or an adverse change in the financial condition of specialty retail
tenants or department stores. Each of Parent and Sub shall have received a
certificate of the chief executive officer or chief financial officer of the
Company to the effect that there has been no such material adverse change.
(d) OPINIONS RELATING TO REIT AND PARTNERSHIP
STATUS. Each of Parent and Sub shall have received (i) an opinion of Willkie
Farr & Gallagher, dated as of the Closing Date, reasonably satisfactory to each
of Parent and Sub that commencing with the taxable year ended December 31, 1994
(A) the Company was organized and has operated in conformity with the
requirements for qualification as a REIT within the meaning of the Code and (B)
each Company Joint Venture, the Operating Partnership, the Financing
Partnership and each other Company Subsidiary that is a
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partnership, joint venture or limited liability company has been during and
since 1994, and continues to be, treated for federal income tax purposes as a
partnership and not as a corporation or an association taxable as a corporation
and (ii) an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to
Parent, reasonably satisfactory to Parent, that, (A) commencing with its
taxable year ended December 31, 1994, Parent was organized and has operated in
conformity with the requirements for qualification as a REIT and that, after
giving effect to the Merger, the Parent's proposed method of operation will
enable it to continue to meet the requirements for qualification and taxation
as a REIT under the Code and (B) the Parent Operating Partnership and each
Parent Joint Venture has been during and since 1994, and continues to be,
treated for federal income tax purposes as partnerships, and not as
corporations or associations taxable as corporations (in the case of each of
(A) and (B) above, with customary exceptions, assumptions and qualifications).
(e) OTHER TAX OPINION. Each of Parent and Sub
shall have received an opinion dated the Closing Date from Willkie Farr &
Gallagher, based upon certificates and letters, which letters and certificates
are substantially in the form set forth in EXHIBIT L hereto and dated the
Closing Date, to the effect that the Merger will qualify as a reorganization
under the provisions of Section 368(a) of the Code.
(f) CONSENTS. All consents and waivers
(including without limitation, waivers of rights of first refusal) from third
parties necessary in connection with the consummation of the Transactions shall
have been obtained, other than such consents and waivers from third parties,
which, if not obtained, would not result, individually or in the aggregate, in
Economic Losses of $58,000,000 or more.
Notwithstanding the foregoing, neither Parent nor Sub shall be
obligated to effect the Merger if the Economic Losses resulting from the
failure of one or more of the conditions set forth in Sections 6.2(a), 6.2(c)
and 6.2(f) to be satisfied (the determination of whether a failure of any of
such conditions has occurred for the purposes of this
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sentence being made without giving effect to the $58,000,000 limitations set
forth in such subsections), in the aggregate, but without duplication exceeds
$58,000,000.
SECTION 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY.
The obligation of the Company to effect the Merger and to
consummate the other Transactions contemplated to occur on the Closing Date is
further subject to the following conditions, any one or more of which may be
waived by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each of Parent and Sub set forth in this
Agreement that are qualified as to materiality shall be true and correct, and
the representations and warranties of Parent set forth in this Agreement that
are not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date, as
though made on and as of the Closing Date, except to the extent the
representation or warranty is expressly limited by its terms to another date,
and the Company shall have received a certificate (which certificate may be
qualified by knowledge to the same extent as the representations and warranties
of each of Parent and Sub contained herein are so qualified) signed on behalf
of each of Parent and Sub by the chief executive officer and the chief
financial officer of such party to such effect. This condition shall be deemed
satisfied unless any or all breaches of either Parent's or Sub's
representations and warranties in this Agreement (without giving effect to any
materiality qualification or limitation) have a Parent Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF EACH OF PARENT
AND SUB. Each of Parent and Sub shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Effective Time, and the Company shall have received a certificate of
each of Parent and Sub signed on behalf of such party by the chief executive
officer or the chief financial officer of such party to such effect.
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(c) MATERIAL ADVERSE CHANGE. Since the date of
this Agreement, there shall have been no Parent Material Adverse Change and the
Company shall have received a certificate of the chief executive officer or
chief financial officer of the Parent to such effect.
(d) OPINION RELATING TO REIT STATUS. The Company
shall have received an opinion of Paul, Weiss, Rifkind, Wharton & Garrison,
counsel to Parent, reasonably satisfactory to the Company, that, (A) commencing
with its taxable year ended December 31, 1994, Parent was organized and has
operated in conformity with the requirements for qualification as a REIT and
that, after giving effect to the Merger, the Parent's proposed method of
operation will enable it to continue to meet the requirements for qualification
and taxation as a REIT under the Code and (B) the Parent Operating Partnership
and each Parent Joint Venture has been during and since 1994, and continues to
be, treated for federal income tax purposes as partnerships, and not as
corporations or associations taxable as corporations (in the case of (A) and
(B) above with customary exceptions, assumptions and qualifications).
(e) OTHER TAX OPINION. The Company shall have
received an opinion dated the Closing Date from Paul, Weiss, Rifkind, Wharton &
Garrison, based upon certificates and letters, which letters and certificates
are substantially in the form set forth in EXHIBIT M hereto and dated the
Closing Date, to the effect that the Merger will qualify as a reorganization
under the provisions of Section 368(a) of the Code.
(f) CONSENTS. All consents and waivers
(including, without limitation, waivers or rights of first refusal) from third
parties necessary in connection with the consummation of the Transactions shall
have been obtained, other than such consents and waivers from third parties,
which, if not obtained, would not have a Parent Material Adverse Effect.
(g) THE INVESTMENT COMPANY ACT OPINION. The
Company shall have received a favorable opinion dated the
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Closing Date from Paul, Weiss, Rifkind, Wharton & Garrison, as to the matter
described in EXHIBIT N.
Notwithstanding the foregoing, the Company shall not be
obligated to effect the Merger if the failure of one or more of the conditions
set forth in Sections 6.3(a), 6.3(c) and 6.3(f) to be satisfied (the
determination of whether a failure of any of such conditions has occurred for
the purposes of this sentence being made without giving effect to any
materiality qualification or limitation set forth in such subsections), in the
aggregate, causes a Parent Material Adverse Effect.
ARTICLE VII
Board Actions
-------------
SECTION 7.1 BOARD ACTIONS. Notwithstanding Section 5.7
or any other provision of this Agreement to the contrary, to the extent
required by the fiduciary obligations of the Board of Directors of the Company,
as determined in good faith based on the advice of the Company's outside
counsel, the Company may:
(a) disclose to the shareholders of the Company
any information required to be disclosed under applicable law;
(b) in response to an unsolicited request
therefor, participate in discussions or negotiations with, or furnish
information with respect to the Company pursuant to a confidentiality agreement
no less favorable to the Company than the Confidentiality Agreement (as
determined by the Company's outside counsel) to, any person in connection with
a Competing Transaction proposed by such person; and
(c) approve or recommend (and, in connection
therewith withdraw or modify its approval or recommendation of this Agreement
or the Merger) a Superior Competing Transaction (as defined below) or enter
into an agreement with respect to such Superior Competing Transaction (For
purposes of this Agreement, "SUPERIOR COMPETING TRANSACTION"
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means a bona fide proposal of a Competing Transaction made by a third party
which a majority of the members of Board of Directors of the Company determines
in good faith (based on the advice of the Company's investment banking firm of
national reputation) to be more favorable from a financial point of view to the
Company's shareholders than the Merger, and for which financing, to the extent
required, is then committed).
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.1 TERMINATION. This Agreement may be
terminated at any time prior to the filing of the Certificate of Merger with
the Secretary of State of the State of Ohio, whether before or after either of
the Shareholder Approvals are obtained:
(a) by mutual written consent duly authorized by
the respective Boards of Directors of Parent and the Company;
(b) by Parent, upon a breach of any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions set forth in
Section 6.2(a) or Section 6.2(b), as the case may be, would be incapable of
being satisfied by October 30, 1996 (as otherwise extended);
(c) by the Company, upon a breach of any
representation, warranty, covenant or agreement on the part of Parent set forth
in this Agreement, or if any representation or warranty of Parent shall have
become untrue, in either case such that the conditions set forth in Section
6.3(a) or Section 6.3(b), as the case may be, would be incapable of being
satisfied by October 30, 1996 (as otherwise extended);
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(d) by either Parent or the Company, if any
judgment, injunction, order, decree or action by any Governmental Entity of
competent authority preventing the consummation of the Merger shall have become
final and nonappealable;
(e) by either Parent or the Company, if the
Merger shall not have been consummated before October 30, 1996; PROVIDED,
HOWEVER, that a party that has willfully and materially breached a
representation, warranty or covenant of such party set forth in this Agreement
shall not be entitled to exercise its right to terminate under this Section
8.1(e);
(f) by either Parent or the Company if, upon a
vote at a duly held Company Shareholders Meeting or any adjournment thereof,
the Company Shareholder Approvals shall not have been obtained as contemplated
by Section 5.1;
(g) by either Parent or the Company if, upon a
vote at a duly held Parent Stockholders Meeting or any adjournment thereof, the
Parent Stockholder Approvals shall not have been obtained as contemplated by
Section 5.1;
(h) by the Company, upon payment to Parent of the
amounts referred to in Section 8.2(b), if prior to the Company Shareholders
Meeting, the Board of Directors of the Company shall have withdrawn or modified
in any manner adverse to Parent and Sub its approval or recommendation of the
Merger or this Agreement in connection with, or approved or recommended, a
Superior Competing Transaction; and
(i) by Parent if (i) prior to the Company
Shareholders Meeting, the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in any manner adverse to Parent and
Sub its approval or recommendation of the Merger or this Agreement in
connection with, or approved or recommended, any Superior Competing
Transaction, (ii) the Company shall have entered into any agreement with
respect to any Competing Transaction (other than a confidentiality agreement as
contemplated by Section 7.1(b)) or (iii) the Board of Directors of the Company
or
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any committee thereof shall have resolved to do any of the foregoing.
(j) by the Company if the Average Closing Price
(as defined below) is less than $21.25. "AVERAGE CLOSING PRICE" shall mean the
average of the closing prices of Parent Common Stock on the NYSE for all
trading days beginning on the eighteenth trading day prior to the date of the
Company Shareholder Meeting and ending on and including the third trading day
prior to such date.
SECTION 8.2 EXPENSES.
(a) Except as otherwise specified in this Section
8.2 or agreed in writing by the parties, all out-of-pocket costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense.
(b) The Company agrees that if this Agreement
shall be terminated (i) pursuant to Section 8.1(b), (f), (h) or (i) and, in the
case of Section 8.1(b) or (f), following the date of this Agreement and prior
to termination, the Company shall have received a proposal constituting a
Competing Transaction and within 12 months following termination the Company
shall enter into a definitive agreement providing for a Competing Transaction
that is equally or more favorable from a financial point of view to the
Company's shareholders as the Merger, then the Company will pay as directed by
Parent a fee in an amount equal to the Break-Up Fee (as defined below) and (ii)
pursuant to Section 8.1(b) and following the date of this Agreement and prior
to termination the Company shall have received a proposal constituting a
Competing Transaction, the Company shall have willfully breached any
representation, warranty or covenant of the Company set forth in this Agreement
and within 12 months following termination, the Company shall enter into a
definitive agreement providing for a Competing Transaction that is not equally
or more favorable from a financial point of view to the Company's shareholders
as the Merger, then the Company will pay, as directed by Parent an amount equal
to the Break-Up Expenses (as defined below). Payment of any of
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such amounts shall be made, as directed by Parent, by wire transfer of
immediately available funds promptly, but in no event later than two business
days after such termination. The "BREAK-UP FEE" shall be an amount equal to
the lesser of (i) $35,000,000 (the "BASE AMOUNT") and (ii) the sum of (A) the
maximum amount that can be paid to Parent without causing it to fail to meet
the requirements of Section Section 856(c)(2) and (3) of the Code determined as
if the payment of such amount did not constitute income described in Section
Section 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the code ("QUALIFYING
INCOME"), as determined by independent accountants to Parent and (B) in the
event Parent receives a letter from outside counsel (the "BREAK-UP FEE TAX
OPINION") indicating that Parent has received a ruling from the IRS holding
that Parent's receipt of the Base Amount would either constitute Qualifying
Income or would be excluded from gross income within the meaning of Section
Section 856(c)(2) and (3) of the Code (the "REIT REQUIREMENTS") or that the
receipt by Parent of the remaining balance of the Base Amount following the
receipt of and pursuant to such ruling would not be deemed constructively
received prior thereto, the Base Amount less the amount payable under clause
(A) above. The Company's obligation to pay the Break-Up Fee shall terminate
three years from the date of this Agreement. In the event that Parent is not
able to receive the full Base Amount, the Company shall place the unpaid amount
in escrow and shall not release any portion thereof to Parent unless and until
the Company receives any one or combination of the following: (i) a letter
from Parent's independent accountants indicating the maximum amount that can be
paid at that time to Parent without causing Parent to fail to meet the REIT
Requirements or (ii) a Break-Up Fee Tax Opinion, in which event the Company
shall pay to Parent the lesser of the unpaid Base Amount or the maximum amount
stated in the letter referred to in (i) above. The "BREAK-UP EXPENSES" shall
be an amount equal to the lesser of (i) Parent's out-of-pocket expenses
incurred in connection with this Agreement and the Transactions (including,
without limitation, all attorneys', accountants' and investment bankers' fees
and expenses) but in no event in an amount greater than $7,500,000 (the
"EXPENSE FEE BASE AMOUNT") and (ii) the sum of (A) the maximum amount that can
be paid to Parent without causing it to fail to meet the requirements
<PAGE> 95
82
of Sections 856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute Qualifying Income, as determined by independent
accountants to Parent and (B) in the event Parent receives a Break-Up Fee Tax
Opinion indicating that Parent has received a ruling from the IRS holding that
Parent's receipt of the Expense Fee Base Amount would either constitute
Qualifying Income or would be excluded from gross income within the meaning of
the REIT Requirements or that receipt by Parent of the remaining balance of the
Expense Fee Base Amount following the receipt of and pursuant to such ruling
would not be deemed constructively received prior thereto, the Expense Fee Base
Amount less the amount payable under clause (A) above. The Company's
obligation to pay the Break-Up Expenses shall terminate three years from the
date of this Agreement. In the event that Parent is not able to receive the
full Expense Fee Base Amount, the Company shall place the unpaid amount in
escrow and shall not release any portion thereof to Parent unless and until the
Company receives any one or combination of the following: (i) a letter from
Parent's independent accountants indicating the maximum amount that can be paid
at that time to Parent without causing Parent to fail to meet the REIT
Requirements or (ii) a Break-Up Fee Tax Opinion, in which event the Company
shall pay to Parent the lesser of the unpaid Expense Fee Base Amount or the
maximum amount stated in the letter referred to in (i) above.
(c) Parent agrees that if the Company is entitled
to terminate this Agreement by reason of the failure of Parent to satisfy, by
October 30, 1996, the conditions to the obligations of the Company to effect
the Merger set forth in Section 6.3(f) and so exercises such right to
terminate, then Parent will pay a fee in an amount equal to the Termination Fee
(as defined below) as directed by the Operating Partnership. Payments of any
such amounts shall be made, as directed by the Operating Partnership, by wire
transfer of immediately available funds promptly, but in no event later than
two business days after such termination. The "TERMINATION FEE" shall be an
amount equal to the lesser of (i) $35,000,000 (the "TERMINATION FEE BASE
AMOUNT") and (ii) the sum of (A) the maximum amount that can be paid to the
Operating Partnership without causing the
<PAGE> 96
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Company to fail to meet the requirements of Section Section 856(c)(2) and (3)
of the Code determined as if the payment of such amount did not constitute
Qualifying Income, as determined by independent accountants to the Company and
(B) in the event the Company receives a letter from outside counsel (the
"TERMINATION FEE TAX OPINION") indicating that the Company has received a
ruling from the IRS holding that the Operating Partnership's receipt of the
Termination Fee Base Amount would either constitute Qualifying Income or would
be excluded from gross income within the meaning of the REIT Requirements or
that the receipt by the Operating Partnership of the remaining balance of the
Termination Fee Base Amount following the receipt of and pursuant to such
ruling would not be deemed constructively received prior thereto, the
Termination Fee Base Amount less the amount payable under clause (A) above.
Parent's obligation to pay the Termination Fee shall terminate three years from
the date of this Agreement. In the event that the Operating Partnership is not
able to receive the full Termination Fee Base Amount, Parent shall place the
unpaid amount in escrow and shall not release any portion thereof to the
Operating Partnership unless and until Parent receives any one or combination
of the following: (i) a letter from the Company's independent accountants
indicating the maximum amount that can be paid at that time to the Operating
Partnership without causing the Company to fail to meet the REIT Requirements
or (ii) a Termination Fee Tax Opinion, in which event Parent shall pay to the
Operating Partnership the lesser of the unpaid Termination Fee Base Amount or
the maximum amount stated in the letter referred to in (i) above.
SECTION 8.3 EFFECT OF TERMINATION. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 8.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, or the Company,
other than the last sentence of Section 5.2, Section 8.2, this Section 8.3 and
Article IX and except to the extent that such termination results from a
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
<PAGE> 97
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SECTION 8.4 AMENDMENT. This Agreement may be amended by
the parties in writing by action of their respective Boards of Directors at any
time before or after any Shareholder Approvals are obtained and prior to the
filing of the Certificate of Merger with the Secretary of State of the State of
Ohio; PROVIDED, HOWEVER, that, after the Shareholder Approvals are obtained, no
such amendment, modification or supplement shall alter the amount or change the
form of the consideration to be delivered to the Company's shareholders or
alter or change any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the Company's shareholders or the
Parent's stockholders.
SECTION 8.5 EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other party, (b) waive any inaccuracies
in the representations and warranties of the other party contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 8.4, waive compliance with any of the
agreements or conditions of the other party contained in this Agreement (Parent
and Sub being deemed one party for the purposes of this Section 8.5). Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
Any waivers pursuant to clause (c) of the second preceding sentence (i) of the
provisions of Section 4.1(e) may be given in writing on behalf of Parent and
Sub by the Chief Executive Officer of Parent and (ii) of the provisions of
Section 4.2(e) may be given in writing by or on behalf of the Company by the
Chief Executive Officer of the Company. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
<PAGE> 98
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ARTICLE IX
General Provisions
------------------
SECTION 9.1 NONSURVIVAL OF REPRESENTATIONS AND
WARRANTIES. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
SECTION 9.2 NOTICES. All notices, requests, claims,
demands and other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally, sent by overnight courier
(providing proof of delivery) to the parties or sent by telecopy (providing
confirmation of transmission) at the following addresses or telecopy numbers
(or at such other address or telecopy number for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
Simon Property Group, Inc.
Merchants Plaza
115 West Washington Street
Suite 15 East
Indianapolis, IN 46204
Attn: David Simon
James M. Barkley, Esq.
Fax: (317) 685-7221
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Attn: Edwin S. Maynard, Esq.
Toby S. Myerson, Esq.
Fax: (212) 757-3990
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(b) if to the Company, to
DeBartolo Realty Corporation
7655 Market Street
P.O. Box 3287
Youngstown, Ohio 44513-3287
Attn: Richard S. Sokolov
Fax: (216) 758-1610
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attn: Richard L. Posen, Esq.
William N. Dye, Esq.
Fax: (212) 821-8111
SECTION 9.3 CERTAIN DEFINITIONS. For purposes of this
Agreement:
An "AFFILIATE" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
"COMPANY DISCLOSURE LETTER" means the letter previously
delivered to each of Parent and Sub by the Company disclosing certain
information in connection with this Agreement.
"COMPANY INTERESTS" means, collectively, the Company
Subsidiaries and all direct or indirect interests of the Company or any Company
Subsidiary in any Company Joint Venture.
"COMPANY JOINT VENTURE" means, collectively, any partnership,
joint venture or business trust in which the Operating Partnership or the
Financing Partnership owns an interest.
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"COMPANY SUBSIDIARY" means the Management Company and each
Subsidiary of the Company, including, without limitation, the Operating
Partnership, the Financing Partnership and each Subsidiary (if any) of the
Operating Partnership or the Financing Partnership (as defined below), but
excluding Company Joint Ventures.
"EJDC" means The Edward J. DeBartolo Corporation, an Ohio
corporation.
"FINANCING PARTNERSHIP" means DeBartolo Capital Partnership, a
Delaware general partnership.
"KNOWLEDGE" where used herein with respect to the Company
shall mean the knowledge of the persons named in SCHEDULE 9.3 to the Company
Disclosure Letter and where used with respect to Parent shall mean the
knowledge of the persons named in SCHEDULE 9.3 to the Parent Disclosure Letter.
"MAJORITY COMPANY JOINT VENTURE" means, collectively, all
Company Joint Ventures identified as Majority Company Joint Ventures on
SCHEDULE 3.1(B)(II) to the Company Disclosure Letter.
"MANAGEMENT COMPANY" means The DeBartolo Properties
Management, Inc., an Ohio Corporation.
"MINORITY COMPANY JOINT VENTURE" means, collectively, all
Company Joint Ventures other than the Majority Company Joint Ventures.
"OPERATING PARTNERSHIP" means DeBartolo Realty Partnership,
L.P., a Delaware limited partnership.
"PARENT DISCLOSURE LETTER" means the letter previously
delivered to the Company by Parent and Sub disclosing certain information in
connection with this Agreement.
"PARENT INTERESTS" means, collectively, the Parent
Subsidiaries and all direct or indirect interests of Parent or any Parent
Subsidiary in any Parent Joint Venture.
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"PARENT JOINT VENTURE" means, collectively, any partnership,
business trust or joint venture in which the Parent Operating Partnership owns
an interest.
"PARENT MANAGEMENT COMPANY" means M.S. Management Associates,
Inc., a Delaware corporation.
"PARENT OPERATING PARTNERSHIP" means Simon Property Group,
L.P., a Delaware limited partnership.
"PARENT SUBSIDIARY" means each Subsidiary of Parent,
including, without limitation, the Parent Operating Partnership and each
Subsidiary (if any) of the Parent Operating Partnership but excluding Parent
Joint Ventures.
"PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
"SUBSIDIARY" of any person means any corporation, partnership,
limited liability company, joint venture or other legal entity of which such
person (either directly or through or together with another Subsidiary of such
person) owns 50% or more of the voting stock or other voting equity interests
of such corporation, partnership, limited liability company, joint venture or
other legal entity.
"WHOLLY-OWNED COMPANY JOINT VENTURE" means a Company Joint
Venture, all of the equity interests of which are owned by the Company, a
Company Subsidiary or another Wholly-Owned Company Joint Venture.
"WHOLLY-OWNED PARENT JOINT VENTURE" means a Parent Joint
Venture, all of the equity interests of which are owned by Parent, a Parent
Subsidiary or another Wholly-Owned Parent Joint Venture.
SECTION 9.4 INTERPRETATION. When a reference is made in
this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
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89
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
SECTION 9.5 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 9.6 ENTIRE AGREEMENT; NO THIRD-PARTY
BENEFICIARIES. This Agreement, the Confidentiality Agreement and the other
agreements entered into in connection with the Transactions (a) constitute the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter of
this Agreement and, (b) except for the provisions of Article II, Section
5.6(b)(ii), the next to last sentence of Section 5.12(a), Section 5.12(b) and
(c) and Section 5.14, are not intended to confer upon any person other than the
parties hereto any rights or remedies, it being understood that EJDC shall have
the right to enforce the provisions of Section 5.6(b)(ii).
SECTION 9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICT OF LAWS THEREOF, EXCEPT TO THE EXTENT THAT THE MERGER OR
OTHER TRANSACTIONS CONTEMPLATED HEREBY ARE REQUIRED TO BE GOVERNED BY THE OHIO
STATUTE.
SECTION 9.8 ASSIGNMENT. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement shall be assigned
or delegated, in whole or in part, by operation of law or otherwise by any of
the parties without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
<PAGE> 103
90
SECTION 9.9 ENFORCEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of New York or in any New York
State court located in New York City, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of
the parties hereto (a) consents to submit itself (without making such
submission exclusive) to the personal jurisdiction of any federal court located
in the State of New York or any New York State court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement and (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court.
<PAGE> 104
91
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
SIMON PROPERTY GROUP, INC.
By: /s/ DAVID SIMON
----------------------------------
Name: David Simon
Title: President
DAY ACQUISITION CORP.
By: /s/ DAVID SIMON
----------------------------------
Name: David Simon
Title: President
DeBARTOLO REALTY CORPORATION
By: /s/ RICHARD S. SOKOLOV
----------------------------------
Name: Richard S. Sokolov
Title: Chief Executive Officer
<PAGE> 105
Merger Agreement Schedules
--------------------------
<PAGE> 106
SCHEDULE A
Holders of Common Stock Delivering Proxies to Parent
----------------------------------------------------
BJS Capital Partners, L.P.
<PAGE> 107
SCHEDULE B
Holders of Parent Stock
Delivering Proxies to the Company
---------------------------------
Melvin Simon & Associates, Inc.
<PAGE> 108
SCHEDULE C
Parent Principals
-----------------
Melvin Simon
Herbert Simon
David Simon
Deborah J. Simon
Cynthia J. Simon
Irwin Katz, as Successor Trustee under Declaration of Trust and Trust Agreement
dated August 4, 1970
Irwin Katz, as Trustee of the Melvin Simon Trust No. 1, the Melvin Simon Trust
No. 6, the Melvin Simon Trust No. 7 and the Herbert Simon Trust No. 3
Melvin Simon & Associates, Inc.
Penn Simon Corporation
Naco Simon Corp.
Sandy Springs Properties, Inc.
Simon Enterprises, Inc.
S.F.G. Company, L.L.C.
Melvin Simon, Herbert Simon and David Simon, not individually but as voting
trustees under that certain Voting Trust Agreement, Voting Agreement
and Proxy dated as of December 1, 1993, between Melvin Simon &
Associates, Inc. and Melvin Simon, Herbert Simon and David Simon.
<PAGE> 109
SCHEDULE D
Company Principals
------------------
The Edward J. DeBartolo Corporation
The Estate of Edward J. DeBartolo
Edward J. DeBartolo, Jr., individually, and in his capacity as Trustee under
(i) the Lisa Marie DeBartolo Revocable Trust, (ii) the Tiffanie Lynne
DeBartolo Revocable Trust and (iii) Edward J. DeBartolo Trust No. 7
for the benefit of Nicole Anne DeBartolo
Cynthia R. DeBartolo
Marie Denise DeBartolo York, individually, and in her capacity as Trustee under
(i) Edward J. DeBartolo Trust No. 8 for the benefit of John Edward
York, (ii) Edward J. DeBartolo Trust No. 9 for the benefit of Anthony
John York, (iii) Edward J. DeBartolo Trust No. 10 for the benefit of
Mara Denise York and (iv) Edward J. DeBartolo Trust No. 11 for the
benefit of Jenna Marie York
Bay Park, Inc.
Ward Plaza Associates
Cheltenham Shopping Center Associates
Summit Mall, Inc.
Tyrone Square, Inc.
Upper Valley Mall, Inc.
Mission Viejo Mall, Inc.
Pinellas Square, Inc.
Great Lakes Mall, Inc.
Palm Beach Mall, Inc.
Lafayette Square, Inc.
Lima Mall, Inc.
Richmond Mall, Inc.
Woodville Mall, Inc.
DeBartolo Adventura, Inc.
Boynton Beach, Inc.
The Florida Mall Corporation
DeBartolo, Inc.
D.L. Grove, Inc.
TC Mall II, Inc.
Paddock Mall, Inc.
National Industrial Development Corporation
<PAGE> 110
SCHEDULE D (CONTINUED)
Great Northeast Mall, Inc.
Rues Properties, Inc.
Columbia SC I, Inc.
Columbia SC II, Inc.
Northgate I Real Estate Corporation
Northgate II Real Estate Corporation
Tacoma SC I, Inc.
Tacoma SC II, Inc.
Coral Square Associates
South Bend Associates
Washington Square Associates
H-Castleton
<PAGE> 111
EXHIBIT A
FORM OF CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT, dated as of _________, 1996 (the
"AGREEMENT"), by and among DeBartolo Realty Corporation, an Ohio corporation
("DEBARTOLO"), as the general partner of DeBartolo Realty Partnership, L.P., a
Delaware limited partnership ("DRP"), and, after the consummation of the
transactions contemplated hereby and by the Merger Agreement referred to below,
as a general partner of SDG (as hereinafter defined) (DRP simultaneously
herewith will change its name to Simon DeBartolo Group, L.P. ("SDG")), Simon
Property Group, Inc., a Maryland corporation ("SIMON"), in its individual
capacity and as the general partner of Simon Property Group, L.P., a Delaware
limited partnership ("SPG L.P."), and the limited partners of SPG L.P. listed
on SCHEDULE A (as supplemented from time to time pursuant to Section 1.2(c)
hereof) hereto ("SIMON", and, together with Simon, the "SUBSCRIBERS").
RECITALS
--------
(a) Simultaneously with the consummation of the merger of
Day Acquisition Corp. ("SUBCO") with and into DeBartolo (the "MERGER") and the
other transactions contemplated by the Agreement and Plan of Merger (the
"MERGER AGREEMENT"), dated as of March 26, 1996, among Simon, Subco and
DeBartolo, each Subscriber shall contribute to SDG, and SDG shall accept from
each such Subscriber, certain of its respective interests in SPG L.P.
(collectively, the "SIMON INTERESTS") specified pursuant to Recital (b) below,
and in consideration for such contributions by
<PAGE> 112
2
each Subscriber, and in exchange therefor, SDG shall issue to each Subscriber,
and each Subscriber shall receive from SDG, certain partnership interests in
SDG ("UNITS").
(b) Each Subscriber shall contribute to SDG, and SDG
shall accept from each such Subscriber, the Simon Interests set forth opposite
the name of each such Subscriber on SCHEDULE B hereto (as supplemented from
time to time pursuant to Section 1.2(c) hereof). SDG shall issue to each
Subscriber, and such Subscriber shall receive from SDG, the number of Units set
forth opposite the name of each such Subscriber on SCHEDULE C hereto (as
supplemented from time to time pursuant to Section 1.2(c) hereof).
(c) In order to consummate the transactions contemplated
by this Agreement at the Closing (as hereinafter defined), (i) the Fourth
Amended and Restated Agreement of Limited Partnership of DRP, dated as of April
21, 1994 (the "DEBARTOLO PARTNERSHIP AGREEMENT"), which, among other things,
will change the name of DRP to "Simon DeBartolo Group, L.P.," shall be amended
and restated in the form attached hereto as ANNEX A (the "NEW SDG PARTNERSHIP
AGREEMENT"), and (ii) the Second Amended and Restated Agreement of Limited
Partnership of SPG L.P., dated as of December 30, 1995 (the "OLD SPG
PARTNERSHIP AGREEMENT"), shall be amended and restated in the form attached
hereto as ANNEX B (the "NEW SPG PARTNERSHIP AGREEMENT").
(d) Capitalized terms used but not defined herein shall
have the respective meanings ascribed to such terms in the Merger Agreement.
<PAGE> 113
3
NOW THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereby agree as follows:
SECTION 1
CONTRIBUTION AND EXCHANGE; CLOSING
1.1 CONTRIBUTION AND EXCHANGE. Subject to the receipt of
the consents specified on SCHEDULE D hereto prior to the Closing in form and
substance satisfactory to DeBartolo and Simon, upon the terms and subject to
the other conditions of this Agreement, each Subscriber shall contribute to
SDG, and SDG shall accept from each such Subscriber, its respective Simon
Interests, as set forth opposite the name of each such Subscriber on SCHEDULE B
hereto.1 SDG shall issue to each Subscriber, and each Subscriber shall receive
from SDG, the number of Units set forth opposite the name of each such
Subscriber on SCHEDULE C hereto.2 If prior to the Closing SPG L.P. shall make
a cash flow distribution to its partners for all or any
__________________________________
1/ SCHEDULE B sets forth (i) the limited partner interest of each SPG L.P.
Limited Partner in SPG L.P. being transferred to SDG and (ii) with
respect to Simon s general partner interest in SPG L.P. being transferred
to SDG, units representing 10.5% of the total outstanding units in SPG
L.P. plus the assignment of 49.5% of the interest in the profits of SPG
L.P.
2/ SCHEDULE C sets forth the Units being issued to each SPG L.P. Limited
Partner in SDG as well as the non managing general partner interest being
issued to Simon in SDG. It is anticipated that subsequent to the first
anniversary of the Closing, Simon will transfer to SDG for no additional
consideration, all of its remaining economic interest in SPG L.P. other
than units constituting 1% of the total issued and outstanding units in
SPG L.P. It is also anticipated that 13 months after the Closing, all
Preferred Units owned by Simon will be transferred to SDG in exchange for
the same number of Preferred Units in SDG.
<PAGE> 114
4
portion of the period covered by the first cash flow distribution made by SDG
to its partners after the Closing, each Subscriber shall be entitled to receive
in respect of its Units that portion of such distribution made by SDG which
relates to the portion of the period, if any, not covered by the distribution
made by SPG L.P. and the balance of such distribution shall be made to the
other partners of SDG. If prior to the Closing DRP shall make a cash flow
distribution to its partners for all or any portion of the period covered by
the first cash flow distribution made by SPG L.P. to its partners after the
Closing, each partner of SDG who is not a Subscriber shall be entitled to
receive in respect of its Units that portion of such distribution made by SPG
L.P. which relates to the portion of the period, if any, not covered by the
distribution made by DRP and the balance of such distribution shall be made to
the Subscribers.
1.2 THE CLOSING. The closing for the contribution of
Simon Interests in exchange for Units as provided for hereunder (the
"CLOSING") shall take place concurrently with the consummation of the Merger at
the offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York. At the Closing:
(a) Each Subscriber shall deliver to SDG such
good and sufficient instruments of conveyance and assignment as SDG and its
counsel shall deem reasonably necessary or appropriate to vest in SDG good
title in and to the Simon Interests, respectively owned by each such
Subscriber, free and clear of all Liens.
(b) Simon, as the general partner of SPG L.P.,
DeBartolo, as the managing general partner of SDG, and, to the extent
necessary, existing limited
<PAGE> 115
5
partners of SPG L.P. shall deliver a duly executed counterpart of the New SPG
Partnership Agreement, pursuant to which (i) SDG agrees to be bound by the
terms and conditions of the New SDG Partnership Agreement, and (ii) SDG becomes
a limited partner of SPG L.P.
(c) The New SDG Partnership Agreement shall be
executed and delivered by (i) DeBartolo, as managing general partner of SDG,
(ii) the Simon Limited Partners who become limited partners of SDG (to the
extent their signatures are required), (iii) Simon, as non-managing general
partner of SDG, and (iv) by existing partners of SDG to the extent required,
but in any event, at least a Majority-in-Interest (as such terms is defined in
the DeBartolo Partnership Agreement) of the limited partners of DRP. In this
connection, it is anticipated that other limited partners of SPG L.P. will
execute Contribution Agreements substantially in the form hereof and that at
the Closing, Units will be issued to such other limited partners of SPG L.P. in
exchange for their respective limited partnership units in SPG L.P. in the
same ratio as Units are being issued to the Simon Limited Partners hereunder.
Simon shall provide from time to time modified Schedules A, B, C, E and F to
reflect the execution and delivery from time to time of such additional
contribution agreements, whereupon such holders of interests in SPG L.P. shall
become SDG Limited Partners for the purposes hereof. Each such additional
contribution agreement shall be deemed to constitute a counterpart pursuant to
Section 6.7 below. Not less than ten business days prior to the Closing, Simon
shall deliver to DeBartolo, SDG and SPG L.P. a final, accurate composite of all
contribution agreements signed by all of the Simon Limited Partners
<PAGE> 116
6
who have signed Contribution Agreements together with the final forms of
Schedules A, B, C, E and F reflecting all of the Simon Limited Partners that
have signed Contribution Agreements, the aggregate Simon Interests to be
exchanged by such Simon Limited Partners and other aggregate information called
for by said Schedules. To the extent such composite Contribution Agreement
only reflects the information called for by the preceding sentence, it shall
not be deemed to constitute an amendment, waiver or modification of this
Agreement for the purposes of Section 6.5 below.
(d) Any other documents or agreements required to
admit the Subscribers as partners of SDG shall be executed and delivered as
necessary.
SECTION 2
REPRESENTATION AND WARRANTIES; INDEMNIFICATION
2.1 REPRESENTATIONS AND WARRANTIES OF SDG. SDG
represents and warrants to each Subscriber that:
(a) DUE ORGANIZATION AND GOOD STANDING. SDG is a
limited partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and has the requisite power and
authority to carry on its business as now being conducted. SDG is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
<PAGE> 117
7
individually or in the aggregate, would not have a material adverse effect on
the business, financial condition or results of operations of SDG or on the
ability of SDG to consummate the transactions contemplated in this Agreement.
The DeBartolo Partnership Agreement, a copy of which has been delivered to
Simon, as general partner of SPG L.P., has not been amended or modified (except
as permitted by the Merger Agreement), annulled, rescinded or revoked since
such delivery, and is in full force and effect as of the date hereof; it being
understood by the parties hereto that upon the Closing, the DeBartolo
Partnership Agreement shall be amended and restated and the agreements and
relationships among the partners of SDG shall thereafter be governed by the New
SDG Partnership Agreement.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. SDG
has the requisite partnership power and authority to enter into this Agreement
and consummate the transactions contemplated thereby. The execution, delivery
and performance of this Agreement by SDG and the consummation by SDG of the
transactions contemplated hereby have been duly authorized on behalf of SDG by
DeBartolo, as the general partner of SDG. This Agreement has been duly
authorized, executed and delivered by DeBartolo, as the general partner of SDG,
and, subject to the consent of certain limited partners of SDG as required by
the DeBartolo Partnership Agreement (the "S-D CONSENT"), it constitutes a
legal, valid and binding obligation of SDG, enforceable against SDG in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws at the time in effect affecting the enforceability of rights of
creditors
<PAGE> 118
8
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) NON-CONTRAVENTION. The execution, delivery
and performance by SDG of this Agreement and the issuance of the Units pursuant
to the New SDG Partnership Agreement do not and will not (i) subject to the
obtaining of the S-D Consent, contravene or conflict with the DeBartolo
Partnership Agreement or the New SDG Partnership Agreement, (ii) contravene or
conflict with or constitute a violation of any provision of any Laws binding
upon or applicable to SDG, (iii) require any consent, approval or other action
by any Governmental Entity or any other person other than those consents or
approvals set forth on SCHEDULE D hereto, (iv) constitute a default under or
give rise to any right of termination, cancellation or acceleration of any
right or obligation of SDG under any provision of any agreement, contract,
indenture, lease or other instrument binding upon SDG or any license,
franchise, permit or other similar authorization held by SDG or by which any of
SDG's assets may be bound or (v) result in the creation or imposition of any
Liens on SDG; provided, however, it is understood that the right of SDG to
execute, deliver and perform this Agreement may be deemed to require the
consents set forth on SCHEDULE D hereto.
(d) LITIGATION. There are no pending actions,
suits or proceedings pending or, to the knowledge of DRP, threatened in
writing, against or affecting DRP or any of its properties, assets or
operations, or with respect to which
<PAGE> 119
9
DRP is responsible by way of indemnity or otherwise that could, individually or
in the aggregate, reasonably be likely to have a material adverse effect.
(e) UNITS ISSUED FREE AND CLEAR OF LIENS. All of
the Units required to be issued to each Subscriber pursuant to this Agreement
shall be validly issued free and clear of any Liens, and each Subscriber shall
have all of its respective rights and privileges as provided in the New SDG
Partnership Agreement.
(f) CAPITALIZATION. Following the consummation
of the transactions contemplated in this Agreement, the number of Units held by
each partner of SDG shall be calculated as set forth on SCHEDULE E hereto and
the results of such calculation shall be set forth on Exhibit A to the New SDG
Partnership Agreement.
(g) SEC DOCUMENTS. The Annual Report on Form
10-K of DeBartolo for the year ended December 31, 1995 as filed with the
Securities Exchange Commission, a copy of which has been delivered to each
Subscriber, contains no untrue statement of material fact and does not omit to
state any fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.2 REPRESENTATIONS AND WARRANTIES OF SIMON
(a) SEC DOCUMENTS. The Annual Report on Form
10-K of Simon for the year ended December 31, 1995 as filed with the Securities
Exchange Commission, a copy of which has been delivered to SDG, contains no
untrue statement of material fact and does not omit to state any material fact
required to be stated therein
<PAGE> 120
10
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading,
2.3 REPRESENTATIONS AND WARRANTIES OF EACH SUBSCRIBER
THAT IS NOT A NATURAL PERSON. Each Subscriber which is not a natural person
represents and warrants to SDG and DeBartolo, as general partner of SDG, and to
each other Subscriber that:
(a) it is an organization duly organized and
validly existing in good standing under the laws of its jurisdiction of
organization and
(b) the execution, delivery and performance by
such Subscriber of this Agreement, the New SDG Partnership Agreement and the
New SPG Partnership Agreement (i) are within its power and authority and do
not and will not contravene or conflict with the certificate or articles of
incorporation, by-laws, partnership agreement or other organizational or
governance documents of such Subscriber and (ii) have been duly authorized by
all necessary action by such Subscriber.
2.4 REPRESENTATIONS AND WARRANTIES OF ALL SUBSCRIBERS.
Each Subscriber represents and warrants to SDG and to each other Subscriber as
follows:
(a) AUTHORIZATION AND VALIDITY OF AGREEMENT.
This Agreement has been duly executed and delivered by such Subscriber and
constitutes a legal, valid and binding obligation of such Subscriber,
enforceable against such Subscriber in accordance with its terms and the New
SPG Partnership Agreement shall be duly executed and delivered by such
Subscriber and shall constitute legal, valid and binding obligations of such
Subscriber, enforceable against such Subscriber in
<PAGE> 121
11
accordance with its terms, except in each case that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws at the time in effect affecting the enforceability
of rights of creditors and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(b) NON-CONTRAVENTION. The execution, delivery
and performance by such Subscriber of this Agreement, the New SDG Partnership
Agreement and the New SPG Partnership Agreement and the consummation of the
transactions contemplated herein and therein by such Subscriber do not and will
not (i) contravene or conflict with or constitute a violation of any provision
of any Laws binding upon or applicable to such Subscriber, (ii) require any
consent, approval or other action by any Governmental Entity or any other
person other than those consents or approvals as set forth on SCHEDULE F, or
(iii) result in the creation or imposition of any Lien on any of the Simon
Interests held by such Subscriber.
(c) LITIGATION. There are no pending actions,
suits or proceedings pending or, to the knowledge of such Subscriber,
threatened in writing, against or affecting such Subscriber or any of its
properties, assets or operations, or with respect to which such Subscriber is
responsible by way of indemnity or otherwise that could or in any way limit the
ability of such Subscriber to consummate the transaction contemplated hereby.
<PAGE> 122
12
(d) ACCESS TO INFORMATION. Such Subscriber
acknowledges that it or its representative or agent (i) has been given full and
complete access to SDG in connection with this Agreement and the transactions
contemplated hereby, (ii) has had the opportunity to review all documents
relevant to its decision to enter into this Agreement and (iii) has had the
opportunity to ask questions of SDG and its management concerning its
investment in SDG and the transactions contemplated hereby.
(e) INVESTMENT INTENT OF EACH SUBSCRIBER. Such
Subscriber acknowledges that it understands that the Units to be issued to such
Subscriber in exchange for the Simon Interests to be contributed by Subscriber
as provided herein (i) shall not be registered under the Securities Act in
reliance upon the exemption afforded by Section 4(2) thereof for transactions
by an issuer not involving any public offering and (ii) shall not be registered
or qualified under any applicable state securities laws. Such Subscriber
represents that (i) it is acquiring such Units for investment only and without
any view toward distribution thereof and it shall not sell or otherwise dispose
of such Units except in compliance with the registration requirements or
exemption provisions of any applicable federal or state securities laws and in
accordance with the terms of such securities contained in the New SDG
Partnership Agreement, as amended, (ii) its economic circumstances are such
that it is able to bear all risks of the investment in the Units for an
indefinite period of time, including the risk of a complete loss of its
investment in the Units, (iii) it has knowledge and experience in financial and
business matters sufficient to evaluate the risks of
<PAGE> 123
13
investment in the Units and (iv) it has consulted with its own counsel and tax
advisor, to the extent deemed necessary by it, as to all legal and taxation
matters covered by this Agreement and has not relied upon DRP, DeBartolo, Simon
or any of their respective affiliates, officers and representatives for any
explanation of the application of the various federal or state securities laws
or tax laws with regard to its acquisition of the Units. Such Subscriber
further acknowledges and represents that it has made its own independent
investigation of SDG and the business proposed to be conducted by SDG, and that
any information relating thereto furnished to such Subscriber was supplied by
or on behalf of SDG.
(f) OWNERSHIP AND ENCUMBRANCE OF THE ASSETS.
(i) Such Subscriber has all right, title
and interest in the respective Simon Interests to be contributed to SDG by it
free and clear of any Liens. Except as disclosed on SCHEDULE G, such
Subscriber has not granted any rights, options or rights of first refusal, or
entered into any agreements of any kind that are currently in effect or that
have not been waived, to purchase or otherwise acquire such Simon Interests, or
any part thereof or any interest therein, except the rights of SDG under this
Agreement.
(ii) Upon consummation of the Closing, SDG
shall be the legal owner of the Summary Interests delivered by each such
Subscriber free and clear of all Liens.
(g) ADVISORS. Such Subscriber has consulted with
its own counsel and tax advisor, to the extent such Subscriber deemed
necessary, as to the legal
<PAGE> 124
14
and taxation matters associated with this Agreement and the transactions
contemplated hereby and has not relied upon DRP, DeBartolo, Simon or any of
their respective affiliates, officers and representatives for any explanation
of the application of federal or state securities or tax laws with regard to
its contribution of the Simon Interests or its receipt of the Units pursuant to
the terms hereof.
2.5 INDEMNIFICATION. Each Subscriber shall, subject to
the limitations hereinafter set forth, indemnify and hold SDG and its partners
free and harmless of and from any claim, loss, damage, expense, cost or
liability (including, without limitation, reasonable attorneys' fees and
disbursements) resulting from its respective breach of any representation or
warranty in made by it in Sections 2.4 and 2.5. SDG shall, subject to the
limitations hereinafter set forth, indemnify and hold each Subscriber, and its
partners, officers and directors (if applicable), free and harmless of and from
any claim, loss, damage, expense, cost or liability (including without
limitation, reasonable attorneys' fees and disbursements) resulting from a
breach of any representation and warranty in Section 2.1. Simon shall, subject
to the limitations hereinafter set forth, indemnify and hold SDG and its
partners free and harmless of and from any claim, loss, damage, expense, cost
or liability (including, without limitation, reasonable attorneys' fees and
disbursements) resulting from a breach of any representation or warranty in
Section 2.2. SPG L.P. shall, subject to the limitations hereinafter set forth,
indemnify and hold SDG and its partners free and harmless of and from any
claim, loss, damage, expense, cost or liability (including, without limitation,
reasonable attorneys' fees and disbursements) resulting from a breach of any
<PAGE> 125
15
representation or warranty in Section 2.3. Notwithstanding anything to the
contrary contained herein, (i) in no event shall the amount that SDG may
recover against any Subscriber or that any Subscriber may recover against SDG
under or in respect of this Section 2.6 for a breach of any representation or
warranty in Sections 2.2, 2.4 or 2.5 hereof exceed the fair market value of the
Units issued to such Subscriber, (ii) all obligations and liabilities of each
Subscriber under this Agreement are enforceable solely against such
Subscriber's Units and not against any of such Subscriber's other assets, any
other Subscriber or any assets of any other Subscriber.
2.6 TRANSFER TAXES. SDG shall be solely responsible for
the payment of any transfer taxes or similar charges imposed by any state,
county or municipality in which any of the Simon Interests is located in
connection with the contribution of the Simon Interests to SDG. Also at the
Closing, and in addition to the delivery of any documents required to be
delivered in connection therewith, each Subscriber and SDG shall execute,
acknowledge and deliver such returns, questionnaires, certificates, affidavits,
declarations and other documents which may be required in connection with the
sales taxes and other taxes, fees or charges imposed by any governmental agency
in connection with the transactions contemplated hereby, and shall complete,
sign and swear to the same as may be necessary.
<PAGE> 126
16
SECTION 3
CONDITIONS TO CLOSING
3.1 CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The
obligations of DRP and each Subscriber to consummate the Closing are subject to
the simultaneous consummation of the Merger, the simultaneous execution and
delivery of the New SDG Partnership Agreement (by DeBartolo, as managing
general partner of SDG, Simon, as non-managing general partner of SDG, and to
the extent required by those limited partners of SPG L.P. who become limited
partners of SDG pursuant to the performance of this Agreement and the other
Contribution Agreements and to the simultaneous execution and delivery of the
New SPG Partnership Agreement.
3.2 CONDITIONS TO OBLIGATIONS OF SDG. The obligations of
DRP to consummate the Closing with respect to a particular Subscriber is
subject to the satisfaction of the further conditions that: (i) the
representations and warranties of such Subscriber as set forth herein shall be
true and correct as of the Closing Date in all material respects with the same
force and effect as if made on the Closing Date, (ii) the S-D Consent shall
have been obtained and (iii) each Subscriber shall have performed in all
material respects all of its obligations hereunder required to be performed by
such Subscriber on or prior to the Closing Date.
3.3 CONDITIONS TO OBLIGATIONS OF EACH SUBSCRIBER. The
obligations of each Subscriber to consummate the Closing is subject to the
further conditions that: (i) the representations and warranties of DRP set
forth in this agreement shall be true and correct in all material respects as
of the Closing Date as though made on the
<PAGE> 127
17
Closing Date, (ii) DRP shall have performed in all material respects all of its
obligations hereunder required to be performed by DRP at or prior to the
Closing Date, (iii) the requisite partners of DRP shall have consented the
execution and delivery of the New SDG Partnership Agreement and to the extent
required shall have executed and delivered counterparts of the New SDG
Partnership Agreement at the Closing and (iv) each consent set forth opposite
the name of each Subscriber on SCHEDULE F shall have been obtained.
SECTION 4
COVENANTS
4.1 FURTHER ASSURANCES. SDG and each Subscriber agree,
at any time and from time to time after the Closing, to execute, acknowledge
where appropriate and deliver such further instruments and documents and to
take such other action as the other of them may reasonably request in order to
carry out the intents and purposes of this Agreement. The provisions of this
Section 4 shall survive the Closing.
SECTION 5
CONSENTS TO TRANSFER
5.1 CONSENT OF SIMON LIMITED PARTNERS. Pursuant to
Section 9.1 of the Old SPG Partnership Agreement, the Simon Limited Partners
who are parties hereto hereby (i) consent to the contribution to SDG of the
Simon Interests of Simon as provided herein and (ii) consents to the admission
of SDG as a special limited partner of SPG L.P. pursuant to the Partnership
Agreement.
<PAGE> 128
18
5.2 CONSENT OF SIMON. Pursuant to Section 9.2 of the Old
SPG Partnership Agreement, Simon, as the general partner of SPG L.P., hereby
(i) consents to the contribution to SDG of the respective Simon Interests of
each Simon Limited Partner as provided herein and (ii) consents to the
admission of SDG as a limited partner of SPG L.P..
SECTION 6
MISCELLANEOUS
6.1 NOTICES. All notices and other communications given
or made under this Agreement shall be in writing and shall be deemed to have
been duly given or made if delivered personally or sent by registered or
certified mail (postage prepaid, return receipt requested) or by telecopier (if
written confirmation of receipt is available and provided) to the parties at
the following addresses:
(a) If to SPG to:
Simon Realty Corporation
Merchants Plaza
115 West Washington Street, Suite 15 East
Indianapolis, IN 46204
Attention: David Simon
James M. Barkley, Esq.
Telecopy: (317) 685-7221
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Toby S. Myerson, Esq.
Edwin S. Maynard, Esq.
<PAGE> 129
19
Telecopy: (212) 757-3990
(b) If to each Subscriber, to the
address or telecopy number
thereof that each Subscriber shall
have previously indicated in writing.
or such other addresses as shall be furnished by the parties hereto by like
notice, and such notice or communication shall be deemed to have been given or
made as of the date so delivered or made.
6.2 ENTIRE AGREEMENT. This Agreement (together with each
other Contribution Agreement referred to in Section 1.2(c) above) constitutes
the entire agreement among the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral and
written, among the parties hereto with respect to such subject matter.
6.3 BINDING EFFECT; BENEFIT. Subject to Section 6.4
hereof, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
6.4 ASSIGNABILITY. This Agreement (a) shall not be
assignable by SDG without prior written consent of each Subscriber and (b)
shall not be assignable by any Subscriber without the prior written consent of
SDG.
<PAGE> 130
20
6.5 AMENDMENT; WAIVER. No provision of this Agreement
may be amended, waived or otherwise modified except by an instrument in writing
executed by the parties hereto.
6.6 HEADINGS. The headings contained in this Agreement
are for convenience only and shall not affect the meaning or interpretation of
this Agreement.
6.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, including those executed from time to time by the
holders of partnership interests in SPG L.P. referred to in Section 1.2(c)
above each of which shall be deemed to be an original and all of which together
shall be deemed to be one and the same instrument. Delivery of executed
signature pages by telecopier shall be acceptable evidence of delivery to the
parties hereto. Delivery of executed signature pages by telecopier shall be
followed immediately by delivery of the original signature pages by overnight
courier.
6.8 LIMITATION OF LIABILITY. Any obligation or liability
whatsoever of either DeBartolo or Simon or any Subscriber which is a
corporation or a partnership which may arise at any time under this Agreement
or any other instrument, transaction, or undertaking contemplated hereby shall
be satisfied, if at all, out of the assets of the DeBartolo, Simon, SDG or any
such other corporation or partnership only. No such obligation or liability
shall be personally binding upon, nor shall resort for the enforcement thereof
be had to, any of DeBartolo, Simon or SDG's any such other corporation's or
partnership's directors, partners, shareholders, officers, employees, or
<PAGE> 131
21
agents, regardless of whether such obligation or liability is in the nature of
contract, tort or otherwise.
<PAGE> 132
22
6.9 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
SIMON DEBARTOLO GROUP, L.P.
By: DEBARTOLO REALTY CORPORATION,
as General Partner
By: ___________________________
Name:
Title:
SIMON PROPERTY GROUP, INC.
By: ___________________________
Name:
Title:
[SUBSCRIBERS]
<PAGE> 133
Schedule A
----------
SPG L.P. Limited Partners
-------------------------
<PAGE> 134
Schedule B
----------
SPG L.P. Interests
------------------
<TABLE>
<CAPTION>
Name of Subscriber SPG L.P. Interest
------------------ -----------------
<S> <C>
_______________________ ____ units
_______________________ ____ units
_______________________ ____ units
Simon 10.5% of the outstanding units in SPG L.P. plus an
assignment of 49.5% of the profits interest in SPG
L.P.
</TABLE>
<PAGE> 135
Schedule C
----------
Units
-----
<TABLE>
<CAPTION>
Name of Subscriber Number of Units
------------------ ---------------
<S> <C>
_______________________ ____ Units
_______________________ ____ Units
_______________________ ____ Units
Simon Calculated as set forth on Schedule E hereto, with
such calculations set forth on Exhibit A to the New
SDG Partnership Agreement
</TABLE>
<PAGE> 136
Schedule D
----------
Required Consents of SDG
-------------------------
1. Consent required pursuant to (a) the SECOND AMENDED
AND RESTATED NEW FACILITY CREDIT AGREEMENT, dated as of March 31, 1994 by and
among DeBARTOLO, INC. and THE EDWARD J. DeBARTOLO CORPORATION, as the
Borrowers, WELLS FARGO BANK, N.A., as the Issuing Bank, and the Co-Lenders
specified therein, and WELLS FARGO REALTY ADVISORS FUNDING, INCORPORATED as the
Administrative Agent and (b) the pledge agreements and other documents
delivered pursuant thereto.
2. Consents required pursuant to (a) the SECOND AMENDED
AND RESTATED RESTRUCTURING FACILITY CREDIT AGREEMENT, dated as of March 31,
1994 by and among DeBARTOLO, INC. and THE EDWARD J. DeBARTOLO CORPORATION, as
the borrowers, and the Co-Lenders specified therein, and WELLS FARGO REALTY
ADVISORS FUNDING, INCORPORATED, as the Administrative Agent and (b) the pledge
agreements and other documents delivered pursuant thereto.
3. Consents required to be obtained prior to the
consummation of the merger as specified in the Merger Agreement or in the
[Solicitation Statement distributed to the limited partners of DRP and SPG
L.P.]
<PAGE> 137
Schedule E
----------
FORMULA FOR DETERMINATION OF SIMON DeBARTOLO
GROUP, L.P. UNITS TO BE OUTSTANDING AFTER THE MERGER
----------------------------------------------------
1. The DeBartolo Realty Partnership, L.P. General and
Limited Partners shall receive a number of Units in Simon DeBartolo Group, L.P.
equal to the total number of shares of Simon Property Group, Inc. issued in the
Merger to the shareholders DeBartolo Realty Corporation plus the additional
number of shares that would have been issued had all Limited Partnership
interests been exercised in full. Were the closing to have occurred on March
26, 1996, this number would be 61,076,480.1
2. The total number of Units in Simon DeBartolo Group,
L.P. to be issued to Simon Property Group, L.P. General and Limited Partners
shall be a maximum of 99% of the total number of outstanding Units in Simon
Property Group, L.P. as at the date of the Merger. At March 26, 1996, the
total number of outstanding units is 95,843,000 and 99% of this number is
94,884,570. The total number of Units issuable to the DeBartolo Realty
Partnership, L.P. Limited Partners are herein referred to as "DeBartolo Units"
and the total number of Units issuable to the Simon Property Group, L.P.
General and Limited Partners are herein called the "SPG Units."1/
3. Of the DeBartolo Units, a percentage equal to its
then percentage interest in the DeBartolo Realty Partnership, L.P. (at present
61.8424%) will be allocated to DeBartolo Realty Corporation as general partner
and the remaining Units
__________________________________
1/ The methodology used to arrive at this formula and these numbers is as
follows. The 61,076,480 Unit number is equal to the total number of
shares of Simon Property Group, Inc. that would be issued in the Merger
at the exchange ratio if the Merger took place on March 26, 1996 and if
all outstanding limited partnership interests in DeBartolo Realty
Partnership, L.P. had been exercised in full. The 95,843,000 Unit number
is equal to the total number of shares of stock of Sunny that would be
outstanding immediately prior to the Merger if it took place on March 26,
1996 if all outstanding Units in the Simon Property Group, L.P. were
exercised in full. Since all or almost all of the assets of DeBartolo
Realty Corporation and Simon Property Group, Inc. consist of their
general partnership interests in the two operating partnerships, the
relationship between the shares which would be issued in the Merger if
all outstanding limited partnership interests in DeBartolo Realty
Corporation were exercised in full to the shares of Simon Property Group,
Inc. that would be outstanding immediately prior to the Merger if all
Units were converted prior to the Merger establishes the relative values
of the two partnerships on March 26, 1996. As a matter of convenience
the Simon Property Group, L.P. Units will be exchanged on a 1-for-1
basis.
<PAGE> 138
2
will be allocated to the DeBartolo Realty Partnership, L.P. limited partners.
The number of Units to be issued to each DeBartolo Realty Partnership, L.P.
limited partner will be a percentage of the total number of Units to be
allocated to the DeBartolo Realty Partnership, L.P. partners equal to the
percentage interest that each such limited partner had in the DeBartolo Realty
Partnership, L.P. immediately prior to the Merger. Accordingly, if the Closing
took place March 26, 1996, 37,771,158 Units will be allocated to DeBartolo
Realty Corporation as general managing partner and 23,305,322 Units will be
issued in the aggregate to the DeBartolo Realty Partnership, L.P. limited
partners.
4. The number of Units issued to the Simon Property
Group, L.P. general and limited partners will be as follows: (x) one Unit will
be issued for each Simon Property Group, L.P. Unit exchanged by a Simon
Property Group, L.P. Limited partner and (y) Simon Property Group, Inc., as
the general partner of Simon Property Group, L.P., will receive for the
economic interests being transferred by it a number of Units equal to the
number of Simon Property Group, L.P. Units then owned by it less a number equal
to 1% of the then outstanding Simon Property Group, L.P. Units. Accordingly,
if the Closing took place on March 26, 1996, this number would be 58,579,241.
(This number is derived by multiplying 95,843,000 by 61.22%, the present
percentage interest held by Simon Property Group, Inc. in Simon Property Group,
L.P. and subtracting 95,843 Units being 1% of the outstanding Units). To the
extent that Simon Property Group, L.P. limited partners do not exchange Simon
Property Group, L.P. Units, the Simon Property Group, L.P. Units that would
have been issued in respect thereof will not be issued. This would have the
effect of increasing the percentage interest in Simon DeBartolo Group, L.P. by
DeBartolo Realty Partnership, L.P. partners.
<PAGE> 139
Schedule F
----------
Required Consents of [Subscribers]
----------------------------------
Partner Consents:
- - - -----------------
Circle Centre Partners, Ltd.
Re: Circle Centre Mall, Indianapolis, Indiana
Lender Consents:
- - - ----------------
CIGNA
1. Ingram Creek
2. Ingram Park Mall
3. LaPlaza Mall
Metropolitan Life Insurance Company
1. Bloomingdale Court
2. Forest Plaza
3. Fox River Plaza
4. Lake View Plaza
5. Lincoln Crossing
6. Matteson Plaza
7. Regency Plaza
8. St. Charles Towne Plaza
9. West Ridge Plaza
10. White Oaks Plaza
Union Bank of Switzerland
1. Circle Centre Mall
2. $400 Million Revolving Credit Facility
Marine Midland, Trustee
1. Jefferson Valley Mall
Citicorp
2. Eastland Mall
3. St. Charles Towne Center
<PAGE> 140
2
Lender Consents cont.:
Principal Group
1. Cobblestone Court
2. Crystal Court
3. Fairfax Court
4. Gaitway Plaza
5. Ridgewood Court
6. Royal Eagle Plaza
7. The Plaza at Buckland Hills
8. The Yards Plaza
9. Village Park Plaza
10. West Town Corners
11. Westland Park Plaza
12. Willow Knolls Court
REVOLVING CREDIT AGREEMENT DATED AS OF FEBRUARY 27, 1996, BETWEEN MELVIN SIMON
ASSOCIATES, INC. AND MORGAN GUARANTY TRUST COMPANY OF NEW YORK AND PLEDGE AND
SECURITY AGREEMENT, ALSO DATED AS OF FEBRUARY 27, 1966, AMONG MELVIN SIMON &
ASSOCIATES, INC., PENN SIMON CORPORATION, NACO SIMON CORP., SANDY SPRINGS
PROPERTIES, INC., SIMON ENTERPRISES, INC. AND MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, PURSUANT TO WHICH THE PLEDGORS PLEDGED TO THE BANK THEIR RIGHT TO
RECEIVE CASH DISTRIBUTIONS ATTRIBUTABLE TO THEIR RESPECTIVE LIMITED PARTNERSHIP
UNITS IN SIMON PROPERTY GROUP, L.P. AND CLASS B COMMON STOCK OF SIMON PROPERTY
GROUP, INC.
