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Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF
7.00% CUMULATIVE CONVERTIBLE PREFERRED UNITS
OF
SIMON PROPERTY GROUP, L.P.
WHEREAS, Simon Property Group, L.P. (the "Operating Partnership") has
agreed to designate a series of preferred units having the powers, preferences
and relative, participating, optional or other special rights set forth herein
and to issue the units so designated solely as partial consideration for the
▇▇▇ Portfolio Properties as defined in certain contribution agreements with
respect to properties the sale of which was arranged by ▇▇▇ Management Limited
Partnership and WellsPark Management LLC and, under certain circumstances, as
partial consideration for Pheasant Lane Mall in Nashua New Hampshire and
Cambridgeside Galleria in Cambridge, Massachusetts pursuant to contribution
agreements with respect to those properties (the contribution agreements for
the ▇▇▇ Portfolio Properties. Pheasant Lane Mall and Cambridgeside Galleria are
referred to herein as the "Contribution Agreements"); and
WHEREAS, the designation of the preferred units of the Operating
Partnership hereby is permitted by the terms of the Seventh Amended and
Restated Limited Partnership Agreement of the Operating Partnership (the
"Partnership Agreement");
WHEREAS, Simon Property Group, Inc. (the "Corporation"), the managing
general partner of the Operating Partnership (in such capacity, the "Managing
General Partner"), has determined that it is in the best interest of the
Operating Partnership to designate a new series of preferred units of the
Operating Partnership;
NOW THEREFORE, the Managing General Partner hereby designates a
series of preferred units and fixes the designations, powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of such preferred units,
as follows:
SECTION 1. Designation and Number. The units of such series
shall be designated "7.00% Cumulative Convertible Preferred Units" (the "7.00%
Cumulative Convertible Preferred Units"). The authorized number of 7.00%
Cumulative Convertible Preferred Units shall be 1,500,000 but such 7.00%
Cumulative Convertible Preferred Units shall only be issuable as consideration
pursuant to the Contribution Agreements. Subject to Sections 5 and 6 hereof,
each 7.00% Cumulative Convertible Preferred Unit shall be paired with one (1)
8.00% Cumulative Redeemable Preferred Unit of the Operating Partnership ("8.00%
Cumulative Redeemable Preferred Unit") or, if issued, with New Preferred Units
as permitted under Section 5 of the Certificate of Designation of 8.00%
Cumulative Redeemable Preferred Units (the "8.00% Certificate of Designation")
and such paired units shall be subject to the transfer restrictions set forth
in Section 9 hereof (as such, "Paired Units"); provided that in the event of
(i) the redemption by the Operating Partnership of 8.00% Cumulative Redeemable
Preferred Units for Common Units; (ii) the conversion of 8.00% Cumulative
Redeemable Preferred Units into 8.00% Cumulative Redeemable Preferred Stock (as
defined in the 8.00% Certificate of Designation) as permitted under Section 6
of such 8.00% Certificate of Designation or (iii) the repurchase of 8.00%
Cumulative Redeemable Preferred Units payable in Paired Shares as permitted
under Section 7 of such 8.00% Certificate of Designation, then in each such
case, the 7% Cumulative Convertible Preferred Units shall cease to be paired
with such Common Units issuable upon such redemption, such 8.00% Cumulative
Redeemable Preferred Stock issuable upon such conversion, or such Paired Shares
issuable upon repurchase, as the case may be, of the 8.00% Cumulative
Redeemable Preferred Units and the provisions of Section 9(b) hereof shall no
longer apply to the 7.00% Cumulative Convertible Preferred Units which had been
paired with the 8.00% Cumulative Redeemable Preferred Stock which were so
redeemed or converted.
SECTION 2. Ranking. The 7.00% Cumulative Convertible Preferred
Units shall, with respect to the payment of distributions pursuant to Section
6.2 of the Partnership Agreement or rights upon the dissolution, liquidation or
winding-up of the Operating Partnership, rank: (i) senior to the holders of
Partnership Units of the Operating Partnership (the "Common Units") and any
other equity securities of the Operating Partnership which by their terms rank
junior to the 7.00% Cumulative Convertible Preferred Units as to distributions
pursuant to Section 6.2 of the Partnership Agreement or rights upon the
dissolution, liquidation or winding-up of the Operating Partnership (such
Common Units and such other equity securities, collectively, the "Junior
Units"), (ii) pari passu with any other preferred units which are not by their
terms junior or, subject to Section 11 hereof, senior to the 7.00% Cumulative
Convertible Preferred Units as to distributions pursuant to Section 6.2 of the
Partnership Agreement or rights upon the dissolution, liquidation or winding-up
of the Operating Partnership, and in all respects shall rank pari passu with
the 6.50% Series A Convertible Preferred Units, Series B Convertible Preferred
Units, 8-3/4% Series B Cumulative Redeemable Preferred Units, 7.89% Series C
Cumulative Step-Up Premium Rate Preferred Units and 8.00% Cumulative Redeemable
Preferred Units, which are the only preferred units of the Operating
Partnership authorized as of the date hereof ("Parity Units") and (iii) subject
to Section 11 hereof, junior to any other preferred units which by their terms
are senior to the 7.00% Cumulative Convertible Preferred Units as to
distributions pursuant to Section 6.2 of the Partnership Agreement or rights
upon the dissolution, liquidation or winding-up of the Operating Partnership
("Senior Units").