Pledge and Security Agreement dated as of December 16, 1993, made by Melvin
Simon and Herbert Simon (collectively "Simon Pledgors") to Chemical Bank, and
additional documents executed in connection therewith, pursuant to which the
Simon Pledgors pledged to the Bank 392,135 limited partnership units owned by
them in Simon Property Group, L.P.
<PAGE> 141
Schedule G
----------
Rights, Options, Etc.
---------------------
Revolving Credit Agreement dated as of February 27, 1996, between Melvin Simon
Associates, Inc. And Morgan Guaranty Trust Company of New York and Pledge and
Security Agreement, also dated as of February 27, 1966, among Melvin Simon &
Associates, Inc., Penn Simon Corporation, Naco Simon Corp., Sandy Springs
Properties, Inc., Simon Enterprises, Inc. And Morgan Guaranty Trust Company of
New York, pursuant to which the Pledgors pledged to the Bank their right to
receive cash distributions attributable to their respective limited partnership
units in Simon Property Group, L.P. and Class B common stock of Simon Property
Group, Inc.
Pledge and Security Agreement dated as of December 16, 1993, made by Melvin
Simon and Herbert Simon (collectively "Simon Pledgors") to Chemical Bank, and
additional documents executed in connection therewith, pursuant to which the
Simon Pledgors pledged to the Bank 392,135 limited partnership units owned by
them in Simon Property Group, L.P.
<PAGE> 142
EXHIBIT D
FORM OF AFFILIATE LETTER
Simon Property Group, Inc.
Merchants Plaza
115 West Washington Street
Suite 15 East
Indianapolis, IN 46204
Ladies and Gentlemen:
I have been advised that as of the date of this letter
agreement, I may be deemed to be an "affiliate" of DeBartolo Realty
Corporation, an Ohio corporation (the "Company"), as such term is (i) defined
for purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), or (ii)
used in and for purposes of Accounting Series Releases 130 and 135, as amended,
of the Commission. Pursuant to the terms of the Agreement and Plan of Merger,
dated as of March 26, 1996 (as amended from time to time, the "Merger
Agreement"), by and among Simon Property Group, Inc., a Maryland corporation
("Parent"), Day Acquisition Corp., an Ohio corporation and a direct subsidiary
of Parent ("Sub"), and the Company, Sub will be merged with and into the
Company (the "Merger")
Pursuant to the Merger each issued and outstanding share of
Common Stock, par value $.01 per share, of the Company shall be converted into
the right to receive from Parent 0.68 of a fully paid and nonassessable share
of Parent Common Stock, par value $.0001 per share ("Parent Common Stock"):
I represent, warrant and covenant to Parent that, with respect
to all Parent Common Stock received by the undersigned as a result of the
Merger:
1. I shall not knowingly make any sale, transfer or
other disposition of Parent Common Stock in violation of the Act or the Rules
and Regulations.
2. I have carefully read this letter and the Merger
Agreement and have had an opportunity to discuss the requirements of such
documents and any other applicable limitations upon my ability to sell,
transfer or otherwise dispose of Parent Common Stock with my counsel or counsel
for the Company.
3. I have been advised that the issuance of Parent
Common Stock to me pursuant to the Merger has been registered with the
Commission under the Act. However, I have also been advised that, since at the
time the Merger was submitted for
<PAGE> 143
2
a vote of the stockholders of the Company, I may be deemed to have been an
affiliate of the Company and the distribution by me of Parent Common Stock has
not been registered under the Act, I may not offer to sell, sell, transfer or
otherwise dispose of Parent Common Stock issued to me in the Merger unless (i)
such offer, sale, transfer or other disposition has been registered under the
Act or is made in conformity with Rule 145 under the Act, or (ii) in the
opinion of counsel reasonably acceptable to Parent, or pursuant to a "no
action" letter obtained by the undersigned from the staff of the Commission,
such sale, transfer or other disposition is otherwise exempt from registration
under the Act.
4. I understand that, except as provided in the
Registration Rights Agreement to be entered into by Parent and the undersigned
(the "Registration Rights Agreement") as contemplated by the Merger Agreement
or as provided in this letter, Parent is under no obligation to register under
the Act the sale, transfer or other disposition of Parent Common Stock by me or
on my behalf or to take any other action necessary in order to make compliance
with an exemption from such registration available.
5. I understand that Parent will give stop transfer
instructions to Parent's transfer agents with respect to Parent Common Stock,
that the Parent Common Stock issued to me will all be in certificated form and
that the certificates therefor, or any substitutions therefor, will bear a
legend substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT
OF 1933 APPLIES. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT,
DATED _________________, 1996, BETWEEN THE REGISTERED HOLDER
HEREOF AND SIMON PROPERTY GROUP, INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF SIMON
PROPERTY GROUP, INC."
6. I also understand that unless the transfer by me of
my Parent Common Stock has been registered under the Act or is a sale made in
conformity with the Rules promulgated thereunder, Parent reserves the right to
place a legend substantially to the following effect on the certificates issued
to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
WERE ACQUIRED BY A PERSON WHO RECEIVED SUCH SECURITIES IN A
TRANSACTION TO WHICH
<PAGE> 144
3
RULE 145 UNDER THE ACT APPLIES. THE SECURITIES HAVE NOT BEEN
ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING
OF THE ACT AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT."
It is understood and agreed that the legends set forth in
paragraphs 5 and 6 above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for the
purposes of the Act. It is understood and agreed that such legends and the
stop orders referred to above will be removed if (i) the Securities evidenced
by such certificates are registered under the Act, (ii) two years shall have
elapsed from the date the undersigned acquired Parent Common Stock received in
the Merger and the provisions of Rule 145(d)(2) are then available to the
undersigned, (iii) three years shall have elapsed from the date the undersigned
acquired Parent Common Stock received in the Merger and the provisions of Rule
145(d)(3) are then available to the undersigned, or (iv) Parent has received
either an opinion of counsel, reasonably satisfactory to Parent, or a "no
action" letter obtained by the undersigned from the staff of the Commission to
the effect that the sale, transfer or disposition of the securities evidenced
by such certificates is exempt from registration under the Act.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter.
Sincerely,
___________________________________
Name:
Accepted this _____ day of
_________________, 1996
[ ]
By:_______________________
Name:
<PAGE> 145
4
Title:
<PAGE> 146
Exhibit E-1
SIMON PROPERTY GROUP, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
SIMON PROPERTY GROUP, INC., a Maryland corporation, having its
principal office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended and restated to
read in its entirety as follows: SIMON DeBARTOLO GROUP, INC.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
FIRST: THE UNDERSIGNED, James J. Winn, Jr., whose address is Charles
Center South, 36 South Charles Street, Baltimore, Maryland 21201, being at least
eighteen years of age, acting as incorporator, does hereby form a corporation
under the General Laws of the State of Maryland.
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is:
Simon DeBartolo Group, Inc.
THIRD: (a) The purposes for which and any of which the Corporation is
formed and the business and objects to be carried on and promoted by it are:
(1) To engage in the business of a real estate investment
trust ("REIT") as that phrase is defined in the Internal Revenue Code
of 1986, as amended (the "Code"), and to engage in any lawful act or
activity for which corporations may be organized under the Maryland
General Corporation Law.
(2) To engage in any one or more businesses or transactions,
or to acquire all or any portion of any entity engaged in any one or
more businesses or transactions, which the Board of Directors may from
time to time authorize or approve, whether or not related to the
business described elsewhere in this Article or to any other business
at the time or theretofore engaged in by the Corporation.
(b) The foregoing enumerated purposes and objects shall be in
no way limited or restricted by reference to, or inference from, the terms of
any other clause of this or any other Article of the Charter of the Corporation,
and each shall be regarded as independent; and they are
- 1 -
<PAGE> 147
intended to be and shall be construed as powers as well as purposes and objects
of the Corporation and shall be in addition to and not in limitation of the
general powers of corporations under the General Laws of the State of Maryland.
FOURTH: The present address of the principal office of the Corporation
in the State of Maryland is c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the Corporation
in this State is The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. Said resident agent is a Maryland corporation.
SIXTH: (a) The total number of shares of stock of all classes which
the Corporation has authority to issue is 650,000,000 shares of capital stock
(par value $.000l per share), amounting in aggregate par value to $65,000.00, of
which shares 383,996,000 are classified as "Common Stock", 12,000,000 are
classified as "Class B Common Stock", 4,000 are classified as "Class C Common
Stock," 4,000,000 are classified as "Series A Preferred Stock," and 250,000,000
are classified as "Excess Stock". The Board of Directors may classify and
reclassify any unissued shares of capital stock by setting or changing in any
one or more respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption of such shares of stock.
(b) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of the Common
Stock of the Corporation:
(1) Each share of Common Stock shall have one vote, and,
except as otherwise provided in respect of any class of stock hereafter
classified or reclassified, and except as otherwise provided with
respect to directors elected by the holders of the Class B Common Stock
or of the Class C Common Stock, each voting as a separate class, the
exclusive voting power for all purposes shall be vested in the holders
of the Common Stock, the Class B Common Stock, the Class C Common
Stock, and the Series A Preferred Stock, voting together as a single
class. Shares of Common Stock shall not have cumulative voting rights.
(2) Subject to the provisions of law and any preferences of
any class of stock hereafter classified or reclassified, dividends, or
other distributions, including dividends or other distributions payable
in shares of another class of the Corporation's stock, may be paid
ratably on the Common Stock at such time and in such amounts as the
Board of Directors may deem advisable, but only if at the same time,
dividends are paid on outstanding shares of Class B Common Stock and
Class C Common Stock in accordance with subparagraphs (c)(2) and
(c-1)(2), respectively, of this Article Sixth.
- 2 -
<PAGE> 148
(3) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of
the Common Stock shall be entitled, together with the holders of Class
B Common Stock, Class C Common Stock, Excess Stock and any other class
of stock hereafter classified or reclassified not having a preference
on distributions in the liquidation, dissolution or winding up of the
Corporation, to share ratably in the net assets of the Corporation
remaining, after payment or provision for payment of the debts and
other liabilities of the Corporation and the amount to which the
holders of any class of stock hereafter classified or reclassified
having a preference on distributions in the liquidation, dissolution or
winding up of the Corporation shall be entitled.
(4) Each share of Common Stock is convertible into Excess
Stock as provided in Article NINTH hereof.
(c) The following is a description (which should be read in
conjunction with paragraph (c-1) of this Article SIXTH) of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of the Class B
Common Stock of the Corporation:
(1) Each share of Class B Common Stock shall have one vote,
and, except as otherwise provided in respect of any class of stock
hereafter classified or reclassified and except as otherwise provided
in this paragraph (c) and in paragraph (c-1), the exclusive voting
power for all purposes shall be vested in the holders of the Class B
Common Stock, the Class C Common Stock, the Common Stock, and the
Series A Preferred Stock voting together as a single class. Shares of
Class B Common Stock shall not have cumulative voting rights. The
holders of the shares of Class B Common Stock shall have the right,
voting as a separate class, to elect four directors of the Corporation
and shall vote with the holders of the Class C Common Stock, the Common
Stock, and the Series A Preferred Stock (voting together as a single
class) to elect the remaining directors (other than the director or
directors to be elected by the holders of the Class C Common Stock
voting as a separate class); provided that if the Simon Family Group
(as defined in Article NINTH) shall sell or transfer a portion of their
Common Stock, Class B Common Stock and Units (as defined in Article
NINTH) so as to reduce their Aggregate Assumed Equity Interest in the
Corporation (as defined in Article NINTH) to less than 50% of the Simon
Family Group Initial Aggregate Assumed Equity Interest (as defined in
Article NINTH) in the Corporation, from and after the date of such
reduction the holders of the shares of Class B Common Stock shall have
the right, voting as a separate class, to elect two directors of the
Corporation. For purposes of this subparagraph, shares held in a voting
trust shall be deemed owned by the beneficiaries of the voting trust.
- 3 -
<PAGE> 149
(2) Subject to the provisions of law and the preferences of
the Series A Preferred Stock and of any class of stock hereafter
classified or reclassified, dividends or other distributions, including
dividends or other distributions payable in shares of another class of
the Corporation's stock, may be paid ratably on the Class B Common
Stock at such time and in such amounts as the Board of Directors may
deem advisable; provided that cash dividends or other distributions
shall be paid on each share of Class B Common Stock at the same time as
cash dividends or other distributions are paid on Common Stock or Class
C Common Stock and in an amount equal to the amount payable on the
number of shares of Common Stock into which each share of Class B
Common Stock is then convertible; provided further that non-cash
dividends or other non-cash distributions (including the issuance of
warrants or rights to acquire securities of the Corporation) shall be
distributed on each share of Class B Common Stock at the same time as
such non-cash dividends or other non-cash distributions are distributed
on Common Stock or Class C Common Stock and in an amount equal to the
amount distributable on the number of shares of Common Stock into which
each share of Class B Common Stock is then convertible; provided
further that any dividends or other distributions payable otherwise on
the Class B Common Stock shall be paid in shares of Common Stock or
securities convertible or exchangeable into Common Stock (or warrants
or rights issued to acquire Common Stock or securities convertible or
exchangeable into Common Stock).
(3) (A) Each share of Class B Common Stock is convertible
into Excess Stock as provided in Article NINTH hereof. Each share of
Class B Common Stock may be converted at the option of the holder
thereof into one share of Common Stock. Immediately and automatically
each share of Class B Common Stock shall be converted into one share of
Common Stock (i) if the Aggregate Assumed Equity Interest in the
Corporation of the Simon Family Group is for any reason reduced to less
than 5% of the Aggregate Assumed Equity Interest in the Corporation or
(ii) if such share of Class B Common Stock is otherwise sold or
otherwise transferred to or is otherwise held by anyone other than a
member of the Simon Family Group. For purposes of this subparagraph,
shares held in a voting trust shall be deemed owned by the
beneficiaries of the voting trust.
(B) The Corporation may not subdivide its outstanding
shares of Common Stock, combine its outstanding shares of Common Stock
into a smaller number of shares, or issue by reclassification of its
shares of Common Stock any shares of the Corporation without making the
same adjustment to the Class B Common Stock. The Corporation shall not
distribute to all holders of its Common Stock evidences of its
indebtedness or assets (excluding cash dividends or other distributions
to the extent permitted by subparagraph (c)(2) of this Article SIXTH)
or rights or warrants to subscribe for or purchase securities issued by
the
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Corporation or property of the Corporation (excluding those
referred to in subparagraph (c)(2) of this Article SIXTH), without
making the same distribution to all holders of its Class B Common
Stock. No adjustment of the conversion rate shall be made as a result
of or in connection with the issuance of Common Stock of the
Corporation pursuant to options or stock purchase agreements now or
hereafter granted or entered into with officers or employees of the
Corporation or its subsidiaries in connection with their employment,
whether entered into at the beginning of the employment or at any time
thereafter. In case of any capital reorganization of the Corporation,
or the consolidation or merger of the Corporation with or into another
corporation, or a statutory share exchange, or the sale, transfer or
other disposition of all or substantially all of the property, assets
or business of the Corporation then, in each such case, each share of
Common Stock and each share of Class B Common Stock shall be treated
the same.
(C) Upon conversion of any shares of Class B Common
Stock, no payment or adjustment shall be made on account of dividends
accrued, whether or not in arrears, on such shares or on account of
dividends declared and payable to holders of Common Stock of record on
a date prior to the date of conversion.
(D) Except with respect to shares of Class B Common
Stock which have been deemed to have been automatically converted into
Common Stock pursuant to subparagraph (c)(3)(A) of this Article SIXTH,
in order to convert shares of Class B Common Stock into Common Stock
the holder thereof shall surrender at the office of the Transfer Agent
the certificate or certificates therefor, duly endorsed to the
Corporation or in blank, and give written notice to the Corporation at
said office that he elects to convert such shares and shall state in
writing therein the name or names (with addresses) in which he wishes
the certificate or certificates for Common Stock to be issued. Shares
of Class B Common Stock shall be deemed to have been converted on the
date of the surrender of such certificate or certificates for shares
for conversion as provided above, and the person or persons entitled to
receive the Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such Common Stock
on such date. As soon as practicable on or after the date of conversion
as aforesaid, the Corporation will issue and deliver at said office a
certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with cash for any
fraction of a share, as provided in subparagraph (c)(3)(F) of this
Article SIXTH, to the person or persons entitled to receive the same.
The Corporation will pay any and all federal original issue taxes that
may be payable in respect of the issue or delivery of shares of Common
Stock on conversion of shares of Class B Common Stock pursuant hereto.
The Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which
the shares of Class B Common
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Stock so converted were registered, and no issue or delivery shall be
made unless and until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has established to the
satisfaction of the Corporation either that such tax has been paid or
that no such tax is payable.
(E) All shares of Class B Common Stock converted into
Common Stock shall be retired and cancelled and shall not be reissued
as Class B Common Stock but such shares so retired and cancelled shall
resume the status of authorized and unclassified shares of Common
Stock.
(F) The Corporation shall not issue fractional shares
of Common Stock upon any conversion of shares of Class B Common Stock.
As to any final fraction of a share which the holder of one or more
shares of Class B Common Stock would be entitled to receive upon
exercise of such holder's conversion right the Corporation shall pay a
cash adjustment in an amount equal to the same fraction of the Market
Price (as defined in Article NINTH) for the date of exercise.
(G) The Corporation shall at all times have
authorized and unissued a number of shares of Common Stock sufficient
for the conversion of all shares of Class B Common Stock at the time
outstanding. If any shares of Common Stock require registration with or
approval of any governmental authority under any Federal or State law,
before such shares may be validly issued upon conversion, then the
Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration or approval as the case may be.
The Corporation warrants that all Common Stock issued upon conversion
of shares of Class B Common Stock will upon issue be fully paid and
nonassessable by the Corporation and free from original issue taxes.
(4) Subject to the provisions of law and the preferences of
the Series A Preferred Stock and of any class of stock hereafter
classified or reclassified, in the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of Class B Common Stock shall be entitled,
together with the holders of Class C Common Stock, Common Stock, Excess
Stock and any other class of stock hereafter classified or reclassified
not having a preference on distributions in the liquidation,
dissolution or winding up of the Corporation, to share ratably in the
net assets of the Corporation remaining, after payment or provision for
payment of the debts and other liabilities of the Corporation and the
amount to which the holders of the Series A Preferred Stock and of any
class of stock hereafter classified or reclassified having a preference
on distributions in the liquidation, dissolution or winding up of the
Corporation shall be entitled.
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(c-1) The following is a description (which should be read in
conjunction with paragraph (c) of this Article SIXTH) of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of the Class C
Common Stock of the Corporation:
(1) Each share of Class C Common Stock shall have one vote,
and, except as otherwise provided in respect of any class of stock
hereafter classified or reclassified and except as otherwise provided
in this paragraph (c-1) and in paragraph (c), the exclusive voting
power for all purposes shall be vested in the holders of the Class C
Common Stock, the Class B Common Stock, the Common Stock, and the
Series A Preferred Stock voting together as a single class. Shares of
Class C Common Stock shall not have cumulative voting rights. Subject
to paragraph (b) of Article SEVENTH, the holders of the shares of Class
C Common Stock shall have the right, voting as a separate class, to
elect two directors of the Corporation and shall vote with the holders
of the Class B Common Stock, the Common Stock, and the Series A
Preferred Stock (voting together as a single class) to elect the
remaining directors (other than the directors to be elected by the
holders of the Class B Common Stock voting as a separate class);
provided that if the DeBartolo Family Group (as defined in Article
NINTH) shall sell or transfer a portion of their Common Stock, Class C
Common Stock and Units (as defined in Article NINTH) so as to reduce
their Aggregate Assumed Equity Interest in the Corporation (as defined
in Article NINTH) to less than 50% of the DeBartolo Family Group
Initial Aggregate Assumed Equity Interest (as defined in Article NINTH)
in the Corporation, from and after the date of such reduction the
holders of the shares of Class C Common Stock shall have the right,
voting as a separate class, to elect one director of the Corporation.
For purposes of this subparagraph, shares held in a voting trust shall
be deemed owned by the beneficiaries of the voting trust.
(2) Subject to the provisions of law and the preferences of
the Series A Preferred Stock and of any class of stock hereafter
classified or reclassified, dividends or other distributions, including
dividends or other distributions payable in shares of another class of
the Corporation's stock, may be paid ratably on the Class C Common
Stock at such time and in such amounts as the Board of Directors may
deem advisable; provided that cash dividends or other distributions
shall be paid on each share of Class C Common Stock at the same time as
cash dividends or other distributions are paid on Common Stock or Class
B Common Stock and in an amount equal to the amount payable on the
number of shares of Common Stock into which each share of Class C
Common Stock is then convertible; provided further that non-cash
dividends or other non-cash distributions (including the issuance of
warrants or rights to acquire securities of the Corporation) shall be
distributed on each share of Class C Common Stock at the same time as
such non-cash dividends or other non-cash distributions are
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<PAGE> 153
distributed on Common Stock or Class B Common Stock and in an amount
equal to the amount distributable on the number of shares of Common
Stock into which each share of Class C Common Stock is then
convertible; provided further that any dividends or other distributions
payable otherwise on the Class C Common Stock shall be paid in shares
of Common Stock or securities convertible or exchangeable into Common
Stock (or warrants or rights issued to acquire Common Stock or
securities convertible or exchangeable into Common Stock).
(3) (A) Each share of Class C Common Stock is convertible
into Excess Stock as provided in Article NINTH hereof. Each share of
Class C Common Stock may be converted at the option of the holder
thereof into one share of Common Stock. Immediately and automatically
each share of Class C Common Stock shall be converted into one share of
Common Stock (i) if the Aggregate Assumed Equity Interest in the
Corporation of the DeBartolo Family Group is for any reason reduced to
less than 5% of the Aggregate Assumed Equity Interest in the
Corporation or (ii) if such share of Class C Common Stock is otherwise
sold or otherwise transferred to or is otherwise held by anyone other
than a member of the DeBartolo Family Group. For purposes of this
subparagraph, shares held in a voting trust shall be deemed owned by
the beneficiaries of the voting trust.
(B) The Corporation may not subdivide its outstanding
shares of Common Stock, combine its outstanding shares of Common Stock
into a smaller number of shares, or issue by reclassification of its
shares of Common Stock any shares of the Corporation without making the
same adjustment to the Class C Common Stock. The Corporation shall not
distribute to all holders of its Common Stock evidences of its
indebtedness or assets (excluding cash dividends or other distributions
to the extent permitted by subparagraph (c-1)(2) of this Article SIXTH)
or rights or warrants to subscribe for or purchase securities issued by
the Corporation or property of the Corporation (excluding those
referred to in subparagraph (c-1)(2) of this Article SIXTH), without
making the same distribution to all holders of its Class C Common
Stock. No adjustment of the conversion rate shall be made as a result
of or in connection with the issuance of Common Stock of the
Corporation pursuant to options or stock purchase agreements now or
hereafter granted or entered into with officers or employees of the
Corporation or its subsidiaries in connection with their employment,
whether entered into at the beginning of the employment or at any time
thereafter. In case of any capital reorganization of the Corporation,
or the consolidation or merger of the Corporation with or into another
corporation, or a statutory share exchange, or the sale, transfer or
other disposition of all or substantially all of the property, assets
or business of the Corporation then, in each such case, each share of
Common Stock and each share of Class C Common Stock shall be treated
the same.
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<PAGE> 154
(C) Upon conversion of any shares of Class C Common
Stock, no payment or adjustment shall be made on account of dividends
accrued, whether or not in arrears, on such shares or on account of
dividends declared and payable to holders of Common Stock of record on
a date prior to the date of conversion.
(D) Except with respect to shares of Class C Common
Stock which have been deemed to have been automatically converted into
Common Stock pursuant to subparagraph (c-1)(3)(A) of this Article
SIXTH, in order to convert shares of Class C Common Stock into Common
Stock the holder thereof shall surrender at the office of the Transfer
Agent the certificate or certificates therefor, duly endorsed to the
Corporation or in blank, and give written notice to the Corporation at
said office that he elects to convert such shares and shall state in
writing therein the name or names (with addresses) in which he wishes
the certificate or certificates for Common Stock to be issued. Shares
of Class C Common Stock shall be deemed to have been converted on the
date of the surrender of such certificate or certificates for shares
for conversion as provided above, and the person or persons entitled to
receive the Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such Common Stock
on such date. As soon as practicable on or after the date of conversion
as aforesaid, the Corporation will issue and deliver at said office a
certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with cash for any
fraction of a share, as provided in subparagraph (c-1)(3)(F) of this
Article SIXTH, to the person or persons entitled to receive the same.
The Corporation will pay any and all federal original issue taxes that
may be payable in respect of the issue or delivery of shares of Common
Stock on conversion of shares of Class C Common Stock pursuant hereto.
The Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which
the shares of Class C Common Stock so converted were registered, and no
issue or delivery shall be made unless and until the person requesting
such issue has paid to the Corporation the amount of any such tax, or
has established to the satisfaction of the Corporation either that such
tax has been paid or that no such tax is payable.
(E) All shares of Class C Common Stock converted into
Common Stock shall be retired and cancelled and shall not be reissued
as Class C Common Stock but such shares so retired and cancelled shall
resume the status of authorized and unclassified shares of Common
Stock.
(F) The Corporation shall not issue fractional shares
of Common Stock upon any conversion of shares of Class C Common Stock.
As to any final fraction of a share which the holder of one or more
shares of Class C Common Stock would be entitled to receive upon
exercise of such holder's
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<PAGE> 155
conversion right the Corporation shall pay a cash adjustment in an
amount equal to the same fraction of the Market Price (as defined in
Article NINTH) for the date of exercise.
(G) The Corporation shall at all times have
authorized and unissued a number of shares of Common Stock sufficient
for the conversion of all shares of Class C Common Stock at the time
outstanding. If any shares of Common Stock require registration with or
approval of any governmental authority under any Federal or State law,
before such shares may be validly issued upon conversion, then the
Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration or approval as the case may be.
The Corporation warrants that all Common Stock issued upon conversion
of shares of Class C Common Stock will upon issue be fully paid and
nonassessable by the Corporation and free from original issue taxes.
(4) Subject to the provisions of law and the preferences of
the Series A Preferred Stock and of any class of stock hereafter
classified or reclassified, in the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of Class C Common Stock shall be entitled,
together with the holders of Class B Common Stock, Common Stock, Excess
Stock and any other class of stock hereafter classified or reclassified
not having a preference on distributions in the liquidation,
dissolution or winding up of the Corporation, to share ratably in the
net assets of the Corporation remaining, after payment or provision for
payment of the debts and other liabilities of the Corporation and the
amount to which the holders of the Series A Preferred Stock and any
class of stock hereafter classified or reclassified having a preference
on distributions in the liquidation, dissolution or winding up of the
Corporation shall be entitled.
(c-2) Subject in all cases to the provisions of Article NINTH
with respect to Excess Stock, the following is a description of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of the Series A
Preferred Stock of the Corporation:
(1) All shares of Series A Preferred Stock redeemed,
purchased, exchanged or otherwise acquired by the Corporation as
provided in this paragraph (c-2) shall be retired and canceled and,
upon the taking of any action required by applicable law, shall be
restored to the status of authorized but unissued shares of capital
stock and reclassified as Common Stock, and may thereafter be issued or
reclassified, but not as Series A Preferred Stock.
(2) The Series A Preferred Stock shall, with respect to
dividend rights, rights upon liquidation, winding up or dissolution,
and redemption rights, rank (A)
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<PAGE> 156
junior to any other class or series of preferred stock hereafter duly
established by the Board of Directors of the Corporation, the terms of
which shall specifically provide that such series shall rank prior to
the Series A Preferred Stock as to the payment of dividends and
distribution of assets upon liquidation (the "Senior Preferred Stock"),
(B) PARI PASSU with any other class or series of preferred stock
hereafter duly established by the Board of Directors of the
Corporation, the terms of which shall specifically provide that such
class or series shall rank PARI PASSU with the Series A Preferred Stock
as to the payment of dividends and distribution of assets upon
liquidation (the "Parity Preferred Stock") and (C) prior to any other
class or series of preferred stock or other class or series of capital
stock of or other equity interests in the Corporation, including,
without limitation, all classes of the common stock of the Corporation,
whether now existing or hereafter created (all of such classes or
series of capital stock and other equity interests of the Corporation,
including, without limitation, the Common Stock, the Class B Common
Stock, and the Class C Common Stock, all $0.0001 par value, of the
Corporation are collectively referred to herein as the "Junior
Securities").
(3) (A) Except as may be required by law or as otherwise
expressly provided in this subparagraph (c-2)(3), on all matters upon
which the holders of shares of Common Stock shall be entitled to vote,
the shares of Common Stock and Series A Preferred Stock shall be voted
together as a single class, and each share of Series A Preferred Stock
shall be entitled to one vote (or fraction thereof) for each share (or
fraction thereof) of Common Stock issuable upon conversion, pursuant to
subparagraph (c-2)(5), of such share of Series A Preferred Stock,
determined as of the close of business on the record date established
by the Board of Directors of the Corporation for the purpose of voting
on such matter.
(B) If, and whenever, at any time or times, dividends
payable on shares of Series A Preferred Stock shall have been in
arrears and unpaid (whether or not declared and whether or not there
are funds of the Corporation legally available for the payment of
dividends) for four consecutive quarterly dividend periods, then the
holders of record of shares of Series A Preferred Stock, as reflected
in the stock transfer records of the Corporation (the "Holders") shall,
in addition to any other voting rights, have the right to vote
separately as a single class with respect to (i) any acquisition of the
Corporation by another entity by means of any transaction or series of
related transactions (including, without limitation, any
reorganization, merger or consolidation, but excluding any merger
effected exclusively for the purpose of changing the domicile of the
Corporation) or (ii) any sale of all or substantially all of the assets
of the Corporation; unless, in each such case, either (A) the Holders
of record of the Corporation's securities as constituted immediately
prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration
for such acquisition or sale or otherwise), hold at least 50% of the
aggregate voting power
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<PAGE> 157
of all classes of voting securities of the surviving or acquiring
entity or (B) the terms of such acquisition or sale require, as a
condition precedent to the consummation thereof, the payment in full of
all accrued and unpaid dividends (whether or not declared and whether
or not there are funds of the Corporation legally available for the
payment of dividends) on the Series A Preferred Stock.
(C) So long as any shares of Series A Preferred Stock
are outstanding, the Corporation will not, without the affirmative vote
of at least 80% of the outstanding shares of Series A Preferred Stock
(or such greater number as may be required by law), voting separately
as a single class, in person or by proxy, at a special or annual
meeting called for the purpose, or by unanimous written consent in lieu
of a meeting: (i) effect or allow any amendment, alteration or repeal
of any of the provisions of the Charter of the Corporation or of any
articles amendatory thereof or supplement thereto which in any manner
would adversely affect, alter or change the powers, preferences or
rights of any share of Series A Preferred Stock; or (ii) create,
authorize or issue any class or series of Senior Preferred Stock.
(4) (A) The Holders of shares of Series A Preferred Stock
shall be entitled to receive, when and as declared by the Board of
Directors of the Corporation, quarterly dividends on the shares of
Series A Preferred Stock, cumulative from the initial date of issuance
of such shares (the "Issue Date"), in an amount equal to the greater of
(i) $0.5078125 per share per calendar quarter or (ii) an amount per
share equal to the dividends paid since the last Dividend Payment Date
(as hereinafter defined) with respect to the number of shares of Common
Stock then issuable upon conversion of a share of Series A Preferred
Stock. Dividends on the shares of Series A Preferred Stock shall be
payable on the last Business Day (as hereinafter defined) of each
calendar quarter, commencing on the last Business Day of the fourth
calendar quarter of 1995 (each such last Business Day of a calendar
quarter being a "Dividend Payment Date"). Such dividends shall be paid
to the Holders of record at the close of business on the record date
specified by the Board of Directors of the Corporation at the time such
dividend is declared; PROVIDED, HOWEVER, that such record date shall
not be more than 60 days nor less than 10 days prior to the respective
Dividend Payment Date. Dividends on the shares of Series A Preferred
Stock shall be fully cumulative and shall accrue (whether or not
declared and whether or not there are funds of the Corporation legally
available for the payment of dividends) from the Issue Date, based on a
91-day quarter and the actual number of days elapsed. As used in this
paragraph (c-2), "Business Day" shall mean any day (other than a day
which is a Saturday, Sunday or legal holiday in the State of New York)
on which banks are authorized to be open for business in New York City.
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<PAGE> 158
(B) Any dividend payment made on shares of Series A
Preferred Stock shall first be credited against the dividends accrued
with respect to the earliest quarterly period for which dividends have
not been paid.
(C) All dividends paid with respect to shares of
Series A Preferred Stock pursuant to this subparagraph (c-2)(4) shall
be paid pro rata to the Holders entitled thereto.
(5) The Holders of shares of Series A Preferred Stock shall
have the right, at their option, to convert such shares into shares of
Common Stock at any time on or after the second anniversary of the
Issue Date, subject to the following terms and conditions:
(A) Each share of Series A Preferred Stock shall be
convertible, at the option of the Holder thereof, into such number of
fully paid and nonassessable shares of Common Stock of the Corporation
equal to $25.00 divided by the Conversion Price (as hereinafter
defined) in effect at the time of conversion. The price at which shares
of Common Stock shall be delivered upon conversion (herein called the
"Conversion Price") shall be initially $26.25 per share of Common
Stock. The Conversion Price shall be reduced and increased in certain
instances as provided in subparagraph (c-2)(7) below. The number of
shares of Common Stock into which each share of Series A Preferred
Stock is convertible on the Issue Date is 0.9523809.
(B) In order to convert shares of Series A Preferred
Stock into Common Stock the Holder thereof shall surrender to the
Corporation the certificate or certificates therefor, duly endorsed or
assigned to the Corporation or in blank, and give written notice to the
Corporation that such Holder elects to convert such shares. No payment
or adjustment shall be made upon any conversion on account of any
dividends accrued on the shares of Series A Preferred Stock being
surrendered for conversion or on account of any dividends on the Common
Stock issued upon such conversion.
(C) Shares of Series A Preferred Stock shall be
deemed to have been converted immediately prior to the close of
business on the day of the surrender of such shares for conversion in
accordance with subsection (c-2)(5)(B) above, and the person or persons
entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the records holder or holders of
such Common Stock at such time. As promptly as practicable on or after
the conversion date, the Corporation shall issue and deliver a
certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with payment in lieu of
any fraction of a share, as hereinafter provided, to the person or
persons entitled to receive the same. In case shares of
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<PAGE> 159
Series A Preferred Stock are called for redemption, the right to
convert such shares shall cease and terminate at the close of business
on the date fixed for redemption, unless default shall be made in
payment of the redemption price on the redemption date.
(D) No fractional shares of Common Stock shall be
issued upon conversion of any shares of Series A Preferred Stock, but,
instead of any fraction of a share which would otherwise be issuable,
the Corporation shall pay a cash adjustment in respect of such fraction
in an amount equal to the same fraction of the Average Trading Price
(as hereinafter defined) of the Common Stock for the ten (10) trading
days ending on the day of conversion if the day of conversion is a
trading day (as hereinafter defined) or, if such day is not a trading
day, the most recent trading day immediately preceding the day of
conversion. As used in this paragraph (c-2), (i) "Average Trading
Price" shall mean the average of the Closing Sale Price (as hereafter
defined) reported for each trading day within the period; (ii) "Closing
Sale Price" on any trading day shall mean, with respect to one share of
Common Stock, the last reported sale price regular way or, in case no
such reported sale takes place on such day, the average of the closing
bid and asked prices regular way for such day, in each case on the New
York Stock Exchange, or, if the Common Stock is not listed or admitted
to trading on such exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading,
or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the average of the highest reported bid
and lowest reported asked prices as furnished by the National
Association of Securities Dealers, Inc. through NASDAQ or a similar
organization if NASDAQ is no longer reporting such information. If on
any such trading day the shares of Common Stock are not quoted by any
such organization, the Closing Sale Price of one share on such day
shall be the fair market value of one share of Common Stock on such
day, as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be evidenced by a duly adopted
resolution of the Board of Directors and shall be conclusive; and (iii)
"Trading Day" shall mean a day on which the New York Stock Exchange,
or, if the Common Stock is not listed or admitted to trading on such
exchange, such other exchange or market upon which the Closing Sale
Price is to be determined as hereinabove provided, is open for trading.
(E) The Corporation shall at all times reserve and
keep available, free from pre-emptive rights, out of its authorized but
unissued Common Stock, for the purposes of effecting the conversion of
shares of Series A Preferred Stock, the full number of shares of Common
Stock then deliverable upon the conversion of all shares of Series A
Preferred Stock then outstanding.
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<PAGE> 160
(F) Each share of Series A Preferred Stock is
convertible into Excess Stock as provided in Article NINTH.
(6) (A) Upon a liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, the
Holders of Series A Preferred Stock shall be entitled, before any
assets of the Corporation shall be distributed among or paid over the
holders of any Junior Securities, but after distributions of such
assets among, or payment thereof over to, creditors of the Corporation
and to Holders of any Senior Preferred Stock, to receive from the
assets of the Corporation available for distribution to stockholders an
amount in cash or property (valued at its fair market value), or a
combination thereof, equal to $25.00 per share (prorated for fractional
shares), plus, in each such case, an amount in cash or property (valued
at its fair market value) equal to all accrued and unpaid dividends
thereon (whether or not declared and whether or not there are funds of
the Corporation legally available for the payment of dividends) to and
including the date of final distribution. After any such payment in
full, the Holders of Series A Preferred Stock shall not, as such, be
entitled to any further participation in any distribution of assets of
the Corporation. As used in this subparagraph (c-2)(6), the terms
"liquidation preference" and "liquidation value" (and other terms of
similar import) shall mean $25.00 per share.
(B) Neither the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation,
nor the sale of all or substantially all the assets of the Corporation,
shall be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, for the purposes of this subparagraph
(c-2)(6).
(C) If, upon any such liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
assets of the Corporation shall be insufficient to make the full
payments required by subparagraph (c-2)(6)(A) and all full
distributions with respect to all Parity Preferred Stock, no such
distribution shall be made on account of any shares of any Parity
Preferred Stock or Series A Preferred Stock unless proportionate
distributive amounts shall be paid on account of the shares of Series A
Preferred Stock and Parity Preferred Stock, ratably, in proportion to
the full distributable amounts to which Holders of the Series A
Preferred Stock and holders of all such Parity Preferred Stock are
respectively entitled upon such dissolution, liquidation or winding up.
(7) Shares of Series A Preferred Stock shall be redeemable by
the Corporation as provided below (with all references in this
subparagraph (c-2)(7) to a redemption price per share to be adjusted
proportionally in respect of fractional shares):
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<PAGE> 161
(A) (i) At the option of the Corporation, shares of
Series A Preferred Stock may be redeemed, as a whole or from time to
time in part, at any time from and after the fifth anniversary of the
Issue Date, at the following redemption prices per share: If redeemed
during the 12-month period beginning on the anniversary date of the
Issue Date indicated,
<TABLE>
<CAPTION>
Redemption Redemption
Anniversary Price Anniversary Price
----------- ----- ----------- -----
<S> <C> <C> <C>
Fifth $26.75 Ninth $25.75
Sixth $26.50 Tenth $25.50
Seventh $26.25 Eleventh $25.25
Eighth $26.00
</TABLE>
and thereafter at a redemption price of $25.00 per share, in each case
payable in cash.
(ii) At the option of any Holder, at any time
specified by such Holder upon not less than 10 days notice after
receiving 60 days prior written notice of the Corporation stating that
the Corporation intends to issue shares of Common Stock or other equity
securities of the Corporation to any "foreign person" (as such term is
used in Section 897(h)(4)(B) of the Internal Revenue Code of 1986, as
amended, or any successor provision), directly or indirectly, if such
issuance would result in ownership of 48% or more of the value of all
outstanding shares of Common Stock and other equity securities of the
Corporation, directly or indirectly, by "foreign persons". The
redemption price shall equal $25.00 per share plus all accrued and
unpaid dividends (whether or not declared and whether or not there are
funds of the Corporation legally available for the payment of
dividends) on such share.
(B) In addition to the redemption option set forth in
subparagraph (c-2)(7)(A) above, at the option of the Corporation,
shares of Series A Preferred Stock may be redeemed, as a whole or from
time to time in part, from and after the second anniversary of the
Issue Date and during any period that the Closing Sale Price of the
Common Stock exceeds 120% of the Conversion Price for any 20 trading
days within a period of 30 consecutive trading days, at a redemption
price, payable in shares of Common Stock, equal to that number of
shares of Common Stock then issuable upon conversion, pursuant to
subparagraph (c-2)(5) above, of the shares of Series A Preferred Stock
to be redeemed.
(C) The Corporation shall not redeem any shares of
Series A Preferred Stock pursuant to subparagraph (c-2)(7)(A)(i) or
subparagraph (c-2)(7)(B) above, unless and until all accrued and unpaid
dividends (whether or not
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<PAGE> 162
declared and whether or not there are funds of the Corporation legally
available for the payment of dividends) on the Series A Preferred Stock
have been or contemporaneously are declared and paid in full.
(D) Whenever shares of Series A Preferred Stock are
to be redeemed pursuant to subparagraph (c-2)(7)(A)(i) or subparagraph
(c-2)(7)(B) above, a notice of such redemption shall be mailed,
addressed to each Holder of the shares to be redeemed, by first class
mail, postage prepaid, or delivered to each Holder of the shares to be
redeemed at such Holder's address as the same appears on the stock
transfer records of the Corporation. Such notice shall be mailed or
delivered (i) in the case of a redemption pursuant to subparagraph
(c-2)(7)(A)(i) above, not less than 60 days prior to the date fixed for
redemption or (ii) in the case of a redemption pursuant to subparagraph
(c-2)(7)(B) above, not less than 10 days prior to the date fixed for
redemption. Each such notice shall state: (i) the date fixed for
redemption; (ii) the number of shares to be redeemed; (iii) the
redemption price; (iv) the place or places where such shares are to be
surrendered for payment of the redemption price; and (v) that dividends
on the shares to be redeemed will cease to accrue on such date fixed
for redemption unless default shall be made in payment of the
redemption price on such date. If fewer than all shares of Series A
Preferred Stock held by a Holder are to be redeemed, the notice mailed
to such Holder shall specify the number of shares to be redeemed from
such Holder.
(E) Notice having been given as provided in
subparagraph (c-2)(7)(A)(ii) or subparagraph (c-2)(7)(D) above, as
applicable:
(i) in the case of a redemption pursuant to
subparagraphs (c-2)(7)(A)(i) or (ii) above, if on or before the
redemption date specified in such notice an amount in cash sufficient
to redeem in full, on the redemption date and at the applicable
redemption price, all shares of Series A Preferred Stock called for
redemption shall have been set apart and deposited in trust so as to be
available for such purpose and only for such purpose, or shall have
been paid to the Holders thereof, then effective as of the close of
business on such redemption date, the shares of Series A Preferred
Stock so called for redemption shall cease to accrue dividends, and
said shares shall no longer be deemed to be outstanding and shall have
the status of authorized but unissued shares of capital stock and be
reclassified as Common Stock of the Corporation, and all rights of the
Holders thereof, as such as stockholders of the Corporation (except the
right to receive from the Corporation the redemption price) shall
cease;
(ii) in the case of redemption pursuant to
subparagraph (c-2)(7)(B) above, all shares of Series A Preferred Stock
called for redemption shall be deemed to have been converted into
shares of Common Stock in
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<PAGE> 163
accordance with subparagraph (c-2)(5) above immediately prior to the
close of business on the redemption date specified in such notice, and
the person or persons entitled to receive the Common Stock issuable
upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock at such time; and effective as
of the close of business on such redemption date, the shares of Series
A Preferred Stock so called for redemption shall cease to accrue
dividends, and said shares shall no longer be deemed to be outstanding
and shall have the status of authorized but unissued shares of Common
Stock of the Corporation, and all rights of the Holders thereof, as
such as stockholders of the Corporation (except the right to receive
from the Corporation the redemption price) shall cease; and
(iii) in either such case, upon surrender in
accordance with said notice of the certificates for any shares so
redeemed (properly endorsed or assigned for transfer, if the notice
shall so state), such shares shall be redeemed by the Corporation at
the redemption price as aforesaid. In the case of redemption pursuant
to subparagraph (c-2)(7)(B) above, as promptly as practicable on or
after the date of such surrender, the Corporation shall issue and
deliver a certificate or certificates for the number of full shares of
Common Stock issuable upon such redemption, together with payment in
lieu of any fraction of a share, to the person or persons entitled to
receive the same, all in accordance with the provisions of subparagraph
(c-2)(5) above. In case fewer than all the shares of Series A Preferred
Stock represented by any certificate so surrendered are redeemed, a new
certificate of like terms and having the same date of original issuance
shall be issued representing the unredeemed shares of Series A
Preferred Stock without cost to the Holder thereof.
(F) In the event that fewer than all the shares of
Series A Preferred Stock are to be redeemed pursuant to subparagraph
(c-2)(7)(A)(i) or subparagraph (c-2)(7)(B) above, the Corporation shall
redeem shares of Series A Preferred Stock pro rata among the Holders,
based on the number of shares of Series A Preferred Stock held by each
Holder.
(G) Nothing contained in this subparagraph (c-2)(7)
shall limit any legal right of the Corporation to purchase or otherwise
acquire any shares of Series A Preferred Stock at any price, whether
higher or lower than the redemption price.
(8) (A) The Conversion Price and the number of shares of
Common Stock issuable upon the conversion of shares of Series A
Preferred Stock shall be subject to adjustment in case the Corporation
shall at any time after the Issue Date (i) pay a dividend or make any
other distribution to all holders of its outstanding Common Stock,
Class B Common Stock, or Class C Common Stock in shares of
- 18 -
<PAGE> 164
Common Stock, Class B Common Stock, or Class C Common Stock such that
the total number of shares of Common Stock, Class B Common Stock, and
Class C Common Stock outstanding is increased; (ii) subdivide or
split-up its outstanding shares of Common Stock, Class B Common Stock,
or Class C Common Stock into a greater total number of shares of Common
Stock, Class B Common Stock, and Class C Common Stock; (iii) combine
its outstanding shares of Common Stock, Class B Common Stock, or Class
C Common Stock into a smaller total number of shares of Common Stock,
Class B Common Stock, and Class C Common Stock; (iv) issue by
reclassification of its shares of Common Stock, Class B Common Stock,
or Class C Common Stock other shares of capital stock of the
Corporation; (v) issue rights or warrants to all holders of its
outstanding Common Stock, Class B Common Stock, or Class C Common Stock
entitling them to subscribe for or purchase shares of Common Stock,
Class B Common Stock, or Class C Common Stock at a price per share less
than the Closing Sale Price of the Common Stock on the trading day
preceding the record date of such issuance or (vi) in case the
Corporation shall distribute to all holders of its outstanding Common
Stock, Class B Common Stock, or Class C Common Stock evidences of its
indebtedness or assets (excluding cash dividends, dividends or
distributions in shares of Common Stock, Class B Common Stock, or Class
C Common Stock or rights or warrants to subscribe for or purchase
securities referred to in the preceding clause (v)). In any such event,
the number of shares of Common Stock issuable upon conversion of each
share of Series A Preferred Stock immediately prior thereto shall be
adjusted so that the Holder thereof shall be entitled to receive the
kind and number of shares of Common Stock or other securities of the
Corporation that such Holder would have owned or would have been
entitled to receive after the happening of any of the events described
above had such share of Series A Preferred Stock been converted
immediately prior to the happening of such event or any record date
with respect thereto. An adjustment made pursuant to this subparagraph
(c-2)(8)(A) shall become effective immediately after the effective date
of such event, retroactive to the record date, if any, for such event.
(B) Whenever the number of shares of Common Stock
issuable upon the conversion of shares of Series A Preferred Stock is
adjusted, as provided in subparagraph (c-2)(8)(A) above, the Conversion
Price shall be adjusted (calculated to the nearest $.0001) by
multiplying such Conversion Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the number of shares of
Common Stock issuable upon conversion of each share of Series A
Preferred Stock immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Common Stock so
issuable immediately thereafter.
(C) Notwithstanding anything in this subparagraph
(c-2)(8), in no event will any adjustment be made to the Conversion
Price or the number of
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<PAGE> 165
shares of Common Stock issuable upon the conversion of shares of Series
A Preferred Stock solely as a result of any conversion of any shares of
Class B Common Stock or Class C Common Stock into shares of Common
Stock on a one-for-one basis.
(D) For purposes of this subparagraph (c-2)(8), the
term "shares of Common Stock" shall mean the class of stock designated
as the Common Stock of the Corporation at the Issue Date. In the event
that at any time, as a result of an adjustment made pursuant to
subparagraph (c-2)(8)(A) above, the shares of Series A Preferred Stock
shall become convertible into any securities of the Corporation other
than shares of Common Stock, thereafter the number of such other
securities so issuable upon such conversion and the Conversion Price of
such securities shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock.
(9) In case at any time:
(A) the Corporation shall set a record date for the
purpose of declaring a dividend (or any other distribution) on the
Common Stock, Class B Common Stock, or Class C Common Stock payable
otherwise than in cash out of its retained earnings; or
(B) the Corporation shall set a record date for the
granting to the holders of the Common Stock, Class B Common Stock, or
Class C Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or
(C) of any reclassification of the capital stock of
the Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock, Class B Common Stock, or Class C
Common Stock), or of any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of
the Corporation is required, or of the sale or transfer of all or
substantially all of the assets of the Corporation;
then, in any such case, the Corporation shall cause to be mailed to the
Holders of the Series A Preferred Stock, at least 20 days (or 10 days
in any case specified in subparagraphs (c-2)(9)(A) or (B) above) prior
to the applicable record or effective date hereinafter specified, a
notice stating (i) the date on which a record is to be taken for the
purpose of such dividend, distribution, rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common
Stock, Class B Common Stock, or Class C Common Stock of record to be
entitled to such dividend, distribution, rights or warrants are to be
determined, or (ii) the date on
- 20 -
<PAGE> 166
which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective,
and the date as of which it is expected that holders of Common Stock,
Class B Common Stock, or Class C Common Stock of record shall be
entitled to exchange their shares of Common Stock, Class B Common
Stock, or Class C Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. In no event shall the
giving of such notice limit the Corporation's obligations to adjust the
Conversion Price and number of shares of Common Stock issuable upon the
conversion of shares of Series A Preferred Stock upon the occurrence of
the events specified in subparagraph (c-2)(8) above.
(d) A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the Excess Stock of the Corporation is
set forth in Article NINTH hereof.
(e) Subject to the foregoing, the power of the Board of
Directors to classify and reclassify any of the shares of capital stock shall
include, without limitation, subject to the provisions of the Charter, authority
to classify or reclassify any unissued shares of such stock into a class or
classes of preferred stock, preference stock, special stock or other stock, and
to divide and classify shares of any class into one or more series of such
class, by determining, fixing, or altering one or more of the following:
(1) The distinctive designation of such class or series and
the number of shares to constitute such class or series; provided that,
unless otherwise prohibited by the terms of such or any other class or
series, the number of shares of any class or series may be decreased by
the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of such
class or series may be increased by the Board of Directors in
connection with any such classification or reclassification, and any
shares of any class or series which have been redeemed, purchased,
otherwise acquired or converted into shares of Common Stock or any
other class or series shall become part of the authorized capital stock
and be subject to classification and reclassification as provided in
this subparagraph.
(2) Whether or not and, if so, the rates, amounts and times at
which, and the conditions under which, dividends shall be payable on
shares of such class or series, whether any such dividends shall rank
senior or junior to or on a parity with the dividends payable on any
other class or series of stock, and the status of any such dividends as
cumulative, cumulative to a limited extent or non- cumulative and as
participating or non-participating.
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<PAGE> 167
(3) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law and, if
so, the terms of such voting rights provided that, there shall be no
increase in the number of directors except as set forth in paragraph
(a) of Article SEVENTH and such voting rights shall not effect the
rights of the holders of the Class B Common Stock or the Class C Common
Stock with respect to the election of directors.
(4) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and conditions
thereof, including provision for adjustment of the conversion or
exchange rate in such events or at such times as the Board of Directors
shall determine.
(5) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall
be redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates; and whether or not there shall be any sinking fund or
purchase account in respect thereof, and if so, the terms thereof.
(6) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the affairs
of, or upon any distribution of the assets of, the Corporation, which
rights may vary depending upon whether such liquidation, dissolution or
winding up is voluntary or involuntary and, if voluntary, may vary at
different dates, and whether such rights shall rank senior or junior to
or on a parity with such rights of any other class or series of stock.
(7) Whether or not there shall be any limitations applicable,
while shares of such class or series are outstanding, upon the payment
of dividends or making of distributions on, or the acquisition of, or
the use of moneys for purchase or redemption of, any stock of the
Corporation, or upon any other action of the Corporation, including
action under this subparagraph, and, if so, the terms and conditions
thereof.
(8) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of such
class or series, not inconsistent with law and the Charter of the
Corporation.
(f) For the purposes hereof and of any articles supplementary
to the Charter providing for the classification or reclassification of any
shares of capital stock or of any other charter document of the Corporation
(unless otherwise provided in any such articles or document), any class or
series of stock of the Corporation shall be deemed to rank:
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<PAGE> 168
(1) prior to another class or series either as to dividends or
upon liquidation, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case may be, in
preference or priority to holders of such other class or series;
(2) on a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per share
thereof be different from those of such others, if the holders of such
class or series of stock shall be entitled to receipt of dividends or
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend rates or
redemption or liquidation prices, without preference or priority over
the holders of such other class or series; and
(3) junior to another class or series either as to dividends
or upon liquidation, if the rights of the holders of such class or
series shall be subject or subordinate to the rights of the holders of
such other class or series in respect of the receipt of dividends or
the amounts distributable upon liquidation, dissolution or winding up,
as the case may be.
SEVENTH: (a) The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. The number of directors
of the Corporation shall never be less than the minimum number permitted by the
General Laws of the State of Maryland now or hereafter in force and:
(1) so long as any shares of both Class B Common Stock and
Class C Common Stock are outstanding, the number of directors of the
Corporation shall be thirteen;
(2) so long as any shares of Class B Common Stock (but no
Class C Common Stock) are outstanding, the number of directors of the
Corporation shall be nine; and
(3) so long as any shares of Class C Common Stock (but no
Class B Common Stock) are outstanding, the number of directors of the
Corporation shall be nine.
At least a majority of the directors shall be Independent Directors (as defined
in Article NINTH).
(b) Subject to the rights of the holders of any class of
Preferred Stock then outstanding, newly created directorships resulting from any
increase in the authorized number of directors shall be filled by a vote of the
stockholders or a majority of the entire Board of Directors, and any vacancies
on the Board of Directors resulting from death, disability ("disability," which
for purposes of this paragraph (b) shall mean illness, physical or mental
disability
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<PAGE> 169
or other incapacity), resignation, retirement, disqualification, removal from
office, or other cause shall be filled by a vote of the stockholders or a
majority of the directors then in office; provided that
(1) any vacancies on the Board of Directors resulting from
death, disability, resignation, retirement, disqualification, removal
from office, or other cause of a director elected by the holders of
Class B Common Stock shall be filled by a vote of the holders of Class
B Common Stock; and
(2) any vacancies on the Board of Directors with respect to a
director elected by the holders of Class C Common Stock shall be filled
as follows:
(A) at any time after the closing date of the Merger,
any vacancy resulting from death or disability shall be filled by
holders of Class C Common Stock, voting as a separate class to elect as
a replacement director a candidate who (i) is the Chief Executive
Officer of The Edward J. DeBartolo Corporation (or any successor to
such corporation), provided that the right granted pursuant to this
subparagraph (b)(2)(A)(i) may be exercised only once and may only be
exercised to fill a vacancy resulting from the death or disability of
Edward J. DeBartolo, Jr. or Marie Denise DeBartolo York, or (ii) has
similar experience and standing in the business community to the
Independent Directors and who has been approved by a majority of the
Independent Directors elected by the holders of Common Stock and other
capital stock entitled to vote with the Common Stock as a single class.
If such Independent Directors do not approve such candidate, the
holders of Class C Common Stock may propose another candidate for
approval by a majority of the Independent Directors. The right of
holders of Class C Common Stock to propose candidates to the
Independent Directors shall continue until one such candidate is
approved by a majority of the Independent Directors;
(B) at any time prior to the fourth anniversary of
the closing date of the Merger, any vacancy other than one resulting
from a death or disability shall, subparagraph (c-1)(1) of Article
SIXTH notwithstanding, reduce by such vacancy an equivalent number of
the directors that holders of Class C Common Stock may, voting as a
separate class, elect, and such a vacancy shall be filled by a majority
of the entire Board of Directors. If as a result of this subparagraph
(b)(2)(B) the number of directors that holders of Class C Common Stock
may elect is reduced to zero, then immediately and automatically each
share of Class C Common Stock shall be converted into one share of
Common Stock;
(C) at any time during the period from and including
the fourth anniversary to but not including the fifth anniversary of
the closing date of the Merger, any vacancy other than one resulting
from a death or disability shall be
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<PAGE> 170
filled by holders of Class C Common Stock, voting as a separate class,
to elect as a replacement director a candidate who meets the
qualifications and has been selected in accordance with the procedures
set forth in subparagraph (b)(2)(A)(ii) above; PROVIDED if during such
period vacancies result other than from death or disability with
respect to both of the directors who were directors on the fourth
anniversary date, then, subparagraph (c-1)(1) of Article SIXTH
notwithstanding, the number of directors that the holders of Class C
Common Stock may, voting as a separate class, elect shall be reduced to
one, and the vacancy with respect to the second resigned director shall
be filled by a majority of the entire Board of Directors; and
(D) at any time after the fifth anniversary of the
closing date of the Merger, any vacancy other than one resulting from a
death or disability shall be filled by holders of Class C Common Stock,
voting as a separate class, to elect as a replacement director a
candidate who meets the qualifications and has been selected in
accordance with the procedures set forth in subparagraph (b)(2)(A)(ii)
above.
No decrease in the number of directors constituting the Board of Directors shall
affect the tenure of office of any director.
(c) Whenever the holders of any one or more series of
Preferred Stock of the Corporation shall have the right, voting separately as a
class, to elect one or more directors of the Corporation, the Board of Directors
shall consist of said directors so elected in addition to the number of
directors fixed as provided in paragraph (a) of this Article SEVENTH or in the
By-Laws; provided that if any shares of Class B Common Stock or Class C Common
Stock are outstanding, the election of one or more directors by such holders of
Preferred Stock will eliminate the corresponding number a directors to be
elected by the combined holders of the Common Stock, the Class B Common Stock,
the Class C Common Stock, and the Series A Preferred Stock voting together as a
single class, and will neither increase the size of the Board of Directors nor
eliminate the seat or seats of directors elected by the holders of the Class B
Common Stock or of the Class C Common Stock, each voting as a separate class.
Notwithstanding the foregoing, and except as otherwise may be required by law,
whenever the holders of any one or more series of Preferred Stock of the
Corporation shall have the right, voting separately as a class, to elect one or
more directors of the Corporation, the terms of the director or directors
elected by such holders shall expire at the next succeeding annual meeting of
stockholders.
(d) Subject to the rights of the holders of any class
separately entitled to elect one or more directors, any director, or the entire
Board of Directors, may be removed from office at any time, but only for cause
and then only by the affirmative vote of the holders of at least a majority of
the combined voting power of all classes of shares of capital stock entitled to
vote in the election for directors voting together as a single class.
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<PAGE> 171
(e) The following are the names of the current directors of
the Corporation, each of whom shall serve until the annual meeting of
stockholders indicated next to his or her name, and who thereafter will serve
(or whose replacement will serve) until the next following annual meeting of
stockholders.
<TABLE>
<CAPTION>
CURRENT TERM ENDS
WITH ELECTION AT
NAME OF CURRENT DIRECTOR ANNUAL MEETING IN:
STOCK CLASSES ENTITLED TO ELECT DIRECTOR CLASS
- - - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(person from current Simon Board) Common Stock, Class B Common Stock, Class A 1997(1)
C Common Stock, Series A Preferred Stock
(person from current Simon Board) Common Stock, Class B Common Stock, Class A 1998(2)
C Common Stock, Series A Preferred Stock
(person from current Simon Board) Common Stock, Class B Common Stock, Class A 1998(2)
C Common Stock, Series A Preferred Stock
(person from current DeBartolo Common Stock, Class B Common Stock, Class A 1998(2)
Board) C Common Stock, Series A Preferred Stock
(person from current Simon Board) Common Stock, Class B Common Stock, Class A 1999(2)
C Common Stock, Series A Preferred Stock
(person from current DeBartolo Common Stock, Class B Common Stock, Class A 1999(2)
Board) C Common Stock, Series A Preferred Stock
(person from current DeBartolo Common Stock, Class B Common Stock, Class A 1999(2)
Board) C Common Stock, Series A Preferred Stock
(Simon director) Class B Common Stock B 1997(1)
(Simon director) Class B Common Stock B 1997(1)
(Simon director) Class B Common Stock B 1997(1)
(Simon director) Class B Common Stock B 1997(1)
(DeBartolo director) Class C Common Stock C 1997(1)
(DeBartolo director) Class C Common Stock C 1997(1)
</TABLE>
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<PAGE> 172
- - - --------
1 In the event that proposed amendments to this section are submitted to the
stockholders subsequent to 1996, this date shall be adjusted such that (a) if
the proposal is submitted in 1997, this date will be changed to one that is the
sum of this date plus one year; and (b) if the proposal is submitted in 1998,
this date will be changed to one that is the sum of this date plus two years.
2 In the event that proposed amendments to this section are submitted to the
stockholders subsequent to 1996, whether in 1997 or 1998, this date will be
changed to one that is the sum of this date plus one year.
(f) Any action by the Corporation relating to (1) transactions
between the Corporation and M.S. Management Associates, Inc., Simon MOA
Management Company, Inc., DeBartolo Properties Management, Inc. and/or M.S.
Management Associates (Indiana), Inc. or (2) transactions involving the
Corporation, individually or in its capacity as general partner (whether
directly or indirectly through another entity) of Simon DeBartolo Group, L.P.,
in which the Simon Family Group or the DeBartolo Family Group or any member or
affiliate of any member of the Simon Family Group or DeBartolo Family Group has
an interest (other than through ownership interests in the Corporation or Simon
DeBartolo Group, L.P.), shall, in addition to such other vote that may be
required, require the prior approval of a majority of the Independent Directors.
EIGHTH: (a) The following provisions are hereby adopted for the
purpose of defining, limiting, and regulating the powers of the Corporation and
of the directors and the stockholders:
(1) The Board of Directors is hereby empowered to authorize
the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into
shares of its stock of any class or classes, whether now or hereafter
authorized, for such consideration as may be deemed advisable by the
Board of Directors and without any action by the stockholders.
(2) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any stock or any other
securities of the Corporation other than such, if any, as the Board of
Directors, in its sole discretion, may determine and at such price or
prices and upon such other terms as the Board of Directors, in its sole
discretion, may fix; and any stock or other securities which the Board
of Directors may determine to offer for subscription may, as the Board
of Directors in its sole discretion shall determine, be offered to the
holders of any class, series or type of stock or other securities at
the time outstanding to the exclusion of the holders of any or all
other classes, series or types of stock or other securities at the time
outstanding.
(3) The Board of Directors of the Corporation shall,
consistent with applicable law, have power in its sole discretion to
determine from time to time in
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accordance with sound accounting practice or other reasonable valuation
methods what constitutes annual or other net profits, earnings,
surplus, or net assets in excess of capital; to fix and vary from time
to time the amount to be reserved as working capital, or determine that
retained earnings or surplus shall remain in the hands of the
Corporation; to set apart out of any funds of the Corporation such
reserve or reserves in such amount or amounts and for such proper
purpose or purposes as it shall determine and to abolish any such
reserve or any part thereof; to redeem or purchase its stock or to
distribute and pay distributions or dividends in stock, cash or other
securities or property, out of surplus or any other funds or amounts
legally available therefor, at such times and to the stockholders of
record on such dates as it may, from time to time, determine; to
determine the amount, purpose, time of creation, increase or decrease,
alteration or cancellation of any reserves or charges and the propriety
thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or
discharged); to determine the fair value and any matters relating to
the acquisition, holding and disposition of any assets by the
Corporation; and to determine whether and to what extent and at what
times and places and under what conditions and regulations the books,
accounts and documents of the Corporation, or any of them, shall be
open to the inspection of stockholders, except as otherwise provided by
statute or by the By-Laws, and, except as so provided, no stockholder
shall have any right to inspect any book, account or document of the
Corporation unless authorized so to do by resolution of the Board of
Directors.
(4) The Board of Directors shall, in connection with the
exercise of its business judgment involving a Business Combination (as
defined in Section 3-601 of the Corporations and Associations Article
of the Annotated Code of Maryland) or any actual or proposed
transaction which would or may involve a change in control of the
Corporation (whether by purchases of shares of stock or any other
securities of the Corporation in the open market, or otherwise, tender
offer, merger, consolidation, dissolution, liquidation, sale of all or
substantially all of the assets of the Corporation, proxy solicitation
or otherwise), in determining what is in the best interests of the
Corporation and its stockholders and in making any recommendation to
its stockholders, give due consideration to all relevant factors,
including, but not limited to (A) the economic effect, both immediate
and long-term, upon the Corporation's stockholders, including
stockholders, if any, who do not participate in the transaction; (B)
the social and economic effect on the employees, customers of, and
others dealing with, the Corporation and its subsidiaries and on the
communities in which the Corporation and its subsidiaries operate or
are located; (C) whether the proposal is acceptable based on the
historical and current operating results or financial condition of the
Corporation; (D) whether a more favorable price could be obtained for
the Corporation's stock
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or other securities in the future; (E) the reputation and business
practices of the offeror and its management and affiliates as they
would affect the employees of the Corporation and its subsidiaries; (F)
the future value of the stock or any other securities of the
Corporation; (G) any antitrust or other legal and regulatory issues
that are raised by the proposal; and (H) the business and financial
condition and earnings prospects of the acquiring person or entity,
including, but not limited to, debt service and other existing
financial obligations, financial obligations to be incurred in
connection with the acquisition, and other likely financial obligations
of the acquiring person or entity. If the Board of Directors determines
that any proposed Business Combination (as defined in Section 3-601 of
the Corporations and Associations Article of the Annotated Code of
Maryland) or actual or proposed transaction which would or may involve
a change in control of the Corporation should be rejected, it may take
any lawful action to defeat such transaction, including, but not
limited to, any or all of the following: advising stockholders not to
accept the proposal; instituting litigation against the party making
the proposal; filing complaints with governmental and regulatory
authorities; acquiring the stock or any of the securities of the
Corporation; selling or otherwise issuing authorized but unissued
stock, other securities or granting options or rights with respect
thereto; acquiring a company to create an antitrust or other regulatory
problem for the party making the proposal; and obtaining a more
favorable offer from another individual or entity.
(5) The Corporation shall provide any indemnification
permitted by the laws of Maryland and shall indemnify directors,
officers, agents and employees as follows: (A) the Corporation shall
indemnify its directors and officers, whether serving the Corporation
or at its request any other entity, to the full extent required or
permitted by the General Laws of the State of Maryland now or hereafter
in force, including the advance of expenses under the procedures and to
the full extent permitted by law and (B) the Corporation shall
indemnify other employees and agents, whether serving the Corporation
or at its request any other entity, to such extent as shall be
authorized by the Board of Directors or the Corporation's By-Laws and
be permitted by law. The foregoing rights of indemnification shall not
be exclusive of any other rights to which those seeking indemnification
may be entitled. The Board of Directors may take such action as is
necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such
by-laws, resolutions or contracts implementing such provisions or such
further indemnification arrangements as may be permitted by law. No
amendment of the Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the right to indemnification
provided hereunder with respect to acts or omissions occurring prior to
such amendment or repeal or shall limit or eliminate the rights granted
under indemnification agreements entered into by the Corporation and
its directors, officers, agents and employees.
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<PAGE> 175
(6) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer of
the Corporation shall be personally liable to the Corporation or its
stockholders for money damages. No amendment of the Charter of the
Corporation or repeal of any of its provisions shall limit or eliminate
the benefits provided to directors and officers under this provision
with respect to any act or omission which occurred prior to such
amendment or repeal.
(7) For any stockholder proposal to be presented in connection
with an annual meeting of stockholders of the Corporation, including
any proposal relating to the nomination of a director to be elected to
the Board of Directors of the Corporation, the stockholders must have
given timely written notice thereof in writing to the Secretary of the
Corporation in the manner and containing the information required by
the By-Laws. Stockholder proposals to be presented in connection with a
special meeting of stockholders will be presented by the Corporation
only to the extent required by Section 2-502 of the Corporations and
Associations Article of the Annotated Code of Maryland.
(b) The Corporation reserves the right to amend, alter, change
or repeal any provision contained in the Charter, including any amendments
changing the terms or contract rights, as expressly set forth in the Charter, of
any of its outstanding stock by classification, reclassification or otherwise,
by a majority of the directors (including a majority of the Independent
Directors, a majority of the directors elected by the holders of the Class B
Common Stock and one director elected by the holders of the Class C Common
Stock, if such Class B Common Stock and Class C Common Stock have at that time
elected directors) adopting a resolution setting forth the proposed change,
declaring its advisability, and either calling a special meeting of the
stockholders certified to vote on the proposed change, or directing the proposed
change to be considered at the next annual stockholders meeting. Unless
otherwise provided herein, the proposed change will be effective only if it is
adopted upon the affirmative vote of the holders of not less than a majority of
the aggregate votes entitled to be cast thereon (considered for this purpose as
a single class); provided however, that any amendment to, repeal of or adoption
of any provision inconsistent with subparagraphs (a)(4), (a)(6) or (a)(7) or
this paragraph (b) of Article EIGHTH will be effective only if it is adopted
upon the affirmative vote of not less than 80% of the aggregate votes entitled
to be cast thereon (considered for this purpose as a single class) and any
amendment to, repeal of, or adoption of any provision inconsistent with
paragraphs (c) or (c-1) of Article SIXTH or Article SEVENTH will be effective
only if it is adopted upon both (1) the affirmative vote of not less than 80% of
the aggregate votes entitled to be cast thereon (considered for this purpose as
a single class) and (2) the affirmative vote of not less than a majority of the
aggregate votes entitled to be cast by the holders of the Class B Common Stock
(in the case of paragraph (c) of Article SIXTH or Article SEVENTH) or by the
holders of the Class C Common Stock (in the case of paragraph (c-1) of Article
SIXTH or Article SEVENTH).
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<PAGE> 176
(c) In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
alter or repeal the By-Laws of the Corporation.
(d) The enumeration and definition of particular powers of the
Board of Directors included in the foregoing shall in no way be limited or
restricted by reference to or inference from the terms of any other clause of
this or any other Article of the Charter of the Corporation, or construed as or
deemed by inference or otherwise in any manner to exclude or limit any powers
conferred upon the Board of Directors under the General Laws of the State of
Maryland now or hereafter in force.
NINTH: (a) (1) The following terms shall have the following
meaning:
"Aggregate Assumed Equity Interest in the Corporation" shall
mean the aggregate equity interest in the Corporation represented by
the Common Stock, the Class B Common Stock, the Class C Common Stock
and the Units on the assumption that all shares of Class B Common Stock
and Class C Common Stock and all such Units are exchanged for Common
Stock
"Beneficial Ownership" shall mean ownership of Capital Stock
by a Person who would be treated as an owner of such shares of Capital
Stock either directly or indirectly through the application of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
any comparable successor provisions thereto. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have
correlative meanings.
"Beneficiary" shall mean any Qualified Charitable Organization
which, from time to time, is designated by the Corporation to be a
beneficiary of the Trust.
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"By-Laws" shall mean the By-Laws of the Corporation.
"Capital Stock" shall mean stock that is Common Stock, Class B
Common Stock, Class C Common Stock, Excess Stock or Preferred Stock.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Constructive Ownership" shall mean ownership of Capital Stock
by a Person who would be treated as an owner of such shares of Capital
Stock either directly or indirectly through the application of Section
318 of the Code, and any comparable successor provisions thereto, as
modified by Section 856(d)(5) of the
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<PAGE> 177
Code. The terms "Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have correlative meanings.
"DeBartolo Family Group" shall mean the Estate of Edward J.
DeBartolo, Sr., Edward J. DeBartolo, Jr. and Marie Denise DeBartolo
York, other members of the immediate family of any of the foregoing,
any other lineal descendants of any of the foregoing, any estates of
any of the foregoing, any trusts established for the benefit of any of
the foregoing, and any other entity controlled by any of the foregoing.
"DeBartolo Family Group Initial Aggregate Assumed Equity
Interest in the Corporation" shall mean the portion of the Aggregate
Assumed Equity Interest in the Corporation owned by the DeBartolo
Family Group immediately following the closing of the Merger.
"Exchange Rights" shall mean any rights granted to limited
partners of Simon DeBartolo Group, L.P., a Delaware limited partnership
(including pursuant to an Exchange Rights Agreement) and Simon Property
Group L.P., a Delaware limited partnership, to exchange (subject to the
Ownership Limit) limited partnership interests in such Partnership for
shares of Capital Stock.
"Independent Director" shall mean a director of the
Corporation who is neither employed by the Corporation nor a member (or
an affiliate of a member) of the Simon Family Group or the DeBartolo
Family Group.
"Market Price" of any class of Capital Stock on any date shall
mean the average of the Closing Price for the five consecutive Trading
Days ending on such date, or if such date is not a Trading Date, the
five consecutive Trading Days preceding such date. The "Closing Price"
on any date shall mean (i) the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange, or (ii) if such class of Capital Stock is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which such class of capital stock is listed or admitted to trading, or
(iii) if such class of capital stock is not listed or admitted to
trading on any national securities exchange, the last quoted price, or
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system
is no longer in use, the principal other automated quotations systems
that may then be in use, or (iv) if such class of Capital Stock is not
quoted by any such
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organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such class
of Capital Stock selected by the Board of Directors.
"Merger" shall mean the merger, pursuant to the Agreement and
Plan of Merger dated March 26, 1996, among the Corporation, Day
Acquisition Corp., an Ohio corporation and a wholly owned subsidiary of
the Corporation ("Sub"), and DeBartolo Realty Corporation, an Ohio
corporation ("DeBartolo"), pursuant to which merger Sub shall be merged
with and into DeBartolo.
"Option" shall mean any options, rights, warrants or
convertible or exchangeable securities containing the right to
subscribe for, purchase or receive upon exchange or conversion shares
of Capital Stock.
"Ownership Limit" shall mean (x) in the case of any member of
the Simon Family Group, 24%, and (y) in the case of any other Person,
6%, in each case, of any class of Capital Stock, or any combination
thereof, determined by (i) number of shares outstanding, (ii) voting
power or (iii) value (as determined by the Board of Directors),
whichever produces the smallest holding of Capital Stock under the
three methods, computed with regard to all outstanding shares of
Capital Stock and, to the extent provided by the Code, all shares of
Capital Stock issuable under outstanding Options and Exchange Rights
that have not been exercised.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for
or to be used exclusively for the purposes described in Section 642(c)
of the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity and
also includes a group as the term is used for purposes of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Purported Beneficial Holder" shall mean, with respect to any
event (other than a purported Transfer) which results in Excess Stock,
the Person for whom the Purported Record Holder held shares that were,
pursuant to subparagraph (a)(3) of this article NINTH, automatically
converted into Excess Stock upon the occurrence of such event.
"Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer which results in Excess Stock, the purported
beneficial transferee for whom the Purported Record Transferee would
have acquired shares of Common Stock or Preferred Stock if such
Transfer had been valid under subparagraph (a)(2) of this Article
NINTH.
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<PAGE> 179
"Purported Record Holder" shall mean, with respect to any
event (other than a purported Transfer) which results in Excess Stock,
the record holder of the shares that were, pursuant to subparagraph
(a)(3) of this Article NINTH, automatically converted into Excess Stock
upon the occurrence of such event.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Stock, the record holder of
the Common Stock or the Preferred Stock if such Transfer had been valid
under subparagraph (a)(2) of this Article NINTH.
"Qualified Charitable Organization" shall mean (i) any entity
which would be exempt from federal income under Section 501(c)(3) of
the Code and to which contributions are deductible under Section 170 of
the Code or (ii) any federal, state or local government entity.
"REIT" shall mean a real estate investment trust under Section
856 of the Code.
"Restriction Termination Date" shall mean the first day after
the effective date of the Merger on which the Corporation's status as a
REIT shall have been terminated by the Board of Directors and the
stockholders of the Corporation.
"Simon Family Group" shall mean Melvin Simon, Herbert Simon
and David Simon, other members of the immediate family of any of the
foregoing, any other lineal descendants of any of the foregoing, any
estates of any of the foregoing, any trust established for the benefit
of any of the foregoing, and any other entity controlled by any of the
foregoing.
"Simon Family Group Initial Aggregate Assumed Equity Interest
in the Corporation" shall mean the portion of the Aggregate Assumed
Equity Interest in the Corporation owned by the Simon Family Group
immediately following the closing of the Merger.
"Trading Day" shall mean, with respect to any class of Capital
Stock, a day on which the principal national securities exchange on
which such class of Capital Stock is listed or admitted to trading is
open for the transaction of business or, if such class of Capital Stock
is not listed or admitted to trading on any national securities
exchange, shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Transfer" shall mean any sale, transfer, gift, hypothecation,
pledge, assignment, devise or other disposition of Capital Stock
(including (i) the granting of any option (including an option to
acquire an Option or any series of such
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options) or entering into any agreement for the sale, transfer or other
disposition of Capital Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or
exchangeable for Capital Stock), whether voluntary or involuntary,
whether of record, constructively or beneficially and whether by
operation of law or otherwise.
"Trust" shall mean the trust created pursuant to subparagraph
(b)(1) of this Article NINTH.
"Trustee" shall mean any trustee for the Trust (or any
successor trustee) appointed from time to time by the Corporation;
provided, however, during any period in which Excess Stock is issued
and outstanding the Corporation shall undertake to appoint trustees of
the Trust which trustees are unaffiliated with the Corporation.
"Undesignated Excess Stock" shall have the meaning set forth
in subparagraph (b)(3) of this Article NINTH.
"Units" shall mean units representing limited partnership
interests in Simon Property Group, L.P. or DeBartolo Realty Partnership
L.P.
(2) (A) Except as provided in subparagraph (a)(9) of this
Article NINTH, from the effective date of the Merger and prior to the
Restriction Termination Date, no Person shall Beneficially Own or
Constructively Own shares of the outstanding Capital Stock in excess of
the Ownership Limit.
(B) Except as provided in subparagraph (a)(9) of this
Article NINTH, from the effective date of the Merger and prior to the
Restriction Termination Date, any Transfer that, if effective, would
result in any Person Beneficially Owning or Constructively Owning
Capital Stock in excess of the Ownership Limit shall be void ab initio
as to the Transfer of that number of shares of Capital Stock which
would be otherwise Beneficially or Constructively Owned by such Person
in excess of the Ownership Limit; and the intended transferee shall
acquire no rights in such shares of Common Stock or Preferred Stock in
excess of the Ownership Limit.
(C) Except as provided in subparagraph (a)(9) of this
Article NINTH, from the effective date of the Merger and prior to the
Restriction Termination Date, any Transfer that, if effective, would
result in the Capital Stock being Beneficially Owned by fewer than 100
Persons (determined without reference to any rules of attribution)
shall be void ab initio; and the intended transferee shall acquire no
rights in such shares of Common Stock or Preferred Stock.
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<PAGE> 181
(D) Except as provided in subparagraph (a)(9) of this
Article NINTH, from the effective date of the Merger and prior to the
Restriction Termination Date, any Transfer of shares or other event or
transaction involving Capital Stock that, if effective, would result in
the Corporation being "closely held" within the meaning of Section
856(h) of the Code shall be void ab initio as to the Transfer of that
number of shares or other event or transaction of Capital Stock which
would cause the Corporation to be "closely held" within the meaning of
Section 856(h) of the Code; and the intended transferee shall acquire
no rights in such shares of Common Stock or Preferred Stock in excess
of the Ownership Limit.
(3) (A) If, notwithstanding the other provisions
contained in this Article NINTH, at any time after the effective date
of the Merger and prior to the Restriction Termination Date, there is a
purported Transfer or other event such that any Person would
Beneficially Own or Constructively Own Capital Stock in excess of the
Ownership Limit, then, except as otherwise provided in subparagraph
(a)(9), each such share of Common Stock or Preferred Stock which, when
taken together with all other Capital Stock, would be in excess of the
Ownership Limit (rounded up to the nearest whole share), shall
automatically be converted into one share of Excess Stock, as further
described in subparagraph (a)(3)(C) below and such shares of Excess
Stock shall be automatically transferred to the Trustee as trustee for
the Trust. The Corporation shall issue fractional shares of Excess
Stock if required by such conversion ratio. Such conversion shall be
effective as of the close of business on the business day prior to the
date of the Transfer or other event.
(B) If, notwithstanding the other provisions
contained in this Article NINTH, at any time after the effective date
of the Merger and prior to the Restriction Termination Date, there is a
purported Transfer or other event which, if effective, would cause the
Corporation to become "closely held" within the meaning of Section
856(h) of the Code, then each share of Common Stock or Preferred Stock
being Transferred or which are otherwise affected by such event and
which, in either case, would cause, when taken together with all other
Capital Stock, the Corporation to be "closely held" within the meaning
of Section 856(h) of the Code (rounded up to the nearest whole share)
shall automatically be converted into one share of Excess Stock, as
further described in subparagraph (a)(3)(C) of this Article NINTH, and
such shares of Excess Stock shall be automatically transferred to
Trustee as trustee for the Trust. The Corporation shall issue
fractional shares of Excess Stock if required by such conversion ratio.
Such conversion shall be effective as of the close of business on the
business day prior to the date of the Transfer or other event.
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<PAGE> 182
(C) Upon conversion of Common Stock or Preferred
Stock into Excess Stock pursuant to this subparagraph (a)(3) of this
Article NINTH, Common Stock shall be converted into Excess Common Stock
and Preferred Stock shall be converted into Excess Preferred Stock.
(4) If the Board of Directors or its designees shall at any
time determine in good faith that a Transfer or other event has taken
place in violation of subparagraph (a)(2) of this Article NINTH or that
a Person intends to acquire or has attempted to acquire Beneficial
Ownership or Constructive Ownership of any shares of Capital Stock in
violation of subparagraph (a)(2) of this Article NINTH, the Board of
Directors or its designees may take such action as it or they deem
advisable to refuse to give effect to or to prevent such Transfer or
other event, including, but not limited to, refusing to give effect to
such Transfer or other event on the books of the Corporation or
instituting proceedings to enjoin such Transfer or other event or
transaction; provided, however, that any Transfers or attempted
Transfers (or, in the case of events other than a Transfer, Beneficial
Ownership or Constructive Ownership) in violation of subparagraphs
(a)(2)(A), (B), (C) and (D) of this Article NINTH shall be void ab
initio and any Transfers or attempted Transfers (or, in the case of
events other than a Transfer, Beneficial Ownership or Constructive
Ownership) in violation of subparagraphs (a)(2)(A), (B), and (D) shall
automatically result in the conversion described in subparagraph
(a)(3), irrespective of any action (or non-action) by the Board of
Directors or its designees.
(5) Any Person who acquires or attempts to acquire shares of
Capital Stock in violation of subparagraph (a)(2) of this Article
NINTH, or any Person who is a transferee such that Excess Stock results
under subparagraph (a)(3) of this Article NINTH, shall immediately give
written notice to the Corporation of such event and shall provide to
the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted
Transfer or other event on the Corporation's status as a REIT.
(6) From the effective date of the Merger and prior to the
Restriction Termination Date:
(A) Every Beneficial Owner or Constructive Owner of
more than 5%, or such lower percentages as required pursuant to
regulations under the Code, of the outstanding Capital Stock of the
Corporation shall, before January 30 of each year, give written notice
to the Corporation stating the name and address of such Beneficial
Owner or Constructive Owner, the general ownership structure of such
Beneficial Owner or Constructive Owner, the number of shares of each
class of Capital Stock Beneficially Owned or Constructively Owned, and
a description of how such shares are held.
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(B) Each Person who is a Beneficial Owner or
Constructive Owner of Capital Stock and each Person (including the
stockholder of record) who is holding Capital Stock for a Beneficial
Owner or Constructive Owner shall provide on demand to the Corporation
such information as the Corporation may request from time to time in
order to determine the Corporation's status as a REIT and to ensure
compliance with the Ownership Limit.
(7) Subject to subparagraph (a)(12) of this Article NINTH,
nothing contained in this Article NINTH shall limit the authority of
the Board of Directors to take such other action as it deems necessary
or advisable to protect the Corporation and the interests of its
stockholders by preservation of the Corporation's status as REIT and to
ensure compliance with the Ownership Limit.
(8) In the case of an ambiguity in the application of any of
the provisions of subparagraph (a) of this Article NINTH, including any
definition contained in subparagraph (a)(1), the Board of Directors
shall have the power to determine the application of the provisions of
this subparagraph (a) with respect to any situation based on the facts
known to it.
(9) The Board of Directors upon receipt of a ruling from the
Internal Revenue Service or an opinion of tax counsel in each case to
the effect that the restrictions contained in subparagraphs (a)(2)(A),
(B), (C) and (D) of this Article NINTH will not be violated, may exempt
a Person from the Ownership Limit:
(A) (i) if such Person is not an individual for
purposes of Section 542(a)(2) of the Code, or (ii) if such Person is an
underwriter which participates in a public offering of Common Stock or
Preferred Stock for a period of 90 days following the purchase by such
underwriter of the Common Stock or Preferred Stock, or (iii) in such
other circumstances which the Board of Directors determines are
appropriately excepted from the Ownership Limit, and
(B) the Board of Directors obtains such
representations and undertakings from such Person as are reasonably
necessary to ascertain that no individual's Beneficial Ownership and
Constructive Ownership of Capital Stock will violate the Ownership
Limit and agrees that any violation or attempted violation will result
in such Common Stock or Preferred Stock being converted into shares of
Excess Stock in accordance with subparagraph (a)(3) of this Article
NINTH.
(10) From the effective date of the Merger and until the
Restriction Terminate Date, each certificate for the respective class
of Capital Stock shall bear the following legend:
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The shares of Capital Stock represented by this certificate
are subject to restrictions on transfer for the purpose of the
Corporation's maintenance of its status as a real estate
investment trust under the Internal Revenue Code of 1986, as
amended from time to time (the "Code"). Transfers in
contravention of such restrictions shall be void ab initio.
Unless excepted by the Board of Directors of the Corporation,
no Person may (1) Beneficially Own or Constructively Own
shares of Capital Stock in excess of 6% (other than members of
the Simon Family Group, whose relevant percentage is 24%) of
the value of any class of outstanding Capital Stock of the
Corporation, or any combination thereof, determined as
provided in the Corporation's Charter, as the same may be
amended from time to time (the "Charter"), and computed with
regard to all outstanding shares of Capital Stock and, to the
extent provided by the Code, all shares of Capital Stock
issuable under existing Options and Exchange Rights that have
not been exercised; or (2) Beneficially Own Capital Stock
which would result in the Corporation being "closely held"
under Section 856(h) of the Code. Unless so excepted, any
acquisition of Capital Stock and continued holding of
ownership constitutes a continuous representation of
compliance with the above limitations, and any Person who
attempts to Beneficially Own or Constructively Own shares of
Capital Stock in excess of the above limitations has an
affirmative obligation to notify the Corporation immediately
upon such attempt. If the restrictions on transfer are
violated, the transfer will be void ab initio and the shares
of Capital Stock represented hereby will be automatically
converted into shares of Excess Stock and will be transferred
to the Trustee to be held in trust for the benefit of one or
more Qualified Charitable Organizations, whereupon such Person
shall forfeit all rights and interests in such Excess Stock.
In addition, certain Beneficial Owners or Constructive Owners
must give written notice as to certain information on demand
and on an annual basis. All capitalized terms in this legend
have the meanings defined in the Charter. The Corporation will
mail without charge to any requesting stockholder a copy of
the Charter, including the express terms of each class and
series of the authorized capital stock of the Corporation,
within five days after receipt of a written request therefor.
(11) If any provision of this Article NINTH or any application
of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected, and other applications of
such provision shall be affected only to the extent necessary to comply
with the determination of such court.
(12) Nothing in this Article NINTH shall preclude the
settlement of any transaction entered into through the facilities of
the New York Stock Exchange.
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<PAGE> 185
(b) (1) Upon any purported Transfer or other event that
results in Excess Stock pursuant to subparagraph (a)(3) of this Article NINTH,
such Excess Stock shall be deemed to have been transferred to the Trustee as
trustee of the Trust for the exclusive benefit of one or more Qualifying
Charitable Organizations as are designated from time to time by the Board of
Directors with respect to such Excess Stock. Shares of Excess Stock held in
trust shall be issued and outstanding stock of the Corporation. The Purported
Record Transferee or Purported Record Holder and the Purported Beneficial
Transferee or Purported Beneficial Holder shall have no rights in such Excess
Stock, except such rights to certain proceeds upon Transfer of shares of Excess
Stock or upon any voluntary or involuntary liquidation, dissolution or winding
up of, or any distribution of the assets of, the Corporation as are expressly
set forth herein.
(2) Excess Stock shall be entitled to dividends in an amount
equal to any dividends which are declared and paid with respect to
shares of Common Stock or Preferred Stock from which such shares of
Excess Stock were converted. Any dividend or distribution paid prior to
discovery by the Corporation that shares of Common Stock or Preferred
Stock have been converted into Excess Stock shall be repaid to the
Corporation upon demand for delivery to the Trustee. The recipient of
such dividend shall be personally liable to the Trust for such
dividend. Any dividend or distribution declared but unpaid shall be
rescinded as void ab initio with respect to such shares of Common Stock
or Preferred Stock and shall automatically be deemed to have been
declared and paid with respect to the shares of Excess Stock into which
such shares of Common Stock or Preferred Stock shall have been
converted.
(3) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of, or any distribution of the assets of, the
Corporation, (i) subject to the preferential rights of the Preferred
Stock, if any, as may be determined by the Board of Directors and the
preferential rights of the Excess Preferred Stock, if any, each holder
of shares of Excess Common Stock shall be entitled to receive, ratably
with each other holder of Common Stock and Excess Common Stock that
portion of the assets of the Corporation available for distribution to
the holders of Common Stock or Excess Common Stock as the number of
shares of the Excess Common Stock held by such holder bears to the
total number of shares of Common Stock and the number of shares of
Excess Common Stock then outstanding and (ii) each holder of shares of
Excess Preferred Stock shall be entitled to receive that portion of the
assets of the Corporation which a holder of the shares of Preferred
Stock that were converted into such shares of Excess Preferred Stock
would have been entitled to receive had such shares of Preferred Stock
remained outstanding. Notwithstanding the foregoing, distributions
shall not be made to holders of Excess Stock except in accordance with
the following sentence. The Corporation shall distribute to the
Trustee, as holder of the Excess Stock in trust, on behalf of the
Beneficiaries any such assets received in respect of the Excess Stock
in any liquidation, dissolution or winding up of, or any
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<PAGE> 186
distribution of the assets of the Corporation. Following any such
distribution, the Trustee shall distribute such proceeds between the
Purported Record Transferee or Purported Record Holder, as appropriate,
and the Qualified Charitable Organizations which are Beneficiaries in
accordance with procedure for distribution of proceeds upon Transfer of
Excess Stock set forth in subparagraph (b)(5) of this Article NINTH;
provided, however, that with respect to any Excess Stock as to which no
Beneficiary shall have been determined within 10 days following the
date upon which the Corporation is prepared to distribute assets
("Undesignated Excess Stock"), any assets that would have been
distributed on account of such Undesignated Excess Stock had a
Beneficiary been determined shall be distributed to the holders of
Common Stock and the Beneficiaries of the Trust designated with respect
to shares of Excess Common Stock, or to the holders of Preferred Stock
and the Beneficiaries of the Trust designated with respect to shares of
Excess Preferred Stock as determined in the sole discretion of the
Board of Directors.
(4) Excess Stock shall be entitled to such voting rights as
are ascribed to shares of Common Stock or Preferred Stock from which
such shares of Excess Stock were converted. Any voting rights exercised
prior to discovery by the Corporation that shares of Common Stock or
Preferred Stock have been converted into Excess Stock shall be
rescinded and recast as determined by the Trustee.
(5) (A) Following the expiration of the ninety day period
referred to in subparagraph (b)(6) of this Article NINTH, Excess Stock
shall be transferable by the Trustee to any Person whose Beneficial
Ownership or Constructive Ownership of shares of Capital Stock
outstanding, after giving effect to such Transfer, would not result in
the shares of Excess Stock proposed to be transferred constituting
Excess Stock in the hands of the proposed transferee. A Purported
Record Transferee or, in the case of Excess Stock resulting from any
event other than a purported Transfer, the Purported Record Holder
shall have no rights whatsoever in such Excess Stock, except that such
Purported Record Transferee or, in the case of Excess Stock resulting
from any event other than a purported Transfer, the Purported Record
Holder, upon completion of such Transfer, shall be entitled to receive
the lesser of a price per share for such Excess Stock not in excess
(based on the information provided to the Corporation in the notice
given pursuant to this subparagraph (b)(5)(A)) of (x) the price per
share such Purported Beneficial Transferee paid for the Common Stock or
Preferred Stock in the purported Transfer that resulted in the Excess
Stock, or (y) if the Purported Beneficial Transferee did not give value
for such shares of Excess Stock (through a gift, devise or other
transaction), a price per share of Excess Stock equal to the Market
Price of the Common Stock or Preferred Stock on the date of the
purported Transfer that resulted in the Excess Stock. Upon such
transfer of any interest in Excess Stock held by the Trust, the
corresponding shares of Excess
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<PAGE> 187
Stock in the Trust shall be automatically converted into such number of
shares of Common Stock or Preferred Stock (of the same class as the
shares that were converted into such Excess Stock) as is equal to the
number of shares of Excess Stock, and such shares of Common Stock or
Preferred Stock (of the same class as the shares that were converted
into such Excess Stock) as is equal to the number of shares of Excess
Stock, and such shares of Common Stock or Preferred Stock shall be
transferred of record to the proposed transferee of the Excess Stock.
If, notwithstanding the provisions of this Article NINTH, under any
circumstances, a Purported Transferee receives an amount for shares of
Excess Stock that exceeds the amount provided by the formula set forth
above, the Purported Transferee must pay the excess to the Trust. Prior
to any transfer resulting in Common Stock or Preferred Stock being
converted into Excess Stock, the Purported Record Transferee and
Purported Beneficial Transferee, jointly, or Purported Record Holder
and Purported Beneficial Holder, jointly, must give written notice to
the Corporation of the date and sale price of the purported Transfer
that resulted in Excess Stock or the Market Price on the date of the
other event that resulted in Excess Stock. Prior to a Transfer by the
Trustee of any shares of Excess Stock, the intended transferee must
give advance notice to the Corporation of the information (after giving
effect to the intended Transfer) required under subparagraph (a)(6),
and the Corporation must have waived in writing its purchase rights, if
any, under subparagraph (b)(6) of this Article NINTH. The Board of
Directors may waive the notice requirements of this subparagraph in
such circumstances as it deems appropriate.
(B) Notwithstanding the foregoing, if the provisions
of paragraph (b)(5) of this Article NINTH are determined to be void or
invalid by virtue of any legal decision, statue, rule or regulation,
then the Purported Beneficial Transferee or Purported Beneficial Holder
of any shares of Excess Stock may be deemed, at the option of the
Corporation, to have acted as an agent on behalf of the Trust, in
acquiring or holding such shares of Excess Stock and to hold such
shares of Excess Stock in trust on behalf of the Trust.
(6) Shares of Excess Stock shall be deemed to have been
offered for sale by the Trust to the Corporation, or its designee, at a
price per share of Excess Stock equal to the lesser of:
(A) (i) in the case of Excess Stock resulting from a
purported Transfer, (x) the price per share of the Common Stock or
Preferred Stock in the transaction that created such Excess Stock (or,
in the case of devise or gift, the Market Price of the Common Stock or
Preferred Stock at the time of such devise or gift), or (y) in the
absence of a notice from the Purported Record Transferee or Purported
Record Holder and Purported Beneficial Transferee to the Corporation
within ten days after request therefor, such price as may be
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<PAGE> 188
determined by the Board of Directors in its sole discretion, which
price per share of Excess Stock shall be equal to the lowest Market
Price of Common Stock or Preferred Stock (whichever resulted in Excess
Stock) at any time prior to the date the Corporation, or its designee,
accepts such offer; or
(ii) in the case of Excess Stock resulting
from an event other than a Purported Transfer, (x) the Market Price of
the Common Stock or Preferred Stock on the date of such event, or (y)
in the absence of a notice from the Purported Record Holder and
Purported Beneficial Holder to the Corporation within ten days after
request therefor, such price as may be determined, by the Board of
Directors in its sole discretion, which price shall be the lowest
Market Price for shares of Common Stock or Preferred Stock (whichever
resulted in Excess Stock) at any time from the date of the event
resulting in Excess Stock and prior to the date the Corporation, or its
designee, accepts such offer, and
(B) the Market Price of the Common Stock or Preferred
Stock on the date the Corporation, or its designee, accepts such offer.
The Corporation shall have the right to accept such offer for a period
of ninety days after the later of (i) the date of the Transfer which
resulted in such shares of Excess Stock and (ii) the date the Board of
Directors determines in good faith that a Transfer or other event
resulting in shares of Excess Stock has occurred, if the Corporation
does not receive a notice of such Transfer or other event pursuant to
subparagraph (a)(5) of this Article NINTH.
TENTH: Whenever the Corporation shall have the obligation to purchase
Units and shall have the right to choose to satisfy such obligation by
purchasing such Units either with cash or with Common Stock, the determination
whether to utilize cash or Common Stock to effect such purchase shall be made by
majority vote of the Independent Directors.
ELEVENTH: The duration of the Corporation shall be perpetual. The
Corporation shall be subject to termination at any time by the vote of the
holders of a majority of the outstanding shares of Common Stock, Class B Common
Stock, Class C Common Stock, and Series A Preferred Stock entitled to vote
thereon.
TWELFTH: In the event any term, provision, sentence or paragraph of the
Charter of the Corporation is declared by a court of competent jurisdiction to
be invalid or unenforceable, such term, provision, sentence or paragraph shall
be deemed severed from the remainder of the Charter, and the balance of the
Charter shall remain in effect and be enforced to the fullest extent permitted
by law and shall be construed to preserve the intent and purposes of the
Charter. Any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such term, provision, sentence or paragraph
of the Charter in any other jurisdiction.
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<PAGE> 189
IN WITNESS WHEREOF, I have signed these Articles of Incorporation,
acknowledging the same to be my act, on [ ], 1996.
Witness:
______________________________ __________________________________
SECOND: (a) As of immediately before the amendment the total number of
shares of stock of all classes which the Corporation has authority to issue is
412,000,000 shares, of which shares 246,000,000 are Common Stock, 12,000,000 are
Class B Common Stock, 4,000,000 are Series A Preferred Stock, and 150,000,000
are Excess Stock.
(b) As amended the total number of shares of stock of all
classes which the Corporation has authority to issue is 650,000,000 shares, of
which 383,996,000 shares are Common Stock (par value $.0001 per share),
12,000,000 shares are Class B Common Stock (par value $.0001 per share), 4,000
shares are Class C Common Stock (par value $.0001 per share), 4,000,000 shares
are Series A Preferred Stock (par value $.0001 per share), and 250,000,000
shares are Excess Stock (par value $.0001 per share).
(c) The aggregate par value of all shares having a par value is
$41,200 before the amendment and $65,000.00 as amended.
(d) The shares of stock of the Corporation are divided into
classes, and the amendment contains a description, as amended, of each class,
including the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption.
THIRD: The foregoing amendment to the Charter of the Corporation has
been approved by a majority of the entire Board of Directors and by the
requisite number of shares entitled to vote on the matter.
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<PAGE> 190
IN WITNESS WHEREOF, SIMON PROPERTY GROUP, INC. has caused these presents to be
signed in its name and on its behalf by its President and witnessed by its
Secretary on [ ], 1996.
WITNESS: SIMON PROPERTY GROUP, INC.
___________________________ By __________________________
Secretary President
THE UNDERSIGNED, President of SIMON PROPERTY GROUP, INC., who executed
on behalf of the Corporation the foregoing Articles of Amendment and Restatement
of which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Amendment and Restatement
to be the corporate act of said Corporation and hereby certifies that to the
best of his knowledge, information, and belief the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
By ________________________
________________________
President
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<PAGE> 191
Exhibit E-2
SIMON PROPERTY GROUP, INC.
ARTICLES OF AMENDMENT
SIMON PROPERTY GROUP, INC., a Maryland corporation, having its
principal office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended by changing the
following provisions:
1. Article SECOND is hereby replaced in its entirety by the following:
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is:
Simon DeBartolo Group, Inc.
2. Paragraph (a) of Article SIXTH is hereby replaced in its entirety by
the following:
SIXTH: (a) The total number of shares of stock of all classes which the
Corporation has authority to issue is 650,000,000 shares of capital stock (par
value $.000l per share), amounting in aggregate par value to $65,000.00, of
which shares 384,000,000 are classified as "Common Stock", 12,000,000 are
classified as "Class B Common Stock", 4,000,000 are classified as "Series A
Preferred Stock," and 250,000,000 are classified as "Excess Stock". The Board of
Directors may classify and reclassify any unissued shares of capital stock by
setting or changing in any one or more respects the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of such shares of stock.
3. Article NINTH is hereby replaced in its entirety by the following:
NINTH: (a) (1) The following terms shall have the following meaning:
"Aggregate Assumed Equity Interest in the Corporation" shall
mean the aggregate equity interest in the Corporation represented by
the Common Stock,
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<PAGE> 192
the Class B Common Stock, and the Units on the assumption that all
shares of Class B Common Stock and all such Units are exchanged for
Common Stock
"Beneficial Ownership" shall mean ownership of Capital Stock
by a Person who would be treated as an owner of such shares of Capital
Stock either directly or indirectly through the application of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
any comparable successor provisions thereto. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have
correlative meanings.
"Beneficiary" shall mean any Qualified Charitable Organization
which, from time to time, is designated by the Corporation to be a
beneficiary of the Trust.
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"By-Laws" shall mean the By-Laws of the Corporation.
"Capital Stock" shall mean stock that is Common Stock, Class B
Common Stock, Excess Stock or Preferred Stock.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Constructive Ownership" shall mean ownership of Capital Stock
by a Person who would be treated as an owner of such shares of Capital
Stock either directly or indirectly through the application of Section
318 of the Code, and any comparable successor provisions thereto, as
modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns" and "Constructively Owned" shall have
correlative meanings.
"DeBartolo Family Group" shall mean the Estate of Edward J.
DeBartolo, Sr., Edward J. DeBartolo, Jr. and Marie Denise DeBartolo
York, other members of the immediate family of any of the foregoing,
any other lineal descendants of any of the foregoing, any estates of
any of the foregoing, any trusts established for the benefit of any of
the foregoing, and any other entity controlled by any of the foregoing.
"DeBartolo Family Group Initial Aggregate Assumed Equity
Interest in the Corporation" shall mean the portion of the Aggregate
Assumed Equity Interest in the Corporation owned by the DeBartolo
Family Group immediately following the closing of the Merger.
"Exchange Rights" shall mean any rights granted to limited
partners of Simon DeBartolo Group, L.P., a Delaware limited partnership
(including pursuant
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<PAGE> 193
to an Exchange Rights Agreement) and Simon Property Group L.P., a
Delaware limited partnership, to exchange (subject to the Ownership
Limit) limited partnership interests in such Partnership for shares of
Capital Stock.
"Independent Director" shall mean a director of the
Corporation who is neither employed by the Corporation nor a member (or
an affiliate of a member) of the Simon Family Group.
"Market Price" of any class of Capital Stock on any date shall
mean the average of the Closing Price for the five consecutive Trading
Days ending on such date, or if such date is not a Trading Date, the
five consecutive Trading Days preceding such date. The "Closing Price"
on any date shall mean (i) the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange, or (ii) if such class of Capital Stock is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which such class of capital stock is listed or admitted to trading, or
(iii) if such class of capital stock is not listed or admitted to
trading on any national securities exchange, the last quoted price, or
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system
is no longer in use, the principal other automated quotations systems
that may then be in use, or (iv) if such class of Capital Stock is not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in such class of Capital Stock selected by the Board of
Directors.
"Merger" shall mean the merger, pursuant to the Agreement and
Plan of Merger dated March 26, 1996 among the Corporation, Day
Acquisition Corp., an Ohio corporation and a wholly owned subsidiary of
the Corporation ("Sub"), and DeBartolo Realty Corporation, an Ohio
corporation ("DeBartolo"), pursuant to which merger Sub shall be merged
with and into DeBartolo.
"Option" shall mean any options, rights, warrants or
convertible or exchangeable securities containing the right to
subscribe for, purchase or receive upon exchange or conversion shares
of Capital Stock.
"Ownership Limit" shall mean (x) in the case of any member of
the Simon Family Group, 24%, and (y) in the case of any other Person,
6%, in each case, of any class of Capital Stock, or any combination
thereof, determined by (i) number
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<PAGE> 194
of shares outstanding, (ii) voting power or (iii) value (as determined
by the Board of Directors), whichever produces the smallest holding of
Capital Stock under the three methods, computed with regard to all
outstanding shares of Capital Stock and, to the extent provided by the
Code, all shares of Capital Stock issuable under outstanding Options
and Exchange Rights that have not been exercised.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for
or to be used exclusively for the purposes described in Section 642(c)
of the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity and
also includes a group as the term is used for purposes of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Purported Beneficial Holder" shall mean, with respect to any
event (other than a purported Transfer) which results in Excess Stock,
the Person for whom the Purported Record Holder held shares that were,
pursuant to subparagraph (a)(3) of this article NINTH, automatically
converted into Excess Stock upon the occurrence of such event.
"Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer which results in Excess Stock, the purported
beneficial transferee for whom the Purported Record Transferee would
have acquired shares of Common Stock or Preferred Stock if such
Transfer had been valid under subparagraph (a)(2) of this Article
NINTH.
"Purported Record Holder" shall mean, with respect to any
event (other than a purported Transfer) which results in Excess Stock,
the record holder of the shares that were, pursuant to subparagraph
(a)(3) of this Article NINTH, automatically converted into Excess Stock
upon the occurrence of such event.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Stock, the record holder of
the Common Stock or the Preferred Stock if such Transfer had been valid
under subparagraph (a)(2) of this Article NINTH.
"Qualified Charitable Organization" shall mean (i) any entity
which would be exempt from federal income under Section 501(c)(3) of
the Code and to which contributions are deductible under Section 170 of
the Code or (ii) any federal, state or local government entity.
"REIT" shall mean a real estate investment trust under Section
856 of the Code.
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<PAGE> 195
"Restriction Termination Date" shall mean the first day after
the effective date of the Merger on which the Corporation's status as a
REIT shall have been terminated by the Board of Directors and the
stockholders of the Corporation.
"Simon Family Group" shall mean Melvin Simon, Herbert Simon
and David Simon, other members of the immediate family of any of the
foregoing, any other lineal descendants of any of the foregoing, any
estates of any of the foregoing, any trust established for the benefit
of any of the foregoing, and any other entity controlled by any of the
foregoing.
"Simon Family Group Initial Aggregate Assumed Equity Interest
in the Corporation" shall mean the portion of the Aggregate Assumed
Equity Interest in the Corporation owned by the Simon Family Group
immediately following the closing of the Merger.
"Trading Day" shall mean, with respect to any class of Capital
Stock, a day on which the principal national securities exchange on
which such class of Capital Stock is listed or admitted to trading is
open for the transaction of business or, if such class of Capital Stock
is not listed or admitted to trading on any national securities
exchange, shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Transfer" shall mean any sale, transfer, gift, hypothecation,
pledge, assignment, devise or other disposition of Capital Stock
(including (i) the granting of any option (including an option to
acquire an Option or any series of such options) or entering into any
agreement for the sale, transfer or other disposition of Capital Stock
or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Capital
Stock), whether voluntary or involuntary, whether of record,
constructively or beneficially and whether by operation of law or
otherwise.
"Trust" shall mean the trust created pursuant to subparagraph
(b)(1) of this Article NINTH.
"Trustee" shall mean any trustee for the Trust (or any
successor trustee) appointed from time to time by the Corporation;
provided, however, during any period in which Excess Stock is issued
and outstanding the Corporation shall undertake to appoint trustees of
the Trust which trustees are unaffiliated with the Corporation.
"Undesignated Excess Stock" shall have the meaning set forth
in subparagraph (b)(3) of this Article NINTH.
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<PAGE> 196
"Units" shall mean units representing limited partnership
interests in Simon Property Group, L.P. or DeBartolo Realty Partnership
L.P.
(2) (A) Except as provided in subparagraph (a)(9) of this
Article NINTH, from the effective date of the Merger and prior to the
Restriction Termination Date, no Person shall Beneficially Own or
Constructively Own shares of the outstanding Capital Stock in excess of
the Ownership Limit.
(B) Except as provided in subparagraph (a)(9) of this
Article NINTH, from the effective date of the Merger and prior to the
Restriction Termination Date, any Transfer that, if effective, would
result in any Person Beneficially Owning or Constructively Owning
Capital Stock in excess of the Ownership Limit shall be void AB INITIO
as to the Transfer of that number of shares of Capital Stock which
would be otherwise Beneficially or Constructively Owned by such Person
in excess of the Ownership Limit; and the intended transferee shall
acquire no rights in such shares of Common Stock or Preferred Stock in
excess of the Ownership Limit.
(C) Except as provided in subparagraph (a)(9) of this
Article NINTH, from the effective date of the Merger and prior to the
Restriction Termination Date, any Transfer that, if effective, would
result in the Capital Stock being Beneficially Owned by fewer than 100
Persons (determined without reference to any rules of attribution)
shall be void AB INITIO; and the intended transferee shall acquire no
rights in such shares of Common Stock or Preferred Stock.
(D) Except as provided in subparagraph (a)(9) of this
Article NINTH, from the effective date of the Merger and prior to the
Restriction Termination Date, any Transfer of shares or other event or
transaction involving Capital Stock that, if effective, would result in
the Corporation being "closely held" within the meaning of Section
856(h) of the Code shall be void AB INITIO as to the Transfer of that
number of shares or other event or transaction of Capital Stock which
would cause the Corporation to be "closely held" within the meaning of
Section 856(h) of the Code; and the intended transferee shall acquire
no rights in such shares of Common Stock or Preferred Stock in excess
of the Ownership Limit.
(3) (A) If, notwithstanding the other provisions contained in
this Article NINTH, at any time after the effective date of the Merger
and prior to the Restriction Termination Date, there is a purported
Transfer or other event such that any Person would Beneficially Own or
Constructively Own Capital Stock in excess of the Ownership Limit,
then, except as otherwise provided in subparagraph (a)(9), each such
share of Common Stock or Preferred Stock which, when taken
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<PAGE> 197
together with all other Capital Stock, would be in excess of the
Ownership Limit (rounded up to the nearest whole share), shall
automatically be converted into one share of Excess Stock, as further
described in subparagraph (a)(3)(C) below and such shares of Excess
Stock shall be automatically transferred to the Trustee as trustee for
the Trust. The Corporation shall issue fractional shares of Excess
Stock if required by such conversion ratio. Such conversion shall be
effective as of the close of business on the business day prior to the
date of the Transfer or other event.
(B) If, notwithstanding the other provisions contained in
this Article NINTH, at any time after the effective date of the Merger
and prior to the Restriction Termination Date, there is a purported
Transfer or other event which, if effective, would cause the
Corporation to become "closely held" within the meaning of Section
856(h) of the Code, then each share of Common Stock or Preferred Stock
being Transferred or which are otherwise affected by such event and
which, in either case, would cause, when taken together with all other
Capital Stock, the Corporation to be "closely held" within the meaning
of Section 856(h) of the Code (rounded up to the nearest whole share)
shall automatically be converted into one share of Excess Stock, as
further described in subparagraph (a)(3)(C) of this Article NINTH, and
such shares of Excess Stock shall be automatically transferred to
Trustee as trustee for the Trust. The Corporation shall issue
fractional shares of Excess Stock if required by such conversion ratio.
Such conversion shall be effective as of the close of business on the
business day prior to the date of the Transfer or other event.
(C) Upon conversion of Common Stock or Preferred Stock
into Excess Stock pursuant to this subparagraph (a)(3) of this Article
NINTH, Common Stock shall be converted into Excess Common Stock and
Preferred Stock shall be converted into Excess Preferred Stock.
(4) If the Board of Directors or its designees shall at any
time determine in good faith that a Transfer or other event has taken
place in violation of subparagraph (a)(2) of this Article NINTH or that
a Person intends to acquire or has attempted to acquire Beneficial
Ownership or Constructive Ownership of any shares of Capital Stock in
violation of subparagraph (a)(2) of this Article NINTH, the Board of
Directors or its designees may take such action as it or they deem
advisable to refuse to give effect to or to prevent such Transfer or
other event, including, but not limited to, refusing to give effect to
such Transfer or other event on the books of the Corporation or
instituting proceedings to enjoin such Transfer or other event or
transaction; PROVIDED, HOWEVER, that any Transfers or attempted
Transfers (or, in the case of events other than a Transfer, Beneficial
Ownership or Constructive Ownership) in violation of subparagraphs
(a)(2)(A), (B), (C) and (D) of this Article NINTH shall be void AB
INITIO and any Transfers or
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attempted Transfers (or, in the case of events other than a Transfer,
Beneficial Ownership or Constructive Ownership) in violation of
subparagraphs (a)(2)(A), (B), and (D) shall automatically result in the
conversion described in subparagraph (a)(3), irrespective of any action
(or non-action) by the Board of Directors or its designees.
(5) Any Person who acquires or attempts to acquire shares of
Capital Stock in violation of subparagraph (a)(2) of this Article
NINTH, or any Person who is a transferee such that Excess Stock results
under subparagraph (a)(3) of this Article NINTH, shall immediately give
written notice to the Corporation of such event and shall provide to
the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted
Transfer or other event on the Corporation's status as a REIT.
(6) From the effective date of the Merger and prior to the
Restriction Termination Date:
(A) Every Beneficial Owner or Constructive Owner of more
than 5%, or such lower percentages as required pursuant to regulations
under the Code, of the outstanding Capital Stock of the Corporation
shall, before January 30 of each year, give written notice to the
Corporation stating the name and address of such Beneficial Owner or
Constructive Owner, the general ownership structure of such Beneficial
Owner or Constructive Owner, the number of shares of each class of
Capital Stock Beneficially Owned or Constructively Owned, and a
description of how such shares are held.
(B) Each Person who is a Beneficial Owner or Constructive
Owner of Capital Stock and each Person (including the stockholder of
record) who is holding Capital Stock for a Beneficial Owner or
Constructive Owner shall provide on demand to the Corporation such
information as the Corporation may request from time to time in order
to determine the Corporation's status as a REIT and to ensure
compliance with the Ownership Limit.
(7) Subject to subparagraph (a)(12) of this Article NINTH,
nothing contained in this Article NINTH shall limit the authority of
the Board of Directors to take such other action as it deems necessary
or advisable to protect the Corporation and the interests of its
stockholders by preservation of the Corporation's status as REIT and to
ensure compliance with the Ownership Limit.
(8) In the case of an ambiguity in the application of any of
the provisions of subparagraph (a) of this Article NINTH, including any
definition contained in subparagraph (a)(1), the Board of Directors
shall have the power to
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determine the application of the provisions of this subparagraph (a)
with respect to any situation based on the facts known to it.
(9) The Board of Directors upon receipt of a ruling from the
Internal Revenue Service or an opinion of tax counsel in each case to
the effect that the restrictions contained in subparagraphs (a)(2)(A),
(B), (C) and (D) of this Article NINTH will not be violated, may exempt
a Person from the Ownership Limit:
(A) (i) if such Person is not an individual for purposes
of Section 542(a)(2) of the Code, or (ii) if such Person is an
underwriter which participates in a public offering of Common Stock or
Preferred Stock for a period of 90 days following the purchase by such
underwriter of the Common Stock or Preferred Stock, or (iii) in such
other circumstances which the Board of Directors determines are
appropriately excepted from the Ownership Limit, and
(B) the Board of Directors obtains such representations
and undertakings from such Person as are reasonably necessary to
ascertain that no individual's Beneficial Ownership and Constructive
Ownership of Capital Stock will violate the Ownership Limit and agrees
that any violation or attempted violation will result in such Common
Stock or Preferred Stock being converted into shares of Excess Stock in
accordance with subparagraph (a)(3) of this Article NINTH.
(10) From the effective date of the Merger and until the
Restriction Terminate Date, each certificate for the respective class
of Capital Stock shall bear the following legend:
The shares of Capital Stock represented by this certificate
are subject to restrictions on transfer for the purpose of the
Corporation's maintenance of its status as a real estate
investment trust under the Internal Revenue Code of 1986, as
amended from time to time (the "Code"). Transfers in
contravention of such restrictions shall be void AB INITIO.
Unless excepted by the Board of Directors of the Corporation,
no Person may (1) Beneficially Own or Constructively Own
shares of Capital Stock in excess of 6% (other than members of
the Simon Family Group, whose relevant percentage is 24%) of
the value of any class of outstanding Capital Stock of the
Corporation, or any combination thereof, determined as
provided in the Corporation's Charter, as the same may be
amended from time to time (the "Charter"), and computed with
regard to all outstanding shares of Capital Stock and, to the
extent provided by the Code, all shares of Capital Stock
issuable under existing Options and Exchange Rights that have
not been exercised; or (2) Beneficially Own Capital Stock
which would result in the Corporation being "closely held"
under Section 856(h) of the Code.
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<PAGE> 200
Unless so excepted, any acquisition of Capital Stock and
continued holding of ownership constitutes a continuous
representation of compliance with the above limitations, and
any Person who attempts to Beneficially Own or Constructively
Own shares of Capital Stock in excess of the above limitations
has an affirmative obligation to notify the Corporation
immediately upon such attempt. If the restrictions on transfer
are violated, the transfer will be void AB INITIO and the
shares of Capital Stock represented hereby will be
automatically converted into shares of Excess Stock and will
be transferred to the Trustee to be held in trust for the
benefit of one or more Qualified Charitable Organizations,
whereupon such Person shall forfeit all rights and interests
in such Excess Stock. In addition, certain Beneficial Owners
or Constructive Owners must give written notice as to certain
information on demand and on an annual basis. All capitalized
terms in this legend have the meanings defined in the Charter.
The Corporation will mail without charge to any requesting
stockholder a copy of the Charter, including the express terms
of each class and series of the authorized capital stock of
the Corporation, within five days after receipt of a written
request therefor.
(11) If any provision of this Article NINTH or any application
of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected, and other applications of
such provision shall be affected only to the extent necessary to comply
with the determination of such court.
(12) Nothing in this Article NINTH shall preclude the
settlement of any transaction entered into through the facilities of
the New York Stock Exchange.
(b) (1) Upon any purported Transfer or other event that
results in Excess Stock pursuant to subparagraph (a)(3) of this Article NINTH,
such Excess Stock shall be deemed to have been transferred to the Trustee as
trustee of the Trust for the exclusive benefit of one or more Qualifying
Charitable Organizations as are designated from time to time by the Board of
Directors with respect to such Excess Stock. Shares of Excess Stock held in
trust shall be issued and outstanding stock of the Corporation. The Purported
Record Transferee or Purported Record Holder and the Purported Beneficial
Transferee or Purported Beneficial Holder shall have no rights in such Excess
Stock, except such rights to certain proceeds upon Transfer of shares of Excess
Stock or upon any voluntary or involuntary liquidation, dissolution or winding
up of, or any distribution of the assets of, the Corporation as are expressly
set forth herein.
(2) Excess Stock shall be entitled to dividends in an amount
equal to any dividends which are declared and paid with respect to
shares of Common Stock or Preferred Stock from which such shares of
Excess Stock were converted. Any dividend or distribution paid prior to
discovery by the Corporation that shares
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of Common Stock or Preferred Stock have been converted into Excess
Stock shall be repaid to the Corporation upon demand for delivery to
the Trustee. The recipient of such dividend shall be personally liable
to the Trust for such dividend. Any dividend or distribution declared
but unpaid shall be rescinded as void AB initio with respect to such
shares of Common Stock or Preferred Stock and shall automatically be
deemed to have been declared and paid with respect to the shares of
Excess Stock into which such shares of Common Stock or Preferred Stock
shall have been converted.
(3) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of, or any distribution of the assets of, the
Corporation, (i) subject to the preferential rights of the Preferred
Stock, if any, as may be determined by the Board of Directors and the
preferential rights of the Excess Preferred Stock, if any, each holder
of shares of Excess Common Stock shall be entitled to receive, ratably
with each other holder of Common Stock and Excess Common Stock that
portion of the assets of the Corporation available for distribution to
the holders of Common Stock or Excess Common Stock as the number of
shares of the Excess Common Stock held by such holder bears to the
total number of shares of Common Stock and the number of shares of
Excess Common Stock then outstanding and (ii) each holder of shares of
Excess Preferred Stock shall be entitled to receive that portion of the
assets of the Corporation which a holder of the shares of Preferred
Stock that were converted into such shares of Excess Preferred Stock
would have been entitled to receive had such shares of Preferred Stock
remained outstanding. Notwithstanding the foregoing, distributions
shall not be made to holders of Excess Stock except in accordance with
the following sentence. The Corporation shall distribute to the
Trustee, as holder of the Excess Stock in trust, on behalf of the
Beneficiaries any such assets received in respect of the Excess Stock
in any liquidation, dissolution or winding up of, or any distribution
of the assets of the Corporation. Following any such distribution, the
Trustee shall distribute such proceeds between the Purported Record
Transferee or Purported Record Holder, as appropriate, and the
Qualified Charitable Organizations which are Beneficiaries in
accordance with procedure for distribution of proceeds upon Transfer of
Excess Stock set forth in subparagraph (b)(5) of this Article NINTH;
PROVIDED, HOWEVER, that with respect to any Excess Stock as to which no
Beneficiary shall have been determined within 10 days following the
date upon which the Corporation is prepared to distribute assets
("Undesignated Excess Stock"), any assets that would have been
distributed on account of such Undesignated Excess Stock had a
Beneficiary been determined shall be distributed to the holders of
Common Stock and the Beneficiaries of the Trust designated with
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<PAGE> 202
respect to shares of Excess Common Stock, or to the holders of
Preferred Stock and the Beneficiaries of the Trust designated with
respect to shares of Excess Preferred Stock as determined in the sole
discretion of the Board of Directors.
(4) Excess Stock shall be entitled to such voting rights as
are ascribed to shares of Common Stock or Preferred Stock from which
such shares of Excess Stock were converted. Any voting rights exercised
prior to discovery by the Corporation that shares of Common Stock or
Preferred Stock have been converted into Excess Stock shall be
rescinded and recast as determined by the Trustee.
(5) (A) Following the expiration of the ninety day period
referred to in subparagraph (b)(6) of this Article NINTH, Excess Stock
shall be transferable by the Trustee to any Person whose Beneficial
Ownership or Constructive Ownership of shares of Capital Stock
outstanding, after giving effect to such Transfer, would not result in
the shares of Excess Stock proposed to be transferred constituting
Excess Stock in the hands of the proposed transferee. A Purported
Record Transferee or, in the case of Excess Stock resulting from any
event other than a purported Transfer, the Purported Record Holder
shall have no rights whatsoever in such Excess Stock, except that such
Purported Record Transferee or, in the case of Excess Stock resulting
from any event other than a purported Transfer, the Purported Record
Holder, upon completion of such Transfer, shall be entitled to receive
the lesser of a price per share for such Excess Stock not in excess
(based on the information provided to the Corporation in the notice
given pursuant to this subparagraph (b)(5)(A)) of (x) the price per
share such Purported Beneficial Transferee paid for the Common Stock or
Preferred Stock in the purported Transfer that resulted in the Excess
Stock, or (y) if the Purported Beneficial Transferee did not give value
for such shares of Excess Stock (through a gift, devise or other
transaction), a price per share of Excess Stock equal to the Market
Price of the Common Stock or Preferred Stock on the date of the
purported Transfer that resulted in the Excess Stock. Upon such
transfer of any interest in Excess Stock held by the Trust, the
corresponding shares of Excess Stock in the Trust shall be
automatically converted into such number of shares of Common Stock or
Preferred Stock (of the same class as the shares that were converted
into such Excess Stock) as is equal to the number of shares of Excess
Stock, and such shares of Common Stock or Preferred Stock (of the same
class as the shares that were converted into such Excess Stock) as is
equal to the number of shares of Excess Stock, and such shares of
Common Stock or Preferred Stock shall be transferred of record to the
proposed transferee of the Excess Stock. If, notwithstanding the
provisions of this Article NINTH, under any circumstances, a Purported
Transferee receives an amount for shares of Excess Stock that exceeds
the amount provided by the formula set forth above, the Purported
Transferee must pay the excess to the Trust. Prior to any transfer
resulting in Common Stock or Preferred Stock being converted into
Excess Stock, the Purported Record Transferee and Purported Beneficial
Transferee, jointly, or Purported Record
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<PAGE> 203
Holder and Purported Beneficial Holder, jointly, must give written
notice to the Corporation of the date and sale price of the purported
Transfer that resulted in Excess Stock or the Market Price on the date
of the other event that resulted in Excess Stock. Prior to a Transfer
by the Trustee of any shares of Excess Stock, the intended transferee
must give advance notice to the Corporation of the information (after
giving effect to the intended Transfer) required under subparagraph
(a)(6), and the Corporation must have waived in writing its purchase
rights, if any, under subparagraph (b)(6) of this Article NINTH. The
Board of Directors may waive the notice requirements of this
subparagraph in such circumstances as it deems appropriate.
(B) Notwithstanding the foregoing, if the provisions of
paragraph (b)(5) of this Article NINTH are determined to be void or
invalid by virtue of any legal decision, statue, rule or regulation,
then the Purported Beneficial Transferee or Purported Beneficial Holder
of any shares of Excess Stock may be deemed, at the option of the
Corporation, to have acted as an agent on behalf of the Trust, in
acquiring or holding such shares of Excess Stock and to hold such
shares of Excess Stock in trust on behalf of the Trust.