SECTION 3. Distributions. (a) Distributions on the 7.00%
Cumulative Convertible Preferred Units are cumulative from the date of issuance
and are payable quarterly on or about the last day of March, June, September
and December of each year in an amount in cash equal to 7.00% of the
Liquidation Preference (as defined herein) per annum.
(b) Distributions on the 7.00% Cumulative Convertible Preferred
Units, without any additional return on unpaid distributions, will accrue,
whether or not the Operating Partnership has earnings, whether or not there are
funds legally available for the payment of such distribution and whether or not
such distributions are declared or paid when due. All such distributions
accumulate from the first date of issuance of any such 7.00% Cumulative
Convertible Preferred Units. Distributions on the 7.00% Cumulative Convertible
Preferred Units shall cease to accumulate on such units on the date of their
earlier conversion or redemption.
(c) In allocating items of income, gain, loss and deductions which
could have an effect upon the determination of the federal income tax liability
of any holder of a 7.00% Cumulative Convertible Preferred Unit, except as
otherwise required by Section 704(c) of the Internal Revenue Code of 1986, as
amended, or any other applicable provisions thereof, the Operating Partnership
shall allocate each such item proportionately, based on the distributive share
of profits or losses, as the case may be, of the Operating Partnership
allocated to holders of the 7.00% Cumulative Convertible Preferred Units as
compared to the total of the distributive shares of such profits and losses, as
the case may be, allocated to all partners of the Operating Partnership.
(d) If any 7.00% Cumulative Convertible Preferred Units are
outstanding, then, except as provided in the following sentence, no
distributions shall be declared or paid or set apart for payment on any Parity
Units or Junior Units for any period unless full cumulative distributions have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payments on the 7.00%
Cumulative Convertible Preferred Units for all past distribution periods and
the then current distribution period. When distributions are not paid in full
(or a sum sufficient for such full payment is not set apart) upon the 7.00%
Cumulative Convertible Preferred Units and any Parity Units, all distributions
declared upon the 7.00% Cumulative Convertible Preferred Units and any other
Parity Units shall be declared pro rata so that the amount of distributions
declared per 7.00% Cumulative Convertible Preferred Unit and such other Parity
Units shall in all cases bear to each other the same ratio that accrued
distributions per 7.00% Cumulative Convertible Preferred Unit and such other
series of Parity Units bear to each other.
(e) Except as provided in subparagraph (d) above, unless full
cumulative distributions on the 7.00% Cumulative Convertible Preferred Units
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past
distribution periods and the then current distribution period, no distributions
(other than in Junior Units) shall be declared, set aside for payment or paid
and no other distribution shall be declared or made upon any Junior Units, nor
shall any Junior Units be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any such Junior Units) by the Operating Partnership
(except by conversion into or exchange for Junior Units).
SECTION 4. Liquidation Preference. (a) Each 7.00% Cumulative
Convertible Preferred Unit shall be entitled to a liquidation preference of
$28.00 per 7.00% Cumulative Convertible Preferred Unit ("Liquidation
Preference").
(b) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Operating Partnership pursuant to Article VIII
of the Partnership Agreement, the holders of 7.00% Cumulative Convertible
Preferred Units then outstanding shall be entitled to be paid out of the assets
of the Operating Partnership available for distribution, after and subject to
the payment in full of all amounts required to be distributed to the holders of
Senior Units, but before any payment shall be made to the holders of Junior
Units, an amount equal to the aggregate Liquidation Preference of the 7.00%
Cumulative Convertible Preferred Units held by such holder, plus an amount
equal to accrued and unpaid distributions thereon, if any. If upon any such
liquidation, dissolution or winding up of the Operating Partnership the
remaining assets of the Operating Partnership available for the distribution
after payment in full of amounts required to be paid or distributed to holders
of Senior Units shall be insufficient to pay the holders of the 7.00%
Cumulative Convertible Preferred Units the full amount to which they shall be
entitled, the holders of the 7.00% Cumulative Convertible Preferred Units and
the holders of any series of Parity Units shall share ratably with other
holders of Parity Units in any distribution of the remaining assets and funds
of the Operating Partnership in proportion to the respective amounts which
would otherwise be payable in respect to the Parity Units held by each of the
said holders upon such distribution if all amounts payable on or with respect
to said Parity Units were paid in full. After payment in full of the
Liquidation Preference and accumulated and unpaid distributions to which they
are entitled, the holders of 7.00% Cumulative Convertible Preferred Units shall
not be entitled to any further participation in any distribution of the assets
of the Operating Partnership.
SECTION 5. Redemption. (a) General. The 7.00% Cumulative
Convertible Preferred Units are not redeemable, except as permitted under
Sections 6 and 7 herein, prior to August 27, 2009.
(b) Optional Redemption. (i) On and after August 27, 2009, the
Operating Partnership may, at its option, at any time, redeem the 7.00%
Cumulative Convertible Preferred Units, in whole or in part, at the Liquidation
Preference, plus accrued and unpaid distributions thereon, if any, to and
including the date of redemption (the "Redemption Price"). The Redemption
Price (other than the portion thereof consisting of accrued and unpaid
distributions, which shall be payable in cash) is payable in Common Units at
the Deemed Partnership Unit Value, as of the Redemption Date (as defined
below), of the Common Units to be issued.
(ii) Provided that no later than the Redemption Date the Operating
Partnership shall have (A) set apart the funds necessary to pay the accrued and
unpaid distribution on all the 7.00% Cumulative Convertible Preferred Units
then called for redemption and (B) reserved for issuance a sufficient number of
authorized Common Units, the Operating Partnership may give the holders of the
7.00% Cumulative Convertible Preferred Units written notice ("Redemption
Notice") of a redemption pursuant to Section 5(b) (a "Redemption") not more
than 70 nor less than 40 calendar days prior to the date fixed for redemption
(the "Redemption Date") at the address of such holders on the books of the
Operating Partnership (provided that failure to give such notice or any defect
therein shall not affect the validity of the proceeding for a Redemption except
as to the holder to whom the Operating Partnership has failed to give such
notice or whose notice was defective). The 7.00% Cumulative Convertible
Preferred Units for which the Redemption Price has been paid shall no longer be
deemed outstanding from and after the date of payment and all rights with
respect to such units shall forthwith cease and terminate. In case fewer than
all of the outstanding 7.00% Cumulative Convertible Preferred Units are called
for redemption, such units shall be redeemed pro rata, as nearly as
practicable, among all holders of 7.00% Cumulative Convertible Preferred Units,
provided that, if within 20 business days of the Redemption Notice the
Contributor Representative (as such term is defined in the Tax Protection
Agreement entered into on or prior to the date hereof between Operating
Partnership and certain other parties (the "Tax Protection Agreement"))
notifies the Operating Partnership of an alternative allocation ("Allocation
Notice"), then the redemption of the 7.00% Cumulative Preferred Units shall be
allocated in accordance with such Allocation Notice. On or before the
Redemption Date, a holder of 7.00% Cumulative Convertible Preferred Units shall
have the conversion right set forth in Section 6 hereof notwithstanding
anything in this Section 5 to the contrary.
(c) In the event of the redemption of a 7.00% Cumulative Convertible
Preferred Unit pursuant to this Section 5 for Common Units (but not any Paired
Shares issued upon conversion thereof in exchange therefor), then such Common
Units issuable upon such conversion shall be paired with 8.00% Cumulative
Redeemable Preferred Units so that they are transferable, redeemable or
convertible as a paired unit consisting of the Common Units so issued and one
(1) 8.00% Cumulative Redeemable Preferred Unit and such paired units shall be
"Paired Units" for purposes hereof.
SECTION 6. Conversion. (a) Each 7.00% Cumulative Convertible
Preferred Unit shall be convertible at the option of the holder, at any time on
and after August 27, 2004, upon no less than 15 business days prior written
notice to the Corporation and the Operating Partnership, in whole or in part,
unless previously redeemed, pursuant to Section 6(b) below.
(b) Each 7.00% Cumulative Convertible Preferred Unit that the holder
elects to convert will be redeemed for the sum of (i) a share of 7.00%
Cumulative Convertible Preferred Stock of the Corporation having an aggregate
liquidation preference equal to the Liquidation Preference of the 7.00%
Cumulative Convertible Preferred Units that the holder elects to convert plus
(ii) a cash payment in an amount equal to accrued and unpaid distributions
thereon. The preferred stock of the Corporation so issued shall have the
rights and preferences set forth on Annex I hereto ("Corporation 7.00%
Cumulative Convertible Preferred Stock"); provided, however, if the Closing
Price of the Paired Shares on any three (3) consecutive trading days occurring
after the date hereof is greater than the then Threshold Value (defined
below), then each such 7.00% Cumulative Convertible Preferred Unit that the
holder so elects to convert will instead be converted into 0.75676 Common Units
(as adjusted from time to time pursuant to Section 6(c) hereof, the "Conversion
Factor"). Common Units or Corporation 7.00% Cumulative Convertible Preferred
Stock issuable upon the conversion of 7.00% Cumulative Convertible Preferred
Units shall be deemed "Conversion Units" hereunder. The "Threshold Value"
initially shall be $37.00 but shall be subject to adjustment pursuant to
Section 6(d) hereof.