(6) Shares of Excess Stock shall be deemed to have been
offered for sale by the Trust to the Corporation, or its designee, at a
price per share of Excess Stock equal to the lesser of:
(A) (i) in the case of Excess Stock resulting from a
purported Transfer, (x) the price per share of the Common Stock or
Preferred Stock in the transaction that created such Excess Stock (or,
in the case of devise or gift, the Market Price of the Common Stock or
Preferred Stock at the time of such devise or gift), or (y) in the
absence of a notice from the Purported Record Transferee or Purported
Record Holder and Purported Beneficial Transferee to the Corporation
within ten days after request therefor, such price as may be determined
by the Board of Directors in its sole discretion, which price per share
of Excess Stock shall be equal to the lowest Market Price of Common
Stock or Preferred Stock (whichever resulted in Excess Stock) at any
time prior to the date the Corporation, or its designee, accepts such
offer; or
(ii) in the case of Excess Stock resulting from an
event other than a Purported Transfer, (x) the Market Price of the
Common Stock or Preferred Stock on the date of such event, or (y) in
the absence of a notice from the Purported Record Holder and Purported
Beneficial Holder to the Corporation within ten days after request
therefor, such price as may be determined, by the Board of Directors in
its sole discretion, which price shall be the lowest Market Price for
shares of Common Stock or Preferred Stock (whichever resulted in
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<PAGE> 204
Excess Stock) at any time from the date of the event resulting in
Excess Stock and prior to the date the Corporation, or its designee,
accepts such offer, and
(B) the Market Price of the Common Stock or Preferred
Stock on the date the Corporation, or its designee, accepts such offer.
The Corporation shall have the right to accept such offer for a period
of ninety days after the later of (i) the date of the Transfer which
resulted in such shares of Excess Stock and (ii) the date the Board of
Directors determines in good faith that a Transfer or other event
resulting in shares of Excess Stock has occurred, if the Corporation
does not receive a notice of such Transfer or other event pursuant to
subparagraph (a)(5) of this Article NINTH.
SECOND: (a) As of immediately before the amendment the total number of
shares of stock of all classes which the Corporation has authority to issue is
412,000,000 shares, of which shares 246,000,000 are Common Stock, 12,000,000 are
Class B Common Stock, 4,000,000 are Series A Preferred Stock, and 150,000,000
are Excess Stock.
(b) As amended the total number of shares of stock of all
classes which the Corporation has authority to issue is 650,000,000 shares, of
which 384,000,000 shares are Common Stock (par value $.0001 per share),
12,000,000 shares are Class B Common Stock (par value $.0001 per share),
4,000,000 shares are Series A Preferred Stock (par value $.0001 per share), and
250,000,000 shares are Excess Stock (par value $.0001 per share).
(c) The aggregate par value of all shares having a par value is
$41,200 before the amendment and $65,000.00 as amended.
(d) The shares of stock of the Corporation are divided into
classes, and the amendment contains a description, as amended, of each class,
including the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption.
THIRD: The foregoing amendment to the Charter of the Corporation has
been approved by a majority of the entire Board of Directors and by the
requisite number of shares entitled to vote on the matter.
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IN WITNESS WHEREOF, SIMON PROPERTY GROUP, INC. has caused these presents to be
signed in its name and on its behalf by its President and witnessed by its
Secretary on [ ], 1996.
WITNESS: SIMON PROPERTY GROUP, INC.
________________________________ By __________________________
Secretary President
THE UNDERSIGNED, President of SIMON PROPERTY GROUP, INC., who executed
on behalf of the Corporation the foregoing Articles of Amendment and Restatement
of which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Amendment and Restatement
to be the corporate act of said Corporation and hereby certifies that to the
best of his knowledge, information, and belief the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
By _______________________
_______________________
President
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<PAGE> 206
Exhibit F-1
SIMON DEBARTOLO GROUP, INC.
AMENDED AND RESTATED BY-LAWS
ARTICLE I.
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETING. The Corporation shall hold an annual
meeting of its stockholders to elect directors and transact any other business
within its powers, either at 10:00 a.m. on the second Wednesday of May in each
year if not a legal holiday, or at such other time on such other day falling on
or before the 30th day thereafter as shall be set by the Board of Directors.
Except as the Charter or statute provides otherwise, any business may be
considered at an annual meeting without the purpose of the meeting having been
specified in the notice. Failure to hold an annual meeting does not invalidate
the Corporation's existence or affect any otherwise valid corporate acts.
SECTION 1.02. SPECIAL MEETING. At any time in the interval between
annual meetings, a special meeting of the stockholders may be called by the
Chairman of the Board or the President or by a majority of the Board of
Directors by vote at a meeting or in writing (addressed to the Secretary of the
Corporation) with or without a meeting; provided that a special meeting of
holders of the Class B Common Stock or Class C Common Stock shall be called by
the President in the event a vacancy occurs on the Board from any cause among
the directors elected by the holders of the Class B Common Stock or Class C
Common Stock, as the case may be, and that a special meeting of holders of the
Series A Preferred Stock, the Common Stock, the Class C Common Stock and the
Class B Common Stock shall be called by the President in the event a vacancy
occurs on the Board from any cause among the directors elected by the holders of
the Series A Preferred Stock, the Common Stock, the Class C Common Stock and the
Class B Common Stock (voting together as a single class) and is not filled by
the directors within 30 days after the vacancy occurs. Special meetings of the
stockholders shall be called at the request of the stockholders as may be
required by law.
SECTION 1.03. PLACE OF MEETINGS. Meetings of stockholders shall be held
at such place in the United States as is set from time to time by the Board of
Directors.
SECTION 1.04. NOTICE OF MEETINGS; WAIVER OF NOTICE. Not less than ten
nor more than 90 days before each stockholders' meeting, the Secretary shall
give written notice of the meeting to each stockholder entitled to vote at the
meeting and each other stockholder entitled to notice of the meeting. The notice
shall state the time and place of the meeting and, if the meeting is a special
meeting or notice of the purpose is required by statute, the purpose of the
meeting. Notice is given to a stockholder when it is personally delivered to
him, left at his residence or usual place of business, or mailed to him at his
address as it appears on the records of the Corporation. Notwithstanding the
foregoing provisions, each person who is entitled to notice
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waives notice if he or she before or after the meeting signs a waiver of the
notice which is filed with the records of stockholders' meetings, or is present
at the meeting in person or by proxy.
SECTION 1.05. QUORUM; VOTING. Unless any statute or the Charter
provides otherwise, at a meeting of stockholders the presence in person or by
proxy of stockholders entitled to cast a majority of all the votes entitled to
be cast at the meeting constitutes a quorum, and a majority of all the votes
cast at a meeting at which a quorum is present is sufficient to approve any
matter which properly comes before the meeting, except that a plurality of all
the votes cast at a meeting at which a quorum is present is sufficient to elect
a director.
SECTION 1.06. ADJOURNMENTS. Whether or not a quorum is present, a
meeting of stockholders convened on the date for which it was called may be
adjourned from time to time without further notice by a majority vote of the
stockholders present in person or by proxy to a date not more than 120 days
after the original record date. Any business which might have been transacted at
the meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
SECTION 1.07. GENERAL RIGHT TO VOTE; PROXIES. Unless the Charter
provides otherwise, each outstanding share of stock, regardless of class, is
entitled to one vote on each matter submitted to a vote at a meeting of
stockholders. In all elections for directors, each share of stock entitled to
vote may be voted for as many individuals as there are directors to be elected
and for whose election the share is entitled to be voted. A stockholder may vote
the stock he or she owns of record either in person or by written proxy signed
by the stockholder or by his or her duly authorized attorney in fact. Unless a
proxy provides otherwise, it is not valid more than 11 months after its date.
SECTION 1.08. LIST OF STOCKHOLDERS. At each meeting of stockholders, a
full, true and complete list of all stockholders entitled to vote at such
meeting, showing the number and class of shares held by each and certified by
the transfer agent for such class or by the Secretary, shall be furnished by the
Secretary.
SECTION 1.09. CONDUCT OF BUSINESS. Nominations of persons for election
to the Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving notice provided for in Section 1.12, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in Section 1.12. The chairman of the meeting shall have the power and duty
to determine whether a nomination or any business proposed to be brought before
the meeting was made in accordance with the procedures set forth in this Section
and Section 1.12 and, if any proposed nomination or business is not in
compliance with this Section and Section 1.12, to declare that such defective
nomination or proposal be disregarded.
SECTION 1.10. CONDUCT OF VOTING. At all meetings of stockholders,
unless the voting is conducted by inspectors, the proxies and ballots shall be
received, and all questions touching
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the qualification of voters and the validity of proxies, the acceptance or
rejection of votes and procedures for the conduct of business not otherwise
specified by these By-Laws, the Charter or law, shall be decided or determined
by the chairman of the meeting. If demanded by stockholders, present in person
or by proxy, entitled to cast 10% in number of votes entitled to be cast, or if
ordered by the chairman, the vote upon any election or question shall be taken
by ballot and, upon like demand or order, the voting shall be conducted by two
inspectors, in which event the proxies and ballots shall be received, and all
questions touching the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided, by such inspectors.
Unless so demanded or ordered, no vote need be by ballot and voting need not be
conducted by inspectors. The stockholders at any meeting may choose an inspector
or inspectors to act at such meeting, and in default of such election the
chairman of the meeting may appoint an inspector or inspectors. No candidate for
election as a director at a meeting shall serve as an inspector thereat.
SECTION 1.11. INFORMAL ACTION BY STOCKHOLDERS. Any action required or
permitted to be taken at a meeting of stockholders may be taken without a
meeting if there is filed with the records of stockholders meetings an unanimous
written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter and a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote at it.
SECTION 1.12. STOCKHOLDER PROPOSALS. For any stockholder proposal to be
presented in connection with an annual meeting of stockholders of the
Corporation, including any proposal relating to the nomination of a director to
be elected to the Board of Directors of the Corporation, the stockholders must
have given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (b) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and of the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of
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stock of the Corporation which are owned beneficially and of record by such
stockholders and such beneficial owner.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. FUNCTION OF DIRECTORS. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors. All
powers of the Corporation may be exercised by or under authority of the Board of
Directors, except as conferred on or reserved to the stockholders by statute or
by the Charter or By-Laws.
SECTION 2.02. NUMBER OF DIRECTORS. The Corporation shall have that
number of directors as provided in paragraph (a) of Article SEVENTH of its
Charter.
SECTION 2.03. ELECTION AND TENURE OF DIRECTORS. Subject to the rights
of holders of Class B Common Stock and Class C Common Stock, and subject to
paragraph (e) of Article SEVENTH of the Charter, at each annual meeting the
stockholders shall elect directors to hold office until the next annual meeting
and until their successors are elected and qualify.
SECTION 2.04. REMOVAL OF DIRECTOR. Any director or the entire Board of
Directors may be removed only in accordance with the provisions of the Charter.
SECTION 2.05. VACANCY ON BOARD. Subject to the rights of the holders of
any class of Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors shall be
filled by a vote of the stockholders or a majority of the entire Board of
Directors, and any vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office, or other cause
shall be filled in accordance with paragraph (b) of Article SEVENTH of the
Charter. A director elected by the stockholders or by the Board of Directors to
fill a vacancy which results from the removal of a director serves for the
balance of the term of the removed director.
SECTION 2.06. REGULAR MEETINGS. After each meeting of stockholders at
which directors shall have been elected, the Board of Directors shall meet as
soon as practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board, the President or the Chairman, with notice in accordance with
Section 2.08, the Board of Directors shall meet immediately following the close
of, and at the place of, such stockholders' meeting. Any other regular meeting
of the Board of Directors shall be held on such date and at any place as may be
designated from time to time by the Board of Directors.
SECTION 2.07. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board or the
President or by a majority of the Board of Directors by vote at a meeting, or in
writing with or without a meeting. A special meeting of the
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Board of Directors shall be held on such date and at any place as may be
designated from time to time by the Board of Directors. In the absence of
designation such meeting shall be held at such place as may be designated in the
call.
SECTION 2.08. NOTICE OF MEETING. Except as provided in Section 2.06,
the Secretary shall give notice to each director of each regular and special
meeting of the Board of Directors. The notice shall state the time and place of
the meeting. Notice is given to a director when it is delivered personally to
him, left at his residence or usual place of business, or sent by telegraph,
facsimile transmission or telephone, at least 24 hours before the time of the
meeting or, in the alternative by mail to his address as it shall appear on the
records of the Corporation, at least 72 hours before the time of the meeting.
Unless the By-Laws or a resolution of the Board of Directors provides otherwise,
the notice need not state the business to be transacted at or the purposes of
any regular or special meeting of the Board of Directors. No notice of any
meeting of the Board of Directors need be given to any director who attends
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened, or to any director who, in writing executed and filed with the records
of the meeting either before or after the holding thereof, waives such notice.
Any meeting of the Board of Directors, regular or special, may adjourn from time
to time to reconvene at the same or some other place, and no notice need be
given of any such adjourned meeting other than by announcement.
SECTION 2.09. ACTION BY DIRECTORS. Unless statute or the Charter or
By-Laws requires a greater proportion, the action of a majority of the directors
present at a meeting at which a quorum is present is action of the Board of
Directors. A majority of the entire Board of Directors shall constitute a quorum
for the transaction of business. In addition, the affirmative vote of least
[six] of the Independent Directors is necessary to cause any partnership in
which the Corporation acts, directly or indirectly, as a general partner to sell
any property owned by such partnership in accordance with the terms of the
partnership agreement of such partnership. In the absence of a quorum, the
directors present by majority vote and without notice other than by announcement
may adjourn the meeting from time to time until a quorum shall attend. At any
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified. Any action required or permitted to be taken at a meeting of the Board
of Directors may be taken without a meeting, if an unanimous written consent
which sets forth the action is signed by each member of the Board and filed with
the minutes of proceedings of the Board.
SECTION 2.10. MEETING BY CONFERENCE TELEPHONE. Members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
SECTION 2.11. COMPENSATION. By resolution of the Board of Directors a
fixed sum and expenses, if any, for attendance at each regular or special
meeting of the Board of Directors or of committees thereof, and other
compensation for their services as such or on committees
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of the Board of Directors, may be paid to directors. Directors who are full-time
employees of the Corporation need not be paid for attendance at meetings of the
board or committees thereof for which fees are paid to other directors. A
director who serves the Corporation in any other capacity also may receive
compensation for such other services, pursuant to a resolution of the directors.
SECTION 2.12. ADVISORY DIRECTORS. The Board of Directors may by
resolution appoint advisory directors to the Board, who may also serve as
directors emeriti, and shall have such authority and receive such compensation
and reimbursement as the Board of Directors shall provide. Advisory directors or
directors emeriti shall not have the authority to participate by vote in the
transaction of business.
SECTION 2.13. LOSS OF DEPOSITS. No director shall be liable for any
loss which may occur by reason of the failure of any bank, trust company,
savings and loan association, or other institution with whom moneys or stock of
the Corporation have been deposited.
SECTION 2.14. SURETY BONDS. Unless required by law, no director shall
be obligated to give any bond or surety or other security for the performance of
any of his or her duties.
ARTICLE III.
COMMITTEES
SECTION 3.01. COMMITTEES. The Board of Directors may appoint from among
its members an Executive Committee, an Audit Committee, a Compensation
Committee, a Nominating Committee and other committees composed of two or more
directors and delegate to these committees any of the powers of the Board of
Directors, except the power to declare dividends or other distributions on
stock, elect directors, issue stock other than as provided in the next sentence,
recommend to the stockholders any action which requires stockholder approval,
amend the By-Laws, or approve any merger or share exchange which does not
require stockholder approval. Each committee except the Audit Committee and the
Nominating Committee shall have as a member at least one director elected by the
Class B Common Stock and at least one elected by the Class C Common Stock. The
entire Audit Committee and a majority of the Compensation Committee shall be
Independent Directors. The Nominating Committee shall have five members, with
two being Independent Directors, two elected by the Class B Common Stock, and
one elected by the Class C Common Stock, and, except as otherwise provided in
paragraph (b) of Article SEVENTH of the Charter, only those members of the
Nominating Committee elected by the Class B Common Stock or the Class C Common
Stock shall nominate the persons to be elected to serve as directors by the
holders of Class B Common Stock or Class C Common Stock, respectively. If the
Board of Directors has given general authorization for the issuance of stock, a
committee of the Board, in accordance with a general formula or method specified
by the Board by resolution or by adoption of a stock option or other plan, may
fix the terms of stock subject to classification or reclassification and the
terms on which any
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stock may be issued, including all terms and conditions required or permitted to
be established or authorized by the Board of Directors.
SECTION 3.02. COMMITTEE PROCEDURE. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of the
committee. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the committee and filed with
the minutes of the committee. The members of a committee may conduct any meeting
thereof by conference telephone in accordance with the provisions of Section
2.10.
ARTICLE IV.
OFFICERS
SECTION 4.01. EXECUTIVE AND OTHER OFFICERS. The Corporation shall have
a President, a Secretary, and a Treasurer. The Corporation may also have a
Chairman of the Board, a Chief Executive Officer, one or more Vice-Presidents,
assistant officers, and subordinate officers as may be established by the Board
of Directors. A person may hold more than one office in the Corporation except
that no person may serve concurrently as both President and Vice-President of
the Corporation. The Chairman of the Board shall be a director; the other
officers may be directors.
SECTION 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one
be elected, shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present. In general, the Chairman of
the Board shall perform all such duties as are from time to time assigned to him
or her by the Board of Directors.
SECTION 4.03. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall be the principal executive officer of the Corporation and, subject to the
control of the Board of Directors and with the President, shall in general
supervise and control all of the business and affairs of the Corporation. In
general, he or she shall perform such other duties usually performed by a chief
executive officer of a corporation and such other duties as are from time to
time assigned to him or her by the Board of Directors of the Corporation. Unless
otherwise provided by resolution of the Board of Directors, the Chief Executive
Officer, if one be elected, in the absence of the Chairman of the Board, shall
preside at all meetings of the Board of Directors and of the stockholders at
which he or she shall be present.
SECTION 4.04. PRESIDENT. Unless otherwise specified by the Board of
Directors, the President shall be the chief operating officer of the Corporation
and perform the duties customarily performed by a chief operating officer of a
corporation. If no Chief Executive Officer is appointed, he or she shall also
serve as the Chief Executive Officer of the Corporation. The President may sign
and execute, in the name of the Corporation, all authorized deeds, mortgages,
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bonds, contracts or other instruments, except in cases in which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the Corporation. In general, he or she shall perform such other duties
usually performed by a president of a corporation and such other duties as are
from time to time assigned to him or her by the Board of Directors or the Chief
Executive Officer of the Corporation. Unless otherwise provided by resolution of
the Board of Directors, the President, in the absence of the Chairman of the
Board and the Chief Executive Officer, shall preside at all meetings of the
Board of Directors and of the stockholders at which he or she shall be present.
SECTION 4.05. VICE-PRESIDENTS. The Vice-President or Vice-Presidents,
at the request of the Chief Executive Officer or the President, or in the
President's absence or during his inability to act, shall perform the duties and
exercise the functions of the President, and when so acting shall have the
powers of the President. If there be more than one Vice-President, the Board of
Directors may determine which one or more of the Vice-Presidents shall perform
any of such duties or exercise any of such functions, or if such determination
is not made by the Board of Directors, the Chief Executive Officer, or the
President may make such determination; otherwise any of the Vice-Presidents may
perform any of such duties or exercise any of such functions. The Vice-President
or Vice-Presidents shall have such other powers and perform such other duties,
and have such additional descriptive designations in their titles (if any), as
are from time to time assigned to them by the Board of Directors, the Chief
Executive Officer, or the President.
SECTION 4.06. SECRETARY. The Secretary shall keep the minutes of the
meetings of the stockholders, of the Board of Directors and of any committees,
in books provided for the purpose; he or she shall see that all notices are duly
given in accordance with the provisions of the By-Laws or as required by law; he
or she shall be custodian of the records of the Corporation; he or she may
witness any document on behalf of the Corporation, the execution of which is
duly authorized, see that the corporate seal is affixed where such document is
required or desired to be under its seal, and, when so affixed, may attest the
same; and, in general, the Secretary shall perform all duties incident to the
office of a secretary of a corporation, and such other duties as are from time
to time assigned to him or her by the Board of Directors, the Chief Executive
Officer, or the President.
SECTION 4.07. TREASURER. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by the Board of
Directors; he or she shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation; and, in general, the Treasurer shall perform all the duties
incident to the office of a treasurer of a corporation, and such other duties as
are from time to time assigned to him or her by the Board of Directors, the
Chief Executive Officer, or the President.
SECTION 4.08. ASSISTANT AND SUBORDINATE OFFICERS. The assistant and
subordinate officers of the Corporation are all officers below the office of
Vice-President, Secretary, or
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Treasurer. The assistant or subordinate officers shall have such duties as are
from time to time assigned to them by the Board of Directors, the Chief
Executive Officer, or the President.
SECTION 4.09. ELECTION, TENURE AND REMOVAL OF OFFICERS. The Board of
Directors shall elect the officers. The Board of Directors may from time to time
authorize any committee or officer to appoint assistant and subordinate
officers. Election or appointment of an officer, employee or agent shall not of
itself create contract rights. All officers shall be appointed to hold their
offices, respectively, during the pleasure of the Board. The Board of Directors
(or, as to any assistant or subordinate officer, any committee or officer
authorized by the Board) may remove an officer at any time. The removal of an
officer does not prejudice any of his contract rights. The Board of Directors
(or, as to any assistant or subordinate officer, any committee or officer
authorized by the Board) may fill a vacancy which occurs in any office for the
unexpired portion of the term.
SECTION 4.10. COMPENSATION. The Board of Directors shall have power to
fix the salaries and other compensation and remuneration, of whatever kind, of
all officers of the Corporation. No officer shall be prevented from receiving
such salary by reason of the fact that he or she is also a director of the
Corporation. The Board of Directors may authorize any committee or officer, upon
whom the power of appointing assistant and subordinate officers may have been
conferred, to fix the salaries, compensation and remuneration of such assistant
and subordinate officers.
ARTICLE V.
DIVISIONAL TITLES
SECTION 5.01. CONFERRING DIVISIONAL TITLES. The Board of Directors may
from time to time confer upon any employee of a division of the Corporation the
title of President, Vice President, Treasurer or Controller of such division or
any other title or titles deemed appropriate, or may authorize the Chairman of
the Board or the President to do so. Any such titles so conferred may be
discontinued and withdrawn at any time by the Board of Directors, or by the
Chairman of the Board or the President if so authorized by the Board of
Directors. Any employee of a division designated by such a divisional title
shall have the powers and duties with respect to such division as shall be
prescribed by the Board of Directors, the Chairman of the Board or the
President.
SECTION 5.02. EFFECT OF DIVISIONAL TITLES. The conferring of divisional
titles shall not create an office of the Corporation under Article IV unless
specifically designated as such by the Board of Directors; but any person who is
an officer of the Corporation may also have a divisional title.
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ARTICLE VI.
STOCK
SECTION 6.01. CERTIFICATES FOR STOCK. Each stockholder is entitled to
certificates which represent and certify the shares of stock he or she holds in
the Corporation. Each stock certificate shall include on its face the name of
the Corporation, the name of the stockholder or other person to whom it is
issued, and the class of stock and number of shares it represents. It shall be
in such form, not inconsistent with law or with the Charter, as shall be
approved by the Board of Directors or any officer or officers designated for
such purpose by resolution of the Board of Directors. Each stock certificate
shall be signed by the Chairman of the Board, the President, or a
Vice-President, and countersigned by the Secretary, an Assistant Secretary, the
Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the
actual corporate seal or a facsimile of it or in any other form and the
signatures may be either manual or facsimile signatures. A certificate is valid
and may be issued whether or not an officer who signed it is still an officer
when it is issued. A certificate may not be issued until the stock represented
by it is fully paid.
SECTION 6.02. TRANSFERS. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates of stock; and may appoint
transfer agents and registrars thereof. The duties of transfer agent and
registrar may be combined.
SECTION 6.03. RECORD DATES AND CLOSING OF TRANSFER BOOKS. The Board of
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper determination
with respect to stockholders, including which stockholders are entitled to
notice of a meeting, vote at a meeting, receive a dividend, or be allotted other
rights. The record date may not be prior to the close of business on the day the
record date is fixed nor, subject to Section 1.06, more than 90 days before the
date on which the action requiring the determination will be taken; the transfer
books may not be closed for a period longer than 20 days; and, in the case of a
meeting of stockholders, the record date or the closing of the transfer books
shall be at least ten days before the date of the meeting.
SECTION 6.04. STOCK LEDGER. The Corporation shall maintain a stock
ledger which contains the name and address of each stockholder and the number of
shares of stock of each class which the stockholder holds. The stock ledger may
be in written form or in any other form which can be converted within a
reasonable time into written form for visual inspection. The original or a
duplicate of the stock ledger shall be kept at the offices of a transfer agent
for the particular class of stock, or, if none, at the principal office in the
State of Maryland or the principal executive offices of the Corporation.
SECTION 6.05. CERTIFICATION OF BENEFICIAL OWNERS. The Board of
Directors may adopt by resolution a procedure by which a stockholder of the
Corporation may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class
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of stockholders who may certify; the purpose for which the certification may be
made; the form of certification and the information to be contained in it; if
the certification is with respect to a record date or closing of the stock
transfer books, the time after the record date or closing of the stock transfer
books within which the certification must be received by the Corporation; and
any other provisions with respect to the procedure which the Board considers
necessary or desirable. On receipt of a certification which complies with the
procedure adopted by the Board in accordance with this Section, the person
specified in the certification is, for the purpose set forth in the
certification, the holder of record of the specified stock in place of the
stockholder who makes the certification.
SECTION 6.06. LOST STOCK CERTIFICATES. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen, or destroyed, or the
Board of Directors may delegate such power to any officer or officers of the
Corporation. In their discretion, the Board of Directors or such officer or
officers may refuse to issue such new certificate save upon the order of some
court having jurisdiction in the premises.
SECTION 6.07. EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE. The
provisions of Sections 3-701 to 3-709 of the Corporations and Associations
Article of the Annotated Code of Maryland shall not apply to any share of the
capital stock of the Corporation and such shares of capital stock are exempted
from such Sections to the fullest extent permitted by Maryland law.
ARTICLE VII.
FINANCE
SECTION 7.01. CHECKS, DRAFTS, ETC. All checks, drafts and orders for
the payment of money, notes and other evidences of indebtedness, issued in the
name of the Corporation, shall, unless otherwise provided by resolution of the
Board of Directors, be signed by the Chief Executive Officer, the President, a
Vice-President or an Assistant Vice-President and countersigned by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
SECTION 7.02. ANNUAL STATEMENT OF AFFAIRS. The President or chief
accounting officer shall prepare annually a full and correct statement of the
affairs of the Corporation, to include a balance sheet and a financial statement
of operations for the preceding fiscal year. The statement of affairs shall be
submitted at the annual meeting of the stockholders and, within 20 days after
the meeting, placed on file at the Corporation's principal office.
SECTION 7.03. FISCAL YEAR. The fiscal year of the Corporation shall be
the twelve calendar months period ending December 31 in each year, unless
otherwise provided by the Board of Directors.
SECTION 7.04. DIVIDENDS. If declared by the Board of Directors at any
meeting thereof, the Corporation may pay dividends on its shares in cash,
property, or in shares of the
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capital stock of the Corporation, unless such dividend is contrary to law or to
a restriction contained in the Charter.
SECTION 7.05. CONTRACTS. To the extent permitted by applicable law, and
except as otherwise prescribed by the Charter or these By-Laws with respect to
certificates for shares, the Board of Directors may authorize any officer,
employee, or agent of the Corporation to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation. Such
authority may be general or confined to specific instances.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.01. PROCEDURE. Any indemnification, or payment of expenses in
advance of the final disposition of any proceeding, shall be made promptly, and
in any event within 60 days, upon the written request of the director or officer
entitled to seek indemnification (the "Indemnified Party"). The right to
indemnification and advances hereunder shall be enforceable by the Indemnified
Party in any court of competent jurisdiction, if (i) the Corporation denies such
request, in whole or in part, or (ii) no disposition thereof is made within 60
days. The Indemnified Party's costs and expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any such action shall also be reimbursed by the Corporation. It shall be a
defense to any action for advance for expenses that (a) a determination has been
made that the facts then known to those making the determination would preclude
indemnification or (b) the Corporation has not received both (i) an undertaking
as required by law to repay such advances in the event it shall ultimately be
determined that the standard of conduct has not been met and (ii) a written
affirmation by the Indemnified Party of such Indemnified Party's good faith
belief that the standard of conduct necessary for indemnification by the
Corporation has been met.
SECTION 8.02. EXCLUSIVITY, ETC. The indemnification and advance of
expenses provided by the Charter and these By-Laws shall not be deemed exclusive
of any other rights to which a person seeking indemnification or advance of
expenses may be entitled under any law (common or statutory), or any agreement,
vote of stockholders or disinterested directors or other provision that is
consistent with law, both as to action in his official capacity and as to action
in another capacity while holding office or while employed by or acting as agent
for the Corporation, shall continue in respect of all events occurring while a
person was a director or officer after such person has ceased to be a director
or officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. All rights to indemnification and advance of
expenses under the Charter of the Corporation and hereunder shall be deemed to
be a contract between the Corporation and each director or officer of the
Corporation who serves or served in such capacity at any time while this By-Law
is in effect. Nothing herein shall prevent the amendment of this By-Law,
provided that no such amendment shall diminish the rights of any person
hereunder with respect to events occurring or claims made before its adoption or
as to claims made after its adoption in respect of events occurring before its
adoption. Any repeal or
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modification of this By-Law shall not in any way diminish any rights to
indemnification or advance of expenses of such director or officer or the
obligations of the Corporation arising hereunder with respect to events
occurring, or claims made, while this By-Law or any provision hereof is in
force.
SECTION 8.03. SEVERABILITY; DEFINITIONS. The invalidity or
unenforceability of any provision of this Article VIII shall not affect the
validity or enforceability of any other provision hereof. The phrase "this
By-Law" in this Article VIII means this Article VIII in its entirety.
ARTICLE IX.
SUNDRY PROVISIONS
SECTION 9.01. BOOKS AND RECORDS. The Corporation shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors. The
books and records of a Corporation may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection. Minutes shall be recorded in written form but may be maintained in
the form of a reproduction. The original or a certified copy of the By-Laws
shall be kept at the principal office of the Corporation.
SECTION 9.02. CORPORATE SEAL. The Board of Directors shall provide a
suitable seal, bearing the name of the Corporation, which shall be in the charge
of the Secretary. The Board of Directors may authorize one or more duplicate
seals and provide for the custody thereof. If the Corporation is required to
place its corporate seal to a document, it is sufficient to meet the requirement
of any law, rule, or regulation relating to a corporate seal to place the word
"Seal" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
SECTION 9.03. BONDS. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his duties, with one or more sureties
and in such amount as may be satisfactory to the Board of Directors.
SECTION 9.04. VOTING UPON SHARES IN OTHER CORPORATIONS. Stock of other
cor-porations or associations, registered in the name of the Corporation, may be
voted by the President, a Vice-President, or a proxy appointed by either of
them. The Board of Directors, however, may by resolution appoint some other
person to vote such shares, in which case such person shall be entitled to vote
such shares upon the production of a certified copy of such resolution.
SECTION 9.05. MAIL. Any notice or other document which is required by
these By-Laws to be mailed shall be deposited in the United States mails,
postage prepaid.
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SECTION 9.06. EXECUTION OF DOCUMENTS. A person who holds more than one
office in the Corporation may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer.
SECTION 9.07. RELIANCE. Each director, officer, employee and agent of
the Corporation shall, in the performance of his or her duties with respect to
the Corporation, be fully justified and protected with regard to any act or
failure to act in reliance in good faith upon the books of account or other
records of the Corporation, upon an opinion of counsel or upon reports made to
the Corporation by any of its officers or employees or by the adviser,
accountants, appraisers or other experts or consultants selected by the Board of
Directors or officers of the Corporation, regardless of whether such counsel or
expert may also be a director.
SECTION 9.08. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS. The directors shall have no responsibility to devote their full time to
the affairs of the Corporation. Any director or officer, employee or agent of
the Corporation, in his or her personal capacity or in a capacity as an
affiliate, employee, or agent of any other person, or otherwise, may have
business interests and engage in business activities similar to or in addition
to those of or relating to the Corporation.
SECTION 9.09. AMENDMENTS. In accordance with the Charter, these By-Laws
may be repealed, altered, amended or rescinded (a) by the stockholders of the
Corporation only by vote of not less than 80% of the outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at any meeting of the
stockholders called for that purpose (provided that notice of such proposed
repeal, alteration, amendment or rescission is included in the notice of such
meeting) or (b) except for the provision of Section 2.09 which relates to the
sale of property owned by partnerships in which the Corporation acts as a
general partner, by vote of two-thirds of the Board of Directors (including at
least a majority of the directors elected by the Class B Common Stock and at
least one director elected by Class C Common Stock) at a meeting held in
accordance with the provisions of these By-Laws.
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Exhibit F-2
SIMON DEBARTOLO GROUP, INC.
AMENDMENTS TO THE BY-LAWS
The Board of Directors of SIMON DeBARTOLO GROUP, INC. will amend its
By-Laws in the following manner:
1. ARTICLE III, Section 3.01, captioned "Committees," will be amended
by replacing the third and fourth sentences, which currently read:
The entire Audit Committee and a majority of both the Compensation
Committee and the Nominating Committee shall be Independent Directors.
The Nominating Committee shall have as members at least two directors
elected by the Class B Common Stock, and only these members of the
Nominating Committee shall nominate the persons to be elected to serve
as directors by the holders of Class B Common Stock.
with the following two sentences:
The entire Audit Committee and a majority of the Compensation Committee
shall be Independent Directors. The Nominating Committee shall have
five members, with at least two directors elected by the Class B Common
Stock, and only these members of the Nominating Committee shall
nominate the persons to be elected to serve as directors by the holders
of Class B Common Stock.
2. ARTICLE III, Section 3.02, captioned "Committee Procedure," will be
amended first by deleting in its entirety the third sentence, which currently
reads:
The members of a committee present at any meeting, whether or not they
constitute a quorum, may appoint a director to act in the place of an
absent member.
and second by adding the following sentences at the end of the current section:
In addition, and without derogating from the requirements set forth in
Section 2.09, the Board shall have a Special Committee, consisting of
Independent Directors none of whom is employed by the Corporation or is
a member (or an affiliate of a member) of the Simon Family Group or the
DeBartolo Family Group. In addition to any other requirements set forth
in the Charter or in these By-Laws, approval by a majority of the
members of the Special Committee shall be required with respect to any
transactions involving the Corporation, individually or in its capacity
as a general partner of the Simon DeBartolo Group, L.P., in which
either the
<PAGE> 221
Simon Family Group or the DeBartolo Family Group or any member or
affiliate of any member of either such group has an interest (other
than through an ownership interest in the Corporation or the Simon
DeBartolo Group, L.P.).
3. ARTICLE III, Section 3.03, currently captioned "Emergency," will be
deleted in its entirety.
<PAGE> 222
EXHIBIT H
---------
FORM OF
SEVERANCE PROGRAM
OF
DEBARTOLO REALTY CORPORATION
AND
DEBARTOLO PROPERTIES MANAGEMENT, INC.
<PAGE> 223
SEVERANCE PROGRAM
OF
DEBARTOLO REALTY CORPORATION
AND
DEBARTOLO PROPERTIES MANAGEMENT, INC.
DeBartolo Realty Corporation (the "Company") believes that the best
interests of the Company and DeBartolo Property Management, Inc. ("DPMI") will
be served if certain employees are encouraged to remain with the Company and
DPMI after the consummation of the merger of Day Acquisition Corp. into the
Company pursuant to the Agreement and Plan of Merger Dated as of March __, 1996
among Simon Property Group, Inc., Day Acquisition Corp. and the Company (the
"Merger Agreement"). Accordingly, the Company hereby establishes this "Severance
Program of DeBartolo Realty Corporation and DeBartolo Properties Management,
Inc." (the "Program") for the benefit of such employees.
SECTION
-------
1. DEFINITIONS
- - - --------------
In addition to the terms defined in the preceding paragraph, the
following definitions shall apply for purposes of the Program.
1. "ANNUAL SALARY" means an Eligible Employee's annual rate of base
salary as in effect immediately prior to the Effective Time.
2. "BOARD" means the Board of Directors of the Company.
3. "BONUS" means the maximum annual bonus which would be payable to the
Eligible Employee for the calendar year in which an Eligible Termination occurs,
calculated on the assumption of
<PAGE> 224
full achievement of the applicable target performance goals established under
the applicable bonus plan with respect to that year; provided, however, that in
no event shall the Bonus be less than the highest annual bonus paid to the
Eligible Employee during the three years immediately preceding the year in which
an Eligible Termination occurs.
4. "CAUSE" means any of the following, other than due to an Eligible
Employee's Permanent Disability or death:
5. an Eligible Employee's continuing willful neglect of, or refusal to
perform, the duties required or associated with the Eligible Employee's
employment; or
6. conviction of a felony, or a misdemeanor involving fraud, theft,
larceny, or embezzlement.
7. "CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
8. "COMMON STOCK" means the common stock of Simon, par value $0.0001
per share.
9. "COMMITTEE" means the Committee of the Board designated to
administer the Plan.
10. "DRC COMPANIES" means the Company, DPMI, and their respective
successors.
11. "EFFECTIVE TIME" means the "Effective Time" as defined in Section
1.3 of the Merger Agreement.
<PAGE> 225
12. "ELIGIBLE EMPLOYEE" means a full-time employee of any of the DRC
Companies, other than Richard S. Sokolov.
13. "ELIGIBLE TERMINATION" means an involuntary termination of
employment without Cause (other than by reason of Permanent Disability or
death), or a resignation for Good Reason, which occurs within the two-year
period following the Effective Time; PROVIDED, HOWEVER, that the transfer of
employment to another employer that is one of the DRC Companies or the Simon
Companies shall not in itself constitute an Eligible Termination (but any such
transfer will not preclude another or accompanying event or reason from
constituting or causing an Eligible Termination, and the protections of the
Program and corresponding obligations of the Company will remain in effect
following any such transfer of employment).
14. "GOOD REASON" means any one or more of the following actions,
without an Eligible Employee's express prior written consent or approval, other
than due to an Eligible Employee's Permanent Disability or death:
15. any removal of the Eligible Employee from any of the positions he
or she holds immediately prior to the Effective Time or an elimination of any
such positions, when the effect of such removal or elimination is a material
diminution of status, responsibilities or duties; or
16. any reduction of an Eligible Employee's Annual Salary.
17. "PERMANENT DISABILITY" means an Eligible Employee's inability, by
reason of any physical or mental impairment, to substantially perform the
significant aspects of his or her
<PAGE> 226
regular duties, which inability is reasonably contemplated to continue for at
least one (1) year from its incurrence.
18. "PROGRAM" means the Severance Program of DeBartolo Realty
Corporation and DeBartolo Properties Management, Inc., as set forth herein.
19. "SIMON" means Simon Property Group, Inc.
20. "SIMON COMPANIES" means Simon and its subsidiaries and affiliates,
and any successor or successors thereto.
21. "YEARS OF SERVICE" means the number of full and partial years that
an Eligible Employee served as a full-time employee or any DRC Company or any
predecessor thereto including, without limitation, The Edward J. DeBartolo
Corporation.
SECTION 22. EFFECT OF AN ELIGIBLE TERMINATION
23. If an Eligible Employee incurs an Eligible Termination, the
Eligible Employee shall be entitled to all applicable benefits provided
hereafter in this Section 2 or as otherwise set forth in this Program.
24. PAYMENT OF SEVERANCE BENEFIT: Within five (5) business days after
the date of his or her Eligible Termination, either Simon or the Company shall
pay or cause to be paid to the Eligible Employee a single lump sum amount, in
cash, as follows:
(i) in the case of an Eligible Employee whose title is Senior
Vice President or higher, the sum of (A) the Eligible
Employee's Annual Salary, and (B) the Eligible Employee's
Bonus;
<PAGE> 227
(ii) in the case of an Eligible Employee whose title is Vice
President, the sum of (A) one-half of the Eligible Employee's
Bonus, and (B) the higher of (1) the Base Severance Benefit,
or (2) one-half of the Eligible Employee's Annual Salary;
(iii) in the case of an Eligible Employee who is neither a
Senior Vice President nor a Vice President but who is a
participant in the Company's Short-Term Incentive Plan, the
sum of (A) one-quarter of the Eligible Employee's Bonus, and
(B) the higher of (1) the Base Severance Benefit, or (2)
one-quarter of the Eligible Employee's Annual Salary; and
(iv) in the case of any other Eligible Employee, the Base
Severance Benefit. For purposes of the Program, the "Base
Severance Benefit" shall mean a severance benefit based on an
Eligible Employee's Years of Service, determined as follows:
<TABLE>
<CAPTION>
YEARS OF SERVICE SEVERANCE BENEFIT
---------------- -----------------
<S> <C>
1 - 5 1/4 Annual Salary
6 - 10 1/3 Annual Salary
11 - 15 1/2 Annual Salary
16 - 20 3/4 Annual Salary
21 or more 1 x Annual Salary
</TABLE>
Amounts payable to an Eligible Employee under this Section 2.1(a) shall not be
duplicative of amounts payable as severance to such Eligible Employee pursuant
to a written employment agreement or employment letter with any DRC Company,
provided that (1) any such Eligible Employee shall be entitled to the HIGHER of
the amount payable under this Section 2.1(a) or under such agreement or letter,
and (2) any amounts so payable to such Eligible Employee shall be paid in a
single lump sum as provided in this Section 2.1(a).
25. PAYMENT OF ACCRUED BUT UNPAID AMOUNTS: Within twenty (20) business
days after the date of his or her Eligible Termination, the Company shall pay
the Eligible Employee any unpaid portion of the Eligible Employee's bonus
accrued with respect to the full calendar year ended prior to the date of the
Eligible Termination and all compensation earned by such Eligible Employee but
not yet paid (including cash compensation for vacation days, sick days and
personal days accrued but not taken as of the date of the Eligible Termination,
based on the Annual Salary amount converted to a per diem equivalent in
accordance with the Company's normal payroll practices as in effect prior to the
Effective Time), except that any compensation deferred by the Eligible Employee
under any qualified or non-qualified deferred compensation plans shall be paid
in accordance with the terms and provisions of such plans.
(c) VESTING OF DEFERRED STOCK STAY BONUS: With respect to an Eligible
Employee who received a stay bonus of deferred shares of Common Stock described
in Section 5.12(b)(iii) of the Merger Agreement (a "Deferred Stock Stay Bonus"),
any shares of Common Stock subject to such Deferred Stock Stay Bonus which have
not vested as the date of his or her Eligible Termination shall immediately vest
and be issued by Simon to the Eligible Employee within five (5) business days
after such Eligible Termination, provided that Simon may elect to pay cash in
lieu of such shares of Common Stock equal to the aggregate fair market value of
such shares of Common Stock as of the date of such Eligible Termination. For
this purpose, the "fair market value" of a share of Common Stock shall be the
mean between the highest and lowest sales prices of the Common Stock on the New
York Stock Exchange on such date.
(d) Each Eligible Employee who incurs an Eligible Termination shall
also receive continued health care coverage and outplacement services, each at
the Company's expense for a period of three months following such Eligible
Termination.
2.2. MAXIMUM BENEFITS: Anything in Section 2.1 to the contrary
notwithstanding, payments under Section 2.1 shall not exceed the maximum amount
which can be paid to an Eligible Employee without causing such payments to be
treated as "parachute payments" for purposes of Section 280G of the Code
(determined by taking into account all payments made to the Eligible Employee
under any other plan or arrangement that are taken into account for purposes of
Section 280G).
2.3. MITIGATION: An Eligible Employee shall not be required to mitigate
damages or the amount of any payment provided for under this Program by seeking
other employment or otherwise, and compensation earned from such employment or
otherwise shall not reduce the amounts otherwise payable under this Program. No
amounts payable under this Program shall be subject to reduction or offset in
respect of any claims which the Company or any member of the DRC Companies (or
any other person or entity) may have against the Eligible Employee.
2.4. WITHHOLDING: The Company may, to the extent required by law,
withhold applicable federal and state income, employment and other taxes from
any payments due to any Eligible Employee hereunder.
SECTION 3. LIMITS ON AMENDMENT OR TERMINATION; EFFECT ON
OTHER PLANS
3.1. The Company may terminate this Program prior to the Effective
Time. As of the Effective Time, this Program (expressly including, but not
limited to, this Section 3) shall remain in effect, and may not be altered or
amended in any way which would adversely affect the rights of any Eligible
Employee hereunder, for two (2) years following the Effective Time, and for such
additional time as may be necessary to give effect to the terms of the Program
as in effect at the Effective Time. Thereafter, the Company may amend or
terminate this Program in any manner which does not adversely affect the rights
of any Eligible Employee who has incurred an Eligible Termination.
3.2. An Eligible Employee shall, after the date of his or her Eligible
Termination, retain all rights (to the extent any such rights existed at any
time prior to the Effective Time) to indemnification under applicable law or
under the applicable DRC Companies' Certificate of Incorporation or By-Laws, as
they may be amended or restated from time to time. In addition, to the extent
coverage had been otherwise available to the Eligible Employee prior to the
Effective Time, the Company shall maintain Director's and Officer's liability
insurance on behalf of the Eligible Employee as set forth in Section 5.14 of the
Merger Agreement.
SECTION 4. ADMINISTRATION OF THE PROGRAM
4.1. The Committee shall be the Administrator of this Program and shall
have the exclusive right, power and authority to:
(a) interpret, in its sole discretion, any and all of the provisions of
the Program;
(b) establish a claims review procedure, if necessary and advisable;
and
(c) consider and decide conclusively any questions (whether of fact or
otherwise) arising in connection with the administration of the Program or any
claim for a benefit arising under the Program.
SECTION 5. MISCELLANEOUS
5.1. Neither the establishment of the Program nor any action of the
Company, any other member of the DRC Companies or the Simon Companies, the
Committee, or any fiduciary shall be held or construed to confer upon any person
any legal right to continued employment with the Company or with any of the DRC
Companies or the Simon Companies. Nothing in the Program shall be construed to
prevent the Company or any of the DRC Companies or the Simon Companies from
terminating an Eligible Employee's employment for Cause. If an Eligible Employee
is terminated for Cause, the Company shall have no obligation to make any
payments under this Program, except for payments that may otherwise be payable
under then existing employee benefit plans, programs and arrangements of any of
the DRC Companies or the Simon Companies.
5.2. Benefits payable under the Program shall be paid out of the
general assets of the Company. The Company is not required to fund the benefits
payable under this Program; PROVIDED, HOWEVER, nothing in this Section 5.2 shall
be interpreted as precluding the Company from funding or setting aside amounts
in anticipation of paying any such benefits.
5.3. Benefits payable under the Program shall not be subject to
assignment, alienation, transfer, pledge, encumbrance, commutation or
anticipation by any Eligible Employee. Any attempt to assign, alienate,
transfer, pledge, encumber, commute or anticipate Program benefits shall be
void. In addition, no rights or interest under the Program shall be in any
manner subject to levy, attachment or other legal process to enforce payment of
any claim against any Eligible Employee except to the extent required by law.
5.4. Except as otherwise provided herein, this Program shall be binding
upon, inure to the benefit of and be enforceable by the Company and the Eligible
Employees and their respective heirs, legal representatives, successors and
assigns. If the Company shall be merged into or consolidated with another
entity, the provisions of this Program shall be binding upon and inure to the
benefit of the entity surviving such merger or resulting from such
consolidation, and such provisions shall also be binding upon and inure to the
benefit of any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company, and such successor shall assume and perform the
obligations, responsibilities and liabilities to which the Company or any of the
DRC Companies is subject under this Program in the same manner and to the same
extent that the Company or any of the DRC Companies would be required to perform
if no such succession had taken place. The provisions of this Section 5.4 shall
continue to apply to each subsequent employer of any Eligible Employee in the
event of any subsequent merger, consolidation or transfer of assets of any such
subsequent employer.
5.5. This Program shall be governed by and construed in accordance with
the laws of the State of Ohio (without reference to rules relating to conflicts
of laws), except to the extent superseded by applicable federal law.
5.6. Any action required or permitted to be taken by the Company under
this Plan shall be taken by the Board or by the Committee, or any designee of
the Committee pursuant to Section 4, in each case subject to the limits on
amendment and termination contained in Section 3 hereof.
5.7. The payment of benefits under this Program to an Eligible Employee
who has incurred an Eligible Termination may, at the time of payment, be
conditioned upon the Eligible Employee agreeing to and signing (i) a customary
exit letter that may contain confidentiality, future cooperation and other
similar and customary provisions, if requested, and (ii) a general release of
employment and other claims that the Eligible Employee may have; provided,
however, that in no event shall entitlement to benefits under this Program be
conditioned upon an Eligible Employee's agreement to refrain from seeking or
accepting employment with a competitor of any of the DRC Companies or the Simon
Companies or otherwise seeking or accepting any gainful employment with any
employer.
5.8. Benefits payable to an Eligible Employee under this Program shall
not be taken into account for purposes of determining such Eligible Employee's
entitlement to, or amount of, benefits under any other employee benefit plan or
arrangement of the DRC Companies or the Simon Companies.
<PAGE> 228
EXHIBIT I
FORM OF
FIFTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
SIMON-DEBARTOLO GROUP, L.P.
<PAGE> 229
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I Definitions; Etc. . . . . . . . . . . . . . . . . . 3
1.1 Definitions . . . . . . . . . . . . . . . . . . . . 3
1.2 Exhibit, Etc. . . . . . . . . . . . . . . . . . . . 28
ARTICLE II Organization . . . . . . . . . . . . . . . . . . . . 29
2.1 Continuation. . . . . . . . . . . . . . . . . . . . 29
2.2 Name. . . . . . . . . . . . . . . . . . . . . . . . 30
2.3 Character of the Business. . . . . . . . . . . . . . 30
2.4 Location of the Principal Place of
Business . . . . . . . . . . . . . . . . . . . . . . 31
2.5 Registered Agent and Registered Office. . . . . . . 31
ARTICLE III Term . . . . . . . . . . . . . . . . . . . . . . . . 32
3.1 Commencement. . . . . . . . . . . . . . . . . . . . 32
3.2 Dissolution. . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IV Contributions to Capital . . . . . . . . . . . . . . 33
4.1 General Partner Capital Contributions. . . . . . . . 33
4.2 Limited Partner Capital Contributions. . . . . . . . 33
4.3 Additional Funds. . . . . . . . . . . . . . . . . . 34
4.4 Stock Option Plan . . . . . . . . . . . . . . . . . 41
4.5 Dividend Reinvestment Plan . . . . . . . . . . . . . 42
4.6 No Third Party Beneficiary. . . . . . . . . . . . . 43
4.7 No Interest; No Return. . . . . . . . . . . . . . . 43
4.8 Capital Accounts . . . . . . . . . . . . . . . . . . 44
ARTICLE V Conditions/Representations and Warranties . . . . . 48
5.1 Representations and Warranties by
Managing General Partner . . . . . . . . . . . . . . 48
5.2 Representations and Warranties by
Non-Managing General Partner . . . . . . . . . . . . 50
5.3 Representations and Warranties by the
</TABLE>
i
<PAGE> 230
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Limited Partners . . . . . . . . . . . . . . . . . . 51
5.4 Acknowledgment by Each Partner . . . . . . . . . . . 52
ARTICLE VI Allocations, Distributions and Other
Tax and Accounting Matters . . . . . . . . . . . . . 52
6.1 Allocations . . . . . . . . . . . . . . . . . . . . 52
6.2 Distributions . . . . . . . . . . . . . . . . . . . 65
6.3 Books of Account. . . . . . . . . . . . . . . . . . 69
6.4 Reports. . . . . . . . . . . . . . . . . . . . . . . 70
6.5 Audits. . . . . . . . . . . . . . . . . . . . . . . 71
6.6 Tax Returns. . . . . . . . . . . . . . . . . . . . . 72
6.7 Tax Matters Partner. . . . . . . . . . . . . . . . . 73
6.8 Withholding. . . . . . . . . . . . . . . . . . . . . 75
ARTICLE VII Rights, Duties and Restrictions of the
General Partners . . . . . . . . . . . . . . . . . . 76
7.1 Expenditures by Partnership. . . . . . . . . . . . . 76
7.2 Powers and Duties of the Managing General
Partner. . . . . . . . . . . . . . . . . . . . . . . 76
7.3 Major Decisions. . . . . . . . . . . . . . . . . . . 84
7.4 Managing General Partner and Non-Managing
General Partner Participation. . . . . . . . . . . . 88
7.5 Proscriptions . . . . . . . . . . . . . . . . . . . 89
7.6 Additional Partners . . . . . . . . . . . . . . . . 90
7.7 Title Holder . . . . . . . . . . . . . . . . . . . . 90
7.8 Waiver and Indemnification. . . . . . . . . . . . . 90
7.9 Limitation of Liability of Directors,
Shareholders and Officers of the Managing
General Partner and the Non-Managing
General Partner . . . . . . . . . . . . . . . . . . 93
ARTICLE VIII Dissolution, Liquidation and Winding-Up . . . . . . 94
8.1 Accounting . . . . . . . . . . . . . . . . . . . . . 94
8.2 Distribution on Dissolution . . . . . . . . . . . . 94
8.3 Sale of Partnership Assets. . . . . . . . . . . . . 95
8.4 Distributions in Kind . . . . . . . . . . . . . . . 96
8.5 Documentation of Liquidation. . . . . . . . . . . 97
</TABLE>
ii
<PAGE> 231
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
8.6 Liability of the Liquidating Agent . . . . . . . . . 97
ARTICLE IX Transfer of Partnership Interests and
Related Matters . . . . . . . . . . . . . . . . . . 98
9.1 Managing General Partner Transfers and
Deemed Transfers . . . . . . . . . . . . . . . . . . 98
9.2 Non-Managing General Partner Transfers
and Deemed Transfers . . . . . . . . . . . . . . . . 99
9.3 Transfers by Limited Partners . . . . . . . . . . . 100
9.4 Issuance of Additional Partnership Units
and Preferred Units. . . . . . . . . . . . . . . . . 104
9.5 Restrictions on Transfer . . . . . . . . . . . . . . 106
9.6 Shelf Registration Rights . . . . . . . . . . . . . 107
ARTICLE X Rights and Obligations of the Limited
Partners . . . . . . . . . . . . . . . . . . . . . . 112
10.1 No Participation in Management . . . . . . . . . . . 112
10.2 Bankruptcy of a Limited Partner . . . . . . . . . . 112
10.3 No Withdrawal . . . . . . . . . . . . . . . . . . . 113
10.4 Duties and Conflicts . . . . . . . . . . . . . . . . 113
10.5 Guaranty and Indemnification Agreements . . . . . . 115
ARTICLE XI Grant of Rights to the Limited Partners . . . . . . 117
11.1 Grant of Rights . . . . . . . . . . . . . . . . . . 117
11.2 Limitation on Exercise of Rights . . . . . . . . . . 118
11.3 Computation of Purchase Price/Form of
Payment . . . . . . . . . . . . . . . . . . . . . . 119
11.4 Closing . . . . . . . . . . . . . . . . . . . . . . 120
11.5 Closing Deliveries . . . . . . . . . . . . . . . . . 121
11.6 Term of Rights . . . . . . . . . . . . . . . . . . . 122
11.7 Covenants of the Non-Managing General
Partner . . . . . . . . . . . . . . . . . . . . . . 122
11.8 Limited Partners' Covenant . . . . . . . . . . . . . 123
ARTICLE XII EJDC Option . . . . . . . . . . . . . . . . . . . . 124
12.1 Grant and Terms of Option . . . . . . . . . . . . . 124
</TABLE>
iii
<PAGE> 232
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE XIII General Provisions . . . . . . . . . . . . . . . . . . . . . 129
13.1 Investment Representations . . . . . . . . . . . . . 129
13.2 Notices . . . . . . . . . . . . . . . . . . . . . . 131
13.3 Successors . . . . . . . . . . . . . . . . . . . . . 131
13.4 Liability of Limited Partners. . . . . . . . . . . . 132
13.5 Effect and Interpretation . . . . . . . . . . . . . 132
13.6 Counterparts . . . . . . . . . . . . . . . . . . . . 132
13.7 Partners Not Agents . . . . . . . . . . . . . . . . 132
13.8 Entire Understanding; Etc. . . . . . . . . . . . . . 132
13.9 Severability . . . . . . . . . . . . . . . . . . . . 133
13.10 Trust Provision . . . . . . . . . . . . . . . . . . 133
13.11 Pronouns and Headings . . . . . . . . . . . . . . . 133
13.12 Non-Effect on Certain Limited Partners . . . . . . . 133
13.13 Assurances . . . . . . . . . . . . . . . . . . . . . 134
</TABLE>
iv
<PAGE> 233
FIFTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
DEBARTOLO REALTY PARTNERSHIP, L.P.
--------------------------------------------------------
THIS FIFTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT,
dated as of _________, 1996, is made by and among DeBartolo Realty Corporation,
an Ohio corporation having an office at 7620 Market Street, Youngstown, Ohio
44513, as general partner (the "Managing General Partner"), Simon Property
Group, Inc., a Maryland corporation having an office at Merchant's Plaza, 115
West Washington Street, Indianapolis, Indiana 46204, as non-managing general
partner (the "Non-Managing General Partner"), and those parties who have
executed this Agreement as limited partners and whose names and addresses are
set forth on Exhibit A hereto as Limited Partners (the "Limited Partners").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, DeBartolo Realty Partnership, L.P., a Delaware
limited partnership (the "Partnership"), was organized on November 18, 1993,
and a Certificate in respect of the Partnership was filed in the office of the
Secretary
<PAGE> 234
2
of State of the State of Delaware. The Limited Partnership Agreement was last
amended and restated by instrument dated April 21, 1994; and
WHEREAS, Day Acquisition Corp., an Ohio corporation which was
formed as a wholly-owned subsidiary of the Non-Managing General Partner on
_________, 1996, merged into the Managing General Partner on March __, 1996,
which Managing General Partner was the surviving corporation after giving
effect to the transactions completed on that date pursuant to the Merger
Agreement and Plan of Merger among the Non- Managing General Partner, Day
Acquisition Corp. and the Managing General Partner dated March __, 1996 (the
"Merger Agreement"); and
WHEREAS, the parties hereto wish to provide for the further
amendment and restatement of the Agreement of Limited Partnership of the
Partnership, as heretofore amended and restated, to allow for the admission of
the Non-Managing General Partner and certain Limited Partners and to make
various other changes provided for below; and
WHEREAS, the persons whose names appear on Exhibit A hereto as
Limited Partners consist of the existing
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limited partners in the Partnership and certain of the existing limited
partners of Simon Property Group, L.P., a Delaware limited partnership ("Simon,
L.P."), it being understood that such limited partners of Simon, L.P., in
exchange for the contribution to the Partnership of their interests in Simon,
L.P., are becoming Limited Partners in the Partnership; and
WHEREAS, concurrently with the execution hereof, the
Non-Managing General Partner is contributing to the Partnership a portion of
its interests in Simon, L.P., as set forth on Exhibit A, in exchange for its
interest as non-managing general partner of the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound, hereby agree that the Agreement of
Limited Partnership of the Partnership, as heretofore amended and restated, is
hereby amended and restated in its entirety to read as follows:
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4
ARTICLE I
DEFINITIONS; ETC.
-----------------
1.1 DEFINITIONS. Except as otherwise herein expressly
provided, the following terms and phrases shall have the meanings set forth
below or in the preamble to this Agreement set forth above:
"ACCOUNTANTS" shall mean the firm or firms of independent
certified public accountants selected by the Managing General Partner from time
to time on behalf of the Partnership to audit the books and records of the
Partnership and to prepare and certify statements and reports in connection
therewith.
"ACT" shall mean the Revised Uniform Limited Partnership Act
as enacted in the State of Delaware, as the same may hereafter be amended from
time to time.
"ADDITIONAL UNITS" shall have the meaning set forth in Section
9.4 hereof.
"ADJUSTMENT DATE" shall have the meaning set forth in Section
4.3(b) hereof.
"ADMINISTRATIVE EXPENSES" shall mean (i) all administrative
and operating costs and expenses incurred by
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the Partnership, and (ii) those administrative costs and expenses and
accounting and legal expenses incurred by the Managing General Partner or the
Non-Managing General Partner on behalf or for the benefit of the Partnership.
"AFFECTED GAIN" shall have the meaning set forth in Section
6.1(g) hereof.
"AFFILIATE" shall mean, with respect to any Partner (or as to
any other Person the affiliates of whom are relevant for purposes of any of the
provisions of this Agreement), (i) any member of the Immediate Family of such
Partner or Person; (ii) any partner, trustee, beneficiary or shareholder of
such Partner or Person; (iii) any legal representative, successor or assignee
of any Person referred to in the preceding clauses (i) and (ii); (iv) any
trustee or trust for the benefit of any Person referred to in the preceding
clauses (i) through (iii); or (v) any Entity which, directly or indirectly
through one or more intermediaries, Controls, is Controlled by, or is under
common Control with, such Partner or any Person referred to in the preceding
clauses (i) through (iv).
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6
"AFFILIATE FINANCING" shall mean financing or refinancing
obtained from a Partner or an Affiliate of a Partner by the Partnership.
"AGREEMENT" shall mean this Fifth Amended and Restated Limited
Partnership Agreement, as originally executed and as amended, modified,
supplemented or restated from time to time, as the context requires.
"AMORTIZATION REQUIREMENTS" shall have the meaning set forth
in Section 12.1(d) hereof.
"BANKRUPTCY" shall mean, with respect to any Partner, (i) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code or any other federal or
state law relating to insolvency, bankruptcy or reorganization, (ii) an
adjudication that such Partner is insolvent or bankrupt, (iii) the entry of an
order for relief under the federal Bankruptcy Code with respect to such
Partner, (iv) the filing of any such petition or the commencement of any such
case or proceeding against such Partner, unless such petition and the case or
proceeding initiated thereby are dismissed within ninety (90) days from the
date of such filing, (v) the
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7
filing of an answer by such Partner admitting the allegations of any such
petition, (vi) the appointment of a trustee, receiver or custodian for all or
substantially all of the assets of such Partner unless such appointment is
vacated or dismissed within ninety (90) days from the date of such appointment
but not less than five (5) days before the proposed sale of any assets of such
Partner, (vii) the execution by such Partner of a general assignment for the
benefit of creditors, (viii) the convening by such Partner of a meeting of its
creditors, or any class thereof, for purposes of effecting a moratorium upon or
extension or composition of its debts, (ix) the failure of such Partner to pay
its debts as they mature, (x) the levy, attachment, execution or other seizure
of substantially all of the assets of such Partner where such seizure is not
discharged within thirty (30) days thereafter, or (xi) the admission by such
Partner in writing of its inability to pay its debts as they mature or that it
is generally not paying its debts as they become due.
"CAPITAL ACCOUNT" shall have the meaning set forth in Section
4.8(a) hereof.