(c) Adjustments to the Conversion Factor. (i) Adjustments for
Dividends and Distributions. In case the Operating Partnership shall at any
time or from time to time after the original issuance of the 7.00% Cumulative
Convertible Preferred Units declare a dividend, or make a distribution, on the
outstanding Common Units, in either case, in additional Common Units, or effect
a subdivision, combination, consolidation or reclassification of the
outstanding Common Units into a greater or lesser number of Common Units, then,
and in each such case, the Conversion Factor in effect immediately prior to
such event or the record date therefor, whichever is earlier, shall be adjusted
by multiplying such Conversion Factor by a fraction, (A) the numerator of which
is the number of Common Units that were outstanding immediately after such
event and (B) the denominator of which is the number of Common Units
outstanding immediately prior to such event. An adjustment made pursuant to
this Section 6(c) shall become effective in the case of any such dividend or
distribution, immediately after the close of business on the record date for
the determination of holders of Common Units entitled to receive such dividend
or distribution, or in the case of any such subdivision, reclassification,
consolidation or combination, at the close of business on the day upon which
such partnership action becomes effective.
(ii) Adjustment for Issuances. In case the Corporation shall issue
(other than upon the exercise of options, rights or convertible securities)
Paired Shares at a price per share less than 95% of the Current Per Share
Market Price, then, and in each such case, the Conversion Factor in effect
immediately prior to such issuance shall be adjusted so as to be equal to an
amount determined by multiplying the Conversion Factor in effect immediately
prior to such event by a fraction of which (A) the numerator shall be (x) the
number of Paired Shares outstanding at the close of business on the date
immediately preceding such issuance plus (y) the number of Paired Shares so
issued and (B) the denominator shall be (x) the number of Paired Shares
outstanding immediately preceding such issuance plus (y) the number of Paired
Shares which the aggregate consideration receivable by the Corporation in
connection with such issuance would purchase at such Current Per Share Market
Price. For purposes of this Section 6(c)(ii), the aggregate consideration
receivable by the Corporation in connection with the issuance for cash of
Paired Shares shall be deemed to be equal to the gross offering price (before
deduction of customary underwriting discounts or commissions and expenses
payable to third parties) of all such securities being issued.
(iii) Issuance of Options, Warrants or Other Rights. In case
the Corporation shall issue rights to subscribe for or purchase, or options or
warrants to purchase, any Paired Shares (or securities convertible into Paired
Shares) at a price per Paired Share (or having a conversion price per Paired
Share) less than 95% of the Current Per Share Market Price, the Conversion
Factor in effect immediately prior thereto shall be adjusted so that it shall
equal the price determined by multiplying the Conversion Factor in effect
immediately prior thereto by a fraction, of which (A) the numerator shall be
(x) the number of Paired Shares outstanding on the date immediately preceding
such issuance plus (y) the total number of additional Paired Shares offered for
subscription or issuable upon exercise of such options or warrants (or into
which the convertible securities so offered are convertible) and (B) the
denominator of which shall be (x) the number of Paired Shares outstanding at
the close of business on the date immediately preceding such issuance plus (y)
the number of Paired Shares which the aggregate offering price of the total
number of Paired Shares so offered for subscription or issuable upon exercise
of such options or warrants (or the aggregate conversion price of the
convertible securities so offered) would purchase at such the Current Per Share
Market Price. Such adjustment shall be made successively whenever any rights,
options or warrants are issued; provided, however, that in the event that all
Paired Shares offered for subscription or purchase are not delivered (or
securities convertible into Paired Shares are not delivered) upon the exercise
of such rights, options or warrants, upon the expiration of such rights,
options or warrants the Conversion Factor shall be readjusted to the Conversion
Factor which would have been in effect had the numerator and the denominator of
the foregoing fraction and the resulting adjustments made upon the issuance of
such rights, options or warrants been made based upon the number of Paired
Shares (or securities convertible into Paired Shares) actually delivered upon
the exercise of such rights, options or warrants rather than upon the number of
Paired Shares offered for subscription or purchase. In determining whether any
rights, options or warrants entitle the holders to subscribe for or purchase
Paired Shares at less than 95% of such Current Per Share Market Price, and in
determining the aggregate offering price of such rights, options or warrants
(or the aggregate conversion price of the convertible securities), there shall
be taken into account any consideration received by the Corporation for such
rights, options or warrants (or convertible securities) and receivable by the
Corporation upon the exercise or conversion thereof, the value of such
consideration, if other than cash, to be determined in good faith by the Board
of Directors. Notwithstanding the foregoing, this Section 6(c)(iii) shall not
apply to the issuance of a right, option or warrant to purchase Paired Shares
pursuant to any employee stock option or similar plan adopted by the Board of
Directors of the Corporation.