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8
"CAPITAL CONTRIBUTION" shall mean, with respect to any
Partner, the amount of money and the initial Gross Asset Value of any property
other than money contributed to the Partnership with respect to the Partnership
Units held by such Partner (net of liabilities secured by such property which
the Partnership assumes or takes subject to).
"CERTIFICATE" shall mean the Certificate of Limited
Partnership establishing the Partnership, as filed with the office of the
Delaware Secretary of State on November 18, 1993, as it has or may hereafter be
amended from time to time in accordance with the terms of this Agreement and
the Act.
"CHARTER" shall mean the articles of incorporation of a
General Partner and all amendments, supplements and restatements thereof.
"CLOSING PRICE" on any date shall mean the last sale price per
share, regular way, of the Shares or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, of the
Shares in either case as reported in the principal consolidated transaction
reporting system with respect to securities
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9
listed or admitted to trading on the New York Stock Exchange or, if the Shares
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Shares are listed or admitted to trading or, if the Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the- counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System for the Shares or, if
such system is no longer in use, the principal other automated quotations
system that may then be in use or, if the Shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Shares as such Person is
selected from time to time by the Board of Directors of the Non-Managing
General Partner.
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10
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, or any corresponding provisions of succeeding law.
"COMPUTATION DATE" shall have the meaning set forth in Section
11.3 hereof.
"CONSENT OF THE DEBARTOLOS" shall mean consent of those
Limited Partners who are "DeBartolos" as defined herein. ________ DeBartolo
(the "DeBartolo Designee") is hereby granted authority by those Limited
Partners who are DeBartolos to grant or withhold consent on behalf of the
DeBartolos whenever the Consent of the DeBartolos is required hereunder. The
DeBartolos shall have the right, from time to time, by written notice to the
Partnership signed by DeBartolos who hold in the aggregate more than fifty
percent (50%) of the Partnership Units then held by the DeBartolos, to
substitute a new Person as the DeBartolo Designee for the Person who is then
acting as such. The Partnership, the Partners and all Persons dealing with the
Partnership shall be fully protected in relying on any written consent of the
DeBartolos which is executed by the Person who is then acting as the DeBartolo
Designee. In the
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11
event that at any time there is no DeBartolo Designee, the consent of the
DeBartolos shall be given by those DeBartolos who hold in the aggregate more
than fifty percent (50%) of the Partnership Units then held by the DeBartolos.
"CONSENT OF THE LIMITED PARTNERS" shall mean the written
consent of a Majority-In-Interest of the Limited Partners, which consent shall
be obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by a Majority-In-Interest of the Limited
Partners, unless otherwise expressly provided herein, in their sole and
absolute discretion. Whenever the Consent of the Limited Partners is sought by
a General Partner, the request for such consent, outlining in reasonable detail
the matter or matters for which such consent is being requested, shall be
submitted to all of the Limited Partners, and each Limited Partner shall have
at least 15 days to act upon such request.
"CONSENT OF THE SIMONS" shall mean consent of those Limited
Partners who are "Simons" as defined herein. David Simon (the "Simon
Designee") is hereby granted authority by those Limited Partners who are Simons
to grant
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12
or withhold consent on behalf of the Simons whenever the Consent of the Simons
is required hereunder. The Simons shall have the right from time to time, by
written notice to the Partnership signed by Simons who hold in the aggregate
more than fifty percent (50%) of the Partnership Units then held by the Simons,
to substitute a new Person as the Simon Designee for the Person who is then
acting as such. The Partnership, the Partners and all Persons dealing with the
Partnership shall be fully protected in relying on any written consent of the
Simons which is executed by the Person who is then acting as the Simon
Designee. In the event that at any time there is no Simon Designee, the
Consent of the Simons shall be given by those Simons who hold in the aggregate
more than fifty percent (50%) of the Partnership Units then held by the Simons.
"CONTRIBUTED FUNDS" shall have the meaning set forth in
Section 4.3(b) hereof.
"CONTRIBUTED GENERAL PARTNER INTEREST" shall mean Partnership
Units and interests in the profits of Simon, L.P. contributed by the
Non-Managing General Partner pursuant to the Contribution Agreement.
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13
"CONTRIBUTED LIMITED PARTNER INTERESTS" shall mean Partnership
Units in Simon, L.P. contributed by the Limited Partners to the Partnership
pursuant to the Contribution Agreement.
"CONTRIBUTION AGREEMENT" shall mean the Agreement dated ______
between the Partnership and the several partners of Simon, L.P. pursuant to
which such partners agree to contribute their partnership interests in Simon,
L.P., or portions thereof, to the Partnership in exchange for Units.
"CONTRIBUTION DATE" shall have the meaning set forth in
Section 9.4 hereof.
"CONTROL" shall mean the ability, whether by the direct or
indirect ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a corporation, to select the
managing partner of a partnership, or otherwise to select, or have the power to
remove and then select, a majority of those Persons exercising governing
authority over an Entity. In the case of a limited partnership, the sole
general partner, all of the general partners to the extent each has equal
management
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14
control and authority, or the managing general partner or managing general
partners thereof shall be deemed to have control of such partnership and, in
the case of a trust, any trustee thereof or any Person having the right to
select or remove any such trustee shall be deemed to have control of such
trust.
"COVERED SALE" shall have the meaning set forth in Section
6.2(d) hereof.
"CURRENT PER SHARE MARKET PRICE" on any date shall mean the
average of the Closing Price for the five consecutive Trading Days ending on
such date.
"DEBARTOLO GROUP LIMITED PARTNERS" shall mean, collectively,
(i) EJDC, an Ohio corporation or any successor to EJDC by merger or corporate
reorganization, (ii) the Estate of Edward J. DeBartolo, Edward J. DeBartolo
Jr., Marie Denise DeBartolo York, their children and trusts created for the
benefit of descendants of Edward J. DeBartolo and (iii) the Affiliates of the
foregoing.
"DEBARTOLOS" shall mean the Estate of Edward J. DeBartolo,
Edward J. DeBartolo, Jr., Marie Denise DeBartolo York and other members of the
Immediate Family of any of the
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15
foregoing, any other lineal descendants of any of the foregoing, any trusts
established for the benefit of any of the foregoing, and any other Entity
Controlled by any one or more of the foregoing.
"DEEMED PARTNERSHIP UNIT VALUE" as of any date shall mean the
Current Per Share Market Price as of the Trading Day immediately preceding such
date; PROVIDED, HOWEVER, that Deemed Partnership Unit Value shall be adjusted
as described in Section 11.7(d) hereof in the event of any stock dividend,
stock split, stock distribution or similar transaction.
"DEPRECIATION" shall mean for each Partnership Fiscal Year or
other period, an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable under the Code with respect to a Partnership asset
for such year or other period, except that if the Gross Asset Value of a
Partnership asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be
an amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other
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16
cost recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.
"DEVELOPMENT LAND" shall mean any vacant land suitable for
development as a Project.
"DIRECTORS" shall mean the Board of Directors of the
Non-Managing General Partner.
"EFFECTIVE TIME" shall have the meaning set forth in the
Merger Agreement.
"EJDC" shall mean The Edward J. DeBartolo Corporation, an Ohio
corporation.
"EJDC LENDER" shall mean the Persons described as lenders in
Exhibit F.
"EJDC LOAN TRANSACTION" shall mean the loans documented in
Exhibit F.
"EJDC OPTION" shall have the meaning set forth in Section 12.1
hereof.
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17
"EJDC OPTION TERMINATION DATE" shall have the meaning set
forth in Section 12.1(e) hereof.
"ENTITY" shall mean any general partnership, limited
partnership, limited liability company, limited liability partnership,
corporation, joint venture, trust, business trust, cooperative or association.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"EXERCISE NOTICE" shall have the meaning set forth in Section
11.1 hereof.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"GENERAL PARTNER" shall mean the Managing General Partner, the
Non-Managing General Partner and their respective duly admitted successors and
assigns and any other Person who is a general partner of the Partnership at the
time of reference thereto.
"GROSS ASSET VALUE" shall have the meaning set forth in
Section 4.8(b) hereof.
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18
"GROSS INCOME" shall mean the income of the Partnership
determined pursuant to Section 61 of the Code before deduction of items of
expense or deduction.
"IMMEDIATE FAMILY" shall mean, with respect to any Person,
such Person's spouse, parents, parents-in-law, descendants by blood or
adoption, nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law
and children-in-law (in each case by whole or half-blood).
"INCURRENCE" shall have the meaning set forth in Section
10.5(a) hereof.
"INDEPENDENT DIRECTORS" shall mean members of the Board of
Directors of the Non-Managing General Partner who are neither employed by the
Non-Managing General Partner nor a member (or an Affiliate of a member) of the
Simons.1
"INITIAL EJDC NOTICE" shall have the meaning set forth in
Section 12.1(a) hereof.
__________________________________
1 In the event the requisite stockholder approval is obtained to amend the
Charter of Simon-DeBartolo Group, Inc. to provide for a 13-person board,
directors elected by the DeBartolo holders of Class C Common Stock will also be
excluded from the definition of Independent Directors.
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19
"INSTITUTIONAL INVESTORS" shall have the meaning set forth in
Rule 501(a)(1)-(3), (7) and (8) of Regulation D promulgated under the
Securities Act.
"INSTITUTIONAL LENDER" shall mean a commercial bank or trust
company, a savings and loan association or an insurance company.
"JCP" shall mean JCP Realty, Inc., a Delaware corporation, or
any of its Affiliates that becomes a Limited Partner hereunder and that is an
"accredited investor" as defined in Regulation D under the Securities Act, as
amended.
"JCP LIMITED PARTNER" shall mean JCP, in its capacity as a
Limited Partner hereunder.
"JCP PROPERTY LIABILITIES" means any liabilities encumbering
the assets of Treasure Coast-JCP Associates, Ltd., Pinellas Square Associates,
Melbourne-JCP Associates, Ltd., Boynton-JCP Associates, Ltd., Chesapeake-JCP
Associates, Ltd., Mall of the Mainland Associates, L.P., Port Charlotte-JCP
Associates and Northfield Center Limited Partnership and any liability of the
Partnership with respect to which JCP has incurred the "economic risk of
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20
loss" within the meaning of Treasury Regulation Section 1.752-2.
"LIEN" shall mean any liens, security interests, mortgages,
deeds of trust, charges, claims, encumbrances, restrictions, pledges, options,
rights of first offer or first refusal and any other rights or interests of
others of any kind or nature, actual or contingent, or other similar
encumbrances of any nature whatsoever.
"LIMITED PARTNER LIABILITY" shall mean, with respect to each
Limited Partner, each liability (or portion thereof) included in the basis of
such Limited Partner (other than as an "excess nonrecourse liability" within
the meaning of Regulations Section 1.752-3(a)(3)) for federal income tax
purposes.
"LIMITED PARTNERS" shall mean those Persons whose names are
set forth on Exhibit A hereto as Limited Partners, their permitted successors
or assigns as limited partners hereof, and/or any Person who, at the time of
reference thereto, is a limited partner of the Partnership.
"LIQUIDATING AGENT" shall mean such Person as is selected as
the Liquidating Agent hereunder by the Managing General Partner, which Person
may include the Managing
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21
General Partner or an Affiliate of the Managing General Partner, provided such
Liquidating Agent agrees in writing to be bound by the terms of this Agreement.
The Liquidating Agent shall be empowered to give and receive notices, reports
and payments in connection with the dissolution, liquidation and/or winding-up
of the Partnership and shall hold and exercise such other rights and powers as
are necessary or required to permit all parties to deal with the Liquidating
Agent in connection with the dissolution, liquidation and/or winding-up of the
Partnership.
"LIQUIDATION TRANSACTION" shall mean any sale of assets of the
Partnership in contemplation of, or in connection with, the liquidation of the
Partnership.
"LOSSES" shall have the meaning set forth in Section 6.1(a)
hereof.
"MAJOR DECISIONS" shall have the meaning set forth in Section
7.3(b) hereof.
"MAJORITY-IN-INTEREST OF THE LIMITED PARTNERS" shall mean
Limited Partner(s) who hold in the aggregate more than fifty percent (50%) of
the Partnership Units then held by all the Limited Partners, as a class
(excluding any
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22
Partnership Units or Preferred Units held by the Non-Managing General Partner
or by the Managing General Partner or any Person Controlled by or any Person
holding as nominee for either of such Partners).
"MANAGING GENERAL PARTNER" shall mean the DeBartolo Realty
Corporation, an Ohio corporation.
"MINIMUM GAIN" shall have the meaning set forth in Section
6.1(d)(1) hereof.
"MINIMUM GAIN CHARGEBACK" shall have the meaning set forth in
Section 6.1(d)(1) hereof.
"NET FINANCING PROCEEDS" shall mean the cash proceeds received
by the Partnership in connection with any borrowing by or on behalf of the
Partnership (whether or not secured), or distributed to the Partnership in
respect of any such borrowing by any Subsidiary Entity, after deduction of all
costs and expenses incurred by the Partnership in connection with such
borrowing, and after deduction of that portion of such proceeds used to repay
any other indebtedness of the Partnership, or any interest or premium thereon.
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23
"NET OPERATING CASH FLOW" shall mean, with respect to any
fiscal period of the Partnership, the aggregate amount of all cash received by
the Partnership from any source for such fiscal period (including Net Sale
Proceeds and Net Financing Proceeds), less the aggregate amount of all expenses
or other amounts paid with respect to such period and such additional cash
reserves as of the last day of such period as the Managing General Partner
deems necessary for any capital or operating expenditure permitted hereunder.
"NET SALE PROCEEDS" shall mean the cash proceeds received by
the Partnership in connection with a sale of any asset by or on behalf of the
Partnership or a sale of any asset by or on behalf of any Subsidiary Entity,
after deduction of any costs or expenses incurred by the Partnership, or
payable specifically out of the proceeds of such sale (including, without
limitation, any repayment of any indebtedness required to be repaid as a result
of such sale or which the Managing General Partner elects to repay out of the
proceeds of such sale, together with accrued interest and premium, if any,
thereon and any sales commissions or
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24
other costs and expenses due and payable to any Person in connection with a
sale).
"NON-MANAGING GENERAL PARTNER" shall mean the Simon Property
Group, Inc., a Maryland corporation.
"NONRECOURSE LIABILITIES" shall have the meaning set forth in
Section 6.1(d)(1) hereof.
"OFFERED UNITS" shall mean the Partnership Units of a Limited
Partner identified in an Exercise Notice which, pursuant to the exercise of
Rights, are to be acquired by the Non-Managing General Partner under the terms
hereof.
"OWNERSHIP LIMIT" shall have the meaning set forth in Article
Ninth of the Charter of the Non-Managing General Partner.
"PARTNER NONRECOURSE DEBT" shall have the meaning set forth in
Section 6.1(d)(2) hereof.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning
set forth in Section 6.1(d)(2) hereof.
"PARTNER NONRECOURSE DEDUCTION" shall have the meaning set
forth in Section 6.1(d)(2) hereof.
"PARTNERS" shall mean the Managing General Partner, the
Non-Managing General Partner and the Limited
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25
Partners, their duly admitted successors or assigns or any Person who is a
partner of the Partnership at the time of reference thereto.
"PARTNERSHIP" shall mean the limited partnership hereby
constituted, as such limited partnership may from time to time be constituted.
"PARTNERSHIP FISCAL YEAR" shall mean the calendar year.
"PARTNERSHIP INTEREST" shall mean the interest of a Partner in
the Partnership.
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set forth in
Section 1.704-2(b)(2) of the Regulations.
"PARTNERSHIP UNITS" OR "UNITS" shall mean the interest in the
Partnership of any Partner which entitles a Partner to the allocations (and
each item thereof) specified in Section 6.1(a) hereof and all distributions
from the Partnership, and its rights of management, consent, approval, or
participation, if any, as provided in this Agreement. Partnership Units do not
include Preferred Units. Each Partner's percentage of ownership interest in
the Partnership shall be determined by dividing the number
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26
of Partnership Units then owned by each Partner by the total number of
Partnership Units then outstanding. The initial number of Partnership Units
held by each Partner at the date hereof is as set forth opposite its name on
attached Exhibit A.
"PAYMENT PERIOD" shall have the meaning set forth in Section
12.1(a) hereof.
"PERSON" shall mean any individual or Entity.
"PLEDGE" shall mean granting of a Lien on a Partnership
Interest.
"POST-EXCHANGE DISTRIBUTION" shall have the meaning set forth
in Section 6.2(a) hereof.
"PREFERRED CONTRIBUTED FUNDS" shall have the meaning set forth
in Section 4.3(e) hereof.
"PREFERRED DISTRIBUTION REQUIREMENT" shall have the meaning
set forth in Section 4.3(e) hereof.
"PREFERRED DISTRIBUTION SHORTFALL" shall have the meaning set
forth in Section 6.2(b)(i) hereof.
"PREFERRED REDEMPTION AMOUNT" shall mean, with respect to any
class or series of Preferred Units, the sum of (i) the amount of any
accumulated Preferred Distribution
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27
Shortfall with respect to such class or series of Preferred Units, (ii) the
Preferred Distribution Requirement to the date of redemption and (iii) the
Preferred Redemption Price indicated in the Preferred Unit Designation with
respect to such class or series of Preferred Units.
"PREFERRED REDEMPTION PRICE" shall have the meaning set forth
in Section 4.3(e) hereof.
"PREFERRED SHARES" shall mean any class of equity securities
of the Non-Managing General Partner now or hereafter authorized or
reclassified, other than the Shares or the Excess Stock, having dividend rights
that are superior or prior to dividends payable on the Shares.
"PREFERRED UNIT DESIGNATION" shall have the meaning set forth
in Section 4.3(e) hereof.
"PREFERRED UNIT ISSUE PRICE" shall mean the amount of the
Required Funds contributed or deemed to have been contributed by the
Non-Managing General Partner in exchange for a Preferred Unit.
"PREFERRED UNITS" shall mean interests in the Partnership
issued to the Non-Managing General Partner pursuant to Section 4.3(c) hereof.
Holders of Preferred
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28
Units shall have such rights to the allocations of Profits and Losses as
specified in Section 6.1 hereof and to distributions pursuant to Section 6.2
hereof, but shall not, by reason of ownership of such Preferred Units, be
entitled to participate in the management of the Partnership or to consent to
or approve any action which is required by the Act or this Agreement to be
approved by any or all of the Partners.
"PRINCIPAL GROUP" shall mean, as of any date, a Limited
Partner, or two or more Limited Partners which are Affiliates, and which
individually or collectively own 5% or more of the Partnership Units
outstanding as of such date.
"PRINCIPAL GROUP REPRESENTATIVE" shall mean, as of any date,
the designated representative of any Principal Group.
"PROFITS" shall have the meaning set forth in Section 6.1(a)
hereof.
"PROJECT" shall mean any property that is or is planned to be
used primarily for retail purposes, and shall include, but is not limited to, a
regional mall, community
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29
shopping center, specialty retail center and a mixed-use property which
contains a major retail component.
"PROPERTY OR PROPERTIES" shall mean any Development Land or
Project in which the Partnership acquires ownership of (a) the fee or leasehold
interest or (b) an indirect interest through any other partnership or other
Entity in the fee or leasehold interest.
"PURCHASE PRICE" shall have the meaning set forth in Section
11.3 hereof.
"QUALIFIED REIT SUBSIDIARIES" shall have the meaning set forth
in Section 856(i)(2) of the Code.
"REGISTRATION RIGHTS AGREEMENTS" shall mean the agreements, in
effect as of the Effective Time, among the Non-Managing General Partner,
certain of its stockholders and certain holders of Units.
"REGULATIONS" shall mean the final, temporary or proposed
Income Tax Regulations promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
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30
"REGULATORY ALLOCATION" shall have the meaning set forth in
Section 6.1(d)(5) hereof.
"REIT" shall mean a real estate investment trust as defined in
Section 856 of the Code.
"REIT EXPENSES" shall mean (i) costs and expenses relating to
the formation and continuity of existence of the Managing General Partner and
the Non-Managing General Partner and their respective subsidiaries, including
taxes, fees and assessments associated therewith, and any and all costs,
expenses or fees payable to any director or trustee of the Managing General
Partner, the Non-Managing General Partner or such subsidiaries, (ii) costs and
expenses relating to any offer or registration of securities by the General
Partner or the Non- Managing General Partner and all statements, reports, fees
and expenses incidental thereto, including underwriting discounts, selling
commissions and placement fees applicable to any such offer of securities
(PROVIDED, HOWEVER, that in the case of any registration of securities
effectuated by the Managing General Partner or the Non-Managing General Partner
on behalf of one or more of its security holders, REIT Expenses shall not
include
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31
underwriting discounts or selling commissions), (iii) costs and expenses
associated with the preparation and filing of any periodic reports by the
Managing General Partner or the Non-Managing General Partner under federal,
state or local laws or regulations, including tax returns and filings with the
SEC and any stock exchanges on which the Shares are listed, (iv) costs and
expenses associated with compliance by the Managing General Partner or the
Non-Managing General Partner with laws, rules and regulations promulgated by
any regulatory body, including the SEC, (v) costs and expenses associated with
any 401(k) Plan, incentive plan, bonus plan or other plan providing for
compensation for the employees of the Managing General Partner, the
Non-Managing General Partner or Simon Property Group (Delaware), Inc., and (vi)
all operating, administrative and other costs incurred by the Managing General
Partner or the Non-Managing General Partner (including attorney's and
accountant's fees, income and franchise taxes and salaries paid to officers of
the Managing General Partner or the Non-Managing General Partner, but excluding
costs of any repurchase by the General Partners of any of their securities);
PROVIDED,
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HOWEVER, that amounts described herein shall be considered REIT Expenses
hereunder only if and to the extent the aggregate amount of such expenses
incurred during the fiscal year in question and during all prior fiscal years
exceeds the aggregate of all amounts distributed or distributable to the
Managing General Partner or the Non-Managing General Partner by any subsidiary
thereof (including, without limitation, in the case of the Non-Managing General
Partner, by Simon Property (Delaware), Inc.) other than the Partnership or
Simon, L.P., as appropriately apportioned between the Partnership and Sunny,
L.P., during such fiscal years.
"REIT REQUIREMENTS" shall mean all actions or omissions as may
be necessary (including making appropriate distributions from time to time) to
permit the Managing General Partner and the Non-Managing General Partner to
qualify or continue to qualify as real estate investment trusts within the
meaning of Section 856 ET SEQ. of the Code, as such provisions may be amended
from time to time, or corresponding provisions of succeeding law.
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33
"RELATED ISSUE" shall mean, with respect to a class or series
of Preferred Units, the class or series of Preferred Shares the sale of which
provided the Non-Managing General Partner with the proceeds to contribute to
the Partnership.
"REQUIRED FUNDS" shall have the meaning set forth in Section
4.3(a) hereof.
"RESPONSE NOTE" shall have the meaning set forth in Section
12.1(b).
"RIGHTS" shall have the meaning set forth in Section 11.1
hereof.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHARES" shall mean the shares of Common Stock, par value
$.0001 per share, of the Non-Managing General Partner.
"SIMONS" shall mean Melvin Simon, Herbert Simon and David
Simon, other members of the Immediate Family of any of the foregoing, any other
lineal descendants of any of
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34
the foregoing, any trusts established for the benefit of any of the foregoing,
and any other Entity Controlled by any one or more of the foregoing.
"SUBSEQUENT EJDC NOTICE" shall have the meaning set forth in
Section 12.1(c) hereof.
"SUBSIDIARY ENTITY" shall mean any Entity in which the
Partnership owns a direct or indirect equity interest.
"SUBSIDIARY PARTNERSHIP" shall mean any partnership in which
the Partnership owns a direct or indirect equity interest.
"SUBSTITUTED LIMITED PARTNER" shall have the meaning set forth
in the Act.
"TAX MATTERS PARTNER" shall have the meaning set forth in
Section 6.7 hereof.
"THIRD PARTY" or "THIRD PARTIES" shall mean a Person or
Persons who is or are neither a Partner or Partners nor an Affiliate or
Affiliates of a Partner or Partners.
"THIRD PARTY FINANCING" shall mean financing or refinancing
obtained from a Third Party by the Partnership.
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35
"TRADING DAY" shall mean a day on which the principal national
securities exchange on which the Shares are listed or admitted to trading is
open for the transaction of business or, if the Shares are not listed or
admitted to trading on any national securities exchange, shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive order to
close.
"TRANSFER" means any assignment, sale, transfer, conveyance or
other disposition or act of alienation (other than a Pledge), whether voluntary
or involuntary, or by operation of law.
1.2 EXHIBIT, ETC. References to "Exhibit" are, unless
otherwise specified, to one of the Exhibits attached to this Agreement, and
references to an "Article" or a "Section" are, unless otherwise specified, to
one of the Articles or Sections of this Agreement. Each Exhibit attached
hereto and referred to herein is hereby incorporated herein by reference.
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36
ARTICLE II
ORGANIZATION
------------
2.1 CONTINUATION. The parties hereto do hereby agree to
continue the Partnership as a limited partnership pursuant to the provisions of
the Act, and all other pertinent laws of the State of Delaware, for the
purposes and upon the terms and conditions hereinafter set forth. The Partners
agree that the rights and liabilities of the Partners shall be as provided in
the Act except as otherwise herein expressly provided. Promptly upon the
execution and delivery hereof, the Managing General Partner shall cause each
notice, instrument, document, or certificate as may be required by applicable
law, and which may be necessary to enable the Partnership to continue to
conduct its business, and to own its properties, under the Partnership name, to
be filed or recorded in all appropriate public offices. Upon request of the
Managing General Partner, the Partners shall execute any assumed or fictitious
name, certificate or certificates required by law to be filed in connection
with the Partnership. The Managing General Partner shall properly cause the
execution and delivery of such additional
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37
documents and shall perform such additional acts consistent with the terms of
this Agreement as may be necessary to comply with the requirements of law for
the continued operation of a limited partnership under the laws of the State of
Delaware (it being understood that the Managing General Partner shall be
required to provide the Non-Managing General Partner and Limited Partners with
copies of any amended Certificates of Limited Partnership required to be filed
under such laws only upon request) and for the continued operation of a limited
partnership in each other jurisdiction in which the Partnership shall conduct
business.
2.2 NAME. The name of the Partnership is hereby changed
to Simon-DeBartolo Group, L.P., and henceforth all business of the Partnership
shall be conducted under the name of Simon-DeBartolo Group, L.P. or such other
name as the Managing General Partner may select; PROVIDED, HOWEVER, that the
Managing General Partner may not choose the name (or any derivative thereof) of
any Limited Partner (other than the names "DeBartolo" or "Simon") without the
prior written consent of such Limited Partner. All transactions
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38
of the Partnership, to the extent permitted by applicable law, shall be carried
on and completed in such name (it being understood that the Partnership may
adopt assumed or fictitious names in certain jurisdictions).
2.3 CHARACTER OF THE BUSINESS. The purpose of the
Partnership is and shall be to acquire, hold, own, sell, transfer, encumber,
convey, exchange, and otherwise dispose of or deal with the Properties and any
other real and personal property of all kinds; to undertake such other
activities as may be necessary, advisable, desirable or convenient to the
business of the Partnership; and to engage in such other ancillary activities
as shall be necessary or desirable to effectuate the foregoing purposes. The
Partnership shall have all powers necessary or desirable to accomplish the
purposes enumerated. In connection with the foregoing, but subject to all of
the terms, covenants, conditions and limitations contained in this Agreement
and any other agreement entered into by the Partnership, the Partnership shall
have full power and authority to enter into, perform, and carry out contracts
of any kind, to borrow or lend money and to issue evidences of indebtedness,
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39
whether or not secured by mortgage, trust deed, pledge or other Lien and,
directly or indirectly, to acquire and construct additional Properties
necessary or useful in connection with its business.
2.4 LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. The
location of the principal place of business of the Partnership shall be at
__________________________________ or such other location as shall be selected
from time to time by the Managing General Partner in its sole discretion;
PROVIDED, HOWEVER, that the Managing General Partner shall promptly notify the
Partners of any change in the location of the principal place of business of
the Partnership.
2.5 REGISTERED AGENT AND REGISTERED OFFICE. The
Registered Agent of the Partnership shall be The Prentice-Hall Corporation
System, Inc. or such other Person as the Managing General Partner may select in
its sole discretion. The Registered Office of the Partnership in the State of
Delaware shall be c/o Prentice-Hall Corporation System, Inc., 32 Loockerman
Square, Suite L-100, Dover, DE 19901, or such other location as the Managing
General Partner may select in its sole and absolute discretion. The Managing
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40
General Partner shall promptly notify the Partners of any change in the
Registered Agent or Registered Office of the Partnership.
ARTICLE III
TERM
----
3.1 COMMENCEMENT. The Partnership commenced business as
a limited partnership on November 18, 1993 upon the filing of the Certificate
with the Secretary of State of the State of Delaware.
3.2 DISSOLUTION. The Partnership shall continue until
dissolved and terminated upon the earlier of (i) December 31, 2096, or (ii) the
occurrence of the earliest of the following events:
(a) the dissolution, termination, retirement or
Bankruptcy of the last remaining General Partner unless the Partnership is
continued as provided in Section 9.1 hereof;
(b) the election to dissolve the Partnership made
in writing by the Managing General Partner, but only if
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41
the consent required by Section 7.3 and the consent of the Non-Managing General
Partner are obtained;
(c) the sale or other disposition of all or
substantially all the assets of the Partnership; or
(d) dissolution required by operation of law.
ARTICLE IV
CONTRIBUTIONS TO CAPITAL
------------------------
4.1 GENERAL PARTNER CAPITAL CONTRIBUTIONS.
(a) Simultaneously with the execution and
delivery hereof, the Non-Managing General Partner is contributing to the
Partnership, Simon, L.P. units representing 10.5% of the outstanding Simon,
L.P. units (excluding preferred units) and is contributing to the Partnership a
49.5% interest in the profits of Simon, L.P., both in exchange for a
non-managing general partnership interest in the Partnership with the number of
Units set forth on Exhibit A.
(b) The Non-Managing General Partner shall
hereafter contribute to the capital of the Partnership, in
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42
exchange for Units as provided in Section 4.3(b) hereof, the proceeds of the
sale of any Shares.
4.2 LIMITED PARTNER CAPITAL CONTRIBUTIONS. Concurrently
herewith, the Limited Partners identified on Exhibit A as limited partners of
Simon, L.P. are contributing or causing to be contributed, to the capital of
the Partnership in exchange for Partnership Units, their limited partnership
interests in Simon, L.P. Except as expressly provided in Sections 4.3, 4.4 and
4.5, below, no Partner may make additional contributions to the capital of the
Partnership without the consent of the General Partner.
4.3 ADDITIONAL FUNDS.
(a) The Partnership may obtain funds ("Required
Funds") which it considers necessary to meet the needs, obligations and
requirements of the Partnership, or to maintain adequate working capital or to
repay Partnership indebtedness, and to carry out the Partnership's purposes,
from the proceeds of Third Party Financing or Affiliate Financing, in each case
pursuant to such terms, provisions, and conditions and in such manner
(including the engagement of brokers and/or investment bankers to assist in
providing
<PAGE> 275
43
such financing) and amounts as the Managing General Partner and as the
Non-Managing General Partner shall determine to be in the best interests of the
Partnership, subject to the terms and conditions of this Agreement. Any and
all funds required or expended, directly or indirectly, by the Partnership for
capital expenditures may be obtained or replenished through Partnership
borrowings. Any Third Party Financing or Affiliate Financing obtained by the
General Partners on behalf of the Partnership may be convertible in whole or in
part into Additional Units (to be issued in accordance with Section 9.4
hereof), may be unsecured, may be secured by mortgage(s) or deed(s) of trust
and/or assignments on or in respect of all or any portion of the assets of the
Partnership or any other security made available by the Partnership, may
include or be obtained through the public or private placement of debt and/or
other instruments, domestic and foreign, may include the provision for the
option to acquire Additional Units (to be issued in accordance with Section 9.4
hereof), and may include the acquisition of or provision for interest rate
swaps, credit enhancers and/or other transactions or items in respect of
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44
such Third Party Financing or Affiliate Financing; PROVIDED, HOWEVER, that in
no event may the Partnership obtain any Affiliate Financing or Third Party
Financing that is recourse to any Partner or any Affiliate, partner,
shareholder, beneficiary, principal, officer or director of any Partner without
the consent of the affected Partner and any other Person or Persons to whom
such recourse may be had.
(b) To the extent the Partnership does not borrow
all of the Required Funds (and whether or not the Partnership is able to borrow
all or part of the Required Funds), the Managing General Partner or the
Non-Managing General Partner (or an Affiliate thereof) (i) may itself borrow
such Required Funds, in which case the Managing General Partner or the
Non-Managing General Partner shall lend such Required Funds to the Partnership
on the same economic terms and otherwise on substantially identical terms, or
(ii) may raise such Required Funds in any other manner, in which case, unless
such Required Funds are raised by the Non-Managing General Partner through the
sale of Preferred Shares, the Managing General Partner or the Non-Managing
General Partner shall contribute to the Partnership
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45
as an additional Capital Contribution the amount of the Required Funds so
raised ("Contributed Funds") (hereinafter, each date on which the Managing
General Partner or the Non-Managing General Partner so contributes Contributed
Funds pursuant to this paragraph (b) is referred to as an "Adjustment Date").
Any Required Funds raised from the sale of Preferred Shares shall be
contributed to the Partnership as Contributed Funds pursuant to Section 4.3(e),
below. In the event the Managing General Partner or the Non-Managing General
Partner advance Required Funds to the Partnership pursuant to this paragraph
(b), then the Partnership shall assume and pay (or reflect on its books as
additional Required Funds) the expenses (including any applicable underwriting
discounts) incurred by the Managing General Partner or the Non-Managing General
Partner (or such Affiliate) in connection with raising such Required Funds
through a public offering of its securities or otherwise. If the Managing
General Partner or the Non-Managing General Partner advances Required Funds to
the Partnership as Contributed Funds pursuant to this paragraph (b), additional
Partnership Units shall be issued to the Managing General
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46
Partner or the Non-Managing General Partner to reflect its contribution of the
Contributed Funds. The number of Partnership Units so issued shall be
determined by dividing the amount of Contributed Funds by the Deemed
Partnership Unit Value, computed as of the Trading Day immediately preceding
the Adjustment Date. The Managing General Partner or the Non-Managing General
Partner shall promptly give each Limited Partner written notice of the number
of Partnership Units so issued.
(c) With respect to the making of a loan to the
Partnership by the Managing General Partner or the Non-Managing General Partner
which (i) is in the aggregate principal amount of at least $20 million and (ii)
which, by its terms, is to mature in more than 12 months (or which is to mature
in less than 12 months but is subject to extension solely at the discretion of
the lender, which extension shall cause the loan to mature in more than 12
months), the Managing General Partner shall give each Principal Group
Representative not less than 20 days prior written notice of each Funding Date
for each such loan and of the principal amount of such loan to be advanced by
the Managing General
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47
Partner or the Non-Managing General Partner, as the case may be, and each
Limited Partner in any Principal Group shall have the right to provide
simultaneously with the Managing General Partner or the Non-Managing General
Partner, as the case may be, its pro-rata share (computed based upon the number
of Units held by such Limited Partner compared to the total number of Units
then outstanding, computed as of the day immediately preceding such Funding
Date) of such loan on the same terms and conditions. To the extent that any
lending Limited Partner's proportionate share of Units increases or decreases,
as a result of an action taken by the Managing General Partner after such
notice is given but prior to the day immediately preceding such Funding Date,
the Managing General Partner will as promptly as practicable notify such
Limited Partner of its respective revised proportionate share of such loan.
(d) With respect to the making of any additional
Capital Contributions by either the Managing General Partner or the
Non-Managing General Partner, each Limited Partner in any Principal Group
shall, subject to compliance with the notice requirements set forth in the
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48
following sentence, have the right to provide simultaneously with the Managing
General Partner or the Non-Managing General Partner, as the case may be, its
pro-rata share (computed based upon the number of Units held by such Limited
Partner compared to the total number of Units then outstanding, computed as of
the day immediately preceding such Adjustment Date) of the Contributed Funds to
be contributed on any such Adjustment Date on the same terms and conditions as
the Contributed Funds of the Managing General Partner or the Non-Managing
General Partner, as the case may be. Any Limited Partner in a given Principal
Group that, not less than 20 days prior to the next Adjustment Date, has given
written notice (such notice to be valid only until the next Adjustment Date),
to the Managing General Partner and the Non-Managing General Partner of its
intention to make such pro-rata contributions shall have (i) the right to
receive from the Managing General Partner not less than 20 days prior written
notice of the next Adjustment Date for the Contributed Funds and of the amount
of funds to be so contributed and (ii) the right, but not the obligation, to
make a Capital Contribution on or before
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49
such Adjustment Date equal to its pro-rata share of the Contributed Funds, as
described in the preceding sentence. To the extent that any contributing
Limited Partner's proportionate share of Units increases or decreases, as a
result of action taken by the Managing General Partner or the Non-Managing
General Partner, after such notice is given but prior to the date immediately
preceding the Adjustment Date, the Managing General Partner will as promptly as
practicable notify such Limited Partner of its respective revised proportionate
share of the Contributed Funds in question.
(e) In the event the Non-Managing General Partner
contributes to the Partnership as Preferred Contributed Funds any Required
Funds obtained from the sale of Preferred Shares ("Preferred Contributed
Funds"), then the Partnership shall assume and pay (or reflect on its books as
additional Required Funds) the expenses (including any applicable underwriter
discounts) incurred by the Non-Managing General Partner in connection with
raising such Required Funds. In addition, the Non-Managing General Partner
shall be issued Preferred Units of a designated
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50
class or series to reflect its contribution of such funds. Each class or
series of Preferred Units shall be designated by the Non-Managing General
Partner to identify such class or series with the class or series of Preferred
Shares which constitutes the Related Issue. Each class or series of Preferred
Units shall be described in a written document (the "Preferred Unit
Designation") attached as Exhibit B, that shall set forth, in sufficient
detail, the economic rights, including dividend, redemption and conversion
rights and sinking fund provisions, of the class or series of Preferred Units
and the Related Issue. The number of Preferred Units of a class or series
shall be equal to the number of shares of the Related Issue sold. The
Preferred Unit Designation shall provide for such terms for the class or series
of Preferred Units that shall entitle the Non-Managing General Partner to
substantially the same economic rights as the holders of the Related Issue.
Specifically, the Non-Managing General Partner shall receive distributions on
the class or series of Preferred Units pursuant to Section 6.2 equal to the
aggregate dividends payable on the Related Issue at the times such dividends
are paid, together
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51
with any rights to accumulation thereof (the "Preferred Distribution
Requirement"). The Partnership shall redeem the class or series of Preferred
Units for a redemption price per Preferred Unit equal to the redemption price
per share of the Related Issue, exclusive of any accrued unpaid dividends (the
"Preferred Redemption Price") upon the redemption of any shares of the Related
Issue. Each class or series of Preferred Units shall also be converted into
additional Partnership Units at the time and on such economic terms and
conditions as the Related Issue is converted into Shares. Upon the issuance of
any class or series of Preferred Units pursuant to this paragraph, the
Non-Managing General Partner shall provide the Limited Partners with a copy of
the Preferred Unit Designation relating to such class or series.
4.4 STOCK OPTION PLAN. If at any time a stock option
granted by the Partnership in connection with the Stock Option Plan is
exercised in accordance with its terms, and the Partnership chooses not to
acquire any or all of the stock required to satisfy such option through open
market purchases, the Non-Managing General Partner shall, as soon
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52
as practicable after such exercise, sell to the Partnership for use in
satisfying such stock option, at a purchase price equal to the Current Per
Share Market Price on the date such stock option is exercised, the number of
Shares for which such option is exercised (or, if such stock option is to be
satisfied in part through open market purchases, the remaining number of
shares) and the Non-Managing General Partner shall contribute to the capital of
the Partnership, in exchange for additional Partnership Units, an amount equal
to the price paid to the Non- Managing General Partner by the Partnership in
connection with the Partnership's purchase of Shares upon exercise of such
stock option. The number of Partnership Units to be so issued shall be
determined by dividing the amount of such capital contribution by the Deemed
Partnership Unit Value, computed as of the Trading Day immediately preceding
the date of such capital contribution. The Non-Managing General Partner shall
promptly give each Limited Partner written notice of the number of Partnership
Units so issued. The Partnership shall retain the exercise or purchase price
paid by the
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53
holder of such option for the Shares such holder is entitled to receive upon
such exercise.
4.5 DIVIDEND REINVESTMENT PLAN. All amounts received by
the Non-Managing General Partner in respect of its dividend reinvestment plan,
if any, (a) either shall be utilized by the Non-Managing General Partner to
effect open market purchases of its stock, or (b) if the Non-Managing General
Partner elects instead to issue new shares with respect to such amounts, shall
be contributed by the Non- Managing General Partner to the Partnership in
exchange for additional Partnership Units. The number of Partnership Units so
issued shall be determined by dividing the amount of funds so contributed by
the Deemed Partnership Unit Value, computed as of the Trading Day immediately
preceding the date such funds are contributed. The Non-Managing General
Partner shall promptly give each Limited Partner written notice of the number
of Partnership Units so issued.
4.6 NO THIRD PARTY BENEFICIARY. No creditor or other
third party having dealings with the Partnership shall have the right to
enforce the right or obligation of any Partner to make Capital Contributions or
to pursue any other
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54
right or remedy hereunder or at law or in equity, it being understood and
agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners
herein set forth to make Capital Contributions to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or
assigned by the Partnership or pledged or encumbered by the Partnership to
secure any debt or other obligation of the Partnership or of any of the
Partners.
4.7 NO INTEREST; NO RETURN. No Partner shall be entitled
to interest on its Capital Contribution or on such Partner's Capital Account.
Except as provided herein or by law, no Partner shall have any right to
withdraw any part of its Capital Account or to demand or receive the return of
its Capital Contribution from the Partnership.
4.8 CAPITAL ACCOUNTS.
(a) The Partnership shall establish and maintain
a separate capital account ("Capital Account") for
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55
each Partner, including a partner who shall pursuant to the provisions hereof
acquire a Partnership Interest, which Capital Account shall be:
(1) credited with the amount of cash contributed
by such Partner to the capital of the Partnership; the initial Gross
Asset Value (net of liabilities secured by such contributed property
that the Partnership assumes or takes subject to) of any other
property contributed by such Partner to the capital of the
Partnership; such Partner's distributive share of Profits; and any
other items in the nature of income or gain that are allocated to such
Partner pursuant to Section 6.1 hereof, but excluding tax items
described in Regulations Section 1.704-1(b)(4)(i); and
(2) debited with the amount of cash distributed
to such Partner pursuant to the provisions of this Agreement; the
Gross Asset Value (net of liabilities secured by such distributed
property that such Partner assumes or takes subject to) of any
Partnership property distributed to such Partner pursuant to any
provision of this Agreement; the amount
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56
of unsecured liabilities of the Partner assumed by the Partnership;
such Partner's distributive share of Losses; in the case of the
General Partners, payments of REIT Expenses by the Partnership; and
any other items in the nature of expenses or losses that are allocated
to such Partner pursuant to Section 6.1 hereof, but excluding tax
items described in Regulations Section 1.704-1(b)(4)(i).
In the event that any or all of a Partner's Partnership Units
or Preferred Units are transferred within the meaning of Regulations Section
1.704-1(b)(2)(iv)(l), the transferee shall succeed to the Capital Account of
the transferor to the extent that it relates to the Units so transferred.
In the event that the Gross Asset Values of Partnership assets
are adjusted pursuant to Section 4.8(b)(ii) hereof, the Capital Accounts of the
Partners shall be adjusted to reflect the aggregate net adjustments as if the
Partnership sold all of its properties for their fair market values and
recognized gain or loss for federal income tax
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57
purposes equal to the amount of such aggregate net adjustment.
A Limited Partner shall be liable unconditionally to the
Partnership for all or a portion of any deficit in its Capital Account if it so
elects to be liable for such deficit or portion thereof. Such election may be
for either a limited or unlimited amount and may be amended or withdrawn at any
time. The election, and any amendment thereof, shall be made by written notice
to the Managing General Partner delivered 25 days in advance of any such
election (which the Managing General Partner shall promptly upon receipt
deliver copies of to the other Partners) stating that the Limited Partner
elects to be liable, and specifying the limitations, if any, on the maximum
amount or duration of such liability. Said election, or amendment thereof,
shall be effective only from the date 25 days after the written notice is
received by the Managing General Partner, and shall terminate upon the date, if
any, specified therein as a termination date or upon delivery to the Managing
General Partner of a subsequent written notice withdrawing or otherwise
amending such election. A withdrawal, or an
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58
amendment reducing the Limited Partner's maximum liability, shall not be
effective to avoid responsibility for any loss incurred prior to such amendment
or withdrawal. Except as provided in this Section 4.6 or as required by law,
no Limited Partner shall be liable for any deficit in its Capital Account or be
obligated to return any distributions of any kind received from the
Partnership.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Section 1.704-1(b) of the Regulations, and shall be interpreted and
applied as provided in the Regulations.
(b) The term "Gross Asset Value" or "Gross Asset
Values" means, with respect to any asset of the Partnership, such asset's
adjusted basis for federal income tax purposes, except as follows:
(i) the initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair
market value of such asset as reasonably determined by the Managing
General Partner;
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59
(ii) the Gross Asset Values of all Partnership
assets shall be adjusted to equal their respective gross fair market
values, as reasonably determined by the General Partner, immediately
prior to the following events:
(A) a Capital Contribution (other than a
DE MINIMIS Capital Contribution, within the meaning of Section
1.704-1(b)(2)(iv)(f)(5)(i) of the Regulations) to the
Partnership by a new or existing Partner as consideration for
Partnership Units;
(B) the distribution by the Partnership
to a Partner of more than a DE MINIMIS amount (within the
meaning of Section 1.704-1(b)(2)(iv)(f)(5)(ii) of the
Regulations) of Partnership property as consideration for the
redemption of Partnership Units; and
(C) the liquidation of the Partnership
within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations; and
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60
(iii) the Gross Asset Values of Partnership
assets distributed to any Partner shall be the gross fair market values
of such assets as reasonably determined by the Managing General Partner
as of the date of distribution.
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Profits and Losses. Any adjustment to the Gross Asset Values of Partnership
property shall require an adjustment to the Partners' Capital Accounts as
described in Section 4.8(a) above.
ARTICLE V
CONDITIONS/REPRESENTATIONS AND WARRANTIES
-----------------------------------------
5.1 REPRESENTATIONS AND WARRANTIES BY MANAGING GENERAL
PARTNER. The Managing General Partner represents and warrants to the Limited
Partners, the Non-Managing General Partner and to the Partnership that (i) it
is a corporation duly formed, validly existing and in good standing under the
laws of the State of Ohio, with full
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61
right, corporate power and authority to fulfill all of its obligations
hereunder or as contemplated herein; (ii) all transactions contemplated by this
Agreement to be performed by it have been duly authorized by all necessary
action; (iii) this Agreement has been duly executed and delivered by and is the
legal, valid and binding obligation of the Managing General Partner and is
enforceable in accordance with its terms, except as such enforcement may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or transfer or other laws of general application affecting the
rights and remedies of creditors and (b) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law); (iv) no authorization, approval, consent or order of any court or
governmental authority or agency or any other entity is required in connection
with the execution and delivery of this Agreement by the Managing General
Partner, except as may have been received prior to the date of this Agreement;
(v) the execution and delivery of this Agreement by the Managing General
Partner and the consummation of the transactions contemplated hereby will
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62
not conflict with or constitute a breach or violation of, or default under, any
contract, indenture, mortgage, loan agreement, note, lease, joint venture or
partnership agreement or other instrument or agreement to which the Managing
General Partner is a party; and (vi) the Partnership Units, upon payment of the
consideration therefore pursuant to this Agreement, will be validly issued,
fully paid and, except as otherwise provided in accordance with applicable law,
non-assessable.
5.2 REPRESENTATIONS AND WARRANTIES BY NON-MANAGING
GENERAL PARTNER. The Non-Managing General Partner represents and warrants to
the Limited Partners, the Managing General Partner and to the Partnership that
(i) it is a corporation duly formed, validly existing and in good standing
under the laws of the State of Maryland, with full right, corporate power and
authority to fulfill all of its obligations hereunder or as contemplated
herein; (ii) all transactions contemplated by this Agreement to be performed by
it have been duly authorized by all necessary action; (iii) this Agreement has
been duly executed and delivered by and is the legal, valid and binding
obligation of the Non-
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Managing General Partner and is enforceable in accordance with its terms,
except as such enforcement may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other laws of
general application affecting the rights and remedies of creditors and (b)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law); (iv) no authorization,
approval, consent or order of any court or governmental authority or agency or
any other entity is required in connection with the execution and delivery of
this Agreement by the Non-Managing General Partner, except as may have been
received prior to the date of this Agreement; and (v) the execution and
delivery of this Agreement by the Non-Managing General Partner and the
consummation of the transactions contemplated hereby will not conflict with or
constitute a breach or violation of, or default under, any contract, indenture,
mortgage, loan agreement, note, lease, joint venture or partnership agreement
or other instrument or agreement to which the Non-Managing General Partner is a
party.
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5.3 REPRESENTATIONS AND WARRANTIES BY THE LIMITED
PARTNERS. Each Limited Partner, for itself only, represents and warrants to
the General Partners, the other Limited Partners and the Partnership that (i)
all transactions contemplated by this Agreement to be performed by such Limited
Partner have been duly authorized by all necessary action; and (ii) this
Agreement is binding upon, and enforceable against, such Limited Partner in
accordance with its terms, except as such enforcement may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
transfer or other laws of general application affecting the rights and remedies
of creditors and (b) general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
5.4 ACKNOWLEDGMENT BY EACH PARTNER. Each Partner hereby
acknowledges that no representations as to potential profit, cash flows, or
yield, if any, in respect of the Partnership, Simon, L.P., or any one or more
or all of the Projects owned, directly or indirectly, by the Partnership or
Simon, L.P., have been made by any Partner or its
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Affiliates or any employee or representative of any Partner or its Affiliates,
and that projections and any other information, including, without limitation,
financial and descriptive information and documentation, which may have been in
any manner submitted to such Partner shall not constitute a representation or
warranty, express or implied.
ARTICLE VI
ALLOCATIONS, DISTRIBUTIONS AND OTHER
------------------------------------
TAX AND ACCOUNTING MATTERS
--------------------------
6.1 ALLOCATIONS.
(a) For the purpose of this Agreement, the terms
"Profits" and "Losses" mean, respectively, for each Partnership Fiscal Year or
other period, the Partnership's taxable income or loss for such Partnership
Fiscal Year or other period, determined in accordance with Section 703(a) of
the Code (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the Code
shall be included in taxable income or loss), adjusted as follows:
(1) any income of the Partnership that
is exempt from federal income tax and not other-
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66
wise taken into account in computing Profits or Losses pursuant to
this Section 6.1(a) shall be added to such taxable income or loss;
(2) in lieu of the depreciation,
amortization, and other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken into
account Depreciation for such Partnership Fiscal Year or other period;
(3) any items that are specially
allocated pursuant to Section 6.1(d) hereof and the income allocation
under Section 6.1(b) hereof shall not be taken into account in
computing Profits or Losses; and
(4) any expenditures of the Partnership
described in Section 705(a)(2)(B) of the Code (or treated as such under
Regulation Section 1.704-1(b)(2)(iv)(i)) and not otherwise taken into
account in computing Profits or Losses pursuant to this Section 6.1(a)
shall be deducted from such taxable income or loss.
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(b) Except as otherwise provided in Section
6.1(d) hereof and this Section 6.1(b), the Profits and Losses of the
Partnership (and each item thereof) for each Partnership Fiscal Year shall be
allocated among the Partners in accordance with their proportionate ownership
of Partnership Units and Preferred Units in the following order of priority:
(1) First, Profits shall be allocated to
the holder(s) of Preferred Units in an amount equal to the excess of
(A) the amount of Net Operating Cash Flow distributed to such holders
pursuant to Section 6.2(b) and Section 6.2(c) (but only to the extent
attributable to the Preferred Distribution Requirement and Preferred
Distribution Shortfalls) for the current and all prior Partnership
Fiscal Years over (B) the amount of Profits previously allocated to
such holders pursuant to this subparagraph (1).
(2) Second, for any Partnership Fiscal
Year ending on or after a date in which Preferred Units are redeemed,
Profits (or Losses) shall be allocated to the holder(s) of such
Preferred Units in an amount
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equal to the excess (or deficit) of the sum of the applicable
Preferred Redemption Amounts for the Preferred Units that have been or
are being redeemed during the Partnership Fiscal Year over the
Preferred Unit Issue Price of such Preferred Units. In addition, in
the event that the Partnership is liquidated pursuant to Article VIII,
the allocation described above shall be made to the holder(s) of
Preferred Units with respect to all Preferred Units then outstanding.
(3) Third, any remaining Profits and
Losses shall be allocated among the Partners in accordance with their
proportionate ownership of Partnership Units except as otherwise
required by the Regulations.
(4) Notwithstanding subparagraphs (1),
(2) and (3), Profits and Losses from a Liquidation Transaction shall
be allocated as follows:
First, Profits (or Losses) shall be allocated to the
holders of Preferred Units in an amount equal to the excess
(or deficit) of the sum of the applicable Preferred Redemption
Amounts of the
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Preferred Units which have been or will be redeemed with the
proceeds of the Liquidation Transaction over the Preferred
Unit Issue Price of such Preferred Units;
Second, Profits or Losses shall be allocated among
the Partners so that the Capital Accounts of the Partners
(excluding from the Capital Account of the Partners the amount
attributable to their Preferred Units) are proportional to the
number of Partnership Units held by the Partners; and
Third, any remaining Profits and Losses shall be
allocated among the Partners in accordance with their
proportionate ownership of Partnership Units.
(c) For the purpose of Section 6.1(b) hereof,
gain or loss resulting from any disposition of Partnership property shall be
computed by reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property for federal income
tax purposes differs from its Gross Asset Value.
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(d) Notwithstanding the foregoing provisions of this Section 6.1, the
following provisions shall apply:
(1) A Partner shall not receive an
allocation of any Partnership deduction that would result in total
loss allocations attributable to "Nonrecourse Liabilities" (as defined
in Regulations Section 1.704-2(b)(3)) in excess of such Partner's
share of Minimum Gain (as determined under Regulations Section
1.704-2(g)). The term "Minimum Gain" means an amount determined in
accordance with Regulations Section 1.704-2(d) by computing, with
respect to each Nonrecourse Liability of the Partnership, the amount
of gain, if any, that the Partnership would realize if it disposed of
the property subject to such liability for no consideration other than
full satisfaction thereof, and by then aggregating the amounts so
computed. If the Partnership makes a distribution allocable to the
proceeds of a Nonrecourse Liability, in accordance with Regulation
Section 1.704-2(h) the distribution will be treated as allocable to an
increase in Partnership Minimum Gain to the extent the increase
results from
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71
encumbering Partnership property with aggregate Nonrecourse
Liabilities that exceeds the property's adjusted tax basis. If there
is a net decrease in Partnership Minimum Gain for a Partnership Fiscal
Year, in accordance with Regulations Section 1.704-2(f) and the
exceptions contained therein, the Partners shall be allocated items of
Partnership income and gain for such Partnership Fiscal Year (and, if
necessary, for subsequent Partnership Fiscal Years) equal to the
Partners' respective shares of the net decrease in Minimum Gain within
the meaning of Regulations Section 1.704-2(g)(2) (the "Minimum Gain
Chargeback"). The items to be allocated pursuant to this Section
6.1(d)(1) shall be determined in accordance with Regulations Section
1.704-2(f) and (j).
(2) Any item of "Partner Nonrecourse
Deduction" (as defined in Regulations Section 1.704-2(i)) with respect
to a "Partner Nonrecourse Debt" (as defined in Regulations Section
1.704-2(b)(4)) shall be allocated to the Partner or Partners who bear
the economic risk of loss for such Partner Nonrecourse Debt
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72
in accordance with Regulations Section 1.704-2(i)(1). If the
Partnership makes a distribution allocable to the proceeds of a
Partner Nonrecourse Debt, in accordance with Regulation Section
1.704-2(i)(6) the distribution will be treated as allocable to an
increase in Partner Minimum Gain to the extent the increase results
from encumbering Partnership property with aggregate Partner
Nonrecourse Debt that exceeds the property's adjusted tax basis.
Subject to Section 6.1(d)(1) hereof, but notwithstanding any other
provision of this Agreement, in the event that there is a net decrease
in Minimum Gain attributable to a Partner Nonrecourse Debt (such
Minimum Gain being hereinafter referred to as "Partner Nonrecourse
Debt Minimum Gain") for a Partnership Fiscal Year, then after taking
into account allocations pursuant to Section 6.1(d)(1) hereof, but
before any other allocations are made for such taxable year, and
subject to the exceptions set forth in Regulations Section
1.704-2(i)(4), each Partner with a share of Partner Nonrecourse Debt
Minimum Gain at the beginning of such
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73
Partnership Fiscal Year shall be allocated items of income and gain
for such Partnership Fiscal Year (and, if necessary, for subsequent
Partnership Fiscal Years) equal to such Partner's share of the net
decrease in Partner Nonrecourse Debt Minimum Gain as determined in a
manner consistent with the provisions of Regulations Section
1.704-2(g)(2). The items to be allocated pursuant to this Section
6.1(d)(2) shall be determined in accordance with Regulations Section
1.704-2(i)(4) and (j).
(3) Pursuant to Regulations Section
1.752-3(a)(3), for the purpose of determining each Partner's share of
excess nonrecourse liabilities of the Partnership, and solely for such
purpose, each Partner's interest in Partnership profits is hereby
specified to be the quotient of (i) the number of Partnership Units
then held by such Partner, and (ii) the aggregate amount of
Partnership Units then outstanding.
(4) No Limited Partner shall be allocated
any item of deduction or loss of the Partnership
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74
if such allocation would cause such Limited Partner's Capital Account
to become negative by more than the sum of (i) any amount such Limited
Partner is obligated to restore upon liquidation of the Partnership,
plus (ii) such Limited Partner's share of the Partnership's Minimum
Gain and Partner Nonrecourse Debt Minimum Gain. An item of deduction
or loss that cannot be allocated to a Limited Partner pursuant to this
Section 6.1(d)(4) shall be allocated to the General Partners in
accordance with their respective Partnership Interests. For this
purpose, in determining the Capital Account balance of such Limited
Partner, the items described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6) shall be taken into account. In
the event that (A) any Limited Partner unexpectedly receives any
adjustment, allocation, or distribution described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and (B) such
adjustment, allocation, or distribution causes or increases a deficit
balance (net of amounts which such Limited Partner is obligated to
restore or deemed obligated to restore under
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Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5) and determined
after taking into account any adjustments, allocations, or
distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5), or (6) that, as of the end of the
Partnership Fiscal Year, reasonably are expected to be made to such
Limited Partner) in such Limited Partner's Capital Account as of the
end of the Partnership Fiscal Year to which such adjustment,
allocation, or distribution relates, then items of Gross Income
(consisting of a pro rata portion of each item of Gross Income) for
such Partnership Fiscal Year and each subsequent Partnership Fiscal
Year shall be allocated to such Limited Partner until such deficit
balance or increase in such deficit balance, as the case may be, has
been eliminated. In the event that this Section 6.1(d)(4) and Section
6.1(d)(1) and/or (2) hereof apply, Section 6.1(d)(1) and/or (2) hereof
shall be applied prior to this Section 6.1(d)(4).
(5) The Regulatory Allocations shall be
taken into account in allocating other items of income, gain, loss,
and deduction among the Partners so that,
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76
to the extent possible, the cumulative net amount of allocations of
Partnership items under this Section 6.1 shall be equal to the net
amount that would have been allocated to each Partner if the
Regulatory Allocations had not been made. This Section 6.1(d)(5) is
intended to minimize to the extent possible and to the extent
necessary any economic distortions which may result from application
of the Regulatory Allocations and shall be interpreted in a manner
consistent therewith. For purposes hereof, "REGULATORY ALLOCATIONS"
shall mean the allocations provided under this Section 6.1(d)(other
than this Section 6.1(d)(5)).
(e) In accordance with Sections 704(b) and 704(c) of
the Code and the Regulations thereunder, income, gain, loss and deduction with
respect to any property contributed to the capital of the Partnership shall,
solely for federal income tax purposes, be allocated among the Partners on a
property by property basis so as to take account of any variation between the
adjusted basis of such property to the Partnership for federal income tax
purposes and the initial Gross Asset Value of such property. If the
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77
Gross Asset Value of any Partnership property is adjusted as described in the
definition of Gross Asset Value, subsequent allocations of income, gains or
losses from taxable sales or other dispositions and deductions with respect to
such asset shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and the Gross Asset Value of such
asset in the manner prescribed under Sections 704(b) and 704(c) of the Code and
the Regulations thereunder. In furtherance of the foregoing, the Partnership
shall employ the method prescribed in Regulation Section 1.704-3(b) (the
"traditional method") or the equivalent successor provision(s) of proposed,
temporary or final Regulations. The Partnership shall allocate items of
income, gain, loss and deduction allocated to it by a Subsidiary Partnership to
the Partner or Partners contributing the interest or interests in such
Subsidiary Partnership, so that, to the greatest extent possible and consistent
with the foregoing, such contributing Partner or Partners are allocated the
same amount and character of items of income, gain, loss and deduction with
respect to such Property Partnership that they would have been
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78
allocated had they contributed undivided interests in the assets owned by such
Subsidiary Partnership to the Partnership in lieu of contributing the interest
or interests in the Subsidiary Partnership to the Partnership.
(f) Notwithstanding anything to the contrary
contained in this Section 6.1, the allocation of Profits and Losses for any
Partnership Fiscal Year during which a Person acquires a Partnership Unit
(other than upon formation of the Partnership) pursuant to Section 4.3(b) or
otherwise, shall take into account the Partners' varying interests for such
Partnership Fiscal Year pursuant to any method permissible under Section 706 of
the Code that is selected by the Managing General Partner (notwithstanding any
agreement between the assignor and assignee of such Partnership Unit although
the Managing General Partner may recognize any such agreement), which method
may take into account the date on which the Transfer or an agreement to
Transfer becomes irrevocable pursuant to its terms, as determined by the
Managing General Partner.
(g) If any portion of gain from the sale of
property is treated as gain which is ordinary income by
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79
virtue of the application of Code Sections 1245 or 1250 ("AFFECTED GAIN"), then
(A) such Affected Gain shall be allocated among the Partners in the same
proportion that the depreciation and amortization deductions giving rise to the
Affected Gain were allocated and (B) other tax items of gain of the same
character that would have been recognized, but for the application of Code
Sections 1245 and/or 1250, shall be allocated away from those Partners who are
allocated Affected Gain pursuant to clause (A) so that, to the extent possible,
the other Partners are allocated the same amount, and type, of capital gain
that would have been allocated to them had Code Sections 1245 and/or 1250 not
applied. For purposes hereof, in order to determine the proportionate
allocations of depreciation and amortization deductions for each fiscal year or
other applicable period, such deductions shall be deemed allocated on the same
basis as Net Income or Net Loss for such respective period.