(iv) Adjustment for Consolidation, Merger, Reorganization or
Recapitalization, etc. In case of any consolidation, merger or reorganization
of the Corporation or the Operating Partnership with or into another Entity or
the sale of all or substantially all of the assets of the Corporation or the
Operating Partnership to another Entity (other than a consolidation, merger or
sale which is treated as a liquidation pursuant to Section 4 hereof or any
recapitalization of either the Corporation or the Operating Partnership), each
7.00% Cumulative Convertible Preferred Unit shall, in the case of such sale,
thereafter be convertible into the kind and amount of shares of stock or other
securities or property to which a holder of the number of shares of Corporation
7.00% Cumulative Convertible Preferred Stock of the Corporation or Common Units
of the Operating Partnership, as the case may be, deliverable upon conversion
of such 7.00% Cumulative Convertible Preferred Units would have been entitled
upon such sale and, in the case of such consolidation, merger or reorganization
or recapitalization, the holder of each 7.00% Cumulative Convertible Preferred
Unit will, insofar as practicable, receive a security or securities in the
surviving entity or the recapitalized entity, as the case may be, comparable to
the 7.00% Cumulative Convertible Preferred Unit which, among other comparable
provisions, insofar as may be practicable, shall be convertible into securities
comparable to the Common Units but shall, following such merger, consolidation
or reorganization, be immediately convertible following such merger,
consolidation or reorganization notwithstanding the requirements set forth in
Section 6(b) hereof; and, in such case, other appropriate adjustments (as
determined in good faith by the Board of Directors of the Corporation, in the
case of a consolidation, merger, reorganization, recapitalization or sale
involving the Corporation, or the Managing General Partner, in the case of a
consolidation, merger, reorganization, recapitalization or sale involving the
Operating Partnership) shall be made in the application of the provisions in
this Section 6 set forth with respect to the rights and interests thereafter of
the holders of the 7.00% Cumulative Convertible Preferred Units, to the end
that the provisions set forth in this Section 6 (including provisions with
respect to changes in and other adjustments of the Conversion Factor) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock, partnership units or other property thereafter deliverable
upon the conversion of the 7.00% Cumulative Convertible Preferred Units.
(d) Adjustments to the Threshold Value. (i) In case the
Corporation shall at any time or from time to time after the original issuance
of the 7.00% Cumulative Convertible Preferred Units declare a dividend, or make
a distribution, on the outstanding Paired Shares, in either case, in additional
Paired Shares, or effect a subdivision, combination, consolidation or
reclassification of the outstanding Paired Shares into a greater or lesser
number of Paired Shares, then, and in each such case, the Threshold Value in
effect immediately prior to such event or the record date therefor, whichever
is earlier, shall be adjusted by multiplying such Threshold Value by a
fraction, (A) the numerator of which is the number of Paired Shares that were
outstanding immediately prior such event and (B) the denominator of which is
the number of Paired Shares outstanding immediately after to such event.
(ii) The Threshold Value shall also be equitably adjusted to reflect
the effect of an issuance which would result in an adjustment to the Conversion
Factor under Section 6(c)(iv).
(iii) An adjustment made pursuant to this Section 6(d) shall
become effective in the case of any such dividend or distribution, immediately
after the close of business on the record date for the determination of holders
of Paired Shares entitled to receive such dividend or distribution, or in the
case of any such subdivision, reclassification, recapitalization, consolidation
or combination, at the close of business on the day upon which such partnership
or corporate action becomes effective.
(e) No adjustment in the Conversion Factor or the Threshold Value
shall be required unless such adjustment would require an increase or decrease
of at least 0.25% of the Conversion Factor or the Threshold Value, as
applicable; provided, that any adjustments which by reason of this Section 6(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.
(f) No fractional Conversion Units or scrip representing fractions
of Conversion Units shall be issued upon conversion of a 7.00% Cumulative
Convertible Preferred Unit. If a fractional Conversion Unit is otherwise
deliverable to a converting holder upon a conversion of 7.00% Cumulative
Convertible Preferred Units, the Operating Partnership shall in lieu thereof
pay to the person entitled thereto an amount in cash equal to the current value
of such fractional interest, calculated to the nearest 1/1000th of a unit, to
be computed using the current market price of a Paired Share on the date of
conversion, in the case of a conversion into Common Units.
(g) Whenever the Conversion Factor is adjusted pursuant to
Section 6(c) or the Threshold Value is adjusted pursuant to Section 6(d), the
Operating Partnership shall promptly mail to the holders of 7.00% Cumulative
Convertible Preferred Units at their addresses as shown on the books of the
Operating Partnership and to the Contributor Representative at its notice
address pursuant to the Tax Protection Agreement a notice stating that the
Conversion Factor and/or the Threshold Value, as the case may be, has been
adjusted, the effective date of such adjustment and the new Conversion Factor
or Threshold Value.