(h) The Profits, Losses, gains, deductions, and
credits of the Partnership (and all items thereof) for each Partnership Fiscal
Year shall be determined in accor-
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80
dance with the accounting method followed by the Partnership for federal income
tax purposes.
(i) Except as provided in Sections 6.1(e) and
6.1(g) hereof, for federal income tax purposes, each item of income, gain,
loss, or deduction shall be allocated among the Partners in the same manner as
its correlative item of "book" income, gain, loss, or deduction has been
allocated pursuant to this Section 6.1.
(j) To the extent permitted by Regulations
Sections 1.704-2(h)(3) and 1.704-2(i)(6), the Managing General Partner shall
endeavor to treat distributions as having been made from the proceeds of
Nonrecourse Liabilities or Partner Nonrecourse Debt only to the extent that
such distributions would cause or increase a deficit balance in any Partner's
Capital Account that exceeds the amount such Partner is otherwise obligated to
restore (within the meaning of Regulations Section 1.704-1(b)(2)(ii)(c)) as of
the end of the Partnership's taxable year in which the distribution occurs.
(k) If any Partner sells or otherwise disposes of
any property, directly or indirectly, to the
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81
Partnership, and as a result thereof, gain on a subsequent disposition of such
property by the Partnership is reduced pursuant to Section 267(d) of the Code,
then, to the extent permitted by applicable law, gain for federal income tax
purposes attributable to such subsequent disposition shall first be allocated
among the Partners other than the selling Partner in an amount equal to such
Partners' allocations of "book" gain on the property pursuant to this Section
6.1, and any remaining gain for federal income tax purposes shall be allocated
to the selling Partner.
6.2 DISTRIBUTIONS. (a) Except with respect to a
liquidation of the Partnership pursuant to Section 3.2 hereof, and subject to
the priority set forth in paragraphs (b) and (c) of the Section 6.2, the
Managing General Partner shall cause the Partnership to distribute all or a
portion of Net Operating Cash Flow to the Partners from time to time as
determined by the Managing General Partner, but in any event not less
frequently than quarterly, in such amounts as the Managing General Partner
shall determine in its sole discretion; PROVIDED, HOWEVER, that, except as
provided in Sections (b) and (c) below, all such distributions shall be
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82
made PRO RATA in accordance with the outstanding Partnership Units as of the
date that is five business days before the date such distribution is made. In
no event may a Partner receive a distribution of Net Operating Cash Flow with
respect to a Partnership Unit that such Partner has exchanged prior to the date
of such distribution for a Share, pursuant to the Rights granted under Section
11.1 or the EJDC Option granted under Section 12.1,(a "Post-Exchange
Distribution"); rather, all such Post-Exchange Distributions shall be
distributed to the Non-Managing General Partner.
(b) Except to the extent Net Operating Cash Flow
is distributed pursuant to subsection (c) of this Section 6.2 distributions of
Net Operating Cash Flow shall be made in the following order of priority:
(i) First, to the extent that the amount of
cash distributed to the holders of Preferred Units for any prior
quarter was less than the Preferred Distribution Requirement for such
quarter, and has not been subsequently distributed pursuant to this
subparagraph (b)(i) or pursuant to paragraph (c) (a "Preferred
Distribution Shortfall"), Net Operating
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Cash Flow shall be distributed to the holders of Preferred Units in an
amount necessary to satisfy such Preferred Distribution Shortfall for
the current and all prior Partnership Fiscal Years. In the event that
the Net Operating Cash Flow distributed for a particular quarter is
less than the Preferred Distribution Shortfall, then all Net Operating
Cash Flow shall be distributed to the holder(s) of Preferred Units in
proportion to their respective Preferred Distribution Shortfalls.
(ii) Second, Net Operating Cash Flow shall
be distributed to the holder(s) of Preferred Units in an amount equal
to the applicable Preferred Distribution Requirement for each
outstanding Preferred Unit. In the event that the amount of Net
Operating Cash Flow distributed for a particular quarter is less than
the Preferred Distribution Requirement, then all Net Operating Cash
Flow shall be distributed to the holder(s) of Preferred Units in
proportion to their Preferred Distribution Requirements for such
quarter.
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(iii) Except as provided in the last
sentence of Section 6.2(a), the balance of the Net Operating Cash Flow
to be distributed, if any, shall be distributed to holders of
Partnership Units, in proportion to their ownership of Partnership
Units, as of the date that is five business days before the date such
distribution is made.
(c) If in any quarter the Partnership redeems any
outstanding Preferred Units, Net Operating Cash Flow shall first be distributed
to the Non-Managing General Partner in an amount equal to the applicable
Preferred Redemption Amount for the Preferred Units being redeemed before being
distributed pursuant to Section 6.2(b).
(d) Notwithstanding the provision of the first
sentence of Section 6.2(a), (i) the Managing General Partner shall use its best
efforts to cause the Partnership to distribute sufficient amounts, in
accordance with (a), above, to enable the Managing General Partner and the
Non-Managing General Partner to pay shareholder dividends that will (A) satisfy
the REIT Requirements, and (B) avoid any federal income or excise tax liability
of the Managing
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85
General Partner or the Non-Managing General Partner; and (ii) in the event of a
Covered Sale which occurs on a date on or after the Effective Time, and before
but not including the fifth anniversary of the Effective Time, and which gives
rise to a special allocation of taxable income or gain to one or more Limited
Partners pursuant to Section 6.1(e), (A) the Managing General Partner shall
cause the Partnership to distribute, PRO RATA in accordance with the
Partnership Units, the Net Sale Proceeds therefrom up to an amount sufficient
to enable such Limited Partner(s) to pay any income tax liability, computed at
the maximum applicable federal and state statutory rate, with respect to the
income or gain so specially allocated and on the distribution required by this
clause (c) (or, if any such Limited Partner is a partnership or Subchapter S
corporation, to enable such Limited Partner to distribute sufficient amounts to
its equity owners to enable such owners to pay any income tax liability,
computed at the maximum applicable federal and state statutory rate, with
respect to their share of such taxable income or gain and such distributions)
and (B) if the amounts distributed in accordance with the preceding
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86
clause (A) are insufficient to fund such income tax liabilities, the Managing
General Partner shall cause the Partnership to distribute sufficient funds from
other sources to fund such income tax liabilities. As used in this Section
6.2, the term "Covered Sale" means a sale or other taxable disposition of any
Property described on Exhibit C.
6.3 BOOKS OF ACCOUNT. At all times during the
continuance of the Partnership, the Managing General Partner shall maintain or
cause to be maintained full, true, complete and correct books of account in
accordance with GAAP wherein shall be entered particulars of all monies, goods
or effects belonging to or owing to or by the Partnership, or paid, received,
sold or purchased in the course of the Partnership's business, and all of such
other transactions, matters and things relating to the business of the
Partnership as are usually entered in books of account kept by Persons engaged
in a business of a like kind and character. In addition, the Partnership shall
keep all records as required to be kept pursuant to the Act. The books and
records of account shall be kept at the principal
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87
office of the Partnership, and each Partner and its representatives shall at
all reasonable times have access to such books and records and the right to
inspect and copy the same.
6.4 REPORTS. Within ninety (90) days after the end of
each Partnership Fiscal Year, the Partnership shall cause to be prepared and
transmitted to each Partner, an annual report of the Partnership relating to
the previous Partnership Fiscal Year containing a balance sheet as of the year
then ended, a statement of financial condition as of the year then ended, and
statements of operations, cash flow and Partnership equity for the year then
ended, which annual statements shall be prepared in accordance with GAAP and
shall be audited by the Accountants. The Partnership shall also cause to be
prepared and transmitted to each Partner within forty-five (45) days after the
end of each of the first three (3) quarters of each Partnership Fiscal Year, a
quarterly unaudited report containing a balance sheet, a statement of the
Partnership's financial condition and statements of operations cash flow and
Partnership equity, in each case relating to the fiscal quarter then just
ended,
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88
and prepared in accordance with GAAP. The Partnership shall further cause to
be prepared and transmitted to the Managing General Partner and the
Non-Managing General Partner (i) such reports and/or information as are
necessary for each to fulfill its obligations under the Securities Act of 1933,
the Securities and Exchange Act of 1934 and the applicable stock exchange
rules, and under any other regulations to which such Partners or the
Partnership may be subject, and (ii) such other reports and/or information as
are necessary for each of the Managing General Partner and the Non-Managing
General Partner to determine and maintain their qualifications as REITs under
the REIT Requirements, their earnings and profits derived from the Partnership,
their liability for a tax as a consequence of its Partnership Interest and
distributive share of taxable income or loss and items thereof, in each case,
in a manner that will permit the Managing General Partner and the Non-Managing
General Partner to comply with their respective obligations to file federal,
state and local tax returns and information returns and to provide their
shareholders with tax information. The Non-Managing General Partner shall
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89
provide to each Partner copies of all reports it provides to its stockholders
at the same time such reports are distributed to such stockholders. The
Managing General Partner shall also promptly notify the Partners of all actions
taken by the Managing General Partner for which it has obtained the Consent of
the Limited Partners.
6.5 AUDITS. Not less frequently than annually, the books
and records of the Partnership shall be audited by the Accountants.
6.6 TAX RETURNS.
(a) Consistent with all other provisions of this
Agreement, the Managing General Partner shall determine the methods to be used
in the preparation of federal, state, and local income and other tax returns
for the Partnership in connection with all items of income and expense,
including, but not limited to, valuation of assets, the methods of Depreciation
and cost recovery, credits and tax accounting methods and procedures and, with
the consent of the Non-Managing General Partner, all tax elections.
(b) The Managing General Partner shall, at least
30 days prior to the due dates for such returns, cause
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the Accountants to prepare and submit to the DeBartolo Designee, the Simon
Designee and the JCP Limited Partner for their review, drafts of all federal
and state income tax returns of the Partnership, and the Managing General
Partner shall consult in good faith with the DeBartolo Designee, the Simon
Designee and the JCP Limited Partner regarding any proposed modifications to
such tax returns of the Partnership.
(c) The Partnership shall timely cause to be
prepared and transmitted to the Partners federal and appropriate state and
local Partnership Income Tax Schedules "K-1," or any substitute therefor, with
respect to each Partnership Fiscal Year on appropriate forms prescribed.
Beginning with its taxable year ending December 31, 1996, the Partnership shall
make reasonable efforts to prepare and submit such forms before the due date
for filing federal income tax returns for the fiscal year in question
(determined without extensions), and shall in any event prepare and submit such
forms on or before July 15 of the year following the fiscal year in question.
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6.7 TAX MATTERS PARTNER. The Managing General Partner is
hereby designated as the Tax Matters Partner within the meaning of Section
6231(a)(7) of the Code for the Partnership; PROVIDED, HOWEVER, (i) in
exercising its authority as Tax Matters Partner it shall be limited by the
provisions of this Agreement affecting tax aspects of the Partnership; (ii) the
Managing General Partner shall give prompt notice to the Partners of the
receipt of any written notice that the Internal Revenue Service or any state or
local taxing authority intends to examine Partnership income tax returns for
any year, receipt of written notice of the beginning of an administrative
proceeding at the Partnership level relating to the Partnership under Section
6223 of the Code, receipt of written notice of the final Partnership
administrative adjustment relating to the Partnership pursuant to Section 6223
of the Code, and receipt of any request from the Internal Revenue Service for
waiver of any applicable statute of limitations with respect to the filing of
any tax return by the Partnership; (iii) the Managing General Partner shall
promptly notify the Partners if it does not intend to file for judicial review
with respect to
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the Partnership; and (iv) as Tax Matters Partner, the Managing General Partner
shall not be entitled to bind a Partner by any settlement agreement (within the
meaning of Section 6224 of the Code) unless such Partner consents thereto in
writing and shall notify the Partners in a manner and at such time as is
sufficient to allow the Partners to exercise their rights pursuant to Section
6224(c)(3) of the Code; (v) the Managing General Partner shall consult in good
faith with the Simon Designee, DeBartolo Designee and the JCP Limited Partner
regarding the filing of a Code Section 6227(b) administrative adjustment
request with respect to the Partnership or a Property before filing such
request, it being understood, however, that the provisions hereof shall not be
construed to limit the ability of any Partner, including the Managing General
Partner, to file an administrative adjustment request on its own behalf
pursuant to Section 6227(a) of the Code; and (vi) the Managing General Partner
shall consult in good faith with the Simon Designee, DeBartolo Designee and the
JCP Limited Partner regarding the filing of a petition for judicial review of
an administrative adjustment request under Section 6228 of the
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Code, or a petition for judicial review of a final partnership administrative
judgment under Section 6226 of the Code relating to the Partnership before
filing such petition.
6.8 WITHHOLDING. Each Partner hereby authorizes the
Partnership to withhold from or pay on behalf of or with respect to such
Partner any amount of federal, state, local, or foreign taxes that the Managing
General Partner determines the Partnership is required to withhold or pay with
respect to any amount distributable or allocable to such Partner pursuant to
this Agreement, including, without limitation, any taxes required to be
withheld or paid by the Partnership pursuant to Code Section 1441, 1442, 1445,
or 1446. Any amount paid on behalf of or with respect to a Partner shall
constitute a loan by the Partnership to such Partner, which loan shall be due
within fifteen (15) days after repayment is demanded of the Partner in
question, and shall be repaid through withholding of subsequent distributions
to such Partner. Nothing in this Section 6.8 shall create any obligation on
the Managing General Partner to advance funds to the Partnership or to borrow
funds from third parties in
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order to make payments on account of any liability of the Partnership under a
withholding tax act. Any amounts payable by a Limited Partner hereunder shall
bear interest at the lesser of (i) the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
THE WALL STREET JOURNAL or (ii) the maximum lawful rate of interest on such
obligation, such interest to accrue from the date such amount is due (I.E.,
fifteen (15) days after demand) until such amount is paid in full. To the
extent the payment or accrual of withholding tax results in a federal, state or
local tax credit to the Partnership, such credit shall be allocated to the
Partner to whose distribution the tax is attributable.
ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE
GENERAL PARTNERS
--------------------------------------
7.1 EXPENDITURES BY PARTNERSHIP. The Managing General
Partner is hereby authorized to pay compensation for accounting,
administrative, legal, technical, management and other services rendered to the
Partnership. All of the aforesaid expenditures shall be made on behalf of the
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Partnership and the Managing General Partner shall be entitled to reimbursement
by the Partnership for any expenditures incurred by it on behalf of the
Partnership which shall have been made other than out of the funds of the
Partnership. The Partnership shall also assume, and pay when due, all
Administrative Expenses and REIT Expenses.
7.2 POWERS AND DUTIES OF THE MANAGING GENERAL PARTNER.
The Managing General Partner shall be responsible for the management of the
Partnership's business and affairs. Except as otherwise herein expressly
provided, and subject to the limitations contained in Section 7.3 hereof with
respect to Major Decisions, the Managing General Partner shall have, and is
hereby granted, full and complete power, authority and discretion to take such
action for and on behalf of the Partnership and in its name as the Managing
General Partner shall, in its sole and absolute discretion, deem necessary or
appropriate to carry out the purposes for which the Partnership was organized.
Any action by the Managing General Partner relating to (i) transactions between
the Partnership or a Subsidiary Entity and M.S. Management Associates, Inc.,
Simon MOA Management Company,
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Inc. and/or M.S. Management Associates (Indiana), Inc., (ii) transactions
between the Partnership or a Subsidiary Entity and DeBartolo Properties
Management, Inc. or (iii) transactions involving the Partnership or a
Subsidiary Entity in which the Simons, the DeBartolos or any Affiliate of the
Simons or the DeBartolos has an interest (other than a non-controlling minority
equity interest which has no management or veto powers, in a Person, other than
the Partnership or a Subsidiary Entity, which is engaged in such transaction)
other than through ownership of Partnership Units, shall require the prior
approval of a majority of the Independent Directors. Except as otherwise
expressly provided herein and subject to Section 7.3 hereof, the Managing
General Partner shall have, for and on behalf of the Partnership, the right,
power and authority:
(a) To manage, control, hold, invest, lend,
reinvest, acquire by purchase, lease or otherwise sell, contract to purchase or
sell, grant, obtain, or exercise options to purchase, options to sell or
conversion rights, assign, transfer, convey, deliver, endorse, exchange,
pledge, mortgage or otherwise encumber, abandon, improve,
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repair, maintain, operate, insure, lease for any term and otherwise deal with
any and all property of whatsoever kind and nature, and wheresoever situated,
in furtherance of the purposes of the Partnership, and in addition, without
limiting the foregoing, by the affirmative vote of no less than three (3) out
of five (5) of the Independent Directors of the Non-Managing General Partner,
the Managing General Partner may authorize and require the sale of any property
owned by the Partnership or a Subsidiary Entity;
(b) To acquire, directly or indirectly, interests
in real or personal property of any kind and of any type, and any and all kinds
of interests therein, and to determine the manner in which title thereto is to
be held; to manage, insure against loss, protect and subdivide any of the real
or personal property, interests therein or parts thereof; to improve, develop
or redevelop any such real or personal property; to participate in the
ownership and development of any property; to dedicate for public use, to
vacate any subdivisions or parts thereof, to resubdivide, to contract to sell,
to grant options to purchase or lease and to sell on any terms; to convey, to
mortgage, pledge or
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otherwise encumber said property, or any part thereof; to lease said property
or any part thereof from time to time, upon any terms and for any period of
time, and to renew or extend leases, to amend, change or modify the terms and
provisions of any leases and to grant options to lease and options to renew
leases and options to purchase; to partition or to exchange said real property,
or any part thereof, for other real or personal property; to grant easements or
charges of any kind; to release, convey or assign any right, title or interest
in or about or easement appurtenant to said property or any part thereof; to
construct and reconstruct, remodel, alter, repair, add to or take from
buildings on said property; to insure any Person having an interest in or
responsibility for the care, management or repair of such property; to direct
the trustee of any land trust to mortgage, lease, convey or contract to convey
the real estate held in such land trust or to execute and deliver deeds,
mortgages, notes and any and all documents pertaining to the property subject
to such land trust or in any matter regarding such trust; and to execute
assignments
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of all or any part of the beneficial interest in such land trust;
(c) To employ, engage or contract with or dismiss
from employment or engagement Persons to the extent deemed necessary by the
Managing General Partner for the operation and management of the Partnership
business, including but not limited to, employees, contractors, subcontractors,
engineers, architects, surveyors, mechanics, consultants, accountants,
attorneys, insurance brokers, real estate brokers and others;
(d) To enter into contracts on behalf of the
Partnership;
(e) To borrow or lend money, procure loans and
advances from any Person for Partnership purposes, and to apply for and secure
from any Person credit or accommodations; to contract liabilities and
obligations, direct or contingent and of every kind and nature with or without
security; and to repay, discharge, settle, adjust, compromise or liquidate any
such loan, advance, credit, obligation or liability (including by deeding
property to a lender in lieu of foreclosure);
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(f) To pledge, hypothecate, mortgage, assign,
deposit, deliver, enter into sale and leaseback arrangements or otherwise give
as security or as additional or substitute security or for sale or other
disposition any and all Partnership property, tangible or intangible,
including, but not limited to, real estate and beneficial interests in land
trusts, and to make substitutions thereof, and to receive any proceeds thereof
upon the release or surrender thereof; to sign, execute and deliver any and all
assignments, deeds and other contracts and instruments in writing; to
authorize, give, make, procure, accept and receive moneys, payments, property,
notices, demands, vouchers, receipts, releases, compromises and adjustments; to
waive notices, demands, protests and authorize and execute waivers of every
kind and nature; to enter into, make, execute, deliver and receive written
agreements, undertakings and instruments of every kind and nature; to give oral
instructions and make oral agreements; and generally to do any and all other
acts and things incidental to any of the foregoing or with reference to any
dealings or
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transactions which any attorney may deem necessary, proper or advisable;
(g) To acquire and enter into any contract of
insurance which the Managing General Partner deems necessary or appropriate for
the protection of the Partnership or any Affiliate thereof, for the
conservation of the Partnership's assets (or the assets of any Affiliate
thereof) or for any purpose convenient or beneficial to the Partnership or any
Affiliate thereof;
(h) To conduct any and all banking transactions
on behalf of the Partnership; to adjust and settle checking, savings, and other
accounts with such institutions as the Managing General Partner shall deem
appropriate; to draw, sign, execute, accept, endorse, guarantee, deliver,
receive and pay any checks, drafts, bills of exchange, acceptances, notes,
obligations, undertakings and other instruments for or relating to the payment
of money in, into, or from any account in the Partnership's name; to execute,
procure, consent to and authorize extensions and renewals of the same; to make
deposits and withdraw the same
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and to negotiate or discount commercial paper, acceptances, negotiable
instruments, bills of exchange and dollar drafts;
(i) To demand, sue for, receive, and otherwise
take steps to collect or recover all debts, rents, proceeds, interests,
dividends, goods, chattels, income from property, damages and all other
property to which the Partnership may be entitled or which are or may become
due the Partnership from any Person; to commence, prosecute or enforce, or to
defend, answer or oppose, contest and abandon all legal proceedings in which
the Partnership is or may hereafter be interested; and to settle, compromise or
submit to arbitration any accounts, debts, claims, disputes and matters which
may arise between the Partnership and any other Person and to grant an
extension of time for the payment or satisfaction thereof on any terms, with or
without security;
(j) To make arrangements for financing, including
the taking of all action deemed necessary or appropriate by the Managing
General Partner to cause any approved loans to be closed;
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(k) To take all reasonable measures necessary to
insure compliance by the Partnership with applicable arrangements, and other
contractual obligations and arrangements entered into by the Partnership from
time to time in accordance with the provisions of this Agreement, including
periodic reports as required to lenders and using all due diligence to insure
that the Partnership is in compliance with its contractual obligations;
(l) To maintain the Partnership's books and
records;
(m) To create or maintain Affiliates engaged in
activities that the Partnership could itself undertake; and
(n) To prepare and deliver, or cause to be
prepared and delivered by the Accountants, all financial and other reports with
respect to the operations of the Partnership, and preparation and filing of all
federal and state tax returns and reports.
Except as otherwise provided herein, to the extent the duties
of the Managing General Partner require expenditures of funds to be paid to
third parties, the
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Managing General Partner shall not have any obligations hereunder except to the
extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the Managing General Partner, in its capacity as such, to
expend its individual funds for payment to third parties or to undertake any
individual liability or obligation on behalf of the Partnership.
Notwithstanding any other provisions of this Agreement or the
Act, any action of the Managing General Partner on behalf of the Partnership or
any decision of the Managing General Partner to refrain from acting on behalf
of the Partnership, undertaken in the good faith belief that such action or
omission is necessary or advisable in order (i) to protect or further the
ability of the Managing General Partner and the Non-Managing General Partner to
continue to qualify as REITs or (ii) to avoid the Managing General Partner's or
the Non-Managing General Partner's incurring any taxes under Section 857 or
Section 4981 of the Code, is expressly authorized under this Agreement and is
deemed approved by all of the Limited Partners. Nothing,
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however, in this Agreement shall be deemed to give rise to any liability on the
part of a Limited Partner for the Managing General Partner's or the
Non-Managing General Partner's failure to qualify or continue to qualify as a
REIT or a failure to avoid incurring any taxes under the foregoing sections of
the Code, unless such failure or failures result from an act of the Limited
Partner which constitutes a breach of this Agreement (including, without
limitation, Section 10.4(b)).
7.3 MAJOR DECISIONS.
(a) The Managing General Partner shall not,
without the Consent of the Limited Partners, and the consent of the
Non-Managing General Partner, (i) on behalf of the Partnership, amend, modify
or terminate this Agreement other than to reflect (A) the admission of
Additional Limited Partners pursuant to Section 9.4 hereof, (B) the making of
additional Capital Contributions and the issuance of additional Partnership
Units by reason thereof, all in accordance with the terms of this Agreement,
(C) the withdrawal or assignment of the interest of any Partner in accordance
with the terms of this Agreement, or (D) any
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changes necessary to satisfy the REIT Requirements, or (ii) permit the
Partnership, on behalf of any Subsidiary Partnership, to amend, modify or
terminate the organizing agreement pursuant to which such Subsidiary
Partnership operates other than to reflect (A) the admission of additional
limited partners therein pursuant to the terms thereof, (B) the making of
additional capital contributions thereto pursuant to the terms thereof, (C) the
withdrawal or assignment of the interest of any partner thereof pursuant to the
terms thereof, or (D) any changes necessary to satisfy the REIT Requirements.
Notwithstanding the foregoing, this Agreement shall not be modified or amended
in such manner as to reduce the interest of any Partner in the Partnership, to
reduce any Partner's share of distributions made by the Partnership, to create
any obligations for any Partner or to deprive any Partner of (or otherwise
impair) any other rights it may have under this Agreement (including in respect
of tax allocations) unless the affected Partner shall execute or consent in
writing to the modification or amendment in question; PROVIDED, HOWEVER, that
an amendment that reduces the interest of any
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Partner in the Partnership or reduces any Partner's share of distributions made
by the Partnership (including tax allocations in respect of such distributions)
shall not require the consent of any Partner if such change is made on a
uniform or pro-rata basis with respect to all Partners.
(b) The Managing General Partner shall not,
without the consent of the Non-Managing General Partner, and for all periods
during which the Simons hold at least ten percent of the Partnership Units then
outstanding, the Managing General Partner shall not, without the prior Consent
of the Simons, and for all periods during which the DeBartolos hold at least
ten percent of the Partnership Units then outstanding, the Managing General
Partner shall not, without the prior Consent of the DeBartolos, on behalf of
the Partnership, undertake any of the following actions (together with any act
described in paragraph (a) hereof, the "Major Decisions"):
(i) make a general assignment for the benefit of
creditors (or cause or permit (if permission of the Partnership or any
Subsidiary Partnership is required) such an assignment to be made on behalf of
a Subsidiary
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Partnership) or appoint or acquiesce in the appointment of a custodian,
receiver or trustee for all or any part of the assets of the Partnership (or
any Subsidiary Partnership);
(ii) take title to any personal or real property,
other than in the name of the Partnership or a Subsidiary Partnership or
pursuant to Section 7.7 hereof;
(iii) institute any proceeding for Bankruptcy on behalf of
the Partnership, or cause or permit (if permission of the Partnership or any
Subsidiary Partnership is required) the institution of any such proceeding on
behalf of any Subsidiary Partnership;
(iv) act or cause the taking or refraining of any
action with respect to the dissolution and winding up of the Partnership (or
any Subsidiary Partnership) or an election to continue the Partnership (or any
Subsidiary Partnership) or to continue the business of the Partnership (or any
Subsidiary Partnership); or
(v) sell, exchange, transfer or otherwise dispose
of all or substantially all of the Partnership's assets.
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(c) The Managing General Partner shall not, without the
prior Consent of the Limited Partners,
(i) after the Effective Time, increase or
decrease the Ownership Limit or, except as provided in this Agreement, agree to
an exemption under Article NINTH of the Charter of Simon Property Group, Inc.
(except that it is understood that the Non-Managing General Partner may grant
certain waivers at the Effective Time), or alter any provision of Article NINTH
of the Charter of Simon Property Group, Inc. or of any of the definitions of
defined terms contained in such article;
(ii) except in connection with the dissolution and
winding-up of the Partnership by the liquidating agent, agree to or consummate
the merger or consolidation of the Partnership or the voluntary sale or other
transfer of all or substantially all of the Partnership's assets in a single
transaction or related series of transactions (without limiting the
transactions which will not be deemed to be a voluntary sale or transfer, the
foreclosure of a mortgage lien on any Property or the grant by the Partnership
of a deed in lieu of foreclosure for such
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Property shall not be deemed to be such a voluntary sale or other transfer); or
(iii) dissolve the Partnership.
Without the consent of all the Limited Partners, the Managing
General Partner shall have no power to do any act in the contravention of this
Agreement or applicable law.
7.4 MANAGING GENERAL PARTNER AND NON-MANAGING GENERAL
PARTNER PARTICIPATION. The Managing General Partner and the Non- Managing
General Partner agree that all activities and business operations of the
Managing General Partner and the Non-Managing General Partner, including but
not limited to, activities pertaining to the acquisition, development,
redevelopment and ownership of properties, shall be conducted directly or
indirectly through the Partnership or Simon, L.P. or any Subsidiary
Partnership, that any property acquisitions shall be acquired through the
Partnership or any Subsidiary Partnership and not through the Simon, L.P. and
that any funds raised by the Managing General Partner or the Non-Managing
General Partner, whether by issuance of stock, borrowing or otherwise, will be
made
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available to the Partnership whether as capital contributions, loans or
otherwise, as appropriate. Without the Consent of the Limited Partners neither
the Managing General Partner nor the Non-Managing General Partner shall,
directly or indirectly, participate in or otherwise acquire any interest in any
real or personal property other than in accordance with this Section 7.4. In
addition, the Managing General Partner and the Non-Managing General Partner
agree to conduct their respective affairs, to the extent they are so able to
do, in a manner which will preserve the equivalence in value between a Share
and a Partnership Unit.
7.5 PROSCRIPTIONS. The Managing General Partner shall
not have the authority to:
(a) Do any act in contravention of this
Agreement;
(b) Possess any Partnership property or assign
rights in specific Partnership property for other than Partnership
purposes; or
(c) Do any act in contravention of applicable
law.
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Nothing herein contained shall impose any obligation on any Person doing
business with the Partnership to inquire as to whether or not the Managing
General Partner has properly exercised its authority in executing any contract,
lease, mortgage, deed or any other instrument or document on behalf of the
Partnership, and any such third Person shall be fully protected in relying upon
such authority.
7.6 ADDITIONAL PARTNERS. Additional Partners may be
admitted to the Partnership only as provided in Section 9.4 hereof.
7.7 TITLE HOLDER. To the extent allowable under
applicable law, title to all or any part of the Properties of the Partnership
may be held in the name of the Partnership or any other individual,
corporation, partnership, trust or otherwise, the beneficial interest in which
shall at all times be vested in the Partnership. Any such title holder shall
perform any and all of its respective functions to the extent and upon such
terms and conditions as may be determined from time to time by the Managing
General Partner.
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7.8 WAIVER AND INDEMNIFICATION. Neither the Managing General
Partner, the Non-Managing General Partner nor any of their Affiliates,
directors, trust managers, officers, shareholders, nor any Person acting on
their behalf pursuant hereto, shall be liable, responsible or accountable in
damages or otherwise to the Partnership or to any Partner for any acts or
omissions performed or omitted to be performed by them within the scope of the
authority conferred upon the Managing General Partner or the Non-Managing
General Partner by this Agreement and the Act, provided that the Managing
General Partner's, the Non-Managing General Partner's or such other Person's
conduct or omission to act was taken in good faith and in the belief that such
conduct or omission was in the best interests of the Partnership and, provided
further, that the Managing General Partner, the Non-Managing General Partner or
such other Person shall not be guilty of fraud, willful misconduct or gross
negligence. The Non-Managing General Partner acknowledges that it owes
fiduciary duties both to its shareholders and to the Limited Partners and it
shall use its reasonable efforts to discharge such duties to each;
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PROVIDED, HOWEVER, that in the event of a conflict between the interests of the
shareholders of the Non-Managing General Partner and the interests of the
Limited Partners, the Limited Partners agree that the Non-Managing General
Partner shall discharge its fiduciary duties to the Limited Partners by acting
in the best interests of the Non-Managing General Partner's shareholders.
Nothing contained in the preceding sentence shall be construed as entitling
either the Managing General Partner or the Non-Managing General Partner to
realize any profit or gain from any transaction between such Partner and the
Partnership (except as may be required by law upon a distribution to the
Managing General Partner or the Non-Managing General Partner), including from
the lending of money by the Managing General Partner or the Non-Managing
General Partner to the Partnership or the contribution of property by the
Managing General Partner or the Non-Managing General Partner to the
Partnership, it being understood that in any such transaction the Managing
General Partner or the Non-Managing General Partner, as the case may be, shall
be entitled to cost recovery only. The Partnership shall, and hereby does,
indemnify and hold
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harmless each of the Managing General Partner and the Non-Managing General
Partner and its Affiliates, their respective directors, officers, shareholders
and any other individual acting on its or their behalf to the extent such
Persons would be indemnified by the Non-Managing General Partner pursuant to
Article Eighth of the Charter of the Non-Managing General Partner if such
persons were directors, officers, agents or employees of the Non-Managing
General Partner (or Article __ of the Charter of the Managing General Partner,
if such individuals were directors, officers, agents or employees of the
Managing General Partner); PROVIDED, HOWEVER, that no Partner shall have any
personal liability with respect to the foregoing indemnification, any such
indemnification to be satisfied solely out of the assets of the Partnership.
The Partnership shall, and hereby does, indemnify each Limited Partner and its
Affiliates, their respective directors, officers, shareholders and any other
individual acting on its or their behalf, from and against any costs (including
costs of defense) incurred by it as a result of any litigation in which any
Limited Partner is named as a defendant and which
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relates to the operations of the Partnership, unless such costs are the result
of misconduct on the part of, or a breach of this Agreement by, such Limited
Partner; PROVIDED, HOWEVER, no Partner shall have any personal liability with
respect to the foregoing indemnification, any such indemnification to be
satisfied solely out of the assets of the Partnership.
7.9 LIMITATION OF LIABILITY OF DIRECTORS, SHAREHOLDERS
AND OFFICERS OF THE MANAGING GENERAL PARTNER AND THE NON-MANAGING GENERAL
PARTNER. Any obligation or liability whatsoever of either of the Managing
General Partner or the Non-Managing General Partner which may arise at any time
under this Agreement or any other instrument, transaction, or undertaking
contemplated hereby shall be satisfied, if at all, out of the assets of the
Managing General Partner, the Non-Managing General Partner or the Partnership
only. No such obligation or liability shall be personally binding upon, nor
shall resort for the enforcement thereof be had to, any of either of the
Managing General Partner's or the Non-Managing General Partner's Directors,
shareholders, officers, employees, or agents,
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regardless of whether such obligation or liability is in the nature of
contract, tort or otherwise.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
---------------------------------------
8.1 ACCOUNTING. In the event of the dissolution,
liquidation and winding-up of the Partnership, a proper accounting (which shall
be certified by the Accountants) shall be made of the Capital Account of each
Partner and of the Profits or Losses of the Partnership from the date of the
last previous accounting to the date of dissolution. Financial statements
presenting such accounting shall include a report of the Accountants.
8.2 DISTRIBUTION ON DISSOLUTION. In the event of the
dissolution and liquidation of the Partnership for any reason, the assets of
the Partnership shall be liquidated for distribution in the following rank and
order:
(a) Payment of creditors of the Partnership (other than
Partners) in the order of priority as provided by law;
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(b) Establishment of reserves as provided by the Managing
General Partner to provide for contingent liabilities, if any;
(c) Payment of debts of the Partnership to Partners, if
any, in the order of priority provided by law;
(d) To the Partners in accordance with the positive
balances in their Capital Accounts after giving effect to all
contributions, distributions and allocations for all periods,
including the period in which such distribution occurs (other than
those distributions made pursuant to this Section 8.2(d) and Section
8.3 hereof).
If upon dissolution and termination of the Partnership the Capital Account of
any Partner is less than zero, then such Partner shall have no obligation to
restore the negative balance in its Capital Account unless such Partner has so
elected under Section 4.8. Whenever the Liquidating Agent reasonably
determines that any reserves established pursuant to paragraph (b) above are in
excess of the reasonable requirements of the Partnership, the amount determined
to be
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excess shall be distributed to the Partners in accordance with the above
provisions.
8.3 SALE OF PARTNERSHIP ASSETS. In the event of the
liquidation of the Partnership in accordance with the terms of this Agreement,
the Liquidating Agent may sell Partnership property; provided, however, all
sales, leases, encumbrances or transfers of Partnership assets shall be made by
the Liquidating Agent solely on an "arm's-length" basis, at the best price and
on the best terms and conditions as the Liquidating Agent in good faith
believes are reasonably available at the time and under the circumstances and
on a non-recourse basis to the Limited Partners. The liquidation of the
Partnership shall not be deemed finally terminated until the Partnership shall
have received cash payments in full with respect to obligations such as notes,
purchase money mortgages, installment sale contracts or other similar
receivables received by the Partnership in connection with the sale of
Partnership assets and all obligations of the Partnership have been satisfied
or assumed by the Managing General Partner or the Non-Managing General Partner.
The Liquidating Agent shall continue to
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act to enforce all of the rights of the Partnership pursuant to any such
obligations until paid in full or otherwise discharged or settled.
8.4 DISTRIBUTIONS IN KIND. In the event that it becomes
necessary to make a distribution of Partnership property in kind, the Managing
General Partner may, with the Consent of the Limited Partners and consent of
the Non-Managing General Partner, transfer and convey such property to the
distributees as tenants in common, subject to any liabilities attached thereto,
so as to vest in them undivided interests in the whole of such property in
proportion to their respective rights to share in the proceeds of the sale of
such property (other than as a creditor) in accordance with the provisions of
Section 8.2 hereof. Immediately prior to the distribution of Partnership
property in kind to a Partner, the Capital Account of each Partner shall be
increased or decreased, as the case may be, to reflect the manner in which the
unrealized income, gain, loss and deduction inherent in such property (to the
extent not previously reflected in the Capital Accounts) would be allocated
among the Partners if there were a taxable
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disposition of such property for its fair market value as of the date of the
distribution.
8.5 DOCUMENTATION OF LIQUIDATION. Upon the completion of
the dissolution and liquidation of the Partnership, the Partnership shall
terminate and the Liquidating Agent shall have the authority to execute and
record any and all documents or instruments required to effect the dissolution,
liquidation and termination of the Partnership.
8.6 LIABILITY OF THE LIQUIDATING AGENT. The Liquidating
Agent shall be indemnified and held harmless by the Partnership from and
against any and all claims, demands, liabilities, costs, damages and causes of
action of any nature whatsoever arising out of or incidental to the Liquidating
Agent's taking of any action authorized under or within the scope of this
Agreement; PROVIDED, HOWEVER, that no Partner shall have any personal liability
with respect to the foregoing indemnification, any such indemnification to be
satisfied solely out of the assets of the Partnership; PROVIDED FURTHER,
HOWEVER, that the Liquidating Agent shall not be entitled to indemnification,
and shall not be held
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harmless, where the claim, demand, liability, cost, damage or cause of action
at issue arose out of:
(a) A matter entirely unrelated to the Liquidating
Agent's action or conduct pursuant to the provisions of this
Agreement; or
(b) The proven misconduct or gross negligence of the
Liquidating Agent.
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS AND RELATED MATTERS
-----------------------------------------------------
9.1 MANAGING GENERAL PARTNER TRANSFERS AND DEEMED
TRANSFERS. The Managing General Partner shall not (i) withdraw from the
Partnership, (ii) merge, consolidate or engage in any combination with another
Person, (iii) sell all or substantially all of its assets or (iv) sell, assign,
pledge, encumber or otherwise dispose of all or any portion of its Partnership
Units except where such merger, consolidation, sale, assignment, pledge or
other disposal is to the Non-Managing General Partner, as its sole successor.
In the event of the withdrawal by the last remaining General Partner from the
Partnership, in violation of this Agreement
<PAGE> 355
123
or otherwise, or the dissolution, termination or Bankruptcy of the last
remaining General Partner, within 90 days after the occurrence of any such
event, all the remaining Partners may elect in writing to continue the
Partnership business by selecting a substitute general partner effective as of
the date of the occurrence of any such event.
9.2 NON-MANAGING GENERAL PARTNER TRANSFERS AND DEEMED
TRANSFERS. The Non-Managing General Partner shall not (i) withdraw from the
Partnership, (ii) merge, consolidate or engage in any combination with another
Person other than the Managing General Partner, (iii) sell all or substantially
all of its assets or (iv) sell, assign, pledge, encumber or otherwise dispose
of all or any portion of its Partnership Units or Preferred Units without the
Consent of the Limited Partners. Upon any transfer of any Partnership Units
(not Preferred Units) in accordance with the provisions of this Section 9.2,
the transferee Non-Managing General Partner shall become vested with the powers
and rights of the transferor Non-Managing General Partner, and shall be liable
for all obligations and responsible for all duties of the Transferor
Non-Managing General Partner,
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once such transferee has executed such instruments as may be necessary to
effectuate such admission and to confirm the agreement of such transferee to be
bound by all the terms and provisions of this Agreement with respect to the
Partnership units so acquired. It is a condition to any transfer otherwise
permitted hereunder that the transferee assumes by operation of law or express
agreement all of the obligations of the transferor Non-Managing General Partner
under this Agreement with respect to such transferred Partnership Units and no
such transfer (other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the transferor Non-Managing General
Partner are assumed by a successor corporation by operation of law) shall
relieve the transferor Non-Managing General Partner of its obligations under
this Agreement accruing prior to the date of such transfer.
9.3 TRANSFERS BY LIMITED PARTNERS. Except as otherwise
provided in this Section 9.3, the Limited Partners shall not Transfer all or
any portion of their Partnership Units to any transferee without the consent of
the Managing General Partner and the Non- Managing General Partner, which
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125
consent may be withheld in their sole and absolute discretion; PROVIDED,
HOWEVER, that the foregoing shall not be considered a limitation on the ability
of the Limited Partners to exercise their Rights pursuant to Article XI hereof
or their EJDC Options pursuant to Article XII hereof.
(a) Notwithstanding the foregoing, but subject to
the provisions of Section 9.4 hereof, any Limited Partner may at any time,
without the consent of the Managing General Partner or the Non-Managing General
Partner, (i) Transfer all or a portion of its Partnership Units to an Affiliate
of such Limited Partner, or (ii) Pledge some or all of its Partnership Units to
any Institutional Lender (and, in the case of EJDC and its Affiliates, any EJDC
Lender). Any Transfer to an Affiliate pursuant to clause (i) and any Transfer
to a pledgee of Partnership Units Pledged pursuant to clause (ii) may be made
without the consent of the Managing General Partner or the Non- Managing
General Partner but, except as provided in Article XII, such transferee or such
pledgee shall hold the Units so transferred to it (and shall be admitted to the
Partnership as a Substitute Limited Partner) subject to all the
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126
restrictions set forth in this Section 9.3. It is a condition to any Transfer
otherwise permitted hereunder that the transferee assumes by operation of law
or express agreement all of the obligations of the transferor Limited Partner
under this Agreement with respect to such transferred Partnership Units arising
after the effective date of the Transfer and no such Transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law, and other than pursuant to an exercise of the Rights pursuant
to Article XI wherein all obligations and liabilities of the transferor Partner
arising from and after the date of such Transfer shall be assumed by the
Non-Managing General Partner) shall relieve the transferor Partner of its
obligations under this Agreement prior to the effective date of such Transfer.
Upon any such Transfer, the transferee shall be admitted as a Substituted
Limited Partner as such term is defined in the Act and shall succeed to all of
the rights, including rights with respect to the Rights, of the transferor
Limited Partner under this Agreement in the place and stead of such
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transferor Limited Partner; PROVIDED, HOWEVER, that notwithstanding the
foregoing, any transferee of any transferred Partnership Unit shall, unless the
Ownership Limit is waived in writing by the Non-Managing General Partner, be
subject to the Ownership Limit applicable to Persons other than the Limited
Partners and/or their Affiliates which may limit or restrict such transferee's
ability to exercise the Limited Partner's Rights, if any. Any transferee,
whether or not admitted as a Substituted Limited Partner, shall take subject to
the obligations of the transferor hereunder. Unless admitted as a Substituted
Limited Partner, no transferee of a Partnership Unit pursuant to this Section
9.3 pursuant to a transfer which is not consented to by the General Partners,
whether by a voluntary transfer, by operation of law or otherwise, shall have
rights hereunder, other than to receive such portion of the distributions made
by the Partnership as are allocable to the Partnership Units transferred.
(b) Any exercise of the EJDC Option by a
DeBartolo Group Limited Partner other than EJDC or Marie Denise DeBartolo York
must be consented to in writing by
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EJDC (or by the EJDC Lenders following a foreclosure by such Lenders under the
EJDC Loan Transaction). Any such transfer not so consented to shall be void AB
INITIO. To the extent it was a pledgee as of the Effective Time, an EJDC
Lender that forecloses on such Pledge has the right to freely transfer the
Partnership Units received in such foreclosure, subject to the provisions of
Section 9.5 hereof, to third parties without the consent of the Managing
General Partner or the Non-Managing General Partner, and any transferee of an
EJDC Lender shall be admitted as Substitute Limited Partner, subject to all
rights and obligations of this Agreement, and subject to all of the
restrictions set forth in this Section 9.3.
(c) In addition to the Rights granted to the JCP
Limited Partner and any other Transfers permitted under this Article IX, the
JCP Limited Partner shall have the right to transfer Partnership Interests to a
single accredited investor, as defined in Rule 501 promulgated under the
Securities Act. Upon receipt of a certificate signed by any of The First
National Bank of Chicago, NationsBank or Bank of America stating that, as
pledgee of a
<PAGE> 361
129
JCP Limited Partner, it has acquired the Partnership Interest(s) of one or more
of the JCP Limited Partners or naming the purchaser of such Partnership
Interest(s) at a foreclosure sale (and, in either case, specifying the
applicable Limited Partner(s) and Partnership Interest(s)), be admitted as a
Substituted Limited Partner under this Article IX, and the transferring Limited
Partner shall withdraw from the Partnership. The Partnership shall not be
required in any way to determine the validity of any written instrument
referred to in the immediately preceding sentence, and shall be authorized to
rely upon any such written instrument signed by the necessary parties.
(d) The Limited Partners acknowledge that the
Partnership Interests have not been registered under any federal or state
securities laws and, as a result thereof, they may not be sold or otherwise
transferred, except with compliance with such laws. Notwithstanding anything
to the contrary contained in this Agreement, no Partnership Interests may be
sold or otherwise transferred unless such transfer is exempt from registration
under any applicable securities laws or such transfer is registered under such
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130
laws, it being acknowledged that the Partnership has no obligation to take any
action which would cause any such interests to be registered.
9.4 ISSUANCE OF ADDITIONAL PARTNERSHIP UNITS AND
PREFERRED UNITS. At any time after the date hereof, subject to the provisions
of Section 9.5 hereof, the Managing General Partner may, with the consent of
the Non-Managing General Partner, upon its determination that the issuance of
additional Partnership Units ("Additional Units") is in the best interests of
the Partnership, cause the Partnership to issue Additional Units to any
existing Partner or issue Additional Units to and admit as a partner in the
Partnership any Person in exchange for the contribution by such Person of cash
and/or property which the Managing General Partner determines is desirable to
further the purposes of the Partnership under Section 2.3 hereof and which the
Managing General Partner determines has a value that justifies the issuance of
such Additional Units. In the event that Additional Units are issued by the
Partnership pursuant to this Section 9.4, the number of Partnership Units
issued shall be determined by dividing the
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131
Gross Asset Value of the property contributed (reduced by the amount of any
indebtedness assumed by the Partnership or to which such property is subject)
as of the date of contribution to the Partnership (the "Contribution Date") by
the Deemed Partnership Unit Value, computed as of the Trading Day immediately
preceding the Contribution Date.
In addition, the Managing General Partner may, upon its
determination that the issuance of Preferred Units is in the best interests of
the Partnership, issue Preferred Units in accordance with Section 4.3(c)
hereof.
The Managing General Partner shall be authorized on behalf of
each of the Partners to amend this Agreement to reflect the admission of any
Partner or any increase in the Partnership Units or Preferred Units of any
Partner in accordance with the provisions of this Section 9.4, and the Managing
General Partner shall promptly deliver a copy of such amendment to the
Non-Managing General Partner and each Limited Partner. The Limited Partners
hereby irrevocably appoint the Managing General Partner as their
attorney-in-fact, coupled with an interest, solely for the purpose of executing
and delivering such documents, and taking such
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132
actions, as shall be reasonably necessary in connection with the provisions of
this Section 9.4 or making any modification to this Agreement permitted by
Section 7.3.
9.5 RESTRICTIONS ON TRANSFER.
(a) In addition to any other restrictions on
transfer herein contained, in no event may any Transfer or assignment of a
Partnership Unit by any Partner be made nor may any new Partnership Unit be
issued by the Partnership (i) to any Person which lacks the legal right, power
or capacity to own a Partnership Unit; (ii) in violation of applicable law;
(iii) if such Transfer would immediately or with the passage of time cause
either the Managing General Partner or the Non-Managing General Partner to fail
to comply with the REIT Requirements, such determination to be made assuming
that such Partners do comply with the REIT Requirements immediately prior to
the proposed Transfer; (iv) if such Transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title I of ERISA,
a "party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(e) of the Code); (v) if such Transfer
would, in
<PAGE> 365
133
the opinion of counsel to the Partnership, cause any portion of the underlying
assets of the Partnership to constitute assets of any employee benefit plan
pursuant to Department of Labor Regulations Section 2510.3-101; (vi) if such
Transfer would result in a deemed distribution to any Partner attributable to a
failure to meet the requirements of Regulations Section 1.752-2(d)(1), unless
such Partner consents thereto, (vii) such Transfer would cause any lender to
the Partnership (except the EJDC Lenders) to hold in excess of ten (10) percent
of the Partnership Interest that would, pursuant to the regulations under
Section 752 of the Code or any successor provision, cause a loan by such a
lender to constitute Partner Nonrecourse Debt or (viii) a Transfer, other than
to an Affiliate, of a Partnership Interest the value of which would have been
less than $20,000 when issued.
(b) No Preferred Unit may be transferred by the
Non-Managing General Partner to any Person who is not a General Partner of the
Partnership.
9.6 SHELF REGISTRATION RIGHTS.
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134
The Non-Managing General Partner agrees that, upon the request
of any Limited Partner that has not entered into a Registration Rights
Agreement with the Non-Managing General Partner substantially in the form of
Exhibit D hereto (each, a "Shelf Rights Holder"), made at any time, the
Non-Managing General Partner will within 60 days thereafter file a "shelf"
registration statement (the "Shelf Registration"), on an appropriate form
pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Securities Act"), or any similar rule that may be adopted by the SEC, with
respect to the sale of Registrable Securities (as defined below) by the Shelf
Rights Holders in ordinary course brokerage or dealer transactions not
involving an underwritten public offering. The Non- Managing General Partner
shall use all reasonable efforts to have the Shelf Registration declared
effective as soon as practicable after such filing and to keep such Shelf
Registration continuously effective following the date on which such Shelf
Registration is declared effective for so long as any Units are outstanding.
The Non-Managing General Partner further agrees, if necessary, to supplement or
make
<PAGE> 367
135
amendments to the Shelf Registration, if required by the registration form used
by the Non-Managing General Partner for the Shelf Registration or by the
instructions applicable to such registration form or by the Securities Act or
the rules and regulations thereunder, and the Non- Managing General Partner
agrees to furnish to each Shelf Rights Holder copies of any such supplement or
amendment at least three days prior to its being used and/or filed with the
SEC. Notwithstanding the foregoing, if the Non-Managing General Partner shall
furnish to the Unit holder a certificate signed by the Chief Executive Officer
of the Non-Managing General Partner stating that in the good faith judgment of
the Directors it would be significantly disadvantageous to the Non-Managing
General Partner and its stockholders for any such Shelf Registration to be
amended or supplemented, the Non-Managing General Partner may defer such
amending or supplementing of such Shelf Registration for not more than 45 days
and in such event the Unit holder shall be required to discontinue disposition
of any Registrable Securities covered by such Shelf Registration during such
period. Notwithstanding the foregoing, if the
<PAGE> 368
136
Non-Managing General Partner irrevocably elects, or is so required under
Section 11.3(a), prior to the filing of any Shelf Registration to issue all
cash in lieu of Shares upon the exchange of Units by the holder requesting the
filing of such Shelf Registration, the Non-Managing General Partner shall not
be obligated to file such Shelf Registration Statement. The Non-Managing
General Partner shall make available to its security holders, as soon as
reasonably practicable, a statement of operations covering a period of twelve
(12) months, commencing on the first day of the fiscal quarter next succeeding
each sale of any Registrable Securities pursuant to the Shelf Registration, in
a manner which shall satisfy the provisions of Section 11(a) of the Securities
Act.
(a) SECURITIES SUBJECT TO THIS SECTION 9.6. The
securities entitled to the benefits of this Section 9.6 are the Shares that
have been or may be issued from time to time upon the exchange of Units
pursuant to Article XI hereof and any other securities issued by the
Non-Managing General Partner in accordance with the terms of this Agreement in
exchange for any of the Shares (collectively,
<PAGE> 369
137
the "Registrable Securities") but, with respect to any particular Registrable
Security, only so long as it continues to be a Registrable Security.
Registrable Securities shall include any securities issued in accordance with
the terms of this Agreement as a dividend or distribution on account of
Registrable Securities or resulting from a subdivision of the outstanding
Shares of Registrable Securities into a greater number of shares (by
reclassification, stock split or otherwise). For the purposes of this
Agreement, a security that was at one time a Registrable Security shall cease
to be a Registrable Security when (i) such security has been effectively
registered under the Securities Act, and either (A) the registration statement
with respect thereto has remained continuously effective for 150 days or (B)
such security has been disposed of pursuant to such registration statement,
(ii) such security is or can be immediately sold to the public in reliance on
Rule 144 (or any similar provision then in force) under the Securities Act,
(iii) such security has been otherwise transferred (except in connection with
the exercise of the EJDC Option) and (a) the Non-Managing
<PAGE> 370
138
General Partner has delivered a new certificate or other evidence of ownership
not bearing the legend set forth on the Shares upon the initial issuance
thereof (or other legend of similar import) and (b) in the opinion of counsel
to the Non-Managing General Partner, the subsequent disposition of such
security would not require the registration or qualification under the
Securities Act or any similar state law then in force, or (iv) such security
has ceased to be outstanding.
(b) REGISTRATION EXPENSES. The Non-Managing
General Partner shall pay all expenses incident to the Shelf Registration,
including, without limitation, (i) all SEC, stock exchange and National
Association of Securities Dealers, Inc. registration, filing and listing fees,
(ii) all fees and expenses incurred in complying with securities or "blue sky"
laws (including reasonable fees and disbursements of counsel in connection with
"blue sky" qualifications of the Registrable Securities), (iii) all printing,
messenger and delivery expenses, (iv) all fees and disbursements of the
Non-Managing General Partner's independent public accountants and counsel and
(v) all fees
<PAGE> 371
139
and expenses of any special experts retained by the Non-Managing General
Partner in connection with the Shelf Registration pursuant to the terms of this
Section 9.6, regardless of whether such Shelf Registration becomes effective,
unless such Shelf Registration fails to become effective as a result of the
fault of the Shelf Rights Holders; PROVIDED, HOWEVER, that the Non-Managing
General Partner shall not pay the costs and expenses of any Shelf Rights Holder
relating to brokerage or dealer fees, transfer taxes, or the fees or expenses
of any counsel, accountants or other representatives retained by the Shelf
Rights Holders, individually or in the aggregate.
ARTICLE X
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
----------------------------------------------
10.1 NO PARTICIPATION IN MANAGEMENT. Except as expressly
permitted hereunder, the Limited Partners shall not take part in the management
of the Partnership's business, transact any business in the Partnership's name
or have the power to sign documents for or otherwise bind the Partnership;
PROVIDED, that the foregoing shall not be
<PAGE> 372
140
deemed to limit the ability of a Limited Partner (or any officer or director
thereof) who is an officer, director or employee of the Partnership, either the
Managing General Partner or Non-Managing General Partner, or any Affiliate
thereof, to act in such capacity.
10.2 BANKRUPTCY OF A LIMITED PARTNER. The Bankruptcy of any
Limited Partner shall not cause a dissolution of the Partnership, but the
rights of such Limited Partner to share in the Profits or Losses of the
Partnership and to receive distributions of Partnership funds shall, on the
happening of such event, devolve to its successors or assigns, subject to the
terms and conditions of this Agreement, and the Partnership shall continue as a
limited partnership. However, in no event shall such assignee(s) become a
Substituted Limited Partner.
10.3 NO WITHDRAWAL. No Limited Partner may withdraw from the
Partnership without the prior written consent of the Managing General Partner
and of the Non-Managing General Partner, other than as expressly provided in
this Agreement.
<PAGE> 373
141
10.4 DUTIES AND CONFLICTS. (a) The Partners recognize that
each of the other Partners and their Affiliates have or may have other business
interests, activities and investments, some of which may be in conflict or
competition with the business of the Partnership, and that such persons are
entitled to carry on such other business interests, activities and investments.
In addition, the Partners recognize that certain of the Limited Partners and
their Affiliates are and may in the future be tenants of the Partnership or
other Persons or own anchor or other stores in the Partnership's Properties or
other properties and in connection therewith may have interests that conflict
with those of the Partnership. In deciding whether to take any actions in such
capacity, such Limited Partners and their Affiliates shall be under no
obligation to consider the separate interests of the Partnership and shall have
no fiduciary obligations to the Partnership and shall not be liable for
monetary damages for losses sustained, liabilities incurred or benefits not
derived by the other Partners as the result of such Limited Partner's acting
exclusively in its independent capacity; nor shall
<PAGE> 374
142
the Partnership, the Non-Managing General Partner or the Managing General
Partner be under any obligation to consider the separate interests of the
Limited Partners and their Affiliates in such Limited Partners' independent
capacities or have any fiduciary obligations to the Limited Partners and their
Affiliates in such capacity or be liable for monetary damages for losses
sustained, liabilities incurred or benefits not derived by the Limited Partners
and their Affiliates in such independent capacities arising from actions or
omissions taken by the Partnership. The Limited Partners and their Affiliates
may engage in or possess an interest in any other business or venture of any
kind, independently or with others, on their own behalf or on behalf of other
entities with which they are affiliated or associated, and such persons may
engage in any activities, whether or not competitive with the Partnership,
without any obligation to offer any interest in such activities to the
Partnership or to any Partner or otherwise. Neither the Partnership nor any
Partner shall have any right, by virtue of this Agreement, in or to such
activities, or the income or profits derived therefrom, and the pursuit of such
<PAGE> 375
143
activities, even if competitive with the business of the Partnership, shall not
be deemed wrongful or improper.
(b) Notwithstanding the foregoing, without the
prior consents of the Managing General Partner and the Non- Managing General
Partner, no Limited Partner shall knowingly take any action, including
acquiring, directly or indirectly, an interest in any tenant of a Property
which would have, through the actual or constructive ownership of any tenant of
any Property, the effect of causing the percentage of the gross income of
either of the Managing General Partner or the Non-Managing General Partner that
fails to be treated as "rents from real property" within the meaning of Section
856(d)(2) of the Code to exceed such percentage on the date hereof (which
currently provides that ownership of a tenant of the Partnership will not be
attributed to a Person unless such Person directly or indirectly owning the
tenant also directly or indirectly owns 10% or more of the Managing General
Partner or the Non-Managing General Partner). Each Limited Partner shall have
a duty to notify the Managing General Partner and the Non-Managing General
Partner on a timely basis of any potential
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144
acquisition or change in ownership that could reasonably be expected to have
such effect.
10.5 GUARANTY AND INDEMNIFICATION AGREEMENTS.
(a) The Partnership shall notify the Limited
Partners no less than 45 days (or, if the Partnership itself has less than 45
days' prior notice, as promptly as practicable) prior to the occurrence of any
event that the Partnership reasonably expects will reduce the amount of
Partnership liabilities that the Limited Partners may include in their
individual tax bases of their respective Partnership Interests pursuant to
Treasury Regulation Section 1.752-3(a)(2). Upon receipt of such notice, each
Limited Partner shall inform the Partnership of any action it desires to take
in its sole and absolute discretion in order to increase the "economic risk of
loss" (within the meaning of Treasury Regulation Section 1.752-2) (the
"INCURRENCE") that it has with respect to liabilities of the Partnership or
applicable Subsidiary Partnerships. The Partnership shall cooperate with each
Limited Partner to facilitate the Incurrence by such Limited Partner with
respect to Partnership Liabilities or liabilities of Subsidiary
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145
Partnerships in such a way so that the Incurrence has the least amount of real
economic risk to such Limited Partner and provided that the Incurrence does not
have a material adverse impact on any other Partner in the Partnership or any
such Partner's Affiliates.
No direct or indirect Partner in the Partnership or any
partnership which is the obligor on a JCP Property Liability shall incur the
"economic risk of loss" (within the meaning of Treasury Regulation Section
752-2) with respect to any JCP Property Liability without the prior written
consent of the JCP Limited Partner.
(b) Notwithstanding the provisions of paragraph
(a), no Limited Partners shall have any right to negotiate directly with any
lender of the Partnership, any such negotiation to be undertaken in good faith
by the Managing General Partner or the Non- Managing General Partner on behalf
of, and at the request of, all affected Limited Partners.
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146
ARTICLE XI
GRANT OF RIGHTS TO THE LIMITED PARTNERS
---------------------------------------
11.1 GRANT OF RIGHTS. The Non-Managing General Partner does
hereby grant to each of the Limited Partners and each of the Limited Partners
does hereby accept the right, but not the obligation (hereinafter such right
sometimes referred to as the "Rights"), to convert all or a portion of such
Limited Partner's Partnership Units into Shares or cash, as selected by the
Non-Managing General Partner, any time or from time to time, on the terms and
subject to the conditions and restrictions contained in this Article XI. The
Rights granted hereunder may be exercised by a Limited Partner, on the terms
and subject to the conditions and restrictions contained in this Article XI,
upon delivery to the Non-Managing General Partner of a notice in the form of
Exhibit E (an "Exercise Notice"), which notice shall specify the Partnership
Interests to be converted by such Limited Partner. Once delivered, the
Exercise Notice shall be irrevocable, subject to payment by the Non-Managing
General Partner of the Purchase Price in respect of such Partnership Units in
accordance with the
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147
terms hereof and subject to Section 1 of the Registration Rights Agreements.
In the event the Non-Managing General Partner elects to cause such Units to be
converted into cash, the Non-Managing General Partner shall effect such
conversion by redeeming the Partnership Units subject to the Exercise Notice
for cash.
11.2 LIMITATION ON EXERCISE OF RIGHTS. Rights may be
exercised at any time and from time to time. In addition, if an Exercise
Notice is delivered to the Non-Managing General Partner but, as a result of the
Ownership Limit or as a result of other restrictions contained in the Charter
of the Non-Managing General Partner, the Rights cannot be exercised in full for
Shares, the Exercise Notice shall be deemed to be modified such that the Rights
shall be exercised only to the extent permitted under the Ownership Limit or
under the Charter of the Non-Managing General Partner. Notwithstanding the
foregoing, any Person shall be permitted to exercise its Rights hereunder
during the first half of a taxable year of the Non-Managing General Partner
even if upon conversion of the Units that are the subject of an Exercise Notice
into Shares, the Shares held by such
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148
Person will exceed the Ownership Limit, so long as such Person shall
immediately following such conversion sell so many of such Shares as shall
cause the Ownership Limit not to be exceeded upon consummation of such sale.
The Non-Managing General Partner hereby agrees to exercise its right pursuant
to Article Ninth of its Charter to permit the Ownership Limit to be exceeded in
the circumstances described in the preceding sentence.