(h) In the event of the conversion of a 7.00% Cumulative Convertible
Preferred Unit pursuant to this Section 6 into Common Units, then such Common
Units issuable upon such conversion shall be paired with 8.00% Cumulative
Redeemable Preferred Units so that they are transferable, redeemable or
convertible as a paired unit consisting of 0.75676 Common Units (subject to
adjustment) and one (1) 8.00% Cumulative Redeemable Preferred Unit and such
paired units shall be "Paired Units" for purposes hereof; provided, however,
that 8.00% Cumulative Redeemable Preferred Units shall not be paired with
Paired Shares issued upon conversion or in exchange for Common Units. In the
event of the conversion of a 7.00% Cumulative Convertible Preferred Unit
pursuant to this Section 6 into 7.00% Cumulative Convertible Preferred Stock,
then the 8.00% Cumulative Redeemable Preferred Unit to which it is paired shall
simultaneously be converted into 8.00% Cumulative Convertible Preferred Stock
pursuant to Section 6 of the 8.00% Certificate of Designation.
SECTION 7. Put Right. (a) In the event of (i) the death of
an Actual Taxpayer (as defined in the Tax Protection Agreement) holding
directly or indirectly 7.00% Cumulative Convertible Preferred Units, (ii) in
the case of 7.00% Cumulative Convertible Preferred Units held directly or
indirectly by an Actual Taxpayer in trust, the death of the person designated
from time to time by the trustee(s) of such trust, or (iii) a Tax Triggering
Event with respect to an Actual Taxpayer holding directly or indirectly 7.00%
Cumulative Convertible Preferred Units, then in any such event such holder or
the subsequent holder or holders, as the case may be, of such 7.00% Cumulative
Convertible Preferred Units may require the Operating Partnership to repurchase
such 7.00% Cumulative Convertible Preferred Units, in accordance with Section
7(b) below, at a price of $28.00 per 7.00% Cumulative Convertible Preferred
Unit, plus distributions accrued and unpaid to the repurchase date (such sum,
the "Repurchase Price"). As used in this Section 7(a), "Tax Triggering Event"
means, with respect to any Actual Taxpayer holding directly or indirectly 7.00%
Cumulative Convertible Preferred Units, any transaction by the Operating
Partnership (x) involving the Contributed Property and (y) constituting a
Taxable Sale. The terms Contributed Property and Taxable Sale shall have the
meanings specified in the Tax Protection Agreement. The term "Repurchase Date"
shall mean the date on which the first payment (in cash or Paired Shares) is
made as described in Section 7(b) below.
(b) The aggregate Repurchase Price shall be paid within one year
after the exercise of the right described in Section 7(a) above, at the option
of the Operating Partnership, (i) in cash, or (ii) in fully registered Paired
Shares valued at the Current Per Share Market Price for such Paired Shares as
of the date such shares are to be issued hereunder, except that the portion of
the aggregate Repurchase Price consisting of accrued and unpaid distributions
shall be paid in full in cash when such distributions are paid with respect to
other 7.00% Cumulative Convertible Preferred Units, but in no event later than
the time of the first cash payment provided in this Section 7(b) or the
issuance of such Paired Shares, as the case may be. If the Operating
Partnership elects to pay for the 7.00% Cumulative Convertible Preferred Units
in cash, the aggregate Repurchase Price shall be paid, at the option of the
Operating Partnership, either (x) in full on or before such date which is one
year after the exercise of the right described in Section 7(a) above or (y) in
four (4) equal annual installments commencing not later than one year after the
exercise of the right described in Section 7(a) above, with interest accruing
on unpaid amounts from the date of exercise of the right described in Section
7(a) above at the rate of 7% per annum.
SECTION 8. No Right to Certain Distributions. Any holder of
7.00% Cumulative Convertible Preferred Units whose units are redeemed pursuant
to Section 5 hereto, converted pursuant to Section 6 hereto or caused to be
repurchased pursuant to Section 7 hereto, prior to being entitled to received
any cash or other securities upon the occurrence of any such event, will be
required to execute and deliver to the Operating Partnership and the
Corporation a Distribution Return Agreement substantially in the form of Annex
II hereto.
SECTION 9. Restrictions on Transfer; Stapled Security.
Restrictions on Transfer, Redemption, Conversion or Put; Stapled Security. (a)
The Paired Units shall be subject to the restrictions on transfer set forth in
Sections 9.3 and 9.5 of the Partnership Agreement as if such units were
"Partnership Units" thereunder. Any transfer or attempted transfer in
violation of the provisions of this Section 9(a) shall be null and void.