11.3 COMPUTATION OF PURCHASE PRICE/FORM OF PAYMENT. The
purchase price ("Purchase Price") payable to the Limited Partners shall be
equal to the Deemed Partnership Unit Value multiplied by the number of
Partnership Units with respect to which the Rights are being exercised computed
as of the date on which the Exercise Notice was delivered to the Non-Managing
General Partner (the "Computation Date"). Subject to the following paragraph,
the Purchase Price for the Offered Units shall be payable, at the option of the
Non-Managing General Partner, by causing the Partnership to redeem the
Partnership Units for cash in the amount of the Purchase Price, or by the
issuance by the Non-Managing General Partner of the number of Shares
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149
equal to the number of Partnership Units with respect to which the Rights are
being exercised (adjusted as appropriate to account for stock splits, stock
dividends or other similar transactions between the Computation Date and the
closing of the purchase and sale of the Offered Units in the manner specified
in Section 11.7(d) below).
Where a Limited Partner exercising its rights
pursuant to this Section on or after the fifth anniversary of the Effective
Time, up to, but not including, the eighth anniversary of such date, was a
DeBartolo Group Limited Partner as of the Effective Time, and such Limited
Partner has received a special allocation of taxable income or gain from a
Covered Sale within 90 days prior to such exercise, then to the extent of any
tax due on such allocation and on the redemption of such Units, the Managing
General Partner shall, if the Limited Partner so requested in the Exercise
Notice, cause the Partnership to redeem the Units for cash in accordance with
this Section 11.3.
11.4 CLOSING. The closing of the acquisition of Offered
Units shall, unless otherwise mutually agreed, be held at the principal offices
of the Non-Managing General
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150
Partner, on the date agreed to by the Non-Managing General Partner and the
relevant Limited Partner, which date (the "Settlement Date") shall in no event
be on the date which is the later of (i) ten (10) days after the date of the
Exercise Notice and (ii) the expiration or termination of the waiting period
applicable to the Limited Partner, if any, under the Hart-Scott-Rodino Act (the
"HSR Act"). The Non-Managing General Partner agrees to use its best efforts to
obtain an early termination of the waiting period applicable to each tender, if
any, under the HSR Act. Until the Settlement Date, each tendering Partner
shall continue to own his respective tendered Offered Units, and will continue
to be treated as the holder of such Offered Units for all purposes of this
Agreement, including, without limitation, for purposes of voting, consent,
allocations and distributions. Offered Units will be transferred to the
Non-Managing General Partner only upon receipt by the tendering Partner of
Shares or cash in payment in full therefor.
11.5 CLOSING DELIVERIES. At the closing of the purchase and
sale of Offered Units, payment of the Purchase
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151
Price shall be accompanied by proper instruments of transfer and assignment and
by the delivery of (i) representations and warranties of (A) the Limited
Partner with respect to its due authority to sell all of the right, title and
interest in and to such Offered Units to the Non- Managing General Partner and
with respect to the status of the Limited Partner Interest being sold, free and
clear of all Liens, and (B) the Non-Managing General Partner with respect to
due authority to acquire such Units for Shares or to cause the Partnership to
redeem Partnership Units subject to an Exercise Notice for cash and, in the
case of payment by Shares, (ii)(A) an opinion of counsel for the Non-Managing
General Partner, reasonably satisfactory to the Limited Partner, to the effect
that such Shares have been duly authorized, are validly issued, fully- paid and
non-assessable, and (B) a stock certificate or certificates evidencing the
Shares to be issued and registered in the name of the Limited Partner or its
designee.
11.6 TERM OF RIGHTS. The rights of the parties with respect
to the Rights shall remain in effect, subject
<PAGE> 384
152
to the terms hereof, throughout the existence of the Partnership.
11.7 COVENANTS OF THE NON-MANAGING GENERAL PARTNER. To
facilitate the Non-Managing General Partner's ability to fully perform its
obligations hereunder, the Non-Managing General Partner covenants and agrees as
follows:
(a) At all times during the pendency of the
Rights, the Non-Managing General Partner shall reserve for issuance such number
of Shares as may be necessary to enable the Non-Managing General Partner to
issue such Shares in full payment of the Purchase Price in regard to all
Partnership Units which are from time to time outstanding and held by the
Limited Partner.
(b) As long as the Non-Managing General Partner
shall be obligated to file periodic reports under the Exchange Act, the
Non-Managing General Partner will timely file such reports in such manner as
shall enable any recipient of Shares issued to a Limited Partner hereunder in
reliance upon an exemption from registration under the Securities Act to
continue to be eligible to utilize Rule 144 promulgated by the SEC pursuant to
the Securities Act,
<PAGE> 385
153
or any successor rule or regulation or statute thereunder, for the resale
thereof.
(c) During the pendency of the Rights, the
relevant Limited Partners shall receive in a timely manner all reports filed by
the Non-Managing General Partner with the SEC and all other communications
transmitted from time to time by the Non-Managing General Partner to the owners
of its Shares.
(d) Under no circumstances shall the Non-Managing
General Partner declare any stock dividend, stock split, stock distribution or
the like, unless fair and equitable arrangements are provided, to the extent
necessary, to fully adjust, and to avoid any dilution in, the Rights of any
Limited Partner under this Agreement.
11.8 LIMITED PARTNERS' COVENANT. Each of the Limited
Partners covenants and agrees with the Non-Managing General Partner that all
Offered Units tendered to the Non-Managing General Partner or the Partnership,
as the case may be, in accordance with the exercise of Rights herein provided
shall be delivered free and clear of all Liens and should any Liens exist or
arise with respect to such Offered
<PAGE> 386
154
Units, the Non-Managing General Partner or the Partnership, as the case may be,
shall be under no obligation to acquire the same unless, in connection with
such acquisition, the Non-Managing General Partner has elected to cause the
Partnership to pay such portion of the Purchase Price in the form of cash
consideration in circumstances where such consideration will be sufficient to
cause such existing Lien to be discharged in full upon application of all or a
part of such consideration and the Partnership is expressly authorized to apply
such portion of the Purchase Price as may be necessary to satisfy any
indebtedness in full and to discharge such Lien in full. In the event any
transfer tax is payable by the Limited Partner as a result of a transfer of
Partnership Units pursuant to the exercise by a Limited Partner of the Rights,
the Limited Partner shall pay such transfer tax.
ARTICLE XII
EJDC OPTION
-----------
12.1 GRANT AND TERMS OF OPTION. In addition to the rights
granted in Article XI, the Non-Managing General
<PAGE> 387
155
Partner does hereby grant to EJDC and its Affiliates, and EJDC and its
Affiliates do hereby accept the right, but not the obligation (the "EJDC
Option"), to dispose of a certain number of Units held by EJDC and its
Affiliates, in certain circumstances and at certain times, subject to the terms
and conditions set forth below:
(a) If, prior to the EJDC Option Termination Date
(as defined in paragraph (e) below), EJDC elects to dispose of Units (other
than by exchanging them for Shares pursuant to Article XI) to satisfy any
Amortization Requirements (as defined in paragraph (d) below), EJDC shall
provide a written Notice (an "Initial EJDC Notice") to the Non-Managing General
Partner with respect to the period (a "Payment Period"), commencing upon the
Non-Managing General Partner's receipt of an Initial EJDC Notice and ending on
the earlier of (x) the first anniversary of the date of such receipt and (y)
the date on which the next Amortization Requirement is satisfied specifying:
(i) the number of Units (which number shall not,
in any event, exceed 30% of the number of Units owned by EJDC and its
Affiliates at the Effective Time) that are
<PAGE> 388
156
required to be disposed of solely to pay taxes and expenses payable on or in
connection with such disposition and to satisfy the Amortization Requirement
(as set forth in paragraph (d) below) for the Payment Period in respect of
which the Initial EJDC Notice is being given; and
(ii) the date on which such Amortization
Requirement is required to be satisfied.
(b) Within 10 days of its receipt of an Initial EJDC
Notice, the Non-Managing General Partner shall provide written notice (a
"Response Notice") to EJDC specifying the Non-Managing General Partner's
election to take one (but not more than one) of the following actions in the
Non-Managing General Partner's sole discretion:
(i) agree not to exercise any "blackout" or
"carveback" rights or other Non-Managing General Partner imposed limitations on
the availability or exercise of registration rights of EJDC and its Affiliates
under the Registration Rights Agreement so as to permit EJDC and its Affiliates
to exchange up to the number of Units specified in the Initial EJDC Notice with
the Non-Managing General Partner for Shares and sell the Shares in a registered
<PAGE> 389
157
offering in time for EJDC to satisfy the Amortization Requirement specified in
the Initial EJDC Notice and pay the taxes and expenses payable on or in
connection with such exchange; PROVIDED, that the Non-Managing General Partner
shall not have the option to elect the actions specified in this paragraph (i)
in any Payment Period commencing in 1996;
(ii) pay on a date specified by EJDC cash to EJDC
and its Affiliates upon tender by EJDC and its Affiliates of up to the number
of Units specified in the Initial EJDC Notice at a Purchase Price per Unit and
in accordance with the closing procedures that would be applicable upon the
exercise of Rights as specified in Sections 11.3, 11.4 and 11.5 above; or
(iii) permit EJDC and its Affiliates to sell up to
the number of Units specified in the Initial EJDC Notice to up to three
Institutional Investors in the then current Payment Period.
Failure by the Non-Managing Partner to provide a timely notice shall be deemed
to constitute an election of clause (iii).
<PAGE> 390
158
(c) If the sale of Units permitted to be sold under
clause (iii) of paragraph (b) above does not occur or is not completed within
120 days of receipt by EJDC of the Response Notice, then EJDC and its
Affiliates may not sell Units after the expiration of such 120-day period. In
order for EJDC and its Affiliates to dispose of Units in such Payment Period
after the expiration of such 120-day period, a new written notice (a
"Subsequent EJDC Notice") shall have been delivered by EJDC to the Non-Managing
General Partner which Subsequent EJDC Notice shall specify the same information
as shall have been specified in the Initial EJDC Notice for the then current
Payment Period, except that the number of units specified for disposition shall
not exceed 30% of the number of Units held by EJDC and its Affiliates at the
Effective Time minus the number of Units previously disposed of by EJDC and its
Affiliates in such Payment Period. Upon receipt of a Subsequent EJDC Notice
the Non-Managing General Partner shall within 10 days of receipt thereof
deliver to EJDC a Response Notice (a new Subsequent EJDC Notice being required
at each 120 day interval in order for Units to continue to be disposed of by
EJDC and its
<PAGE> 391
159
Affiliates during the then current Payment Period). In any event, upon the end
of a Payment Period, EJDC shall be required to deliver to the Non-Managing
General Partner a new Initial EJDC Notice with respect to the disposition of
Units in the new Payment Period, subject to the same limitations as were set
forth in the original Initial EJDC Notice as to such new Payment Period.
(d) EJDC covenants that the proceeds from the disposition
of Units pursuant to the exercise of the EJDC Option will be used only to pay
any taxes or expenses payable on or in connection with the sale, tender or
exchange of the Units in connection with any such exercise or to satisfy
amortization payments (the "Amortization Requirements") to a holder of EJDC's
indebtedness actually due, but only to the extent of indebtedness to such
holder as of the Effective Time, which shall not exceed the following amounts
for each Payment Period:
(i) A Payment Period Commencing in 1996 - up to
$150,000,000
(ii) A Payment Period Commencing in 1997 - up to
$150,000,000 minus the amount of
<PAGE> 392
160
the Amortization Requirement actually satisfied
in a Payment Period commencing in 1996 (such
that, by way of example, (x) if a $150,000,000
payment is made by EJDC to satisfy the
Amortization Requirement for a Payment Period
commencing in 1996 then the Amortization
Requirement for any Payment Period commencing
in 1997 would be zero and no EJDC Option would
be exercisable by EJDC in 1997 and (y) if a
$60,000,000 payment is made by EJDC to satisfy
the Amortization Requirement for a Payment
Period commencing in 1996 then the Amortization
Requirement for a Payment Period commencing in
1997 would be $90,000,000, etc.).
(iii) A Payment Period Commencing in 1998 - up to
$170,000,000
No other use of such proceeds shall be permitted.
<PAGE> 393
161
(e) The EJDC Option will terminate at the earlier
to occur of (i) the date on which the indebtedness of EJDC having the
Amortization Requirements is repaid and (ii) December 31, 1998 (the "EJDC Option
Termination Date"), and at such time the disposition of Units by EJDC and its
Affiliates pursuant to an Initial EJDC Notice or a Subsequent EJDC Notice shall
terminate.
ARTICLE XIII
GENERAL PROVISIONS
------------------
13.1 INVESTMENT REPRESENTATIONS.
(a) Each Limited Partner acknowledges that it (i)
has been given full and complete access to the Partnership and those person who
will manage the Partnership in connection with this Agreement and the
transactions contemplated hereby, (ii) has had the opportunity to review all
documents relevant to its decision to enter into this Agreement, and (iii) has
had the opportunity to ask questions of the Partnership and those persons who
will manage the Partnership concerning its investment in the Partnership and
the transactions contemplated hereby.
<PAGE> 394
162
(b) Each Limited Partner acknowledges that it
understands that the Units to be purchased by it hereunder will not be
registered under the Securities Act of 1933 in reliance upon the exemption
afforded by Section 4(2) thereof for transactions by an issuer not involving
any public offering, and will not be registered or qualified under any
applicable state securities laws. Each Limited Partner represents that (i) it
is acquiring such Units for investment only and without any view toward
distribution thereof, and it will not sell or otherwise dispose of such Units
except pursuant to the exercise of the Rights, or otherwise in accordance with
the terms hereof, and it will not sell or otherwise dispose of such Units
except in compliance with the registration requirements or exemption provisions
of any applicable state securities laws, (ii) its economic circumstances are
such that it is able to bear all risks of the investment in the Units for an
indefinite period of time including the risk of a complete loss of its
investment in the Units and (iii) it has knowledge and experience in financial
and business matters sufficient to evaluate the risks of investment in the
Units. Each Limited
<PAGE> 395
163
Partner further acknowledges and represents that it has made its own
independent investigation of the Partnership and the business proposed to be
conducted by the Partnership, and that any information relating thereto
furnished to the Limited Partner was supplied by or on behalf of the
Partnership.
13.2 NOTICES. All notices, offers or other communications
required or permitted to be given pursuant to this Agreement shall be in
writing and may be personally delivered or sent by United States mail or by
reputable overnight delivery service and shall be deemed to have been given
when delivered in person, upon receipt when delivered by overnight delivery
service or three business days after deposit in United States mail, registered
or certified, postage prepaid, and properly addressed, by or to the appropriate
party. For purposes of this Section 13.1, the addresses of the parties hereto
shall be as set forth on Exhibit A hereof. The address of any party hereto may
be changed by a notice in writing given in accordance with the provisions
hereof.
<PAGE> 396
164
13.3 SUCCESSORS. This Agreement and all the terms and
provisions hereof shall be binding upon and shall inure to the benefit of all
Partners, and their legal representatives, heirs, successors and permitted
assigns, except as expressly herein otherwise provided.
13.4 LIABILITY OF LIMITED PARTNERS. The liability of the
Limited Partners for their obligations, covenants, representations and
warranties under this Agreement shall be several and not joint.
13.5 EFFECT AND INTERPRETATION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN CONFORMITY WITH THE LAWS OF THE STATE OF DELAWARE.
13.6 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
13.7 PARTNERS NOT AGENTS. Nothing contained herein shall
be construed to constitute any Partner the agent of another Partner, except as
specifically provided herein, or in any manner to limit the Partners in the
carrying on of their own respective businesses or activities.
<PAGE> 397
165
13.8 ENTIRE UNDERSTANDING; ETC. This Agreement and the other
agreements referenced herein or therein or to which the signatories hereto or
thereto are parties constitute the entire agreement and understanding among the
Partners and supersede any prior understandings and/or written or oral
agreements among them respecting the subject matter within.
13.9 SEVERABILITY. If any provision of this Agreement, or
the application of such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those to which it is held invalid by such court, shall not be affected thereby.
13.10 TRUST PROVISION. This Agreement, to the extent
executed by the trustee of a trust, is executed by such trustee solely as
trustee and not in a separate capacity. Nothing herein contained shall create
any liability on, or require the performance of any covenant by, any such
trustee individually, nor shall anything contained herein
<PAGE> 398
166
subject the individual personal property of any trustee to any liability.
13.11 PRONOUNS AND HEADINGS. As used herein, all pronouns
shall include the masculine, feminine and neuter, and all defined terms shall
include the singular and plural thereof wherever the context and facts require
such construction. The headings, titles and subtitles herein are inserted for
convenience of reference only and are to be ignored in any construction of the
provisions hereof. Any references in this Agreement to "including" shall be
deemed to mean "including without limitation."
13.12 NON-EFFECT ON CERTAIN LIMITED PARTNERS. As to any
Limited Partner who was a Limited Partner of the Partnership prior to the
Effective Time and who does not execute this Agreement, the provisions of the
Fourth Amended and Restated Partnership Agreement of the Partnership dated
April 21, 1994 which, under the terms thereof, cannot, in certain
circumstances, be Amended without the consent of such non- signing Limited
Partner, shall continue in effect as to such Limited Partner to the extent such
provisions are inconsistent with this Agreement.
<PAGE> 399
167
13.13 ASSURANCES. Each of the Partners shall hereafter
execute and deliver such further instruments (provided such instruments are in
form and substance reasonably satisfactory to the executing Partner) and do
such further acts and things as may be reasonably required or useful to carry
out the intent and purpose of this Agreement and as are not inconsistent with
the terms hereof.
<PAGE> 400
168
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed as of the date and year first
above written, which Agreement shall be effective on the date it is executed
and delivered by the Parties hereto.
GENERAL PARTNER:
- - - ---------------
DeBARTOLO REALTY CORPORATION,
an Ohio Corporation
7655 Market Street
P.O. Box 3287
Youngstown, OH 44513-3287
By:__________________________
Name:
Title:
SIMON PROPERTY GROUP, INC.,
a Maryland corporation
Merchants Plaza
115 West Washington Street
Suite 15 East
Indianapolis, IN 46204
By:__________________________
Name:
Title:
<PAGE> 401
169
LIMITED PARTNERS:
- - - ----------------
By:__________________________
<PAGE> 402
EXHIBIT "A"
-----------
PARTNERSHIP UNITS
-----------------
<TABLE>
<CAPTION>
GENERAL PARTNER(S) NUMBER OF UNITS PERCENTAGE INTEREST
------------------ --------------- -------------------
<S> <C> <C>
Simon Property
Group, Inc., a
Maryland
corporation
DeBartolo Realty
Corporation, an
Ohio corporation
</TABLE>
LIMITED PARTNER(S)
------------------
This exhibit will identify which Limited Partners were former limited partners
of Simon Property Group, L.P. and which Limited Partners were former limited
partners of DeBartolo Realty Partnership, L.P.
The number of Units and Percentage Interests for each Partner shall be
calculated in accordance with the Formula, attached hereto.
<PAGE> 403
EXHIBIT "B"
-----------
PREFERRED UNIT DESIGNATIONS
---------------------------
None.
<PAGE> 404
EXHIBIT "C"
-----------
COVERED SALES
-------------
<TABLE>
<S> <C>
Mission Viejo Mall Aventura Mall
Boynton Beach Mall Coral Square
Florida Mall Grove at Lakeland Square
Gulf View Square Highland Lakes Plaza
Lakeland Square Melbourne Square
Miami International Mall Paddock Mall
Palm Beach Mall Port Charlotte Town Center
Terrace at Florida Mall Treasure Coast Square
Northfield Square Castleton Square
Lafayette Square University Park Mall
Ward Plaza Washington Plaza
Great Lakes Mall Great Lakes Plaza
Lima Plaza Lima Mall
Century III Mall Randall Park Mall
Mainland Crossing Philadelphia Center
Chesapeake Square Chesapeake Center
Northgate Shopping Center Columbia Center
Bay Park Tacoma Mall
Tyrone Square Summit Mall
Washington Square Upper Valley Mall
Brunswick Square Richardson Square
New Orleans Centre/CNG Tower* Eastern Hills
Biltmore Square Woodville Mall
Cheltenham Square Glen Burnie Mall
</TABLE>
<PAGE> 405
<TABLE>
<S> <C>
TC Peripheral Richmond Mall
(Mainland Peripheral)
</TABLE>
* If sold together, such properties will not constitute "Covered
Properties."
EXHIBIT "D"
-----------
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
<PAGE> 406
EXHIBIT "E"
-----------
FORM OF EXERCISE NOTICE
-----------------------
[Limited Partner], as of [date of exercise], hereby
irrevocably (except as set forth in the Agreement referred to below) elects,
pursuant to the rights granted to it in Section 11.1 of the Agreement of
Limited Partnership of Simon-DeBartolo Group, L.P. (the "Agreement") to convert
[ ]% of its Partnership Units (as such term is defined in the Agreement) into
shares of common stock of Simon Property Group, Inc. or cash, as selected by
Simon Property Group, Inc.
[Limited Partner]
By:___________________________
Name:
Title:
<PAGE> 407
EXHIBIT "F"
-----------
EJDC LENDERS AND EJDC LOAN DOCUMENTATION
----------------------------------------
The EJDC Lenders are each and every lender (and their trustees
or agents) party from time to time to:
1. the SECOND AMENDED AND RESTATED NEW FACILITY CREDIT
AGREEMENT, dated as of March 31, 1994 by and among DeBARTOLO, INC. and THE
EDWARD J. DeBARTOLO CORPORATION, as the borrowers, WELLS FARGO BANK, N.A., as
the issuing bank, and the co-lenders specified therein, and WELLS FARGO REALTY
ADVISORS FUNDING, INCORPORATED as the administrative agent; or
2. the SECOND AMENDED AND RESTATED RESTRUCTURING
FACILITY CREDIT AGREEMENT, dated as of March 31, 1994 by and among DeBARTOLO,
INC. and THE EDWARD J. DeBARTOLO CORPORATION, as the borrowers, and the
co-lenders specified therein, and WELLS FARGO REALTY ADVISORS FUNDING,
INCORPORATED, as the administrative agent.
The EJDC Loan Documentation are the aforementioned credit
agreements and the other loan and collateral documents delivered in connection
therewith.
<PAGE> 408
Exhibit K
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
REGISTRATION RIGHTS AGREEMENT, dated as of _______, 1996 (the
"Agreement"), by and among the persons set forth on Schedule 1 (the "Simon
Family Members"), SIMON PROPERTY GROUP, INC., a Maryland corporation (the
"Company"), MELVIN SIMON & ASSOCIATES, INC., an Indiana corporation ("MSA"),
JCP REALTY, INC., a Delaware corporation ("JCP"), BRANDYWINE REALTY, INC., a
Delaware corporation ("Brandywine"), and the Estate of Edward J. DeBartolo,
Sr., Edward J. DeBartolo, Jr., Marie Denise DeBartolo York, and the Trusts and
other entities listed on Schedule 2 and (collectively, the "DeBartolo Group"),
and any of their respective successors-in-interest and permitted assigns. MSA
and the Simon Family Members are hereinafter referred to as the "Simon Family
Entities." The Simon Family Entities, JCP, Brandywine and each member of the
DeBartolo Group are hereinafter sometimes referred to as the "Limited
Partners." With respect to any request pursuant to Section 2.1 on behalf of
any party hereto that is a member of the DeBartolo Group, The Edward J.
DeBartolo Corporation
<PAGE> 409
2
shall act as the sole representative (in such capacity the "DeBartolo
Representative") of all the members of the DeBartolo Group for the purpose of
making such request. The Limited Partners are hereinafter sometimes referred
to as the "Rights Holders." The Rights Holders and their respective
successors-in-interest and permitted assigns are hereinafter sometimes referred
to as the "Holders."
Upon execution of the Fifth Amended and Restated Agreement of
Limited Partnership (the "Partnership Agreement") of DeBartolo Realty
Partnership, L.P., a Delaware limited partnership (the "Operating
Partnership"), dated as of March __, 1996, among DeBartolo Realty Corporation,
as its managing general partner (the "General Partner"), the Company, as its
non-managing general partner, and its limited partners, and the consummation of
the transactions contemplated thereby, each of the Limited Partners will be a
limited partner holding (individually or together with its affiliates) in
excess of 1.75% of the units of partnership interest (the "Units") in the
Operating Partnership controlled by the General Partner. Pursuant to the
Partnership Agreement, the Limited Partners now have the right at any time to
exchange all or any portion of their
<PAGE> 410
3
Units for shares (the "Shares") of the Company's common stock, par value $.0001
per share (the "Common Stock"), or cash, at the election of the Company, and,
except as provided herein, any Shares issued upon such exchange will not be
registered under the Securities Act of 1933, as amended (the "Securities Act").
In order to induce the Limited Partners to enter into the
Partnership Agreement, the Company has agreed to provide certain registration
rights with respect to the Shares as set forth in this Agreement.
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. SECURITIES SUBJECT TO THIS AGREEMENT. The securities
entitled to the benefits of this Agreement are (a) the Shares issued by the
Company to the Holders upon exchange of Units, (b) the Shares issued by the
Company to the Holders upon conversion of the Class B Common Stock, par value
$.0001 per share, if any of the Company (c) the Shares issued by the Company
held by said Holders upon the conversion of Class C Common Stock, par value
$.0001 per
<PAGE> 411
4
share, if any, of the Company and (d) any other securities issued by the
Company in exchange for or upon conversion of any such Shares (collectively,
the "Registrable Securities") but, with respect to any particular Registrable
Security, only so long as it continues to be a Registrable Security.
Registrable Securities shall include any securities issued as a dividend or
distribution on account of Registrable Securities or resulting from a
subdivision of the outstanding shares of Registrable Securities into a greater
number of shares (by reclassification, stock split or otherwise). For the
purposes of this Agreement, a security that was at one time a Registrable
Security shall cease to be a Registrable Security when (a) such security has
been effectively registered under the Securities Act other than pursuant to
Section 4 of this Agreement, and either (i) the registration statement with
respect thereto has remained continuously effective for 150 days or (ii) such
security has been disposed of pursuant to such registration statement, (b) such
security is sold to the public in reliance on Rule 144 (or any similar
provision then in force) under the Securities Act, (c) such security has been
otherwise transferred, except in connection with the
<PAGE> 412
5
exercise of the EJDC Option (as defined in the Partnership Agreement), and (i)
the Company has delivered a new certificate or other evidence of ownership not
bearing the legend set forth on the Shares upon the initial issuance thereof
(or other legend of similar import) and (ii) in the opinion of counsel to the
Company reasonably acceptable to the Holders and addressed to the Company and
the holder of such security, the subsequent disposition of such security shall
not require the registration or qualification under the Securities Act, or (d)
such security has ceased to be outstanding.
Notwithstanding anything to the contrary herein, any Limited
Partner may exercise any of its rights hereunder prior to its receipt of
Shares, provided that such Limited Partner, simultaneously with the delivery of
any notice requesting registration hereunder, shall deliver an Exercise Notice
to the Company requesting exchange of Units exchangeable into such number of
Shares as such Limited Partner has requested to be registered. Any such
Exercise Notice so delivered shall be (a) conditioned on the effectiveness of
the requested registration in connection with which it was delivered and (b)
deemed to cover only
<PAGE> 413
6
such number of Units as are exchangeable into the number of Shares actually
sold pursuant to the requested registration. Any Shares to be issued in
connection with any such Exercise Notice shall be issued upon the closing of
the requested registration. In the event that the Company elects to issue all
cash in lieu of Shares upon the exchange of the Units covered by any such
Exercise Notice, the registration requested by the Limited Partner that
delivered such Exercise Notice, if a Demand Registration, shall not constitute
a Demand Registration under Section 2.1 hereof.
Nothing contained herein shall create any obligation on the
part of the Company to issue Shares, rather than cash, upon the exchange of any
Units.
2. DEMAND REGISTRATION.
2.1 REQUEST FOR REGISTRATION. At any time, each
Holder (or, with respect to each Holder that is a member of the DeBartolo
Group, the DeBartolo Representative) may make a written request per 12-month
period (specifying the intended method of disposition) for registration under
the Securities Act (each, a "Demand Registration") of all or part of such
Holder's Registrable Securities (but such part, together with the number of
securities requested by other
<PAGE> 414
7
Holders to be included in such Demand Registration pursuant to this Section
2.1, shall have an estimated market value at the time of such request (based
upon the then market price of a share of Common Stock of the Company) of at
least $10,000,000). Notwithstanding the foregoing, the Company shall not be
required to file any registration statement on behalf of any Holder within six
months after the effective date of any earlier registration statement so long
as the Holder requesting the Demand Registration was given a notice offering it
the opportunity to sell Registrable Securities under the earlier registration
statement and such Holder did not request that all of its Registrable
Securities be included; PROVIDED, HOWEVER, that if a Holder requested that all
of its Registrable Securities be included in the earlier registration statement
but not all were so included through no fault of the Holder, such Holder may,
but shall not be obligated to, require the Company to file another registration
statement pursuant to a Demand Registration (subject, in the event of a Demand
Registration for less than all such remaining Registrable Securities, to the
same $10,000,000 limitation set forth above) exercised by such Holder within
six months of the effective date of such
<PAGE> 415
8
earlier registration statement. Within ten days after receipt of a request for
a Demand Registration, the Company shall give written notice (the "Notice") of
such request to all other Holders and shall include in such registration all
Registrable Securities that the Company has received written requests for
inclusion therein within 15 days after the Notice is given (the "Requested
Securities"). Thereafter, the Company may elect to include in such
registration additional shares of Common Stock to be issued by the Company. In
such event, such shares to be issued by the Company in connection with a Demand
Registration shall be deemed to be Registrable Securities and the Company shall
be deemed to be a holder thereof. All requests made pursuant to this Section
2.1 shall specify the aggregate number of Registrable Securities to be
registered.
2.2 EFFECTIVE REGISTRATION AND EXPENSES. A
registration shall not constitute a Demand Registration under Section 2.1
hereof until it has become effective. In any registration initiated as a
Demand Registration, the Company shall pay all Registration Expenses (as
defined in Section 8) incurred in connection therewith, whether or not such
Demand Registration becomes effective, unless such
<PAGE> 416
9
Demand Registration fails to become effective as a result of the fault of one
or more Holders other than the Company, in which case the Company will not be
required to pay the Registration Expenses incurred with respect to the offering
of such Holder or Holders' Registrable Securities. The Registration Expenses
incurred with respect to the offering of such Holder or Holders' Registrable
Securities shall be the product of (a) the aggregate amount of all Registration
Expenses incurred in connection with such registration and (b) the ratio that
the number of such Registrable Securities bears to the total number of
Registrable Securities included in the registration.
2.3 PRIORITY ON DEMAND REGISTRATIONS. The Holder
making the Demand Registration may elect whether the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the
form of a firm commitment underwritten offering or otherwise; PROVIDED,
HOWEVER, that such Holder may not elect that such offering be made on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act. In any case
in which an offering is in the form of a firm commitment underwritten offering,
if the managing underwriter or underwriters of such offering advise
<PAGE> 417
10
the Company in writing that in its or their opinion the number of Registrable
Securities proposed to be sold in such offering exceeds the number of
Registrable Securities that can be sold in such offering without adversely
affecting the market for the Company's common stock, the Company will include
in such registration the number of Registrable Securities that in the opinion
of such managing underwriter or underwriters can be sold without adversely
affecting the market for the Company's common stock. In such event, the number
of Registrable Securities, if any, to be offered for the accounts of Holders
(including the Holder making the Demand Registration) shall be reduced PRO RATA
on the basis of the relative number of any Registrable Securities requested by
each such Holder to be included in such registration to the extent necessary to
reduce the total number of Registrable Securities to be included in such
offering to the number recommended by such managing underwriter or
underwriters. In this connection, it is understood that Teachers' Retirement
System of the State of Illinois ("Teachers'") and Homart San Antonio Investment
Co. ("Homart") have entered into a Registration Rights Agreement dated December
1, 1993, as amended (the "First Agreement"),
<PAGE> 418
11
providing for rights to register certain securities held by Teachers' and
Homart on similar terms to the terms hereof. The Company hereby agrees to use
its commercially reasonable efforts to secure the consent of Teachers' (a) to
waive the provisions of the following two sentences with respect to the
securities held by it, and (b) to participate PRO RATA with the Holders in any
reduction of the Registrable Securities to be offered hereunder as provided in
the preceding sentence above in this Section 2.3. In the event Teachers' (if
no such consent is secured) or Homart have exercised their rights pursuant to
the First Agreement to have any of their shares of Common Stock included in
such registration statement and in the opinion of the managing underwriter the
number of Registrable Securities proposed to be sold in such offering plus the
number of shares of Common Stock to be sold by Teachers' and/or Homart exceeds
the total number of shares of Common Stock that can be sold in such offering
without adversely affecting the market for the Company's Common Stock, then the
number of Registrable Securities to be offered for the account of the Holders
shall be reduced pro rata as aforesaid to zero before any reduction in the
number of shares of Common Stock to be
<PAGE> 419
12
offered by Teachers' and/or Homart. Each of the Holders agrees and
acknowledges that Teachers' and Homart are third party beneficiaries of this
Agreement and that this Section 2.3 cannot be amended in a manner adverse to
Teachers' or Homart without the consent of Teachers' and Homart.
2.4 SELECTION OF UNDERWRITERS. If any of the
Registrable Securities covered by a Demand Registration are to be sold in an
underwritten offering, the Holders, in the aggregate, that own or will own a
majority of the Registrable Securities that the Company has been requested to
register (including the Requested Securities but excluding any securities to be
issued by the Company), shall have the right to select the investment banker or
investment bankers and manager or managers that will underwrite the offering;
PROVIDED, HOWEVER, that such investment bankers and managers must be reasonably
satisfactory to the Company.
3. PIGGYBACK REGISTRATION. Whenever the Company
proposes to file a registration statement under the Securities Act with respect
to an underwritten public offering of common stock by the Company for its own
account or for the account of any stockholders of the Company (other than a
registration statement filed pursuant to either
<PAGE> 420
13
Section 2 hereof), the Company shall give written notice (the "Offering
Notice") of such proposed filing to each of the Holders at least 30 days before
the anticipated filing date. Such Offering Notice shall offer all such Holders
the opportunity to register such number of Registrable Securities as each such
Holder may request in writing, which request for registration (each, a
"Piggyback Registration") must be received by the Company within 15 days after
the Offering Notice is given. The Company shall use all reasonable efforts to
cause the managing underwriter or underwriters of a proposed underwritten
offering, if any, to permit the holders of the Registrable Securities requested
to be included in the registration for such offering to include such
Registrable Securities in such offering on the same terms and conditions as the
common stock of the Company or, if such offering is for the account of other
stockholders, the common stock of such stockholders included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters of a
proposed underwritten offering advise the Company in writing that in its or
their opinion the number of Registrable Securities proposed to be sold in such
offering exceeds the number of Registrable
<PAGE> 421
14
Securities that can be sold in such offering without adversely affecting the
market for the Company's common stock, the Company will include in such
registration the number of Registrable Securities that in the opinion of such
managing underwriter or underwriters can be sold without adversely affecting
the market for the Company's common stock. In such event, the number of
Registrable Securities, if any, to be offered for the accounts of Holders shall
be reduced PRO RATA on the basis of the relative number of any Registrable
Securities requested by each such Holder to be included in such registration to
the extent necessary to reduce the total number of Registrable Securities to be
included in such offering to the number recommended by such managing
underwriter or underwriters. The Company shall pay all Registration Expenses
incurred in connection with any Piggyback Registration. In this connection, it
is understood that if Teachers' and/or Homart have exercised their rights
pursuant to the First Agreement to have any of their shares of Common Stock
included in such registration statement and in the opinion of the managing
underwriter the number of Registrable Securities proposed to be sold in such
offering plus the number of shares of Common Stock to be
<PAGE> 422
15
offered by Teachers' and/or Homart exceeds the total number of shares of Common
Stock that can sold in such offering without adversely affecting the market for
the Company's Common Stock, then the number of Registrable Securities to be
offered for the account of the Holders shall be reduced pro rata as aforesaid
to zero before any reduction in the number of shares of Common Stock to be
offered by Teachers' and/or Homart.
4. SHELF REGISTRATION. The Company agrees that, upon
the request of any Holder, the Company shall cause to be filed on or as soon as
practicable thereafter a registration statement (a "Shelf Registration
Statement") on Form S-3 or any other appropriate form under the Securities Act
for an offering to be made on a delayed or continuous basis pursuant to Rule
415 thereunder or any similar rule that may be adopted by the Securities and
Exchange Commission (the "Commission") and permitting sales in ordinary course
broker or dealer transactions not involving an underwritten public offering
(and shall register or qualify the shares to be sold in such offering under
such other securities or "blue sky" laws as would be required pursuant to
Section 7(g) hereof) covering up to the
<PAGE> 423
16
aggregate number of (a) Shares to be issued to such Holder upon the exchange of
Units so that the Shares issuable upon the exchange of such Units will be
registered pursuant to the Securities Act and (b) Registrable Securities held
by such Holder. The Company shall use its best efforts to cause the Shelf
Registration Statement to be declared effective by the Commission within three
months after the filing thereof. The Company shall use its reasonable efforts
to keep the Shelf Registration Statement continuously effective (and to
register or qualify the shares to be sold in such offering under such other
securities or "blue sky" laws as would be required pursuant to Section 7(g)
hereof) for so long as any Holder holds any Units that may be exchanged for
Shares under the Partnership Agreement or until the Company has caused to be
delivered to each Holder an opinion of counsel, which counsel must be
reasonably acceptable to such Holders, stating that the Shares issued upon
exchange of Units may be sold by the Holders pursuant to Rule 144 promulgated
under the Securities Act without regard to any volume limitations and that the
Company has satisfied the informational requirements of Rule 144. The Company
shall file any necessary listing applications or
<PAGE> 424
17
amendments to existing applications to cause the Shares issuable upon exchange
of Units to be listed on the primary exchange on which the Common Stock is then
listed, if any. Notwithstanding the foregoing, if the Company determines that
it is necessary to amend or supplement such Shelf Registration Statement and if
the Company shall furnish to the Holders a certificate signed by the Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be significantly disadvantageous to
the Company and its stockholders for any such Shelf Registration Statement to
be amended or supplemented, the Company may defer such amending or
supplementing of such Shelf Registration Statement for not more than 45 days
and in such event the Holders shall be required to discontinue disposition of
any Registrable Securities covered by such Shelf Registration Statement during
such period. Notwithstanding the foregoing, if the Company irrevocably elects
prior to the filing of any Shelf Registration Statement to issue all cash in
lieu of Shares upon the exchange of Units by the Holder requesting the filing
of such Shelf Registration Statement, the Company
<PAGE> 425
18
shall not be obligated to file such Shelf Registration Statement.
5. RIGHTS OF OTHER STOCKHOLDERS. The Company shall not
grant any person, for so long as any securities convertible into or
exchangeable for Registrable Securities are outstanding, any rights to have
their securities included in any registration statement to be filed by the
Company if such rights are greater than the rights of the Holders granted
herein without extending such greater rights to the Holders. Subject to the
penultimate sentence of Section 2.3 and the last sentence of Section 3, to the
extent the securities of such other stockholders are entitled to be included in
any such registration statement and the managing underwriter or underwriters
believe that the number of securities proposed to be sold in such offering
exceeds the number of securities that can be sold in such offering without
adversely affecting the market for the Company's common stock, the number of
securities to be offered for the accounts of such other stockholders shall be
reduced to the extent necessary before the number of securities to be offered
for the accounts of the Holders is reduced. It is understood that the Company
has heretofore
<PAGE> 426
19
granted registration rights pursuant to the First Agreement to Teachers' and
Homart which rights will remain outstanding following the execution of the this
Agreement and that under the terms of the First Agreement, the Company is not
permitted to grant to any person for so long as any securities convertible into
or exchangeable for shares of Common Stock held by Teachers' and/or Homart are
outstanding registration rights which are greater than the rights granted to
Teachers' and Homart in the First Agreement. In this connection, the Simon
Family Entities, JSP and Brandywine, each of whom is also a signatory to the
First Agreement, hereby irrevocably waive all of their rights under such First
Agreement, it being understood that all of their rights to have their
securities included in any registration statement filed by the Company shall
flow from this Agreement.
6. HOLDBACK AGREEMENTS.
6.1 RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF
REGISTRABLE SECURITIES. Each Holder (a) participating in an underwritten
offering covered by any Demand Registration or Piggyback Registration or (b) in
the event the Company is issuing shares of its capital stock to the public in
an
<PAGE> 427
20
underwritten offering, agrees, if requested by the managing underwriter or
underwriters for such underwritten offering, not to effect (except as part of
such underwritten offering or pursuant to Article XII of the Partnership
Agreement) any public sale or distribution of Registrable Securities or any
securities convertible into or exchangeable or exercisable for such Registrable
Securities, including a sale pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act, during the period (a "Lock-Out
Period") commencing 14 days prior to and ending no more than 90 days subsequent
to the date (an "Execution Date") specified in the Lock-Out Notice (as defined
below) as the anticipated date of the execution and delivery of the
underwriting agreement (or, if later, a pricing or terms agreement signed
pursuant to such underwriting agreement) to be entered into in connection with
such Demand Registration or Piggyback Registration or other underwritten
offering. The Execution Date shall be no fewer than 21 days subsequent to the
date of delivery of written notice (a "Lock-Out Notice") by the Company to each
Holder of the anticipated execution of an underwriting agreement (or pricing or
terms agreement), and the Execution Date shall be specified in the Lock-Out
<PAGE> 428
21
Notice. The Company may not deliver a Lock-Out Notice unless it is making a
good faith effort to effect the offering with respect to which such Lock-Out
Notice has been delivered. Notwithstanding the foregoing, the Company may not
(a) establish Lock-Out Periods in effect for more than 208 days in the
aggregate within either of the two consecutive twelve-month periods commencing
on August 7, 1995 (or such earlier date as the Company may file a Shelf
Registration for the benefit of one or more of the Holders), (b) establish
Lock-Out Periods in effect for more than 208 days in the aggregate within any
of the consecutive fifteen-month periods commencing on August 7, 1997 and (c)
cause any Lock-Out Period to commence (i) during the 45-day period immediately
following the expiration of any Lock-Out Period, such 45-day period to be
extended by one day for each day of delay pursuant to Section 7(a) PROVIDED,
HOWEVER, that in no event shall such extension exceed 90 days, PROVIDED,
FURTHER, HOWEVER, that such 90-day limit on extensions shall terminate on
December 31, 1998; or (ii) if the Company shall have been requested to file a
Registration Statement pursuant to Section 2 during such 45-day period (as
extended), until the earlier of (x) the date on which all
<PAGE> 429
22
Registrable Securities thereunder shall have been sold and (y) 45 days after
the effective date of such Registration Statement. Notwithstanding the
foregoing, any Lock-Out Period may be shortened at the Company's sole
discretion by written notice to the Holders, and the applicable Lock-Out Period
shall be deemed to have ended on the date such notice is received by the
Holders. For the purposes of this Section 6.1, a Lock-Out Period shall be
deemed to not have occurred, and a Lock-Out Notice shall be deemed to not have
been delivered, if, within 30 days of the delivery of a Lock-Out Notice, the
Company delivers a written notice (the "Revocation Notice") to the Holders
stating that the offering (the "Aborted Offering") with respect to which such
Lock-Out Notice was delivered has not been, or shall not be, consummated;
PROVIDED, HOWEVER, that any Lock-Out Period that the Company causes to commence
within 45 days of the delivery of such Revocation Notice shall be reduced by
the number of days pursuant to which the Holders were subject to restrictions
on transfer pursuant to this Section 6.1 with respect to such Aborted Offering.
6.2 RESTRICTIONS ON PUBLIC SALE BY THE COMPANY.
If, but only if, the managing underwriter or
<PAGE> 430
23
underwriters for any underwritten offering of Registrable Securities made
pursuant to a Demand Registration so request, the Company agrees not to effect
any public sale or distribution of any of its securities similar to those being
registered, or any securities convertible into or exchangeable or exercisable
for such securities (except pursuant to registrations on Form S-4 or S-8 or any
successor or similar forms thereto) during the 14 days prior to, and during the
180-day period beginning on, the effective date of such Demand Registration.
7. REGISTRATION PROCEDURES. Whenever the Holders have
requested that any Registrable Securities be registered pursuant to Section 2
or 3, the Company shall use its best efforts to effect the registration of
Registrable Securities in accordance with the intended method of disposition
thereof as expeditiously as practicable, and in connection with any such
request, the Company shall as expeditiously as possible:
(a) in connection with a request pursuant to
Section 2, prepare and file with the Commission, not later than 40 days (or
such longer period as may be required in order for the Company to comply with
the provisions of
<PAGE> 431
24
Regulation S-X under the Securities Act) after receipt of a request to file a
registration statement with respect to Registrable Securities, a registration
statement on any form for which the Company then qualifies or which counsel for
the Company shall deem appropriate and which form shall be available for the
sale of such Registrable Securities in accordance with the intended method of
distribution thereof and, if the offering is an underwritten offering, shall be
reasonably satisfactory to the managing underwriter or underwriters, and use
its best efforts to cause such registration statement to become effective;
PROVIDED, HOWEVER, that if the Company shall within five (5) Business Days
after receipt of such request furnish to the Holders making such a request a
certificate signed by the Chief Executive Officer of the Company stating that
in the good faith judgment of the Board of Directors of the Company it would be
significantly disadvantageous to the Company and its stockholders for such a
registration statement to be filed on or before the date filing would be
required, the Company shall have an additional period of not more than 45 days
within which to file such registration statement (provided that only one such
notice may be given during any
<PAGE> 432
25
12 month period); and PROVIDED, FURTHER, that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall (a) furnish to the counsel selected by the Holder making the demand, or
if no demand, then, by the Holders, in the aggregate, that own or will own a
majority of the Registrable Securities covered by such registration statement,
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel, and (b) notify each seller or
prospective seller of Registrable Securities of any stop order issued or
threatened by the Commission or withdrawal of any state qualification and take
all reasonable actions required to prevent such withdrawal or the entry of such
stop order or to remove it if entered;
(b) in connection with a registration pursuant to
Section 2, prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not less than 150 days (or such shorter period that will terminate when all
Registrable Securities covered by such registration statement have been sold,
but
<PAGE> 433
26
not before the expiration of the applicable period referred to in Section 4(3)
of the Securities Act and Rule 174 thereunder, if applicable), and comply with
the provisions of the Securities Act applicable to it with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended method of disposition by the
sellers thereof set forth in such registration statement;
(c) notify each seller of Registrable Securities
and the managing underwriter, if any, promptly, and (if requested by any such
Person) confirm such advice in writing,
(i) when the prospectus or any
supplement thereto or amendment or post-effective amendment to the
registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment, when the same
has become effective,
(ii) of any request by the Commission for
amendments or post-effective amendments to the registration statement
or supplements to the prospectus or for additional information,
<PAGE> 434
27
(iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the registration
statement or the initiation or threatening of any proceedings for that
purpose,
(iv) if at any time during the
distribution of securities by the managing underwriter the
representations and warranties of the Company to be contained in the
underwriting agreement cease to be true and correct in all material
respects, and
(v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(d) use its best efforts to prevent the issuance
of any stop order suspending the effectiveness of the registration statement or
any state qualification or any order preventing or suspending the use of any
preliminary prospectus, and use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement or any
state qualification or of any
<PAGE> 435
28
order preventing or suspending the use of any preliminary prospectus at the
earliest possible moment;
(e) if requested by the managing underwriter or a
seller of Registrable Securities, promptly incorporate in a prospectus
supplement or post-effective amendment to the registration statement such
information as the managing underwriter or a seller of Registrable Securities
reasonably request to have included therein relating to the plan of
distribution with respect to the Registrable Securities, including, without
limitation, information with respect to the amount of Registrable Securities
being sold to such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten offering
of the Registrable Securities to be sold in such offering; and make all
required filings of such prospectus supplement or post-effective amendment
promptly after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
(f) furnish to each seller of Registrable
Securities and the managing underwriter one signed copy of the registration
statement and each amendment thereto as filed with the Commission, and such
number of copies of such
<PAGE> 436
29
registration statement, each amendment (including post-effective amendments)
and supplement thereto (in each case including all documents incorporated by
reference and all exhibits thereto whether or not incorporated by reference),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as each seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(g) use reasonable efforts to register or qualify
such Registrable Securities under such other securities or "blue sky" laws of
such jurisdictions as any seller or underwriter reasonably requests in writing
and to do any and all other acts and things that may be reasonably necessary or
advisable to register or qualify for sale in such jurisdictions the Registrable
Securities owned by such seller; PROVIDED, HOWEVER, that the Company shall not
be required to (a) qualify generally to do business in any jurisdiction where
it is not then so qualified, (b) subject itself to taxation in any such
jurisdiction, (c) consent to general service of process in any such
jurisdiction or (d) provide any undertaking required by such other
<PAGE> 437
30
securities or "blue sky" laws or make any change in its charter or bylaws that
the Board of Directors determines in good faith to be contrary to the best
interest of the Company and its stockholders;
(h) use reasonable efforts to cause the
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(i) notify each seller of such Registrable
Securities at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and prepare and file
with the Commission a supplement or amendment to such prospectus so that, as
thereafter delivered to the pur-
<PAGE> 438
31
chasers of such Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(j) enter into customary agreements (including an
underwriting agreement in customary form, if the offering is an underwritten
offering) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection:
(i) make such representations and
warranties to the underwriters in form, substance and scope,
reasonably satisfactory to the managing underwriter, as are
customarily made by issuers to underwriters in primary underwritten
offerings on the form of registration statement used in such offering;
(ii) obtain opinions and updates thereof
of counsel, which counsel and opinions to the Company (in form, scope
and substance) shall be reasonably satisfactory to the managing
underwriter, addressed to the managing underwriter, covering the
matters
<PAGE> 439
32
customarily covered in opinions requested in primary underwritten
offerings on the form of registration statement used in such offering
and such other matters as may be reasonably requested by the managing
underwriter;
(iii) obtain so-called "cold comfort"
letters and updates thereof from the Company's independent public
accountants addressed to the managing underwriter in customary form
and covering matters of the type customarily covered in "cold comfort"
letters to underwriters in connection with primary underwritten
offerings and such other matters as may be reasonably requested by the
managing underwriter;
(iv) cause the underwriting agreements to
set forth in full the indemnification provisions and procedures of
Section 9 (or such other substantially similar provisions and
procedures as the managing underwriter shall reasonably request) with
respect to all parties to be indemnified pursuant to said Section; and
<PAGE> 440
33
(v) deliver such documents and
certificates as may be reasonably requested by the Participating
Holder or Holders to evidence compliance with the provisions of this
Section 7(j) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
The above shall be done at the effectiveness of such
registration statement (when consistent with customary industry practice), each
closing under any underwriting or similar agreement as and to the extent
required thereunder and from time to time as may reasonably be requested by the
sellers of Registrable Securities, all in a manner consistent with customary
industry practice.
(k) make available for inspection by any seller
of Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement, the counsel referred to in clause (a)
of Section 7(a) and any attorney, accountant or other agent retained by any
such seller or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
<PAGE> 441
34
(collectively, the "Records") as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Company's
officers, directors, employees and agents to supply all information reasonably
requested by any such Inspector in connection with such registration statement.
Records that the Company determines, in good faith, to be confidential and that
it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (a) the disclosure of such Records is, in the reasonable
judgment of any Inspector, necessary to avoid or correct a misstatement or
omission of a material fact in the registration statement or (b) the release of
such Records is ordered pursuant to a subpoena or other order from a court or
governmental agency of competent jurisdiction or required (in the written
opinion of counsel to such seller or underwriter, which counsel shall be
reasonably acceptable to the Company) pursuant to applicable state or federal
law. Each seller of Registrable Securities agrees that it will, upon learning
that disclosure of such Records are sought by a court or governmental agency,
give notice to the Company and allow the Company, at the Com-
<PAGE> 442
35
pany's expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(l) if such sale is pursuant to an underwritten
offering, use reasonable efforts to obtain a "cold comfort" letter and updates
thereof from the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by "cold comfort" letters
as the holders, in the aggregate, of a majority of the Registrable Securities
being sold and the managing underwriter or underwriters reasonably request;
(m) otherwise use reasonable efforts to comply
with the Securities Act, the Exchange Act, all applicable rules and regulations
of the Commission and all applicable state securities and real estate
syndication laws, and make generally available to its security holders, as soon
as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act;
(n) use reasonable efforts to cause all
Registrable Securities covered by the registration statement
<PAGE> 443
36
to be listed on each securities exchange, if any, on which similar securities
issued by the Company are then listed, provided that the applicable listing
requirements are satisfied;
(o) cooperate with the sellers of Registrable
Securities and the managing underwriter to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities to
be in such denominations and registered in such names as the managing
underwriter may reasonably request at least 2 business days prior to any sale
of Registrable Securities to the underwriters;
(p) cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any underwriter;
(q) prior to the filing of any document which is
to be incorporated by reference into the registration statement or the
prospectus (after the initial filing of the registration statement) provide
copies of such document to the sellers of Registrable Securities, the
underwriters and their respective counsel, make the Company
<PAGE> 444
37
representatives available for discussion of such document with such persons
and, to the extent changes may be made to such document without the consent of
a third party (other than the Company's accountants or any affiliate of the
Company), make such changes in such document prior to the filing thereof as any
such persons may reasonably request to the extent and only to the extent that
such changes relate to a description of a DeBartolo Group Holder or the Plan or
Distribution being effected by a DeBartolo Group Holder; and
(r) participate, if so requested, in a "road
show" in connection with the sale of the Registrable Securities but only to the
extent reasonably requested by the managing underwriter, if such sale is
pursuant to an underwritten offering.
The Company may require each seller or prospective seller of
Registrable Securities as to which any registration is being effected to
furnish to the Company such information regarding the distribution of such
securities and other matters as may be required to be included in the
registration statement.
Each holder of Registrable Securities agrees that, upon
receipt of any notice from the Company of the happening
<PAGE> 445
38
of any event of the kind described in Paragraph (i) of this Section 7, such
holder shall forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Paragraph (i) of this Section 7, and, if so directed
by the Company, such holder shall deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. If the Company shall give any such notice,
the Company shall extend the period during which such registration statement
shall be maintained effective pursuant to this Agreement (including the period
referred to in Paragraph (b) of this Section 7) by the number of days during
the period from and including the date of the giving of such notice pursuant to
Paragraph (i) of this Section 7 to and including the date when each seller of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Paragraph (i) of this Section 7.
<PAGE> 446
39
The Company shall keep the sellers of Registrable Securities
to be offered in a given registration advised of the status of any registration
in which they are participating. In addition, the Company and each such seller
of Registrable Securities may enter into understandings in writing whereby such
seller of Registrable Securities will agree in advance as to the acceptability
of the price or range of prices per share at which the Registrable Securities
included in such registration are to be offered to the public. Furthermore,
the Company shall establish pricing notification procedures reasonably
acceptable to each such seller of Registrable Securities and shall, as promptly
as practicable after learning the same from the managing underwriter, use
reasonable efforts to give oral notice to each such seller of Registrable
Securities of the anticipated date on which the Company expects to receive a
notification from the managing underwriter (and any changes in such anticipated
date) of the price per share at which the Registrable Securities included in
such registration are to be offered to the public.
<PAGE> 447
40
8. REGISTRATION EXPENSES. The Company shall pay all
expenses incident to its performance of or compliance with this Agreement,
including, without limitation, (a) all Commission, stock exchange and National
Association of Securities Dealers, Inc. registration, filing and listing fees,
(b) all fees and expenses incurred in complying with securities or "blue sky"
laws (including reasonable fees and disbursements of counsel in connection with
"blue sky" qualifications of the Registrable Securities), (c) all printing,
messenger and delivery expenses, (d) all fees and disbursements of the
Company's independent public accountants and counsel and (e) all fees and
expenses of any special experts retained by the Company in connection with any
Demand Registration or Piggyback Registration pursuant to the terms of this
Agreement, regardless of whether such registration becomes effective; PROVIDED,
HOWEVER, that the Company shall not pay the costs and expenses of any Holder
relating to underwriters' commissions and discounts relating to Registrable
Securities to be sold by such Holder (but such costs and expenses shall be paid
by the Holders on a PRO RATA basis), brokerage fees, transfer taxes, or the
fees or expenses of any counsel, accountants or other repre-
<PAGE> 448
41
sentatives retained by the Holders, individually or in the aggregate. All of
the expenses described in this Section 8 that are to be paid by the Company are
herein called "Registration Expenses."
9. INDEMNIFICATION; CONTRIBUTION.
9.1 INDEMNIFICATION BY THE COMPANY. The Company
agrees to indemnify, to the fullest extent permitted by law, each Holder and
each secured creditor referred to in Section 12.4(c)(ii) hereof (a "Secured
Creditor"), each of their respective officers, directors, agents, advisors,
employees and trustees, and each person, if any, who controls such Holder or
Secured Creditor (within the meaning of the Securities Act), against any and
all losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in light of the circumstances under which
they were made) not misleading, except insofar as the same are caused by or
<PAGE> 449
42
contained in any information with respect to such Holder or Secured Creditor
furnished in writing to the Company by such Holder or Secured Creditor
expressly for use therein or by such Holder's or Secured Creditor's failure to
deliver a copy of the prospectus or any supplements thereto after the Company
has furnished such Holder or Secured Creditor with a sufficient number of
copies of the same or by the delivery of prospectuses by such Holder or Secured
Creditor after the Company notified such Holder or Secured Creditor in writing
to discontinue delivery of prospectuses. The Company also shall indemnify any
underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Holders.
9.2 INDEMNIFICATION BY HOLDERS. In connection with any
registration statement in which a Holder is participating, each such Holder
shall furnish to the Company in writing such information and affidavits with
respect to such Holder as the Company reasonably requests for use in connection
with any such registration statement or prospectus and agrees to indemnify,
severally and not
<PAGE> 450
43
jointly, to the fullest extent permitted by law, the Company, its officers,
directors and agents and each person, if any, who controls the Company (within
the meaning of the Securities Act) against any and all losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of a material fact or any omission or alleged omission of a material fact
required to be stated in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue or alleged untrue statement or omission is
contained in or omitted from, as the case may be, any information or affidavit
with respect to such Holder so furnished in writing by such Holder specifically
for use in the Registration Statement. Each Holder also shall indemnify any
underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Company.
<PAGE> 451
44
9.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any party
that proposes to assert the right to be indemnified under this Section 9 shall,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim is to be made against an indemnifying party
or parties under this Section 9, notify each such indemnifying party of the
commencement of such action, enclosing a copy of all papers served, but the
omission so to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing
provisions of this Section 9 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party
will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified
<PAGE> 452
45
party, and after notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will not be liable
to the indemnified party for any legal or other expenses except as provided
below and except for the reasonable costs of investigation subsequently
incurred by the indemnified party in connection with the defense. If the
indemnifying party assumes the defense, the indemnifying party shall have the
right to settle such action without the consent of the indemnified party;
PROVIDED, HOWEVER, that the indemnifying party shall be required to obtain such
consent (which consent shall not be unreasonably withheld) if the settlement
includes any admission of wrongdoing on the part of the indemnified party or
any decree or restriction on the indemnified party or its officers or
directors; PROVIDED, FURTHER, that no indemnifying party, in the defense of any
such action, shall, except with the consent of the indemnified party (which
consent shall not be unreasonably withheld), consent to entry of any judgment
or enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability with respect to such action. The
<PAGE> 453
46
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (a) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (b)
the indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available in the indemnifying
party, (c) a conflict or potential conflict exists (based on advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (d) the
indemnifying party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, in each of which cases the reasonable fees, disbursements and
other charges of counsel will be at the expense of the indemnifying party or
parties. It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related
<PAGE> 454
47
proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time from all such indemnified party
or parties unless (a) the employment of more than one counsel has been
authorized in writing by the indemnifying party or parties, (b) an indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it that are different from or in addition to those
available to the other indemnified parties or (c) a conflict or potential
conflict exists (based on advice of counsel to an indemnified party) between
such indemnified party and the other indemnified parties, in each of which
cases the indemnifying party shall be obligated to pay the reasonable fees and
expenses of such additional counsel or counsels. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent shall not be unreasonably withheld).
9.4 CONTRIBUTION. If the indemnification provided for in
this Section 9 from the indemnifying party is unavailable to an indemnified
party hereunder in respect
<PAGE> 455
48
of any losses, claims, damages, liabilities or expenses referred to herein,
then the indemnifying party, to the extent such indemnification is unavailable,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions that resulted in such losses, claims, damages,
liabilities or expenses. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Sec-
<PAGE> 456
49
tion 9.3, any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9.4 were determined by PRO
RATA allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. 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.
If indemnification is available under this Section 9, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 9.1 and 9.2 without regard to the relative fault of said
indemnifying parties or indemnified party.
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No
person may participate in any underwritten registration hereunder unless such
person (i) agrees to sell such person's securities on the basis provided in any
underwriting agreements approved by the persons entitled hereunder to
<PAGE> 457
50
approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
11. RULE 144. The Company covenants that it shall use
its best efforts to file the reports required to be filed by it under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder if and when the Company becomes obligated to file
such reports (or, if the Company ceases to be required to file such reports, it
shall, upon the request of any Holder, make publicly available other
information), and it shall, if feasible, take such further action as any Holder
may reasonably request, all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time or (ii)
any similar rules or regulations hereafter adopted by the Commission. Upon the
written request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
<PAGE> 458
51
12. MISCELLANEOUS.
12.1 REMEDIES. Each Holder, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
The Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
12.2 AMENDMENTS AND WAIVERS. Except as otherwise
provided herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company has obtained the written consent of
all Holders.
12.3 NOTICES. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, or sent by certified or registered or express mail, postage
prepaid. Any such notice shall be deemed given when so delivered personally,
or, if mailed, five days (or, in the case of express mail,
<PAGE> 459
52
one day) after the date of deposit in the United States mail, as follows:
(i) if to the Company, to:
Simon Property Group, Inc.
Merchants Plaza
115 West Washington Street
Suite 15 East
Indianapolis, IN 46204
Attention: David Simon
James M. Barkley, Esq.
Facsimile No.: (317) 685-7221
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Toby S. Myerson, Esq.
Edwin S. Maynard, Esq.
Facsimile: (212) 757-3990
(ii) if to any Holder, to the most current address
of such Holder given by such Holder to the Company in writing.
Any party may by notice given in accordance with this Section
12.3 to the other parties designate another address or person for receipt of
notice hereunder.
12.4 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of
and be binding upon the Holders and their respective successors and assigns and
the successors and assigns of the Company; PROVIDED, HOWEVER, that, except as
<PAGE> 460
53
otherwise provided in Section 12.4(b) hereof, no Holder may assign its rights
hereunder to any person who is not a permitted transferee of such Holder
pursuant to the terms of the Partnership Agreement; PROVIDED FURTHER, that,
except as otherwise provided in Section 12.4(b) or (c) hereof, no Holder may
assign its rights hereunder to any person who does not acquire all or
substantially all of such Holder's Registrable Securities or Units, as the case
may be, or, (i) in the case of the Simon Family Entities, to any person who
does not acquire at least $10,000,000 worth of the Simon Family Entities'
Registrable Securities or Units and (ii) in the case of the DeBartolo Group to
any person who does not acquire at least $10,000,000 worth of DeBartolo Group's
Registrable Securities or Units.
(b) AFFILIATES. It is understood that JCP and
Brandywine are affiliates and that under the terms of the Partnership
Agreement, Limited Partners have the right to assign their partnership
interests, in whole or in part, to their affiliates. The provisions of this
Agreement shall inure to the benefit of all such affiliates and, for all
purposes of this Agreement, a party to this Agreement (other than the Company)
and all of its affiliates which at the
<PAGE> 461
54
time in question are Limited Partners of the Operating Partnership shall be
deemed to be one party, with the consequence that (i) they may aggregate their
Units for the purpose of exercising their rights under this Agreement and (ii)
to assign the benefits of this Agreement to a third party which is not an
affiliate of them, except as otherwise provided with respect to the Simon
Family Entities in Section 12.4(a) above, they must together assign to such
third party all or substantially all of the aggregate amount of Units held by
all of them.
(c) TRANSFER OF EXCHANGE AND REGISTRATION RIGHTS.
(i) The rights of each DeBartolo Group Holder to make a request and to cause
the Company to register Registrable Securities owned by such Holder under
Section 2 hereof and the right to cause the Company to include Registrable
Securities in a registration for the account of the Company under Section 3
hereof (the "Rights") may be assigned, from time to time and reassigned, in
whole or in part, to a transferee or assignee receiving (except as provided in
Section 12.4(c)(ii) below) at least three percent (3%) of the outstanding
shares of Common Stock or Units exchangeable into at least such number of
shares of
<PAGE> 462
55
Common Stock (the "Three Percent Requirement") in connection with a transfer or
assignment of shares of Common Stock received upon exchange of Units in
connection with a substantially contemporaneous resale of all such Units or
Units which is not prohibited under any other agreement to which the transferor
or assignor is a party or any pledge of Units or Common Stock which is not
prohibited under any other agreement to which the transferor or assignor is a
party, provided that (x) such transfer may otherwise be effected in accordance
with applicable securities law, (y) the Company is given written notice of such
assignment prior to such assignment or promptly thereafter, and (z) the
transferee or assignee by written agreement acknowledges that he is bound by
the terms of this Agreement. From and after the occurrence of any such
transfer, the defined term "Holder" shall include such transferees or
assignees.
(ii) The Rights granted to each member of the
DeBartolo Group hereunder may be assigned pursuant to this Section 12.4(c) to a
secured creditor to whom such Holder has pledged Units (or other securities
exchangeable or convertible into Registrable Securities) or Registrable
Securities prior to the date hereof, which pledge shall be
<PAGE> 463
56
permitted hereunder, and the Three Percent Requirement shall not apply to any
such assignment. Such rights may, to the extent provided in the pledge,
security or other agreement or instrument pursuant to which such rights have
been assigned and to the extent permitted by the Securities Act and the rules
and regulations thereunder, be exercised by any such secured creditor even
though it does not become an assignee of the pledged Units of such Holder
pursuant to Section 12.4(c)(i) hereof. Each of the Estate of Edward J.
DeBartolo, Edward J. DeBartolo, Jr., The Edward J. DeBartolo Corporation and
each corporate or other person or legal entity, other than Marie Denise
DeBartolo York specified on SCHEDULE B to the Stockholders Agreement does
hereby grant the rights, as described in the two preceding sentences, to Wells
Fargo Realty Advisors Funding, Incorporated, as the Administrative Agent, under
(A) the Second Amended and Restated New Facility Credit Agreement, dated as of
March 31, 1994 by and among DeBartolo, Inc. and The Edward J. DeBartolo
Corporation, as the Borrowers, Wells Fargo Bank, N.A., as the issuing Bank, and
the Co-Lenders specified therein, and Wells Fargo Realty Advisors Funding,
Incorporated, in its capacity as the Administrative Agent
<PAGE> 464
57
thereunder, and (B) the Second Amended and Restated Restructuring Facility
Credit Agreement, dated as of March 31, 1994 by and among DeBartolo, Inc. and
The Edward J. DeBartolo Corporation, as the borrowers, and the Co-Lenders
specified therein, and Wells Fargo Realty Advisors Funding, Incorporated, in
its capacity as the Administrative Agent thereunder. Upon notice to the
Company by any such secured creditor that it has become authorized to exercise
such Rights, no further written instrument shall be required under this
Agreement; provided that such Secured Creditor provides the Company at the time
it exercises any rights on behalf of a Holder with such indemnification and
certifications as are reasonably satisfactory to the Company in form and
substance as to its authorization to exercise such rights. It is further
expressly understood and agreed that (i) the Company shall not be required in
any way to determine the validity or sufficiency, whether in form or in
substance, of any certification from an Administrative Agent that it is
authorized to exercise Rights transferred by any Holder, (ii) the Company shall
have no liability to any such Holder for acting in accordance with any such
certification and (iii) no further indemnification to the Company shall be
<PAGE> 465
58
required pursuant to this Section 12.4(c). The Company shall not be required
in any way to determine the validity or sufficiency, whether in form or in
substance, of any written instrument referred to in the second sentence of this
Section 12.4(c)(ii), and it shall be sufficient if any writing purporting to be
such an instrument is delivered to the Company and purports on its face to be
correct in form and signed or otherwise executed by such Holder. The Company
may continue to rely on such written instrument until such time, if any, that
it receives a written instrument from the secured creditor named therein (or
its successor) revoking, or acknowledging the revocation or other termination
of, the authority granted by such written instrument.
12.5 MERGERS, ETC. In addition to any other restriction on
mergers, consolidations and reorganizations contained in the articles of
incorporation, by-laws, code of regulations or agreements of the Company, the
Company covenants and agrees that it shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless all the Registrable Securities
<PAGE> 466
59
and all of the outstanding shares of Common Stock of the Company and Units are
exchanged or purchased upon substantially equivalent economic terms for cash or
freely marketable securities of the surviving corporation unless the surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in a writing to assume in full and without modification other than conforming
changes necessary to reflect the new issuer of the Registrable Securities all
of the obligations of the Company under this Agreement, and for that purpose
references hereunder to "Registrable Securities" shall be deemed to include the
securities which holders of Common Stock would be entitled to receive in
exchange for Registrable Securities pursuant to any such merger, consolidation,
sale of all or substantially all of its assets or business, liquidation,
dissolution or reorganization.
12.6 CONSENT OF TEACHERS'. Notwithstanding anything to the
contrary contained herein, the Company hereby agrees to use its commercially
reasonable best efforts to cause Teachers' to execute this Agreement at the
<PAGE> 467
60
Closing and to waive all of its rights under the First Agreement.
12.7 BJS REGISTRATION RIGHTS AGREEMENT. The parties hereto
agree that the provisions of Section 5 hereof shall not apply to the
Registration Rights Agreement, dated March 26, 1996, between the Company and
BJS Capital Partners L.P. ("BJS"), copies of which have been delivered to the
parties hereto.
12.8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
12.9 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
12.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
12.11 SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in
<PAGE> 468
61
any circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired, it being intended that all of the rights of the Holders shall be
enforceable to the full extent permitted by law.
12.12 ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
<PAGE> 469
62
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above.
SIMON PROPERTY GROUP, INC.
By:_____________________________
Name:
Title:
MELVIN SIMON & ASSOCIATES, INC.
By:_____________________________
Name:
Title:
JCP REALTY, INC.
By:_____________________________
Name:
Title: Executive Vice President
BRANDYWINE REALTY, INC.
By:_____________________________
Name:
Title: Executive Vice President
<PAGE> 470
63
_______________________________
MELVIN SIMON
______________________________
HERBERT SIMON
______________________________
DAVID SIMON
______________________________
DEBORAH J. SIMON
______________________________
CYNTHIA J. SIMON
______________________________
IRWIN KATZ, as Successor Trustee
Under Declaration of Trust and
Trust Agreement Dated August 4,
1970
______________________________
IRWIN KATZ, as Trustee of the
Melvin Simon Trust No. 1, the
Melvin Simon Trust No. 6, the
Melvin Simon Trust No. 7
and the Herbert Simon Trust No. 3
<PAGE> 471
64
MELVIN SIMON & ASSOCIATES, INC.
By:
------------------------
Name:
Title:
PENN SIMON CORPORATION
By: ________________________
Name:
Title:
NACO SIMON CORP.
By: ________________________
Name:
Title:
SANDY SPRINGS PROPERTIES, INC.
By: ________________________
Name:
Title:
SIMON ENTERPRISES, INC.
<PAGE> 472
65
By: _______________________
Name:
Title:
S.F.G. COMPANY, L.L.C.
By: MELVIN SIMON & ASSOCIATES,
INC., its manager
By: __________________
Name:
Title:
<PAGE> 473
66
MELVIN SIMON, HERBERT SIMON AND DAVID
SIMON, NOT INDIVIDUALLY BUT AS
VOTING TRUSTEES UNDER THAT CERTAIN
VOTING TRUST AGREEMENT, VOTING
AGREEMENT AND PROXY DATED AS OF
DECEMBER 1, 1993, BETWEEN MELVIN
SIMON & ASSOCIATES, INC., AND MELVIN
SIMON, HERBERT SIMON AND DAVID
SIMON:
____________________________
Melvin Simon
____________________________
Herbert Simon
____________________________
David Simon
THE EDWARD J. DeBARTOLO CORPORATION
By: ________________________
Name:
Title:
THE ESTATE OF EDWARD J. DeBARTOLO
By: ________________________
Name:
Title:
<PAGE> 474
67
By: ________________________
Name:
Title:
________________________________
Edward J. DeBartolo, Jr.,
individually, and in his capacity as
Trustee under (i) the Lisa Marie
DeBartolo Revocable Trust- successor
by assignment from Edward J.
DeBartolo Trust No. 5, (ii) the
Tiffanie Lynne DeBartolo Revocable
Trust-successor by assignment from
Edward J. DeBartolo Trust No. 6 and
(iii) Edward J. DeBartolo Trust No. 7
for the Benefit of Nicole Anne
DeBartolo
________________________________
Cynthia R. DeBartolo
________________________________
Marie Denise DeBartolo York,
individually, and in her capacity as
Trustee under (i) Edward J.
DeBartolo Trust No. 8 for the
benefit of John Edward York, (ii)
Edward J. DeBartolo Trust No. 9 for
the benefit of Anthony John York,
(iii) Edward J. DeBartolo Trust No.
10 for the benefit of Mara Denise
York and (iv) Edward J. DeBartolo
Trust No. 11 for the benefit of
Jenna Marie York
<PAGE> 475
68
CORAL SQUARE ASSOCIATES
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
SOUTH BEND ASSOCIATES
By: DeBartolo, Inc.
By: _____________________
Name:
Title:
By: The Estate of Edward J.
DeBartolo
By: ______________________
Name:
Title:
By: ______________________
Name:
Title:
<PAGE> 476
69
WASHINGTON SQUARE ASSOCIATES
By: The Edward J. DeBartolo
Corporation
By: ______________________
Name:
Title:
H-CASTLETON
By: Altamonte, Inc.
By: ______________________
Name:
Title:
<PAGE> 477
70
BAY PARK, INC.
WARD PLAZA ASSOCIATES
CHELTENHAM SHOPPING CENTER
ASSOCIATES
SUMMIT MALL, INC.
TYRONE SQUARE, INC.
UPPER VALLEY MALL, INC.
MISSION VIEJO MALL, INC.
PINELLAS SQUARE, INC.
GREAT LAKES MALL, INC.
PALM BEACH MALL, INC.
LAFAYETTE SQUARE, INC.
LIMA MALL, INC.
RICHMOND MALL, INC.
WOODVILLE MALL, INC.
DeBARTOLO AVENTURA, INC.
BOYNTON BEACH, INC.
THE FLORIDA MALL CORPORATION
DeBARTOLO, INC.
D.L. GROVE, INC.
TC MALL II, INC.
PADDOCK MALL, INC.
NATIONAL INDUSTRIAL DEVELOPMENT
CORPORATION
GREAT NORTHEAST MALL, INC.
By: __________________________
Name:
Title:
RUES PROPERTIES, INC.
By: __________________________
Name:
Title:
COLUMBIA SC I, INC.
COLUMBIA SC II, INC.
<PAGE> 478
71
NORTHGATE I REAL ESTATE CORPORATION
NORTHGATE II REAL ESTATE
CORPORATION
TACOMA SC I, INC.
TACOMA SC II, INC.
By: __________________________
Name:
Title:
<PAGE> 479
EXHIBIT L
SIMON PROPERTY GROUP, INC.
--------------------------
and
---
DAY ACQUISITION CORP.
---------------------
OFFICER'S CERTIFICATE
---------------------
The undersigned officer of Simon Property Group, Inc., a Maryland
corporation ("Parent")1 and Day Acquisition Corp., an Ohio corporation and
Controlled subsidiary of Parent ("Sub"), in connection with the rendering by
Willkie Farr & Gallagher and Paul, Weiss, Rifkind, Wharton & Garrison of the
written opinions required by Sections 6.2(e) and 6.3(e), respectively, of the
Agreement and Plan of Merger (the "Agreement") dated as of March 26, 1995, as
amended, between Parent, Sub, and DeBartolo Realty Corporation, an Ohio
corporation ("Company"), and recognizing that said law firms will rely on this
Certificate in rendering such opinions, hereby certifies as follows:
1. The fair market value of Parent Common Stock and other consideration
received by each Company stockholder will be approximately equal to the fair
market value of the Company stock surrendered in exchange therefor, and the
aggregate consideration received by Company stockholders in exchange for their
Company stock will be approximately equal to the fair market value of all of the
outstanding shares of Company stock immediately prior to the Merger.
2. Pursuant to the Merger, Sub will merge with and into Company, and
Company will acquire and continue to hold following the Merger substantially all
of the assets and liabilities of Sub. Specifically,
- - - ----------
1 Defined terms used and not defined herein have the same meanings ascribed to
them as in the Agreement.
<PAGE> 480
the assets of Sub transferred to Company pursuant to the Merger will represent
at least 90 percent (90%) of the fair market value of the net assets and at
least seventy percent (70%) of the fair market value of the gross assets held by
Sub immediately prior to the Merger. In addition, at least ninety percent (90%)
of the fair market value of the of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets held by Company immediately
prior to the Merger will continue to be held by Company immediately after the
Merger. For purposes of this representation, the following assets will be
treated as assets held by Sub or Company, as the case may be, immediately prior
but not subsequent to the Merger: (i) assets disposed of by Company or Sub
(other than assets transferred from Sub to Company in the Merger) prior to or
subsequent to the Merger and in contemplation thereof (including without
limitation any asset disposed of by Company, other than in the ordinary course
of business, pursuant to a plan or intent existing during the period ending at
the Effective Time of the Merger and beginning with the commencement of
negotiations (whether formal or informal) with Parent regarding the Merger (the
"Pre-Merger Period"), (ii) assets used by Company or Sub to pay stockholders
receiving cash in lieu of fractional shares of Parent Common Stock, or to pay
other expenses or liabilities incurred in connection with the Merger, and (iii)
assets used to make distribution, redemption or other payments in respect of
Company stock or rights to acquire such stock (including payments treated as
such for tax purposes) except amounts paid as normal, regular dividends.
3. Prior to the Merger, Parent will be in control of Sub within the
meaning of Section 368(c) of the Code.
4. Parent has no plan or intention to cause Company to issue additional
shares of its stock that would result in Parent losing control of Company within
the meaning of Section 368(c) of the Code.
5. Parent has no plan or intention to reacquire any Parent Stock issued
in the Merger.
6. Parent has no plan or intention to: liquidate Company; to merge
Company with or into another corporation (including Parent or its affiliates)
except for transfers of stock to corporations controlled by Parent, as described
in both 368(a)(2)(C) of the Code and Treasury Regulation Section 1.368(2)(j)(4);
to cause Company to sell, distribute or otherwise dispose of the stock of
Company; or to cause Company to sell or otherwise dispose of any of its assets
or any of the assets acquired from Sub in the Merger, except for dispositions
made in the ordinary course of business, or transfers of assets to a corporation
controlled by Company, as described in both Section 368(a)(2)(C) of the Code and
Treasury Regulation Section 1.3682(j)(4).
7. Sub will have no liabilities assumed by Company, and will not
transfer to Company any assets subject to liabilities in the Merger.
8. Following the Merger, Company will continue its historic business or
use a significant portion of its historic business assets in a business.
9. Parent and Sub will pay their respective expenses, if any incurred
in connection with the Merger.
10. There is no intercorporate indebtedness existing between Parent and
Company or between Sub and Company that was issued, acquired, or will be settled
at a discount. Parent will assume no liabilities of any Company stockholder in
connection with the Merger.
11. In the Merger, shares of Company stock representing control of
Company, as
<PAGE> 481
defined in Section 368(c) of the Code, will be exchanged solely for voting stock
of Parent. For purposes of this representation and the representation in
paragraph 23 below, shares of Company stock exchanged in the Merger for cash or
other property (including, without limitation, cash paid to Company stockholders
in lieu of fractional shares of Parent common stock but not including any cash
or property provided by Company) will be treated as Company stock outstanding at
the Effective Time of the Merger. The term "Control" means the direct ownership
of stock possessing at least 80 percent (80%) of the total combined voting power
of all classes of stock entitled to vote and at least eighty percent (80%) of
the total number of shares of each class of non-voting stock of Company.
12. During the past five (5) years, and at the present, none of the
outstanding shares of Company stock, including the right to acquire or vote any
such shares have, directly or indirectly, been owned by Parent or to the best of
the knowledge of the management of Parent, Parent affiliates, other than as
disclosed in the [Joint Proxy Statement] of Parent and Company for the Merger.
13. Neither Parent nor Sub are investment companies as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
14. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the stockholders of Company instead of issuing fractional shares
of Parent Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the shareholders of Company
in exchange for their shares of Company stock. The fractional share interests of
each stockholder of Company will be aggregated, and no stockholder of Company
will receive cash in an amount equal to or greater than the value of one full
share of Parent stock.
15. The Merger is being undertaken by Parent and Sub for valid business
purposes and not for the purpose of tax avoidance.
16. No stockholder of Company is acting as agent for Parent in
connection with the Merger or approval thereof; Parent will not reimburse any
Company stockholder for Company stock such stockholder may have purchased or for
other obligations such stockholder may have incurred.
<PAGE> 482
17. Neither Parent nor Sub is, or will be at the Effective Time of the
Merger, under the jurisdiction of a court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code.
18. No shares of Sub have been or will be used as consideration or
issued to stockholders of Company in the Merger.
19. The terms of the Agreement are the product of arm'slength
negotiations.
20. No compensation received by any stockholder-employees of Company
will be separate consideration for, or allocable to, any of their shares of
Company Stock.
21. With respect to each instance, if any, in which shares of Company
Stock have been purchased by a stockholder of Parent (a "Stockholder") during
the Pre-Merger Period (a "Stock Purchase"), to the best of the knowledge of the
management of Parent: (i) the Stock Purchase was made by such Stockholder on its
own behalf and not as a representative, or for the benefit of Parent; (ii) the
purchase price paid by such Stockholder pursuant to the Stock Purchase was the
product of arm's length negotiations, was funded by such Stockholder's own
assets, was not advanced, and will not be reimbursed either directly or
indirectly, by Parent; (ii) at no time was such Stockholder or any other party
required or obligated to surrender to Parent the Company stock acquired in the
Stock Purchase, and neither such Stockholder nor any other party will be
required to surrender to Parent the Parent Common Stock for which such shares of
Company stock will be exchanged in the Merger; and (iv) the Stock Purchase was
not a formal or informal condition to consummation of the Merger and was entered
into solely to satisfy the separate interests of such Stockholder and the
seller.
22. To the best of the knowledge of the management of Parent, there is
no plan or intention ("Plan") on the part of the stockholders of Company to
engage in a sale, exchange,
<PAGE> 483
transfer, distribution, pledge, disposition or any other transaction, including
a transaction or arrangement that reduces the risk of loss such as a short sale,
hedge, swap or otherwise, of the shares of Parent stock to be received upon
consumation of the Merger (a "Sale") of shares of Parent Common Stock received
in the Merger that would reduce the Company stockholders' ownership of Parent
Common Stock to a number of shares having a value, as of the Effective Time of
the Merger of less than 50 percent (50%) of the aggregate fair market value,
immediately prior to the Merger, of all outstanding shares of Company stock. For
purposes of this representation, shares of Company stock with respect to which a
Company stockholder receives consideration in the Merger other than Parent
Common Stock (including, without limitation, cash or other property received in
lieu of fractional shares of Parent Common Stock) and with respect to which a
Sale occurs prior to, or subsequent to and in contemplation of the Merger, shall
be considered shares of outstanding Company stock exchanged for Parent Common
Stock in the Merger and then disposed of pursuant to a Plan.
23. Except with respect to payments of cash to Company stockholders in
lieu of fractional shares of Parent Common Stock, cash payments to dissenting
Company stockholders and transfer and similar taxes paid on behalf of Company
stockholders, if any, one hundred percent (100%) of the Company stock
outstanding immediately prior to the Merger will be exchanged solely for Parent
Common Stock. Thus, except as set forth in the preceding sentence, Sub and
Parent intend that no consideration be paid or received (directly or indirectly,
actually or constructively) for Company stock other than Parent Common Stock.
Parent and Sub recognize that: (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreement and documents related thereto, (ii) your opinions will be subject to
certain limitations and qualifications including that they may not be relied
upon if any such representations are not accurate in all material
<PAGE> 484
respects; and your opinions will not address any tax consequences of the Merger
of any action taken in connection therewith except as set forth in such
opinions.
In rendering this Officer's Certificate, Parent and Sub have relied on
their counsel and auditors, and on the representations set forth in: (i) the
Officer's Certificate of Company, and (ii) the Stockholder's Certificate, both
of which are to be furnished to Willkie Farr & Gallagher and Paul, Weiss,
Rifkind, Wharton & Garrison.
[intentionally left blank]
<PAGE> 485
To the best of the knowledge of Parent and Sub, the foregoing facts are now true
and will continue to be true through and as of the Effective Time of the Merger.
If any of the representations contained herein ceases to be true at any time
prior to the Effective Time of the Merger, Parent and Sub agree to deliver to
Company a written notice to that effect. Parent and Sub are authorized to make
the representations set forth herein.
IN WITNESS WHEREOF, we have signed this certificate this ____ day of
_________ 1996.
Simon Property Group, Inc.
By: ____________________
Name:
Title:
Day Acquisition Corp.
By: ____________________
Name:
Title:
<PAGE> 486
DEBARTOLO REALTY CORPORATION
----------------------------
OFFICER'S CERTIFICATE
---------------------
The undersigned officer of DeBartolo Realty Corporation, an Ohio
Corporation ("Company"),2 in connection with the rendering by Willkie Farr &
Gallagher and Paul, Weiss, Rifkind, Wharton & Garrison of the written opinions
required by Sections 6.2(e) and 6.3(e), respectively, of the Agreement and Plan
of Merger dated as of March 26, 1996, as amended, between Simon Property Group,
Inc., a Maryland corporation ("Parent"), Day Acquisition Corp., a Delaware
corporation ("Sub"), and Company, (the "Agreement") and recognizing that said
law firms will rely on this Certificate in rendering such opinions hereby
certifies as follows:
The fair market value of the Parent Common Stock and other
consideration received by each Company stockholder will be
approximately equal to the fair market value of the Company stock
surrendered in exchange therefore, and the aggregate consideration
received by Company stockholders in exchange for their Company stock
will be approximately equal to the fair market value of all of the
outstanding shares of Company Stock immediately prior to the merger.
To the best of the knowledge of the management of Company there is
no plan or intention ("Plan") on the part of the stockholders of
Company who own five percent (5%) or more of the Company Stock and the
remaining stockholders of Company to engage in a sale, exchange,
transfer, distribution, pledge, disposition or any other transaction
that would reduce or limit the risk of loss such as a short sale,
hedge, swap, or otherwise, of the shares of Parent stock to be received
upon consumation of the Merger (a "Sale") of shares of Parent Common
Stock received in the Merger that would reduce the Company
stockholders' ownership of Parent Common Stock to a number of shares
having a value as of the Effective Time of the Merger of less than
fifty percent (50%) of the aggregate fair market value, immediately
prior to the Merger, of all outstanding shares of Company
- - - ----------
2 Defined terms used and not defined herein have the same meanings ascribed to
them as in the Agreement.
<PAGE> 487
stock. For purposes of this representation, shares of Company stock
with respect to which a Company stockholder receives consideration in
the Merger other than Parent Common Stock (including, without
limitation, cash or other property received in lieu of fractional
shares of Parent Common Stock) and with respect to which a Sale occurs
prior to, or subsequent to and in contemplation of, the Merger, shall
be considered shares of outstanding Company stock exchanged for Parent
Common Stock in the Merger and then disposed of pursuant to a Plan.
Pursuant to the Merger, Sub will merge with and into Company. At
least ninety percent (90%) of the fair market value of the net assets
and at least seventy percent (70%) of the fair market value of the
gross assets held by Company immediately prior to the Merger will
continue to be held by Company following the Merger. For purposes of
this representation, the following assets will be treated as assets
held by Company immediately prior to the Merger: (i) assets disposed of
by Company prior to or subsequent to the Merger and in contemplation
thereof (including, without limitation, any assets disposed of by
Company, other than in the ordinary course of business, pursuant to a
plan or intent existing during the period ending at the Effective Time
of the Merger and beginning with the commencement of negotiations
(whether formal or informal) with Parent regarding the Merger) (the
"Pre-Merger Period"); (ii) assets used by Company to pay stockholders
cash in lieu of fractional shares of Parent Common Stock, or to pay
other expenses or liabilities incurred in connection with the Merger;
and (iii) assets used to make distributions, redemptions or other
payments in respect of Company stock or rights to acquire such stock
(including payments treated as such for tax purposes) except amounts
paid as normal, regular dividends.
Company has no plan or intention to issue additional shares of its
stock that would result in Parent losing control of Company within the
meaning of Section 368(c) of the Code.
Company and the stockholders of Company will pay their respective
expenses, if any, incurred in connection with the Merger.
Following the Merger, Company will continue its historic business
or use a significant portion of its historic business assets in a
business.
There is no intercorporate indebtedness existing between Parent
and Company or between Sub and Company that was issued, acquired, or
will be settled at a discount.
<PAGE> 488
In the Merger, shares of Company representing control of Company
will be exchanged solely for voting Common Stock of Parent. For
purposes of this representation and the representation in paragraph 24
below, shares of Company stock exchanged in the Merger for cash or
other property (including, without limitation, cash paid to Company
stockholders in lieu of fractional shares of Parent Common Stock but
not including any cash or other property provided by Company) will be
treated as Company stock outstanding at the Effective Time of the
Merger but not exchanged for voting Common Stock of Parent. As used in
this Certificate, "Control" shall consist of the direct ownership of
stock possessing at least 80 percent (80%) of the total combined voting
power of all classes of stock entitled to vote and at least eighty
percent (80%) of the total number of shares of each class of non-voting
stock of Company. For purposes of determining Control, a person shall
not be considered to own voting stock if rights to vote such stock (or
to restrict or otherwise control the voting of such stock) are held by
a third party (including a voting trust) other than as agent of such
person.
At the Effective Time of the Merger, other than in Section ____ of
the Agreement, there will not be outstanding any equity interest in
Company, any other warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire stock in
Company or any other equity interest in Company that, if exercised or
converted, would affect Parent's acquisition or retention of Control of
Company.
Company is not an investment company as defined in Sections
368(a)(2)(F)(iii) and (iv) of the Code.
On the date of the Merger, the fair market value of the assets of
Company will exceed the sum of its liabilities plus the amount of
liabilities, if any, to which such assets are subject.
Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Other than in the ordinary course of business or pursuant to its
obligations under the Agreement, Company has made no transfer of any or
its assets (including any distribution of assets with respect to, or in
redemption of, stock) in contemplation of the Merger (or any other
corporate acquisition) or during the Pre-Merger Period.
The Merger is being undertaken by Company for valid business
purposes and not for the purpose of tax avoidance.
<PAGE> 489
Company has no plan or intention to sell, distribute or otherwise
dispose of any of its assets or any of the assets acquired from Sub in
the Merger, except for dispositions made in the ordinary course of
business or transfers of assets to a corporation controlled by Company,
as described in both Section 368(a)(2)(c) of the Code and Treasury
Regulation Section 1.368-2(j)(4).
To the best of Company's knowledge, during the past five years,
and at present, none of the outstanding shares of Company stock
including the right to acquire or vote such shares have, directly or
indirectly, been owned by Parent or Parent affiliates, other than as
disclosed in the [Joint Proxy Statement].
The liabilities of Company and any liabilities to which the assets
of Company are subject have been incurred by Company in the ordinary
course of its business.
Under Section 2.2(g) of the Agreement, in lieu of issuing
fractional shares of Parent Common Stock that would otherwise be
issued, each stockholder of Company shall receive cash. The payment of
cash in lieu of fractional shares of Parent Common Stock will be made
solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and will not represent separately
bargained-for consideration. The total cash consideration that will be
paid in the Merger to stockholders of Company in lieu of issuing
fractional shares of Parent Common stock will not exceed one percent
(1%) of the total consideration that will be issued in the Merger to
the stockholders of Company in exchange for their shares of Company
stock. The fractional share interests of each holder of Company stock
will be aggregated, and no holder of Company stock will receive cash in
an amount equal to or greater than the value of one full share of
Parent Common Stock.
The terms of the Agreement are the product of arm's-length
negotiations.
No compensation received by any stockholder employees of Company
will be separate consideration for, or allocable to, any of their
shares of Company stock.
Other than shares of Company stock or options to acquire Company
stock issued as compensation to present or former service providers
(including, without limitation, employees and directors) of Company in
the ordinary course of business, if any, no issuances of Company stock
or rights to acquire Company stock have occurred or will occur during
the Pre-Merger period other than pursuant to options, warrants or
<PAGE> 490
agreements outstanding prior to the Pre-Merger Period.
Cash or other property paid to employees of Company during the
Pre-Merger period has been or will be in the ordinary course of
business or pursuant to agreements entered into prior to the Pre-Merger
period and constitutes reasonable compensation for services rendered.
During the Pre-Merger Period, no indebtedness or other obligation
of Company or its subsidiaries has been or will be guaranteed by any
stockholder of Company (or any person or entity related to a
stockholder of Company) in contemplation of the Merger.
Except with respect to payments of cash to Company stockholders in
lieu of fractional shares of Parent Common Stock, cash payments to
dissenting Company stockholders and transfer and similar taxes paid on
behalf of Company stockholders, if any, one hundred percent (100%) of
the Company stock outstanding immediately prior to the Merger will be
exchanged solely for Parent Common Stock. Thus, except as set forth in
the preceding sentence, Company intends that no consideration be paid
or received (directly or indirectly, actually or constructively) for
Company stock other than Parent Common Stock.
Company recognizes that: (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreement and documents related thereto; and (ii) your opinions will be subject
to certain limitations and qualifications including that they may not be relied
upon if any such representations are not accurate in all material respects.
Company recognizes that your opinions will not address any tax consequences of
the Merger or any action taken in connection therewith except as expressly set
forth in such opinions.
Notwithstanding anything herein to the contrary, Company makes no
representations regarding the actions or conduct of Company pursuant to Parent's
exercise of control over Company after the Merger.
In rendering this Officer's Certificate, Company has relied on its
counsel and auditors, and on the representations set forth in: (i) the Parent
and Sub Officer's Certificate; and (ii) the
<PAGE> 491
Stockholder's Certificate(s), both of which are to be furnished to Willkie Farr
& Gallagher and Paul, Weiss, Rifkind, Wharton & Garrison.
To the best of the knowledge of Company, the foregoing representations
and the representations made by Company in the Agreement and other documents
associated therewith are true and accurate and will continue to be true and
accurate in all material respects through and as of the Effective Time of the
Merger. If any of the representations contained herein ceases to be true at any
time prior to the Effective Time of the Merger, Company agrees to deliver to
Parent a written notice to that effect. Company is authorized to make all of the
representations set forth herein.
IN WITNESS WHEREOF, I have signed this certificate this day of
______________ 1996.
DEBARTOLO REALTY CORPORATION
By:
Name:
Title:
<PAGE> 492
Form of Stockholder's Certificate
---------------------------------
(For Individuals holding 5% or more of Company stock)
STOCKHOLDER'S CERTIFICATE
-------------------------
In connection with the opinions rendered by Willkie Farr & Gallagher
and Paul, Weiss, Rifkind, Wharton & Garrrison as required by Sections 6.2(e) and
6.3(e) of the Agreement and Plan of Merger (the "Agreement") dated as of March
26, 1996, as amended, between Simon Property Group, Inc., a Maryland corporation
("Parent"), Day Acquisition Corp., an Ohio corporation and Controlled subsidiary
of Parent ("Sub"), and DeBartolo Realty Corporation, an Ohio corporation
("Company"), the undersigned stockholder of Company certifies as follows:
1. I have, and as of the Effective Time3 of the Merger will have, no
present plan or intention to engage in a sale, exchange, transfer, pledge,
disposition or any other transaction or arrangement that would reduce or limit
the risk of loss, such as a short sale, hedge, swap or otherwise, of the shares
of Parent stock I am receive upon consummation of the Merger (collectively, a
"Sale"). For purposes of this representation, a Sale of Parent stock shall be
considered to have occurred pursuant to a plan or intention if such Sale occurs
in a transaction that is in contemplation of, or related or pursuant to, the
Merger.
2. I am currently the legal and beneficial owner of the shares of stock
listed in Company's share register, and I have not acquired such shares in
contemplation of the Merger.
While the representations contained herein indicate my present plans
and intentions, my plans and intentions may change at any time after the
Effective Time of the Merger. The representations contained in this
- - - ----------
3 Defined terms used and not defined herein have the same meanings ascribed to
them as in the Agreement.
<PAGE> 493
Certificate may not be relied upon by any person to constrain or otherwise limit
my actions with regard to the Parent stock I am to receive in the Merger at any
time after the Effective Time of the Merger.
I understand and acknowledge that Parent and Company and their
respective legal counsel may rely on the truth and accuracy of my
representations contained herein in rendering the above referenced opinions. If
any of the representations contained herein ceases to be true at any time prior
to the Effective Time of the Merger, I agree to deliver to Parent and Company a
written notice to that effect.
IN WITNESS WHEREOF, I have signed this Certificate this ___ day of
_____________, 1996.
----------------------------------
<PAGE> 494
Form of Stockholder's Certificate
---------------------------------
(For Entities holding 5% or more of Company stock)
STOCKHOLDER'S CERTIFICATE
-------------------------
In connection with the opinions rendered by Willkie Farr & Gallagher
and Paul, Weiss, Rifkind, Wharton & Garrrison as required by Sections 6.2(e) and
6.3(e) of the Agreement and Plan of Merger (the "Agreement") dated as of March
26, 1996, as amended, between Simon Property Group, Inc., a Maryland corporation
("Parent:), Day Acquisition Corp., an Ohio corporation and Controlled subsidiary
of Parent ("Sub"), and DeBartolo Realty Corporation, an Ohio corporation
("Company"), the undersigned officer of ___________________ (" ")
certifies as follows:
1. _________________________ has, and as of the Effective Time4 of the
Merger will have, no present plan or intention to engage in a sale, exchange,
transfer, pledge, disposition or any other transaction or arrangement that would
reduce or limit the risk of loss, such as a short sale, hedge, swap or
otherwise, of the shares of Parent stock to be received by
__________________________ upon consummation of the Merger (collectively, a
"Sale"). For purposes of this representation, a Sale of Parent stock shall be
considered to have occurred pursuant to a plan or intention if such Sale occurs
in a transaction that is in contemplation of, or related or pursuant to, the
Merger.
- - - ----------
4 Defined terms used and not defined herein have the same meanings ascribed to
them as in the Agreement.
<PAGE> 495
2. _________________________ is currently the legal and beneficial
owner of the shares of stock listed in Company's share register, and has not
acquired such shares in contemplation of the Merger.
While the representations contained herein indicate ________________'s
present plans and intentions, those plans and intentions may change at any time
after the Effective Time of the Merger. The representations contained in this
Certificate may not be relied upon by any person to constrain or otherwise limit
___________________'s actions with regard to the Parent stock to be received in
the Merger at any time after the Effective Time of the Merger.
____________________ understands and acknowledges that Parent and
Company and their respective legal counsel may rely on the truth and accuracy of
the representations contained herein in rendering the above referenced opinions.
If any of the representations contained herein ceases to be true at any time
prior to the Effective Time of the Merger, ______________________ agrees to
deliver to Parent and Company a written notice to that effect.
___________________ is authorized to make all of the representations set forth
herein.
IN WITNESS WHEREOF, I have signed this Certificate this ___ day of
_____________, 1996.
--------------------------------
By: __________________________
Name:
Title:
<PAGE> 496
FORMS OF LETTERS
AND CERTIFICATES
EXHIBIT M
SIMON PROPERTY GROUP, INC.
--------------------------
and
---
DAY ACQUISITION CORP.
---------------------
OFFICER'S CERTIFICATE
---------------------
The undersigned officer of Simon Property Group, Inc., a Maryland
corporation ("Parent")1 and Day Acquisition Corp., an Ohio corporation and
Controlled subsidiary of Parent ("Sub"), in connection with the rendering by
Willkie Farr & Gallagher and Paul, Weiss, Rifkind, Wharton & Garrison of the
written opinions required by Sections 6.2(e) and 6.3(e), respectively, of the
Agreement and Plan of Merger (the "Agreement") dated as of March 26, 1995, as
amended, between Parent, Sub, and DeBartolo
- - - --------
1 Defined terms used and not defined herein have the same meanings ascribed to
them as in the Agreement.
1
<PAGE> 497
Realty Corporation, an Ohio corporation ("Company"), and recognizing that said
law firms will rely on this Certificate in rendering such opinions, hereby
certifies as follows:
1. The fair market value of Parent Common Stock and other consideration
received by each Company stockholder will be approximately equal to the fair
market value of the Company stock surrendered in exchange therefor, and the
aggregate consideration received by Company stockholders in exchange for their
Company stock will be approximately equal to the fair market value of all of the
outstanding shares of Company stock immediately prior to the Merger.
2. Pursuant to the Merger, Sub will merge with and into Company, and
Company will acquire and continue to hold following the Merger substantially all
of the assets and liabilities of Sub. Specifically, the assets of Sub
transferred to Company pursuant to the Merger will represent at least 90 percent
(90%) of the fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets held by Sub immediately prior
to the Merger. In addition, at least ninety percent (90%) of the fair market
value of the of the net assets and at least seventy percent (70%) of the fair
market value of the gross assets held by Company immediately prior to the Merger
will continue to be held by Company immediately after the Merger. For purposes
of this representation, the following assets will be treated as assets held by
Sub or Company, as the case may be, immediately prior but not subsequent to the
Merger: (i) assets disposed of by Company or Sub (other than assets transferred
from Sub to Company in the Merger) prior to or subsequent to the Merger and in
contemplation thereof (including without limitation any asset disposed of by
Company, other than in the ordinary course of business, pursuant to a plan or
intent existing during the period ending at the Effective Time of the Merger and
beginning with the commencement of negotiations (whether formal or informal)
with Parent regarding the Merger (the "Pre-Merger Period"), (ii) assets used by
Company or Sub to pay stockholders receiving cash in lieu of fractional shares
of Parent Common Stock, or to pay other expenses or liabilities incurred in
connection with the Merger, and (iii) assets used to make distribution,
redemption or other payments in respect of Company stock or rights to acquire
such stock (including payments treated as such for tax purposes) except amounts
paid as normal, regular dividends.
3. Prior to the Merger, Parent will be in control of Sub within the
meaning of Section 368(c) of the Code.
4. Parent has no plan or intention to cause Company to issue additional
shares of its stock that would result
2
<PAGE> 498
in Parent losing control of Company within the meaning of Section 368(c) of the
Code.
5. Parent has no plan or intention to reacquire any Parent Stock issued
in the Merger.
6. Parent has no plan or intention to: liquidate Company; to merge
Company with or into another corporation (including Parent or its affiliates)
except for transfers of stock to corporations controlled by Parent, as described
in both 368(a)(2)(C) of the Code and Treasury Regulation Section 1.368(2)(j)(4);
to cause Company to sell, distribute or otherwise dispose of the stock of
Company; or to cause Company to sell or otherwise dispose of any of its assets
or any of the assets acquired from Sub in the Merger, except for dispositions
made in the ordinary course of business, or transfers of assets to a corporation
controlled by Company, as described in both Section 368(a)(2)(C) of the Code and
Treasury Regulation Section 1.3682(j)(4).
7. Sub will have no liabilities assumed by Company, and will not
transfer to Company any assets subject to liabilities in the Merger.
8. Following the Merger, Company will continue its historic business or
use a significant portion of its historic business assets in a business.
9. Parent and Sub will pay their respective expenses, if any incurred
in connection with the Merger.
10. There is no intercorporate indebtedness existing between Parent and
Company or between Sub and Company that was issued, acquired, or will be settled
at a discount.
3
<PAGE> 499
Parent will assume no liabilities of any Company stockholder in connection with
the Merger.
11. In the Merger, shares of Company stock representing control of
Company, as defined in Section 368(c) of the Code, will be exchanged solely for
voting stock of Parent. For purposes of this representation and the
representation in paragraph 23 below, shares of Company stock exchanged in the
Merger for cash or other property (including, without limitation, cash paid to
Company stockholders in lieu of fractional shares of Parent common stock but not
including any cash or property provided by Company) will be treated as Company
stock outstanding at the Effective Time of the Merger. The term "Control" means
the direct ownership of stock possessing at least 80 percent (80%) of the total
combined voting power of all classes of stock entitled to vote and at least
eighty percent (80%) of the total number of shares of each class of non-voting
stock of Company.
12. During the past five (5) years, and at the present, none of the
outstanding shares of Company stock, including the right to acquire or vote any
such shares have, directly or indirectly, been owned by Parent or to the best of
the knowledge of the management of Parent, Parent affiliates, other than as
disclosed in the [Joint Proxy Statement] of Parent and Company for the Merger.
13. Neither Parent nor Sub are investment companies as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
14. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
4
<PAGE> 500
the Merger to the stockholders of Company instead of issuing fractional shares
of Parent Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the shareholders of Company
in exchange for their shares of Company stock. The fractional share interests of
each stockholder of Company will be aggregated, and no stockholder of Company
will receive cash in an amount equal to or greater than the value of one full
share of Parent stock.
15. The Merger is being undertaken by Parent and Sub for valid business
purposes and not for the purpose of tax avoidance.
16. No stockholder of Company is acting as agent for Parent in
connection with the Merger or approval thereof; Parent will not reimburse any
Company stockholder for Company stock such stockholder may have purchased or for
other obligations such stockholder may have incurred.
17. Neither Parent nor Sub is, or will be at the Effective Time of the
Merger, under the jurisdiction of a court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code.
18. No shares of Sub have been or will be used as consideration or
issued to stockholders of Company in the Merger.
19. The terms of the Agreement are the product of arm's-length
negotiations.
20. No compensation received by any stockholder-employees of Company
will be separate consideration for, or allocable to, any of their shares of
Company Stock.
5
<PAGE> 501
21. With respect to each instance, if any, in which shares of Company
Stock have been purchased by a stockholder of Parent (a "Stockholder") during
the Pre-Merger Period (a "Stock Purchase"), to the best of the knowledge of the
management of Parent: (i) the Stock Purchase was made by such Stockholder on its
own behalf and not as a representative, or for the benefit of Parent; (ii) the
purchase price paid by such Stockholder pursuant to the Stock Purchase was the
product of arm's length negotiations, was funded by such Stockholder's own
assets, was not advanced, and will not be reimbursed either directly or
indirectly, by Parent; (ii) at no time was such Stockholder or any other party
required or obligated to surrender to Parent the Company stock acquired in the
Stock Purchase, and neither such Stockholder nor any other party will be
required to surrender to Parent the Parent Common Stock for which such shares of
Company stock will be exchanged in the Merger; and (iv) the Stock Purchase was
not a formal or informal condition to consummation of the Merger and was entered
into solely to satisfy the separate interests of such Stockholder and the
seller.
22. To the best of the knowledge of the management of Parent, there is
no plan or intention ("Plan") on the part of the stockholders of Company to
engage in a sale, exchange, transfer, distribution, pledge, disposition or any
other transaction, including a transaction or arrangement that reduces the risk
of loss such as a short sale, hedge, swap or otherwise, of the shares of Parent
stock to be received upon consummation of the Merger (a "Sale") of shares of
Parent Common Stock received in the Merger that would reduce the Company
stockholders' ownership of Parent Common Stock to a number of shares having a
value, as of the Effective Time of the Merger of less than 50 percent (50%) of
the aggregate fair market value, immediately prior to the Merger, of all
outstanding shares of Company stock. For purposes of this representation, shares
of Company stock with
6
<PAGE> 502
respect to which a Company stockholder receives consideration in the Merger
other than Parent Common Stock (including, without limitation, cash or other
property received in lieu of fractional shares of Parent Common Stock) and with
respect to which a Sale occurs prior to, or subsequent to and in contemplation
of the Merger, shall be considered shares of outstanding Company stock exchanged
for Parent Common Stock in the Merger and then disposed of pursuant to a Plan.
23. Except with respect to payments of cash to Company stockholders in
lieu of fractional shares of Parent Common Stock, cash payments to dissenting
Company stockholders and transfer and similar taxes paid on behalf of Company
stockholders, if any, one hundred percent (100%) of the Company stock
outstanding immediately prior to the Merger will be exchanged solely for Parent
Common Stock. Thus, except as set forth in the preceding sentence, Sub and
Parent intend that no consideration be paid or received (directly or indirectly,
actually or constructively) for Company stock other than Parent Common Stock.
Parent and Sub recognize that: (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreement and documents related thereto, (ii) your opinions will be subject to
certain limitations and qualifications including that they may not be relied
upon if any such representations are not accurate in all material respects; and
your opinions will not address any tax consequences of the Merger of any action
taken in connection therewith except as set forth in such opinions.
7
<PAGE> 503
In rendering this Officer's Certificate, Parent and Sub have relied on
their counsel and auditors, and on the representations set forth in: (i) the
Officer's Certificate of Company, and (ii) the Stockholder's Certificate, both
of which are to be furnished to Willkie Farr & Gallagher and Paul, Weiss,
Rifkind, Wharton & Garrison.
[intentionally left blank]
8
<PAGE> 504
To the best of the knowledge of Parent and Sub, the foregoing facts are now true
and will continue to be true through and as of the Effective Time of the Merger.
If any of the representations contained herein ceases to be true at any time
prior to the Effective Time of the Merger, Parent and Sub agree to deliver to
Company a written notice to that effect. Parent and Sub are authorized to make
the representations set forth herein.
IN WITNESS WHEREOF, we have signed this certificate this ____ day of
_________ 1996.
Simon Property Group, Inc.
By: ____________________
Name:
Title:
Day Acquisition Corp.
By: ____________________
Name:
Title:
9
<PAGE> 505
DEBARTOLO REALTY CORPORATION
----------------------------
OFFICER'S CERTIFICATE
---------------------
The undersigned officer of DeBartolo Realty Corporation, an Ohio
Corporation ("Company"),2 in connection with the rendering by Willkie Farr &
Gallagher and Paul, Weiss, Rifkind, Wharton & Garrison of the written opinions
required by Sections 6.2(e) and 6.3(e), respectively, of the Agreement and Plan
of Merger dated as of March 26, 1996, as amended, between Simon Property Group,
Inc., a Maryland corporation ("Parent"), Day Acquisition Corp., a Delaware
corporation ("Sub"), and Company, (the "Agreement") and recognizing that said
law firms will rely on this Certificate in rendering such opinions hereby
certifies as follows:
The fair market value of the Parent Common Stock and other
consideration received by each Company stockholder will be approximately equal
to the fair market value of the Company stock surrendered in exchange therefore,
and the aggregate consideration received by Company stockholders in exchange for
their Company stock will be approximately equal to the fair market value of all
of the outstanding shares of Company Stock immediately prior to the merger.
- - - ----------
2 Defined terms used and not defined herein have the same meanings ascribed
to them as in the Agreement.
<PAGE> 506
To the best of the knowledge of the management of Company there is no
plan or intention ("Plan") on the part of the stockholders of Company who own
five percent (5%) or more of the Company Stock and the remaining stockholders of
Company to engage in a sale, exchange, transfer, distribution, pledge,
disposition or any other transaction that would reduce or limit the risk of loss
such as a short sale, hedge, swap, or otherwise, of the shares of Parent stock
to be received upon consummation of the Merger (a "Sale") of shares of Parent
Common Stock received in the Merger that would reduce the Company stockholders'
ownership of Parent Common Stock to a number of shares having a value as of the
Effective Time of the Merger of less than fifty percent (50%) of the aggregate
fair market value, immediately prior to the Merger, of all outstanding shares of
Company stock. For purposes of this representation, shares of Company stock with
respect to which a Company stockholder receives consideration in the Merger
other than Parent Common Stock (including, without limitation, cash or other
property received in lieu of fractional shares of Parent Common Stock) and with
respect to which a Sale occurs prior to, or subsequent to and in contemplation
of, the Merger, shall be considered shares of outstanding Company stock
exchanged for Parent Common Stock in the Merger and then disposed of pursuant to
a Plan.
Pursuant to the Merger, Sub will merge with and into Company. At least
ninety percent (90%) of the fair market value of the net assets and at least
seventy percent (70%) of the fair market value of the gross assets held by
Company immediately prior to the Merger will continue to be held by Company
following the Merger. For purposes of this representation, the following assets
will be treated as assets held by Company immediately prior to the Merger: (i)
assets disposed of by
2
<PAGE> 507
Company prior to or subsequent to the Merger and in contemplation thereof
(including, without limitation, any assets disposed of by Company, other than in
the ordinary course of business, pursuant to a plan or intent existing during
the period ending at the Effective Time of the Merger and beginning with the
commencement of negotiations (whether formal or informal) with Parent regarding
the Merger) (the "Pre-Merger Period"); (ii) assets used by Company to pay
stockholders cash in lieu of fractional shares of Parent Common Stock, or to pay
other expenses or liabilities incurred in connection with the Merger; and (iii)
assets used to make distributions, redemptions or other payments in respect of
Company stock or rights to acquire such stock (including payments treated as
such for tax purposes) except amounts paid as normal, regular dividends.
Company has no plan or intention to issue additional shares of its
stock that would result in Parent losing control of Company within the meaning
of Section 368(c) of the Code.
Company and the stockholders of Company will pay their respective
expenses, if any, incurred in connection with the Merger.
Following the Merger, Company will continue its historic business or
use a significant portion of its historic business assets in a business.
There is no intercorporate indebtedness existing between Parent and
Company or between Sub and Company that was issued, acquired, or will be settled
at a discount.
In the Merger, shares of Company representing control of Company will
be exchanged solely for voting Common Stock of Parent. For purposes of this
representation and the representation in paragraph 24 below, shares of Company
stock exchanged in the Merger for cash or other property (including,
3
<PAGE> 508
without limitation, cash paid to Company stockholders in lieu of fractional
shares of Parent Common Stock but not including any cash or other property
provided by Company) will be treated as Company stock outstanding at the
Effective Time of the Merger but not exchanged for voting Common Stock of
Parent. As used in this Certificate, "Control" shall consist of the direct
ownership of stock possessing at least 80 percent (80%) of the total combined
voting power of all classes of stock entitled to vote and at least eighty
percent (80%) of the total number of shares of each class of non-voting stock of
Company. For purposes of determining Control, a person shall not be considered
to own voting stock if rights to vote such stock (or to restrict or otherwise
control the voting of such stock) are held by a third party (including a voting
trust) other than as agent of such person.
At the Effective Time of the Merger, other than in Section ____ of the
Agreement, there will not be outstanding any equity interest in Company, any
other warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in Company or any other equity
interest in Company that, if exercised or converted, would affect Parent's
acquisition or retention of Control of Company.
Company is not an investment company as defined in Sections
368(a)(2)(F)(iii) and (iv) of the Code.
On the date of the Merger, the fair market value of the assets of
Company will exceed the sum of its liabilities plus the amount of liabilities,
if any, to which such assets are subject.
Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
4
<PAGE> 509
Other than in the ordinary course of business or pursuant to its
obligations under the Agreement, Company has made no transfer of any or its
assets (including any distribution of assets with respect to, or in redemption
of, stock) in contemplation of the Merger (or any other corporate acquisition)
or during the Pre-Merger Period.
The Merger is being undertaken by Company for valid business purposes
and not for the purpose of tax avoidance.
Company has no plan or intention to sell, distribute or otherwise
dispose of any of its assets or any of the assets acquired from Sub in the
Merger, except for dispositions made in the ordinary course of business or
transfers of assets to a corporation controlled by Company, as described in both
Section 368(a)(2)(c) of the Code and Treasury Regulation Section 1.368-2(j)(4).
To the best of Company's knowledge, during the past five years, and at
present, none of the outstanding shares of Company stock including the right to
acquire or vote such shares have, directly or indirectly, been owned by Parent
or Parent affiliates, other than as disclosed in the [Joint Proxy Statement].
The liabilities of Company and any liabilities to which the assets of
Company are subject have been incurred by Company in the ordinary course of its
business.
Under Section 2.2(g) of the Agreement, in lieu of issuing fractional
shares of Parent Common Stock that would otherwise be issued, each stockholder
of Company shall receive cash. The payment of cash in lieu of fractional shares
of Parent Common Stock will be made solely for the purpose of avoiding the
expense
5
<PAGE> 510
and inconvenience to Parent of issuing fractional shares and will not represent
separately bargained-for consideration. The total cash consideration that will
be paid in the Merger to stockholders of Company in lieu of issuing fractional
shares of Parent Common stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the stockholders of Company
in exchange for their shares of Company stock. The fractional share interests of
each holder of Company stock will be aggregated, and no holder of Company stock
will receive cash in an amount equal to or greater than the value of one full
share of Parent Common Stock.
The terms of the Agreement are the product of arm's-length
negotiations.
No compensation received by any stockholder employees of Company will
be separate consideration for, or allocable to, any of their shares of Company
stock.
Other than shares of Company stock or options to acquire Company stock
issued as compensation to present or former service providers (including,
without limitation, employees and directors) of Company in the ordinary course
of business, if any, no issuances of Company stock or rights to acquire Company
stock have occurred or will occur during the Pre-Merger period other than
pursuant to options, warrants or agreements outstanding prior to the Pre-Merger
Period.
Cash or other property paid to employees of Company during the
Pre-Merger period has been or will be in the ordinary course of business or
pursuant to agreements entered into prior to the Pre-Merger period and
constitutes reasonable compensation for services rendered.
6
<PAGE> 511
During the Pre-Merger Period, no indebtedness or other obligation of
Company or its subsidiaries has been or will be guaranteed by any stockholder of
Company (or any person or entity related to a stockholder of Company) in
contemplation of the Merger.
Except with respect to payments of cash to Company stockholders in lieu
of fractional shares of Parent Common Stock, cash payments to dissenting Company
stockholders and transfer and similar taxes paid on behalf of Company
stockholders, if any, one hundred percent (100%) of the Company stock
outstanding immediately prior to the Merger will be exchanged solely for Parent
Common Stock. Thus, except as set forth in the preceding sentence, Company
intends that no consideration be paid or received (directly or indirectly,
actually or constructively) for Company stock other than Parent Common Stock.
Company recognizes that: (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreement and documents related thereto; and (ii) your opinions will be subject
to certain limitations and qualifications including that they may not be relied
upon if any such representations are not accurate in all material respects.
Company recognizes that your opinions will not address any tax consequences of
the Merger or any action taken in connection therewith except as expressly set
forth in such opinions.
Notwithstanding anything herein to the contrary, Company makes no
representations regarding the actions or conduct of Company pursuant to Parent's
exercise of control over Company after the Merger.
In rendering this Officer's Certificate, Company has relied on its
counsel and auditors, and on the representations set forth in: (i) the Parent
and Sub Officer's Certificate; and (ii) the Stockholder's Certificate(s), both
of which are to be furnished to Willkie Farr & Gallagher and Paul, Weiss,
Rifkind, Wharton & Garrison.
To the best of the knowledge of Company, the foregoing representations
and the representations made by Company in the Agreement and other documents
associated therewith are true and accurate and will continue to be true and
accurate in all material respects through and as of the Effective Time of the
Merger. If any of the representations contained herein ceases to be true at any
time prior to the Effective Time of the Merger, Company agrees to deliver to
Parent a written notice to that effect. Company is authorized to make all of the
representations set forth herein.
7
<PAGE> 512
IN WITNESS WHEREOF, I have signed this certificate this day of
______________ 1996.
DEBARTOLO REALTY CORPORATION
By:
Name:
Title:
8
<PAGE> 513
Form of Stockholder's Certificate
---------------------------------
(For Individuals holding 5% or more of Company stock)
STOCKHOLDER'S CERTIFICATE
-------------------------
In connection with the opinions rendered by Willkie Farr & Gallagher
and Paul, Weiss, Rifkind, Wharton & Garrrison as required by Sections 6.2(e) and
6.3(e) of the Agreement and Plan of Merger (the "Agreement") dated as of March
26, 1996, as amended, between Simon Property Group, Inc., a Maryland corporation
("Parent"), Day Acquisition Corp., an Ohio corporation and Controlled subsidiary
of Parent ("Sub"), and DeBartolo Realty Corporation, an Ohio corporation
("Company"), the undersigned stockholder of Company certifies as follows:
1. I have, and as of the Effective Time3 of the Merger will have, no
present plan or intention to engage in a sale, exchange, transfer, pledge,
disposition or any other transaction or arrangement that would reduce or limit
the risk of loss, such as a short sale, hedge, swap or otherwise, of the shares
of Parent stock I am receive upon consummation of the Merger (collectively, a
"Sale"). For purposes of this representation, a Sale of Parent stock shall be
considered to have occurred pursuant to a plan or intention if such Sale occurs
in a transaction that is in contemplation of, or related or pursuant to, the
Merger.
- - - ----------
3 Defined terms used and not defined herein have the same meanings ascribed to
them as in the Agreement.
1
<PAGE> 514
2. I am currently the legal and beneficial owner of the shares of stock
listed in Company's share register, and I have not acquired such shares in
contemplation of the Merger.
While the representations contained herein indicate my present plans
and intentions, my plans and intentions may change at any time after the
Effective Time of the Merger. The representations contained in this Certificate
may not be relied upon by any person to constrain or otherwise limit my actions
with regard to the Parent stock I am to receive in the Merger at any time after
the Effective Time of the Merger.
I understand and acknowledge that Parent and Company and their
respective legal counsel may rely on the truth and accuracy of my
representations contained herein in rendering the above referenced opinions. If
any of the representations contained herein ceases to be true at any time prior
to the Effective Time of the Merger, I agree to deliver to Parent and Company a
written notice to that effect.
IN WITNESS WHEREOF, I have signed this Certificate this ___ day of
_____________, 1996.
----------------------------------
2
<PAGE> 515
Form of Stockholder's Certificate
---------------------------------
(For Entities holding 5% or more of Company stock)
STOCKHOLDER'S CERTIFICATE
-------------------------
In connection with the opinions rendered by Willkie Farr & Gallagher
and Paul, Weiss, Rifkind, Wharton & Garrrison as required by Sections 6.2(e) and
6.3(e) of the Agreement and Plan of Merger (the "Agreement") dated as of March
26, 1996, as amended, between Simon Property Group, Inc., a Maryland corporation
("Parent"), Day Acquisition Corp., an Ohio corporation and Controlled subsidiary
of Parent ("Sub"), and DeBartolo Realty Corporation, an Ohio corporation
("Company"), the undersigned officer of ______________________ (" ")
certifies as follows:
1. _________________________ has, and as of the Effective Time4 of the
Merger will have, no present plan or intention to engage in a sale, exchange,
transfer, pledge, disposition or any other transaction or arrangement that would
reduce or limit the risk of loss, such as a short sale, hedge, swap or
otherwise, of the shares of Parent stock to be received by
__________________________ upon consummation of the Merger (collectively, a
"Sale"). For purposes of this representation, a Sale of Parent stock shall be
considered to have occurred pursuant to a plan or intention if such Sale occurs
in a transaction that is in contemplation of, or related or pursuant to, the
Merger.
- - - ----------
4 Defined terms used and not defined herein have the same meanings ascribed to
them as in the Agreement.
1
<PAGE> 516
2. _________________________ is currently the legal and beneficial
owner of the shares of stock listed in Company's share register, and has not
acquired such shares in contemplation of the Merger.
While the representations contained herein indicate
__________________'s present plans and intentions, those plans and intentions
may change at any time after the Effective Time of the Merger. The
representations contained in this Certificate may not be relied upon by any
person to constrain or otherwise limit ___________________'s actions with regard
to the Parent stock to be received in the Merger at any time after the Effective
Time of the Merger.
____________________ understands and acknowledges that Parent and
Company and their respective legal counsel may rely on the truth and accuracy of
the representations contained herein in rendering the above referenced opinions.
If any of the representations contained herein ceases to be true at any time
prior to the Effective Time of the Merger, ______________________ agrees to
deliver to Parent and Company a written notice to that effect.
___________________ is authorized to make all of the representations set forth
herein.
IN WITNESS WHEREOF, I have signed this Certificate this ___ day of
_____________, 1996.
--------------------------------
By:__________________________
Name:
Title:
2
<PAGE> 517
EXHIBIT N
---------
Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison with regard to
status of special limited partnership interest under the Investment Company Act.
Capitalized terms used herein without definition shall have the meaning assigned
to them in the Merger Agreement to which this Exhibit N is attached.
- - - --------------------------------------------------------------------------------
[appropriate introductory language and recitals, including the following:]
We have examined the Amended and Restated Agreement of Limited Partnership of
the Parent Operating Partnership and the rights and powers that will be granted
to the special limited partnership interest (the "Special Limited Partnership
Interest") that will be held by the Operating Partnership in connection
therewith, which will include the following:
- The right to receive information concerning any matter
affecting the Parent Operating Partnership.
- The right to approve the acquisition, disposition or
encumbrance (other than as a result of operating leases or in
the ordinary course of business) of partnership real property.
- The right to approve a merger, liquidation or dissolution of
the Parent Operating Partnership and the sale of all or
substantially all of its assets.
- The right to approve any borrowing or lending.
- The right to approve the admission of additional general or
limited partners, the making of additional capital
contributions, the withdrawal of any part of a partner's
capital contribution and the transfer or assignment of any
partnership interests.
- The right to approve the making, modification or withdrawal of
tax elections.
* * * * * * *
Based upon and subject to the foregoing, we are of the opinion that the Special
Limited Partnership Interest will not constitute a "security," as that term is
defined in the Investment Company Act of 1940, as amended.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000912045
<NAME> DEBARTOLO REALTY CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,373
<SECURITIES> 4,875
<RECEIVABLES> 51,643
<ALLOWANCES> 9,506
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,947,324
<DEPRECIATION> 616,817
<TOTAL-ASSETS> 1,600,914
<CURRENT-LIABILITIES> 0
<BONDS> 1,470,274
<COMMON> 555
0
0
<OTHER-SE> 12,896
<TOTAL-LIABILITY-AND-EQUITY> 1,600,914
<SALES> 0
<TOTAL-REVENUES> 88,426
<CGS> 0
<TOTAL-COSTS> 33,104
<OTHER-EXPENSES> 53
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,524
<INCOME-PRETAX> 13,766
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,766
<DISCONTINUED> 0
<EXTRAORDINARY> 9,191
<CHANGES> 0
<NET-INCOME> 14,195
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