(b) Notwithstanding anything in this Certificate of Designation to
the contrary, Paired Units shall only be transferred to a transferee, caused to
be redeemed pursuant to Section 5, converted pursuant to Section 6 or caused to
be repurchased pursuant to Section 7 as a Paired Unit, if any such units are
otherwise required to be paired under this Certificate of Designation. Any
such transfer, redemption or repurchase or attempted transfer, redemption or
repurchase of 7.00% Cumulative Convertible Preferred Units in violation of the
provisions of this Section 9(b) shall be null and void.
SECTION 10. Status of Converted or Redeemed 7.00% Cumulative
Convertible Preferred Units. Upon any conversion or any redemption, repurchase
or other acquisition by the Operating Partnership of 7.00% Cumulative
Convertible Preferred Units, the 7.00% Cumulative Convertible Preferred Units
so converted, redeemed, repurchased or acquired shall be retired and canceled.
SECTION 11. Voting. (a) The Operating Partnership shall not, without
the affirmative consent or approval of the holders of at least a majority of
the 7.00% Cumulative Convertible Preferred Units then outstanding, voting
separately as a class, (i) authorize any Senior Units; (ii) amend, alter or
modify any of the provisions of this Certificate of Designation so as to
adversely affect the holders of 7.00% Cumulative Convertible Preferred Units;
or (iii) issue to any holder of Common Units any Parity Units by way of
exchange, distribution or similar transaction in respect of such Common Units,
unless such exchange, distribution or similar transaction is for fair value (as
determined in good faith by the Managing General Partner).
(b) The Corporation shall not, without the affirmative consent or
approval of the holders of at least a majority in Liquidation Preference of the
7.00% Cumulative Convertible Preferred Units and Corporation 7.00% Cumulative
Convertible Preferred Stock then outstanding, voting together as a single
class, (i) authorize any Senior Preferred Stock (as defined in Annex I hereto)
or (ii) amend, alter or modify any of the provisions of the Certificate of
Designation of the Corporation 7.00% Cumulative Convertible Preferred Stock so
as to adversely affect the holders thereof.
SECTION 12.Registration Rights for Corporation 7.00% Cumulative
Convertible Preferred Stock. The Corporation 7.00% Cumulative Convertible
Preferred Stock issued to any holder of 7.00% Cumulative Convertible Preferred
Units pursuant to Section 6 hereof shall be deemed "Registrable Securities" for
purposes of Section 9.6 of the Partnership Agreement, subject to the
limitations and qualifications contained in Section 9.6 of the Partnership
Agreement unless the holder of such 7.00% Cumulative Convertible Preferred
Units is party to a registration rights agreement pursuant to Section 5.06 of
the Portfolio Agreement, in which case such holder exclusively shall have the
rights set forth therein.
SECTION 13. Issuance of Paired SRC Limited Partnership Units. If
any Common Units are to be issued to a holder of a 7.00% Cumulative Convertible
Preferred Unit in connection with the redemption or conversion of such 7.00%
Cumulative Convertible Preferred Unit as provided herein, the Operating
Partnership shall distribute to the holder of such 7.00% Cumulative Convertible
Preferred Unit so converted, for no additional consideration, a number of SRC
Limited Partnership Units (as defined in the Partnership Agreement) equal to
the number of Common Units so issued; provided, however, that if the value of
such SRC Limited Partnership Units, as determined by the Operating Partnership
consistent with its prior valuation methodology used to value SRC Limited
Partnership Units, exceeds $.50 per Unit, then prior to the distribution of
such SRC Limited Partnership Units, the Operating Partnership shall notify the
Contributor Representative of its valuation of the SRC Limited Partnership
Units. If the Contributor Representative believes that the distribution of
such SRC Limited Partnership Units may be taxable to the converting holders
under Section 731(a) of the Code it may request that the Operating Partnership
offer to provide the converting Partners with the opportunity to enter into so-
called "bottom-up" guarantees under terms and conditions set forth in Section
2(z) of the Tax Protection Agreement, mutatis mutandis. Remedy for a failure
by the Operating Partnership to comply with such obligation to provide "bottom-
up" guarantees shall be as set forth in Section 3 of the Tax Protection
Agreement, mutatis mutandis. It shall be a condition to any distribution of
SRC Limited Partnership Units to a holder that such holder agree in writing to
become a limited partner under the SRC Partnership agreement.
SECTION 14. Definitions. Except as otherwise herein expressly
provided, the following terms and phrases shall have the meanings set forth
below:
"Closing Price" on any date shall mean the last sale price per share,
regular way, of the Paired 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
Paired Shares in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Paired 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 Paired Shares
are listed or admitted to trading or, if the Paired 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 Paired 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 Paired 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 Paired Shares selected from
time to time by the Board of Directors of the Managing General Partner.
"Current Per Share Market Price" on any date shall mean the average
of the Closing Prices for the five consecutive Trading Days ending on such
date.
"Deemed Partnership Unit Value" as of any date shall mean (i) the
Current Per Share Market Price as of the Trading Day immediately preceding such
date, minus (ii) the SPG Realty Deemed Partnership Unit Value; provided,
however, that in the event of a stock dividend, stock split, stock distribution
or the like, the Deemed Partnership Unit Value shall be adjusted by the
Managing General Partner to provide fair and equitable arrangements, to the
extent necessary, to fully adjust and avoid any dilution in the rights of the
holders of the 7.00% Cumulative Convertible Preferred Units.
"Entity" shall mean any general partnership, limited partnership,
limited liability company, limited liability partnership, corporation, joint
venture, trust, business trust, cooperative or association.
"Limited Partners" shall mean those Persons whose names are set forth
on Exhibit A to the Partnership Agreement 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 Operating Partnership.
"Managing General Partner" shall mean Simon Property Group, Inc., a
Delaware corporation.
"Non-Managing General Partners" shall mean, collectively, SD Property
Group, Inc. and SPG Properties, Inc.
"Paired Share" shall mean one Share and one Trust Interest.
"Partners" shall mean the Managing General Partner, the Non-Managing
General Partners and the Limited Partners, their duly admitted successors or
assigns or any Person who is a partner of the Operating Partnership at the time
of reference thereto.
"Partnership Units" shall mean the interest in the Operating
Partnership of any Partner which entitles a Partner to the allocations (and
each item thereof) specified in the Partnership Agreement and all distributions
from the Operating Partnership, and its rights of management, consent,
approval, or participation, if any, as provided in the Partnership Agreement.
Partnership Units do not include Preferred Units. Each Partner's percentage
ownership interest in the Operating Partnership shall be determined by dividing
the number of Partnership Units then owned by each Partner by the total number
of Partnership Units then outstanding.
"Person" shall mean any individual or Entity.
"Shares" shall mean the shares of common stock, par value $0.0001 per
share, of the Corporation.
"SPG Managing General Partner" shall mean SPG Realty Consultants,
Inc.
"SPG Realty" shall mean SPG Realty Consultants, Inc.
"SPG Realty Deemed Partnership Unit Value" with respect to a
particular Trust Interest as of any date shall mean the value of the SPG Shares
underlying such Trust Interest, which shall be an amount equal to the greater
of (i) the aggregate par value of the SPG Share underlying the Trust Interest
and (ii) the amount determined in good faith by the Board of Directors of the
SPG Managing General Partner to represent the fair market net asset value of
the SPG Share underlying the Trust Interest.
"SPG Shares" shall mean the Common Stock, par value $.01 per share of
the SPG Managing General Partner.
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Paired Shares are listed or admitted to
trading is open for the transaction of business or, if the Paired 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.
"Trust" shall mean the trust owning all of the outstanding shares of
Common Stock, par value $0.0001 per share, of SPG Realty subject to a trust
agreement among certain stockholders of the Corporation, a trustee and the SPG
Realty pursuant to which all holders of Shares are beneficiaries of such Trust.
"Trust Interest" shall mean a pro rata beneficial interest in the
Trust.
IN WITNESS WHEREOF, the Managing General Partner has caused this
Certificate to be signed by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ its Secretary, this 27th day of
August, 1999.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
DISTRIBUTION RETURN AGREEMENT
Date: __________________
Simon Property Group, L.P.
National City Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned is a holder of 7.00% Cumulative Convertible Preferred
Units ("Preferred Units") of Simon Property Group, L.P., a Delaware limited
liability (the "Operating Partnership"). On the date hereof, the undersigned
has presented to the Operating Partnership _____________ (number) Preferred
Units (the "Tendered Units") for (a) redemption (the "Redemption"); (b)
conversion (the "Conversion") or (c) repurchase (the "Repurchase") pursuant to
their terms. This letter agreement is being given in satisfaction of a
condition to the Redemption, Conversion, or Repurchase, as applicable, of the
Tendered Units.
The undersigned hereby agrees with the Operating Partnership that, in the
event the undersigned receives any payment or distribution with respect to
Tendered Units after their Redemption, Conversion, or Repurchase, as
applicable, other than a payment or distribution required to be made in
connection therewith, the undersigned will promptly remit such payment or
distribution back to the Operating Partnership.
In furtherance of the foregoing, the undersigned further grants to the
Operating Partnership the right to set off against any unpaid amount due to the
Operating Partnership under this letter agreement any debt or other obligation
of the Operating Partnership owing to the undersigned, including, without
limitation, any dividend or other distribution payable to the undersigned by
reason of its ownership of Preferred Units or any other securities of the
Operating Partnership.
This letter agreement shall be construed in accordance with, and governed
by, the laws of the State of New York, without regard to conflicts of laws
principles.
Very truly yours,
(Name of Holder of Preferred Units)
By:
Name:
Title:
AGREED:
SIMON PROPERTY GROUP, L.P.
By:
Name:
Title: