SCHEDULE 14Ad18rn0p25nwr6d.cloudfront.net/CIK-0000890319/... · Simon Property Group, Inc....
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TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐ Check the appropriate box: ☐ Preliminary Proxy Statement ☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ☒ Definitive Proxy Statement ☐ Definitive Additional Material ☐ Soliciting Material under §240.14a-12 TAUBMAN CENTERS, INC. (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): ☐ No fee required. ☒ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: Taubman Centers, Inc. Common Stock, par value $0.01 (“Taubman common stock”) and Series B Non-Participating Convertible Preferred Stock, par value $0.001 per share (“Taubman Series B preferred stock”). (2) Aggregate number of securities to which the transaction applies: 61,608,379 shares of Taubman common stock 598,189 shares of Taubman common stock subject to issuance upon the settlement of outstanding equity awards pursuant to the Taubman Stock Plans (as defined below). 27,012,863.8 shares of Taubman common stock issuable upon conversion of 27,012,863.8 outstanding units of partnership interest in The Taubman Realty Group Limited Partnership, including 44,844 Taubman Incentive Units (as defined below) and 871,261.76 Option Deferred units (as defined below). 26,079,159 shares of Taubman Series B preferred stock. (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): Solely for the purpose of calculating the filing fee, the underlying value of the transaction was calculated based on the sum of (a) the product of (i) 89,219,431.8 shares of Taubman common stock (including 598,189 shares of Taubman common stock subject to issuance upon the settlement of outstanding equity awards pursuant to the Taubman Stock Plans and 27,012,863.8 shares of Taubman common stock issuable upon conversion of 27,012,863.8 outstanding units of partnership interest in The Taubman Realty Group Limited Partnership, including 44,844 Taubman Incentive Units and 871,261.76 Option Deferred units) and (ii) the common stock merger consideration of $52.50 and (b) the product of (A) 26,079,159 shares of Taubman Series B preferred stock and (B) the Series B preferred stock merger consideration of $52.50 divided by 14,000 (collectively, the “Total Consideration”). The filing fee equals the product of 0.0001298 multiplied by the Total Consideration. (4) Proposed maximum aggregate value of transaction: $4,684,117,966.35 (5) Total fee paid: $607,998.51 ☒ Fee paid previously with preliminary materials. ☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed:
Transcript of SCHEDULE 14Ad18rn0p25nwr6d.cloudfront.net/CIK-0000890319/... · Simon Property Group, Inc....
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14APROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
FiledbytheRegistrant☒
FiledbyaPartyotherthantheRegistrant ☐
Checktheappropriatebox: ☐ PreliminaryProxyStatement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ DefinitiveProxyStatement
☐ DefinitiveAdditionalMaterial
☐ SolicitingMaterialunder§240.14a-12
TAUBMAN CENTERS, INC. (Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PaymentofFilingFee(Checktheappropriatebox): ☐ Nofeerequired.☒ FeecomputedontablebelowperExchangeActRules14a-6(i)(1)and0-11. (1) Titleofeachclassofsecuritiestowhichtransactionapplies:TaubmanCenters,Inc.CommonStock,parvalue$0.01(“Taubmancommonstock”)
andSeriesBNon-ParticipatingConvertiblePreferredStock,parvalue$0.001pershare(“TaubmanSeriesBpreferredstock”).
(2) Aggregatenumberofsecuritiestowhichthetransactionapplies: 61,608,379sharesofTaubmancommonstock 598,189shares of Taubmancommonstock subject to issuance uponthe settlement of outstanding equity awards pursuant to the TaubmanStock
Plans(asdefinedbelow). 27,012,863.8sharesofTaubmancommonstockissuableuponconversionof27,012,863.8outstandingunitsofpartnershipinterestinTheTaubman
RealtyGroupLimitedPartnership,including44,844TaubmanIncentiveUnits(asdefinedbelow)and871,261.76OptionDeferredunits(asdefinedbelow).
26,079,159sharesofTaubmanSeriesBpreferredstock.
(3) PerunitpriceorotherunderlyingvalueoftransactioncomputedpursuanttoExchangeActRule0-11(Setforththeamountonwhichthefilingfeeiscalculated and state how it was determined): Solely for the purpose of calculating the filing fee, the underlying value of the transaction wascalculatedbasedonthesumof(a)theproductof(i)89,219,431.8sharesofTaubmancommonstock(including598,189sharesofTaubmancommonstock subject to issuance upon the settlement of outstanding equity awards pursuant to the Taubman Stock Plans and 27,012,863.8 shares ofTaubmancommonstockissuableuponconversionof27,012,863.8outstandingunitsofpartnershipinterestinTheTaubmanRealtyGroupLimitedPartnership,including44,844TaubmanIncentiveUnitsand871,261.76OptionDeferredunits)and(ii)thecommonstockmergerconsiderationof$52.50and(b)theproductof(A)26,079,159sharesofTaubmanSeriesBpreferredstockand(B)theSeriesBpreferredstockmergerconsiderationof $52.50 divided by 14,000 (collectively, the “Total Consideration”). The filing fee equals the product of 0.0001298 multiplied by the TotalConsideration.
(4) Proposedmaximumaggregatevalueoftransaction:$4,684,117,966.35
(5) Totalfeepaid:$607,998.51
☒ Feepaidpreviouslywithpreliminarymaterials. ☐ CheckboxifanypartofthefeeisoffsetasprovidedbyExchangeActRule0-11(a)(2)andidentifythefilingforwhichtheoffsettingfeewaspaid
previously.Identifythepreviousfilingbyregistrationstatementnumber,ortheFormorScheduleandthedateofitsfiling. (1) AmountPreviouslyPaid:
(2) Form,ScheduleorRegistrationStatementNo.:
(3) FilingParty:
(4) DateFiled:
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MERGER AGREEMENT PROPOSAL — YOUR VOTE IS VERY IMPORTANT
May29,2020
DearShareholder:
YouarecordiallyinvitedtoattendaspecialmeetingoftheshareholdersofTaubmanCenters,Inc.(“Taubman”orthe “Company”), which will be held at 10:00 A.M., Eastern Time, on June 25, 2020, at Taubman’s headquarters,located at 200 East Long Lake Road, Suite 300, Bloomfield Hills, Michigan 48304. Formal notice of the specialmeeting, a proxy statement and a proxy card accompany this letter. As part of our precautions regarding thecoronavirusorCOVID-19,thespecialmeetingmaybeheldsolelybymeansofremotecommunicationratherthaninperson.Ifwetakethisstep,wewillannouncethedecisiontodosoinadvanceandprovidedetailsonhowtoparticipateinapressreleaseissuedbytheCompanyandonourwebsite,www.taubman.com. Wewillalsofilethepressreleasewith the Securities and Exchange Commission (the “SEC”) as definitive additional solicitation material. Weencourage you to vote by proxy—over the Internet, by telephone or by mail—well in advance of the specialmeeting, to ensure your shares are represented whether or not you decide to attend.
Atthespecialmeeting,holdersofourcommonstock,parvalue$0.01pershare(“Taubmancommonstock”),andourSeriesBNon-ParticipatingConvertiblePreferredStock,parvalue$0.001pershare(“TaubmanSeriesBpreferredstock”and,togetherwiththeTaubmancommonstock,the“Taubmanvotingstock”),willbeaskedtoconsiderandvoteuponaproposaltoadoptandapproveanAgreementandPlanofMerger,datedasofFebruary9,2020(asitmaybeamendedfromtimetotime, the“merger agreement”), byandamongSimonPropertyGroup, Inc. (“Simon”), SimonPropertyGroup,L.P.(the“Simonoperatingpartnership”),SilverMergerSub1,LLC(“MergerSub1”),SilverMergerSub2,LLC(“MergerSub2”andtogetherwithSimon,theSimonoperatingpartnershipandMergerSub1,the“Simonparties”), theCompanyandTheTaubmanRealtyGroupLimitedPartnership(the“Taubmanoperatingpartnership”),and the transactions contemplated by the merger agreement (the “Transactions”) (such proposal, the “MergerAgreementProposal”).
Pursuanttothemergeragreement,subjecttothesatisfactionorwaiverofcertainconditions,MergerSub2willbemergedwithandintotheTaubmanoperatingpartnership(the“PartnershipMerger”)andtheCompanywillbemergedwith and into Merger Sub 1 (the “REIT Merger” and, together with the Partnership Merger, the “Mergers”). Uponcompletion of the Partnership Merger, the Taubman operating partnership will survive (the “Surviving Taubmanoperatingpartnership”)andtheseparateexistenceofMergerSub2willcease.UponcompletionoftheREITMerger,Merger Sub 1 will survive (“Surviving TCO”) and the separate existence of the Company will cease. Immediatelyfollowing the Partnership Merger, the Surviving Taubman operating partnership will be converted (the “LLCConversion”)intoaDelawarelimitedliabilitycompany(the“JointVenture”).TheMergers,theLLCConversionandtheotherTransactionsaredescribedfurtherintheaccompanyingproxystatement.
IftheREITMergeriscompleted,holdersofTaubmancommonstockwillbeentitledtoreceive$52.50incashforeachshareofTaubmancommonstockheld(the“commonstockmergerconsideration”)andholdersofTaubmanSeriesBpreferredstockwill beentitledtoreceive, foreachshareofTaubmanSeriesBpreferredstockheld,anamountincash equal to the common stock merger consideration, divided by 14,000 (the “Series B preferred stock mergerconsideration”). If the Partnership Merger is completed, holders of units of partnership interest in the Taubmanoperating partnership (each, a “Taubman OP unit”) who are not one of the Taubman family members (as definedbelow) will be entitled to receive, for each Taubman OP unit held, at their election, the common stock mergerconsiderationor0.3814limitedpartnershipunitsintheSimonoperatingpartnership(each,a“SimonOPunit”),certainTaubmanOPunitsheldbytheTaubmanfamilymemberswillremainoutstandingasunitsofpartnershipinterestintheSurvivingTaubmanoperatingpartnership,andallotherTaubmanOPunitsheldbytheTaubmanfamilymemberswillbe converted into the right to receive the commonstock merger consideration. Following the Mergers and the LLCConversion, theSimonoperatingpartnershipwill own100%oftheoutstandingequityofSurvivingTCO,SurvivingTCOwillown80%ofthelimitedliabilitycompanyinterestsoftheJointVentureandtheTaubmanfamilymemberswillowntheremaining20%ofthelimitedliabilitycompanyinterestsoftheJointVenture(assuming,forpurposesofthiscalculation,thatTaubmanOPunitsissuableundertheOptionDeferralAgreementareoutstandinginterestsoftheJointVenture).
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The proposed Transactions constitute a “going-private transaction” under the rules of the SEC. As of May22, 2020, Robert S. Taubman (“R. Taubman”), the Company’s Chairman, President and Chief Executive Officer,WilliamS.Taubman(“W.Taubman”),theCompany’sChiefOperatingOfficer,andcertainentitiesandtrustsaffiliatedwith R. Taubman, with W. Taubman, or with other members of their immediate family (collectively, the “Taubmanfamilymembers”)intheaggregate,havethepowertovoteapproximately30%oftheoutstandingsharesofTaubmanvotingstock.
The board of directors of the Company (the “Taubman Board”) formed a special committee (the “SpecialCommittee”) consisting solely of independent and disinterested directors of the Company to, among other things,review, evaluate and negotiate the Transactions, including the Mergers, and other alternatives available to theCompany. The Special Committee unanimously determined that the merger agreement and the Transactions areadvisableandfairto,andinthebestinterestsof,TaubmanandtheTaubmancommonshareholders,andunanimouslyrecommended that the Taubman Board, among other things: (i) determine that the merger agreement and theTransactionsareadvisableandfairto,andinthebestinterestsof,TaubmanandtheTaubmancommonshareholders;(ii)adoptandapprovethemergeragreementandtheTransactions;(iii)subjecttothetermsofthemergeragreement,resolve to recommend that the Taubman common shareholders adopt and approve the merger agreement; and(iv)directthatthemergeragreementbesubmittedtotheTaubmancommonshareholdersandtheholdersofTaubmanSeries B preferred stock for their adoption and approval. The Taubman Board, acting upon the unanimousrecommendation of the Special Committee: (i) determined that the merger agreement and the Transactions areadvisableandfairto,andinthebestinterestsof,TaubmanandtheTaubmancommonshareholders;(ii) adoptedandapprovedthemerger agreement andtheTransactions; (iii) subject tothetermsof themerger agreement, resolvedtorecommendthat theTaubmancommonshareholders adopt andapprovethemergeragreement; and(iv) directedthatthe merger agreement be submitted to the Taubman common shareholders and the holders of Taubman Series Bpreferred stock for their adoption and approval.The Taubman Board unanimously recommends that you vote“FOR” the Merger Agreement Proposal.
TheTaubmanfamilymembersandSimonenteredintoavotingagreementinconnectionwiththeexecutionofthemerger agreement. Under the voting agreement, subject to certain exceptions, the Taubman family members havecovenantedto, amongotherthings,voteanysharesofTaubmanvotingstockownedbytheminfavoroftheMergerAgreement Proposal andthe Adjournment Proposal (as definedin the accompanyingproxystatement) at the specialmeeting.
Pursuant to rules of the SEC, you also will be asked to vote at the special meeting on a non-binding, advisoryproposaltoapprovecompensationthatmaybecomepayabletotheCompany’snamedexecutiveofficersinconnectionwith the REIT Merger and the other Transactions (the “Advisory Compensation Proposal”), as described in theaccompanyingproxystatement.However,approvaloftheAdvisoryCompensationProposalisnotrequiredtocompletethe REIT Merger or the other Transactions.The Taubman Board also unanimously recommends that you vote“FOR” the Advisory Compensation Proposal.
Theaccompanyingproxystatementdescribesthemergeragreement,theTransactionsandrelatedagreementsandprovidesspecificinformationconcerningthespecialmeeting.Inaddition,youmayobtaininformationaboutusfromdocumentsfiledwiththeSEC.Weurgeyoutoreadtheentireproxystatement,includingtheannexes,carefully,astheysetforththedetailsofthemergeragreementandotherimportantinformationrelatedtotheTransactions.
Inconsideringtherecommendationof theTaubmanBoard, youshouldbeawarethat certain of theCompany’sdirectors andexecutive officers mayhaveinterests in theTransactions that maybedifferent from, or in additionto,thoseoftheotherTaubmanshareholders,asfurtherdescribedintheaccompanyingproxystatement.
Your vote is very important, regardless of the number of shares of Taubman common stock or TaubmanSeries B preferred stock you own. TheconsummationoftheTransactionsissubject totheapprovaloftheMergerAgreementProposalby(i)theholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmancommonstockandTaubmanSeriesBpreferredstockentitledtovotethereon(votingtogetherasasingleclass),(ii)theholdersofatleastamajorityofTaubmanSeriesBpreferredstockentitledtovotethereonand(iii)theholdersofatleastamajorityoftheoutstandingsharesofTaubmancommonstockandTaubmanSeriesBpreferredstockentitledtovotethereon(votingtogether as a single class), but excluding the outstanding shares of Taubman common stock and TaubmanSeriesBpreferred stock ownedof record or beneficially by the Taubmanfamily members. If you fail to vote on theMergerAgreementProposal,theeffectwillbethesameasavoteagainsttheMergerAgreementProposal.
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Ifyouownsharesofrecord,youwillfindenclosedoneormoreproxycardswithinstructionsabouthowtovoteovertheInternetorbytelephone.Whetherornotyouplantoattendthespecialmeeting,weencourageyoutovoteovertheInternet,orbytelephone,assoonaspossiblesothatyoursharescanbevotedatthespecialmeetinginaccordancewithyourinstructions.IfyoudonothaveaccesstotheInternetoratouch-tonetelephone,youmayalsosign,dateandreturn your enclosed proxycard(s) in the envelope provided. Youcanrevokeyour proxybefore the special meetingandissueanewproxyasyoudeemappropriate.Theaccompanyingproxystatementdescribestheprocedurestofollowifyouwishtorevokeyourproxy.
Ifyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“streetname,”youshouldfollowthedirections provided by your bank, broker or other nominee regarding how to instruct your bank, broker or othernomineetovoteyourshares.Ifyoudonotfollowthoseinstructions,yourshareswillnotbevoted,whichwillhavethesameeffectasvotingagainsttheMergerAgreementProposal.
If you have any questions or need assistance voting your shares, please contact Innisfree M&A Incorporated,whichisactingasTaubman’sproxysolicitationagentandinformationagentinconnectionwiththeTransactions:
Innisfree M&A Incorporated 501 Madison Avenue, 20th Floor
New York, NY 10022 Shareholders may call toll-free at (877) 456-3427
Banks and brokers may call collect at (212) 750-5833
Ifyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“streetname,”youshouldalsocallyourbank,brokerorothernomineeforadditionalinformation.
Sincerelyyours,
ChrisHeaphy Secretary
Neither the SEC nor any state securities commission has: approved or disapproved of the Mergers or theother Transactions; passed upon the merits or fairness of the Mergers or the other Transactions; or passed uponthe adequacy or accuracy of the disclosure in the accompanying proxy statement. Any representation to thecontrary is a criminal offense.
The obligations of parties to the merger agreement to complete the Mergers and the other Transactions aresubject to the satisfaction or waiver of the conditions set forth in the merger agreement, a copy of which isincluded as part of the accompanying proxy statement.
TheaccompanyingproxystatementisdatedMay29,2020and,togetherwiththeenclosedformofproxy,isfirstbeingmailedtotheCompany’sshareholdersonoraboutMay29,2020.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On: June 25, 2020
NOTICEISHEREBYGIVENthataSpecialMeetingofShareholdersofTaubmanCenters,Inc.(the“Company”)will be held at 10:00 A.M., Eastern Time, at Taubman Centers, Inc.’s headquarters, located at 200 East Long LakeRoad,Suite300,BloomfieldHills,Michigan48304,toconsiderandvoteonthefollowingproposals:
(1) aproposaltoadoptandapproveanAgreementandPlanofMerger,datedasofFebruary9,2020(asitmaybeamendedfromtimetotime,whichwerefertoasthe“mergeragreement”),byandamongSimonPropertyGroup,Inc.(“Simon”),SimonPropertyGroup,L.P.(the“Simonoperatingpartnership”),SilverMergerSub1,LLC(“MergerSub1”),SilverMergerSub2,LLC(“MergerSub2”andtogetherwithSimon,theSimonoperatingpartnershipandMergerSub1,the“Simonparties”),theCompanyandTheTaubmanRealtyGroupLimitedPartnership(the“Taubmanoperatingpartnership”), andthetransactionscontemplatedthereby(the“Transactions”), including the merger of the Company with and into Merger Sub 1 (the “REIT Merger”)(suchproposal,the“MergerAgreementProposal”);
(2) anon-binding,advisoryproposaltoapprovecompensationthatmaybecomepayabletothenamedexecutiveofficers of the Company in connection with the REIT Merger and the other Transactions (the “AdvisoryCompensationProposal”);and
(3) a proposal to approve an adjournment of the special meeting, even if a quorumis present, if necessary orappropriate, tosolicit additional proxies if there areinsufficient votesat thetimeofthespecial meetingtoapprovetheMergerAgreementProposal(the“AdjournmentProposal”).
As part of our precautions regarding the coronavirus or COVID-19, the special meeting maybe held solely bymeansofremotecommunicationratherthaninperson.Ifwetakethisstep,wewillannouncethedecisiontodosoinadvance and provide details on how to participate in a press release issued by the Company and on our website,www.taubman.com. WewillalsofilethepressreleasewiththeSecuritiesandExchangeCommission(the“SEC”)asdefinitiveadditionalsolicitationmaterial.We encourage you to vote by proxy—over the Internet, by telephone orby mail—well in advance of the special meeting, to ensure your shares are represented whether or not youdecide to attend.
TheholdersofrecordofTaubmancommonstockandTaubmanSeriesBpreferredstockatthecloseofbusinessonJune5,2020areentitledtonoticeof,andtovoteat,thespecialmeetingandatanyadjournmentorpostponementthereof.Allshareholdersofrecordareinvitedtoattendthespecialmeetinginperson.
The Taubman Board unanimously recommends that the common shareholders of the Company and theholders of Taubman Series B preferred stock vote “FOR” the Merger Agreement Proposal, “FOR” theAdvisory Compensation Proposal and “FOR” the Adjournment Proposal.
The proposed Transactions constitute a “going-private transaction” under the rules of the SEC. As of May 22,2020,RobertS.Taubman(“R.Taubman”),theCompany’sChairman,PresidentandChiefExecutiveOfficer,WilliamS.Taubman(“W.Taubman”),theCompany’sChiefOperatingOfficer,andcertainentitiesandtrustsaffiliatedwithR.Taubman, with W. Taubman, or with other members of their immediate family (collectively, the “Taubman familymembers”)intheaggregate,havethepowertovoteapproximately30%oftheoutstandingsharesofTaubmanvotingstock.
Your vote is very important, regardless of the number of shares of Taubman common stock or TaubmanSeries B preferred stock you own. TheconsummationoftheTransactionsissubject totheapprovaloftheMergerAgreementProposalby(i)theholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmancommonstockandTaubmanSeriesBpreferredstockentitledtovotethereon(votingtogetherasasingleclass),(ii)theholdersofatleastamajorityofTaubmanSeriesBpreferredstockentitledtovotethereonand(iii)theholdersofatleastamajorityoftheoutstandingsharesofTaubmancommonstockandTaubmanSeriesBpreferredstockentitledtovotethereon
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(voting together as a single class), but excluding the outstanding shares of Taubman common stock and TaubmanSeriesBpreferredstockownedofrecordorbeneficiallybytheTaubmanfamilymembers.If you fail to vote on theMerger Agreement Proposal, the effect will be the same as a vote against the Merger Agreement Proposal.
Approval,onanon-binding,advisorybasis,oftheAdvisoryCompensationProposalrequirestheaffirmativevoteoftwo-thirdsoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingasasingleclass).TheAdjournmentProposalwillbeapprovedifthevotescastinfavorofsuchproposalexceedthevotescastagainstsuchproposal by the holders of shares of Taubman voting stock entitled to vote thereon. Approval of the AdvisoryCompensationProposalandtheAdjournmentProposalarenotconditionstothecompletionoftheMergers.
Whether or not you plan to attend the special meeting in person, please submit your proxy electronicallyover the Internet or by telephone as promptly as possible. If you do not have access to the Internet or a touch-tone telephone, please sign, date, and return, as promptly as possible, the enclosed proxy card in theaccompanying prepaid reply envelope. If you attend the special meeting you may revoke any prior proxy byvoting by ballot in person or, in the event that the special meeting is held by means of remote communication,virtually.
If your shares are held by a bank, broker or other nominee on your behalf in “street name,” you shouldinstruct your bank, broker or other nominee regarding how to vote your shares in accordance with the votinginstruction form that you will receive from your bank, broker or other nominee. Your bank, broker or othernominee cannot vote on any of the proposals, including the Merger Agreement Proposal, without yourinstructions.
You may revoke your proxy at any time before the vote at the special meeting by following the proceduresoutlinedintheaccompanyingproxystatement.
TheTransactions,includingtheREITMerger,aredescribedintheaccompanyingproxystatement,whichweurgeyoutoreadcarefully.AcopyofthemergeragreementisattachedasAnnexAtotheaccompanyingproxystatement.
ByOrderoftheBoardofDirectorsofTaubmanCenters,Inc.
ChrisB.HeaphySecretary
Dated:May29,2020
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING, PLEASE VOTEPROMPTLY ELECTRONICALLY OVER THE INTERNET OR BY TELEPHONE. ALTERNATIVELY,PLEASE COMPLETE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXYCARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE.
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DEFINEDTERMS iv
SUMMARYTERMSHEET 1
ThePartiestotheMergers 1
TheMergerAgreementProposal 2
ConditionstotheCompletionoftheTransactions 2
WhentheTransactionsBecomeEffective 3
ReasonsfortheTransactionsandtheRecommendationoftheSpecialCommitteeandoftheTaubmanBoard;FairnessoftheREITMerger 3
OpinionofFinancialAdvisortotheSpecialCommittee 4
PurposesandReasonsoftheSimonPartiesfortheTransactions 4
PurposesandReasonsoftheTaubmanFilingPersonsfortheTransactions 4
PositionoftheSimonPartiesastoFairnessoftheTransactions 4
PositionoftheTaubmanFilingPersonsastotheFairnessoftheTransactions 4
CertainEffectsoftheTransactions 5
TreatmentofCompanyEquityAwards 5
InterestsofTaubman’sDirectorsandExecutiveOfficersintheTransactions 6
InterestsofCertainOtherShareholdersintheTransactions 7
IntenttoVoteinFavoroftheMergers 7
TheTaubmanFamilyMembers’ObligationtoSimontoVoteinFavoroftheMergerAgreementProposal 8
AlternativeAcquisitionProposals 8
Termination 9
TerminationFees 9
SpecificPerformance 10
Financing 10
MaterialU.S.FederalIncomeTaxConsequencesoftheREITMerger 10
TheSpecialMeeting 10
RecordDateandQuorum 10
RequiredVotes 11
TheVotingAgreement 11
TheJVAgreement 11
LitigationRelatedtotheTransactions 11
QUESTIONSANDANSWERS 12
SPECIALFACTORS 19
BackgroundoftheTransactions 19
ReasonsfortheTransactionsandRecommendationoftheSpecialCommitteeandtheTaubmanBoard 34
OpinionofFinancialAdvisortotheSpecialCommittee 41
TheSimonParties’PurposesandReasonsfortheTransactions 48
TheTaubmanFilingPersons’PurposesandReasonsfortheTransactions 48
PositionoftheSimonPartiesastotheFairnessoftheREITMerger 49
PositionoftheTaubmanFilingPersonsastotheFairnessoftheREITMerger 51
PlansfortheCompanyAftertheMergers 54
CertainEffectsoftheTransactions 54
BenefitsoftheTransactionsforTaubman’sUnaffiliatedShareholders 56
DetrimentsoftheTransactionsforTaubman’sUnaffiliatedShareholders 56
BenefitsoftheTransactionsfortheTaubmanFilingPersons 56
DetrimentsoftheTransactionsfortheTaubmanFilingPersons 56
CertainUnauditedProspectiveFinancialInformation 57
InterestsofTaubman’sDirectorsandExecutiveOfficersintheTransactions 59
IntenttoVoteinFavoroftheMergers 68
TheTaubmanFamilyMembers’ObligationtoSimontoVoteinFavoroftheMergerAgreementProposal 68
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MaterialU.S.FederalIncomeTaxConsequencesoftheREITMerger 68
FeesandExpenses 71
Financing 72
AnticipatedAccountingTreatmentoftheREITMerger 72
CAUTIONARYSTATEMENTCONCERNINGFORWARD-LOOKINGINFORMATION 73
THEPARTIESTOTHEMERGERS 74
TaubmanCenters,Inc.andTheTaubmanRealtyGroupLimitedPartnership 74
TheSimonParties 74
THESPECIALMEETING 75
Date,TimeandPlace 75
PurposeoftheSpecialMeeting 75
RecommendationoftheTaubmanBoard 75
RecordDateandQuorum 75
RequiredVote 76
VotingbyCompany’sDirectorsandExecutiveOfficers 76
Voting;Proxies;Revocation 76
Abstentions 78
AdjournmentsandPostponements 78
SolicitationofProxies 78
THEMERGERAGREEMENTPROPOSAL 79
General 79
RequiredVote 79
VoteRecommendation 79
THEMERGERAGREEMENT 80
TransactionStructure 80
PartnershipMerger 80
REITMerger 81
EffectiveTime;Closing 82
ExchangeAgent;DeliveryofConsideration 83
Withholding 83
ConditionstotheCompletionoftheTransactions 83
TaubmanSpecialMeeting 85
The“Go-Shop”Period 86
The“No-Shop”Period 87
TheTaubmanBoardofDirectors’Recommendation;TaubmanBoardRecommendationChanges 88
FinancingCovenant;TaubmanCooperation 90
CertainConsents;TreatmentofExistingDebt 91
RegulatoryMatters 92
Termination 93
TerminationFees 94
ConductofBusinessPendingtheTransactions 95
LitigationRelatedtotheTransactions 96
PublicAnnouncements 97
AdditionalCovenants 97
Indemnification;Directors’andOfficers’Insurance 97
RepresentationsandWarranties 98
Waiver;Amendment 99
GoverningLaw;Jurisdiction;WaiverofJuryTrial 99
SpecificPerformance 100
FeesandExpenses 100
GovernanceofSurvivingTCO,theSurvivingTaubmanoperatingpartnershipandtheJointVenture 100
THEVOTINGAGREEMENT 101
VotingofSubjectShares 101
VotingofSubjectOPUnits 101
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RestrictionsonTransfer 102
JointVenture 102
Termination 102
AmendmentandWaiver 103
TaubmanFamilyRepresentative 103
RobertS.TaubmanCooperationCommitment 103
THEJVAGREEMENT 104
Governance 104
REITRequirements 105
BusinessOpportunities 105
Non-Compete 105
TransferRestrictions 105
ExchangeRights 105
LITIGATIONRELATEDTOTHETRANSACTIONS 107
AGREEMENTSINVOLVINGTAUBMANCOMMONSTOCK 108
TheVotingAgreement 108
RobertS.TaubmanCooperationCommitment 108
PROVISIONSFORUNAFFILIATEDSHAREHOLDERS 109
IMPORTANTINFORMATIONREGARDINGTAUBMANCENTERS,INC. 110
CompanyBackground 110
DirectorsandExecutiveOfficers 110
PriorPublicOfferings 114
HistoricalSelectedFinancialInformation 115
BookValuePerShare 116
MarketPriceoftheCompanyCommonStockandDividendInformation 116
SecurityOwnershipofManagementandCertainBeneficialOwners 117
CertainTransactionsintheShares 119
NOAPPRAISALORDISSENTERS’RIGHTS 120
DELISTINGANDDEREGISTRATIONOFTAUBMANCOMMONSTOCKANDOFTAUBMANSERIESJANDSERIESKPREFERREDSTOCK 121
THEADVISORYCOMPENSATIONPROPOSAL 122
General 122
AdvisoryVote 122
RequiredVote 122
VoteRecommendation 122
THEADJOURNMENTPROPOSAL 123
General 123
RequiredVote 123
VoteRecommendation 123
PRESENTATIONOFSHAREHOLDERPROPOSALSANDNOMINATIONSATTHE2020ANNUALMEETING 124
OTHERINFORMATIONREGARDINGTHESIMONPARTIESANDTHETAUBMANFILINGPERSONS 125
TheSimonParties 125
DirectorsandExecutiveOfficers 126
TheTaubmanFilingPersons 128
SignificantPastTransactionsandContracts 129
NegotiationsRegardingtheElectionofDirectors 131
WHEREYOUCANFINDADDITIONALINFORMATION 132
AnnexA:MergerAgreement A-1
AnnexB:OpinionofLazard B-1
AnnexC:VotingAgreement C-1
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DEFINED TERMS
Thefollowingtermsareusedthroughoutthisproxystatement.Unlessstatedotherwise,thetermssetforthbelow,wheneverusedinthisproxystatement,havethefollowingmeanings:
• “AcceptableConfidentialityAgreement”meansanagreementwithTaubmanthatiseither(i)ineffectasofthe execution and delivery of the merger agreement; or (ii) executed, delivered and effective after theexecution and delivery of the merger agreement, in either case containing provisions that require anycounterparty thereto (andanyof its affiliates andrepresentatives namedtherein) that receive material non-publicinformationof,orwithrespectto,Taubmantokeepsuchinformationconfidentialthat,ineachcase,contains confidentiality and use provisions that are no less restrictive to such counterparty (and any of itsaffiliatesandrepresentativesasprovidedtherein)thanthetermsoftheMutualNon-DisclosureAgreement,datedasofNovember8,2019,betweenTaubmanandSimon(itbeingunderstoodthatsuchagreementneednot contain any “standstill” or similar provisions or otherwise prohibit the making of any AcquisitionProposal); provided, that in noevent will anyagreement that permits thecounterparty thereto toenter intoexclusive arrangements (other than customary “tree” arrangements) with potential financing sources beconsideredan“AcceptableConfidentialityAgreement.”
• “Acquisition Proposal” means anyoffer or proposal (other than an offer or proposal bySimon, the Simonoperatingpartnership,MergerSub1orMergerSub2)toengageinanAcquisitionTransaction.
• “Acquisition Transaction” means any transaction or series of related transactions (other than theTransactions)providingfor:○ anydirectorindirectacquisition(whetherbymerger,consolidationorotherwise)ofmorethan15%of
thevotingpowerofTaubmanortheTaubmanoperatingpartnershipbyanypersonorgroup;○ anyconsolidation,businesscombination,reorganization,shareexchange,saleofassets,recapitalization,
equityinvestment,jointventure,liquidation,dissolutionorothersimilartransactioninvolvingTaubmanor the Taubmanoperatingpartnership that wouldresult in anypersonor group,directlyorindirectly,acquiring assets (including capital stock of or interests in any subsidiary or affiliate of Taubman)representing, directly or indirectly, more than 15% of the consolidated assets of Taubman and itssubsidiaries, taken as a whole (as determined on a book value basis (including indebtednesssecuredsolelybysuchassets));
○ any tender offer or exchange offer or any other direct or indirect purchase or other acquisition ofsecurities, that, if consummated, would result in any person or group, whether fromTaubmanor anyother person(s), beneficially owning more than 15% of the outstanding shares of Taubman commonstockormorethan15%oftheoutstandingTaubmanOPunits;
○ anyothertransactionorseriesofrelatedtransactionspursuanttowhichanypersonorgroupproposestoacquire, directly or indirectly, control of assets of Taubman or any of its subsidiaries having a fairmarket value greater than 15% of the fair market value of all of the assets of Taubman and itssubsidiaries,takenasawhole,immediatelypriortosuchtransaction;or
○ anycombinationoftheforegoing.
• “AdvisoryCompensationProposal”meansthenon-binding,advisoryproposaltoapprovecompensationthatmaybecomepayabletothenamedexecutiveofficersoftheCompanyinconnectionwiththeREITMergerandtheotherTransactions.
• “Adjournment Proposal” means the proposal to approve an adjournment of the special meeting, even if aquorumispresent,ifnecessaryorappropriate,tosolicitadditionalproxiesifthereareinsufficientvotesatthetimeofthespecialmeetingtoapprovetheMergerAgreementProposal.
• “CashTenderAgreement”meanstheAmendedandRestatedCashTenderAgreement,datedasofMay16,2000, by and among Taubman, the Taubman operating partnership, and A. Alfred Taubman, A. AlfredTaubman, acting not individually but as Trustee of the A. Alfred Taubman Restated Revocable Trust(the“RevocableTrust”),andTRAPartners.
• “closing”meanstheclosingoftheTransactions.
• “Code”meanstheU.S.InternalRevenueCodeof1986,asamended.
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• “commonstockmergerconsideration”means$52.50incashforeachshareofTaubmancommonstock.
• “CompensationCommittee”meansthecompensationcommitteeoftheTaubmanBoard.
• “ContinuingOffer”meanstheSecondAmendedandRestatedContinuingOffer,datedasofMay16,2000,byTaubmantocertainholdersofTaubmanOPunitsandTaubmanIncentiveUnits.
• “DRULPA”meanstheDelawareRevisedUniformLimitedPartnershipAct.
• “excessthreshold”means$10millionannually,determinedinaggregate(andbasedonabsolutevalue)withrespect to all instances where such term is used in the JV agreement (except that any action, project orexpenditure that is approved or ratified by the board of the Joint Venture will not reduce or count againstsuchfigure).
• “ExchangeAct”meanstheSecuritiesExchangeActof1934,asamended.
• “familytransferee”meanscertainimmediatefamilymembersorrelatedentitiesoftheTaubmanfamily.
• “FFO”meansfundsfromoperations.
• “GAAP”meansgenerallyacceptedaccountingprinciplesasappliedintheUnitedStates.
• “go-shopperiod”meanstheperiodbeginningonFebruary9, 2020(thedate of themerger agreement) andcontinuing until 11:59 p.m., New York City time, on March 25, 2020 (the 45th day after the date of themergeragreement).
• “G.TaubmanKalisman”meansGayleTaubmanKalisman.
• “IRS”meanstheU.S.InternalRevenueService.
• “Joint Venture” means the Surviving Taubman operating partnership after it is converted into a limitedliabilitycompanyintheLLCConversion.
• “JointVentureunit”meansoneunitoflimitedliabilitycompanyinterestsintheJointVenture.
• “JVagreement”meanstheoperatingagreementoftheJointVenture.
• “LLCConversion”meanstheconversionoftheSurvivingTaubmanoperatingpartnershipintoaDelawarelimitedliabilitycompany.
• “Manager”meansTheTaubmanCompanyLLC.
• “MBCA”meanstheMichiganBusinessCorporationAct.
• “mergeragreement”meanstheAgreementandPlanofMerger, datedasofFebruary9,2020,asit maybeamendedfromtimetotime,byandamongSimon,theSimonoperatingpartnership,MergerSub1,MergerSub2,theCompanyandtheTaubmanoperatingpartnership.
• “Merger Agreement Proposal” means the proposal to adopt and approve the merger agreement and theTransactions,includingtheREITMerger.
• “Mergers”meanstheREITMergerandthePartnershipMerger.
• “MergerSub1”meansSilverMergerSub1,LLC.
• “MergerSub2”meansSilverMergerSub2,LLC.
• “Michigan LARA” means the Corporations, Securities & Commercial Licensing Bureau of the State ofMichiganDepartmentofLicensingandRegulatoryAffairs.
• “minoritypartners”meanstheholdersofTaubmanOPunits(otherthanTaubman)whoarenottheTaubmanfamilymembers.
• “NAV”meansnetassetvalue.
• “NOI”meansnetoperatingincome.
• “NYSE”meanstheNewYorkStockExchange.
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• “OptionDeferralAgreement”meansthatcertainAmendedandRestatedOptionDeferralAgreement, datedas of January 27, 2011, by and amongR. Taubman, the Taubmanoperating partnership and the Manager,together with that certain Subsequent Deferral Election under the Taubman operating partnership and TheTaubmanCompanyLLCElectionandOptionDeferralAgreement,datedasofOctober7,2016.
• “OptionDeferredunit”meansarighttoreceiveaTaubmanOPunitthathasbeendeferredbyR.TaubmanpursuanttotheOptionDeferralAgreement.
• “PartnershipMerger”meansthemergerofMergerSub2withandintotheTaubmanoperatingpartnership,withtheTaubmanoperatingpartnershipsurvivingsuchmerger.
• “Projections” means certain non-public financial projections as to the potential future performance ofTaubman for the years 2020 through 2024 prepared by Taubman’s management at the direction of theSpecialCommitteeinconnectionwiththeTransactions.
• “Redemption” means the redemption of the Taubman Series J Preferred Stock and Taubman Series KPreferredStock.
• “REIT”meansarealestateinvestmenttrustwithinthemeaningofSection856oftheCode.
• “REITMerger”meansthemergeroftheCompanywithandintoMergerSub1,withMergerSub1survivingsuchmerger.
• “R.Taubman”meansRobertS.Taubman.
• “SEC”meanstheSecuritiesandExchangeCommission.
• “SeriesBpreferredstockmergerconsideration”meansanamountincashequaltothecommonstockmergerconsideration(i.e.,$52.50incash),dividedby14,000foreachshareofTaubmanSeriesBpreferredstock.
• “SeverancePlan”meanstheSeverancePlanforSeniorLevelManagementoftheCompany,approvedbytheCompensation Committee on December 11, 2017, as reinstated by the Compensation Committee onFebruary9,2020.
• “shareholders of the Company”or “Companyshareholders” or “Taubmanshareholders” means, holders oftheTaubmancommonstockandtheTaubmanSeriesBpreferredstock,asthecontextmayrequire.
• “Simon”meansSimonPropertyGroup,Inc.
• “Simonoperatingpartnership”meansSimonPropertyGroup,L.P.
• “Simon operating partnership preferred contribution” means the contribution, immediately following theeffectivetimeoftheLLCConversion,bytheSimonoperatingpartnershiptothecapitaloftheJointVentureofanamountequaltotheaggregateTaubmanSeriesJandSeriesKPreferredStockliquidationpreferenceinexchangeforacertainnumberofSeriesAPreferredUnits(asdefinedintheJVagreement).
• “SimonOPunit”meanslimitedpartnershipunitsintheSimonoperatingpartnership.
• “Simonparties”meansSimon,theSimonoperatingpartnership,MergerSub1andMergerSub2.
• “SimonPeriod”meanstheperiodfollowingtheTaubmanPeriod.
• “SpecialCommittee”meansthespecialcommitteeoftheTaubmanBoard.
• “SuperiorProposal”meansanywrittenAcquisitionProposalforanAcquisitionTransactionontermsthattheTaubmanBoard(ortheSpecialCommittee)hasdeterminedingoodfaith(afterconsultationwithitsfinancialadvisor and outside legal counsel), taking into account all legal, financial and regulatory aspects of suchAcquisition Proposal, would be more favorable, from a financial point of view, to the shareholders ofTaubman(intheircapacityassuch)thantheTransactions.Forpurposesofthereferencetoan“AcquisitionProposal” and “Acquisition Transaction” in this definition, all references to “15%” in the definition of“AcquisitionTransaction”willbedeemedtobereferencesto“75%.”
• “Surviving Taubman operating partnership” means the Taubman operating partnership after the effectivetimeofthePartnershipMerger.
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• “SurvivingTCO”meansMergerSub1aftertheeffectivetimeoftheREITMerger.
• “Taubman”orthe“Company”or“TCO”meansTaubmanCenters,Inc.
• “TaubmanBoard”meanstheboardofdirectorsoftheCompany.
• “Taubmancommonstock”meansthecommonstock,parvalue$0.01pershare,ofTaubman.
• “TaubmanEquityAwards”means,collectively,TCORSUs,TCOPSUs,TCODSUs,TCODERs,TaubmanIncentiveUnits,andOptionDeferredunits.
• “Taubmanfamily”means,collectively,theTaubmanfamilymembers.
• “Taubmanfamilymembers”meansR.Taubman,W.Taubman,andcertainentitiesandtrustsaffiliatedwithR.Taubman,withW.Taubman,orwithothermembersoftheirimmediatefamily.
• “Taubmanfamilyrepresentative”meansR.Taubman,inhiscapacityastheTaubmanfamilyrepresentative(oranotherdulyappointedrepresentativeoftheTaubmanfamilymembers).
• “Taubmanfilingpersons”meansR.Taubman,W.TaubmanandTVG.
• “TaubmanIncentiveUnit”meansanincentivepartnershipunitgrantedpursuanttoanyTaubmanStockPlanthat is intended to constitute a “profits interest” within the meaning of the Code and the regulationspromulgatedthereunder, andIRSRevenueProcedure93-27andIRSRevenueProcedure2001-43,andthathasbeengrantedpursuanttoa“ProfitsUnitsDesignation”asdefinedintheTaubmanOPAgreement.
• “Taubman non-voting preferred stock” means, collectively, the Taubman Series J Preferred Stock and theTaubmanSeriesKPreferredStock.
• “Taubman OP agreement” means the Third Amendment and Restatement of Agreement of LimitedPartnershipoftheTaubmanoperatingpartnership,datedasofDecember12,2012,asamendedbythatFirstAmendmentdatedasofJune1,2016,bythatSecondAmendmentdatedasofDecember18,2018andasmaybesubsequentlyamendedfromtimetotime.
• “Taubman OPpayment” means the payment, immediately after the Simon operating partnership preferredcontribution, bythe Joint Venture to Taubmanin an amount equal to the aggregate TaubmanSeries J andSeriesKPreferredStockliquidationpreference.
• “Taubmanoperatingpartnership”or“TRG”meansTheTaubmanRealtyGroupLimitedPartnership.
• “TaubmanOPunit”meansaunitofpartnershipinterestintheTaubmanoperatingpartnership.
• “Taubman Period” means the period beginning on the effective date of the JV agreement and upon theoccurrence of specified events set forth in the JV agreement (including the Taubman family members’ownershipoftheJointVenturefallingbelowaspecifiedthreshold).
• “TaubmanSeriesBpreferredstock”meanstheSeriesBNon-ParticipatingConvertiblePreferredStock,parvalue$0.001pershare,ofTaubman.
• “Taubman Series J Preferred Stock” means the Series J Cumulative Redeemable Preferred Stock, no parvalue,ofTaubman.
• “TaubmanSeriesJandSeriesKPreferredStockRedemptionAmount”meanscashinimmediatelyavailablefunds in the amount of $25.00 plusall accumulated and unpaid dividends to, but not including, theredemption date set forth in the notice of redemption, per share of Taubman Series J Preferred Stock andTaubmanSeriesKPreferredStock,respectively.
• “TaubmanSeries KPreferred Stock” means the Series KCumulative Redeemable Preferred Stock, no parvalue,ofTaubman.
• “Taubman shareholder approval” means, collectively, the approval of the Merger Agreement Proposal by:(i) the holders of at least two-thirds of the outstanding shares of Taubman voting stock entitled to votethereon(votingtogetherasasingleclass);(ii)theholdersofatleastamajorityoftheoutstandingshares
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ofTaubmanSeriesBpreferredstockentitledtovotethereon;and(iii)theholdersofatleastamajorityoftheoutstanding shares of Taubman voting stock entitled to vote thereon (voting together as a single class),excludingtheoutstandingsharesofTaubmanvotingstockownedofrecordorbeneficiallybytheTaubmanfamilymembers.
• “TaubmanStockPlans”meanscollectively,theTaubman2008OmnibusLong-TermIncentivePlanandtheTaubman2018OmnibusLong-TermIncentivePlan.
• “Taubmanvotingstock”meanstheTaubmancommonstockandtheTaubmanSeriesBpreferredstock.
• “TCODER”meansadividendequivalentrightgrantedintandemwithanyTCORSUorTCOPSU.
• “TCODSU”meansarighttoreceiveashareofTaubmancommonstockthathasbeendeferredpursuanttoanyTaubmanStockPlan(excludingundertheOptionDeferralAgreement).
• “TCO PSU” means an outstanding performance-based stock unit award of TCO granted under the TCOStockPlansthatvestsinwholeorinpartonthebasisoftheachievementofperformancetargets.
• “TCORSU”meansarestrictedstockunitawardofTCOgrantedundertheTCOStockPlansthatvestssolelyonthebasisofarecipient’sservicetoTCOoritsaffiliates.
• “Transactions”meansthetransactionscontemplatedbythemergeragreement,includingtheMergers.
• “TVG”meansTaubmanVenturesGroupLLC.
• “unaffiliated security holders” means unaffiliated security holders as defined under Rule 13e-3 of theExchangeAct.
• “votingagreement”referstothevotingagreement,datedasofFebruary9,2020,byandamongSimonandtheTaubmanfamilymembersthatownTaubmanvotingstockorTaubmanOPunits.
• “W.Taubman”meansWilliamS.Taubman.
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SUMMARY TERM SHEET
ThissummaryhighlightsselectedinformationfromthisproxystatementrelatedtothemergeragreementandtheTransactions,andmaynotcontainalloftheinformationthatisimportanttoyou.TounderstandtheTransactionsmorefully and for a more complete description of the legal terms of the merger agreement, Mergers and the otherTransactions, you should carefully read this entire proxy statement, the annexes to this proxy statement and thedocumentsthatwerefertointhisproxystatement.Youmayobtainanyadditionalinformationreferredtointhisproxystatementwithoutchargeasdescribedunderthecaption“Where You Can Find Additional Information.”
Because the Transactions constitute a “goingprivate” transaction under SECrules, the Company, the TaubmanfilingpersonsandcertainoftheSimonpartiesandtheiraffiliateshavefiledwiththeSECaTransactionStatementonSchedule13E-3withrespecttotheTransactions.YoumayobtainanyadditionalinformationabouttheSchedule13E-3underthecaption“Where You Can Find Additional Information.”
The Parties to the Mergers (Page 74)
Taubman Centers, Inc. and The Taubman Realty Group Limited Partnership
TaubmanisaMichigancorporation(incorporatedin1973)thatoperatesasaself-administeredandself-managedREIT.Taubman’ssoleassetisanapproximate70%generalpartnershipinterestintheTaubmanoperatingpartnership,which owns direct or indirect interests in all of Taubman’s real estate properties. In this proxy statement, the terms“we,” “us,” and “our” refer to Taubman, the Taubman operating partnership and/or the Taubman operatingpartnership’ssubsidiariesasthecontextmayrequire.
Weown,manage,lease,acquire,disposeof,develop,andexpandretailshoppingcentersandintereststherein.OurownedportfolioofoperatingcentersasofMarch31,2020included24urbanandsuburbanshoppingcentersoperatingin11U.S.states,PuertoRico,SouthKorea,andChina.TheTaubmanCompanyLLC(the“Manager”)providescertainmanagementandadministrativeservicesforusandforourU.S.properties.
Simon Property Group, Inc.
Simon,aDelawarecorporation,operatesasaself-administeredandself-managedREIT.Simonisstructuredasanumbrella partnership REIT under which substantially all of its business is conducted through the Simon operatingpartnership,Simon’smajority-ownedpartnershipsubsidiary,forwhichSimonisthegeneralpartner.Simon’sprimarybusiness is owning, developing and managing premier shopping, dining, entertainment and mixed-use destinations,whichconsist primarilyofmalls, PremiumOutlets®, andTheMills®. Simon’sproperties, asofDecember31,2019,comprised 191million square feet in North America, Asia andEurope. Asof December 31, 2019, Simonownedorheldaninterest in204income-producingproperties intheUnitedStates, whichconsistedof106malls, 69PremiumOutlets,14Mills,fourlifestylecenters,and11otherretailpropertiesin37statesandPuertoRico.Internationally,asofDecember31, 2019,Simonhadownershipinterests in29PremiumOutlets andDesignerOutlet properties primarilylocatedinAsia,EuropeandCanada.AsofDecember31,2019,Simonalsoowneda22.2%equitystakeinKlépierreSA, or Klépierre, a publicly traded, Paris-based real estate company, which owns, or has an interest in, shoppingcenterslocatedin15countriesinEurope.
Simon Property Group, L.P.
The Simon operating partnership is a Delaware limited partnership that is a majority-owned subsidiary of Simon,owningallofSimon’srealestatepropertiesandotherassets.AsofDecember31,2019,Simonownedanapproximate86.8%ownershipinterestintheSimonoperatingpartnership,withtheremaining13.2%ownershipinterestownedbylimited partners. As the sole general partner of the Simonoperating partnership, Simonhas exclusive control of theSimonoperatingpartnership’sday-to-daymanagement.
Silver Merger Sub 1, LLC
MergerSub1,LLCisanewlyformedDelawarelimitedliabilitycompany.MergerSub1,LLCisawhollyownedsubsidiaryoftheSimonoperatingpartnershipandwasformedsolelyforthepurposeofengagingintheTransactions.As of the date hereof, Merger Sub 1, LLC has not engaged in any business other than in connection with theTransactions.
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Silver Merger Sub 2, LLC.
MergerSub2,LLCisanewlyformedDelawarelimitedliabilitycompany.MergerSub2,LLCisawhollyownedsubsidiaryofMergerSub1,LLCandwasformedsolelyforthepurposeofengagingintheTransactions.Asofthedatehereof,MergerSub2,LLChasnotengagedinanybusinessotherthaninconnectionwiththeTransactions.
Formoreinformation,see“The Parties to the Mergers.”
The Merger Agreement Proposal (Page 79)
You are being asked to consider and vote on a proposal to adopt and approve the merger agreement and theTransactions, includingthe REITMerger. Pursuant to the merger agreement, subject to the satisfaction or waiver ofcertain conditions, Merger Sub 2 will be merged with and into the Taubman operating partnership. Followingcompletion of the Partnership Merger, the Taubmanoperating partnership will survive and the separate existence ofMerger Sub2 will cease. Immediately followingthe Partnership Merger, the Taubmanoperating partnership will beconvertedintoaDelawarelimitedliabilitycompanypursuanttotheLLCConversion.FollowingtheLLCConversion,TaubmanwillbemergedwithandintoMergerSub1intheREITMerger.FollowingtheREITMerger,MergerSub1willsurviveandtheseparateexistenceofTaubmanwillcease.Onthetermsandsubjecttotheconditionssetforthinthemergeragreement,attheeffectivetimeoftheREITMerger,eachshareoftheTaubmancommonstockthenissuedandoutstanding,otherthancertainsharesofexcludedTaubmancommonstock(assetforthinthemergeragreement),willbeconvertedintotherighttoreceivethecommonstockmergerconsideration(i.e.,$52.50incash)andeachshareofTaubmanSeriesBpreferredstockthenissuedandoutstandingwillbeconvertedintotherighttoreceiveanamountincashequaltothecommonstockmergerconsideration(i.e.,$52.50incash),dividedby14,000.
Formoreinformation,see“The Merger Agreement Proposal.”
Conditions to the Completion of the Transactions (Page 83)
TheobligationsofTaubman,theTaubmanoperatingpartnershipandtheSimonpartiestoeffecttheTransactionsaresubjecttothesatisfactionorwaiver(exceptfortheconditionstoobtaintheTaubmanshareholderapprovalandtheTaubman operating partnership approval, which cannot be waived), at or prior to the closing date, of the followingconditions:
• receiptofTaubmanshareholderapprovalfrom(i)theholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasasingleclass);(ii)theholdersofatleasta majority of the outstanding shares of Taubman Series B preferred stock entitled to vote thereon; and(iii) the holders of at least a majority of the outstanding shares of Taubman voting stock entitled to votethereon(votingtogetherasasingleclass),excludingtheoutstandingsharesofTaubmanvotingstockownedofrecordorbeneficiallybytheTaubmanfamilymembers;
• receipt of Taubman operating partnership approval, and such approval must not have been rescinded,modifiedorwithdrawn;
• nolaw,judgment,legalrestraint,prohibitionorbindingordershallbeineffect,orimminentlythreatenedbyany governmental entity of competent jurisdiction, which prohibits, makes illegal, enjoins, or otherwisepreventstheconsummationoftheTransactions;and
• thesharesofSimoncommonstocktobereservedforissuanceuponexchangeorredemptionofSimonOPunitsissuedorissuabletoholdersofTaubmanOPunitsintheTransactionshavebeenapprovedforlistingontheNYSE.
Inaddition,theSimonparties’obligationstoeffecttheclosingarefurthersubjecttothefollowingconditions:• the accuracy of the representations and warranties of Taubman and the Taubman operating partnership,
subject to certain materiality standards as described under the section entitled “The Merger Agreement—ConditionstotheCompletionoftheTransactions;”
• the performance by Taubman and the Taubman operating partnership in all material respects of theircovenantsunderthemergeragreement;
• theabsenceofamaterialadverseeffectwithrespecttoTaubman;• thereceiptofanofficer’scertificatecertifyingthattheforegoingconditionshavebeensatisfied;and
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• thereceipt ofataxopinionofHonigmanLLP,taxcounseltoTaubman(or, if HonigmanLLPisunableorunwilling to render such opinion, Kirkland &Ellis LLPor another nationally recognized REITcounsel asmay be reasonably acceptable to Simon) with respect to Taubman’s qualification and taxation as a REITundertheCode.
In addition, Taubman’s and the Taubman operating partnership’s obligations to effect the closing are furthersubjecttothefollowingconditions:
• the accuracy of the representations and warranties of the Simon parties, subject to certain materialitystandardsasdescribedunderthesectionentitled“TheMergerAgreement—ConditionstotheCompletionoftheTransactions;”
• theperformancebytheSimonpartiesinallmaterialrespectsoftheircovenantsunderthemergeragreement;and
• thereceiptofanofficer’scertificatecertifyingthattheforegoingconditionshavebeensatisfied.
TheseconditionstotheTransactionsaredescribedinmoredetailinthesectionentitled“The Merger Agreement—Conditions to the Completion of the Transactions.”
When the Transactions Become Effective (Page 82)
WeanticipatecompletingtheTransactionsinthesecondorthirdquarterof2020,subjecttotheapprovaloftheMergerAgreementProposalandthesatisfactionoftheotherclosingconditionsdescribedinthisproxystatement.
However,theSimonpartieswillnotberequiredtoeffecttheclosing(unlesstheyotherwiseconsent):• priortoNovember9,2020,if,onthedatethatclosingwouldotherwisehaveoccurred,anyinvestigationor
legal action by any governmental entity is then-pending that, in Simon’s reasonable judgment, followingconsultation with Taubman and the Taubman family representative, is seeking or would reasonably beexpected to lead to or result in a Simon Burdensome Condition (as further described under “The MergerAgreement—RegulatoryMatters”),or
• prior toJuly9, 2020, if, onthedatethat theclosingwouldotherwisehaveoccurred, consents andwaiverswithrespecttotheTransactions(asdescribedunder“TheMergerAgreement—CertainConsents;Treatmentof Existing Debt”) have not been obtained from certain third parties or, with respect to any such consentunderaloandocumentthathasnotbeenobtained,theunderlyingloanhasnotbeenprepaidordefeased.
Reasons for the Transactions and the Recommendation of the Special Committee and of the Taubman Board;Fairness of the REIT Merger (Page 34)
After careful consideration, and with the assistance of its legal and financial advisors, the Special CommitteeevaluatedthemergeragreementandtheTransactionsand,onFebruary9,2020,theSpecialCommitteeunanimouslydetermined that the merger agreement and the Transactions are advisable and fair to, and in the best interests of,Taubmanand the Taubmancommonshareholders, and unanimously recommended that the TaubmanBoard, amongother things: (i) determine that the merger agreement andthe Transactions are advisable andfair to, andin the bestinterests of, TaubmanandtheTaubmancommonshareholders; (ii) adoptandapprovethemergeragreement andtheTransactions; (iii) subject to the terms of the merger agreement, resolve to recommend that the Taubman commonshareholdersadoptandapprovethemergeragreement; and(iv)direct thatthemergeragreementbesubmittedtotheTaubmancommonshareholdersandtheholdersofTaubmanSeriesBpreferredstockfortheiradoptionandapproval.
OnFebruary9,2020,theTaubmanBoard,actingupontheunanimousrecommendationoftheSpecialCommittee:(i) determinedthat the merger agreement andthe Transactions are advisable andfair to, andin the best interests of,Taubman and the Taubman common shareholders; (ii) adopted and approved the merger agreement and theTransactions; (iii) subject to the terms of the merger agreement, resolved to recommend that the Taubmancommonshareholdersadoptandapprovethemergeragreement;and(iv)directedthatthemergeragreementbesubmittedtotheTaubmancommonshareholdersandtheholdersofTaubmanSeriesBpreferredstockfortheiradoptionandapproval.Accordingly, the Taubman Board recommends that you vote “FOR” the Merger Agreement Proposal, “FOR”the Advisory Compensation Proposal and “FOR” the Adjournment Proposal.
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Opinion of Financial Advisor to the Special Committee (Page 41 and Annex B)
OnFebruary9,2020,LazardFrères&Co.LLC(“Lazard”)rendereditswrittenopinion,consistentwithitsoralopinionrenderedonthesamedate,totheSpecialCommitteethat,asofsuchdate,andbaseduponandsubjecttotheassumptions, procedures, factors, qualifications and limitations set forth therein, the common stock mergerconsideration to be paid to holders of Taubman common stock (other than holders of shares of excluded TaubmancommonstockandtheTaubmanfamilymembers)pursuanttothemergeragreementwasfair,fromafinancialpointofview,tosuchholdersofTaubmancommonstock.
The full text of Lazard’s written opinion, dated February 9, 2020, which sets forth the assumptions made,procedures followed, factors considered and qualifications and limitations on the review undertaken by Lazardin connection with its opinion, is attached to this proxy statement as Annex B and is incorporated by referenceherein in its entirety. The following summary of Lazard’s opinion is qualified in its entirety by reference to thefull text of the opinion. You are encouraged to read Lazard’s opinion and this section carefully and in theirentirety.
Lazard’sengagementanditsopinionwereforthebenefitoftheSpecialCommittee(initscapacityassuch)andTaubman’sotherindependentdirectors(intheircapacitiesassuch),andLazard’sopinionwasrenderedtotheSpecialCommitteeinconnectionwithitsevaluationoftheREITMergerandaddressedonlythefairnessasofthedateoftheopinion, from a financial point of view, to the holders of Taubman common stock (other than holders of shares ofexcludedTaubmancommonstockandtheTaubmanfamilymembers)ofthecommonstockmergerconsiderationtobepaidtosuchholderspursuanttothemergeragreement.Lazard’sopinionwasnotintendedto,anddoesnot,constitutearecommendationtoanyshareholderastohowsuchshareholdershouldvoteoractwithrespecttothemergeroranymatterrelatingthereto.
Purposes and Reasons of the Simon Parties for the Transactions (Page 48)
Under the SEC rules governing “going private” transactions, each of the Simon parties is an affiliate of theCompanyforpurposesoftheproposedtransactionundersuchrulesand,therefore,isrequiredtoexpressitspurposesandreasonsfortheTransactionstotheCompany’sunaffiliatedsecurityholders.ForadescriptionoftheSimonparties’purposesandreasonsfortheTransactionstotheCompany’sunaffiliatedsecurityholders, see“Special Factors—TheSimon Parties’ Purposes and Reasons for the Transactions.”
Purposes and Reasons of the Taubman Filing Persons for the Transactions (Page 48)
UndertheSECrulesgoverning“goingprivate”transactions,eachoftheTaubmanfilingpersonsisanaffiliateofthe Company for purposes of the proposed transaction under such rules and, therefore, is required to express itspurposes and reasons for the Transactions to the Company’s unaffiliated security holders. For a description of theTaubmanfilingpersons’purposesandreasonsfortheTransactionstotheCompany’sunaffiliatedsecurityholders,see“Special Factors—The Taubman Filing Persons’ Purposes and Reasons for the Transactions.”
Position of the Simon Parties as to Fairness of the Transactions (Page 49)
Under the SEC rules governing “going private” transactions, each of the Simon parties is an affiliate of theCompanyforpurposesoftheproposedtransactionundersuchrulesand,therefore,isrequiredtoexpressitsbeliefsasto the fairness of the REIT Merger to the Company’s unaffiliated security holders. For a description of the Simonparties’ beliefs as to the fairness of the REIT Merger to the Company’s unaffiliated security holders, see “SpecialFactors—Position of the Simon Parties as to the Fairness of the REIT Merger.”
Position of the Taubman Filing Persons as to the Fairness of the Transactions (Page 51)
UndertheSECrulesgoverning“goingprivate”transactions,eachoftheTaubmanfilingpersonsisanaffiliateoftheCompanyforpurposesoftheproposedtransactionundersuchrulesand,therefore,isrequiredtoexpressitsbeliefsastothefairnessoftheREITMergertotheCompany’sunaffiliatedsecurityholders.ForadescriptionoftheTaubmanfiling persons’ beliefs as to the fairness of the REIT Merger to the Company’s unaffiliated security holders, see“Special Factors—Position of the Taubman Filing Persons as to the Fairness of the REIT Merger.”
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Certain Effects of the Transactions (Page 54)
If the Taubman shareholder approval is obtained and the other conditions to closing of the Mergers are eithersatisfiedorwaived,thefollowingwilloccur:
• at the effective time of the Partnership Merger, (i) each Taubman OP unit issued and outstandingimmediatelypriortotheeffectivetimeofthePartnershipMergerheldbyaminoritypartnerwillbeconvertedintotherighttoreceive,attheelectionofsuchminoritypartner,thecommonstockmergerconsiderationor0.3814newSimonOPunits;(ii)certainTaubmanOPunitsissuedandoutstandingimmediatelypriortotheeffective timeof the Partnership Merger held bythe Taubmanfamily members will remain outstandingasunitsofpartnershipinterestintheSurvivingTaubmanoperatingpartnership;and(iii)allotherTaubmanOPunits issuedandoutstandingimmediately prior to the effective timeof the Partnership Merger held bytheTaubmanfamilymemberswillbeconvertedintotherighttoreceivethecommonstockmergerconsideration;
• immediately following the effective time of the Partnership Merger, at the effective time of the LLCConversion,theSurvivingTaubmanoperatingpartnershipwillbeconvertedintoaDelawarelimitedliabilitycompany pursuant to the LLC Conversion, in which each unit of partnership interest in the SurvivingTaubman operating partnership that is owned by the Taubman family members, Merger Sub 1 or byTaubman immediately prior to the effective time of the LLCConversion will be converted into one JointVentureunit;
• immediately prior to the effective time of the REIT Merger, Taubman will issue a redemption notice andcausefundstobesetasidetopaytheredemptionpriceforeachshareofTaubmanSeriesJPreferredStockand Taubman Series K Preferred Stock, at their respective liquidation preference of $25.00 plusall accumulated and unpaid dividends to, but not including, the redemption date of such share(the“Redemption”);and
• attheeffectivetimeoftheREITMerger,(i)eachshareofTaubmancommonstockissuedandoutstandingimmediately prior to the effective time of the REIT Merger (other than certain excluded shares) will beconvertedintotherighttoreceivethecommonstockmergerconsideration;and(ii)eachshareofTaubmanSeries B preferred stock will be converted into the right to receive the Series B preferred stock mergerconsideration.
Following the Mergers and the LLC Conversion, the Simon operating partnership will own 100% of theoutstanding equity of Surviving TCO, Surviving TCO will own directly or indirectly 80% of the limited liabilitycompanyinterestsoftheJointVenture,andtheTaubmanfamilymemberswillowntheremaining20%ofthelimitedliability company interests of the Joint Venture (assuming, for purposes of this calculation, that Taubman OP unitsissuable under the Option Deferral Agreement become outstanding limited liability company interests of the JointVenture).SurvivingTCOandtheTaubmanfamilymemberswillenterintotheJVagreementwithrespecttotheJointVentureatthetimeoftheLLCConversion.See“The JV Agreement.”
For a further discussion of the effects of the Transactions, see “Special Factors—Certain Effects of theTransactions.”
Treatment of Company Equity Awards (Page 60)
Company Restricted Stock Units, Performance Stock Units, Deferred Stock Units and Dividend Equivalent Rights
UpontheeffectivetimeoftheREITMerger:(1)eachoutstandingTCORSUandeachoutstandingTCOPSUthatvestsinaccordancewithitstermsinconnectionwiththeclosingoftheREITMergerwillautomaticallyconvertintotherighttoreceivethecommonstockmergerconsideration(withsuchTCOPSUsvestingbasedonthegreateroftheaverageofactualperformanceachievement,asoftheclosing,ofthetwoperformancemetricsapplicabletosuchgrants,andtargetperformance);(2)eachoutstandingTCORSUandTCOPSUthatisnoteligibletovestinaccordancewithitstermsinconnectionwiththeclosingoftheREITMergerwillbeconvertedintoacashsubstituteawardtobepaid(A)withrespecttoanysuchawardgrantedpriorto2020,inaccordancewiththesameservice-vestingschedulethatapplied to the original TCO RSU or TCO PSU award and (B) with respect to any such award granted in 2020, inaccordancewiththesamevestingschedule(includingperformance-vestingconditions)that
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appliedtotheoriginalTCORSUorTCOPSUaward;(3)eachoutstandingTCODSUwillbeconvertedintotherighttoreceivethecommonstockmergerconsideration;and(4)eachTCODERgrantedintandemwithanyTCORSUorTCOPSUwill be treated in the samemanner as the outstanding TCORSUor TCOPSUto which suchTCODERrelates.
Also,upontheeffectivetimeofthePartnershipMerger,eachoutstandingtime-vestingandperformance-vestingTaubman Incentive Unit will vest and be converted into a Taubman OP unit (with such Taubman Incentive Unitsvesting based on the greater of the average of actual performance achievement, as of the closing, of the twoperformancemetricsapplicabletosuchgrants,andtargetperformance),whichshallthenbetreatedinthesamemanner(andhavingtherighttothesameelection)astheTaubmanOPunitsheldbytheminoritypartners.
Finally, at the effective time of the LLC Conversion, the Option Deferral Agreement will be deemed to beamendedsothateachOptionDeferredunitwillrepresenttherighttoreceive,followingtheLLCConversion,oneJointVentureunit,andwillremainsubjecttoallothertermsandconditionsoftheOptionDeferralAgreement.
Interests of Taubman’s Directors and Executive Officers in the Transactions (Page 59)
In considering the recommendations of the Special Committee and of the Taubman Board with respect to themergeragreement,youshouldbeawarethat,asidefromtheirinterestsasshareholdersoftheCompany,theCompany’sdirectors andexecutive officers mayhaveinterests in theTransactions that maybedifferent from, or in additionto,those of the other Taubman shareholders. In particular, several of Taubman’s directors and executive officers aremembers of the Taubman family and own interests in TRG. Following the Transactions, the Simon operatingpartnershipwillown100%oftheoutstandingequityofSurvivingTCO,SurvivingTCOwillown80%ofthelimitedliabilitycompanyinterestsoftheJointVenture,andtheTaubmanfamilymemberswillowntheremaining20%ofthelimitedliabilitycompanyinterestsoftheJointVenture(assuming,forpurposesofthiscalculation,thatTaubmanOPunitsissuableundertheOptionDeferralAgreementbecomeoutstandinglimitedliabilitycompanyinterestsoftheJointVenture).SurvivingTCOandtheTaubmanfamilymemberswillenterintotheJVagreementwithrespecttotheJointVentureatthetimeoftheLLCConversionintheformattachedasExhibitBtothemergeragreementanddescribedfurtherinthisproxystatementunderthecaption“The JV Agreement.”OtherinterestsoftheCompany’sdirectorsandexecutiveofficersthatmaybedifferentfrom,orinadditionto,theinterestsoftheCompany’sshareholdersinclude:
• ThevestingofcertainoutstandingandunvestedTCORSUsandTCOPSUs,asapplicable,heldbyexecutiveofficersoftheCompanywillbeacceleratedpursuanttotheirterms(exceptthatTCOPSUsgrantedpriorto2020will becomevestedbasedonthegreater oftheaverageofactual performanceachievement, asoftheclosing,ofthetwoperformancemetricsapplicabletosuchgrants,andtargetperformance),andtheexecutiveofficerswillreceivethecommonstockmergerconsiderationinrespectofsuchawardspursuanttothemergeragreementinconnectionwiththecompletionoftheTransactions.
• TCO RSUs and TCO PSUs held by executive officers of the Company, the vesting of which will not beaccelerated pursuant to their terms (including awards that were granted in March of 2020 in the ordinarycourseofbusinessconsistentwithpastpractice),willbeconvertedintocashsubstituteawards,onapersharebasis,inanamountequaltothecommonstockmergerconsideration,whichwillbecomevestedandpaidinaccordancewiththesameservice-vestingschedulethatappliedtotheoriginalTCORSUorTCOPSUaward(andforTCOPSUsthatweregrantedinMarchof2020,inaccordancewithperformance-vestingconditions,whichwill, aftertheclosing,vestbasedsolelyonachievementofpre-establishedNOIgrowthtargets), andpaidifandtotheextenttheybecomevestedinaccordancewiththeirtermsaftertheTransactions.Thesecashsubstitute awards are also generally subject to vesting upon a qualifying termination of employmentoccurringwithintwoyearsafterthecompletionoftheTransactions.
• TCODSUsheldbydirectors,totheextentunvestedasoftheclosingoftheTransactions,willbecomefullyvested and the directors will receive the common stock merger consideration in respect of such awardspursuanttothemergeragreementinconnectionwiththecompletionoftheTransactions.
• TCODERsthatrelatetoanyTCORSUsorTCOPSUswillbetreatedinthesamemannerastheTCORSUsorTCOPSUs,asapplicable,towhichtheTCODERrelates, withTCODERsthatrelatetoTCORSUsorTCO PSUs that become cash substitute awards continuing to accrue, at the rate set forth in the mergeragreement(a“cashsubstituteDER”),andwillbepaidifandtothesameextentthecashsubstituteawardstowhichtheTCODERsrelatebecomevestedandpayableinaccordancewiththeirtermsafterthecompletionoftheTransactions.
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• Time-vestingandperformance-vestingTaubmanIncentiveUnitsthatvestinaccordancewiththeirtermsinconnectionwiththeclosingoftheTransactionswillvestandwillautomaticallyconvertintoaTaubmanOPunit(withsuchperformance-vestingTaubmanIncentiveUnitsvestingbasedonthegreateroftheaverageofactualperformanceachievement,asoftheclosing,ofthetwoperformancemetricsapplicabletosuchgrants,and target performance), which shall then be treated in the same manner (and have the right to the sameelection)asallotherTaubmanOPunitsheldbytheminoritypartners.
• AttheeffectivetimeoftheLLCConversion,theOptionDeferralAgreementwillbedeemedtobeamendedsothateachOptionDeferredunitwillrepresenttherighttoreceive,followingtheLLCConversion,oneJointVentureunit,andwillremainsubjecttoallothertermsandconditionsoftheOptionDeferralAgreement.
• The Company’s executive officers as of the effective time of the Transactions are expected to remain theexecutiveofficersoftheJointVenture.
• Executive officers (other than R. Taubman and W. Taubman) are entitled to severance benefits if theyexperience a qualifying termination of employment within a specified period following the closing of theTransactions, which benefits include cash payments in respect of lost base salary and bonus amounts andacceleratedvestingofcashsubstituteawards(describedbelow),amongotherbenefits.
• The Company’s directors and executive officers are entitled to continued indemnification and insurancecoverageunderthemergeragreement,theCompany’sarticlesofincorporationandSurvivingTCO’slimitedliabilitycompanyagreement.
These interests are discussed in more detail in the section entitled “Special Factors—Interests of Taubman’sDirectors and Executive Officers in the Transactions.”TheSpecialCommitteeandtheTaubmanBoardwereawareofthe different or additional interests described herein and considered those interests along with other matters inrecommending and/or approving, as applicable, the merger agreement and the Transactions, including the REITMerger.
Interests of Certain Other Shareholders in the Transactions (Pages 48, 51, 104)
In considering the recommendation of the Taubman Board, you should be aware that the Taubman familymembers,includingourCEO,R.Taubman,andCOO,W.Taubman,mayhaveinterestsintheTransactionsthatmaybedifferent from, or in addition to, those of the other Taubmanshareholders. TheTaubmanfamily members will haveequity interests in Surviving Taubman operating partnership after the consummation of the Transactions. Theseinterestsmayhavecreatedorwillcreatepotentialconflictsofinterest.TheSpecialCommitteeandtheTaubmanBoardwereawareoftheseinterestsduringtheirrespectivedeliberationsonthemeritsoftheTransactionsandinmakingtheirdecisions to recommend and approve, respectively, the merger agreement and the transactions contemplated by themergeragreement. Theseinterestsarediscussedunderthecaptions“Special Factors—The Taubman Filing Persons’Purposes and Reasons for the Transactions,” “Special Factors—Position of the Taubman Filing Persons as to theFairness of the REIT Merger,” “Special Factors—Interests of Taubman’s Directors and Executive Officers in theTransactions”and“The JV Agreement.”
Intent to Vote in Favor of the Mergers (Page 68)
Ourdirectorsandexecutiveofficershaveinformedusthat,asofthedateofthisproxystatement,theyintendtovoteallofthesharesofTaubmanvotingstockownedbythemthattheyhavethepowertovoteinfavoroftheMergerAgreementProposalandeachoftheotherproposalslistedinthisproxystatement.AsofMay22,2020,ourdirectorsandexecutiveofficersownedandhadthepowertovote,intheaggregate,1,820,203sharesofTaubmancommonstockand24,212,905sharesof TaubmanSeriesBpreferredstock, orcollectivelyapproximately29.7%oftheoutstandingsharesofTaubmanvotingstock,includingthe1,748,477sharesofTaubmancommonstockand24,190,938sharesofTaubmanSeriesBpreferredstockownedbyR.TaubmanandW.Taubmanandsubjecttothevotingagreement.Seealso“The Voting Agreement.”
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The Taubman Family Members’ Obligation to Simon to Vote in Favor of the Merger Agreement Proposal (Page68)
Under the voting agreement, the Taubman family members party thereto have covenanted to Simon to, amongotherthings,voteanysharesofTaubmanvotingstockownedbytheminfavoroftheMergerAgreementProposalandthe Adjournment Proposal at the special meeting. As of May 22, 2020, the Taubman family members party to thevoting agreement, in aggregate, have the power to vote approximately 30% of the outstanding shares of Taubmanvotingstock.Formoreinformationregardingthevotingagreement,see“The Voting Agreement.”
Alternative Acquisition Proposals (Pages 86, 87)
The “Go-Shop” Period
Underthemerger agreement, fromthedate of themerger agreement until 11:59p.m., NewYorkCitytime, onMarch 25, 2020 (the “No-Shop Period Start Date”), Taubman and the Taubman operating partnership and theirrespective directors, officers, employees, accountants, consultants, legal counsel, financial advisors and agents andother representatives (collectively, “Representatives”), hadtheright to, amongother things: (1) solicit, seek, initiate,proposeorinducethemaking,submissionorannouncementof,orencourage,facilitateorassist,anyinquiry,proposalor offer that constitutes, or that could constitute, an Acquisition Proposal (as defined in the section entitled “TheMerger Agreement—The ‘Go-Shop’ Period”) and (2) engage in, enter into, continue or otherwise participate in anydiscussionsornegotiationswithanypersonwithrespecttoanyAcquisitionProposalsandcooperatewithorassistorparticipateinorfacilitateanysuchinquiries,proposals,offers,discussionsornegotiationsoranyeffortorattempttomake any Acquisition Proposals, as further described under the section entitled “The Merger Agreement—The ‘Go-Shop’ Period.”
The “No-Shop” Period
Underthemergeragreement,exceptasitmayrelatetoanyExcludedParty(asdefinedinthesectionentitled“TheMerger Agreement—The ‘No-Shop’ Period”),fromtheNo-ShopPeriodStartDateuntiltheeffectivetimeoftheREITMerger,TaubmanandtheTaubmanoperatingpartnershiphaveagreednotto,andtoinstructeachoftheirrespectiveRepresentativesnotto,directlyorindirectly,amongotherthingsandsubjecttocertainexceptions:(1)solicit,initiateorproposethemakingorsubmissionof,orknowinglyencourageorfacilitatethemakingorsolicitationof,anyofferorproposalthatconstitutesorwouldreasonablybeexpectedtoleadtoanAcquisitionProposal;(2)furnishtoanypersonanynon-publicinformationrelatingtoTaubmanoritssubsidiarieswiththeintenttoinducethemakingorsubmissionof, ortoknowinglyencourage, facilitate orassist, anAcquisitionProposal; (3)participatein, knowinglyfacilitate orengageindiscussionsornegotiationswithanypersonwithrespecttoanAcquisitionProposal;(4)enterintoanyletterofintent,memorandumofunderstanding,agreementinprinciple,investmentagreement,mergeragreement,acquisitionagreement or other contract relating to an Acquisition Proposal or that would reasonably be expected to lead to anAcquisitionProposal,otherthananAcceptableConfidentialityAgreement(asdefinedunderthesectionentitled“TheMerger Agreement—The ‘No-Shop’ Period”);or(5)reimburseoragreetoreimbursetheexpensesofanyotherperson(otherthantheRepresentativesofTaubmanortheTaubmanoperatingpartnership)inconnectionwithanAcquisitionProposal or any inquiry, discussion, offer or request that would reasonably be expected to lead to an AcquisitionProposal.
Notwithstandingtheforegoingrestrictions,undercertainspecifiedcircumstances,fromtheNo-ShopPeriodStartDate and continuing until Taubman’s receipt of the Taubman shareholder approval, Taubman and the Taubmanoperating partnership and their respective Representatives may, among other things, after giving Parent reasonablyprompt notice of its intent to do so, participate or engage in discussions or negotiations with, furnish non-publicinformationrelatingtoTaubmanoranyofitssubsidiariesto,oraffordaccesstothebusiness,properties,assets,books,records or other non-public information, or to any personnel, of, Taubman or any of its subsidiaries pursuant to anAcceptableConfidentialityAgreementto,anypersonthathasmade,renewedordeliveredtoTaubmananAcquisitionProposal after the date of the merger agreement, and otherwise facilitate such Acquisition Proposal or assist suchperson(andits Representatives andfinancingsources) withsuchAcquisitionProposal (in eachcase, if requestedbysuchperson),iftheSpecialCommitteehasdeterminedingoodfaith(afterconsultationwithitsfinancialadvisorsandoutsidelegalcounsel) thatsuchAcquisitionProposaleitherconstitutesaSuperiorProposalorisreasonablylikelytoleadtoaSuperiorProposal.Formoreinformation,pleasesee“The Merger Agreement—The ‘No-Shop’ Period.”
The “Go-Shop” and “No-Shop” provisions are described in more detail in the sections entitled “The MergerAgreement—The ‘Go-Shop’ Period”and“The Merger Agreement—The ‘No-Shop’ Period.”
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Termination (Page 102)
TaubmanorSimonmayterminatethemergeragreementatanytimebeforetheeffectivetimeoftheREITMergerunderthefollowingcircumstances(andsubjecttocertainconditions):
• bymutualwrittenconsentofTaubmanandSimon;
• iftheTransactionshavenotbeencompletedonorbeforeFebruary9,2021(the“enddate”);
• ifanygovernmentalentityofcompetentauthorityissuesafinal,non-appealableorderorenactsanapplicablelaw that prohibits, makes illegal, enjoins, or otherwise restricts or prevents the consummation of theTransactions;or
• if the Taubman shareholder approval has not been obtained at a duly convened meeting of Taubmanshareholders.
In addition, Taubman may terminate the merger agreement under the following circumstances (and subject tocertainconditions):
• at any time before the effective time of the REIT Merger, if the Simon parties have breached anyrepresentation,warrantyorcovenantcontainedinthemergeragreement,orifanyrepresentationorwarrantyof such party has become untrue, in each case, such that, if such breach or failure to be true occurs orcontinues on the closing date, the conditions to closing relating to the accuracy of such party’srepresentationsandwarrantiesortheperformancebysuchpartyofitscovenantsunderthemergeragreementwouldnotbesatisfiedasoftheclosingdate(subject,asapplicable,toa45-daycureperiod);or
• priortoTaubman’sreceipt oftheTaubmanshareholderapproval, inordertoenterintoadefinitivewrittenagreement providing for a Superior Proposal in compliance with the “No-Shop” provisions of the mergeragreement.
In addition, Simon has certain rights to terminate the merger agreement under the following circumstances(andsubjecttocertainconditions):
• atanytimebeforetheeffectivetimeoftheREITMerger,ifTaubmanortheTaubmanoperatingpartnershiphas breached any representation, warranty or covenant contained in the merger agreement (other than the“No-Shop”provisions),orifanyrepresentationorwarrantyofsuchpartyhasbecomeuntrue,ineachcase,suchthat,ifsuchbreachorfailuretobetrueoccursorcontinuesontheclosingdate,theconditionstoclosingrelatingtotheaccuracyofsuchparty’srepresentationsandwarrantiesortheperformancebysuchpartyofitscovenantsunderthemergeragreementwouldnotbesatisfiedasoftheclosingdate(subject,asapplicable,toa45-daycureperiod);or
• prior to Taubman’s receipt of the Taubman shareholder approval, if a Taubman Board recommendationchange has occurred or if Taubman has willfully breached the “No-Shop” provisions of the mergeragreement.
In some cases, termination of the merger agreement may require the Taubman operating partnership to pay aterminationfeetoSimonasdescribedbelow.
Termination Fees (Page 94)
Uponaterminationofthemergeragreementundercertaincircumstances,theTaubmanoperatingpartnershipwillberequiredtopayaterminationfeetoSimonof$111,851,783,whichamountisequaltoapproximately3.0%ofthevalueofTaubman’sequitytobeacquiredbySimonintheTransactions.IfsuchterminationhadoccurredpriortotheNo-ShopPeriodStartDateundercertaincircumstances(andforalimitedperiodbeyondtheNo-ShopPeriodStartDateincertaincases),theTaubmanoperatingpartnershipwouldhavebeenberequiredtopayaterminationfeetoSimonof$46,604,909, which amount is equal to approximately 1.25% of the value of Taubman’s equity to be acquired bySimonintheTransactions.
Formoreinformation,see“The Merger Agreement—Termination Fees.”
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Specific Performance (Page 100)
Thepartieswillbeentitledtoaninjunctiontopreventabreachorthreatenedbreachofthemergeragreementandtoenforcespecificallytheperformanceofthetermsandprovisionsofthemergeragreement,includingtherightofaparty to cause the other parties to consummate the Transactions, in addition to any other remedy to which they areentitledatlaworinequity.
Financing (Page 72)
ItisexpectedthatthefundsnecessarytocompletetheTransactionswillcomefromtheworkingcapitalofSimonandtheexistingcreditfacilitiesoftheSimonoperatingpartnership.Simonhasnoalternativefinancingarrangements.
Material U.S. Federal Income Tax Consequences of the REIT Merger (Page 68)
The exchange of Taubman common stock for cash in the REIT Merger will be a taxable transaction for U.S.federalincometaxpurposes.AU.S.holder(asdefinedinthediscussionundertheheading“Special Factors—MaterialU.S. Federal Income Tax Consequences of the REIT Merger”) of Taubmancommonstockwhoreceives cashin theREITMergerisgenerallyexpectedtorecognizegainorlossinanamountequaltothedifference,ifany,between(1)theamountofcashreceivedand(2)suchU.S.holder’sadjustedtaxbasisintheTaubmancommonstockexchangedtherefor.Subjecttotheexceptionsdiscussedundertheheading“Special Factors—Material U.S. Federal Income TaxConsequences of the REIT Merger—Non-U.S. Holders,”non-U.S.holdersaregenerallynotexpectedtobesubjecttoU.S.federalincometaxonthegainorlossrecognizedoncashreceivedwithrespecttotheirTaubmancommonstockpursuanttotheREITMerger.
HoldersofsharesofTaubmancommonstockshouldread“Special Factors—Material U.S. Federal Income TaxConsequences of the REIT Merger”beginningonpage68foramoredetaileddiscussionoftheU.S.federalincometaxconsequencesofthereceiptthecommonstockmergerconsiderationinexchangeforTaubmancommonstockpursuantto the REITMerger. Suchholders should also consult their tax advisors for a complete analysis of the effect of theREITMergerontheirU.S.federal,state,localand/orforeigntaxesinlightoftheirparticularcircumstances.
The Special Meeting (Page 75)
The special meeting of Taubman shareholders will be held on June 25, 2020, starting at 10:00 A.M., EasternTime,atTaubman’sheadquarters,locatedat200EastLongLakeRoad,Suite300,BloomfieldHills,Michigan48304.Atthespecialmeeting,holdersofTaubmanvotingstockwillbeaskedtoconsiderandvoteupon:
• TheMergerAgreementProposal;
• TheAdvisoryCompensationProposal;and
• TheAdjournmentProposal.
As part of our precautions regarding the coronavirus or COVID-19, the special meeting maybe held solely bymeansofremotecommunicationratherthaninperson.Ifwetakethisstep,wewillannouncethedecisiontodosoinadvance and provide details on how to participate in a press release issued by the Company and on our website,www.taubman.com. We will also file the press release with the SEC as definitive additional solicitation material.We encourage you to vote by proxy—over the Internet, by telephone or by mail—well in advance of the specialmeeting, to ensure your shares are represented whether or not you decide to attend.
Record Date and Quorum (Page 75)
The record holders of Taubman voting stock at the close of business on June 5, 2020 (the “record date”) areentitledtoreceivenoticeofthespecialmeetingandtovotethesharesofTaubmanvotingstockthattheyheldontherecord date at the special meeting. Each outstanding share of Taubman voting stock is entitled to one vote on eachmatter to be voted upon at the special meeting. As of the close of business on May22, 2020, 87,687,538 shares ofTaubmanvotingstockwereoutstanding,consistingof61,608,379sharesofTaubmancommonstockand26,079,159sharesofTaubmanSeriesBpreferredstock.
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Thepresenceatthespecialmeeting,inpersonorbyproxy,oftheholdersofamajorityofthesharesofTaubmanvotingstockoutstandingontherecorddatewillconstituteaquorumforallpurposes,permittingTaubmantoconductitsbusinessatthespecialmeeting.
Formoreinformation,see“The Special Meeting—Record Date and Quorum.”
Required Votes (Pages 79, 122, 123)
The Merger Agreement Proposal
TheMergerAgreementProposalrequirestheapprovalof(i)theholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasasingleclass);(ii)theholdersofatleastamajorityoftheoutstandingsharesofTaubmanSeriesBpreferredstockentitledtovotethereon;and(iii)theholdersofat least a majority of the outstanding shares of Taubman voting stock entitled to vote thereon (voting together as asingle class), excluding the outstanding shares of Taubman voting stock owned of record or beneficially by theTaubmanfamilymembers.If you fail to vote on the Merger Agreement Proposal, the effect will be the same as avote against the Merger Agreement Proposal. The Taubman family members have covenanted to Simon in thevoting agreement to vote all of the shares of Taubman voting stock that they hold in favor of the approval of theMerger Agreement Proposal.
The Advisory Compensation Proposal
TheAdvisoryCompensationProposalrequirestheapprovaloftwo-thirdsoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon,votingtogetherasasingleclass.
The Adjournment Proposal
TheAdjournmentProposalwillbeapprovedifthesharesofTaubmanvotingstockcastinfavorofsuchproposalexceedthesharesofTaubmanvotingstockcastagainstsuchproposal.
The Voting Agreement (Page 101)
In connection with the execution of the merger agreement, on February 9, 2020, Simon and certain TaubmanfamilymembersenteredintothevotingagreementwherebyeachofthoseTaubmanfamilymembers,hascovenantedtoSimon to, among other things, vote any of its shares of Taubman voting stock in favor of the Merger AgreementProposal and the Adjournment Proposal at the special meeting. As of May22, 2020, the Taubmanfamily memberspartytothevotingagreement, inaggregate, havethepowertovoteapproximately30%oftheoutstandingsharesofTaubmanvotingstock.Formoreinformationaboutthevotingagreement,see “The Voting Agreement.”
The JV Agreement (Page 104)
Under the merger agreement, immediately following the LLC Conversion, Surviving TCO and the TaubmanfamilymemberswillenterintotheJVagreementwithrespecttotheJointVenturethatwilldefinetherights,dutiesandresponsibilitiesofSurvivingTCOandtheTaubmanfamilymembersasmembersoftheJointVenture.AtthetimeoftheLLCConversion,SurvivingTCOwillhold80%ofthecommonunitsoftheJointVentureandtheTaubmanfamilymembers will hold the remaining 20%(assuming, for purposes of this calculation, that Taubman OP units issuableundertheOptionDeferralAgreementareoutstandinginterestsoftheJointVenture).FormoreinformationontheJVagreement,see“The JV Agreement.”
Litigation Related to the Transactions (Page 107)
OnMay18,2020andMay21,2020,twolawsuitswerefiledbypurportedshareholdersofTaubmaninconnectionwiththeTransactions,styledas(i)Hannah Masonv.Taubman Centers, Inc., et al.,No.2:20-cv-11226-SDD-MJH,intheUnitedStatesDistrictCourtfortheEasternDistrictofMichigan(the“MasonLawsuit”),and(ii)Joseph Post, et al.v.Taubman Centers, Inc., et al.,No. 1:20-cv-00685-UNA, in the United States District Court for the District ofDelaware (the “Post Lawsuit”). The Mason Lawsuit and the Post Lawsuit assert claims against Taubman and itsdirectors;thePostLawsuitalsonameseachoftheSimonPartiesasdefendants.BothlawsuitsallegethatTaubman’spreliminary proxy statement, filed on April 28, 2020, was deficient, and seek injunctive and other relief. For moreinformationabouttheMasonLawsuitandthePostLawsuit,see“Litigation Related to the Transactions.”
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QUESTIONS AND ANSWERS
Thefollowingquestionsandanswersaddressbrieflysomequestionsyoumayhaveregardingthespecialmeeting,themergeragreementandtheTransactions,includingtheMergers.ThesequestionsandanswersmaynotaddressallquestionsthatmaybeimportanttoyouasashareholderoftheCompany.Pleaserefertothemoredetailedinformationcontained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to orincorporatedbyreferenceinthisproxystatement.
Q: When and where is the special meeting?
A: 10:00A.M.,EasternTime,onJune25,2020,at Taubman’sheadquarters, locatedat200EastLongLakeRoad,Suite300,BloomfieldHills,Michigan48304.AspartofourprecautionsregardingthecoronavirusorCOVID-19,thespecialmeetingmaybeheldsolelybymeansofremotecommunicationratherthaninperson.Ifwetakethisstep,wewillannouncethedecisiontodosoinadvanceandprovidedetailsonhowtoparticipateinapressreleaseissuedbytheCompanyandonourwebsite,www.taubman.com.WewillalsofilethepressreleasewiththeSECasdefinitive additional solicitation material. We encourage you to vote by proxy—over the Internet, bytelephone or by mail—well in advance of the special meeting, to ensure your shares are representedwhether or not you decide to attend.
Q: Who can attend and vote at the special meeting?
A: All holders of Taubman common stock and Taubman Series B preferred stock as of the close of business onJune 5, 2020, the record date for voting at the special meeting, including shareholders of record and beneficialowners of Taubman common stock and Taubman Series B preferred stock registered in the “street name” of abank,brokerorothernominee,areinvitedtoattendthespecialmeeting.Ifyouareashareholderofrecord,pleasebepreparedtoprovideproperidentification,suchasadriver’slicense.Ifyouholdyoursharesin“streetname,”youwillneedtoprovideproofofownership,suchasarecentaccountstatementorletterfromyourbank,brokerorothernominee,alongwithproperidentification.
Q: What is a quorum?
A: Thepresenceatthespecialmeeting,inpersonor,intheeventthatthespecialmeetingisheldbymeansofremotecommunication, virtually, or by proxy, of the holders of a majority of the shares of Taubman voting stockoutstandingontherecorddatewillconstituteaquorumforallpurposes.AsofthecloseofbusinessofMay22,2020,87,687,538sharesofTaubmanvotingstockwereoutstanding,consistingof61,608,379sharesofTaubmancommon stock and 26,079,159 shares of Taubman Series B preferred stock. If you submit a proxy but fail toprovidevotinginstructionsorabstainonanyoftheproposalslistedontheproxycard,yourshareswillbecountedforpurposeofdeterminingwhetheraquorumispresentatthespecialmeeting.Ifyoursharesareheldin“streetname”byyourbank,brokerorothernomineeandyoudonottellthebank,brokerorothernomineehowtovoteyour shares, these shares will not be counted for purposes of determining whether a quorumis present for thetransactionofbusinessatthespecialmeeting.
Q: How many votes do I have?
A: Atthespecialmeeting,holdersofTaubmancommonstockandTaubmanSeriesBpreferredstockwilleachhaveonevotepersharethatourrecordsshowareownedbysuchholderasoftherecorddate.
Q: What are the proposed Transactions?
A: Pursuant to the merger agreement, subject to the satisfaction or waiver of certain conditions, in the PartnershipMerger,MergerSub2willbemergedwithandintotheTaubmanoperatingpartnershipand,intheREITMerger,the Company will be merged with and into Merger Sub 1. Upon completion of the Partnership Merger, theTaubman operating partnership will survive, as the Surviving Taubman operating partnership, and the separateexistence of Merger Sub 2 will cease. Upon completion of the REIT Merger, Merger Sub 1 will survive, asSurviving TCO, and the separate existence of the Company will cease. Immediately following the PartnershipMerger, in the LLCConversion, the Surviving Taubman operating partnership will be converted into the JointVenture,aDelawarelimitedliabilitycompany.
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IftheREITMergeriscompleted,holdersofTaubmancommonstockwillbeentitledtoreceivethecommonstockmergerconsiderationof$52.50incashforeachshareofTaubmancommonstockheldandholdersofTaubmanSeriesBpreferredstockwillbeentitledtoreceive,foreachshareofTaubmanSeriesBpreferredstockheld,theSeries B preferred stock merger consideration of an amount in cash equal to the common stock mergerconsideration,dividedby14,000.ImmediatelypriortotheeffectivetimeoftheREITMerger,TaubmanwillissuearedemptionnoticeandcausefundstobesetasidetopaytheredemptionpriceforeachshareofTaubmanSeriesJPreferredStockandeachshareofTaubmanSeriesKPreferredStock,attheirrespectiveliquidationpreferenceof$25.00plusallaccumulatedandunpaiddividendsto,butnotincluding,theredemptiondateofsuchshare.IfthePartnershipMergeriscompleted,holdersofTaubmanOPunitswhoarenotTaubmanfamilymemberswillbeentitled to receive, at their election, the commonstockmerger consideration or 0.3814SimonOPunits, certainTaubmanOPunitsheldbytheTaubmanfamilymemberswillremainoutstandingasunitsofpartnershipinterestin the surviving Taubman operating partnership and all other Taubman OP units held by the Taubman familymembers will be converted into the right to receive the common stock merger consideration. Following theMergersandtheLLCConversion,theSimonoperatingpartnershipwill own100%oftheoutstandingequityofSurvivingTCO,SurvivingTCOwillown80%ofthelimitedliabilitycompanyinterestsoftheJointVentureandtheTaubmanfamilymemberswillowntheremaining20%ofthelimitedliabilitycompanyinterestsoftheJointVenture.
ForadiscussionofthemergeragreementandtheTransactions,see“The Merger Agreement.”
Q: What will holders of Taubman common stock receive in the REIT Merger?
A: If the REITMerger is completed, holders of shares of Taubmancommonstock (other than shares of TaubmancommonstockownedbytheCompanyastreasurystock,byanydirectorindirectwhollyownedsubsidiaryoftheCompany,byanyoftheSimonpartiesorbyanydirectorindirectwhollyownedsubsidiaryoftheSimonparties)will be entitled to receive $52.50 in cash for each share of Taubman common stock issued and outstandingimmediatelypriortotheeffectivetimeoftheREITMerger,withoutinterestandlessapplicablewithholdingtaxes.
Q: What will holders of Taubman Series B preferred stock receive in the REIT Merger?
A: IftheREITMergeriscompleted,holdersofTaubmanSeriesBpreferredstockwillbeentitledtoreceive,foreachshare of Taubman Series B preferred stock held, an amount in cash equal to the common stock mergerconsideration,dividedby14,000.
Q: What will holders of Taubman Equity Awards granted under the Taubman Stock Plans receive in theREIT Merger?
A: UpontheeffectivetimeoftheREITMerger:(1)eachoutstandingTCORSUandeachoutstandingTCOPSUthatvestsinaccordancewithitstermsinconnectionwiththeclosingoftheREITMergerwillautomaticallyconvertinto the right to receive the common stock merger consideration (with such TCO PSUs vesting based on thegreater of the average of actual performance achievement, as of the closing, of the two performance metricsapplicable to such grants, and target performance); (2) each outstanding TCO RSU and TCO PSU that is noteligibletovestinaccordancewithitstermsinconnectionwiththeclosingoftheREITMergerwillbeconvertedintoacashsubstituteawardtobepaid(A)withrespecttoanysuchawardgrantedpriorto2020,inaccordancewiththesameservice-vestingschedule that appliedtotheoriginal TCORSUorTCOPSUawardand(B)withrespecttoanysuchawardgrantedin2020,inaccordancewiththesamevestingschedule(includingperformance-vestingconditions)thatappliedtotheoriginalTCORSUorTCOPSUaward;(3)eachoutstandingtime-vestingandperformance-vestingTaubmanIncentiveUnitwillvestandbeconvertedintoaTaubmanOPunit(withsuchTaubmanIncentiveUnitsvestingbasedonthegreateroftheaverageofactualperformanceachievement,asoftheclosing, ofthetwoperformancemetrics applicabletosuchgrants, andtarget performance), whichshall thenbetreatedinthesamemanner(andhavingtherighttothesameelection)asallotherTaubmanOPunitsheldbytheminoritypartners;(4)eachTCODERgrantedintandemwithanyTCORSUorTCOPSUwillbetreatedinthesame manner as the outstanding TCO RSU or TCO PSU to which such TCO DER relates; and (5) eachoutstandingTCODSUwillbeconvertedintotherighttoreceivethecommonstockmergerconsideration.Finally,attheeffectivetimeoftheLLCConversion,theOptionDeferralAgreementwillbedeemedtobeamendedsothateachOptionDeferredunit will represent theright toreceive, followingtheLLCConversion, oneJoint VentureunitandwillremainsubjecttoallothertermsandconditionsoftheOptionDeferralAgreement.
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Q: How does the common stock merger consideration compare to the market price of the Taubman commonstock prior to the announcement of the REIT Merger?
A: The $52.50 per share to be paid in respect of each share of Taubman common stock represents: an impliedpremiumof98.7%totheclosingpriceforTaubmancommonstockof$26.42onJanuary31,2020,thelasttradingday prior to market rumors emerging that Simon was engaging in discussions to acquire Taubman, and a 51%premiumtotheclosingpricefortheTaubmancommonstockof$34.67onFebruary7,2020(thelasttradingdaybeforetheannouncementofthemergeragreementonFebruary10,2020).
Q: What matters will be voted on at the special meeting?
A: Youwillbeaskedtovoteonthefollowingproposals:
• theMergerAgreementProposal;
• theAdvisoryCompensationProposal;and
• theAdjournmentProposal.
For more information, see “The Merger Agreement Proposal,” “The Advisory Compensation Proposal,” and“Adjournment Proposal.”
Q: How does the Taubman Board recommend that I vote?
A: Based in part on the unanimous recommendation of the Special Committee, the Taubman Board unanimouslyrecommendsthatourshareholdersvote:
• “FOR”theMergerAgreementProposal;
• “FOR”theAdvisoryCompensationProposal;and
• “FOR”theAdjournmentProposal.
Youshouldread“Special Factors—Reasons for the Transactions and Recommendation of the Special Committeeand the Taubman Board.” for a discussion of the factors that the Special Committee and the Taubman Boardconsideredindecidingtorecommendand/orapprove,asapplicable,themergeragreementandtheTransactions.
Q: What vote is required to approve the Merger Agreement Proposal?
A: TheMergerAgreementProposalrequirestheapprovalof(1)theholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasasingleclass), (2)theholdersofatleastamajorityofthesharesoftheTaubmanSeriesBpreferredstockentitledtovotethereon,and(3)theholdersofatleastamajorityoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasasingleclass),butexcludingtheoutstandingsharesofTaubmanvotingstockownedofrecordorbeneficiallybytheTaubmanfamilymembers.If you fail to vote on the Merger Agreement Proposal, the effect will be thesame as a vote against the Merger Agreement Proposal.
Q: If my shares are held by my bank, broker or other nominee on my behalf in “street name,” will my bank,broker or other nominee vote my shares for me?
A: No.InaccordancewiththerulesofNYSE,banks,brokersandothernomineeswhoholdTaubmanvotingstockin“street name” for their customers do not have discretionary authority to vote those shares with respect to theMergerAgreementProposal,theAdvisoryCompensationProposal,ortheAdjournmentProposal.Accordingly,ifbanks,brokersorothernomineesdonotreceivespecificvotinginstructionsfromthebeneficialownersofthoseshares, they are not permitted to vote those shares with respect to any of the proposals to be presented at thespecial meeting. As a result, if you hold your Taubman voting stock in “street name” and you do not providevotinginstructionsforanyoftheproposals, yourTaubmanvotingstockwill (1)notbecountedforpurposesofdeterminingwhetheraquorumispresentatthespecialmeeting,(2)havethesameeffectasavote“AGAINST”theMergerAgreementProposalandAdvisoryCompensationProposaland(3)assumingaquorumispresent,havenoeffectontheAdjournmentProposal.
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Q: May I vote in person?
A: Yes.Shareholdersofrecordwillbeabletoattendthespecialmeetinginpersonandcompleteawrittenballotor,in the event that the special meeting is held by means of remote communication, attend the special meetingvirtually and complete a virtual ballot, whether or not you sign and return your proxy card. If you are not ashareholder of record, but instead your shares are held by a bank, broker or other nominee on your behalf in“streetname,”youmustprovideaproxyexecutedinyourfavorfromyourbank,brokerorothernomineeinorderto be able to vote in person at the special meeting or virtually in the event that the special meeting is held bymeansofremotecommunication. If youholdyoursharesthroughTheTaubmanCompanyandRelatedEntitiesEmployeeRetirementSavingsPlan(the401(k)plan),onlyVanguardFiduciaryTrustCompany,thetrusteefortheplan, mayvoteonyourbehalf. Accordingly, 401(k)planparticipants maynot votetheir sharesinpersonat thespecialmeetingorvirtuallyintheeventthatthespecialmeetingisheldbymeansofremotecommunication.Weencourage you to vote by proxy—over the Internet, by telephone or by mail—well in advance of the specialmeeting, to ensure your shares are represented whether or not you decide to attend.
Q: Will the Taubman family members vote their voting shares in favor of the merger agreement at the specialmeeting?
A: Yes.TheTaubmanfamilymembersandSimonenteredintoavotingagreementinconnectionwiththeexecutionofthemergeragreement.Underthevotingagreement,subjecttocertainexceptions,theTaubmanfamilymembershavecovenantedtoSimonto, amongother things, voteanysharesof Taubmanvotingstockownedbytheminfavor of the Merger Agreement Proposal at the special meeting. As of May 22, 2020, the Taubman familymembers,inaggregate,havethepowertovoteapproximately30%oftheoutstandingsharesofTaubmanvotingstock. For a discussion of the Taubman family members’ obligation to Simon to vote in favor of the MergerAgreementProposal,see“Special Factors—The Taubman Family Members’ Obligation to Simon to Vote in Favorof the Merger Agreement Proposal.”
Q: What effects will the REIT Merger have on shares of Taubman common stock and Taubman Series Bpreferred stock?
A: ThesharesofTaubmancommonstockarecurrentlyregisteredundertheExchangeActandarelistedonNYSEunder the symbol “TCO.” The shares of the Taubman Series B preferred stock are not registered under theExchangeActandarenotlistedonanationalsecuritiesexchange.AsaresultoftheREITMerger,theCompanywillbecomeprivatelyheldandtherewillbenopublicmarketforsharesofTaubmancommonstockorsharesofTaubmanSeriesBpreferredstock.AftertheREITMerger,thesharesofTaubmancommonstockwillceasetobelisted on NYSE. In addition, registration of the Taubman common stock under the Exchange Act will beterminated.
Formoreinformationsee“Special Factors—Certain Effects of the Transactions.”
Q: Who will own the Company and the Taubman operating partnership after the Transactions?
A: Upon completion of the REIT Merger, Merger Sub 1, a wholly owned subsidiary of the Simon operatingpartnership, will survive, as Surviving TCO, and the separate existence of the Company will cease. UponcompletionofthePartnershipMerger,theTaubmanoperatingpartnershipwillsurvive,astheSurvivingTaubmanoperating partnership, and the separate existence of Merger Sub 2 will cease. Immediately following thePartnershipMerger,theSurvivingTaubmanoperatingpartnershipwillbeconvertedintheLLCConversionintothe Joint Venture, a Delaware limited liability company. Following the Mergers and the LLC Conversion, theSimonoperatingpartnershipwillown100%oftheoutstandingequityofSurvivingTCO,SurvivingTCOwillown80%ofthelimitedliabilitycompanyinterestsoftheJointVentureandtheTaubmanfamilymemberswillowntheremaining20%ofthelimitedliabilitycompanyinterestsoftheJointVenture.
Q: What will happen if the Mergers are not consummated?
A: IftheMergersarenotconsummatedforanyreason,theCompany’sshareholderswillnotreceiveanypaymentfortheir shares in connection with the REIT Merger. Instead, the Company will remain a public company. TheTaubman common stock will continue to be listed and traded on NYSE. Upon a termination of the mergeragreement, under certain circumstances, the Taubmanoperating partnership would have been required to pay aterminationfeetoSimonof$46,604,909,whichamountisequaltoapproximately1.25%ofthevalueof
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Taubman’sequitytobeacquiredbySimonintheTransactions,ifsuchterminationhadoccurredduringthego-shopperiod(andforalimitedperiodbeyondthego-shopperiodincertaincases)andwouldberequiredtopayatermination fee to Simon of $111,851,783, which amount is equal to approximately 3.0% of the value ofTaubman’sequitytobeacquiredbySimonintheTransactionsifsuchterminationoccursaftertheconclusionofthego-shopperiod.Thego-shopperiodexpiredat11:59p.m.,NewYorkCitytimeonMarch25,2020,andthusthepossibility of the $46,604,909termination fee beingpaid pursuant to the merger agreement has ceased. Formoreinformationonthefeesthat maybepayableuponterminationofthemergeragreement, see“The MergerAgreement—Termination Fees.”
Q: What vote is required to approve the Advisory Compensation Proposal?
A: Approval,onanon-binding,advisorybasis,oftheAdvisoryCompensationProposalrequirestheaffirmativevoteoftwo-thirdsofthesharesofTaubmanvotingstockentitledtovotethereon,votingasasingleclass.
Q: What will happen if shareholders do not approve the Advisory Compensation Proposal?
A: TheapprovaloftheAdvisoryCompensationProposalisnotaconditiontothecompletionoftheMergersortheother Transactions. SEC rules require the Company to seek approval on a non-binding, advisory basis ofcompensationpayabletotheCompany’snamedexecutiveofficersinconnectionwiththeTransactions.ThevoteonthisproposalisanadvisoryvoteandwillnotbebindingontheCompanyorSimon.IftheMergerAgreementProposal is approved by Taubman shareholders and the Transactions are completed, the Transactions-relatedcompensationmaybepaidtotheCompany’snamedexecutiveofficers(totheextentsuchcompensationbecomespayablepursuanttoitsterms),evenifshareholdersfailtoapprovetheAdvisoryCompensationProposal.
Q: What do I need to do now?
A: We urge you to read this proxy statement carefully, including its annexes and the documents referred to asincorporated byreference in this proxystatement, as well as the related Schedule 13E-3, includingthe exhibitsthereto, filedwiththeSEC,andtoconsider howtheMergers andtheTransactionsaffect you. See“Where YouCan Find Additional Information.”
Ifyouareashareholderofrecord,youcanensurethatyoursharesarevotedatthespecialmeetingbysubmittingyourproxyvia:
• theInternet,attheaddressprovidedonyourproxycard;
• telephone,usingthetoll-freenumberlistedonyourproxycard;or
• mail, if you do not have access to the Internet or a touch-tone telephone. Please complete, sign, date andreturnyourproxycardintheenvelopeprovided.
Ifyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“streetname,”youshouldfollowthedirections provided by your bank, broker or other nominee regarding how to instruct it to vote your shares.Withoutthoseinstructions, yourshareswill notbevoted,whichwill havethesameeffect asvotingagainst theMergerAgreementProposal.
Q: Should I send in my stock certificates or other evidence of ownership now?
A: No.AftertheMergersarecompleted,youwillreceivealetteroftransmittalwithdetailedwritteninstructionsforexchanging your shares of Taubman voting stock for the common stock merger consideration or the Series Bpreferredstockmergerconsideration,asapplicable. IfyoursharesofTaubmanvotingstockareheldbyabank,brokerorothernomineeonyourbehalfin“streetname,”youmayreceiveinstructionsfromyourbank,brokerorothernomineeastowhataction,ifany,youneedtotaketoeffectthesurrenderofyour“streetname”sharesinexchange for the common stock merger consideration or the Series B preferred stock merger consideration, asapplicable.Donotsendinyourcertificatesnow.
Q: Can I revoke my proxy and voting instructions?
A: Yes.Yourproxyisrevocable.Ifyouareashareholderofrecord,youmayrevokeyourproxyatanytimebeforethevoteistakenatthespecialmeetingbygivingwrittennoticeofrevocationtotheSecretaryoftheCompany,
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ChrisHeaphy,200EastLongLakeRoad,Suite300,BloomfieldHills,Michigan48304-2324,bygivingwrittennoticeofrevocationinpersonatthespecialmeeting,bysubmittinganewproxybyInternet,usingthetelephoneorbycompleting,signing,datingandreturninganewproxycardbymailtotheCompany(attheaddresssetforthabove),orbyattendingthespecialmeetingandvotinginpersonor,intheeventthatthespecialmeetingisheldbymeansofremotecommunication,virtually(butsimplyattendingthespecialmeetingwillnotcauseyourproxytoberevoked).
Pleasenotethatifyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“streetname”andyouhaveinstructedabank,brokerorothernomineetovoteyourshares,theabove-describedoptionsforrevokingyour voting instructions do not apply, and instead you must follow the instructions received from your bank,brokerorothernomineetorevokeyourvotinginstructions.
Q: What happens if I sell my shares of Taubman common stock or Taubman Series B preferred stock beforecompletion of the REIT Merger?
A: If you transfer your shares of Taubman common stock or Taubman Series B preferred stock, you will havetransferredyourrighttoreceivethecommonstockmergerconsiderationortheSeriesBpreferredstockmergerconsideration,asapplicable,intheREITMerger.InordertoreceivethecommonstockmergerconsiderationortheSeriesBpreferredstockmergerconsideration,asapplicable,youmustholdyoursharesofTaubmancommonstockorTaubmanSeriesBpreferredstock,asapplicable,throughcompletionoftheREITMerger.
TherecorddateforshareholdersentitledtovoteatthespecialmeetingisearlierthanthedateonwhichtheREITMerger will beconsummated. So, if youtransfer your shares of Taubmancommonstockor TaubmanSeries Bpreferredstockaftertherecorddatebutbeforethespecialmeeting,youwillhavetransferredyourrighttoreceivethecommonstockmergerconsiderationortheSeriesBpreferredstockmergerconsideration,asapplicable, butretainedtherighttovoteatthespecialmeeting.
Q: Will I have to pay U.S. federal income taxes on the common stock merger consideration I receive in theREIT Merger?
A: The exchange of Taubman common stock for cash in the REIT Merger will be a taxable transaction forU.S.federalincometaxpurposes.AU.S.holder(asdefinedinthediscussionundertheheading“Special Factors—Material U.S. Federal Income Tax Consequences of the REIT Merger”) of Taubman common stock whoreceives cash in the REIT Merger is generally expected to recognize gain or loss in an amount equal to thedifference, if any, between(1) theamountof cashreceivedand(2) suchU.S.holder’s adjustedtaxbasis intheTaubman common stock exchanged therefor. Subject to the exceptions discussed under the heading “SpecialFactors—Material U.S. Federal Income Tax Consequences of the REIT Merger—Non-U.S. Holders,”non-U.S.holdersaregenerallynotexpectedtobesubjecttoU.S.federalincometaxonthegainorlossrecognizedoncashreceivedwithrespecttotheirTaubmancommonstockpursuanttotheREITMerger.
HoldersofsharesofTaubmancommonstockshouldread“Special Factors—Material U.S. Federal Income TaxConsequences of the REIT Merger” beginning on page 68for a more detailed discussion of the U.S. federalincome tax consequences of the receipt the common stock merger consideration in exchange for Taubmancommonstockpursuant totheREITMerger. Suchholders shouldalsoconsult their taxadvisorsforacompleteanalysisoftheeffect oftheREITMergerontheirU.S.federal, state, localand/orforeigntaxesinlightoftheirparticularcircumstances.
Q: If I do not favor the approval and adoption of the merger agreement, what are my appraisal rights underMichigan law?
A: IfyouareaholderofTaubmancommonstockorTaubmanSeriesBpreferredstockasoftherecorddate,youcanvoteagainsttheMergerAgreementProposal.Youdonothave,however,anydissenters’orappraisalrightswithrespect to the REIT Merger or the other Transactions, including any right to receive notice with respect todissenters’rightsunderSection703aoftheMBCA,anyrightorremedyunderSections762etseq.oftheMBCA,anydissenters’ orappraisal rights undertheDRULPAoranydissenters’ orappraisal rights undertheTaubmanOPagreement.
Q: Who will solicit and pay the cost of soliciting proxies?
A: TheCompanyhasretainedInnisfreeM&AIncorporated,aproxysolicitationfirm,toassistitinthesolicitationofproxiesforthespecialmeetingandwillpayInnisfreeM&AIncorporatedafeenottoexceed$35,000,plus
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reimbursement of out-of-pocket expenses. In addition, the Company has agreed to indemnify Innisfree M&AIncorporatedagainstcertainliabilitiesandexpensesthatrelatetoorariseoutofitssolicitationofproxies(subjecttocertainexceptions).Brokeragehouses,nominees,fiduciariesandothercustodianswillberequestedtoforwardsoliciting materials to beneficial owners and will be reimbursed for their reasonable out-of-pocket expensesincurredinsendingproxymaterialstobeneficialowners.
Q: What is householding?
A: Wehaveelectedtosendasinglecopyofthisproxystatementtoanyhouseholdatwhichtwoormoreshareholdersresideunlessoneoftheshareholdersatsuchaddressprovidesnoticethatheorshedesirestoreceiveindividualcopiesorhaselectede-maildeliveryofproxymaterials.Aseparateproxycardisincludedintheproxymaterialsforeachoftheseshareholders.This“householding”practicereducesourprintingandpostagecosts.Ifyouwouldlike to request additional copies of this proxy statement, you can request householding by contacting InnisfreeM&AIncorporatedasdescribedunder“Whocanhelpanswermyotherquestions?”below.
Q: Who can help answer my other questions?
A: Ifyouhavemorequestionsaboutthespecialmeeting,theMergersortheotherTransactions,orrequireassistanceinsubmittingyourproxyorvotingyoursharesorneedadditionalcopiesoftheproxystatementortheenclosedproxy card(s), please contact Innisfree M&AIncorporated, which is acting as the proxy solicitation agent andinformationagentinconnectionwiththeTransactions:
Innisfree M&A Incorporated 501 Madison Avenue, 20th Floor
New York, NY 10022 Shareholders may call toll-free at (877) 456-3427
Banks and brokers may call collect at (212) 750-5833
Ifyoursharesareheldbyyourbank,brokerorothernomineeonyourbehalfin“streetname,”youcanalsocallyourbank,brokerorothernomineeforadditionalinformation.
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SPECIAL FACTORS
Thefollowing,togetherwiththesummaryofthemergeragreementsetforthunder“The Merger Agreement,”isadescription of the material aspects of the REIT Merger. While we believe that the following description covers thematerial aspectsoftheREITMerger,thedescriptionmaynotcontainalloftheinformationthatisimportanttoyou.We encourage you to read carefully this entire document, including the merger agreement attached to this proxystatementasAnnexA,foramorecompleteunderstandingoftheREITMerger.Thefollowingdescriptionissubjectto,andisqualifiedinitsentiretybyreferenceto,themergeragreement.Youmayobtainadditionalinformationwithoutchargeasdescribedinthesection“Where You Can Find Additional Information.”
Background of the Transactions
TheTaubmanBoard,withtheassistanceofTaubman’smanagementandTaubman’sadvisors,regularlyevaluatesTaubman’sstrategicdirection,potentialoperationalchangesandongoingbusinessplansandopportunities,includinginlightofTaubman’sperformance,competitivedynamics,macroeconomicdevelopmentsandindustrytrends,allwithaviewtowardmaximizingshareholdervalue.Aspartoftheseevaluations,theTaubmanBoardhasconsideredavarietyofstrategicalternativesforTaubman,includingthecontinuationofTaubmanasanindependentpubliccompany,thesaleofTaubman,acombinationofTaubmanwithothercompanies,jointventuresandpartnerships,thesaleofselectedassets,aspin-offofasubsetofitsportfolio,privateplacementsandvariousotheralternativestoenhanceshareholdervalue. These evaluations also included an assessment of Taubman’s shareholder base, the rights and ownershippercentageofmembersoftheTaubmanfamily,Taubman’ssharepriceperformanceandthechallengesfacingthemallindustry,includingasaresultofthegrowthofonlineretail,continuedcompetitionfromshoppingthroughalternativemeans and channels, weakening department store sales and mall tenant bankruptcies (including the bankruptcy ofForever21inSeptember2019).
AmongthebroadstrategicinitiativesconsideredbytheTaubmanBoardin2019wasapotentialjointventurewithrespect to certain assets of Taubman and Simon, which the Taubman Board believed could help reduce leverage,strengthen Taubman’s balance sheet and reduce Taubman’s overall risk in a challenging retail environment.Accordingly,atthedirectionoftheTaubmanBoard,onOctober24,2019,RobertS.Taubman(“Mr.R.Taubman”),Chairman of the Taubman Board and President and Chief Executive Officer of Taubman, met for dinner withDavid Simon, Chairman of the Simon Board and President and Chief Executive Officer of Simon, to explore thepossibilityofsuchajointventure. Duringthismeeting, Mr.SimonindicatedthathewouldbeinterestedinassistingTaubmangoprivate.Mr.R.TaubmanrespondedthathewouldneedtoconsidersuchatransactionwiththeTaubmanBoard. After the meeting, Mr. R. Taubmanconsulted with Mr. MyronE. Ullman, III, Taubman’s independent LeadDirector, overthecourseofseveral days,regardingapotential acquisitionofTaubmanandthenumerousissuesthatwould need to be considered by the Taubman Board, as well as by members of the Taubman family, in any suchtransaction, if the Taubman Board were to authorize exploring such a transaction. Following discussions betweenMr.R.TaubmanandMr.Ullmanoverthecourseofseveral days, Mr.UllmanadvisedMr.R.Taubmanthat hewassupportiveofexploringsuchapotentialtransactionwithSimon,andthatheunderstoodthevariouscomplicatedissuesforallpartiesthatwouldneedtobeevaluatedandnegotiated,includingthatboththemembersoftheTaubmanfamilyand the unaffiliated shareholders of Taubmanwould have to approve the transaction, and recommended that Mr. R.Taubman speak with Mr. Simon again to determine Mr. Simon’s willingness to proceed in the framework of atransactionthatwouldaddressthesemanycomplicatedissuesinasatisfactorymannerbeforebringingthispossibilitytothefullTaubmanBoardforconsideration.
On October 28, 2019, Mr. R. Taubman and Mr. Simon spoke by telephone. Mr. R. Taubman noted variouselementsofapotentialtransactionthatheexpectedwouldberequiredforhimandmembersoftheTaubmanfamilytosupportsuchatransaction,aswellasemphasizingthatanysuchtransaction,andmovingforwardtoconsideranysuchtransaction, would also be entirely subject to discussion and approval by the Taubman Board and the independentmembers of the Taubman Board. Amongthe terms that Mr. R. Taubman noted were that members of the TaubmanfamilywouldneedtoretainasubstantialpositionintheTaubmanoperatingpartnership(potentiallyaroundtwo-thirdsoftheircurrentposition),thatmembersoftheTaubmanfamilywouldneedtobeprotectedonminimumdistributionsandtheannualbudgetapprovalprocess,thatthetransactionwouldnotbeadeferredsaleandthereforeSimonwouldnot have any call right with respect to the interests retained by the members of the Taubman family, and that themembersoftheTaubmanfamilywouldneedanabilitytovoluntarilyexittheTaubmanoperatingpartnershipatsomefuturepoint.Messrs.R.TaubmanandSimonalsodiscussedtheindustriallogicofatransaction,andMr.R.Taubmanaskedwhethertheconsiderationfortheunaffiliatedpublicshareholderswouldconsistofallcashoracombinationofcashandshares.Mr.Simonstatedthathewouldneedtoconsiderthatissue,butthathisinitial
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reactionwasthattheconsiderationwouldbepaid75%incashand25%inSimonshares.Mr.R.TaubmannotedhisexpectationthattheTaubmanfamilymembersmustnotreceiveanydifferential considerationinrespectofsharesorunitsbeingsold,ascomparedtounaffiliatedshareholdersandunitholders,andthatanytransactionwouldbesubjecttoreview,recommendationandapprovalnotonlyofindependentdirectorsofTaubman,butofamajorityofthevotingpower not held by members of the Taubman family. Mr. R. Taubman also indicated that he would expect that theTaubman Board would require a “go-shop” as part of any transaction. Following these discussions, Mr. Simonconfirmed that he was interested in pursuing a potential transaction and that it would be helpful for Simon to havecertainlimited,nonpublicinformationaboutTaubmaninordertofurtherevaluateSimon’sinterest. Mr.R.Taubmanstated that before Taubman could provide nonpublic information he would need to discuss the matter with theindependentmembersoftheTaubmanBoard,and,iftheindependentmembersoftheTaubmanBoardweretoapprovefurther engagement, that Taubman and Simon would need to enter into a customary confidentiality and standstillagreement.
OnNovember1,2019,theTaubmanBoardheldameeting,whichwasattendedbymembersofTaubmanseniormanagement. Mr. R. Taubman updated the other members of the Taubman Board on his October 24, 2019 andOctober 28, 2019 conversations with Mr. Simon, his discussions with Mr. Ullman and the preliminary transactionparameters that Messrs. Simon and R. Taubman had discussed to date. Mr. R. Taubman explained his preliminaryviews regarding a transaction with Mr. Simon, including the industrial logic of such a transaction and his initialthoughts on the potential post-closing governance and liquidity framework. Mr. R. Taubman further stated that hebelieveditwouldbeproductiveforTaubmantoprovidetoSimon,subjecttosigninganappropriateconfidentialityandstandstillagreement,certainlimitednonpublicinformationaboutTaubmantoallowthepartiestodeterminewhetheratransaction acceptable to the Taubman Board might be achievable. Following an executive session of the TaubmanBoard(withMr. R. Taubmanandmembers of Taubmansenior management recused), themembers of theTaubmanBoard discussed the industrial logic of a potential transaction with Simon, the potential benefits to Taubmanshareholders of a potential transaction and the appropriate process for evaluating such a transaction. Followingdiscussion, it was the consensus of such members of the Taubman Board that further consideration of a potentialtransaction with Simon would be in the best interests of Taubman and its shareholders, and the Taubman Boardauthorized Mr. R. Taubman and Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”) and Honigman LLP(“Honigman”), each counsel to Taubman, to negotiate and execute a confidentiality and standstill agreement withSimonandtoprovidenonpublicinformationtoSimoninordertofacilitatethemakingofanacquisitionproposalbySimon.
OnNovember3,2019,theTaubmanBoardheldameeting,whichwasattendedbyrepresentativesofKirkland&EllisLLP(“Kirkland”),attheinvitationoftheindependentdirectors,todiscussthepotentialtransactionwithSimon.Mr. R. Taubmanrecused himself fromthis meeting. The members of the TaubmanBoard discussed the appropriateprocessforevaluatingsuchatransaction,includingtheformationofaproperlyempoweredcommitteeoftheTaubmanBoard consisting solely of independent and disinterested directors for the purpose of reviewing, evaluating andnegotiating any potential transaction with Simon and other alternatives that may be available to Taubman. At themeeting, a representative of Kirklanddiscussedtheformationof suchacommittee. TheTaubmanBoardformedtheSpecial Committee, withMayreeC.Clark,MichaelJ. Embler, CiaBuckleyMarakovitsandMyronUllmanIII asitsmembers, and appointed Mr. Ullman as its chairman. The Special Committee was delegated the full power andauthorityoftheTaubmanBoardtoreview,evaluateandnegotiateapotentialsaleofTaubmanandanyalternativesthatmaybeavailabletoTaubman,includingremaininganindependentcompany,toengageitsownadvisorsandtomakearecommendation to the Taubman Board regarding any such transaction. The Taubman Board’s delegation alsoprovided that the Taubman Board would not recommend a potential sale of Taubman to Simon without a priorfavorablerecommendationbytheSpecialCommittee.TheTaubmanBoardalsoapprovedtheselectionofKirklandascounseltotheSpecialCommitteeandTaubman’sotherindependentdirectors.TherepresentativeofKirklandreviewedthefiduciarydutiesofthedirectors.
BetweenNovember3,2019andNovember8,2019,TaubmanandSimonnegotiatedthetermsofaconfidentialityandstandstillagreement,withWachtellLiptonandKirklandparticipatinginsuchnegotiations.OnNovember8,2019,Taubman and Simon executed the agreement, which included mutual confidentiality terms, as well as reciprocalstandstillprovisions.SimonthereafterconductedduediligenceonTaubmansubjecttotheconfidentialityandstandstillagreement.
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OnNovember4,2019,theSpecialCommitteeheldameeting,whichwasattendedbyrepresentativesofKirkland,todiscusstheprocessforselectingafinancialadvisortotheSpecialCommitteeaswellasotherorganizationalmatterstofacilitatetheSpecialCommittee’sprocess.
BetweenNovember4,2019andNovember11,2019,theSpecialCommitteeevaluatedanddiscussedthepotentialengagementofmultiplepotentialfinancialadvisors,includingLazard.InconnectionwiththepotentialengagementofLazard, Lazard provided to the Special Committee information regarding its relationships with the Taubman familymembers,TaubmanandSimon.OnNovember11,2019,theSpecialCommitteeselectedLazardtoactasitsfinancialadvisor.TheSpecialCommitteeselectedLazardinlightofLazard’sextensiveexperienceinM&AtransactionsintheREITindustry,itsexperiencerepresentingspecialcommitteesinacquisitionsanditslackofmaterialrelationshipswiththeTaubmanfamilymembers,TaubmanandSimon.
On November 15, 2019, the Special Committee held a meeting, which was attended by representatives ofKirkland,todiscussstructuralaspectsofapotentialtransactionwithSimonandtherespectiverolesandresponsibilitiesofadvisorsintheSpecialCommittee’sprocessforevaluatingapotentialtransaction.
AlsoonNovember15,2019,Mr.SimoncontactedMr.R.Taubmanandsubmittedanoralindicationofinterest(the “November 15 Proposal”) on behalf of Simon to acquire Taubman at a price of $53.00 per Taubman commonshare,comprisedofato-be-determinedmixofcashandsharesofSimoncommonstock.Thisproposalrepresenteda51.3%premiumoverthe$35.03closingpriceofTaubman’scommonsharesonNovember14,2019,thedaypriortotheirconversation.Mr.R.TaubmanandMr.SimondiscussedaproposedtransactionthatwouldprovideforSimon’sacquisitionofan80%interestintheTaubmanoperatingpartnership,bywayoftheacquisitionofTaubmanitself,withmembers of the Taubman family (i) retaining two-thirds of their interest in the Taubman operating partnership(thus maintaining ownership of a 20%interest in the Taubman operating partnership) and selling one-third of theirinterest in the Taubman operating partnership to Simon in exchange for the same consideration as the unaffiliatedholders of Taubman operating partnership units would receive in the transaction and (ii) selling their shares ofTaubman common stock in exchange for the same consideration as the unaffiliated Taubman shareholders wouldreceive in the transaction. Mr. R. Taubman informed Mr. Simon that although he was disappointed with the priceproposed by Mr. Simon, the Special Committee would need to review the November 15 Proposal and that Mr. R.TaubmanwouldrespondtoMr.Simonfollowingsuchreview.
Later onNovember 15, 2019, the Special Committee held a meeting, whichwasattendedbyMr. R. Taubman.Mr.R.TaubmanprovidedtheSpecialCommitteewithanoverviewofdiscussionswithMr.SimontodateregardingapotentialtransactionwithSimon,includinghisNovember15,2019conversationwithMr.SimonandtheNovember15Proposal.
OnNovember17,2019,theTaubmanBoardheldameeting,whichwasattendedbyrepresentativesofTaubman’ssenior management and Kirkland, Lazard, Wachtell Lipton, Honigman and Goldman, Sachs & Co. (“Goldman”),Taubman’s financial advisor. Mr. R. Taubman provided the Taubman Board with an overview of discussions withMr.SimontodateregardingapotentialtransactionwithSimon,includinghisNovember15,2019conversationwithMr. Simon and the November 15 Proposal. The Taubman Board discussed various aspects of the November 15ProposalandinstructedMr.R.TaubmantocontinuediscussionswithMr.SimoninordertofirstnegotiatetomaximizepricefortheunaffiliatedTaubmanshareholders,withfurtherdiscussionsofpotentialpost-closinggovernancetermstofollow.
FollowingtheNovember17,2019meetingoftheTaubmanBoard,theSpecialCommitteeheldameeting,whichwasattendedbyallofTaubman’sotherindependentdirectorsaswellasrepresentativesofKirklandandLazard.TheSpecial Committee discussedtheNovember15Proposal, includingstructural, financial andgovernanceaspects. Theindependentdirectors(otherthanmembersoftheSpecialCommittee)thenleftthemeetingandtheSpecialCommitteediscussed potential next steps for the Special Committee’s evaluation process as well as the role of the SpecialCommittee in future interactions between Mr. R. Taubman and Mr. Simon. It was the consensus of the SpecialCommitteethatMr.R.TaubmanshouldcontinuetodiscussthepotentialtransactionwithMr.Simondirectlyinordertomaintainaproductivenegotiatingdynamic, butthatMr.R.Taubman’snextdiscussionwithMr.Simonshouldbeconducted under the oversight of, and in accordance with appropriate guidelines from, the Special Committee (the“Initial Process Guidelines”), and that the framework for engagement would be revisited on an ongoing basis. TheSpecialCommitteeinstructedtherepresentativesofKirklandtoprepareadraftoftheInitialProcessGuidelinesfortheSpecial Committee’s review, which would be conveyed to Mr. R. Taubman in advance of his next discussion withMr.Simon.
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OnNovember18,2019,theSpecialCommitteeheldameeting,whichwasattendedbyrepresentativesofKirklandand Lazard, to further discuss the November 15 Proposal and the process for evaluating and negotiating a potentialtransactionwithSimon.Atthemeeting,themembersoftheSpecialCommitteeprovidedinputontheInitialProcessGuidelines,tobereflectedbyKirklandinawrittendraftoftheInitialProcessGuidelines.
On November 19, 2019, Kirkland provided a draft of the Initial Process Guidelines to the Special Committee.Laterthatday,theSpecialCommitteeheldameetingtodiscusstheInitialProcessGuidelines.Followingthemeeting,on November 19, 2019, the Special Committee provided comments on the written draft of the Initial ProcessGuidelinestoKirkland.
On November 20, 2019, the Special Committee held a meeting, which was attended by several of Taubman’sother independent directors as well as representatives of Kirkland. At the meeting, the representatives of Kirklandreviewed the corporate and governance structure of Taubmanandthe Taubmanoperating partnership. The directorsdiscussedtheimpactofthecorporateandgovernancestructureonapotentialtransaction,includingwithrespecttothetreatmentofTaubman’scommonstock,Taubman’spreferredstock,theTaubmanoperatingpartnership’spartnershipunitsandthecontractual relationshipsbetweenTaubmananditssubsidiariesandtheTaubmanfamilymembers.Thedirectors also discussed that certain Taubman family members had consent rights over the sale of a number ofproperties owned by the Taubman operating partnership. The representatives of Kirkland also discussed options forconductinga“marketcheck,”aswellasevaluatingotherstrategicandfinancialalternativestothepotentialtransactionwithSimon, includingTaubmancontinuingtooperate as a standalonepublic company. TheSpecial Committee alsodiscussedthecircumstancesinwhichMr.R.Taubmancouldbeobligatedtovoteinfavorofanalternativeproposaland, followingdiscussion, it wastheconsensusoftheSpecial Committeethat theywouldfurther discussthis matterandmakeaproposaltoMr.R.Taubmanattheappropriatetime.Theindependentdirectors(otherthanmembersoftheSpecial Committee) then left the meeting and the representatives of Kirkland discussed the draft Initial ProcessGuidelines as revised after November 19, 2019 to reflect the comments provided by the Special Committee. ThereviseddraftInitialProcessGuidelinesemphasized,amongotherthings,thattheSpecialCommitteemustbecentrallyinvolved in the evaluation and negotiation processes for any transaction with Simon and provided parameters fordiscussionswithMr.Simon.
LateronNovember20,2019,membersoftheSpecialCommitteespokewithMr.R.TaubmanandconveyedtheInitialProcessGuidelinestoMr.R.TaubmanthatwouldgovernMr.R.Taubman’snextdiscussionwithMr.Simon,whichhadbeenscheduledforNovember21.
On November 21, 2019, the Special Committee held a meeting, with representatives of Kirkland and Lazardpresent.ThemembersoftheSpecialCommitteediscussedtheNovember20,2019conversationwithMr.R.Taubman,notingthatMessrs.R.TaubmanandSimonintendedtohavedinnertogetherthatevening.RepresentativesofLazardthen reviewed with the Special Committee preliminary financial analyses relating to the November 15 Proposal,Taubman’ssharepriceperformanceandpastcommunicationsfromTaubman’sshareholders(includingfromLand&Buildings Investment Management, LLC, which had communicated from time to time that there were actions theTaubmanBoardcouldpotentiallytaketoincreaseshareholdervalue,includingasaleorspin-offofcertainTaubmanassets, none of which specifically referenced a transaction with Simon). The Special Committee concluded that itshouldreconveneafterMr.R.TaubmanandMr.Simonspokethatevening.
LateronNovember21,2019,Messrs.R.TaubmanandSimonhaddinnertodiscussthepotentialtransaction.Atthe dinner, in accordance with the Initial Process Guidelines, Mr. R. Taubman noted that, while he and the SpecialCommittee believed that the November 15 Proposal undervalued Taubman, the Special Committee was prepared tocontinueengagingtoexploreatransactionwithSimon.
OnNovember22,2019,Ms.MarakovitsandMs.ClarkspoketelephonicallywithMr.R.Taubman,whoprovidedthemwithanupdateregardinghisNovember21dinnerwithMr.Simon.
OnNovember23,2019,theSpecialCommitteeheldameeting,whichwasattendedbyMr.R.Taubman.Atthemeeting Mr. R. Taubman provided an update to the Special Committee regarding his November 21 dinner withMr.Simon,andtheSpecialCommitteediscussedpotentialnextsteps.
OnNovember25,2019,theSpecialCommitteeheldameeting,whichwasattendedbyrepresentativesofKirklandand Lazard, as well as Mr. R. Taubman. At the meeting Mr. R. Taubman again discussed with the members of theSpecialCommitteehisNovember21dinnerwithMr.Simon,andtheydiscussedpotentialnextsteps.
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On December 1, 2019, the Special Committee held a meeting, with representatives of Kirkland and Lazardpresent,todiscussdraftsofthetermsheetforthemergeragreementandvotingagreementthatwouldrequire,amongother things, the Taubman family members to vote in favor of the contemplated transaction with Simon(the “Transaction TermSheet”) and the JVagreement (the “JVTermSheet”), the sequencing of Mr. R. Taubman’sfurtherinteractionswithMr.Simonregardingprice,transactiontermsandpost-closinggovernance,includingwhetherand when to send the Transaction Term Sheet and/or the JV Term Sheet to Simon, and the role of the SpecialCommittee in interactions between Messrs. R. Taubman and Simon. During the meeting, the Special CommitteediscussedwiththerepresentativesofKirklandandLazardthepotentialsequencingofsendingthetermsheetstoSimonandthemeritsandpotentialrisksoftheSpecialCommitteehavingdirectparticipationinnegotiationswithMr.Simonat that time. At theconclusionof themeeting, theSpecial Committee determinedthat it wouldfurther discuss thesematterswithMr.R.Taubman.
On December 2, 2019, the Special Committee held a meeting, which was attended by Mr. R. Taubman andrepresentativesofKirkland,Lazard,Wachtell LiptonandGoldman.TheSpecialCommitteediscussedtheNovember15ProposalandpotentialnextstepsforrespondingtoSimon.Followingdiscussion,theSpecialCommitteeinstructedMr.R.Taubmanthat,beforeanytermsheetsweresenttoSimon,Mr.R.TaubmanshouldmeetwithMr.SimonagaintoseektoimproveSimon’sproposedpurchaseprice.Inparticular,theSpecialCommitteeinstructedMr.R.Taubmanthat he should not commit to a purchase price less than $63.00 per share, and indicated that the Special CommitteecouldbeflexibleregardingthemixofcashandsharesofSimoncommonstockinordertoachievethehighestpossibleprice(includingpotentiallyacceptingall cash). TheSpecial Committeeconcludedthat, subjecttoMr.R.Taubman’sadherence to these negotiating instructions, in order to avoid disrupting the negotiating dynamic at that time,Mr.R.TaubmanwouldnextmeetwithMr.SimonwithoutrepresentativesoftheSpecialCommitteeorLazardpresent.
LateronDecember2,2019,Messrs.R.TaubmanandSimonhaddinnertofurtherdiscussthetermsofapotentialtransaction.Duringthecourseofthesediscussions,Mr.SimonmadeanoralproposalforSimontoacquireTaubmanata price of $58.00 per commonshare in cash. This proposal represented an 81.3%premiumover the $31.99 closingprice of Taubman’s commonshares on December 2, 2019. Mr. R. Taubman conveyed to Mr. Simon that, based ondirection fromthe Special Committee, he did not believe that the Special Committee would accept Simon’s revisedproposal,butthatapurchasepriceof$63.00persharemightbeviewedbytheSpecialCommitteeasacceptableandthecommittee could be flexible regarding the mix of cash and shares of Simon common stock in order to achieve thehighestpossibleprice(includingpotentiallyacceptingallcash).
On December 3, 2019, the Special Committee held a meeting, which was attended by Mr. R. Taubman andrepresentatives of Kirkland and Lazard. At the meeting, Mr. R. Taubman updated the Special Committee on hisdiscussionswithMr.SimonduringtheirDecember2,2019dinnerandnotedthatheexpectedtospeakwithMr.Simonagain later that week. After discussion, the Special Committee determined that it wouldmeet with Mr. R. TaubmanagainbeforehisnextdiscussionwithMr.Simoninordertodiscussguidelinesandtheappropriateparticipantsforsuchdiscussion.
OnDecember4,2019,theTaubmanBoardheldameeting,whichwasattendedbyrepresentativesofHonigman.During the meeting, Mr. R. Taubman provided an update on discussions with Simon to date. Mr. R. TaubmandiscussedwiththeTaubmanBoardtheGreen Street Advisors(“GreenStreet”)reportthatwasissuedonDecember3,2019 regarding regional mall REITs. Mr. R. Taubman described that while Green Street’s NAV analysis did notchange in the report, Green Street had reduced Taubman’s intrinsic value and increased Simon’s intrinsic value,primarily related to Simon’s balance sheet strength. Members of the TaubmanBoard thereafter discussed the recentdiscussionswithSimonandtheGreenStreetreport.
On December 5, 2019, the Special Committee held a meeting, with representatives of Kirkland and Lazard inattendance. At the meeting, the members of the Special Committee considered the merits and potential risks of theSpecial Committeehavingdirect participationintheupcomingdiscussionbetweenMr.R.TaubmanandMr.Simon.Followingdiscussion,itwastheconsensusoftheSpecialCommitteethatinlightoftheriskthataddingparticipantstothediscussionsbetweenMr.R.TaubmanandMr.SimoncoulddisruptthenegotiatingdynamicandpotentiallyimpairtheoutcomefortheunaffiliatedTaubmancommonshareholdersinatransactionwithSimon,Mr.R.TaubmanwouldattendtheupcomingdiscussionwithMr.SimonwithoutrepresentativesoftheSpecialCommitteeorLazardattending,subjecttoMr.R.Taubman’sadherencetoguidelinesfromtheSpecialCommitteeregardingthemattersto
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be discussed (the “Additional Process Guidelines”). Representatives of Lazard then reviewed with the SpecialCommitteepreliminaryfinancialanalysesrelatingtoapotentialtransactionwithSimon,andthemembersofSpecialCommittee discussedwith Lazardthe Special Committee’s viewsonprice andSimon’s ability to pay, includingtheimpactofleverage,accretionandconsiderationmix.
OnDecember6,2019,membersoftheSpecialCommitteespokewithMr.R.Taubmanbytelephonetoconveythe Additional Process Guidelines. The Additional Process Guidelines emphasized, among other things, thatMr.R.Taubmanshouldnotcommit toapurchasepricelessthan$60.00pershareandshouldnotagreetoanyfinalpost-closinggovernanceorothernon-pricetermswithpotentialimplicationsonthevaluetobereceivedbyunaffiliatedTaubmancommonshareholdersinatransactionwithSimonpriortoaninitialagreementonprice.
AlsoonDecember6,2019,Messrs.R.TaubmanandSimonmetforlunchanddiscussedthepotentialtransaction.Duringthemeeting, Mr.Simonmadearevisedoral proposal toMr.R.TaubmanforSimontoacquireTaubmanfor$57.00pershare,inamixofcashandsharesofSimoncommonstock(whichMr.Simonindicatedmaylikelybe75%incashand25%inshares). Mr.R.TaubmanconveyedtoMr.Simonthat, basedonpriorfeedbackfromtheSpecialCommittee,hedidnotbelievethattheSpecialCommitteewouldaccepttheproposal.Mr.SimonthenmadeafurtherrevisedoralproposaltoMr.R.TaubmanforSimontoacquireTaubmanfor$60.00pershare,againinamixofcashandsharesofSimoncommonstock(the“UpdatedDecember6Proposal”).Mr.Simonagainindicatedthat,whilehewasnotyetsureofthecashandstockmix,Simonwasleaningtowardpaying75%incashand25%inSimonshares.This proposal represented a 92.7% premium over the $31.13 closing price of Taubman’s common shares onDecember 5, 2019, themost recent completedtradingdaybeforetheir discussion. Mr. Simonalsoaskedthat SimonreceivetermsheetsoutliningthekeytermsofthemergeragreementandtheJVagreement.Mr.R.TaubmanstatedthathewouldcommunicatetherevisedproposalandrequestfortermsheetstotheSpecialCommittee.
LateronDecember6,2019,membersoftheSpecialCommitteespokewithMr.R.Taubmanbytelephone.Duringthediscussion,Mr.R.TaubmanprovidedmembersoftheSpecialCommitteewithanupdateregardinghislunchwithMr.SimonandtheUpdatedDecember6Proposal.ThemembersoftheSpecialCommitteeindicatedthattheSpecialCommitteewoulddiscusstheUpdatedDecember6ProposallateronDecember6,2019.
LateronDecember6,2019,theSpecialCommitteeheldameetingtodiscusstheUpdatedDecember6Proposal,with representatives of Kirkland and Lazard in attendance. The members of the Special Committee discussed thetelephone call with Mr. R. Taubman earlier that day, the Updated December 6 Proposal and potential responses,including possible outreach to other parties that may potentially be interested in a transaction involving Taubman.Followingdiscussion,theSpecialCommitteedeterminedthatMr.R.TaubmanshouldcontinuediscussionswithSimonregarding a potential transaction on the basis of the Updated December 6 Proposal and that the Special Committeeshould further consider whether to solicit potential interest fromadditional parties, taking into account the potentialbenefits and risks of doing so, as well as the likelihood of another party having the scale and strategic focus, theliquidity, balance sheet, and leverage (in particular, during the present challenging environment), the potentialsynergies, theknowledgeofthebusiness, andtheunderstandingofTaubman’sassets andtheir value, toenableit topresent a proposal that could be competitive with the Updated December 6 Proposal. The Special Committee alsodiscussedthepotentialimpactofTaubman’scorporateandgovernancestructureonanypotentialtransactioninvolvingTaubman,includinginlightofcertainTaubmanfamilymembershavingaconsentrightoverthesaleofanumberofproperties of theTaubmanoperatingpartnership. At themeeting, representatives of KirklandalsoreviewedwiththeSpecial Committee drafts of the Transaction Term Sheet and the JV Term Sheet, with the members of the SpecialCommittee providing direction on provisions of the term sheets. The Special Committee then authorized thesubmission of the term sheets to Simon following the implementation of the feedback provided by the SpecialCommitteeatthemeeting.
LateronDecember6,2019,TaubmansentdraftsoftheJVTermSheetandtheTransactionTermSheettoSimon.Thedraft of theTransactionTermSheet contemplated, amongother things: (i) a 45-day“open”go-shopperiodthatwouldpermit Taubmanto paya lower termination fee in connection with anyalternative proposal that was initiallyreceived during the go-shop period, even if the merger agreement was terminated after the go-shop period; (ii) a“fiduciaryout”provisionthatwouldallowTaubmantoterminatethemergeragreementtoacceptasuperiorproposalduringandfollowingthego-shopperiod;and(iii)arequirementthatholdersofamajorityoftheoutstandingTaubmancommonsharesandSeriesBpreferredshares,otherthantheTaubmanfamilymembers,approvethetransaction.ThedraftoftheJVTermSheet,amongotherthings:(i)contemplatedthatMr.R.TaubmanwouldbethechiefexecutiveofficeroftheJointVenture,withgeneralauthoritytooperatetheJointVenture’sbusiness,subjectto
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variousconsentrightsthatSimonwouldhaveonmaterialtransactionsanddecisions,andthemechanismsforresolvinganydeadlocks,(ii)providedthatstartingtwoyearsfromtheclosing,subjecttocertainlimitationsandprocedures,theTaubmanfamilymemberswouldbeentitledtoexchangetheirequityinterestsintheJointVenturefor,attheoptionofthe Taubman family members, units in the Simon operating partnership or cash, based on the greater of threealternative valuation mechanisms and (iii) set forth a process for establishing an annual budget, operating plan anddistributionpolicyandprovidedrulesonwhatwouldhappenifanannualbudget,operatingplanordistributionpolicywerenotapproved.
OnDecember7,2019,theSpecialCommitteeheldameeting,whichwasattendedbyMr.R.Taubman,membersofTaubmanseniormanagementandrepresentativesofKirkland,Lazard,WachtellLipton,HonigmanandGoldman.Atthe meeting, the Taubman Board discussed with Mr. R. Taubman, among other things, certain aspects of the termsheets,includingterminationfeesandantitrusteffortsandstructurematters,aswellaspotentialtimingfornegotiatinga transaction with Simon. During the discussion, the members of the Special Committee provided their views onvarioustransactionterms,withrepresentativesofKirklandprovidingperspectivesonthesetopics,andthemembersofthe Special Committee provided direction to Mr. R. Taubman regarding such terms. Mr. R. Taubman noted that heplannedtospeakwithMr. Simonregardingthetermsheets thefollowingdayandwouldreflect thefeedbackof theSpecialCommitteeinhisdiscussionsandprovideanupdatetotheSpecialCommitteefollowingsuchdiscussion.
OnDecember8,2019,Messrs.R.TaubmanandSimonmettodiscuss,amongotherthings,theJVTermSheetandtheTransactionTermSheet,focusinginparticularontheJVTermSheet.Attheconclusionofthemeeting,Messrs.R.TaubmanandSimonagreedthatitwouldbebeneficialtoholdameetingonDecember9,2019tofurtherdiscussthesematters.
LateronDecember8,2019,theTaubmanBoardheldameeting,withmembersofTaubmanseniormanagementand representatives of Honigman in attendance. During the meeting, members of the Special Committee andMr. R. Taubman provided the other members of the Taubman Board with an update on discussions with Simon,includingtheUpdatedDecember6ProposalandthedistributionoftheJVTermSheetandTransactionTermSheettoSimon.Mr.R.TaubmanalsoprovidedanoverviewofhismeetingwithMr.SimonearlierinthedayonDecember8,2019. Following discussion, the Taubman Board indicated its support for the Updated December 6 Proposal andTaubman’scontinuedexplorationofapotentialtransactionwithSimon.
On December 9, 2019, Taubman and Simon held a meeting at the offices of Wachtell Lipton in whichrepresentatives of Taubman senior management, Simon senior management, Wachtell Lipton, Kirkland, Honigman,Latham&Watkins,LLP,counseltoSimon(“Latham”),andPaul,Weiss,Rifkind,Wharton&GarrisonLLP,counselto Simon (“Paul Weiss”), participated. The parties discussed, among other things, the JV Term Sheet and theTransactionTermSheet.
LateronDecember9,2019,SimonsentreviseddraftsoftheTransactionTermSheetandtheJVTermSheettoTaubman.ThedraftoftheTransactionTermSheetcontemplated,amongotherthings:(i)a“forcethevote”provisionthat wouldprevent Taubmanfromterminatingthemergeragreement toaccept asuperior proposal followingthego-shopperiodunlessanduntiltheTaubmanshareholdersvotedagainsttheSimontransactionatameetingofTaubmanshareholders;(ii)a45-day“closed”go-shopperiodthatwouldnotpermitTaubmantopayalowerterminationfeeifthe merger agreement was terminated after the expiration of the go-shop period in connection with any alternativeproposalthatwasinitiallyreceivedduringthego-shopperiod;(iii)recurringmatchingrightsforSimonwithrespecttoany alternative proposal received by Taubman; (iv) a termination fee payable by Taubman to Simon of 4% of theaggregateequityvalueofTaubmanintheeventthatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposal followingthego-shopperiod; (v)aterminationfeeof2%oftheaggregateequityvalueofTaubmanintheeventthatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposalduringthego-shopperiod;(vi)a“nakednovote”expensereimbursementamountpayablebyTaubmantoSimonofupto1%oftheaggregateequityvalueofTaubmanifthemergeragreementisterminatedbecauseTaubman’sshareholdersdonotapprovethemergeragreement;and(vii)a“tail”provisioninthevotingagreementthatwouldrequiretheTaubmanfamilymemberstovoteagainst any alternative proposal submitted to Taubman’s shareholders during the 12-month period following anyterminationofthemergeragreement(otherthanasuperiorproposalacceptedbyTaubmanduringthego-shopperiod).ThedraftoftheJVTermSheet,amongotherthings:(i)providedthattheperiodduringwhichMr.R.TaubmanwouldhaveoperationalcontrolovertheJointVenturewouldbetimelimitedandaddedcertainothereventsthatwouldshiftoperational control to Simon, (ii) deleted the proposed valuation mechanisms if the Taubman family membersexercisedtheirsalerightsandindicatedthatthevaluationmechanismswouldbe
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discussedatalaterstage,(iii)addedadditionalconsentrightsforSimonduringtheperiodinwhichMr.R.TaubmanwouldhaveoperationalcontroloftheJointVentureandmodifiedthedeadlockdisputeproceduresanditemsthatcouldbecapableofbeingresolvedthrougharbitration,(iv)indicatedthattheTaubmanfamilymemberswouldbesubjecttoanon-compete,(v)addedvariousparametersandlimitationsonannualdistributionsandtheannualbudgetprocessand(vi)providedthattheJointVenturewouldberesponsibleforanypreferredequityordebtofTaubmanthatisrepaidbySimonandforanytransactionexpensesincurredbyTaubmaninconnectionwiththetransaction.
OnDecember10,2019,Mr.R.TaubmanandMr.Simonmettodiscuss,amongotherthings,thetimingforthepotentialtransactionandvariousissuesintherevisedJVTermSheet.
On December 12, 2019, the Taubman Board held a regularly scheduled meeting, with members of Taubmanseniormanagementinattendance.Atthemeeting,Mr.R.TaubmanprovidedtheothermembersoftheTaubmanBoardwithanupdate onthepotential transaction withSimon, includingMr. R. Taubman’s discussions withMr. Simontodate.
OnDecember13,2019,theSpecialCommitteeheldameeting,whichwasattendedbyrepresentativesofKirklandand Lazard. The representatives of Kirkland reviewed with the Special Committee the December 9 draft of theTransactionTermSheet,includingthefiduciaryandterminationprovisionsandtheabilityoftheSpecialCommitteetosolicit and negotiate alternative proposals, as well as the December 9 draft of the JV Term Sheet. The SpecialCommitteeprovidedtherepresentativesofKirklandwithitsviewsanddirectiononsuchmatters, andauthorizedthesubmissionofadraftmergeragreementtoSimonreflectingtheSpecialCommittee’sfeedback.TheSpecialCommitteealsodiscussedthecircumstancesinwhichMr.R.TaubmanandotherTaubmanfamilymemberscouldbeobligatedtovoteinfavorofanalternativeproposaland,followingdiscussion,itwastheconsensusoftheSpecialCommitteethattheSpecial Committee wouldfurther discuss this matter andmakea proposal to Mr. R. Taubmanat theappropriatetime.
BetweenDecember13,2019andDecember16,2019,WachtellLiptonandPaulWeissexchangedseveraldraftsof the JV Term Sheet, negotiating, among other items, the liquidity mechanics and valuation mechanisms, consentrightsforeachpartywhentheotherpartywouldhaveoperationalcontroloftheJointVenture,thedisputeresolutionmechanism, the timeperiodduringwhichMr. R. Taubmanwouldhaveoperational control of theJoint Venture, theminimumdistributionrequirementsandannualbudgetmatters.
On December 16, 2019, representatives of Kirkland, Wachtell Lipton and Latham discussed by telephone thevarious issues that were unresolved in the Transaction Term Sheet, including the “force the vote” provision,the“closed”go-shopprovision, the“tail” provisionofthevotingagreement, thesizeoftheterminationfeesandtheinclusionofthe“nakednovote”expensereimbursementprovision.
OnDecember17,2019,representativesofKirklandsentaninitialdraftofthemergeragreementtoLatham.Thedraftmergeragreementcontemplated,amongotherthings:(i)a“fiduciaryout”terminationprovisionthatwouldallowTaubmantoterminatethemergeragreementtoacceptasuperiorproposalbeforeandafterthego-shopperiod;(ii)a45-day“open”go-shopprovision;(iii)aterminationfeepayablebyTaubmantoSimonof1%ofthevalueofTaubman’sequitytobeacquiredbySimonintheproposedtransactionintheeventthatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposalduringthego-shopperiodorwithanypartythathassubmittedanacquisitionproposalduringthego-shopperiodthattheSpecialCommitteehasdeterminedingoodfaithconstitutesorcouldreasonablybeexpectedtoleadtoasuperiorproposal;(iv)aterminationfeepayablebyTaubmantoSimonof2%oftheequityvalueof Taubman to be acquired by Simon in the proposed transaction in the event that Taubman terminates the mergeragreementtoenterintoasuperiorproposalinothercircumstancesfollowingthego-shopperiod;(v)aregulatoryeffortsprovisionthatrequiredSimontodoallthingsnecessary,properandadvisabletoobtainregulatoryapprovals,exceptaswouldhaveamaterialadverseeffectonthecombinedbusinessofSimonandTaubman;and(vi)noclosingconditionsrelatedtothereceiptofcontractualconsentsfromthirdpartiesandnomandateddelayperiodtocompletetheproposedtransaction if anythird-party consents havenot beenobtainedwhenall other closingconditions havebeensatisfied.Thereafter,untilexecutionofthemergeragreementonFebruary9,2020,TaubmanandSimonandtheirrepresentativesexchangedmultipledraftsofthemergeragreementandengagedinrelatednegotiations.
On December 20, 2019, the Special Committee held a meeting, which was attended by representatives ofTaubman’s senior management, Kirkland, Lazard and Goldman. At the meeting, Taubman’s senior managementreviewed with the Special Committee a set of preliminary financial projections that the Special Committee hadinstructedmanagementtoprepareinthecontextofevaluatingatransactionwithSimon,withmanagementnotingthat
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such projections remained incomplete pending additional details that management was still preparing. The SpecialCommittee reviewed with management the key drivers and rationale behind the preliminary financial projections,includingtheshiftingretaillandscape,andviewsontheachievabilityofsuchprojections.DuringanexecutivesessionoftheSpecialCommittee,theSpecialCommitteeconcludedthatitshouldreceiveandreviewtheadditionalportionsofsuchprojectionspriortomakinganyfinaldeterminationwithrespecttosuchprojections.
OnDecember 23, 2019, the Special Committee held a meeting, with representatives of KirklandandLazard inattendance. At the meeting, the representatives of Kirkland reviewed with the Special Committee the directors’fiduciary duties, both generally and in the context of the potential transaction with Simon, and various other legalmatters, including process considerations. The representatives of Lazard discussed with the Special Committee thepotentialmeritsandrisksofconductingapre-signingmarketcheck,andtheyidentifiedcertainthirdpartiesthatcouldpotentially be interested in a transaction involving Taubman. After discussion and consideration of various factors,including the fact that any merger agreement with Simon would contain a “go-shop” provision, the risk that SimonwouldterminatenegotiationswithTaubmanshouldTaubmanexplorestrategicoptionswithotherparties,theviewoftheSpecialCommitteethatit wouldbeunlikelythatanothercounterpartywouldbeinapositiontomakeaproposalthat would be superior to the proposed transaction with Simon, the fact that the Taubman family members had aconsentrightoverthesaleofanumberofpropertiesoftheTaubmanoperatingpartnershipandtheriskofaleakandtheresultingmanagementdistractionthatcouldoccuriftheSpecialCommitteeengagedinoutreacheffortsatthattime,theSpecialCommitteedeterminedthatitwouldnotbeinthebestinterestsofTaubmananditsshareholderstoengageinamarket checkbeforesigninganagreementwithSimon,butthat Taubmanshouldconduct apost-signingmarketcheckifitweretoproceedwithatransactionwithSimon.
OnDecember 24, 2019, Taubmansent an initial draft of the JVagreement and a revised draft of the JVTermSheettoSimon,withtermsgenerallyconsistentwithpriorversionsoftheJVTermSheetthathadbeencirculatedtoSimon. Thereafter, until execution of the merger agreement and finalization of the form of the JV agreement onFebruary9, 2020, TaubmanandSimonandtheir representatives exchangedmultiple drafts of theJVagreement andengaged in related negotiations, including negotiating various provisions regarding governance and consent rights,deadlockanddisputeresolutionprocedures,liquidityoptions(bothforSimonandfortheTaubmanfamilymembers)andrelatedvaluationmechanisms,annualbudgetsandminimumdistributionrequirements.
OnJanuary 5, 2020, Messrs. R. Taubman and Simon discussed the timing of the contemplated transaction andpotentialnextsteps.
OnJanuary6,2020,SimonsentreviseddraftsofthemergeragreementandtheJVagreementtoTaubman.Thedraftmergeragreementcontemplated,amongotherthings:(i)a“forcethevote”provisionthatwouldpreventTaubmanfrom terminating the merger agreement to accept a superior proposal following the go-shop period; (ii) a 45-day“closed”go-shopprovisionthatwouldnotpermitTaubmantopayalowerterminationfeeifthemergeragreementwasterminated after the expiration of the go-shop period in connection with any alternative proposal that was initiallyreceived during the go-shop period; (iii) a termination fee payable by Taubman to Simon of 2% of the value ofTaubman’s equity to be acquired by Simon in the Transactions in the event that Taubman terminates the mergeragreementtoenterintoasuperiorproposalduringthego-shopperiod;(iv)aterminationfeepayablebyTaubmantoSimonof4%oftheequityvalueofTaubmantobeacquiredbySimonintheTransactionsintheeventthatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposalfollowingthego-shopperiod;(v)aregulatoryeffortsprovisionthatrequiredSimontodoall thingsnecessary, properandadvisabletoobtainregulatoryapprovals, exceptthat Simon would not be required to commit to or make any regulatory concession with respect to properties ofTaubmanorSimonthatsatisfiedcertainmaterialitycriteria;and(vi)aclosingconditionrelatedtothereceiptofcertainrequiredcontractualconsentsfromthirdparties.ThedraftJVagreementcontinuedtoincludetheopenissuesthatthepartieshadbeendiscussing,includingtheliquiditymechanicsandvaluationmechanisms,consentrightsforeachpartywhentheotherpartywouldhaveoperationalcontroloftheJointVenture,thedisputeresolutionmechanism,thetimeperiodduringwhichMr.R.TaubmanwouldhaveoperationalcontroloftheJointVenture,anddistributionpolicyandannualbudgetmatters.
Later on January 6, 2020, the Special Committee held a meeting, with representatives of Taubman’s seniormanagement,WachtellLipton,Kirkland,LazardandGoldmaninattendance.Atthemeeting,membersofTaubman’ssenior management reviewed with the Special Committee the Projections (as described in “–Certain UnauditedProspective Financial Information”),whichreflectedupdatestothepreliminaryfinancialprojectionspresentedtotheSpecial Committee onDecember 20, 2019. TheProjections reflected the inclusionof the portions of the projectionsthathadnotbeenincludedintheprojectionsreviewedbytheSpecialCommitteeonDecember20,2019
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andtookintoaccount,amongotherthings,continuingdevelopmentsinTaubman’sbusiness,includingthecontinuinguncertaintyandheadwindsintheretailenvironment,theriseofe-commerceandslowerthanexpectedrentgrowth.TheSpecial Committee approved the Projections and authorized Lazard to use the Projections for purposes of Lazard’svaluationanalysesinconnectionwithapotentialtransactioninvolvingSimon.
OnJanuary8,2020,TaubmanandSimonheldameetingattheofficesofPaulWeissinwhichrepresentativesofTaubman senior management, Simon senior management, Kirkland, Wachtell Lipton, Honigman and Paul Weissparticipated.Atthemeeting,thepartiescontinuedtodiscussvariousopenissuesintheJVagreement.
OnJanuary9, 2020, TaubmanandSimonhelda meetingat theoffices of Kirklandinwhichrepresentatives ofTaubmanseniormanagement,Simonseniormanagement,Kirkland,LathamandWachtellLiptonparticipated.Atthemeeting, the parties discussed open issues in the merger agreement, including, among other things, provisionsregardingterminationrights,terminationfees,thego-shopperiodandthird-partyconsents.
AlsoonJanuary9,2020,Mr.SimonandMr.R.Taubmanmettocontinuediscussingtheproposedtransactionandthecurrentmarketenvironment.Duringthisdiscussion,Mr.Simoncommunicatedthat,inlightof,amongotherthings,theuncertainanddeterioratingretailenvironment,thecriticalsituationwithForever21,andtherecentperformanceofSimon’sstock,SimonwasnolongerwillingtopursueatransactiononthetermsoftheUpdatedDecember6Proposal,andSimoninsteadsubmittedarevisedverbalproposalforSimontoacquireTaubmanfor$57.00pershareincash(asopposed to cash and stock, as previously proposed). Further, Mr. Simon indicated that Simon wanted the TaubmanfamilymemberstoretaintheirfullownershipstakeintheTaubmanoperatingpartnershipratherthansellingone-thirdoftheirinterestaspartofthetransactionaspreviouslyproposed(the“January9Proposal”).Thisproposalrepresenteda 78.2%premiumover the $31.99 closing price of Taubman’s commonshares on January 8, 2019, the most recentcompleted trading day before their discussion. In response, Mr. R. Taubman informed Mr. Simon that the SpecialCommitteewouldneedtoreviewtheJanuary9Proposal.Mr.R.TaubmanalsonotedtoMr.Simonthatheexpectedthat the Taubmanfamily members wouldbewillingto retain their full ownershipinterest in the TaubmanoperatingpartnershipifSimonwouldagreetocertainliquidityterms(whichultimatelywerenotagreed).Mr.R.TaubmanalsoexpressedhisdisappointmentwiththereducedpricereflectedintheJanuary9Proposal,butMr.Simondidnotchangehispositionfollowingextensivefurtherdiscussion.Aftertheirmeetingandaspreviouslyscheduled,Mr.R.Taubmanand Mr. Simon proceeded to meet with other representatives of Taubman senior management, Simon seniormanagement, Wachtell LiptonandPaulWeisstocontinuediscussingtheopenissuesintheJVagreement, includingthe liquidity mechanics and valuation mechanisms, consent rights for each party when the other party would haveoperationalcontroloftheJointVenture,thedisputeresolutionmechanism,theminimumdistributionrequirementsandannualbudgetmatters.
OnJanuary10,2020,theSpecialCommitteeheldameeting,withrepresentativesofKirklandandLazardpresent.Duringthemeeting,andinadvanceofameetingoftheSpecialCommitteescheduledforlaterthatdayatwhichMr.R.Taubman would be providing an update on recent interactions with Simon (including an overviewof the January 9Proposal), the representatives of Kirkland provided the Special Committee with an update on recent negotiationsbetweentheparties onthemerger agreement andtheJVagreement. TheSpecial Committeealsodiscussedwiththerepresentatives of Kirkland certain open issues in the merger agreement, including, among other things, provisionsregardingterminationrights,terminationfees,thego-shopperiodandthirdpartyconsents.Followingdiscussion,theSpecial Committee determined that it would reconvene after the scheduled call with Mr. R. Taubmanto discuss theJanuary9Proposal.
LateronJanuary10,2020,theSpecialCommitteeheldameeting,withMr.R.TaubmanandrepresentativesofKirkland,LazardandWachtellLiptonpresent.TheSpecialCommitteediscussedwithMr.R.TaubmantheJanuary8,2020andJanuary 9, 2020meetings betweenthe parties described above, andMr. R. Taubmanprovidedthe SpecialCommittee with an overview of his January 9, 2020 conversation with Mr. Simon and the January 9 Proposal.Mr.R.Taubmanindicatedthat,inlightof,amongotherthings,theuncertainanddeterioratingretailenvironment,hewassupportiveofcontinuingtoexploreatransactionwithSimononthetermssetforthintheJanuary9Proposal,butnotedthat theSpecial Committee hadbeendelegatedthefull powerandauthority of theTaubmanBoardto review,evaluate and negotiate a potential transaction with Simon. Following discussion, the members of the SpecialCommittee concluded that the Special Committee would hold an additional meeting with the representatives ofKirklandandLazardlaterthatdaytofurtherconsiderthesemattersandtheJanuary9Proposal.
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Later onJanuary10, 2020, theSpecial Committee helda meeting, withrepresentatives of KirklandandLazardpresent. At the meeting, the Special Committee discussed the January 9 Proposal, including with respect to price,consideration mix and post-closing governance as it related to these matters, and potential next steps. Followingdeliberation, the Special Committee concluded that Ms. Marakovits, on behalf of the Special Committee, shoulddirectly participate in the next meeting between Mr. R. Taubman and Mr. Simon, which had been scheduled forJanuary12,2020.
LateronJanuary10,2020,Ms.MarakovitsandMr.EmblerheldatelephoneconversationwithMr.R.Taubmanto discuss potential next steps, indicating, among other things, the Special Committee’s determination thatMs. Marakovits should participate in the January 12, 2020 discussion between Mr. R. Taubman and Mr. Simon.Ms.MarakovitsandMr.EmbleraskedMr.R.TaubmanwhethertheTaubmanfamilywouldbeinterestedinpotentiallyselling all of their interests in the Taubman operating partnership to Simon in the proposed transaction, and Mr. R.TaubmansaidthattheTaubmanfamilywouldnotbeinterestedindoingso.
Later onJanuary10, 2020, theSpecial Committee helda meeting, withrepresentatives of KirklandandLazardpresent. Ms. Marakovits provided an update on the conversation that she and Mr. Embler had earlier that day withMr. R. Taubman. The Special Committee discussed with the representatives of Kirkland open issues in the mergeragreement and the JV agreement. The representatives of Lazard reviewed with the Special Committee Lazard’spreliminary analysis of the January9Proposal, includingrelative to the UpdatedDecember 6Proposal. TheSpecialCommittee then discussed next steps for responding to the January 9 Proposal, including views on the best way toincreaseSimon’sproposedpriceandtheappropriatesequencingofdiscussionsregardingpriceandgovernancetermstoobtainthebestoutcomefortheunaffiliatedTaubmancommonshareholders.TheSpecialCommitteealsodiscussedaframeworkforobligatingtheTaubmanfamilymemberstofacilitatethemakingofasuperiorproposal(the“TaubmanFamily Commitments”) and instructed Kirkland to propose to Mr. R. Taubman a draft of the Taubman FamilyCommitments that wouldrequire the Taubmanfamily members to vote all of their ownershipinterests in favor of asuperior proposal that provided for (i) (x) aggregate sale proceeds to the Taubmanfamily members that are at leastequal to the proceeds to be received in a transaction with Simon and (y) other terms with respect to the Taubmanfamilymembers’investmentthatareatleastasfavorableasawholetothoseprovidedinatransactionwithSimonor(ii)thesaleofalloftheTaubmanfamilymembers’ownershipinterestsatapricethatwouldprovidepersharenetsaleproceedsto theTaubmanfamilymembers that are at least equal to theproceedstheywouldreceivein a transactionwithSimon.ThedraftTaubmanFamilyCommitmentsalsorequiredtheTaubmanfamilymemberstonegotiateingoodfaithwiththeSpecialCommitteeanysuperiorproposalthatdidnotinitiallysatisfythesecriteria.
OnJanuary11,2020,theSpecialCommitteeheldameeting,withrepresentativesofKirklandandLazardpresent.At the meeting, the Special Committee andits advisors further discussed next steps for responding to the January 9Proposal, including views on the best way to increase Simon’s proposed price and the appropriate sequencing ofdiscussions regarding price and governance terms to obtain the best outcome for the unaffiliated Taubmanshareholders. Following discussion, it was the consensus of the Special Committee that the parties should agree onpricepriortofurthernegotiatinggovernanceterms.
Later on January 11, 2020, Ms. Marakovits contacted Mr. R. Taubman and informed him that the SpecialCommitteehadconcludedthatattheupcomingJanuary12meetingwithMr.Simon,thepartiesshouldagreeonpricepriortofurthernegotiatinggovernanceterms.
OnJanuary12,2020,LazardprovidedMs.MarakovitswithpreliminaryfinancialanalysesrelatingtotheJanuary9Proposal, toassist Ms. Marakovits inher discussionwithMr. R.TaubmanandMr. Simonscheduledforlater thatday.
OnJanuary12,2020,Ms.Marakovits,Mr.R.TaubmanandMr.SimonmettodiscusstheJanuary9Proposal.ThepartiesdiscussedthefinancialaspectsoftheJanuary9Proposal,includinginlightofTaubman’sprospects,potentialaccretiontoSimoninlightoftheshiftinconsiderationmixtoall-cashandSimon’sabilitytopay,amongotheraspects.Duringthisconversation,Mr.SimoncommunicatedtoMs.MarakovitsandMr.R.Taubmanthat,inlightofavarietyof factors, including the deteriorating retail environment, the pending bankruptcy of Forever 21 and Simon’s recentstockperformance,thepersharepriceof$57.00representedSimon’sbestandfinalpriceandthat,shouldthepartiesfailtoagreeonpriceandmoveforwardwiththetransactionatthattime,Simonwouldneedtoputthetransactiononhold,foraperiodoffourtosixweeks,whileitfocusedonapotentialtransactioninvolvingForever21.Atthemeeting,Ms.MarakovitsagreedonbehalfoftheSpecialCommitteetoproceedwiththepotentialtransactiononthebasisofapersharepriceof$57.00incashand,onbehalfoftheSpecialCommittee,shethen
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authorizedMr.R.TaubmantofurtherdiscussgovernancetermswithMr.Simon.Mr.R.Taubmanalsoindicatedthathewasinfavorofproceedingwiththepotentialtransactiononthebasisofapersharepriceof$57.00incash.Mr.R.Taubman and Mr. Simon then discussed, among other terms, that the Taubman family members would sellapproximately one-third of their interests in the Taubman operating partnership for cash at the same price to bereceivedbytheunaffiliatedholdersofTaubmanoperatingpartnershipunits,thetermsofaone-timeputrightfortheTaubmanfamilymemberstosellalloftheirinterestsintheTaubmanoperatingpartnershiptoSimonduringthethirdyearfollowingtheclosingofthetransaction,andcertainotheraspectsofthedraftJVagreement,includingminimumdistribution requirements, consent rights and the valuation mechanisms in the case of sales by the Taubman familymembersoftheirinterestsintheJointVenture.
LateronJanuary12,2020,andagainonJanuary13,2020,representativesofTaubmanseniormanagement,Simonseniormanagement,WachtellLiptonandPaulWeissmettodiscusstheopenissuesintheJVagreement,includingtheTaubman family members’ desire to have the right to sell to Simon, following the closing of the acquisition ofTaubman, all of their interests in the Taubman operating partnership at a fixed price equal to the price paid to theunaffiliated holders of Taubman operating partnership units in the acquisition of Taubman. In the course of thesediscussions,Mr.R.Taubmanultimatelyagreed,amongotherthings,thattheTaubmanfamilymemberswouldnothavethe right under the JVagreement to sell to Simon, following the closing of the acquisition of Taubman, all of theirremaining interests in the Taubman operating partnership at a fixed price equal to the price paid to the unaffiliatedTaubmanshareholdersintheacquisitionofTaubman.
On January 14, 2020, members of Simon senior management and Taubman senior management met for a duediligencesessiontodiscuss,amongotherthings,Taubman’s2020budget.
AlsoonJanuary14,2020,adraftofthevotingagreementwassenttoSimon.Thedraftofthevotingagreementdid not include a “tail” provision requiring the Taubman family members to vote against any alternative proposalsubmittedtoTaubman’sshareholdersduringthe12-monthperiodfollowinganyterminationofthemergeragreement.Between January 14, 2020 and February 9, 2020, the parties negotiated the provisions of the voting agreement,includingthecircumstancesunderwhichthevotingagreementwouldterminate.
AlsoonJanuary14,2020,KirklandsentthedraftTaubmanFamilyCommitmentstoWachtellLiptonforreviewbyMr.R.Taubman.
On January 15, 2020, the Special Committee held a meeting, with Mr. R. Taubman and representatives ofKirklandandLazardpresent.Atthemeeting,Mr.R.TaubmanprovidedthemembersoftheSpecialCommitteewithanupdateonhisdiscussionswithMr.SimonregardingtheJVagreementtodate,includingtheJanuary12meetingwithMr.Simonandsubsequentdiscussions.TheSpecialCommitteediscussedthesemattersandpotentialnextsteps,anditwas the consensus of the Special Committee that the parties should proceed to execute a transaction subject tofinalizingallopenissuesintheagreementsinasatisfactorymanner.
OnJanuary16,2020,representativesofKirklandandWachtellLiptonsentreviseddraftsofthemergeragreementand JV agreement to Simon. The draft merger agreement contemplated, among other things: (i) a “fiduciary out”termination provision that would allow Taubman to terminate the merger agreement to accept a superior proposalbeforeandafterthego-shopperiod;(ii)a45-day“open”go-shopprovision;(iii)aterminationfeepayablebyTaubmanto Simonof 1.25%of the value of Taubman’s equity to be acquired by Simonin the Transactions in the event thatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposalduringthego-shopperiodorwithanypartythat has submitted an acquisition proposal during the go-shop period that the Special Committee has determined ingoodfaithconstitutesorcouldreasonablybeexpectedtoleadtoasuperiorproposal;(iv)aterminationfeepayablebyTaubmantoSimonof2.5%oftheequityvalueofTaubmantobeacquiredbySimonintheTransactionsintheeventthatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposalinothercircumstancesfollowingthego-shopperiod;(v)aregulatoryeffortsprovisionthatrequiredSimontodoallthingsnecessary,properandadvisableto obtain regulatory approvals, except that Simon would not be required to commit to or make any regulatoryconcession with respect to specified properties of Taubman; and (vi) no closing conditions related to the receipt ofcontractualconsentsfromthirdpartiesandnomandateddelayperiodtocompletetheproposedtransactionifanythird-partyconsentshavenotbeenobtainedwhenallotherclosingconditionshavebeensatisfied.ThereviseddraftoftheJVagreement continued to have open points regarding, among other items, minimum distribution requirements, theprocesstoapprovetheannualbudgetandconsequencesifanannualbudgetwasnotapproved,consentrightsregardingtheoperationoftheJointVenturefollowingtheclosing,thedispute
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resolutionprocessifaconsentfromtheotherpartyonoperationalmatterswasnotobtained,therightoftheTaubmanfamilymemberstoexchangealloftheirinterestsintheJointVenturebetweenthesecondandthirdanniversariesoftheclosingandotherliquiditymechanicsandvaluationmechanisms.
LateronJanuary16,2020,WachtellLiptonsentareviseddraftoftheTaubmanFamilyCommitmentstoKirklandreflecting the positions of the Taubmanfamily members. Thedraft provided, amongother things, that the Taubmanfamily members would reasonably cooperate with the go-shop process, but only with respect to transactions thatprovidea structure similar to that of thetransactionwithSimon, includinganongoingpartnershiparrangement withrespecttotheTaubmanoperatingpartnership.
On January 19, 2020, representatives of Taubman and Simon met to discuss the merger agreement, withrepresentativesofKirkland,WachtellLiptonandLathampresent.Atthemeeting,thepartiesdiscussedopenissuesinthemergeragreement,including,amongotherthings,provisionsregardingterminationrights,terminationfees,thego-shopperiodandthird-partyconsents.
On January 20, 2020, Simon sent a revised draft of the merger agreement to Taubman. The draft mergeragreementcontemplated,amongotherthings:(i)a45-day“closed”go-shopprovisionthatwouldnotpermitTaubmanto paya lower termination fee if the merger agreement was terminated after the expiration of the go-shopperiod inconnection with anyalternative proposal that was initially received during the go-shopperiod; (ii) a termination feepayable by Taubmanto Simonof 1.9%of the value of Taubman’s equity to be acquired by Simonin the proposedtransactionintheeventthatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposalduringthego-shop period; (iii) a termination fee payable by Taubman to Simon of 3.8% of the equity value of Taubman to beacquiredbySimonintheproposedtransactionintheeventthatTaubmanterminatesthemergeragreementtoenterintoa superior proposal following the go-shop period; and (iv) closing conditions related to the receipt of certaincontractualconsentsfromthirdparties.Thereviseddraftofthemergeragreementdidnotchangetheregulatoryeffortscovenant that wasinTaubman’spreviousdraft, butnotedthat theregulatoryefforts provisionwassubject toreviewandcommentbySimon’scounsel.
OnJanuary21,2020,Messrs.R.TaubmanandSimonandrepresentativesofWachtellLiptonandPaulWeissmettodiscusstheopenissuesintheJVagreement,includingrequiredminimumdistributionsandtheliquidityprovisions.After the meeting, Taubman sent a draft of the JV agreement to Simon reflecting these discussions. Thereafter, thepartiescontinuedtoexchangeandnegotiatedraftsoftheJVagreement.
Later on January 21, 2020, representatives of Taubman and Simon met to discuss the merger agreement, withrepresentativesofKirkland,WachtellLiptonandLathampresent.Atthemeeting,thepartiesdiscussedopenissuesinthemergeragreement,including,amongotherthings,theprovisionsregardingterminationfees,thego-shopperiodandthirdpartyconsents.
OnJanuary22,2020,KirklandsentareviseddraftoftheTaubmanFamilyCommitmentstoWachtellLipton.Thedraftprovided,amongotherthings,that(i)anyTaubmanfamilymemberthatisadirectororofficerofTaubmanwillcooperate with the Special Committee and its advisors to facilitate the go-shop process, (ii) Mr. R. Taubman willnegotiateingoodfaith(onbehalfoftheTaubmanfamilymembers)withacompetingbidderthathasmadeaproposalwhichtheSpecialCommitteedeterminesisasuperiorproposal,orisreasonablylikelytoleadtoasuperiorproposal,andthathasastructuresimilartothetransactionswithSimonand(iii)Mr.R.Taubmanwilldiscussingoodfaithwiththe Special Committee terms on which the Taubman family members might be willing to agree to an alternativetransactionthatdoesnothaveastructuresimilartothetransactionwithSimon.
Later on January 22, 2020, the Special Committee held a meeting, which was attended by certain of theCompany’s other independent directors and representatives of Kirkland and Lazard. During the meeting, therepresentatives of Kirkland again reviewed the fiduciary duties of the directors, and the representatives of LazardreviewedwiththeSpecial CommitteeLazard’s financial analysesrelatingtoapotential transactionwithSimon.TherepresentativesofLazardalsoreviewedwiththeSpecialCommitteevariousstrategicalternativesthatcouldpotentiallybeavailabletoTaubman,includingexecutingonitsstrategicplan,engaginginjointventureswithrespecttovariousassets,spinning-offaportfolioofvariousassetsandsellingTaubmantoanalternativestrategicorfinancialbuyer.Inconnectionwiththisdiscussion,therepresentativesofKirklandprovidedtheSpecialCommitteewithanupdateonthestatusoftheTaubmanFamilyCommitmentsandtheotherdrafttransactiondocuments,includingthemergeragreementand the JV agreement. Between January 22, 2020 and January 25, 2020, representatives of Kirkland and WachtellLiptonfinalizedthetermsoftheTaubmanFamilyCommitments.
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OnJanuary23,2020,representativesofKirklandsentareviseddraftofthemergeragreementtoSimon.Thedraftmergeragreementcontemplated,amongotherthings:(i)aterminationfeepayablebyTaubmantoSimonof1.25%ofthevalueofTaubman’sequitytobeacquiredbySimonintheTransactionsintheeventthatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposalduringthego-shopperiodorwithintwofull“match”rightperiodsfollowingtheexpirationofthego-shopperiodwithanythirdpartythathassubmittedanacquisitionproposalduringthe go-shop period that the Special Committee has determined in good faith constitutes or could reasonably beexpectedtoleadtoasuperiorproposal;(ii)aterminationfeepayablebyTaubmantoSimonof3.0%oftheequityvalueofTaubmantobeacquiredbySimonintheTransactionsintheeventthatTaubmanterminatesthemergeragreementtoenterintoasuperiorproposalinothercircumstancesfollowingthego-shopperiod;(iii)aregulatoryeffortsprovisionthatrequiredSimontodoallthingsnecessary,properandadvisabletoobtainregulatoryapprovals,exceptthatSimonwouldnotberequiredtocommittoormakeanyregulatoryconcessionwithrespecttospecifiedpropertiesofSimon;and(iv)noclosingconditionsrelatedtothereceiptofcontractualconsentsfromthirdpartiesandnomandateddelayperiodtocompletetheproposedtransactionifanythirdpartyconsentshavenotbeenobtainedwhenallotherclosingconditionshavebeensatisfied.
Later onJanuary23, 2020,representatives ofTaubmanandSimonheldatelephoneconversationtodiscussthemerger agreement, with representatives of Kirkland, Wachtell Lipton and Latham present. The parties discussed,among other things, the regulatory commitments applicable to Taubman and Simon and the provisions regardingterminationfees,thego-shopperiodandthirdpartyconsents.
On January 24, 2020, Simon sent a revised draft of the merger agreement to Taubman. The draft mergeragreementcontemplated,amongotherthings:(i)aterminationfeepayablebyTaubmantoSimonof1.25%ofthevalueof Taubman’s equity to beacquiredbySimonintheTransactions (whichamount wasbracketedin thedraft mergeragreement,andsubsequentlyacceptedbySimon)intheeventthatTaubmanterminatesthemergeragreementtoenterinto a superior proposal during the go-shop period or within 10 business days following the expiration of a single“match”periodbeginningpriortotheexpirationofthego-shopperiodandendingfollowingtheexpirationofthego-shop period with any party that has submitted an acquisition proposal during the go-shop period that the SpecialCommittee has determined in good faith constitutes a superior proposal (which was subsequently accepted byTaubman);(ii)aterminationfeepayablebyTaubmantoSimonof3.0%oftheequityvalueofTaubmantobeacquiredbySimonintheTransactions(whichamountwasbracketedinthedraftmergeragreement,andsubsequentlyacceptedby Simon) in the event that Taubman terminates the merger agreement to enter into a superior proposal in othercircumstances following the go-shop period; (iii) a regulatory efforts provision that required Simon to do all thingsnecessary,properandadvisabletoobtainregulatoryapprovals,exceptthatSimonwouldnotberequiredtocommittoormakeanyregulatoryconcessionwithrespecttospecifiedpropertiesofTaubmanorSimon;(iv)noclosingconditionrelatedtothereceiptofcontractualconsentsfromthirdparties;and(v)aprovisionallowingSimontodelaytheclosingoftheTransactionsuntil sixmonthsafterthedateofthemergeragreementifcertaincontractualconsentsfromthirdpartieshavenotbeenobtained.
FromJanuary24,2020throughJanuary26,2020,thepartiescontinuedtoexchangedraftsof,andnegotiatetheprovisionsof,themergeragreementandtheJVagreementandrelatedtransactiondocumentsandschedules.
On January 26, 2020, Mr. Simon contacted Mr. R. Taubman and communicated that while Simon was stillinterested in pursuing a transaction with Taubman, it would need to assess market conditions further and would notcontinuetoengageinnegotiationsofthetransactionagreementsuntilSimonhadmadesuchanassessment.
Later on January 26, 2020, the Taubman Board held a meeting, which was attended by members of seniormanagement andrepresentatives of Wachtell Lipton, HonigmanandKirkland. Duringthe meeting, Mr. R. TaubmanupdatedtheTaubmanBoardregardingthelatestdiscussionswithMr.SimonandMr.Simon’spositionontransactiontimingandtheopenissuesinthetransactiondocuments.
Later on January 26, 2020, the Special Committee held a meeting, which was attended by representatives ofKirkland and Lazard. During the meeting, the representatives of Kirkland provided an update on the status of thetransaction documents and the representatives of Lazard reviewed with the Special Committee Lazard’s financialanalysesofthepotentialtransactionwithSimon.
FollowingJanuary26,2020anduntilFebruary5,2020,Mr.SimonandMr.R.Taubmanremainedincontactanddiscussed market developments and whether to reengage in discussions regarding a potential transaction.Mr.R.TaubmanregularlyinformedmembersoftheSpecialCommitteeregardingsuchdiscussions.
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OnJanuary28,2020,theSpecialCommitteeheldameeting,whichwasattendedbyrepresentativesofKirklandand Lazard. During the meeting, the Special Committee discussed the status of discussions with Simon regarding apotentialtransaction.
BetweenthecloseoftradingonJanuary23,2020andJanuary31,2020,Taubman’sstockpricedeclinedby16.4%(from$31.59to$26.42)andSimon’sstockpricedeclinedby9.6%(from$147.25to$133.15).
OnJanuary31,2020,theTaubmanBoardheldameeting,whichwasattendedbymembersofseniormanagementandrepresentativesofWachtellLiptonandHonigman.Duringthemeeting,Mr.R.TaubmaninformedmembersoftheTaubmanBoardregardingthelatestdiscussionswithMr.Simonandthestatusoftheproposedtransaction.
OnFebruary3,2020,marketrumorsemergedthatSimonwasengagingindiscussionstoacquireTaubman.OnFebruary4,2020,BloombergpublishedanarticlereportingthatTaubmanandSimonhadbeenengagedindiscussionsregardingapotentialtransaction.
On February 5, 2020, Mr. Simon contacted Mr. R. Taubman and communicated that Simon was prepared toreengage in transaction discussions, but that Simon would not pay more than $52.00 per share. FollowingMr. R. Taubman’s objection to the revised proposal, Mr. Simon offered to increase the purchase price to$52.50pershareincash(the“February5Proposal”),butstatedthatthiswasSimon’sbestandfinaloffer,andthattheFebruary5ProposalwasconditionedontheagreementoftheTaubmanfamilymemberstocertainpointsthathadnotpreviouslybeenrequested,namelyto(i)furtherexploretheabilityofSimontoobtainpotentialsynergiesinthecontextof the Taubman operating partnership post-closing ownership structure, (ii) provide Simon with the ability to delaypayment for one year on its acquisition of one-half of the Taubman family members’ equity interests in the JointVentureiftheTaubmanfamilymembersexercisetheirone-timeexchangerighttosell100%oftheirequityintheJointVentureinthethirdyearfollowingtheclosingofthetransactionsaspermittedbytheJVagreementand(iii)provideSimon with a right to call all of the Taubman family members’ equity interests in the Joint Venture in certaincircumstances.Mr.R.TaubmanindicatedtoMr.SimonthatwhiletheSpecialCommitteewouldneedtodeterminetheacceptabilityofthepricebeingproposed,Mr.R.Taubmanwouldbewillingtoconsidertheproposedchangestothegovernanceprovisionsinthecontextoftheoveralltransaction.
OnFebruary5,2020,theTaubmanBoardheldameeting,whichwasattendedbymembersofseniormanagementand representatives of Wachtell Lipton and Honigman. At the meeting, Mr. R. Taubman provided an update on hisrecent discussions with Mr. Simon and the February 5 Proposal. The Taubman Board discussed the February 5ProposalandpotentialresponsestoSimon.
LateronFebruary5,2020,theSpecialCommitteeheldameeting,whichwasattendedbyMr.R.TaubmanandrepresentativesofKirklandandLazard.Duringthemeeting,Mr.R.TaubmanfurtherdiscussedtheFebruary5Proposaland his perspectives on the terms proposed by Simon, noting his willingness to agree to post-closing governanceprovisions proposed by Simon in the context of a transaction that provided significant value to the unaffiliatedTaubman common shareholders, subject to negotiating the specific terms and conditions of such provisions. Mr. R.TaubmanfurthernotedthatsincethepublicationoftheFebruary4BloombergarticleregardingapotentialacquisitionofTaubman,Taubmanhadreceivedmanycallsfrominvestorsandotherparties,butthatnopartyhadcalledtoinquireaboutacquiringTaubman.AfterMr.R.Taubmanleftthemeeting,theSpecialCommitteediscussedthepossibilityofagain requesting that the Taubman family members sell all of their interests to Simon or concede additional post-closing governance rights if doing so could lead Simon to pay additional consideration to the unaffiliated Taubmancommon shareholders. Following discussion, the Special Committee concluded that pursuing such an approach wasunlikelytogenerateadditionalvaluefortheunaffiliatedTaubmancommonshareholdersfromSimonandwouldlikelyinsteadjeopardizeatransactionthatthemembersoftheSpecialCommitteeviewedascompelling,particularlyinlightofthesignificantmarketriskandSimon’sconcernsaboutthemarketandretailenvironment.Followingdiscussion,itwas the consensus of the Special Committee that the parties should work expeditiously to finalize and execute thetransactionagreements.
Thatsameday,onFebruary5,2020,Mr.EmblercontactedMr.R.TaubmantoconveytheSpecialCommittee’sviews.
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Later on February 5, 2020, Simon sent revised drafts of the merger agreement, the JV agreement, the votingagreement and other various transaction documents and schedules to Taubman. FromFebruary 5, 2020 through theexecutionofthemergeragreementonFebruary9,2020,thepartiesnegotiatedtheprovisionsofthemergeragreement,theJVagreement,thevotingagreementandothervarioustransactiondocumentsandschedules.
OnFebruary6,2020,theSpecialCommitteeheldameeting,whichwasattendedbyrepresentativesofKirklandand Lazard. At the meeting, the representatives of Kirkland provided an update on the status of the transactionagreementsandtherepresentativesofLazardreviewedwiththeSpecialCommitteeLazard’sfinancialanalysesoftheFebruary5Proposal.
Between the close of trading on January 31, 2020 and February 7, 2020, Taubman’s stock price increased by31.2%(from$26.42to$34.67).
OnFebruary9,2020,theSpecialCommitteeheldameeting,whichwasattendedbyTaubman’sotherindependentdirectorsandrepresentativesofKirklandandLazard.Atthemeeting,therepresentativesofKirklandagainreviewedthe fiduciary duties of the directors and provided a summary of the final terms of the transaction agreements. Therepresentatives of Lazard reviewed Lazard’s financial analysis of the Transactions and rendered its oral opinion,confirmedbydeliveryofawrittenopiniondatedFebruary9,2020,totheSpecialCommitteetotheeffectthat,asofthat date and based upon and subject to the qualifications, limitations and assumptions stated in such opinion, theconsiderationtobepaidbySimontotheholdersofTaubmancommonstock(otherthantheTaubmanfamilymembers)in the REIT Merger was fair, from a financial point of view, to such holders. The representatives of Lazard alsoreviewedwiththeSpecialCommitteetheproposedgo-shopprocess.TheSpecialCommitteeunanimouslydeterminedthatthemergeragreementandtheTransactionsareadvisableandfairto,andinthebestinterestsof,TaubmanandtheTaubmanshareholders,andtheSpecialCommitteeunanimouslyrecommendedthattheTaubmanBoard:(i)determinethatthemergeragreementandtheTransactionsareadvisableandfairto,andinthebestinterestsof,TaubmanandtheTaubmanshareholders;(ii)adoptandapprovethemergeragreementandtheTransactions;(iii)subjecttothetermsofthemergeragreement,resolvetorecommendthattheTaubmanshareholdersadoptandapprovethemergeragreement;and(iv)directthatthemergeragreementbesubmittedtotheTaubmanshareholdersandtheholdersofTaubmanSeriesBPreferredStockfortheiradoptionandapproval.
Immediately following the meeting of the Special Committee on February 9, 2020, the Taubman Board held ameeting, which was attended by Taubman senior management and representatives of Wachtell Lipton, Honigman,KirklandandLazard.Atthemeeting,theTaubmanBoard,actingupontheunanimousrecommendationoftheSpecialCommittee:(i)unanimouslydeterminedthatthemergeragreementandtheTransactionsareadvisableandfairto,andinthebestinterestsof,TaubmanandtheTaubmanshareholders;(ii)adoptedandapprovedthemergeragreementandthe Transactions; (iii) subject to the terms of the merger agreement, resolved to recommend that the Taubmanshareholdersadoptandapprovethemergeragreement;and(iv)directedthatthemergeragreementbesubmittedtotheTaubmanshareholdersandtheholdersofTaubmanSeriesBpreferredstockfortheiradoptionandapproval.
LaterintheeveningonFebruary9,2020,thepartiesexecutedanddeliveredthemergeragreementandthevotingagreement.
OnthemorningofFebruary10,2020,TaubmanandSimonissuedajointpressreleaseannouncingtheproposedtransaction and the go-shop period commenced. Later that same day, in connection with the go-shop period, at thedirection of the Special Committee, representatives of Lazard began contacting potential counterparties to activelysolicittheirinterestinmakinganacquisitionproposalwithrespecttoTaubman.
During the go-shop period, Lazard contacted 18 potential counterparties, consisting of 4 strategic parties and14financialsponsorparties.NoneofthesepartiesenteredintoaconfidentialityagreementwithTaubmanorreceivednon-publicduediligenceinformationaboutTaubman.Inaddition,noneofthesepartiesmadeanacquisitionproposalwith respect to Taubman. During the go-shop period, the Special Committee regularly held meetings withrepresentativesofLazardandKirklandtodiscussupdatesregardingthego-shopprocess.
Thego-shopperiodexpiredat11:59p.m.,NewYorkCitytime,onMarch25,2020.
Reasons for the Transactions and Recommendation of the Special Committee and the Taubman Board
As described above under the section entitled “—Background of the Transactions,” the Taubman Boardestablished the Special Committee and delegated to it the Taubman Board’s power and authority to, among otherthings:(i)reviewandevaluatethepossiblesaleofTaubman;(ii)identify,reviewandevaluatealternativestothe
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possiblesaleofTaubmanthatmaybeavailabletoTaubman,includingremaininganindependentcompany;(iii)iftheSpecialCommitteeconsidersitadvisableorappropriate,negotiatetheprice,structure,form,termsandconditionsofasale of Taubman or any alternative thereto and the form, terms and conditions of any definitive agreements inconnectiontherewith;(iv)determinewhetherasaleofTaubmanoranyalternativetheretoisfairto,advisableandinthebestinterestsofTaubmananditsshareholders;(v)engage,andobtainanynecessaryordesirableadvice,assistanceand opinions from, financial advisors or other advisors, consultants and agents; and (vi) recommend to the fullTaubmanBoardwhataction,ifany,shouldbetakenbyTaubmanwithrespecttoasaleofTaubmanoranyalternativethereto.
Withtheassistanceofitslegalandfinancialadvisors,theSpecialCommitteeevaluatedthemergeragreementandtheTransactionsand,onFebruary9,2020,theSpecialCommitteeunanimouslydeterminedthatthemergeragreementand the Transactions are advisable and fair to, and in the best interests of, Taubman and the Taubman commonshareholders, and unanimously recommended that the Taubman Board, among other things: (i) determine that themerger agreement and the Transactions are advisable and fair to, and in the best interests of, Taubman and theTaubmancommonshareholders;(ii)adoptandapprovethemergeragreementandtheTransactions;(iii)subjecttothetermsofthemergeragreement,resolvetorecommendthattheTaubmancommonshareholdersadoptandapprovethemergeragreement;and(iv)directthatthemergeragreementbesubmittedtotheTaubmancommonshareholdersandtheholdersofTaubmanSeriesBpreferredstockfortheiradoptionandapproval.
OnFebruary9,2020,theTaubmanBoard,actingupontheunanimousrecommendationoftheSpecialCommittee:(i) determinedthat the merger agreement andthe Transactions are advisable andfair to, andin the best interests of,Taubman and the Taubman common shareholders; (ii) adopted and approved the merger agreement and theTransactions; (iii) subject to the terms of the merger agreement, resolved to recommend that the Taubmancommonshareholdersadoptandapprovethemergeragreement;and(iv)directedthatthemergeragreementbesubmittedtotheTaubmancommonshareholdersandtheholdersofTaubmanSeriesBpreferredstockfortheiradoptionandapproval.Accordingly, the Taubman Board unanimously recommends that you vote “FOR” the Merger AgreementProposal, “FOR” the Advisory Compensation Proposal and “FOR” the Adjournment Proposal.
WhenyouconsidertheSpecialCommitteeandtheTaubmanBoard’srecommendation,youshouldbeawarethatcertainTaubmandirectorsandexecutiveofficersmayhaveinterestsintheTransactionsthatmaybedifferentfrom,orin addition to, those of the other Taubman shareholders. The Special Committee, consisting entirely of independentdirectors, wasawareofandconsideredtheseinterests, amongothermatters, inevaluatingthemergeragreementandthe Transactions and in making its decision to recommend that the Taubman Board adopt and approve the mergeragreementandtheTransactions.Formoreinformationabouttheseinterests,refertothesectionentitled“—Interests ofTaubman’s Directors and Executive Officers in the Transactions.” The Special Committee and the Taubman BoardbelievethattheTransactions,includingtheREITMerger,arefairtoTaubman’sunaffiliatedsecurityholders.
The Special Committee engaged its own legal and financial advisors and received advice throughout thenegotiations from such advisors. Since the members of the Special Committee are disinterested with respect to theTransactions, independent of andnot affiliated with Simon, the Taubmanfamily members or anyof their respectiveaffiliates,theSpecialCommitteebelievedthatitcouldeffectivelyrepresenttheinterestsoftheunaffiliatedTaubmanshareholders in negotiating the terms of the Transactions. In evaluating the merger agreement and the Transactions,including the REIT Merger, and in the course of reaching their determinations and decisions described above, andmaking the recommendations described above, the Special Committee and the Taubman Board considered, amongother things, the following factors and potential benefits of the Transactions (not necessarily in order of relativeimportance),eachofwhichtheybelievedsupportedtheirrespectivedecisions:
• the Special Committee’s belief and the Taubman Board’s belief that the consideration to unaffiliatedTaubmanshareholderspershareofTaubmancommonstock,asfurtherdescribedunderthesectionentitled“The Merger Agreement—REIT Merger—Treatment of Taubman Common Stock and Taubman Series BPreferred Stock,” wasmorefavorable to suchholders thanthepotential valuethat might result fromotheralternatives reasonably available to Taubman, including the alternative of remaining an independentcompany and pursuing Taubman’s current strategic plan, and other strategic or financial alternatives thatmight be undertaken as an independent company, in light of a number of factors, including the risks anduncertaintiesassociatedwiththosealternatives;
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• thecurrentandhistoricalmarketpricesofTaubmancommonstock,includingthefactthattheconsiderationof$52.50pershareofTaubmancommonstockrepresents:○ an implied premium of 98.7% to the closing share price for Taubman common stock of $26.42 on
January 31, 2020, the last trading day prior to market rumors emerging that Simon was engaging indiscussionstoacquireTaubman;
○ an implied premium of 51.4% to the closing share price for Taubman common stock of $34.67 onFebruary7,2020,thelastcompletedtradingdaybeforetheannouncementoftheTransactions;and
○ an implied premium of 32.6% to the volume-weighted average price of $39.60 for the shares ofTaubmancommonstockoverthe52-weekperiodendedJanuary31,2020,thelasttradingdaypriortomarketrumorsemergingthatSimonwasengagingindiscussionstoacquireTaubman;
• the Special Committee’s and the Taubman Board’s respective reviews of Taubman’s business, operations,financial condition, strategy, prospects and the risk in achieving such prospects, as well as industryconditionsandtrends,andtheSpecialCommittee’sandtheTaubmanBoard’sviewthattheconsiderationtobe paid in connection with the Transactions was fair in light of Taubman’s business, operations, financialcondition,strategy,prospectsandtheriskinachievingsuchprospects, aswellasTaubman’shistoricalandprojected financial performance, taking into account, among other things, the projections prepared byTaubmanmanagementwithrespecttoTaubman’sprospectsasanindependentcompany,asfurtherdescribedbelowinthesectionentitled“—Certain Unaudited Prospective Financial Information”;
• theSpecialCommittee’sandtheTaubmanBoard’srespectiveunderstandingsofTaubman’sbusiness,assets,financial condition andresults of operations, its competitive position andhistorical and projected financialperformance,andthenatureandchallengesoftheretailpropertyindustry;
• thatthetransactionconsiderationprovidesTaubmanshareholderswithimmediatecertaintyofgreatervalueand liquidity at an attractive per share equity value without the market or execution risks associated withcontinuedindependence;
• the financial presentation of Lazard dated February 9, 2020, and the oral opinion of Lazard, subsequentlyconfirmedbydeliveryofawrittenopiniondatedFebruary9,2020,renderedtotheSpecialCommittee,totheeffectthat,asofFebruary9,2020,andbasedonandsubjecttothefactorsandassumptionssetforthinthewrittenopinion, theconsiderationto bepaidtotheTaubmancommonshareholders (other thanSimon, theTaubmanfamilymembersandanyoftheir respectiveaffiliates) pursuanttothemergeragreementwasfairfromafinancialpointofviewtosuchholders,asfurtherdescribedunder“—Opinion of Financial Advisor tothe Special Committee”;
• thatthemergeragreementallowsallunaffiliatedholdersofTaubmanOPunitstoelecttoreceive(i)thesamecashconsiderationtobereceivedbyTaubmanshareholders or (ii) a numberof SimonOPunits equal toafixed exchange ratio, as further described under “—Certain Effects of the Transactions—The PartnershipMerger and LLC Conversion”;
• thattheexchangeratiowithrespecttotheexchangeofTaubmanOPunitsforSimonOPunitsisfixedandwill not be adjusted for fluctuations in the market price of Simon common stock and, because Simon OPunitsareconvertibleintosharesofSimoncommonstock,theholdersofTaubmanOPunitsreceivingSimonOPunitsintheTransactionswillbenefitfromanyincreaseinthetradingpriceofSimonOPunitsbetweentheannouncementandtheclosingoftheTransactions;
• theSpecialCommittee’sandtheTaubmanBoard’srespectiveviewsthattheconsiderationtobepaidintheTransactionsrepresentedthehighestpershareconsiderationthatcouldbereasonablyobtained;
• the fact that, during the period since discussions regarding the Transactions began until the signing of themergeragreement,sharepricesforbothTaubmanandSimonhaddeclined;
• thattheSpecialCommitteeandtheTaubmanBoard,withtheassistanceoftheirrespectivefinancialandlegaladvisors,hadconsideredalternatives,includingcontinuingtooperateTaubmanonastandalonebasis,asaleofselectedassets,aspin-offofselectedassetsorasaletoanalternativebuyer,andconsideredthe
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risks and uncertainties associated with such alternatives, and the Special Committee’s and the TaubmanBoard’sviewthatnootheralternativeswerereasonablylikelytocreategreatervalueforTaubmancommonshareholdersthantheTransactions,takingintoaccounttheriskofexecutionaswellasbusiness,competitive,industryandmarketrisk;
• the fact that market rumors that Simon was engaging in discussions to acquire Taubman became public,whichprovidedanythirdpartywishingtoengageindiscussionswithTaubmanwithanopportunitytomakeitsinterestknown,andthefactthat,althoughtheSpecialCommitteehadnotgrantedSimonexclusivityandwasfreetoconsiderindicationsfromanyotherparty,nopotentialacquirorotherthanSimonmadeaproposalto acquire Taubman before the merger agreement was publicly announced on February 10, 2020, and theSpecial Committee’s view that, if potential acquirors were interested in exploring a transaction withTaubman, such potential acquirors could have engaged with the Special Committee or its representativesaftersuchpublicannouncement;
• the Special Committee’s and the Taubman Board’s review of the merger agreement, the structure of theTransactionsandthefinancialandothertermsandconditionsoftheTransactions;
• theeffortsmadebytheSpecialCommittee,withtheassistanceofitslegalandfinancialadvisors,tobefullyinformedandtonegotiateandexecutetransactionagreementsasfavorabletoTaubmanandtheunaffiliatedTaubmanshareholdersaspossible, andthefactthatextensivenegotiationsregardingthemergeragreementwereheldbetweentheSpecialCommitteeanditsadvisorsandSimonanditsadvisors;
• thattheTaubmanfamilymembershaveagreedtonegotiateingoodfaithwithacompetingbidderthathasmadeaproposalwhichtheSpecialCommitteedeterminesisaSuperiorProposal,orisreasonablylikelytoleadtoaSuperiorProposal,andthathasastructuresimilartotheTransactions,andthattheTaubmanfamilymembers have agreed to discuss in good faith with the Special Committee terms on which the TaubmanfamilymembersmightbewillingtoagreetoanalternativetransactionthatdoesnothaveastructuresimilartotheTransactions;
• the fact that during the go-shop period, the Special Committee and its advisors were permitted to solicit,initiate,proposeorinducethemaking,submissionorannouncementof,orencourage,facilitateorassist,anyproposal or offer that could constitute an acquisition proposal from a person other than Simon, and werepermitted to terminate the merger agreement to accept a Superior Proposal from such person as long asTaubman paid the applicable termination fee to Simon and complied with certain other procedures in themergeragreement,asmorefullydescribedunder“The Merger Agreement—The ‘Go-Shop’ Period”;
• that the merger agreement permits the Special Committee to evaluate, negotiate and recommend that theTaubmanBoardapproveacompetingtransaction,includingthat:○ the Special Committee (or the Taubman Board acting on the Special Committee’s recommendation)
maymakeaTaubmanBoardrecommendationchangepriortotheapprovalandadoptionofthemergeragreement by the Taubman shareholders, subject to compliance with the merger agreement, if itdetermines in good faith (after consultation with its legal counsel and financial advisor) that, withrespect toaSuperior Proposal, thefailuretotakesuchactionwouldbeinconsistent withits fiduciarydutiesunderapplicablelaw;and
○ the merger agreement provides for the payment of a termination fee of either $46,604,909, whichamountisequaltoapproximately1.25%ofthevalueofTaubman’sequitytobeacquiredbySimonintheTransactions(ifthemergeragreementhadbeenterminatedduringthego-shopperiodorincertaincircumstances for a limited time period thereafter) or $111,851,783, which amount is equal toapproximately3.0%ofthevalueofTaubman’sequitytobeacquiredbySimonintheTransactions(ifthemergeragreementisterminatedfollowingtheconclusionofsuchperiods)toSimonif(i)Taubmanterminates the merger agreement in connection with a Superior Proposal, (ii) Simon terminates themergeragreementinconnectionwithaTaubmanBoardrecommendationchangeor(iii)underspecifiedcircumstances,Taubmanentersintoacompetingproposalwithintwelvemonthsfollowingaterminationofthemergeragreement.TheSpecialCommitteeandtheTaubmanBoardbothbelievedthatthesefeesarereasonableinlightofthecircumstancesandtheoverall termsofthemergeragreement, consistentwithfeesincomparabletransactions,andnotpreclusiveofotheroffers.Foradditionalinformation,seethesectionentitled“The Merger Agreement—Termination”and“The Merger Agreement—TerminationFees”;
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• theothertermsofthemergeragreement,includingtheconditionstotheclosingoftheTransactions,andthat:○ themergeragreementdoesnotcontainafinancingconditionwithrespecttoanyfinancingbySimon;○ the merger agreement requires Simon to use its reasonable best efforts to obtain any necessary
regulatory approvals, subject to certain limitations described in the section entitled “The MergerAgreement—Regulatory Matters”;
○ theoutsidedateunderthemergeragreementonwhicheitherparty,subjecttospecifiedexceptions,canterminatethemergeragreement,shouldprovidesufficienttimetoconsummatetheTransactions;and
○ themergeragreementpermitsTaubmantoenforcespecificallythetermsofthemergeragreement,andtoseekdamagesintheeventofabreachbySimon;
• that Taubman would be permitted to continue to declare and pay its regular quarterly cash dividends toholders of Taubman common stock and accrue quarterly dividends to holders of eligible Taubman EquityAwardsineachfiscalquarterthroughtheclosingoftheTransactions(aswellasanyprorateddividendsfortheportionofanyquarterinwhichtheclosingoftheTransactionsoccurs,whichmaybedeclaredpriortotheclosing of the Transactions and have a record and/or payment date immediately prior to closing of theTransactions),ineachcase,subjecttothelimitssetforthinthemergeragreement;
• thatthemergeragreementissubjecttotheadoptionby(i)theaffirmativevoteoftheholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasasingleclass), (ii) theaffirmative voteof theholders of amajority of theoutstandingsharesof TaubmanSeries Bpreferredstockentitledtovotethereonand(iii)theaffirmativevoteoftheholdersofatleastamajorityoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingasasingleclass),excludingtheoutstanding shares of Taubman voting stock owned of record or beneficially by the Taubman familymembers;
• thatthemergeragreementdoesnotprovideforaterminationfeeintheeventthattheTaubmanshareholdersdonotapprovetheTransactionsintheabsenceofacompetingproposal;and
• that the Taubman family members covenanted to Simon in the voting agreement to vote their shares ofTaubmanvotingstockandtheirTaubmanOPunitsinfavoroftheTransactionsandthatthevotingagreementterminates automatically if the merger agreement is validly terminated and could be terminated by theTaubmanfamilymembersiftheTaubmanBoardchangesitsrecommendationoftheTransactions.
In the course of reaching its determinations and decisions described above and making the recommendationdescribedabove, theSpecial Committee andtheTaubmanBoardalsoconsideredanumberof factors relatingtotheproceduralsafeguardsthattheSpecialCommitteeandtheTaubmanBoardbothbelievewereandarepresenttoensurethe fairness of the Transactions and to permit the Special Committee to effectively represent the interests of theunaffiliatedTaubmanshareholders,whichproceduralsafeguardstheTaubmanBoardandtheSpecialCommitteeeachbelievedsupportedtheSpecialCommittee’sdecisionandprovidedassuranceofthefairnessoftheTransactionstosuchholders. These procedural safeguards, which are not intended to be exhaustive and are not necessarily listed in anyrelativeorderofimportance,arediscussedbelow:
• thattheSpecialCommitteewasformedattheoutsetoftheTransactions;
• thattheSpecialCommitteeconsistsoffourdirectorswhoareindependentof,andnotaffiliatedwith,Simon,theTaubmanfamilymembersoranyoftheirrespectiveaffiliates;
• thatthemembersoftheSpecialCommitteearedisinterestedwithrespecttotheTransactions;
• thattheSpecialCommitteehadexclusiveauthoritytodecidewhetherornottoproceedwithatransactionoranyalternativethereto,subjecttotheTaubmanBoard’sapprovaloftheTransactionsasrequiredbyMichiganlaw;
• thattheSpecialCommitteeretainedandwasadvisedbyitsownlegalandfinancialadvisors;
• thattheSpecialCommitteewasempoweredto,amongotherthings:(i)reviewandevaluatethepossiblesaleof Taubman; (ii) identify, review and evaluate alternatives to the possible sale of Taubman that may beavailabletoTaubman,includingremaininganindependentcompany;(iii)iftheSpecialCommittee
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considers it advisable or appropriate, negotiate theprice, structure, form,termsandconditionsof a sale ofTaubman or any alternative thereto and the form, terms and conditions of any definitive agreements inconnectiontherewith;(iv)determinewhetherasaleofTaubmanoranyalternativetheretoisfairto,advisableandinthebestinterestsofTaubmananditsshareholders;(v)engage,andobtainanynecessaryordesirableadvice, assistance and opinions from, financial advisors or other advisors, consultants and agents; and(vi)recommendtothefullTaubmanBoardwhataction,ifany,shouldbetakenbyTaubmanwithrespecttoasaleofTaubmanoranyalternativethereto;
• that the Special Committee had no obligation to recommend any transaction, including a transaction withSimon,andthattheSpecialCommitteehadtheauthoritytorejectanyproposalsmadebySimonoranyotherperson;
• thattheSpecialCommitteewasinvolvedinfrequentandextensivedeliberationsoveraperiodofmorethanthreemonthsregardingSimon’sproposaltoacquireTaubmanandtheothertransactionscontemplatedbythemergeragreement,including32SpecialCommitteemeetings,andwasprovidedwithfullaccesstoTaubmanmanagementanditsadvisorsinconnectionwithitsevaluationprocess;
• thatthemergeragreementissubjecttoa“majority-of-the-minority”votingrequirement,pursuanttowhichtheconsummationoftheTransactionsissubjecttoaconditionthatthemergeragreementbeapprovedandadoptedbytheaffirmativevoteofholdersofamajorityoftheoutstandingsharesofTaubmanvotingstocknotbeneficiallyownedbytheTaubmanfamilymembers;
• that the merger agreement provides for a “go-shop” period, during which the Special Committee and itsadvisorswerepermittedtosolicit,initiate,proposeorinducethemaking,submissionorannouncementof,orencourage, facilitate or assist, any proposal or offer that could constitute an acquisition proposal from aperson other than Simon, and were permitted to ultimately terminate the merger agreement to accept aSuperior Proposal from such person as long as Taubman complies with certain procedures in the mergeragreement,asmorefullydescribedunder“The Merger Agreement—The ‘Go-Shop’ Period”;
• thatthemergeragreementpermitstheSpecialCommittee,undercertaincircumstances,tochange,withhold,withdraw, qualify or modify its recommendation and permits Taubman under certain circumstances torespond to inquiries regarding acquisition proposals and, upon payment of a termination fee of either$46,604,909,whichamountisequaltoapproximately1.25%ofthevalueofTaubman’sequitytobeacquiredbySimonintheTransactions(ifthemergeragreementhadbeenterminatedduringthego-shopperiodorincertain circumstances for a limited time period thereafter) or $111,851,783, which amount is equal toapproximately 3.0%of the valueof Taubman’s equity to beacquired bySimonin theTransactions (if themerger agreement is terminated following such periods) to Simon, to terminate the merger agreement toacceptaSuperiorProposal(assuchtermisdefinedinthemergeragreement),asdescribedunderthesectionentitled“The Merger Agreement—The ‘No-Shop’ Period”and“The Merger Agreement—Termination Fees”;
• that the Taubman family members are receiving the same consideration as the unaffiliated Taubmanshareholderswithrespectto(i)allsharesofTaubmancommonstockheldbytheTaubmanfamilymembers(allofwhicharebeingsoldintheTransactions),(ii)allsharesofTaubmanSeriesBpreferredstockheldbythe Taubman family members (all of which are being sold in the Transactions) and (iii) the Taubman OPunitsthatarebeingsoldbytheTaubmanfamilymembersinconnectionwiththeclosingoftheTransactions;and
• that the Special Committee made its evaluation of the Transactions independent of the Taubman familymembersandtheiraffiliates,andwithknowledgeoftheinterestsoftheTaubmanfamilymembersandtheiraffiliatesintheTransactions.
TheSpecialCommitteeandtheTaubmanBoardalsoconsideredandbalancedagainstthepotentialbenefitsoftheTransactionsanumberofuncertaintiesandrisksconcerningtheTransactions,includingthefollowing(notnecessarilyintheorderofrelativeimportance):
• theparticipationintheTransactions bytheTaubmanfamilymembers andtheir affiliates, andthefact thattheirinterestsintheTransactionsdifferfromtheotherTaubmancommonshareholders(formoreinformationabouttheseinterests,refertothesectionentitled“—Interests of Taubman’s Directors and Executive Officersin the Transactions”);
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• thefactthattheconsiderationtobepaidinconnectionwiththeTransactionsof$52.50pershareofTaubmancommonstockrepresents:○ animplieddiscount of 3.3%tothehighest tradingpricefor theshares of Taubmancommonstockof
$54.30overthe52-weekperiodendedFebruary7,2020,thelastcompletedtradingdaybeforethedateoftheannouncementoftheTransactions;and
○ a reduction of $0.50 per share compared to Simon’s initial proposal on November 15, 2019, and areduction of $7.50 per share compared to the highest price proposed by Simon during the course ofnegotiations with Taubman, andthat suchchanges were accompanied bya shift froma considerationmixof25%stockconsiderationand75%cashconsiderationto100%cashconsideration;
• the potential impact of the Taubman family members’ existing ownership in Taubman and the Taubmanoperatingpartnershiponotherpotentialbidders;
• thefact thattheSpecial Committeedidnotconductaformalpre-signingmarketcheckpriortosigningthemergeragreement;
• theriskofTaubmanincurringsubstantialexpensesrelatedtotheTransactions,includinginconnectionwithanylitigationthatmayresult;
• themergeragreement’s restrictionsontheconductofTaubman’sanditssubsidiaries’ businesspriortothecompletion of the Transactions, generally requiringTaubmanandits subsidiaries to conduct their businessonly in the ordinary course, subject to specific limitations, which may delay or prevent Taubman and itssubsidiariesfromundertakingbusinessopportunitiesthatmayarisependingcompletionoftheTransactions;
• theriskthattheannouncementandpendencyoftheTransactionsmaycausesubstantialharmtoTaubman’sbusiness or its relationships with employees or tenants or other business relationships and may divertmanagementandemployeeattentionawayfromtheday-to-dayoperationofTaubman’sbusiness;
• thefactthattheunaffiliatedTaubmanshareholderswillnothavetheopportunitytocontinueparticipatinginTaubman’spotentialupsideasastandalonecompanybutthattheTaubmanfamilywill;
• that the exchange ratio with respect to the exchange of Taubman OP units for Simon OP units in theTransactionsisfixedandwill not beadjustedforfluctuationsinthemarket priceofSimoncommonstockand,becauseSimonOPunitsareconvertibleintosharesofSimoncommonstock,theholdersofTaubmanOPunitsreceivingSimonOPunitsintheTransactionswillbeimpactedbyanydecreaseinthetradingpriceofSimoncommonstockbetweentheannouncementandtheclosingoftheTransactions;
• thatthereceiptofcashinrespectofsharesofTaubmancommonstockintheTransactionswillbetaxabletoTaubmancommonshareholdersforU.S.federalincometaxpurposes(formoreinformationaboutthesetaxmatters, refer to the section entitled “—Material U.S. Federal Income Tax Consequences of the REITMerger”);
• that,underspecifiedcircumstances,theTaubmanoperatingpartnershipmayberequiredtopayaterminationfee in the event the merger agreement is terminated and the effect this could have on Taubman and itssubsidiaries,including:○ thepossibilitythattheterminationfeecoulddiscourageotherpotentialpartiesfrommakingacompeting
offer, although the Special Committee and the Taubman Board both believed that the sizes of theterminationfees, representingapproximately 1.0%ofthetotal equityvalueof Taubman(or1.25%ofthe total equity value of Taubman and its subsidiaries to be acquired by Simon in the Transactions)basedontheconsiderationof$52.50pershareofTaubmancommonstockifthemergeragreementisterminatedduringthego-shopperiodorincertaincircumstancesforalimitedtimeperiodthereafterorapproximately2.4%ofthetotalequityvalueofTaubman(or3%ofthetotalequityvalueofTaubmananditssubsidiariestobeacquiredbySimonintheTransactions)basedontheconsiderationof$52.50pershareofTaubmancommonstockifthemergeragreementisterminatedfollowingtheconclusionofsuch periods, were reasonable in amount and would not unduly deter any other party that might beinterestedinmakingacompetingproposal;and
○ ifthemergerisnotconsummated,TaubmanmayberequiredtopayitsownexpensesassociatedwiththeTransactions;
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• the fact that there can be no assurance that all conditions to the parties’ obligations to complete theTransactionswillbesatisfiedandthat,asaresult,itispossiblethattheTransactionsmaynotbecompletedevenifthemergeragreementisadoptedandtherequisiteshareholderapprovalisobtained;
• therisksandcoststoTaubmaniftheTransactionsdonotclose,includingthediversionofmanagementandemployeeattention,potentialemployeeattritionandthepotentialeffectonbusinessandtenantrelationships;
• thatcertainTaubmandirectorsandofficersmayhaveinterestsintheTransactionsthatmaybedifferentfrom,orinadditionto,thoseoftheotherTaubmanshareholders(formoreinformationabouttheseinterests,refertothesectionentitled“—Interests of Taubman’s Directors and Executive Officers in the Transactions”);
• therisksandcoststoTaubmaninconnectionwithpotentiallitigationrelatingtotheTransactions;and
• risksofthetypeandnaturedescribedunderthesectionstitled“Cautionary Statement Concerning Forward-Looking Information.”
In reaching their determinations and making their recommendations, the Special Committee and the TaubmanBoarddidnotconsiderestimatesofNAVofTaubmantobeareliablevaluationmethodbecause,amongotherthings:(i)theyconsideredtheimpracticabilityofdeterminingaliquidationvaluegiventhesignificantexecutionriskinvolvedinanybreakupofTaubmanandlackofrelevantcomparableA-ratedmallandlifestylecenterassetsand/orportfoliosthathavetradedinthemarketplace,(ii)aliquidationprocesswouldlikelyinvolveadditionalandpotentiallysignificantlegalfees,taxes,costsofsaleandotherexpensesthatwouldreduceanyamountsthatshareholdersmightreceiveuponliquidation, (iii) NAVdoes not account for overhead and other similar costs and (iv) the Taubmanfamily membershaveaconsentrightoverthesaleofanumberofTaubmanproperties.
While the Special Committee and the Taubman Board considered potentially positive and potentially negativefactors, the Special Committee and the Taubman Board concluded that, overall, the potentially positive factorsoutweighed the potentially negative factors. Accordingly, the Special Committee and the Taubman Board bothunanimously determined that the merger agreement and the Transactions are advisable and fair to, and in the bestinterestsof,TaubmanandtheTaubmancommonshareholders.
TheforegoingdiscussionisnotintendedtobeanexhaustivelistoftheinformationandfactorsconsideredbytheSpecial Committee and the Taubman Board in their consideration of the Transactions, but includes the materialpositive factors and material negative factors considered by the Special Committee and the Taubman Board in thatregard.Inviewofthenumberandvarietyoffactorsandtheamountofinformationconsidered,theSpecialCommitteeandtheTaubmanBoarddidnotfinditpracticableto,anddidnot,makespecificassessmentsof,quantify,orotherwiseassignrelativeweightstothespecificfactorsconsideredinreachingitsdetermination.Inaddition,individualmembersoftheSpecialCommitteeandtheTaubmanBoardmayhavegivendifferentweightstodifferentfactors.Basedonthetotality of the information presented, the Special Committee collectively reached the unanimous decision torecommend that the Taubman Board submit the merger agreement to the Taubman shareholders and the holders ofTaubmanSeriesBpreferredstockfortheiradoptionandapproval,andtheTaubmanBoarddidso,ineachcase,inlightofthefactorsdescribedaboveandotherfactorsthatthemembersoftheSpecialCommitteeandtheTaubmanBoardfeltwereappropriate.
The Special Committee unanimously recommends and the Taubman Board also unanimously recommends(after having received the unanimous recommendation of the Special Committee) that the Company’s shareholdersvote “FOR” the Merger Agreement Proposal, “FOR” the Advisory Compensation Proposal, and “FOR” theAdjournment Proposal.
Opinion of Financial Advisor to the Special Committee
TheSpecialCommitteeretainedLazardasfinancialadvisorinconnectionwiththeTransactions.OnFebruary9,2020, Lazardrendered its written opinion, consistent with its oral opinionrendered onthe samedate, to the SpecialCommitteethat,asofsuchdate,andbaseduponandsubjecttotheassumptions,procedures,factors,qualificationsandlimitationssetforththerein,thecommonstockmergerconsiderationtobepaidtoholdersofTaubmancommonstock(otherthanholdersofsharesofexcludedTaubmancommonstockandtheTaubmanfamilymembers)pursuanttothemergeragreementwasfair,fromafinancialpointofview,tosuchholdersofTaubmancommonstock.
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The full text of Lazard’s written opinion, dated February 9, 2020, which sets forth the assumptions made,procedures followed, factors considered and qualifications and limitations on the review undertaken by Lazardin connection with its opinion, is attached to this proxy statement as Annex B and is incorporated by referenceherein in its entirety. The following summary of Lazard’s opinion is qualified in its entirety by reference to thefull text of the opinion. You are encouraged to read Lazard’s opinion and this section carefully and in theirentirety.
Lazard’sengagementanditsopinionwereforthebenefitoftheSpecialCommittee(initscapacityassuch)andTaubman’sotherindependentdirectors(intheircapacitiesassuch),andLazard’sopinionwasrenderedtotheSpecialCommitteeinconnectionwithitsevaluationoftheREITMergerandaddressedonlythefairnessasofthedateoftheopinion, from a financial point of view, to the holders of Taubman common stock (other than holders of shares ofexcludedTaubmancommonstockandtheTaubmanfamilymembers)ofthecommonstockmergerconsiderationtobepaidtosuchholderspursuanttothemergeragreement.Lazard’sopinionwasnotintendedto,anddoesnot,constitutearecommendationtoanyshareholderastohowsuchshareholdershouldvoteoractwithrespecttotheTransactionsorany matter relating thereto. Lazard’s opinion was necessarily based on economic, monetary, market and otherconditionsasineffecton,andtheinformationmadeavailabletoLazard,asofthedateoftheopinion.Lazardassumednoresponsibilityforupdatingorrevisingitsopinionbasedoncircumstancesoreventsoccurringafterthedateoftheopinion.LazarddidnotexpressanyopinionastothepriceatwhichsharesofTaubmancommonstockmaytradeatanytimesubsequenttotheannouncementoftheTransactions.Inaddition,Lazard’sopiniondidnotaddresstherelativemerits oftheREITMergerascomparedtoanyothertransactionorbusinessstrategyinwhichTaubmanmighthaveengagedorthemeritsoftheunderlyingdecisionbyTaubmantoengageintheREITMerger.
Inconnectionwithitsopinion,Lazard:
• Reviewedthefinancialtermsandconditionsofthemergeragreement;
• ReviewedcertainpubliclyavailablehistoricalbusinessandfinancialinformationrelatingtoTaubman;
• ReviewedvariousfinancialforecastsandotherdataprovidedtoLazardbyTaubmanrelatingtothebusinessofTaubman(includingtheProjections);
• Held discussions with members of the senior management of Taubman with respect to the business andprospectsofTaubman;
• ReviewedpublicinformationwithrespecttocertainothercompaniesinlinesofbusinessLazardbelievedtobegenerallyrelevantinevaluatingthebusinessofTaubman;
• ReviewedhistoricalstockpricesandtradingvolumesofTaubmancommonstock;and
• Conductedsuchotherfinancialstudies,analysesandinvestigationsasLazarddeemedappropriate.
Lazardassumedandreliedupontheaccuracyandcompletenessoftheforegoinginformation,withoutindependentverificationofsuchinformation.Lazarddidnotconductanyindependentvaluationorappraisalofanyoftheassetsorliabilities(contingentorotherwise)ofTaubmanorconcerningthesolvencyorfairvalueofTaubman,andLazardwasnotfurnishedwithanysuchvaluationorappraisal. Withrespecttothefinancialforecasts(includingtheProjections)utilizedinLazard’sanalyses,Lazardassumed,withtheconsentoftheSpecialCommittee,thattheywerereasonablypreparedonbasesreflectingthebestcurrentlyavailableestimatesandjudgmentsastothefuturefinancialperformanceofTaubman.Lazardassumednoresponsibilityforandexpressednoviewastoanysuchforecastsortheassumptionsonwhichtheywerebased.WhileLazardnotedthatthemergeragreementcontainsa“go-shop”provisionpursuanttowhichpotentialthirdpartieswouldbecontactedfollowingtheannouncementoftheTransactions,priortotheissuanceof Lazard’s opinion, Lazard was not directed to, and it did not, solicit indications of interest from third partiesregardingapotentialtransactionwithTaubman.
Inrenderingitsopinion,Lazardassumed,withtheconsentoftheSpecialCommittee,thattheREITMergerwouldbeconsummatedonthetermsdescribedinthemergeragreement,withoutanywaiverormodificationofanymaterialterms or conditions. Lazard also assumed, with the consent of the Special Committee, that obtaining the necessarygovernmental,regulatoryorthirdpartyapprovalsandconsentsfortheREITMergerwouldnothaveanadverseeffectonTaubmanortheREITMerger.LazarddidnotexpressanyopinionastoanytaxorotherconsequencesthatmightresultfromtheREITMerger,nordidLazard’sopinionaddressanylegal,tax,regulatoryoraccountingmatters,astowhichLazardunderstoodthatTaubmanhadobtainedsuchadviceasitdeemednecessaryfromqualifiedprofessionals.Lazard expressed no view or opinion as to any terms or other aspects (other than the common stock mergerconsiderationtotheextentexpressly
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specifiedintheopinion)oftheTransactions,including,withoutlimitation,theformorstructureoftheREITMerger,theSeriesBpreferredstockmergerconsideration,thevotingagreement,thePartnershipMerger(includingtheoptionof the minority partners to elect to receive the common stock merger consideration or Simon OP units), the LLCConversion,oranyotheragreementsorarrangementsenteredintoinconnectionwith,orcontemplatedby,theREITMerger. Inaddition, Lazardexpressednovieworopinionastothefairnessoftheamountornatureof, oranyotheraspectsrelatingto,thecompensationtoanyofficers,directorsoremployeesofanypartiestotheREITMerger,orclassofsuchpersons,relativetothecommonstockmergerconsiderationorotherwise.
In connection with rendering its opinion, Lazard performed certain financial analyses and reviews of certaininformation that Lazard deemed appropriate in connection with rendering its opinion as summarized below.Thesummaryoftheanalysesandreviewsprovidedbelowisnotacompletedescriptionoftheanalysesandreviewsunderlying Lazard’s opinion. The preparation of a fairness opinion is a complex process involving variousdeterminationsastothemostappropriateandrelevantmethodsoffinancialanalysisandreviewandtheapplicationofthose methods to particular circumstances, and, therefore, is not readily susceptible to partial analysis or summarydescription. Considering selected portions of these analyses and reviews or the summary set forth below withoutconsideringtheanalysesandreviewsasawhole,couldcreateanincompleteormisleadingviewoftheanalysesandreviewsunderlyingLazard’sopinion.Inarrivingatitsopinion,Lazardconsideredtheresultsofallofitsanalysesandreviews and did not attribute any particular weight to any particular analysis or review or application thereofconsidered byit; rather, Lazardmadeits determination as to fairness onthe basis of its experience andprofessionaljudgmentafterconsideringtheresultsofallofitsanalysesandreviews.
For purposes of its analyses andreviews, Lazard considered industry performance, general business, economic,marketandfinancialconditionsandothermatters, manyofwhicharebeyondthecontrolofTaubman.Nocompany,businessortransactionusedinLazard’sanalysesandreviews,asacomparison,isidenticaltoTaubman,itsbusinessortheREITMerger,andanevaluationoftheresultsofthoseanalysesandreviewsisnotentirelymathematical.Rather,the analyses and reviews involve complex considerations and judgments concerning financial and operatingcharacteristics and other factors that could affect the acquisition, public trading or other values of the companies,businesses or transactions used in Lazard’s analyses and reviews. The estimates contained in Lazard’s analyses andreviewsandtherangesofvaluationsresultingfromanyparticularanalysisorreviewarenotnecessarilyindicativeofactualresultsorvaluesorpredictiveoffutureresultsorvalues,whichmaybesignificantlymoreorlessfavorablethanthosesuggestedbyLazard’sanalysesandreviews.Inaddition,analysesandreviewsrelatingtothevalueofcompanies,businesses or securities do not purport to be appraisals or to reflect the prices at which companies, businesses orsecuritiesactuallymaybesold.Accordingly,theestimatesusedin,andtheresultsderivedfrom,Lazard’sanalysesandreviewsareinherentlysubjecttosubstantialuncertainty.
Summary of Lazard Financial Analyses
The summary of the analyses and reviews provided belowincludes information presented in tabular format. Inorder to fully understand Lazard’s analyses and reviews, the tables must be read together with the full text of eachsummary.ThetablesalonedonotconstituteacompletedescriptionofLazard’sanalysesandreviews.Consideringthedata in the tables below without considering the full description of the analyses and reviews, including themethodologiesandassumptionsunderlyingtheanalysesandreviews,couldcreateamisleadingorincompleteviewofLazard’sanalysesandreviews.
Exceptasotherwisenoted,thefollowingquantitativeinformation,totheextentthatitisbasedonmarketdata,isbasedonmarketdataasitexistedonorbeforeFebruary7,2020,thelasttradingdaybeforetheannouncementoftheTransactions,andisnotnecessarilyindicativeofcurrentmarketconditions.LazardhasbeeninstructedbytheSpecialCommitteetousetheProjectionsasabasisforitsanalyses.
Discounted Cash Flow Analysis
Lazard performed a discounted cash flowanalysis of Taubman. Adiscounted cash flowanalysis is a valuationmethodologyusedtoderiveanintrinsicvaluationofacompanybycalculatingthepresentvalueofitsestimatedfuturecashflows.“Futurecashflows”referstoprojectedunleveredfreecashflowsofacompany(calculatedbybeginningwith EBITDA and adjusting for certain other income and expenses, and subtracting capital expenditures). “Presentvalue”referstothecurrentvalueoffuturecashflowsoramountsandisobtainedbydiscountingthefuturecashflowsoramountsbyadiscountratethattakesintoaccountmacroeconomicassumptionsandestimatesofrisk,
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theopportunitycostofcapital,capitalstructure,expectedreturnsandotherappropriatefactors.LazardcalculatedthediscountedcashflowvalueforTaubmanasthesumofthenetpresentvalue,asofFebruary9,2020,ofeachof:
• theestimatedfuturecashflowsthatTaubmanisexpectedtogenerateforeachoffiscalyears2020through2023;and
• theestimatedvalueofTaubmanattheendoffiscalyear2023ortheterminalvalue.
The estimated future cash flows of Taubman were calculated by Lazard based on the Projections. Lazardadditionally deducted projected annual share-based compensation expenses of $10.6 million as provided in theProjectionsfromtheestimatedfuturecashflowsinitsanalysisoftheProjections.
Lazard then calculated the implied capitalization rates of the select comparable companies, using the samemethodologyforcalculatingtheaverageofthefinancialmultiplesandratiosdescribedunder“Comparable CompaniesPublic Trading Analysis”below.Thefollowingtablesummarizestheresultsofthisreviewfortheselectcomparablecompanies:
Taubman
SelectComparable Companies
AsofFebruary7,2020* 7.1% 7.2%
AsofJanuary31,2020** 7.7% 7.4%
1-YearAverage 6.6% 6.6%
3-YearAverage 5.9% 6.2%
5-YearAverage 5.5% 5.7%
* ThelasttradingdaybeforetheannouncementoftheTransactions.** ThelasttradingdaypriortomarketrumorsemergingthatSimonwasengagingindiscussionstoacquireTaubman.
Lazard then selected and applied a range of capitalization rates of 5.50%to 6.50%to estimated share of 2024property net operating income of $660 million as set forth in the Projections, to calculate the terminal value ofTaubman.LazardselectedtherangeofcapitalizationratesappliedtotheterminalyearpropertynetoperatingincomebasedonLazard’sanalysisoftheimpliedhistoricalcapitalizationratesoftheselectcomparablecompanies(asdefinedbelow),asadjustedbasedonitsprofessionaljudgmentandexperience,andfurtherinformedbyTaubman’sobservedhistoricalimpliedcapitalizationratesascomparedtothoseoftheselectcomparablecompanies.
For its discounted cash flow calculations, Lazard applied discount rates ranging from 5.50% to 6.75% to theestimated share of future cash flows. Such discount rates were based on Lazard’s estimated range of Taubman’sweightedaveragecostofcapital,derivedfromanumberoffactorsusingtheCapitalAssetPricingModel,takingintoaccountcertainmetrics,including,amongothers,theapplicableriskfreerateofreturn,unleveredriskprofile,costoflong-termdebtandleverageratioofTaubmanandtheselectcomparablecompanies.
LazardthencalculatedanenterprisevaluerangeforavaluationdateofDecember31,2019bytakingthesumofthe estimated discounted cash flows (including the net present value of the implied terminal value) adjusted for anamountinrespectofnettangibleotherassetsandliabilitiesandplusthevalueofperipheralland,withsuchadjustmentbasedonvaluesasofSeptember30,2019(beingthelastdateforwhichsuchinformationwasavailable),ineachcaseasprovidedbyTaubmanmanagement.
Lazard then calculated an equity value range for Taubman by taking the implied enterprise value range andsubtracting(i)theoutstandingprincipalamountofTaubman’sshareofconsolidatedsecureddebt,subtracting(ii)theoutstanding principal amount of Taubman’s share of unconsolidated secured debt, subtracting (iii) the outstandingprincipalamountofTaubman’sothercreditfacilitiesandtermloans,subtracting(iv)theoutstandingprincipalamountdue to the holders of Taubman Series J Preferred Stock and Taubman Series K Preferred Stock, and adding(v)Taubman’scashandcashequivalents,ineachcaseasprovidedbyTaubmanmanagementasofDecember31,2019.Lazard divided the resulting equity value rangeby61.5 million, the fully diluted shares of TaubmancommonstockoutstandingasofFebruary6, 2020asprovidedbyTaubmanmanagement, toestimateanimpliedrangepershareofTaubmancommonstock,andcomparedittothecommonstockmergerconsiderationtobepaidtoholdersofTaubmancommonstock(otherthanholdersofsharesofexcludedTaubmancommonstockandtheTaubmanfamilymembers)pursuanttothemergeragreement:
Implied Price Per Share Range
$43.84–$65.28
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Comparable Companies Public Trading Analysis
Lazard applied comparable company multiples to perform a valuation analysis of Taubman to determine animpliedpersharevaluefortheTaubmancommonstock.
LazardreviewedvariousfinancialmultiplesandratiosofselectedpubliclytradedcompaniesthatLazardbelieved,basedonitsexperiencewithcompaniesoperatinginthehighqualitymallREITindustryanditsprofessionaljudgment,to berelevant for purposes of this analysis, consideredsuchcompanies’ operations, lines of business, markets, sizesandgeographies, andapplied suchmultiples to the applicable estimated Adjusted FFOfor 2020for Taubmanas setforthintheProjections.
The selected group of companies Lazard reviewed, referred to as the “select comparable companies,” were(i)Simonand(ii)TheMacerichCompany.
Lazard selected the companies reviewed in this analysis because, among other things, the select comparablecompanies operate businesses similar to the business of Taubman. However, no selected company is identical toTaubmanandcertainofthesecompaniesmayhavecharacteristicsthataremateriallydifferentfromthoseofTaubman.Accordingly,Lazardbelievesthatpurelyquantitativeanalysesarenot,inisolation,determinativeinthecontextoftheREITMerger and that qualitative judgments concerning differences between the businesses, financial and operatingcharacteristicsandprospectsofTaubmanandtheselectcomparablecompaniesarealsorelevant.
Foreachoftheselectcomparablecompanies,Lazardcalculatedtheratioofsuchcompany’sclosingtradingprice,asof(i)forreferenceonly,February7,2020(thelasttradingdaybeforetheannouncementoftheTransactions)and(ii)January31,2020(thelasttradingdaypriortomarketrumorsemergingthatSimonwasengagingindiscussionstoacquireTaubman)toeachcompany’sestimatedfundsfromoperations,or“FFO,”forthenext12-monthperiod,orthe“2020FFO.”The2020FFOestimatesfortheselectcomparablecompaniesusedbyLazardinitsanalysiswerebasedonpubliclyavailableWallStreetequityresearchestimates.Lazardalsocalculatedthesameratioonanaveragebasisasobservedoverthehistoricalone-year,three-yearand,forreferenceonly,five-yearbasis.
Lazard then observed the average of these ratios for the select comparable companies. The following tablesummarizestheresultsofthisreviewfortheselectcomparablecompanies:
Taubman
SelectComparable Companies
AsofFebruary7,2020* 9.4x 8.9x
AsofJanuary31,2020** 7.2x 8.4x
1-YearAverage 11.1x 11.0x
3-YearAverage 13.8x 13.0x
5-YearAverage 16.2x 15.2x
* ThelasttradingdaybeforetheannouncementoftheTransactions.** ThelasttradingdaypriortomarketrumorsemergingthatSimonwasengagingindiscussionstoacquireTaubman.
LazardthenselectedandappliedarangeofFFOmultiplesof(i)6.4xto10.4xforthe2020FFOasofJanuary31,2020,(ii)9.0xto13.0xforthe1-yearaverageand(iii)11.0xto15.0xforthe3-yearaverage,toTaubman’sestimated2020Adjusted FFOas set forth in the Projections. Lazard selected the range of FFOmultiples applied to TaubmanbasedonLazard’sanalysisoftheaverageFFOmultipleoftheselectcomparablecompaniesasofJanuary31,2020,thelast trading day prior to market rumors emerging that Simon was engaging in discussions to acquire Taubman, asadjusted based on its professional judgment and experience, and further informed by Taubman’s observed FFOmultipletradingpremiumtotheaverageoftheselectcomparablecompaniesoverthelastfiveyears.
Fromthisanalysis, LazardestimatedanimpliedrangepershareofTaubmancommonstockandcomparedit tothecommonstockmergerconsiderationtobepaidtoholdersofTaubmancommonstock(otherthanholdersofsharesofexcludedTaubmancommonstockandtheTaubmanfamilymembers)pursuanttothemergeragreement:
Implied Price Per Share
Range
Current2020FFO* $23.34-$37.94
2020FFO1-YearAverage $32.88-$47.47
2020FFO3-YearAverage $40.21-$54.81
* AsofJanuary31,2020,thelasttradingdaypriortomarketrumorsemergingthatSimonwasengagingindiscussionstoacquireTaubman.
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Precedent Transaction Valuation Analysis
Lazard reviewed and analyzed, to the extent publicly available, financial information for selected precedenttransactions in the high quality mall REIT industry that Lazard believed, based on its professional judgement andexperience, to be relevant for purposes of this analysis, which are collectively referred to as the Lazard precedenttransactions.AlthoughnoneoftheLazardprecedenttransactionsorthecompaniespartytosuchtransactionsisdirectlycomparabletotheREITMergerortoTaubman,theLazardprecedenttransactionswerechosenbecausecertainaspectsof the Lazard precedent transactions, for purposes of this analysis and based on the professional judgment andexperience of Lazard, may be considered similar to the REIT Merger. The analyses necessarily involve complexconsiderations and judgments concerning differences in financial and operational characteristics of the companiesinvolved and other factors that could affect the Lazard precedent transactions differently than they would affect theREITMerger.TheLazardprecedenttransactionsreviewed,andtheimpliedcapitalizationrateofeach,asofthetimeoftheannouncementoftheapplicableLazardprecedenttransaction,were:
Announcement Date Target / Acquiror Capitalization Rate
03/26/18 GeneralGrowthProperties/BrookfieldPropertyPartnersL.P. 5.7%
09/16/14 GlimcherRealtyTrust/WashingtonPrimeGroup,Inc. 5.8%
Mean 5.8%
Median 5.8%
Based on its professional judgment and experience, and taking into consideration the observed impliedcapitalizationratesfortheLazardprecedenttransactions,Lazardthenappliedaselectedarangeofcapitalizationratesof5.8%±50basispoints,basedonLazard’sprofessionaljudgmentandexperience,toTaubman’sestimatedshareof2020propertynetoperatingincomeof$583milliontoderiveanimpliedenterprisevaluerangeforTaubman.Lazardthencalculatedanequityvaluerangeusingthesamemethodologyforcalculatingtheequityvaluebasedonenterprisevalue describedunder “Discounted Cash Flow Analysis” above. Financial data of the Lazard precedent transactionswerebasedonpublicfilingsandotherpublicinformation.
This precedent transactions valuation analysis indicated the following implied range per share of TaubmancommonstockequityvaluereferencerangeforTaubman,ascomparedtothecommonstockmergerconsiderationtobepaidtoholdersofTaubmancommonstock(otherthanholdersofsharesofexcludedTaubmancommonstockandtheTaubmanfamilymembers)pursuanttothemergeragreement:
Implied Per Share Equity Value Reference Range
$47.41–$67.17
Other Analyses
TheanalysesanddatadescribedbelowwerepresentedtotheSpecialCommitteeforinformationalpurposesonlyanddidnotprovidethebasisfortherenderingofLazard’sopinion.
52-Week High/Low Trading Prices
Lazard reviewed the range of trading prices of shares of Taubman common stock for the 52 weeks ended onFebruary7,2020,thelasttradingdaybeforetheannouncementoftheTransactions.Lazardobservedthat,duringsuchperiod, the closing share price of Taubman common stock ranged from $26.42 per share to $54.30 per share, ascompared to the common stock merger consideration to be paid to holders of Taubman common stock (other thanholders of shares of excluded Taubman common stock and the Taubman family members) pursuant to the mergeragreement.
Analyst Price Targets Analysis
LazardreviewedpubliclyavailablesharepricetargetsoftenWallStreetresearchanalystsforTaubmancommonstock as of February 7, 2020, the last trading day before the announcement of the Transactions. The range of thesetargetpriceswas$29.50to$55.00,withameanof$35.05andamedianof$33.00,ascomparedtothecommonstockmerger consideration to be paid to holders of Taubman common stock (other than holders of shares of excludedTaubmancommonstockandtheTaubmanfamilymembers)pursuanttothemergeragreement.
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Comparable Company Trading Premium/Discount to Net Asset Value Analysis
LazardreviewedthediscounttonetassetvaluepershareofTaubmancommonstockbasedonpublished,publiclyavailable Wall Street equity research reports, which indicated a discount range of 24%for Simon and 50%for TheMacerichCompanyfortheselectedcomparablecompanies,asofJanuary31,2020,thelasttradingdaypriortomarketrumorsemergingthatSimonwasengagingindiscussionstoacquireTaubman.LazardappliedthisdiscountrangetotheWallStreetconsensusestimateofNetAssetValueforTaubman,asofJanuary31,2020,of$61.34.
ThisanalysisimpliedapricepersharerangeforsharesofTaubmancommonstockof$30.73pershareto$46.83per share, as comparedtothecommonstockmerger considerationto bepaidtoholders of Taubmancommonstock(otherthanholdersofsharesofexcludedTaubmancommonstockandtheTaubmanfamilymembers)pursuanttothemergeragreement.
Premiums Paid Analysis
Lazard performed an illustrative premiums paid analysis based on the premiums paid, where applicable,in selected transactions involving a U.S. acquirer and a U.S. REIT target with a transaction value greater than$1.0billionandatleast50%ofthetotalconsiderationconsistedofcommonstockmergerconsiderationannouncedinthe five years prior to February 7, 2020, the last trading day before the announcement of the Transactions. Lazardcalculatedthe25thpercentile, medianand75thpercentile premiabycomparing, totheextent publiclyavailable, thepershareacquisitionpricetotherelevanttargetcompany’sclosingsharepriceonthedatepriortotheannouncementofthetransaction, or other relevant date as referencedin public filings for therespective transaction, referred to as the“undisturbeddate.”
Premia to Share Priceon
Undisturbed Date
75thPercentile 22.4%
25thPercentile 13.1%
Usinga13.1%to22.4%premiarangebasedonthe25thpercentileand75thpercentileone-daypremiapaidinthetransactionsreferencedaboveandTaubmanclosingpricepershareasofJanuary31,2020,thelasttradingdaypriortomarket rumors emerging that Simon was engaging in discussions to acquire Taubman, Lazard estimated an impliedprice per share rangefor shares of Taubmancommonstockof $29.88to $32.35, as comparedto the commonstockmerger consideration to be paid to holders of Taubman common stock (other than holders of shares of excludedTaubmancommonstockandtheTaubmanfamilymembers)pursuanttothemergeragreement.
Miscellaneous
In connection with Lazard’s services as financial advisor to the Special Committee with respect to theTransactions,TaubmanagreedtopayLazardthefollowingfees:(i)$3million,whichwaspaidfollowingtherenderingof Lazard’s opinion, and (ii) $13.5 million, to be paid upon the completion of the REIT Merger, which may beincreasedby$1.5millionif(andonlyif),followingtheannouncementoftheTransactions,ashareholderengagesinanactivist campaignin connectionwiththeREITMerger or a potential alternative purchaser makes or delivers abonafidewritten offer or proposal for a potential alternative transaction that could lead to greater consideration forTaubman’s shareholders and, in either case, Lazard or another financial advisor or investment bank has renderedmaterialassistanceinconnectiontherewith.TaubmanalsoagreedtoreimburseLazardforcertainexpensesincurredinconnectionwithLazard’sengagementandtoindemnifyLazardandcertainrelatedpersonsundercertaincircumstancesagainstvariousliabilitiesthatmayarisefromorberelatedtoLazard’sengagement,includingcertainliabilitiesunderUnitedStatesfederalsecuritieslaws.
LazardhasnotreceivedanyotherfeesforprovidingfinancialadvisoryservicestoSimonorTaubmanoranentityknownbyLazardtobeanaffiliateofSimonorTaubmanduringthelasttwoyears.
Lazard,aspartofitsinvestmentbankingbusiness,iscontinuallyengagedinthevaluationofbusinessesandtheirsecuritiesinconnectionwithmergersandacquisitions,negotiatedunderwritings,secondarydistributionsoflistedandunlistedsecurities, privateplacements, leveragedbuyouts, andvaluationsforestate, corporateandotherpurposes. Inaddition,intheordinarycourse,LazardanditsaffiliatesandemployeesmaytradesecuritiesofTaubman,Simonand
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certainoftheirrespectiveaffiliatesfortheirownaccountsandfortheaccountsoftheircustomers,mayatanytimeholdalongorshort positioninsuchsecurities, andmayalsotradeandholdsecurities onbehalf ofTaubman, Simonandcertain of their respective affiliates. The issuance of Lazard’s opinion was approved by the opinion committee ofLazard.
Lazardisaninternationallyrecognizedinvestmentbankingfirmprovidingafullrangeoffinancialadvisoryandotherservices.LazardwasselectedtoactasinvestmentbankertotheSpecialCommitteebecauseofitsqualifications,expertiseandreputationininvestmentbankingandmergersandacquisitionsgenerallyandintherealestateindustryspecifically,aswellasitsfamiliaritywiththebusinessofTaubman.
Lazard Materials
InadditiontothepresentationmadetotheSpecialCommitteeonFebruary9,2020,whichhasbeenfiledwiththeSEC as an exhibit to the Schedule 13E-3 of which this proxy statement forms a part and as described in“Special Factors—Opinion and Materials of Financial Advisor to the Special Committee (Lazard),” copies ofpreliminary illustrative presentations presented or delivered by Lazard to the Special Committee on November 21,2019, December 5, 2019, January 10, 2020, January 12, 2020, January 22, 2020, January 26, 2020 and February 6,2020containingpreliminaryillustrativefinancialanalysesalsoareattachedasexhibitstosuchSchedule13E-3.Noneof these other preliminary illustrative presentations byLazard, alone or together, constitute, or formthe basis of, anopinion of Lazard with respect to the commonstock merger consideration, and the preliminary illustrative financialanalysesthereinwerebasedoneconomic,monetary,marketandotherconditionsasineffecton,andtheinformationmadeavailabletoLazardasof,thedatesoftherespectivepresentations.
The Simon Parties’ Purposes and Reasons for the Transactions
UndertheSECrulesgoverning“goingprivate”transactions,eachoftheSimonpartiesisanaffiliateofTaubmanforpurposesoftheproposedtransactionundersuchrulesand,therefore,isrequiredtoexpressitspurposesandreasonsfor the Transactions to Taubman’s unaffiliated security holders. Eachof the Simonparties is makingthe statementsincludedinthissectionsolelyforthepurposeofcomplyingwiththerequirementsofRule13e-3andrelatedrulesandregulations under the Exchange Act. The views of each of the Simon parties should not be construed as arecommendation to any Taubman shareholder as to how that shareholder should vote on the Merger AgreementProposal.
FortheSimonparties,thepurposeoftheTransactionsistoenabletheSimonpartiestoformtheJointVentureandenterintotheJVagreementintransactionsinwhichtheholdersofTaubmancommonstockwillbecashedout,suchthattheSimonpartieswillbeartherewardsandrisksofsuchownershipaftertheTransactionsarecompletedandtheTaubmancommonstockceasestobepubliclytraded.
Atthetimetheydecidedtoexecutethemergeragreement,theSimonpartiesconsideredwhatthenappearedtobepotentialbenefitsoftheTransactions,includingthefollowing:
• if Taubman can successfully execute its business strategy, the value of Simon’s equity investment couldincrease;
• the Transactions could provide Taubman with greater operational flexibility than it would have had as anindependentpubliccompany;and
• ceasing to be a public entity would free Taubman from reporting and other substantial burdens placed onpublicentities.
Inthecourseofconsideringthegoing-privatetransaction,theSimonpartiesdidnotconsideralternativestructuresbecausetheSimonpartiesbelievedtheTransactionswerethemostdirectandeffectivewaytoenabletheSimonpartiestoformtheJointVentureandenterintotheJVagreement.
The Taubman Filing Persons’ Purposes and Reasons for the Transactions
UndertheSECrulesgoverning“goingprivate”transactions,eachoftheTaubmanfilingpersonsisanaffiliateofthe Company for purposes of the proposed transaction under such rules and, therefore, is required to express itspurposesandreasonsfortheTransactionstotheCompany’sunaffiliatedsecurityholders.EachTaubmanfilingpersonis makingthe statements includedin this sectionsolely for the purpose of complyingwith the requirements of Rule13e-3andrelatedrulesundertheExchangeAct.TheviewsofeachTaubmanfilingpersonshouldnotbeconstruedasarecommendation to any Taubman shareholder as to how that shareholder should vote on the Merger AgreementProposal.
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IftheTransactionsarecompleted,Taubmanwillbecomeanindirect,whollyownedsubsidiaryofSimon,andtheTaubman common stock will cease to be publicly traded. Additionally, following the consummation of theTransactions, theSimonpartieswill own80%ofthelimitedliability companyinterests intheJointVentureandtheTaubmanfamilymemberswillowntheremaining20%ofthelimitedliabilitycompanyinterestsintheJointVenture(assuming,forpurposesofthiscalculation,thatTaubmanOPunitsissuableundertheOptionDeferralAgreementareoutstandinginterestsoftheJointVenture).FortheTaubmanfilingpersons,thepurposeoftheTransactionsistoallowthe Simon parties and the Taubman family members to form the Joint Venture and enter into the JV agreement.Throughtheirownershipinterest intheJointVenture,theTaubmanfilingpersonswill beartherewardsandrisksofsuch ownership after the Transactions are completed and the Taubman common stock ceases to be publicly traded.Additionally, pursuant to the terms of the merger agreement and the JV agreement, the Transactions will allow theTaubman filing persons to realize value for a portion of their investment in Taubman and the Taubman operatingpartnershipwhileprovidinganopportunitytoformapartnershipwithanexperiencedmarketparticipant.TheTaubmanfiling persons believe that a partnership between the Taubman family members and the Simon parties in the JointVenture presents anoutstandingfit in termsof corporate culture andmaintains theTaubmanoperatingpartnership’suniquebrand,whilealsoprovidingtheTaubmanfilingpersonsaccesstofutureliquidityfortheirholdingsintheJointVenture pursuant to the terms of the JV agreement. Additionally, the Taubman filing persons believe that the JointVenture will provide beneficial opportunities to Taubman’s employees, and allow, in a more efficient and flexiblemanner,theJointVenturetoinvestininnovativeretailenvironmentsthatcreateexcitingshoppingandentertainmentexperiences for consumers, immersive opportunities for retailers, and substantial new job prospects for the localcommunitiesservedbytheJointVenture.
EachoftheTaubmanfilingpersonsbelievesthatitisinthebestinterestsofTaubmanandtheTaubmanoperatingpartnershipforTaubmanandtheJointVenturetooperatewithnopubliclytradedequity.TheTaubmanfilingpersonsbelievethatwithoutpubliclytradedequity,TaubmanandtheJointVenturecouldhavegreateroperationalflexibilitythanitwouldhavehadasanindependentpubliccompany.
AnadditionalpurposeoftheTransactionsistoenableTaubmanshareholderstoimmediatelyrealizethevalueoftheirinvestmentinTaubmanthroughtheirreceiptofthecommonstockmergerconsiderationof$52.50incash.
Additionally,theTransactionswillallowallunaffiliatedholdersofTaubmanOPunitstoelecttoreceive,attheirelection, (i) the same common stock merger consideration of $52.50 to be received by Taubman shareholders, or(ii)0.3814SimonOPunitsperTaubmanOPunit,andallunaffiliatedholdersofTaubmanSeriesBpreferredstocktoreceivetheSeriesBpreferredstockmergerconsideration.
Accordingly,theTaubmanfilingpersonshavedecidedtoundertakethegoing-privatetransactionatthistimeforthereasonsdescribedabove.
The Taubman filing persons did not consider any form of transaction other than the Transactions because theTaubman filing persons believe that the Transactions are the most direct, efficient and effective way for Simon toacquirealloftheoutstandingsharesofTaubmanandindirectly,an80%ownershipinterestintheJointVenture,whileallowing the Taubman family members to own a 20%interest in the Joint Venture (assuming, for purposes of thiscalculation,thatTaubmanOPunitsissuableundertheOptionDeferralAgreementareoutstandinginterestsoftheJointVenture). The Taubman filing persons did not consider any other alternative transaction structure based on theirdeterminationthat nootheralternativesavailablewould(i) providetheTaubmanoperatingpartnershipbothwiththeperspectiveofanexperiencedsectorparticipantthatwouldbringresourcestotheTaubmanoperatingpartnershipwitha party willing to paya fair price for an investment in an entity in whichthe Taubmanfamily members maintainedmeaningful governance rights and R. Taubman and W. Taubman remained executive officers, (ii) not result in thecessation of the Taubman operating partnership’s existence as an autonomous entity, (iii) provide Taubmanshareholders the opportunity to realize value at a significant premiumto the trading price of the Taubmancommonstock, (iv) provide the Taubman family members with an opportunity to realize immediate value for their shares ofTaubman common stock and for approximately one-third of their Taubman OPunits, and (v) provide the TaubmanfamilymemberswithaccesstofutureliquiditypursuanttothetermsoftheJVagreement.
Position of the Simon Parties as to the Fairness of the REIT Merger
UndertheSECrulesgoverning“goingprivate”transactions,eachoftheSimonpartiesisanaffiliateofTaubmanfor purposes of the proposed transaction under such rules and, therefore, is required to express its beliefs as to thefairness of the REIT Merger to Taubman’s unaffiliated security holders. Each of the Simon parties is making thestatementsincludedinthissectionsolelyforthepurposeofcomplyingwiththerequirementsofRule13e-3and
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relatedrulesandregulationsundertheExchangeAct.TheviewsofeachoftheSimonpartiesshouldnotbeconstruedasarecommendationtoanyTaubmanshareholderastohowthatshareholdershouldvoteonthemergerproposal.
SimonnegotiatedwiththeSpecialCommitteeandTaubmanwiththeintenttoachievethetermsofatransactionthat would be most favorable to Simon, and not necessarily to Taubman’s unaffiliated security holders, and,accordingly,didnotnegotiatethemergeragreementwiththegoalofobtainingtermsthatwerefairtotheTaubman’sunaffiliatedsecurityholders.TheSpecialCommitteeiscomprisedentirelyofnon-managementindependentdirectorswho are not affiliated with Taubman, and the members of the Special Committee have no financial interest in theTransactionsdifferentfrom,orinadditionto,theinterestsofTaubman’sunaffiliatedsecurityholdersotherthantheirinterestsdescribedunder“—Interests of Taubman’s Directors and Executive Officers in the Transactions.”
None of the Simon parties participated in the deliberations of the Special Committee or the Taubman Boardregarding,orreceivedadvicefromTaubman’sortheSpecialCommittee’slegaladvisorsorfinancialadvisorsasto,thesubstantiveorproceduralfairnessoftheTransactionstoTaubman’sunaffiliatedsecurityholders. NoneoftheSimonpartieshasperformed,orengagedafinancial advisortoperform,anyvaluationorotheranalysisforthepurposesofassessingthefairnessoftheTransactionstounaffiliatedTaubmanshareholders.
At the time the merger agreement was executed, each of the Simon parties believed that the Transactions aresubstantivelyandprocedurallyfairtoTaubman’sunaffiliatedsecurityholdersbasedonitsunderstandingthat:
• the Special Committee, composed of non-management independent directors who are not affiliated withTaubman,determined,byunanimousvoteofallofthemembersoftheSpecialCommittee,andtheTaubmanBoarddetermined, bytheunanimousvoteof all members of theTaubmanBoardthat theTransactions arefairto,andinthebestinterestsof,Taubman’sunaffiliatedsecurityholders;
• the Special Committee retained independent, nationally recognized legal and financial advisors, each ofwhichhasextensiveexperienceintransactionssimilartotheREITMerger;
• thecommonstockmergerconsiderationof$52.50pershareincashrepresentsanimpliedpremiumof51.4%to the closing share price for Taubman common stock of $34.67 on February 7, 2020, the last completedtradingdaybeforetheannouncementoftheTransactions;
• the $52.50 per share common stock merger consideration and other terms and conditions of the mergeragreement resulted from extensive negotiations between the Special Committee and its advisors and theSimonpartiesandtheiradvisors;
• the Special Committee received an opinion, dated February 9, 2020, from its financial advisor as to thefairness,fromafinancialpointofviewandasofsuchdate,ofthecommonstockmergerconsiderationtobereceived by holders of Taubman’s unaffiliated security holders pursuant to the merger agreement, whichopinionwasbaseduponandsubject tovariousassumptionsmade,proceduresfollowed,factorsconsideredandlimitationsonthereviewundertaken;
• the merger agreement allows the Taubman Board, acting upon the recommendation of the SpecialCommittee,towithdrawitsrecommendationofthemergeragreementinfavoroftheMergersinresponsetoa Superior Proposal or intervening event, subject to Taubman paying Simon a termination fee of$46,604,909,whichamountisequaltoapproximately1.25%ofthevalueofTaubman’sequitytobeacquiredbySimonintheTransactions(ifthemergeragreementhadbeenterminatedduringthego-shopperiodorincertaincircumstancesforalimitedtimeperiodthereafter)or$111,851,783,whichamountisequalto3.0%ofthe value of Taubman’s equity to be acquired by Simon in the Transactions (if the merger agreement isterminated following the conclusion of such periods) to Simon if (i) Taubman terminates the mergeragreementinconnectionwithaSuperiorProposal,(ii)SimonterminatesthemergeragreementinconnectionwithaTaubmanBoardrecommendationchangeor(iii)underspecifiedcircumstances,Taubmanentersintoacompetingproposalwithintwelvemonthsfollowingaterminationofthemergeragreement;and
• themergeragreementissubjecttotheapprovalandadoptionby(i)theaffirmativevoteoftheholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasa single class), (ii) the affirmative vote of the holders of a majority of the outstanding shares of TaubmanSeriesBpreferredstockand(iii)theaffirmativevoteoftheholdersofatleastamajorityoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasasingleclass)excludingthe
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outstanding shares of Taubman voting stock owned of record or beneficially by the Taubman familymembers.
At the timethe merger agreement was executed, the Simonparties also considered a variety of risks andothercountervailingfactorsrelatedtothemergeragreementandREITMerger,includingthefollowing:
• theriskthattheREITMergermightnotbecompletedinatimelymanneroratall;and
• the fact that the merger agreement provides that, during the period from the date 45 days following theexecutionofthemergeragreementuntiltheeffectivetimeoftheREITMerger,Taubmanissubjecttocertainrestrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to third parties and to engage in negotiations with third parties regarding alternativeacquisitionproposals,subjecttocustomaryexceptions.
TheSimonpartiesdidnotconductagoing-concernvaluationofTaubmancommonstockorconsiderthepricespaidbyTaubmanorcertainoftheTaubmanfamilyforpastpurchasesofTaubmancommonstockforthepurposesofdeterminingthefairnessofthecommonstockmergerconsiderationtoTaubman’sunaffiliatedsecurityholders.
The foregoing discussion of the information and factors considered and given weight by the Simon parties inconnection with the fairness of the REIT Merger is not intended to be exhaustive but includes all material factorsconsideredbytheSimonparties. TheSimonparties didnot findit practicable to, anddidnot, quantify or otherwiseassignrelativeweightstotheindividualfactorsconsideredinreachingtheirconclusionsastothefairnessoftheREITMerger.
Position of the Taubman Filing Persons as to the Fairness of the REIT Merger
UndertheSECrulesgoverning“goingprivate”transactions,eachoftheTaubmanfilingpersonsisanaffiliateoftheCompanyforpurposesoftheproposedtransactionundersuchrulesand,therefore,isrequiredtoexpressitsbeliefsastothefairnessoftheREITMergertotheCompany’sunaffiliatedsecurityholders.EachTaubmanfilingpersonismakingthestatementsincludedinthissectionsolelyforthepurposeofcomplyingwiththerequirementsofRule13e-3and related rules under the Exchange Act. The views of each Taubman filing persons should not be construed as arecommendation to any Taubman shareholder as to how that shareholder should vote on the Merger AgreementProposal.
TheTaubmanfilingpersonsmayhaveinterestsintheTransactionsthatmaybedifferentfrom,orinadditionto,thoseoftheotherTaubmanshareholders.Theseinterestsaredescribedunder“—Interests of Taubman’s Directors andExecutive Officers in the Transactions,” “—The Taubman Filing Persons’ Purposes and Reasons for theTransactions,” and “The JV Agreement.” In light of these different interests, the Taubman Board established theSpecial Committee, which consists solely of individuals (i) not directly or indirectly affiliated with Taubman or theTaubmanfamilymembers,ortheirrespectiveaffiliates(otherthananaffiliationwithTaubmanbyvirtueofservingasadirectorofTaubman),(ii)notmembersofTaubman’smanagement,and(iii)whoareindependentanddisinterested(other than their interests described under “—Interests of Taubman’s Directors and Executive Officers in theTransactions”)anddelegatedtoit theTaubmanBoard’spowerandauthorityto, amongotherthings: (a)reviewandevaluatethepossiblesaleofTaubman,(b)identify,reviewandevaluatealternativestothepossiblesaleofTaubmanthat may be available to Taubman, including remaining an independent company, (c) if the Special Committeeconsidersitadvisableorappropriate,negotiatetheprice,structure,form,termsandconditionsofasaleofTaubmanorany alternative thereto and the form, terms and conditions of any definitive agreements in connection therewith, (d)determine whether a sale of Taubman or any alternative thereto is fair to, advisable and in the best interests ofTaubmananditsshareholders,(e)engage,andobtainanynecessaryordesirableadvice,assistanceandopinionsfrom,financialadvisorsorotheradvisors,consultantsandagents,and(f)recommendtothefullTaubmanBoardwhataction,ifany,shouldbetakenbyTaubmanwithrespecttoasaleofTaubmanoranyalternativethereto.
TheTransactionswereapprovedunanimouslyby(i)membersoftheTaubmanBoard,includingallofindependentdirectors,and(ii)allofthemembersoftheSpecialCommittee.
NoneoftheTaubmanfilingpersonsortheotherTaubmanfamilymembersparticipatedinthedeliberationsoftheSpecialCommitteeastothesubstantiveorproceduralfairnessoftheREITMergertotheTaubmanshareholders.Forthesereasons,theTaubmanfilingpersonsdonotbelievethattheirinterestsintheTransactionsinfluencedthedecisionoftheSpecialCommitteewithrespecttothemergeragreementortheTransactions.
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Basedontheknowledgeandanalysis ofeachoftheTaubmanfilingpersonsofavailable informationregardingTaubman,aswellasdiscussionswithTaubman’sseniormanagementregardingTaubmananditsbusinessandfactorsconsideredby,andtheanalysisandresultingconclusionsof,theTaubmanBoardandtheSpecialCommitteediscussedunder “—Reasons for the Transactions and Recommendation of the Special Committee and the Taubman Board”(whichanalysisandresultingconclusionseachoftheTaubmanfilingpersonsadoptastheirown),eachoftheTaubmanfiling persons believe that the REIT Merger is substantively and procedurally fair to the Taubman unaffiliatedshareholdersbasedonthefollowingfactors,amongothers:
• the Special Committee unanimously determined that the merger agreement and the Transactions areadvisableandfairto,andinthebestinterestsof,TaubmanandtheTaubmancommonshareholders;
• theTaubmanBoard,basedontherecommendationoftheSpecialCommittee,unanimouslydeterminedthatthemergeragreement andtheTransactionsareadvisableandfair to, andinthebest interests of, TaubmanandtheTaubmancommonshareholders;
• thecommonstockmergerconsiderationof$52.50pershareincashrepresentsanimpliedpremiumof98.7%totheclosingshare price for Taubmancommonstockof $26.42onJanuary31, 2020, thelast tradingdayprior to market rumors emerging that Simon was engaging in discussions to acquire Taubman, and animpliedpremiumof51.4%totheclosingsharepriceforTaubmancommonstockof$34.67onFebruary7,2020,thelastcompletedtradingdaybeforetheannouncementoftheTransactions;
• the common stock merger consideration payable to the Taubman shareholders, and the other terms andconditions of the merger agreement, resulted fromnegotiations between and among Taubman, the SpecialCommittee,theTaubmanfamilymembers,theSimonpartiesandeachoftheirrespectiveadvisors;
• notwithstanding that the opinion of Lazard was provided for the information and assistance of the SpecialCommittee and that none of the Taubman filing persons and the Simon parties are entitled to rely on(or relied on) such opinion, the fact that the Special Committee received the opinion of Lazard, datedFebruary 9, 2020, to the effect that, as of February 9, 2020, and based on and subject to the factors andassumptions set forth in the written opinion of Lazard, the consideration to be paid to the Taubmanshareholders (other than the Simon parties, the Taubman family members and any of their respectiveaffiliates)pursuanttothemergeragreementwasfairfromafinancialpointofviewtosuchholders,asfurtherdescribedunder“—Opinion of Financial Advisor to the Special Committee”;
• theSpecialCommitteeretainedandwasadvisedbyitsownlegalandfinancialadvisors,eachofwhichhasextensiveexperienceintransactionssimilartotheTransactions;
• theSpecialCommitteewasinvolvedinfrequentandextensivedeliberationsoveraperiodofmorethanthreemonths regarding Simon’s proposal to acquire Taubman and the other transactions contemplated by themergeragreement,including32SpecialCommitteemeetings,andwasprovidedwithfullaccesstoTaubmanmanagementanditsadvisorsinconnectionwithitsevaluationprocess;
• thebeliefthatthevaluetoTaubmanshareholdersofTaubmancontinuingasanindependentpubliccompanywouldnotbeasgreatasthecommonstockmergerconsideration;
• thecommonstockmergerconsiderationprovidesTaubmanshareholderswithimmediatecertaintyofgreatervalue andliquidity at an attractive per share equity value without the market or execution risks associatedwithcontinuedindependenceasapubliccompany;
• theSpecial Committee’s belief that thecommonstockmerger considerationto bepaidintheTransactionsrepresentedthehighestpershareconsiderationthatcouldbeobtained;
• the approval and adoption of the merger agreement is subject to a “majority-of-the-minority” votingrequirement, pursuant to which the consummation of the Transactions is subject to a condition that themerger agreement beadoptedbytheaffirmative vote of holders of a majority of theoutstandingshares ofTaubmanvotingnotbeneficiallyownedbytheTaubmanfamilymembers;
• theTaubmanBoardagreednottoapproveatransactionoranyalternativetheretowithoutapriorfavorablerecommendationwithrespecttosuchtransactionoralternativebytheSpecialCommittee;
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• theTaubmanfamilymembersarereceivingthesameconsiderationastheunaffiliatedTaubmanshareholderswithrespecttoallsharesoftheTaubmancommonstockheldbytheTaubmanfamilymembers(allofwhicharebeingsoldintheTransactions);
• themergeragreementprovidesfora“go-shop”period,duringwhichtheSpecialCommitteeanditsadvisorsmaysolicit,initiate,proposeorinducethemaking,submissionorannouncementof,orencourage,facilitateor assist, any proposal or offer that could constitute an acquisition proposal from a person other than theSimonparties,andmayultimatelyterminatethemergeragreementtoacceptaSuperiorProposalfromsuchperson as long as Taubman complies with certain procedures in the merger agreement, as more fullydescribedunder“The Merger Agreement—The ‘Go-Shop’ Period”;
• the merger agreement permits the Special Committee, under certain circumstances, to change, withhold,withdraw, qualify or modify its recommendation and permits Taubman under certain circumstances torespond to inquiries regarding acquisition proposals and, upon payment of a termination fee to Simon ofeither$46,604,909,whichamountisequaltoapproximately1.25%ofthevalueofTaubman’sequitytobeacquired by Simon in the Transactions (if the merger agreement had been terminated during the go-shopperiod or in certain circumstances for a limited time period thereafter) or $111,851,783, which amount isequaltoapproximately3.0%ofthevalueofTaubman’sequitytobeacquiredbySimonintheTransactions(ifthemergeragreementisterminatedfollowingsuchperiods),toterminatethemergeragreementtoacceptaSuperiorProposal(assuchtermisdefinedinthemergeragreement),asdescribedunderthesectionentitled“The Merger Agreement—The ‘No-Shop’ Period”and“The Merger Agreement—Termination Fees”;
• theTaubmanfamilymembershaveagreedtonegotiateingoodfaithwithacompetingbidderthathasmadeaproposal that theSpecial Committee determinesis a Superior Proposal, or is reasonablylikelytoleadtoaSuperior Proposal, and that has a structure similar to the Transactions, and the Taubman family membershave agreed to discuss in good faith with the Special Committee terms on which the Taubman familymembersmightbewillingtoagreetoanalternativetransactionthatdoesnothaveastructuresimilartotheTransactions;and
• theSpecialCommitteehadconsideredalternatives,includingcontinuingtooperateTaubmanonastandalonebasis,asaleofselectedassets,aspin-offofselectedassetsorasaletoanalternativebuyer,andconsideredthe risks and uncertainties associated with such alternatives, and the Special Committee concluded that noother alternatives were reasonably likely to create greater value for the unaffiliated holders of TaubmancommonstockthantheTransactions.
NoneoftheTaubmanfilingpersonshasperformed,orengagedafinancialadvisortoperform,anyvaluationorotheranalysesforthepurposesofassessingthefairnessofthemergerstotheTaubmanshareholders.
IntheirconsiderationofthefairnessoftheREITMerger,theTaubmanfilingpersonsdidnotfinditpracticableto,anddidnot,appraiseTaubman’sassetstodeterminetheliquidationvalueforTaubman’sshareholders(i)becauseoftheirbeliefthatliquidationsalesgenerallyresultinproceedsthataresubstantiallylessthantheproceedsofasaleofagoingconcern, (ii) becauseof the impracticability of determininga liquidationvaluegiventhesignificant executionriskinvolvedinanybreakup,and(iii)becausealiquidation-basedvaluationdoesnotappropriatelytakeintoaccountoverheadandother potentially significant costs of a liquidation. Noneof the Taubmanfilingpersonsconsiderednetbook value, which is an accounting concept, for purposes of determining the fairness of the common stock mergerconsideration to the Taubman shareholders because, in their view, net book value is not indicative of Taubman’smarket value but rather an indicator of historical costs. Each of the Taubman filing persons note, however, that thecommonstockmergerconsiderationof$52.50incashpershareishigherthanthenetbookvalueofTaubmanpershareof$(3.94)asofMarch31,2020.AsofMarch31,2020,Taubman’snetbookvaluewasapproximately$(241,664,000).None of the Taubman filing persons sought to establish a pre-Transactions going concern value for the Taubmancommon stock to determine the fairness of the common stock merger consideration to the Taubman shareholdersbecausefollowingtheTransactionsTaubmanandtheTaubmanoperatingpartnershipwillhaveasignificantlydifferentcapitalstructure.However,totheextentthepre-TransactionsgoingconcernvaluewasreflectedinthesharepriceoftheTaubmancommonstockonFebruary7,2020,thelastcompletedtradingdaybeforethepublicannouncementoftheTransactions,thecommonstockmergerconsiderationof$52.50persharerepresentedanimpliedpremiumof51.4%totheclosingsharepriceforTaubmancommonstockof$34.67onFebruary7,2020.
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The foregoing discussion of the information and factors considered and given weight by the Taubman filingpersonsinconnectionwiththefairnessoftheREITMergerisnotintendedtobeexhaustivebutincludesthematerialfactorsconsideredbytheTaubmanfilingpersons.TheTaubmanfilingpersonsdidnotfindit practicableto,anddidnot,quantifyorotherwiseassignrelativeweightstotheindividualfactorsconsideredinreachingtheirconclusionsastothefairness of the REITMerger. Rather, the fairness determinations were madeafter consideration of the foregoingfactorsasawhole.
Plans for the Company After the Mergers
Following completion of the Transactions, Taubman will have been merged with and into Merger Sub 1 andTaubmanwillceasetoexistasaseparatecorporateentity.ThesharesofTaubmancommonstock,TaubmanSeriesJPreferredStockandTaubmanSeriesKPreferredStockarecurrentlyregisteredundertheExchangeAct.FollowingtheconsummationoftheTransactions,itisexpectedthatallstockofTaubmanwillbedelistedfromtheNYSE.
Pursuant to thetermsof theJVagreement it is expectedthat Taubman’s operations will beconductedafter theMergersthroughtheJointVenture.Priortotheoccurrenceofcertainspecifiedterminationevents(including,butnotlimitedto,theownershipoftheTaubmanfamilymembersfallingbelowaspecifiedthreshold)(the“TaubmanPeriod”),theoperationsoftheJointVentureanditssubsidiarieswillbemanagedbytheChiefExecutiveOfficerandPresident,R.Taubman(or,ifR.TaubmanceasestobeChiefExecutiveOfficerandPresident,W.Taubmanoranotherappointeeof the Taubman family members reasonably acceptable to Surviving TCO), subject to approval rights held bySurvivingTCOover certain matters, including, but not limited to, equity issuances, debt incurrences beyondcertainagreed-upon exceptions, the annual budget (subject to certain procedures and exceptions), certain litigation, affiliatetransactionsandcertaincontracts.
FollowingtheendoftheTaubmanPeriod,theoperationsoftheJointVentureanditssubsidiarieswillbemanagedby a board of directors appointed by Surviving TCO, subject to a more limited set of approval rights held by theTaubmanfamilymembersandtheTaubmanfamilymembersmaintainingcertainminimumownershipthresholds.
Asofthedateofthisproxystatement,otherthantheMergers,theSimonpartieshavenocurrentplans,proposalsor negotiations which would relate to or result in an extraordinary transaction involving Taubman’s business ormanagement,suchasamerger,reorganization,liquidation,relocationofanyoperations,orsaleortransferofamaterialamountofassets,ortheincurrenceofanyindebtedness(otherthanthedebtfinancingdescribedherein).
Certain Effects of the Transactions
IfthemergeragreementisapprovedbytheTaubmanshareholderapprovalandtheotherconditionstoclosingoftheMergersareeithersatisfiedorwaived,thefollowingwilloccur.
The Partnership Merger and LLC Conversion
Atthe effective timeof the Partnership Merger, (i) eachTaubmanOPunit issuedandoutstandingimmediatelyprior to the effective time of the Partnership Merger held by a minority partner will be converted into the right toreceive, at theelectionofsuchminoritypartner, thecommonstockmergerconsiderationor0.3814SimonOPunits;(ii)certainTaubmanOPunitsissuedandoutstandingimmediatelypriortotheeffectivetimeofthePartnershipMergerheld by the Taubman family members will remain outstanding as units of partnership interest in the SurvivingTaubmanoperatingpartnership;and(iii)allotherTaubmanOPunitsissuedandoutstandingimmediatelypriortotheeffective time of the Partnership Merger held by the Taubman family members will be converted into the right toreceive the common stock merger consideration. In addition, at the effective time of the Partnership Merger, eachTaubmanIncentiveUnitwillvestandbeconvertedintoaTaubmanOPunit,tobetreatedinthePartnershipMergerinthesamemannerastheTaubmanOPunitsheldbytheminoritypartners.ThemembershipinterestsofMergerSub2issued and outstanding immediately prior to the effective time of the Partnership Merger will automatically beconverted into a number of units of partnership interest in Surviving Taubman operating partnership such thatfollowingthePartnershipMerger,MergerSub1andTaubmanwillcollectivelyown80%(assuming,forpurposesofthiscalculation,thattheTaubmanOPunitsissuableundertheOptionDeferralAgreementareoutstandinginterestsofSurvivingTaubmanoperatingpartnership)oftheoutstandinginterestsofSurvivingTaubmanoperatingpartnership.
ImmediatelyfollowingtheeffectivetimeofthePartnershipMerger,attheeffectivetimeoftheLLCConversion,theSurvivingTaubmanoperatingpartnershipwillbeconvertedintoaDelawarelimitedliabilitycompanypursuant
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totheLLCConversion,inwhicheachunitofpartnershipinterestintheSurvivingTaubmanoperatingpartnershipthatisownedbytheTaubmanfamilymembers,MergerSub1orbyTaubmanimmediatelypriortotheeffectivetimeoftheLLCConversionwillbeconvertedintooneJointVentureunit,andeachOptionDeferredunitwillbeconvertedintotherighttoreceiveoneJointVentureunit.
The Preferred Stock Redemption
OntheclosingdateandpriortotheeffectivetimeofthePartnershipMerger,theTaubmanoperatingpartnershipwillredeemany“preferredequity”oftheTaubmanoperatingpartnershipheldbyTaubmanforanamountequaltothesumoftheTaubmanSeriesJandSeriesKPreferredStockRedemptionAmount,whichwillbepaidbytheTaubmanoperating partnership to Taubman on the closing date. Immediately following the effective time of the LLCConversion,theSimonoperatingpartnershipwillcontributetothecapitaloftheJointVentureanamountequaltotheaggregateTaubmanSeriesJandSeriesKPreferredStockliquidationpreferenceinexchangeforacertainnumberofSeriesAPreferredUnits(asdefinedintheJVagreement).ImmediatelyaftertheSimonoperatingpartnershippreferredcontribution,theJointVenturewillpaytoTaubmananamountequaltotheaggregateTaubmanSeriesJandSeriesKPreferredStockliquidationpreference.ImmediatelyaftertheTaubmanOPpaymentandpriortotheeffectivetimeoftheREITMerger,TaubmanwillissuearedemptionnoticeandcausefundstobesetasidetopaytheredemptionpriceforeachshareoftheTaubmanSeriesJPreferredStockandeachshareoftheTaubmanSeriesKPreferredStock,attheirrespectiveliquidationpreferenceof$25.00plusall accumulatedandunpaiddividendsto,butnotincluding,theredemptiondateofsuchshare.
The REIT Merger
Immediately following the Redemption, at the effective time of the REIT Merger, (i) each share of Taubmancommon stock (other than excluded Taubman common stock, as set forth in the merger agreement) issued andoutstanding immediately prior to the REIT Merger Effective Time will be converted into the right to receive thecommonstockmergerconsideration;and(ii)eachshareofTaubmanSeriesBpreferredstockwillbeconvertedintotherighttoreceiveanamountincashequaltothecommonstockmergerconsideration,dividedby14,000.
Equity Awards
UpontheeffectivetimeoftheREITMerger:(1)eachoutstandingTCORSUandeachoutstandingTCOPSUthatvestsinaccordancewithitstermsinconnectionwiththeclosingoftheREITMergerwillautomaticallyconvertintotherighttoreceivethecommonstockmergerconsideration(withsuchTCOPSUsvestingbasedonthegreateroftheaverageofactualperformanceachievement,asoftheclosing,ofthetwoperformancemetricsapplicabletosuchgrants,andtargetperformance);(2)eachoutstandingTCORSUandTCOPSUthatisnoteligibletovestinaccordancewithitstermsinconnectionwiththeclosingoftheREITMergerwillbeconvertedintoacashsubstituteawardtobepaid(A)withrespecttoanysuchawardgrantedpriorto2020,inaccordancewiththesameservice-vestingschedulethatapplied to the original TCO RSU or TCO PSU award and (B) with respect to any such award granted in 2020, inaccordancewiththesamevestingschedule(includingperformance-vestingconditions)thatappliedtotheoriginalTCORSUorTCOPSUaward;(3)eachoutstandingtime-vestingandperformance-vestingTaubmanIncentiveUnitwillvestand be converted into a Taubman OP unit (with such Taubman Incentive Units vesting based on the greater of theaverageofactualperformanceachievement,asoftheclosing,ofthetwoperformancemetricsapplicabletosuchgrants,andtargetperformance),whichshallthenbetreatedinthesamemanner(andhavingtherighttothesameelection)asallotherTaubmanOPunitsheldbytheminoritypartners;(4)eachTCODERgrantedintandemwithanyTCORSUorTCOPSUwill be treated in the samemanner as the outstanding TCORSUor TCOPSUto which suchTCODERrelates; and (5) each outstanding TCO DSU will be converted into the right to receive the common stock mergerconsideration.Finally,attheeffectivetimeoftheLLCConversion,theOptionDeferralAgreementwillbedeemedtobeamendedsothateachOptionDeferredunitwillrepresenttherighttoreceive,followingtheLLCConversion,oneJointVentureunit,andwillremainsubjecttoallothertermsandconditionsoftheOptionDeferralAgreement.
Final Structure
Following the Mergers and the LLC Conversion, the Simon operating partnership will own 100% of theoutstanding equity of Surviving TCO, Surviving TCO will directly or indirectly own 80% of the limited liabilitycompanyinterestsoftheJointVenture,andtheTaubmanfamilymemberswillcollectivelyowntheremaining20%ofthe limited liability company interests of the Joint Venture. Surviving TCOand the Taubman family members willenterintotheJVagreementwithrespecttotheJointVentureatthetimeoftheLLCConversionintheformattachedasExhibitBtothemergeragreement,whichisattachedtothisproxystatementasAnnexA.
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Other Effects
TheTaubmancommonstockiscurrentlyregisteredundertheExchangeActandisquotedontheNYSEunderthesymbol “TCO.” As a result of the Transactions, Taubman will become privately held and there will be no publicmarketfortheTaubmancommonstock.AftertheTransactions,theTaubmancommonstockwillceasetobequotedontheNYSEandpricequotationswithrespecttosalesofTaubmancommonstockinthepublicmarketwillnolongerbeavailable.Inaddition,theregistrationoftheTaubmancommonstockundertheExchangeActwillbeterminatedandTaubmanwillnolongerfileperiodicreportswiththeSECwithrespecttotheTaubmancommonstock.Terminationofregistration of the Taubman common stock under the Exchange Act will reduce the information required to befurnishedbyTaubmantoitsshareholdersandtheSEC,andwouldmakecertainprovisionsoftheExchangeAct,suchas the short-swing trading provisions of Section 16(b) of the Exchange Act and the requirement to furnish a proxystatement in connection with stockholders’ meetings pursuant to Section 14(a) of the Exchange Act, no longerapplicabletoTaubman.
ThedirectorsofMergerSub1immediatelypriortotheeffectivetimeoftheREITMergerwillbethedirectorsofSurvivingTCOandtheofficersofMergerSub1immediatelypriortotheeffectivetimeoftheREITMergerwillbetheofficers of Surviving TCO. The limited liability company agreement of Surviving TCO will be in the form of thelimitedliabilitycompanyagreementattachedasExhibitAtothemergeragreement.
Simon does not currently own any interest in Taubman. Following the Transactions, the Simon operatingpartnership will own 100% of the equity interests in Surviving TCO and will have a corresponding interest inTaubman’s net book value and net earnings. Each partner of the Simon operating partnership will have an indirectinterestinournetbookvalueandnetearningsinproportiontosuchpartner’sownershipinterestintheSimonoperatingpartnership.Taubman’snetincomeattributabletotheholdersoftheTaubmancommonstockforthefiscalyearendedDecember 31, 2019 was $203,925,000 and Taubman’s net book value as of December 31, 2019 was approximately$(177,406,000).
Benefits of the Transactions for Taubman’s Unaffiliated Shareholders
TheprimarybenefitoftheTransactionstotheTaubmanunaffiliatedshareholderswillbetheirrighttoreceivethecommonstockmergerconsiderationof$52.50pershare,whichrepresentsanimpliedpremiumof51.4%totheclosingshare price for Taubman common stock of $34.67 on February 7, 2020, the last completed trading day before theannouncement of the Transactions. Additionally, the Taubman unaffiliated shareholders will avoid the risk after theTransactionsofanypossibledecreaseinTaubman’sfutureearnings,potentialgrowthorvalue.
Detriments of the Transactions for Taubman’s Unaffiliated Shareholders
TheprimarydetrimentoftheTransactionstoTaubman’sunaffiliatedshareholdersisthelackofaninterestofsuchshareholdersinthepotentialfutureearnings,growthorvaluerealizedbyTaubmanortheJointVentureaftertheREITMerger.
Benefits of the Transactions for the Taubman Filing Persons
InconnectionwiththeTransactions,theTaubmanfilingpersonswillreceivebenefitsandbesubjecttoobligationsthat are different from, or in addition to, the benefits received by the Taubmanshareholders generally. The primarybenefits oftheTransactionstotheTaubmanfilingpersonswill betoretaina20%ownershipinterest in, andcertainmanagement and governance rights in, the Joint Venture (subject to certain ownership requirements; see “The JVAgreement”), continuing to receive cash distributions from the Joint Venture and having the option of obtainingliquidityfortheirJointVentureunitsasdescribedunder“The JV Agreement.”
Detriments of the Transactions for the Taubman Filing Persons
TheprimarydetrimentsoftheTransactionstotheTaubmanfilingpersonsincludethefactthattheTaubmanfilingpersonswillonlybeabletoobtainliquidityfortheirJointVentureunitsafteracertainperiodoftimeandsubjecttocertain limitations, with suchliquidity calculated througha mechanismthat mayresult in a purchase price per JointVentureunitthatislowerthanthepricethatwouldhavebeenreceivedhadsuchTaubmanfilingpersonsreceivedthecommon stock merger consideration in return for such Joint Venture unit. The liquidity rights pursuant to the JVagreement are described in more detail under the section entitled “The JV Agreement.” Additionally, the TaubmanfilingpersonswillbeartheriskofanypotentialdecreaseintheJointVenture’searnings,potentialgrowthorvalue.
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Certain Unaudited Prospective Financial Information
While Taubmanhas fromtimeto timeprovidedlimited financial guidance to investors, Taubmanhas not, as amatter ofcourse, otherwisepubliclydisclosedinternal projectionsastofutureperformance, earningsorotherresultsbeyondtheupcomingannualperioddueto,amongotherreasons,theuncertainty,unpredictabilityandsubjectivityoftheunderlyingassumptionsandestimates.However,inconnectionwiththeTransactions,atthedirectionoftheSpecialCommittee, Taubman’s management prepared certain non-public financial projections as to the potential futureperformance of Taubman for the years ended December 31, 2020 through December 31, 2024 (referred to as the“Projections”),whichwereprovidedtotheSpecialCommitteeinconnectionwithitsevaluationoftheTransactions.Atthe direction of the Special Committee, the Projections were provided to Lazard in connection with its financialanalyses, including Lazard’s financial analyses described under “—Opinion of Financial Advisor to the SpecialCommittee.”PortionsoftheProjectionswithrespectto2020werealsoprovidedtoSimonforitsuseinconnectionwithitsevaluationoftheTransactions.Formoreinformation,see“—Background of the Transactions.”
ThefollowingsummaryoftheProjectionsisincludedforthepurposeofprovidingTaubmanshareholdersaccessto certain non-public information that was furnished to certain parties in connection with the Transactions. Thisinformation may not be appropriate for other purposes and is not included to influence the voting decision of anyshareholder. Theinclusion of this summary should not be regarded as an indication that Taubman’s management oranyone who received the Projections then considered, or now considers, them to be a reliable prediction of futureevents,andtheProjectionsshouldnotberelieduponassuch.
TheProjectionswerenotpreparedwithaviewtowardpublicdisclosureorwithaviewtowardcomplyingwiththepublished guidelines of the SEC regarding projections or GAAP, or the guidelines established by the AmericanInstitute of Certified Public Accountants with respect to prospective financial information. Neither Taubman’sindependentauditornoranyotherindependentaccountanthascompiled,examined,orperformedanyprocedureswithrespecttotheProjections,norhavetheyexpressedanyopinionoranyotherformofassuranceonsuchinformationoritsachievability.BeneficialinterestinPropertyNOI,BeneficialinterestinEBITDA,AdjustedFFO,AdjustedFFOperDiluted Share and Unlevered Free Cash Flow contained in the summary set forth below are non-GAAP financialmeasureswithinthemeaningoftheapplicablerulesandregulationsoftheSEC,whicharefinancialmeasuresthatarenotcalculatedinaccordancewithGAAP.Thesenon-GAAPfinancialmeasuresshouldnotbeviewedasasubstituteforGAAP financial measures and may be different from non-GAAP financial measures used by other companies.Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to,financialmeasurespreparedinaccordancewithGAAP.SECrulesthatmayotherwiserequireareconciliationofanon-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures provided todirectors or a financial advisor (liketheProjections) inconnectionwitha proposedtransactionliketheTransactionswhen the disclosure is included in a document like this proxy statement. In addition, reconciliations of non-GAAPfinancialmeasurestoGAAPfinancialmeasureswerenotrelieduponbyLazardforpurposesofitsopinionorbytheSpecial Committee or the Taubman Board in connection with their consideration of the Transactions. Accordingly,Taubman has not provided a reconciliation of the non-GAAP financial measures included in the Projections to therelevantGAAPfinancialmeasures.
Although the Projections are presented with numerical specificity, they reflect numerous estimates andassumptions made by Taubman’s management with respect to industry performance, general business, economic,regulatory,marketandfinancialconditionsandotherfutureevents,aswellasmattersspecifictoTaubman’sbusiness,all of whicharedifficult orimpossibletopredict accuratelyandmanyofwhicharebeyondTaubman’scontrol. TheProjections reflect subjective judgment in many respects and thus are susceptible to multiple interpretations andperiodicrevisionsbasedonactualexperienceandbusinessdevelopments.Assuch,theProjectionsconstituteforward-lookinginformationandaresubjecttomanyrisksanduncertaintiesthatcouldcauseactualresultstodiffermateriallyfromtheresults forecasted in the Projections, including, but not limited to, general economic conditions, changes inmarket rental rates, unscheduled closings or bankruptcies of tenants, relationships with tenants, trends in the retailindustry,changesinconsumershoppingbehavior,theimpactoftheCOVID-19pandemicandotherfactorsdiscussedinthisproxystatementandinotherreportsfiledwithorfurnishedtotheSECbyTaubman.TherecanbenoassurancethattheProjectionswillberealizedorthatactualresultswillnotbesignificantlyhigherorlowerthanthoseforecasted.TheProjectionscoverseveralyearsandsuchinformationbyitsnaturebecomeslessreliablewitheachsuccessiveyear.
TheProjectionsweredevelopedbyTaubman’smanagementwithoutgivingeffecttotheTransactions,including,butnotlimitedto,anycostsincurredinconnectionwiththeTransactions.Inaddition,theProjectionswillbeaffected
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byTaubman’sabilitytoachievestrategicgoals,objectivesandtargetsovertheapplicableperiods.TheProjectionsdonottakeintoaccounttheimpactoftheCOVID-19pandemic.TheProjectionsreflectassumptionsastocertainbusinessdecisionsthataresubjecttochange.TheProjectionscannot,therefore, beconsideredaguaranteeoffutureoperatingresults,andshouldnotbereliedonassuch.
In addition, the Projections have not been updated or revised to reflect information, circumstances, eventsor results after the date they were prepared or as of the date of this proxy statement, and except as required byapplicable securities laws, Taubman does not intend to update or otherwise revise the Projections or the specificportions presented to reflect circumstances existing after the date the Projections were prepared or to reflect theoccurrence of future events, even in the event that any or all of the underlying assumptions are shown to be inerror.
TheinclusionofthefollowingsummaryoftheProjectionsshouldnotbedeemedanadmissionorrepresentationbyTaubmanor any other person that Taubmanor any other person views such Projections as material information,particularlyinlightoftheinherentrisksanduncertaintiesassociatedwithsuchlong-rangeforecasts.NorepresentationismadebyTaubmanoranyotherpersonregardingtheProjectionsorTaubman’sultimateperformancecomparedtosuchinformation. Inlight oftheforegoingfactors, andtheuncertainties inherent intheProjections, shareholders arecautionednot to place undue, if any, reliance onthe Projections or the followingsummary. TheProjections andthefollowingsummaryshouldbeevaluated, if at all, inconjunctionwiththehistorical consolidatedfinancial statementsandotherinformationcontainedinTaubman’spublicfilingswiththeSEC.
ThefollowingisasummaryoftheProjections,whicharepresentedfortheTaubmanoperatingpartnership,andreflectitsbeneficialinterestintheunderlyingproperties,primarilyinrespectofNOI,capitalexpendituresandinterestexpense.TheseProjectionsareapplicabletoTaubmanatitsproratainterestintheTaubmanoperatingpartnership.TheProjectionswerebasedonnumerousvariablesandassumptions,includingthefollowingkeyassumptions:
• NOI growth is based on, where applicable, specific redevelopment plans for each property, and it isotherwisebasedonassumedsamepropertygrowthratesrangingfrom-2.0%to4.0%perannum,basedontheassessedgrowthpotentialoftheproperties.Thegrowthpotentialofeachpropertyisevaluatedbasedonvariousfactorsincluding,butnotlimitedto,thelocationoftheproperty,foottraffic,competitivepositioning,upcoming supply and tenant demand. Property revenues and expenses are estimated based on a stabilizedoccupancy rate, forward lease expirations, tenant sales projections (which are based on historical andexpectedtenantperformance),releasingandrenewalrentalrates(whicharebasedonrecentlysignedrents,tenant feedback and historical and expected occupancy cost ratios) and historical and projected expensemarginsandcostreimbursementfromtenants.Thepropertiesarecategorizedintofourdistinctgroups,eachwith a different assumed same property growth rate, based on their assessed potential and projectedperformance.
• Straight-lineadjustmentstorentalrevenuesfor2021through2024ateachpropertyarebasedontheaverageof the actual straight-line adjustments recognized in 2018 and 2019 and the estimated straight-lineadjustmentsin2020.
• Beneficialinterestintotalleasecancellationincomeacrossallpropertieswillnormalizefromapproximately$10millionin2020toapproximately$5millionin2024.
• Straight-lineofgroundrentexpensefor2020through2024willremainflat,basedon2019actualamountof$1.5millionperannum.
• Non-realestatedepreciationwillremainflat,basedon2020estimateof$4.5millionperannum.
• StamfordTownCenterissoldin2020.
• Proceedsfromthesaleof50%ofTaubman’sinterestinCityOn.Xi’antoBlackstonearereceivedin2020.
• GeneralandadministrativeexpensesrelatingtocorporateoverheadintheU.S.,andotheroperatingexpensesrelatedto corporate overheadinAsia will growat a rate of 2.0%per annum,basedonthe2020estimatedamount.
• Pre-construction development costs, fees associated with management, leasing and development services,andothercorporateincomeandexpenseswillremainconstantafter2020estimatedamount.
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• Share-basedcompensationexpensewillremainatapproximately$11millionperyear,inlinewithhistoricalaveragesoftheactualshare-basedcompensationexpensesfortheyearsendedDecember31,2016,2017and2018.
• Mortgageswillberefinancedattheirrespectivematuritiesin-linewithexistingdebtyieldsandcostofdebt.Interestexpensefromtermloansandcreditfacilitiesareprojectedbasedonexistingswaparrangementsandcontractualspreadstomonthlyone-monthforwardLIBOR,andincludesa25bpscushion.
• AvailablefreecashflowinexcessofanassumedminimumcashbalanceoutsideofAsiaattheendofeachyearwillbeusedtorepayexistingindebtedness.
• TheTaubmanSeriesJPreferredStockandTaubmanSeriesKPreferredStockwillremaininplace.
• Common area maintenance capital expenses, leasing capital expenses and development and renovationcapitalexpendituresforeachpropertyfor2020to2024areestimatedbasedonhistoricalandexpectedcapitalspendingandtakeintoaccountspecificredevelopmentplansforeachproperty.
• Noequityissuanceswilloccurotherthaninconnectionwithshare-basedcompensation.
• Nodividendgrowththroughtheperiod.
For the Year Ending December 31,
($ in millions, except for per share amounts) 2020 2021 2022 2023 2024
BeneficialinterestinPropertyNOI(1) $ 582.7 $ 607.2 $ 627.6 $ 643.9 $ 660.3
BeneficialinterestinEBITDA(2) $ 552.2 $ 572.7 $ 590.9 $ 605.1 $ 619.5
InterestExpense $(197.0) $(209.9) $(217.0) $(227.4) $(224.9)
AdjustedFFO(3) $ 324.0 $ 331.7 $ 342.6 $ 346.2 $ 363.0
AdjustedFFOPerDilutedShare(4) $ 3.65 $ 3.73 $ 3.85 $ 3.88 $ 4.06
UnleveredFreeCashFlow(5) $ 277.2 $ 412.1 $ 458.8 $ 498.9 $ 560.1
Certainamountsintheabovetablemayreflectroundingadjustments.(1) Beneficial interest in Property NOI is defined as property-level operating revenue (excluding straight-line adjustments to rental
revenue),lessmaintenance,propertytaxes,utilities,promotion,groundrent,otherpropertyoperatingexpenses,andleasecancellationincome.
(2) Beneficial interest in EBITDArepresents the Taubman operating partnership’s share of earnings before interest, income taxes, anddepreciationandamortizationoftheconsolidatedandunconsolidatedbusinesses.
(3) AdjustedFFOisdefinedasFFOasdefinedbytheNationalAssociationofRealEstateInvestmentsTrusts(NAREITFFO)excludingcertain non-recurring items including, but not limited to, restructuring charges, deferred income tax expense, costs associated withshareholderactivism,chargesrecognizedinconnectionwiththewrite-offofdeferredfinancingscosts,promotefees,andfluctuationinthefairvalueofequitysecurities.
(4) Adjusted FFO Per Diluted Share is calculated as Adjusted FFO divided by the projected number of weighted average sharesoutstanding, as adjusted for the dilutive impact of share-based compensation ((i) 88,778,702 shares outstanding as of 2020,(ii)88,851,190sharesoutstandingasof2021,(iii)89,058,463sharesoutstandingasof2022,(iv)89,284,430sharesoutstandingasof2023and(v)89,502,217sharesoutstandingasof2024).
(5) UnleveredFreeCashFlowisdefinedasBeneficialinterestinEBITDA,plusstraight-linerentadjustments,plusstraight-lineofgroundleases,plusshare-basedcompensation,plusnetproceedsfromdispositions,lesstaxes,lesscapitalexpenditures.
Interests of Taubman’s Directors and Executive Officers in the Transactions
InconsideringtherecommendationoftheSpecialCommitteeandoftheTaubmanBoardthatyouvotetoapprovetheMergerAgreementProposal,youshouldbeawarethat,asidefromtheirinterestsasshareholdersoftheCompany,theCompany’sdirectorsandexecutiveofficersmayhaveinterestsintheTransactionsthatmaybedifferentfrom,orinaddition to, those of the other Taubman shareholders. The members of the Special Committee were aware of andconsidered these interests, among other matters, in evaluating and negotiating the merger agreement and theTransactions,andinmakingrecommendationstotheTaubmanBoard,whichwasalsoawareofandtookintoaccountthese interests, amongother matters, whenmaking its recommendation to the shareholders of the Companythat theMerger Agreement Proposal be approved. See “—Background of the Transactions,” and “—Reasons for theTransactions and Recommendation of the Special Committee and the Taubman Board,” “—Opinion of FinancialAdvisor to the Special Committee”and“The JV Agreement.”
The Company’s shareholders should take these interests into account in deciding whether to vote “FOR”theMergerAgreementProposal.Theseinterestsaredescribedinmoredetailbelow,andcertainofthemarequantifiedinthenarrativeandthetablesbelow.
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R. Taubman and W. Taubman
The Option Deferral Agreement pursuant to which R. Taubman has the right to receive Taubman OP units atcertainspecifieddatesinthefuture,shallbedeemedtobeamendedsothateachoftheseunitsshallrepresenttherighttoreceive,followingtheLLCConversioneffectivetime,oneJointVentureunit,withsuchdeferredJointVentureunitsremainingsubjecttoallothertermsandconditionsoftheOptionDeferralAgreement(includingthecontinuedrighttoreceivedistributionsinthesamemannerandinthesameamountasreceivedbyanyotherJointVentureunit).
Following the Transactions, the Simon operating partnership will own 100% of the outstanding equity ofSurvivingTCO,SurvivingTCOwillown80%ofthelimitedliabilitycompanyinterestsoftheJointVenture,andtheTaubmanfamilymemberswillowntheremaining20%ofthelimitedliabilitycompanyinterestsoftheJointVenture(assuming, for purposes of this calculation, that Taubman OP units issuable under the Option Deferral AgreementbecomeoutstandinglimitedliabilitycompanyinterestsoftheJointVenture).SurvivingTCOandtheTaubmanfamilymembers will enter into a JVagreement with respect to the Joint Venture at the timeof the LLCConversionin theformattachedasExhibitBtothemergeragreementanddescribedfurtherbelow.ForadescriptionofthetreatmentoftheTaubmancommonstockandother TaubmanOPunits beneficially ownedbyR. Taubman, W.TaubmanandtheotherTaubmanfamilymembersintheTransactionsandadiscussionoftheircontinuinginterestintheJointVenture,see“—Certain Effects of the Transactions”andthe“The JV Agreement.”
Asindicatedbelow,neitherR.TaubmannorW.Taubmanhasanyemploymentorchangeincontrolagreementsorotherseveranceprotections,anddoesnotholdanylong-termincentiveawards.However,Messrs.R.TaubmanandW.Taubman will continue to be eligible to receive, in the ordinary course consistent with past practice, annual bonusamounts based on achievement of pre-established performance metrics, above the level that is required to fund theannualbonuspoolforotherexecutiveofficers.R.TaubmanandW.Taubmanwillalsocontinuetobeentitledtousethecompanyplaneforpersonaluse,subjecttoreimbursementforsuchuse,inaccordancewithpastpractice.
Treatment of Taubman Equity Awards
AttheeffectivetimeoftheTransactions,eachthenoutstandingequityawardheldbyourdirectorsandexecutiveofficerswillbetreatedasdescribedbelow.
EachTCORSU,otherthanaTCORSUgrantedin2020,whichbyitstermsvestsinfullinconnectionwiththeclosingof theTransactions, andeachTCODSU,shall, without anyactionbytheholder thereof, vest in full, andineachcaseshallbeconvertedintotherightoftheholderthereoftoreceiveanamountincash,withoutinterest,equaltothe product of (i) the number of shares of Taubman common stock subject to such TCO RSU or TCO DSU, asapplicable, and (ii) the commonstock merger consideration. Any commonstock merger consideration payable withrespectsuchTCORSUsandTCODSUsshallbepaidassoonaspracticable,andinanyeventwithinfive(5)businessdays,followingtheeffectivetimeoftheTransactionsandsubjecttoanyrequiredwithholdingtaxes.
Each TCO PSU, other than a TCO PSU granted in 2020, which by its terms is eligible to become vested inconnection with the closing of the Transactions shall, without any action by the holder thereof, become vested(determinedbasedonthegreaterof(x)theaverageofactualperformanceachievementofthetwoperformancemetricsapplicable to such grants, as of the closing, and (y) target performance) and shall be converted into the right of theholder thereof to receive an amount in cash, without interest, equal to the product of (i) the number of shares ofTaubman common stock subject to the vested portion of such TCO PSU and (ii) the common stock mergerconsideration.AnycommonstockmergerconsiderationpayablewithrespecttosuchTCOPSUsshallbepaidassoonas practicable, and in any event within five (5) business days, following the effective time of the Transactions andsubjecttoanyrequiredwithholdingtaxes.TheportionofanyTCOPSUdescribedabovethatdoesnotbecomevestedfollowingthedeterminationofperformanceasdescribedaboveshall becancelledandforfeitedimmediatelypriortotheeffectivetimeoftheTransactionswithoutconsiderationtherefor.
EachTCORSUandanyTCOPSU,other thana TCORSUor TCOPSUgrantedin 2020, whichis not, byitsterms,eligibletobecomevestedupontheeffectivetimeoftheTransactions,shall,immediatelypriortotheeffectivetimeoftheTransactions,withoutanyactionbytheholderthereof,becancelledandconvertedintoasubstituteawardinrespect thereof (assuming, for any applicable TCO PSU, achievement of performance conditions at the greater of(x)theaverageofactualperformanceachievementofthetwoperformancemetricsapplicabletosuchgrants,asoftheclosing,and(y)targetperformance),whichsubstituteawardshallconstitutearighttoreceive,onapersharebasiswithrespect to the portion of such substitute award that vests, a cash payment equal to the common stock mergerconsideration(a“cashsubstituteawardamount”).Eachsuchcashsubstituteawardshallcontinuetobesubjecttothesameservice-vestingschedulethatappliedtotheoriginalTCORSUorTCOPSUtowhichitrelates,withany
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cash substitute award granted in respect of a TCO PSU vesting solely subject to service conditions being satisfiedthroughtheendoftheoriginallyscheduledperformanceperiod,andthecashsubstituteawardamountsthatvestandbecomespayableshallbepaidatsuchtime.
EachTCORSUandanyTCOPSU,ineachcasethatisgrantedin2020shall,immediatelypriortotheeffectivetimeoftheTransactions,withoutanyactionbytheholderthereof,becancelledandconvertedintoasubstituteawardinrespect thereof, which substitute award shall constitute a right to receive, on a per share basis with respect to theportionofsuchsubstituteawardthatvests,acashpaymentequaltothecashsubstituteawardamount.Each2020cashsubstitute award shall continue to be subject to the same service-based and performance-based vesting schedule(asapplicable)thatappliedtotheoriginalTCORSUorTCOPSUtowhichitrelates,andtheapplicablecashsubstituteawardamountthatvestsandbecomespayableshallbepaidatsuchtime.
EachTCODERthat relates to an outstandingTCORSU,TCOPSUor TCODSUwhichbyits termsis, as ofimmediately prior to the effective time of the Transactions, already vested, or is eligible to become vested inconnectionwiththeeffectivetimeoftheTransactions,shall,withoutanyactionbytheholderthereof,becomevested(totheextentnotpreviouslyvested)tothesameextentastheTCORSU,TCOPSUorTCODSUtowhichsuchTCODERrelatesasdescribedabove,andshallbecomeimmediatelydueandpayableinaccordancewithitstermsand,uponpaymentinfullthereofinaccordancewithitsterms,shallbecancelledasoftheeffectivetimeoftheTransactions.
Each TCO DER that relates to an outstanding TCO RSU or TCO PSU which is not, by its terms, eligible tobecome vested upon the effective time of the Transactions shall, immediately prior to the effective time of theTransactions,withoutanyactionbytheholderthereof,becancelledandshallbeconvertedintoacashsubstituteDERthatcontinuestoaccrue,attheratesetforthinthemergeragreementandwillbepaidonthesametermsthatappliedtotheoriginalrelatedTCORSUorTCOPSU.
Notwithstandinganythingtothecontrary,anypaymentinrespectofanyTCORSUs,TCOPSUs,TCODERsorTCO DSUs (including any cash substitute awards and cash substitute DERs) which immediately prior to thecancellationthereofwastreatedas“deferredcompensation”subjecttoSection409AoftheCodeshallbemadeontheapplicablesettlementdateforsuchTCORSUs,TCOPSUs,TCODERsorTCODSUsifrequiredinordertocomplywithSection409AoftheCode.
Eachoutstandingtime-vestingandperformance-vestingTaubmanIncentiveUnitthatvestsinaccordancewithitstermsinconnectionwiththeclosingoftheTransactionswillvestandwillautomaticallyconvertintoaTaubmanOPunit (with such Taubman Incentive Units vesting based on the greater of (x) the average of actual performanceachievement,asoftheclosing,ofthetwoperformancemetricsapplicabletosuchgrants,and(y)targetperformance),whichshall thenbetreatedinthesamemanner(andhavingtherighttothesameelection)asall otherTaubmanOPunits held by the minority partners. See the section entitled “—Quantification of Potential Payments” beginning onpage66of this proxy statement for an estimate of the amounts that would become payable to each of Taubman’snamedexecutiveofficersinrespectoftheirunvestedequityawards.
Thefollowingtable provides informationfor eachof theCompany’s executive officers regardingtheaggregatenumberofTCORSUs,TCOPSUsandTaubmanIncentiveUnitsthatwouldbeoutstanding,andtheaggregateamountofTCODERsthatwouldbeaccrued,ineachcaseimmediatelypriortotheclosingoftheTransactions,assumingthattheTransactionsclosedonMay22,2020.
NameTCO RSUs
(#)
TCOPSUs (#)(a)
Time-Vesting Taubman Incentive
Units (#)
Performance- Vesting
Taubman Incentive Units
(#)(a)TCO DERs
($)
Robert S. Taubman ChiefExecutiveOfficer — — — — —
Simon J. Leopold EVP,ChiefFinancialOfficer&Treasurer 18,399 22,460 8,154 36,690 68,536.13
William S. Taubman ChiefOperatingOfficer — — — — —
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NameTCO RSUs
(#)
TCOPSUs (#)(a)
Time-Vesting Taubman Incentive
Units (#)
Performance- Vesting
Taubman Incentive Units
(#)(a)TCO DERs
($)
Paul A. Wright President,TaubmanAsia 18,772 18,592 — — 113,510.08
Peter J. Sharp President,TaubmanAsia — — — — —
(a) TCOPSUsandperformance-vestingTaubmanIncentiveUnitsaregranted(andthereforeoutstanding)assumingthemaximumnumberof shares or units, as applicable, that are eligible to become vested. If performance achievement does not result in the maximumnumberofsharesorunitsbeingvested,anythenunvestedportionofthesharesorunitsareforfeited.
For additional information regarding the amount of payments that would be payable to each of the Company’sexecutive officers in respect of these TCORSUs, TCOPSUsandTCODERsin connection with the closing of theTransactions, assuming,amongotherfacts, thattheTransactionsclosedonMay22,2020,see“—Golden ParachuteCompensation.”
Finally, at the effective time of the LLC Conversion, the Option Deferral Agreement will be deemed to beamendedsothateachOptionDeferredunitwillrepresenttherighttoreceive,followingtheLLCConversion,oneJointVenture unit, and will remain subject to all other terms and conditions of the Option Deferral Agreement. See thesectionentitled“—R. Taubman and W. Taubman”beginningonpage60ofthisproxystatementformoredetails.
Non-Employee Directors Deferred Stock Units
Non-employeedirectorsoftheCompanyhavebeengrantedTCODSUspursuanttotheTaubmanStockPlansintheordinarycourseofbusinessconsistentwiththeCompany’snon-employeedirectorcompensationprogrameffectiveJanuary1,2020.Asdescribedbelowunder“The Merger Agreement—REIT Merger—Treatment of Outstanding EquityAwards,” at the effective time of the Transactions, all then outstanding TCODSUs will receive the common stockmergerconsiderationforeachshareofTaubmancommonstocksubjecttoeachsuchTCODSU.
The following table provides information for each of the Company’s non-employee directors regarding theaggregate number of TCODSUsthat would be outstanding and exchanged for commonstock merger considerationassumingthattheTransactionsclosedonMay22,2020.
Name
Number ofTCO
DSUs (#)
Amount Payableat
Closing(1) ($)
MayreeClark — —
MichaelJ.Embler 7,036 369,390
JaniceL.Fields 7,352 385,980
MichelleJ.Goldberg 5,245 275,363
NancyKillefer 4,818 252,945
CiaBuckleyMarakovits 15,544 816,060
RonaldW.Tysoe 29,767 1,562,768
MyronE.Ullman,III 20,759 1,089,846
(1) Amountsarecalculatedbymultiplying(a)thecommonstockmergerconsiderationpriceof$52.50pershare,times(b)thenumberofshares of Taubman common stock subject to the TCODSUs held by each of the non-employee directors as of May 22, 2020, theassumedclosingdateoftheTransactions.
ForadditionalinformationaboutbeneficialownershipofTaubmancommonstockbytheCompany’sdirectorsandexecutiveofficers,see“Important Information Regarding Taubman Centers, Inc.—Security Ownership of Managementand Certain Beneficial Owners.”
Termination Protections
IftheTransactionsarecompleted,theCompany’sexecutiveofficers,asoftheeffectivetimeoftheTransactions,areexpectedtoremaintheexecutiveofficersoftheJointVenture.
Messrs.R.TaubmanandW.TaubmanhavenotenteredintoanyemploymentorchangeincontrolagreementsandarenoteligibletoparticipateintheSeverancePlan.
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Simon J. Leopold, Executive Vice President, Chief Financial Officer and Treasurer of Taubman, is party to achangeofcontrolemploymentagreementwithus.Mr.LeopoldandPaulA.Wright,PresidentofTaubmanAsia,arealso party to the Severance Plan, described below. Mr. Leopold will continue to be eligible to receive severancebenefits under his change in control employment agreement if they are more favorable than the severance benefitsprovidedthroughtheSeverancePlan,andanybenefitspayableunderthechange-in-controlagreementwillbeoffsetbyanybenefitprovidedundertheSeverancePlan.
Change in Control Employment Agreement – Simon Leopold
Mr. Leopold’s agreement has a three-year term that automatically extends for an additional year on eachanniversaryofthefirstdayofitstermsunlessanoticenottoextendisgivenbyusatleast60dayspriortotherenewaldate. If a change of control of Taubman occurs during the term of the agreement, then the agreement becomesoperative for a fixed three-year period commencing on the date of the change of control and supersedes any otheremploymentagreementbetweenusandanyofouraffiliates,ontheonehand,andtheexecutive,ontheother.
The agreement provides generally that Mr. Leopold’s terms and conditions of employment, including position,location, compensation and benefits, will not be adversely changed during the three-year period after a change ofcontrol of Taubman. In addition, the agreement also provides that upon a change of control of Taubman or aterminationofemploymentinanticipationofachangeofcontrolofTaubman,generallyalloftheexecutive’sshare-based compensation awards that are outstanding on the date of the change of control will vest and, in specifiedcircumstances, will become exercisable or payable. After a change of control of Taubman, if the executive’semploymentisterminated(1)byreasonoftheexecutive’sdeathordisability,theexecutiveorhisorherbeneficiaryorestate will generally be entitled to receive accrued but unpaid base salary and an annual cash bonus for the year inwhich the termination of employment occurs, pro-rated through the date of termination; or (2) by us other than forcause,deathordisability,oriftheexecutiveresignsforgoodreason,oruponcertainterminationsinconnectionwithorinanticipationofachangeofcontrol,theexecutivewillgenerallybeentitledtoreceive:
• theamountsnotedaboveforterminationbyreasonofdeathordisability;
• twoandahalftimestheexecutive’sannualbasesalaryandanannualcashbonusamount;
• continuedwelfarebenefitsandperquisitesforatleastthirtymonths;and
• outplacementservicesforoneyear.
The annual cash bonus portion of this severance amount will be based on the higher of (x) the highest bonusearned bythe executive during the three full fiscal years prior to the change of control of Taubmanor (y) the mostrecentbonusearnedbytheexecutivepriortothedateofterminationofemployment.
Forpurposesofthechangeincontrolemploymentagreement,(a)“cause”isdefinedasthewillfulandcontinuedfailure of Mr. Leopold to substantially perform his duties after a written demand for substantial performance (otherthananysuchfailureresultingfromincapacityduetophysicalormentalillnessorfollowingMr.Leopold’sdeliveryofanoticeofterminationforgoodreason)orthewillfulengagingofMr.Leopoldinillegalconduct,orgrossmisconduct,thatismateriallyanddemonstrablyinjurioustotheCompany;and(b)“goodreason”isdefinedas(i)theassignmenttoMr.Leopoldofanydutiesinconsistentinanyrespectwithhisposition(includingstatus,offices,titles,andreportingrequirements),authority,dutiesorresponsibilitiesascontemplatedbytheagreement,oranyotherdiminutioninsuchposition,authority,dutiesorresponsibilities(whetherornotoccurringsolelyasaresultoftheCompanyceasingtobeapublicly traded entity), excluding an isolated, insubstantial and inadvertent action not taken in bad faith that theCompany promptly cures, (ii) any failure of the Company to comply with any of the provisions of the agreementpertaining to the Company’s obligations to provide Mr. Leopold with his compensation (base salary, annual bonus,incentive, savingsandretirementplans, welfarebenefit plans, expenses, fringebenefits, officeandsupport staff, andvacation),excludinganisolated,insubstantialandinadvertentactionnottakeninbadfaiththattheCompanypromptlycures,(iii)theCompanyrequiringMr.Leopoldtobebasedatanyofficeorlocationthatis35milesormoreawayfromhiscurrentofficeortotravelonbusinesstoasubstantiallygreaterextentthanrequiredimmediatelypriortothedateofthe change in control; and (iv) the Company’s failure to require any successor to the Company or TRGto assumeexpresslyandagreetohonortheagreement.
ThechangeincontrolemploymentagreementprovidesthatifanypaymentsandbenefitstobepaidorprovidedtoMr.Leopold,whetherpursuanttothetermsoftheagreementorotherwise,wouldbesubjectto“goldenparachute”
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excisetaxesundertheCode, thepayments andbenefits will bereducedtotheextent necessarytoavoidsuchexcisetaxes,butonlyifsuchareductionofpayorbenefitswouldresultinagreaterafter-taxbenefittotheeligibleemployee(asocalled“best-netreduction”).
Further,asaconditiontoreceivingtheforegoingandsubjecttolimitedspecifiedexceptions,Mr.Leopoldmustsign a release of claims agreement against Taubman and its agents, and is also subject to customary confidentialityprovisionsaftertheterminationofemploymentwithTaubman.
Severance Plan for Senior Level Management (Severance Plan)
TheSeverancePlanprovidesMessrs.Leopold,Wrightandcertainothermembersofseniormanagement(each,a“Participant”)withvariousbenefitsintheeventofan“InvoluntaryTermination,”whichisdefinedasaterminationofemployment(1)byusotherthanforcauseorbecauseofsuchemployee’sdeathordisabilityor(2)bytheemployeeforgoodreason.Messrs.R.TaubmanandW.TaubmanarenoteligibletoparticipateintheSeverancePlan.TheSeverancePlanexpiredinaccordancewithitstermsonDecember11,2019,buteffectiveFebruary9,2020,theSeverancePlanwasrenewed,andwill remainineffect unlessanduntil theJointVenturedeterminestoamendorterminatetheplan(provided,thatnosuchamendmentorterminationcanadverselyaffectaParticipant’srightsundertheplanwithouttheParticipant’sconsent).ForpurposesoftheSeverancePlan,(a)“cause”isdefinedasthewillfulandcontinuedfailureofaParticipanttosubstantiallyperformsuchParticipant’sdutiesafterawrittendemandforperformance(otherthananysuchfailure resultingfromincapacity dueto physical or mental illness or followingthe Participant’s delivery to theCompanyofavalidnoticeofterminationforgoodreason)orthewillfulengagingofaParticipantinillegalconduct,orgrossmisconduct,thatismateriallyanddemonstrablyinjurioustotheCompany;and(b)“goodreason”isdefinedas,withouttheParticipant’sconsent,amaterialdiminutioninaParticipant’sauthority,dutiesorresponsibilities(whetherornotoccurringsolelyasaresultoftheCompanyceasingtobeapubliclytradedentityandexcludinganinsubstantialactionnottakeninbadfaiththattheCompanypromptlycures), amaterial diminutioninaParticipant’sthencurrentbasesalary,amaterialdiminutioninaParticipant’stotaltargetannualbonusandannualincentiveawardopportunity(provided that such diminution is not offset by a related increase in base salary or other incentive compensationarrangement), a material relocation of 35 miles or more from a Participant’s primary place of work, or a materialbreachbytheCompanyofanyemploymentagreementwithaParticipant.
TheSeverancePlanincludescoverageforanInvoluntaryTerminationwithinoneyearafterachangeincontrolofTaubman(a“SeverancePlanCICTermination”).IntheeventofaSeverancePlanCICTermination,aParticipantwillbeentitledtothefollowing:
(i) paymentofannualsalaryand(ifany)unusedpaidtimeofforunusedvacationearnedandaccruedpriortosuchtermination(paidnomorethan30daysaftertermination);
(ii) acashlumpsumpayment(payablewithin65daysaftertermination)equaltothesumof:(A)250%ofthesumof(x)12timesthehighest monthlybasesalaryinthe12-monthperiodprecedingthemonthinwhichterminationoccurs(“AnnualBaseSalary”)and(y)thegreateroftheParticipant’stargetbonusintheyearofterminationorthehighest bonusearnedinthelast threefull fiscal years (orfor suchlesser numberof fullfiscalyearspriortotermination),includingannualizationforabonusearnedinapartialfiscalyearplus(B)18timestheapplicablemonthlyCOBRApremium;
(iii) full and immediate vesting of the Participant’s unvested equity awards (other than performance equityawards)grantedundertheapplicableTaubmanStockPlanpriorto2019;and
(iv) thevestingoftheParticipant’s unvestedperformanceequityawardsgrantedundertheapplicableTaubmanStock Plan prior to 2019, with the determination of performance and other factors as provided under thetermsofsuchplanandrelatedawardagreements.
Exceptasspecificallysetforthabove,theforegoingamountsandrightswillnotbereducedorcanceledpursuanttoanyprovisionregardingthesameinanyemploymentagreement(includinganychangeincontrolemploymentagreement) a Participant otherwise has. Any benefits payable under either a change-in-control employmentagreement or employment agreement will be offset by any benefit provided under the Severance Plan. TheSeverancePlanprovidesfor a best-net reductionintheevent that Sections280GandSection4999oftheCodewouldotherwiseimpose“goldenparachute”excisetaxes.
Receipt of the payments andbenefits (other thanthe annual salary and(if any) unusedpaid timeoff or unusedvacationearnedandaccruedpriortosuchtermination)undertheSeverancePlanissubjecttoexecutionbythe
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Participant of a general waiver and release of claims with us that becomes effective. Further, any rights topayment under the Severance Plan will terminate immediately if the Participant violates any proprietaryinformationorconfidentialityobligationtous.
InadditiontothosebenefitsprovidedbytheSeverancePlan,ifMr.Wrightisterminatedfollowingthetransaction–whichisnotcurrentlycontemplated–hewouldbeentitled,inaccordancewithlocalpracticeinHongKong,whereheisemployed,to90days’noticeofanysuchtermination(orpaymentofbasesalaryinlieuthereof)fromTaubman,and, in lieu of any payments that may be otherwise due in respect of the monthly COBRA premium under theSeverancePlan,tothreemonthsofcontinuedmedicalcoverageundertheTaubmanAsiamedicalplan.
Treatment of 2019 and 2020 Company Equity Awards upon Certain Terminations of Employment on or following theTransactions
PursuanttothetermsoftheTaubmanStockPlansandtheawardagreementspursuanttowhichthegrantoftheTCORSUs,TCOPSUsandTCODERsheldbycertainTaubman’sexecutiveofficersweremadein2019and2020,iftheemploymentofanexecutiveofficer(otherthanMr.Leopold,withrespecttothoseawardsgrantedtohimin2020)isterminatedbyTaubmanwithout“cause”orduetotheexecutiveofficer’sresignationfor“goodreason,”ineachcase,onorwithintwoyearsfollowingachangeincontrolofTaubman,whichisreferredtointhisproxystatementasan“EquityPlanCICTermination,”allsuchequityawardsthenheldbysuchexecutiveofficerwouldfullyvestuponsuchtermination of employment. These “double trigger” vesting provisions are applicable in lieu of any “single trigger”vestingprovisionscontainedinanyemploymentagreementorseveranceplantoTaubmanequityawardsheldbytheapplicable executive officers, and will continue to apply to such awards after such awards are converted into cashsubstitute awards at the effective time of the Transactions. For purposes of the Taubman Stock Plans and awardagreementsthereundergoverningsuchawards,“cause”isdefinedas(a)anexecutive’sengaginginwillfulmisconductthatisinjurioustoTaubman,thewillfulfailuretosubstantiallyperformanexecutive’sdutiestoasatisfactorydegree(other than any such failure resulting fromincapacity due to physical or mental illness or following the executive’sdelivery to the Company of a valid notice of termination for good reason), an executive’s material violation of theemployment or operation procedures of Taubman or an executive’s embezzlement or misappropriation of funds orpropertyfromTaubman;and(b)“goodreason”isdefinedas,withouttheexecutive’sconsent,amaterialdiminutioninauthority, duties or responsibilities of an executive (whether or not occurring solely as a result of the Company’sceasing to be a publicly traded entity andexcluding an insubstantial action not taken in badfaith that the Companypromptly cures), a material diminution in an executive’s then current base salary, a material diminution in anexecutive’s total target annual bonus and annual incentive award opportunity (provided that such diminution is notoffset by a related increase in base salary or other incentive compensation arrangement), a material relocation of 35milesormorefromanexecutive’sprimaryplaceofwork,oramaterial breachbytheCompanyofanyemploymentagreementwithanexecutive.
Information for each of the Company’s executive officers regarding the amounts payable in respect of theaggregatenumberofTCORSUs,TCOPSUs,TCODSUs,TCODERsandTaubmanIncentiveUnitsthatwillvest,andthe amount thereof that would become payable, in each case as a result of the Transactions assuming, among otherthings,thattheTransactionsclosedonMay22,2020aredescribedbelowunder“—Golden Parachute Compensation.”
ForadditionalinformationaboutbeneficialownershipofTaubmancommonstockbytheCompany’sdirectorsandexecutiveofficers,see“Important Information Regarding Taubman Centers, Inc.—Security Ownership of Managementand Certain Beneficial Owners.”
Indemnification / Insurance
TheCompany’s articles of incorporation providefor indemnification of directors andexecutive officers againstcertainliabilitiesthatmayarisebyreasonoftheirstatusorserviceasdirectorsorofficers.Inaddition,pursuanttothemergeragreement,theCompany’sdirectorsandexecutiveofficerswillbeentitledtocertainongoingindemnificationfromParentandthesurvivingcorporationandcoverageunderdirectors’andofficers’liabilityinsurancepoliciesforatleastsixyearsfollowingtheTransactions.Theindemnificationandinsuranceprovisionsinthemergeragreementarefurther described in the section entitled “The Merger Agreement—Indemnification; Directors’ and Officers’Insurance.”
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Compensation of the Special Committee
The Special Committee consists of four independent members of the Taubman Board, Mayree C. Clark,Michael J. Embler, Cia Buckley Marakovits and Myron Ullman III. At a meeting of the Taubman Board held onFebruary 9, 2020, the Taubman Board unanimously adopted resolutions providing that each member of the SpecialCommitteewouldreceivecompensationof$60,000forsuchmember’sserviceontheSpecialCommittee.ThesefeesarenotdependentontheclosingoftheTransactionsorontheSpecialCommittee’sortheTaubmanBoard’sapprovalof,orrecommendationswithrespectto,theTransactions.
Quantification of Potential Payments
For an estimate of the value of the payments and benefits described above that would be payable to theCompany’sexecutiveofficers,allofwhomserveastheCompany’snamedexecutiveofficers,inconnectionwiththeTransactions,seethesectionentitled“—Golden Parachute Compensation”below.
Golden Parachute Compensation
The following table sets forth the information required by Item 402(t) of Regulation S-K regarding thecompensation for each of the Company’s named executive officers that is based on or otherwise becomes payableimmediatelypriorto,orupontheeffectivenessof,theTransactions.
Certain Assumptions
Exceptasotherwisespecificallynoted,forpurposesofquantifyingthepotentialpaymentsandbenefitsdescribedinthissection,thefollowingassumptionswereused:
• TherelevantpricepershareofTaubmancommonstockis$52.50(see“Background of the Transactions”formoreinformationastohowthispricepersharewasdetermined);
• The effective time of the Transactions is May 22, 2020, which is the assumed date of the closing of theTransactionssolelyforpurposesofthedisclosureinthissection;
• ForpurposesofdeterminingtheamountpayableinrespectofTCOPSUs,thetargetperformancewasused;
• TheemploymentofeachexecutiveofficerofTaubmanwasterminatedbyTaubmanwithout“cause”ordueto the officer’s resignation for “good reason” (as such terms are defined in the relevant plans andagreements),ineithercase,immediatelyfollowingtheassumedeffectivetimeofMay22,2020;
• Thenumber of outstandingTaubmanEquity Awards andthe compensation andbenefits levels usedin thecalculationsbelowreflectlevelsineffectonMay22,2020,whichmaychangebasedonwhentheeffectivetimeoftheTransactionsoccurs;and
• Although this disclosure provides information for each of our named executive officers, all references to“TCONEOs”usedbelowrefersolelytoMessrs.LeopoldandWright.
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Theamountsindicatedbelowareestimatesbasedonmultipleassumptionsthatmayormaynotactuallyoccurorbeaccurateontherelevantdate,includingtheassumptionsdescribedabove,anddonotreflectcertaincompensationactionsoreventsthatmayoccurbeforecompletionofthemerger.
Name Cash ($)(1) Equity ($)(2)
Perquisites/ Benefits
($)(3)
Tax Reimbursement
($) Total ($)
R. Taubman ChiefExecutiveOfficer — — — — —
Simon Leopold EVP,ChiefFinancialOfficer&Treasurer 3,224,375 2,190,372 116,916 — 5,531,663
W. Taubman ChiefOperatingOfficer — — — — —
Paul A. Wright President,TaubmanAsia 2,026,417 2,075,120 10,101 — 4,111,638
Peter J. Sharp President,TaubmanAsia(4) — — — — —
(1) Cash. OnaSeverancePlanCICTermination,Mr.Leopoldisentitledtoalumpsumcashpaymentequalto(a)250%ofthesumof(x) his annual base salary ($525,000) and (y) the annual cash bonus amount determined as provided in his change of controlemploymentagreement(whichforpurposesofthetableabove,isassumedtobeequaltoMr.Leopold’sannualcashbonusearnedinrespectof2018,equalto129%ofhisbasesalary($677,250)), whichisequalto$3,005,625and(b)aproratedportionofhisannualbonusfortheyearoftermination,whichforpurposesofthetableabove,iscalculatedassumingachievementoftargetperformance,andequalto$218,750(i.e.,5/12of100%ofhis$525,000annualbasesalary).OnaSeverancePlanCICTermination,Mr.Wrightisentitledtoseverancebenefitsequaltothefollowing:(1)alumpsumcashpaymentequalto250%ofthesumof(x)hisAnnualBaseSalary($502,577)and(y)theannualcashbonusamountdeterminedasprovidedintheSeverancePlan(whichforpurposesofthetableabove,isassumedtobeequaltoMr.Wright’stargetannualcashbonusopportunity,equalto$257,732)whichisequalto$1,900,773,and(2) three months basesalary($125,644)per his employment terms. Notethat for Mr. Wright, all amounts havebeenconvertedfromHongKongdollarstoU.S.dollarsbasedontheexchangerateofHKD:USDof7.76:1.ThecashseverancepayabletoeachofthesetwoTCONEOsisa“double-trigger”benefitcontingentuponaterminationwithoutcauseorresignationwithgoodreasonduringthethreeyears(forMr.Leopold)oroneyear(forMr.Wright)followingtheSeverancePlanCICTerminationdate.
Forfurtherdetailsregardingthecashpayments,pleasesee“Termination Protections”above.(2) Equity Awards.OntheStockPlanCICTerminationdate,eachTCONEObecomesfullyvestedinunvestedTCORSUsandTCOPSUs
(andrelatedTCODERs)that“singletrigger”vestontheclosingoftheTransactions,andalsointhoseunvestedcashsubstituteawardsinto which TCORSUs and TCOPSUs were converted on the closing of the Transactions, and related TCODERs, which “doubletrigger”vestontheStockPlanCICTermination.TheamountsinthetablebelowreflectthevalueoftheTCORSUs,TCOPSUsandTCODERsthatbecomevested,inaccordancewiththeirterms,ontheStockPlanCICTerminationDate.NotethatforMr.Leopold,theamountsinthetablebelowalsoreflectthosetime-vestingandperformance-vestingTaubmanIncentiveUnitswhich“singletrigger”vestontheclosingoftheTransactionsand“doubletrigger”vestontheStockPlanCICTermination.
Single Trigger Vesting ($) Double Trigger Vesting ($)
Cash Substitute Awards
Named Executive OfficerTCO
RSUs(a)TCO
PSUs(a)TCO
DERs(a)TCO
RSUs(b)TCO
PSUs(b)TCO
DERs(b)
R.Taubman — — — — — —
Mr.Leopold 423,098 634,620 — 426,458 639,660 68,536
W.Taubman — — — — — —
Mr.Wright 306,285 301,875 69,446 679,245 674,205 44,064
Mr.Sharp — —
(a) Ofthese“singletrigger”vestingTCORSUs,TCOPSUsandTaubmanIncentiveUnits,asapplicable,thisnumberreflects:(i)forMr.Wright,5,834ofTCORSUshavingavalueof$306,285andforMr.Leopold,8,059ofTaubmanIncentiveUnitshavingavalueof$423,098,ineachcasethatwouldotherwisehavevestedsubjecttocontinuedservice;and(ii)forMr.Wright,5,750ofTCOPSUshavingavalueof$301,875andforMr.Leopold,12,088ofTaubmanIncentiveUnitshavingavalueof$634,620,ineachcasethatotherwisevestedsubjecttoperformance-vesting(whicharebecomingvestedbasedonthegreateroftheaverageofactual performance achievement of the two performance metrics applicable to such grants, as of the closing, and targetperformance). In each case, the value of the TCO RSUs, TCO PSUs and Taubman Incentive Units has been determined bymultiplyingthenumberofawardsbythecommonstockmergerconsiderationpriceof$52.50pershare.Ofthese“singletrigger”TCODERs, this number reflects for Mr. Wright, $34,975 accrued in respect of the “single trigger” TCORSUs, and $34,471accruedinrespectofthe“singletrigger”TCOPSUs,ineachcasetowhichhisTCODERsrelate,asapplicable.
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(b) Of these “double trigger” vesting TCO RSUs, TCO PSUs and Taubman Incentive Units, as applicable, this number reflects:(i)forMr.Wright,12,938ofTCORSUshavingavalueof$679,245andforMr.Leopold,8,123ofTCORSUshavingavalueof$426,458 in each case that, once converted into cash substitute awards, would otherwise have continued to vest subject tocontinuedservice;(ii)forMr.Wright,12,842ofTCOPSUshavingavalueof$674,205andforMr.Leopold,12,184ofTaubmanIncentiveUnitshavingavalueof$639,660,ineachcasethat,onceconvertedintocashsubstituteawards,wouldotherwisevestsubject to performance-vesting (which are becoming vested based on the greater of the average of actual performanceachievementofthetwoperformancemetricsapplicabletosuchgrants,asoftheclosing,andtargetperformance).Ineachcase,thevaluehasbeendeterminedbymultiplyingthenumberofawardsbythecommonstockmergerconsiderationpriceof$52.50per share. Of these “double trigger” TCO DERs, this number reflects: (x) for Mr. Wright, $22,194 accrued in respect of the“doubletrigger”TCORSUs,and$21,870accruedinrespectofthe“doubletrigger”TCOPSUs,ineachcasetowhichhisTCODERsrelate,asapplicable;and(y)forMr.Leopold,$27,415accruedinrespectofthe“doubletrigger”TCORSUs,and$41,121accruedinrespectofthe“doubletrigger”TCOPSUs,ineachcasetowhichhisTCODERsrelate,asapplicable.Forfurtherdetailsregardingthe“singletrigger”vestingoftheTCORSUs,TCOPSUs,TCODERsreferencedabove,andthe“doubletrigger”cashsubstituteawardsandreferencedabove,pleasesee“The Merger Agreement—REIT Merger—Treatment ofOutstanding Equity Awards” and “Special Factors—Interests of Taubman’s Directors and Officers in the Transactions—Treatment of 2019 and 2020 Company Equity Awards upon Certain Terminations of Employment on or following theTransactions.”
(3) Perquisites/Benefits.Messrs.LeopoldandWrightareentitledtothefollowing“doubletrigger”severancebenefitsuponaterminationwithout cause or resignation with good reason during the three years (for Mr. Leopold) or one year (for Mr. Wright) following thechangeincontrolofTaubman:(a)forMr.Leopold,continuedprovisionofwelfarebenefits(inclusiveofmedical,prescription,dental,short-termandlong-termdisability,employeelife,grouplife,accidentaldeathandtravelaccidentinsurance)for30monthshavingavalue (using 2020 COBRA rates) equal to $107,916 and one year of outplacement services having a value of $9,000, and (b) forMr.Wright,threemonthsofcontinuedhealthcare,havingavalueof$10,100.
(4) Mr. Sharp ceased to be employed with Taubman on October 9, 2019. Consequently, he is not entitled to any golden parachutecompensation.
Items Not Reflected in Table. Thefollowingitemsarenotreflectedinthetablesetforthabove,becausethesearepayments that are not based on or otherwise related to the change in control of Taubman: (1) accrued salary, cashbonusandpaidtimeoff;(2)costsofanymandatedgovernmentalassistanceprogramtoformeremployees;(3)amountsoutstanding under the Company’s 401(k) plan or (4) the value of the 871,261.76 Taubman OP units held by R.Taubman under the Option Deferral Agreement, which Taubman OP units are already vested and scheduled to bedistributedinfiveannualinstallmentsbeginninginDecember2022,butwhichwillbecomedueandpayableinasingledistributionifhisemploymentisterminatedwithinsixmonthsofachangeofcontrolofTaubman.Thevalueofthissingle distribution, based on the common stock merger consideration price of $52.50 per share, is equal to$45,741,242.40.
Intent to Vote in Favor of the Mergers
Ourdirectorsandexecutiveofficershaveinformedusthat,asofthedateofthisproxystatement,theyintendtovote all of the shares of Taubmancommonstock and TaubmanSeries Bpreferred stock owneddirectly by theminfavoroftheMergerAgreementProposalandeachoftheotherproposalslistedinthisproxystatement.
As of May 22, 2020, our directors and executive officers owned and had the power to vote, in the aggregate,1,820,203 shares of Taubman common stock and 24,212,905 shares of Taubman Series B preferred stock, orcollectivelyapproximately29.7%oftheoutstandingsharesofTaubmanvotingstock,includingthe1,748,477sharesofTaubmancommonstockand24,190,938sharesofTaubmanSeriesBpreferredstockownedbyR.TaubmanandW.Taubmanandsubject tothevotingagreement. Seealso“Important Information Regarding Taubman Centers, Inc.—Security Ownership of Management and Certain Beneficial Owners.”
The Taubman Family Members’ Obligation to Simon to Vote in Favor of the Merger Agreement Proposal
Underthevotingagreement,eachoftheTaubmanfamilymembersthatownsTaubmancommonstock,TaubmanSeries B preferred stock or Taubman OP units has covenanted to Simon, among other things, vote any shares ofTaubman common stock and Taubman Series B preferred stock owned by them in favor of the Merger AgreementProposalatthespecialmeeting.AsofMay22,2020,theTaubmanfamilymembers,inaggregate,havethepowertovote approximately 30% of the outstanding shares of Taubman voting stock. See also “—The Taubman FamilyMembers’ Obligation to Simon to Vote in Favor of the Merger Agreement Proposal”and“The Voting Agreement.”
Material U.S. Federal Income Tax Consequences of the REIT Merger
ThefollowingisageneraldiscussionofthematerialU.S.federalincometaxconsequencesoftheREITMergertoholders of Taubman common stock. The following discussion is based on the Code, U.S. Treasury regulationspromulgatedthereunderandjudicialandadministrativeauthorities,rulingsanddecisions,allasineffectasofthedateofthisproxystatement/prospectus.Theseauthoritiesmaychange,possiblywithretroactiveeffect,andanysuchchangecouldaffecttheaccuracyofthestatementsandconclusionssetforthinthisdiscussion.ThisdiscussionassumesthattheREITMergerwill
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be completed in accordance with the merger agreement and as further described in this proxy statement/prospectus.ThisdiscussionisnotacompletedescriptionofallofthetaxconsequencesoftheREITMergerand,inparticular,doesnotaddressanytaxreportingrequirements,taxconsequencesarisingundertheunearnedincomeMedicarecontributiontaxpursuanttotheHealthCareandEducationReconciliationActof2010,anyconsiderationswithrespecttoFATCA(whichforthispurposemeansSections1471through1474oftheCode)oranytaxconsequencesarisingunderthelawsofanystate,localorforeignjurisdiction,orunderanyU.S.federallawsotherthanthosepertainingtotheincometax.
The following discussion applies only to holders of Taubman common stock who hold such stock as a capitalassetwithinthemeaningofSection1221oftheCode(generally,propertyheldforinvestment).Further,thisdiscussiondoesnotpurporttoconsiderallaspectsofU.S.federalincometaxationthatmightberelevanttoholdersinlightoftheirparticularcircumstancesanddoesnotapplytoholderssubjecttospecialtreatmentundertheU.S.federalincometaxlaws (such as, for example, banks and certain other financial institutions, tax-exempt organizations, partnerships, Scorporationsorotherpass-throughentities(orinvestorsinpartnerships,Scorporationsorotherpass-throughentities),regulated investment companies, controlled foreign corporations, passive foreign investment companies, REITs,insurancecompanies, mutualfunds,dealersorbrokersinstocksandsecurities, commoditiesorcurrencies, tradersinsecuritiesthatelecttoapplyamark-to-marketmethodofaccounting,holderswhoarerequiredtorecognizeincomeorgain with respect to the REITMerger no later than suchincomeor gain is required to be reported onan applicablefinancialstatementunderSection451(b)oftheCode,holderssubjecttothealternativeminimumtaxprovisionsoftheCode, “qualified foreign pension funds” (within the meaning of Section 897(1)(2) of the Code) or entities all of theinterestsinwhichareheldbyaqualifiedpensionfund,“qualifiedshareholders”(withinthemeaningofSection897(k)(3)oftheCode)orinvestorstherein,non-U.S.holders(asdefinedbelow)whohold,orhaveheldatanytime,directly,indirectly, or constructively, more than 10%of the common stock outstanding (except to the extent specifically setforth below), holders who acquired Taubman common stock pursuant to the exercise of employee stock options,throughataxqualifiedretirementplanorotherwiseascompensation,U.S.holders(asdefinedbelow)whosefunctionalcurrency is not the U.S. dollar, holders whohold Taubmancommonstockas part of a hedge, straddle, constructivesale,conversionorotherintegratedtransaction,orU.S.expatriates).
Forpurposesofthisdiscussion,theterm“U.S.holder”meansabeneficialownerofTaubmancommonstockthatisforU.S.federalincometaxpurposes(i)anindividualcitizenorresidentoftheUnitedStates,(ii)acorporation,orentitytreatedasacorporationforU.S.federalincometaxpurposes,organizedinorunderthelawsoftheUnitedStatesoranystatethereofortheDistrictofColumbia,(iii) atrustif (a)acourtwithintheUnitedStatesisabletoexerciseprimarysupervisionovertheadministrationofthetrustandoneormore“UnitedStatespersons”(asdefinedundertheCode)havetheauthoritytocontrolallsubstantialdecisionsofthetrustor(b)suchtrusthasmadeavalidelectiontobetreated as a United States person for U.S. federal income tax purposes or (iv) an estate, the income of which isincludibleingrossincomeforU.S.federalincometaxpurposesregardlessofitssource.Asusedherein,theterm“non-U.S.holder”meansabeneficialownerofTaubmancommonstockthatisnotaU.S.holderoranentityorarrangementtreatedasapartnershipforU.S.federalincometaxpurposes.
If an entity or an arrangement treated as a partnership for U.S. federal income tax purposes holds Taubmancommon stock, the U.S. federal income tax treatment of a partner in such partnership generally will depend on thestatusofthepartnerandtheactivitiesofthepartnership.AnyentitytreatedasapartnershipforU.S.federalincometaxpurposes that holds Taubman common stock and any partners in such partnership are urged to consult their ownindependenttaxadvisorsregardingthetaxconsequencesoftheREITMergertotheirspecificcircumstances.
ThisdiscussionisnotbindingontheIRS.NoassurancecanbegiventhattheIRSwouldnotassert,orthatacourtwouldnotsustain,apositioncontrarytoanydescribedherein.
THIS DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. EACHHOLDER OF TAUBMAN COMMON STOCK SHOULD CONSULT ITS OWN TAX ADVISOR WITHRESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO SUCH HOLDER’SPARTICULAR SITUATIONS AS WELL AS WITH RESPECT TO ANY TAX CONSEQUENCES OF THEOWNERSHIP AND DISPOSITION OF TAUBMAN COMMON STOCK ARISING UNDER THE U.S.FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-UNITED STATES TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
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ForU.S.federalincometaxpurposes,thepartieswilltreattheREITMergerasataxablesalebytheCompanyofalloftheCompany’sassetstoMergerSub1inexchangeforthemergerconsiderationandtheassumptionofalloftheCompany’s liabilities, followed by a distribution of such consideration to the holders of equity interests in theCompanyin liquidation pursuant to Section 331andSection 562of the Code. Because, as a REIT, the Companyisentitled to receive a deduction for liquidating distributions, and the Companyanticipates that its deemedliquidatingdistributionwillexceeditstaxableincomerecognizedasaresultoftheREITMerger,theCompanyanticipatesthatitwill not be subject to U.S. federal incometax on any gain recognized in connection with the REITMerger and theothertransactionscontemplatedbythemergeragreement.
U.S. Holders
The exchange of Taubman common stock for cash in the REIT Merger will be a taxable transaction forU.S.federalincometaxpurposes.Ingeneral,aU.S.holderwhosesharesofTaubmancommonstockareexchangedforcash in the REIT Merger will recognize capital gain or loss for U.S. federal income tax purposes equal to thedifference,ifany,betweentheamountofcashreceivedwithrespecttosuchstock(determinedbeforethedeductionofanyapplicablewithholdingtaxes,asdescribedbelowunder“—Information Reporting and Backup Withholding”)andtheU.S.holder’sadjustedtaxbasisinsuchstock.AU.S.holder’sadjustedtaxbasiswillgenerallyequalthepricetheU.S.holderpaidforits stock,increasedbynetcapital gainsdeemeddistributedbytheCompany,if any,totheU.S.holderandreduced(butnotbelowzero)byanydistributionstotheU.S.holderthatweretreatedasreturnsofcapital.IfaU.S.holderacquireddifferentblocksofTaubmancommonstockatdifferenttimesandatdifferentprices,suchU.S.holdermustdetermineitsadjustedtaxbasis,gainorlossandholdingperiodseparatelywithrespecttoeachblockofTaubmancommonstock. Anycapital gainor loss will belong-termcapital gainor loss if theU.S. holder’s holdingperiodforitsTaubmancommonstockismorethanoneyearasofthedateoftheREITMerger.Long-termcapitalgainof a non-corporate U.S. holder is generally taxed at preferential rates. There are limitations on the deductibility ofcapitallosses.
AU.S. holder whohas held Taubmancommonstockfor less thansix months at the timeof the REITMerger,takingintoaccounttheholdingperiodrulesofSections246(c)(3)and(4)oftheCode,andwhorecognizesalossontheexchangeofsuchstockintheREITMergerwillbetreatedasrecognizingalong-termcapitallosstotheextentofanycapitalgaindividendsreceivedfromtheCompany,orsuchholder’sshareofanydesignatedretainedcapitalgains,withrespecttosuchstock.
ThecashmergerconsiderationreceivedbyaU.S.holderinexchangeforTaubmancommonstockpursuanttotheREITMergerwillnotbetreatedaspassiveactivityincome.Asaresult,U.S.holdersgenerallywillnotbeabletoapplyanypassivelossesagainstthatincomeorgain.
Non-U.S. Holders
Anon-U.S.holder’sgainorlossfromtheREITMergerwillbedeterminedinthesamemannerasthatofaU.S.holder. Subject to the discussion of backup withholding below under “—Information Reporting and BackupWithholding,”anon-U.S.holdergenerallyshouldnotbesubjecttoU.S.federalincometaxonthegainorlossfromthereceiptofcashinexchangeforTaubmancommonstockpursuanttotheREITMerger,exceptasdescribedbelow.
Anon-U.S.holdermaybesubjecttoU.S.federalincometaxundertheForeignInvestmentinRealPropertyTaxActof1980,asamended(“FIRPTA”),withrespecttogainrealizeduponadispositionofTaubmancommonstockiftheCompanyisa“UnitedStaterealpropertyholdingcorporation”(“USRPHC”)(generally,acorporationatleast50%ofwhoseassetsconsistofinterestsinrealpropertylocatedwithintheUnitedStates)duringaspecifiedtestingperiod.However,eveniftheCompanyisaUSRPHCduringthespecifiedtestingperiod,gainrecognizedbyanon-U.S.holderupon the exchange of Taubman common stock generally will not be taxed under FIRPTA if the Company is a“domesticallycontrolledqualifiedinvestmententity,”definedtoincludeaREIT,lessthan50%invalueofthestockofwhichisandwashelddirectlyorindirectlybyforeignpersonsatalltimesduringaspecifiedtestingperiod(providedthatifanyclassofaREIT’sstockisregularlytradedonanestablishedsecuritiesmarketintheUnitedStates,apersonholdinglessthan5%ofsuchclassduringthetestingperiodisgenerallypresumednottobeaforeignperson,unlesstheREIT has actual knowledge otherwise). The Company believes that it is a “domestically controlled qualifiedinvestment entity,” and, therefore, assuming that the Company is a “domestically controlled qualified investmententity” at the effective time of the REIT Merger, taxation under FIRPTA will not apply to the receipt of cash inexchangeforTaubmancommonstockpursuanttotheREITMerger.
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IftheCompanydoesnotqualifyasa“domesticallycontrolledqualifiedinvestmententity,”thetaxconsequencesto a non-U.S. holder of an exchange of Taubmancommonstock for cash pursuant to the REITMerger will dependuponwhethersuchstockisregularlytradedonanestablishedsecurities market andtheamountofsuchstockthat isheld by the non-U.S. holder. The Company believes that its common stock is regularly traded on an establishedsecurity market in the United States within the meaning of FIRPTA and the applicable U.S. Treasury regulations.Therefore, a non-U.S. holder will generally be subject to U.S. federal income tax under FIRPTAonly if the holderownsmorethan10%ofTaubmancommonstockatanytimeduringtheshorteroftheperiodthatthenon-U.S.holderownedsuchstockorthefive-yearperiodendingonthedateoftheREITMerger.Non-U.S.holdersareurgedtoconsulttheirtaxadvisorsregardingtheparticulartaxconsequencesofFIRPTAtotheREITMerger.Inparticular,anon-U.S.holderwhohasheldmorethan10%ofTaubmancommonstockatanytimeduringtheone-yearperiodendingonthedateoftheREITMergeroranon-U.S.holderwhoisa“qualifiedshareholder”(withinthemeaningofSection897(k)(3) of the Code) is urged to consult its tax advisors concerning the tax consequences of the receipt of the mergerconsideration.
However, even if not subject to FIRPTA, gain will be taxable to a non-U.S. holder if such gain is treated aseffectively connected with the non-U.S. holder’s U.S. trade or business or, if required by an applicable income taxtreaty as a condition for subjecting the non-U.S. holder to U.S. taxation on a net income basis, is attributable to apermanentestablishmentorfixedbasethatthenon-U.S.holdermaintainsintheUnitedStates.Inthiscase,thesametreatmentthatappliestoU.S.holderswithrespecttothegainwillapplytothenon-U.S.holder(and,ifthenon-U.S.holderisacorporation,suchholdermaybesubjecttothebranchprofitstaxata30%rate(orsuchlowerrateasmaybespecifiedbyanapplicableincometaxtreaty)onsucheffectivelyconnectedgain).Inaddition,gainwillbetaxabletoanon-U.S.holderifthenon-U.S.holderisanonresidentalienindividualwhowaspresentintheUnitedStatesfor183daysormoreduringthetaxableyearandhasa“taxhome”intheUnitedStates,ormaintainsanofficeorafixedplaceofbusinessintheUnitedStatestowhichthegainisattributable.Insuchcases,unlessreducedbyanapplicableincometaxtreaty,a30%U.S.federalincometaxwillapplytothenonresidentalienindividual’scapitalgains,whichmaybeoffsetbyU.S.sourcecapitallosses.
Non-U.S.holdersareurgedtoconsulttheirtaxadvisorsregardingtheapplicationoftheforegoingrulesinlightoftheir particular facts and circumstances and the procedures for claiming treaty benefits or otherwise establishing anexemptionfromU.S.withholdingtax.
Information Reporting and Backup Withholding
AU.S.holdermay, undercertaincircumstances, besubject toinformationreportingandbackupwithholdingatthe applicable rate (currently, 24%) with respect to the cash merger consideration received pursuant to the REITMerger, unless such holder properly establishes an exemption or provides its correct tax identification number andotherwise complies with the applicable requirements of the backup withholding rules. Certain holders (such ascorporationsandnon-U.S.holders)areexemptfrombackupwithholding.Non-U.S.holdersmayberequiredtocomplywith certification requirements and identification procedures in order to establish an exemption from informationreporting and backup withholding. Backup withholding is not an additional tax. Any amounts withheld under thebackup withholding rules can be refunded or credited against a holder’s U.S. federal income tax liability, if any,providedthatsuchholderfurnishestherequiredinformationtotheIRSinatimelymanner.
Fees and Expenses
Exceptasdescribedunder“The Merger Agreement—Termination Fees,”iftheTransactionsarenotcompleted,allfees and expenses incurred in connection with the Transactions will be paid by the party incurring those fees andexpenses.TotalfeesandexpensesincurredortobeincurredbytheCompanyinconnectionwiththeTransactionsareestimatedatthistimetobeasfollows:
Description
Amount (in
thousands)
Financialadvisorsfeeandexpenses $33,000
SECfilingfee $ 608
Printing,proxysolicitation,filingfeesandmailingcosts $ 233
Miscellaneous $ 3,000
Totalfeesandexpenses $36,841
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Inadditiontothefeesandexpensesdescribedabove,theCompanyanticipatesthatitwillincurlegalexpensesinconnectionwiththeTransactions,includingfeesandexpensesofcounseltotheSpecialCommitteeandcounseltotheCompany. The Company is not able to estimate the amount of such fees and expenses as of the date of this proxystatement.
Financing
ItisexpectedthatthefundsnecessarytocompletetheTransactionswillcomefromtheworkingcapitalofSimonand the existing credit facilities of the Simon operating partnership. Simon has made no alternative financingarrangements. The obligations of the Simon parties to consummate the Transactions are not subject to a financingcondition.
Anticipated Accounting Treatment of the REIT Merger
TheREITMergerwillbeaccountedforinaccordancewithGAAP.TaubmaniscurrentlyresearchingwhethertheREIT Merger constitutes a change of control under GAAP, which will impact whether the purchase method ofaccountingorhistoricalbookvalueswillbeusedtoaccountfortheTransactions.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement, and the documents incorporated by reference in this proxy statement, include “forward-looking statements” that reflect our expectations as to the completion and timing of the Transactions, including theMergers, other information relating to the Mergers and the other Transactions, projected financial information andother forward-looking information. These statements can be identified by the fact that they do not relate strictly tohistoricalorcurrentfacts.Thereareforward-lookingstatementsthroughoutthisproxystatement,includingundertheheadings,amongothers,“Summary Term Sheet,”“Questions and Answers,”“The Special Meeting,”“Special Factors,”and“Important Information Regarding Taubman Centers, Inc.,”andofteninstatementsidentifiedbythewords“will,”“may,” “could,” “expect,” “anticipate,” “believes,” “intends,” “should,” “plans,” “estimates,” “approximate,”“guidance,”andsimilarexpressionsinthisproxystatementthatpredictorindicatefutureeventsandtrendsthatdonotreport historical matters. Forward-lookingstatements involvesignificant knownandunknownrisksanduncertaintiesthatmaycauseactualresultsinfutureperiodstodiffermateriallyfromthoseprojectedorcontemplatedintheforward-lookingstatementsasaresultof,butnotlimitedto,thefollowingfactors:thefailuretoreceive,onatimelybasisorotherwise,therequiredapprovalsbyTaubman’sshareholders;theriskthataconditiontoclosingoftheTransactionsmay not be satisfied; Simon’s and Taubman’s ability to consummate the Transactions; the possibility that theanticipatedbenefitsfromtheTransactionswillnotbefullyrealized;theabilityofTaubmantoretainkeypersonnelandmaintainrelationshipswithbusinesspartnerspendingtheconsummationoftheTransactions;theimpactoflegislative,regulatory,competitiveandpublichealthchangesandotherriskfactorsrelatingtotheindustriesinwhichSimonandTaubmanoperate,asdetailedfromtimetotimeineachofSimon’sandTaubman’sreportsfiledwiththeSEC;andtherecentoutbreakofthenovelcoronavirus(COVID-19)pandemic,includingtheeffectofCOVID-19uponTaubman’sbusinessandtenants,andtheU.S.shoppingcenterandretailindustriesgenerally,andtheimpactofthepandemicuponglobalfinancial,business,travelandtourism,political,publichealthandotherconditions,circumstances,requirementsandpractices. There can be noassurance that the Transactions will in fact be consummated. Additional informationaboutthesefactorsandaboutthematerialfactorsorassumptionsunderlyingsuchforward-lookingstatementsmaybefoundunderItem1.AinTaubman’sAnnualReportonForm10-KforthefiscalyearendedDecember31,2019andunderPartIIItem1AinTaubman’sQuarterlyReportonForm10-QforthequarterendedMarch31,2020.Taubmancautionsthat theforegoinglist ofimportant factors that mayaffect futureresults is notexhaustive. Whenrelyingonforward-looking statements to make decisions with respect to the Transactions, shareholders and others shouldcarefully consider theforegoingfactors andother uncertainties andpotential events. All subsequent writtenandoralforward-lookingstatementsconcerningtheTransactionsorothermattersattributabletoTaubmanoranyotherpersonacting on their behalf are expressly qualified in their entirety by the cautionary statements referenced above. Theforward-looking statements contained herein speak only as of the date that such forward-looking statement waspreparedormade(inthecaseofprojectedfinancialinformation)orasthedateofthisproxystatementorthedateofanydocumentincorporatedbyreferenceinthisdocument,asapplicable.Taubmandoesnotundertakeanyobligationtoupdateorreviseanyforward-lookingstatements foranyreason, evenif newinformationbecomesavailable orothereventsoccurinthefuture,exceptasmayberequiredbylaw.
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THE PARTIES TO THE MERGERS
Taubman Centers, Inc. and The Taubman Realty Group Limited PartnershipTaubmanisaMichigancorporation(incorporatedin1973)thatoperatesasaself-administeredandself-managed
REIT.Taubman’ssoleassetisanapproximate70%generalpartnershipinterestintheTaubmanoperatingpartnership,whichownsdirectorindirectinterestsinallofTaubman’srealestateproperties.
Through the Taubman operating partnership, Taubman owns, manages, leases, acquires, disposes of, develops,andexpandsshoppingcentersandintereststherein.Taubman’sownedportfolioofoperatingcentersasofMarch31,2020consistedof24urbanandsuburbanshoppingcentersoperatingin11U.S.states,PuertoRico,SouthKorea,andChina.
ForinformationaboutTaubmanandtheTaubmanoperatingpartnership, see“Important Information RegardingTaubman Centers, Inc—Company Background”and“Where You Can Find Additional Information.”
The Simon Parties
Simon Property Group, Inc.Simon,aDelawarecorporation,operatesasaself-administeredandself-managedREIT.Simonisstructuredasan
umbrella partnership REIT under which substantially all of its business is conducted through the Simon operatingpartnership,Simon’smajority-ownedpartnershipsubsidiary,forwhichSimonisthegeneralpartner.Simon’sprimarybusiness is owning, developing and managing premier shopping, dining, entertainment and mixed-use destinations,whichconsist primarilyofmalls, PremiumOutlets®, andTheMills®. Simon’sproperties, asofDecember31,2019,comprised 191million square feet in North America, Asia andEurope. Asof December 31, 2019, Simonownedorheldaninterest in204income-producingproperties intheUnitedStates, whichconsistedof106malls, 69PremiumOutlets,14Mills,fourlifestylecenters,and11otherretailpropertiesin37statesandPuertoRico.Internationally,asofDecember31, 2019,Simonhadownershipinterests in29PremiumOutlets andDesignerOutlet properties primarilylocatedinAsia,EuropeandCanada.AsofDecember31,2019,Simonalsoowneda22.2%equitystakeinKlépierreSA, or Klépierre, a publicly traded, Paris-based real estate company, which owns, or has an interest in, shoppingcenterslocatedin15countriesinEurope.
SimoncommonstockandpreferredstockaretradedontheNYSEunderthetradingsymbols“SPG,”“SPGJ”and“SPG/20.”
TheprincipalbusinessaddressandphonenumberofSimonare:SimonPropertyGroup,Inc.225WestWashingtonStreetIndianapolis,IN46204(317)636-1600
Simon Property Group, L.P.TheSimonoperatingpartnershipisaDelawarelimitedpartnershipthatisamajority-ownedsubsidiaryofSimon,
owningallofSimon’srealestatepropertiesandotherassets.AsofDecember31,2019,Simonownedanapproximate86.8%ownershipinterestintheSimonoperatingpartnership,withtheremaining13.2%ownershipinterestownedbylimited partners. As the sole general partner of the Simonoperating partnership, Simonhas exclusive control of theSimonoperatingpartnership’sday-to-daymanagement.
Silver Merger Sub 1, LLCMergerSub1isanewlyformedDelawarelimitedliabilitycompany.ItisawhollyownedsubsidiaryoftheSimon
operating partnership andwasformedsolely for the purpose of engagingin the Transactions. Asof the date hereof,MergerSub1hasnotengagedinanybusinessotherthaninconnectionwiththeTransactions.
Silver Merger Sub 2, LLCMergerSub2isanewlyformedDelawarelimitedliabilitycompany.ItisawhollyownedsubsidiaryofMerger
Sub1andwasformedsolelyforthepurposeofengagingintheTransactions.Asofthedatehereof,MergerSub2hasnotengagedinanybusinessotherthaninconnectionwiththeTransactions.
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THE SPECIAL MEETING
Date, Time and Place
This proxy statement is being furnished to Taubman shareholders as part of the solicitation of proxies by theTaubmanBoardforuseatthespecial meetingtobeheldonJune25,2020,startingat10:00A.M.,EasternTime,atTaubman’sheadquarters,locatedat200EastLongLakeRoad,Suite300,BloomfieldHills,Michigan48304,oratanyadjournmentorpostponementthereof.AspartofourprecautionsregardingthecoronavirusorCOVID-19,thespecialmeeting may be held solely by means of remote communication rather than in person. If we take this step, we willannouncethedecisiontodosoinadvanceandprovidedetails onhowtoparticipate inapressreleaseissuedbytheCompany and on our website,www.taubman.com. We will also file the press release with the SEC as definitiveadditionalsolicitationmaterial.We encourage you to vote by proxy—over the Internet, by telephone or by mail—well in advance of the special meeting, to ensure your shares are represented whether or not you decide toattend.
ThisproxystatementandtheenclosedformofproxyarefirstbeingmailedtoTaubmanshareholdersonoraboutMay29,2020.
Purpose of the Special Meeting
Atthespecialmeeting,holdersoftheTaubmanvotingstockwillbeaskedtoconsiderandvoteupon:
• theMergerAgreementProposal;
• theAdvisoryCompensationProposal;and
• theAdjournmentProposal.
Taubman shareholder approval of the Merger Agreement Proposal is a condition to the completion of theTransactions.IftheTaubmanshareholderapprovaloftheMergerAgreementProposalisnotobtained,theTransactionswill not occur. However, approval of the Advisory Compensation Proposal and the Adjournment Proposal are notconditionstothecompletionoftheTransactions.
Recommendation of the Taubman Board
TheTaubmanBoardunanimouslyrecommendsthattheTaubmanshareholdersvote:
• “FOR”theMergerAgreementProposal;
• “FOR”theAdvisoryCompensationProposal;and
• “FOR”theAdjournmentProposal.
See “Special Factors—Reasons for the Transactions and Recommendation of the Special Committee and theTaubman Board.”
Record Date and Quorum
The record holders of Taubman voting stock at the close of business on June 5, 2020 (the record date for thespecialmeeting)areentitledtoreceivenoticeofthespecialmeetingandtovotethesharesofTaubmanvotingstockthattheyheldontherecorddateatthespecialmeeting.EachoutstandingshareofTaubmanvotingstockisentitledtoonevoteoneachmattertobevoteduponatthespecialmeeting.
TheTaubmancommonstockandTaubmanSeriesBpreferredstockconstitutethevotingstockoftheCompany.The Taubman non-voting preferred stock does not entitle their holders to receive notice of or to vote at the specialmeeting. No other shares of our capital stock other than the Taubman voting stock and the Taubman non-votingpreferredstockareoutstanding.TherearenoothersecuritiesoftheCompanyoutstandingthatareentitledtovoteatthespecialmeeting.
Thepresenceatthespecialmeeting,inpersonor,intheeventthatthespecialmeetingisheldbymeansofremotecommunication,virtually,orbyproxy,oftheholdersofamajorityofthesharesofTaubmanvotingstockoutstandingontherecorddatewillconstituteaquorumforallpurposes.AsofthecloseofbusinessonMay22,2020,
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87,687,538sharesof Taubmanvotingstockwereoutstanding, consistingof61,608,379sharesof Taubmancommonstockand26,079,159sharesofTaubmanSeriesBpreferredstock.Proxiesreceivedbutmarkedasabstentionswillbeincludedinthecalculationofthenumberofsharesconsideredtobepresentatthespecialmeeting.
Required Vote
FortheCompanytocompletetheTransactions,theMergerAgreementProposalrequirestheapprovalby:(i)theholders of at least two-thirds of the outstanding shares of Taubman voting stock entitled to vote thereon (votingtogether as a single class); (ii) the holders of at least a majority of the outstanding shares of Taubman Series Bpreferredstockentitledtovotethereon;and(iii)theholdersofatleastamajorityoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasasingleclass),excludingtheoutstandingsharesofTaubmanvotingstockownedofrecordorbeneficiallybytheTaubmanfamilymembers.
Approval,onanon-binding,advisorybasis,oftheAdvisoryCompensationProposalrequirestheaffirmativevoteoftwo-thirdsof theoutstandingsharesof Taubmanvotingstockentitledtovotethereon, votingtogether asasingleclass.
TheAdjournmentProposalwillbeapprovedifthesharesofvotingstockcastinfavorofsuchproposalexceedtheshares of voting stock cast against such proposal by the holders of Taubman voting stock entitled to vote thereon.However,suchapprovalisnotrequiredfor,anddoesnothaveanyimpacton,thecompletionofTransactions.
Atthespecialmeeting,holdersofsharesofTaubmancommonstockwillhaveonevotepershareandholdersofsharesofTaubmanSeriesBpreferredstockwillhaveonevotepershare,ineachcase,thatourrecordsshowareownedasoftherecorddate.
Voting by Company’s Directors and Executive Officers
AsofthecloseofbusinessonMay22,2020,theCompany’sdirectorsandexecutiveofficers,asagroup,eitherowned or had the power to vote 26,033,108 shares of Taubman voting stock (consisting of 1,820,203 shares ofTaubman common stock and 24,212,905 shares of Taubman Series B preferred stock), representing 29.7% of theaggregateTaubmanvotingstockoutstanding.
TheCompanycurrently expects that all of its directors andexecutive officers will vote their shares “FOR”theMergerAgreementProposal,“FOR”theAdvisoryCompensationProposaland“FOR”theAdjournmentProposal.
Pursuant toandsubject to thetermsofthevotingagreement, theTaubmanfamilymembers that ownTaubmanvoting stockhavecovenanted to Simonto vote all shares of Taubmanvoting stockof whichtheyare the beneficialowner or record holder in favor of the Merger Agreement Proposal and the Adjournment Proposal. As of May 22,2020,theTaubmanfamilymembers,inaggregate,arethebeneficialownersorrecordholdersofapproximately92.8%of the outstanding shares of Taubman Series B preferred stock and 2.8% of the outstanding shares of Taubmancommon stock. As of May 22, 2020, the Taubman family members, in aggregate, have the power to voteapproximately30%oftheoutstandingsharesofTaubmanvotingstock.See“The Voting Agreement.”
Voting; Proxies; Revocation
Attendance
All holders of Taubman voting stock as of the record date for the special meeting, including shareholders ofrecordandbeneficialownersofTaubmanvotingstockwhosesharesareheldin“streetname”throughabank,brokerorothernominee,areinvitedtoattendthespecial meetingorattendvirtuallyintheeventthatthespecial meetingisheld by means of remote communication. If you are a shareholder of record, please be prepared to provide properidentification,suchasadriver’slicense.Ifyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“street name,” you will need to provide proof of ownership, such as a recent account statement or letter fromyourbank,brokerorothernominee,alongwithproperidentification.
Voting in Person
Shareholdersofrecordwillbeabletovoteinpersonatthespecialmeetingorvirtuallyintheeventthatthespecialmeetingisheldbymeansofremotecommunication.Ifyouarenotashareholderofrecord,butinsteadyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“streetname,”youmustprovideaproxyexecutedinyourfavorfromyourbank,brokerorothernomineeinordertobeabletovoteinpersonatthespecialmeeting.
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Providing Voting Instructions by Proxy
To ensure that your shares are represented at the special meeting, we recommend that you provide votinginstructions promptly byproxy(over theInternet, bytelephoneor bymail, as describedbelow), evenif youplantoattend the special meeting in person or virtually, in the event that the special meeting is held by means of remotecommunication.
Record Holders
If you are a shareholder of record, you may provide voting instructions by proxy using one of the methodsdescribedbelow.
Submit a Proxy by Telephone or over the Internet. This proxy statement is accompanied by a proxy card withinstructionsforsubmittingvotinginstructions.Youmayvotebytelephonebycallingthetoll-freenumberorovertheInternetbyaccessingtheInternetaddressasspecifiedontheenclosedproxycardbythedeadlinessetforthonthecard.Yourshareswillbevotedasyoudirectinthesamemannerasifyouhadcompleted,signed,datedandreturnedyourproxycard,asdescribedbelow.
Submit a Proxy Card.Ifyoucomplete,sign,dateandreturntheenclosedproxycardbymailsothatitisreceivedbeforethespecialmeeting,yourshareswillbevotedinthemannerdirectedbyyouonyourproxycard.
Ifyousign,dateandreturnyourproxycardwithoutindicatinghowyouwishtovote,yourproxywillbevotedinfavoroftheMergerAgreementProposal,theAdvisoryCompensationProposalandtheAdjournmentProposal.Ifyoufail to return your proxy card, the effect will be that your shares will not be counted for purposes of determiningwhetheraquorumispresentatthespecialmeeting(unlessyouarearecordholderasoftherecorddateandattendthespecial meeting in person) and will have the same effect as a vote against the Merger Agreement Proposal and theAdvisoryCompensationProposal.Assumingaquorumispresent,failuretoreturnyourproxycardwillhavenoeffectontheAdjournmentProposal.
“Street Name” Shares
Ifyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“streetname,”yourbank,brokerorother nominee will send you instructions as to howto provide voting instructions for your shares. Many banks andbrokerage firms have a process for their customers to provide voting instructions over the Internet or by phone, inadditiontoprovidingvotinginstructionsbyvotinginstructioncard.
Ifyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“streetname,”yourbank,brokerorothernomineewillsendyouinstructionsastohowtoprovidevotinginstructionsforyoursharesbyvotinginstructioncard. In accordance with the rules of the NYSE, if a beneficial owner of shares does not provide specific votinginstructionstoabank,brokerorothernomineethatholdssharesin“streetname”forsuchbeneficialowner,suchbank,brokerorothernomineehastheauthoritytoexerciseitsvotingdiscretiononanymattertheNYSEdeterminestobea“routine” proposal. Because all three proposals described in this proxy statement are considered “non-routine”proposals, we do not expect any shares that are held by a bank, broker or nominee for which such bank, broker ornomineehasnot receivedvotinginstructionstobepresent inpersonorrepresentedbyproxyat thespecial meeting.Any shares not voted, in person or by proxy, at the special meeting will have the same effect as a vote against theMergerAgreementProposalandagainsttheAdvisoryCompensationProposal.Assumingaquorumispresent,failuretoprovidevotinginstructionswillhavenoeffectontheAdjournmentProposal.
401(k) Participants
IfyouholdyoursharesthroughTheTaubmanCompanyandRelatedEntitiesEmployeeRetirementSavingsPlan(the 401(k) plan), only Vanguard Fiduciary Trust Company, the trustee for the plan, may vote on your behalf.Accordingly,401(k)planparticipantsmaynotvotetheirsharesinpersonatthespecialmeeting.
Yourvotinginstructionformwill servetoinstruct thetrusteeofthe401(k)Planhowtovoteyourshares. If nodirection is given to the trustee, the trustee will vote your shares held in the plan in the same proportion as votesreceivedfromotherparticipantsintheplan.Thetrustee’sdutieswithrespecttovotingthecommonstockinthe401(k)PlanaregovernedbythefiduciaryprovisionsofERISA,whichmayrequire,incertainlimitedcircumstances,thatthetrusteeoverridethevotesofparticipantswithrespecttothesharesheldbythetrusteeandtodetermine,inthetrustee’sbestjudgment,howtovotetheshares.
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Revocation of Proxies
Yourproxyisrevocable. If youareashareholderofrecord, youmayrevokeyourproxyat anytimebeforethevoteistakenatthespecialmeetingby:
• submittinganewproxywithalaterdate,includingasdescribedabovebyInternetproxysubmission,usingthetelephoneorbycompleting,signing,datingandreturninganewproxycardbymailtotheCompany;
• attendingthespecialmeetingandvotinginperson;or
• givingwrittennoticeofrevocationtotheSecretaryoftheCompany,ChrisHeaphy,TaubmanCenters,Inc.,200EastLongLakeRoad,Suite300,P.O.Box200,BloomfieldHills,Michigan48303-2324,orbygivingwrittennoticeofrevocationinpersonatthespecialmeeting.
Attending the special meeting without taking one of the actions described above will not revoke your proxy.PleasenotethatifyouareashareholderofrecordandwanttorevokeyourproxybymailinganewproxycardtotheCompany or by sending a written notice of revocation to the Company, you should ensure that you send your newproxycardorwrittennoticeofrevocationinsufficienttimeforittobereceivedbytheCompanybeforethedayofthespecialmeeting.
Ifyoursharesareheldbyabank,brokerorothernomineeonyourbehalfin“streetname,”youwillneedtofollowtheinstructionsprovidedtoyoubyitinordertorevokeyourvotinginstructioncardorsubmitnewvotinginstructions.
Abstentions
ProxiesreceivedbutmarkedasabstentionswillbeincludedinthecalculationofthenumberofsharesofTaubmanvotingstockrepresentedatthespecialmeetingforpurposesofdeterminingwhetheraquorumispresent.Suchproxieswill have the sameeffect as a vote against the Merger Agreement Proposal andagainst the AdvisoryCompensationProposal.Assumingaquorumispresent,failuretoprovideyourproxycardorvotinginstructionswillhavenoeffectontheAdjournmentProposal.
Adjournments and Postponements
The special meeting may be adjourned or postponed fromtime to time, including for the purpose of solicitingadditionalproxiesifthereareinsufficientvotesatthetimeofthespecialmeetingtoobtaintheTaubmanshareholderapproval,althoughthisisnotcurrentlyexpected.Ifthereispresent,inpersonorbyproxy,sufficientfavorablevotingpowertosecurethevoteoftheshareholdersoftheCompanynecessarytoobtaintheTaubmanshareholderapproval,theCompanydoesnotanticipatethatitwilladjournorpostponethespecialmeeting.Anysignedproxiesreceivedbythe Company in which no voting instructions are provided on the Adjournment Proposal will be voted in favor ofadjournment,iftheproposalisintroduced.Formoreinformation,see“The Adjournment Proposal.”
Solicitation of Proxies
Wewillbearthecostofoursolicitationofproxies.Thisincludesthechargesandexpensesofbrokeragefirmsandothers for forwarding solicitation material to beneficial owners of our outstanding Taubman voting stock. We maysolicit proxies over the Internet, or by mail, personal interview, email or telephone. The Company has retainedInnisfreeM&AIncorporated,aproxysolicitationfirm,toassistitinthesolicitationofproxiesforthespecialmeetingand will pay Innisfree a fee not to exceed $35,000, plus reimbursement of out-of-pocket expenses. In addition, theCompany has agreed to indemnify Innisfree against certain liabilities and expenses that relate to or arise out of itssolicitation of proxies (subject to certain exceptions). Brokerage houses, nominees, fiduciaries and other custodianswillberequestedtoforwardsolicitingmaterialstobeneficialownersandwillbereimbursedfortheirreasonableout-of-pocketexpensesincurredinsendingproxymaterialstobeneficialowners.
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THE MERGER AGREEMENT PROPOSAL
General
The Company is asking shareholders to consider and vote on a proposal to adopt and approve the mergeragreement.Pursuanttothemergeragreement,subjecttothesatisfactionorwaiverofcertainconditions,MergerSub2will be merged with and into the Taubman operating partnership, and the Company will be merged with and intoMerger Sub 1. On completion of the Partnership Merger, the Taubman operating partnership will survive and theseparateexistenceofMergerSub2willcease.OncompletionoftheREITMerger,MergerSub1willsurviveandtheseparateexistenceoftheCompanywillcease.ImmediatelyfollowingthePartnershipMerger,theTaubmanoperatingpartnershipwillbeconvertedintoaDelawarelimitedliabilitycompany.Onthetermsandsubjecttotheconditionssetforthinthemergeragreement,attheeffectivetimeoftheREITMergereachshareofourTaubmancommonstockthenissued and outstanding, other than certain shares of excluded Taubman common stock (as set forth in the mergeragreement),willbeconvertedintotherighttoreceive$52.50incash.ForadetaileddiscussionoftheTransactions,see“The Merger Agreement”below.
Asdiscussedinthesectionentitled“Special Factors—Reasons for the Transactions and Recommendation of theSpecial Committee and the Taubman Board,”theTaubmanBoard,actingupontheunanimousrecommendationoftheSpecialCommittee,hasunanimouslydeterminedthatthemergeragreementandtheTransactionsareadvisableandfairto,andinthebestinterestsof,theCompanyandtheCompany’scommonshareholdersandinthebestinterestsoftheTaubmanoperatingpartnershipandthelimitedpartnersoftheTaubmanoperatingpartnership.
The Taubman shareholder approval of the Merger Agreement Proposal is a condition to the completion of theTransactions.IftheTaubmanshareholderapprovaloftheMergerAgreementProposalisnotobtained,theTransactionswillnotoccur.
Required Vote
ApprovaloftheMergerAgreementProposalrequirestheapprovalby:(i)theholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogetherasasingleclass),(ii)theholdersof at least a majority of the outstanding shares of Taubman Series B preferred stock entitled to vote thereon, and(iii)theholdersofatleastamajorityoftheoutstandingsharesofTaubmanvotingstockentitledtovotethereon(votingtogether as a single class), excluding the outstanding Taubman voting stock owned of record or beneficially by theTaubmanfamilymembers.Abstentionswillhavethesameeffectasavoteagainstthisproposal.
Vote Recommendation
TheTaubmanBoardunanimouslyrecommendsavote“FOR”theMergerAgreementProposal.
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THE MERGER AGREEMENT
Thefollowingdescribescertainprovisionsofthemergeragreement,whichisattachedasAnnexAtothisproxystatementandwhichisincorporatedbyreferenceherein.Thedescriptionsinthissectionandelsewhereinthisproxystatement are qualified in their entirety byreference to the merger agreement. This summary does not purport to becompleteandmaynotcontainalloftheinformationaboutthemergeragreementthatisimportanttoyou.YoushouldcarefullyreadthemergeragreementinitsentiretybeforemakinganydecisionsregardingtheTransactionsbecauseitistheprincipaldocumentgoverningtheTransactions.
The merger agreement and this summary of its terms have been included to provide you with informationregardingthetermsofthemergeragreementandarenotintendedtoprovideanyfactualinformationaboutSimon,theSimon operating partnership, Taubman, the Taubman operating partnership, Merger Sub 1 or Merger Sub 2 or tomodifyorsupplementanyfactualdisclosuresaboutSimonorTaubmancontainedinthisproxystatementorinSimon’sorTaubman’spublicreportsfiledwiththeSEC.Inparticular,themergeragreementandthissummaryarenotintendedtobe,andshouldnotberelieduponas,disclosuresregardingtheactualstateofanyfactsandcircumstancesrelatingtoSimon or Taubman. The merger agreement contains representations and warranties by and covenants of Simon, theSimonoperatingpartnership,Taubman,theTaubmanoperatingpartnership,MergerSub1orMergerSub2thatweremade only for purposes of the merger agreement and as of specified dates. The representations, warranties andcovenants in the merger agreement were made solely for the benefit of the parties to the merger agreement, werequalified and subject to important limitations in connection with negotiating the terms of the merger agreement(including by being qualified by confidential disclosure schedules exchanged between the parties to the mergeragreement)andmaybesubjecttoacontractualstandardofmaterialitywhichmaydifferfromwhatmaybeviewedasmaterial by investors. In particular, in your review of the representations and warranties contained in the mergeragreementanddescribedinthissummary,itisimportanttobearinmindthattherepresentationsandwarrantieswerenegotiatedwiththeprincipalpurposeofestablishingthecircumstancesinwhichapartytothemergeragreementmayhavetherightnottoclosetheTransactionsiftherepresentationsandwarrantiesoftheotherpartyprovetobeuntrueduetoachangeincircumstanceorotherwise,andallocatingriskbetweenthepartiestothemergeragreement,ratherthan establishing matters as facts. Information concerning the subject matter of the representations and warranties,which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of themergeragreement.
Transaction Structure
Themergeragreementprovidesthat, subjecttothesatisfactionorwaiverofspecifiedconditions, MergerSub2will be merged with and into the Taubman operating partnership and, promptly following the effective time of thePartnershipMerger,TaubmanwillbemergedwithandintoMergerSub1.UponcompletionofthePartnershipMerger,the Taubman operating partnership will survive and the separate existence of Merger Sub 2 will cease. Uponcompletion of the REIT Merger, Merger Sub 1 will survive and the separate corporate existence of Taubman willcease.ImmediatelyfollowingthePartnershipMerger,theSurvivingTaubmanoperatingpartnershipwillbeconvertedinto a Delaware limited liability company. The Partnership Merger, the REIT Merger, the LLCConversion and theothertransactionscontemplatedbythemergeragreementarereferredtoasthe“Transactions.”
Followingthe Partnership Merger, the REITMerger andthe LLCConversion, the Simonoperating partnershipwilldirectlyorindirectlyown100%oftheoutstandingequityofSurvivingTCO,SurvivingTCOwillown80%oftheoutstandinglimited liability companyinterests of the Joint Venture, andthe Taubmanfamily members will owntheremaining20%oftheoutstandinglimitedliabilitycompanyinterestsoftheJointVenture.
Surviving TCO and the Taubman family members will enter into the JV agreement at the time of the LLCConversion in the form attached as Exhibit B to the merger agreement and described further below under“The JV Agreement.”
Partnership Merger
AttheeffectivetimeofthePartnershipMerger:
• each Taubman OP unit issued and outstanding immediately prior to the effective time of the PartnershipMergerheldbyaminoritypartnerwillbeconvertedintotherighttoreceive,attheelectionofsuchminoritypartner,thecommonstockmergerconsiderationor0.3814newSimonOPunits;
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• certainTaubmanOPunitsissuedandoutstandingimmediatelypriortotheeffectivetimeofthePartnershipMerger held by a Taubman family member will remain outstanding as units of partnership interest in theSurvivingTaubmanoperatingpartnership;and
• allotherTaubmanOPunitsissuedandoutstandingimmediatelypriortotheeffectivetimeofthePartnershipMerger held by a Taubman family member will be converted into the right to receive the common stockmergerconsideration.
Inaddition,attheeffectivetimeofthePartnershipMerger,eachTaubmanIncentiveUnitvestsinaccordancewithitstermsinconnectionwiththeeffectivetimeofthePartnershipMergerandwillautomaticallyconvertintoaTaubmanOP unit (with such Taubman Incentive Units vesting based on the greater of the average of actual performanceachievement, as of the closing, of the two performance metrics applicable to such grants, and target performance),whichshallbetreatedinthesamemanner(andhavingtherighttothesameelection)astheTaubmanOPunitsheldbytheminoritypartners.
ThemembershipinterestsofMergerSub2issuedandoutstandingimmediatelypriortotheeffectivetimeofthePartnership Merger will automatically be converted into a number of units of partnership interest in the SurvivingTaubman operating partnership such that following the Partnership Merger, Merger Sub 1 and Taubman willcollectively own 80% of the outstanding interests of the Surviving Taubman operating partnership (assuming, forpurposesofthis calculation, that theTaubmanOPunits issuableundertheOptionDeferral Agreement(asdescribedbelow)areoutstandinginterestsoftheSurvivingTaubmanoperatingpartnership),andtheTaubmanfamilymemberswillcollectivelyowntheremaining20%.
REIT Merger
Treatment of Taubman Common Stock and Taubman Series B Preferred Stock
Pursuanttothetermsandconditionsinthemergeragreement,attheeffectivetimeoftheREITMerger:
• eachshareofTaubmancommonstockissuedandoutstandingimmediatelypriortotheeffectivetimeoftheREITMergerwillbeconvertedintotherighttoreceivethecommonstockmergerconsideration;and
• eachshareofTaubmanSeriesBpreferredstockwillbeconvertedintotherighttoreceiveanamountincashequaltothecommonstockmergerconsiderationdividedby14,000.
Treatment of Taubman Series J Preferred Stock and Taubman Series K Preferred Stock
ImmediatelypriortotheeffectivetimeoftheREITMerger, Taubmanwill issuearedemptionnoticeandcausefundstobesetasidetopaytheredemptionpriceforeachoutstandingshareofTaubmanSeriesJPreferredStockandeachoutstandingshareofTaubmanSeriesKPreferredStock,attheirrespectiveliquidationpreferenceof$25.00plusallaccumulatedandunpaiddividendsto,butnotincluding,theredemptiondateofsuchshare.
Treatment of Outstanding Equity Awards
AttheeffectivetimeoftheREITMerger,outstandingTaubmanequityawardswillbetreatedasdescribedbelow:
• each outstanding Taubman RSU and each outstanding Taubman PSU granted under the Taubman StockPlansthatvestsinaccordancewithitstermsinconnectionwiththeeffectivetimeoftheREITMergerwillautomaticallyconvertintotherighttoreceivethecommonstockmergerconsideration(withthenumberofsharesofTaubmancommonstocksubjecttoanysuchTaubmanPSUthatwillbecomevestedtobebasedonassumed achievement of performance metrics at the greater of (x) the average of actual performanceachievement of the two performance metrics applicable to such grants, as of the closing, and (y) targetperformance);
• eachoutstandingTaubmanRSUandTaubmanPSUthatisnoteligibletovestinaccordancewithitstermsinconnectionwiththeeffectivetimeoftheREITMergerwillbeconvertedintoacashsubstituteawardtobepaid(i) withrespect toanysuchawardgrantedpriorto2020,inaccordancewiththesameservice-vestingschedulethatappliedtotheoriginal TaubmanRSUorTaubmanPSUaward(withthenumberofsharesofTaubmancommonstocksubject to anysuchTaubmanPSUgrantedprior to2020tobebasedonassumedachievementofperformancemetricsatthegreaterof(x)theaverageofactualperformanceachievementofthetwoperformancemetricsapplicabletosuchgrants,asoftheclosing,and
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(y) target performance), and (ii) with respect to any such awards granted in 2020, in accordance with thesamevestingschedule(includingperformance-vestingconditions)thatappliedtotheoriginalTaubmanRSUor Taubman PSU award (except that the cash substitute awards in respect of such 2020 Taubman PSUawardswillvestsubjecttoachievementofonlyoneperformancemetric);
• eachoutstandingTaubmanDSUgrantedundertheTaubmanStockPlanswillbeconvertedintotherighttoreceivethecommonstockmergerconsideration;and
• eachTaubmanDERwillbetreatedinthesamemannerastheoutstandingTaubmanRSUorTaubmanPSUtowhichsuchTaubmanDERrelates.AnysuchTaubmanDERrelatedtoaTaubmanRSUorTaubmanPSUwhichbyitstermsdoesnotvest at theeffectivetimeoftheREITMergerwill convert toacashsubstituteawardthatcontinuestoaccrue,atarateof$0.675pershare,onaquarterlybasisovertheremainingvestingscheduleoftherelatedsubstituteawardandwillbepaidonthesametermsthatappliedtotheoriginalrelatedTaubmanRSUorTaubmanPSU.
Inaddition,attheeffectivetimeoftheLLCConversion,theOptionDeferralAgreement(asdefinedinthemergeragreement)amongTaubman,theTaubmanoperatingpartnershipandR.Taubman,pursuanttowhichR.TaubmanhastherighttoreceiveTaubmanOPunitsat certainspecifieddatesinthefuture, will bedeemedtobeamendedsothateachOptionDeferredunit(asdefinedinthemergeragreement)willrepresenttherighttoreceive,followingtheLLCConversion,onelimitedliabilitycompanyinterestintheJointVenture(a“JointVentureunit”),andwillremainsubjectto all other terms and conditions of the Option Deferral Agreement, including the continued right to receivedistributionsinthesamemannerandinthesameamountasreceivedbyanyotherJointVentureunit.
Effective Time; Closing
TheeffectivetimeoftheREITMergerwilloccuratthetimethepartiesfilecertificatesofmergerwithrespecttotheREITMergerwiththeMichiganLARAandtheSecretaryofStateoftheStateofDelawareontheclosingdateorsuchlatertimeasagreedtobySimonandTaubmanandspecifiedinthecertificatesofmerger.TaubmanandSimonhave agreed to cause the effective time of the REIT Merger to occur promptly following the effective time of thePartnershipMerger.
The effective time of the Partnership Merger will occur at the time the parties file a certificate of merger withrespecttothePartnershipMergerwiththeSecretaryofStateoftheStateofDelawareontheclosingdateorsuchlatertimeasagreedtobySimonandTaubmanandspecifiedinthepartnershipcertificateofmerger.
TheeffectivetimeoftheLLCConversionwill occurat thetimethepartiesfileacertificateofconversionwithrespect totheLLCConversionandacertificate of formationwithrespect totheJoint VenturewiththeSecretaryofStateoftheStateofDelawareontheclosingdateorsuchlatertimeasagreedtobySimonandTaubmanandspecifiedinthecertificateofconversion.TaubmanandSimonhaveagreedtocausetheeffectivetimeoftheLLCConversiontooccurimmediatelyfollowingtheeffectivetimeofthePartnershipMerger.
UnlessSimonandTaubmanagreeotherwise,theclosingoftheTransactionswilloccuronthethirdbusinessdayaftertheconditionstothetransactionssetforthinthemergeragreementhavebeensatisfiedorwaived.However,theSimonpartieswillnotberequiredtoeffecttheclosing(i)priortoNovember9,2020,if,onthedatethatclosingwouldotherwisehaveoccurred,anyinvestigationorlegalactionbyanygovernmentalentityisthen-pending,that,inSimon’sreasonable judgment, following consultation with Taubman and the Taubman family representative, is seeking orwouldreasonablybeexpectedtoleadtoorresultinaSimonBurdensomeCondition(asdescribedunder“—RegulatoryMatters” below) (individually or in the aggregate with all other Regulatory Concessions (as described under“—Regulatory Matters” below) in respect of any governmental entity, that Simon, following consultation withTaubmanandtheTaubmanfamilyrepresentative,reasonablyexpectstoberequiredorimposed),or(ii)priortoJuly9,2020,if,onthedatethattheclosingwouldotherwisehaveoccurred,certainconsentsandwaiverswithrespecttotheTransactions(asdescribedunder“—Certain Consents; Treatment of Existing Debt”below)havenotbeenobtainedor,with respect to any such consent under a loan document that has not been obtained, the loan underlying such loanconsent has not been prepaid or defeased. Notwithstanding the foregoing, the Simon parties may elect to effect theclosing at any time prior to the dates set forth in the prior sentence if at such time the closing would otherwise berequiredtooccurpursuanttothemergeragreement.
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Exchange Agent; Delivery of Consideration
SimonwillappointanexchangeagentbeforetheeffectivetimeofthePartnershipMerger.AssoonasreasonablypracticableaftertheeffectivetimeoftheREITMerger(andinanyeventwithinthreebusinessdaysaftertheeffectivetimeoftheREITMerger),theexchangeagentwillsendaletteroftransmittaltorecordholdersofTaubmancommonstock(other thanshares ownedbyTaubmanas treasury stock, byanydirect or indirect wholly ownedsubsidiary ofTaubman,byanyoftheSimonpartiesorbyanyoftheirdirectorindirectwhollyownedsubsidiariesimmediatelypriortotheeffectivetimeoftheREITMerger),TaubmanSeriesBpreferredstock,TaubmanOPunitsheldbytheTaubmanfamilymembers(otherthanthoseTaubmanOPunitsthatwillremainoutstandingasunitsofpartnershipinterestintheSurvivingTaubmanoperatingpartnership), TaubmanOPunits heldbyminoritypartners andTaubmanOPincentiveunits(asapplicable),togetherwithinstructionsonhowtosurrendersuchTaubmancommonstock,TaubmanSeriesBpreferred stock, Taubman OP units or Taubman OP incentive units (as applicable) in exchange for the applicablemerger consideration. Upon surrender to the exchange agent of the applicable certificate or book entry shares, eachholderwillbeentitledtoreceiveinexchangetherefortheapplicablemergerconsiderationtowhichsuchsharesorunitshavebeenconverted.Pleasedonotsendinyourcertificatesnow.
Withholding
Simonandtheexchangeagentwillbeentitledtodeductandwithholdfromtheconsiderationotherwisepayablepursuanttothemergeragreementsuchamountsasarerequiredtobedeductedandwithheldwithrespecttothemakingofsuchpaymentunderapplicabletaxlaw.Amountswithheldandtimelypaidovertotheappropriatetaxingauthoritywill be treated for purposes of the merger agreement as having been paid to the person in respect of which suchdeductionorwithholdingwasmade.
Conditions to the Completion of the Transactions
Theobligationsofeachpartytoeffecttheclosingissubjecttothesatisfactionorwaiver(exceptfortheconditionstoobtaintheapprovalofTaubmanshareholdersandtheTaubmanoperatingpartnershipunitholders,whichshallnotbewaivable)ofthefollowingconditions:
• themergeragreementandtheTransactionsmusthavebeenapprovedandadoptedby(i)theaffirmativevoteoftheholdersofatleasttwo-thirdsoftheoutstandingsharesofTaubmancommonstockandTaubmanSeriesBpreferred stock(votingtogether as a single class) entitled to vote at the Taubmanshareholders meeting,(ii)theaffirmativevoteoftheholdersofatleastamajorityoftheoutstandingsharesofTaubmanSeriesBpreferred stock entitled to vote at the Taubman shareholders meeting and (iii) the affirmative vote of theholders of at least a majority of the outstanding shares of TaubmancommonstockandTaubmanSeries Bpreferred stock (voting together as a single class) entitled to vote at the Taubman shareholders meeting(excludingtheoutstandingsharesofTaubmancommonstockandTaubmanSeriesBpreferredstockownedofrecordorbeneficiallybytheTaubmanfamilymembers);
• thePartnershipMergermusthavebeenapprovedbythewrittenconsentofpartners(otherthanTaubmanandotherthanany“ParityPreferredPartner”(asdefinedintheTaubmanOPagreement)) holdingat least fiftypercent (50%) of the aggregate percentage interests in the Taubman operating partnership held by suchpartners(the“Taubmanoperatingpartnershipapproval”),andsuchapprovalmustnothavebeenrescinded,modifiedorwithdrawn;
• no applicable law and no judgment, preliminary, temporary or permanent, or other legal restraint orprohibitionandnobindingordermaybeineffect,orimminentlythreatenedbyanygovernmentalentityofcompetent jurisdiction, whichprohibits, makes illegal, enjoins, or otherwise prevents the consummation oftheTransactions;and
• thesharesofSimoncommonstocktobereservedforissuanceuponexchangeorredemptionofSimonOPunits issued or issuable to holders of TaubmanOPunits in the Transactions must have been approved forlistingontheNYSE,subjecttoofficialnoticeofissuance.
Inaddition,theSimonparties’obligationstoeffecttheclosingarefurthersubjecttothefollowingconditions:
• the representations and warranties of Taubman and the Taubman operating partnership relating toqualification, organization and subsidiaries; authority, execution and delivery, and enforceability of themergeragreement;capitalstructure;andbrokers’feesandexpensesmustbetrueandcorrectinallmaterialrespectsatandasoftheclosingdate;
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• therepresentationsandwarrantiesofTaubmanandtheTaubmanoperatingpartnershiprelatingtoabsenceofamaterialadverseeffect(asdescribedbelow)withrespecttoTaubmanfromSeptember30,2019tothedateofthemergeragreementmustbetrueandcorrectinallrespectsatandasoftheclosingdate;
• the representations and warranties of Taubman and the Taubman operating partnership relating tocapitalization must be true andcorrect in all respects, except for de minimis inaccuracies, at andas of theclosingdate;
• allotherrepresentationsandwarrantiesofTaubmanandtheTaubmanoperatingpartnershipmustbetrueandcorrect at and as of the closing date, except where the failure to be true and correct (ignoring for suchpurposes any reference to materiality or material adverse effect contained in such representations andwarranties) would not reasonably be expected to have a material adverse effect (as described below) withrespecttoTaubman;
• TaubmanandtheTaubmanoperatingpartnershipmusthaveperformedinallmaterialrespectsallcovenantssetforthinthemergeragreementrequiredtobeperformedbythemunderthemergeragreementatorpriortotheclosingdate;
• sincethedateofthemergeragreement,theremustnothaveoccurredandbecontinuinganymaterialadverseeffectwithrespecttoTaubman;
• TaubmanmusthavedeliveredtoSimonanofficer’scertificateconfirmingthattheprecedingconditionshavebeensatisfied;and
• SimonmusthavereceivedataxopinionofHonigmanLLP,taxcounseltoTaubman(or,ifHonigmanLLPisunable or unwilling to render such opinion, Kirkland & Ellis LLP or another nationally recognizedREIT counsel as may be reasonably acceptable to Simon), dated as of the closing date, to the effect that,subject to customary exceptions, assumptions and qualifications, at all times since its taxable year endedDecember 31, 2012 and through and including its taxable year that ends at the effective time of theREIT Merger, Taubman has been organized and operated in conformity with the requirements forqualificationandtaxationasaREITundertheCodeanditsactualmethodofoperationhasenabledTaubmanto meet, throughthe effective timeof the REITMerger, the requirements for qualification andtaxation asREITundertheCode.
In addition, Taubman’s and the Taubman operating partnership’s obligations to effect the closing are furthersubjecttothefollowingconditions:
• the representations and warranties of the Simon parties relating to qualification, organization andsubsidiaries; andauthority, executionanddelivery, andenforceability of themerger agreement; the Simonoperatingpartnership’scapitalization;andbrokers’feesandexpensesmustbetrueandcorrectinallmaterialrespectsatandasoftheclosingdate;
• allotherrepresentationsandwarrantiesoftheSimonpartiesmustbetrueandcorrectatandasoftheclosingdate,exceptwherethefailuretobetrueandcorrect(ignoringforsuchpurposesanyreferencetomaterialityor material adverse effect contained in such representations and warranties) would not reasonably beexpectedtohaveamaterialadverseeffectwithrespecttoSimon;
• the Simon parties must have performed in all material respects all covenants set forth in the mergeragreementrequiredtobeperformedbythemunderthemergeragreementatorpriortotheclosingdate;and
• SimonmusthavedeliveredtoTaubmananofficer’scertificateconfirmingthattheprecedingconditionshavebeensatisfied.
Forpurposesofthisproxystatementandthemergeragreement,“materialadverseeffect”means,withrespecttoTaubman,anyeffect,change,eventoroccurrencethat,individuallyorintheaggregate,hasamaterialadverseeffectonthe business, assets, liabilities, results of operations or financial condition of Taubman and its subsidiaries (and itsunconsolidatedjointventures),takenasawhole;provided,however,thatnoneofthefollowing,andnoeffect,change,event or occurrence arising out of, or resulting from, the following, shall constitute or be taken into account,individually or in the aggregate, in determining whether a material adverse effect has occurred or may occur:(i)changesgenerallyaffectingtheeconomy,creditorfinancialorcapitalmarkets,intheUnitedStatesorelsewhere
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intheworld, includingchangesininterest orexchangerates; (ii) changesgenerallyaffectingtheindustriesinwhichTaubmananditssubsidiariesoperate;(iii)changesorprospectivechangesinapplicablelaworGAAPorinaccountingstandards,oranychangesorprospectivechangesintheinterpretationorenforcementofanyoftheforegoing,oranychanges or prospective changes in general legal, regulatory or political conditions; (iv) changes caused by theannouncementorperformanceofthemergeragreementortheconsummationoftheTransactions,includingtheimpactthereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners, employees orgovernmentalentities, oranylitigationarisingfromallegationsofbreachoffiduciarydutyorviolationofapplicablelawrelatingtothemerger agreement or theTransactions (providedthat this clause(iv) shall not applytotheuseofmaterialadverseeffectwithrespecttoTaubmaninanyrepresentationorwarrantyexplicitlyaddressingtheexecution,delivery, announcement or performance of the merger agreement or the consummation of the Transactions or non-contraventionwithcontractualorlegalobligationsoranyconditiontoclosingasitrelatestosuchrepresentationsandwarranties);(v)actsofwar(whetherornotdeclared),sabotageorterrorism,oranyescalationorworseningofanysuchactsofwar(whetherornotdeclared),sabotageorterrorism;(vi)volcanoes,tsunamis,pandemics,earthquakes,floods,storms, hurricanes, tornados or other natural disasters; (vii) any action taken by Taubman or its subsidiaries that isrequired by the merger agreement or with the prior written consent or at the written direction of another person inaccordancewiththemergeragreement,orthefailuretotakeanyactionbyTaubmanoritssubsidiariesifthatactionisprohibited by the merger agreement; (viii) changes resulting or arising from the identity of, or any facts orcircumstances specific to, the Simon parties; (ix) changes or prospective changes in Taubman’s or its subsidiaries’credit ratings; (x) changes in the price or tradingvolumeof Taubman’s commonstock; (xi) anyfailure to meet anyinternalorpublicprojections,forecasts,guidance,estimates,milestones,budgetsorinternalorpublishedfinancialoroperating predictions of revenue, earnings, cash flow or cash position (it being understood that the exceptions inclauses (ix), (x) and(xi) shall not prevent or otherwise affect a determination that the underlying cause of anysuchchange or failure referred to therein (to the extent not otherwise falling within any of the exceptions provided byclauses (i) through (xi) hereof) is, may be, contributed to or may contribute to, a material adverse effect); providedfurther,however,thatanyeffect,change,eventoroccurrencereferredtoinclauses(i),(ii), (iii), (v)and(vi)maybetakenintoaccountindeterminingwhetherornottherehasbeenormaybeamaterialadverseeffecttotheextentsucheffect, change,eventoroccurrencehasadisproportionateadverseeffect onTaubmananditssubsidiaries, takenasawhole,ascomparedtootherparticipantsintheindustriesinwhichTaubmananditssubsidiariesoperate.
Forpurposesofthisproxystatementandthemergeragreement,“materialadverseeffect”means,withrespecttoSimon, anyeffect, change, event or occurrencethat, individually or intheaggregate, wouldhaveamaterial adverseeffectonSimon’sabilitytoconsummatetheTransactionsandperformitsmaterialcovenantsandobligationsunderthemergeragreement.
Taubman Special Meeting
Taubmanhasagreedtocall ameetingofitsstockholdersforthepurposeofadoptingandapprovingthemergeragreement, as soon as reasonably practicable after the SECconfirms that it has no further comments on this proxystatement;provided,thatTaubmanwillnotbeobligatedtocallsuchmeetingpriortotheNo-ShopPeriodStartDate.TaubmanmustuseitsreasonablebesteffortstoseektoobtaintheTaubmanshareholderapproval,unlessaTaubmanBoard recommendation change (as described in “—The Taubman Board of Directors’ Recommendation; TaubmanBoard Recommendation Changes”below)hasbeeneffected. Taubmanmay, inits sole discretion, adjourn, recessorpostponetheTaubmanspecialmeetingtotheextentnecessarytoensurethatanyrequiredinformationisprovidedtotheshareholdersofTaubmanwithinareasonableamountoftimeinadvanceoftheTaubmanspecialmeeting.Taubmanmayalso adjourn, recess or postpone the Taubmanspecial meeting if as of the time for which the Taubmanspecialmeetingisoriginallyscheduled(assetforthinthisproxystatement)thereareinsufficientsharesofTaubmancommonstock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of theTaubman special meeting or to allowreasonable additional time to solicit additional proxies to the extent TaubmanreasonablybelievesnecessaryinordertoobtaintheTaubmanshareholderapproval;provided,thatinnoeventshalltheTaubmanspecialmeetingbeadjourned,recessedorpostponedonmorethantwooccasions,andineachsuchinstancebymorethan15businessdaysfromthepreviouslyscheduleddateofsuchmeeting,unlessrequiredbyapplicablelaworwiththeconsentofSimon.
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The “Go-Shop” Period
Under the merger agreement, from the date of the merger agreement until the No-Shop Period Start Date,TaubmanandtheTaubmanoperatingpartnershipandtheirrespectiveRepresentativeshadtherightto:(i)solicit,seek,initiate,proposeorinducethemaking,submissionorannouncementof,orencourage,facilitateorassist,anyinquiry,proposalorofferthatconstitutes,orthatcouldconstitute,anAcquisitionProposal,includingbyprovidinginformation(includingnon-publicinformation)relatingtoTaubmanoranyofitssubsidiariesandaffordingaccesstothebusiness,properties, assets, books, records or other non-public information, or to any personnel, of Taubman or any of itssubsidiariestoanyperson(anditsRepresentatives,includingpotentialfinancingsourcesofsuchperson)pursuanttoanAcceptableConfidentialityAgreement;provided,thatanymaterialinformationconcerningTaubmanoritssubsidiariesto be providedor made available to anythird party will, to the extent not previously provided or made available toSimon,beprovidedormadeavailabletoSimonpromptly(and,inanyevent,within12hours)followingthetimeitisprovidedormadeavailabletosuchthirdparty;and(ii)engagein,enterinto,continueorotherwiseparticipateinanydiscussionsornegotiationswithanyperson(andtheirrespectiveRepresentatives,includingpotentialfinancingsourcesof such person) with respect to any Acquisition Proposals (or inquiries, proposals or offers or any other effort orattemptthatcouldleadtoanAcquisitionProposal)andcooperatewithorassistorparticipateinorfacilitateanysuchinquiries,proposals,offers,discussionsornegotiationsoranyeffortorattempttomakeanyAcquisitionProposalsorotherproposalsthatcouldleadtoanyAcquisitionProposal,includinggrantingawaiver,amendmentorreleaseunderany pre-existing standstill or similar provision to the extent necessary to allow for an Acquisition Proposal oramendment to an Acquisition Proposal to be made to Taubman or the Taubman Board (or the Special Committee).Notwithstanding anything to the contrary, the Simon parties and their affiliates may not enter into exclusivearrangements with potential financing sources that would, by their terms or otherwise, materially impair, delay orpreventanypersonfromfinancinganyAcquisitionProposal.
Forpurposesofthisproxystatementandthemergeragreement:
“AcceptableConfidentiality Agreement”meansanagreement withTaubmanthat is either (i) ineffect asoftheexecution and delivery of the merger agreement; or (ii) executed, delivered and effective after the execution anddeliveryofthemergeragreement,ineithercasecontainingprovisionsthatrequireanycounterpartythereto(andanyofits affiliates and representatives named therein) that receive material non-public information of, or with respect to,Taubmantokeepsuchinformationconfidentialthat,ineachcase,containsconfidentialityanduseprovisionsthatarenolessrestrictivetosuchcounterparty(andanyofitsaffiliatesandrepresentativesasprovidedtherein)thanthetermsof the Mutual Non-Disclosure Agreement, dated as of November 8, 2019, between Taubman and Simon (it beingunderstoodthatsuchagreementneednotcontainany“standstill”orsimilarprovisionsorotherwiseprohibitthemakingof any Acquisition Proposal); provided, that in no event will any agreement that permits the counterparty thereto toenter into exclusive arrangements (other than customary “tree” arrangements) with potential financing sources beconsideredan“AcceptableConfidentialityAgreement.”
“AcquisitionProposal”meansanyofferorproposal(otherthananofferorproposalbytheSimonparties)foranAcquisitionTransaction.
“Acquisition Transaction” means any transaction or series of related transactions (other than the Transactions)providingfor:
• anydirectorindirectacquisition(whetherbymerger, consolidationorotherwise)ofmorethan15%ofthevotingpowerofTaubmanortheTaubmanoperatingpartnershipbyanypersonorgroup;
• any consolidation, business combination, reorganization, share exchange, sale of assets, recapitalization,equity investment, joint venture, liquidation, dissolution or other similar transaction involvingTaubmanortheTaubmanoperatingpartnershipthatwouldresultinanypersonorgroup,directlyorindirectly,acquiringassets(includingcapitalstockoforinterestsinanysubsidiaryoraffiliateofTaubman)representing,directlyorindirectly,morethan15%oftheconsolidatedassetsofTaubmananditssubsidiaries,takenasawhole(asdeterminedonabookvaluebasis(includingindebtednesssecuredsolelybysuchassets));
• anytenderofferorexchangeofferoranyotherdirectorindirectpurchaseorotheracquisitionofsecurities,that, if consummated, wouldresult inanypersonorgroup,whetherfromTaubmanoranyotherperson(s),beneficiallyowningmorethan15%oftheoutstandingsharesofTaubmancommonstockormorethan15%oftheoutstandingTaubmanOPunits;
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• any other transaction or series of related transactions pursuant to which any person or group proposes toacquire, directly or indirectly, control of assets of Taubmanor anyof its subsidiaries havinga fair marketvaluegreaterthan15%ofthefairmarketvalueofalloftheassetsofTaubmananditssubsidiaries,takenasawhole,immediatelypriortosuchtransaction;or
• anycombinationoftheforegoing.
“Superior Proposal” means any written Acquisition Proposal for an Acquisition Transaction on terms that theTaubman Board (acting on the recommendation of the Special Committee) has determined in good faith(after consultation with its financial advisor and outside legal counsel), taking into account all legal, financial andregulatory aspects of such Acquisition Proposal, would be more favorable, from a financial point of view, to theshareholders of Taubman (in their capacity as such) than the Transactions. For purposes of the reference to an“Acquisition Proposal” and “Acquisition Transaction” in this definition, all references to “15%”in the definition of“AcquisitionTransaction”willbedeemedtobereferencesto“75%.”
The “No-Shop” Period
Subject to the procedures and terms associated with the receipt of a Superior Proposal set forth in the mergeragreement,exceptasitmayrelatetoanyExcludedParty,fromtheNo-ShopPeriodStartDateuntiltheearliertooccurof the valid termination of the merger agreement and the effective time of the REIT Merger, Taubman and theTaubman operating partnership have agreed not to, and to instruct each of their respective Representatives not to,directlyorindirectly:
• solicit, initiateorproposethemakingorsubmissionof,orknowinglyencourageorfacilitatethemakingorsubmission of, any offer or proposal that constitutes or would reasonably be expected to lead to anAcquisitionProposal;
• furnish to any person (other than the Simon parties or any of their designees) any non-public informationrelatingtoTaubmanoranyofitssubsidiariesoraffordtoanyperson(otherthantheSimonpartiesoranyoftheirdesignees)accesstothebusiness,properties,assets,books,recordsorothernon-publicinformation,ortoanypersonnel,ofTaubmanoranyofitssubsidiaries,inanysuchcasewiththeintenttoinducethemakingorsubmissionof,ortoknowinglyencourage,facilitateorassistanAcquisitionProposal;
• participatein,knowinglyfacilitateorengageindiscussionsornegotiationswithanypersonwithrespecttoan Acquisition Proposal or any offer, proposal or inquiry that would reasonably be expected to lead to anAcquisitionProposal(subjecttocertainexceptions);
• enterintoanyletterofintent,memorandumofunderstanding,agreementinprinciple,investmentagreement,merger agreement, acquisition agreement or other contract relating to an Acquisition Transaction or thatwouldreasonablybeexpectedtoleadtoanAcquisitionProposal, otherthananAcceptableConfidentialityAgreement (any such letter of intent, memorandum of understanding, merger agreement, acquisitionagreement or other contract providing for an Acquisition Transaction, an “Alternative AcquisitionAgreement”);or
• reimburse or agree to reimburse the expenses of any other person (other than Taubman’s or the Taubmanoperating partnership’s Representatives) in connection with an Acquisition Proposal or any inquiry,discussion,offerorrequestthatwouldreasonablybeexpectedtoleadtoanAcquisitionProposal.
Notwithstandingtheforegoingrestrictions,fromandaftertheNo-ShopPeriodStartDate,Taubman,theTaubmanoperatingpartnershipandtheirrespectiveRepresentativesmaycontinuetoengageinsuchactivitieswithrespecttoanyExcluded Party (and its Representatives), including with respect to any amended or modified Acquisition ProposalsubmittedbyanyExcludedPartyfollowingtheNo-ShopPeriodStartDate.
Inaddition,exceptasitmayrelatetoanyExcludedParty,oranyoftheSimonparties,fromtheNo-ShopPeriodStartDateuntiltheearliertooccurofthevalidterminationofthemergeragreementandtheeffectivetimeoftheREITMerger,TaubmanhasagreedtoceaseandcausetobeterminatedanydiscussionsornegotiationswithanypersonanditsaffiliatesandRepresentativesthatwouldbeprohibitedbythemergeragreement.
“ExcludedParty”meansanypersonorgroupofpersonsthatincludesanypersonorgroupofpersonsfromwhomTaubmanoranyofitsRepresentativeshasreceivedawrittenAcquisitionProposalpriortotheNo-ShopPeriodStartDatethattheTaubmanBoard(ortheSpecialCommittee)determinesingoodfaith,afterconsultationwithitsfinancialadvisorandoutsidelegalcounsel,constitutesorcouldreasonablybeexpectedtoleadtoaSuperiorProposal.
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Additionally, under certaincircumstances, fromtheNo-ShopPeriodStart Dateandcontinuinguntil Taubman’sreceipt of the Taubman shareholder approval, Taubman and the Taubman operating partnership may, directly orindirectly through one or more of their Representatives, participate or engage in discussions or negotiations with,furnish non-public information relating to Taubman or any of its subsidiaries to, or afford access to the business,properties, assets, books, records or other non-public information, or to any personnel, of Taubman or any of itssubsidiariespursuanttoanAcceptableConfidentialityAgreementto,anypersonthathasmade,renewedordeliveredto Taubman an Acquisition Proposal after the date of the merger agreement or to such person’s Representatives(includingpotentialfinancingsourcesofsuchperson),andotherwisefacilitatesuchAcquisitionProposalorassistsuchperson(andits Representatives andfinancingsources) withsuchAcquisitionProposal (in eachcase, if requestedbysuchperson),ineachcasewithrespecttoanAcquisitionProposalthatwasnottheresultofamaterial breachofthe“No-Shop”restrictionssetforthinthemergeragreement;provided,thattheSpecialCommitteehasdeterminedingoodfaith (after consultation with its financial advisors and outside legal counsel) that such Acquisition Proposal eitherconstitutes a Superior Proposal or is reasonably likely to lead to a Superior Proposal and that failure to take suchactions would be inconsistent with the Special Committee’s fiduciary duties pursuant to applicable law; provided,further, that, subject toapplicable law,anynon-public informationconcerningTaubmanandtheTaubmanoperatingpartnershipthatisprovidedtoanysuchpersonoritsRepresentativespursuanttotheforegoingthatwasnotpreviouslymadeavailabletoSimonwillbeprovidedormadeavailabletoSimonpromptly(and,inanyevent,within12hours)followingsuchtimeasitisprovidedormadeavailabletosuchpersonortosuchperson’sRepresentative.
The Taubman Board of Directors’ Recommendation; Taubman Board Recommendation Changes
Exceptasspecificallypermittedinthemergeragreement,atnotimeafterthedateofthemergeragreementmaythe Taubman Board (or the Special Committee) take any of the following actions (any such action,a“Boardrecommendationchange”):
• withhold, withdraw, amend or modify, or publicly propose to withhold, withdraw, amend or modify, theTaubman Board recommendation (defined as the “Titanium Board Recommendation” in the mergeragreement)(inthecaseofamendmentsormodifications,inanymanneradversetoSimon);
• adopt, approve or recommend to the shareholders of Taubman, or publicly propose to adopt, approve orrecommendtotheshareholdersofTaubman,anAcquisitionProposal;
• failtoincludetheTaubmanBoardrecommendationinthisproxystatement;or
• makeanyrecommendation in connection with a tender offer or exchange offer for the equity securities ofTaubmanotherthanarecommendationagainstsuchoffer,ormakeanyotherpublicstatementinconnectionwithsuchofferthatdoesnotexpresslyreaffirmtheTaubmanBoardrecommendation;
provided, that, for the avoidance of doubt, none of (i) the determination by the Taubman Board (or the SpecialCommittee)thatanAcquisitionProposalconstitutesaSuperiorProposal;(ii)thetakingofanyactioncontemplatedandpermitted by the “No-Shop” provisions of the merger agreement; (iii) the delivery by Taubman of any noticecontemplatedbythe“No-Shop”provisionsofthemergeragreement;or(iv)any“stop,lookandlisten”communicationbyTaubman,theTaubmanBoardortheSpecialCommitteepursuanttoRule14d-9(f)promulgatedundertheExchangeAct(oranysimilarcommunication)willconstituteaTaubmanBoardrecommendationchange.
In addition, except as specifically permitted in the merger agreement, at no time after the date of the mergeragreementmaytheTaubmanBoard(ortheSpecialCommittee)causeorpermitTaubmanoranyofitssubsidiariestoenterintoanAlternativeAcquisitionAgreement.
Notwithstanding the restrictions described above, and subject to the procedures described in the subsequentparagraph,priortoobtainingtheTaubmanshareholderapproval,theTaubmanBoard(actingupontherecommendationoftheSpecialCommittee)mayeffectaTaubmanBoardrecommendationchangeif(i)TaubmanhasreceivedawrittenAcquisition Proposal that the Taubman Board (acting upon the recommendation of the Special Committee) hasdeterminedingoodfaith(afterconsultationwithitsfinancialadvisorandoutsidelegalcounsel)constitutesaSuperiorProposal;or(ii)inresponsetoanInterveningEvent(asdefinedbelow),asfurtherdescribedbelow.
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The Taubman Board (acting upon the recommendation of the Special Committee) may (x) effect a TaubmanBoard recommendation change with respect to an Acquisition Proposal or (y) authorize Taubman to terminate themergeragreementtoenterintoanAlternativeAcquisitionAgreementwithrespecttoanAcquisitionProposal,ineachcase,if:
• the TaubmanBoard(acting uponthe recommendation of the Special Committee) determines in goodfaith(after consultation with its financial advisor and outside legal counsel) that the failure to do so would beinconsistentwithitsfiduciarydutiespursuanttoapplicablelaw;
• (i)TaubmanhasprovidedpriorwrittennoticetoSimonatleastfourbusinessdaysinadvance(the“NoticePeriod”) to the effect that the Taubman Board (or the Special Committee) has (A) received a SuperiorProposal and (B) intends to (x) effect a Taubman Board recommendation change with respect to suchAcquisition Proposal or (y) authorize Taubman to terminate the merger agreement to enter into anAlternativeAcquisitionAgreementwithrespecttosuchAcquisitionProposalabsentanyrevisiontothetermsand conditions of the merger agreement, which notice will specify the basis for such actions, including asummary of the material terms and conditions of such Acquisition Proposal and a copy of the definitiveproposedtransactionagreementandallancillaryagreementsand,totheextentcontainingtermsmaterialtosuchAcquisitionProposal,relatedschedules(otherthananyconfidential disclosureschedulessolelyoftheperson or persons making such Acquisition Proposal), in each case to be entered into in respect of suchAcquisitionProposal;and(ii)priorto(x)effectingaTaubmanBoardrecommendationchangewithrespecttosuch Acquisition Proposal or (y) authorizing Taubman to terminate the merger agreement to enter into anAlternative Acquisition Agreement with respect to such Acquisition Proposal, Taubman and itsRepresentatives,duringtheNoticePeriod,musthavenegotiatedwithSimonanditsRepresentativesingoodfaith(totheextentthatSimondesirestosonegotiate)tomakesuchadjustmentstothetermsandconditionsofthemergeragreementsothattheTaubmanBoard(ortheSpecialCommittee)wouldnolongerdeterminethatthefailuretomakeaTaubmanBoardrecommendationchangeinresponsetosuchAcquisitionProposalwould be inconsistent with its fiduciary duties pursuant to applicable law; provided, however, that in theeventofanymaterialrevisionstosuchAcquisitionProposal(includinganychangeinprice),Taubmanwillbe required to deliver a new written notice to Simon and to comply with the requirements of the mergeragreementwithrespecttosuchnewwrittennotice(itbeingunderstoodthatthe“NoticePeriod”inrespectofsuchnewwrittennoticewillbethreebusinessdays);and
• intheeventofanyterminationofthemergeragreementinordertocauseorpermitTaubmanoranyofitssubsidiaries to enter into an Alternative Acquisition Agreement with respect to such Acquisition Proposal,Taubmanhaspaid(orcausedtobepaid)theapplicableterminationfee.
TheTaubmanBoard(actingupontherecommendationoftheSpecialCommittee)mayeffectaTaubmanBoardrecommendationchangeinresponsetoanInterveningEventif:
• the TaubmanBoard(acting uponthe recommendation of the Special Committee) determines in goodfaith(after consultation with its financial advisor and outside legal counsel) that the failure to do so would beinconsistentwithitsfiduciarydutiespursuanttoapplicablelaw;
• TaubmanhasprovidedpriorwrittennoticetoSimonatleastfourbusinessdaysinadvancetotheeffectthattheTaubmanBoard(actingupontherecommendationoftheSpecialCommittee)has(A)sodeterminedand(B) resolved to effect a Taubman Board recommendation change pursuant to the applicable terms of themerger agreement, which notice will specify and describe the facts and circumstances relating to theapplicable Intervening Event in reasonable detail and the factual bases for the Taubman Board’sdeterminationthatsucheventsorcircumstancesconstituteanInterveningEvent;and
• prior to effecting such Taubman Board recommendation change, Taubman and its Representatives, duringsuchfourbusinessdayperiod,musthavenegotiatedwithSimonanditsRepresentativesingoodfaith(totheextent that Simon desires to so negotiate) to allow Simon to make such adjustments to the terms andconditionsofthemergeragreementtoobviatetheneedtoeffectaTaubmanBoardrecommendationchangeinresponsetosuchInterveningEvent,andfollowingsuchfourbusinessdayperiod,theTaubmanBoard(ortheSpecialCommittee)willhavedetermined(afterconsultationwithitsfinancialadvisorandoutsidelegalcounsel and taking into account Simon’s proposed revisions to the terms and conditions of the mergeragreement)ingoodfaiththatthefailuretomakeaTaubmanBoardrecommendationchangeinresponsetosuchInterveningEventwouldbeinconsistentwithitsfiduciarydutiespursuanttoapplicablelaw;provided,
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however,thateachtimematerialmodificationstotheInterveningEventoccur,TaubmanwillnotifySimonofsuchmodificationsandthefourbusinessdayperiodsetforthabovewillrecommence(providedthatsuchtimeperiodshallinsteadbethreebusinessdaysfromthedayofsuchnotification).
An“InterveningEvent”meansanymaterialeffect,change,eventoroccurrencearisingafterthedateofthemergeragreementthat(i)wasnotknownorreasonablyforeseeabletotheTaubmanBoardortheSpecialCommitteeasofthedateofthemergeragreement(or,ifknown,theconsequencesofwhichwerenotreasonablyforeseeable)and(ii)doesnotrelatetoanyAcquisitionProposal;provided,thatinnoeventshallthefollowingconstitute,orbetakenintoaccountindeterminingtheexistenceofanInterveningEvent:(A)thefactalonethatTaubmanmeetsorexceedsanyinternalorpublished forecasts or projections for any period, (B) changes in the market price or trading volume of Taubmancommonstock,inandofitself,afterthedateofthemergeragreementor(C)changesinconditionsintheindustriesinwhich Taubman and its subsidiaries conduct business, except to the extent such changes had a materiallydisproportionate effect on Taubman relative to other companies of a similar size operating in industries in whichTaubmananditssubsidiariesconductbusiness.
Financing Covenant; Taubman Cooperation
Theobtainingofanyfinancingisnotaconditiontotheclosing.However,Taubmanhasagreedthat,priortotheclosing,itwill,andwillcauseitssubsidiariesto,useitsreasonablebesteffortstoprovide,atSimon’ssoleexpense,thefollowingcooperationasSimonmayreasonablyrequesttoassistSimoninthearrangementofanythirdpartyfinancingtransactionrelatedtotheTransactions(provided,thatsuchrequestedcooperationdoesnotunreasonablyinterferewiththeongoingoperationsofTaubmanoritssubsidiaries):
• participate in a reasonable number of meetings, drafting sessions, rating agency presentations and duediligencesessionsandassistinpreparationofratingagencyandotherpresentations(providedthatTaubmananditssubsidiariesandtheirrespectiveRepresentativeswillnotberequiredtoparticipateinmorethanoneroadshoworsimilarmeetinginrespectofmarketingthirdpartyfinancing);
• furnishSimonanditsfinancingsourceswithsuchfinancialstatements,financialdataandotherinformationregardingTaubmananditssubsidiariesofthetypethatwouldberequiredbyRegulationS-XandRegulationS-KpromulgatedundertheSecuritiesActof1933,asamended(the“SecuritiesAct”),forapublicofferingofsecurities of Simon if Simon were filing a new registration statement, including updates to any suchinformationasmaybereasonablyrequestedbySimon;
• cause Taubman’s independent accountants to prepare and deliver “comfort letters,” dated the date of eachfinal offering document usedin connection with anysecurities offering bySimon(with appropriate bring-downcomfort letters deliveredoneachclosingdateofanysuchoffering, includinginconnectionwiththeexercise of an option to purchase additional securities of Simon), subject to and in compliance withprofessionalstandards;
• providecustomaryrepresentationletterstoTaubman’sindependentaccountantsinconnectionwithdeliveryofanysuch“comfortletters;”
• cause Taubman’s independent accountants to provide consent to use of their audit reports in materialsrelatingtosuchfinancinginrespectoftheTransactions,includingSECfilingsandofferingmemorandathatinclude or incorporate Simon’s consolidated financial information and their reports thereon in accordancewithnormalcustomarypractice;and
• provide customary documentation and other information that financing sources reasonably determine isnecessary under applicable “know your customer” and anti-money laundering rules and regulations to theextentrequestedatleasttenbusinessdayspriortotheclosing;
provided,that(i)neitherTaubmannortheTaubmanoperatingpartnershiporanyoftheirrespectivesubsidiarieswillberequired to pay any fees prior to the closing (other than reasonable out of pocket expenses promptly reimbursed bySimonon demand) or incur any other liability in connection with any financing until the occurrence of the closing;(ii)neitherTaubmannortheTaubmanoperatingpartnershipnoranyoftheirrespectivesubsidiarieswillberequiredtoexecuteordeliveranydocumentsortakeanyactionrelatingtoanyfinancingthatisnotcontingentupontheclosing;(iii)noRepresentativeofTaubmanortheTaubmanoperatingpartnershiporanyoftheirrespectivesubsidiarieswillberequired to take any action that would reasonably be expected to result in or cause any personal liability in theirpersonalcapacityonthepartofanyRepresentativethatisanindividualor,totheextentnotsubject
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to reimbursement or indemnification by Simon under the merger agreement, any other liability on the part of anyRepresentative; (iv) no action will be required to the extent such action could reasonably be expected to cause anyrepresentationorwarrantyorcovenantcontainedinthemergeragreementtobebreached;(v)noactionwillberequiredto the extent that it could reasonably be expected to conflict with the organizational documents of Taubman or theTaubman operating partnership or any of their respective subsidiaries or any applicable law or could reasonably beexpectedtoresult inaviolationorbreachof, oradefault (withorwithoutnotice, lapseoftime,orboth)under, anycontracttowhichTaubmanortheTaubmanoperatingpartnershiporanyoftheirrespectivesubsidiariesisapartyorisboundby;(vi)wouldrequireTaubmanortheTaubmanoperatingpartnershiporanyoftheirrespectivesubsidiariesoranyof their Representatives to provideaccess toor discloseinformationthat Taubmandetermines wouldjeopardizeanyattorney-clientorotherlegalprivilegeofTaubmanortheTaubmanoperatingpartnershiporanyoftheirrespectivesubsidiaries; and(vii)noactionwillberequiredtotheextentsuchactioncouldreasonablybeexpectedtocauseanyconditiontotheclosingtofailtobesatisfiedorotherwisecauseanybreachofthemergeragreement.
Simon has agreed that it will, and will cause its affiliates to, promptly, upon request by Taubman, reimburseTaubmananditssubsidiariesforallout-of-pocketcostsandexpenses(includingattorneys’fees)incurredinconnectionwith the financing cooperation provisions of the merger agreement. Simon has agreed that neither Taubman, theTaubmanoperatingpartnership, noranyoftheir respectiveRepresentatives will haveanyresponsibility for, or incuranyliability to anypersonunder or in connection with, the arrangement of anyfinancing that Simonmayobtain orseekinconnectionwiththeTransactions(includinganyequityfinancing),andSimonhasagreedtoindemnifyandholdharmlessTaubman,itssubsidiariesandtheirrespectiveRepresentativesfromandagainstanyandalllosses,damages,claims,costsorexpensessufferedorincurredbytheminconnectionwiththearrangementofanyfinancingthatSimonmay obtain or seek to obtain in connection with the Transactions (including any equity financing), any cooperationcontemplated by the financing cooperation provision of the merger agreement, and any information utilized inconnection therewith; provided, however, that the foregoing indemnity will not apply to any liabilities to the extentresultingfrom(i)awillfulandmaterialbreachofanyrepresentation,warrantyorcovenantoragreementofTaubmanunder the merger agreement, (ii) gross negligence or (iii) fraud, in eachcase as determined bya court of competentjurisdictioninafinal,non-appealablejudgement.
Certain Consents; Treatment of Existing Debt
Themergeragreementprovidesthat,promptlyafterthedateofthemergeragreement,exceptasmayotherwisebeagreedtobetweenSimonandTaubman,Taubmanwill,andwillcauseitssubsidiariesto,usereasonablebesteffortstoobtaincertainconsentsandwaiverswithrespecttotheTransactionsthatmayberequiredfromcertainlendersunderloandocumentsofTaubmanoranyofitssubsidiariesandfromcertainlessorsundergroundleasesofTaubmanoritssubsidiaries or joint venture partners under joint venture or partnership documents of Taubman or any of itssubsidiaries.SimonwillcooperateandassistTaubmaninconnectionwithsolicitingandobtaininganysuchconsents.Allout-of-pocketconsent/assumptionfeesandexpenses,includingout-of-pocketlegalfeesforjointventurepartners,lessors, lenders and/or servicers (to the extent such fees and expenses are payable pursuant to the applicable jointventure, ground lease or loan document), incurred in connection with seeking such consents, shall be borne by theTaubmanoperatingpartnershiporitssubsidiaries.Taubmanisauthorizedforitselfandonbehalfofitssubsidiariestoenterintoamendmentsormodificationsoftheapplicableloan,groundleaseorjointventuredocumentsasTaubmandeems necessary to obtain such consents, subject to certain limitations and restrictions set forth in the mergeragreement.
In the event anysuchconsent under a loandocument is not obtained prior to May19, 2020, TaubmanandtheTaubmanoperatingpartnershipwill,andwillcausetheirsubsidiariesto,usereasonablebesteffortstoattempttosecureabindingcommitmentorothersimilardocumentationreasonablyacceptabletoSimonthatwouldallowTaubmanoritssubsidiariesto,attheclosing,prepay,ordefeasetheapplicablefinancingandreplacesuchfinancingoncommerciallyreasonable,marketterms,whichwillbereasonablyacceptabletoSimon.IntheeventthatanysuchloanconsentisnotobtainedandTaubmanor its subsidiaries havenot prepaid or defeased the applicable financing for whichsuchloanconsent was required to be obtained (or obtained a binding commitment or other similar documentation reasonablyacceptabletoSimonfromalendertoeffectsuchprepaymentordefeasanceontheclosingdate)byJune18,2020orbythe Taubman special meeting (whichever is earlier), Simon will have the right, but not the obligation, to providereplacement financing to the applicable subsidiary of Taubman on commercially reasonable market economic termswithrespecttotheloanforwhichtheconsenthasnotbeenobtainedandwhichhasnototherwisebeenrefinancedbyTaubmanoritssubsidiaries(orforwhichsuchabindingcommitmentorother
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documentationhasnotbeenobtained).AnyreplacementfinancingprovidedbySimonshallbeinanamountsufficientfor the subsidiary of Taubman to prepay or defease such original loan and shall be on substantially similar loandocumentsaswereexecutedinconnectionwiththeborrowingoftheoriginalloan(includingmortgages,indemnities,guaranties, pledges, other collateral agreements, opinions and other customary loan deliverables and diligencematerials); provided, however, that any replacement financing made by Simon or its subsidiaries with respect to anunsecured loanmaybe madeona securedbasis, subject to the next sentence. Taubmanandthe Taubmanoperatingpartnershipwill,andwillcausetheirsubsidiariesto,reasonablycooperatewithSimontoenableSimontoprovideanysuchapplicablereplacementfinancingonasecuredbasis,includingbyfacilitatingthecreationandperfectionofliens(includingmortgagesandequitypledges)requiredbySimon;provided,however,thatnotwithstandinganythinghereintothecontrary,Taubmananditssubsidiarieswillnotberequiredtoagreetoanysecuredloanorfacilitateanyliensthatwouldviolatethetermsofanyindebtedness(otherthanindebtednessthatisbeingrepaid)orjointventureagreementtowhichTaubmanoritssubsidiariesareaparty.
Regulatory Matters
Subjecttothenextparagraph,SimonandTaubmanhavegenerallyagreedtousereasonablebesteffortstotakeallactions,andtodoallthingsnecessary,properoradvisable,tocausetheconditionstotheclosingoftheTransactionstobesatisfiedandtoconsummatetheTransactionspriortotheenddate,includingobtainingallapprovalsandconsentsfromanygovernmentalentityorthirdpartynecessary,properoradvisabletoconsummatetheTransactions(however,neitherpartywillberequiredtomakeorcommittomakeanyconcessionorpaymentto,orincuranyliabilityto,anynon-governmentalentitytoobtainanysuchconsent).
Each of SimonandTaubmanhas agreed to defend any legal action commenced by any governmental entity inconnection with the Transactions. Simon has agreed to take, commit to, agree to and effect (i) the sale, divestiture,lease or other disposition of any assets, businesses or properties of Simon or Taubman or any of their respectivesubsidiaries, (ii) any other action, commitment, condition, contingency, contribution, obligation, restriction,requirementortermthataftertheclosingwouldlimiteitherofSimon’sorTaubman’sfreedomofactionwithrespectto,oritsabilitytoretain,anyofSimon’sorTaubman’sortheirrespectivesubsidiaries’assets,businessesorpropertiesortheirintereststherein,ineachcasetotheextentnecessarytoresolveobjections,ifany,thatagovernmentalentityasserts(orthreatenstoassert)underanyapplicablelawwithrespecttotheTransactions,andtoavoidoreliminateeachand every impediment under any applicable law asserted by any such governmental entity with respect to theTransactions,ineachcasesoastoenabletheclosingtooccurpriortotheenddateand(iii)anyholdseparateordersasarenecessaryinordertoavoid,oreffectthedissolutionof,anytemporaryrestrainingorderorpreliminaryinjunctionpreventingtheclosingoftheTransactions(suchactionsdescribedinclauses(i),(ii)and(iii),collectively,“RegulatoryConcessions”). However, notwithstanding the foregoing, noneof the Simonparties will be permitted to, andneitherTaubmannortheTaubmanoperatingpartnershipwillberequiredto(andneitherTaubmannortheTaubmanoperatingpartnership shall), in each case without the prior written consent of the Taubman family representative, commit to,agreetoormakeanyRegulatoryConcessionsthatwouldresultinaTaubmanBurdensomeCondition(definedbelow).Further,notwithstandingtheforegoing,(x)SimonanditssubsidiarieswillnotberequiredtocommittoormakeanyRegulatoryConcessionsthatwouldresultinaSimonBurdensomeCondition(definedbelow)orthatisnotconditionedon the consummation of the Transactions, (y) neither Taubman nor the Taubman operating partnership will bepermitted to (and neither Taubmannor the Taubmanoperating partnership shall) offer to a governmental entity anyRegulatory Concession without the prior written consent of Simon and (z) in connection with any RegulatoryConcession,SimonwillactingoodfaithandtakeintoaccountthebestinterestsofTaubmananditssubsidiariesandofSimonanditssubsidiaries.“TaubmanBurdensomeCondition”meansthesale,divestiture,leaseorotherdispositionof,orholdseparateorderwithrespectto,specifiedproperties(orintereststherein)ofTaubman,and“SimonBurdensomeCondition”meansthesale, divestiture, leaseorotherdispositionof, or holdseparateorderwithrespect to, specifiedproperties(orintereststherein)ofSimonorTaubman.
Notwithstandinganythingtothecontraryherein(but subject tothepreviousparagraph), Simonshall, followingconsultationwithTaubmanandtheTaubmanfamilyrepresentativeandactingingoodfaith(andtakingintoaccountthebestinterestsofTaubmananditssubsidiariesandofSimonanditssubsidiaries),(x)direct,deviseandimplementthestrategyforobtaininganynecessaryapprovalof,orforrespondingtoanyrequestfrom,orinquiryorinvestigationby (including directing the timing, nature and substance of all such responses), any governmental entity that hasauthority to enforce any regulatory law, (y) have the right to lead all meetings and communications (including anynegotiations)with,anygovernmentalentitythathasauthoritytoenforceanyregulatorylawand(z)controlthedefenseandsettlementofanyinquiry,investigationoractionbroughtbyorbeforeanygovernmentalentitythathasauthoritytoenforceanyregulatorylaw.
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Termination
Taubman and Simon may terminate the merger agreement at any time before the effective time of theREITMergerunderthefollowingcircumstances:
• bymutualwrittenconsentofTaubmanandSimon;
• if theTransactionshavenotbeencompletedonorbeforetheenddate(however, therighttoterminatethemerger agreement under this provision will not be available to any party whose failure to fulfill anyobligation under the merger agreement (which failure constitutes a breach by such party of the mergeragreement) has been the primary cause of, or primarily resulted in, the failure of the Transactions to beconsummatedonorbeforesuchdate);
• ifanygovernmentalentityofcompetentauthorityissuesafinal,non-appealableorderorenactsanapplicablelaw that prohibits, makes illegal, enjoins, or otherwise restricts or prevents the consummation of theTransactions(however,therighttoterminatethemergeragreementunderthisprovisionwillnotbeavailabletoanypartywhosefailuretofulfill anyobligationunderthemergeragreement(whichfailureconstitutesabreachbysuchpartyofthemergeragreement) hasbeentheprimarycauseof, orprimarilyresultedin, thefailureoftheTransactionstobeconsummatedonorbeforesuchdate);or
• if the Taubman shareholders have not approved and adopted the merger agreement at a duly convenedmeetingofTaubmanshareholders.
Inaddition,Taubmanmayterminatethemergeragreementunderthefollowingcircumstances:
• at any time before the effective time of the REIT Merger, if the Simon parties have breached anyrepresentation,warrantyorcovenantcontainedinthemergeragreement,orifanyrepresentationorwarrantyoftheSimonpartieshasbecomeuntrue,ineachcase,suchthat,ifsuchbreachorfailuretobetrueoccursorcontinues on the closing date, the conditions to closing relating to the accuracy of the Simon parties’representationsandwarrantiesortheperformancebytheSimonpartiesoftheircovenantsunderthemergeragreement would not be satisfied as of the closing date; however, Taubmanmaynot terminate the mergeragreementunderthisprovisionunlessanysuchbreachorfailuretobetrue(x)isnotcapableofbeingcuredinamannersufficienttoallowsatisfactionofsuchconditionstoclosingpriortotheenddate,or(y)hasnotbeen cured prior to the earlier of 45 days after written notice by Taubman to Simon and the end date(however, Taubman may not terminate the merger agreement if Taubman or the Taubman operatingpartnershipistheninbreachofanyrepresentation,warrantyorcovenantcontainedinthemergeragreement,orifanyrepresentationorwarrantyofTaubmanortheTaubmanoperatingpartnershiphasbecomeuntrue,ineachcase,suchthat,ifsuchbreachorfailuretobetrueoccursorcontinuesontheclosingdate,theconditionstoclosingrelatingtotheaccuracyofTaubman’sortheTaubmanoperatingpartnership’srepresentationsandwarranties or theperformancebyTaubmanortheTaubmanoperatingpartnershipof their covenants underthemergeragreementwouldnotbesatisfiedasoftheclosingdate);or
• priortoapprovalandadoptionofthemergeragreementbytheTaubmanshareholders,inordertoenterintoadefinitivewrittenagreementprovidingforaSuperiorProposalincompliancewiththe“No-Shop”provisionsofthemergeragreement.
Inaddition,Simonmayterminatethemergeragreementunderthefollowingcircumstances:
• atanytimebeforetheeffectivetimeoftheREITMerger,ifTaubmanortheTaubmanoperatingpartnershiphas breached any representation, warranty or covenant contained in the merger agreement (other than the“No-Shop” provisions), or if any representation or warranty of Taubman or the Taubman operatingpartnershiphasbecomeuntrue,ineachcase,suchthat,ifsuchbreachorfailuretobetrueoccursorcontinuesontheclosingdate,theconditionstoclosingrelatingtotheaccuracyofTaubman’sortheTaubmanoperatingpartnership’s representations and warranties or the performance by Taubman or the Taubman operatingpartnership of their covenants under the merger agreement would not be satisfied as of the closing date;however, Simon may not terminate the merger agreement under this provision unless any such breach orfailure to be true (x) is not capable of being cured in a manner sufficient to allow satisfaction of suchconditions to closing prior to the end date, or (y) has not been cured prior to the earlier of 45 days afterwritten notice by Simon to Taubman and the end date (however, Simon may not terminate the mergeragreementif theSimonpartiesaretheninbreachofanyrepresentation, warrantyorcovenantcontainedinthemergeragreement,orifanyrepresentationorwarrantyoftheSimonpartieshasbecomeuntrue,ineach
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case,suchthat,ifsuchbreachorfailuretobetrueoccursorcontinuesontheclosingdate,theconditionstoclosingrelatingtotheaccuracyoftheSimonparties’representationsandwarrantiesortheperformancebythe Simon parties of their covenants under the merger agreement would not be satisfied as of the closingdate);or
• priortoapprovalandadoptionofthemergeragreementbytheTaubmanshareholders,ifaTaubmanBoardrecommendation change has occurred or if Taubmanhas willfully and materially breached the “No-Shop”provisionsofthemergeragreement.
TerminationofthemergeragreementpriortotheeffectivetimeoftheREITMergershallnotrequiretheapprovaloftheshareholdersofeitherSimonorTaubman.Insomecases,terminationofthemergeragreementmayrequiretheTaubmanoperatingpartnershiptopayaterminationfeetoSimonasdescribedbelowunder“—TerminationFees.”
Termination Fees
ThemergeragreementrequirestheTaubmanoperatingpartnershiptopayaterminationfeetoSimonineachofthefollowingcircumstances:
• if the merger agreement is terminated by Taubman in order to enter into a definitive written agreementprovidingforaSuperiorProposal;
• if the merger agreement is terminated by Simon because a Taubman Board recommendation change hasoccurred or Taubman has willfully and materially breached the “No-Shop” provisions of the mergeragreement;or
• if(i)anAcquisitionProposalhasbeenmadetoTaubmanandnotwithdrawnorhasbeenmadedirectlytotheshareholdersofTaubmangenerallyandnotwithdrawn,(ii)thereafterthemergeragreementisterminatedby(x)eitherTaubmanorSimonbecausetheREITMergerhasnotbeenconsummatedonorbeforetheenddate,(y)eitherTaubmanorSimonbecausetheTaubmanshareholdershavenotapprovedandadoptedthemergeragreement at a duly convened meeting of Taubman shareholders or (z) Simon because Taubman hasbreached certain covenants, agreements or other obligations contained in the merger agreement, and(iii) within twelve months of termination such Acquisition Transaction is consummated by Taubman orTaubmanentersintoadefinitiveagreementprovidingforanAcquisitionTransactionandsuchAcquisitionTransactionisthereafterconsummatedbyTaubman.Forpurposesofthisterminationright,referencestothe“15%”inthedefinitionoftheterm“AcquisitionTransaction”willbedeemedtobereferencesto“50%.”
Theterminationfeewillbeanamountequalto$111,851,783,whichamountisequaltoapproximately3.0%ofthevalue of Taubman’s equity to beacquired bySimonin the Transactions; except in the event the termination feebecomespayablesolelyinconnectionwith(i) aterminationbyTaubmanprior totheReducedTerminationFeeEndDate(definedbelow)toenterintoadefinitivewrittenagreementwithanExcludedParty(asdescribedin“—The“No-Shop” Period” above) providing for a Superior Proposal or (ii) a termination by Simon in the event of a TaubmanBoard recommendation change occurring prior to the Reduced Termination Fee End Date that is expressly relatedsolelytoanAcquisitionProposalmadebyanExcludedParty,thenineithercasetheterminationfeewillbeanamountequalto$46,604,909,whichamountisequaltoapproximately1.25%ofthevalueofTaubman’sequitytobeacquiredbySimonintheTransactions.
Forpurposesofthisproxystatementandthemergeragreement,“ReducedTerminationFeeEndDate”meansthelaterof(i)theNo-ShopPeriodStartDateand(ii)intheeventthatanynoticeperiodproperlycommencedpursuanttothe“No-Shop”provisionsof themerger agreement beginsonorprior totheNo-ShopPeriodStart Date, solelywithrespect to a termination related to the Excluded Party who submitted a Superior Proposal that initiated such noticeperiod,11:59p.m.,NewYorkCitytime,onthe10thbusinessdayfollowingtheexpirationofsuchnoticeperiod.
If Taubman fails to pay the termination fee when due, Taubman will also be required to pay any costs andexpenses (including attorneys’ fees) incurred by Simonin connection with any legal action taken in order to obtainsuchpayment,togetherwithinterestontheamountdue.
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Conduct of Business Pending the Transactions
Conduct of Business of Taubman
Under the merger agreement, Taubman has undertaken certain covenants that place restrictions on it and itssubsidiariesfromthedateofthemergeragreementuntil theearlierofthevalidterminationofthemergeragreementandtheeffectivetimeoftheREITMerger,unlessSimongivesitspriorwrittenconsent(whichcannotbeunreasonablywithheld, conditioned or delayed), as set forth onthe disclosure letter delivered byTaubmanin connection with themerger agreement, as otherwise expressly required or contemplated by the merger agreement, or as prohibited orrequired by applicable law. In general, Taubman has agreed to, and has agreed to cause its subsidiaries to, usecommercially reasonable efforts to (i) conduct its business in the ordinary course of business consistent with pastpracticesand,during2020,inaccordancewithitsoperationalbudgetdeliveredtoSimonpriortotheexecutionofthemerger agreement (other than immaterial deviations therefrom) and (ii) preserve intact its goodwill, its businessorganization and material business relationships and keep available the services of its current officers and keyemployees.
In addition, without limiting the requirements described above, subject to certain exceptions set forth in themerger agreement and the disclosure letter delivered by Taubman in connection with the merger agreement, unlessSimon consents in writing (which consent cannot be unreasonably withheld, conditioned or delayed), Taubman hasagreedtocertainrestrictionslimitingitsanditssubsidiaries’abilityto,amongotherthings:
• amendits certificate of incorporation or by-laws, or amendin anymanner adverse to Simonor the Simonoperating partnership the Taubman OP agreement or the comparable organizational documents of anysubsidiaryofTaubman;
• issue any shares of its capital stock or other equity or voting interests, or redeem, purchase or otherwiseacquireanysharesofitscapitalstockorotherequityorvotinginterests;
• declareorpayanydividendonormakeanyotherdistributionwithrespecttoitscapitalstockorotherequitysecurities, except for (i) thedeclarationandpaymentbyTaubmanofquarterly dividends, withdeclaration,recordandpaymentdatesconsistentwithpastpractice,ataratenottoexceedaquarterlyrateof$0.675pershareofTaubmancommonstock(aswellasanyprorateddividendsfortheportionofanyquarterinwhichthe closing occurs, which may be declared prior to the closing and have a record and/or payment dateimmediately prior to closing), (ii) the declaration and payment by Taubman of dividends pursuant to thetermsofTaubman’sSeriesJandSeriesKPreferredStock,(iii)thedeclarationandpaymentbytheTaubmanoperating partnership of monthly distributions pursuant to the terms of the Taubman OP agreement, withdeclaration,recordandpaymentdatesconsistentwithpastpractice,ataratenottoexceedamonthlyrateof$0.225perTaubmanOPunit(aswellasanyprorateddistributionsfortheportionofanymonthinwhichtheclosing occurs, which may be paid immediately prior to closing), and (iv) the declaration and payment ofdividendsorotherdistributionstoTaubmanortheTaubmanoperatingpartnershipbyanydirectorindirectsubsidiaryofTaubman;
• prepay, incur or materially amend the terms of any indebtedness, or make loans to, material capitalcontributionsto,ormaterialinvestmentsinotherpersons;
• sell, pledge, lease, license, mortgage, guarantee, sell and leaseback, subject to any lien (other than certainpermittedliens) or otherwisedisposeof anyof Taubman’s real properties or interests therein, or anyothermaterialpropertiesormaterialassets;
• makeorauthorizecapitalexpendituresinanycalendaryearthatexceedtheamountsbudgetedinTaubman’scurrentcapitalexpendituresplanbymorethan5%;
• makeanymaterialchangeinitsmethodsorprinciplesofaccounting;
• assign,transfer,lease,cancel,failtoreneworfailtoextendmaterialpermits;
• settleorcompromiseanyclaimoractioninexcessofspecifiedamounts;
• dispose of any material intellectual property owned by or exclusively licensed to Taubman or any of itssubsidiaries;
• enterintooramendcertaincontracts;
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• adoptaplanofmerger,liquidation,dissolution,restructuringorotherreorganizationofTaubmanoritsnon-whollyownedsubsidiaries;
• ceasetomaintainitsqualificationasaREIT;
• enter into any tax protection agreement (excluding an amended tax protection agreement); make, change,rescindorrevokeanymaterialtaxelection;changeamaterialmethodoftaxaccounting;amendanymaterialtax return; or settle or compromise any material tax liability, audit, claimor assessment; or enter into anyclosingagreementrelatedtotaxes,exceptineachcasetotheextentsuchactionisrequiredbyapplicablelawornecessary(A)topreservethestatusofTaubmanasaREITor(B)toqualifyorpreservethestatusofanysubsidiaryofTaubmanasapartnershipordisregardedentityforfederalincometaxpurposesorasaREIT,aQRSoraTRSundertheapplicableprovisionsofSection856oftheCode;
• increasetheamount,rateortermsofcompensationofanymemberofTaubman’soperatingcommitteeoranyexecutive officer; grant any new equity awards; terminate, promote or hire any member of Taubman’soperatingcommittee;acceleratethevestingortimeorpaymentunderanyTaubmancompensationorbenefitplan; or terminate, materially amend or materially increase the benefits provided under any TaubmancompensationorbenefitplanorenterintooradoptanyTaubmancompensationorbenefitplan;
• enterintoacollectivebargainingagreement;
• adoptorimplementanystockholderrightplanorsimilararrangementapplicabletothemergeragreementortheTransactions;
• enterinto,amendorterminateanycontractswithrelatedparties;
• take any action under the Taubman or the Taubman operating partnership organizational documents orotherwisethatwouldgiverisetodissenters’,appraisalorsimilarrightstotheholdersofTaubmansecuritieswithrespecttotheTransactions;
• acquireanycorporationorotherentity,realproperty,personalpropertyormaterialassetsinexcessofcertainlimitations;or
• authorizeoragreetotakeanyoftheforegoingactions.
Conduct of Business of Simon
Inaddition,underthemergeragreement,Simonhasagreedthat,fromthedateofthemergeragreementuntiltheearlierofthevalidterminationofthemergeragreementandtheeffectivetimeoftheREITMerger,unlessTaubmangivesitspriorwrittenconsent(whichcannotbeunreasonablywithheld,conditionedordelayed),asotherwiseexpresslyrequiredorcontemplatedbythemergeragreement,orasprohibitedorrequiredbyapplicablelaw,itwillnot,andwillnotpermittheSimonoperatingpartnershipto:
• amend the Simon OP agreement solely to the extent such amendment would disproportionately andmateriallyadverselyimpacttheminoritypartnerswhoelecttoreceivenewSimonOPunitsinthePartnershipMergerascomparedtootherlimitedpartnersoftheSimonoperatingpartnership;or
• ceasetomaintainitsqualificationasaREIT.
Litigation Related to the Transactions
The merger agreement requires each party to promptly notify the other party and keep such party reasonablyinformedwithrespecttothestatusofanylitigationinvolvingoraffectingthemergeragreement, theTransactionsoranyothertransactioncontemplatedbythemergeragreementthatiscommencedorthreatenedagainstsuchpartyoranyofitssubsidiariesoraffiliates(oranyoftheirrespectivedirectorsorexecutiveofficers).
SimonwillkeepTaubmaninformedonareasonablypromptbasisregardinganysuchlitigationagainstSimonoranyof its subsidiaries or affiliates (or anyof their respective directors or executive officers). Simonwill control thedefense, settlementorprosecutionofanysuchlitigation, andwill consult withTaubmanwithrespecttothedefense,settlementandprosecutionofanysuchlitigationandwillconsideringoodfaithTaubman’sadvicewithrespecttosuchlitigation.
Taubman will give Simon the opportunity to participate in the defense, settlement or prosecution of any suchlitigationagainstTaubmanoranyofitssubsidiariesoraffiliates(oranyoftheirrespectivedirectorsorexecutive
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officers), and will consult Simon with respect to the defense, settlement and prosecution of any such litigation.Taubmanmaynotcompromise,settleorcometoanarrangementregarding,oragreetocompromise,settleorcometoan arrangement regarding, any such litigation without Simon’s written consent, which may not be unreasonablywithheld, conditioned or delayed; provided that, prior to approval of the Transactions by Taubman shareholders,Simon’s consent will not be required for any settlement of such litigation that relates to an Acquisition Proposal orAcquisitionTransactiontotheextentsuchsettlementdoesnotprovideforthepaymentoffundsbyTaubmanorpurporttomodifythemergeragreementortherightsoftheSimonpartiesthereunder.
Public Announcements
Subjecttocertainexceptions,SimonandTaubmanhaveagreedtoconsultwitheachotherbeforeissuing,andgiveeachotherareasonableopportunitytoreviewandcommentupon,anypressrelease,submissionorannouncement,orotherpublicstatementswithrespecttotheTransactions,andeachofSimonandTaubmanhasagreednottoissueanypressrelease,submissionorannouncement,ormakeanysuchpublicstatementpriortosuchconsultation.
Additional Covenants
Themergeragreementalsocontainsadditionalagreementsrelatingto,amongotherthings,accesstoinformation,Section 16matters, stock exchangelisting, redemption of the Taubmanoperating partnership preferred interests andTaubman Series J and Series K Preferred Stock, tax matters, the Taubman operating partnership approval and anti-takeoverlaws.
Indemnification; Directors’ and Officers’ Insurance
The merger agreement provides that Surviving TCO and the Joint Venture and its subsidiaries will(andSimonwillcausesuchentitiesto)honorandfulfilltheobligationsofTaubmananditssubsidiariespursuanttoanyindemnificationorothersimilaragreementsofTaubman,theTaubmanoperatingpartnershiporanyoftheirrespectivesubsidiaries,ineachcaseasineffectonthedateofthemergeragreement.Themergeragreementalsoprovidesthat,fromandaftertheeffectivetimeoftheREITMergerandendingonthesixthanniversaryoftheeffectivetimeoftheREITMerger,tothefullestextentpermittedbyapplicablelaw(includingtothefullestextentauthorizedorpermittedby any amendments to or replacements of the MBCA, DGCL, DLLCA or DRULPA adopted after the date of themerger agreement that increase the amount to which a corporation, limited liability company or limited partnershipmayindemnifyitsofficersanddirectors)eachofSimonandtheJointVentureagreesthattheJointVenturewill(andSimon will cause such entity to) indemnify and hold harmless each individual who was or is as of the date of themergeragreement,orwhobecomespriortotheeffectivetimeoftheREITMerger,adirector,officeroremployeeofTaubman, the Taubman operating partnership or any of their respective subsidiaries or who is as of the date of themergeragreement,orwhothereaftercommencespriortotheeffectivetimeoftheREITMerger,servingattherequestof Taubman, the Taubman operating partnership or any of their respective subsidiaries as a director, officer oremployeeofanotherentity,againstalllossesincurredinconnectionwithanyactualorthreatenedlegalactionarisingoutoforpertainingtothefactthatsuchpersonisorwasanofficer,directororemployeeofTaubman,theTaubmanoperating partnership or any of their respective subsidiaries or is or was serving at the request of Taubman, theTaubman operating partnership or any of their respective subsidiaries as a director, officer or employee of anotherentity,whetherassertedorclaimedpriorto,atoraftertheeffectivetimeoftheREITMerger.Themergeragreementprovides that, in the event of any such legal action, each such person will be entitled to advancement of expensesincurredinthedefenseofanysuchlegalactionfromtheJointVenturewithintenbusinessdaysofreceiptbytheJointVenturefromsuchpersonofarequesttherefor;providedthatanypersontowhomexpensesareadvancedprovidesanundertakingtorepaysuchadvancesifitisultimatelydeterminedbyfinaladjudicationthatsuchpersonisnotentitledtoindemnification.ThemergeragreementalsoprovidesthatSimon,theSimonoperatingpartnership,SurvivingTCO,theSurviving Taubman operating partnership, the Joint Venture and their respective subsidiaries shall cooperate in thedefenseofanysuchmatter.
Themergeragreementalsoprovidesthat,forsixyearsfollowingtheeffectivetimeoftheREITMerger,SurvivingTCO and the Joint Venture will maintain in effect the provisions in the limited liability company agreement ofSurvivingTCOandtheJVagreementandintheirsubsidiaries’respectiveorganizationaldocuments,totheextenttheyprovideforindemnification,advancementandreimbursementofexpensesandexculpationofeachindemnifiedpartydescribedabove,withrespecttofactsorcircumstancesoccurringatorpriortotheeffectivetimeoftheREITMerger,onthesame(ormorefavorabletosuchindemnifiedparties)basisassetforthinTaubman’scertificateof
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incorporation or by-laws, the Taubman OP agreement or their respective subsidiaries’ organizational documents ineffect on the date of the merger agreement, to the fullest extent permitted from time to time under applicable law,whichprovisionsmaynotbeamendedexceptasrequiredbyapplicablelaworexcepttomakechangespermittedbyapplicablelawthatwouldenlargethescopeoftheindemnifiedparties’indemnificationrightsthereunder.
At or prior to the closing date, Taubman and/or the Taubman operating partnership will purchase a “tail”directors’ and officers’ liability insurance policy and fiduciary liability insurance policy for Taubman, the Taubmanoperatingpartnershipandtheir respectivecurrentandformerdirectorsandofficerswhoarecurrentlycoveredbythedirectors’ and officers’ and fiduciary liability insurance coverage currently maintained by Taubman and/or theTaubmanoperatingpartnership,suchtailtoprovidecoverageforaperiodofsixyearsfromandaftertheeffectivetimeoftheREITMergerinanamountnotlessthantheexistingcoverageandtohaveothertermsnotlessfavorabletotheinsuredpersonsthanthedirectors’andofficers’liabilityinsuranceandfiduciaryliabilityinsurancecoveragecurrentlymaintainedbyTaubmanortheTaubmanoperatingpartnershipwithrespecttoclaimsarisingfromfactsoreventsthatoccurredonorbeforetheeffectivetimeoftheREITMerger,solongastheaggregatecostforeachyearofsuch“tail”policy does not exceed 300% of the aggregate annual premium most recently paid by Taubman or the Taubmanoperatingpartnershippriortothedateofthemergeragreement.Totheextentsucha“tail”policyisnotobtained,foraperiod of six years from and after the effective time of the REIT Merger, Surviving TCO, the Surviving Taubmanoperating partnership and the Joint Venture each will (and Simon will cause such entities to) either cause to bemaintainedineffectthecurrentpoliciesofdirectors’andofficers’liabilityinsuranceandfiduciaryliabilityinsurancemaintained by Taubman, the Taubman operating partnership or their respective subsidiaries or provide substitutepoliciesforTaubman,theTaubmanoperatingpartnershipandtheirrespectivecurrentandformerdirectorsandofficerswho are currently covered by the directors’ and officers’ and fiduciary liability insurance coverage currentlymaintainedbyTaubmanortheTaubmanoperatingpartnershipineithercase,ofnotlessthantheexistingcoverageandhavingothertermsnotlessfavorabletotheinsuredpersonsintheaggregatethanthedirectors’andofficers’liabilityinsurance and fiduciary liability insurance coverage currently maintained by Taubman or the Taubman operatingpartnershipwithrespecttoclaimsarisingfromfactsoreventsthatoccurredonorbeforetheeffectivetimeoftheREITMerger, except that in no event shall Surviving TCO, the Surviving Taubman operating partnership or the JointVentureberequiredtopaywithrespect tosuchinsurancepolicies inrespect of anyonepolicyyearmorethansuchmaximum amount, and if Surviving TCO, the Surviving Taubman operating partnership and the Joint Venture areunable to (and Simon is unable to cause such entities to) obtain such insurance it will obtain as much comparableinsuranceaspossiblefortheyearswithinsuchsix-yearperiodforanannualpremiumequaltosuchmaximumamount,inrespectofeachpolicyyearwithinsuchperiod.
Representations and Warranties
ThemergeragreementcontainsrepresentationsandwarrantiesbyTaubman,theTaubmanoperatingpartnershipandtheSimonpartiesthataresubject,insomecases,tospecifiedexceptionsandqualificationscontainedinthemergeragreementorinthedisclosurelettersdeliveredbySimonandTaubmaninconnectionwiththemergeragreement.
Theserepresentationsandwarrantiesrelateto,amongotherthings:
• corporateorganizationandsimilarcorporatematters;
• approvalandauthorizationofthemergeragreementandtheTransactions;
• capitalstructure;
• required consents and approvals of governmental entities in connection with the Transactions and non-contravention;
• informationsuppliedinconnectionwiththisproxystatement;
• taxes;and
• brokersfeesandexpenses.
AdditionalrepresentationsandwarrantiesmadeonlybyTaubmanandtheTaubmanoperatingpartnershiprelateto,amongotherthings:
• documentsfiledwiththeSECandfinancialstatementsincludedinthosedocuments;
• absenceofcertainchangessinceSeptember30,2019;
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• absenceofundisclosedliabilities;
• litigation;
• compliancewithapplicablelawsandpermits;
• materialcontracts;
• labormatters;
• benefitsmattersandERISAcompliance;
• realandpersonalproperties;
• intellectualproperty;
• environmentalmatters;
• opinionoftheSpecialCommittee’sfinancialadvisor;
• investmentcompanystatus;
• insurancematters;
• relatedpartyagreements;and
• mortgages.
Additional representations and warranties made only by the Simon parties relate to, among other things,ownership of Merger Sub 1 and Merger Sub 2, financing for the Transactions and ownership of Taubman commonstock,andtheabsenceofshareholderormanagementarrangements.
The representations and warranties in the merger agreement of each of Taubman, the Taubman operatingpartnership and the Simon parties will not survive the consummation of the Transactions or the termination of themergeragreementpursuanttoitsterms.
Waiver; Amendment
AtanytimepriortotheeffectivetimeoftheREITMerger,thepartiesmay(i)extendthetimefortheperformanceofanyobligationsoftheotherparties,(ii)waiveanyinaccuraciesintherepresentationsandwarrantiescontainedinthemergeragreementoranydocumentdeliveredpursuanttothemergeragreement,(iii)waivecompliancewithanyofthecovenantsorconditionscontainedinthemergeragreementor(iv)waivethesatisfactionofanyconditioncontainedinthemergeragreement.Anyagreementonthepartofapartytoanysuchextensionorwaiverwillbevalidonlyifsetforthinawritteninstrumentsignedonbehalfofsuchparty.
ThemergeragreementmaybeamendedbythepartiesatanytimebeforeoraftertheTransactionsareapprovedbyTaubman stockholders or the Taubman operating partnership unitholders; provided, however, that (i) after theTransactions havebeenapprovedbyTaubmanshareholders, there maybe madenoamendment that requires furtherapproval by the Taubman stockholders without the further approval of the Taubman shareholders, and (ii) after thereceipt of the approval of the Taubmanoperating partnership unitholders, there maybe noamendment that requiresfurther approval by the Taubman operating partnership unitholders without further approval of such unitholders.Themergeragreementmaynotbeamendedexceptinawritingsignedonbehalfofeachoftheparties.
Anytermination,amendment,extensionorwaiverofthemergeragreementwill,inordertobeeffective,require,in the case of Taubman or Simon, action by its board of directors (in the case of Taubman, acting on therecommendationoftheSpecialCommittee)oradulyauthorizedcommitteethereof(including,inthecaseofTaubman,theSpecialCommittee)
Any (i) amendment or modification of the merger agreement, (ii) extension or waiver of any provision of themergeragreementbyTaubmanortheTaubmanoperatingpartnershipand(iii)anyconsentorapprovaltobegivenormadebyTaubmanortheTaubmanoperatingpartnershipunderorrelatingtothemergeragreementwill,ineachcase,require the written consent of the Taubman family representative (provided, for the avoidance of doubt, that theTaubmanfamilyrepresentativewillhavenorighttoconsenttoanyterminationofthemergeragreement).
Governing Law; Jurisdiction; Waiver of Jury Trial
The parties have agreed that the merger agreement and all claims, actions and proceedings arising out of orrelatingtothemergeragreement,theTransactionsortheactionsofTaubman,theTaubmanoperatingpartnership,
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Simon,theSimonoperatingpartnership,MergerSub1orMergerSub2inthenegotiation,administration,performanceand enforcement thereof will be governed by Michigan law. Each party has irrevocably submitted to the exclusivejurisdictionofthestateandfederalcourtsintheStateofMichiganinanydispute,claimorcauseofactionarisingoutof or relating to the merger agreement or the Transactions. Each party has further irrevocably and unconditionallywaivedanyrightsuchpartymayhavetoatrialbyjurywithrespecttoanylitigationdirectlyorindirectlyarisingoutoforrelatingtothemergeragreementortheTransactions.
Specific Performance
Themergeragreementprovidesthatthepartieswillbeentitledtoaninjunctiontopreventabreachorthreatenedbreach of the merger agreement and to enforce specifically the performance of the terms and provisions thereof,includingtherightofapartytocausetheotherpartiestoconsummatetheTransactions,inadditiontoanyotherremedytowhichtheyareentitledatlaworinequity.Thepartiesalsoagreednottoassertthataremedyofspecificenforcementis unenforceable, invalid, contrary to applicable law or inequitable for any reason, nor to assert that a remedy ofmonetarydamageswouldprovideanadequateremedyforanysuchbreach.
Fees and Expenses
Except in specified circumstances (including as will be provided in the JV agreement), all fees and expensesincurredinconnectionwiththeTransactionswill bepaidbythepartyincurringsuchfeesorexpenses, regardlessofwhetherornotsuchTransactionsareconsummated.
Governance of Surviving TCO, the Surviving Taubman operating partnership and the Joint Venture
Surviving TCO
Themerger agreement provides that fromandafter the effective timeof theREITMerger, until successors aredulyelectedor appointedandqualifiedinaccordancewithapplicable law,(i) thesolemanagingmemberof MergerSub1immediatelypriortotheeffectivetimeoftheREITMergerwillbethesolemanagingmemberofSurvivingTCOand(ii)theofficersofMergerSub1immediatelypriortotheeffectivetimeoftheREITMergerwillbetheofficersofSurvivingTCO.Atthe effective timeof theREITMerger, the limitedliability companyagreement of thesurvivingcompanyshallbeintheformattachedtothemergeragreement,untilthereafteramended.AttheeffectivetimeoftheREITMerger,thelimitedliabilitycompanyagreementofSurvivingTCOwillbeintheformattachedasExhibitAtothe merger agreement, with such changes as may be agreed in writing between Simon and Taubman prior to theeffectivetimeoftheREITMerger,untilthereafteramended.
The Surviving Taubman Operating Partnership
FromandaftertheeffectivetimeofthePartnershipMerger,untiltheearlierofsuchtimeassuccessorsaredulyelected or appointed and qualified in accordance with applicable law or the effective time of the LLC Conversion,(i)thegeneralpartneroftheTaubmanoperatingpartnershipimmediatelypriortotheeffectivetimeofthePartnershipMergerwillbethegeneralpartneroftheSurvivingTaubmanoperatingpartnershipand(ii)theofficersandauthorizedsignatoriesoftheTaubmanoperatingpartnershipimmediatelypriortotheeffectivetimeofthePartnershipMergerwillbetheofficersandauthorizedsignatoriesoftheSurvivingTaubmanoperatingpartnership.AttheeffectivetimeofthePartnershipMerger,theTaubmanOPagreementasineffectimmediatelypriortotheeffectivetimeofthePartnershipMergerwillbethelimitedpartnershipagreementoftheSurvivingTaubmanoperatingpartnership,withsuchchangesas may be agreed in writing between Simon and Taubman prior to the effective time of the REIT Merger, untilthereafteramended.
Joint Venture
From and after the effective time of the LLC Conversion, until successors are duly elected or appointed andqualifiedinaccordancewithapplicablelawandtheJVagreement,thedirectors,officersandauthorizedsignatoriesoftheJointVentureshallbethosesetforthinorselectedpursuanttotheJVagreement.AttheeffectivetimeoftheLLCConversion,theJVagreementshallbeintheformattachedasExhibitBtothemergeragreement,withsuchchangesasmay be agreed in writing between Simon, Taubman and the other persons that will be parties thereto prior to theeffectivetimeoftheREITMerger,untilthereafteramended.
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THE VOTING AGREEMENT
Thefollowingsectionsummarizesmaterialprovisionsofthevotingagreement,datedasofFebruary9,2020,byandbetweenSimonandcertainTaubmanfamilymembers.ThevotingagreementisattachedtothisproxystatementasAnnexCandisincorporatedbyreferencehereininitsentirety,andqualifiesthefollowingsummaryinitsentirety.Therights and obligations of Simon and of the Taubman family members that are parties to the voting agreement aregovernedbythevotingagreementandnotbythissummaryoranyotherinformationcontainedinorincorporatedbyreferenceintothisproxystatement.Taubmanshareholdersareurgedtoreadthevotingagreementcarefullyandinitsentirety,aswellasthisproxystatementandtheinformationincorporatedbyreferenceintothisproxystatement,beforemakinganydecisionsregardingtheproposals.
The following summary of the voting agreement is included in this proxy statement to provide you withinformationregardingthetermsofthevotingagreementandisnotintendedtoprovideanyfactualinformationaboutSimonortheTaubmanfamilymembers.SuchinformationcanbefoundelsewhereinthisproxystatementandintheotherpublicfilingsTaubmanandSimonhasmadeandwillmakewiththeSEC.See “Other Information Regarding theSimon Parties and the Taubman Filing Persons.”
AsofMay22,2020,theTaubmanfamilymembers,inaggregate,arethebeneficialownersand/orrecordholdersof1,748,477sharesofTaubmancommonstock,24,191,177sharesofTaubmanSeriesBpreferredstock(collectively,the “Subject Shares”) and 24,191,177 Taubman OP units (the “Subject OP Units,” and, together with the SubjectShares,the“SubjectInterests”).AtthecloseofbusinessonMay22,2020,therewere61,608,379sharesofTaubmancommonstockand26,079,159sharesofTaubmanSeriesBpreferredstockoutstanding.Accordingly,asofthecloseofbusinessonMay22,2020,theTaubmanfamilymembers,inaggregate,havethepowertovoteapproximately30%ofthe outstanding shares of Taubman voting stock. At the close of business on May 22, 2020, there were 87,705,137TaubmanOPunitsoutstanding,61,608,379ofwhichwereownedbyTaubman,and26,096,758ofwhichwereownedbypartnersotherthanTaubman.Accordingly,asofMay22,2020,theTaubmanfamilymemberswhoarepartytothevotingagreementhold,inaggregate,approximately92.7%oftheTaubmanOPunitsoutstandingheldbypartnersotherthanTaubman.
Voting of Subject Shares
TheTaubmanfamilymemberswhoarepartytothevotingagreementhaveagreedto:
• appear at any meeting of the Taubmanshareholders (in person or by proxy), and at every adjournment orpostponementthereof,andcausealloftheSubjectSharestobecountedaspresentforpurposesofcalculatingaquorum;
• vote(orcausetobevoted)alltheSubjectSharesinfavorofor,ifanyactionistobetakenbywrittenconsentin lieu of a meeting of Taubman’s shareholders, deliver to Taubman a duly executed affirmative writtenconsentinfavorof(totheextentapplicable),(i)theapprovalandadoptionofthemergeragreementandtheTransactions and (ii) any other proposal in respect of which the vote or written consent of the TaubmanshareholdersisrequestedthatcouldreasonablybeexpectedtofacilitatetheTransactions;and
• vote(orcausetobevoted)against, andnotprovideanywrittenconsentfor,(i)theadoptionorapprovalofanyAcquisitionProposal(asdefinedinthemergeragreement)and(ii)anyotherproposalinrespectofwhichthevoteorwrittenconsentorotherapprovaloftheTaubmanshareholdersisrequestedthatcouldreasonablybe expected to impede, materially interfere with, materially delay or prevent the consummation of theTransactions.
Voting of Subject OP Units
Inaddition,theTaubmanfamilymemberswhoarepartytothevotingagreementhaveagreedto,atanymeetingofthepartnersoftheTaubmanoperatingpartnership,andateveryadjournmentorpostponementthereof,orinanyactionbywrittenconsentofthepartnersoftheTaubmanoperatingpartnership,vote(orcausetobevoted)alloftheSubjectOPUnits:
• in favor of (i) the approval and adoption of the merger agreement and the Transactions and (ii) any otherproposal or action in respect of which the vote or written consent of holders of the Taubman OP units isrequestedthatcouldreasonablybeexpectedtofacilitatetheconsummationoftheTransactions;and
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• against(i)anyAcquisitionProposaland(ii)anyotherproposaloractioninrespectofwhichthevote,consentorotherapprovalofthepartnersoftheTaubmanoperatingpartnershipisrequestedthatcouldreasonablybeexpected to impede, materially interfere with, materially delay or prevent the consummation of theTransactions.
The Taubman family members who are party to the voting agreement may vote in their sole discretion on allissuesotherthanthosespecifiedintherein.
Restrictions on Transfer
In addition, the Taubman family members who are party to the voting agreement have agreed to certainrestrictionsonthetransferofSubjectInterests,includingagreeingnotto:
• (i)directlyorindirectlysell,assign,transfer(includingbymergerorbyoperationoflaw),encumber,pledge,grantaparticipationin,participateinanytenderorexchangeoffer,assignorotherwisedisposeof,whetherby liquidation, dissolution, dividend, distribution or otherwise any Subject Interests or the beneficialownership thereof, (ii) deposit anySubject Interests into a votingtrust or enter into a voting agreement orarrangement with respect to any Subject Interests or the beneficial ownership thereof or grant or agree togrant anyproxyorpowerofattorneywithrespect theretothat is inconsistent withthevotingagreement or(iii)enterintoanycontract,optionorotherarrangementorundertakingwithrespecttothedirectorindirecttransfer of any Subject Interests or the beneficial ownership thereof; provided that the Taubman familymembers may transfer Subject Interests to (a) certain affiliates, including other Taubman family membersand certain other affiliates provided that such transferee, to the extent not already a party to the votingagreement, agrees in writing to be bound as a party under the voting agreement, or to (b) certain otherpermittedtransferees,includingthroughtransfers(1)madeinconnectionwithestateplanningpurposes,(2)toacharitableinstitutionforphilanthropicpurposes,(3)pursuanttoanytrust orwill ofaTaubmanfamilymember, or by the laws of intestate succession, (4) pursuant to a qualified domestic relations order or asrequired by a divorce settlement, or (5) in connection with the payment of the exercise price and/or thesatisfaction of any tax withholding obligations arising from the vesting of any restricted shares or otherequityawardsortheconversionofanyconvertiblesecurities,providedthatinthecaseofclauses(1)and(2)suchtransferee,totheextentnotalreadyapartytothevotingagreement,agreesinwritingtobeboundasapartyunderthevotingagreement.
Inadditiontotheexceptionsdescribedabove,theTaubmanfamilymembersmayenterintoagreementstopledgeandencumbertheSubject Interests inconnectionwithanybona fide lendingorhedgingtransactionorarrangement,providedthatthepledgingpartyretainstherighttovoteorconsentto,orcausetobevotedorconsentedto,allSubjectInterestsinaccordancewiththetermsofthevotingagreement,orthepledgeeinsuchatransactionassumesalloftheobligationsofthepledgingpartyunderthevotingagreement.
Joint Venture
TheTaubmanfamilymembersthatwillretainaninterestintheTaubmanoperatingpartnershipinconnectionwiththeTransactionshaveagreedtodelivertoSimoninconnectionwiththeclosingoftheTransactionsasignaturepagetotheJVagreement.
Termination
Thevotingagreementwillterminateautomaticallyupontheearliesttooccurof:
• theterminationofthemergeragreement;
• theeffectivetimeoftheREITMerger;or
• the Taubman family representative providing written notice to Simon that it is terminating the votingagreement following (i) a Taubman Board recommendation change, or (ii) any amendment, waiver,modification or other change to any provision of the merger agreement that (a) decreases the amount orchanges the form of the Merger Consideration (as defined in the merger agreement) or (b) is otherwiseadverseinanymaterialrespecttotheTaubmanfamilymemberswhoarepartytothevotingagreementortotheTaubmanshareholders.
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Amendment and Waiver
The voting agreement may only be amended with the written consent of Simon and the Taubman familyrepresentative(actingonbehalfofeachoftheTaubmanfamilymemberswhoarepartytothevotingagreement).
However, Taubman, following approval by the Special Committee, must consent in writing to any of thefollowingactionsinrelationtoanyprovisionofthevotingagreement:(i)theamendmentormodificationofthevotingagreement,(ii)theextensionorwaiverofanyprovisionbyanypartyunderthevotingagreement,or(iii)anyconsentorapprovaltobegivenormadebyanyofthepartiesunderthevotingagreement,exceptforthoseexpresslycontemplatedbythevotingagreement.
Taubman Family Representative
The Taubman family members appointed R. Taubman as the Taubman family representative. As the Taubmanfamilyrepresentative,R.TaubmanhasthepowerandauthorityonbehalfofeachoftheTaubmanfamilymemberswhoarepartytothevotingagreementto:
• interpret the terms and provisions of the merger agreement, the voting agreement and certain otheragreementstobeexecutedbytheTaubmanfamilymembersinconnectionwiththeTransactions;
• execute and deliver and receive deliveries of such other agreements and all other certificates, statements,notices, approvals, extensions, waivers, undertakings, amendments and other documents required orpermittedtobegiveninconnectionwiththeconsummationoftheTransactions;
• terminatethevotingagreementonbehalfoftheTaubmanfamilymembersinaccordancewiththetermsofthevotingagreement;
• actastheTaubmanfamilyrepresentativeforthepurposesofthemergeragreement;
• receiveserviceofprocessonbehalfoftheTaubmanfamilymembersinconnectionwithanyclaimsunderthemerger agreement, the voting agreement or the other agreements entered into in connection with theTransactions,andagreeto,negotiateandenterintosettlementsandcompromisesof,andassumethedefenseof,claims,andcomplywithordersofcourtswithrespecttosuchclaims;
• giveandreceivenoticesandcommunications;and
• take all actions necessary or appropriate in his judgment on behalf of the Taubman family members inconnectionwiththemergeragreement,thevotingagreementandcertainotheragreementstobeenteredintoinconnectionwiththeTransactions.
Robert S. Taubman Cooperation Commitment
R. Taubman agreed with Taubman to cooperate with the Special Committee in his capacity as a director andofficertofacilitatethego-shopprocess.R.Taubmanhasagreedtonegotiateingoodfaith(onbehalfoftheTaubmanfamily) with a competing bidder that has made a proposal that the Special Committee determines is a SuperiorProposal,orisreasonablylikelytoleadtoaSuperiorProposal,andthathasastructuresimilartotheTransactions.R.Taubman has also agreed to discuss in good faith with the Special Committee terms on which the Taubman familymightbewillingtoagreetoanalternativetransactionthatdoesnothaveastructuresimilartotheTransactions.
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THE JV AGREEMENT
ThefollowingisasummaryofthematerialtermsoftheJVagreement,whichisanticipatedtobecomeeffectiveattheeffectivetimeoftheLLCConversionandprovidesfor,amongotherthings,certaingovernanceandliquidityrightsfor Surviving TCO and the Taubman family members following the closing. At the effective time of the LLCConversion,SurvivingTCOwillhold80%ofthecommonunitsoftheJointVentureandtheTaubmanfamilymemberswill hold the remaining 20%. Affiliates of Simon will also hold certain preferred units of the Joint Venture asconsiderationforprovidingthefundsfortheredemptionoftheTaubmannon-votingpreferredstock,whichpreferredunitswillbeonsubstantiallythesametermsastheTaubmannon-votingpreferredstock.TheJVagreementisattachedasExhibitBtothemergeragreementandisincorporatedbyreferencehereininitsentirety,andqualifiesthefollowingsummaryinitsentirety.
Governance
Board of Directors
The JVagreement will include certain governance provisions that will be applicable prior to the occurrence ofspecified events (including, but not limited to, the Taubmanfamily’s ownershipfalling belowaspecified threshold)(the “TaubmanPeriod”) andother provisions that will be applicable thereafter (the “SimonPeriod”). Asummaryoftheseprovisionsissetforthbelow.
DuringtheTaubmanPeriod,theJointVentureboardwillbecomprisedofsixindividuals(unlessotherwiseagreedby Surviving TCO and a representative of the Taubman family), with three appointed by a representative of theTaubmanfamilymembersandthreeappointedbySurvivingTCO.
DuringtheSimonPeriod,thenumberofdirectors will bedeterminedfromtimetotimebySurvivingTCOandSurviving TCO will appoint all directors. During the Simon Period, and as long as the Taubman family members(togetherwithanyFamilyTransferees)continuestoown,collectively,atleast2%oftheJointVenture’soutstandingcommon units, the Taubman family members will have the right to appoint, remove and replace one non-votingobservertotheJointVentureboard.
Voting
DuringtheTaubmanPeriod,allactionsbytheJointVenture’sboardmustbebyunanimousvoteofthedirectors,andduringtheSimonPeriod,allactionsbytheJointVenture’sboardmustbebymajorityvoteofthedirectorspresentatameetingwhereaquorumispresent.
Chairman and CEO; Management of the Joint Venture; Annual Budgets and Distribution Policy
DuringtheTaubmanPeriod,R.TaubmanwillbeChiefExecutiveOfficerandPresidentoftheJointVentureand,aslongasheisamemberoftheJointVentureboard,ChairmanoftheJointVentureboard(or,ifR.TaubmanceasestobeChiefExecutiveOfficerandPresidentand/ortheChairmanoftheboard,W.TaubmanoranotherappointeeoftheTaubman family members reasonably acceptable to Surviving TCO will be Chief Executive Officer and Presidentand/ortheChairmanoftheboard,asapplicable).
DuringtheTaubmanPeriod,theoperationsoftheJointVentureanditssubsidiarieswillbemanagedbytheChiefExecutiveOfficer,subjecttoconsentrightsheldbySurvivingTCOovercertainmatters,including,butnotlimitedto,equity issuances, debt incurrences beyond certain agreed-upon exceptions, the annual budget (subject to certainproceduresandexceptions),certainlitigation,affiliatetransactionsandcertaincontracts.DuringtheSimonPeriod,theChief Executive Officer and President of the Joint Venture will be appointed by the Joint Venture board and theChairmanwillbeelectedbytheboardannually.DuringtheSimonPeriod,theoperationsoftheJointVenturewillbemanagedbytheboard, subject to a morelimitedset of approval rights heldbytheTaubmanfamilymembers for aslongasitmaintainscertainminimumownershiplevels.
Eachyear,theJointVenture’sannualcapitalbudgetandannualoperatingbudgetwillbesubmittedbytheChiefExecutiveOfficertotheboardforapproval.Intheeventthataproposedannualbudgetisnotunanimouslyapproved,the Chief Executive Officer will consider in good faith any feedback he or she receives from the board andsubsequently may (but is not required to) resubmit a revised annual budget for the board’s approval. If any annualbudgetorrevisedannualbudgetisnotapprovedbytheboard,thentheapplicableannualbudgetfortheprecedingyearwillbedeemedadoptedandapprovedasanannualbudgetfortheupcomingfiscalyear,subjecttocertainlimitations.
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TheJoint Venturewill berequiredtodistribute toits members, onamonthlybasis, inadditiontocertainotherminimum requirements agreed to in the Operating Agreement or approved as part of the annual distribution policyprocedure described in the JVagreement, the greater of (i) 95%of the portion of the Joint Venture’s REIT taxableincomeattributable(directlyorindirectly)toSurvivingTCO,grossedupforallthemembersoftheJointVentureand(ii)certainminimumdistributionlevelsagreedtobySurvivingTCOandtheTaubmanfamily.
Officers
TheJVagreementwillprovidethattheChiefExecutiveOfficer(duringtheTaubmanPeriod)ortheJointVentureboard (during the Simon Period) has the power to appoint officers of the Joint Venture. Following the closing, it isanticipatedthatthecurrentofficersofTaubmanwillcontinuetoserveinsuchcapacity.
REIT Requirements
AtanytimethatSimonintendstoqualifyasaREIT,theJointVenturemustbeoperatedasifitwereaREIT.
Business Opportunities
ForsolongastheTaubmanfamilymembers(togetherwithanyFamilyTransferee)continuetoown,collectively,atleast50%ofthemembershipinterestsintheJointVenturethattheyownedimmediatelyaftertheclosing,subjecttocertain exceptions, business opportunities first identified by the Joint Venture will belong to the Joint Venture andSurvivingTCOwillagreenottopursuesuchbusinessopportunitiesoutsideoftheJointVenturewithouttheconsentoftheTaubmanfamily.
Non-Compete
ForsolongastheTaubmanfamilymembers(togetherwithanyFamilyTransferee)continuetoown,collectively,at least 2%oftheJoint Venture’s outstandingcommonunits, andfor aone-year periodthereafter, subject tocertainexceptions,certainoftheTaubmanfamilymembersinvolvedinthemanagementoftheJointVenturewillbesubjecttocustomarynon-competitionobligations.
Transfer Restrictions
Subjecttocertaincustomaryexceptions(includingfortransferstocertainimmediatefamilymembersorrelatedentitiesoftheTaubmanfamilymembers(a“FamilyTransferee”)),theJVagreementwillrestricttheTaubmanfamilymembers fromtransferringtheir equityintheJoint Venturetothirdparties without thewrittenconsent of SurvivingTCO.Subjecttocertaincustomaryexceptions,SurvivingTCOwillberestrictedfromtransferringitsequityintheJointVenturetothirdpartieswithoutthewrittenconsentofarepresentativeoftheTaubmanfamilyuntiltheearlieroftheseventhanniversaryoftheLLCConversionandtheendoftheTaubmanPeriod.
Exchange Rights
TheTaubmanfamilymemberswillhavetheright,beginningtwoyearsaftertheclosing,toexchangetheirequityinterestsintheJointVentureforSimonOPunitsorcashoracombinationofsuchunitsandcash(attheelectionoftheTaubmanfamilymembers).EquityinterestsintheJointVenturewillbevaluedforsuchpurposesatthegreaterof(i)amultiple of the Joint Venture’s trailing twelve-month FFO and (ii) the fair market value of the Joint Venture’s netassets,ineachcasesubjecttocertainadjustmentsandprocedures.
TheTaubmanfamilymemberswillhavetherighttoexchangetheirequityinterestsatthefollowingtimesandinthefollowingamounts:
• Up to 20% of the Taubman family’s initial equity in the Joint Venture may be exchanged following thesecond anniversary of the closing; up to 40% following the third anniversary of the closing; up to60%followingthefourthanniversaryoftheclosing;upto80%followingthefifthanniversaryoftheclosing;and up to 100% following the sixth anniversary of the closing (in each case, inclusive of any priorexchanges).
• In addition, between the second and third anniversaries of the closing (i.e., between 24 to 36 monthsthereafter),theTaubmanfamilymembersmayexchange100%oftheirequityintheJointVenture.
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SurvivingTCOwillhavetheoptiontomodifytheconsiderationforsuchexchangetobe50%inSimonOPunitsand50%incash.SurvivingTCOwillalsohavetheoptiontocausetheexchangeofhalfoftheequityinterestssubjecttosuchexchangetocloseonadelayedbasis,withinoneyearoftheinitialclosing,forthesamevalueandconsiderationmix.
Ineachcase,anexchangemustbefornolessthananumberofequityinterestsequalto10%ofthecommonunitsoftheJointVentureownedbytheTaubmanfamilymembersasofimmediatelyaftertheclosingortheTaubmanfamily’sentireremainingequitystake,ifsmaller.
Voting of Limited Partnership Units in the Simon Operating Partnership
TheTaubmanfamilymemberswillagreetovoteanySimonOPunitstheyacquirepursuanttoanysuchexchangesasdirectedbytheSimonfamilydesigneeunderthelimitedpartnershipagreementoftheSimonoperatingpartnership,subjecttocertainexceptions.
Registration Rights
The Taubman family members will have customary registration rights with respect to any common shares ofSimontheymayreceiveuponredemptionorexchangeofanySimonOPunitsreceivedpursuanttosuchexchanges.
Simon Call Right
Undercertain circumstances involvingtheinitiationof dispute resolutionprocedures regardingdeadlocksundertheJVagreementinwhichSimonisthepredominantlyprevailingpartyontwooccasionswithinaspecifiedperiodoftime(solongastheTaubmanfamilymembersinitiatedoneofthequalifyingdisputeresolutionprocedures),SurvivingTCOwillhavetherighttocausetheTaubmanfamilymemberstoexchange100%oftheirequityinterestsintheJointVentureforSimonOPunitsorcashoracombinationofsuchunitsandcash(atSurvivingTCO’selection),basedonthesamevaluationmethodologiesastheTaubmanfamily’selectiveexchangesdescribedabove.TheTaubmanfamilymemberswillhavetheoptiontomodifytheconsiderationforsuchexchangetobe50%inSimonOPunitsand50%incash.
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LITIGATION RELATED TO THE TRANSACTIONS
OnMay18,2020andMay21,2020,twolawsuitswerefiledbypurportedshareholdersofTaubmaninconnectionwiththeTransactions,styledas(i)Hannah Masonv.Taubman Centers, Inc., et al.,No.2:20-cv-11226-SDD-MJH,intheUnitedStatesDistrictCourtfortheEasternDistrictofMichigan(the“MasonLawsuit”),and(ii)Joseph Post, et al.v.Taubman Centers, Inc., et al., No. 1:20-cv-00685-UNA, in the United States District Court for the District ofDelaware (the “Post Lawsuit”). The Mason Lawsuit and the Post Lawsuit assert claims against Taubman and itsdirectors;thePostLawsuitisapurportedclassactionlawsuitthatalsonameseachoftheSimonPartiesasdefendants.Both lawsuits allege that Taubman’s preliminary proxy statement, filed on April 28, 2020, was deficient, and seekinjunctiveandotherrelief.
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AGREEMENTS INVOLVING TAUBMAN COMMON STOCK
The Voting Agreement
Inconnectionwiththeexecutionofthemergeragreement,onFebruary9,2020,SimonandtheTaubmanfamilymembers entered into the voting agreement whereby each Taubman family member has covenanted to Simon to,among other things, vote any shares of Taubman voting stock owned by them in favor of the Merger AgreementProposalatthespecialmeeting.AsofMay22,2020,theTaubmanfamilymembers,inaggregate,havethepowertovote approximately 30%of the outstanding shares of Taubmanvoting stock. For more information about the votingagreement,see “The Voting Agreement.”
AcopyofthevotingagreementisattachedtothisproxystatementasAnnexCandisincorporatedbyreferenceinto this proxy statement. The summary of the voting agreement in the preceding paragraph or in “The VotingAgreement”doesnotpurporttobecomplete,maynotcontainalltheinformationaboutthevotingagreementthatmaybeimportanttoyouandisqualifiedinitsentiretybyreferencetothefulltextofsuchagreement.Weencourageyoutoreadthevotingagreementcarefullyandinitsentirety,astherightsandobligationsofthepartiestheretoaregovernedbytheexpresstermsofthevotingagreementandnotbythissummaryoranyotherinformationcontainedinthisproxystatement.
Robert S. Taubman Cooperation Commitment
R. Taubman agreed with Taubman to cooperate with the Special Committee in his capacity as a director andofficertofacilitatethego-shopprocess.R.Taubmanhasagreedtonegotiateingoodfaith(onbehalfoftheTaubmanfamily) with a competing bidder that has made a proposal that the Special Committee determines is a SuperiorProposal,orisreasonablylikelytoleadtoaSuperiorProposal,andthathasastructuresimilartotheTransactions.R.Taubman has also agreed to discuss in good faith with the Special Committee terms on which the Taubman familymightbewillingtoagreetoanalternativetransactionthatdoesnothaveastructuresimilartotheTransactions.
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PROVISIONS FOR UNAFFILIATED SHAREHOLDERS
Noprovisionhasbeenmade(a)togranttheCompany’sunaffiliatedstockholdersaccesstothecorporatefilesof(i)theCompany,(ii)anyotherpartytothemerger,or(iii)anyoftheirrespectiveaffiliates,or(b)toobtaincounselorappraisalservicesattheexpenseoftheCompany,anyothersuchpartyoraffiliate.
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IMPORTANT INFORMATION REGARDING TAUBMAN CENTERS, INC.
Company Background
TaubmanisaMichigancorporation(incorporatedin1973)thatoperatesasaself-administeredandself-managedREIT.Taubman’ssoleassetisanapproximate70%generalpartnershipinterestintheTaubmanoperatingpartnership,aDelawarelimitedpartnershipwhichownsdirectorindirectinterestsinallofourrealestateproperties.TaubmanisthesolemanaginggeneralpartneroftheTaubmanoperatingpartnership.ThroughtheTaubmanoperatingpartnership,Taubmanowns,manages,leases,acquires,disposesof,develops,andexpandsshoppingcentersandintereststherein.Taubman’s owned portfolio of operating centers as of May 29, 2020 consisted of 24 urban and suburban shoppingcentersoperatingin11U.S.states,PuertoRico,SouthKorea,andChina.
FormoreinformationaboutTaubman,see“Where You Can Find Additional Information.”
Taubman’s principal executive offices are located at 200 East Long Lake Road, Suite 300, Bloomfield Hills,Michigan,anditstelephonenumberis(248)258-6800.
During the past five years, neither Taubman nor the Taubman operating partnership nor any of Taubman’sdirectorsorexecutiveofficerslistedbelowhasbeenconvictedinacriminalproceeding(excludingtrafficviolationsorsimilar misdemeanors). In addition, during the past five years, except as set forth below, neither Taubman nor theTaubmanoperatingpartnershipnoranyoftheTaubmandirectorsorexecutiveofficerslistedbelowhasbeenapartytoanyjudicialoradministrativeproceeding(exceptformattersthatweredismissedwithoutsanctionorsettlement)thatresulted in a judgment, decree or final order enjoining the person fromfuture violations of, or prohibiting activitiessubject to, federal or state securities laws, or a findingof anyviolationof federal or state securities laws. Except asnotedbelow,eachoftheindividualslistedbelowisacitizenoftheUnitedStates.
Directors and Executive Officers
The names and material occupations, positions, offices or employment during the past five years of theCompany’s directors and executive officers are set forth below. Except as set forth below, each of the Company’sdirectorsandexecutiveofficersisacitizenoftheUnitedStates.
Name Age Position With the Company
MayreeC.Clark 63 Director
MichaelJ.Embler 56 Director
JaniceL.Fields 64 Director
MichelleJ.Goldberg 51 Director
NancyKillefer 66 Director
CiaBuckleyMarakovits 55 Director
RonaldW.Tysoe 67 Director
MyronE.Ullman,III 73 Director
RobertS.Taubman 66 ChairmanoftheTaubmanBoard,PresidentandChiefExecutiveOfficer
SimonJ.Leopold 52 ExecutiveVicePresident,ChiefFinancialOfficerandTreasurer
WilliamS.Taubman 61 ChiefOperatingOfficer
PaulA.Wright 49 President,TaubmanAsia
Directors
Mayree C. ClarkhasservedasadirectorsinceJanuary2018.SheisthefoundingpartnerofEachwinCapital,aninvestment management organization, which she has led since 2010for the benefit of third party investors and nowoverseesherfamily’sinvestments.Previously,Ms.ClarkservedasanindependentdirectorofRegulatoryDataCorp.(RDC), owned by Vista Equity Partners, until 2020. Ms. Clark was also a Partner and Member of the executivecommitteeofAEAHoldings,aSeniorAdvisortoitsrealestateaffiliate,AetosCapitalAsia(2006-2010).ShehasheldavarietyofexecutivepositionsatMorganStanleyoveraspanof24years(1981-2005),servingasHeadofRealEstateCapitalMarkets,GlobalResearchDirector,DirectorofGlobalPrivateWealthManagement,deputytotheChairman,President andChiefExecutiveOfficer, andnon-executiveChairmanofMSCI.Ms.ClarkhasservedontheboardofdirectorsofAllyFinancialInc.(since2009)(includingpastserviceasChairoftheRiskCommitteeandcurrentserviceasamemberoftheRiskCommitteeandAuditCommittee)andtheSupervisoryBoardofDeutsche
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BanksinceMay2018(includingserviceasChairoftheRiskCommitteeandmemberoftheStrategyCommitteeandNomination Committee). Ms. Clark was appointed by the Council of Institutional Investors to serve on the 2019CorporateGovernanceAdvisoryCouncil,andpreviouslyservedontheboardofdirectorsoftheStanfordManagementCompany, which is responsible for Stanford University’s endowment (2007-2015) and Commonfund (1992-2004).Ms. Clark brings significant investor stewardship and extensive business leadership experience as CEO of aninvestment management firm and as an executive of a major public financial services company. Ms. Clark alsopossesses experience in real estate, investment banking and capital markets, asset management, strategic planning,governance, andriskmanagement, as well as extensiveglobal exposurethroughher prior professional positions andserviceonotherboardsandprofessionalorganizations.
Michael J. Emblerhas served as a director since January 2018. Mr. Embler currently is a private investor.Mr. Embler wastheChiefInvestment Officer ofFranklinMutual AdvisersLLC,anasset management subsidiaryofFranklinResources,Inc.from2005to2009,andHeadofitsDistressedInvestmentGroupfrom2001to2005.From1992until2001,heworkedatNomuraHoldingsAmericainpositionsofincreasingresponsibilityculminatinginthepositionofManagingDirectorco-headingNomura’sProprietaryDistressedDebt/SpecialSituationsGroup.Mr.Emblerhas served on the board of directors of NMI Holdings, Inc. (since 2012) (including service as Chair of the AuditCommittee and member of the Compensation Committee) and American Airlines Group, Inc. since 2013 (includingserviceasChairoftheFinanceCommitteeandmemberoftheAuditCommittee).Previously,Mr.EmblerservedontheboardofdirectorsofCITGroupInc.(2009-2016),Abovenet,Inc.(2003-2012),DynegyInc.(2011-2012)andKindredHealthcare (2001-2008). Healsonowserves as a director of MohonkPreserve, a non-profit landtrust in NewYorkState,whereheservesasTreasurerandChairoftheFinanceCommittee.Mr.Emblerbringsinvestorperspectiveandexperience in finance, asset management and restructurings, capital markets and capitalmanagement. He possessesexperienceasaseniorexecutive,perspectiveasaninstitutionalinvestorandserviceasapubliccompanydirector.Asaresultoftheforegoingexpertiseandexperience,Mr.EmblerqualifiesasafinancialexpertunderSECrules.HealsohasearnedaCertificateinCybersecurityOversightfromtheNationalAssociationofCorporateDirectors.
Janice L. Fieldshas served as a director since January 2019. She is a professional director of public companyboards,currentlyservingontheboardofdirectorsofChico’sFAS,Inc.(since2013)(includingserviceasChairoftheCorporateGovernanceandNominatingCommitteeandmemberoftheExecutiveCommittee)andWelbilt,Inc.(sinceApril2018)(includingserviceasmemberoftheCompensationandCorporateGovernanceCommittees).Ms.Fieldsisthe former President, McDonald’s USA, LLC, a subsidiary of McDonald’s Corporation, from 2010 to 2012; U.S.DivisionPresidentfortheCentralDivisionfrom2003to2006;ExecutiveVicePresidentandChiefOperatingOfficerfrom2006to2010;servedinnumerousotherrolesinher35yearsatMcDonald’s.Previously,Ms.FieldsservedontheboardofdirectorsofBuffaloWildWings(March2017-February2018)(mostrecentlyservedasChairoftheBoard)andontheboardofdirectorsofMonsantoCompany(2008-2018)(mostrecentlyservedasChairoftheSustainabilityandCorporateResponsibilityCommittee).Additionally,Ms.FieldshasservedontheGlobalBoardofTrusteesfortheRonaldMcDonaldHouseCharitiesGlobal Brandsince2012.Ms.Fieldsis aseasonedretail-andconsumer-orientedexecutivewithstrongoperationalandcorporategovernanceexperience.Ms.Fieldspossessesadiversityofexperience,includingbrandmarketing,finance,supplychain,humanrelations,realestate,sustainability,communications,investorrelations,riskmanagement,strategicplanningandglobalexperience.Shealsohasextensivepubliccompanyboardandboardcommitteeexperience.
Michelle J. Goldberghas served as a director since May 2019. Ms. Goldberg serves as a Partner at IgnitionPartners, an early stage, technology venture capital firm, since 2000, and a Venture Partner at SoGal Ventures,investinginhowthenextgenerationlives,worksandstayshealthy,sinceMay2017.Previously,Ms.Goldbergservedas a Consultant in Microsoft’s Developer Division (1999-2000), an Investment Banker working in middle marketmergers and acquisitions at Olympic Capital Partners (1997-2000), an Associate, Management Consulting in thefinancialinstitutionsgroupatA.T.Kearney,Inc.(1994-1997)andtheProjectCoordinatorfortheChinaExternalTradeDevelopment Council in Taiwan (1991-1992). Currently, she serves on the board of directors of Legg Mason, Inc.(since November 2017) (including service as Chair of the Risk Committee and a member of the Special M&AandAudit Committees). Previously, Ms. Fields served on the board of directors of Plum Creek Timber Company, Inc.(August 2015-February 2016). As a venture capital investor and advisor to firms, Ms. Goldberg specializes ineCommerce and digital media, Internet analytics, mobile and enterprise software. Ms. Goldberg provides a deepunderstandingofenterprisetechnology,includingcloudcomputing,bigdata,scalabilityandSaaS.Shealsopossessessubstantialpubliccompanyboardandcorporategovernanceexperience.
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Nancy Killeferhas servedas a director since December 2019. Sheis a professional director of public companyboards, currently serving on the board of directors of Facebook, Inc. (since 2020), Natura & Co. (since 2020) andCardinal Health Inc. (since 2015) (including service as member of the Human Resources and CompensationCommittee). Previously, Ms. Killefer was a Senior Partner of McKinsey & Company, Inc.’s Public Sector practice(whichshefounded)from2007to2013,ManagingPartnerofMcKinsey’sWashingtonD.C.office,from2000to2007,andsheservedinvariousotherleadershippositionsatMcKinsey,includingdirector,from1979to1997.Ms.KilleferalsoservedinvariousrolesattheU.S.DepartmentoftheTreasury,includingasAssistantSecretaryforManagement,ChiefFinancialOfficerandChiefOperatingOfficer,from1997to2000.Ms.KilleferpreviouslyservedontheboardofdirectorsofAvonProducts,Inc.,apubliccompany,from2013-2020(includingserviceasChairoftheNominatingandCorporate Governance Committee and member of the Compensation and Management Development Committee),CSRAInc., a public company, from2015-2018(including service as Chair of the boardandChair of the ExecutiveCommittee), Computer Sciences Corporation, a public company, from2013-2015 (including service as Chair of theCompensationCommittee),andTheAdvisoryBoardCompany,aprivatecompany,from2013-2017(includingserviceasamemberoftheAuditCommittee).ShealsohasextensiveexperienceservingonU.S.governmentandotherboards.From2000to 2005, sheservedontheIRSOversight Board(Chair of the Board from2002to2005). From2014to2018, she served on the Defense Business Board, an advisory board to the U.S.Secretary of Defense (Vice Chair).Ms.Killeferisanexperiencedseniorexecutiveanddirector,havingheldavarietyofrolesatMcKinsey&Company,Inc. for 31 years in a variety of leadership roles where she served a multitude of consumer, retail, restaurant,technologyand other companies. She possesses a diversity of experience across a numberof sectors combined withsignificant leadership experience, strategic depth and global experience, and she provides significant governance,compensation and human resources expertise resulting from her board experience. Ms. Killefer brings substantialexperience in the areas of strategic planning and finance. She holds significant public company board and boardcommitteeexperience.Asaresultoftheforegoingexpertiseandexperience,Ms.KilleferqualifiesasafinancialexpertunderSECrules.
Cia Buckley Marakovitshas beena director since2016. Ms. BuckleyMarakovits serves as thePresident (since2020),ChiefInvestmentOfficer(since2012),Partner,ManagingDirectorandMemberoftheInvestmentCommittee(since 2007) of Dune Real Estate Partners LP (which evolved from Dune Capital Management LP). From 1997 to2007,Ms.BuckleyMarakovitsheldavarietyofpositionsatJERPartners(anaffiliateoftheJ.E.RobertCompanies),includingChiefFinancialOfficer,HeadofAssetManagement,HeadofAcquisitionsand,mostrecently,PresidentoftheU.S.FundBusiness.ShealsoservedonvariousinvestmentcommitteesofJERPartnersandspentnineyearsintheReal Estate Investment Banking Group of Bankers Trust managing investments in a variety of asset classes.Ms.BuckleyMarakovitsisaFullMemberoftheUrbanLandInstitute,aMemberandformerChairoftheInvestmentCommitteeforULIandULIF,aTrusteeofULI,activeintheWomen’sLeadershipInitiative,aMemberofthePensionReal Estate Association, a Member of Columbia Business School’s MBA Real Estate Program Advisory Board, aMemberoftheExecutiveCommitteeoftheSamuelZellandRobertLurieRealEstateCenterattheWhartonSchoolofBusiness,aMemberofWX,WomenExecutivesinRealEstate,theTreasurerandaMemberoftheBoardofTrusteesand Chair of the Finance Committee, Collegiate School and a Trustee of Phillips Exeter Academy. Ms. BuckleyMarakovits has in-depth expertise and knowledge of real estate (domestic and globally), private investing,fiduciaryresponsibility with institutional investors, capital markets, finance, risk assessment, compliance and executivemanagement throughout her professional experiences and service with real estate industry associations and inacademia.Shealsohasextensiveexperiencewithrealestateinvestingindiverseassetclassesonbehalfofnumerous,varied institutional investors, which provides her with significant and valuable insight into the Company’s strategicplanningandvaluationanalysisand,especially, ourinvestors’ viewsregardingthoseitems.Ms.BuckleyMarakovitspossessesanin-depthknowledgeofaccountingandfinancefromherexecutiveandprivate directorpositions,whichincludedservingasPresidentandChiefFinancialOfficer.
Robert S. Taubmanserves as the Chairman of the Board, and President and Chief Executive Officer of theCompanyand the Manager, which is a subsidiary of TRG. Hehas been Chairman since December 2001, a directorsince1992andPresidentandCEOsince1990.Currently,Mr.TaubmanisamemberandformerTrusteeoftheUrbanLandInstitute,servesontheAdvisoryBoardofGovernors,NationalAssociationofRealEstateInvestmentTrusts,isamember and past trustee of the International Council of Shopping Centers and is a member of the University ofMichigan Investment Advisory Committee for its endowment and is involved in a number of other community andphilanthropicorganizations.Previously,Mr.TaubmanwastheChairmanoftheBoardandadirectoroftheRealEstateRoundtable.Mr.TaubmanhasservedontheboardofdirectorsofComericaBankandrelatedpredecessorboardssince1987(currently,amemberoftheEnterpriseRiskCommittee).Mr.Taubmanalsoservedontheboard
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ofdirectorsofSotheby’sHoldings,Inc.(2000-May2016)(servedasChairoftheFinanceCommitteeandasChairoftheCompensationCommittee).Mr.TaubmanhasledtheCompanyasaprincipalexecutiveofficerforover36years,asadirectorfor28yearsandasChairmanoftheBoardfor19years.HeisarecognizedleaderintheREITandregionalmallindustries.Mr.Taubmanholdsauniqueperspectiveandunderstandingofourbusiness,cultureandhistory,havingledusthroughmanyeconomiccycles, internal andexternal growthandcurtailment, global expansionandother keyoperational and strategic initiatives. His day-to-day leadership of the Company gives him critical insights into ouroperations, strategyandcompetition, andallowshimtofacilitate theTaubmanBoard’s ability toperformits criticaloversight function. Throughhis workat theCompanyandhis leadershiprolesinnumerousreal estate andshoppingcenterindustryassociationsinMichiganandnationally,hepossessesanin-depthknowledgeoftheREITindustryandregional malls, outlet centers and mixed-use centers on a global basis, and has significant relationships with keydevelopers,potentialandcurrentjointventurepartners,andtenants.Mr.Taubmanalsohasextensiveboardandboardcommittee experience at other public companies, which provides him significant insight as to governance andcompliance-relatedmattersofpubliccompanies.
Ronald W. Tysoehas served as a director since 2007. He is a professional director of public company boards,currentlyservingontheboardofdirectorsofCintasCorporation(sinceJanuary2008)andasChairmanoftheboardofdirectors, Chair of the Corporate Governance Committee and member of the Human Resources and CompensationCommitteeofJ.C.PenneyCompany,Inc.(since2013).Mr.TysoealsohasservedastheDirectorofHauserPrivateEquity since 2008. Previously, Mr. Tysoe was the Senior Advisor at Perella Weinberg Partners LP, a boutiqueinvestment banking firm in New York (2006-2007) and Vice Chairman, Finance and Real Estate, of FederatedDepartmentStores,Inc.(nowMacy’s,Inc.,1990-2006).Mr.TysoealsopreviouslyservedontheboardofdirectorsofCanadian Imperial Bank of Commerce (2004-April 2019) (including service as a member of the Risk ManagementCommittee) and Scripps Networks Interactive, Inc. (2008-May 2018) (most recently served as Chair of the AuditCommitteeandamemberoftheCompensationCommitteeandPricingCommittee).Mr.Tysoe’slong-standingserviceasaseniorexecutiveandadirectorofacompanyintheretailindustryhasprovidedhimwithextensiveknowledgeandexperienceintransactional, brandmarketing,strategicplanning,governanceandinternationalbusinessmatters.Suchexperience enables Mr. Tysoe to provide unique insight into tenant and development matters andthe retail industrygenerally. He also possesses an in-depth knowledge of accounting and finance from his executive and directorpositions, which included serving as a chief financial officer. He further has extensive board and board committeeexperience at other public companies across manyindustries, which enables himto provide significant insight as togovernance and compliance-related matters and in particular accounting and finance matters. As a result of theforegoingexpertiseandexperience,Mr.TysoequalifiesasafinancialexpertunderSECrules.
Myron Ullman, IIIhasservedasadirectorandLeadDirectorsinceDecember2016,andpreviouslyservedas adirectorfrom2003to2004.Mr.UllmanpreviouslyservedasExecutiveChairmanofJ.C.PenneyCompany,Inc.,fromAugust2015toAugust2016,andpreviouslyfromNovember2011toJanuary2012.FromApril2013toAugust2015,served as Chief Executive Officer and a member of the board of directors of J.C. Penney Company, Inc., andpreviously served as the Chairman of the board of directors and Chief Executive Officer from December 2004 toNovember2011.Mr.UllmanservedasDirecteurGeneral,GroupManagingDirectorofLVMHMöetHennessyLouisVuitton,aluxurygoodsmanufacturerandretailer,fromJuly1999toJanuary2002.FromJanuary1995toJune1999,heservedasChairmanandChiefExecutiveOfficerofDFSGroupLimited,aretailerofluxurybrandedmerchandise.From1992to1995,heservedasChairmanandChiefExecutiveOfficerofR.H.Macy&Co., Inc.Mr.Ullmanalsoserved as the Chairmanof the National Retail Federation from2006to 2008, and he served as the Chairmanof theFederalReserveBankofDallasfrom2008toDecember2014.Mr.UllmancurrentlyservesastheLeadIndependentDirector and Chairman of the board of directors of Starbucks Corporation (including service as a member of theNominatingandCorporateGovernanceCommittee).Inaggregate,Mr.Ullmanhasservedontheboardofdirectorsfor11 U.S. and international public companies, including Starbucks, J.C. Penney Company, Inc., Ralph LaurenCorporation(most recentlyservedasamemberoftheAudit CommitteeandNominatingandCorporateGovernanceCommittee), Taubman, Saks, Inc., R.H. Macy Corporation (most recently served as Chairman of the board ofdirectors), LVMH Möet Hennessy Louis Vuitton and Federated Department Stores, Inc. (most recently served asDeputyChairmanoftheboardofdirectors).ThroughhisseniorleadershipandpubliccompanyboardexperiencewithU.S. and international retailers, Mr. Ullman brings to the Taubman Board extensive knowledge in critical areas,including leadership of global businesses, finance, executive compensation, governance, risk assessment andcompliance. He also possesses brand marketing experience and international distribution and operations experiencefromhisrolesatmajorU.S.andinternationalretailers,aswellasconstructiveinsightsandperspectivesfrom
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positions he has held in the technology and real estate industries and the public sector. Further, Mr. Ullman’sexperiencesaschairmanandchiefexecutiveofficerofvariousentitiesduringhiscareerprovidetheTaubmanBoardwithinsightintothechallengesinherentinmanagingacomplexorganization.
Executive Officers
Simon J. LeopoldistheExecutiveVicePresident,ChiefFinancialOfficerandTreasureroftheCompanyandofthe Manager. Mr. Leopold has been Executive Vice President and Chief Financial Officer since January 2016 andTreasurer since September 2012. Mr. Leopold joined the Company in September 2012 as Senior Vice President,Capital Markets and Treasurer, and he became Executive Vice President, Capital Markets and Treasurer in March2015.Previously,Mr.Leopoldspentapproximately13yearsasaninvestmentbanker,whereheservedasamanagingdirectorintherealestatebankinggroupsat DeutscheBank(1999to2011),KBW(2011to2012)andUBSin2012.Earlierinhiscareer,Mr.LeopoldworkedinNewYorkCitygovernmentinavarietyofurbanplanningandeconomicdevelopmentpositionsintheOfficeoftheMayor,DepartmentofCityPlanningandthecity’sEconomicDevelopmentCorporation.HeisamemberoftheNationalAssociationofRealEstateInvestmentTrusts,theInternationalCouncilofShoppingCentersandtheUrbanLandInstitute.HehasalsoservedasadirectorofAgreeRealtyCorporationsinceJuly2019.
William S. Taubmanis the Chief Operating Officer of the Company, a position he has held since 2005.Mr. Taubmanis alsotheExecutiveVicePresident of theManager, a positionhehasheldsince1994.Mr. Taubmanserved as Executive Vice President of the Company from 1994 to 2005 and held various other positions with theManager prior to 1994. Mr. Taubman served as a director of the Company from 2000 to May 2018. He joined theCompany in 1986 from Oppenheimer & Co., Inc. in New York, where he was a financial analyst specializing inmergersandacquisitions.Hisresponsibilitiesincludetheoverallmanagementofthedevelopment,leasingandcenteroperations functions. Mr. Taubman also is a member of the International Council of Shopping Centers, where hepreviouslyservedasChairmanoftheBoard.HeisamemberoftheUrbanLandInstituteandtheNationalAssociationofRealEstateInvestmentTrustsandisinvolvedinanumberofothercommunityandphilanthropicorganizations.HeisalsothebrotherofR.Taubman.
Paul A. Wrightis the President, Taubman Asia, a position he has held since January 1, 2020. Mr. WrightpreviouslyservedasExecutiveVicePresident,GlobalHeadofLeasingoftheManager,apositionheheldfromApril2017to December 2019. He previously served in various other senior leasing roles for TaubmanAsia ManagementLimited from mid-2006 to March 2017, most recently as Group Vice President of Leasing. Prior to the Company,Mr.Wrightheldsenior-levelpositionswithCittaManagementLimitedandLendlease.Mr.WrightisnotaU.S.citizen.
Prior Public Offerings
Duringthe past three years, the Companyhas not madeanyunderwritten public offeringof TaubmancommonstockforcashthatwasregisteredundertheSecuritiesActorexemptfromregistrationunderRegulationA.
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Historical Selected Financial Information
SetforthbelowiscertainhistoricalselectedfinancialinformationrelatingtotheCompany.ThehistoricalselectedfinancialdataasofandforthefiscalyearsendedDecember31,2019,2018,2017,2016and2015havebeenderivedfromtheCompany’shistoricalauditedconsolidatedfinancial statements, andthehistorical selectedfinancial data as of andfor thethree monthsendedMarch31,2020and2019are derivedfromthe Company’s unaudited condensedconsolidated financial statements. This information is only asummaryandshouldbereadinconjunctionwithourAnnualReportonForm10-KforthefiscalyearendedDecember31,2019andour Quarterly Report on Form 10-Q for the quarterly period ended March 31,2020. More comprehensive financial information isincluded in those reports, including in the management’s discussion and analysis of financial condition and results of operationssection.Foradditionalinformation,see“Where You Can Find Additional Information.”Historicalresultsarenotnecessarilyindicativeofresultstobeexpectedinanyfutureperiod.
Year Ended December 31For the Quarter Ended
March 31
2019 2018 2017 2016 2015 2020 2019
(in thousands, except per share amounts,
per square foot amounts, and shares outstanding)
OPERATING DATA:
Totalrevenues $ 661,054 $ 640,870 $ 629,165 $ 612,557 $ 557,172 $ 159,459 $ 160,208
Totalexpenses $ 720,068 $ 609,477 $ 607,505 $ 514,822 $ 424,286 $ 158,694 $ 153,336
GainsonpartialdispositionsandremeasurementsofownershipinterestsinUJVs $ 319,105 $ 24,643
Netincome $ 330,374 $ 115,742 $ 112,757 $ 188,151 $ 192,557 $ 36,484 $ 29,738
NetincomeattributabletoTaubmancommonshareholders $ 203,925 $ 57,952 $ 55,267 $ 107,358 $ 109,020 $ 19,872 $ 15,097
NetincomepershareattributabletoTaubmancommonshareholders–basic $ 3.33 $ 0.95 $ 0.91 $ 1.78 $ 1.78 $ 0.32 $ 0.25
NetincomepershareattributabletoTaubmancommonshareholders–diluted $ 3.32 $ 0.95 $ 0.91 $ 1.77 $ 1.76 $ 0.32 $ 0.25
Weightedaveragenumberofcommonsharesoutstanding–basic 61,181,983 60,994,444 60,675,129 60,363,416 61,389,113 61,249,637 61,124,016
Weightedaveragenumberofcommonsharesoutstanding–diluted 62,238,439 61,277,715 61,040,495 60,829,555 62,161,334 61,474,090 61,399,108
FundsfromOperations(FFO)attributabletoTaubmancommonshareholders(1) $ 216,813 $ 229,046 $ 215,786 $ 239,963 $ 207,084 $ 48,877 $ 57,779
AdjustedFFOattributabletoTaubmancommonshareholders $ 229,460 $ 236,513 $ 227,619 $ 219,390 $ 213,969 $ 54,736 $ 58,688
FFOpershareattributabletoTaubmancommonshareholders–diluted $ 3.50 $ 3.71 $ 3.51 $ 3.91 $ 3.31 $ 0.79 $ 0.93
AdjustedFFOpershareattributabletoTaubmancommonshareholders–diluted(2) $ 3.71 $ 3.83 $ 3.70 $ 3.58 $ 3.42 $ 0.88 $ 0.95
TaubmanownershippercentageofTRGatendofperiod 70% 71% 71% 71% 71% 70% 71%
BALANCE SHEET DATA:
Realestatebeforeaccumulateddepreciation $ 4,731,061 $ 4,717,569 $ 4,461,045 $ 4,173,954 $ 3,713,215 $ 4,737,571 $ 4,732,683
InvestmentsinUJVs $ 831,995 $ 673,616 $ 605,629 $ 604,808 $ 433,911 $ 788,844 $ 691,221
Totalassets $ 4,515,465 $ 4,344,106 $ 4,214,592 $ 4,010,912 $ 3,546,510 $ 4,727,010 $ 4,451,394
Totaldebt,net $ 3,710,327 $ 3,830,195 $ 3,555,228 $ 3,255,512 $ 2,627,088 $ 4,003,126 $ 3,846,501
Totalliabilities $ 4,692,871 $ 4,644,203 $ 4,357,120 $ 4,072,911 $ 3,425,699 $ 4,968,674 $ 4,783,247
Noncontrollinginterests $ (167,183) $ (215,024) $ (172,268) $ (142,783) $ 8,004 $ (184,988) $ (222,922)
Totalshareowners’equity(deficit) $ (177,406) $ (307,897) $ (150,028) $ (70,703) $ 120,811 $ (241,664) $ (339,653)
(1) TheNationalAssociationofRealEstateInvestmentTrustsdefinesFFOasnetincome(calculatedinaccordancewithGAAP),excludingdepreciationandamortizationrelatedtorealestate,gainsandlossesfromthesaleofcertainrealestateassets,gainsandlossesfromchangeincontrol,andimpairmentwrite-downsofcertainrealestateassetsandinvestmentsinentitieswhentheimpairmentisdirectlyattributabletodecreasesinthevalueofdepreciablerealestateheldbytheentity.
(2) The Company presents adjusted versions of FFO when used by management to evaluate operating performance when certain significant items haveimpactedresultsthataffectcomparabilitywithpriororfutureperiodsduetothenatureoramountsoftheseitems.TheCompanybelievesthedisclosureoftheadjusteditemsissimilarlyusefultoinvestorsandotherstounderstandmanagement’sviewoncomparabilityofsuchmeasuresbetweenperiods.
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Book Value Per Share
OurnetbookvaluepershareasofMarch31,2020wasapproximately$(3.94)(calculatedbasedon61,375,291shares outstanding as of such date). As of March 31, 2020, Taubman’s net book value was approximately$(241,664,000).
Market Price of the Company Common Stock and Dividend Information
TheCompany’scommonstockistradedontheNYSEunderthesymbol“TCO.”AsofthecloseofbusinessonMay28,2020,thelatestpracticabletradingdaypriortothedateofthisproxystatement,therewere61,608,379sharesof the Company’s common stock outstanding and entitled to vote, held by approximately 341 holders of record ofCompanycommonstock.ThefollowingtablepresentsthehighandlowsalepricesofCompanycommonstockfortheperiodindicatedinpublishedfinancialsourcesandthedividenddeclaredpershareduringsuchperiod.
TCO
High LowDividendsDeclared
Fiscal 2018
FirstQuarter $66.61 $54.88 $0.655
SecondQuarter 61.02 50.65 0.655
ThirdQuarter 65.50 57.48 0.655
FourthQuarter 60.10 43.44 0.655
Fiscal 2019
FirstQuarter $54.07 $44.28 $0.675
SecondQuarter 54.50 40.09 0.675
ThirdQuarter 44.05 37.70 0.675
FourthQuarter 40.85 29.52 0.675
Fiscal 2020
FirstQuarter $53.40 $26.24 $0.675
SecondQuarter(throughMay28,2020) $47.51 $34.51 $ —
TheclosingpriceofthesharesoftheCompany’scommonstockonFebruary7,2020,thelasttradingdaybeforethepublicannouncementoftheTransactions,was$34.67pershareoftheCompany’scommonstock.OnJanuary31,2020, the last trading day prior to market rumors emerging that Simon was engaging in discussions to acquireTaubman,theclosingpriceforsharesoftheTaubmancommonstockontheNYSEwas$26.42pershare.
OnMay28,2020,themostrecentpracticabledatebeforethisproxystatementwasdistributedtoourshareholders,theclosingpriceforsharesoftheCompany’scommonstockontheNYSEwas$40.52pershare.
You are encouraged to obtain current market quotations for the shares of the Company’s common stock inconnectionwithvotingyoursharesoftheCompany’scommonstock.
IftheTransactionsarecompleted,therewillbenofurthermarketforsharesoftheCompany’scommonstockandthesharesoftheCompany’scommonstockwillbedelistedfromtheNYSEandderegisteredundertheExchangeAct.
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Security Ownership of Management and Certain Beneficial Owners
AsofMay22,2020,61,608,379sharesofTaubmancommonstockand26,079,159sharesofTaubmanSeriesBpreferred stock were issued and outstanding. At the close of business on May 22, 2020, our directors, the namedexecutiveofficersandthedirectorsandexecutiveofficersasagroupandothershareholderswhoareknowntoustobebeneficial owners of more than 5%of our voting securities beneficially owned and had sole voting and dispositivepower(exceptasotherwiseindicated)ofourTaubmancommonstockandourTaubmanSeriesBpreferredstockassetforthinthefollowingtable:
Directors, Named Executive Officers and More Than 5% Shareholders(1)
Number of Shares Owned
Directly or Indirectly
Number ofShares
Which Can Be Acquired Within
60 Days ofRecord
Date Held in Deferral Plans(3)
Number of Shares Beneficially Owned
Percentof
Shares
RobertS.Taubman 25,667,759 — 25,667,759(4)(9) 29.3
SimonJ.Leopold 43,919 — 43,919(5) *
WilliamS.Taubman 25,297,685 — 25,297,685(6)(9) 28.8
MayreeC.Clark 9,690 — 9,690 *
MichaelJ.Embler 5,000 7,036 12,036 *
JaniceL.Fields — 7,352 7,352 *
MichelleJ.Goldberg — 5,425 5,425 *
NancyKillefer 1,682 4,818 6,500 *
PaulA.Wright 14,397 — 14,397 *
CiaBuckleyMarakovits 4,000 15,544 19,544 *
RonaldW.Tysoe — 29,767 29,767 *
MyronE.Ullman,III 15,025 20,758 35,783 *
PeterJ.Sharp(2) 8,744 — 8,744 *
TheEstateofA.AlfredTaubman 22,503,279 — 22,503,279(7)(9) 25.7
GayleTaubmanKalisman200E.LongLakeRoad,Suite180BloomfieldHills,MI48304 22,976,268 — 22,976,268(8)(9) 26.2
TaubmanVenturesGroupLLC200E.LongLakeRoad,Suite180BloomfieldHills,MI48304 22,498,279 — 22,498,279(9) 25.7
TheVanguardGroup,Inc.100VanguardBlvd.Malvern,PA19355 8,843,584 — 8,843,584(10) 10.1
BlackRock,Inc.55East52ndStreetNewYork,NY10055 6,889,162 — 6,889,162(11) 7.9
Cohen&Steers,Inc.280ParkAvenue,10thFloorNewYork,NY10017 5,718,034 — 5,718,034(12) 6.5
FMRLLC245SummerStreetBoston,MA02210 3,422,496 — 3,422,496(13) 3.9
DirectorsandExecutiveOfficersasagroup(12persons) 26,041,872 90,700 26,132,572(14) 29.8
* less than 1%(1) WehaverelieduponinformationsuppliedbycertainbeneficialownersanduponinformationcontainedinfilingswiththeSEC.Share
figuresshownassumethatoutstandingTRGunitsarenotexchangedforcommonstockundertheContinuingOffer(whichTRGunitsmaybe exchangedat a ratio of oneshare of Taubmancommonstockfor everyTRGunit) andthat outstandingshares of TaubmanSeriesBpreferredstockarenotconvertedintoTaubmancommonstock(whichispermitted,underspecifiedcircumstances,attheratioofoneshare
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ofTaubmancommonstockforevery14,000sharesofTaubmanSeriesBpreferredstock,withanyresultingfractionalsharesredeemedforcash).AsofMay22,2020,therewere87,687,538beneficiallyownedsharesofTaubmanvotingstockoutstanding,consistingof61,608,379sharesofTaubmancommonstockand26,079,159sharesofTaubmanSeriesBpreferredstock.
(2) Mr.SharpceasedtobeemployedwithTaubmanonOctober9,2019.(3) UnderTaubmanCenters,Inc.Non-EmployeeDirectors’DeferredCompensationPlan,theTCORSUsgrantedarefullyvestedatthe
timeofgrantbutdonothavevotingrights. Thedeferralperiodcontinuesuntil theearlieroftheterminationofdirectorserviceorachangeofcontrol.
(4) Consists of (A) 38,314 shares of Taubman Series B preferred stock owned by R. Taubman, 1,338,496 shares of Taubman Series BpreferredstockownedbyR&W-TRGLLC(R&W),acompanyownedbyR.Taubmanandhisbrother,W.Taubman(sharedvotinganddispositivepower),22,311,442sharesofTaubmanSeriesBpreferredstockownedbyTVG(sharedvotinganddispositivepower),5,000sharesofTaubmanSeriesBpreferredstockownedbyTGPartners(sharedvotinganddispositivepower),and472,650sharesofTaubmanSeriesBpreferredstockownedbyTFAssociates,LLC(“TFA”)(sharedvotinganddispositivepower)(inaggregate,92.7%oftheTaubmanSeriesBpreferredstock)and(B)267,395sharesofTaubmancommonstockthatR.Taubmanowns,265,246sharesofTaubmancommonstockthatRSTCO,LLCowns,42,880sharesofTaubmancommonstockownedbyanirrevocabletrustforwhichR. Taubmanis the sole trustee for the benefit of R. Taubmanandhis children, 27,895 shares of Taubmancommonstock ownedinUTMA accounts for the benefit of his children, 711,504 shares of Taubman common stock owned by R&W (shared voting anddispositivepower),186,837sharesofTaubmancommonstockownedbyTVG(sharedvotinganddispositivepower),and100sharesofTaubmancommonstockownedbytheRevocableTrust(sharedvotinganddispositivepower).R.TaubmandisclaimsanybeneficialinterestinthevotingstockownedbyR&W,TVG,TGPartners,TFAandtheRevocableTrustbeyondhispecuniaryinterestinsuchentities.Seenote9.R&Whas pledged 1,338,496 shares of Taubman Series B preferred stock, 1,338,496 TRG units, and 711,504 shares of Taubmancommonstock,toCitibank,N.A.ascollateralforvariousloans.RSTCO,LLChaspledged265,246sharesofTaubmancommonstocktoBankofAmerica,N.A.
(5) Consistsof(A)21,967sharesofSeriesBpreferredstock,and(B)21,932sharesofTaubmancommonstockand20sharesofTaubmancommonstockonanas-convertedbasisheldthroughastockfundofthe401(k)plan,allownedbySimonLeopold.
(6) Consists of (A)25,036shares of TaubmanSeries BpreferredstockownedbyW.Taubman, 1,338,496shares of TaubmanSeries BpreferredstockownedbyR&W(sharedvotinganddispositivepower),22,311,442sharesofTaubmanSeriesBpreferredstockownedby TVG (shared voting and dispositive power), 5,000 shares of Taubman Series B preferred stock owned by TG Partners (sharedvotinganddispositivepower)and472,650sharesofTaubmanSeriesBpreferredstockownedbyTFA(sharedvotinganddispositivepower) (in aggregate, 92.6%of the Taubman Series B preferred stock), and (B) 43,032 shares of Taubman common stock that W.Taubman owns, 203,588 shares of Taubman common stock that WSTCO, LLC owns, 711,504 shares of Taubman common stockownedbyR&W(sharedvotinganddispositivepower),186,837sharesofTaubmancommonstockownedbyTVG(sharedvotinganddispositivepower),and100sharesofTaubmancommonstockownedbytheRevocableTrust(sharedvotinganddispositivepower).W. Taubman disclaims any beneficial interest in the Taubman voting stock owned by R&W, TVG, TG Partners, TFA and theRevocableTrustbeyondhispecuniaryinterestinsuchentities.Seenote8.R&Whas pledged 1,338,496 shares of Taubman Series B preferred stock, 1,338,496 TRG units, and 711,504 shares of Taubmancommonstock,toCitibank,N.A.ascollateralforvariousloans.WSTCO,LLChaspledged203,588sharesofTaubmancommonstocktoBankofAmerica,N.A.
(7) Consists of (A) 22,311,442 shares of TaubmanSeries B preferred stock owned by TVG(shared voting and dispositive power) and5,000 shares of Taubman Series B preferred stock owned by TGPartners (in aggregate, 85.6%of the Taubman Series B preferredstock), and(B) 186,837shares of TaubmancommonstockownedbyTVG(sharedvotinganddispositive power). TheEstate of A.AlfredTaubmandisclaimsbeneficialownershipintheTaubmanvotingstockownedbyTVGandTGPartnersbeyonditspecuniaryinterestinthoseentities.
(8) Consists of (A) 239 shares of Taubman Series B preferred stock owned by G. Taubman Kalisman, 22,311,442 shares of TaubmanSeries B preferred stock owned by TVG(shared voting and dispositive power), 5,000 shares of Taubman Series B preferred stockownedbyTGPartners(sharedvotinganddispositivepower)and472,650sharesofTaubmanSeriesBpreferredstockownedbyTFA(shared voting and dispositive power) (in aggregate, 87.4% of the Taubman Series B preferred stock), and (B) 186,837 shares ofTaubmancommonstockownedbyTVG(sharedvotinganddispositivepower)and100sharesofTaubmancommonstockownedbytheRevocableTrust(sharedvotinganddispositivepower).G.TaubmanKalismandisclaimsanybeneficialinterestinthevotingstockownedbyTVG,TGPartners,TFAandtheRevocableTrustbeyondherpecuniaryinterestinsuchentities.Seenote9.
(9) R.Taubman,W.TaubmanandG.TaubmanKalismanareco-trusteesoftheRevocableTrust,andsharevotinganddispositivepowerover100sharesofTaubmancommonstockownedbysuchestate.TheEstateofA.AlfredTaubman,R.Taubman,W.TaubmanandG.TaubmanKalismanmaybedeemedtobeneficiallyown186,837sharesofTaubmancommonstockownedbyTVG,5,000sharesofTaubmanSeriesBpreferredstockownedbyTGPartnersand22,311,442sharesofTaubmanSeriesBpreferredstockownedbyTVG.R. Taubman, W. Taubman and G. Taubman Kalisman may be deemed to beneficially own 472,650 shares of Taubman Series BpreferredstockownedbyTFA.Suchamountsaredisclosedinnotes4,6,7and8.EachpersondisclaimsbeneficialownershipintheTaubmanvotingstockownedbyTVG,TFA,TGPartners andtheRevocable Trust beyondsuchperson’specuniaryinterest insuchentities.
(10) Pursuant to Schedule 13G/A filed with the SEC on February 11, 2020. Represents 14.4% of the Taubman common stock. TheVanguard Group, Inc. has sole power to vote 90,170 shares, shared power to vote 73,527 shares, sole power to dispose 8,747,324shares,andsharedpowertodispose96,260shares.
(11) PursuanttoSchedule13G/AfiledwiththeSEConFebruary4,2020.Represents11.2%oftheTaubmancommonstock.Thisreportincludesholdingsofvarioussubsidiariesoftheholdingcompany.BlackRock,Inc.hassolepowertovote6,628,526sharesandsolepowertodispose6,889,162shares.
(12) PursuanttoaSchedule13G/AfiledwiththeSEConFebruary14,2020.Represents9.3%oftheTaubmancommonstock.Thisreportincludesholdingsofvarioussubsidiariesoftheholdingcompany.Cohen&Steers,Inc.hassolepowertovote5,188,824sharesandsolepowertodispose5,718,034shares.
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(13) Pursuant to a Schedule 13Gfiled with the SECon February 7, 2020. Represents 5.6%of the Taubman common stock. This reportincludesholdingsofvarioussubsidiariesoftheholdingcompany.FMRLLChassolepowertovote302,133sharesandsolepowertodispose3,422,496shares.
(14) Consistsofanaggregateof(A)24,212,905sharesofTaubmanSeriesBpreferredstockbeneficiallyowned(inaggregate,92.8%oftheTaubman Series B preferred stock), and (B) 1,828,967 shares of Taubman common stock beneficially owned and 90,700 shares ofTaubmancommonstocksubjecttoissuanceundertheNon-EmployeeDirectors’DeferredCompensationPlan(inaggregate,3.1%oftheTaubmancommonstock).Seenotes4and6forsharesandunitspledgedascollateral.
Certain Transactions in the Shares
Transactions in Taubman Voting Stock During the Past 60 Days
Neither the Taubman filing persons nor the Simon parties have made any transactions with respect to theTaubmanvotingstockduringthepast60days.
Agreements Involving Taubman Securities
Other than the merger agreement and agreements entered into in connection therewith, including the votingagreementdiscussedunder“Agreements Involving Taubman Common Stock—The Voting Agreement,”Taubman,theTaubman filing persons, and the Simon parties and their respective affiliates have not made any transactions withrespecttotheTaubmanvotingstockduringthepast60days,otherthanassetforthbelow:
R&W-TRGLLC,acompanyownedbyR.Taubmanandhisbrother,W.Taubman,haspledged1,338,496sharesofSeriesBpreferredstock,1,338,496TRGunitsand711,504sharesofTaubmancommonstocktoCitibank,N.A.ascollateral for variousloans. RSTCO,LLC,whichis ownedbyR. Taubman, haspledged265,246sharesof commonstocktoBankofAmerica,N.A.,andWSTCO,LLC,whichisownedbyW.Taubman,haspledged203,588sharesofTaubmancommonstocktoBankofAmerica,N.A.
CertainTaubmanfilingpersonsarepartytotheContinuingOfferandCashTenderAgreement,eachofwhichisdescribedunder“Significant Past Transactions and Contracts—Transactions Between the Company and its Affiliatesand the Taubman Filing Persons and their Affiliates.”
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NO APPRAISAL OR DISSENTERS’ RIGHTS
Appraisal rights are statutory rights that, if applicable under law, enable shareholders to dissent from anextraordinarytransaction, suchasamerger, andtodemandthat thecorporationpaythefair valuefortheir sharesasdetermined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders inconnectionwiththeextraordinarytransaction.
Taubmanshareholdersdonothavedissenters’orappraisalrightswithrespecttotheTransactions,includinganyrighttoreceivenoticewithrespecttodissenters’rightsunderSection703aoftheMBCA,anyrightorremedyunderSections 762 et seq. of the MBCA, any dissenters’ or appraisal rights under the DRULPA or any dissenters’ orappraisalrightsundertheTaubmanOPagreement.
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DELISTING AND DEREGISTRATION OF TAUBMAN COMMON STOCK AND OF TAUBMAN SERIES JAND SERIES K PREFERRED STOCK
If the Transactions are completed, the Taubman common stock, the Taubman Series J Preferred Stock and theTaubmanSeriesKPreferredStockwill ceasetobelistedontheNYSEandpricequotationswithrespecttosalesofshares of the Taubman common stock, the Taubman Series J Preferred Stock and the Taubman Series K PreferredStock in the public market will no longer be available. In addition, registration of the Taubman common stock, theTaubman Series J Preferred Stock and the Taubman Series K Preferred Stock under the Exchange Act will beterminated.Asaresult,wewouldnolongerfilereportswiththeSEConaccountoftheTaubmancommonstockortheTaubmanSeriesJPreferredStockortheTaubmanSeriesKPreferredStock.
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THE ADVISORY COMPENSATION PROPOSAL
General
InaccordancewithSection14AoftheExchangeAct,Taubmanisprovidingitsshareholderswiththeopportunitytocastanon-binding,advisoryvoteonthecompensationthatmaybepaidorbecomepayabletoitsnamedexecutiveofficers in connection with the Transactions, which has been quantified and discussed in more detail in “SpecialFactors—Interests of Taubman’s Directors and Executive Officers in the Transactions—Golden ParachuteCompensation.”
Advisory Vote
AsrequiredbySection14AoftheExchangeAct,Taubmanisaskingitsshareholderstovoteontheadoptionofthefollowingresolution:
“RESOLVED,that thecompensation that maybepaidor becomepayable to Taubman’s namedexecutiveofficers in connection with the Transactions, as disclosed in the sections of the Proxy Statement entitled‘Special Factors—Interests of Taubman’s Directors and Executive Officers in the Transactions—GoldenParachute Compensation,’isherebyAPPROVED.”
The vote on executive compensation that may become payable in connection with the REIT Merger is a voteseparateandapartfromthevotetoadoptandapprovethemergeragreement.Accordingly,youmayvotefororagainstthe Advisory Compensation Proposal, and that vote will have no impact on the approval of the Merger AgreementProposal,andviceversa.Becausethevoteisadvisoryinnatureonly,itwillnotbebindingoneithertheCompanyorSimon. Accordingly, approval of the Advisory Compensation Proposal is not a condition to the completion of theTransactions. In addition, because Taubman and its affiliates are contractually obligated to pay the compensationdisclosed in the sections of the Proxy Statement entitled “Special Factors—Interests of Taubman’s Directors andOfficers in the Transactions—Golden Parachute Compensation,”thecompensationwillbepayable,subjectonlytotheconditions applicable thereto, if the merger agreement is approved and the REIT Merger is consummated andregardlessoftheoutcomeoftheadvisoryvote.
Required Vote
TheAdvisoryCompensationProposalwillbeapprovedbytheaffirmativevoteoftheholdersofatleasttwo-thirdsof the outstanding shares of Taubman voting stock entitled to vote thereon (voting together as a single class).Abstentionswillhavethesameeffectasavoteagainstthisproposal.
Vote Recommendation
TheBoardrecommendsavote“FOR”theAdvisoryCompensationProposal.
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THE ADJOURNMENT PROPOSAL
General
CompanyshareholdersarealsobeingaskedtoconsiderandvoteontheAdjournmentProposal. Weareseekingshareholderapprovaltoadjournthespecialmeetingevenifaquorumispresent,ifnecessaryandappropriate,tosolicitadditionalproxiesifthereareinsufficientvotesatthetimeofthespecialmeetingtoobtaintheTaubmanshareholderapproval.Thespecialmeetingwillnotbeadjourned,recessedorpostponedonmorethantwooccasions,andineachsuchinstancebymorethan15businessdaysfromthepreviouslyscheduledspecial meetingdate, unlessrequiredbylaworwiththeconsentofSimon.EvenwithSimon’sconsent,thespecialmeetingmaynotbeadjournedformorethan30daysinanyonecase.Ifthespecialmeetingisadjourned,nonoticeofthetimeorplaceofthereconvenedmeetingwill be given to Taubman shareholders other than an announcement made at the special meeting. At the adjournedmeeting, any business may be transacted that might have been transacted at the original meeting. If after theadjournmentanewrecorddateforshareholdersentitledtovoteisfixedfortheadjournedmeeting,theTaubmanBoardshallfixanewrecorddatefornoticeofsuchadjournedmeetinginaccordancewiththeMBCA,andshallgivenoticeoftheadjournedmeetingtoeachshareholderofrecordentitledtovoteat suchadjournedmeetingasoftherecorddatefixedfornoticeofsuchadjournedmeeting.Ifaquorumisnotpresentatthespecialmeeting,however,amajorityofthevotes cast by the holders of shares of Taubman voting stock entitled to vote on the action may adjourn the specialmeeting.
The Company does not intend to call a vote on this proposal if Proposal 1 has been approved at the specialmeeting.
The approval by the shareholders of the Adjournment Proposal is not a condition to the completion of theTransactions.
Required Vote
The Adjournment Proposal will be approved if the votes cast in favor of such proposal exceed the votes castagainstsuchproposalbytheholdersofsharesofTaubmanvotingstockentitledtovotethereon.Assumingaquorumispresent,failuretoprovideyourproxycardorvotinginstructionswillhavenoeffectontheAdjournmentProposal.
Vote Recommendation
TheBoardrecommendsavote“FOR”theAdjournmentProposal.
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PRESENTATION OF SHAREHOLDER PROPOSALS AND NOMINATIONS AT THE 2020 ANNUALMEETING
The 2019 annual meeting of shareholders was held on May 30, 2019. Depending on the timing of theconsummation of the Transactions, and whether they are consummated at all, we may or may not have an annualmeetingofshareholdersin2020whileweareapubliclylistedcompanyontheNYSE.Ifwedohaveannualmeetingsin the future as a publicly listed company on the NYSE, our holders of Taubman voting stock as of the applicablerecorddatewillcontinuetobeentitledtoattend,voteandparticipateinourannualmeetingsofshareholders,includingthe2020annual meetingof shareholders, in whichcasewewill providenotice of or otherwise publicly disclose thedate onwhichsuch2020annual meeting will be held. Anyshareholder nominations or proposals for other businessintendedtobepresentedatournextannualmeeting,ifany,mustbesubmittedtousassetforthbelow.
IftheCompanyholdsa2020annualmeeting,shareholdersinterestedinsubmittingaproposalforinclusionintheproxymaterialsfortheannualmeetingofshareholdersin2020maydosobyfollowingtheproceduresprescribedinRule14a-8oftheExchangeAct.Tobeeligibleforinclusion,shareholderproposalsmusthavebeenreceivedbyusnolaterthanJanuary7,2020,unlessthedateofour2020AnnualMeetingischangedbymorethan30daysfromMay30,2020, in which case the proposal must be received a reasonable time before we begin to print and mail our proxymaterials.
Underthebylaws,nobusinessmaybeconductedbeforeanannualmeetingofshareholdersunlessitisproperlybroughtbeforethemeetingbyoratthedirectionoftheTaubmanBoardorbyashareholderofrecordentitledtovotewhohas delivered written notice to our Secretary, Chris Heaphy, 200 East Long Lake Road, Suite 300, BloomfieldHills, Michigan 48304-2324 (containing certain information specified in the bylaws about the shareholder and theproposed action). Notice must have been received by our Secretary by January 7, 2020, and must otherwise be incompliancewiththerequirementsoftheSEC’sproxyrules.However,ifthe2020annualmeetingoccursmorethan60daysafterMay30,2020,anydirectornominationorshareholderproposalofotherbusinessintendedtobepresentedforconsiderationat the2020annualmeeting, butnotintendedtobeconsideredforinclusioninourproxystatementandformofproxyrelatingtosuchmeeting(i.e.notpursuanttoRule14a-8oftheExchangeAct),mustbereceivedbyus(A)notlaterthanthecloseofbusinessonthelaterofthe90thdaypriortothedateofthe2020annualmeetingorthe10thdayfollowingthedayonwhichpublicannouncementismadeofthedateofthe2020annualmeeting,and(B)notearlierthanthe120thdaypriortothe2020annualmeeting.
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OTHER INFORMATION REGARDING THE SIMON PARTIES AND THE TAUBMAN FILING PERSONS
The Simon Parties
Simon Property Group, Inc.
Simon,aDelawarecorporation,operatesasaself-administeredandself-managedREIT.Simonisstructuredasanumbrella partnership REIT under which substantially all of its business is conducted through the Simon operatingpartnership,Simon’smajority-ownedpartnershipsubsidiary,forwhichSimonisthegeneralpartner.Simon’sprimarybusiness is owning, developing and managing premier shopping, dining, entertainment and mixed-use destinations,whichconsist primarilyofmalls, PremiumOutlets®, andTheMills®. Simon’sproperties, asofDecember31,2019,comprised 191million square feet in North America, Asia andEurope. Asof December 31, 2019, Simonownedorheldaninterest in204income-producingproperties intheUnitedStates, whichconsistedof106malls, 69PremiumOutlets,14Mills,fourlifestylecenters,and11otherretailpropertiesin37statesandPuertoRico.Internationally,asofDecember31, 2019,Simonhadownershipinterests in29PremiumOutlets andDesignerOutlet properties primarilylocatedinAsia,EuropeandCanada.AsofDecember31,2019,Simonalsoowneda22.2%equitystakeinKlépierreSA, or Klépierre, a publicly traded, Paris-based real estate company, which owns, or has an interest in, shoppingcenterslocatedin15countriesinEurope.
SimoncommonstockandpreferredstockaretradedontheNYSEunderthetradingsymbols“SPG,”“SPGJ”and“SPG/20.”
TheprincipalbusinessaddressandphonenumberofSimonare:
SimonPropertyGroup,Inc.225WestWashingtonStreetIndianapolis,IN46204(317)636-1600
Simon Property Group, L.P.
TheSimonoperatingpartnershipisaDelawarelimitedpartnershipthatisamajority-ownedsubsidiaryofSimon,owningallofSimon’srealestatepropertiesandotherassets.AsofDecember31,2019,Simonownedanapproximate86.8%ownershipinterestintheSimonoperatingpartnership,withtheremaining13.2%ownershipinterestownedbylimited partners. As the sole general partner of the Simonoperating partnership, Simonhas exclusive control of theSimonoperatingpartnership’sday-to-daymanagement.
Silver Merger Sub 1, LLC
MergerSub1isanewlyformedDelawarelimitedliabilitycompany.ItisawhollyownedsubsidiaryoftheSimonoperating partnership andwasformedsolely for the purpose of engagingin the Transactions. Asof the date hereof,MergerSub1hasnotengagedinanybusinessotherthaninconnectionwiththeTransactions.
Silver Merger Sub 2, LLC
MergerSub2isanewlyformedDelawarelimitedliabilitycompany.ItisawhollyownedsubsidiaryofMergerSub1andwasformedsolelyforthepurposeofengagingintheTransactions.Asofthedatehereof,MergerSub2hasnotengagedinanybusinessotherthaninconnectionwiththeTransactions.
Duringthepastfiveyears,noneoftheSimonpartiesnorSimon’sdirectorsorexecutiveofficerslistedbelowhasbeenconvictedinacriminalproceeding(excludingtrafficviolationsorsimilarmisdemeanors).Inaddition,duringthepastfiveyears,exceptassetforthbelow,noneoftheSimonpartiesnorSimon’sdirectorsorexecutiveofficerslistedbelowhas beena party to anyjudicial or administrative proceeding (except for matters that were dismissed withoutsanctionorsettlement)thatresultedinajudgment,decreeorfinalorderenjoiningthepersonfromfutureviolationsof,or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or statesecuritieslaws.EachoftheindividualslistedbelowisacitizenoftheUnitedStates.
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Directors and Executive Officers
The names and material occupations, positions, offices or employment during the past five years of Simon’sdirectorsandexecutiveofficersaresetforthbelow.EachofSimon’sdirectorsandexecutiveofficersisacitizenoftheUnitedStates.
Name Age Position With the Company
GlynF.Aeppel 61 Director
LarryC.Glasscock 71 Director
KarenN.Horn,Ph.D. 76 Director
AllanHubbard 72 Director
ReubenS.Leibowitz 72 Director
GaryM.Rodkin 67 Director
StefanM.Selig 57 Director
DanielC.Smith,Ph.D. 62 Director
J.AlbertSmith,Jr. 79 Director
MartaR.Stewart 62 Director
DavidSimon 58 ChairmanoftheBoard,ChiefExecutiveOfficerandPresident
RichardS.Sokolov 70 Director,ViceChairman
HerbertSimon 85 Director,ChairmanEmeritusoftheBoard
StevenE.Fivel 59 GeneralCounselandSecretary
BrianJ.McDade 40 ExecutiveVicePresident,ChiefFinancialOfficerandTreasurer
JohnRulli 63 PresidentofMallsandChiefAdministrativeOfficer
AlexanderL.W.Snyder 50 AssistantGeneralCounselandAssistantSecretary
Directors
Glyn F. Aeppelhasservedasadirectorsince2016.Ms.AeppelservesasPresidentandChiefExecutiveOfficerofGlencove Capital, a lifestyle hospitality investment and advisory company that she founded in 2010. FromOctober2008toMay2010,Ms.AeppelservedasChiefInvestmentOfficerofAndreBalazsProperties, anowner,developerandoperator oflifestyleluxuryhotels. FromApril 2006toOctober2008,sheservedasExecutiveVicePresidentofAcquisitionsandDevelopmentforLoewsHotelsandwasamemberofitsexecutivecommittee. FromApril 2004toApril2006,shewasaprincipalofAeppelandAssociates,ahospitalityadvisorydevelopmentcompany,duringwhichtime she assisted Fairmont Hotels and Resorts in expanding in the United States and Europe. Prior to April 2004,Ms.AeppelheldexecutivepositionswithLeMeridienHotels,InterstateHotels&Resorts,Inc.,FFCHospitality,LLC,HolidayInnWorldwideandMarriottCorporation.Ms.AeppelcurrentlyservesontheboardofdirectorsofAvalonBayCommunities, Inc., where she is a member of the nominating and governance committee and of the investmentandfinancecommittee. Shealsoserves ontheboardsof ExclusiveResorts, LLC,GilbaneInc., andConcordHospitalityEnterprises,allprivatelyheldcompanies.Ms.AeppelpreviouslyservedontheboardsofKeyHospitalityAcquisitionCorporation,LoewsHotelsCorporationandSunriseSeniorLiving,Inc.
Larry C. Glasscockhasservedasdirectorsince2010.Mr.GlasscockservedasChairmanandCEOofAnthem,Inc.,ahealthcareinsurancecompany,fromNovember2005toMarch2010.Mr.GlasscockalsoservedasPresidentandChiefExecutiveOfficerofWellPoint,Inc.from2004to2007.Mr.GlasscockpreviouslyservedasChairman,PresidentandChiefExecutiveOfficerofAnthem,Inc.from2003to2004andservedasPresidentandChiefExecutiveOfficerofAnthem,Inc.from2001to2003.Mr.GlasscockalsopreviouslyservedasadirectorofAnthem,Inc.,andasadirectorfor Sprint Nextel Corporation until 2013. Mr. Glasscock is currently the non-executive Chairman of the Board forZimmerBiometHoldings,Inc.whereheisamemberoftheauditcommitteeandthecorporategovernancecommittee.He is also a director of Sysco Corporation where he is the chairman of the corporate governance and nominatingcommittee, a member of the executive committee, and a member of the compensation and leadership developmentcommittee.
Karen N. Horn, Ph.D.has served as director since 2004. Dr. Horn has served as Senior Managing Director ofBrockCapitalGroup,acorporateadvisoryandinvestmentbankingfirm,since2003.RetiredPresident,GlobalPrivateClientServicesandManagingDirectorofMarsh,Inc.,asubsidiaryofMarsh&McLennanCompanies,havingservedin these positions from 1999 to 2003. Prior to joining Marsh, she was Senior Managing Director and Head ofInternationalPrivateBankingatBankersTrustCompany;ChairmanandChiefExecutiveOfficer,BankOne,
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Cleveland, N.A.; President of the Federal Reserve Bank of Cleveland; Treasurer of Bell of Pennsylvania; and VicePresidentofFirstNationalBankofBoston.SheisalsoamemberoftheboardoftheNationalAssociationofCorporateDirectors andpreviouslyservedasits chairperson, ViceChairmanoftheU.S.RussiaFoundation, andtheChairmanand a member of the board of the National Bureau of Economic Research. She previously served as a director ofGeorgia-PacificCorporation,FannieMaeandEliLillyandCompany,andinthepastfiveyearssheservedasadirectorofNorfolkSouthernCorporationandT.RowePriceMutualFunds.
Allan Hubbardhas served as director since 2009. Mr. Hubbard has served as Co-Founder and Chairman andPartnerofE&ACompanies,aprivately-heldholdingcompanythatacquiresandoperatesestablishedcompanies,since1977. Mr. Hubbardservedas Assistant to the President for Economic Policy anddirector of the NationalEconomicCouncil for the GeorgeW.Bushadministration. Healsoservedas Executive Director of the President’sCouncilonCompetitiveness for the George H.W. Bush administration. Mr. Hubbard previously served as a director ofAcadiaHealthcare,Anthem,Inc.,PIMCOEquitySeries,andPIMCOEquitySeriesVIT.
Reuben S. Leibowitzhasservedasdirector since2005.Mr. LeibowitzhasservedasManagingMemberofJENPartners,aprivateequityfirm,since2005.Mr.LeibowitzwasaManagingDirectorofWarburgPincusfrom1984to2005. He was a director of Chelsea Property Group, Inc. from 1993 until it was acquired by Simon in 2004 andpreviouslyservedasadirectoroffourotherpubliccompanies.
Gary M. Rodkinhasservedasdirectorsince2015.Mr.RodkinservedasChiefExecutiveOfficerandmemberoftheboardofConAgraFoods,Inc.from2005untilhisretirementinMay2015.Mr.RodkinwasChairmanandChiefExecutive Officer of PepsiCo Beverages and Foods North America from February 2003 to June 2005.Mr.RodkinjoinedPepsiCoin1998,afteritacquiredTropicana,whereMr.RodkinhadservedasPresidentsince1995.From1979to1995,Mr.RodkinheldmarketingandgeneralmanagementpositionsofincreasingresponsibilityatGeneralMills,withhislastthreeyearsatthecompanyasPresident,Yoplait-Colombo.Mr.RodkincurrentlyservesontheboardofdirectorsofMcCormick&Company,Incorporated,whereheisamemberoftheirNominating/CorporateGovernancecommittee.Inthepastfiveyears,hehasservedasadirectorofConAgraFoods,Inc.andAvonProducts,Inc.
Stefan M. Selighasservedasdirectorsince2017.Mr.SeligisFounderofBridgeParkAdvisorsLLC,astrategicadvisory firm. Prior to that Mr. Selig served as the Undersecretary of the Commerce for International Trade for theU.S.DepartmentofCommercefrom2014-2016.Mr.SeligpreviouslywaswithBankofAmericaMerrillLynchfrom1999-2014,ultimatelyservingasExecutiveViceChairmanofGlobalCorporateandInvestmentBanking.Mr.SeligcurrentlyservesontheboardofdirectorsofEntercomCommunicationsCorp.,TuscanHoldingsCorp.,andSafeholdInc. where he is the lead independent director and serves on each of the audit, compensation and nominating andgovernancecommittees.
Daniel C. Smith, Ph.D.has served as director since 2009. Dr. Smith serves as President and Chief ExecutiveOfficeroftheIndianaUniversityFoundationandClareW.BarkerProfessorofMarketingatIndianaUniversity,KelleySchool of Business (the “Kelley School”). Served as Dean of the Kelley School from 2005 - 2012 and as ChiefExecutiveOfficeroftheIndianaUniversityFoundationsince2012.Dr.SmithjoinedthefacultyoftheKelleySchoolin 1996 and has served as Chair of the Marketing Department, Chair of the MBAProgram, and AssociateDeanofAcademicAffairs.
J. Albert Smith, Jr.hasservedasdirectorsince1993.Mr.SmithhasservedasChairman,ChaseBank,anationalfinancial institution, in Central Indiana since 2014 and Managing Director of J.P. Morgan Private Bank since 2005.Mr.SmithwasPresidentofBankOneCentralIndianafrom2001to2005;ManagingDirectorofBancOneCorporationfrom1998 to 2001; President of Bank One, Indiana, NAfrom1994 to 1998; and President of Banc OneMortgageCorporationfrom1974to1994.
Marta R. Stewarthasservedasdirectorsince2018.Mrs.StewartservedasExecutiveVicePresidentandChiefFinancial OfficerofNorfolkSouthernCorporation,oneofthenation’spremiertransportationcompanies, from2013untilherretirementinAugust2017.Mrs.StewartjoinedNorfolkSouthernCorporationin1983andservedinseveralfinancepositionsbeforebeingnamedVicePresidentandControllerin2003andthenVicePresidentandTreasurerin2009.Mrs.StewartcurrentlyservesontheboardofdirectorsofTheRaytheonCompanywheresheisamemberoftheauditcommitteeandofthepublicpolicyandcorporateresponsibilitycommittee.
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David Simonhas served as Chairman of Simon since 2007, CEO of Simon or its predecessor since 1995 andPresident of Simonsince February 2019; a director of Simonor its predecessor since its incorporation in 1993; andPresident of Simon’s predecessor from 1993 to 1996. From 1988 to 1990, Mr. Simon was Vice President ofWassersteinPerella&Company.From1985to1988,hewasanAssociateatFirstBostonCorp.Inthepastfiveyears,hepreviously servedas a director of WashingtonPrimeGroup. Heis thesonof thelate Mr. MelvinSimonandthenephewofMr.HerbertSimon.
Richard S. Sokolovhas served as Vice Chairmanof Simonsince February 2019anda director of Simonor itspredecessor since 1996; President and Chief Operating Officer of Simon or its predecessor from 1996 to February2019;andPresidentandChiefExecutiveOfficerofDeBartoloRealtyCorporationfromitsincorporationin1994untilit merged with Simon’s predecessors in 1996. Mr. Sokolov joined its predecessor, The Edward J. DeBartoloCorporation,in1982asVicePresidentandGeneralCounselandwasnamedSeniorVicePresident,DevelopmentandGeneralCounselin1986.Inthepastfiveyears,hepreviouslyservedasadirectorofWashingtonPrimeGroup.
Herbert SimonhasservedasChairmanEmeritusoftheBoardofSimonsince2007.Co-ChairmanoftheBoardofSimonoritspredecessorfrom1995to2007.Mr.HerbertSimonwasChiefExecutiveOfficerandadirectorofSimon’spredecessor from its incorporation in 1993 to 1995. He also serves on the Board of Governors for the NationalBasketballAssociation(“NBA”)andasChairmanoftheBoardofMelvinSimonandAssociates,Inc.(“MSA”).HeistheuncleofMr.DavidSimon.
Executive Officers
Steven E. FivelservesasSimon’sGeneralCounselandSecretary.PriortorejoiningSimonin2011asAssistantGeneralCounselandAssistantSecretary,Mr.FivelservedasExecutiveVicePresident,GeneralCounselandSecretaryofBrightpoint,Inc.Mr.FivelwaspreviouslyemployedbyMSAfrom1988until1993andthenbySimonfrom1993to1996.Mr.FivelwaspromotedtoGeneralCounselandSecretaryin2017.
Brian J. McDadeservesasSimon’sExecutiveVicePresident,ChiefFinancialOfficerandTreasurer.Mr.McDadejoinedSimonin2007astheDirectorofCapitalMarketsandwaspromotedtoSeniorVicePresidentofCapitalMarketsin2013.Mr.McDadebecameTreasurer in2014andwaspromotedtoExecutiveVicePresidentandChiefFinancialOfficerin2018.
John RulliservesasSimon’sPresidentofMallsandChiefAdministrativeOfficer.Mr.RullijoinedMSAin1988andheldvariouspositionswithMSAandSimonthereafter.Mr.RullibecameChiefAdministrativeOfficerin2007andwaspromotedtoSeniorExecutiveVicePresidentin2011.Mr.RulliwaspromotedtoPresidentofMallsin2017.
Alexander L.W. SnyderservesasSimon’sAssistantGeneralCounselandAssistantSecretary.Mr.SnyderjoinedSimon in 2016 as Senior Deputy General Counsel. Immediately prior to joining Simon, Mr. Snyder was ManagingPartneroftheCrimsonFulcrumStrategicInstitute.Mr.SnyderpreviouslyservedasExecutiveVicePresident,GeneralCounsel and Corporate Secretary for Beechcraft Corporation as well as Chief Counsel Mergers &AcquisitionsforKochIndustries,Inc.Mr.SnyderwaspromotedtoAssistantGeneralCounselandAssistantSecretaryin2017.
The Taubman Filing Persons
Duringthepastfiveyears,noneoftheTaubmanfamilymembersoranyoftheirrespectivedirectorsorexecutiveofficers has been convicted of a criminal proceeding (excluding traffic violations or similar misdemeanors). Inaddition, during the past five years, none of the Taubman family members or any of their respective directors orexecutiveofficershasbeenapartytoanyjudicialoradministrativeproceeding(exceptformattersthatweredismissedwithoutsanctionorsettlement)thatresultedinajudgment,decreeorfinalorderenjoiningsuchpersonorentityfromfutureviolationsof,orprohibitingactivitiessubjectto,federalorstatesecuritieslawsorafindingofanyviolationoffederalorstatesecuritieslaws.
Robert S. Taubman
R.TaubmanservesastheChairmanoftheBoard,andPresidentandChiefExecutiveOfficerofTaubmanandtheManager,whichisasubsidiaryoftheTaubmanoperatingpartnership.HehasbeenChairmansinceDecember2001,adirectorsince1992andPresidentandCEOsince1990.Currently,R.TaubmanisamemberandformerTrusteeoftheUrban Land Institute, serves on the Advisory Board of Governors, National Association of Real Estate InvestmentTrusts,isamemberandpasttrusteeoftheInternationalCouncilofShoppingCenters,isamemberofthe
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University of Michigan Investment Advisory Committee for its endowment and is involved in a number of othercommunityandphilanthropicorganizations.Previously,R.TaubmanwastheChairmanoftheBoardandadirectorofthe Real Estate Roundtable. R. Taubman has served on the board of directors of Comerica Bank and relatedpredecessorboardssince1987(currently,amemberoftheEnterpriseRiskCommittee).Mr.TaubmanalsoservedontheboardofdirectorsofSotheby’sHoldings,Inc.(2000-2016)(servedasChairoftheFinanceCommitteeandasChairoftheCompensationCommittee).Mr.TaubmanhasledtheCompanyasaprincipalexecutiveofficerforover36years,asadirectorfor28yearsandasChairmanoftheTaubmanBoardfor19years.HeisalsothebrotherofW.TaubmanandG.TaubmanKalisman.
ThebusinessaddressofR.Taubmanis200EastLongLakeRoad,Suite300,BloomfieldHills,Michigan48304,telephonenumber248-258-6800.
R.TaubmanisaUnitedStatescitizen.
William S. Taubman
W.TaubmanistheChiefOperatingOfficeroftheCompany,apositionhehasheldsince2005.W.TaubmanisalsotheExecutiveVicePresidentoftheManager,apositionhehasheldsince1994.W.TaubmanservedasExecutiveVicePresidentoftheCompanyfrom1994to2005andheldvariousotherpositionswiththeManagerpriorto1994.W.TaubmanservedasadirectoroftheCompanyfrom2000to2018.HejoinedtheCompanyin1986fromOppenheimer&Co.,Inc.inNewYork,wherehewasafinancial analystspecializinginmergersandacquisitions. W.TaubmanisalsoamemberoftheInternationalCouncilofShoppingCenters,wherehepreviouslyservedasChairmanoftheBoard.He is a member of the Urban Land Institute and the National Association of Real Estate Investment Trusts and isinvolvedinanumberofothercommunityandphilanthropicorganizations.HeisalsothebrotherofR.TaubmanandG.TaubmanKalisman.
ThebusinessaddressofW.Taubmanis200EastLongLakeRoad,Suite300,BloomfieldHills,Michigan48304,telephonenumber248-258-6800.
W.TaubmanisaUnitedStatescitizen.
Taubman Ventures Group LLC
TVGisaMichiganlimitedliabilitycompany.TVGismanagedbyamajorityininterest ofthevotingcommonmembers. The voting common members are the AAT Trust and entities created and managed by R. Taubman, W.Taubman and G. Taubman Kalisman. The principal business of TVG is to hold, administer and invest certaininvestment assets, including Taubman, the Taubman operating partnership, and interests in various private equity,hedgefundandventurecapitalinvestments.Asofthedateofthisproxystatement,TVGowns186,837sharesoftheTaubman common stock, 22,311,442 shares of the Taubman Series B preferred stock and 22,311,442 Taubman OPunits.TVGisapartytothevotingagreement.
The business address of TVG is c/o Taubman Ventures Management, 200 East Long Lake Road, Suite 180,BloomfieldHills,Michigan48304,telephonenumber248-258-7303.
Significant Past Transactions and Contracts
Transactions Between the Company and its Affiliates and the Taubman Filing Persons and their Affiliates
Asdescribedbelow,overthepasttwoyears,theCompanyoritsaffiliateshaveenteredintocertaintransactionswithcertainmembersoftheTaubmanfamilymembersortheiraffiliates.
TheManageristhemanageroftheSunvalleyshoppingcenter(“Sunvalley”)inConcord,California,andhasbeenthe manager since its original development (opened in 1967). TRG owns a 50% general partnership interest inSunValley Associates, a California general partnership, which indirectly owns the center. The other 50% partnerconsistsoftwoentitiesownedandcontrolledbyTheEstateofA.AlfredTaubman(R.Taubman,W.TaubmanandG.TaubmanKalismanareco-personalrepresentativesofsuchestate).A.AlfredTaubmanwastheformerChairmanoftheTaubmanBoardandthefatherofR.TaubmanandW.Taubman.TheSunvalleypartnershipagreementnamesTRGasthemanaginggeneralpartnerandprovidesthatsolongasTRGhasanownershipinterestintheproperty,theManagerwill remain its manager and leasing agent. Sunvalley is subject to a ground lease on the land, which is owned byTaubmanLandAssociatesLLC(“TaubmanLand”).TaubmanLandisowned50%byanaffiliateofTRGand50%byanentitythatR.Taubman,W.TaubmanandG.TaubmanKalismanhaveownershipinterestsinandcontrol.Rentwas$1.7millionforeachof2019and2018.
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The Taubman family members and certain of their affiliates receive various management services from theManager. For such services, the Taubman family members and their affiliates paid the Manager approximately$2.4millionand$2.6millionin2019and2018,respectively.
TaubmanVenturesManagement,anoperatingdivisionofTVGthatmanagesthepersonalassetsof,andprovidesadministrative services to the Taubman family members, utilizes a portion of the Manager’s Bloomfield Hills,Michigan offices. For the use of the office space, TaubmanVentures Management paid the Manager approximately$168,973 and $185,500 in 2019 and 2018, respectively, representing its pro rata share of the total occupancy costs.Although historically employees of TaubmanVentures Management and other affiliated companies of the TaubmanfamilymemberswereenrolledinManager’sbenefitprogramandmadepaymentstotheManagertofullyreimbursethecostsassociatedwithsuchparticipationplusanadministrativefee;in2018and2019,suchemployeesparticipatedintheirownbenefitprogramandthereforedidnotmakeanypaymentstotheManager.
The Manager owns a corporate plane for business use and pursuant to aircraft time sharing agreements withR. Taubmanand W. Taubman, the Taubmanfamily members reimbursed the Manager approximately $544,323and$535,169in 2019and2018, respectively, for personal use of the corporate plane, representing reimbursement of allpilotandcrewexpenses,fuelcostsandlandingfees.
Atthetimeofourinitial publicofferingandacquisitionofourpartnershipinterest inTRGin1992,weenteredintotheCashTenderAgreementwithTheEstateofA.AlfredTaubmanandTRAPartners(nowTVG),eachofwhomownedaninterestinTRG,wherebyeachoftheRevocableTrustandTVG(and/oranyassigneeoftheRevocableTrustor TVG, which now include other specified entities that are affiliated with the children of A. Alfred Taubman (R.Taubman,W.Taubman,andG.TaubmanKalisman))hastherighttotendertousTaubmanOPunits(providedthatifthetenderingpartyistenderinglessthanallofitsTaubmanOPunits,theaggregatevalueisatleast$50million)andcauseustopurchasethetenderedinterestsatapurchasepricebasedonamarketvaluationofTaubmanonthetradingdate immediately preceding the date of the tender (except as otherwise provided below). TVG is controlled by amajority-in-interest among the Revocable Trust and entities affiliated with the children of A. Alfred Taubman (R.Taubman,W.TaubmanandG.TaubmanKalisman).Attheelectionofthetenderingparty,TaubmanOPunitsheldbymembers of A. AlfredTaubman’s family andTaubmanOPunits heldbyentities inwhichhis family members holdinterestsmaybeincludedinsuchatender.
Wewillhavetheoptiontopayfortheseinterestsfromavailablecash,borrowedfunds,orfromtheproceedsofanofferingofTaubmancommonstock.Generally,weexpecttofinancethesepurchasesthroughthesaleofnewsharesofTaubmancommonstock.Thetenderingpartnerwillbearallmarketriskifthemarketpriceatclosingislessthanthepurchasepriceandwillbearthecostsofsale.Anyproceedsoftheofferinginexcessofthepurchasepricewillbeforoursolebenefit. Weaccount fortheCashTenderAgreementasafreestandingwrittenput option. Astheoptionputprice is defined by the current market price of our stock at the time of tender, the fair value of the written optiondefinedbytheCashTenderAgreementisconsideredtobezero.BasedonamarketvalueatMarch31,2020of$41.88pershareforTaubmancommonstock,theaggregatevalueofTRGunitsthatmaybetenderedundertheCashTenderAgreementwas$1.0billion.
ThepurchaseoftheseinterestsatMarch31,2020wouldhaveresultedinusowninganadditional28%interestinTRG.
Taubmanhasmadeacontinuing,irrevocableoffertoexchangesharesofTaubmancommonstockforTaubmanOP units pursuant to the Continuing Offer to all present holders of Taubman OP units, including certain of theTaubmanfilingpersonsandtheiraffiliates(otherthancertainexcludedholdersofTaubmanOPunits,currentlyTVGand certain other entities), permitted assignees of all present holders of Taubman OP units, those future holders ofTaubman OP units as Taubman may, in its sole discretion, agree to include in the Continuing Offer, and all futureoptionees under The Taubman 2018 Omnibus Long-Term Incentive Plan. Pursuant to the Continuing Offer, oneTaubmanOPunitisexchangeableforoneshareofTaubmancommonstock.UponatenderofTaubmanOPunits,thecorresponding shares of Taubman Series B preferred stock, if any, will automatically be converted into Taubmancommonstockataratioof14,000sharesofSeriesBpreferredstockforoneshareofTaubmancommonstock.
Transactions Between Directors and Executive Officers of the Company and the Taubman Filing Persons or theirAffiliates
During the past two years, there have been no transactions between our directors or executive officers(excludingR.TaubmanandW.Taubman)andtheTaubmanfamilymembers or their affiliates inwhichtheamountinvolvedexceeds$60,000.
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Transactions Between the Company and its Affiliates and the Taubman Filing Persons and their Affiliates Regardingthe Election of Directors
AsofMay22,2020,theTaubmanfamilymembers,inaggregate,havethepowertovoteapproximately30%ofthe outstanding shares of Taubman voting stock. The Taubman family members’ aggregate ownership of TaubmanSeriesBpreferredstock(representinganapproximate28%votinginterestintheCompanyinaggregate)correspondswiththeTaubmanfamilymembers’economicownershipinTRG.SharesofTaubmancommonstockandourTaubmanSeriesBpreferredstockvotetogetherasasingleclassonallmatterssubmittedtoavoteofTaubmanshareholders.
BasedontheircurrentownershipoftheTaubmanSeriesBpreferredstock,theholdersoftheoutstandingsharesoftheTaubmanSeriesBpreferredstock(approximately92.8%ofwhichareheldbytheTaubmanfamilymembers,inaggregate)havetherighttonominateuptofourindividualsforelectiontotheTaubmanBoardandcertainotherclassvoting rights. Like all director nominees, the Taubman Series B nominees are voted on by shareholders at theCompany’sannualmeeting.ForsolongastheholdersofTaubmanSeriesBpreferredstockareentitledtonominateindividualsforelectiontotheTaubmanBoard,theTaubmanBoardisrequiredtoconsistofninedirectors(otherthanasaresultofanyvacancycausedbydeath,resignationorremovalofadirector),andamajorityofourdirectorsmustbe independent. Of our current nine directors, only one, R. Taubman, was initially nominated by the holders of theTaubman Series B preferred stock. He was subsequently nominated, and recommended for election, by our Board.NoneofoureightotherdirectorswasnominatedbytheholdersoftheTaubmanSeriesBpreferredstock.
Negotiations Regarding the Election of Directors
JonathanLitt,aformerdirectoroftheCompany,isthefounderandChiefInvestmentOfficerofLand&BuildingsInvestmentManagement,LLC,theinvestmentmanagerofLand&BuildingsCapitalGrowthFund,LP(L&BGrowthFund).Mr.LittwaselectedtotheTaubmanBoardatthe2018annualmeetingofshareholdersafterbeingnominatedbyL&BGrowthFundandhadpreviouslybeennominatedbyL&BGrowthFundasadirectoratthe2017annualmeetingofshareholders.In2019,wereimbursedLand&Buildingsintheamountof$5millionforaportionofthebilledfeesand expenses incurred by the Land & Buildings’ funds in connection with Land & Buildings’ involvement at theCompanyandMr. Litt’s service ontheTaubmanBoard. WereceivedawrittencertificationfromLand&Buildingsthatactualbilledfeesandexpensesexceeded$5million.Land&Buildingsagreedtoneithercontestnortoencourageotherstocontestourrecommendationsatthe2019annualmeetingofshareholders.
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
Taubmanfilesannual,quarterlyandcurrentreports,informationstatementsandotherinformationwiththeSECpursuanttotheExchangeAct. TheCompany’sSECfilingsareavailabletothepublicovertheInternetat theSEC’swebsite at www.sec.gov. Information about the Company, including its filings, is also available on its website atwww.taubman.comunder investor relations. The information contained on or accessible through that website is notpartofthisproxystatement, otherthanthedocumentsthattheCompanyfileswiththeSECthatareincorporatedbyreferenceintothisproxystatement.
BecausetheTransactionsarea“goingprivate”transaction,Taubman,theSimonpartiesandtheTaubmanfamilymembers havefiledwith theSECaTransactionStatement onSchedule 13E-3withrespect to the Transactions. TheSchedule13E-3,includinganyamendmentsandexhibitsfiledorincorporatedbyreferenceasapartofit,isavailableforinspectionassetforthabove.TheSchedule13E-3willbeamendedtoreportpromptlyanymaterialchangeintheinformationsetforthinthemostrecentSchedule13E-3filedwiththeSEC.
TheSECallowsTaubmanto“incorporatebyreference”intothisproxystatementdocumentsitfileswiththeSEC.This means that Taubman can disclose important information to you by referring you to those documents. Theinformationincorporatedbyreferenceisconsideredtobeapartofthisproxystatementand,withrespecttothisproxystatementbutnotwithrespecttotheSchedule13E-3,laterinformationthatTaubmanfileswiththeSECwill updateand supersede that information. Information in documents that is deemed, in accordance with SEC rules, to befurnished and not filed shall not be deemed to be incorporated by reference into this proxy statement. Taubmanincorporatesbyreferencethedocumentslistedbelowand,withrespecttothisproxystatementbutnotwithrespecttotheSchedule13E-3,anydocumentsfiledbyTaubmanpursuanttoSection13(a), 13(c), 14or15(d)oftheExchangeActafterthedateofthisproxystatement,andpriortothedateofthespecialmeeting:
• Taubman’sAnnualReportonForm10-KforthefiscalyearendedDecember31,2019,filedwiththeSEConFebruary27,2020,asamendedbyAmendmentNo.1onForm10−K/A,filedonApril29,2020;
• Taubman’sQuarterlyReportonForm10-QforthequarterlyperiodendedMarch31,2020,filedonMay5,2020;and
• Taubman’sCurrentReportsonForm8-K,filedonFebruary10,2020,February10,2020,February11,2020,andMarch20,2020.
ThesedocumentscontainimportantinformationaboutTaubman’sbusinessandTaubman’sfinancialperformance.AcopyofeachoftheabovedescribeddocumentsisalsobeingfurnishedtogetherwiththecopyofthisproxystatementthatisbeingsenttoTaubmanshareholders.
Taubmanwill amendthe Schedule 13E-3to incorporate byreference anyadditional documents that it mayfilewiththeSECunderSection13(a), 13(c), 14or15(d)oftheExchangeActafterthedateofthisproxystatementandpriortothedateofthespecialmeetingtotheextentrequiredtofulfillitsobligationsundertheExchangeAct.
No persons have been authorized to give any information or to make any representations other than thosecontainedinthisproxystatementand,ifgivenormade,suchinformationorrepresentationsmustnotberelieduponashavingbeenauthorizedbyusoranyotherperson.ThisproxystatementisdatedMay29,2020.Youshouldnotassumethattheinformationcontainedinthisproxystatementisaccurateasofanydateotherthanthatdate,andthemailingofthisproxystatementtoshareholderswillnotcreateanyimplicationtothecontrary.
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Annex A
EXECUTIONVERSION
AGREEMENT AND PLAN OF MERGER
Dated as of February 9, 2020
by and among
SIMON PROPERTY GROUP, INC.,
SIMON PROPERTY GROUP, L.P.,
SILVER MERGER SUB 1, LLC,
SILVER MERGER SUB 2, LLC,
TAUBMAN CENTERS, INC.
and
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
TABLE OF CONTENTS
TABLE OF CONTENTS Page
ARTICLEI.THETRANSACTIONS A-2
Section1.01 TheTransactions A-2
Section1.02 Closing A-3
Section1.03 EffectiveTimes A-3
Section1.04 OrganizationalDocuments A-4
Section1.05 ManagersandOfficers A-4
ARTICLEII.EFFECTOFTHETRANSACTIONS A-5
Section2.01 EffectonCapitalStock A-5
Section2.02 EffectonPartnershipInterests A-6
Section2.03 EffectofLLCConversion A-7
Section2.04 ExchangeofCertificates A-8
Section2.05 TreatmentofTitaniumEquityAwards A-10
Section2.06 TreatmentofTitaniumSeriesJandSeriesKPreferredStock A-12
Section2.07 WithholdingRights A-12
ARTICLEIII.REPRESENTATIONSANDWARRANTIESOFTHETITANIUMPARTIES A-13
Section3.01 Qualification,Organization,Subsidiaries,etc A-13
Section3.02 Authority;ExecutionandDelivery;Enforceability;OwnershipRestrictions A-13
Section3.03 CapitalStructure A-14
Section3.04 GovernmentalAuthorization;Non-Contravention A-16
Section3.05 TitaniumSECDocuments A-17
Section3.06 AbsenceofCertainChangesorEvents A-18
Section3.07 NoUndisclosedLiabilities A-18
Section3.08 Taxes A-18
Section3.09 LaborMatters A-20
Section3.10 BenefitsMatters;ERISACompliance A-21
Section3.11 Litigation A-22
Section3.12 CompliancewithApplicableLaws;Permits A-22
Section3.13 MaterialContracts A-23
Section3.14 RealandPersonalProperties A-25
Section3.15 InformationSupplied A-25
Section3.16 IntellectualProperty A-25
Section3.17 EnvironmentalMatters A-26
Section3.18 Brokers’FeesandExpenses A-27
Section3.19 OpinionofFinancialAdvisor A-27
Section3.20 InvestmentCompanyAct A-27
Section3.21 Insurance A-27
Section3.22 RelatedPartyAgreements A-27
Section3.23 Mortgages A-27
Section3.24 NoOtherRepresentationsorWarranties A-27
ARTICLEIV.REPRESENTATIONSANDWARRANTIESOFTHESILVERPARTIES A-27
Section4.01 Qualification,Organization,Subsidiaries,etc A-28
Section4.02 Authority;ExecutionandDelivery;Enforceability;OwnershipRestrictions A-28
Section4.03 SilverOPUnits A-28
Section4.04 GovernmentalAuthorization;Non-Contravention A-29
Section4.05 OwnershipofSilverMergerSub1andSilverMergerSub2 A-29
Section4.06 InformationSupplied A-29
Section4.07 Financing A-30
Section4.08 Taxes A-30
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Page
Section4.09 NoOwnershipofTitaniumStock A-30
Section4.10 Brokers’FeesandExpenses A-30
Section4.11 NoShareholderorManagementArrangements A-30
Section4.12 NoOtherRepresentationsorWarranties A-31
ARTICLEV.COVENANTS A-31
Section5.01 ConductofBusiness A-31
Section5.02 TreatmentofAcquisitionProposals A-34
Section5.03 Efforts A-38
ARTICLEVI.ADDITIONALAGREEMENTS A-40
Section6.01 PreparationandMailingoftheProxyStatement A-40
Section6.02 AccesstoInformation;Confidentiality A-41
Section6.03 Indemnification,ExculpationandInsurance A-41
Section6.04 Section16Matters A-43
Section6.05 Financing A-43
Section6.06 PublicAnnouncements A-45
Section6.07 StockExchangeListing A-45
Section6.08 RedemptionofPreferredInterestsandTitaniumSeriesJandSeriesKPreferredStock A-45
Section6.09 TaxMatters A-45
Section6.10 TitaniumOPApproval A-46
Section6.11 Anti-TakeoverLaws A-46
Section6.12 TransactionLitigation A-47
Section6.13 SpecifiedConsents A-47
Section6.14 CertainAgreements A-48
ARTICLEVII.CONDITIONSPRECEDENT A-49
Section7.01 ConditionstoEachParty’sObligationtoEffecttheTransactions A-49
Section7.02 ConditionstoObligationoftheSilverParties A-49
Section7.03 ConditionstoObligationsoftheTitaniumParties A-50
ARTICLEVIII.TERMINATION,AMENDMENTANDWAIVER A-50
Section8.01 Termination A-50
Section8.02 EffectofTermination A-51
Section8.03 FeesandExpenses A-51
Section8.04 Amendment A-53
Section8.05 Extension;Waiver A-53
Section8.06 ProcedureforTermination,Amendment,ExtensionorWaiver A-53
ARTICLEIX.GENERALPROVISIONS A-53
Section9.01 NonsurvivalofRepresentationsandWarranties A-53
Section9.02 Notices A-53
Section9.03 Definitions A-55
Section9.04 Interpretation A-62
Section9.05 Severability A-63
Section9.06 Counterparts A-63
Section9.07 EntireAgreement;NoThird-PartyBeneficiaries A-63
Section9.08 GoverningLaw;Jurisdiction;WaiverofJuryTrial A-64
Section9.09 Assignment A-64
Section9.10 SpecificEnforcement A-64
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Defined Terms
AcceptableConfidentialityAgreement A-55
AcquisitionProposal A-55
AcquisitionTransaction A-55
Action A-55
Affiliate A-56
Agreement A-1
AlternativeAcquisitionAgreement A-35
Anti-CorruptionLaws A-56
ApplicableBaseAmount A-52
ApplicableLaw(s) A-56
BusinessDay A-56
CapitalizationDate A-14
CashPartnershipMergerConsideration A-6
CashTenderAgreement A-56
CertificateofConversion A-4
CertificateofFormation A-4
Certificates A-8
CertificatesofMerger A-3
Closing A-3
ClosingDate A-3
Code A-56
CollectiveBargainingAgreement A-56
ConfidentialityAgreement A-41
Consents A-39
ContinuingOffer A-56
Contract A-56
DelawareCertificateofMerger A-3
DGCL A-56
DLLCA A-3
DRULPA A-2
EffectiveTime A-3
EndDate A-50
EnforceabilityExceptions A-14
EnvironmentalLaws A-56
EPCRA A-57
ERISA A-57
ERISAAffiliate A-57
ExchangeAct A-57
ExchangeAgent A-8
ExchangeFund A-8
ExcludedParty A-57
ExcludedTitaniumCommonStock A-5
ExcludedTitaniumOPUnits A-6
Filings A-38
ForeignPlan A-22
Fraud A-57
GAAP A-57
GeneralPartnerUnits A-6
GovernmentalEntity A-57
GroundLeaseConsents A-47
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Group A-57
HazardousMaterials A-57
HMTA A-57
HSRAct A-57
IncentiveUnitMergerConsideration A-7
Indebtedness A-57
IntellectualProperty A-57
InterveningEvent A-57
IRS A-21
ITAssets A-26
JVConsents A-47
Knowledge A-58
LetterofTransmittal A-8
Lien A-58
LLCConversion A-3
LLCConversionEffectiveTime A-4
LoanConsents A-47
MaterialAdverseEffect A-58
MaterialContract A-23
MaximumAmount A-42
MBCA A-3
Merger A-3
MergerConsideration A-58
MichiganCertificateofMerger A-3
MichiganCourts A-64
MichiganLARA A-58
MinorityOPPartnersPartnershipMergerConsideration A-6
NewSilverOPUnits A-6
No-ShopPeriodStartDate A-34
NoticePeriod A-37
NYSE A-58
OPExchangeRatio A-59
OPUnitPartnershipMergerConsideration A-6
OptionDeferralAgreement A-59
OptionDeferredUnit A-59
Order A-59
OrganizationalDocuments A-59
OtherFilings A-16
Parties A-1
PartnershipCertificateofMerger A-4
PartnershipMerger A-2
PartnershipMergerConsideration A-7
PartnershipMergerEffectiveTime A-4
Party A-1
Permits A-59
PermittedLiens A-59
Person A-59
ProxyStatement A-40
QRS A-19
QualifyingIncome A-52
RCRA A-56
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Redemption A-1
ReducedTerminationFeeEndDate A-60
RegulatoryConcessions A-39
RegulatoryLaws A-60
REIT A-60
REITRequirements A-52
ReorganizedTitaniumOPDeferredUnit A-12
ReorganizedTitaniumOPUnit A-1
ReorganizedTitaniumOperatingCompany A-2
ReorganizedTitaniumOperatingCompanyOperatingAgreement A-4
Representatives A-34
SEC A-60
Section782ExemptionResolution A-14
SecuritiesAct A-60
Silver A-1
SilverBoard A-2
SilverBy-laws A-60
SilverCharter A-60
SilverMaterialAdverseEffect A-60
SilverMergerSub1 A-1
SilverMergerSub2 A-1
SilverOP A-1
SilverOPAgreement A-60
SilverOPPreferredContribution A-1
SilverOPUnit A-60
SilverParties A-60
SilverTransactionLitigation A-60
Subsidiary A-60
SubstituteAward A-11
SubstituteDER A-60
SuperiorProposal A-60
SurvivingTitanium A-3
SurvivingTitaniumLimitedLiabilityCompanyAgreement A-4
SurvivingTitaniumOP A-2
SurvivingTitaniumOPUnit A-6
TakeoverLaws A-14
TaxGuidance A-52
TaxReturns A-61
Taxes A-61
TerminationFee A-61
Titanium A-1
TitaniumBenefitPlans A-21
TitaniumBoard A-1
TitaniumBoardRecommendation A-14
TitaniumBoardRecommendationChange A-36
TitaniumBy-laws A-61
TitaniumCapitalStock A-14
TitaniumCharter A-61
TitaniumCommonStock A-61
TitaniumCommonStockMergerConsideration A-5
TitaniumDisclosureLetter A-13
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TitaniumDSU A-61
TitaniumEquityAwardConsideration A-61
TitaniumEquityAwards A-61
TitaniumFamily A-61
TitaniumFamilyConvertingUnits A-7
TitaniumFamilyPartnershipMergerConsideration A-7
TitaniumFamilyRemainingUnits A-6
TitaniumFamilyRepresentative A-53
TitaniumIndemnifiedParties A-42
TitaniumLeasedRealProperty A-61
TitaniumMaterialAdverseEffect A-61
TitaniumOP A-1
TitaniumOPAgreement A-61
TitaniumOPApproval A-62
TitaniumOPIncentiveUnit A-62
TitaniumOPMinorityPartner A-6
TitaniumOPPayment A-1
TitaniumOPPreferredRedemption A-1
TitaniumOPUnit A-62
TitaniumOwnedRealProperty A-62
TitaniumParties A-62
TitaniumPSUAward A-62
TitaniumRealProperty A-62
TitaniumRelatedPartyAgreement A-27
TitaniumRSUAward A-62
TitaniumRSU/PSUCashAmount A-11
TitaniumSECDocuments A-17
TitaniumSecurities A-15
TitaniumSeriesBMergerConsideration A-5
TitaniumSeriesBPreferredStock A-14
TitaniumSeriesJandSeriesKPreferredStockLiquidationPreference A-45
TitaniumSeriesJandSeriesKPreferredStockRedemptionAmount A-45
TitaniumSeriesJPreferredStock A-14
TitaniumSeriesKPreferredStock A-14
TitaniumShareholderApproval A-62
TitaniumShareholders A-62
TitaniumShareholdersMeeting A-14
TitaniumSpecialCommittee A-1
TitaniumStockPlans A-62
TitaniumSubsidiaryPartnership A-20
TitaniumTaxProtectionAgreements A-19
TitaniumTransactionLitigation A-62
TransactionLitigation A-62
Transactions A-3
TransferTaxes A-46
TRS A-19
TSCA A-56
VotingAgreement A-2
WillfulBreach A-62
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This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is dated as of February 9, 2020, by andamong Simon Property Group, Inc., a Delaware corporation (“Silver”), Simon Property Group, L.P., a Delawarelimitedpartnership(“SilverOP”),SilverMergerSub1,LLC,aDelawarelimitedliabilitycompanyandadirectwhollyowned subsidiary of Silver OP (“Silver Merger Sub 1”), Silver Merger Sub 2, LLC, a Delaware limited liabilitycompanyanda direct wholly ownedsubsidiary of Silver Merger Sub1 (“Silver Merger Sub2”),TaubmanCenters,Inc.,aMichigancorporation(“Titanium”), andTheTaubmanRealtyGroupLimitedPartnership, a Delawarelimitedpartnership (“Titanium OP”). Each of Silver, Silver OP, Silver Merger Sub 1, Silver Merger Sub 2, Titanium andTitaniumOPissometimesreferredtoasa“Party”and,collectively,the“Parties.”
WHEREAS,thePartiesintendthat,subjecttothetermsandconditionssetforthherein:(a)ontheClosingDateand prior to the Partnership Merger Effective Time, Titanium OP shall redeem (the “Titanium OP PreferredRedemption”)anyPreferredEquity(asdefinedintheTitaniumOPAgreement)heldbyTitaniumforanamountequaltothesumoftheTitaniumSeriesJandSeriesKPreferredStockRedemptionAmount,whichamountshallbepaidbyTitaniumOPtoTitaniumontheClosingDate;(b)immediatelyfollowingtheTitaniumOPPreferredRedemption,atthePartnershipMergerEffectiveTime,SilverMergerSub2willbemergedwithandintoTitaniumOPpursuanttothePartnership Merger, in which (i) each Titanium OP Unit that is owned by Titanium immediately prior to thePartnershipMergerEffectiveTimewillremainoutstandingasoneSurvivingTitaniumOPUnit,(ii)eachTitaniumOPUnitthatisownedbyaTitaniumOPMinorityPartnerimmediatelypriortothePartnershipMergerEffectiveTimewillbe converted into the right to receive the Minority OP Partners Partnership Merger Consideration and (iii) certainTitaniumOPUnitsthatareownedbytheTitaniumFamilyimmediatelypriortothePartnershipMergerEffectiveTimewill remain outstanding as Surviving Titanium OP Units and all other Titanium OP Units that are owned by theTitaniumFamilyimmediatelypriortothePartnershipMergerEffectiveTimewillbeconvertedintotherighttoreceivethe TitaniumFamily Partnership Merger Consideration; (c) immediately following the Partnership Merger EffectiveTime, at the LLC Conversion Effective Time, Surviving Titanium OP will be converted into a Delaware limitedliability companypursuant totheLLCConversion, inwhicheachSurvivingTitaniumOPUnit that is ownedbytheTitanium Family, Merger Sub 1 or by Titanium immediately prior to the LLC Conversion Effective Time will beconverted into one unit of limited liability company interests in the Reorganized Titanium Operating Company(a“ReorganizedTitaniumOPUnit”), andeachOptionDeferredUnit will beconvertedintothe right to receive oneReorganized Titanium OP Unit; (d) immediately following the LLC Conversion Effective Time, Silver OP shallcontribute (the “Silver OP Preferred Contribution”) to the capital of Reorganized Titanium Operating Company anamountequaltotheaggregateTitaniumSeriesJandSeriesKPreferredStockLiquidationPreferenceinexchangeforacertain number of Series A Preferred Units (as such term is defined in the Surviving Titanium Limited LiabilityCompanyAgreement); (e) immediately after the Silver OPPreferred Contribution, Reorganized TitaniumOperatingCompany shall pay to Titanium the amounts described in the foregoing clause (a) (the “Titanium OP Payment”);(f) immediately after the TitaniumOPPayment andprior to the Effective Time, Titaniumshall (i) issue a notice ofredemptionofeachoftheTitaniumSeriesJPreferredStockandtheTitaniumSeriesKPreferredStockand(ii)deposit,or causetobedeposited, withanescrowagent for theTitaniumSeries J PreferredStockandtheTitaniumSeries KPreferred Stock, cash in the amounts described in the foregoing clause (a) (steps (i) and (ii) of this clause (f), the“Redemption”);and(g)immediatelyfollowingtheRedemption,attheEffectiveTime,TitaniumwillbemergedwithandintoSilverMergerSub1pursuanttotheMerger,inwhich(i)eachshareofTitaniumCommonStockissuedandoutstandingimmediatelypriortotheEffectiveTime(otherthananysharesofExcludedTitaniumCommonStock)willbecancelledandwillceasetoexistandwillbeconvertedintotherighttoreceivetheTitaniumCommonStockMergerConsideration,and(ii)eachshareofTitaniumSeriesBPreferredStockissuedandoutstandingimmediatelypriortotheEffective Timewill becancelledandwill ceasetoexist andwill beconvertedintotheright to receivetheTitaniumSeriesBMergerConsideration;
WHEREAS, the board of directors of Titanium (the “Titanium Board”), acting upon the unanimousrecommendationofaspecialcommitteeoftheTitaniumBoard(the“TitaniumSpecialCommittee”),has(a)determinedthat this AgreementandtheTransactionsareadvisableandarefair to, andinthebest interests of, TitaniumandtheTitaniumShareholders; (b) adopted and approved this Agreement and the Transactions; (c) subject toSection5.02,resolvedto recommendthat the TitaniumShareholders adopt andapprovethis Agreement; and(d) directed that thisAgreement be submitted to the Titanium Shareholders and holders of Titanium Series B Preferred Stock for theiradoptionandapproval;
WHEREAS,Titanium,initscapacityasthegeneralpartnerofTitaniumOP,hastakenallactionsrequiredfortheexecutionofthisAgreementbyTitaniumOPandtoapprovetheconsummationbyTitaniumOPoftheTransactions;
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WHEREAS, the board of directors of Silver (the “Silver Board”) has unanimously (a) determined that thisAgreementandtheTransactions,arefairto,advisableandinthebestinterestsof,Silveranditsstockholders;and(b)approvedandadoptedthisAgreementandtheTransactions;
WHEREAS,(a)Silver, initscapacityasthegeneralpartnerofSilverOP,hastakenall actionsrequiredfortheexecution of this Agreement by Silver OP and to approve the consummation by Silver OP of the Transactions;(b) Silver OP, in its capacity as the sole member of Silver Merger Sub 1, has taken all actions required for theexecutionofthisAgreementbySilverMergerSub1andtoapprovetheconsummationbySilverMergerSub1oftheTransactions; and(c) Silver Merger Sub1, in its capacity as the sole member of Silver Merger Sub2, has takenallactions required for the execution of this Agreement by Silver Merger Sub 2 and to approve the consummation bySilverMergerSub2oftheTransactions;
WHEREAS,concurrentlywiththeexecutionanddeliveryofthisAgreement,asaconditionandinducementtotheSilverParties’willingnesstoenterintothisAgreement,certainholdersofTitaniumCommonStock,TitaniumSeriesBPreferredStockandTitaniumOPUnitsareenteringintoaVotingAgreementwithSilver(the“VotingAgreement”),pursuant to which such holders will agree, among other things, to take specified actions in connection with theTransactions,ineachcaseuponthetermsandsubjecttotheconditionssetforththerein;
WHEREAS, in connection with the execution and delivery of this Agreement, in order to facilitate thetransactions contemplated hereby and as a condition to the Silver Parties’ willingness to enter into this Agreement,TitaniumOPandcertainofitspartners,includingTitanium,aredeliveringtoSilvertheTitaniumOPApproval;and
WHEREAS,thePartiesintendthatforU.S.federalincometaxpurposes(a)theMergerwillbetreatedasataxablesale by Titanium of all of Titanium’s assets to Silver Merger Sub 1 in exchange for the Titanium Common StockMergerConsideration,theTitaniumSeriesBMergerConsideration,theTitaniumSeriesJandSeriesKPreferredStockRedemption Amount and the assumption of all of Titanium’s other liabilities (including Titanium’s share of theTitanium OP liabilities, as determined under the applicable U.S. federal income tax regulations), followed by adistributionofsuchconsiderationtotheholdersofequityinterestsinTitaniuminliquidationpursuanttoSection331and Section 562 of the Code, and that this Agreement will constitute a “plan of liquidation” of Titanium for U.S.federalincometaxpurposes;(b)thePartnershipMergerwillbetreatedas(i)withrespecttoTitaniumOPUnitsthatareconvertedintotherighttoreceivetheCashPartnershipMergerConsiderationorTitaniumFamilyPartnershipMergerConsideration, a taxable purchaseof TitaniumOPUnits in exchangefor theCashPartnershipMerger Considerationand(ii)withrespecttoTitaniumOPUnitsthatareconvertedintotherighttoreceivetheOPUnitPartnershipMergerConsideration,acontributionofTitaniumOPUnitstoSilverOPpursuanttoSection721oftheCode;and(c)theLLCConversion will be treated in accordance with Revenue Ruling 95-37, 1995-1 C.B. 130 and Revenue Ruling 84-52,1984-1C.B.157.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants andagreementscontainedinthisAgreement,thePartiesagreeasfollows:
ARTICLEI.
THETRANSACTIONS
Section1.01 TheTransactions.
(a) Titanium OP Preferred Redemption. On the terms and subject to the conditions set forth in thisAgreement,ontheClosingDateandpriortothePartnershipMergerEffectiveTime,TitaniumOPandTitaniumshall effect the TitaniumOPPreferred Redemption for an amount equal to the TitaniumSeries J and Series KPreferred Stock Redemption Amount, which amount shall be paid by TitaniumOPto Titaniumon the ClosingDate.
(b) Partnership Merger. On the terms and subject to the conditions set forth in this Agreement, and inaccordancewiththeDelawareRevisedUniformLimitedPartnershipAct(the“DRULPA”)andtheDLLCA,atthePartnership Merger Effective Time, Silver Merger Sub 2 shall be merged with and into Titanium OP(the“PartnershipMerger”), the separate existence of Silver Merger Sub 2 shall cease, and Titanium OP shallcontinueasthesurvivingcompanyinthePartnershipMerger(“SurvivingTitaniumOP”).
(c) LLC Conversion. On the terms and subject to the conditions set forth in this Agreement, and inaccordancewiththeDRULPAandtheDLLCA,attheLLCConversionEffectiveTime,SurvivingTitaniumOPshallbeconvertedintoaDelawarelimitedliabilitycompany(the“ReorganizedTitaniumOperatingCompany”)
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and the members thereof shall adopt the Reorganized Titanium Operating Company Operating Agreement(the “LLC Conversion” and, together with the Merger, the Partnership Merger, and the other transactionscontemplatedherein,the“Transactions”).
(d) SilverOPPreferredContributionandTitaniumOPPayment.Onthetermsandsubjecttotheconditionsset forth in this Agreement, immediately following the LLC Conversion Effective Time, Silver OP and theReorganized TitaniumOperating Company shall effect the Silver OPPreferred Contribution pursuant to whichSilverOPherebyagreesto,andSilvershallcauseSilverOPto,contributetothecapitalofReorganizedTitaniumOperatingCompanyanamountequaltotheaggregateTitaniumSeriesJandSeriesKPreferredStockLiquidationPreference in exchange for a number of Series A Preferred Units (as such term is defined in the SurvivingTitaniumLimitedLiabilityCompanyAgreement)equaltothequotientof(i)theaggregateTitaniumSeriesJandSeriesKPreferredStockLiquidationPreferencedivided by(ii)$25(i.e.,theSeriesAPreferredUnitliquidationpreferenceofaSeriesAPreferredUnit).OntheClosingDate,SilverOPandtheReorganizedTitaniumOperatingCompany shall enter into a customary subscription agreement to effect the Silver OP Preferred Contribution.Following the consummation of the Silver OP Preferred Contribution, the Reorganized Titanium OperatingCompanyshallpaytoTitaniumtheamountrequiredbySection1.01(a).
(e) Merger.OnthetermsandsubjecttotheconditionssetforthinthisAgreement,andinaccordancewiththe Michigan Business Corporation Act (the “MBCA”) and the Delaware Limited Liability Company Act (the“DLLCA”),attheEffectiveTime,TitaniumshallbemergedwithandintoSilverMergerSub1(the“Merger”),theseparatecorporateexistenceofTitaniumshallcease,andSilverMergerSub1shallcontinueasthesurvivingcompanyintheMerger(“SurvivingTitanium”).
Section1.02 Closing.Theclosing(the“Closing”)oftheTransactionsshalltakeplaceat10:00a.m.,NewYorkCitytime,onthethirdBusinessDayfollowingthesatisfactionor,totheextentpermittedbyApplicableLaw,waiverby the Party or Parties entitled to the benefits thereof of the conditions set forth in Article VII(other than thoseconditionsthatbytheirnaturearetobesatisfiedattheClosing,butsubjecttothesatisfactionor,totheextentpermittedbyApplicableLaw,waiverofthoseconditionsattheClosing),oratsuchotherplace,timeanddateasshallbeagreedinwritingbetweenTitaniumandSilver;provided,thatSilver,SilverOP,SilverMergerSub1andSilverMergerSub2shallinnoeventberequiredtoeffecttheClosing(a)priortoNovember9,2020,if,onthedatethattheClosingwouldotherwise have occurred, any investigation or Action by any Governmental Entity is then-pending that, in Silver’sreasonable judgment, following consultation with Titanium and the Titanium Family Representative, is seeking orwouldreasonablybeexpectedtoleadtoorresultinaSilverBurdensomeCondition(individuallyorintheaggregatewithallotherRegulatoryConcessionsinrespectofanyGovernmentalEntity,thatSilver,followingconsultationwithTitaniumandtheTitaniumFamilyRepresentative,reasonablyexpectstoberequiredorimposed),or(b)priortoJuly9,2020,if,onthedatethattheClosingwouldotherwisehaveoccurred,anySpecifiedConsenthasnotbeenobtainedor,withrespecttoaLoanConsentthathasnotbeenobtained,theloanunderlyingsuchLoanConsenthasnotbeenprepaidordefeased. Fortheavoidanceof doubt, theforegoingprovisois solelyfor thebenefit of theSilver Parties, andtheSilverPartiesmayelecttoeffecttheClosingatanytimepriortothedatessetforthinsuchprovisoifatsuchtimetheClosingwouldotherwiseberequiredtooccurpursuanttothisSection1.02.ThedateonwhichtheClosingoccursisreferredtointhisAgreementasthe“ClosingDate.”
Section1.03 EffectiveTimes.
(a) Effective Time. On the terms and subject to the conditions of this Agreement, at the Closing, theapplicable Parties shall cause to be filed (i) a certificate of merger with respect to the Merger (the “MichiganCertificateofMerger”)withtheMichiganLARAinsuchformasrequiredby,andexecutedinaccordancewith,the applicable provisions of the MBCA, (ii) a certificate of merger with respect to the Merger (the “DelawareCertificateofMerger”and,togetherwiththeMichiganCertificateofMerger,the“CertificatesofMerger”)withthe Delaware Secretary of State in such form as required by, and executed in accordance with, the applicableprovisionsoftheDLLCAand(iii)anyotherfilings,recordingsorpublicationsrequired,ifany,undertheMBCAandtheDLLCAinconnectionwiththeMerger.TheMergershallbecomeeffectiveatthetimethattheCertificatesofMergerhavebeenacceptedforfilingbytheMichiganLARAandtheDelawareSecretaryofState,oratsuchother timeas TitaniumandSilver shall agree in writing andspecify in the Certificates of Merger (the timetheMergerbecomeseffectivebeingthe“EffectiveTime”),itbeingunderstoodandagreedthatthePartiesshallcausetheEffectiveTimetooccurpromptlyfollowingthePartnershipMergerEffectiveTimeandimmediatelyfollowingthecompletionofthestepssetforthinthefirstsentenceofSection6.08.
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(b) PartnershipMergerEffectiveTime.OnthetermsandsubjecttotheconditionsofthisAgreement,attheClosing, the applicable Parties shall cause to be filed (i) a certificate of merger with respect to the PartnershipMerger(the“PartnershipCertificateofMerger”)withtheDelawareSecretaryofState,insuchformasrequiredby,andexecutedinaccordancewith,theapplicableprovisionsoftheDRULPAandtheDLLCAand(ii)anyotherfilings, recordings or publications required, if any, under the DRULPAandthe DLLCAinconnectionwith thePartnershipMerger.ThePartnershipMergershallbecomeeffectiveatthetimethatthePartnershipCertificateofMerger has been accepted for filing by the Delaware Secretary of State, or at such other time as TitaniumandSilvershallagreeinwritingandspecifyinthePartnershipCertificateofMerger(thetimethePartnershipMergerbecomeseffectivebeingthe“PartnershipMergerEffectiveTime”).
(c) LLCConversionEffectiveTime.OnthetermsandsubjecttotheconditionsofthisAgreement,attheClosing, the applicable Parties shall cause to be filed (i) a certificate of conversion with respect to the LLCConversion(the“CertificateofConversion”)withtheDelawareSecretaryofState,insuchformasrequiredby,andexecutedinaccordancewith,theapplicableprovisionsoftheDRULPAandtheDLLCA,(ii)acertificateofformationwithrespecttotheReorganizedTitaniumOperatingCompany(the“CertificateofFormation”)withtheDelaware Secretary of State, in such form as required by, and executed in accordance with, the applicableprovisions of the DLLCA and (iii) any other filings, recordings or publications required, if any, under theDRULPAandtheDLLCAinconnectionwiththeLLCConversion.TheLLCConversionshallbecomeeffectiveat the timethat the Certificate of ConversionandCertificate of Formation havebeenaccepted for filingbytheDelawareSecretaryofState,oratsuchothertimeasTitaniumandSilvershallagreeinwritingandspecifyintheCertificateofConversion(thetimetheLLCConversionbecomeseffectivebeingthe“LLCConversionEffectiveTime”),itbeingunderstoodandagreedthatthePartiesshallcausetheLLCConversionEffectiveTimetooccurimmediatelyfollowingthePartnershipMergerEffectiveTime.
Section1.04 OrganizationalDocuments.
(a) Atthe Effective Time, the limited liability companyagreement of SurvivingTitaniumshall be in theformattachedasExhibitA(the“SurvivingTitaniumLimitedLiabilityCompanyAgreement”),withsuchchangesasmaybeagreedinwritingbetweenSilverandTitaniumpriortotheEffectiveTime,untilthereafteramendedinaccordancewithApplicableLawandtheapplicableprovisionsofsuchlimitedliabilitycompanyagreement.
(b) At the Partnership Merger Effective Time, the limited partnership agreement of Titanium OP as ineffect immediatelypriortothePartnershipMergerEffectiveTimeshall bethelimitedpartnershipagreementofSurvivingTitaniumOP,withsuchchangesasmaybeagreedinwritingbetweenSilverandTitaniumpriortotheEffectiveTime,untilthereafteramendedinaccordancewithApplicableLawandtheapplicableprovisionsofsuchlimitedpartnershipagreement.
(c) At the LLCConversion Effective Time, the operating agreement of Reorganized TitaniumOperatingCompanyshallbeintheformattachedasExhibitB(the“ReorganizedTitaniumOperatingCompanyOperatingAgreement”),withsuchchangesasmaybeagreedinwritingbetweenSilver,TitaniumandtheotherPersonsthatwill beparties thereto prior totheEffective Time, until thereafter amendedinaccordancewithApplicable Lawandtheapplicableprovisionsofsuchoperatingagreement.
Section1.05 ManagersandOfficers.
(a) From and after the Effective Time, until successors are duly elected or appointed and qualified inaccordancewithApplicableLaw,(i)thesolemanagingmemberofSilverMergerSub1immediatelypriortotheEffectiveTimeshall bethesolemanagingmemberofSurvivingTitaniumand(ii) theofficersofMergerSub1immediatelypriortotheEffectiveTimeshallbetheofficersofSurvivingTitanium.
(b) FromandafterthePartnershipMergerEffectiveTime,untiltheearlierofsuchtimeassuccessorsareduly elected or appointed and qualified in accordance with Applicable Law or the LLC Conversion EffectiveTime,(i)thegeneralpartnerofTitaniumOPimmediatelypriortothePartnershipMergerEffectiveTimeshallbethe general partner of Surviving Titanium OP and (ii) the officers and authorized signatories of Titanium OPimmediately prior to the Partnership Merger Effective Time shall be the officers and authorized signatories ofSurvivingTitaniumOP.
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(c) FromandaftertheLLCConversionEffectiveTime,untilsuccessorsaredulyelectedorappointedandqualified in accordance with Applicable Law and the Reorganized Titanium Operating Company OperatingAgreement, the directors, officers and authorized signatories of the Reorganized Titanium Operating Companyshall be those set forth in or selected pursuant to the Reorganized Titanium Operating Company OperatingAgreement.
ARTICLEII.
EFFECTOFTHETRANSACTIONS
Section2.01 EffectonCapitalStock.AttheEffectiveTime,byvirtueoftheMergerandwithoutanyactiononthepartofanyofthePartiesortheholderofanysecuritiesoftheParties:
(a) LimitedLiabilityCompanyInterestsofSilverMergerSub1.EachlimitedliabilitycompanyinterestofSilverMergerSub1issuedandoutstandingimmediatelypriortotheEffectiveTimeshallremainasanissuedandoutstanding limited liability company interest of Surviving Titanium and shall constitute the only outstandinglimitedliabilitycompanyinterestsofSurvivingTitanium.
(b) ExcludedSharesofTitaniumCommonStock.EachshareofTitaniumCommonStockthatisownedbyTitaniumastreasurystock,byanydirectorindirectwhollyownedSubsidiaryofTitanium,byanyoftheSilverPartiesorbyanydirectorindirectwhollyownedSubsidiaryofanyoftheSilverPartiesimmediatelypriortotheEffectiveTime(collectively,the“ExcludedTitaniumCommonStock”)shallnolongerbeoutstandingandshallautomaticallybecancelledandshallceasetoexist,andnoconsiderationshallbedeliveredinexchangetherefor.
(c) TitaniumCommonStock.SubjecttoSection2.04,eachshareofTitaniumCommonStockissuedandoutstandingimmediatelypriortotheEffectiveTime(otherthananysharesofExcludedTitaniumCommonStock)shall be cancelled and shall cease to exist and shall be converted into the right to receive $52.50 in cash (the“TitaniumCommonStockMergerConsideration”)payabletotheholderthereof,withoutinterest.Allsuchsharesof Titanium Common Stock, when so converted, shall no longer be outstanding and shall automatically becancelledandshallceasetoexist,andeachholderofacertificate(orevidenceofsharesinbook-entryform)thatimmediatelyprior totheEffectiveTimerepresentedanysuchsharesofTitaniumCommonStockshall ceasetohave any rights with respect thereto, except the right to receive the Titanium Common Stock MergerConsideration and any dividends or other distributions to which holders become entitled upon the surrender ofsuchcertificate(orevidenceofsharesinbook-entryform)inaccordancewithSection2.04,withoutinterest.Fortheavoidanceofdoubt, anyTitaniumDSUs,TitaniumRSUAwardsorTitaniumPSUAwardsthat havevestedand have been settled in shares of Titanium Common Stock prior to Closing (that is, other than those that areoutstandingandunvestedimmediatelypriortoClosingandvestpursuanttoSection2.05,whichshallbegovernedbySection2.05)willconstituteTitaniumCommonStockconvertedpursuanttothisprovision.
(d) TitaniumSeriesBPreferredStock.SubjecttoSection2.04,eachshareofTitaniumSeriesBPreferredStockissuedandoutstandingimmediatelypriortotheEffectiveTimeshallbecancelledandshallceasetoexistandshallbeconvertedintotherighttoreceiveanamountofcashequaltotheTitaniumCommonStockMergerConsideration divided by14,000 (collectively, the “ Titanium Series B Merger Consideration”) payable to theholderthereof,withoutinterest.AllsuchsharesofTitaniumSeriesBPreferredStock,whensoconverted,shallnolongerbeoutstandingandshallautomaticallybecancelledandshallceasetoexist,andeachholderofacertificate(or evidence of shares in book-entry form) that immediately prior to the Effective Time represented any suchsharesofTitaniumSeriesBPreferredStockshallceasetohaveanyrightswithrespectthereto,excepttherighttoreceive the Titanium Series B Merger Consideration and any dividends or other distributions to which holdersbecomeentitleduponthesurrenderofsuchcertificate (orevidenceofsharesinbook-entryform)inaccordancewithSection2.04,withoutinterest.
(e) Adjustments.Notwithstandingtheforegoing,if, betweenthedateofthisAgreementandtheEffectiveTime the outstanding shares of Titanium Common Stock or Titanium Series B Preferred Stock, or securitiesconvertibleorexchangeableintosharesofTitaniumCommonStockorTitaniumSeriesBPreferredStock,ineachcase shall have been changed into a different number of shares or a different class, by reason of any stockdividend,subdivision,reclassification,recapitalization,split,combinationorexchangeofshares,oranysimilar
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eventshallhaveoccurred,thentheTitaniumCommonStockMergerConsiderationand/ortheTitaniumSeriesBMergerConsideration,asapplicable,willbeappropriatelyadjustedtoreflectthatchange;providedthatnothinginthisSection2.01(e)shallbeconstruedtopermitanyPartyoritsSubsidiariestotakeanyactionthatisotherwiseprohibitedbythisAgreement.
Section 2.02 Effect on Partnership Interests. At the Partnership Merger Effective Time, by virtue of thePartnershipMergerandwithoutanyactiononthepartofanyofthePartiesortheholderofanysecuritiesoftheParties:
(a) Limited Liability Company Interests in Silver Merger Sub 2. All of the limited liability companyinterests of Silver Merger Sub 2 issued and outstanding immediately prior to the Partnership Merger EffectiveTime shall, collectively, be converted into and become a number of units of partnership interest in SurvivingTitanium OP (each, a “Surviving Titanium OP Unit”) equal to the sum of (i) the sum of (A) the number ofTitanium OP Units owned by the Titanium OP Minority Partners plus(B) the number of Titanium FamilyConvertingUnits,ineachcaseissuedandoutstandingimmediatelypriortothePartnershipMergerEffectiveTimeand that become cancelled in the Partnership Merger as provided in Section2.02(c)and Section2.02(d),plus(ii)thenumberofAcquiredEquityAwards,plus(iii)thequotientofthenumberofsharesofTitaniumSeriesBPreferredStocktobecancelledpursuanttoSection2.01(d)divided by 14,000.
(b) TitaniumOPUnitsHeldbyTitanium.EachTitaniumOPUnitthatisownedbyTitaniumimmediatelyprior to the Partnership Merger Effective Time (the “General Partner Units”) shall remain outstanding as oneSurvivingTitaniumOPUnit,andnopaymentshallbemadewithrespectthereto.Fortheavoidanceofdoubt,theSurvivingTitaniumOPUnitsownedbyTitaniumfollowingthePartnershipMergerEffectiveTimeshallequalthenumberofsharesofTitaniumCommonStocktobecancelledpursuanttoSection2.01(c).
(c) TitaniumOPUnitsHeldbyTitaniumOPMinorityPartners.SubjecttoSection2.04,eachTitaniumOPUnit issued and outstanding immediately prior to the Partnership Merger Effective Time owned by a holder ofTitaniumOPUnits other thanSurvivingTitaniumandthe TitaniumFamily (eachsuchholder, a “TitaniumOPMinorityPartner”)shallbeconvertedinto,attheelectionoftheholderthereof(whichelectionmustbemadenolaterthanten(10)BusinessDaysfollowingthedeliveryoftheproceduresforsuchelectionbySilverOPtosuchholders, which procedures shall be subject to Titanium’s approval (which approval shall not be unreasonablywithheld,conditionedordelayed)andshallbeprovidedtosuchholdersnolaterthantwenty(20)BusinessDayspriortothePartnershipMergerEffectiveTime),either(i)theTitaniumCommonStockMergerConsideration(the“CashPartnershipMergerConsideration”)or(ii)anumberofSilverOPUnitsnewlyandvalidlyissuedforsuchpurpose (the “New Silver OP Units”) equal to the OP Exchange Ratio (the “OP Unit Partnership MergerConsideration” and, together with the Cash Partnership Merger Consideration, as applicable, the “MinorityOPPartners Partnership Merger Consideration”), in each case, without interest; provided, that if a Titanium OPMinorityPartnerdoesnotqualifyasanaccreditedinvestorasdefinedinRule501oftheSecuritiesActordoesnotmake a valid and timely election as provided above or does not deliver the applicable executed joinder to theSilverOPAgreementasprovidedbelow,suchTitaniumOPMinorityPartnershallbedeemedtohaveelectedtoreceive the Cash Partnership Merger Consideration pursuant to clause (i) above. Each Titanium OP MinorityPartnerwhoreceivesNewSilverOPUnitsshallbeadmittedasalimitedpartnerofSilverOPinaccordancewiththetermsoftheSilverOPAgreementupondeliveryofanexecutedjoinderagreementsubstantiallyintheformattachedheretoasExhibitC.Fortheavoidanceofdoubt,anyTitaniumOPIncentiveUnitsthathavevestedandhavebeensettledinTitaniumOPUnitspriortoClosing(thatis,otherthanthosethatareoutstandingimmediatelypriortoClosingandvestpursuanttoSection2.02(e),whichshallbegovernedbySection2.02(e))willconstituteTitaniumOPUnitsheldbyTitaniumOPMinorityPartnersconvertedpursuanttothisprovision.
(d) Titanium OP Units Held by the Titanium Family. A number of Titanium OP Units owned by theTitaniumFamily(withtheallocationofsuchTitaniumOPUnitsamongcertainorall membersoftheTitaniumFamilytobedeterminedbytheTitaniumFamilyRepresentativepriortotheEffectiveTime)immediatelypriortothe Partnership Merger Effective Time that results in the Titanium Family owning 20% of the outstandingSurvivingTitaniumOPUnits(assuming,forpurposesofthiscalculation,thatTitaniumOPUnitsissuableunderthe Option Deferral Agreement are outstanding Surviving Titanium OP Units) immediately following thePartnership Merger Effective Time (such Titanium OP Units, the “Titanium Family Remaining Units,” andtogetherwiththeGeneralPartnerUnits,the“ExcludedTitaniumOPUnits”)shallremainoutstandingasSurvivingTitaniumOPUnits,nopaymentshallbemadewithrespectthereto,andtheholdersofsuchSurviving
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Titanium OP Units (which holders shall be determined by the Titanium Family Representative prior to theEffectiveTime)shallremainasgeneralorlimitedpartners(asapplicable)ofSurvivingTitaniumOP.SubjecttoSection2.04,allTitaniumOPUnitsownedbytheTitaniumFamilyimmediatelypriortothePartnershipMergerEffectiveTimeotherthantheTitaniumFamilyRemainingUnits(suchTitaniumOPUnits,the“TitaniumFamilyConverting Units”) shall be converted into the Cash Partnership Merger Consideration (the “Titanium FamilyPartnership Merger Consideration” and, together with the Minority OP Partners Partnership MergerConsideration,the“PartnershipMergerConsideration”),withoutinterest.ScheduleIsets forthanillustrationofthe calculation described in the first sentence of this Section 2.02(d)and the effect of the LLC ConversiondescribedinSection2.03andtheotherrelatedtransactionscontemplatedbythisArticleIIbasedoninformationavailableasofthedatehereof.
(e) TitaniumOPIncentiveUnits.SubjecttoSection2.04,eachTitaniumOPIncentiveUnitthatisissuedandoutstandingimmediatelypriortothePartnershipMergerEffectiveTimewhichbyitstermsasineffectonthedatehereofvestsoriseligibletobecomevestedinconnectionwiththeEffectiveTimeshall(i)totheextentnotalreadyvested,becomevested(treatingforthispurposeanyperformance-basedvestingconditiontowhichsuchTitaniumOPIncentive Unit remains subject as having been attained based on the level of Actual PerformancethroughtheEffectiveTimeorTargetPerformance,whicheverisgreater)and(ii)beconverted,immediatelypriortothePartnershipMergerEffectiveTime,intoanoutstandingTitaniumOPUnitinaccordancewiththeTitaniumStockPlan pursuant to whichsuch TitaniumOPIncentive Unit was granted, which shall then be treated in thesame manner (and having the right to the same election) as all other Titanium OP Units in accordance withSection 2.02(c)above (the Cash Partnership Merger Consideration and/or the OP Unit Partnership MergerConsideration, as applicable, payable with respect thereto, the “Incentive Unit Merger Consideration”).AnyIncentiveUnitMergerConsiderationpayablewithrespecttoTitaniumOPIncentiveUnitsshallbepaidoutoftheExchangeFundinaccordancewithSection2.04.TheportionofanysuchTitaniumOPIncentiveUnitthatdoesnot become vested following the determination of performance as set forth in this Section 2.02(e)shall becancelledandforfeitedimmediatelypriortotheEffectiveTimewithoutconsiderationtherefor.
(f) Treatment of Units. All Titanium OP Units converted into the applicable Partnership MergerConsideration,whensoconverted,shallnolongerbeoutstandingandshallautomaticallybecancelledandshallceasetoexist,andeachholderofacertificate(orevidenceofunitsinbook-entryform)thatimmediatelypriortothe Partnership Merger Effective Time represented any such Titanium OP Units shall cease to have any rightswith respect thereto, except the right to receive the applicable Partnership Merger Consideration and anydividends or other distributions to which holders become entitled upon the surrender of such certificate (orevidenceofsharesinbook-entryform)asprovidedherein,withoutinterest.
(g) Adjustments.Notwithstandingtheforegoing,ifbetweenthedateofthisAgreementandthePartnershipMergerEffectiveTimetheoutstandingSilverCommonStock,SilverOPUnits,TitaniumOPUnitsorTitaniumOPIncentiveUnitsshallhavebeenchangedintoadifferentnumberofunitsoradifferentclass,byreasonofanydividend, subdivision, reclassification, recapitalization, split, combination or exchange of units, or any similareventshallhaveoccurred,thentheMinorityOPPartnersPartnershipMergerConsideration,and/ortheTitaniumFamilyPartnershipMergerConsideration,and/ortheIncentiveUnitMergerConsideration,asapplicable,willbeappropriately adjusted to provide to the holders of Silver OP Units, Titanium OP Units and/or Titanium OPIncentiveUnitsthesameeconomiceffect ascontemplatedbythisAgreementpriortosuchevent;providedthatnothinginthisSection2.02(g)shallbeconstruedtopermitanyPartyoritsSubsidiariestotakeanyactionthatisotherwiseprohibitedbythetermsofthisAgreement.
Section 2.03 Effect of LLC Conversion. At the LLC Conversion Effective Time, by virtue of the LLCConversionandwithoutanyactiononthepartofanyofthePartiesortheholderofanysecuritiesoftheParties:
(a) Interests of the Titanium Family. Each Surviving Titanium OP Unit held by the Titanium FamilyimmediatelypriortotheLLCConversionEffectiveTimeshallbeautomaticallyconvertedintooneReorganizedTitanium OP Unit, such that the Titanium Family will hold 20% of the Reorganized Titanium OP Units(assuming, for purposes of this calculation, that Reorganized Titanium OP Units issuable under the OptionDeferral Agreement are outstanding Reorganized Titanium OP Units), and each applicable member of theTitaniumFamilyshallbecomeamemberoftheReorganizedTitaniumOperatingCompany.
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(b) InterestsofTitanium.EachSurvivingTitaniumOPUnitheldbyTitaniumimmediatelypriortotheLLCConversionEffective Timeshall be automatically converted into one Reorganized TitaniumOPUnit, suchthatTitaniumandSilverMergerSub1willcollectivelyhold80%ofReorganizedTitaniumOPUnits(assuming,forpurposesofthiscalculation,thatReorganizedTitaniumOPUnitsissuableundertheOptionDeferralAgreementare outstanding Reorganized Titanium OP Units), and Surviving Titanium shall become a member of theReorganizedTitaniumOperatingCompany.
Section2.04 ExchangeofCertificates.
(a) ExchangeAgent. Prior to the Partnership Merger Effective Time, Silver shall appoint a bankor trustcompanyreasonablyacceptabletoTitaniumtoactasexchangeagent(the“ExchangeAgent”)forthepaymentoftheMergerConsideration.AtorpriortotheEffectiveTime,Silvershalldeposit,orcausetobedeposited,withtheExchangeAgent,forthebenefitoftheholdersofcertificates(orevidenceofsharesorunitsinbook-entryform)(collectively, “Certificates”) which immediately prior to the Effective Time represented shares of TitaniumCommon Stock (other than any shares of Excluded Titanium Common Stock) or shares of Titanium Series BPreferredStock,orwhichimmediatelypriortothePartnershipMergerEffectiveTimerepresentedTitaniumOPUnits(otherthantheExcludedTitaniumOPUnits)andTitaniumOPIncentiveUnits,forexchangeinaccordancewiththisArticleIIthrough the Exchange Agent, (i) certificates (or, at Silver OP’s option, evidence of units inbook-entryform)representingtheNewSilverOPUnitsissuablepursuanttoSection2.02(c)tobeissuedasOPUnitPartnershipMergerConsiderationand(ii)bywiretransferofimmediatelyavailablefunds,anamountincashsufficient to pay the aggregate cash portion of the Titanium Common Stock Merger Consideration, TitaniumSeries B Merger Consideration, Minority OP Partners Partnership Merger Consideration, Titanium FamilyPartnership Merger Consideration and Incentive Unit Merger Consideration, and any cash in respect of anydividendsorotherdistributionspursuanttoSection2.04(d)(allsuchNewSilverOPUnitsandcashdepositedwiththeExchangeAgentbeinghereinafterreferredtoasthe“ExchangeFund”).
(b) LetterofTransmittal.AspromptlyasreasonablypracticableaftertheEffectiveTime(andinanyeventwithinthreeBusinessDaysaftertheEffectiveTime),SilvershallcausetheExchangeAgenttomailtoeachholderof record immediately prior to the Effective Time or the Partnership Merger Effective Time, as applicable, ofTitanium Common Stock (other than any share of Excluded Titanium Common Stock), Titanium Series BPreferredStock,TitaniumFamilyConvertingUnits, TitaniumOPUnitsheldbyTitaniumOPMinorityPartnersandTitaniumOPIncentiveUnits,aformofletteroftransmittal(the“LetterofTransmittal”)(whichshallspecifythat deliveryshall beeffected, andriskof loss andtitle to theCertificates shall pass, onlyupondeliveryof theCertificates to the ExchangeAgent, shall be in suchformandhavesuchother provisions (includingcustomaryprovisions with respect to delivery of an “agent’s message” with respect to shares or units held in book-entryform) as Silver may specify, subject to Titanium’s reasonable approval, and shall be prepared prior to theClosing),togetherwithinstructionsthereto(itbeingunderstoodthatiftheExchangeAgentdoesnotcustomarilyrequireaLetterofTransmittalwithrespecttobook-entryshares,noLetterofTransmittalshallberequiredtobemailedtosuchholderspursuanttothisSection2.04(b)).
(c) Merger Consideration Received in Connection with Exchange. Upon (i) in the case of shares ofTitanium Common Stock, shares of Titanium Series B Preferred Stock, Titanium OP Units and Titanium OPIncentive Units represented by a certificate, the surrender of such certificate for cancellation to the ExchangeAgent or (ii) in the case of shares of Titanium Common Stock, shares of Titanium Series B Preferred Stock,TitaniumOPUnitsandTitaniumOPIncentiveUnitsheldinbook-entryform,thereceiptofan“agent’smessage”by the Exchange Agent, in each case together with the Letter of Transmittal, duly, completely and validlyexecutedinaccordancewiththeinstructionsthereto(unlessaLetterofTransmittalisnotcustomarilyrequiredbytheExchangeAgentwithrespecttobook-entryshares),andsuchotherdocumentsasmayreasonablyberequiredbytheExchangeAgent,theholderofsuchsharesorunitsshallbeentitledtoreceiveinexchangetherefor(x)(A)theTitaniumCommonStockMergerConsiderationintowhichsuchsharesofTitaniumCommonStockhavebeenconvertedpursuanttoSection2.01(c),(B)theTitaniumSeriesBMergerConsiderationintowhichsuchsharesofTitaniumSeriesBPreferredStockhavebeenconvertedpursuanttoSection2.01(d),(C)theMinorityOPPartnersPartnership Merger Consideration into which such Titanium OP Units held by Titanium OP Minority Partnershavebeenconvertedpursuant toSection2.02(c)and/or Section2.02(e), asapplicable, (D)theTitaniumFamilyPartnership Merger Consideration into which such Titanium Family Converting Units have been convertedpursuant to Section 2.02(d), or (E) the Cash Partnership Merger Consideration into which such Titanium OPIncentiveUnitshavebeenconvertedpursuantto
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Section2.02(e)and(y)anycashinrespectofanydividendsorotherdistributionsthattheholderhastherighttoreceivepursuanttoSection2.04(d).IntheeventofatransferofownershipofTitaniumCommonStock,TitaniumSeriesBPreferredStock,TitaniumOPUnitsorTitaniumOPIncentiveUnitsthatisnotregisteredinthetransferrecordsofTitaniumorTitaniumOP,asapplicable, theapplicableMergerConsideration(andcashinrespectofanydividendsorother distributionsthat theholderhastheright toreceivepursuant toSection2.04(d))maybeissuedtoatransfereeiftheCertificaterepresentingsuchTitaniumCommonStock,TitaniumSeriesBPreferredStock,TitaniumOPUnitsorTitaniumOPIncentiveUnits(including,ifsuchTitaniumCommonStock,TitaniumSeriesBPreferredStock,TitaniumOPUnitsorTitaniumOPIncentiveUnitsisheldinbook-entryform,properevidence of such transfer) is presented to the Exchange Agent, accompanied by all documents required toevidenceandeffectsuchtransferandbyevidencethatanyapplicablestockorothertransferTaxeshavebeenpaid.Until surrenderedascontemplatedbythisSection2.04(c), eachshareof TitaniumCommonStockandshareofTitaniumSeriesBPreferredStock,fromandaftertheEffectiveTime,andeachTitaniumOPUnitandTitaniumOPIncentiveUnit,fromandafterthePartnershipMergerEffectiveTime,andanyCertificatewithrespectthereto,in each case shall be deemed to represent only the right to receive upon such surrender the applicable MergerConsiderationthattheholdersofsharesofTitaniumCommonStock,sharesofTitaniumSeriesBPreferredStock,Titanium OP Units and Titanium OP Incentive Units are entitled to receive in respect of such shares or unitspursuanttoSection2.01(c),Section2.01(d),Section2.02(c),Section2.02(d)and Section2.02(e),asapplicable(andcashinrespectofanydividendsorotherdistributionspursuanttoSection2.04(d)).
(d) TreatmentofUnexchangedUnits.NodividendsorotherdistributionsdeclaredormadewithrespecttoNewSilverOPUnitswitharecorddateafterthePartnershipMergerEffectiveTime,asapplicable,shallbepaidtotheholderofanyunsurrenderedCertificate withrespect totheNewSilverOPUnitsissuableuponsurrenderthereof,andnocashpaymentwithrespecttotheMergerConsiderationshallbepaidtoanysuchholder,untilthesurrenderofsuchCertificateinaccordancewiththisArticleII.SubjecttoTaxorotherApplicableLaw,followingsurrender of suchCertificate, there shall be paid to the holder of the certificate (or evidenceof shares in book-entryform)representingwholeNewSilverOPUnitsissuedinexchangetherefor,withoutinterest,(i)atthetimeof such surrender, the amount of dividends or other distributions declared on the New Silver OP Units with arecorddateafterthePartnershipMergerEffectiveTime,asapplicable,andapaymentdatepriortosuchsurrenderthatispayablewithrespecttosuchwholeNewSilverOPUnits,asapplicable,and(ii)attheappropriatepaymentdate, the amount of dividends or other distributions with a record date after the Partnership Merger EffectiveTime, asapplicable, andapaymentdate subsequent tosuchsurrender payablewithrespect to suchwholeNewSilverOPUnits.
(e) TransfersofShares.FromandaftertheEffectiveTime,thereshallbenofurtherregistrationoftransfersonthe stocktransfer booksof SurvivingTitaniumof shares of TitaniumCommonStockor shares of TitaniumSeries BPreferredStockthat wereoutstandingimmediately prior totheEffectiveTime, andfromandafter thePartnership Merger Effective Time, there shall be no further registration of transfers on the transfer books ofSurvivingTitaniumOPofTitaniumOPUnits(otherthanExcludedTitaniumOPUnitsandGeneralPartnerUnitsdeemed transferred pursuant to the Merger) that were outstanding immediately prior to the Partnership MergerEffectiveTime.
(f) NoFractionalUnits.NocertificatesorscriprepresentingfractionalNewSilverOPUnitsshallbeissuedupon the conversion of Titanium OP Units or Titanium OP Incentive Units pursuant to Section 2.02.Notwithstanding any other provision of this Agreement, each fraction of a New Silver OP Unit that wouldotherwise be issued to any holder of Titanium OP Units or Titanium OP Incentive Units converted in thePartnershipMerger pursuant toSection2.02(c),Section2.02(d)and Section2.02(e), as applicable (after takingintoaccountallTitaniumOPUnitsorTitaniumOPIncentiveUnitsexchangedbysuchholder)shallberoundeduptoawholeNewSilverOPUnit.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund (including any interest receivedwith respect thereto) that remains undistributed to the holders of Titanium Common Stock, Titanium Series BPreferredStock, TitaniumOPUnits, or TitaniumOPIncentiveUnits fortwelve(12)monthsafter theEffectiveTimeorthePartnershipMergerEffectiveTime(orimmediatelypriortosuchearlierdateonwhichtheExchangeFundwould otherwise escheat to, or becomethe property of, anyGovernmental Entity), as applicable, shall bedeliveredtoSilveroritsdesignee,andanyholderofTitaniumCommonStock,TitaniumSeriesBPreferred
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Stock,TitaniumOPUnitsorTitaniumOPIncentiveUnitswhohasnottheretoforecompliedwiththisArticleIIshall thereafter look only to Silver for payment of its claim for Merger Consideration and any dividends anddistributionstowhichsuchholderisentitledpursuanttothisArticleII,ineachcasewithoutanyinterestthereon.
(h) InvestmentofExchangeFund.TheExchangeAgentshallinvestthecashintheExchangeFundifandasdirectedbySilver;provided,however,thatanyinvestmentofsuchcashshallinalleventsbelimitedtodirectshort-term obligations of, or short-term obligations fully guaranteed as to principal and interest by, the U.S.government, in commercial paper rated P-1 or A-1 or better by Moody’s Investors Service, Inc. or Standard &Poor’sCorporation,respectively,orincertificatesofdeposit,bankrepurchaseagreementsorbanker’sacceptancesofcommercialbankswithcapitalexceeding$10billion,andthatnosuchinvestmentorlossthereonshallaffecttheamountspayabletoholdersofCertificatespursuanttothisArticleII.Anyinterestandotherincomeresultingfrom such investments shall be paid to, and be the property of, Silver. No investment losses resulting frominvestment of the Exchange Fund shall diminish the rights of any shareholder of Titanium or unitholder ofTitanium OP to receive the applicable Merger Consideration or any other payment as provided herein. To theextent there are losses with respect to such investments or the Exchange Funddiminishes for any other reasonbelowthelevelrequiredtomakepromptcashpaymentoftheaggregatefundsrequiredtobepaidpursuanttothetermshereof, Silvershall reasonablypromptlyreplaceorrestorethecashintheExchangeFundsoastoensurethattheExchangeFundisatalltimesmaintainedatalevelsufficienttomakesuchcashpayments.
(i) LostCertificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of anaffidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required bySilver,thepostingbysuchPersonofabond,insuchreasonableandcustomaryamountasSilvermaydirect,asindemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agentshall,inexchangeforsuchlost,stolenordestroyedCertificate,issuetheapplicableMergerConsiderationandanydividends and distributions on such Certificate, in each case deliverable in respect thereof pursuant to thisAgreement.
(j) DividendsandDistributions.Intheeventthat(i)adividendordistributionwithrespecttothesharesofTitaniumCommonStockpermittedunderthetermsofthisAgreementhas(A)arecorddatepriortotheEffectiveTime and (B) has not been paid as of the Effective Time, or (ii) a dividend or distribution with respect to theTitaniumOPUnits permitted under the terms of this Agreement has (A) a record date prior to the PartnershipMergerEffectiveTimeand(B)hasnotbeenpaidasofthePartnershipMergerEffectiveTime,then,ineachcase,the holders of shares of TitaniumCommon Stock or the holders of TitaniumOP Units, as applicable, shall beentitledtoreceivesuchdividendordistributionfromTitaniumorTitaniumOP,asapplicable,asofimmediatelypriortothetimesuchsharesorunitsareexchangedpursuanttothisArticleII.
(k) NoDissenters’orAppraisalRights.Nodissenters’orappraisalrightswillbeavailablewithrespecttotheTransactions,includinganyrighttoreceivenoticewithrespecttodissenters’rightsunderSection703aoftheMBCA,anyrightorremedyunderSections762etseq.oftheMBCA,anydissenters’orappraisalrightsundertheDRULPAoranydissenters’orappraisalrightsundertheTitaniumOPAgreement.
Section 2.05 Treatment of Titanium Equity Awards. Prior to the Effective Time, the Titanium Board (or, ifappropriate, anydulyauthorizedcommitteeadministeringanyTitaniumStockPlan)will takeall actionsasit deemsnecessaryorappropriatetogiveeffecttothisSection2.05toprovidethat,otherthanasagreedtoinwritingbetweenTitaniumandaholderofeachTitaniumEquityAward:
(a) Titanium RSU Awards and Titanium DSUs. Except as otherwise provided in Section 2.05(c),immediately prior to, and conditioned upon the occurrence of, the Effective Time, each TitaniumRSUAward,otherthanaTitanium2020EquityAward,thatisthenoutstandingandwhichbyitstermsasineffectonthedatehereofvestsinfullinconnectionwiththeEffectiveTime,andeachTitaniumDSU,shall,withoutanyactionbytheholderthereof,becomevestedinfull(asapplicable)andshallbeconvertedintotherightoftheholderthereofto receive an amount in cash, without interest, equal to the product of (i) the number of shares of TitaniumCommon Stock subject to such Titanium RSU Award or Titanium DSU, as applicable, and (ii) the TitaniumCommonStockMergerConsideration.AnyTitaniumCommonStockMergerConsiderationpayablewithrespectsuchTitaniumRSUAwardsandTitaniumDSUsshallbepaidassoonaspracticable,andinanyeventwithinfive(5)BusinessDays,followingtheEffectiveTimeandsubjecttoanyrequiredwithholdingtaxes.NotwithstandinganythingtothecontrarycontainedinthisAgreement,anypaymentinrespectofanyTitanium
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RSU Awards or Titanium DSUs which immediately prior to such cancellation was treated as “deferredcompensation” subject to Section 409A of the Code shall be made on the applicable settlement date for suchTitaniumRSUAwardsorTitaniumDSUsifrequiredinordertocomplywithSection409AoftheCode.
(b) TitaniumPSUAwards. Immediately prior to, and conditioned upon the occurrence of, the EffectiveTime,eachTitaniumPSUAward,otherthanaTitanium2020EquityAward,thatisthenoutstandingwhichbyitsterms as in effect on the date hereof is eligible to become vested in connection with the Effective Time shall,withoutanyactionbytheholderthereof,becomevested(determinedbasedonthelevelofActualPerformanceorTargetPerformance,whicheverisgreater)andshallbeconvertedintotherightoftheholderthereoftoreceiveanamount in cash, without interest, equal to the product of (i) the number of shares of TitaniumCommon Stocksubject to the vested portion of such Titanium PSU Award and (ii) the Titanium Common Stock MergerConsideration.AnyTitaniumCommonStockMergerConsiderationpayablewithrespecttosuchTitaniumPSUAwards shall be paid as soon as practicable, and in any event within five (5) Business Days, following theEffectiveTimeandsubjecttoanyrequiredwithholdingtaxes.Notwithstandinganythingtothecontrarycontainedin this Agreement, any payment in respect of any Titanium PSU Awards which immediately prior to suchcancellation was treated as “deferred compensation” subject to Section 409Aof the Codeshall be madeontheapplicablesettlementdateforsuchTitaniumPSUAwardsifrequiredinordertocomplywithSection409AoftheCode. Theportionof suchTitaniumPSUAwarddescribedinthisSection2.05(b)that doesnot becomevestedfollowing the determination of performance as set forth in thisSection2.05(b)shall be cancelled and forfeitedimmediatelypriortotheEffectiveTimewithoutconsiderationtherefor.
(c) SubstituteTitaniumRSUandPSUAwards.
(i) NotwithstandinganythingtothecontrarycontainedinthisAgreement,inthecaseofanyTitaniumRSUAwardandanyTitaniumPSUAward,ineachcaseotherthanaTitanium2020EquityAward,thatisoutstanding immediately prior to the Effective Time which is not, by its terms, eligible to become vestedupontheEffectiveTime,suchTitaniumRSUAwardorTitaniumPSUAwardshall,immediatelypriortotheEffectiveTime,withoutanyactionbytheholderthereof,becancelledandshallbeconvertedintoasubstituteawardinrespectthereof,inaccordancewiththetermsoftheapplicableTitaniumStockPlan(assuming,forany applicable Titanium PSU Award, achievement of performance conditions at the greater of TargetPerformanceorActualPerformance)(a“SubstituteAward”),whichSubstituteAwardshallconstitutearightto receive, on a per share basis with respect to the portion of such Substitute Award that vests, a cashpayment payable by Reorganized Titanium Operating Company equal to the Titanium Common StockMergerConsideration(the“TitaniumRSU/PSUCashAmount”).EachSubstituteAwardshallcontinuetobesubjecttothesameservice-vestingschedulethatappliedtotheoriginalTitaniumRSUAwardorTitaniumPSUAward to which it relates (with any Substitute Award granted in respect of a Titanium PSU Awardvesting solely subject to service conditions being satisfied through the end of the originally scheduledperformanceperiod(orasotherwiseprovidedinaccordancewiththetermsoftheapplicableTitaniumStockPlanandapplicableTitaniumPSUAwardagreement)),andtheapplicableTitaniumRSU/PSUCashAmountthatvestsandbecomespayableshallbepaidatsuchtimeasthepreviouslycorrespondingshareofTitaniumCommonStock would otherwise have become vested and deliverable under the applicable TitaniumRSUAwardorTitaniumPSUAwardinaccordancewithitsoriginalservicevestingschedule.
(ii) NotwithstandinganythingtothecontrarycontainedinthisAgreement,inthecaseofanyTitaniumRSUAwardandanyTitaniumPSUAward,ineachcasethatisaTitanium2020EquityAwardandthatisoutstandingimmediately prior to the Effective Time, suchTitaniumRSUAwardor TitaniumPSUAwardshall, immediately prior to the Effective Time, without any action by the holder thereof, be cancelled andshallbeconvertedintoasubstituteawardinrespectthereof,inaccordancewiththetermsoftheapplicableTitaniumStockPlan(a“2020SubstituteAward”), which2020SubstituteAwardshall constitutearighttoreceive,onapersharebasiswithrespecttotheportionofsuchSubstituteAwardthatvests,acashpaymentpayablebyReorganizedTitaniumOperatingCompanyequaltotheTitaniumRSU/PSUCashAmount.Each2020SubstituteAwardshallcontinuetobesubjecttothesamevestingschedulethatappliedtotheoriginalTitaniumRSUAwardorTitaniumPSUAwardtowhichitrelates,andtheapplicable
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Titanium RSU/PSU Cash Amount that vests and becomes payable shall be paid at such time as thepreviously corresponding share of Titanium Common Stock would otherwise have become vested anddeliverable under the applicable Titanium RSU Award or Titanium PSU Award in accordance with itsoriginalvestingschedule.
(d) Treatment of Titanium DERs. Conditioned upon the occurrence of the Effective Time, upon theEffectiveTime:(i)eachTitaniumDERthatrelatestoathenoutstandingTitaniumRSUAwardorTitaniumPSUAward,ineachcaseotherthanaTitanium2020EquityAward,andwhichbyitsterms(A)is,asofimmediatelypriortotheEffectiveTime,alreadyvested, or(B)iseligible tobecomevestedinconnectionwiththeEffectiveTime,shall,withoutanyactionbytheholderthereof,becomevested(totheextentnotpreviouslyvested)tothesame extent as the Titanium RSU Award or Titanium PSU Award to which such Titanium DER relates inaccordancewithSection2.05(a)orSection2.05(b)above,asapplicable,andineachcaseof(A)and(B)shall,tothe extent not theretofore paid, become immediately due and payable in accordance with its terms and, uponpaymentinfull thereofinaccordancewithitsterms, shall becancelledasoftheEffectiveTime;and(ii) inthecaseofanyTitaniumDERthatrelatestoathenoutstandingTitaniumRSUAwardorTitaniumPSUAward,ineachcaseincludinganyTitanium2020EquityAward,whichisnot,byitsterms,eligibletobecomevestedupontheEffectiveTime,suchTitaniumDERshall,immediatelypriortotheEffectiveTime,withoutanyactionbytheholder thereof, be cancelled and shall be converted into a Substitute DER. For the avoidance of doubt, anypayment in respect of any Titanium DER which immediately prior to the cancellation thereof was treated as“deferredcompensation”subjecttoSection409AoftheCodeshallbemadeontheapplicablesettlementdateforsuchTitaniumDER(orSubstituteDER,asapplicable)if requiredinordertocomplywithSection409AoftheCode.
(e) NecessaryActions. Titaniumshall use reasonable best efforts to, prior to the Effective Time, take orcausetobetakenallactionsasarenecessarytogiveeffecttothetransactionscontemplatedbythisSection2.05.Titanium shall provide Silver the opportunity to review and provide comments with respect to any writtenmaterialswithrespecttheretoinadvanceoftheiradoptionordistributiontoholdersofTitaniumEquityAwards,whichcommentsshallbeconsideredandtakenintoaccountbytheTitaniumingoodfaith.
(f) Option Deferral Agreement. At the LLC Conversion Effective Time, the Option Deferral AgreementshallbedeemedtobeamendedsothateachOptionDeferredUnitshallrepresenttherighttoreceive,followingthe LLCConversion Effective Time, one Reorganized TitaniumOPUnit (“Reorganized TitaniumOPDeferredUnit”),withsuchReorganizedTitaniumOPDeferredUnitremainingsubjecttoallothertermsandconditionsoftheOptionDeferralAgreement(includingthecontinuedrighttoreceivedistributionsinthesamemannerandinthesameamountasreceivedbyanyotherReorganizedTitaniumOPUnit). Notwithstandinganythinghereintothe contrary, the parties to the Option Deferral Agreement shall be permitted to amend the Option DeferralAgreementtogiveeffecttothisSection2.05(f).
(g) Funding of Closing Payments. At or prior to the Effective Time, Silver shall deposit, or cause to bedeposited,withTitaniumOPoraSubsidiarythereof,forthebenefitoftheholdersoftheapplicableTitaniumRSUAwards,TitaniumPSUAwardsandTitaniumDSUs,bywiretransferofimmediatelyavailablefunds,anamountincashequaltothesumof(i)theaggregateamountofTitaniumCommonStockMergerConsiderationpayablewith respect to Titanium RSUAwards and Titanium DSUs pursuant toSection2.05(a),plus(ii) the aggregateamount of Titanium Common Stock Merger Consideration payable with respect to Titanium PSU AwardspursuanttoSection2.05(b),plus(iii) theaggregateamountpayablewithrespect toTitaniumDERspursuanttoSection2.05(d)(i).
Section2.06 TreatmentofTitaniumSeriesJandSeriesKPreferredStock.OntheClosingDate,eachshareofTitanium Series J Preferred Stock and each share of Titanium Series K Preferred Stock issued and outstandingimmediatelypriortotheEffectiveTimeshallberedeemedinaccordancewiththetermsofSection6.08,andfromandafter the Effective Time, shall no longer be deemed outstanding and all rights of the holders of such shares shallterminate,excepttherighttoreceivetheredemptionpricethereforplusallaccumulatedandunpaiddividendsthereon,withoutinterest.
Section2.07 WithholdingRights.EachofSilverandtheExchangeAgent(withoutduplication)shallbeentitledtodeductandwithholdfromtheconsiderationotherwisepayabletoanyholderofTitaniumCommonStock,TitaniumSeries B Preferred Stock, Titanium Series J Preferred Stock, Titanium Series K Preferred Stock, Titanium DSUs,TitaniumRSUAwards,TitaniumPSUAwards,TitaniumOPUnits,orTitaniumOPIncentiveUnitspursuant
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to this Agreement such amounts as are required to be deducted and withheld with respect to the making of suchpaymentunderapplicableTaxlaw.AmountssowithheldandtimelypaidovertotheappropriatetaxingauthorityshallbetreatedforallpurposesofthisAgreementashavingbeenpaidtotheholderofTitaniumCommonStock,TitaniumSeries B Preferred Stock, Titanium Series J Preferred Stock, Titanium Series K Preferred Stock, Titanium DSUs,Titanium RSU Awards, Titanium PSU Awards, Titanium OP Units, or Titanium OP Incentive Units in respect ofwhich such deduction or withholding was made. In the event that Silver or the Exchange Agent determines thatwithholdingisrequired,SilverortheExchangeAgentshallusecommerciallyreasonableeffortstonotifyTitaniuminadvanceandthePartiesshallcooperateingoodfaithtoreduceorminimizesuchwithholdingtothemaximumextentpermittedbyApplicableLaw.
ARTICLEIII.
REPRESENTATIONSANDWARRANTIESOFTHETITANIUMPARTIES
TheTitaniumPartiesjointlyandseverallyrepresentandwarranttotheSilverPartiesthat,except(a)asdisclosedintheTitaniumSECDocumentspubliclyavailableatleasttwo(2)BusinessDayspriortothedateofthisAgreement(other than (i) with respect to Titanium SEC Documents filed with or furnished to the SEC by Titanium prior toJanuary1, 2019, anyexhibits or schedules thereto, or anydocuments incorporated byreference therein, and(ii) anyriskfactordisclosurescontainedinthe“RiskFactors”or“ForwardLookingStatements”sectionsthereoforanyothersectiontotheextentthereareforwardlooking,cautionaryorpredictivestatementstherein;itbeingunderstoodthatanyhistoricalfactualinformationcontainedwithinsuchheadings,disclosureorstatementsshallnotbeexcluded)or(b)inthe disclosure letter delivered by Titanium to Silver contemporaneously with the execution and delivery by theTitaniumParties of this Agreement (the “TitaniumDisclosureLetter”) (it being understood that any information setforthinonesectionorsubsectionoftheTitaniumDisclosureLetterwithrespecttothisArticleIIIshallbedeemedtoapply to and qualify the section or subsection of this Agreement to which it corresponds and each other section orsubsectionofthisArticleIIItotheextentthatitisreasonablyapparentonitsfacethatsuchinformationisrelevanttosuchothersectionorsubsection):
Section3.01 Qualification,Organization,Subsidiaries,etc.Titaniumisacorporationdulyincorporated,validlyexisting and in good standing under the laws of the State of Michigan and has all requisite corporate power andauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconducted,exceptwhere the failure to have such power and authority has not had, and would not reasonably be expected to have aTitaniumMaterial AdverseEffect. TitaniumOPisalimitedpartnershipdulyorganized,validlyexistingandingoodstandingunderthelawsoftheStateofDelawareandhasallrequisitepowerandauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconducted,exceptwherethefailuretohavesuchpowerandauthority,individuallyorintheaggregate,hasnothadandwouldnotreasonablybeexpectedtohaveaTitaniumMaterial Adverse Effect. Eachof Titanium’s Subsidiaries (other than TitaniumOP)is a legal entity duly organized,validlyexistingandingoodstandingunderthelawsofitsrespectivejurisdictionoforganizationandhasallrequisitecorporateorsimilarpowerandauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconducted,exceptwherethefailuretohavesuchpowerorauthority,individuallyorintheaggregate,hasnothadandwouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect.EachofTitanium,TitaniumOP and their respective Subsidiaries is duly qualified or licensed to do business and is in good standing in eachjurisdictioninwhichthepropertyowned,leasedoroperatedbyitorthenatureofthebusinessconductedbyitmakessuch approvals, qualification or licensing necessary, except where the failure to be so duly approved, qualified orlicensedandingoodstanding,individuallyorintheaggregate,hasnothadandwouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect.TitaniumandTitaniumOPhavemadeavailabletoSilvertrue,correctandcompletecopiesoftheirrespectiveOrganizationalDocuments,eachasamendedasofthedatehereof,andarenotinviolationofanyoftheprovisionsofsuchOrganizationalDocuments.
Section3.02 Authority;ExecutionandDelivery;Enforceability;OwnershipRestrictions.
(a) Titanium has all requisite corporate power and authority, and Titanium OP has all requisite limitedpartnershippowerandauthority,toexecuteanddeliverthisAgreement,toperformandcomplywithitscovenantsandobligationshereunderandtoconsummatetheTransactions,subject,inthecaseoftheMerger,tothereceiptofTitaniumShareholderApproval,andinthecaseofthePartnershipMergerandtheLLCConversion,tothereceiptofTitaniumOPApproval.
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(b) TheTitaniumBoard,actingupontheunanimousrecommendationoftheTitaniumSpecialCommittee,has(i)determinedthatthisAgreementandtheTransactionsareadvisableandarefairto,andinthebestinterestsof, Titanium and the Titanium Shareholders; (ii) adopted and approved this Agreement and the Transactions;(iii) subject to Section 5.02, resolved to recommend that the Titanium Shareholders adopt and approve thisAgreement; and (iv) directed that this Agreement be submitted to the Titanium Shareholders and holders ofTitanium Series B Preferred Stock for their adoption and approval (the “Titanium Board Recommendation”).Titanium,initscapacityasthegeneralpartnerofTitaniumOP,hastakenallactionsrequiredfortheexecutionofthis Agreement by Titanium OP and to approve the consummation by Titanium OP of the Transactions. TheTitanium Board, acting upon the unanimous recommendation of the Titanium Special Committee, has directedthat Titanium submit the adoption and approval of this Agreement to a vote at a special meeting of theshareholdersofTitaniuminaccordancewiththetermsofthisAgreement(the“TitaniumShareholdersMeeting”).Except for Titanium Shareholder Approval and the Titanium OPApproval, no other corporate or other similarproceedingsonthepartoftheTitaniumPartiesarenecessarytoauthorizeoradoptorapprovethisAgreementortoconsummatetheTransactions(exceptforthefilingof(A)theMichiganCertificateofMergerandtheDelawareCertificate of Merger with the Michigan LARA and the Delaware Secretary of State, respectively, (B) thePartnershipCertificateofMergerwiththeDelawareSecretaryofState,and(C)theCertificateofConversionandtheCertificateofFormationwiththeDelawareSecretaryofState).EachoftheTitaniumPartieshasdulyexecutedanddeliveredthisAgreementand,assumingthedueauthorization,executionanddeliverybytheSilverParties,this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with itstermsexceptasenforcementmaybelimitedbybankruptcy,insolvency,reorganizationorsimilarlawsaffectingcreditors’rightsgenerallyandbygeneralprinciplesofequity(regardlessofwhetherenforceabilityisconsideredinaproceedinginequityoratlaw)(the“EnforceabilityExceptions”).
(c) Assumingtherepresentationandwarrantyset forthinSection4.09is trueandcorrect in all respects,(i) the Titanium Board, acting upon the unanimous recommendation of the Titanium Special Committee, hasadoptedaresolutionpursuanttoSection782(1)oftheMBCAtoexempttheSilverPartiesandtheir existingorfuture Affiliates from the requirements of Section 780 of the MBCA related to “interested shareholders”(as defined in Section 778 of the MBCA) with respect to the Transactions (the “Section 782 ExemptionResolution”)and(ii)no“businesscombination,”“fairprice,”“moratorium,”“controlshareacquisition”orothersimilarantitakeoverstatuteorsimilarstatuteorregulation(collectively,“TakeoverLaws”)applieswithrespecttothis Agreement and the Transactions. The Titanium Board, acting upon the unanimous recommendation of theTitaniumSpecialCommittee,hasadoptedaresolutiondeterminingthatnoneoftheexecutionanddeliveryofthisAgreement or the Voting Agreement or the performance of any of the obligations or agreements contemplatedherebyandthereby,includingtheconsummationoftheTransactions(includingtheMerger),assumingnobreachordefault of suchagreements bytheTitaniumFamily, will result inanyPersonintheTitaniumFamilyhavingBeneficialOwnershiporConstructiveOwnership(assuchtermsaredefinedintheTitaniumCharter)ofmorethan8.23% of the value of the outstanding Titanium Common Stock and Titanium Series B Preferred Stock, inaggregate, or otherwise result in any Capital Stock (as defined in the Titanium Charter) held by the TitaniumFamilybeingdeemedExcessStock(asdefinedintheTitaniumCharter)(the“OwnershipResolution”).Noactionhasbeentaken,whetherpursuanttoSection782(2)oftheMBCAorotherwise,bytheTitaniumBoardtoamend,alterorrepealtheSection782ExemptionResolutionortheOwnershipResolution.
Section3.03 CapitalStructure.
(a) TheauthorizedcapitalstockofTitaniumconsistsof(i)250,000,000sharesofTitaniumCommonStockand (ii) 250,000,000 shares of preferred stock, of which 40,000,000 shares are designated as Series B Non-Participating Convertible Preferred Stock, 0.001par valueper share (the “TitaniumSeries BPreferredStock”),7,700,000sharesaredesignatedasSeriesJCumulativeRedeemablePreferredStock,noparvalue(the“TitaniumSeries J Preferred Stock”), and 6,800,000 shares are designated as Series K Cumulative Redeemable PreferredStock,noparvalue(the“TitaniumSeriesKPreferredStock”and,togetherwiththeTitaniumCommonStock,theTitaniumSeriesBPreferredStockandtheTitaniumSeriesJPreferredStock,the“TitaniumCapitalStock”).AtthecloseofbusinessonFebruary6,2020(the“CapitalizationDate”),(1)61,237,420sharesofTitaniumCommonStockwereissuedandoutstanding,(2)26,398,473sharesofTitaniumSeriesBPreferredStockwereissuedandoutstanding,(3)7,700,000sharesofTitaniumSeriesJPreferredStockwereissuedandoutstanding,(4)6,800,000shares of TitaniumSeries KPreferred Stockwere issuedandoutstandingand(5) 2,609,728shares of TitaniumCommonStockwerereservedandavailablefor
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issuance pursuant to Titanium Stock Plans, of which (A) 84,466 shares were subject to issuance upon thesettlement of outstanding Titanium DSUs, (B) 178,552 shares were subject to issuance upon the settlement ofoutstanding Titanium RSU Awards, and (C) 176,250 shares were subject to issuance upon the settlement ofoutstandingTitaniumPSUAwards(assumingachievementofanyapplicableperformanceconditionsatmaximumlevels).ExceptassetforthinthisSection3.03(a),Section3.03(b)orSection3.03(c),asoftheCapitalizationDate,thereare(i)nooutstandingsharesofcapitalstockof,orotherequityorvotinginterestsin,TitaniumorTitaniumOP, (ii) no outstanding securities of Titanium or Titanium OP convertible into or exchangeable for shares ofcapitalstockof,orotherequityorvotinginterestsin,TitaniumorTitaniumOP,asapplicable,(iii)nooutstandingoptions,warrants,calls,subscriptions,rightsorothercommitmentsoragreementstoacquirefromTitaniumoranySubsidiaryofTitanium,orthatobligateTitaniumoranySubsidiaryofTitaniumtoissue,anycapitalstockof,orotherequityorvotinginterestsin,oranysecuritiesconvertibleintoorexchangeableforsharesofcapitalstockof,or other equity or voting interests in, Titanium or Titanium OP, (iv) no obligations of Titanium or any of itsSubsidiariestogrant,extendorenterintoanysubscription,warrant,right,convertibleorexchangeablesecurityorother similar agreement or commitment relating to any capital stock of, or other equity or voting interests in,TitaniumorTitaniumOP,and(v)nooutstandingrestrictedshares,restrictedshareunits,stockappreciationrights,performanceshares,contingentvaluerights,“phantom”stockorsimilarsecuritiesorrightsthatarederivativeof,or provide economic benefits based, directly or indirectly, on the price or value of any of the foregoing ordividendspaidthereon(theitemsinclauses(i),(ii),(iii),(iv)and(v)beingreferredtocollectivelyas“TitaniumSecurities”).
(b) Except as set forth in the TitaniumCharter, the TitaniumBy-laws, the Titanium OPAgreement, theContinuingOffer ortheCashTenderAgreement, therearenooutstandingagreements ofanykindthat obligateTitaniumor anyof its Subsidiaries to repurchase, redeemor otherwise acquire anyTitaniumSecurities (exceptpursuant to the acquisition by Titanium of shares of Titanium Common Stock for purposes of satisfying TaxwithholdingobligationswithrespecttoholdersofTitaniumDSUs,TitaniumRSUAwards,TitaniumPSUAwardsorotherequityawards),orthatobligateTitaniumoranySubsidiaryofTitaniumtogrant,extendorenterintoanysuch agreements relating to any TitaniumSecurities, including any agreements granting any preemptive rights,subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any TitaniumSecurities. Except for the Voting Agreement, the Continuing Offer or the Cash Tender Agreement, neitherTitaniumnoranyofitsSubsidiariesisapartytoanyshareholders’agreement,votingtrustagreement,registrationrights agreement or other similar agreement or understanding relating to any Titanium Securities or any otheragreementrelatingtothedisposition,votingordividendswithrespecttoanyTitaniumSecurities.AlloutstandingsharesofTitaniumCapitalStock,TitaniumOPUnitsandTitaniumOPIncentiveUnitshavebeendulyauthorizedandvalidly issuedandare fully paidandnonassessable (to theextent suchconcepts are applicable) andfree ofpreemptiverights.SincetheCapitalizationDateuntilthedatehereof,neitherTitaniumnoranyofitsSubsidiarieshasissuedanyTitaniumSecuritiesorincurredanyobligationtomakeanypaymentsbasedonthepriceorvalueofTitaniumSecurities,otherthanpursuanttoTitaniumOPIncentiveUnits,TitaniumDSU,TitaniumRSUAwardsandTitaniumPSUAwardsthat wereoutstandingasoftheCapitalizationDate.Section3.03(b)oftheTitaniumDisclosure Letter sets forth the complete and accurate schedule of all outstanding equity, ownership or votinginterests of TitaniumOPas of the Capitalization Date, including the name of each general partner and limitedpartnerthereof,thenumberofTitaniumOPUnitsownedbysuchpartner,andthepercentagepartnershipinterestrepresentedbysuchTitaniumOPUnits.
(c) AtthecloseofbusinessontheCapitalizationDate,(i)87,653,492TitaniumOPUnitswereissuedandoutstanding,ofwhich61,237,420TitaniumOPUnitswereownedbyTitaniumand26,416,072TitaniumOPUnitswereownedbyPersonsotherthanTitanium,including24,191,177TitaniumOPUnitsbeneficiallyownedbytheTitanium Family and 2,224,895 Titanium OP Units owned by Persons other than the Titanium Family orTitanium,(ii)123,251TitaniumOPIncentiveUnitswereissuedandoutstanding,(iii)preferredequityinterestsinTitaniumOPwithacapitalaccountbalanceof$362,500,000wereissuedandoutstandingandownedbyTitaniumand(iv)871,261.76OptionDeferredUnitswereissuedandoutstanding.
(d) Section3.03(d)oftheTitaniumDisclosureLetter setsforththefollowinginformationwithrespect toeachTitaniumDSU,TitaniumRSUAward,TitaniumPSUAward,andTitaniumOPIncentiveUnitsoutstandingasofthedatehereof(includingundertheOptionDeferralAgreement):(i)thenameoftheholderofsuchTitaniumDSU,TitaniumRSUAward,TitaniumPSUAwardandTitaniumOPIncentiveUnits;(ii)thenumberofsharesofTitanium Common Stock subject to such Titanium DSU, Titanium RSU Award and Titanium PSU Award;(iii)thenumberofTitaniumOPIncentiveUnitsheldbysuchholderandthenumberofsharesof
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Titanium Common Stock with respect to which such Titanium OP Incentive Units would be convertible orexchangedasofthedatehereof;(iv)thedateonwhichsuchTitaniumDSU,TitaniumRSUAward,TitaniumPSUAwardandTitaniumOPIncentiveUnitswasgranted;and(v)theextenttowhichsuchTitaniumDSU,TitaniumRSUAward, TitaniumPSUAwardandTitaniumOPIncentive Units is vestedand/or non-forfeitable, as of thedate hereof and the times and extent to which such Titanium DSU, Titanium RSU Award and Titanium PSUAward(assumingtargetlevelandmaximumperformance)orTitaniumOPIncentiveUnitsisscheduledtobecomevested and/or non-forfeitable thereafter. All shares of Titanium Common Stock to be issued pursuant to anyTitanium DSU, Titanium RSU Award and Titanium PSU Award or upon the redemption of any Titanium OPIncentive Units will be, when issued, duly authorized, validly issued, fully paid and nonassessable, and free ofpreemptiverights.
(e) Section 3.03(e)of the Titanium Disclosure Letter sets forth a true and complete list of all of theSubsidiaries of Titanium OP that are not, directly or indirectly, wholly-owned by Titanium and all other jointventuresinwhichTitaniumoranyofitsSubsidiariesownscapitalstock,debtsecurities,orequitysecurities,andthepercentageofsuchSubsidiaryorotherjointventureowned,directlyorindirectly,byTitaniumOP.ExceptassetforthinSection3.03(e)oftheTitaniumDisclosureLetter:(i)noneofTitaniumoranyofitsSubsidiariesholdsany capital stock, debt securities or equity securities (including any securities convertible into shares or equityinterests of) or other capital interests of any Person other than any of the Subsidiaries of Titanium, (ii) eachoutstanding share of capital stock of or other equity interest in each Subsidiary of Titaniumis duly authorized,validlyissued,fullypaid,nonassessableandfreeofpreemptiverightsandisowned,beneficiallyandofrecord,byTitaniumoroneormoreofitswhollyownedSubsidiariesfreeandclearofallLiens,otherthanPermittedLiens,(iii)therearenooptions,warrantsorotherrights,agreements,arrangementsorcommitmentsofanycharactertowhich any Subsidiary of Titanium is a party or by which any Subsidiary of Titanium is bound relating to theissued or unissued capital stock or other equity, ownership or voting interests in such Subsidiary, or securitiesconvertible into or exchangeable for such capital stock or other equity, ownership or voting interests of suchSubsidiary,orobligatinganySubsidiaryofTitaniumtoissueorsellanysharesofitscapitalstockorotherequity,ownership or voting interests, or securities convertible into or exchangeable for such capital stock of, or otherequity,ownershiporvotinginterestsin,suchSubsidiary,(iv)exceptaswouldnotbematerialtoTitaniumanditsSubsidiaries, taken as a whole, there are no outstanding contractual obligations of Titanium or any of itsSubsidiariestoprovidefundsto,ormakeanyinvestment(intheformofaloan,capitalcontributionorotherwise)in,anySubsidiaryofTitanium,otherthanguaranteesbyTitaniumOPofanyindebtednessorotherobligationsofanySubsidiaryofTitanium,(v)noneofTitanium’sSubsidiariesownsanyTitaniumCapitalStock,and(vi)noneofTitanium’sSubsidiariesareinmaterialviolationofanyoftheirrespectiveOrganizationalDocuments.
Section3.04 GovernmentalAuthorization;Non-Contravention.
(a) The execution, delivery and performance by the Titanium Parties of this Agreement and theconsummationbytheTitaniumPartiesoftheTransactionsrequirenoactionbyorinrespectof,orfilingwith,anyGovernmental Entity other than (i) the filing of (A) the Michigan Certificate of Merger and the DelawareCertificate of Merger with the Michigan LARA and the Delaware Secretary of State, respectively, (B) thePartnershipCertificateofMergerwiththeDelawareSecretaryofState,(C)theCertificateofConversionandtheCertificateofFormationwiththeDelawareSecretaryofState,and(D)filingswithornoticesto,ineachcasewithrespecttoqualificationstodobusinessorwithrespecttopotentialtransfertaxes,therelevantauthoritiesofotherstatesinwhichanyTitaniumPartyisqualifiedtodobusinessorwhereaSubsidiaryofTitaniumdoesbusiness,(ii) compliance with any applicable requirements of any applicable Regulatory Law, (iii) compliance with anyapplicable requirements of the Securities Act, the Exchange Act, and any other applicable U.S. state or federalsecurities laws (including the filing with the SECof the Proxy Statement and any other filings required underapplicable U.S. state or federal securities laws in connection with the Transactions (“Other Filings”)), and(iv) consents, approvals, Orders, authorizations, registrations, declarations andfilings thefailure of whichto beobtained, made or given would not, individually or in the aggregate, reasonably be expected to prevent ormateriallyimpairormateriallydelaytheconsummationoftheTransactionsorhaveaTitaniumMaterialAdverseEffect.
(b) The execution, delivery and performance by the Titanium Parties of this Agreement and theconsummationoftheTransactions,donotandwillnot(i)assumingthereceiptofTitaniumShareholderApprovalandTitaniumOPApproval,contravene,conflictwith,orresultinanyviolationorbreachofany
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provisionofTitaniumCharter,TitaniumBy-lawsortheTitaniumOPAgreement,(ii)assumingcompliancewiththe matters referred to in Section3.04(a)and the receipt of Titanium Shareholder Approval and Titanium OPApproval,contravene,conflictwithorresultinanyviolationorbreachofanyprovisionofanyApplicableLaw,(iii) assuming compliance with the matters referred to in Section3.04(a)and receipt of Titanium ShareholderApprovalandTitaniumOPApproval,requireanyconsentorotheractionbyanyPersonunder,constituteadefaultorothereventthat,withorwithoutnoticeorlapseoftimeorboth,wouldconstituteadefaultunder,orcauseorpermit the termination, cancellation, acceleration or other change of any right or obligation or the loss of anybenefittowhichTitaniumoranyofitsSubsidiariesisentitledunder,anyprovisionofanyContractbindinguponTitanium or any of its Subsidiaries or any governmental licenses, authorizations, permits, consents, approvals,variances,exemptionsorordersaffecting,orrelatinginanywayto,theassetsorbusinessoftheTitaniumPartiesor(iv)result inthecreationorimpositionofanyLienonanyasset ofTitaniumoranyofitsSubsidiaries, withsuchexceptions, in the case of each of clauses (ii) through(iv), as would not, individually or in the aggregate,reasonablybeexpectedtopreventormateriallyimpairormateriallydelaytheconsummationoftheTransactionsorhaveaTitaniumMaterialAdverseEffect.
Section3.05 TitaniumSECDocuments.
(a) Titanium has timely filed with or furnished to the SEC all reports, schedules, forms, statements,prospectusesandotherdocumentsrequiredtobefiledwithorfurnishedtotheSECbyTitaniumsinceJanuary1,2017, together with anyexhibits andschedules thereto andother information incorporated therein (collectively,the “Titanium SEC Documents”). As of their respective effective dates (in the case of the Titanium SECDocumentsthatareregistrationstatementsfiledpursuanttotherequirementsoftheSecuritiesAct)andasoftheirrespective SECfiling dates (in the case of all other TitaniumSECDocuments), the TitaniumSECDocumentscompliedastoforminallmaterialrespectswiththerequirementsoftheSecuritiesActortheExchangeAct,asthecasemaybe,applicabletosuchTitaniumSECDocuments,andnoneoftheTitaniumSECDocumentsasofsuch respective dates (or, if amended prior to the date hereof, as of the date of the filing of such amendment)containedanyuntruestatementofamaterialfactoromittedtostateamaterialfactnecessaryinordertomakethestatementstherein,inlightofthecircumstancesunderwhichtheyweremade,notmisleading.AsofthedateofthisAgreement,therearenooutstandingorunresolvedcommentsreceivedfromtheSECoritsstaffwithrespecttotheTitaniumSECDocuments,andtotheKnowledgeofTitanium,noneoftheTitaniumSECDocumentsisthesubject of outstanding SEC comment or outstanding SEC investigation or other governmental investigationregardingtheaccountingpracticesofTitanium.
(b) TheconsolidatedfinancialstatementsofTitanium(includingtherelatednotes)includedorincorporatedbyreferenceintheTitaniumSECDocumentscompliedastoform,asoftheirrespectivedatesoffilingwiththeSEC (or, if amended prior to the date hereof, as of the date of the filing of such amendment), in all materialrespectswiththeapplicableaccountingrequirementsandpublishedrulesandregulationsoftheSECwithrespectthereto, had been prepared in all material respects in accordance with GAAP(except, in the case of unauditedstatements, as permitted by rules and regulations of the SEC) applied on a consistent basis during the periodsinvolved (except (i) as maybe indicated in the notes thereto or (ii) as permitted by Regulation S-X) and fairlypresentedinallmaterialrespectstheconsolidatedfinancialpositionofTitaniumanditsconsolidatedSubsidiariesasofthedatesthereofandtheconsolidatedresultsoftheiroperationsandcashflowsfortheperiodsshowntherein(subject,inthecaseofunauditedstatements,tonormalyear-endadjustmentsthatwerenot,orarenotexpectedtobe,materialinamount).
(c) Titanium has designed and maintains a system of internal control over financial reporting andaccounting intended to provide reasonable assurance regarding the reliability of financial reporting and thepreparationoffinancialstatementsforexternalpurposes.Titaniumhasdesignedandmaintainsdisclosurecontrolsand procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) intended to providereasonableassurancethat material informationthat is requiredtobedisclosedbyTitaniuminthereportsthat itfilesorsubmitsundertheExchangeActisrecorded,processed,summarizedandreportedwithinthetimeperiodsspecifiedintheSEC’srulesandformsandisaccumulatedandmadeknowntoitsprincipalexecutiveofficerandprincipal financial officer as appropriate to allow timely decisions regarding required disclosure. Titanium hastimelyfiledallcertificationsandstatementsrequiredby(i)Rule13a-14orRule15d-14undertheExchangeAct;or (ii) 18U.S.C. Section1350(Section906of theSarbanes-OxleyAct) withrespect to all applicable TitaniumSEC Documents. Titanium has disclosed, based on its evaluation of Titanium’s internal control over financialreportingasofSeptember30,2019,toTitanium’sauditorsandtheauditcommitteeofthe
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TitaniumBoard(x)anysignificantdeficienciesandmaterialweaknessesinthedesignoroperationofitsinternalcontroloverfinancialreporting(asdefinedinRule13a-15(f)undertheExchangeAct)and(y)anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleinTitanium’sinternalcontroloverfinancialreporting.
Section3.06 AbsenceofCertainChangesorEvents.FromSeptember30,2019tothedateofthisAgreement(a)there has not been any effect, change, event or occurrence that, individually or in the aggregate, has had or wouldreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect,(b)thebusinessoftheTitaniumPartieshasbeenconductedinallmaterialrespectsintheordinarycourseofbusiness,exceptforanyactiontakeninconnectionwiththenegotiation,executionandconsummationofthisAgreementandtheTransactionsand(c)neitherTitaniumnoranyofitsSubsidiarieshastakenanyactionthatwouldhaveconstitutedabreachof,orrequiredSilver’sconsentpursuanttoSections5.01(a)(ii)(B),(iii)(butonlywithrespecttodividendsorotherdistributionsbyTitaniumOPthatareoutsidethe ordinary course of business), (iv)(B), (vii), (viii), (ix), (xii), or (xix)had the covenants therein applied sinceSeptember30,2019.
Section3.07 NoUndisclosedLiabilities.NeitherTitaniumnoranyofitsSubsidiarieshasanyliabilitiesofanynature (whether accrued, absolute, contingent, known, unknown, direct, indirect or otherwise), except liabilities(a)reflectedorreservedagainstinthemostrecentauditedorunauditedbalancesheet(includingthenotesthereto)ofTitaniumanditsSubsidiariesincludedintheTitaniumSECDocumentsfiledpriortothedatehereof,(b)incurredafterSeptember30,2019,intheordinarycourseofbusinessconsistentwithpastpractice,(c)contemplatedbyorincurredinconnection with this Agreement or the Transactions, or (d) that, individually or in the aggregate, have not had, orwouldnotreasonablybeexpectedtohave,aTitaniumMaterialAdverseEffect.
Section3.08 Taxes.
(a) Each of Titanium, Titanium OP and their respective Subsidiaries has timely filed all U.S. federalincome Tax Returns and all other material Tax Returns required to have been filed (or such Tax Returns havebeenfiledontheirbehalf),takingintoaccountanyextensionsoftimewithinwhichtofilesuchTaxReturns,andsuchTaxReturnsareaccurateandcompleteinallmaterialrespects.TrueandcompletecopiesofallU.S.federalincomeTaxReturnsthathavebeenfiledwiththeIRSbyTitanium,TitaniumOPandtheirrespectiveSubsidiariesthatareTRSswithrespecttothetaxableyearsendingonorafterDecember31,2016havebeenprovidedormadeavailabletoSilver.
(b) EachofTitanium,TitaniumOPandtheirrespectiveSubsidiarieshaspaidallmaterialamountsofTaxesrequiredtohavebeenpaidbyitotherthanTaxesthatarenotyetdue(orinthecaseofrealestateTaxes,thatarenotyetdelinquent)orthatarebeingcontestedingoodfaithinappropriateproceedingsandhavebeenadequatelyreservedunderGAAP,whetherornotshownonanyTaxReturn.
(c) Therearenocurrentdisputes,audits,examinations,investigationsorothersimilarproceedingspendingwithregardtoanymaterialamountsofTaxesormaterialTaxReturnsofTitanium,TitaniumOPoranyoftheirrespective Subsidiaries (other than any dispute, audit, examination, investigation or other similar proceedingpending with regard to real estate or other similar property Taxes that are being contested in good faith inappropriateproceedingsandhavebeenadequatelyreservedunderGAAP),andnoneofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiarieshasreceivedawrittennoticeofanysuchaudits,examinations,investigationorothersimilarproceedingsthathasnotbeenresolvedoriscurrentlypending.NodeficiencyforanymaterialTaxhasbeenthreatened,assertedorassessedinwritingbyataxingauthorityagainstTitanium,TitaniumOPoranyoftheir respective Subsidiaries which deficiency has not been paid or is not being contested in good faith inappropriateproceedingsandhasbeenadequatelyreservedunderGAAP.NoneofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiarieshasinthepastthreeyearsreceivedaclaiminwritingbyaGovernmentalEntityinanyjurisdiction in whichit does not file TaxReturns or payanyTaxes that it is or maybe subject to materialtaxationbythatjurisdiction.
(d) As of the date hereof, none of Titanium, Titanium OP or any of their respective Subsidiaries hasextendedorwaived(norgrantedanyextensionorwaiverof)thelimitationperiodfortheassessmentorcollectionofanymaterialTaxthathasnotsinceexpired,ineachcase,otherthanasaresultofanyextensionoftimewithinwhichtofileanymaterialTaxReturnthatremainsunfiled.
(e) NoneofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiarieshasfailedtowithhold,collect,ortimelyremitallmaterialamountsrequiredtohavebeenwithheld,collectedandremittedinrespectofTaxes
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under any Applicable Laws relating to the payment and withholding of Taxes (including but not limited towithholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 1471 and 3402 of the Code or similarprovisions under any state and foreign laws) with respect to any payments to a vendor, employee, independentcontractor,creditor,shareholder,oranyotherPerson.
(f) Within the past two years, neither Titanium nor any of its Subsidiaries has been a “distributingcorporation”ora“controlledcorporation”inadistributionintendedtoqualifyfortax-freetreatmentunderSection355oftheCode.
(g) NoneofTitanium,TitaniumOPoranyoftheir respectiveSubsidiaries hasparticipatedinany“listedtransaction”withinthemeaningofTreasuryRegulationSection1.6011-4(b)(orasimilarprovisionofApplicableLaw).
(h) NoneofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiarieshas(i)enteredintoany“closingagreement”asdescribedinSection7121oftheCode(oranycorrespondingorsimilarprovisionofstate,localorforeignincometaxlaw)or(ii)requested,hasreceivedorissubjecttoanywrittenrulingofaGovernmentalEntityorhasenteredintoanywrittenagreementwithaGovernmentalEntitywithrespecttoanyTaxes,ineachcase,that(A) requires it to take any action or refrain from taking any action or (B) would be terminated or adverselyaffectedasaresultoftheTransactions.
(i) Titanium(A)foralltaxableyearscommencingwithitstaxableyearendedDecember31,1992throughandincludingitstaxableyearendedDecember31,2019,haselectedandhasbeensubjecttofederaltaxationasaREITandhassatisfiedallrequirementstoqualifyasaREITforU.S.federalincometaxpurposesforsuchtaxableyears,(B)atalltimessincesuchdate,hasoperatedinsuchamannersoastoqualifyasaREITforU.S.federalincometaxpurposesandwillcontinuetooperatethroughtheEffectiveTimeinsuchamannersoastosoqualifyforthetaxableyearthatwillendwiththeconsummationoftheMergerand(C)hasnottakenoromittedtotakeanyactionthatcouldreasonablybeexpectedtoresultinachallengebytheIRSoranyothertaxingauthoritytoitsstatusasaREIT,andnosuchchallengeispendingor,totheknowledgeofTitanium,threatened.
(j) Each Subsidiary of Titanium (including Titanium OP) has been since the later of its acquisition orformation andcontinues to be treated for U.S. federal andstate incometax purposes as (A) a partnership (or adisregarded entity) and not as a corporation or an association or publicly traded partnership taxable as acorporation,(B)a“qualifiedREITsubsidiary”withinthemeaningofSection856(i)oftheCode(a“QRS”),(C)a“taxable REITsubsidiary”withinthemeaningof Section856(l) of theCode(a“TRS”)or (D)aREIT.Section3.08(j)of the Titanium Disclosure Letter sets forth a true and complete list of (i) the classification for UnitedStatesfederalincometaxpurposesofeachSubsidiaryofTitaniumand(ii)thetypeofandpercentageofinterestheld,directlyorindirectly, byTitaniumoranySubsidiaryineachentitytreatedasapartnershipforincometaxpurposes.
(k) NoneofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiariesholdsdirectlyorindirectlyanyassetthedispositionofwhichwouldbesubjectto(ortorulessimilarto)Section1374oftheCode,andnoneofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiaries(otherthanTRSs)hasorhashadanyundistributedearningsandprofitsattributabletoanynon-REITyearwithinthemeaningofSection857oftheCode.
(l) Section3.08(l)oftheTitaniumDisclosureLettersetsfortheachTitaniumTaxProtectionAgreement(ashereinafter defined)inforceat thedatehereof. Asofthedatehereof, noPersonhasraisedinwriting, ortotheknowledge of Titanium threatened in writing to raise, a claim against Titanium, Titanium OP or any of theirrespective Subsidiaries for any breach of any TitaniumTax Protection Agreements. As used herein, “TitaniumTax Protection Agreements” means any written agreement to which Titanium, Titanium OP or any TitaniumSubsidiaryPartnershipisapartypursuanttowhich:(i)anyliabilitytoholdersoflimitedpartnershipinterestsinaTitaniumSubsidiaryPartnershiprelatingtoTaxesmayarise,whetherornotasaresultoftheconsummationoftheTransactions; and/or (ii) in connection with the deferral of income Taxes of a holder of limited partnershipinterests inaTitaniumSubsidiaryPartnershiporTitaniumOPhaveagreedto(A)maintainaminimumlevel ofdebt, continue a particular debt or provide rights to guarantee, or otherwise assumeeconomic risk of loss withrespectto,debt,(B)retainornotdisposeofassets,orengageintransactionsofcomparabletaxeffect,foraperiodoftimethathasnotsinceexpired,(C)onlydisposeofassetsinaparticularmanner,(D)use(orrefrainfromusing)aspecifiedmethodoftakingintoaccountbook-taxdisparitiesunderSection704(c)oftheCodewith
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respecttooneormoreassetsofsuchpartyoranyofitsdirectorindirectSubsidiaries,and/or(E)use(orrefrainfromusing)aparticularmethodforallocatingoneormoreliabilitiesofsuchpartyoranyofitsdirectorindirectSubsidiaries under Section 752 of the Code. As used herein, “Titanium Subsidiary Partnership” means aSubsidiaryofTitaniumthatisapartnershipforU.S.federalincometaxpurposes.
(m) There are no Liens for Taxes upon any property or assets of Titanium, TitaniumOPor any of theirrespectiveSubsidiariesexceptforPermittedLiens.
(n) TherearenowrittenTaxallocationorTaxsharingagreementsorsimilararrangementswithrespecttoorinvolvingTitanium,TitaniumOPoranyoftheirrespectiveSubsidiariesforanymaterialamountofTax,exceptfor any (A) contract exclusively between and among Titanium, Titanium OP or any of their respectiveSubsidiaries, (B) Titanium Tax Protection Agreement and (C) customary indemnification or similar provisioncontainedinanyagreementtheprimarypurposesofwhichdonotrelatetoTaxes.AftertheClosingDatenoneofTitanium, Titanium OP or any of their respective Subsidiaries shall be bound by any such Tax allocationagreementsorsimilararrangementsorhaveanymaterialliabilitythereunderforamountsdueinrespectofperiodsprior to the Closing Date (in each case, except for any (A) contract exclusively between and among Titanium,TitaniumOPoranyoftheirrespectiveSubsidiaries,(B)TitaniumTaxProtectionAgreementand(C)customaryindemnificationorsimilarprovisioncontainedinanyagreementtheprimarypurposesofwhichdonotrelatetoTaxes).
(o) SinceJanuary1,2012,neitherTitaniumnoranyofits Subsidiarieshasincurredanymaterial liabilityforTaxesunderSections856(c),856(g),857(b),857(f),860(c)or4981oftheCodeoranyrulessimilartoSection1374oftheCodewhichhavenotbeenpreviouslypaid.
(p) None of Titanium, TitaniumOPor any of their respective Subsidiaries (i) has been a member of anaffiliatedgroupfilingaconsolidatedU.S.federalincomeTaxReturnor(ii)hasanymaterialliabilityfortheTaxesof any Person (other than Titanium, Titanium OP or any of their respective Subsidiaries) under TreasuryRegulationsSection1.1502-6(oranysimilarprovisionofstate,localorforeignlaw),asatransfereeorsuccessor,bycontract (excludingany(A)contract exclusively betweenandamongTitanium,TitaniumOPor anyof theirrespective Subsidiaries, (B) Titanium Tax Protection Agreement and (C) customary indemnification or similarprovisioncontainedinanyagreementtheprimarypurposesofwhichdonotrelatetoTaxes).
(q) Noneof Titanium, TitaniumOPor any of their Subsidiaries will be required to include any materialitem of income in, or exclude any material item of deduction from, taxable income for any taxable period (orportion thereof) beginning after the Closing Date as a result of any (i) change in method of accounting ofTitanium, Titanium OP or any of their respective Subsidiaries for a taxable period ending on or prior to theClosing Date made prior to Closing, (ii) installment sale by Titanium, Titanium OP or any of their respectiveSubsidiaries made prior to Closing or (iii) election by Titanium, Titanium OP or any of their respectiveSubsidiariesunderSection108(i)oftheCode.
(r) NowrittenpowerofattorneythathasbeengrantedbyTitanium,TitaniumOPoranyoftheirrespectiveSubsidiaries (other than to Titanium, TitaniumOPor any of their respective Subsidiaries) currently is in forcewithrespecttoanymatterrelatingtoTaxes.
Section3.09 LaborMatters.
(a) Titanium and its Subsidiaries are in compliance with all Applicable Laws with respect to labor,employment, fair employment practices, terms and conditions of employment, workers’ compensation,occupationalsafetyandhealth,plantclosings,wagesandhours,andimmigration,exceptaswouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect.
(b) NeitherTitaniumnoranyofitsSubsidiariesis(i)thesubjectofanypendingor,totheKnowledgeofTitanium, threatened investigations, audits, complaints, or proceedings by or before any Governmental Entityinvolvinganyapplicantforemployment,anycurrentorformeremployee,oranyclassoftheforegoing;or(ii)thesubjectofanypendingor,totheKnowledgeofTitanium,threatenedlitigationassertinganunfairlaborpractice(withinthemeaningoftheNational LaborRelationsActor comparable state law)or other violationofstate orfederallaborlaw,orseekingtocompelTitaniumoranyofitsSubsidiariestobargainwithanylabororganizationorotheremployeerepresentativeastowagesorconditionsofemployment,ineachcase,exceptas,individuallyorintheaggregate,havenothadandwouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect.NeitherTitaniumnoranyofitsSubsidiariesispartytoanyCollectiveBargainingAgreement
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orsubjecttoanyOrderrelatingtoTitanium’srelationshipordealingswithitsemployees,anylabororganizationoranyotheremployeerepresentative.Asofthedatehereof,thereisnopendingor,totheKnowledgeofTitanium,threatened,strike,slowdown,lockoutorothermaterialjobActionorlabordisputeinvolvingTitaniumoranyofits Subsidiaries, nor has such event occurred within the past three years. None of Titanium’s or any of itsSubsidiaries’personnelarerepresentedbyalabororganizationand,totheKnowledgeofTitanium,asofthedatehereof, in the past three years, there have not been any attempt by employees of Titanium or any of itsSubsidiaries or any labor organization or other employee representative to organize or certify a collectivebargainingunitortoengageinanyotherunionorganizationactivitywithrespecttotheworkforceofTitaniumoranyofitsSubsidiaries.
(c) TotheKnowledgeof Titanium,all of theemployees employedintheUnitedStates are either UnitedStatescitizensorarelegallyentitledtoworkintheUnitedStatesundertheImmigrationReformandControlActof1986,asamended,otherApplicableLawsrelatedtoUnitedStatesimmigrationandApplicableLawsrelatedtotheemploymentofnon-UnitedStatescitizensapplicableinthestateinwhichtheemployeesareemployed.
(d) During the three (3) years prior to the date of this Agreement, neither Titanium nor any of itsSubsidiarieshasengagedinoreffectuatedany“plantclosing”oremployee“masslayoff”(ineachcase,asdefinedin the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar state or localstatute,ruleorregulation)affectinganysiteofemploymentoroneormorefacilitiesoroperatingunitswithinanysiteofemploymentorfacilityofTitaniumoranyofitsSubsidiaries.
Section3.10 BenefitsMatters;ERISACompliance.
(a) Section3.10(a)oftheTitaniumDisclosureLettersetsforth,asofthedateofthisAgreement,acompleteand correct list identifying the material Titanium Benefit Plans. With respect to such Titanium Benefit Plans,TitaniumhasmadeavailabletoSilvercopies,totheextentapplicable,of(i)themostrecentplandocument(andamendmentsthereto),orbenefitsreferenceguide,(ii)themostrecentannualreportonInternalRevenueService(the “IRS”) Form 5500 and all schedules thereto filed with the Department of Labor, (iii) the most recentsummary plan description, (iv) the trust agreement or other material funding mechanism, (v) the most recentfinancialstatementsandactuarialreports,(vi)themostrecentIRSdeterminationletteroropinionletterandanypending request for such a letter, and (vii) all material, non-routine filings and correspondence with anyGovernmental Entity. For purposes of this Agreement, “Titanium Benefit Plans” means, collectively (A) all“employee benefit plans” (as defined in Section 3(3) of ERISA) and all other bonus, pension, profit sharing,retirement, deferred compensation, incentive compensation, equity or equity-based compensation, severance,separation, retention, change in control, disability, vacation, death benefit, hospitalization, medical, dental,accident, lifeinsurance,welfarebenefit, cafeteria, vacation,paidtimeoff,perquisiteorothermaterial employeebenefit plans, programs or arrangements that are sponsored, maintained, contributed to, or required to becontributedtobyTitaniumoranyofitsSubsidiariesforthebenefitofanycurrentorformerdirectors,officersoremployeesofTitaniumoranyofitsSubsidiaries,orwithrespecttowhichTitaniumoranyofitsSubsidiarieshasanobligationorliability(whetheractualorcontingent),and(B)allemployment,severance,retention,changeofcontrol or termination agreements between Titanium or any of its Subsidiaries and any current directors andofficersofTitaniumoranyofitsSubsidiaries.
(b) AllTitaniumBenefitPlanswhichareintendedtobequalifiedunderSection401(a)oftheCodearethesubjectoforhavetimelyappliedfor,asofthedateofthisAgreement,determination,opinionoradvisorylettersfromtheIRStotheeffectthatsuchTitaniumBenefitPlansaresoqualified,and,totheKnowledgeofTitanium,nothing has occurred that could reasonably be expected to adversely affect the qualified status of any suchTitaniumBenefitPlan.
(c) No Titanium Benefit Plan is, and neither Titanium nor any of its Subsidiaries sponsors, maintains,participates in, or contributes to, or has, within the past six (6) years, sponsored, maintained, participated in orcontributedto,any“employeepensionplan”,asdefinedinSection3(2)ofERISA,subjectTitleIVofERISAorSection412of the Code, includinga “multiemployer plan”, as definedin Section4001(a)(3) of ERISA,or any“multipleemployerwelfarearrangement”,withinthemeaningofSection3(40)ofERISA,andneitherTitaniumnor any of its Subsidiaries has any liability (whether actual or contingent, including on account of an ERISAAffiliate)inrespectofanyoftheforegoingplans.
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(d) Except as would not reasonably be expected to have, individually or in the aggregate, a TitaniumMaterialAdverseEffect,eachTitaniumBenefitPlan(includingfortheavoidanceofdoubteachForeignPlan)hasbeenadministeredinaccordancewithitstermsandisincompliancewithERISA(ifapplicable),theCodeandallotherApplicableLaws,andTitaniumanditsSubsidiariesisinmaterialcompliancewithERISA,theCodeandallother Applicable Laws with respect to Titanium Benefit Plans. There has not been any non-exempt prohibitedtransaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to anyTitaniumBenefitPlanthatwouldreasonablybeexpectedtoresultinanymaterialliabilitytoTitaniumoranyofitsSubsidiaries.
(e) Thereisnopendingor,totheKnowledgeofTitanium,threatenedlegalactions,auditorinvestigationby the IRS, the Department of Labor, the Pension Benefit Guaranty Corporation or any other GovernmentalEntity, suits, or claims (other than routine claims for benefits) by or on behalf of any participant in any ofTitanium Benefit Plans, or otherwise involving any such Titanium Benefit Plan, the sponsor, administrator, orfiduciaryofanysuchTitaniumBenefitPlan,ortheassetsofanyTitaniumBenefitPlan,except,ineachcase,forthosethat,individuallyorintheaggregate,havenothadandwouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect.
(f) ExcepttotheextentrequiredunderSection601etseq.ofERISAor4980BoftheCode(oranyotherApplicableLaws),neitherTitaniumnoranyofitsSubsidiarieshasanyobligationtoprovideforpost-retirementorpost-termination medical, group health or life insurance to any present or former employee, officer, individualconsultantordirectorofTitaniumoranyofitsSubsidiaries.
(g) NoneoftheexecutionanddeliveryofthisAgreement,theobtainingofTitaniumShareholderApprovalorTitaniumOPApprovalortheconsummationoftheTransactionsoranyothertransactioncontemplatedbythisAgreement (alone or in conjunction with any other event, including any termination of employment on orfollowingtheClosing)will(i)accelerateortriggerthetimeofpayment,vestingorfunding,ofanycompensationorbenefits payablebyTitaniumoranyofits Subsidiaries; (ii) increasetheamountofcompensationorbenefitsduetoanyemployee,officer,individualconsultantordirectorofTitaniumoranyofitsSubsidiaries,orentitleanysuchpersontoanypayment;or(iii)giverisetothepaymentofany“parachutepayment”underSection280GoftheCode.
(h) Nocompensationhasbeenorwouldreasonablybeexpectedtobeincludableinthegrossincomeofany“serviceprovider”(withinthemeaningofSection409AoftheCode)ofTitaniumoranyofitsSubsidiariesasaresultoftheoperationofSection409AoftheCode.
(i) Thereisnocontract,agreement,planorarrangementtowhichTitaniumoranyofitsSubsidiariesisapartywhichrequiresTitaniumoranyofitsSubsidiariestopayaTaxgross-uporreimbursementpaymenttoanyPerson,including,withrespecttoanyTax-relatedpaymentsunderSection409AoftheCodeorSection280GoftheCode.
(j) EachTitaniumBenefitPlanthatisgovernedbythelawsofanyjurisdictionotherthantheUnitedStatesorprovidescompensationorbenefitstoanyemployeeorformeremployeeofTitaniumoranyofitsSubsidiaries(or any dependent thereof) who resides outside of the United States (each, a “ForeignPlan”) is marked by anasterisk(*)onSection3.10(a)oftheTitaniumDisclosureLetter.WithrespecttoeachForeignPlan,suchForeignPlan has obtained from the Governmental Entity having jurisdiction with respect to such Foreign Plan anyrequired determinations, if any, that such Foreign Plan is in compliance in all material respects with theApplicable Lawandregulations of the relevant jurisdiction if suchdeterminations are required in order to giveeffecttosuchForeignPlan.
Section3.11 Litigation.Asofthedatehereof,therearenoActionspendingor,totheKnowledgeofTitanium,threatened in writing or, to the Knowledge of Titanium, any pending investigations, against Titanium, any of itsSubsidiaries, the Titanium Real Property or any present or former director or officer of Titanium or any of itsSubsidiaries in such individual’s capacity as such, or any Orders to which Titanium, any of its Subsidiaries or theTitaniumRealPropertyissubject, except, ineachcase,forthosethat, individuallyorintheaggregate, havenothadandwouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect.
Section3.12 CompliancewithApplicableLaws;Permits.
(a) Exceptashasnothad,andwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aTitaniumMaterialAdverseEffect,Titanium,itsSubsidiariesandtheTitaniumRealProperty(a)are,andhave
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been since January 1, 2018, in compliance with all Applicable Laws and Permits applicable to Titaniumor itsSubsidiariesand(b)totheKnowledgeofTitanium,arenotunderinvestigationbyanyGovernmentalEntitywithrespectto,andhavenotbeenthreatenedinwritingtobechargedwithorgivennoticebyanyGovernmentalEntityof,anyviolationorpotentialviolationofanysuchApplicableLaw.TitaniumanditsSubsidiariesholdallPermitsnecessaryforthelawfulconductoftheirrespectivebusinessesandownershipandoperationoftheTitaniumRealProperty, as presently conducted and used, and each of the Permits is in valid, subsisting and in full force andeffect,exceptwherethefailuretoholdormaintainaPermithasnothadandwouldnotreasonablybeexpectedtohave,individuallyorintheaggregateaTitaniumMaterialAdverseEffect.TherearenoActionspendingor,totheKnowledge of Titanium, threatened in writing, that seek the revocation, cancellation or modification of anyPermit,exceptwheresuchrevocation,cancellationormodification,individuallyorintheaggregate,hasnothadandwouldnotreasonablybeexpectedtohave,aTitaniumMaterialAdverseEffect.
(b) Except as has not resulted in, and would not reasonably be expected to result in, material liability toTitanium and any of its Subsidiaries, taken as a whole, none of Titanium, its Subsidiaries or their respectiveAffiliates,nor,totheKnowledgeofTitanium,hasanyofTitaniumOP’sunconsolidatedjointventuresandeachoftheofficersanddirectorsoftheforegoing,haveinthepastfive(5)years(i)violatedanyAnti-CorruptionLaws;or(ii) offered, paid, promised to pay, authorized the payment of, received, or solicited anything of value undercircumstancessuchthatall oraportionofsuchthingofvaluewouldbeoffered,given,orpromised,directlyorindirectly,toanyPersontoobtainanyunlawfulandimproperadvantage.
(c) Except as has not resulted in, and would not reasonably be expected to result in, material liability toTitaniumandanyofitsSubsidiaries,takenasawhole,atnotimeduringthepriorfive(5)yearshasTitanium,itsSubsidiaries or their respective Affiliates, nor, to the Knowledge of Titanium, has any of Titanium OP’sunconsolidatedjointventuresandeachoftheofficersanddirectorsoftheforegoing,(i)conductedorinitiatedanyinternal investigation or made a voluntary, directed, or involuntary disclosure to any Governmental Entity orsimilaragencywithrespecttoanyallegedactoromissionarisingunderorrelatingtoanypotentialnoncompliancewithanyAnti-CorruptionLaw;or(ii)beenthesubjectofcurrent,pending,orthreatenedinvestigation,inquiryorenforcementproceedingsforviolationsofanAnti-CorruptionLaworreceivedanynotice,request,orcitationforanyactualorpotentialnoncompliancewithanyAnti-CorruptionLaw.
Section3.13 MaterialContracts.
(a) Section3.13(a)oftheTitaniumDisclosureLettersetsforthalistofallMaterialContractsasofthedateofthisAgreement.ForpurposesofthisAgreement,“MaterialContract”meansanyContracttowhichTitaniumorany of its Subsidiaries is a party or by which Titanium or any of its Subsidiaries or any of their respectivepropertiesorassetsisbound(otherthanthisAgreementandotherthanTitaniumBenefitPlanssetforthonSection3.10(a)oftheTitaniumDisclosureLetter)that:
(i) isorwouldberequiredtobefiledbyTitaniumasa“materialcontract”pursuanttoItem601(b)(10)ofRegulationS-K;
(ii) relatestotheformationofanymaterialpartnership,jointventure,strategicalliance,co-investmentorsimilaragreementwithanythirdparty;
(iii) containsanynon-compete,exclusivityorradiusprovisionswithrespecttoanylineofbusinessorgeographic area that restricts or limits in any material respect the business of Titanium or any of itsSubsidiaries (or would so restrict or limit Surviving Titanium or any of its Subsidiaries or AffiliatesfollowingtheClosing),orwhichrestrictstheconductofanylineofbusinessthatismaterialtoTitaniumanditsSubsidiaries,takenasawhole,ineachcaseotherthananygroundleaseoranytenantleaseenteredintointheordinarycourseofbusiness;
(iv) involves any merger, consolidation or similar business combination transaction or involves anydisposition or acquisition of assets or properties (A) with a fair market value or potential purchase or salepriceinexcessof $25millionor(B)pursuant towhichTitaniumoranyofits Subsidiaries hascontinuingmaterialobligationsoutstandingthereunder,otherthananAcceptableConfidentialityAgreement;
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(v) relatestodevelopment,construction,capitalexpenditures,theprovisionofservicesorpurchaseofmaterials,supplies,equipmentorotherassetsorproperties(otherthanpurchaseordersforsuchitemsintheordinary course of business) and has continuing material obligations thereunder, in each case includingrequiring aggregate payments by Titaniumor any of its Subsidiaries in excess of $50 million during theirremainingterm;
(vi) evidences a capitalized lease obligation or other Indebtedness to any Person, or any guarantythereof, in excess of $25 million, other than any Contract in respect of a ground lease or office leases orobligationsthereunder;
(vii) grantstoanyPersonarightoffirstrefusal,arightoffirstofferoranoptiontopurchase,acquire,sellordisposeofanyTitaniumRealPropertythat,individually,ismaterialtoTitaniumanditsSubsidiaries,takenasawhole;
(viii) constitutesaloantoanyPerson(otherthanwhollyownedSubsidiariesofTitanium)byTitaniumoranyofitsSubsidiariesinanamountinexcessof$10million;
(ix) pursuant to which Titanium or any of its Subsidiaries grants or receives a license to anyIntellectualPropertythatismaterialtoitsbusinessascurrentlyconducted,exceptshrink-wrap,click-throughoroff-the-shelf software licenses andanyother licenses of softwarethat are commercially available to thepublicgenerally;
(x) constitutesanorganizationaldocumentof,orotherwisesetsforththeoperationaltermsof,ajointventure,partnershiporsimilararrangementwithrespecttoanyentity(otherthanawhollyownedSubsidiaryofTitanium)inwhichTitaniumownsanequity,partnershiporvotinginterest;
(xi) settlement, conciliation or similar agreements (A) which would require Titanium or itsSubsidiaries,takenasawhole,topayconsiderationofmorethan$10millionafterthedateofthisAgreementor(B)whichsubjectsTitaniumoranyofitsaffiliatestoanymaterialongoingobligationsorrestrictions;
(xii) isanagreementwith,orContractfortheemploymentof,anyemployeeofTitaniumoranyofitsSubsidiaries that provides for the payment of any cash or other compensation or benefits upon theconsummation of the transactions contemplated by this Agreement (other than those set forth inSections2.02(e)or2.05hereof)inexcessof$100,000;
(xiii) isavotingagreementorotheragreementpursuanttowhichTitaniumorTitaniumOPagreetovoteinanymanneranyvotinginterestsinanotherPerson;
(xiv) isaTitaniumTaxProtectionAgreement;or
(xv) prohibits the pledging of capital stock of Titanium or prohibits the issuance of guarantees byTitanium.
(b) All of the Material Contracts are valid andbindingandin full force andeffect (except thosethat areterminatedafterthedateofthisAgreementinaccordancewiththeirrespectiveterms),exceptwherethefailuretobe valid and binding or in full force and effect, individually or in the aggregate, has not had and would notreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect.TotheKnowledgeofTitanium,asofthedatehereof, no Personis challenging the validity or enforceability of any Material Contract, except such challengeswhich would not reasonably be expected to have a Titanium Material Adverse Effect. As of the date hereof,neitherTitaniumnoranyofitsSubsidiaries,nortotheKnowledgeofTitanium,anyoftheotherpartiesthereto,hasviolatedanyprovisionof,orcommittedorfailedtoperformanyactwhich(withorwithoutnotice,lapseoftime or both) would constitute a breach or default under any provision of, and neither Titaniumnor any of itsSubsidiarieshasreceivednoticethatithasbreached,violatedordefaultedunder,anyMaterialContract,ineachcaseexceptforthosebreaches,violationsanddefaultswhich,individuallyorintheaggregate,havenothadandwouldnot reasonablybeexpectedtohaveaTitaniumMaterial AdverseEffect. Titaniumhasmadeavailable toSilver true and complete copies of each Material Contract in existence as of the date hereof, other than thoseMaterial ContractfiledasexhibitstoTitaniumSECDocumentsfiledwithorfurnishedtotheSECbyTitaniumpriortoJanuary1,2019,trueandcompletecopiesofwhicharefiledwiththeSEC.
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Section3.14 RealandPersonalProperties.
(a) Section3.14(a)oftheTitaniumDisclosureLettersetsforthatrue,correctandcompletelistofeachmallthatisamaterial TitaniumRealPropertyandall material agreementspursuanttowhichsuchrelevantmallsaregroundleasedbyaSubsidiaryofTitanium.Exceptaswouldnot,individuallyorintheaggregate,reasonablybeexpectedtobematerialtoTitaniumanditsSubsidiaries,takenasawhole,TitaniumoroneofitsSubsidiarieshasgoodandvalidfeesimpletitletotheTitaniumOwnedRealPropertyandhasavalidleaseholdinterestineachoftheTitaniumLeasedRealProperties,freeandclearofLiens,ineachcase,exceptforPermittedLiens.Exceptas,individuallyorintheaggregate,hasnothadandwouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect,neitherTitaniumnoranyofitsSubsidiarieshasreceivedwrittennoticeofanyuncuredviolationofanyApplicableLaw(includingzoning,buildingorsimilarlaws)affectinganyportionofanyoftheTitaniumRealPropertiesissuedbyanyGovernmentalEntity.
(b) TitaniumoroneofitsSubsidiarieshasgoodtitleto,oravalidandenforceableleaseholdinterestin,allmaterialpersonalpropertyassetsowned,usedorheldforusebythem,exceptas,individuallyorintheaggregate,has not had and would not reasonably be expected to have a Titanium Material Adverse Effect. Except as,individuallyorintheaggregate,hasnothadandwouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverse Effect, neither Titanium’s nor its Subsidiaries’ ownership of any such material personal property issubjecttoanyLiens,otherthanPermittedLiens.
(c) ExceptaswouldnotreasonablybeexpectedtobematerialtoTitaniumanditsSubsidiaries,takenasawhole,asofthedatehereof,TitaniumoritsSubsidiaries,asapplicable,haveperformedallobligationsrequiredtobe performed by them and are not in any default under or in breach of nor in receipt of any written notice ofbreachorterminationunderanygroundleasesetforthonSection3.14(a)oftheTitaniumDisclosureLetter,andtotheKnowledgeofTitanium,noeventhasoccurredwhichwiththepassageoftimeorthegivingofnoticeorbothwouldresultinadefault,breachoreventofnoncompliancebyTitaniumoritsSubsidiariesunderanysuchgroundlease.
Section 3.15 Information Supplied. None of the information supplied or to be supplied by or on behalf ofTitaniumfor inclusion or incorporation by reference in the Proxy Statement will, at the time it is first published ormailedtotheshareholdersofTitanium,atthetimeofanyamendmentthereoforsupplementthereto,atthetimeoftheTitanium Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material factrequiredtobestatedthereinornecessaryinordertomakethestatementstherein,inlightofthecircumstancesunderwhich they are made, not misleading. The Proxy Statement will comply as to formin all material respects with therequirements of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing, theTitanium Parties make no representation or warranty with respect to statements made or incorporated by referencethereinbasedoninformationsuppliedbyoronbehalfofSilveroranyofitsSubsidiariesforinclusionorincorporationbyreferenceintheProxyStatement.
Section3.16 IntellectualProperty.
(a) Titaniumhasmadeavailable to Silver complete andcorrect lists of all material registeredtrademarksandcopyrights,applicationsfortrademarkandcopyrightregistrations,patentsandpatentapplicationsownedbyTitaniumanditsSubsidiaries.EachitemofIntellectualPropertydescribedintheimmediatelyprecedingsentenceis subsisting, has not been cancelled or abandoned, and is not subject to any Liens other than Permitted Liens,exceptaswouldnotbematerialtoTitaniumanditsSubsidiaries,takenasawhole.ThereisnoActionpending,or,totheKnowledgeofTitanium,threatened,challengingthevalidity,enforceability,ownership,registration,useorscopeofanysuchIntellectualProperty,exceptaswouldnotbematerialtoTitaniumanditsSubsidiaries,takenasawhole.Exceptashasnothadandwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aTitaniumMaterialAdverseEffect:(i)TitaniumoroneofitsSubsidiariesownsorhasavalidlicenseorotherrighttousealltrademarks,servicemarks,tradenames,copyrightsandotherIntellectualPropertyrights(includinganyregistrations or applications for registration of any of the foregoing) necessary to carry on their business ascurrently conducted; (ii) neither Titanium nor any of its Subsidiaries has received any written notice ofinfringement,dilution,misappropriationorotherviolationoforconflictwiththeIntellectualPropertyofothersbyTitaniumoranyofitsSubsidiaries,andtotheKnowledgeofTitanium,neitherTitanium
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nor any of its Subsidiaries is infringing, misappropriating, diluting, otherwise violating, or in conflict with theIntellectual Property of anyPerson; and(iii) to the Knowledgeof Titanium, as of the date hereof, noPersonisinfringing,diluting,misappropriating,otherwiseviolating,orinconflictwithanyIntellectualPropertyownedbyTitaniumoranyofitsSubsidiaries.
(b) Exceptashasnothadandwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aTitaniumMaterial AdverseEffect: Titaniumandeachofits Subsidiaries have(i) compliedwiththeir publishedprivacy policies, contractual obligations and all Applicable Laws concerning the privacy and/or security ofpersonally identifiable information, and (ii) taken commercially reasonable measures to protect personallyidentifiable information in their possession against loss, damage, unauthorized access, or other misuse. To theKnowledgeofTitaniumandexceptashasnothadandwouldnotreasonablybeexpectedtohave,individuallyorin the aggregate, a Titanium Material Adverse Effect, during the last three (3) years there has been no loss,unauthorized access, or other misuse of any personally identifiable information held by Titanium or any of itsSubsidiaries in a manner that would trigger a notification or reporting requirement under any Applicable Lawsconcerningtheprivacyand/orsecurityofpersonallyidentifiableinformation.
(c) Exceptashasnothadandwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aTitanium Material Adverse Effect: (i) the computers, software, hardware and all other information technologyequipment owned, leased or licensed by Titanium and its Subsidiaries and used in their businesses (the “ITAssets”)arereasonablyadequateandsufficientfortheimmediateandreasonablyforeseeableneedsofTitaniumanditsSubsidiaries,andhavenotsufferedanymaterialmalfunctionordisruptionwithinthelastthree(3)years;(ii) Titanium and its Subsidiaries have implemented commercially reasonable data backup, data security anddisasterrecoverymeasuresfortheITAssetsandthedatastoredorcontainedtherein;and(iii)totheKnowledgeofTitanium, there has been no security breach or unauthorized access to the IT Assets that has resulted in theunauthorized access, use, disclosure, destruction, corruption, modification or encryption of any data orinformationstoredorcontainedtherein.
Section 3.17 Environmental Matters. Except as has not had and would not reasonably be expected to have,individuallyorintheaggregate,aTitaniumMaterialAdverseEffect:
(a) (i)Titanium,eachofitsSubsidiariesandeachoftheTitaniumRealPropertiesareincompliancewithallapplicableEnvironmentalLaws;(ii)asofthedatehereof,totheKnowledgeofTitanium,thereisnolitigation,investigation,requestforinformationorotherproceedingpendingorthreatenedinwritingagainstTitaniumoranyofitsSubsidiariesunderanyapplicableEnvironmentalLaws;and(iii)Titaniumhasnotreceived,inthepasttwo(2) years, any written notice of violation or potential liability under any applicable Environmental Laws thatremains unresolved, and no judicial or administrative order has been issued against Titanium or any of itsSubsidiarieswhichremainsunresolvedoroutstanding.
(b) TotheKnowledgeofTitanium,inthepasttwo(2)years,neitherTitaniumnoranyofitsSubsidiarieshasused,generated,released,stored,treatedorhandledanyHazardousMaterials,includingontheTitaniumRealProperties,andtotheKnowledgeofTitanium,therearecurrentlynoabovegroundorundergroundstoragetanks,activeorabandoned,usedforthestorageofHazardousMaterialson,inorunderanyTitaniumRealPropertiesinviolation of applicable Environmental Laws. To the Knowledge of Titanium, in the past two (2) years, neitherTitanium nor any of its Subsidiaries has caused a release of Hazardous Materials in violation of applicableEnvironmentalLaws,includingontheTitaniumRealPropertiesoranyotherrealproperty,and,totheKnowledgeofTitanium,nootherPersonhascausedareleaseorthreatenedreleaseofHazardousMaterialsontheTitaniumReal Properties in violation of applicable Environmental Laws (and no such Titanium Real Properties or anypropertiesformerlyorcurrentlyowned,leasedoroperatedbyTitaniumoroff-sitepropertiesusedbyTitaniuminconnection with waste disposal, are contaminated by any Hazardous Materials in violation of applicableEnvironmentalLaws).
(c) To the Knowledge of Titanium, all Hazardous Material which has been removed from any TitaniumRealPropertiesandanypropertiesformerlyowned,leasedoroperatedbyTitanium,orusedbyTitaniumforthedisposal ofHazardousMaterial, washandled, transportedanddisposedofat thetimeofremoval incompliancewith,andinamannerthatwouldnotgiverisetoliabilityunder,applicableEnvironmentalLaws.
(d) TotheKnowledgeofTitanium,TitaniumandeachofitsSubsidiarieshaveobtainedandareinmaterialcompliance with all authorizations, licenses and permits required under Environmental Lawsto operate at eachownedorleasedrealpropertyandtocarryontheirrespectivebusinesses.
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Section3.18 Brokers’FeesandExpenses.ExceptforLazardFrères&Co.andGoldmanSachs&Co.,thefeesand expenses of which will be paid by Titanium, no broker, investment banker, financial advisor or other person isentitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with theTransactions,baseduponarrangementsmadeby,onbehalforattheexpenseofTitaniumoranyofitsSubsidiaries.
Section3.19 OpinionofFinancialAdvisor.TheTitaniumSpecialCommitteehasreceivedtheopinionofLazardFrères & Co., to the effect that, as of the date of such opinion and subject to the limitations, qualifications andassumptions set forth therein, the Titanium Common Stock Merger Consideration to be paid to the TitaniumShareholders(otherthantheTitaniumFamilyandotherthansharesofExcludedTitaniumCommonStock)pursuanttotheTransactionsisfair,fromafinancialpointofview.
Section3.20 InvestmentCompanyAct.NeitherTitaniumnoranyofitsSubsidiariesisrequiredtoberegisteredasaninvestmentcompanyundertheInvestmentCompanyActof1940,asamended.
Section3.21 Insurance. Titanium and its Subsidiaries maintain insurance coverage with reputable insurers insuchamountsandcoveringsuchrisksasarecommerciallyreasonable.TitaniumanditsSubsidiarieshavepaid,orhavecausedtobepaid,allpremiumsdueundersuchpoliciesandhavenotreceivedwrittennoticethattheyareindefaultwithrespecttoanyobligationsundersuchpoliciesotherthanashasnothad,orwouldnotreasonablybeexpectedtohave, individually or in the aggregate, a Titanium Material Adverse Effect. Except as has not had, or would notreasonably be expected to have, individually or in the aggregate, a TitaniumMaterial Adverse Effect, all errors andomissions, property and casualty, general liability and business interruption insurance policies of Titanium and itsSubsidiaries and all self-insurance programs and arrangements relating to the business, assets and operations ofTitaniumanditsSubsidiariesareinfullforceandeffect.NeitherTitaniumnoranyofitsSubsidiarieshasreceivedanywritten notice of cancellation or termination with respect to any existing insurance policy that is held by, or for thebenefitof,anyofTitaniumoranyofitsSubsidiaries,otherthanashasnothad,orwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aTitaniumMaterialAdverseEffect.
Section3.22 RelatedPartyAgreements.ExceptassetforthintheTitaniumSECDocumentsmadethroughandincludingthedatehereoforaspermittedbythisAgreement,fromJanuary1,2018throughthedatehereof,thereareandhavebeennoagreements,arrangementsorunderstandingsbetweenTitaniumoranyofitsSubsidiaries(orbindingonanyoftheirrespectivepropertiesorassets),ontheonehand,andanymemberoftheTitaniumFamilyoranyoftheirrespectiveAffiliates,ontheotherhand(a“TitaniumRelatedPartyAgreement”).
Section3.23 Mortgages.Asofthedatehereof, exceptformortgagesonanyTitaniumRealProperties, neitherTitaniumnoranyofitsSubsidiariesis(a)theowneroforissuerofmarketmortgagebackedsecuritiesor(b)theholderofanymortgageloans.
Section3.24 NoOtherRepresentationsorWarranties.ExceptfortherepresentationsandwarrantiescontainedinArticleIVorinanycertificatedeliveredbyaSilverPartytoaTitaniumPartyinaccordancewiththetermshereof,eachoftheTitaniumPartiesacknowledgethatnoneoftheSilverPartiesoranyoftheirrespectiveSubsidiariesorAffiliatesor any other Person on behalf of any of the Silver Parties has made or makes any other express or impliedrepresentation or warranty in connection with the Transactions, and no Titanium Party has relied on any suchrepresentationorwarrantyfromanySilverPartyoranyofitsSubsidiariesorAffiliatesoranyotherPersononbehalfofthe Silver Parties in determining to enter into this Agreement. Without limiting the foregoing, each of the TitaniumPartiesacknowledgesthat(a)noneoftheSilverPartiesoranyoftheirrespectiveAffiliatesorSubsidiariesoranyotherPersononbehalfoftheSilverPartieshasmadeormakesanyrepresentationorwarrantyregardingfutureoperatingorfinancialresults,estimates,projections,forecasts,plansorprospects(includingthereasonablenessoftheassumptionsunderlying such estimates, projections, forecasts, plans or prospects), and no TitaniumParty has relied on any suchrepresentationorwarrantyfromanySilverPartyoranyofitsSubsidiariesorAffiliatesoranyotherPersononbehalfoftheSilverPartiesindeterminingtoenterintothisAgreementand(b)noneoftheTitaniumPartiesshallhaveanyclaimagainstanySilverPartyresultingfromanysuchinformationprovidedormadeavailabletoanyTitaniumPartyoranyofitsRepresentatives,andanysuchclaimisherebyexpresslywaived.
ARTICLEIV.
REPRESENTATIONSANDWARRANTIESOFTHESILVERPARTIES
TheSilverPartiesjointlyandseverallyrepresentandwarranttotheTitaniumPartiesthat,exceptasdisclosedinthe reports, schedules, forms, statements, prospectuses and other documents filed with or furnished to the SEC bySilversinceJanuary1,2018andpubliclyavailableatleasttwo(2)BusinessDayspriortothedateofthisAgreement
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(otherthan(i)withrespecttoanysuchdocumentsfiledwithorfurnishedtotheSECbySilverpriortoJanuary1,2019,any exhibits or schedules thereto, or any documents incorporated by reference therein, and (ii) any risk factordisclosures contained in the “Risk Factors” or “Forward Looking Statements” sections thereof or other similarlycautionary or predictive statements therein; it being understood that any factual information contained within suchheadings,disclosureorstatementsshallnotbeexcluded):
Section 4.01 Qualification, Organization, Subsidiaries, etc. Silver is a corporation duly incorporated, validlyexistingandingoodstandingunderthelawsoftheStateofDelawareandhasallcorporatepowerandauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconducted,exceptwherethefailuretohavesuchpowerandauthorityhasnothad,andwouldnotreasonablybeexpectedtohave,aSilverMaterialAdverseEffect.SilverOPisalimitedpartnershipdulyformed,validlyexistingandingoodstandingunderthelawsoftheStateofDelawareandhasallrequisitepowerandauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconducted,exceptwherethefailuretohavesuchpowerandauthority,individuallyorintheaggregate,hasnothadandwouldnotreasonablybeexpectedtohaveaSilverMaterialAdverseEffect.EachofSilverMerger Sub 1 and Silver Merger Sub 2 is a limited liability company duly organized, validly existing and in goodstandingunderthelawsoftheStateofDelawareandhasalllimitedliabilitycompanyorganizationalpowersrequiredtocarryonitsbusinessasnowconducted.EachoftheSilverPartiesandtheirrespectiveSubsidiariesisdulyqualifiedorlicensedtodobusinessandisingoodstandingineachjurisdictioninwhichthepropertyowned,leasedoroperatedbyit orthenatureofthebusinessconductedbyit makessuchapprovals, qualificationorlicensingnecessary,exceptwherethefailuretobesodulyapproved,qualifiedorlicensedandingoodstanding,individuallyorintheaggregate,hasnothadandwouldnotreasonablybeexpectedtohaveaSilverMaterialAdverseEffect.
Section4.02 Authority;ExecutionandDelivery;Enforceability;OwnershipRestrictions.
(a) Each of the Silver Parties has all requisite corporate or other organizational power and authority toexecuteanddeliverthisAgreement,toperformandcomplywithitscovenantsandobligationshereunderandtoconsummatetheTransactions.TheSilverBoardandthesolememberofeachofSilverMergerSub1andMergerSub2have(i)determinedthatthisAgreementandtheTransactionsarefairto,advisableandinthebestinterestsof,Silver;and(ii)approvedandadoptedthisAgreementandtheTransactions.Silver,initscapacityasthegeneralpartner of Silver OP, has taken all actions required for the execution of this Agreement by Silver OP and toapprovetheconsummationbySilverOPoftheTransactions,andSilverOP,initscapacityasthesolememberofeach of Silver Merger Sub 1 and Silver Merger Sub 2, has taken all actions required for the execution of thisAgreementbySilverMergerSub1andSilverMergerSub2andtoapprovetheconsummationbySilverMergerSub1andSilverMergerSub2oftheTransactions.Noothercorporateorotherorganizationalproceedingsonthepart of any Silver Party are necessary to authorize or adopt or approve this Agreement or to consummate theTransactions, except for the filing of (A) the Michigan Certificate of Merger and the Delaware Certificate ofMerger with the Michigan LARA and the Delaware Secretary of State, respectively, (B) the PartnershipCertificate of Merger with the Delaware Secretary of State, and (C) the Certificate of Conversion and theCertificateofFormationwiththeDelawareSecretaryofState. EachoftheSilverPartieshasdulyexecutedanddeliveredthisAgreementand,assumingthedueauthorization,executionanddeliverybytheTitaniumParties,thisAgreementconstitutesitslegal, validandbindingobligation,enforceableagainstit inaccordancewithitstermsexceptasenforcementmaybelimitedbytheEnforceabilityExceptions.
(b) AssumingtherepresentationandwarrantysetforthinSection3.02(c)istrueandcorrectinallrespects,no Takeover Laws applies with respect to this Agreement and the Transactions. There is no shareholder rightsplan,“poisonpill”,antitakeoverplanorothersimilaragreementorplanineffecttowhichSilverisapartyorisotherwisebound.
Section4.03 SilverOPUnits.
(a) The New Silver OP Units to be issued as OP Unit Partnership Merger Consideration, will be, whenissued,dulyauthorized,validlyissued,fullypaidandnonassessableandnotsubjectto,orissuedinviolationof,any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar rightunder any provision of the DRULPA, the Silver OP Agreement or any Contract to which Silver is a party orotherwisebound.
(b) AtthecloseofbusinessonDecember31,2019,(i)353,609,077commonunitsofpartnershipinterestinSilverOP(“SilverOPUnits”)wereissuedandoutstanding,ofwhich306,868,960SilverOPUnitswere
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owned by Silver and 46,740,117 Silver OP Units were owned by Persons other than Silver and (ii) 1,052,321preferredunitsofpartnershipinterestinSilverOP(“SilverOPPreferredUnits”)wereissuedandoutstanding,ofwhich 796,948 Silver OP Preferred Units were owned by Silver and 255,373 Silver OP Preferred Units wereownedbyPersonsotherthanSilver.AlloutstandingSilverOPUnitshavebeendulyauthorizedandvalidlyissuedandarefullypaid,nonassessableandfreeofpreemptiverights.SincetheCapitalizationDateuntilthedatehereof,neitherSilvernoranyofitsSubsidiarieshasissuedanySilverOPUnitsorSilverOPPreferredUnitsorincurredanyobligationtomakeanypaymentsbasedonthepriceorvalueofanysecuritiesofSilverorSilverOP,otherthanpursuanttoequityawardsthatwereoutstandingasoftheCapitalizationDate.
Section4.04 GovernmentalAuthorization;Non-Contravention.
(a) Theexecution,deliveryandperformancebytheSilverPartiesofthisAgreementandtheconsummationbytheSilverPartiesoftheTransactionsrequirenoactionbyorinrespect of, orfilingwith, anyGovernmentalEntityotherthan(i)(A)thefilingoftheMichiganCertificateofMergerandtheDelawareCertificateofMergerwith the Michigan LARA and the Delaware Secretary of State, respectively, (B) the filing of a PartnershipCertificate of Merger with the Delaware Secretary of State, (C) the filing of a Certificate of Conversion and aCertificateofFormationwiththeDelawareSecretaryofState,and(D)filingswithornoticesto,ineachcasewithrespect to qualifications to do business, the relevant authorities of other states in which any Silver Party isqualified to do business, (ii) compliance with any applicable requirements of any applicable Regulatory Law,(iii) compliance with any applicable requirements of the Securities Act, the Exchange Act and any otherapplicableU.S.stateorfederalsecuritieslaws(includingthefilingwiththeSECoftheProxyStatementandanyOther Filings), and (iv) consents, approvals, Orders, authorizations, registrations, declarations, and filings thefailureofwhichtobeobtained,madeorgivenwouldnot,individuallyorintheaggregate,reasonablybeexpectedtohaveaSilverMaterialAdverseEffect.
(b) Theexecution,deliveryandperformancebytheSilverPartiesofthisAgreementandtheconsummationoftheTransactions, donotandwill not(i) contravene,conflict with,orresult inanyviolationorbreachofanyprovisionoftheSilverCharterorSilverBy-laws,thelimitedpartnershipagreementofSilverOP,ortheapplicableOrganizational Documents of Silver Merger Sub 1 or Silver Merger Sub 2, (ii) assuming compliance with thematters referred to in Section 4.04(a)and the receipt of Titanium Shareholder Approval and Titanium OPApproval,contravene,conflictwithorresultinanyviolationorbreachofanyprovisionofanyApplicableLaw,(iii)assumingcompliancewiththemattersreferredtoinSection4.04(a),requireanyconsentorotheractionbyanySilverPartyunder,constituteadefault,oraneventthat,withorwithoutnoticeorlapseoftimeorboth,wouldconstitute a default, under, or causeor permit thetermination, cancellation, acceleration or other changeof anyright or obligation or the loss of any benefit to which Silver or any of its Subsidiaries is entitled under anyprovision of any Contract binding upon Silver or any of its Subsidiaries or any governmental licenses,authorizations,permits,consents,approvals,variances,exemptionsorOrdersaffecting,orrelatinginanywayto,theassetsorbusinessofSilverandanyofitsSubsidiariesor(iv)resultinthecreationorimpositionofanyLienonanyassetofSilveroranyofitsSubsidiaries,withsuchexceptions,inthecaseofeachofclauses(i)through(iv), as would not, individually or in the aggregate, reasonably be expected to have a Silver Material AdverseEffect.
Section4.05 OwnershipofSilverMergerSub1andSilverMergerSub2.
(a) SilverMergerSub1wasformedsolelyforthepurposeofengagingintheTransactions,hasnoassets,liabilitiesorobligationsofanynatureotherthanthoseincidenttoitsformationandpursuanttotheTransactions,and,priortotheEffectiveTime,willnothaveengagedinanyotherbusinessactivitiesotherthanthoserelatingtotheTransactions.
(b) SilverMergerSub2wasformedsolelyforthepurposeofengagingintheTransactions,hasnoassets,liabilitiesorobligationsofanynatureotherthanthoseincidenttoitsformationandpursuanttotheTransactions,priortothePartnershipMergerEffectiveTime,willnothaveengagedinanyotherbusinessactivitiesotherthanthoserelatingtotheTransactions.
Section4.06 InformationSupplied.NoneoftheinformationsuppliedortobesuppliedbyoronbehalfofSilverforinclusionorincorporationbyreferenceintheProxyStatementwill,atthetimeitisfirstpublishedormailedtotheshareholdersofTitanium,atthetimeofanyamendmentthereoforsupplementtheretoandatthetimeoftheTitaniumShareholdersMeeting, containanyuntruestatementofamaterial fact oromit tostateanymaterial fact necessaryinordertomakethestatementstherein,inlightofthecircumstancesunderwhichtheyaremade,not
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misleading or omit to state any material fact necessary to correct any statement in any earlier communication withrespect to the solicitation of proxies for Titanium Shareholders Meeting which has become false or misleading.Notwithstandingtheforegoing,theSilverPartiesmakenorepresentationorwarrantywithrespecttostatementsmadeor incorporated by reference therein based on information supplied by or on behalf of Titanium or any of itsSubsidiariesforinclusionorincorporationbyreferenceintheProxyStatement.
Section4.07 Financing.AssumingtheaccuracyoftherepresentationsandwarrantiesinArticleIII,Silverhas,orwillhavepriortotheClosing,sufficientcashtoenabletheSilverPartiesandSurvivingTitaniumtopaytheaggregateamounts payable hereunder, any repayment or refinancing of debt contemplated by this Agreement or required inconnectionwiththeTransactions(including,fortheavoidanceofdoubt,anyofferstorepurchaseoutstandingdebtupona change of control or fundamental change), and any other amounts required to be paid in connection with theconsummation of the Transactions, and to pay all related fees and expenses of the Silver Parties, and there is norestrictionontheuseofsuchcashforsuchpurposes.SilverhasthefinancialresourcesandcapabilitiesforitandtheotherSilverPartiestofullyperformallofitsandtheirobligationsunderthisAgreement.
Section4.08 Taxes.Silver(A)foralltaxableyearscommencingwithitstaxableyearendedDecember31,1993throughandincludingitstaxableyearendedDecember31,2019,haselectedandhasbeensubjecttofederaltaxationasaREITandhassatisfiedallrequirementstoqualifyasaREITforU.S.federalincometaxpurposesforsuchtaxableyears,(B)atalltimessincesuchdate,hasoperatedinsuchamannersoastoqualifyasaREITforU.S.federalincometaxpurposesandwillcontinuetooperateinsuchamannersoastosoqualifyforthetaxableyearendingDecember31,2020and(C)hasnottakenoromittedtotakeanyactionthatcouldreasonablybeexpectedtoresultinachallengebytheIRSoranyothertaxingauthoritytoitsstatusasaREIT,andnosuchchallengeispendingor,totheknowledgeofSilver,threatened.
Section4.09 NoOwnershipofTitaniumStock.NoneoftheSilverPartiesnoranyoftheir Affiliates hasbeenduring the two years prior to the adoption of the Section 782 Exemption Resolution an “interested shareholder” ofTitaniumasdefinedinSection778oftheMBCA.PriortotheadoptionofSection782ExemptionResolution,noneoftheSilverPartiesnoranyoftheirAffiliatesbeneficiallyowned,directlyorindirectly,orwastherecordholderof(orduringthetwoyearspriortotheadoptionoftheSection782ExemptionResolutionhadbeneficiallyowned,directlyorindirectly, or been the record holder of), or was during the two years prior to the adoption of the Section 782Exemption Resolution a party to any Contract (other than this Agreement, the Voting Agreement and theConfidentialityAgreement), arrangementorunderstandingforthepurposeofacquiring, holding,votingordisposingof, in each case, any shares of Titanium Common Stock, Titanium Series B Preferred Stock, Titanium Series JPreferredStockorTitaniumSeriesKPreferredStock,anyTitaniumOPUnits,oranyoption,warrantorotherrighttoacquireanysharesofTitaniumCommonStock,TitaniumSeriesBPreferredStock,TitaniumSeriesJPreferredStockorTitaniumSeriesKPreferredStockoranyTitaniumOPUnits.
Section4.10 Brokers’FeesandExpenses.ExceptforBofASecurities,Inc.,thefeesandexpensesofwhichwillbepaidbySilver,nobroker,investmentbanker,financialadvisororotherpersonisentitledtoanybroker’s,finder’s,financial advisor’s or other similar fee or commissionin connection with the Transactions baseduponarrangementsmadebyoronbehalfofanyoftheSilverPartiesoranyoftheirrespectiveAffiliates.
Section 4.11 No Shareholder or Management Arrangements. Other than this Agreement (including for theavoidanceofdoubttheschedulesandexhibitsheretoandtheotheragreementsandtransactionscontemplatedhereby)ortheVotingAgreement,noneoftheSilverPartiesoranyoftheirrespectiveAffiliatesisapartytoanyContract,orhas authorized, made or entered into, or committed or agreed to enter into, any formal or informal arrangements orother understandings (whether or not binding) with anyshareholder, director, officer, employee or other Affiliate ofTitaniumoranyofitsSubsidiaries(a)relatingto(i)thisAgreementortheTransactions;(ii)TitaniumorTitaniumOP;or (iii) Surviving Titanium, the Reorganized Titanium Operating Company or any of their respective Subsidiaries,businessesoroperations(includingastocontinuingemployment)fromandaftertheClosing;or(b)pursuanttowhich(i) any holder of Titanium Common Stock, Titanium Series B Preferred Stock, Titanium Series J Preferred Stock,TitaniumSeriesKPreferredStock,TitaniumOPUnits,oranyothersecuritiesofTitaniumorTitaniumOPwouldbeentitledtoreceiveconsiderationofadifferentamountornaturethanasdescribedinthisAgreement;(ii)anyholderofTitaniumCommonStock, TitaniumSeries BPreferred Stock, TitaniumSeries J Preferred Stock, TitaniumSeries KPreferred Stock, TitaniumOPUnits, or any other securities of Titaniumor TitaniumOPhas agreed to approve thisAgreement or vote against any Superior Proposal; or (iii) any Person (other than the Silver Parties) has agreed toprovide,directlyorindirectly,equityinvestmenttoanyoftheSilverPartiestofinanceanyportionoftheTransactions.
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Section4.12 NoOtherRepresentationsorWarranties.ExceptfortherepresentationsandwarrantiescontainedinArticleIIIorinanycertificatedeliveredbyaTitaniumPartytoaSilverPartyinaccordancewiththetermshereof(andnotwithstandingthedeliveryordisclosuretoSilveroritsRepresentativesofanydocumentation,projections,estimates,budgetsorotherinformation),eachoftheSilverPartiesacknowledgesthatnoneoftheTitaniumPartiesoranyoftheirrespectiveSubsidiariesoranyotherPersononbehalfoftheTitaniumPartieshasmadeormakesanyotherexpressorimplied representation or warranty in connection with the Transactions, and no Silver Party has relied on any suchrepresentation or warranty from any Titanium Party or any of its Subsidiaries or Affiliates or any other Person onbehalfoftheTitaniumPartiesindeterminingtoenterintothisAgreement.Withoutlimitingtheforegoing,eachoftheSilverPartiesacknowledgesthat(a)noneoftheTitaniumPartiesoranyoftheirrespectiveAffiliatesorSubsidiariesoranyotherPersononbehalfoftheTitaniumPartieshasmadeormakesanyrepresentationorwarrantyregardingfutureoperatingorfinancialresults,estimates,projections,forecasts,plansorprospects(includingthereasonablenessoftheassumptionsunderlyingsuchestimates,projections,forecasts,plansorprospects),andnoSilverPartyhasreliedonanysuchrepresentationorwarrantyfromanyTitaniumPartyoranyofitsSubsidiariesorAffiliatesoranyotherPersononbehalfoftheTitaniumPartiesindeterminingtoenterintothisAgreementand(b)noneoftheSilverPartiesshallhaveanyclaimagainst anyTitaniumPartyresulting fromanysuchinformation providedor madeavailable to anySilverPartyoranyofitsRepresentatives,andanysuchclaimisherebyexpresslywaived.
ARTICLEV.
COVENANTS
Section5.01 ConductofBusiness.
(a) Conduct of Business of Titanium. From the date of this Agreement until the earlier of the validterminationofthisAgreementandtheEffectiveTime,except(x)asprohibitedorrequiredbyApplicableLaw,(y)as set forth in the Titanium Disclosure Letter or (z) as otherwise expressly required or contemplated by thisAgreement, unlessSilver shall otherwiseconsent inwriting(whichconsent shall not beunreasonablywithheld,conditionedordelayed),Titaniumshall,andshallcauseeachofitsSubsidiariesto,usecommerciallyreasonableefforts to (A) conduct its business in the ordinary course of business consistent with past practices and, during2020, in accordance with its operational budget delivered by Titanium to Silver prior to the execution of thisAgreement (other than immaterial deviations therefrom) and (B) preserve intact its goodwill, its businessorganization and material business relationships and keep available the services of its current officers and keyemployees;provided,however,thatnoactionorfailuretotakeactionbyTitaniumoritsSubsidiariesofthetypespecificallyaddressedbyanyoftheprovisionsofthenextsentenceshallconstituteabreachunderthissentenceunlesssuchactionwouldconstituteabreachofsuchotherprovision.FromthedateofthisAgreementuntil theearlier of valid termination of this Agreement and the Effective Time, except (A) as prohibited or required byApplicable Law, (B) as set forth in the Titanium Disclosure Letter or (C) as otherwise expressly required orcontemplated by this Agreement, unless Silver shall otherwise consent in writing (which consent shall not beunreasonablywithheld,conditionedordelayed),Titaniumshallnot,andshallnotpermitanyofitsSubsidiariesto,doanyofthefollowing:
(i) amendtheTitaniumCharterortheTitaniumBy-lawsoramendinanymaterial respectorinanymanner adverse to Silver or Silver OP the Titanium OP Agreement or the comparable OrganizationalDocumentsofanySubsidiaryofTitanium;
(ii) (A)issue,sell,disposeof,transfer,encumberorgrantanysharesofitscapitalstockorotherequityorvotinginterests,oranysecuritiesorrightsconvertibleinto,exchangeableorexercisablefor,orevidencingthe right to subscribe for any shares of its capital stock or other equity or voting interests, or any rights,warrantsoroptionstopurchaseanysharesofitscapitalstockorotherequityorvotinginterests,exceptforanyissuance,sale,disposition,transferorgrant(1)solelybetweenoramongTitaniumanditswhollyownedSubsidiaries, (2) required pursuant to the exercise or settlement of Titanium Series B Preferred Stock,Titanium RSU Awards, Titanium PSU Awards, Titanium DSUs, Titanium OP Units or other equity orequity-based awards or obligations under the Titanium Stock Plans outstanding on the date hereof inaccordancewiththetermsoftheapplicableTitaniumStockPlanineffectonthedatehereoforgrantedafterthedatehereofnotinviolationofthisAgreementor(3)requiredbythetermsoftheContinuingOffer,theCashTenderAgreement,theTitaniumCharter,theTitaniumBy-lawsortheTitaniumOPAgreement,or(B)redeem,purchaseorotherwiseacquire,directlyorindirectly,anyofitsoutstanding
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sharesof capital stockor other equityor votinginterests, or anyrights, warrants or optionstoacquire anyshares of its capital stock or other equity or voting interests, except (x) pursuant to written commitmentspreviouslydisclosedtoSilverandineffectasofthedatehereofwithdirectorsoremployeesinconnectionwith the termination of their services to Titanium or any of its Subsidiaries, (y) in connection with thesatisfactionofTaxwithholdingobligationswithrespecttoTitaniumDSUs,TitaniumRSUAwards,TitaniumPSU Awards or other equity or equity-based awards, acquisitions by Titanium in connection with theforfeiture of such equity awards or (z) required by the terms of the Continuing Offer, the Cash TenderAgreement,theTitaniumCharter,theTitaniumBy-lawsortheTitaniumOPAgreement;
(iii) declare,setasideorpayanydividendonormakeanyotherdistributions(whetherincash,stock,propertyorotherwise)withrespecttosharesofcapitalstockofTitaniumoranyofitsSubsidiariesorotherequitysecuritiesorownershipinterestsinanyofitsSubsidiaries,exceptfor(A)thedeclarationandpaymentbyTitaniumofquarterlydividends,withdeclaration,recordandpaymentdatesconsistentwithpastpractice,at a rate not to exceed a quarterly rate of $0.675 per share of Titanium Common Stock (as well as anyprorateddividendsfortheportionofanyquarterinwhichtheClosingoccurs,whichmaybedeclaredpriortothe Closingandhave a record and/or payment date immediately prior to Closing), (B) the declaration andpayment by Titaniumof dividends pursuant to the terms of the TitaniumSeries J Preferred Stock and theTitaniumSeriesKPreferredStock,(C)thedeclarationandpaymentbyTitaniumOPofmonthlydistributionspursuanttothetermsoftheTitaniumOPAgreement,withdeclaration,recordandpaymentdatesconsistentwithpastpractice,ataratenottoexceedamonthlyrateof$0.225percommonunitofTitaniumOP(aswellasanyprorateddistributionsfortheportionofanymonthinwhichtheClosingoccurs,whichmaybepaidimmediately prior to Closing); and (D) the declaration and payment of dividends or other distributions toTitanium or the Titanium OP by any direct or indirect Subsidiary of Titanium; provided, however, that,notwithstandingtherestrictionondividendsandotherdistributionsinthisSection5.01(a)(iii),Titaniumandany of its Subsidiaries shall be permitted to declare, set aside or pay or make dividends or distributions,includingunderSection858orSection860oftheCode,reasonablynecessaryforTitaniumtomaintainitsqualificationasaREITundertheCodeorapplicablestatelawandavoidtheimpositionofanyentitylevelincomeorexciseTaxundertheCodeorapplicablestatelaw;
(iv) (A)repurchase,redeem,defease,cancel,prepay,forgive,issue,sellorotherwiseincur,oramendinanymaterialrespectthetermsof,anyIndebtedness,exceptfor(1)IndebtednesssolelybetweenoramongTitanium OP and any of its wholly owned Subsidiaries, (2) letters of credit issued to Titanium OP or itsSubsidiariesintheordinarycourseofbusiness,(3)Indebtednessincurredunder(x)revolvingcreditfacilities(includinginrespectoflettersofcredit)ineffectasofthedatehereofor(y)banklinesofcreditineffectasof the date hereof used to fund short term working capital requirements of Subsidiaries of TitaniumorganizedoutsideoftheUnitedStatesintheordinarycourseofbusinesssolongastheaggregateprincipalamountoutstandingundertheforegoingclauses(x)and(y)(includinginrespectoflettersofcredit)doesnotexceed the amounts budgeted in Titanium’s current business plan, which amounts are set forth inSection5.01(a)oftheTitaniumDisclosureLetter,bymorethan5%,(4)tradecreditortradepayablesintheordinarycourse of business consistent with past practice, (5) repayments of Indebtedness in the ordinary course ofbusinessand(6)mandatorypaymentsunderthetermsofanyIndebtednessinaccordancewithitsterms,or(B)makeanyloansto,materialcapitalcontributionsto,materialinvestmentsinoradvancestoanyperson,except(x)tonon-affiliatesintheordinarycourseofbusinessconsistentwithpastpractice,(y)toTitaniumoranySubsidiaryofTitanium,or(z)asrequiredbyanyjointventureagreementorascontemplatedbySection5.01(a)oftheTitaniumDisclosureLetter;
(v) sell,pledge,lease(aslessor),license,mortgage,guarantee,sellandleasebackorotherwisesubjectto any Lien (other than Permitted Liens), or otherwise dispose of, any Titanium Real Properties or anyinterests therein, or any other material properties or material assets or any material interests therein, otherthan(A)intheordinarycourseofbusinessconsistentwithpastpracticeforfairmarketvalueinanamount(excluding such leasing and licensing) not to exceed $25 million in the aggregate, or (B) pursuant toContractsinexistenceonthedateofthisAgreementandpreviouslydisclosedtoSilver;
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(vi) makeorauthorizecapitalexpendituresinanycalendaryearthat,individuallyorintheaggregate,exceedtheamountsbudgetedinTitanium’scurrentcapitalexpendituresplan,whichamountsaresetforthinSection5.01(a)(vi)oftheTitaniumDisclosureLetter,bymorethan5%,otherthananycapitalexpendituresmade with respect to any Non-Controllable Items (as defined in the Reorganized Titanium OperatingCompanyOperatingAgreement);
(vii) make any material change in financial accounting methods, principles or practices, except asrequiredbyGAAPorApplicableLaw;
(viii) assign,transfer,lease,cancel,failtorenew,failtomaintainorfailtoextendanymaterialPermitifsuchactionorinactionwouldbematerialandadversetoTitaniumanditsSubsidiaries,takenasawhole;
(ix) settleorcompromise,oragreeorproposetosettleorcompromise,anyclaimorActioninvolvingor against Titanium or any of its Subsidiaries, other than settlements or compromises involving monetarypaymentbyortoTitaniumoranyofitsSubsidiariesinanamountnottoexceed$10millionindividuallyorin the aggregate, in any case without the imposition of equitable relief (other than equitable relief that isincidentaltopaymentofmonetarydamages)on,ortheadmissionofwrongdoingby,TitaniumoranyofitsSubsidiaries,andwhichdonotimposeanymaterialrestrictionsontheoperationsorbusinessofTitaniumoritsSubsidiaries,takenasawhole;
(x) abandon,encumber,conveytitle(inwholeorinpart),sell,transfer,assign,dedicatetothepublic,permittolapse,licensetoorotherwisedisposeofanymaterialIntellectualPropertyownedbyorexclusivelylicensedtoTitaniumoranyofitsSubsidiaries,orenterintolicensesoragreementsthatimposerestrictionsorobligationsuponTitaniumoranyofitsAffiliateswithrespecttomaterialIntellectualPropertyownedbyanythirdpartythatwouldimpairtheoperationofthebusinessofTitaniumoranyofitsAffiliates,ineachcase,otherthanintheordinarycourseofbusinessconsistentwithpastpractice;
(xi) (A)exceptfor(x)renewalsintheordinarycourseofbusinessconsistentwithpastpracticeor(y)the entry into any modification or amendment of, or waiver or consent under, any mortgage or relatedagreement to which Titanium or any of its Subsidiaries is a party as required or necessitated by thisAgreement or the Transactions (providedthat any such modification, amendment, waiver or consent is inaccordance with Section 6.13, does not increase the principal amount thereunder or otherwise adverselyaffectinanymaterialrespectTitaniumoranyofitsSubsidiariesorSilveroranyofitsSubsidiaries),amendinanymaterialrespect,waiveanymaterialprovisionunderorterminate(otherthanforcauseorexpirationthereofinaccordancewiththetermsthereof)orcancelanyMaterialContract,or(B)exceptwithrespecttorenewalsofanyMaterialContractintheordinarycourseofbusinessconsistentwithpastpractice,enterintoaContractthatwouldbeaMaterialContractifenteredintopriortothedatehereof;
(xii) adoptaplanofmerger,completeorpartialliquidation,dissolution,consolidation,restructuring,recapitalizationorotherreorganizationofTitaniumorTitaniumOPoranyoftheirSubsidiaries(otherthanwholly-ownedSubsidiaries) oradoptresolutionsprovidingfororauthorizingsuchmerger, liquidationoradissolution, consolidation, restructuring, recapitalization or reorganization (other than the Merger, thePartnershipMergerandtheLLCConversion);
(xiii) ceasetomaintainits qualificationasaREITortakeanyactionthat would, or fail totakeanyactionthefailureofwhichwould,reasonablybeexpectedto(A)causeTitaniumtofailtoqualifyfortaxationas a REIT, or (B) cause any Subsidiary of Titanium to cease to be treated as any of (x) a partnership ordisregardedentityforU.S.federalincometaxpurposesor(y)aREIT,aQRSoraTRSundertheapplicableprovisionsofSection856oftheCode,asthecasemaybe;
(xiv) enter into any Titanium Tax Protection Agreement (excluding an Amended Tax ProtectionAgreement); make, change, rescindor revokeanymaterial Taxelection; changeamaterial methodof Taxaccounting;amendanymaterialTaxReturn;settleorcompromiseanymaterialTaxliability,audit,claimorassessment; or enter into any closing agreement related to Taxes, except in each case to the extent suchactionisrequiredbyApplicableLawornecessary(A)topreservethestatusofTitaniumasaREITundertheCodeor(B)toqualifyorpreservethestatusofanySubsidiaryofTitaniumasapartnershipforU.S.federalincometaxpurposesor disregardedentity for federal incometaxpurposes or as a REIT, a QRSor a TRSundertheapplicableprovisionsofSection856oftheCode,asthecasemaybe;
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(xv) (A)increasetheamount,rateortermsofcompensationofanymemberofTitanium’soperatingcommittee or anyexecutive officer, (B) grant anynewTitaniumEquity Award, (C) terminate, promote orhireanymemberofTitanium’soperatingcommittee(otherthanaterminationduetotheindividual’sdeathordisability),(D)takeanyactiontoacceleratethevestingortimeofpaymentofanycompensationorbenefitunderanyagreementorTitaniumBenefitPlan,(E)terminateormateriallyamendanyTitaniumBenefitPlanorenterintooradoptanyTitaniumBenefitPlanor(F)materiallyincreasethebenefitsprovidedunderanyTitanium Benefit Plan, except, in each case, as required by Applicable Law (including to avoid theimpositionofanypenaltytaxesunderSection409AoftheCode)or,inthecaseof(D)above,asrequiredbyanyTitaniumBenefitPlanasineffectonthedatehereof(orasmodifiedafterthedatehereofinamannerpermittedbythisAgreement);
(xvi) enterintoaCollectiveBargainingAgreement;
(xvii) adopt or implement any stockholder rights plan or similar arrangement that is, or at theEffective Time will be, applicable to this Agreement, the Merger or the Partnership Merger or the othertransactionscontemplatedhereby;
(xviii) (A) enter into any Contract that, if in effect on the date hereof, would be deemed to be aTitanium Related Party Agreement, or (B) amend, modify or terminate, or grant any waiver under, anyTitaniumRelatedPartyAgreement;
(xix) take any action under the Titanium or Titanium OP Organizational Documents or otherwise(includingbyresolution) that wouldgivedissenters’, appraisal or similar rights totheholders of TitaniumSecuritieswithrespecttotheTransactions;
(xx) acquire (including by merger, consolidation, or acquisition of stock or assets or other similartransaction) any Person, division, real property, personal property or material assets, other than(A) acquisitions of personal property in the ordinary course of business consistent with past practice or(B)otheracquisitionswithapurchasepriceoflessthan$25millionintheaggregate;or
(xxi) authorize,orenterintoanycontract,agreement,commitmentorarrangementtotake,anyoftheforegoingactions.
(b) Conduct of Business of Silver. FromthedateofthisAgreementuntiltheearlierofterminationofthisAgreement andtheEffective Time, except (i) as prohibited or required byApplicable Law,or (ii) as otherwiseexpresslyrequiredorcontemplatedbythisAgreement,unlessTitaniumshallotherwiseconsentinwriting(whichconsentshallnotbeunreasonablywithheld,conditionedordelayed),Silvershallnot,andshallnotpermitSilverOPto, (A)amendthe Silver OPAgreement solely to the extent suchamendment woulddisproportionately andmateriallyadverselyimpacttheTitaniumOPMinorityPartnerswhoelecttoreceiveNewSilverOPUnitsinthePartnership Merger as compared to the other limited partners of Silver OP or (B) cease to maintain itsqualification as a REIT or take any action that would, or fail to take any action the failure of which would,reasonablybeexpectedtocauseittofailtoqualifyfortaxationasaREIT.
(c) NoControl oftheOther Party’s Business. TheParties acknowledgeandagreethat therestrictions setforthinthisAgreementarenotintendedtogivetheSilverParties,ontheonehand,ortheTitaniumParties,ontheotherhand,directlyorindirectly,therighttocontrolordirectthebusinessoroperationsoftheotheratanytimeprior to the Effective Time. Prior to the Effective Time, the Silver Parties, on the one hand, and the TitaniumParties,ontheotherhand,willexercise,consistentwiththeterms,conditionsandrestrictionsofthisAgreement,completecontrolandsupervisionovertheirownbusinessandoperations.
Section5.02 TreatmentofAcquisitionProposals.
(a) Go-Shop. NotwithstandinganythingtothecontraryinthisAgreement,duringtheperiodbeginningonthedateofthisAgreementandcontinuinguntil11:59p.m.,NewYorkCitytime,onthe45thdayafterthedateofthis Agreement (the “No-ShopPeriod Start Date”), the TitaniumParties andtheir respective directors, officers,employees, accountants, consultants, legal counsel, financial advisors and agents and other representatives(collectively,“Representatives”) shall have the right to (i) solicit, seek, initiate, propose or induce the making,submissionorannouncementof,orencourage,facilitateorassist,anyinquiry,proposalorofferthatconstitutes,orthat could constitute, an Acquisition Proposal, including by providing information (including non-publicinformation)relatingtoTitaniumoranyofitsSubsidiariesandaffordingaccesstothe
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business, properties, assets, books, recordsorother non-publicinformation, ortoanypersonnel, of Titaniumorany of its Subsidiaries to any Person (and its Representatives, including potential financing sources of suchPerson)pursuanttoanAcceptableConfidentialityAgreement;provided,however,thatanymaterialinformationconcerningTitaniumoritsSubsidiariestobeprovidedormadeavailabletoanythirdpartyshall,totheextentnotpreviously providedor madeavailable to Silver, beprovidedor madeavailable to Silver promptly (and, in anyevent,within12hours)followingsuchtimeasitisprovidedormadeavailabletosuchthirdparty;and(ii)engagein, enter into, continue or otherwise participate in any discussions or negotiations with any Person (and theirrespectiveRepresentatives,includingpotentialfinancingsourcesofsuchPerson)withrespecttoanyAcquisitionProposals (or inquiries, proposals or offers or any other effort or attempt that could lead to an AcquisitionProposal) and cooperate with or assist or participate in or facilitate any such inquiries, proposals, offers,discussions or negotiations or any effort or attempt to make any Acquisition Proposals or other proposals thatcouldleadtoanyAcquisitionProposal,includinggrantingawaiver,amendmentorreleaseunderanypre-existingstandstill or similar provision to the extent necessary to allowfor an Acquisition Proposal or amendment to anAcquisition Proposal to be made to Titanium or the Titanium Board (or the Titanium Special Committee).Notwithstanding anything herein to the contrary, the Silver Parties and their Affiliates shall not enter intoexclusivearrangementswithpotentialfinancingsourcesthatwouldbytheirtermsorotherwisemateriallyimpair,delayorpreventanyPersonfromfinancinganyAcquisitionProposalcontemplatedbythisSection5.02(a).
(b) No Solicitation.ExceptasitmayrelatetoanyExcludedPartyorSilverPartyandsubjecttothetermsofSection5.02(c), from the No-Shop Period Start Date until the earlier to occur of the valid termination of thisAgreementpursuanttoArticleVIIIandtheEffectiveTime,TitaniumshallceaseandcausetobeterminatedanydiscussionsornegotiationswithanyPersonanditsAffiliatesandRepresentativesthatwouldbeprohibitedbythisSection5.02(b).ExceptasitmayrelatetoanyExcludedPartyandsubjecttothetermsofSection5.02(c),fromthe No-ShopPeriod Start Date until the earlier to occur of the valid termination of this Agreement pursuant toArticle VIIIand the Effective Time, the Titanium Parties will not, and will instruct each of their respectiveRepresentatives not to, directly or indirectly, (i) solicit, initiate or propose the making or submission of, orknowingly encourage or facilitate the making or submission of, any offer or proposal that constitutes or wouldreasonablybeexpectedtoleadtoanAcquisitionProposal;(ii)furnishtoanyPerson(otherthantheSilverPartiesoranydesigneesoftheSilverParties)anynon-publicinformationrelatingtoTitaniumoranyofitsSubsidiariesoraffordtoanyPerson(otherthantheSilverPartiesoranydesigneesoftheSilverParties)accesstothebusiness,properties,assets,books,recordsorothernon-publicinformation,ortoanypersonnel,ofTitaniumoranyofitsSubsidiaries,inanysuchcasewiththeintenttoinducethemakingorsubmissionof,ortoknowinglyencourage,facilitate or assist, an Acquisition Proposal; (iii) participate in, knowingly facilitate or engage in discussions ornegotiationswithanyPersonwithrespecttoanAcquisitionProposaloranyoffer,proposalorinquirythatwouldreasonablybeexpectedtoleadtoanAcquisitionProposal(otherthaninformingsuchPersonsoftheexistenceoftheprovisionscontainedinthisSection5.02(b)orcontactingsuchPersonoritsRepresentativessolelytoclarifythe terms and conditions of any Acquisition Proposal); (iv) enter into any letter of intent, memorandum ofunderstanding, agreement inprinciple, investment agreement, mergeragreement, acquisitionagreement orotherContract relating to an Acquisition Transaction or that would reasonably be expected to lead to an AcquisitionProposal; other than an Acceptable Confidentiality Agreement (any such letter of intent, memorandum ofunderstanding, merger agreement, acquisition agreement or other Contract providing for an AcquisitionTransactionan“AlternativeAcquisitionAgreement”)or(v)reimburseoragreetoreimbursetheexpensesofanyotherPerson(otherthantheTitaniumParties’Representatives)inconnectionwithanAcquisitionProposaloranyinquiry,discussion,offerorrequestthatwouldreasonablybeexpectedtoleadtoanAcquisitionProposal.Fromthe No-ShopPeriod Start Date until the earlier to occur of the valid termination of this Agreement pursuant toArticleVIIIandtheEffectiveTime,Titaniumwillberequiredtoenforce,andwillnotbepermittedtowaive,anyprovisionofanystandstillorconfidentialityagreementthatprohibitsorpurportstoprohibitaproposalbeingmadetoTitaniumortheTitaniumBoard(ortheTitaniumSpecialCommittee),unlesstheTitaniumSpecialCommitteehasdeterminedingoodfaith,afterconsultationwithitsoutsidecounsel,thatfailuretotakesuchaction(I)wouldprohibit the counterparty from making an unsolicited Acquisition Proposal to the Titanium Board or TitaniumSpecial CommitteeincompliancewiththisSection5.02and(II) wouldbeinconsistentwithitsfiduciarydutiespursuanttoApplicableLaw.Notwithstandinganythinghereintothecontrary,includingtheoccurrenceoftheNo-ShopPeriodStartDate,fromandaftertheNo-ShopPeriodStartDate,theTitaniumPartiesandtheirrespectiveRepresentativesmaycontinuetoengageintheactivities
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describedinSection5.02(a)withrespecttoanyExcludedParty(anditsRepresentatives),includingwithrespecttoanyamendedormodifiedAcquisitionProposalsubmittedbyanyExcludedPartyfollowingtheNo-ShopPeriodStartDate,andtherestrictionsinthisSection5.02(b)shallnotapplywithrespectthereto.
(c) Superior Proposals and Other Exceptions.NotwithstandinganythingtothecontraryinthisAgreement,from the No-Shop Period Start Date and continuing until Titanium’s receipt of the Titanium ShareholderApproval, the Titanium Parties may, directly or indirectly through one or more of their Representatives,participateorengageindiscussionsornegotiationswith,furnishanynon-publicinformationrelatingtoTitaniumoranyofitsSubsidiariesto,oraffordaccesstothebusiness,properties,assets,books,recordsorothernon-publicinformation,ortoanypersonnel,ofTitaniumoranyofitsSubsidiariespursuanttoanAcceptableConfidentialityAgreementto,anyPersonthathasmade,renewedordeliveredtoTitaniumanAcquisitionProposalafterthedateofthisAgreementortosuchPerson’sRepresentatives(includingpotentialfinancingsourcesofsuchPerson),andotherwise facilitate such Acquisition Proposal or assist such Person (and its Representatives and financingsources)withsuchAcquisitionProposal(ineachcase,ifrequestedbysuchPerson),ineachcasewithrespecttoan Acquisition Proposal that was not the result of a material breach of Section 5.02(a)or Section 5.02(b);provided,however,thattheTitaniumSpecialCommitteehasdeterminedingoodfaith(afterconsultationwithitsfinancialadvisorsandoutsidelegalcounsel)thatsuchAcquisitionProposaleitherconstitutesaSuperiorProposalorisreasonablylikelytoleadtoaSuperiorProposalandthatfailuretotakesuchactionswouldbeinconsistentwith the Titanium Special Committee’s fiduciary duties pursuant to Applicable Law; provided, further, that,subject to Applicable Law, any non-public information concerning the TitaniumParties that is provided to anysuchPersonoritsRepresentativespursuanttothisSection5.02(c)thatwasnotpreviouslymadeavailabletoSilvershallbeprovidedormadeavailabletoSilverpromptly(and,inanyevent,within12hours)followingsuchtimeasitisprovidedormadeavailabletosuchthirdparty.
(d) No Change in Titanium Board Recommendation or Entry into an Alternative Acquisition Agreement.ExceptaspermittedbySection5.02(e),atnotimeafterthedateofthisAgreementmaytheTitaniumBoard(ortheTitaniumSpecialCommittee):
(i) (A) withhold, withdraw, amend or modify, or publicly propose to withhold, withdraw, amend ormodify,theTitaniumBoardRecommendation(inthecaseofamendmentsormodifications,inanymanneradverse toSilver); (B)adopt, approveor recommendtotheTitaniumShareholders, or publicly proposetoadopt,approveorrecommendtotheTitaniumShareholders,anAcquisitionProposal;(C)failtoincludetheTitaniumBoardRecommendation in the ProxyStatement or (D)makeanyrecommendation in connectionwith a tender offer or exchange offer for the equity securities of Titanium other than a recommendationagainstsuchoffer,ormakeanyotherpublicstatementinconnectionwithsuchofferthatdoesnotexpresslyreaffirm the Titanium Board Recommendation (any action described in clauses (A), (B), (C) and (D), a“TitaniumBoardRecommendationChange”);provided,however,that,fortheavoidanceofdoubt,noneof(1) the determination by the Titanium Board (or the Titanium Special Committee) that an AcquisitionProposalconstitutesaSuperiorProposal;(2)thetakingofanyactioncontemplatedbySection5.02(c)asandtotheextentpermittedbySection5.02(e)(i);or(3)thedeliverybyTitaniumofanynoticecontemplatedbySection5.02(e); or (4) any“stop, lookandlisten”communication byTitanium, theTitaniumBoardor theTitaniumSpecialCommitteepursuanttoRule14d-9(f)promulgatedundertheExchangeAct(oranysimilarcommunication)willconstituteaTitaniumBoardRecommendationChange;or
(ii) cause or permit Titanium or any of its Subsidiaries to enter into an Alternative AcquisitionAgreement.
(e) Titanium Board Recommendation Change; Entry into Alternative Acquisition Agreement.Notwithstanding anything to the contrary in this Agreement, at any time prior to obtaining the TitaniumShareholderApproval:
(i) ifTitaniumhasreceivedawrittenAcquisitionProposalthattheTitaniumBoard(actingupontherecommendationoftheTitaniumSpecial Committee) hasdeterminedingoodfaith(after consultationwithits financial advisor and outside legal counsel) constitutes a Superior Proposal, then the Titanium Board(acting on the recommendation of the Titanium Special Committee) may (x) effect a Titanium BoardRecommendationChangewithrespecttosuchAcquisitionProposalor(y)authorizeTitaniumtoterminate
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this Agreement to enter into an Alternative Acquisition Agreement with respect to such AcquisitionProposal;provided,however, that the TitaniumBoard (or the TitaniumSpecial Committee) shall not takeanyactiondescribedintheforegoingclauses(x)and(y)unless:
(A) theTitaniumBoard (acting uponthe recommendation of the TitaniumSpecial Committee)determinesingoodfaith(afterconsultationwithitsfinancialadvisorandoutsidelegalcounsel)thatthefailuretodosowouldbeinconsistentwithitsfiduciarydutiespursuanttoApplicableLaw;
(B) (i) Titanium has provided prior written notice to Silver at least four Business Days inadvance (the “Notice Period”) to the effect that the Titanium Board (or the Titanium SpecialCommittee) has (A) received a Superior Proposal and (B) intends to take the actions described inclauses (A) or (B) of this Section 5.02(e)(i)absent any revision to the terms and conditions of thisAgreement, whichnoticewill specifythebasis forsuchactions, includingasummaryofthematerialterms and conditions of such Acquisition Proposal and a copy of the definitive proposed transactionagreementandallancillaryagreementsand,totheextentcontainingtermsmaterialtosuchAcquisitionProposal, related schedules (other than any confidential disclosure schedules solely of the Person orPersons making such Acquisition Proposal), in each case to be entered into in respect of suchAcquisitionProposal;and(ii)priortotakingsuchactionsdescribedinclauses(A)or(B)ofthisSection5.02(e)(i),TitaniumanditsRepresentatives,duringtheNoticePeriod,musthavenegotiatedwithSilverand its Representatives in good faith (to the extent that Silver desires to so negotiate) to make suchadjustmentstothetermsandconditionsofthisAgreementsothattheTitaniumBoard(ortheTitaniumSpecial Committee) would no longer determine that the failure to make a Titanium BoardRecommendation Change in response to such Acquisition Proposal would be inconsistent with itsfiduciary duties pursuant to Applicable Law; provided, however, that in the event of any materialrevisions to such Acquisition Proposal (including any change in price), Titaniumshall be required todeliveranewwrittennoticetoSilverandtocomplywiththerequirementsofthisSection5.02(e)(i)(B)withrespecttosuchnewwrittennotice(itbeingunderstoodthatthe“NoticePeriod”inrespectofsuchnewwrittennoticewillbethreeBusinessDays);and
(C) intheeventofanyterminationofthisAgreementinordertocauseorpermitTitaniumoranyofitsSubsidiariestoenterintoanAlternativeAcquisitionAgreementwithrespecttosuchAcquisitionProposal, Titaniumshall have validly terminated this Agreement in accordance withSection8.01(d),includingpaying(orcausingtobepaid)theTerminationFeeinaccordancewithSection8.03(b);
(ii) other than in connection with an Acquisition Proposal, the Titanium Board (acting on therecommendationoftheTitaniumSpecialCommittee)mayeffectaTitaniumBoardRecommendationChangeinresponsetoanInterveningEvent if theTitaniumBoard(actingontherecommendationof theTitaniumSpecialCommittee)determinesingoodfaith(afterconsultationwithitsfinancialadvisorandoutsidelegalcounsel)thatthefailuretodosowouldbeinconsistentwithitsfiduciarydutiespursuanttoApplicableLaw;provided,however, that the Titanium Board (or the Titanium Special Committee) shall not effect such aTitaniumBoardRecommendationChangeunless:
(A) TitaniumhasprovidedpriorwrittennoticetoSilveratleastfourBusinessDaysinadvancetotheeffectthattheTitaniumBoard(actingontherecommendationoftheTitaniumSpecialCommittee)has(A)sodeterminedand(B)resolvedtoeffectaTitaniumBoardRecommendationChangepursuanttothisSection5.02(e)(ii),whichnoticewillspecifyanddescribethefactsandcircumstancesrelatingtothe applicable Intervening Event in reasonable detail and the factual bases for the Titanium Board’sdeterminationthatsucheventsorcircumstancesconstituteanInterveningEvent;and
(B) prior to effecting such Titanium Board Recommendation Change, Titanium and itsRepresentatives, during such four Business Day period, must have negotiated with Silver and itsRepresentativesingoodfaith(totheextentthatSilverdesirestosonegotiate)toallowSilvertomakesuchadjustmentstothetermsandconditionsofthisAgreementtoobviatetheneedtoeffectaTitaniumBoard Recommendation Change in response to such Intervening Event, and following such fourBusinessDayperiod,theTitaniumBoard(ortheTitaniumSpecialCommittee)shall havedetermined(afterconsultationwithitsfinancialadvisorandoutsidelegalcounselandtakingintoaccountSilver’s
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proposedrevisionstothetermsandconditionsofthisAgreement)ingoodfaiththatthefailuretomakea Titanium Board Recommendation Change in response to such Intervening Event would beinconsistent with its fiduciary duties pursuant to Applicable Law; provided,however, that each timematerial modifications to the Intervening Event occur, Titanium shall notify Silver of suchmodifications andthefourBusinessDayperiodset forthaboveshall recommenceprovidedthat suchtimeperiodshallinsteadbethreeBusinessDaysfromthedayofsuchnotification.
(f) Notice.FromthedateofthisAgreementuntiltheearliertooccuroftheterminationofthisAgreementpursuant toArticleVIIIand the Effective Time, Titanium shall promptly (and, in any event, within 24 hours)notifySilverifanyAcquisitionProposalisreceivedbytheTitaniumBoardofDirectorsortheTitaniumSpecialCommittee. Such notice must include a summary of the material terms and conditions of such AcquisitionProposal(but,priortotheNo-ShopPeriodStartDate,neednotincludethenameofthePersonorPersonsmakingsuchAcquisitionProposal).AftertheNo-ShopPeriodStartDate,suchnoticeshallincludeanunredactedcopyofanywrittenAcquisitionProposalreceivedandanyotherwrittentermsorproposalprovided(includingfinancingcommitments)andanymaterialmodificationsthereto.FromthedateofthisAgreementuntiltheearliertooccurofthe termination of this Agreement pursuant toArticleVIIIand the Effective Time, Titanium must keep Silverreasonablyinformed,onapromptbasis,ofthestatusandmaterialtermsandconditionsofanysuchAcquisitionProposal (including any material amendments thereto and any additional written materials (including financingcommitments))(but,priortotheNo-ShopPeriodStartDate,neednotincludethenameofthePersonorPersonsmaking such Acquisition Proposal). No later than twenty-four hours following the No-Shop Period Start Date,TitaniumshallnotifySilverinwritingoftheidentityofeachPersonfromwhomSilverreceivedanAcquisitionProposal after the execution of this Agreement and prior to the No-Shop Period Start Date, and deliver (i) anunredactedcopyofthemostrecentAcquisitionProposalmadeinwritingandanymaterialmodificationstheretoand any other written terms or proposal provided (including financing commitments) and any materialmodificationstheretoand(ii) awrittensummaryofthematerial termsofanyAcquisitionProposal notmadeinwritingandanymaterialmodificationsthereto.
(g) Certain Disclosures. Notwithstanding anything to the contrary in this Agreement, nothing in thisAgreementwillprohibitTitaniumortheTitaniumBoard(ortheTitaniumSpecialCommittee)from(i)takinganddisclosingtoTitaniumShareholdersapositioncontemplatedbyRule14e-2(a)promulgatedundertheExchangeAct or complying with Rule 14d-9 promulgated under the Exchange Act, including making a “stop, look andlisten”communicationtoTitaniumShareholderspursuanttoRule14d-9(f)promulgatedundertheExchangeAct(or any similar communication); (ii) complying with Item 1012(a) of Regulation M-A promulgated under theExchange Act; (iii) informing any Person of the existence of the provisions contained in this Section 5.02;(iv)includingafactuallyaccuratedescriptionwithregardtoanAcquisitionProposalinthe“BackgroundoftheMerger”sectionoftheProxyStatementorinanyotherdocumentsrequiredtobefiledorfurnishedtotheSECbyTitaniuminwhichsuchdescriptionofanAcquisitionProposalisrequired,ineachcase,solelyintheeventthatsuchProxyStatementorsuchotherdocumentalsoincludestheTitaniumBoardRecommendation;or(v)makingany disclosure to the Titanium Shareholders unrelated to an Acquisition Proposal (including regarding thebusiness,financialconditionorresultsofoperationsofTitaniumanditsSubsidiaries)thattheTitaniumBoard(orthe Titanium Special Committee) has determined to make in good faith, it being understood that any suchstatementordisclosuremadebytheTitaniumBoard(ortheTitaniumSpecialCommittee)mustbesubjecttothetermsandconditionsofthis Agreement;provided, that anysuchdisclosure or communicationthat constitutes aTitanium Board Recommendation Change shall only be made in accordance withSection5.02(e). In addition,notwithstandinganythingtothecontraryinthisAgreement,itisunderstoodandagreedthat,forpurposesofthisAgreement, the making of a “stop, look and listen” communication to TitaniumShareholders pursuant to Rule14d-9(f) promulgated under the Exchange Act will not be deemed to be a Titanium Board RecommendationChangeorotherwiseaviolationofthisSection5.02.
Section5.03 Efforts.
(a) SubjecttoSection5.03(b),eachPartyshallusereasonablebesteffortstotake,orcausetobetaken,allactions, and to do, or cause to be done, all things necessary, proper or advisable, to the extent permitted byApplicableLaw,tocausetheconditionsinArticleVIItobesatisfiedandtoconsummatetheTransactionspriortothe End Date, including making, as soon as reasonably practicable after the date hereof, all registrations,declarations, notices, reports, submissions, applications or other filings (collectively, “Filings”) to or with, andusingreasonablebesteffortstoobtainallconsents,approvals,waivers,licenses,permits,franchises,
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authorizations or Orders (collectively, “Consents”) of, Governmental Entities that are necessary, proper oradvisable to consummate the Transactions. In addition, each of Titanium and Silver shall use reasonable besteffortstoobtainallConsentsofPersonsotherthanGovernmentalEntitiesthatarenecessary,properoradvisableto consummate the Transactions; provided,however, that none of Titanium, Silver nor any of their respectiveSubsidiariesshallberequiredtomake,orcommitoragreetomake,anyconcessionorpaymentto,orincuranyliabilityto,anysuchnon-GovernmentalEntitytoobtainanysuchConsent.ThePartiesshallsupplyaspromptlyasreasonablypracticableanyadditionalinformationanddocumentarymaterialthatmaybereasonablyrequestedbyanyGovernmentalEntities,includinginconnectionwithanyoftheforegoingFilingsortodeterminewhetheranysuchFilingsarenecessary,properoradvisabletoconsummatetheTransactions.
(b) InfurtheranceofSection5.03(a),(i)eachofSilverandTitaniumshalldefendanyActioncommencedbyanyGovernmentalEntityinconnectionwiththeTransactionsand(ii)Silvershalltakeorcausetobetaken,door cause to be done, propose, negotiate, commit to, agree to and effect (A) the sale, divestiture, lease or otherdispositionofanyassets,businessesorpropertiesofSilverorTitaniumoranyoftheirrespectiveSubsidiaries,(B)any other action, commitment, condition, contingency, contribution, obligation, restriction, requirement or termthataftertheClosingwouldlimiteitherofSilver’sorTitanium’sfreedomofactionwithrespectto,oritsabilitytoretain, any of Silver’s or Titanium’s or their respective Subsidiaries’ assets, businesses or properties or theirinterests therein, in each case to the extent necessary to resolve objections, if any, that a Governmental Entityasserts (or threatens to assert) under any Applicable Law with respect to the Transactions, and to avoid oreliminateeachandeveryimpedimentunderanyApplicableLawassertedbyanysuchGovernmentalEntitywithrespecttotheTransactions,ineachcasesoastoenabletheClosingtooccurpriortotheEndDateand(C)anyholdseparateordersasarenecessaryinordertoavoid,oreffectthedissolutionof,anytemporaryrestrainingorderor preliminary injunction preventing the closing of the Transactions (such actions described in this clause (ii),collectively,“RegulatoryConcessions”);provided,however,thatnotwithstandinganythinginthisAgreementtothecontrary,noSilverPartyshallbepermittedto,andnoTitaniumPartyshallberequiredto(andnoTitaniumParty shall), in each case without the prior written consent of the Titanium Family Representative, commit to,agree to or make any Regulatory Concessions that would result in a Titanium Burdensome Condition; andprovided,further,that,notwithstandinganythinginthisAgreementtothecontrary,(x)SilveranditsSubsidiariesshallnotberequiredtocommittoormakeanyRegulatoryConcessionsthatwouldresultinaSilverBurdensomeCondition or that is not conditioned on the consummation of the Transactions, (y) no Titanium Party shall bepermittedto(andnoTitaniumPartyshall)offertoaGovernmentalEntityanyRegulatoryConcessionwithoutthepriorwrittenconsentofSilverand(z)inconnectionwithanyRegulatoryConcession,SilvershallactingoodfaithandtakeintoaccountthebestinterestsofTitaniumanditsSubsidiariesandofSilveranditsSubsidiaries.Asusedherein,(1)“TitaniumBurdensomeCondition”meansanysale, divestiture, leaseorotherdispositionof, or holdseparateorderwithrespectto,theproperties(orintereststherein)ofTitaniumoranyofitsSubsidiariessetforthon Schedule 5.03(b)(i); and (2) “Silver Burdensome Condition” means any sale, divestiture, lease or otherdispositionof, or holdseparate order with respect to, the properties (or interests therein) of Silver or anyof itsSubsidiaries set forth on Schedule 5.03(b)(ii)or the properties (or interests therein) of Titanium or any of itsSubsidiariessetforthonSchedule5.03(b)(iii).
(c) Each Party shall (i) consult and cooperate with the other Parties in connection with (1) any Filingcontemplated by this Section 5.03and any analysis, appearance, presentation, memorandum, brief, argument,response to questions or information or document requests fromany Governmental Entity, opinion or proposalmadeorsubmittedinconnectionwithanysuchFilingand(2)anyActionrelatingtotheTransactions,includinganygovernmental inquiry, investigation or proceedinginitiated bya private party, and(ii) keepthe other Partyreasonably informed and on a reasonably timely basis of any communication received by such Party from, orgiven by such Party to, any Governmental Entity in connection with the Transactions or if such Party acquiresknowledge,orotherwisebecomesawareofanyGovernmentalEntity’sinquiry,investigationorActionrelatedtotheTransactions.ExceptasmaybeprohibitedbyanyGovernmentalEntityorbyApplicableLaw,eachPartyshallpermit authorized Representatives of the other Party to (A) participate at or in each meeting, conference ortelephone call with a representative of a Governmental Entity relating to any such Filing or Action, (B) havereasonable access to and be consulted in connection with any material document, opinion or proposal made orsubmittedtoanyGovernmentalEntityinconnectionwithanysuchFilingorActionand(C)reviewpriortofilingor submission any Filing with or submission to (including any response to questions from) any GovernmentalEntitysubmittedasrequiredbythisSection5.03.Notwithstandinganythingtothecontraryherein(butsubjecttoSection5.03(b)),Silvershall,followingconsultationwithTitaniumandtheTitaniumFamilyRepresentative
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andactingingoodfaith(andtakingintoaccountthebestinterestsofTitaniumanditsSubsidiariesandofSilverandits Subsidiaries), (x) direct, devise andimplement the strategy for obtaining anynecessary approval of, forrespondingtoanyrequestfrom,inquiryorinvestigationby(includingdirectingthetiming,natureandsubstanceof all suchresponses), (y) have the right to lead all meetings andcommunications (including anynegotiations)with,anyGovernmentalEntitythathasauthoritytoenforceanyRegulatoryLawand(z)controlthedefenseandsettlementofanyinquiry,investigationorActionbroughtbyorbeforeanyGovernmentalEntitythathasauthoritytoenforceanyRegulatoryLaw.
ARTICLEVI.
ADDITIONALAGREEMENTS
Section6.01 PreparationandMailingoftheProxyStatement.
(a) AspromptlyasreasonablypracticableaftertheexecutionofthisAgreement,Titaniumshallprepareandcause to be filed with the SECa proxystatement relating to the matters to be submitted to the shareholders ofTitanium at the Titanium Shareholders Meeting (such proxy statement, and any amendments or supplementsthereto, the “Proxy Statement”). Subject to Section 5.02, the Titanium Board shall make the Titanium BoardRecommendation to Titanium’s shareholders and shall include such recommendation in the Proxy Statement.EachofTitaniumandSilvershallfurnishall informationconcerningsuchPersonanditsAffiliatestotheother,andprovidesuchotherassistance,asmaybereasonablyrequestedbysuchotherpartytobeincludedthereinandshallotherwiseassistandcooperatewiththeotherinthepreparationoftheProxyStatementandtheresolutionofanycommentstotheProxyStatementreceivedfromtheSEC.TitaniumandSilvershallpromptlynotifytheotherParties and correct any information provided by it for use in the Proxy Statement if and to the extent suchinformationshallhavebecomefalseormisleadinginanymaterialrespect,whetherbymisstatementoromission.TitaniumandSilvershallnotifytheotherpromptlyuponthereceiptofanycommentsfromtheSECandofanyrequestbytheSECforamendmentsorsupplementstotheProxyStatementandshallsupplytheotherwithcopiesofallwrittencorrespondencebetweensuchpartyoranyofitsRepresentatives,ontheonehand,andtheSEC,ontheotherhand,withrespecttotheProxyStatement.TitaniumandSilvershallusetheirreasonablebesteffortstorespond as promptly as reasonably practicable to any comments received from the SEC concerning the ProxyStatement and to resolve such comments with the SEC, and Titanium shall cause the Proxy Statement to bedisseminatedtoitsshareholdersaspromptlyasreasonablypracticableaftertheresolutionofanysuchcomments;provided, that Titaniumshall not be obligated to publicly file a definitive version of, disseminate, or cause thedisseminationof,theProxyStatementtoitsshareholderspriortotheNo-ShopPeriodStartDate.PriortothefilingoftheProxyStatement(oranyamendmentorsupplementthereto)oranydisseminationoftheProxyStatementtotheshareholdersofTitanium,orrespondingtoanycommentsfromtheSECwithrespectthereto,eachofTitaniumand Silver shall provide the other with a reasonable opportunity to review and to propose comments on suchdocumentorresponse,whichthepartyreceivingsuchcommentsshallconsideringoodfaith.
(b) Subject to Section 6.01(a), and notwithstanding any Titanium Board Recommendation Change,TitaniumshalltakeallnecessaryactionsinaccordancewithApplicableLaw,theTitaniumCharter,theTitaniumBy-lawsandtherulesofNYSEtodulycall,givenoticeof,conveneandholdtheTitaniumShareholdersMeetingforthepurposeofobtainingtheTitaniumShareholderApproval,assoonasreasonablypracticableaftertheSECconfirmsthatithasnofurthercommentsontheProxyStatement;provided,thatTitaniumshallnotbeobligatedtocalltheTitaniumShareholdersMeetingpriortotheNo-ShopPeriodStartDate.SubjecttoSection5.02,TitaniumshalluseitsreasonablebesteffortstoseektoobtaintheTitaniumShareholderApproval,unlessaTitaniumBoardRecommendation Change has been effected. Notwithstanding any provision of this Agreement to the contrary,Titanium may, in its sole discretion, adjourn, recess or postpone the Titanium Shareholders Meeting (i) to theextent necessary to ensure that any required information is provided to the shareholders of Titanium within areasonableamountoftimeinadvanceoftheTitaniumShareholdersMeetingor(ii)ifasofthetimeforwhichtheTitaniumShareholdersMeetingisoriginallyscheduled(assetforthintheProxyStatement)thereareinsufficientsharesofTitaniumCommonStockrepresented(eitherinpersonorbyproxy)toconstituteaquorumnecessarytoconduct the business of the Titanium Shareholders Meeting or to allow reasonable additional time to solicitadditionalproxiestotheextentTitaniumreasonablybelievesnecessaryin
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order to obtain the Titanium Shareholder Approval; providedthat in no event shall the Titanium ShareholdersMeetingbeadjourned,recessedorpostponedonmorethantwooccasions,andineachsuchinstancebymorethan15BusinessDaysfromthepreviouslyscheduleddateofsuchmeeting,unlessrequiredbyApplicableLaworwiththeconsentofSilver.
(c) IfpriortotheEffectiveTimeanyeventoccurswithrespecttoSilveroranyofitsSubsidiaries,oranychangeoccurswithrespecttootherinformationsuppliedbySilverforinclusionintheProxyStatement,whichisrequired to be described in an amendment of, or a supplement to, the Proxy Statement, Silver shall promptlynotifyTitaniumofsuchevent,andSilverandTitaniumshallcooperateinthepromptfilingwiththeSECofanynecessaryamendmentorsupplementtotheProxyStatementand,asrequiredbyApplicableLaw,indisseminatingtheinformationcontainedinsuchamendmentorsupplementtoTitanium’sshareholders.NothinginthisSection6.01(c)shalllimittheobligationsofanyPartyunderSection6.01(a).
(d) IfpriortotheEffectiveTimeanyeventoccurswithrespecttoTitaniumoranyofitsSubsidiaries, oranychangeoccurswithrespecttootherinformationsuppliedbyTitaniumforinclusionintheProxyStatement,whichis requiredtobedescribedinanamendmentof, or asupplementto, theProxyStatement, TitaniumshallpromptlynotifySilverofsuchevent,andTitaniumandSilvershallcooperateinthepromptfilingwiththeSECofany necessary amendment or supplement to the Proxy Statement and, as required by Applicable Law, indisseminatingtheinformationcontainedinsuchamendmentorsupplementtoTitanium’sshareholders.NothinginthisSection6.01(d)shalllimittheobligationsofanyPartyunderSection6.01(a).
Section6.02 Access to Information; Confidentiality. Subject to Applicable Law,Titaniumagrees that it shall,and shall cause each of its Subsidiaries to, afford Silver and Silver’s Representatives reasonable access, uponreasonableadvancewrittennoticeandduringnormalbusinesshours,duringtheperiodpriortotheEffectiveTime,toall its properties (other thanfor purposes of invasive testing), books, contracts, commitments, personnel andrecordsand,duringsuchperiod,Titaniumshall,andshallcauseeachofitsSubsidiariesto,furnishpromptlytoSilverallotherinformation (other than information regarding any Acquisition Proposal) concerning its business, properties andpersonnelasmaybereasonablyrequested(ineachcase,inamannersoastonotinterfereinanymaterialrespectwiththe normal business operations of Titanium or its Subsidiaries); provided, however, that all such access shall becoordinated through Titanium or its Representatives in accordance with such procedures as they may reasonablyestablish;andprovided,further,thatTitaniumshallnotberequiredtopermitsuchaccessormakesuchdisclosure,ifsuchdisclosureoraccesswouldreasonablybelikelyto(i) violatethetermsofanyconfidentiality agreement oranyotherContractwithathirdparty,(ii)resultinthelossofanyattorney-clientprivilege,(iii)violateormateriallyimpairthecontractualrightsofitscustomersandtenantsor(iv)violateanyApplicableLaw,itbeingagreedthat,withrespectto subclauses (i), (ii) and (iii), Titanium shall use its reasonable efforts to allow for such access or disclosure in amannerthatdoesnotresultinsuchloss,violationorimpairment,includingbyseekingawaiverfromtherelevantthirdparty.NotwithstandinganythingcontainedinthisAgreementtothecontrary,TitaniumshallnotberequiredtoprovideanyaccessormakeanydisclosuretotheotherpursuanttothisSection6.02totheextentsuchaccessorinformationisreasonablypertinent toalitigationwhereTitaniumoranyofits Affiliates, ontheonehand, andSilver or anyof itsAffiliates, on the other hand, are adverse parties or reasonably likely to become adverse parties. Titanium mayreasonablydesignateanycompetitivelysensitivematerialtobeprovidedtoSilverunderthisSection6.02as“OutsideCounsel Only Material.” Such materials and information contained therein shall be given only to the outside legalcounsel of Silver and will not be disclosed by such outside legal counsel to employees (including in-house legalcounsel), officers, directors or other independent contractors (including accountants and expert witnesses) of Silverunless express permission is obtained in advance from Titanium or its legal counsel. All information exchangedpursuanttothisSection6.02shallbesubjecttotheMutualNon-DisclosureAgreement,datedasofNovember8,2019,betweenTitaniumandSilver(the“ConfidentialityAgreement”).
Section6.03 Indemnification,ExculpationandInsurance.
(a) SurvivingTitaniumandtheReorganizedTitaniumOperatingCompanyanditsSubsidiariesshall (andSilver shall causesuchentities to) honorandfulfill theobligations of Titaniumandits Subsidiaries pursuant toanyindemnificationorothersimilaragreementsofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiaries,ineachcaseasineffectonthedateofthisAgreement,whichagreementsshallcontinueinfullforceandeffectinaccordance with their terms. From and after the Effective Time and ending on the sixth anniversary of theEffective Time, to the fullest extent permitted by Applicable Law(including to the fullest extent authorized orpermittedbyanyamendmentstoorreplacementsoftheMBCA,DGCL,DLLCAorDRULPAadoptedafterthedateofthisAgreementthatincreasetheamounttowhichacorporation,limited
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liabilitycompanyorlimitedpartnershipmayindemnifyitsofficersanddirectors)eachofSilverandReorganizedTitaniumOperatingCompanyagreesthatReorganizedTitaniumOperatingCompanywill(andSilverwillcausesuchentityto)indemnifyandholdharmlesseachindividual whowasorisasofthedateofthisAgreement, orwhobecomespriortotheEffectiveTime,adirector,officeroremployeeofTitanium,TitaniumOPoranyoftheirrespective Subsidiaries or who is as of the date of this Agreement, or who thereafter commences prior to theEffective Time, serving at the request of Titanium, Titanium OP or any of their respective Subsidiaries as adirector, officer or employee of another Person(the “TitaniumIndemnifiedParties”), against all claims, losses,liabilities, damages, judgments, inquiries, fines, amounts paid in settlement and fees, costs and expenses,includingattorneys’feesanddisbursements,incurredinconnectionwithanyactualorthreatenedAction,whethercivil,criminal,administrative,regulatoryorinvestigative,totheextentrelatedtomattersexistingoroccurringoralleged to occur at or prior to the Effective Time (including this Agreement and the transactions and actionscontemplated hereby, including the Transactions), arising out of or pertaining to the fact that TitaniumIndemnifiedPartyisorwasanofficer,directororemployeeofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiariesorisorwasservingattherequestofTitanium,TitaniumOPoranyoftheirrespectiveSubsidiariesasadirector, officer or employeeofanother Person, whether assertedorclaimedprior to, at or after theEffectiveTime. Intheevent of anysuchAction, (x) eachTitaniumIndemnifiedPartywill beentitledtoadvancement ofexpensesincurredinthedefenseofanysuchActionfromReorganizedTitaniumOperatingCompanywithintenBusinessDaysofreceiptbyReorganizedTitaniumOperatingCompanyfromsuchTitaniumIndemnifiedPartyofa request therefor;providedthat any person to whomexpenses are advanced provides an undertaking to repaysuch advances if it is ultimately determined by final adjudication that such person is not entitled toindemnificationand(y)Silver,SilverOP,SurvivingTitanium,SurvivingTitaniumOP,theReorganizedTitaniumOperatingCompanyandtheirrespectiveSubsidiariesshallcooperateinthedefenseofanysuchmatter.Withoutlimiting the foregoing, to the extent the Titanium Charter, Titanium By-laws, Titanium OP Agreement, theOrganizationalDocumentsoftheirrespectiveSubsidiaries,andanyindemnificationorothersimilaragreementsofTitanium, Titanium OP or any of their respective Subsidiaries, in each case as in effect on the date of thisAgreement,providemorefavorabletermsregardingindemnification,advancementofexpensesandexculpationtocurrent or former directors, officers or employees of Titanium, Titanium OP and their respective Subsidiaries,eachofSurvivingTitaniumandReorganizedTitaniumOperatingCompanyherebyagreesto(andSilveragreestocausesuchentityto)effectuateanysuchfavorableprovisionsinaccordancewiththeirterms.
(b) For six (6) years following the Effective Time, Surviving Titanium and the Reorganized TitaniumOperatingCompanyshallmaintainineffecttheprovisionsintheSurvivingTitaniumLimitedLiabilityCompanyAgreement and the Reorganized TitaniumOperating Company Operating Agreement and in their Subsidiaries’respective Organizational Documents to the extent they provide for indemnification, advancement andreimbursement of expenses and exculpation of each TitaniumIndemnified Party, as applicable, with respect tofactsorcircumstancesoccurringatorpriortotheEffectiveTime,onthesame(ormorefavorabletotheTitaniumIndemnifiedParties) basisassetforthinTitaniumCharter, TitaniumBy-laws,TitaniumOPAgreementortheirrespective Subsidiaries’ respective Organizational Documents in effect on the date of this Agreement, to thefullestextentpermittedfromtimetotimeunderApplicableLaw,whichprovisionsshallnotbeamendedexceptasrequiredbyApplicableLaworexcepttomakechangespermittedbyApplicableLawthatwouldenlargethescopeofTitaniumIndemnifiedParties’indemnificationrightsthereunder.
(c) At or prior to the Closing Date, Titanium and/or Titanium OP shall purchase a “tail” directors’ andofficers’ liability insurance policy and fiduciary liability insurance policy for Titanium, Titanium OP and theirrespectivecurrentandformerdirectorsandofficerswhoarecurrentlycoveredbythedirectors’andofficers’andfiduciaryliabilityinsurancecoveragecurrentlymaintainedbyTitaniumand/orTitaniumOP,suchtailtoprovidecoverageforaperiodofsix(6)yearsfromandaftertheEffectiveTimeinanamountnotlessthantheexistingcoverageandtohaveothertermsnotlessfavorabletotheinsuredpersonsthanthedirectors’andofficers’liabilityinsurance and fiduciary liability insurance coverage currently maintained by Titanium or Titanium OP withrespect to claims arising from facts or events that occurred on or before the Effective Time, so long as theaggregatecostforeachyearofsuch“tail”policydoesnotexceed300%oftheaggregateannualpremiummostrecentlypaidbyTitaniumorTitaniumOPpriortothedateofthisAgreement(the“MaximumAmount”).Totheextent such a “tail” policy is not obtained, for a period of six (6) years from and after the Effective Time,Surviving Titanium, Surviving Titanium OP and the Reorganized Titanium Operating Company each shall(andSilvershallcausesuchentitiesto)eithercausetobemaintainedineffectthecurrentpoliciesofdirectors’
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and officers’ liability insurance and fiduciary liability insurance maintained by Titanium, TitaniumOPor theirrespectiveSubsidiariesorprovidesubstitutepoliciesforTitanium,TitaniumOPandtheirrespectivecurrentandformer directors and officers who are currently covered by the directors’ and officers’ and fiduciary liabilityinsurancecoveragecurrentlymaintainedbyTitaniumorTitaniumOPineithercase,ofnotlessthantheexistingcoverageandhavingothertermsnotlessfavorabletotheinsuredpersonsintheaggregatethanthedirectors’andofficers’ liability insurance and fiduciary liability insurance coverage currently maintained by Titanium orTitaniumOPwith respect to claims arising fromfacts or events that occurred on or before the Effective Time(withinsurancecarriershavingatleastan“A”ratingbyA.M.Bestwithrespecttodirectors’andofficers’liabilityinsuranceandfiduciaryliabilityinsurance),exceptthatinnoeventshallSurvivingTitanium,SurvivingTitaniumOPortheReorganizedTitaniumOperatingCompanyberequiredtopaywithrespecttosuchinsurancepoliciesinrespectofanyonepolicyyearmorethantheMaximumAmount,andifSurvivingTitanium,SurvivingTitaniumOPandtheReorganizedTitaniumOperatingCompanyareunableto(andSilverisunabletocausesuchentitiesto)obtaintheinsurancerequiredbythisSection6.03itshallobtainasmuchcomparableinsuranceaspossiblefortheyearswithinsuchsix-yearperiodforanannualpremiumequaltotheMaximumAmount,inrespectofeachpolicy year within such period. Surviving Titanium, Surviving Titanium OP and the Reorganized TitaniumOperating Companyeach shall (and Silver shall cause such entities to) maintain such policies in full force andeffect,andcontinuetohonortheobligationsthereunder.TotheextentpremiumsforanysuchinsuranceunderthisSection6.03arepaidforbySilver,SilverOPorSurvivingTitanium,suchpayorshallbereimbursedasincurredbyReorganizedTitaniumOperatingCompany.
(d) In the event that Silver, Silver OP, Surviving Titanium, Surviving Titanium OP, the ReorganizedTitaniumOperatingCompanyoranyoftheirrespectivesuccessorsorassigns(i)consolidateswithormergesintoanyotherPersonandisnotthecontinuingorsurvivingcorporationorentityofsuchconsolidationormergeror(ii) transfersorconveysall orsubstantiallyall ofitspropertiesandassetstoanyPerson,then,andineachsuchcase, Silver, Silver OP, Surviving Titanium, Surviving Titanium OP or the Reorganized Titanium OperatingCompany,asapplicable,shall(andSilvershallcausesuchentitiesto)causeproperprovisiontobemadesothatthesuccessorsandassignsofSilver,SilverOP,SurvivingTitanium,SurvivingTitaniumOPortheReorganizedTitaniumOperatingCompany,asapplicable,assumetheobligationssetforthinthisSection6.03.
(e) TheprovisionsofthisSection6.03(i)shallsurviveconsummationoftheTransactions,(ii)areintendedto be for the benefit of, and will be enforceable by, each indemnified or insured Persons (including TitaniumIndemnified Parties), his or her heirs and his or her representatives, and (iii) are in addition to, and not insubstitutionfor,anyotherrightstoindemnificationorcontributionthatanysuchPersonmayhavebycontractorotherwise.
Section6.04 Section16Matters.PriortotheEffectiveTime,eachofSilverandTitaniumshalltakeallnecessaryandappropriateactionsthatmayberequired(totheextentpermittedunderApplicableLaw)tocauseanydispositionsof Titanium equity securities (including derivative securities) and acquisition of Silver equity securities (includingderivativesecurities)pursuanttoorresultingfromtheTransactionsbyeachindividualwhoisormaybecomesubjecttothereportingrequirementsofSection16(a)oftheExchangeActtobeexemptunderRule16b-3promulgatedundertheExchangeAct.
Section6.05 Financing.
(a) PriortotheClosing,Titaniumshall,andshallcauseitsSubsidiariesto,useitsreasonablebesteffortstoprovide,atSilver’ssoleexpense,thefollowingcooperationasSilvermayreasonablyrequesttoassistSilverinthearrangement of any third party financing transaction related to the Transactions (provided, that such requestedcooperation does not unreasonably interfere with the ongoing operations of Titanium or its Subsidiaries):(i)participateinareasonablenumberofmeetings,draftingsessions,ratingagencypresentationsandduediligencesessions and assist in preparation of rating agency and other presentations (providedthat Titanium and itsSubsidiariesandtheirrespectiveRepresentativesshallnotberequiredtoparticipateinmorethanoneroadshoworsimilarmeetinginrespectofmarketingthirdpartyfinancing);(ii)furnishSilveranditsfinancingsourceswithsuchfinancialstatements,financialdataandotherinformationregardingTitaniumanditsSubsidiariesofthetypethatwouldberequiredbyRegulationS-XandRegulationS-KpromulgatedundertheSecuritiesActforapublicoffering of securities of Silver if Silver were filing a new registration statement (including for use in Silver’spreparation of pro formafinancial statements, it being understood that Silver shall be responsible for preparinganyproformaadjustments andfinancial statements givingeffect to theTransactions), includingupdates to anysuchinformationasmaybereasonablyrequestedbySilver(including
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so as to remain current pursuant to Rule 3-12 under Regulation S-X) (providedthat to the extent any suchfinancial information is contained in any Titanium SECDocuments, such inclusion shall constitute delivery toSilver and its financing sources hereunder and consent by Titanium and its Subsidiaries to use of suchinformation); (iii) cause Titanium’s independent accountants to prepare and deliver “comfort letters,” dated thedateofeachfinalofferingdocumentusedinconnectionwithanysecuritiesofferingbySilver(withappropriatebring-downcomfortlettersdeliveredoneachclosingdateofanysuchoffering,includinginconnectionwiththeexerciseofanoptiontopurchaseadditionalsecuritiesofSilver), subjecttoandincompliancewithprofessionalstandards;(iv)providecustomaryrepresentationletterstoTitanium’sindependentaccountantsinconnectionwithdeliveryofanysuch“comfortletters;”(v)causeTitanium’sindependentaccountantstoprovideconsenttouseoftheirauditreportsinmaterialsrelatingtosuchfinancinginrespectoftheTransactions,includingSECfilingsandoffering memoranda that include or incorporate Silver’s consolidated financial information and their reportsthereon in accordance with normal customary practice; and (vi) provide customary documentation and otherinformationthatfinancingsourcesreasonablydetermineisnecessaryunderapplicable“knowyourcustomer”andanti-moneylaunderingrulesandregulationstotheextentrequestedatleasttenbusinessdayspriortotheClosing;provided,that(1)noneoftheTitaniumPartiesoranyoftheirrespectiveSubsidiariesshallberequiredtopayanyfeespriortotheClosing(otherthanreasonableoutofpocketexpensespromptlyreimbursedbySilverhereunderondemand)orincuranyotherliabilityinconnectionwithanyfinancinguntiltheoccurrenceoftheClosing,(2)none of the TitaniumParties or any of their respective Subsidiaries shall be required to execute or deliver anydocuments or take any action relating to any financing that is not contingent upon the Closing, (3) noRepresentativeoftheTitaniumPartiesoranyoftheirrespectiveSubsidiariesshallberequiredtotakeanyactionthatwouldreasonablybeexpectedtoresultinorcauseanypersonalliabilityintheirpersonalcapacityonthepartof anyRepresentative that is anindividual or, to theextent not subject to reimbursement or indemnification bySilverhereunder,anyotherliabilityonthepartofanyRepresentative,(4)noactionshallberequiredtotheextentsuchactioncouldreasonablybeexpectedtocauseanyrepresentationor warrantyor covenant containedinthisAgreement to be breached, (5) no action shall be required to the extent that it could reasonably be expected toconflictwiththeOrganizationalDocumentsofanyoftheTitaniumPartiesoranyoftheirrespectiveSubsidiariesoranyApplicableLaworcouldreasonablybeexpectedtoresultinaviolationorbreachof,oradefault(withorwithout notice, lapse of time, or both) under, anycontract to whichanyof the TitaniumParties or anyof theirrespective Subsidiaries is a party or is boundby, (6) would require any of the TitaniumParties or any of theirrespective Subsidiaries or any of their Representatives to provide access to or disclose information that theTitaniumdetermineswouldjeopardizeanyattorney-clientorotherlegalprivilegeofanyTitaniumPartyoranyoftheir respective Subsidiaries and (7) no action shall be required to the extent such action could reasonably beexpectedtocauseanyconditiontotheClosingsetforthinArticleVIItofailtobesatisfiedorotherwisecauseanybreach of this Agreement. Silver hereby acknowledges and agrees that the obtaining of any financing is not aconditiontotheClosing.
(b) Silver shall, andshall causeits Affiliates to, promptlyuponrequest byTitanium,reimburseTitaniumand its Subsidiaries for all out-of-pocket costs and expenses (including attorneys’ fees) incurred in connectionwiththecooperationcontemplatedbythisSection6.05.SilveracknowledgesandagreesthatnoneoftheTitaniumParties or their respective Representatives shall have anyresponsibility for, or incur anyliability to anyPersonunder or in connection with, the arrangement of any financing that Silver may obtain or seek to obtain inconnection with the Transactions (including any equity financing), and that Silver shall indemnify and holdharmless Titanium, its Subsidiaries and their respective Representatives from and against any and all losses,damages, claims, costs or expenses suffered or incurred by them in connection with the arrangement of anyfinancing that Silver may obtain or seek to obtain in connection with the Transactions (including any equityfinancing), any cooperation contemplated by this Section 6.05, and any information utilized in connectiontherewith;provided,however,thattheforegoingindemnityshallnotapplytoanyliabilitiestotheextentresultingfrom (i) a Willful Breach of any representation, warranty or covenant or agreement of Titanium under thisAgreement,(ii)grossnegligenceor(iii)fraud,ineachcaseasdeterminedbyacourtofcompetentjurisdictioninafinal,non-appealablejudgment.
(c) Titaniumwilluseitsreasonablebesteffortstoprovide,anduseitsreasonablebesteffortstocauseitsRepresentativestoprovide,toSilveranditsfinancingsourcessuchinformationasmaybenecessarysothatthefinancing information pertaining to Titanium and its Subsidiaries does not contain any untrue statement of amaterialfactoromittostateamaterialfactnecessarytomakethestatementscontainedtherein,inthelightofthecircumstancesunderwhichsuchstatementsaremade,notmisleading.
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Section6.06 PublicAnnouncements.ThePartiesagreethattheinitialpressreleasetobeissuedwithrespecttothe Transactions, following execution of this Agreement, shall be in the form heretofore agreed to by Silver andTitanium. Silver and Titanium shall consult with each other before issuing, and give each other a reasonableopportunitytoreviewandcommentupon,anypressrelease,submissionorannouncement,orotherpublicstatementswithrespecttotheTransactions,includingbyanySubsidiary,andshallnotissueanysuchpressrelease,submissionorannouncement,ormakeanysuchpublicstatementpriortosuchconsultation,exceptasmayberequiredbyApplicableLaw, court process or the rules and regulations of any national securities exchange or national securities quotationsystem;provided,however, that the foregoing shall not apply to any release or other public statement to the extentcontaining information that is consistent with the joint press release referred to aboveor anyother release or publicstatement previously issuedor madein accordance with thisSection6.06;provided,further, that Titaniumneednotconsult Silver in connection with any press release or public statement to be issued or made in order to effect aTitaniumBoardRecommendationChangemadepursuanttoandinaccordancewithSection5.02,oranypressreleaseor public statement permitted by Section 5.02(g), and neither Silver nor Titanium needs to consult the other inconnection with any public disclosure following a Titanium Board Recommendation Change. NotwithstandinganythingtothecontraryinthisSection6.06,eachofthePartiesmaymakepublicstatementsinresponsetoquestionsbypress,analysts,investors,businesspartnersorthoseattendingindustryconferencesorfinancialanalystconferencecalls, so long as such statements are consistent with previous press releases, public disclosures or public statementsmadejointlybySilverandTitaniumandotherwiseinaccordancewiththisAgreement.
Section6.07 StockExchangeListing.Silvershalluseitsreasonablebesteffortstocausethesharesof(a)SilverCommonStocktobereservedforissuanceuponexchangeorredemptionofNewSilverOPUnitsbyaholderthereofpursuanttotheSilverOPAgreement(calculatedonafully-dilutedbasisandaftergivingeffect totheTransactions),and(b)SilverCommonStocktobereservedforissuanceuponexchangeorredemptionofSilverOPUnitsintowhichmembership interests in the Reorganized Titanium Operating Company are first exchanged pursuant to theReorganizedTitaniumOperatingCompanyOperatingAgreement(calculatedonafully-dilutedbasisandaftergivingeffecttotheTransactions),ineachcasetobeapprovedforlistingontheNYSE,subjecttoofficialnoticeofissuance,prior to the Effective Time. Surviving Titanium shall cause the Titanium Common Stock, the Titanium Series JPreferredStockandtheTitaniumSeriesKPreferredStocktobede-listedfromtheNYSEandde-registeredundertheExchangeActassoonasreasonablypracticablefollowingtheEffectiveTime.
Section 6.08 Redemption of Preferred Interests and Titanium Series J and Series K Preferred Stock. On theClosingDateimmediatelyfollowingtheSilverOPPreferredContributionandtheTitaniumOPPaymentandpriortotheEffectiveTime,(a)TitaniumshallissueanoticeofredemptionofeachoftheTitaniumSeriesJPreferredStockandthe Titanium Series K Preferred Stock compliant with the Titanium Charter and otherwise in form and substancereasonably satisfactory to Silver and (b) Titanium shall deposit, or cause to be deposited, with an escrow agent(reasonablyacceptabletoSilver)fortheTitaniumSeriesJPreferredStockandtheTitaniumSeriesKPreferredStock,cash in immediately available funds in the amount of $25.00 (the “Titanium Series J and Series K Preferred StockLiquidationPreference”)plusallaccumulatedandunpaiddividendsto,butnotincluding,theredemptiondatesetforthinsuchnoticeofredemption,pershareofTitaniumSeriesJPreferredStockandTitaniumSeriesKPreferredStock,respectively(collectively,the“TitaniumSeriesJandSeriesKPreferredStockRedemptionAmount”).FollowingtheClosing, Surviving Titanium shall consummate the redemption of the Titanium Series J Preferred Stock and theTitaniumSeriesKPreferredStockinaccordancewiththeTitaniumCharterandthenoticesofredemptionissuedunderclause(a)above.
Section6.09 TaxMatters.
(a) NotwithstandinganythingtothecontrarysetforthinthisAgreement, nothinginthisAgreementshallprohibitTitaniumoranyofitsSubsidiariesfromtakinganyaction,atanytimeorfromtimetotime,(i)thatinthereasonablejudgmentofTitaniumBoard,uponadviceofcounseltoTitanium,isreasonablynecessaryforTitaniumtomaintainitsqualificationasaREITundertheCodeforanyperiodorportionthereofendingonorpriortotheEffective Time or to avoid incurring entity level income or excise Taxes under the Code, including makingdividend or other distributions to shareholders of Titaniumin accordance with this Agreement or otherwise, or(ii)asTitaniumorTitaniumOPdeterminesreasonablyandingoodfaithtobenecessarytobeincomplianceatalltimes with all of its obligations under any Titanium Tax Protection Agreement and avoid liability for anyindemnificationorotherpaymentunderanyTitaniumTaxProtectionAgreement.IftheTitanium
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Boarddeterminesthat it is reasonablynecessarytodeclareadividendormakeadistributiontoshareholders ofTitaniuminordertomaintainitsqualificationasaREIToravoidincurringentitylevelincomeorexciseTaxesundertheCode,itshallnotifySilverassoonasreasonablypracticablepriortosuchdeclaration.
(b) NotwithstandinganythingtothecontrarysetforthinthisAgreement, nothinginthisAgreementshallprohibitSilveroranyofitsSubsidiariesfromtakinganyaction,atanytimeorfromtimetotime,(i)thatinthereasonablejudgmentoftheSilverBoard,uponadviceofcounseltoSilver,isreasonablynecessaryforSilvertomaintain its qualification as a REITunder the Codefor anyperiodor portion thereof endingonor prior to theEffective Time or to avoid incurring entity level income or excise Taxes under the Code, including makingdividendorotherdistributionstostockholdersofSilverinaccordancewiththisAgreementorotherwise,or(ii)asSilverorSilverOPdeterminesreasonablyandingoodfaithtobenecessarytobeincomplianceatalltimeswithall of its obligations under any Silver Tax Protection Agreement and avoid liability for any indemnification orother payment under any Silver Tax Protection Agreement. If the Silver Board determines that it is reasonablynecessary to declare a dividend or make a distribution to stockholders of Silver in order to maintain itsqualification as a REIT or avoid incurring entity level income or excise Taxes under the Code, it shall notifyTitaniumassoonasreasonablypracticablepriortosuchdeclaration.
(c) All transfer, stamp, documentary, sales, use, registration, value-added and other similar Taxes(including all applicable real estate transfer Taxes) incurred in connection with this Agreement and theTransactions (“Transfer Taxes”) will be borne by Reorganized Titanium Operating Company. Silver andReorganized Titanium Operating Company shall cooperate to file or cause to be filed in a timely manner allnecessarydocuments(including,butnotlimitedto,allTaxReturns)withrespecttosuchTransferTaxes,andshallcooperateinattemptingtominimizetheamountofTransferTaxes.
(d) Titanium shall (i) use its reasonable best efforts to obtain the opinion of counsel described inSection 7.02(e)and (ii) deliver to Honigman LLP (or such other counsel rendering the opinion referenced inSection 7.02(e)) an officer’s certificate, dated as of the Closing Date, signed by an officer of Titanium andcontainingrepresentationsofTitaniumasshallbereasonablynecessaryorappropriatetoenableHonigmanLLP(orsuchothercounselrenderingsuchopinion)torendertheopiniondescribedinSection7.02(e)ontheClosingDate.
(e) ForU.S.federalincometaxpurposesthePartiesshalltreat(i)theMergerasataxablesalebyTitaniumof all of Titanium’s assets to Silver Merger Sub 1 in exchange for the Titanium Common Stock MergerConsideration,theTitaniumSeriesBMergerConsideration,theTitaniumSeriesJandSeriesKPreferredStockRedemptionAmountandtheassumptionofall ofTitanium’sotherliabilities (includingTitanium’sshareoftheTitaniumOPliabilities, as determinedunder the applicable U.S. federal incometax regulations), followedbyadistribution of such consideration to the holders of equity interests in Titanium in liquidation pursuant toSection331andSection562oftheCode,andthisAgreementshallconstitutea“planofliquidation”ofTitaniumforU.S.federalincometaxpurposes,(ii)thePartnershipMergeras(A)withrespecttoTitaniumOPUnitsthatareconverted into the right to receive the Cash Partnership Merger Consideration or Titanium Family PartnershipMerger Consideration, a taxable purchase of Titanium OP Units in exchange for the Cash Partnership MergerConsideration and (B) with respect to Titanium OP Units that are converted into the right to the OP UnitPartnershipMergerConsideration,acontributionofTitaniumOPUnitstoSilverOPpursuanttoSection721oftheCode;and(iii)theLLCConversioninaccordancewithRevenueRuling95-37,1995-1C.B.130andRevenueRuling84-52,1984-1C.B.157.
Section6.10 TitaniumOPApproval. Titanium, as general partner of TitaniumOP,immediately followingtheexecutionofthisAgreement,shalldelivertoSilvertheTitaniumOPApprovalfromtheholdersofTitaniumOPUnitsand shall not take any action to cause the Titanium OP Approval to be modified or revoked prior to the validtermination of this Agreement. Prior to the LLC Conversion Effective Time, each of Titanium, Titanium OP, andSilver OP shall, and shall cause their respective Subsidiaries to, take all actions necessary to approve the LLCConversion.
Section6.11 Anti-TakeoverLaws.TheTitaniumParties, theTitaniumBoard(oracommitteethereof)andtheSilverPartiesshall(a)takeallreasonableactionswithintheirpowertoensurethatno“anti-takeover”statuteorsimilarstatuteorregulationisorbecomesapplicabletotheTransactionsand(b)ifany“anti-takeover”statuteor
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similarstatuteorregulationbecomesapplicabletotheTransactions,takeallreasonableactionswithintheirpowertoensure that the Transactions may be consummated as promptly as practicable on the terms contemplated by thisAgreementandotherwisetominimizetheeffectofsuchstatuteorregulationontheTransactions.
Section6.12 TransactionLitigation.
(a) PriortotheEffectiveTime,eachPartyshallprovidetheotherPartieswithpromptwrittennoticeofallTransactionLitigation(includingbyprovidingcopiesofall pleadingswithrespectthereto)andkeepsuchotherParties reasonably informed with respect to the status thereof. Silver shall keep Titanium informed on areasonablypromptbasisregardinganySilverTransactionLitigation.Silvershallcontrolthedefense,settlementorprosecutionofanySilverTransactionLitigation,andSilvershallconsultwithcounseltoTitaniumwithrespecttothe defense, settlement and prosecution of any Silver Transaction Litigation and shall consider in good faithTitanium’sadvicewithrespecttotheSilverTransactionLitigation.
(b) Titaniumshall(i)givetheSilvertheopportunitytoparticipateinthedefense,settlementorprosecutionof any Titanium Transaction Litigation and (ii) consult Silver with respect to the defense, settlement andprosecution of any Titanium Transaction Litigation. Titanium may not compromise, settle or come to anarrangement regarding, or agree to compromise, settle or come to an arrangement regarding, any TitaniumTransaction Litigation unless Silver has consented thereto in writing (which consent shall not be unreasonablywithheld,conditionedordelayed);providedthat,notwithstandinganythinghereintothecontrary,priortoreceiptof the Titanium Shareholder Approval, no consent of any Silver Party shall be required for any settlement ofTransaction Litigation that relates to an Acquisition Proposal or Acquisition Transaction to the extent suchsettlement does not provide for the payment of funds by Titanium or purport to modify the Agreement or therightsoftheSilverPartieshereunder.ForpurposesofthisSection6.12,“participate”meansthatSilver(i)willbekept apprised of proposed strategy and other significant decisions with respect to the Titanium TransactionLitigationbythePartyreceivingnoticeofTransactionLitigation(totheextentthattheattorney-client privilegebetweensuchPartyanditscounselandtheworkproductdoctrinearenotunderminedorotherwiseaffected),and(ii)mayoffercommentsorsuggestionswithrespecttosuchTransactionLitigationbutwillnotbeaffordedanydecision-making power or other authority over such Transaction Litigation, except for the settlement orcompromiseconsentsetforthabove.
Section6.13 SpecifiedConsents.
(a) Section6.13of the Titanium Disclosure Letter sets forth a list of certain consents and waivers withrespecttotheTransactionsthatmayberequiredfromcertainlendersunderloandocumentsofTitaniumoranyofitsSubsidiaries(the“LoanConsents”)andfromcertainlessorsundergroundleasesofTitaniumoritsSubsidiaries(the“GroundLeaseConsents”)orjointventurepartnersunderjointventureorpartnershipdocumentsofTitaniumoranyofitsSubsidiaries(the“JVConsents”,andtogetherwiththeLoanConsentsandGroundLeaseConsents,the“SpecifiedConsents”).Titaniumshall,andshallcauseitsSubsidiariesto,usereasonablebesteffortstoobtaineachoftheSpecifiedConsentspromptlyafterthedateofthisAgreement,exceptasmayotherwisebeagreedtobetween Silver and Titanium. Silver shall cooperate and assist Titanium in connection with soliciting andobtaininganySpecifiedConsents,includingthepreparationanddeliveryofanyinformationrelatingtoSilverorany of its Affiliates and all other information required under the applicable loan, ground lease or joint venturedocuments and as may be reasonably requested by any such joint venture partner, lessor, lender or any loanserviceronbehalfofanylender.TitaniumshallusereasonablebesteffortstokeepSilverapprisedofthecontentandstatusofanycommunicationswith,andcommunicationsfrom,anylessor,jointventurepartner,lenderoranyloanservicerwithrespecttotheSpecifiedConsents.Withoutlimitingtheforegoing,Titaniumshall(i)giveSilvera reasonable opportunity (and in any event no less than twenty-four (24) hours) to reviewand comment on allmaterialmaterialsordocumentswithrespecttotheSpecifiedConsentsandTitaniumshallconsiderthereasonablecommentsofSilverthereoningoodfaith,and(ii)usereasonablebesteffortstokeepSilverapprisedofand,totheextent reasonably practicable, provide Representatives of Silver reasonable opportunity to participate in, anymaterialmeetingorscheduleddiscussionwithanylenderoranyloanservicerwithrespecttotheLoanConsents.All out-of-pocket consent/assumption fees and expenses, including out-of-pocket legal fees for joint venturepartners, lessors, lenders and/or servicers (to the extent such fees and expenses are payable pursuant to theapplicablejointventure,groundleaseorloandocument),incurred
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inconnectionwithseekingtheSpecifiedConsents,shallbebornebyTitaniumOPoritsSubsidiaries.TitaniumisauthorizedforitselfandonbehalfofitsSubsidiariestoenterintoamendmentsormodificationsoftheapplicableloan, groundlease or joint venture documents as Titaniumdeemsnecessary to obtain such Specified Consents,subjecttothetermsofSection6.13(b).
(b) With respect to the Loan Consents, without the prior consent of Silver (which consent shall not beunreasonably withheld, conditioned or delayed): (i) neither Titaniumnor its Representatives on its behalf shallagree to amend, modify, supplement or waive the terms and conditions of the outstanding indebtedness orguarantees thereof in order to change any of the parties subject to the obligations of such indebtedness orguaranteesofTitaniumorits Subsidiaries (other thanasaresult of theTransactions) ormateriallyincreaseanyrecourse obligations of a Subsidiary or the guarantor or replacement guarantor following the Closing, and(ii) neither Titanium nor its Subsidiaries shall make any material financial or other covenant modifications orestablish any material reserves, cash sweep requirements or cash traps in connection with obtaining the LoanConsents. With respect to any JV Consents and Ground Lease Consents, without the prior consent of Silver(which consent shall not be unreasonably withheld, conditioned or delayed), (x) neither Titanium nor itsRepresentativesonitsbehalfshallagreetoamend,modify,supplementorwaivethetermsandconditionsoftheapplicablegroundleaseorjointventuredocumentsinamannerthatismaterial andadversetoTitaniumanditsSubsidiariesorSilveranditsSubsidiaries, and(y)neitherTitaniumnoritsSubsidiariesshallmakeanymaterialpaymentsotherthanthosewhichareregularlyscheduledorrequiredorarelegaloradministrativefees.
(c) Inthe event anyLoanConsent is not obtained prior to the date that is 100days after the date of thisAgreement,TitaniumandTitaniumOPshall,andshallcausetheirSubsidiariesto,usereasonablebesteffortstoattempt to secure a binding commitment or other similar documentation reasonably acceptable to Silver thatwouldallowTitaniumoritsSubsidiariesto,attheClosing,prepay,ordefeasetheapplicablefinancingandreplacesuchfinancingoncommerciallyreasonable,marketterms,whichshallbereasonablyacceptabletoSilver.Intheevent that any Loan Consent is not obtained and Titaniumor its Subsidiaries have not prepaid or defeased theapplicablefinancingforwhichsuchLoanConsentwasrequiredtobeobtained(orobtainedabindingcommitmentor other similar documentation reasonably acceptable to Silver from a lender to effect such prepayment ordefeasanceontheClosingDate)within130daysafterthedateofthisAgreementorbytheTitaniumShareholdersMeeting(whicheverisearlier),Silvershallhavetheright,butnottheobligation,toprovidereplacementfinancingtotheapplicableSubsidiaryofTitaniumoncommerciallyreasonablemarketeconomictermswithrespecttotheloanforwhichtheconsenthasnotbeenobtainedandwhichhasnototherwisebeenrefinancedbyTitaniumoritsSubsidiaries (or for which such a binding commitment or other documentation has not been obtained). AnyreplacementfinancingprovidedbySilvershallbeinanamountsufficientfortheSubsidiaryofTitaniumtoprepayordefeasesuchoriginalloanandshallbeonsubstantiallysimilarloandocumentsaswereexecutedinconnectionwith the borrowing of the original loan (including mortgages, indemnities, guaranties, pledges, other collateralagreements,opinionsandothercustomaryloandeliverablesanddiligencematerials);provided,however,thatanyreplacement financing made by Silver or its Subsidiaries with respect to an unsecured loan may be made on asecuredbasis,subjecttothenextsentence.TitaniumandTitaniumOPshall,andshallcausetheirSubsidiariesto,reasonably cooperate with Silver to enable Silver to provide any such applicable replacement financing on asecured basis, including by facilitating the creation and perfection of Liens (including mortgages and equitypledges) required by Silver; provided,however, that notwithstanding anything herein to the contrary, TitaniumanditsSubsidiarieswillnotberequiredtoagreetoanysecuredloanorfacilitateanyLiensthatwouldviolatetheterms of any Indebtedness (other than Indebtedness that is being repaid) or joint venture agreement to whichTitaniumoritsSubsidiariesareaparty.
Section6.14 CertainAgreements.PriortotheClosing,TitaniumandTitaniumOPshall(a)causetheagreementsor amendments set forth in Schedule 6.14(a)to be adopted and approved by the parties thereto and (b) cause theagreementssetforthinSchedule6.14(b)tobeterminated,ineachcaseeffectiveimmediatelyfollowingthePartnershipMerger Effective Time. Titanium and Titanium OP shall deliver to the Silver Parties duly executed copies of suchagreements or amendments and evidence of such terminations, in substantially the forms included in the exhibits tosuch Schedules. At the Closing, the Parties shall cause Reorganized Titanium Operating Company to deliver anexecutedcounterparttothejoinderstotheSilverOPAgreementdeliveredtoSilverOPpursuanttoSection2.02(c).
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ARTICLEVII.
CONDITIONSPRECEDENT
Section7.01 ConditionstoEachParty’sObligationtoEffecttheTransactions.TherespectiveobligationofeachPartytoeffecttheClosingissubjecttothesatisfactionorwaiver(exceptwithrespecttoSection7.01(a)andSection7.01(b),whichshallnotbewaivable)onorpriortotheClosingDateofthefollowingconditions:
(a) TitaniumShareholderApproval.TheTitaniumShareholderApprovalshallhavebeenobtained.
(b) Titanium OP Approval. The Titanium OP Approval shall have been obtained and not rescinded,modifiedorwithdrawn.
(c) LegalRestraints.NoApplicableLawandnojudgment,preliminary,temporaryorpermanent,orotherlegal restraint or prohibition and no binding Order shall be in effect, or imminently threatened by anyGovernmentalEntityofcompetentjurisdiction,whichprohibits,makesillegal,enjoins,orotherwisepreventstheconsummationoftheTransactions.
(d) Listing.ThesharesofSilverCommonStocktobeissuedasdescribedinSection6.07shallhavebeenapprovedforlistingontheNYSE,subjecttoofficialnoticeofissuance.
Section7.02 Conditions to Obligation of the Silver Parties. The obligations of the Silver Parties to effect theClosingarefurthersubjecttothefollowingconditions:
(a) Representations and Warranties. (i) The representations and warranties of the Titanium Partiescontained in Section 3.01 [Qualification, Organization, Subsidiaries], Section 3.02 [Authority; Execution andDelivery; Enforceability],Section3.03(b),(d)and (e)[Capital Structure] andSection3.18[Brokers’ Fees andExpenses]shallbetrueandcorrectinallmaterialrespectsatandasoftheClosingDateasifmadeatandasofsuchtime(excepttotheextentexpresslymadeasofanearlierdate,inwhichcaseasofsuchearlierdate),(ii)therepresentationsandwarrantiesoftheTitaniumPartiescontainedinSection3.06(a)[Absence of Certain Changes]shallbetrueandcorrectinallrespectsatandasoftheClosingDateasifmadeatandasofsuchtime,(iii) therepresentations and warranties of the Titanium Parties contained inSection3.03(a)and (c)[Capital Structure]shallbetrueandcorrectinallrespectsatandasoftheClosingDateasifmadeatandasofsuchtime(excepttothe extent expressly made as of an earlier date, in which case as of such earlier date) except for de minimisinaccuracies,and(iv)allotherrepresentationsandwarrantiesoftheTitaniumPartiescontainedinArticleIIIshallbetrueandcorrectatandasoftheClosingDateasifmadeatandasofsuchtime(excepttotheextentexpresslymadeasofanearlierdate,inwhichcaseasofsuchearlierdate),exceptwherethefailureofsuchrepresentationsand warranties to be true and correct (without giving effect to any limitation as to “materiality” or “TitaniumMaterialAdverseEffect”setforththerein)wouldnotreasonablybeexpectedtohaveaTitaniumMaterialAdverseEffect.
(b) PerformanceofObligationsoftheTitaniumParties. TheTitaniumPartiesshall haveperformedinallmaterialrespectsallcovenantssetforthinthisAgreementrequiredtobeperformedbythemunderthisAgreementatorpriortotheClosingDate.
(c) NoTitaniumMaterialAdverseEffect.SincethedateofthisAgreement,thereshallnothaveoccurredandbecontinuinganyTitaniumMaterialAdverseEffect.
(d) TitaniumCertificate.TitaniumshallhavedeliveredtoSilveracertificate,datedasoftheClosingDateand signed by a senior officer, confirming that the conditions set forth in Section7.02(a),Section7.02(b)andSection7.02(c)havebeensatisfied.
(e) REITOpinion. Silver shall have received a tax opinion of Honigman LLP, tax counsel to Titanium(or,ifHonigmanLLPisunableorunwillingtorendersuchopinion,Kirkland&EllisLLPoranothernationallyrecognizedREITcounselasmaybereasonablyacceptabletoSilver),datedasoftheClosingDateandinformandsubstanceassetforthinExhibitD,attachedhereto(andinthecaseofsuchothercounselrenderingsuchopinion,intheformofsuchothercounsel’sstandardREITopinionthatisreasonablyacceptabletoSilver)andwithsuchchangesasaremutuallyagreeabletoSilverandTitanium,suchagreementnottobeunreasonablywithheld,totheeffect that, subject to customary exceptions, assumptions and qualifications, at all times since its taxable yearendedDecember31,2012andthroughandincludingitstaxableyearthatendsattheEffectiveTime,Titaniumhasbeenorganizedandoperatedinconformitywiththerequirementsforqualificationand
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taxationasaREITundertheCodeanditsactualmethodofoperationhasenabledTitaniumtomeet,throughtheEffective Time, the requirements for qualification and taxation as REIT under the Code. In rendering suchopinion,HonigmanLLP(orsuchothercounselrenderingsuchopinion)mayrelyuponcustomaryrepresentationscontainedinanofficer’scertificateexecutedbyTitaniumandprovidedpursuanttoSection6.09(d).
Section7.03 ConditionstoObligationsoftheTitaniumParties.TheobligationsoftheTitaniumPartiestoeffecttheClosingarefurthersubjecttothefollowingconditions:
(a) RepresentationsandWarranties.(i)TherepresentationsandwarrantiesoftheSilverPartiescontainedinSection 4.01 [Qualification, Organization, Subsidiaries], Section 4.02 [Authority; Execution and Delivery;Enforceability],Section4.03[Silver OP Units]andSection4.10[Brokers’ Fees and Expenses]shallbetrueandcorrectinallmaterialrespectsatandasoftheClosingDateasifmadeatandasofsuchtime(excepttotheextentexpresslymadeasofanearlierdate,inwhichcaseasofsuchearlierdate),and(ii)allotherrepresentationsandwarrantiesoftheSilverPartiesinthisAgreementshallbetrueandcorrectatandasoftheClosingDateasifmadeatandasofsuchtime(excepttotheextentexpresslymadeasofanearlierdate,inwhichcaseasofsuchearlierdate),exceptwherethefailureofsuchrepresentationsandwarrantiestobetrueandcorrect(withoutgivingeffecttoanylimitationasto“materiality”or“SilverMaterialAdverseEffect”setforththerein),wouldnotreasonablybeexpectedtohaveaSilverMaterialAdverseEffect.
(b) PerformanceofObligationsoftheSilverParties.TheSilverPartiesshallhaveperformedinallmaterialrespectsall covenantssetforthinthisAgreementrequiredtobeperformedbythemunderthisAgreementat orpriortotheClosingDate.
(c) SilverCertificate.SilvershallhavedeliveredtoTitaniumacertificate,datedasoftheClosingDateandsigned by a senior officer, confirming that the conditions set forth inSection7.03(a)and Section7.03(b)havebeensatisfied.
ARTICLEVIII.
TERMINATION,AMENDMENTANDWAIVER
Section8.01 Termination.ThisAgreementmaybeterminatedatanytimepriortotheEffectiveTime,whetherbeforeorafterreceiptofTitaniumShareholderApprovaland/ortheTitaniumOPApproval,onlyasfollows:
(a) bymutualwrittenconsentofTitaniumandSilver;
(b) byeitherTitaniumorSilver:
(i) iftheTransactionsarenotconsummatedonorbeforeFebruary9,2021(the“EndDate”);provided,however,thattherighttoterminatethisAgreementunderthisSection8.01(b)(i)shallnotbeavailabletoanyPartywhosefailuretofulfillanyobligationunderthisAgreement(whichfailureconstitutesabreachbysuchParty of this Agreement) has been the primary cause of, or primarily resulted in, the failure of theTransactions to be consummated on or before such date (it being understood that the Titanium Parties,collectively, and the Silver Parties, collectively, shall each be deemed a single Party for purposes of theforegoingproviso);
(ii) ifanyGovernmentalEntityofcompetentauthorityissuesafinalnonappealableOrderorenactsanApplicableLawthatprohibits,makesillegal,enjoins,orotherwiserestrictsorpreventstheconsummationoftheTransactions;provided,however,thattherighttoterminatethisAgreementunderthisSection8.01(b)(ii)shallnotbeavailabletoanyPartywhosefailuretofulfillanyobligationunderthisAgreement(whichfailureconstitutesabreachbysuchPartyofthisAgreement)hasbeentheprimarycauseof,orprimarilyresultedin,theissuanceofsuchOrderortheenactmentofsuchApplicableLaw(itbeingunderstoodthattheTitaniumParties,collectively,andtheSilverParties,collectively,shalleachbedeemedasinglePartyforpurposesoftheforegoingproviso);or
(iii) iftheTitaniumShareholderApprovalshallnothavebeenobtainedfollowingthecompletionofadulyconvenedTitaniumShareholdersMeetingoranyadjournmentorpostponementthereof;provided,
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however, that any termination of this Agreement pursuant to this Section 8.01(b)(iii)shall be deemed aterminationofthisAgreementpursuanttoSection8.01(f)forpurposesof Section8.03(b)if,atthetimeofsuch termination under this Section 8.01(b)(iii), Silver would have been permitted to terminate thisAgreementpursuanttoSection8.01(f);
(c) by Titanium, if any of the Silver Parties has breached any representation, warranty or covenantcontainedinthisAgreement,orifanyrepresentationorwarrantyofanyoftheSilverPartieshasbecomeuntrue,ineachcase,suchthat,ifsuchbreachorfailuretobetrueoccursorcontinuesontheClosingDate,theconditionssetforthinSection7.03(a)orSection7.03(b),asthecasemaybe,wouldnotbesatisfiedasoftheClosingDate;provided,however, that Titaniummaynotterminate this AgreementpursuanttothisSection8.01(c)unlessanysuchbreachorfailuretobetrue(x)isnotcapableofbeingcuredinamannersufficienttoallowsatisfactionoftheconditionssetforthinSection7.03(a)orSection7.03(b)priortotheEndDateor(y)hasnotbeencuredpriortotheearlierof(i)45daysafterwrittennoticebyTitaniumtoSilverinformingSilverofsuchbreachorfailuretobetrueand(ii)theEndDate;andprovided,further,thatTitaniummaynotterminatethisAgreementpursuanttothisSection 8.01(c)if any of the Titanium Parties is then in breach of any representation, warranty or covenantcontained in this Agreement, or if any representation or warranty of any of the Titanium Parties has becomeuntrue, ineachcase, suchthat, if suchbreachorfailuretobetrueoccursor continuesontheClosingDate, theconditions set forth inSection7.02(a)or Section7.02(b), as the case may be, would not be satisfied as of theClosingDate;
(d) byTitaniumprior toreceipt of theTitaniumShareholder Approval, in order toenter intoa definitivewrittenagreementprovidingforaSuperiorProposalinaccordancewithSection5.02(e);
(e) by Silver, if any of the Titanium Parties has breached any representation, warranty or covenantcontainedinthis Agreement (other thanthecovenantscontainedinSection5.02(b)), or if anyrepresentationorwarrantyofanyoftheTitaniumPartieshasbecomeuntrue,ineachcase,suchthat,ifsuchbreachorfailuretobetrueoccursorcontinuesontheClosingDate,theconditionssetforthinSection7.02(a)orSection7.02(b),asthecasemaybe,wouldnotbesatisfiedasoftheClosingDate;provided,however,thatSilvermaynotterminatethisAgreementpursuanttothisSection8.01(e)unlessanysuchbreachorfailuretobetrue(x)isnotcapableofbeingcuredinamannersufficienttoallowsatisfactionoftheconditionssetforthinSection7.02(a)orSection7.02(b)prior to theEndDate or (y) has not beencuredwithinprior totheearlier of (i) 45daysafter writtennotice bySilvertoTitaniuminformingTitaniumofsuchbreachorfailuretobetrueand(ii) theEndDate; andprovided,further,thatSilvermaynotterminatethisAgreementpursuanttothisSection8.01(e)ifanyoftheSilverPartiesistheninbreachofanyrepresentation,warrantyorcovenantcontainedinthisAgreement,orifanyrepresentationorwarrantyofanyoftheSilverPartieshasbecomeuntrue,ineachcase,suchthat,ifsuchbreachorfailuretobetrueoccursorcontinuesontheClosingDate,theconditionssetforthinSection7.03(a)orSection7.03(b),asthecasemaybe,wouldnotbesatisfiedasoftheClosingDate;or
(f) bySilver,priortoreceiptoftheTitaniumShareholderApproval,(i)intheeventthataTitaniumBoardRecommendationChangeshallhaveoccurred,or(ii)uponaWillfulBreachofSection5.02(b)byTitanium.
Section8.02 EffectofTermination.IntheeventofterminationofthisAgreementbyeitherSilverorTitaniumasprovided in Section 8.01, this Agreement shall forthwith become void and have no effect, without any liability orobligation on the part of any Titanium Party or any Silver Party, other than the last sentence of Section 6.02, thereimbursement andindemnification obligations of Silver pursuant toSection6.05(b),thisSection8.02,Section8.03andArticleIX, which provisions shall survive such termination, provided,however, that, no such termination shallrelieveanyPartyfromanyliabilityordamagesarisingoutofitsfraudorWillfulBreachofthisAgreement.
Section8.03 FeesandExpenses.
(a) Except as specifically provided for herein, all fees and expenses incurred in connection with theTransactions shall be paid by the Party incurring such fees or expenses, whether or not such transactions areconsummated.
(b) TitaniumOPshallpaytoSilvertheTerminationFeeif:
(i) Titanium terminates this Agreement pursuant to Section 8.01(d)or Silver terminates thisAgreementpursuanttoSection8.01(f);or
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(ii) (A)anAcquisitionProposal shall havebeenmadeto Titaniumandnot withdrawnor shall havebeen made directly to the shareholders of Titanium generally and not withdrawn; (B) thereafter thisAgreementisterminatedpursuanttoSection8.01(b)(i),Section8.01(b)(iii)orSection8.01(e)(withrespectto a breach of any covenant, agreement or other obligation of the Titanium Parties set forth inArticleI,ArticleII,ArticleVor ArticleVIof this Agreement) and (C) within 12 months of such termination suchAcquisition Transaction is consummated by Titanium or Titanium enters into a definitive agreementproviding for an Acquisition Transaction and such Acquisition Transaction is thereafter consummated byTitanium, provided, however, that for purposes of this Section 8.03(b)(ii), the references to 15% in thedefinitionof“AcquisitionTransaction”shallbedeemedtobereferencesto50%.
AnyTerminationFeedueunderthisSection8.03(b)shall bepaidbywiretransferofsame-dayfunds(x)inthecaseofclause(i)above,ontheBusinessDayimmediatelyfollowingthedateofterminationofthisAgreement in the case of termination pursuant toSection8.01(f)(or prior to or substantially concurrentlywithsuchtermination, inthecaseofterminationpursuanttoSection8.01(d))and(y)inthecaseofclause(ii)above,onthedateofconsummationoftheAcquisitionTransactionreferredtoinclause(ii)(C)above.
(c) TitaniumacknowledgesandagreesthattheagreementscontainedinSection8.03(b)areanintegralpartoftheTransactionsandthat,withouttheseagreements,SilverwouldnotenterintothisAgreement.Accordingly,if Titanium fails promptly to pay the amount due pursuant to Section 8.03(b), and, in order to obtain suchpayment,SilvercommencesanActionthatresultsinajudgmentinitsfavorforsuchpayment,TitaniumshallpaytoSilveritscostsandexpenses(includingattorneys’feesandexpenses)inconnectionwithsuchAction,togetherwithinterestontheamountofsuchpaymentfromthedatesuchpaymentwasrequiredtobemadeuntilthedateofpaymentatarateperannumequaltotheprimeinterestratepublishedinTheWallStreetJournalonthedatesuchinterest begins accruing. In noevent shall Titaniumbe obligated to paythe Termination Fee onmore than oneoccasion.
(d) NotwithstandinganythingtothecontraryinthisAgreement,intheeventthatTitaniumOPisobligatedto pay Silver the Termination Fee pursuant to Section 8.03(b), Titanium OP shall pay to Silver from theTerminationFeeanamount equal to thelesser of (i) the TerminationFee(the“ApplicableBaseAmount”)and(ii)themaximumamount,ifany,thatcanbepaidtoSilverwithoutcausingittofailtomeettherequirementsofSections856(c)(2)and(3)oftheCode(the“REITRequirements”)forsuchyeardeterminedasif(A)thepaymentofsuchamountdidnotconstituteQualifyingIncome,and(B)Silverhas0.5%ofitsgrossincomefromunknownsourcesduringsuchyearwhichwasnotQualifyingIncome(inadditiontoanyknownoranticipatedincomeofSilver which was not Qualifying Income), in each case as determined by independent accountants to Silver.Notwithstanding the foregoing, in the event Silver receives TaxGuidance providing that Silver’s receipt of theApplicable Base Amount would either constitute Qualifying Income or would be excluded from gross incomewithin the meaning of the REITRequirements, the amount of the Termination Fee payable by TitaniumOPtoSilvershallbeanamountequaltotheApplicableBaseAmountandTitaniumOPshall,uponreceivingnoticethatSilver has received the Tax Guidance, pay to Silver the unpaid Applicable Base Amount within five BusinessDays.IntheeventthatSilverisnotabletoreceivethefullApplicableBaseAmountduetotheabovelimitations,TitaniumOPshallplacetheunpaidamountinescrowbywiretransferwithinthreeBusinessDaysofterminationandshallnotreleaseanyportionthereoftoSilverunlessanduntilSilverreceiveseitheroneoracombinationofthe following once or more often: (x) a letter from Silver’s independent accountants indicating the maximumamount that can be paid at that time to Silver without causing Silver to fail to meet the REIT Requirements(calculatedasdescribedabove)or(y)theTaxGuidance,ineitherofwhicheventsTitaniumOPshallpaytoSilverthelesseroftheunpaidApplicableBaseAmountorthemaximumamountstatedintheletterreferredtoinclause(x)abovewithinfiveBusinessDaysafterTitaniumOPhasbeennotifiedthereof.AnyportionoftheTerminationFee that remains unpaid as of December 31 following the date which is three years from the date of thisAgreement shall bereleasedfromescrowandrevert to TitaniumOP.TitaniumandTitaniumOPshall not bearany cost of or have any liability resulting from any escrow arrangement established pursuant to this Section8.03(d),andSilvershallfullyindemnifyTitaniumandTitaniumOPandholdTitaniumandTitaniumOPharmlessfrom and against any such cost or liability. For purposes herein, “Qualifying Income” shall mean incomedescribed in Sections 856(c)(2)(A)–(H) and 856(c)(3)(A)–(I) of the Code, and “TaxGuidance” shall mean areasonedopinionfromoutsidecounselorarulingfromtheIRS.
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Section8.04 Amendment.ThisAgreementmaybeamendedbythePartiesatanytimebeforeorafterreceiptofthe Titanium Shareholder Approval or the Titanium OP Approval; provided, however, that (i) after receipt of theTitaniumShareholderApproval,thereshallbemadenoamendmentthatbyApplicableLawrequiresfurtherapprovalbytheshareholdersofTitaniumwithoutthefurtherapprovalofsuchshareholders,and(ii)afterreceiptofTitaniumOPApproval,thereshallbemadenoamendmentthatbyApplicableLawrequiresfurtherapprovalbytheunitholdersofTitanium OP without the further approval of such unitholders. This Agreement may not be amended except by aninstrumentinwritingsignedonbehalfofeachoftheParties.
Section8.05 Extension;Waiver.AtanytimepriortotheEffectiveTime,thePartiesmay(a)extendthetimeforthe performance of any of the obligations or other acts of the other Parties, (b) waive any inaccuracies in therepresentationsandwarrantiescontainedinthisAgreementorinanydocumentdeliveredpursuanttothisAgreement,(c)waivecompliancewithanycovenantsandagreementscontainedinthisAgreementor(d)waivethesatisfactionofany of the conditions contained in this Agreement. Any agreement on the part of a Party to any such extension orwaiver shall bevalid onlyif set forth in aninstrument in writingsignedonbehalf of suchParty. Thefailure of anyPartytothisAgreementtoassertanyofitsrightsunderthisAgreementorotherwiseshallnotconstituteawaiverofsuchrights.
Section8.06 Procedure for Termination, Amendment, Extension or Waiver. A termination of this AgreementpursuanttoSection8.01,anamendmentofthisAgreementpursuanttoSection8.04oranextensionorwaiverpursuanttoSection8.05shall,inordertobeeffective,require,inthecaseofTitaniumorSilver,actionbyitsBoardofDirectors(in the case of Titanium, acting on the recommendation of the Titanium Special Committee) or a duly authorizedcommitteethereof(including,inthecaseofTitanium,theTitaniumSpecialCommittee).Notwithstandinganythingtothe contrary contained in this Agreement, (a) any amendment or modification of this Agreement (including anyamendmentormodificationtoanyexhibitorschedulereferredtointhisAgreement), (b)anyextensionorwaiverofanyprovisionofthisAgreementbyanyoftheTitaniumPartiesand(c)anyconsentorapprovaltobegivenormadebyanyoftheTitaniumPartiesunderorrelatingtothisAgreementshall,ineachsuchcase,requirethewrittenconsentoftheTitaniumFamilyRepresentative,andnoTitaniumPartyshalltakeanysuchactionwithoutobtainingsuchwrittenconsent of the Titanium Family Representative (provided, for the avoidance of doubt, that the Titanium FamilyRepresentative shall have no right to consent to any termination of this Agreement pursuant to Section8.01).ThePerson listed on Section 8.06of the Titanium Disclosure Letter (the “ Titanium Family Representative”) has beendesignated as a representative of the Titanium Family in connection with the matters contemplated hereby, is anexpressthirdpartybeneficiaryofthisAgreementandthePartiesshallbeentitledtorelyuponthewrittenconsentoftheTitaniumFamilyRepresentativeforallpurposeshereunder.
ARTICLEIX.
GENERALPROVISIONS
Section9.01 NonsurvivalofRepresentationsandWarranties.NoneoftherepresentationsandwarrantiesinthisAgreementorinanyinstrument deliveredpursuant tothis Agreementshall survivetheEffectiveTime.ThisSection9.01shall not limit anycovenant or agreement of theParties whichbyits termscontemplates performanceafter theEffectiveTime.
Section9.02 Notices. All notices, requests, claims, demands andother communications under this Agreementshallbeinwritingandshallbedeemeddulygiven(a)onthedateofdeliveryifdeliveredpersonally,orifbye-mail,uponwrittenconfirmationofreceipt,(b)onthe1stBusinessDayfollowingthedateofdispatchifdeliveredutilizinganext-dayservicebyarecognizednext-daycourier or (c) ontheearlier of confirmedreceipt or the5thBusinessDayfollowingthedateofmailingifdeliveredbyregisteredorcertifiedmail,returnreceiptrequested,postageprepaid.Allnoticeshereundershallbedeliveredtotheaddressessetforthbelow,orpursuanttosuchotherinstructionsasmaybedesignatedinwritingbythePartytoreceivesuchnotice:
(a) iftoaTitaniumParty,to:
TaubmanCenters,Inc.
200EastLongLakeRoad,Suite300
BloomfieldHills,Michigan48304
Phone:248-258-6800
Attention: ChrisB.Heaphy
E-mail: [email protected]
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withacopy(whichshallnotconstitutenotice)to:
Kirkland&EllisLLP
601LexingtonAvenue
NewYork,NewYork10022
Phone:212-446-4800
Attn: EricSchiele,P.C.
MichaelP.Brueck,P.C.
MarshallP.Shaffer
E-mail: [email protected]
andto:
Wachtell,Lipton,Rosen&Katz
51West52ndStreet
NewYork,NewYork10019
Phone:212-403-1000
Attn: AdamO.Emmerich
RobinPanovka
ViktorSapezhnikov
E-mail: [email protected]
andto:
HonigmanLLP
39400WoodwardAvenue
Suite101
BloomfieldHills,Michigan48304
Phone:248-566-8300
Attn: JosephAviv
MichaelS.Ben
E-mail: [email protected]
(b)iftoaSilverParty,to:SimonPropertyGroup,Inc. 225WestWashingtonStreet Indianapolis,Indiana46204 Phone:317-636-1600 Attn: StevenE.Fivel E-mail: [email protected] withacopy(whichshallnotconstitutenotice)to: Latham&WatkinsLLP 330NorthWabashAvenue,Suite2800 Chicago,Illinois60611
Phone:312-876-7700 Attn: MarkD.Gerstein JulianT.Kleindorfer JasonMorelli E-mail: [email protected] [email protected] [email protected]
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andto: Paul,Weiss,Rifkind,Wharton&GarrisonLLP 1285AvenueoftheAmericas NewYork,NewYork10019-6064 Phone:212-373-3000 Attn: RobertB.Schumer MichaelVogel E-mail: [email protected] [email protected]
Section9.03 Definitions.ForpurposesofthisAgreement:
“AcceptableConfidentialityAgreement”meansanagreement withTitaniumthat is either (i) in effect as of theexecutionanddeliveryofthisAgreement;or(ii)executed,deliveredandeffectiveaftertheexecutionanddeliveryofthisAgreement,ineithercasecontainingprovisionsthatrequireanycounterpartythereto(andanyofitsAffiliatesandrepresentatives named therein) that receive material non-public information of, or with respect to, Titaniumto keepsuchinformationconfidentialthat,ineachcase,containsconfidentialityanduseprovisionsthatarenolessrestrictiveto such counterparty (and any of its Affiliates and representatives as provided therein) than the terms of theConfidentiality Agreement (it being understood that such agreement need not contain any “standstill” or similarprovisions or otherwise prohibit the making of any Acquisition Proposal); provided, that in no event shall anyagreement that permits the counterparty thereto to enter into exclusive arrangements (other than customary “tree”arrangements)withpotentialfinancingsourcesbeconsideredan“AcceptableConfidentialityAgreement”.
“AcquiredEquityAwards”meansanumberofTitaniumOPUnitsequaltothequotientof(i)thesumof(A)theaggregate amount of Incentive Unit Merger Consideration payable pursuant to Section 2.02(e) (provided, that forpurposes of this definition, if any OPUnit Partnership Merger Consideration is paid in respect of any TitaniumOPIncentiveUnitpursuanttosuchSection,theamountincludedinthisclause(A)inrespectofsuchOPUnitPartnershipMerger Considerationshall be equal to the amount of CashPartnership Merger Considerationthat wouldhavebeenpayableinrespectofsuchTitaniumOPIncentiveUnitiftheholderofsuchTitaniumOPIncentiveUnithadinsteadelectedtoreceiveCashPartnershipMergerConsideration),plus (B)theaggregateamountofTitaniumCommonStockMergerConsiderationpayablewithrespecttoTitaniumRSUAwardsandTitaniumDSUspursuanttoSection2.05(a),plus(C) the aggregate amount of TitaniumCommon Stock Merger Consideration payable with respect to TitaniumPSU Awards pursuant to Section 2.05(b), plus(D) the aggregate amount payable with respect to Titanium DERspursuanttoSection2.05(d)(i),divided by(ii)theTitaniumCommonStockMergerConsideration.
“AcquisitionProposal” means any offer or proposal (other than an offer or proposal by a Silver Party) for anAcquisitionTransaction.
“AcquisitionTransaction” means any transaction or series of related transactions (other than the Transactions)providingfor(i)anydirectorindirectacquisition(whetherbymerger,consolidationorotherwise)ofmorethan15%ofthevotingpowerofTitaniumorTitaniumOPbyanyPersonorGroup;(ii) anyconsolidation,businesscombination,reorganization,shareexchange,saleofassets,recapitalization,equityinvestment,jointventure,liquidation,dissolutionorothersimilartransactioninvolvingTitaniumorTitaniumOPthatwouldresultinanyPersonorGroup,directlyorindirectly, acquiring assets (including capital stock of or interests in any Subsidiary or Affiliate of Titanium)representing,directlyorindirectly,morethan15%oftheconsolidatedassetsofTitaniumanditsSubsidiaries,takenasawhole(asdeterminedonabookvaluebasis(includingIndebtednesssecuredsolelybysuchassets));(iii)anytenderofferorexchangeofferoranyotherdirectorindirectpurchaseorotheracquisitionofsecurities,that,ifconsummated,wouldresult in anyPersonor Group, whether fromTitaniumor anyother Person(s), beneficially owningmorethan15%oftheoutstandingsharesofTitaniumCommonStockormorethan15%oftheoutstandingTitaniumOPUnits;(iv)anyothertransactionorseriesofrelatedtransactionspursuanttowhichanyPersonorGroupproposestoacquire,directly orindirectly, control of assets of Titaniumoranyofits Subsidiaries havingafair market valuegreater than15%ofthefairmarketvalueofalloftheassetsofTitaniumanditsSubsidiaries,takenasawhole,immediatelypriortosuchtransaction;or(v)anycombinationoftheforegoing.
“Action”meansanyaction,filingofcharges,suits,claims,arbitrationorproceedings(whethercivil,criminaloradministrative)broughtbyorbeforeanyGovernmentalEntity,arbitrator,mediatororothertribunal,or,forpurposesofSection5.03,anyinvestigationbyanyGovernmentalEntity.
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“Actual Performance” means, with respect to any unvested Titanium OP Incentive Unit that is subject toperformance-based vesting and any unvested Titanium PSU Award, as applicable, the average of the actualperformanceachievement,determinedasoftheEffectiveTime,ofthetwoperformancemetricsapplicabletoeachsuchgrant, as such actual performance achievement with respect to each individual metric is otherwise determined inaccordancewiththetermsoftheapplicableTitaniumEquityAwardagreement.
An“Affiliate”ofanyPersonmeansanotherPersonthatdirectlyorindirectly,throughoneormoreintermediaries,controls, is controlled by, or is under common control with, such first Person. For purposes of this definition,“control(s)”meanspossession,directlyorindirectly,ofthepowertodesignateanddirectorcausethedesignationanddirectionofthemanagementandpoliciesofaPerson,whetherthroughtheownershipofvotingsecurities,bycontract,orotherwise.Fortheavoidanceofdoubt,aPersonshallbedeemedtocontrolanotherPersonifsuchPersonisthesolegeneralpartner,solemanaginggeneralpartnerorsolemanagingmemberofsuchotherPerson.Theterms“controlledby”and“undercommoncontrolwith”shallhavecorrelativemeanings.
“Anti-Corruption Laws” means laws, regulations or orders relating to anti-bribery or anti-corruption(governmentalorcommercial),whichapplytothebusinessanddealingsofTitanium,eachSubsidiaryofTitanium,andthe unconsolidated joint ventures of Titaniumandits Subsidiaries; includinglawsthat prohibit the corrupt payment,offer, promise, or authorization of the payment or transfer of anything of value (including gifts or entertainment),directly or indirectly, to any Governmental Entity, commercial entity, or any other Person to obtain an improperbusinessadvantage;suchas,withoutlimitation,theU.S.ForeignCorruptPracticesActof1977,asamendedfromtimetotime,China’sAnti-unfairCompetitionLaw,andallotherapplicablelawsrelatingtobriberyandcorruption.
“ApplicableLaw(s)”means,withrespecttoanyPerson,anyfederal,national,state,county,municipal,provincial,local,foreignormultinationallaw(statutory,commonorotherwise),constitution,treaty,convention,ordinance,code,rule,regulation,Orderorothersimilarrequirementenacted,adopted,promulgatedorappliedbyaGovernmentalEntityand any award, order or decision of an arbitrator or arbitration panel with jurisdiction over the parties and subjectmatterofthedispute,ineachcasethatisbindinguponorapplicabletosuchPerson,asthesamemaybeamendedfromtimetotimeunlessexpresslyspecifiedotherwiseinthisAgreement.
“BusinessDay”meansanydayotherthan(i)aSaturdayoraSundayor(ii)adayonwhichbankingandsavingsandloaninstitutionsareauthorizedorrequiredbyApplicableLawtobeclosedinNewYorkCity.
“CashTenderAgreement”meanstheAmendedandRestatedCashTenderAgreement,datedasofMay16,2000,by and among Titanium, Titanium OP, and A. Alfred Titanium, A. Alfred Titanium, acting not individually but asTrusteeoftheA.AlfredTitaniumRestatedRevocableTrust,andTRAPartners.
“Code”meanstheInternalRevenueCodeof1986,asamended.
“Collective Bargaining Agreement” means any collective bargaining agreements, labor union contracts, tradeunionagreementsandforeignworkscouncilcontracts.
“ContinuingOffer”meanstheSecondAmendedandRestatedContinuingOffer,datedMay16,2000,byTitaniumtocertainholdersofTitaniumOPUnitsandTitaniumOPIncentiveUnits.
“Contract” means any contract, note, bond, mortgage, Lien, indenture, deed of trust, license, lease, agreement,arrangement, commitment or other instrument or obligation, whether written or oral, that is, in each case, legallybinding.
“DGCL”meanstheGeneralCorporationLawoftheStateofDelaware.
“EnvironmentalLaws”meansanyApplicableLawrelatingtopollutionorprotectionoftheenvironment,naturalresources,andhumanhealthandsafety(withrespecttoexposuretoHazardousMaterials)includinglawsrelatingto(a)releases, discharges, emissions or disposals to air, water, soil (surficial and subsurface), land or groundwater ofHazardous Materials; (b) the use, handling or disposal of polychlorinated biphenyls, toxic mold, asbestos or ureaformaldehyde or any other Hazardous Material; (c) the treatment, storage, disposal or management of HazardousMaterials; (d) the exposure to Hazardous Materials; or (e) the transportation, release or any other use of HazardousMaterials,includingtheComprehensiveEnvironmentalResponse,CompensationandLiabilityAct,42U.S.C.9601,etseq.,theResourceConservationandRecoveryAct,42U.S.C.6901,et seq.(“RCRA”),theToxicSubstancesControlAct,15U.S.C.2601,et seq.(“TSCA”),thoseportionsoftheOccupational,SafetyandHealthAct,29U.S.C.651,etseq.relatingtoHazardousMaterialsexposureandcompliance,theCleanAirAct,
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42U.S.C.7401,et seq.,theFederalWaterPollutionControlAct,33U.S.C.1251,et seq.,theSafeDrinkingWaterAct,42 U.S.C. 300f, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. 1802 et seq. (“HMTA”) and theEmergencyPlanningandCommunityRighttoKnowAct,42U.S.C.11001,et seq.(“EPCRA”),andothercomparablestateandlocallawsandallrulesandregulationspromulgatedpursuanttheretoorpublishedthereunder.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulationspromulgatedthereunder.
“ERISAAffiliate”means,withrespecttoanyentity,tradeorbusiness,anyotherentity,tradeorbusinessthatisamember of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA thatincludesthefirstentity,tradeorbusiness,orthatisamemberofthesame“controlledgroup”asthefirstentity,tradeorbusinesspursuanttoSection4001(a)(14)ofERISA.
“ExchangeAct”meanstheSecuritiesExchangeActof1934,asamended.
“ExcludedParty”meansanyPersonorgroupofPersonsthatincludesanyPersonorgroupofPersonsfromwhomTitaniumoranyofitsRepresentativeshasreceivedawrittenAcquisitionProposalpriortotheNo-ShopPeriodStartDatethattheTitaniumBoard(ortheTitaniumSpecialCommittee)determinesingoodfaith,afterconsultationwithitsfinancialadvisorandoutsidelegalcounsel,constitutesorcouldreasonablybeexpectedtoleadtoaSuperiorProposal.
“Fraud” means an actual, intentional and knowing common law fraud by a Titanium Party with respect to themaking of the representations and warranties contained in this Agreement established by the standard of proofapplicable under Michigan common law and, to the extent not already an element thereunder, upon which Silverreasonablyrelied.
“GAAP”meansUnitedStatesgenerallyacceptedaccountingprinciples.
“Governmental Entity” means any transnational, domestic or foreign federal, state or local governmental,regulatory or administrative authority, department, court, agency, commission or official, including any politicalsubdivisionthereof,oranynon-governmentalself-regulatoryagency,commissionorauthority.
“Group”meansa“group”asdefinedinSection13(d)oftheExchangeAct.
“Hazardous Materials” means each and every element, compound, chemical mixture, contaminant, pollutant,material, waste or other substance whichis defined, determined or identified as hazardous or toxic under applicableEnvironmentalLawsorwhichisregulatedunderEnvironmentalLawsbecauseofitshazardousortoxicpropertiesorcharacteristics.Withoutlimitingthegeneralityoftheforegoing,“HazardousMaterials”include“hazardoussubstances”asdefinedinRCRA,“extremelyhazardoussubstances”asdefinedinEPCRA,“hazardouswaste”asdefinedinRCRA,“hazardous materials” as defined in HMTA, a “chemical substance or mixture” as defined in TSCA, crude oil,petroleum products or any fraction thereof, radioactive materials, including source, byproduct or special nuclearmaterials,asbestosorasbestos-containingmaterials,toxicmold,chlorinatedfluorocarbonsandradon.
“HSRAct”meanstheHart-Scott-RodinoAntitrustImprovementsActof1976,asamended.
“Indebtedness” means, with respect to any Person, all obligations of such Person (i) for borrowedmoneyor inrespect of loans or advances, (ii) evidenced by notes, bonds, debentures or similar Contracts, (iii) in respect ofoutstanding letters of credit or bankers’ acceptances, sureties, performance bonds or similar obligations, (iv) allliabilitiesorobligationsofotherssecuredbyanyLienontheassetsofsuchPerson,and(v)inrespectofallguarantees,keepwellorsimilararrangementsforanyoftheforegoing.
“IntellectualProperty”meanscopyrights,patents,trademarks,servicemarks,servicenames,logos,tradenames,domainnames,technologyrightsandlicenses,computersoftware(includinganysourceorobjectcodestherefor,anddocumentation and websites relating thereto), trade secrets, proprietary and/or confidential information and data,franchises, know-how, inventions, designs, and all other intellectual property and proprietary rights worldwide,includingallrelatedgrants,registrationsandapplicationsforregistrationorissuancethereof.
“Intervening Event” means any material effect, change, event or occurrence arising after the date hereof that(i)wasnotknownorreasonablyforeseeabletotheTitaniumBoardortheTitaniumSpecialCommitteeasofthedatehereof (or, if known, the consequences of which were not reasonably foreseeable) and (ii) does not relate to anyAcquisitionProposal;provided,thatinnoeventshallthefollowingconstitute,orbetakenintoaccountindeterminingtheexistenceofanInterveningEvent:(A)thefactalonethatTitaniummeetsorexceedsanyinternalorpublished
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forecastsorprojectionsforanyperiod,(B)changesinthemarketpriceortradingvolumeofTitaniumCommonStock,in and of itself, after the date hereof, or (C) changes in conditions in the industries in which Titanium and itsSubsidiariesconductbusiness,excepttotheextentsuchchangeshadamateriallydisproportionateeffectonTitaniumrelative to other companies of a similar size operating in industries in which Titanium and its Subsidiaries conductbusiness.
“Knowledge”means,withrespecttotheTitaniumParties,theactualknowledgeofRobertS.Taubman,WilliamS.Taubman,SimonLeopold,ChrisHeaphy,HollyKinnearand/orEricSmith.
“Lien” means, with respect to any property or asset, any mortgage, deed of trust, lien, license, pledge, charge,security interest, encumbrance, claim, hypothecation, option, right of first refusal, right of first offer, right-of-way,easement, servitude, or conditional sale agreement, and includes any agreement to give any of the foregoing in thefuture,andanycontingentsaleorothertitleretentionagreementorleaseinthenaturethereof.
“Material Adverse Effect” with respect to any Person means any effect, change, event or occurrence that,individuallyorintheaggregate,hasamaterialadverseeffectonthebusiness,assets,liabilities,resultsofoperationsorfinancial condition of such Person and its Subsidiaries (and its unconsolidated joint ventures), taken as a whole;provided,however,thatnoneofthefollowing,andnoeffect, change,eventoroccurrencearisingoutof,orresultingfrom,thefollowing,shallconstituteorbetakenintoaccount,individuallyorintheaggregate,indeterminingwhetheraMaterialAdverseEffecthasoccurredormayoccur:(i)changesgenerallyaffectingtheeconomy,creditorfinancialorcapital markets, in the United States or elsewhere in the world, including changes in interest or exchange rates;(ii) changes generally affecting the industries in which such Person and its Subsidiaries operate; (iii) changes orprospectivechangesinApplicableLaworGAAPorinaccountingstandards,oranychangesorprospectivechangesinthe interpretation or enforcement of any of the foregoing, or any changes or prospective changes in general legal,regulatoryorpoliticalconditions;(iv)changescausedbytheannouncementorperformanceofthisAgreementortheconsummation of the Transactions, including the impact thereof on relationships, contractual or otherwise, withcustomers, suppliers, distributors, partners, employees or Governmental Entities, or any litigation arising fromallegationsofbreachoffiduciarydutyorviolationofApplicableLawrelatingtothisAgreementortheTransactions(providedthatthisclause(iv)shallnotapplytotheuseofTitaniumMaterialAdverseEffectinanyrepresentationorwarranty explicitly addressing the execution, delivery, announcement or performance of this Agreement or theconsummation of the Transactions or non-contravention with contractual or legal obligations or any condition toClosing as it relates to such representations and warranties); (v) acts of war (whether or not declared), sabotage orterrorism, or any escalation or worsening of any such acts of war (whether or not declared), sabotage or terrorism;(vi) volcanoes, tsunamis, pandemics, earthquakes, floods, storms, hurricanes, tornados or other natural disasters;(vii) anyactiontakenbysuchPersonor its Subsidiaries that is requiredbythis Agreement or withtheprior writtenconsent or at the written direction of another Person in accordance with this Agreement, or the failure to take anyaction by such Person or its Subsidiaries if that action is prohibited by this Agreement; (viii) changes resulting orarising fromthe identity of, or anyfacts or circumstances specific to, the Silver Parties; (ix) changes or prospectivechanges in such Person’s or its Subsidiaries’ credit ratings; (x) changes in the price or trading volume of the suchPerson’s common stock; (xi) any failure to meet any internal or public projections, forecasts, guidance, estimates,milestones,budgetsorinternalorpublishedfinancialoroperatingpredictionsofrevenue,earnings,cashfloworcashposition (it being understood that the exceptions in clauses (ix), (x) and (xi) shall not prevent or otherwise affect adeterminationthattheunderlyingcauseofanysuchchangeorfailurereferredtotherein(totheextentnototherwisefalling within any of the exceptions provided by clauses (i) through (xi) hereof) is, may be, contributed to or maycontribute to, a Material Adverse Effect); provided further, however, that any effect, change, event or occurrencereferredtoinclauses(i),(ii),(iii),(v)and(vi)maybetakenintoaccountindeterminingwhetherornottherehasbeenor may be a Material Adverse Effect to the extent such effect, change, event or occurrence has a disproportionateadverseeffectonsuchPersonanditsSubsidiaries,takenasawhole,ascomparedtootherparticipantsintheindustriesinwhichsuchPersonanditsSubsidiariesoperate.
“MergerConsideration” means, collectively, the Titanium Common Stock Merger Consideration, the TitaniumSeries B Merger Consideration, the Partnership Merger Consideration and (without duplication with respect toPartnershipMergerConsideration)theIncentiveUnitMergerConsideration.
“MichiganLARA”meanstheStateofMichiganDepartmentofLicensingandRegulatoryAffairs’Corporations,Securities&CommercialLicensingBureau.
“NYSE”meanstheNewYorkStockExchange.
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“OPExchangeRatio”means0.3814.
“OptionDeferralAgreement”meansthatcertainOptionDeferralAgreement,datedasofJanuary27,2011,byandamong Robert S. Taubman, Titanium OP and The Taubman Company LLC, together with that certain SubsequentDeferralElectionundertheTitaniumOPandTheTitaniumCompanyLLCElectionandOptionDeferralAgreement,datedOctober7,2016.
“OptionDeferredUnit”meansarighttoreceiveaTitaniumOPUnitthathasbeendeferredbyRobertS.TaubmanpursuanttotheOptionDeferralAgreement.
“Order” means any order, writ, decree, judgment, award, injunction, ruling, settlement or stipulation issued,promulgated, made, rendered or entered into by or with any Governmental Entity or arbitral body or tribunal withcompetentjurisdiction(ineachcase,whethertemporary,preliminaryorpermanent).
“OrganizationalDocuments”means(a)thearticlesorcertificateofincorporationandthebylawsofacorporation;(b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnershipagreementandthecertificateoflimitedpartnershipofalimitedpartnership;(d)thearticlesorcertificateofformationandlimitedliabilitycompanyagreementofalimitedliabilitycompany;(e)anycharterorsimilardocumentadoptedorfiledinconnectionwiththecreation,formation,ororganizationofaPerson;(f)anyjointventureorsimilaragreementand(g)anyamendmenttoanyoftheforegoing.
“Permits” means licenses, franchises, permits, certificates, approvals, grants, accreditations, registrations,easements,variances,exceptions,consents,billingandauthorizationsfromGovernmentalEntities.
“Permitted Liens” means, collectively, (i) suppliers’, mechanics’, carriers’, workmen’s, repairmen’s,materialmen’s, warehousemen’s, construction and other similar Liens arising or incurred by operation of law orotherwiseincurredintheordinarycourseofbusinessforamountswhicharenotdelinquent,ortheamountorvalidityofwhich is being contested in good faith by appropriate proceedings by the Titanium or its Subsidiaries for whichadequate reserves are being maintained to the extent required by GAAP, (ii) Liens for Taxes, utilities and othergovernmental charges that are not delinquent or whichare beingcontested in goodfaith byappropriate proceedingsandfor whichadequate accruals or reserves havebeenestablishedinaccordancewithGAAP,(iii) requirements andrestrictionsofzoning,buildingandotherApplicableLawsandmunicipalby-laws,ineachcasethatdonotadverselyimpactinanymaterialrespectthecurrentuse,occupancyoroperationoftheTitaniumRealPropertybyTitaniumoritsSubsidiaries and are not violated by the current use, occupancy or activity conducted thereon by Titanium or itsSubsidiaries,asapplicable,(iv)licensesorothergrantsofrightsinIntellectualPropertymadeintheordinarycourseofbusiness, (v) deposits made in the ordinary course of business to secure payments of worker’s compensation,unemploymentinsuranceorothertypesofsocialsecuritybenefitsortheperformanceofbids,tenders,sales,contracts(otherthanfortherepaymentofborrowedmoney),publicorstatutoryobligations,andsurety,stay,appeal,customsorperformancebonds,orsimilarobligationsarisingineachcaseintheordinarycourseofbusiness,(vi)Liensinfavorofcustomsandrevenueauthoritiesarisingasamatteroflawandintheordinarycourseofbusinesstosecurepaymentofcustoms duties in connection with the importation of goods, (vii) Liens resulting from securities laws, (viii) Liensincurredintheordinarycourseofbusinessinconnectionwithanypurchasemoneysecurityinterests,equipmentleasesorsimilarfinancingarrangements,(ix)Lienssecuringpayment,oranyobligation,oftheTitaniumPartieswithrespecttomortgages,revolvingcreditfacilitiesandtermloanfacilitiesineffectasofthedatehereof,(x)licensesgrantedtothirdpartiesintheordinarycourseofbusinessbytheTitaniumParties,(xi)LiensforIndebtednessrelatingtotherealproperty subject thereto or affected thereby; (xii) real property and other leases and subleases; (xiii) Liens that aredisclosedon,orthatsecureIndebtednessdisclosedon,themostrecentconsolidatedbalancesheetofTitanium,orthenotes thereto, included in the Titanium SEC Documents filed prior to the date hereof; (xiv) easements (includingreciprocal easement agreements), rights of way (unrecorded and of record) and other similar restrictions orimperfectionsoftitlethatdonotmateriallydetractfromthevalueofsuchpropertyorinterfereinanymaterialrespectwiththeuse,operationoroccupancybyTitaniumoranyofitsSubsidiariesofsuchproperty;and(xv)statutoryLiensoflandlordsforamountsnotdueandpayableorwhicharebeingcontestedbyTitaniumoritsSubsidiariesingoodfaithbyappropriateproceedingsforwhichadequatereservesarebeingmaintainedtotheextentrequiredbyGAAP.
“Person”meansanynaturalperson,firm,corporation,partnership,company,limitedliabilitycompany,trust,jointventure,association,GovernmentalEntityorotherentity.
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“ReducedTerminationFeeEndDate”meansthelaterof(i)theNo-ShopPeriodStartDateand(ii)intheeventthatanyNoticePeriodproperlycommencedpursuanttoSection5.02(e)(i)(B)beginsonorpriortotheNo-ShopPeriodStartDate,solelywithrespecttoaterminationrelatedtotheExcludedPartywhosubmittedaSuperiorProposalthatinitiated such Notice Period, 11:59 p.m., New York City time, on the tenth (10th) Business Day following theexpirationofsuchNoticePeriod.
“Regulatory Laws” means the HSR Act, the Sherman Antitrust Act of 1890, as amended, and the rules andregulationspromulgatedthereunder,theClaytonActof1914,asamended,andtherulesandregulationspromulgatedthereunder, the Federal Trade Commission Act of 1914, as amended, and the rules and regulations promulgatedthereunder, and any other federal, state and foreign statutes, rules, regulations, orders, decrees, administrative andjudicial doctrines and other laws that are designed or intended to prohibit, restrict or regulate actions having thepurposeoreffectofmonopolizationorrestraintoftradeorlesseningofcompetitionthroughmergeroracquisition.
“REIT”meansarealestateinvestmenttrustwithinthemeaningofSections856through860oftheCode.
“SEC”meanstheUnitedStatesSecuritiesandExchangeCommission.
“SecuritiesAct”meanstheSecuritiesActof1933,asamended.
“SilverBy-laws”meanstheamendedandrestatedby-lawsofSilverasineffectasofthedateofthisAgreementandasmaybeamendedfromtimetotime.
“Silver Charter” means the restated certificate of incorporation of Silver as in effect as of the date of thisAgreementandasmaybeamendedfromtimetotime.
“SilverCommonStock”meanscommonstockofSilver,parvalue$0.0001pershare.
“Silver Material Adverse Effect” means any effect, change, event or occurrence that, individually or in theaggregate, would have a material adverse effect on Silver’s ability to consummate the Transactions and perform itsmaterialcovenantsandobligationsunderthisAgreement.
“SilverOPAgreement”meanstheEighthAmendedandRestatedLimitedPartnershipAgreementofSimonOP,datedasofMay8,2008,asamended,asineffectasofthedateofthisAgreementandasmaybeamendedfromtimetotime.
“SilverOPUnit”meansalimitedpartnershipunitofSilverOP.
“SilverParties”means,collectively,Silver,SilverOP,SilverMergerSub1andSilverMergerSub2.
“SilverTransactionLitigation”meansanyTransactionLitigationcommencedorthreatenedagainstSilveroranyofitsSubsidiariesorAffiliates(oranyoftheirrespectivedirectorsorexecutiveofficers).
“Subsidiary”means,withrespecttoanyPerson,anyentityofwhichsecuritiesorotherownershipinterestshavingordinaryvotingpowerto elect a majority of theboardof directors or other personsperformingsimilar functions, orprovidingtheownerthereofwiththerighttocontrolsuchentity,aredirectlyorindirectlyownedbysuchPerson.Forthe avoidance of doubt, with respect to Titanium, “Subsidiary” shall include Titanium OP and its Subsidiaries andconsolidatedjointventures,andwithrespecttoSilver,“Subsidiary”shallincludeSilverOPanditsSubsidiaries. Forthe purposes of this Agreement, Subsidiaries that are wholly owned by Titanium OPshall be deemed to be whollyownedSubsidiariesofTitanium.
“SubstituteDER”meansaright,grantedintandemwithaSubstituteAward,toreceiveanamountincashequaltothe sum of (x) the unpaid dividend equivalent amounts that have accrued through the Effective Time under theTitaniumDERto which such Substitute DERrelates,plus(y) (A) the product of (I) $0.675 and (II) the number ofshares of Titanium Common Stock subject to the Titanium RSUAward or Titanium PSUAward, as applicable, inrespect of whichsuchSubstitute Awardwasgranted under Section 2.05(c) of this Agreement,multiplied by(B)thenumberofTitaniumfiscal quartersendingduringthevestingperiodoftheSubstituteAwardtowhichtheSubstituteDER relates, as in effect immediately after the Effective Time, which Substitute DER shall, to the extent that theSubstituteAwardtowhichsuchSubstituteDERrelatesvests, bepaidat thesametimeassuchSubstituteAward,inaccordancewiththetermsofSection2.05(c)ofthisAgreement.
“Superior Proposal” means any written Acquisition Proposal for an Acquisition Transaction on terms that theTitaniumBoard(actingontherecommendationoftheTitaniumSpecialCommittee)hasdeterminedingoodfaith(afterconsultationwithitsfinancialadvisorandoutsidelegalcounsel),takingintoaccountalllegal,financialand
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regulatory aspects of such Acquisition Proposal, would be more favorable, from a financial point of view, to theTitanium Shareholders (in their capacity as such) than the Transactions. For purposes of the reference to an“Acquisition Proposal” and “Acquisition Transaction” in this definition, all references to “15%”in the definition of“AcquisitionTransaction”willbedeemedtobereferencesto“75%.”
“Target Performance” means, with respect to any unvested Titanium OP Incentive Unit that is subject toperformance-basedvestingandanyunvestedTitaniumPSUAward,thetargetperformancemetric(i.e.,1x)applicabletoeachindividualperformancemetricsetforthintheapplicableTitaniumEquityAwardagreement.
“TaxReturns”meansanyreturns,declarations,statements,reports,schedules,forms,certificate,claimforrefund,election,filingandinformationreturnsandanyotherdocumentfiledorrequiredtobefiledrelatingtoTaxes,includinganyattachmentthereto.
“Taxes”meansanyandalltaxes,levies,duties,tariffs,impostsandothersimilarchargesandfees(togetherwithanyandallinterest,penalties,additionstotaxandadditionalamountsimposedwithrespectthereto,whetherdisputedornot)imposedbyanyGovernmentalEntityordomesticorforeigntaxingauthority,includingallfederal,state,local,and foreign income, excise, gross receipts, gross income, ad valorem, stamp, transfer, profits, gains, premiums,property, capital, sales, transfer, use, payroll, employment, social security, workers’ compensation, unemploymentcompensation, severance, occupation, environmental, customs duties, disability, real property, personal property,withholding, franchise, windfall or other profits, value added, gains tax and license, registration and documentationfees,alternativeoradd-onminimum,orestimatedtax.
“Termination Fee” means (i) solely if payable in connection with (A) a termination by Titanium pursuant toSection8.01(d)prior to the ReducedTermination FeeEndDate to enter into a definitive written agreement with anExcluded Party providing for a Superior Proposal or (B) a termination by Silver in the event of a Titanium BoardRecommendationChangeoccurringpriortotheReducedTerminationFeeEndDatethatisexpresslyrelatedsolelytoanAcquisitionProposalmadebyanExcludedParty,anamountequalto$46,604,909and(ii)ifpayableinanyothercircumstance,anamountequalto$111,851,783.
“Titanium2020EquityAwards”meansTitaniumEquityAwardsgrantedin2020.
“Titanium By-laws” means the amended and restated by-laws of Titanium as in effect as of the date of thisAgreementandasmaybeamendedfromtimetotime.
“TitaniumCharter” means the Restated Articles of Incorporation of Titaniumas in effect as of the date of thisAgreementandasmaybeamendedfromtimetotime.
“TitaniumCommonStock”meansthecommonstock,parvalue$0.01pershare,ofTitanium.
“Titanium DER” means any dividend equivalent right granted in tandem with any Titanium RSU Award orTitaniumPSUAward.
“Titanium DSU” means a right to receive a share of Titanium Common Stock that has been deferred by anymemberoftheTitaniumBoardpursuanttoanyTitaniumStockPlan(excludingundertheOptionDeferralAgreement).
“Titanium Equity Award Consideration” means the aggregate Titanium Common Stock Merger Considerationpayabletoholders of TitaniumDSUs,TitaniumRSUAwardsandTitaniumPSUAwardsinrespect of thesharesofTitaniumCommonStockunderlyingsuchawards.
“TitaniumEquityAwards” means, collectively, the TitaniumDSUs, TitaniumRSUAwards and TitaniumPSUAwards.
“TitaniumFamily”meansthosePersonssetforthinSection9.03(b)oftheTitaniumDisclosureLetter.
“TitaniumLeasedRealProperty”meansallrealpropertyleased,groundleased,subleasedorlicensedbyTitaniumoranyofitsSubsidiaries.
“TitaniumMaterialAdverseEffect”meansaMaterialAdverseEffectwithrespecttoTitanium.
“TitaniumOPAgreement”meanstheThirdAmendmentandRestatementofAgreementofLimitedPartnershipofTitaniumOP,datedDecember12,2012,asamendedbythatFirstAmendmentdatedasofDecember12,2012,bythatSecondAmendmentdatedasofDecember18,2018andasmaybesubsequentlyamendedfromtimetotime.
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“TitaniumOPApproval”meansthewrittenconsentofpartners(otherthanTitaniumandotherthanany“ParityPreferredPartner” (as definedin theTitaniumOPAgreement)) holdingat least fifty percent (50%)of theaggregatepercentageinterestsinTitaniumOPheldbysuchpartnersapprovingthePartnershipMerger.
“Titanium OP Incentive Unit” means an incentive unit granted pursuant to any Titanium Stock Plan that isintendedtoconstitutea“profitsinterest”withinthemeaningoftheCodeandtheregulationspromulgatedthereunder(includingInternalRevenueServiceProcedure93-27)andthatconstitutesa“ProfitsUnitsDesignation”asdefinedintheTitaniumOPAgreement.
“TitaniumOPUnit”meansaunitofpartnershipinterestofTitaniumOP.
“Titanium Owned Real Property” means all land, together with all buildings, structures, improvements andfixtureslocatedthereon,ownedorpurportedtobeownedbyTitaniumoranyofitsSubsidiaries.
“TitaniumParties”means,collectively,TitaniumandtheTitaniumOP.
“TitaniumPSUAward” means a performance-based share unit award granted pursuant to any Titanium StockPlanthatvestsinwholeorinpartonthebasisoftheachievementofperformancetargets.
“TitaniumRealProperty”meanstheTitaniumOwnedRealPropertyandtheTitaniumLeasedRealProperty.
“TitaniumRSUAward” means a restricted stock unit award granted pursuant to any Titanium Stock Plan thatvestssolelyonthebasisofarecipient’sservicetoTitaniumoritsAffiliates.
“Titanium Shareholder Approval” means (a) the affirmative vote of the holders of at least two-thirds of theoutstanding shares of Titanium Common Stock and Titanium Series B Preferred Stock (voting together as a singleclass)entitledtovoteattheTitaniumShareholdersMeetinginfavoroftheapprovalandadoptionofthisAgreementandtheTransactions,(b)theaffirmativevoteoftheholdersofatleastamajorityoftheoutstandingsharesofTitaniumSeriesBPreferredStockentitledtovoteattheTitaniumShareholdersMeetinginfavoroftheapprovalandadoptionofthisAgreementandtheTransactionsand(c)theaffirmativevoteoftheholdersofatleastamajorityoftheoutstandingsharesofTitaniumCommonStockandTitaniumSeriesBPreferredStock(votingtogetherasasingleclass)entitledtovoteattheTitaniumShareholdersMeeting(excludingtheoutstandingsharesofTitaniumCommonStockandTitaniumSeriesBPreferredStockownedofrecordorbeneficiallybytheTitaniumFamily)infavoroftheapprovalandadoptionofthisAgreementandtheTransactions.
“TitaniumShareholders”meanstheholdersofTitaniumCommonStock.
“Titanium Stock Plans” means collectively, the Titanium 2008 Omnibus Long-Term Incentive Plan and theTitanium2018OmnibusLong-TermIncentivePlan.
“TitaniumTransactionLitigation”meansanyTransactionLitigationcommencedorthreatenedagainst TitaniumoranyofitsSubsidiariesorAffiliates(oranyoftheirrespectivedirectorsorexecutiveofficers).
“TransactionLitigation” means any claim, action, charge, lawsuit, litigation, audit, investigation, arbitration orotherlegalproceedingbroughtbyorpendingbeforeanyGovernmentalEntity,arbitratororothertribunalcommencedorthreatenedagainst aPartyoranyofits Subsidiaries orAffiliates(oranyoftheir respectivedirectorsorexecutiveofficers)orotherwiserelatingto,involvingoraffectingsuchPartyoranyofitsSubsidiariesorAffiliates,ineachcaseinconnectionwith,arisingfromorotherwiserelatingtotheTransactions,otherthananysuchlegalproceedingssolelyamongthePartiesrelatedtothisAgreement.
“WillfulBreach” means a material breach of any covenant or agreement set forth in this Agreement that is aconsequence of a deliberate act or omission undertaken by the breaching Party, whether or not breaching thisAgreementistheconsciousobjectofsuchactoromission.
Section9.04 Interpretation.WhenareferenceismadeinthisAgreementtoanArticle,aSectionoranexhibit,suchreferenceshallbetoanArticle,aSectionoranexhibitofortothisAgreementunlessotherwiseindicated.Thetableofcontents,indexofdefinedtermsandheadingscontainedinthisAgreementareforreferencepurposesonlyandshallnotaffectinanywaythemeaningorinterpretationofthisAgreement.AnycapitalizedtermusedinanyexhibitbutnototherwisedefinedthereinshallhavethemeaningassignedtosuchterminthisAgreement.Wheneverthewords“include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words“withoutlimitation.”Thewords“hereof”, “hereto”, “hereby”, “herein”and“hereunder”andwordsofsimilar importwhenusedinthisAgreementshallrefertothisAgreementasawholeandnottoanyparticular
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provisionofthisAgreement.Theterm“or”isnotexclusive.Theword“extent”inthephrase“totheextent”shallmeanthe degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” The definitionscontainedinthisAgreementareapplicabletothesingularaswellasthepluralformsofsuchterms.Allpronounsandanyvariationsthereofrefertothemasculine,feminineorneuterasthecontextmayrequire.Anyagreement,instrumentorApplicableLawdefinedorreferredtohereinmeanssuchagreement,instrumentorApplicableLawasfromtimetotimeamended,modifiedorsupplemented,unlessotherwisespecificallyindicated.ReferencestoaPersonarealsotoitspermitted successors andassigns. Unless otherwise specifically indicated, all references to “dollars” and“$”will bedeemedreferencestothelawfulmoneyoftheUnitedStatesofAmerica.Thewords“madeavailable”or“provided”toSilver and words of similar import refer to documents (i) posted to the data room maintained by Titanium or itsRepresentatives in connection with the transactions contemplated by this Agreement, (ii) delivered in person orelectronically to the Silver Parties or their Representatives or (iii) that are publicly available in the Electronic DataGathering,AnalysisandRetrieval(EDGAR)databaseoftheSEC,ineachcase,atleasttwo(2)BusinessDayspriortothe date of this Agreement. The phrase “ordinary course of business” shall be deemed followed by the phrase“consistentwithpastpractice”.
Section9.05 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable ofbeingenforcedbyanyruleorApplicableLaw,orpublicpolicy,allotherconditionsandprovisionsofthisAgreementshallneverthelessremaininfullforceandeffectsolongaseithertheeconomicorlegalsubstanceoftheTransactions,is notaffectedinanymannermaterially adversetoanyPartyor suchPartywaivesits rights underthisSection9.05withrespectthereto.Uponsuchdeterminationthatanytermorotherprovisionisinvalid,illegalorincapableofbeingenforced, the Parties shall negotiate in goodfaith to modify this Agreement so as to effect the original intent of theParties as closely as possible in an acceptable manner so that the Transactions are fulfilled to the greatest extentpossible.
Section9.06 Counterparts.ThisAgreementmaybeexecutedinoneormorecounterparts,includingbyfacsimileor by email with .pdf attachments, all of which shall be considered one and the same agreement, and shall becomeeffectivewhenoneormorecounterpartshavebeensignedbyeachofthePartiesanddeliveredtotheotherParties.
Section 9.07 Entire Agreement; No Third-Party Beneficiaries. This Agreement and any exhibits, annexes orschedules hereto, including the Titanium Disclosure Letter, together with that certain letter agreement regardingoperatingandcapexbudgets,datedasofFebruary9,2020,byandamongTitaniumOP,SilverandRobertS.Taubman,and the Confidentiality Agreement, constitute the entire agreement, and supersede all other prior agreements andunderstandings,bothwrittenandoral,amongthePartiesandtheirAffiliates,oranyofthem,withrespecttothesubjectmatterhereofandthereof.NothinginthisAgreement,expressedorimplied,isintendedtoconferonanypersonotherthan the Parties or their respective heirs, successors, executors, administrators and assigns any rights, remedies,obligationsorliabilitiesunderorbyreasonofthisAgreement,exceptfor(a)iftheClosingoccurs,(i)therightoftheholdersofTitaniumCommonStocktoreceivetheTitaniumCommonStockMergerConsideration,(ii)therightoftheholdersofTitaniumSeriesBPreferredStocktoreceivetheTitaniumSeriesBMergerConsideration,(iii)therightoftheholdersofTitaniumSeriesJPreferredStockandTitaniumSeriesKPreferredStocktoreceivetheTitaniumSeriesJandSeriesKPreferredStockRedemptionAmount,(iv)therightoftheTitaniumOPMinorityPartnerstoreceivetheMinority OPPartners Partnership Merger Consideration, (v) the right of the holders of TitaniumFamily ConvertingUnitstoreceivetheTitaniumFamilyPartnershipMergerConsideration,(vi)therightoftheholdersofTitaniumOPIncentive Units to receivetheIncentiveUnit Merger Consideration, (vii) theright of theholders of TitaniumDSUs,TitaniumRSUAwardsandTitaniumPSUAwardstoreceiveTitaniumEquityAwardConsideration,and(viii)therightoftheholdersofTitaniumDSUs,TitaniumRSUAwardsandTitaniumPSUAwardstoreceivetheTitaniumRSU/PSUCashAmount,(b)theprovisionssetforthinSection6.03ofthisAgreementandtherightsoftheTitaniumIndemnifiedParties set forththerein, (c) in theevent of a terminationof this Agreement pursuant toSection8.01(c),therightofTitanium’sandTitaniumOP’sequityholderstopursueclaimsfordamages(includingdamagesbasedonthelossofthepremiumofferedtosuchequityholders);providedthattherightsgrantedpursuanttoclause(c)shallbeenforceableonbehalf of such equity holders only by Titaniumor TitaniumOP, in their respective sole and absolute discretion, onbehalfofsuchequityholders,andanyamountsreceivedbyTitaniumorTitaniumOPinconnectiontherewithmayberetainedbysuchParty, (d) if theClosingoccurs, theprovisionsset forthinSection2.05(f), and(e)therightsoftheTitaniumFamilyRepresentativeprovidedinSection8.06andelsewhereinthisAgreement,which,inthecaseoftheforegoingclauses(a),(b),(d)and(e)shallinuretothebenefitofthePersonsbenefitingtherefrom(suchPersonsshallbeexpressthirdpartybeneficiariesthereof)andsuchPersonsmayenforcethecovenantscontainedtherein.
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Section9.08 GoverningLaw;Jurisdiction;WaiverofJuryTrial.
(a) ThisAgreementandallclaims,actions,proceedingsorcounterclaims(whetherbasedoncontract,tortor otherwise) arising out of or relating to this Agreement, any of the Transactions, or the actions of the SilverParties or the Titanium Parties in the negotiation, administration, performance and enforcement hereof andthereof,shallbegovernedby,andconstruedinaccordancewith,thelawsoftheStateofMichigan(withoutgivingeffecttochoiceoflawprinciplesthereof).
(b) EachoftheParties(i)irrevocablyconsentstosubmititselftotheexclusivejurisdictionofthestateandfederalcourtsintheStateofMichigan(suchcourts,collectively,the“MichiganCourts”)intheeventanydispute,claimorcauseofactionarisesoutoforrelatestothisAgreementortheTransactions,(ii)agreesthatitwillnotattempttodenyordefeatsuchpersonaljurisdictionbymotionorotherrequestforleavefromanyMichiganCourtand (iii) agrees that it will not bring any claim or action arising out of or relating to this Agreement or theTransactionsinanycourtotherthanaMichiganCourt.EachofthePartiesherebyirrevocablyandunconditionallyconsentstoserviceofprocessinthemannerprovidedfornoticesinSection9.02.NothinginthisAgreementwillaffecttherightofanyPartytoserveprocessinanyothermannerpermittedbyApplicableLaw.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAYARISEUNDERTHISAGREEMENTISLIKELYTOINVOLVECOMPLICATEDANDDIFFICULTISSUES,AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANYRIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATIONDIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THETRANSACTIONS, INCLUDING ANY CONTROVERSY INVOLVING ANY REPRESENTATIVE OFSILVERORTITANIUMUNDERTHISAGREEMENT.EACHPARTYCERTIFIESANDACKNOWLEDGESTHAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HASREPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THEEVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTYUNDERSTANDSANDHASCONSIDEREDTHEIMPLICATIONSOFTHISWAIVER, (iii) EACHPARTYMAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTERINTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS ANDCERTIFICATIONSINTHISSECTION9.08.
Section9.09 Assignment.NeitherthisAgreementnoranyoftherights,interestsorobligationshereundershallbe assigned, in whole or in part, by operation of law or otherwise, by any of the Parties without the prior writtenconsentoftheotherParties.NoassignmentbyanyPartyshallrelievesuchPartyofanyofitsobligationshereunder.Subjecttotheimmediatelyprecedingtwosentences,thisAgreementshallbebindingupon,inuretothebenefitof,andbe enforceable by, the Parties and their respective successors and permitted assigns. Any purported assignment notpermittedunderthisSection9.09shallbenullandvoid.
Section9.10 SpecificEnforcement.ThePartiesacknowledgeandagreethatirreparabledamagewouldoccurintheeventthatanyoftheprovisionsofthisAgreementwerenotperformedinaccordancewiththeirspecifictermsorwereotherwisebreached,andthatmonetarydamages,evenifavailable,wouldnotbeanadequateremedytherefor.Itisaccordingly agreedthat the Parties shall be entitled to aninjunctionor injunctions to prevent breaches or threatenedbreachesofthisAgreementandtoenforcespecificallytheperformanceofthetermsandprovisionsofthisAgreement,includingtherightofaPartytocausetheotherPartiestoconsummatetheTransactions.ItisagreedthatthePartiesareentitled to enforce specifically the performance of terms and provisions of this Agreement, without proof of actualdamages(andeachsuchPartyherebywaivesanyrequirementforthesecuringorpostingofanybondinconnectionwithsuchremedy),thisbeinginadditiontoanyotherremedytowhichtheyareentitledatlaworinequity.ThePartiesfurtheragreenottoassertthataremedyofspecificenforcementisunenforceable,invalid,contrarytoApplicableLaworinequitableforanyreason,nortoassertthataremedyofmonetarydamageswouldprovideanadequateremedyforanysuchbreach.
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INWITNESSWHEREOF,thePartieshavedulyexecutedthisAgreement,allasofthedatefirstwrittenabove.
SIMON PROPERTY GROUP, INC., aDelawarecorporation
By: /s/DavidSimon
Name: DavidSimon
Title: ChairmanoftheBoard,ChiefExecutiveOfficerandPresident
SIMON PROPERTY GROUP, L.P., aDelawarelimitedpartnership
By: SIMON PROPERTY GROUP, INC., aDelawarecorporation,itsGeneralPartner
By: /s/DavidSimon
Name: DavidSimon
Title: ChairmanoftheBoard,ChiefExecutiveOfficerandPresident
SILVER MERGER SUB 1, LLC,aDelawarelimitedliabilitycompany
By: /s/DavidSimon
Name: DavidSimon
Title: ChiefExecutiveOfficerandPresident
SILVER MERGER SUB 2, LLC,aDelawarelimitedliabilitycompany
By: /s/DavidSimon
Name: DavidSimon
Title: ChiefExecutiveOfficerandPresident
[Signature Page to Agreement and Plan of Merger]
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INWITNESSWHEREOF,thePartieshavedulyexecutedthisAgreement,allasofthedatefirstwrittenabove.
TAUBMAN CENTERS, INC., aMichigancorporation
By: /s/RobertS.Taubman
Name: RobertS.Taubman
Title: ChairmanoftheBoard,ChiefExecutiveOfficerandPresident
THE TAUBMAN REALTY GROUP LIMITEDPARTNERSHIP, aDelawarelimitedpartnership
By: TAUBMAN CENTERS, INC., aMichigancorporation,itsManagingGeneralPartner
By: /s/RobertS.Taubman
Name: RobertS.Taubman
Title: ChairmanoftheBoard,ChiefExecutiveOfficerandPresident
[Signature Page to Agreement and Plan of Merger]
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EXHIBIT A
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
SILVER MERGER SUB 1, LLC
ThisAmendedandRestatedLimitedLiabilityCompanyAgreement(this“Agreement”)ofSilverMergerSub1,LLC, a Delaware limited liability company (the “Company”) is entered into by Simon Property Group LimitedPartnership,aDelawarelimitedpartnership(the“Member”),andisexecutedasofthe____dayof______,202_(the“Effective Date”).
RECITALS:
WHEREAS, the Company was formed as a Delaware limited liability company pursuant to a Certificate ofFormationfiledwiththeSecretaryofStateoftheStateofDelawareonJanuary24,2020andadoptedaninitiallimitedliabilitycompanyagreementwithrespecttotheCompany(the“Initial LLC Agreement”);
WHEREAS, on February 9, 2020 the Company, Taubman Centers, Inc., a Michigan corporation (“TCO”)andsuchother parties thereto, entered into an Agreement and Plan of Merger (the “Merger Agreement”),whichamongotherthings, contemplatesthemergerofTCOwithandintotheCompanywiththeCompanyasthesurvivingentity(the“Merger”);
WHEREAS, following the Merger and the other transactions contemplated by the Merger Agreement, theCompanywillholdapproximately80%ofthelimitedliabilitycompanyinterestsinTheTaubmanRealtyGroupLLC(“TRG”);and
WHEREAS,inconnectionwiththetransactionscontemplatedbytheMerger Agreement, includingtheMerger,andpursuanttoSection18oftheInitialLLCAgreement,theMemberdesirestoenterintothisAgreementtoamendandrestatetheInitialLLCAgreementtoprovideforthegovernanceoftheCompanyonandaftertheEffectiveDate.
Section1. Name.
(a) Thenameof theCompanyis Silver Merger Sub1, LLC.Thebusiness of theCompanymaybeconductedunderanyothernamedeemednecessaryordesirablebytheMember.
(b) The rights, duties and liabilities of the Member shall be as provided in the Act for members except asprovidedherein.
Section2. Definitions.Unlessotherwiseindicated, all definedtermsusedhereinhavetherespectivemeaningssetforthonScheduleAattachedhereto.
Section3. Purpose.TheCompanyisformedfortheobjectandpurposeofandthenatureofthebusinesstobeconducted by the Company is, engaging in any lawful act or activity for which limited liability companies may beformedundertheActandengaginginanyandallactivitiesnecessaryorincidentaltotheforegoing.
Section 4. Registered Agent. The name and address of the registered agent of the Company for service ofprocess on the Company is The Corporation Trust Company, The Corporation Trust Center, 1209 Orange Street,Wilmington,NewCastleCounty,Delaware19801.
Section 5. Principal Office. The principal office of the Company shall be c/o Simon Property Group, L.P.,225WestWashingtonStreet,P.O.Box7033,Indianapolis,Indiana46207-7033(forovernightdelivery46204),orsuchotherplaceastheMembermaydeterminefromtimetotime.
Section6. Member.ThemailingaddressoftheMemberisthesameasthePrincipalOffice,orsuchotherplaceorplacesastheMembermayprovide.TheMemberisherebyadmittedasthesolememberoftheCompanyandagreestobeboundbythetermsofthisAgreement.
Section7. Powers.TheMembershallhavethepowertodoanyandallactsnecessaryorconvenienttoorforthefurtheranceofthepurposesdescribedherein,includingallpowers,statutoryorotherwise,possessedbymembersunderthetermsofthelawsoftheStateofDelaware.StevenE.Fivel,asan“authorizedperson”withinthemeaningoftheAct,hasexecuted,deliveredandfiledtheCertificateofFormationoftheCompanywiththeSecretaryofState
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oftheStateofDelaware.UponthefilingoftheCertificateofFormationoftheCompanywiththeSecretaryofStateoftheStateofDelaware,hispowersasan“authorizedperson”ceased,andtheMemberthereuponbecamethedesignated“authorized person” and shall continue as the designated “authorized person” within the meaning of the Act. TheMember shall execute, deliver and file any other certificates, and any amendments and/or restatements thereof,necessary for the Company to do business in any other jurisdiction in which the Company may wish to conductbusiness.TheexistenceoftheCompanyasaseparatelegalentityshallcontinueuntilthecancellationoftheCertificateofFormationasprovidedintheAct.
Section8. Management.
(a) TheMember,actingsingly,shallbeauthorizedtoactonbehalfofandtobindtheCompany,includingthecompletion, executionanddeliveryofanyandall agreements, deeds, instruments, receipts, certificates andotherdocuments,andtotakeallsuchotheractionsasitmayconsidernecessaryoradvisableinconnectionwiththemanagementoftheCompany.
(b) Alldeterminations,decisionsandactionsmadeortakenbytheMemberinaccordancewiththisAgreementshallbeconclusiveandabsolutelybindingupontheCompany,theMemberandtheirrespectivesuccessors,assignsandpersonalrepresentatives.
(c) Persons dealing with the Company are entitled to rely conclusively upon the power and authority of theMemberashereinsetforth.
Section 9. Additional Contributions. The Member may make such additional capital contributions to theCompanyastheMemberinitssolediscretionmaydeemnecessaryoradvisableinconnectionwiththebusinessoftheCompany.
Section10. Distributions.
(a) TheCompanyshallnotmakeadistributiontotheMemberifsuchdistributionwouldviolateSection18-607oftheAct.
(b) Distributions shall be made to the Member at the times and in the aggregate amounts determined by theMember.
Section11. TaxMatters. Proper and complete records and books of account of the business of the Companyshall be maintained at the Company's principal place of business. The Member acknowledges and agrees that theCompanyisadomesticentitywithasingleownerandistobedisregardedasaseparateentityforfederalincometaxpurposes as provided in Treas. Reg. § 1.7701-3. The Company's books of account shall be maintained on a basisconsistentwithsuchtreatmentandonthesamebasisutilizedinpreparingtheMember'sfederalincometaxreturn.TheMemberanditsdulyauthorizedrepresentativesmay,foranyreasonreasonablyrelatedtoisinterestasaMemberoftheCompany,examinetheCompany'sbooksofaccountandmakecopiesandextractstherefromatitsownexpense.TheMember shall maintain the records of the Company for no less than three years following the termination of theCompany.
Section12. AssignmentsandTransfersofInterests.TheMembermaytransferalloranyportionofitsinterestsintheCompanytoanypersonatanytime.
Section 13. Admission of Additional Members. One or more additional members may be admitted to theCompany with the consent of the Member. Upon the admission to the Company of any additional members, theMembershallcausethisAgreementtobeamendedandrestatedtoreflecttheadmissionofsuchadditionalmember(s),the initial capital contribution, if any, of such additional member(s), the intention of the members to cause theCompanytobeclassifiedasapartnershipforfederaltaxpurposes,andtoincludesuchotherprovisionsasthemembersmayagreetoreflectthechangeofstatusoftheCompanyfromasinglememberCompanytoaCompanywithtwoormoremembers.
Section14. LiabilityofMember.TheMembershallnothaveanyliabilityfortheobligationsorliabilitiesoftheCompanyexcepttotheextentprovidedintheAct.
Section15. Dissolution.
(a) Subject to the occurrence of an event of dissolution pursuant to Section 15(b), the Company shall haveperpetualexistence.
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(b) TheCompanyshalldissolve,anditsaffairsshallbewoundupuponthefirsttooccurofthefollowing:(i)awrittenconsentoftheMember;(ii)thedeath,retirement,resignation,expulsion,bankruptcyordissolutionofthe Member; (iii) the occurrence of any other event which terminates the continued membership of theMemberintheCompany,includingthedispositionofalloftheMember'sinterestintheCompany,unlessthebusiness of the Company is continued by the consent of all or any remaining members of the Companywithin90daysfollowingtheoccurrenceofanysucheventorinamannerpermittedbytheAct,or(iv)theentryofadecreeofjudicialdissolutionunderSection18-802oftheAct.
Section16. TCOIndemnification. For the avoidance of doubt, each reference to the “Company” below shallincludetheCompanyanditscorporatepredecessorTCO.
(a) TheCompanyshallanddoesherebyagreetoindemnifyeachTCOIndemnifiedPersonwhoisorwasapartyto,orwhoisthreatenedtobemadeapartyto,athreatened,pending,orcompletedaction,suit,orproceeding,whether civil, criminal, administrative, or investigative andwhether formal or informal, including, withoutlimitation, an action by or in the right of the, by reason of the fact that he or she was a director of theCompany prior to the Effective Time, or was, prior to the Effective Time, serving at the request of theCompanyasadirector(orinasimilarcapacity,includingservingasamemberofanycommitteeofTRG)orinanyotherrepresentativecapacityofanotherforeignordomesticcorporationoroforwithrespecttoanyother entity (including TRG), whether for profit or not, against expenses, attorneys' fees, judgments,penalties,fines,andamountspaidinsettlementactuallyandreasonablyincurredbyhimorherinconnectionwiththeaction,suit,orproceeding.ThisSection16(a)isintendedtograntthepersonshereindescribedwiththefullestprotectionnotprohibitedbyexistinglawineffectasofthedateofthisAgreementorsuchgreaterprotectionasmaybepermittedornotprohibitedundersucceedingprovisionsoflaw.
(b) TheCompanyhasthepowertoindemnifyeachTCOIndemnifiedPersonwhoisorwasapartyto,orwhoisthreatenedtobemadeapartyto,athreatened,pending,orcontemplatedaction,suit,orproceeding,whethercivil,criminal,administrative,orinvestigativeandwhetherformalorinformal,includinganactionbyorintheright oftheCompany,byreasonofthefact that heorshewas, prior totheEffectiveTime,anofficer,employee, or agent of the Company or was, prior to the Effective Time, serving at the request of theCompany as an officer, partner, trustee, employee, or agent of another foreign or domestic corporation,partnership (including TRG), joint venture, trust or other enterprise, whether for profit or not, againstexpenses,includingattorneys'fees,judgments,penalties,fines,andamountspaidinsettlementactuallyandreasonablyincurredbyhimorherinconnectionwiththeaction, suit, orproceeding, if thepersonactedingoodfaithandinamannerheorshereasonablybelievedtobeinornotopposedtothebestinterestsoftheCorporation or its shareholders, and with respect to a criminal action or proceeding, if the person had noreasonablecausetobelievehisorherconductwasunlawful.Unlessorderedbyacourt,anindemnificationunder this Section 16(b) shall be made by the Company only as authorized in the specific case upon adeterminationthatindemnificationoftheTCOIndemnifiedPersonisproperinthecircumstancesbecauseheorshehasmettheapplicablestandardofconductsetforthinthisSection16(b).
(c) TheCompanyshall paytheexpensesincurredbyaTCOIndemnifiedPersondescribedinSection16(a)indefending a civil or criminal action, suit, or proceeding described in such Section 16(a) in advance of thefinaldispositionoftheaction,suit,orproceeding.TheCompanyshallpaytheexpensesincurredbyaTCOIndemnified Person described in Section 16(b) in defending a civil or criminal action, suit, or proceedingdescribed in such Section 16(b) in advance of the final disposition of the action, suit, or proceeding uponreceiptofanundertakingbyoronbehalfofsuchpersontorepaytheexpensesifitisultimatelydeterminedthat the person is not entitled to be indemnified by the Company. Such undertaking shall be by unlimitedgeneralobligationofthepersononwhosebehalfadvancesaremadebutneednotbesecured.
(d) IfaclaimunderthisSection16isnotpaidinfullbytheCompanywithin30daysafterawrittenclaimhasbeenreceivedbytheCompany,theclaimantmayatanytimethereafter bringsuit, inacourtofcompetentjurisdictionintheStateofMichigan,againsttheCompany(initscapacityassuccessortoTCO)torecovertheunpaidamountoftheclaimand,ifsuccessfulinwholeorinpart,theclaimantshallbeentitledtobepaidalsotheexpense(includingattorneys’fees)ofprosecutingsuchclaim.Itshallbeadefensetoanysuchaction(otherthananactionbroughttoenforceaclaimforexpensesincurredindefendingaproceedinginadvanceofitsfinaldispositionwheretherequiredundertakinghasbeentenderedtothecorporation)thattheclaimanthasnotmetthestandardsofconductthatmakeitpermissibleunderthelawsoftheStateof
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MichiganfortheCompany(initscapacityassuccessortoTCO)toindemnifytheclaimantfortheamountclaimed.TheburdenofprovingsuchadefenseshallbeontheCompany.NeitherthefailureoftheCompanytohavemadeadeterminationpriortothecommencementofsuchactionthatindemnificationoftheclaimantisproperunderthecircumstancesbecauseheorshehasmettheapplicablestandardofconductsetforthinthelawsoftheStateofMichigan,noranactualdeterminationbytheCompanythattheclaimanthadnotmetsuchapplicablestandardofconduct,shallbeadefensetotheactionorcreateapresumptionthattheclaimanthasnotmettheapplicablestandardofconduct.NoticeofanyapplicationtothecourtpursuanttothisSection16(d)shallbegiventotheCompanypromptlyuponfiling.
(e) TheCompanyshallnotbeliabletoindemnifyanypersonunderthisSection16(a)foranyamountspaidinsettlementofanyactionorclaimeffectedwithouttheCompany’swrittenconsent,whichconsentshallnotbeunreasonablywithheld;or(b)foranyjudicialawardiftheCompanywasnotgivenareasonableandtimelyopportunity,atitsexpense,toparticipateinthedefenseofsuchaction.
(f) IntheeventofpaymentunderthisSection16,theCompany,asapplicable,shallbesubrogatedtotheextentofsuchpaymenttoalloftherightsofrecoveryoftheperson,whoshallexecuteallpapersrequiredandshalldo everything that may be necessary to secure such rights, including the execution of such documentsnecessarytoenablethecorporationeffectivelytobringsuittoenforcesuchrights.
(g) TheCompanyshallnotbeliableunderthisSection16tomakeanypaymentinconnectionwithanyclaimmadeagainsttheindemniteetotheextenttheindemniteehasotherwiseactuallyreceivedpayment(underanyinsurancepolicy,agreement,vote,orotherwise)oftheamountsotherwiseindemnifiablehereunder.
(h) IfSection16oranyportionhereoforthereofshallbeinvalidatedonanygroundbyanycourtofcompetentjurisdiction,thentheCompanyshallneverthelessindemnifyeachdirectororofficertothefullestextentnotprohibitedbyanyapplicableportionofthisSection16thatshallnothavebeeninvalidated,orbyanyotherapplicable law. If Section 16 shall be invalid due to the application of the indemnification provisions ofanotherjurisdiction,thentheCompanyshallindemnifyeachdirectorandofficertothefullestextentunderanyotherapplicablelaw.
Section17. Indemnification.
(a) TheMembershallbeindemnifiedandheldharmlessbytheCompanyfromandagainstanyandallexpenses(includingreasonableattorneys' fees), losses,damages,liabilities, chargesandclaimsofanykindornaturewhatsoever,incurredbyitinitscapacityasaMemberand/orarisingoutoforincidentaltoanyactperformedoromittedtobeperformedbyanyMemberinitscapacityasaMemberinconnectionwiththebusinessoftheCompany.
(b) Notwithstanding anything to the contrary contained in this Agreement, under no circumstances shall theMemberoranymember,partner,shareholderorotherpersondirectlyorindirectlyholdinganinterestintheMember or any officer, director or employee of the foregoing have any personal liability under thisAgreement, and no assets of the Member other than the Member's interest in the Company and theCompany'sassetsshallbesubjecttoanyjudgementorattachmentinconnectionwithanyactionorclaiminconnectionwiththisAgreement.
Section18. Amendments.AnyamendmentstothisAgreementmaybemadeinthesoleandabsolutediscretionoftheMemberandshallbeinwritingsignedbytheMember.
Section19. GoverningLaws.ThisAgreementshallbegovernedby,andconstruedunder,thelawsoftheStateofDelaware,allrightsandremediesbeinggovernedbysaidlaws.TheMemberintendstheprovisionsoftheActtobecontrollingastoanymattersnotsetforthinthisAgreement.
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INWITNESSWHEREOF,theundersigned,intendingtobelegallyboundhereby,hasdulyexecutedthisLimitedLiabilityCompanyAgreementofSilverMergerSub1,LLCasofthedayfirstwrittenabove.
MEMBER:
SIMONPROPERTYGROUP,L.P.,aDelawarelimitedpartnership,itsMemberBy:SIMONPROPERTYGROUP,INC.,aDelawarecorporation,itsgeneralpartner
By:
AlexanderL.W.Snyder,AssistantSecretary
LIMITEDLIABILITYCOMPANYAGREEMENTOF[SILVERMERGERSUB1,LLC]
SIGNATUREPAGE
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SCHEDULE A
DEFINITIONS
A. Definitions. When used in this Agreement, the following terms not otherwise defined herein have thefollowingmeanings:
“Act”shallhavethemeaningsetforthintherecitals.
“Agreement”shallhavethemeaningsetforthintheintroduction.
“Bankruptcy”shallmean,withrespecttotheCompanyortheMemberasapplicableor,ifsuchPerson(i)makesanassignmentforthebenefitofcreditors,(ii)filesavoluntarypetitioninbankruptcy,(iii)isadjudgedasbankruptorinsolvent,orhasenteredagainstitanorderforrelief,inanybankruptcyorinsolvencyproceedings,(iv)filesapetitionor answer seeking for itself anyreorganization, arrangement, composition, readjustment, liquidation or similar reliefunderanystatute, laworregulation,(v)filesananswerorotherpleadingadmittingorfailingtocontest thematerialallegations of a petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces in theappointmentofatrustee,receiverorliquidatorofthePersonorofalloranysubstantialpartofitsproperties,or(vii)if120 days after the commencement of any proceeding against such Person seeking reorganization, arrangement,composition,readjustment,liquidationorsimilarreliefunderanystatute,laworregulation,iftheproceedinghasnotbeen dismissed, or if within 90 days after the appointment without the such Person's consent or acquiescence of atrustee, receiverorliquidatorofsuchPersonorofall oranysubstantial part ofitsproperties, theappointmentisnotvacatedorstayed,orwithin90daysaftertheexpirationofanysuchstay,theappointmentisnotvacated.Theforegoingdefinition of “Bankruptcy” is intendedto replace andshall supersedeandreplace the definition of “Bankruptcy” setforthinSections18-101(1)and18-304oftheAct.
“CertificateofFormation”shallhavethemeaningasdefinedinSection18-101(2)oftheAct.
“Company”shallhavethemeaningsetforthintheintroduction.
“Knowing”meanswithrespecttoanyPersonthatisanindividual,theconsciousawarenessbysuchPersonofthematteratissue.
“Member”shallhavethemeaningsetforthintheintroduction.
“Person” or “Persons” means an individual, a partnership (general or limited), limited liability company,corporation,jointventure,businesstrust,cooperative,association,orotherformofbusinessorganization,whetherornotregardedasalegalentityunderapplicablelaw,atrust(intervivosortestamentary),anestateofadeceased,insane,or incompetent person, a quasigovernmental entity, a government or any agency, authority, political subdivision, orotherinstrumentalitythereof,oranyotherentity.
“PrincipalOffice”shallhavethemeaningsetforthinSection5hereof.
“TCO Indemnified Person” means each individual (including the heirs, executors, and administrators of suchindividual)whowasadirector,officeroremployeeofTCOpriortotheEffectiveTime.
B. RulesofConstruction.DefinitionsinthisAgreementapplyequallytoboththesingularandpluralformsofthe defined terms. The words “include” and “including” shall be deemed to be followed by the phrase “withoutlimitation.”Theterms“herein,”“hereof”and“hereunder”andotherwordsofsimilarimportrefertothisAgreementasa whole and not to any particular Section, paragraph or subdivision. The Section titles appear as a matter ofconvenienceonlyandshall notaffect theinterpretationofthisAgreement. AllSection,paragraph,clause, Exhibit orSchedulereferencesnotattributedtoaparticulardocumentshallbereferencestosuchpartsofthisAgreement.
SCHEDULEA
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EXHIBIT B
JOINT VENTURE OPERATING AGREEMENT of
THE TAUBMAN REALTY GROUP LLC
a Delaware limited liability company [•]
TABLE OF CONTENTS
TABLE OF CONTENTS
JOINT VENTURE OPERATING AGREEMENT of
THE TAUBMAN REALTY GROUP LLC
a Delaware limited liability company
Page
I. CONTINUATION; CHANGE OF JURISDICTION; NAME; PRINCIPAL OFFICE; AGENT FORSERVICE OF PROCESS; FILING OF CERTIFICATE(S); TERM; TITLE TO COMPANYPROPERTY.
Section1.1 Continuation;ChangeofJurisdiction B-2
Section1.2 Name B-2
Section1.3 PrincipalOffice;OtherOffices;AgentforServiceofProcess B-2
Section1.4 FilingofCertificate(s)asRequired B-2
Section1.5 Term B-2
Section1.6 TitletoCompanyProperty B-2
Section1.7 ContinuingOffer B-3
II. DEFINITIONS.
III. PURPOSES AND POWERS; REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS.
Section3.1 PurposesandPowersoftheCompany B-15
Section3.2 PartnershipOnlyforTaxPurposes B-16
Section3.3 RepresentationsandWarrantiesbytheMembers;CertainCovenants B-16
IV. CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; MEMBERSHIP INTERESTS; OTHER.
Section4.1 CapitalContributions;CapitalAccountBalances B-16
Section4.2 AnticipatedFinancings B-16
Section4.3 NoRighttoWithdrawCapital;NoRequirementofFurtherContributions B-17
Section4.4 NoInterestonCapitalContributionsorCapitalAccounts B-17
Section4.5 CapitalAccounts B-17
Section4.6 MembershipInterests;UnitsofMembershipInterest;PercentageInterests B-19
Section4.7 MembershipInterestCertificates B-19
V. ALLOCATIONS; DISTRIBUTIONS; BANK ACCOUNTS; BOOKS OF ACCOUNT; TAXRETURNS; ACCOUNTING AND REPORTS; COMPANY FISCAL YEAR.
Section5.1 Allocations B-20
Section5.2 Distributions B-24
Section5.3 BankAccountsandOtherInvestments B-26
Section5.4 BooksofAccount B-26
Section5.5 TaxReturns B-26
Section5.6 AccountingandReports,Etc. B-26
Section5.7 CompanyFiscalYear B-27
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VI. MANAGEMENT.
Section6.1 Management;PowerandAuthorityandAuthorizedActionsoftheChiefExecutiveOfficerandBoardofDirectors B-27
Section6.2 Number,QualificationandTermofOfficeofDirectors B-29
Section6.3 AppointmentofDirectors B-29
Section6.4 RemovalofDirectors B-30
Section6.5 DirectorResignations B-30
Section6.6 Vacancies B-30
Section6.7 ChairmanoftheBoardofDirectors;ChiefExecutiveOfficerandPresident B-30
Section6.8 BoardMeetings;Notice B-30
Section6.9 BoardActionWithoutMeeting B-31
Section6.10 ConferenceTelephoneBoardMeetings B-31
Section6.11 BoardQuorum B-31
Section6.12 [Reserved] B-32
Section6.13 RemunerationofDirectors B-32
Section6.14 DelegationofAuthorityandDesignationofOfficers B-32
Section6.15 CompensationandIncentiveArrangements B-32
Section6.16 AnnualBudgets B-33
Section6.17 MasterServicesAgreement B-34
Section6.18 MemberCommunications B-34
Section6.19 CertainApprovalRequirementsDuringtheTitaniumPeriod B-34
Section6.20 CertainApprovalRequirementsDuringtheSilverPeriod B-37
Section6.21 AdditionalRestrictionsonSilverParentanditsNon-CompanySubsidiaries B-39
Section6.22 Deadlocks B-40
Section6.23 REITRequirements B-41
Section6.24 ExecutionofLegalInstruments B-42
Section6.25 LimitedFiduciaryorImpliedDuties;Reliance;IndemnityandReimbursement;AdvancementofExpensesandInsurance;Other B-42
Section6.26 PartnershipRepresentative. B-44
Section6.27 SecuritywithRespecttoTaxLoans. B-48
Section6.28 CertainActions B-49
Section6.29 CompanyReimbursements B-50
Section6.30 TransferofTitaniumName B-51
VII. COMPANY BUSINESS AND STRATEGY; BUSINESS OPPORTUNITIES; COMPANYPOLICIES.
Section7.1 GeneralAcknowledgement B-51
Section7.2 CompanyBusinessandStrategyandBusinessOpportunities B-51
Section7.3 Non-Compete B-52
VIII. TRANSFERS OF MEMBERSHIP INTERESTS; EXCHANGE RIGHTS; REGISTRATIONRIGHTS.
Section8.1 Transfers B-53
Section8.2 GeneralProvisionsRegardingTransfers B-54
Section8.3 IssuanceofAdditionalInterestsintheCompany B-54
Section8.4 ExchangeRights B-55
Section8.5 RegistrationRights B-58
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IX. WITHHOLDING AND DOCUMENTATION.
Section9.1 Withholding B-60
Section9.2 Documentation B-60
X. DISSOLUTION OF THE COMPANY, WINDING UP, AND LIQUIDATION.
Section10.1 NoDissolution B-61
Section10.2 EventsCausingDissolution B-61
Section10.3 BankruptcyofaMember B-61
Section10.4 WindingUp B-61
Section10.5 DistributionofAssets B-62
Section10.6 CancellationofCertificates B-62
Section10.7 DispositionofDocumentsandRecords B-63
XI. MISCELLANEOUS.
Section11.1 Notices B-63
Section11.2 ApplicableLaw B-64
Section11.3 WAIVEROFJURYTRIAL B-64
Section11.4 EntireAgreement B-64
Section11.5 WordMeanings;Gender B-64
Section11.6 SectionTitles B-64
Section11.7 Waiver B-65
Section11.8 SeparabilityofProvisions B-65
Section11.9 BindingAgreement B-65
Section11.10 EquitableRemedies B-65
Section11.11 Partition B-65
Section11.12 Amendment B-65
Section11.13 NoThird-PartyRightsCreatedHereby B-66
Section11.14 AgreementinCounterparts B-66
Section11.15 Attorneys-In-Fact B-66
Section11.16 ExecutionbyTrustee B-66
Section11.17 LostMembershipInterestCertificates. B-66
Section11.18 ActionsbyTitaniumFamilyGroup B-66
Section11.19 Release B-67
ScheduleI MembersandPreferredHolders
ScheduleII DesignatedProperties
ScheduleIII PermittedCompetingActivities
ScheduleIV CapitalAccounts
ScheduleV CertainAgreements
ScheduleVI Section6.28Properties
ScheduleVII InitialMandatoryMinimum
ScheduleVIII TTCRestructuring
ExhibitA FormofMembershipInterestCertificate
ExhibitB AdoptionAgreement
ExhibitC IllustrativeFFOCalculations
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ExhibitD TotalRewardsPolicy
ExhibitE InitialAnnualOperatingBudget
ExhibitF InitialAnnualCapitalExpenditureBudget
ExhibitG PermittedAffiliateTransactions
ExhibitH SeriesAPreferredUnitDesignation
ExhibitI REITRequirements
ExhibitJ InitialDirectors
ExhibitK TreatmentofCertainEquityInterests
ExhibitL TotalEquityValue
ExhibitM FormofVotingAgreement
ExhibitN OpCommWaiver
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JOINT VENTURE OPERATING AGREEMENT OF
THE TAUBMAN REALTY GROUP LLC
a Delaware limited liability company
THISJOINTVENTUREOPERATINGAGREEMENT(hereinafter, this“Agreement”) of TheTaubmanRealtyGroupLLC,aDelawarelimitedliabilitycompany(the“Company”),datedasof[•](the“Effective Date”),ismadeandenteredintobyandamongSilverMergerSub1,LLC,aDelawarelimitedliabilitycompany(the“Silver Member”),assuccessorininterest toTaubmanCenters, Inc., a Michigancorporation(“Titanium”), SimonProperty Group, L.P., aDelaware limited partnership (“Silver OP”), theTitaniumFamilyGroup(as definedbelow), SimonProperty Group,Inc.,aDelawarecorporation(“Silver Parent”)andtheotherPersonssetforthonthesignaturepageheretosolelyinthecapacityandforthelimitedpurposessetforththerein.
RECITALS:
A. Prior to the formation of the Company, Titanium was a partner in The Taubman Realty Group LimitedPartnership(the“Prior Partnership”),pursuanttothetermsoftheThirdAmendmentandRestatementofAgreementofLimitedPartnershipofTheTaubmanRealtyGroupLimitedPartnership,datedDecember12,2012.
B. PursuanttothetermsofthatcertainAgreementandPlanofMergerbyandamongSilverParent,SilverOP,Silver Member, Silver Merger Sub 2, LLC, a Delaware limited liability company (“Non-Surviving Merger Sub”),TitaniumandthePriorPartnership,datedasofFebruary9,2020(the“Merger Agreement”),(i)Non-SurvivingMergerSub, merged with and into the Prior Partnership, with the Prior Partnership surviving (the “Partnership Merger”),(ii)immediatelythereafter,TitaniummergedwithandintotheSilverMember,withtheSilverMembersurviving(the“Merger”),(iii)immediatelythereafter,thePriorPartnershipwasconvertedintoaDelawarelimitedliabilitycompany(the“LLC Conversion”),withtheCompanybeingformedasthesuccessorbyconversiontothePriorPartnershipand(iv)asaresultoftheforegoingtransactions,asoftheEffectiveDate,theSilverMemberownsMembershipInterestsinthe Company representing an eighty percent (80%) Percentage Interest and the Titanium Family Group ownsMembership Interests in the Company representing a twenty percent (20%) Percentage Interest (including OptionDeferredUnitsasCommonUnits).
C. Forfederalincometaxpurposes,theCompanyisacontinuationofthePriorPartnership.
D. The Company was formed pursuant to the laws of the State of Delaware by the filing of a certificate ofconversionandacertificateofformation(the“Certificate of Formation”)withtheofficeoftheSecretaryofStateoftheStateofDelawareonthedatehereof.
E. TheMembersdesiretoadoptandenterintothisAgreementtosetforththemannerinwhichthebusinessandaffairs of the Company shall be managed and their respective rights, duties and obligations with respect to theCompany.
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NOW, THEREFORE,in consideration of the foregoing premises and the mutual covenants of the Members,Silver Parent and the other parties hereto hereinafter set forth, and for other good and valuable consideration, thereceiptandsufficiencyofwhichareherebyacknowledged,thepartiesheretoagreeasfollows:
I.
CONTINUATION; CHANGE OF JURISDICTION; NAME; PRINCIPAL OFFICE; AGENT FOR SERVICE OF PROCESS; FILING OF CERTIFICATE(S);
TERM; TITLE TO COMPANY PROPERTY.
Section 1.1 Continuation; Change of Jurisdiction.
ThepartiesheretodoherebycontinuetheCompanyasthesuccessorbyconversionofthePriorPartnershipandasaDelawarelimitedliabilitycompanypursuanttotheDelawareLimitedLiabilityCompanyAct(the“Act”),uponthetermsandconditionshereinsetforth.Totheextentpermittedbyapplicablelaw,theprovisionsofthisAgreementshalloverride the provisions of the Act in the event of any inconsistency or contradiction between them. If the Board ofDirectors shall cause the Company to change its jurisdiction, by merger, consolidation, or in any other fashion ormanner,theActshall,forallpurposesofthisAgreement,refertotheapplicablelawsofthenewjurisdiction.
Section 1.2 Name.
ThenameoftheCompanyis“TheTaubmanRealtyGroupLLC”anditsbusinessshallbecarriedoninthisnamewith such variations and changes or in such other trade names as either the Chief Executive Officer during theTitaniumPeriodortheBoardofDirectors(oritsdesignees)duringtheSilverPeriodreasonablydetermines.
Section 1.3 Principal Office; Other Offices; Agent for Service of Process.
TheprincipalofficeoftheCompanyislocatedat200EastLongLakeRoad,BloomfieldHills,Michigan48304.The Company, with the prior written approval of (i) the Chief Executive Officer during the Titanium Period in amannerthatisnotmateriallyadversetoSilveror(ii)theBoardofDirectorsduringtheSilverPeriod,mayfromtimetotime change such principal office and place of business, with written notice thereof to the Members. Subject to theterms and conditions of this Agreement and the Annual Budget, during the Titanium Period, the Company shallcontinuetomaintainandkeepavailableforuseitsofficelocatedat712FifthAvenue,NewYork,NewYorkconsistentwithpastpractice.SubjecttothetermsandconditionsofthisAgreementandtheAnnualBudget,theCompanymayestablish such additional offices or places of business as the Chief Executive Officer may deem necessary orappropriate for the operation of the Company’s business in the ordinary course of business. The address of theregistered office of, and the registered agent for service of process on, the Company in the State of Delaware isCorporationServiceCompany,1013CentreRoad,Wilmington,Delaware19805.TheChiefExecutiveOfficerduringthe TitaniumPeriod, andthe Board of Directors during the Silver Period, maydesignate another registered agent orregisteredofficefromtimetotimeasmaybedesirablefortheCompany.
Section 1.4 Filing of Certificate(s) as Required.
TheCompanyhascausedorshallcausetheexecutionandfilingofanappropriatecertificateorcertificates,orlikeinstrumentorinstruments,orotherfilingsorapplications,atanytimeandfromtimetotimeasrequiredbytheActorthe law of any applicable jurisdiction in connection with the existence or activities or business of the Company, achangeinthejurisdictionoftheCompany,ortheuseofaname(whichnamemaybedifferentthanthenameoftheCompany), and all amendments thereto of record. Copies of such certificates, instruments or other filings orapplicationsshallbefurnishedonatimelybasistoallMembers.
Section 1.5 Term.
The term of the Company shall continue in perpetuity (provided that the Company may be dissolved inaccordancewiththeprovisionsofArticleX).
Section 1.6 Title to Company Property.
All property owned by the Company, whether real or personal, tangible or intangible, shall be deemed to beownedbytheCompanyasanentityandnoMemberoranyotherPerson,individually,shallhaveanydirectownershipofsuchproperty.SubjecttothetermsandconditionsofthisAgreement,theCompanymayholdanyofitspropertyinits own name or in the name of one (1) or more nominees that are not Members, Preferred Holders or PermittedTransfereesoftheforegoing.
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Section 1.7 Continuing Offer.
TheTitaniumFamilyGroupherebyacknowledgesandagreesthatnomemberoftheTitaniumFamilyGrouporanyoftheirrespectivetransfereeshasanyrightsunderthatcertainSecondAmendedandRestatedContinuingOfferofTitanium,effectiveasofMay16,2000.
II.
DEFINITIONS.
Unless the context in which a termis used clearly indicates otherwise, the following terms have the followingrespectivemeaningswhenusedinthisAgreement,andthesingularshallincludethepluralandviceversa,unlessthecontextrequiresotherwise:
“Action” means any action, filing of charges, suits, claims or proceedings (whether civil, criminal oradministrative)broughtbyorbeforeanyGovernmentalEntity,arbitrator,mediatororothertribunal,or,otherthanforpurposesofSection6.19,anyinvestigationbyanyGovernmentalEntity.
“Additional Interest”isdefinedinSection8.3.
“Adjusted Capital Account Balance” means a Member’s or a Preferred Holder’s Capital Account balanceincreased by the sum of (i) any amount of cash or property such Member or Preferred Holder is unconditionallyobligatedtorestoreuponliquidationoftheCompany(includingasaresultofanyelectionmadeunderSection10.5(c))and (ii) such Member’s or Preferred Holder’s share of Company Minimum Gain and Member Nonrecourse DebtMinimumGain.
“Adjustment Liability”isdefinedinSection6.26(e).
“Administrative Manager”meansthat Personwhohasbywrittencontract withthe Companyagreedto providemanagement, administration, leasing and development services for the properties of the Company or any of itsSubsidiariesorjointventureinvestments. OntheEffectiveDate,TTCistheAdministrativeManagerpursuanttotheMasterServicesAgreement.
“Affiliate”and“Affiliates”means,(i)withrespecttoanyindividual,anymemberofsuchindividual’sImmediateFamily,aFamilyTrustwithrespecttosuchindividual,andanyPerson(otherthananindividual)thatsuchindividualControls; and(ii) withrespect to anyPerson(other thananindividual), anyPerson(other thananindividual) whichControls, is Controlled By, or is Under Common Control With, such Person; providedthat for purposes of thisAgreement,(a)noMemberorPreferredHoldershallbedeemedtobeanAffiliateofanyotherMemberorPreferredHoldersolelybyvirtueofthisAgreementand(b)theCompanyanditsSubsidiaries,ontheonehand,andeachoftheMembersandPreferredHoldersandtheirrespectiveAffiliates,ontheotherhand,shallnotconstituteAffiliatesofeachothersolelybyvirtueofthisAgreement.
“Agreement”isdefinedinthePreambletothisAgreement.
“Alternative Base Method”isdefinedinSection5.1(d)(vii).
“Alternative Procedure”isdefinedinSection6.26(e).
“Annual Budget”or“Annual Budgets”isdefinedinSection6.16(a).
“Annual Capital Budget”isdefinedinSection6.16(a).
“Annual Distribution Policy”isdefinedinSection5.2.
“Annual Operating Budget”isdefinedinSection6.16(a).
“Applicable Company Property”isdefinedinSection6.28(a).
“Authorized Signatories”isdefinedinSection6.1(b).
“Bankrupt”or“Bankruptcy”astoanyPersonmeans(i)applyingfororconsentingtotheappointmentof,orthetaking of possession by, a receiver, custodian, trustee, administrator, liquidator, or the like of itself or of all or asubstantialportionofitsassets,(ii)makingageneralassignmentforthebenefitofitscreditors,or(iii)placingitselforconsenting to its placement under the protection of the law of any jurisdiction relating to bankruptcy, insolvency,reorganizationorwinding-up(otherthaninaccordancewithArticleX).
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“Board Fundamental Decision”isdefinedinSection6.19(a).
“Board of Directors”meanstheboardofdirectorsoftheCompany.
“Book Value”and“Book Values”aredefinedinSection4.5(b).
“Business Day”meansanyDaythatisnotaSaturday,Sunday,orlegalholidayinNewYork,NewYorkandonwhichcommercialbanksareopenforbusinessinNewYork,NewYork.
“Call Exchange Notice”isdefinedinSection8.4(a)(ii).
“Capital Account”isdefinedinSection4.5(a).
“Capital Gains Tax Liability” means, for each Company Fiscal Year, the product of (1) the highest individualfederal incometaxrateapplicabletocapital gains(takingintoaccounttherelevant holdingperiodfortheapplicableassetsdisposedofduringsuchCompanyFiscalYear)ineffectforsuchperiodand(2)thelargestquotientobtainedbydividing (a) each Member’s allocable share of net capital gain (as defined in Section 1222(11) of the Code) of theCompany for such Company Fiscal Year, determined by taking into account allocations of gain pursuant toSection704(c)oftheCodeandtakingintoaccountanybasisadjustmentsavailabletosuchMemberunderSection734orSection743oftheCode,exceptthataMember’sallocationofgainshallnotbetakenintoaccounttotheextentthat(x)theCompanyhasmadeorisrequiredtomake,bywayofindemnificationorotherwise,apaymenttosuchMemberwithrespecttoanallocationofgain,or(y)suchMemberhasotherwiseagreednottoincludethegainallocabletosuchMemberinthecalculationoftheCapitalGainsTaxLiability,by(b)suchMember’sPercentageInterest
“CEO Delegated Authority”isdefinedinSection6.1(c).
“CEO Obligations”meanstherequirementoftheChiefExecutiveOfficerduringtheTitaniumPeriodtomanagethebusinessandaffairsoftheCompanyanditsSubsidiariesinallmaterialrespectsincompliancewiththecovenantsexpressly set forth in this Agreement and, subject to Section 6.16(d), in accordance with the Annual Budget, andtocomplywiththeobligationsoftheChiefExecutiveOfficerhereunder(includingpursuanttoSection7.3);provided,fortheavoidanceof doubt, that theCEOObligationsonlyapplyto actionsthat are withinthereasonable control of theChiefExecutiveOfficer(suchastheexpenditureoffundscontemplatedbytheAnnualBudget)andinnoeventshallthe CEO Obligations be deemed to impose any obligation or requirement that the Chief Executive Officer, theCompanyoritsSubsidiariesmeetorexceedanyfinancial,operationalorotherperformancevariables,thresholds,goalsorresults.
“Certificate of Formation”isdefinedintheRecitalstothisAgreement.
“Chief Executive Officer”meanstheChiefExecutiveOfficeroftheCompany.
“Chief Operating Officer”meanstheChiefOperatingOfficeroftheCompany.
“Code”meanstheInternalRevenueCodeof1986.
“Common Units”isdefinedinSection4.6(a).
“Communication”and“Communications”aredefinedinSection11.1(a).
“Company”isdefinedinthePreambletothisAgreement.
“Company Accountants”meansanationallyrecognizedfirmofcertifiedpublicaccountantsselectedbytheChiefExecutiveOfficerduringtheTitaniumPeriodorbytheBoardofDirectorsduringtheSilverPeriod;providedthat,fromandafterthethird(3rd)anniversaryoftheEffectiveDate,theSilverMembermayrequestthattheCompanyselectasthe Company Accountants a different nationally recognized firm of certified public accountants, and the CompanyAccountantsshallthereafterbeswitchedassorequestedbytheSilverMemberaspromptlyasreasonablypracticable.
“Company FFO”hasthemeaningsetforthin,andshallbedeterminedbaseduponthedefinitionthereofsetforthintheNationalAssociationofRealEstateInvestmentTrustsFundsFromOperationsWhitePaper–2018Restatement(“2018 White Paper”), calculated in a manner that is consistent in all material respects with past financial reportingpractices for the Company, and shall be adjusted to exclude (without duplication) the impact of (a) extraordinary,unusualornon-recurringitems,suchas:(1)prepaymentpenalties,(2)impairmentcharges(whetherornotmeetingthe2018WhitePapercriteriaforaddback),(3)peripherallandsales,and(4)fundsfromoperations
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attributabletoanyassets(includingallorsubstantiallyalloftheintereststherein)thathavebeensold,leased,divestedorotherwisedisposedof,thenetproceedsofwhichsales,divestituresordisposalshavebeenorpriortotheapplicableExchangeDate will be distributed to the Members and(b) the amortization of purchase accountingadjustments andother mark-to-market adjustments. In addition, Company FFO will be adjusted to exclude the impact of ExcludedExpenses.
“Company Fiscal Year”meansthecalendaryear.
“Company LTM FFO”meansCompanyFFOfortheconsecutivetwelve(12)monthperiodendingonthelastdayofthefiscalquarterimmediatelypriortothequarterinwhichtheExchangeNoticeDateoccurs.
“Company Minimum Gain”hasthemeaningof“partnershipminimumgain”setforthinRegulationSection1.704-2(b)(2), andtheamountofCompanyMinimumGain,aswellasanynetincreaseordecreaseinCompanyMinimumGain,forafiscal yearorotherperiodshall bedeterminedinaccordancewiththerulesofRegulationSection1.704-2(d).
“Company Subsidiary”meansadirectorindirectSubsidiaryoftheCompany.
“Competing Activity”isdefinedinSection7.3(a).
“Control(s)”meanspossession,directlyorindirectly,ofthepowertodesignateanddirectorcausethedesignationand direction of the management and policies of a Person, whether through the ownership of voting securities, bycontract,orotherwise.Fortheavoidanceofdoubt,aPersonshallbedeemedtoControlanotherPersonifsuchPersonisthesolegeneralpartner, solemanaginggeneralpartnerorsolemanagingmemberofsuchotherPerson.Theterms“Controlled By”and“Under Common Control With”and“Controlling”shallhavecorrelativemeanings.
“CPI” means the Consumer Price Index for All Urban Consumers (CPI-U) for All Items, 1982-84 = 100,published monthly by the United States Department of Labor, Bureau of Labor Statistics. If the CPI becomesunavailable because publication is discontinued or otherwise, there shall be substituted therefor a comparablenationally recognized index, approved by the Board of Directors, based upon changes in the cost of living or thepurchasingpoweroftheconsumerdollar,publishedbyanagencyofthefederalgovernmentorintheabsencethereof,byanationallyrecognizedfinancialreportingservice.
“Day”or“Days”meanseachcalendarday,includingSaturdays,Sundays,andlegalholidays;provided,however,thatiftheDayonwhichaperiodoftimeforconsentorapprovalorotheractionbeginsorendsisnotaBusinessDay,suchperiodshallbeginorend,asapplicable,onthenextBusinessDay.
“Depreciation” means for each Company Fiscal Year or other period, an amount equal to the depreciation,amortization,orothercostrecoverydeductionallowableundertheCodewithrespecttoanassetforsuchyearorotherperiod,exceptthatiftheBookValueofanassetdiffersfromitsadjustedbasisforfederalincometaxpurposesatthebeginningofsuchyearorotherperiod,DepreciationshallbeanamountwhichbearsthesameratiotosuchbeginningBook Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year orotherperiodbearstosuchbeginningadjustedtaxbasis;provided,however,thatifthefederalincometaxdepreciation,amortization,orothercostrecoverydeductionforsuchyearorotherperiodiszero,DepreciationshallbedeterminedwithreferencetosuchbeginningBookValueusinganyreasonablemethodselectedbythePartnershipRepresentative.
“Designated Individual”isdefinedinSection6.26(a).
“Director”meansamemberoftheBoardofDirectors.
“Director Initiated Action”isdefinedinSection6.1(b).
“Distribution Date”isdefinedinSection5.2(b).
“Distribution Limitation Event”isdefinedinSection5.2(a).
“Dollars”or“$”meansUnitedStatesdollars.
“Effective Date”isdefinedinthePreamble.
“Emergency Situation Response” means, with respect to a property of the Company or any of its Subsidiaries,reasonableactions,inlightofthecircumstances,takeninresponsetounanticipatedsituationsatsuchpropertyin
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ordertomitigateareasonablylikelythreatofpropertydamage,personalinjuryordeath.Fortheavoidanceofdoubt,restorationandanyotheractionsthatareincludedinanEmergencySituationResponseshallonlybesuchactionsthatarereasonablynecessaryoradvisabletostabilizesuchpropertyandanysuchactionstakenafteranysuchsituationhasbeenstabilizedshallnotbeincludedinthisdefinition.
“Equity Shares”meansthesharesofcommonstock,parvalue$0.0001pershare,ofSilverParent.
“ERISA”meanstheEmployeeRetirementIncomeSecurityActof1974.
“Estimated Minimum Distribution Amount”means,foreachCompanyFiscalYear,anamount,asdeterminedfromtimetotimebasedontheresultsoftheCompany’soperations,equaltothesumof(i)thegreaterof(x)theproductof(1)anamountequaltothequotientof(A)SilverOP’s(and,withoutduplication,SilverMember’s)allocableshareofthe Company’s estimated Real Estate Investment Trust Taxable Income for such Company Fiscal Year (taking intoaccountanyadjustmentstobasis,andanydepreciationdeductionsavailableasaresultofadjustmentstobasisunderSection 734 or Section 743 of the Code) divided by (B) Silver OP’s (and, without duplication Silver Member’s)Percentage Interest and (2) ninety-five (95) percent and (y) the estimated Tax Liability Amount for such CompanyFiscalYear,(ii)theProhibitedTransactionTaxDistributionAmountforsuchCompanyFiscalYear,(iii)theSection857(b)(7) TaxDistributionAmount for suchCompanyFiscal Year and(iv) the Excise TaxDistributionAmount forsuchCompanyFiscal Year. Fortheavoidanceofdoubt, theEstimatedMinimumDistributionAmountshall not takeintoaccountanyallocationtoaholderofPreferredUnits(initscapacityassuch).
“Excess Threshold”meanstenmillionDollars($10,000,000)annually,determinedintheaggregate(andbasedonabsolute value) with respect to all instances in this Agreement where such term is used; providedthat any action,projectorexpenditurethatisapprovedorratifiedbytheBoardofDirectorsshallnotreduceorcountagainstthistenmillionDollar($10,000,000)figure.
“Exchange”meanstheexchangebyanExchangingMemberofaCommonUnitforcashorSilverOPUnitsoracombinationoftheforegoing,inaccordancewithSection8.4.
“Exchange Act” isdefinedinSection7.3(b).
“Exchange Closing”isdefinedinSection8.4(f)(ii).
“Exchange Date”isdefinedinSection8.4(f)(i).
“Exchange Notice”isdefinedinSection8.4(b).
“Exchange Notice Date”meansthedateofdeliveryofanExchangeNoticepursuanttoSection8.4(b)oraCallExchangeNoticepursuanttoSection8.4(a)(ii),asapplicable.
“Exchange Price” means, as of any Exchange Notice Date, a Dollar amount per Common Unit which shall beequal to the quotient of (i) (x) Total Equity Value less(y) the reasonable, out-of-pocket costs actually incurred bySilverParentoranyofitsSubsidiariestoobtainanyapprovalscontemplatedbySection8.4(g)divided by(ii)thetotalnumberofCommonUnits(includingOptionDeferredUnits(asdefinedinExhibitK))issuedandoutstandingasoftheExchangeNoticeDate.
“Exchangeable Unit”meansaCommonUnitheldbyanymemberoftheTitaniumFamilyGrouporanyFamilyTransferee.
“Exchanged Units”isdefinedinSection8.4(b).
“Exchanging Member”isdefinedinSection8.4(b).
“Excise Tax Distribution Amount”means,foreachCompanyFiscalYear,anamountequaltotheexcisetaxthatwould be imposed on the Company pursuant to Section 4981(a) of the Code if the Company were a Real EstateInvestmentTrust.
“Excluded Expenses”isdefinedinExhibitL.
“Excluded Fundamental Decisions”isdefinedinSection6.22(c).
“Excluded Titanium Fundamental Decisions”isdefinedinSection6.22(c).
“Failure to Comply Remedies”isdefinedinSection5.1(d)(vii).
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“Family Transferee”meansanyofRST,WST,GTK,anyImmediateFamilyofanyoftheforegoingPersons,anyFamilyTrustwithrespecttoanyoftheforegoingPersons(solongassuchFamilyTrustremainsaFamilyTrustoftheforegoingPersons),oranyentityconsistingoforownedentirelybyone(1)ormoreoftheforegoingPersons(solongassuchentityremainsownedentirelybysuchPersons).
“Family Trust”means,withrespecttoanindividual,atrustsolelyforthebenefitofsuchindividualorsolelyforthe benefit of any member or members of such individual’s Immediate Family or solely for the benefit of suchindividual and any member or members of such individual’s Immediate Family (for the purpose of determiningwhether or not a trust is a Family Trust, the fact that one (1) or more of the beneficiaries (but not the primarybeneficiary) of the trust includes a Person or Persons, other than a member of such individual’s Immediate Family,entitledtoadistributionafterthedeathofthesettlorifhe,she,it,ortheyshallhavesurvivedthesettlorofsuchtrust,which distribution may be made of something other than a Membership Interest or includes an organization ororganizationsexemptfromfederalincometaxespursuanttotheprovisionsofSection501(a)oftheCodeanddescribedin Section 501(c)(3) of the Code, shall be disregarded); provided, however, that in respect of transfers by way oftestamentaryorintervivostrust,thetrusteeortrusteesshallbesolelysuchindividual,amemberormembersofsuchindividual’sImmediateFamily,aResponsibleFinancialInstitution,anattorneythatisamemberingoodstandingofthe Bar of any State in the United States, or an individual or individuals approved by the Board of Directors in itsreasonablediscretion.
“FFO Valuation”isdefinedinExhibitL.
“Fractional Unit”meansaportionof,orlessthanthewholeof,aUnitofMembershipInterest.
“Fraud”meansanintentionalmisrepresentationorintentionalomissionofmaterialfactthathasbeenrelieduponbyaPartytothedetrimentofthatParty.
“Fundamental Decision Approval”isdefinedinSection6.19(a).
“Further Push-Out Election”isdefinedinSection6.26(d).
“GAAP”meansgenerallyacceptedaccountingprinciples,consistentlyappliedintheUnitedStates.
“Governmental Entity” means any transnational, domestic or foreign federal, state or local governmental,regulatory or administrative authority, department, court, agency, commission or official, including any politicalsubdivisionthereof,oranynon-governmentalself-regulatoryagency,commissionorauthority.
“Gross Income” means the income of the Company determined pursuant to Section 61 of the Code beforedeductionofitemsofexpenseordeduction.
“GTK”meansGayleTaubmanKalisman.
“Immediate Family”means,withrespecttoaPerson,(i)suchPerson’sspouse(formerorthen-current),(ii)suchPerson’sparentsandgrandparentsand(iii)descendants(naturaloradoptive,ofthewholeorhalfblood)ofsuchfirstPerson.
“Imputed Underpayment”isdefinedinSection6.26(b).
“Incapacitated”means,astoanyPerson,thatsuchPersonis(i)determinedbyacourtofcompetentjurisdiction(which decision is not overturned during the period set forth herein) to be incompetent to manage his person or hispropertyforacontinuousperiodofnotlessthanonehundredeighty(180)Daysoranaggregateperiodofnotlessthantwohundredseventy(270)Daysinanytwelve(12)monthperiodor(ii) unabletoengageinanymeaningfulgainfulactivitybyreasonofanymedicallydeterminablephysicalormentalimpairmentwhichcanbereasonablyexpectedtoresultindeathorcanbereasonablyexpectedtolastforacontinuousperiodofnotlessthanonehundredeighty(180)Daysoranaggregateperiodofnotlessthantwohundredseventy(270)Daysinanytwelve(12)monthperiod. Themedicaldeterminationreferencedinclause(ii)shallbemadesolelybyanindependent,licensedmedicaldoctorthatisselected as follows: such Person (or if such Person is unable to make such a selection due to a physical or mentalimpairment, the Person who then holds such Person’s medical power of attorney) selects such a doctor, the SilverMember selects another such doctor and such two doctors shall select a third such doctor who shall make thedeterminationreferencedinclause(ii).
“Indemnified Person”meansSilverParent,SilverOP,eachMember,eachOfficer(includingtheChiefExecutiveOfficer),eachAuthorizedSignatory,eachDirector,thePartnershipRepresentative,theDesignated
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Individual of the Partnership Representative, each employee of the Company, each director, manager, officer oremployeeofaCompanySubsidiary(includinganAdministrativeManagerthatisaCompanySubsidiary),eachPersonthatservesorservedattherequestoftheCompanyoranyCompanySubsidiaryasdirector,manager,officer,employeeor agent of any other enterprise and each Affiliate of any of the foregoing persons, in each case in their respectivecapacitiesassuch.
“Initial Mandatory Minimum”meanstheamountsetforthonScheduleVII.
“Initial Total Titanium Exchange Closing”isdefinedinSection8.4(f)(v).
“Interest Rate”meansafluctuatinginterestrateperannumequaltotheinterestratepublishedfromtimetotimeinTheWallStreetJournalanddesignatedthereinastheprimerate,plus2%.
“Lender”isdefinedinSection6.27.
“LLC Conversion”isdefinedintheRecitalstothisAgreement.
“Lockout Period”meanstheperiodoftimecommencingontheEffectiveDateandexpiringonthedatethatisthesecond(2nd)anniversaryoftheEffectiveDate.
“Losses”isdefinedinSection5.1(a).
“Master Services Agreement” means the management, administration, leasing and development servicesagreement dated as of November 30, 1992, between the Company and TTC, engaging TTC as the AdministrativeManager.
“Material Contract”meansanycontractorarrangementtowhichtheCompanyoranyofitsSubsidiariesisaparty(orbywhichitoritsassetsarebound)that,whetherwrittenororal:
(1) grantstoanyPerson(otherthantheCompanyoraCompanySubsidiary)arightoffirstrefusal,arightoffirstoffer,anoptionorotherrighttopurchase,acquire,sellordisposeofanyrealpropertythat,individuallyorintheaggregate,ismaterialtotheCompanyanditsSubsidiaries,takenasawhole,itbeingagreedthat,withoutlimitingthegeneralityoftheforegoing,anysuchpurchase,acquisition,saleordispositionshallbedeemedtobematerial to the Company and its Subsidiaries, taken as a whole, if the price (or the value of consideration)thereunderismorethantenmillionDollars($10,000,000)(includingdebtassumed);
(2) containsanynon-competeorexclusivityprovisionswithrespecttoanylineofbusinessorgeographicareathatrestrictsorlimitsinanymaterialrespectthebusinessoftheCompanyoranyofitsSubsidiaries,orthatotherwiserestrictsorlimitsinanymaterialrespectthelinesofbusinessconductedbytheCompanyoranyofitsSubsidiariesorthegeographicareainwhichtheCompanyoranyofitsSubsidiariesmayconductbusiness,otherthanrestrictionsinanygroundleaseoranytenantlease,licenseorsimilaragreementontheuseoftheshoppingcenterinwhichthepremisesarethereindemisedorradiusrestrictions;
(3) grants the other party or anyPerson“most favored nation” status or similar exclusive discount rightsthatwouldbematerialtotheCompanyanditsSubsidiaries,takenasawhole;
(4) requiresorisreasonablylikelytorequirepaymentbytheCompanyoranySubsidiaryoftheCompanyofmorethantenmillionDollars($10,000,000)intheaggregateinanyone(1)year(provided thatthisclause(4)shallexcludeanylease,licenseforspaceorsimilaragreementfortheuseofrealproperty);
(5) providesfor theengagement ofthirdpartyadvisorswithrespect tocorporate orstrategic matters thatwouldconstituteaBoardFundamentalDecision;
(6) involves the creation or material alteration (including termination) of the terms of a joint venture orsimilarstrategicalliancethatismaterialtotheCompanyanditsSubsidiaries,takenasawhole;
(7) that includes a default, change of control or similar provision that would (i) require payment by theCompanyoranySubsidiaryoftheCompanyofmorethantenmillionDollars($10,000,000)intheaggregatetothe other party or parties thereto, (ii) give rise to any material rights (including termination, cancellation oraccelerationrights)oftheotherpartyorpartiesor(iii) giverisetothelossofanymaterialbenefit towhichtheCompanyoranyofitsSubsidiariesareentitled,ineachcaseofclauses(i),(ii)and(iii),solelyasaresultof(x)theend of the Titanium Period, (y) the removal of the Chief Executive Officer of the Company or (z) any otherchangeofcontroloftheCompanyorSilverParent;or
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(8) isaMaterialLease.
“Material Lease”meansanylease,licenseorsimilaragreementtowhichtheCompanyoranyofitsSubsidiariesisaparty:
(1) in which the Company or a Company Subsidiary is a lessor, licensor or grantor, if such agreement(i)coversmorethantwentythousand(20,000)squarefeetofgrossleasablearea,or(ii)providesforannualrentinexcessofonemillionDollars ($1,000,000), suchamountsubject toadjustment fortheCPI, andineachcaseofclauses(i)and(ii)foratermoftwo(2)yearsormoreandwhichcannotbeterminatedonninety(90)Days’orlessnoticewithoutmaterialpenalty;or
(2) in which the Company or a Company Subsidiary is a lessee, licensee or grantee, if such agreementprovides for annual rent in excess of one million Dollars ($1,000,000) and cannot be terminated on ninety(90)Days’orlessnoticewithoutmaterialpenalty.
“Member”and“Members”are(i)thosePersonsidentifiedassuchontheMembershipInterestLedgeronthedateof this Agreement, in their capacities as members of the Company, (ii) the successors to any portion or all of theMembership Interest of those Persons identified as Members on the Membership Interest Ledger on the date of thisAgreement whoare admitted to the Companyas members pursuant to Section 8.2 and (iii) any Person to whomanAdditionalInterest asamemberisissuedpursuanttoSection8.3andwhoisadmittedtotheCompanyasamemberpursuant to Section 8.2. Notwithstanding the foregoing or anything in this Agreement to the contrary, no PreferredHolder,solelyinitscapacityassuch,shallbedeemedtobeaMember.
“Member Nonrecourse Debt”isdefinedinRegulationsSection1.704-2(b)(4).
“Member Nonrecourse Debt Minimum Gain”isdefinedinSection5.1(d)(ii).
“Member Nonrecourse Deduction”isdefinedinRegulationsSection1.704-2(i).
“Membership Interest”isdefinedinSection4.6(a).
“Membership Interest Certificate”and“Membership Interest Certificates”aredefinedinSection4.7.
“Membership Interest Ledger for Common Units” means a ledger maintained at the principal office of theCompany that shall set forth, among other things, the name and address of each Member and the nature of theMembershipInterestofeachMember,thenumberofUnitsofMembershipInterestheldbyeachMember,ifany,andthecurrentPercentageInterestofeachMember,ifany.
“Membership Interest Ledger for Preferred Units” means a ledger maintained at the principal office of theCompanythatshallsetforth,amongotherthings,thenameandaddressofeachPreferredHolderandthenatureofthePreferredUnitsofeachPreferredHolder,andthenumberofPreferredUnitsheldbyeachPreferredHolder.
“Merger”isdefinedintheRecitalstothisAgreement.
“Merger Agreement”isdefinedintheRecitalstothisAgreement.
“Minimum Distribution Amount” means, for each Company Fiscal Year, an amount equal to the sumof (i) thegreaterof(x)theproductof(1)anamountequaltothequotientof(A)SilverOP’s(and,withoutduplication,SilverMember’s)allocableshareoftheCompany’sRealEstateInvestmentTrustTaxableIncomeforsuchCompanyFiscalYear(takingintoaccountanyadjustmenttobasis,andanydepreciationdeductionsavailableasaresultofadjustmentstobasis, underSection734orSection743oftheCode)dividedby(B)SilverOP’s(and,withoutduplication,SilverMember’s) PercentageInterest and(2)ninety-five(95)percent and(y)theTaxLiability AmountforsuchCompanyFiscalYear,(ii)theProhibitedTransactionTaxDistributionAmountforsuchCompanyFiscalYear,(iii)theSection857(b)(7) TaxDistributionAmount for suchCompanyFiscal Year and(iv) the Excise TaxDistributionAmount forsuchCompanyFiscalYear.Fortheavoidanceofdoubt,theMinimumDistributionAmountshallnottakeintoaccountanyallocationtoaholderofPreferredUnits(initscapacityassuch).
“Minimum Gain”meansanamountdeterminedinaccordancewithRegulationsSection1.704-2(d)bycomputing,withrespecttoeachNonrecourseLiabilityoftheCompany,theamountofgain,ifany,thattheCompanywouldrealizeif it disposedofthepropertysubject tosuchliability fornoconsiderationotherthanfull satisfactionthereof, andbythenaggregatingtheamountssocomputed.
“Name Transfer Date”isdefinedinSection6.30.
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“New China Business”isdefinedinSection7.3(c).
“New Partnership Audit Rules” means Sections 6221 through 6241 of the Code, as amended by the BipartisanBudgetActof2015togetherwithanybindingadministrativeguidanceissuedthereunder,orsuccessorprovisionsandanysimilarprovisionofstateorlocalTaxlaws.
“Non-Compete Subject Persons”isdefinedinSection7.3(a).
“Non-Controllable Items”meanstheminimumamountoffundsinexcessofamountsreservedforsuchmattersintheAnnualBudgetneededto(i)payandperformwhenduealloftheobligationsoftheCompanyanditsSubsidiariesrequiredtobepaidorperformedpursuanttoanynotes,mortgages,loandocuments,operatingagreements,investmentagreements,groundorotherleasesandreciprocaleasementagreementsoranyotherlegallybindingagreements:(a)towhichtheCompanyoranySubsidiaryoftheCompanyisapartyorbywhichitoritsassetsareboundand(b)whichhave(x)beenenteredintopriortothedateoftheMergerAgreement,(y)beenenteredintosubsequenttothedateoftheMergerAgreementbutpriortotheEffectiveTime(asdefinedintheMergerAgreement)andinaccordancewiththe Merger Agreement or (z) been entered into at or following the Effective Time (as defined in the MergerAgreement) in accordance with the terms hereof; (ii) pay when due real estate and other taxes, utility charges andinsurance premiums (and if applicable, self-insured employee benefit claims), in each case for the Company, anySubsidiaryoftheCompanyoranyassetsorpropertiesoftheCompanyoritsSubsidiariesorwhichtheCompanyoranyCompanySubsidiaryisresponsibleforunderanyagreementwithajointventurepartner;(iii) complywithanylegalrequirementnoworhereafterinforcewhichshallbeapplicabletoalloranypartoftheCompany,anySubsidiaryoftheCompanyoranyassetsorpropertiesoftheCompanyoritsSubsidiaries(includingassetsorpropertiesinwhichtheCompanyoraCompanySubsidiaryhasanindirectownershipinterest)(includingthemakingofcapitalexpenditurestothe extent required for such compliance); and (iv) pay the cost of Emergency Situation Responses (including themaking of capital expenditures required in connection therewith). For the avoidance of doubt, the Initial MandatoryMinimumisnotaNon-ControllableItem.
“Non-Income Producing Assets”meansanyassets, rightsorpropertiesthatdonotprovideanymaterial revenue(including,fortheavoidanceofdoubt,thosethatprovidenorevenue)fortheownerorlicensorthereof.
“Nonrecourse Deductions”isdefinedinRegulationsSection1.704-2(b)(1).
“Nonrecourse Liabilities”and“Nonrecourse Liability”aredefinedinRegulationsSection1.704-2(b)(3).
“Non-Surviving Merger Sub”isdefinedintheRecitalstothisAgreement.
“NOPPA”isdefinedinSection6.26(e).
“Officers”isdefinedinSection6.1(b).
“OpComm Liability”isdefinedinSection6.29(c).
“OpComm Waiver”isdefinedinSection6.29(c).
“Operating Committee” means a committee of the Chief Executive Officer, Chief Operating Officer, ChiefFinancial Officer, Executive Vice President, Center Operations, Executive Vice President, General Counsel &Secretary, Senior Vice President, HumanResources andChief HumanResources Officer andPresident of TaubmanAsia,oranyotherpersonservingasubstantiallysimilarfunction.
“Ordinary Tax Liability”means,foreachCompanyFiscalYear,anamountequaltotheproductof(1)thehighestindividual federal incometaxrateapplicabletoordinaryincomeineffect forsuchCompanyFiscal Yearand(2)thelargestquotientobtainedbydividing(a)eachMember’sallocableshareofthetaxableincomeoftheCompanyforsuchCompany Fiscal Year, determined by taking into account allocation of items of income and deduction pursuant toSection704(c)oftheCode,exceptthataMember’sallocationoftaxableincomeshallnotbetakenintoaccounttotheextentthat(x)theCompanyhasmadeorisrequiredtomakeapaymenttosuchMember,bywayofindemnificationorotherwise,withrespecttosuchincome,or(y)suchMemberhasagreednottoincludesuchincomeinthecalculationoftheOrdinaryTaxLiability,andby(i)excludinganyitemsgivingrisetoacapitalgainoracapitallossand(ii)takinginto account any adjustment to basis, and any depreciation deductions available to such Member as a result ofadjustmentstobasis,underSection734orSection743oftheCode,by(b)suchMember’sPercentageInterest.
“Partnership Merger”isdefinedintheRecitalstothisAgreement.
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“Partnership Representative”isdefinedinSection6.26(a).
“Pass-Through Entity Tax” means the entity-level tax imposedbythe State of Connecticut on partnerships andcertain other pass-throughentities pursuant toSection12-726of theConnecticut General Statutes, as amendedfromtimetotime,andanyregulationsorotherguidancepublishedthereunder.
“Pass-Through Partner”isdefinedinSection6.26(e).
“Percentage Interest”isdefinedinSection4.6(b).
“Permitted Affiliate Transactions” means agreements, actions or transactions (a) solely between or among theCompanyoranyofitswhollyownedSubsidiaries,(b)onanarm’slengthbasisandontermsnolessfavorabletotheCompanyoritsSubsidiariesthanthosethatwouldreasonablybeobtainedbyandfromanunaffiliatedthirdpartyandfor consideration not in excess of twenty-five thousand Dollars ($25,000) per year individually or one hundredthousand Dollars ($100,000) per year in the aggregate, (c) relating to bona fide employee, Officer or Directorcompensation(e.g., annualratesofbasesalariesorannualfees, short-termorlong-termincentivearrangements)andset forth in Exhibit D (or another document agreed to in writing by the Silver Member and the Titanium FamilyDesignee),subjecttoSection6.15,or(d)setforthinExhibitG.
“Permitted Affiliate Transfer”isdefinedinSection8.1(b).
“Permitted Transferee”isdefinedinSection8.1(b).
“Person”or“Persons”meansanindividual, a partnership(general, limitedor limitedliability), limitedliabilitycompany, corporation, joint venture, business trust, cooperative, association, or other formof business organization,whether or not regarded as a legal entity under applicable law, a trust (inter vivosor testamentary), an estate of adeceased,insane,orincompetentperson,aquasi-governmentalentity,agovernmentoranyagency,authority,politicalsubdivision,orotherinstrumentalitythereof,oranyotherentity.
“Per Unit Consideration Election”means,foreachCommonUnitbeingexchangedonthesameExchangeDate:
(i) iftheExchangingMember(s)elect,pursuanttotheExchangeNotice,toreceive,ortheSilverMemberelects, pursuant to a Call Exchange Notice, to pay, Silver OPUnits as consideration for all of the Exchange, anumber of Silver OP Units equal to the quotient of (a) the Exchange Price divided by(b) the sixty (60)-Dayaggregate volume-weighted average price per Equity Share (as reported on Bloomberg, or, if Bloomberg nolonger reports such closing prices, another nationally recognized reporting service) on the New York StockExchangeorNASDAQoranyotherU.S.nationalsecuritiesexchangeonwhichtheEquitySharesarelistedforthe VWAP Period (the “Silver OP Unit Consideration”);providedthat no fractional Silver OP Units shall bedeliveredasconsiderationand,inlieuthereof,cashinDollarsshallbepaidatthesamevaluationastheSilverOPUnitConsideration;
(ii) iftheExchangingMember(s)elect,pursuanttotheExchangeNotice,toreceive,ortheSilverMemberelects, pursuant toaCall ExchangeNotice, topay, cashasconsiderationfor all of theExchange, anamountofcashinDollarsequaltotheExchangePrice(the“Silver Cash Consideration”);or
(iii) iftheExchangingMember(s)elect,pursuanttotheExchangeNotice,toreceive,ortheSilverMemberelects,pursuanttoaCallExchangeNotice,topay,aportionoftheconsiderationfortheExchangeincash(suchportionexpressedasapercentage,the“Silver Cash Consideration Percentage”)andaportionoftheconsiderationfortheExchangeinSilverOPUnits(suchportionexpressedasapercentage,the“Silver OP Unit ConsiderationPercentage”), (x) a number of Silver OP Units equal to the product of (a) the Silver OP Unit Considerationmultiplied by(b)theSilverOPUnitConsiderationPercentageand(y)anamountofcashinDollarsequaltotheproductof(a)theSilverCashConsiderationmultiplied by (b)theSilverCashConsiderationPercentage.
Fortheavoidanceofdoubt, (A)thePerUnitConsiderationElectionforeachCommonUnitbeingexchangedonthesameExchangeDateshallbethesameforeachsuchCommonUnitand(B)thesumoftheSilverCashConsiderationPercentage and the Silver OP Unit Consideration Percentage for a Common Unit being exchanged shall equal onehundredpercent(100%).
“Pledge”meansapledgeorgrantofamortgage,securityinterestorlieninrespectofaMembershipInterest.
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“Preferred Holder”meansaholderofPreferredUnits(initscapacityassuch).
“Preferred Rate”meansafixedrateperannumspecifiedintheapplicablePreferredUnitDesignation.
“Preferred Return”hasthemeaning,astoeachclassorseriesofPreferredUnits,setforthinthePreferredUnitDesignationofsuchclassorseriesofPreferredUnits.
“Preferred Unit Designation” means those certain Preferred Unit designations to be set forth in an Exhibitattachedto,andincorporatedbyreferencein,thisAgreement,settingforththerights,privilegesandpreferencesofanyclass or series of Preferred Units. As of the Effective Date, the Preferred Unit Designations consist of the Series APreferredUnitDesignation.
“Preferred Units” means those Membership Interests that are designated as “Preferred Units” pursuant to aPreferred Unit Designation in accordance with this Agreement, which may be issued in one (1) or more differentclassesorseries.AsoftheEffectiveDate,thePreferredUnitsconsistoftheSeriesAPreferredUnits.
“Prior Decision”isdefinedinSection8.4(a)(ii).
“Prior Partnership”isdefinedintheRecitalstothisAgreement.
“Profits”isdefinedinSection5.1(a).
“Prohibited Transaction Tax Distribution Amount” means, for each Company Fiscal Year, an amount equal to100%ofthenetincomeoftheCompanyderivedfromprohibitedtransactions(asdefinedinSection857(b)(6)(B)(i)oftheCode)forsuchCompanyFiscalYear.
“Protected Gain” shall mean all of the income and gain that would be allocable to and/or recognized by theTitaniumFamilyGroupundertheCode(fortheavoidanceofdoubt,takingintoaccountanybasisadjustmentsasoftheEffective Date under Section 734, 743 and 1014 of the Code and the applicable state and local equivalents of suchsectionstowhichtherelevantMemberisentitled)intheeventofthesaleofapropertylistedonScheduleIIoradirectorindirect interest thereininafullytaxabletransactionontheEffectiveDateforanamountequaltothefair marketvalueofsuchpropertyontheEffectiveDatelistedonScheduleII;provided,thattheProtectedGainshallbedecreasedfromtimetotimetotakeintoaccountanybasisadjustmentsaftertheEffectiveDateunderSection734,743and1014oftheCodeandtheapplicablestateandlocalequivalentsofsuchsectionstowhichtherelevantMemberisentitled.
“Push-Out Election”isdefinedinSection6.26(b).
“Qualified Expert”isdefinedinSection6.22(b).
“Real Estate Investment Trust”meanssuchtermasdefinedinSection856oftheCode.
“Real Estate Investment Trust Taxable Income”meanssuchtermasdefinedinSection857(b)(2)oftheCode.
“Registrable Securities”isdefinedinSection8.5(b).
“Regulations” (including Temporary Regulations or Proposed Regulations) means Department of TreasuryregulationspromulgatedundertheCode.
“Regulatory Concession”hasthemeaningsetforthintheMergerAgreement.
“REIT Requirements”isdefinedinSection6.23.
“Required Distribution Amount” means an amount, as reflected in the Annual Distribution Policy, equal to theaggregatecash(orcashperCommonUnit)tobedistributedtotheMembersinrespectoftheirCommonUnitsforsuchCompany Fiscal Year, as such amount may be increased or decreased from time in accordance with the AnnualDistributionPolicy,butshallinnoeventequallessthantheEstimatedMinimumDistributionAmount(asdeterminedfrom time to time). Notwithstanding the foregoing, the Required Distribution Amount shall be equal to at least theInitial Mandatory Minimum per Common Unit in each of 2020, 2021 and 2022 Company Fiscal Years, subject toSection 5.2(a) and pro rata adjustment for partial years. For example and without limiting the foregoing, (i) if theEffectiveDateoccursin2020,theInitialMandatoryMinimumperCommonUnitshallbereducedproratabasedonthe portion of 2020 that occurs prior to the Effective Date and (ii) if a Common Unit is exchanged during the2022 Company Fiscal Year, the Initial Mandatory Minimum per Common Unit for such Common Unit shall bereducedproratabasedontheportionof2022thatoccursaftertheExchangeDate.
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“Responsible Financial Institution”meansalicensedorregulatedbankortrustcompanythathasatleasttwenty-fivebillionDollars($25,000,000,000)intotalassets.
“Restricted Property”isdefinedinSection6.28(a).
“Reviewed Year”isdefinedinSection6.26(c).
“Reviewed Year Member”isdefinedinSection6.26(c).
“RST”meansRobertS.Taubman.
“SEC”meanstheUnitedStatesSecuritiesandExchangeCommission.
“Second Total Titanium Exchange Closing”isdefinedinSection8.4(f)(v).
“Section 6.28(b) Property”isdefinedinSection6.28(b).
“Section 857(b)(7) Tax Distribution Amount”means,foreachCompanyFiscalYear,anamountequalto100%ofredeterminedrents, redetermineddeductions, excessinterest, andredeterminedTRSservice incomeof theCompany(eachasdefinedinSection857(b)(7))forsuchCompanyFiscalYear.
“Securities Act”meanstheSecuritiesActof1933.
“Series A Preferred Unit” means a Preferred Unit designated as a “Series A Preferred Unit” with the rights,limitations,qualifications,privilegesandpreferencesspecifiedintheSeriesAPreferredUnitDesignation,datedasoftheEffectiveDate,setforthonExhibitH(the“Series A Preferred Unit Designation”).
“Shelf Registration”isdefinedinSection8.5(a).
“Shelf Rights Holder”meansanymember of theTitaniumFamilyGroupandanyFamilyTransferee that holdsRegistrableSecurities.
“Silver Call Right”isdefinedinSection8.4(a)(ii).
“Silver Member”isdefinedinthePreambletothisAgreement.
“Silver OP”isdefinedinthePreambletothisAgreement.
“Silver OP Partnership Agreement”meanstheEighthAmendedandRestatedLimitedPartnershipAgreementofSilverOP.
“Silver OP Unit”meansaLimitedPartnershipUnit(asdefinedintheSilverOPPartnershipAgreement).
“Silver OP Unit Consideration Percentage”isdefinedinArticleII.
“Silver Parent”isdefinedinthePreambletothisAgreement.AnyreferencestoSilverParenthereinshall,fortheavoidanceofdoubt,includeanysuccessortoSilverParent.
“Silver Period”meanstheperiodfromandaftertheendoftheTitaniumPeriod.
“Special Allocation Formula”isdefinedinSection5.1(d)(vii).
“State Allocable Share”isdefinedinSection5.1(d)(vii).
“Subject Members” means each partner in the Taxable Partnerships that is an individual, trust, estate, or pass-throughentityhavingindividuals,trusts,orestatesasitsdirectorindirectmembers.
“Subsidiary”means,withrespecttoanyPerson,asofanydateofdetermination,anyentityofwhichsecuritiesorotherownershipinterests havingordinaryvotingpowertoelect amajorityoftheboardofdirectorsorotherpersonsperforming similar functions, or providing the owner thereof with the right to Control such entity, are directly orindirectlyownedbysuchPerson.Fortheavoidanceofdoubt,TTCshallbedeemedtohavebeenaSubsidiaryoftheCompanypriortotheEffectiveDate.
“Subsidiary Partnership”isdefinedinSection6.26(d).
“Tax”or“tax”meananyandalltaxes,levies,duties,tariffs,impostsandothersimilarchargesandfees(togetherwith any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto, whetherdisputedornot)imposedbyanyGovernmentalEntityordomesticorforeigntaxingauthority,includingall
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federal, state, local, and foreign income, excise, gross receipts, gross income, ad valorem, stamp, transfer, profits,gains, premiums, property, capital, sales, transfer, use, payroll, employment, social security, workers’ compensation,unemploymentcompensation,severance,occupation,environmental,customsduties,disability,realproperty,personalproperty,escheat,withholding,franchise,windfallorotherprofits,valueadded,gainstaxandlicense,registrationanddocumentationfees,alternativeoradd-onminimum,orestimatedtax.
“Tax Actions”isdefinedinSection6.26(o).
“Tax Liability Amount”means,foreachCompanyFiscalYear,thesumof(1)theOrdinaryTaxLiabilityand(2)theCapitalGainsTaxLiability.
“Tax Loan”isdefinedinSection5.1(d)(vii).
“Taxable Partnerships” means, collectively, West Farms Associates, a Connecticut general partnership, Rich-TaubmanAssociates,aConnecticutgeneralpartnership,TTC,anyotherConnecticutpartnershiporotherpass-throughentity subject to the Pass-Through Entity Tax in which the Company may subsequently invest, and any other pass-throughentityinwhichthePartnershiphasinvestedorsubsequentlyinveststhatisormaybecomesubjecttoanentity-leveltaxsimilartothePass-ThroughEntityTax.
“Titanium”isdefinedinthePreambletothisAgreement.
“Titanium Business”means,withoutregardtogeography,thebusinessandstrategyoftheCompanyoranyoftheCompany Subsidiaries (including their ownership and operation of, and investments in, properties and assets)conducted by them prior to the Effective Date (including the natural extension thereof), and any other business orstrategyoftheCompanyoranyofitsSubsidiariesaftertheEffectiveDate.
“Titanium Family Approval”isdefinedinSection6.20(a).
“Titanium Family Designee”isdefinedinSection11.18.
“Titanium Family Group”meanseachPersonthatisasignatorytothisAgreementasoftheEffectiveDatethatislistedundertheheading“TitaniumFamilyGroup”onthesignaturepagehereto.
“Titanium Fundamental Decision”isdefinedinSection6.20(a).
“Titanium Other Fundamental Decision”isdefinedinSection6.20(b).
“Titanium Period” means the period beginning on the date of the Effective Date and ending on the earliest of(i) the first day on which the Titanium Family Group (together with any Family Transferees) ceases to own,collectively,atleastfortypercent(40%)oftheMembershipInterestsownedbytheTitaniumFamilyGroupasoftheEffective Date (subject to any adjustment necessary to account for any split, dividend, distribution, combination,reclassificationorsimilarevent,ineachcase,inrespectoftheMembershipInterests),(ii)thedatethatisoneyearafterthefirstdateonwhicheachofRSTandWSTiseitherdeadorIncapacitated,(iii)theoccurrenceofaBankruptcyorinvoluntarybankruptcyinacourtofcompetentjurisdictionwithrespecttotheCompanyoranyofitsSubsidiariesthat,individuallyorintheaggregate,generateatleastone-third(1/3)oftheCompany’sanditsSubsidiaries’netoperatingincomethat is either notcontestedingoodfaithbytheCompanyoris notdismissedwithinonehundredandeighty(180)Daysoftheapplicablefilingor(iv)theInitialTotalTitaniumExchangeClosing.Fortheavoidanceofdoubt,innoeventdoestheTitaniumPeriodrestartonceitends.
“Total Equity Value”isdefinedin,andshallbecalculatedinaccordancewith,ExhibitL.
“Total Titanium Exchange”isdefinedinSection8.4(c).
“Transaction Expenses” means the aggregate amount (but without any duplication) of all fees and expenses(whetherornotyetinvoiced)(fortheavoidanceofdoubt,otherthananypaymentsrequiredtobemadebyArticleIIoftheMergerAgreement),incurredby,oronbehalfof,TitaniumoranyofitsSubsidiariespriortotheEffectiveTimeinconnectionwiththesaleprocessforTitaniumorotherwiserelatingtothenegotiation,preparationorexecutionoftheMergerAgreementoranydocumentsoragreementcontemplatedtherebyortheperformanceorconsummationofthetransactions contemplated thereby, including: (a) fees and expenses of counsel, advisors, consultants, investmentbankers, accountants andauditors andexperts engagedby, or onbehalf of, Titaniumor anyof its Subsidiaries at orprior to the Effective Time in connection with the transactions contemplated by the Merger Agreement, (b) alltransaction-related or other discretionary bonuses, severance payments, change of control payments, “stay put” andothersimilarpaymentspayablebyTitaniumoranyofitsSubsidiariestoanycurrentor
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former board member, manager or employee of Titanium or any of its Subsidiaries arising in connection with theconsummation of the transactions contemplated by the Merger Agreement, (c) the employer portion of any payroll,socialsecurity,unemploymentorsimilarTaxesrelatedtoanypaymentmadepursuanttotheforegoingclauses(a)and(b), (d) any payments made at or prior to the Effective Time by Titaniumor any of its Subsidiaries (other than theCompany or its Subsidiaries) in connection with obtaining any third party consent, the payoff, prepayment ordefeasance of any indebtedness or the redemption of any preferred stock, in each case, in connection with theconsummationofthetransactionscontemplatedbytheMergerAgreement(butnotincludingtheliquidationpreferenceofanypreferredstock)and(e)anypaymentsbyTitaniumoranyofitsSubsidiaries(otherthantheCompanyanditsSubsidiaries)inrespectofindemnificationoradvancementofexpensestodirectors,officersorotherpersonsentitledtosuchrights.
“Transfer” means any direct, indirect or synthetic assignment, sale, transfer, conveyance, Pledge, grant of anoption or proxy, or other disposition or act of alienation, whether voluntary or involuntary, or by operation of law(includingthroughamergerorotherbusinesscombination).
“Triggering Decision”isdefinedinSection8.4(a)(ii).
“TTC”isTheTaubmanCompanyLLC,aDelawarelimitedliabilitycompany.
“Unallocated Preferred Return” means, with respect to a class or series of Preferred Units, the excess of thePreferred Return with respect to such class or series over the cumulative amount of allocations pursuant toSection5.1(b)(i)(A)hereofwithrespecttosuchseries.
“Unit of Membership Interest”and“Units of Membership Interest”aredefinedinSection4.6(a).
“VWAP Period” means the period of the sixty (60) consecutive trading days ending on the trading dayimmediatelypriortotheExchangeNoticeDate.
“Willfully Breached” isdefinedinSection6.1(c).
“Withholding Tax”isdefinedinSection9.1.
“WST”meansWilliamS.Taubman.
III.
PURPOSES AND POWERS; REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS.
Section 3.1 Purposes and Powers of the Company.
(a) The purposes of the Company shall be to (a) promote, conduct or engage in, directly or indirectly, anybusiness,purposeoractivitythatlawfullymaybeconductedbyalimitedliabilitycompanyorganizedpursuanttotheAct,(b)acquire,holdanddisposeofanypropertiesorassetsorinterestsinanycorporation,partnership,jointventure,limitedliabilitycompanyorotherentityand,inconnectiontherewith,toexercisealloftherightsandpowersconferredupontheCompanywithrespecttoitsintereststhereinand(c)conductanyandallactivitiesrelatedorincidentaltotheforegoingpurposes.
(b) The Company shall possess and may exercise all the powers and privileges granted by the Act or by anyotherlaworbythisAgreement,togetherwithanypowersincidentalthereto,includingsuchpowersandprivilegesasare necessary or convenient to the conduct, promotion or attainment of the business, purposes or activities of theCompany, including to do any and all acts and things necessary and appropriate for the furtherance andaccomplishmentofthepurposesdescribedinSection3.1(a)andfortheprotectionandbenefitoftheCompany.
(c) TheCompanyshalldoallthingsnecessarytomaintainitslimitedliabilitycompanyexistenceseparateandapart from each Member, each Preferred Holder and any Affiliate of any Member or Preferred Holder, includingholdingregularmeetingsoftheBoardofDirectorsinaccordancewiththisAgreementandmaintainingitsbooksandrecordsonacurrentbasisseparatefromthatofanyAffiliateoftheCompanyoranyotherPerson.
(d) TheCompanymayformone(1)ormoreSubsidiariestoownone(1)ormoreoftheCompany’spropertiesortoconductpartoftheCompany’sbusiness.
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Section 3.2 Partnership Only for Tax Purposes.
TheCompanyshallbeclassifiedasapartnershipforfederal,state,andlocalincometaxpurposes.ThisAgreementshall not be deemed to create or constitute a partnership among the Members or the Preferred Holders, except asspecified in the immediately preceding sentence. Except as otherwise provided in this Agreement, no Member orPreferredHolder,initscapacityassuch,shallhaveanyauthoritytoactfor,bind,commit,orassumeanyobligationorresponsibility on behalf of the Company, its properties, or any other Member or Preferred Holder. No Member orPreferredHolder,initscapacityasaMemberorPreferredHolderunderthisAgreement,shallberesponsibleorliablepersonally for any indebtedness or obligation of another Member, Preferred Holder, the Company or any of itsSubsidiaries, whether arising in contract, tort, or otherwise, nor shall the Company be responsible or liable for anyindebtedness or obligation of any Member or Preferred Holder, incurred either before or after the execution anddelivery of this Agreement by such Member or Preferred Holder, except as to those responsibilities, liabilities,indebtedness, or obligations which are expressly assumed by such Member, by such Preferred Holder or by theCompanyundertermsofthisAgreement,ifany,orasrequiredbytheAct.
Section 3.3 Representations and Warranties by the Members; Certain Covenants.
(a) EachMemberandeachPreferredHolderthatisanindividualrepresentsandwarrantstoeachotherMember,that(i)suchMemberorsuchPreferredHolderisnota“foreignperson”withinthemeaningofSection1445(f)oftheCode and (ii) this Agreement is binding upon, and enforceable against, such Member or such Preferred Holder inaccordancewithitsterms.
(b) Each Member and each Preferred Holder that is not an individual represents and warrants to each otherMemberandPreferredHolder,that(i)suchMemberorsuchPreferredHolderisneithera“foreignperson”withinthemeaningofSection1445(f)oftheCodenora“foreignpartner”withinthemeaningofSection1446(e)oftheCodeand(ii) this Agreement is binding upon, and enforceable against, such Member or such Preferred Holder in accordancewithitsterms.
(c) EachMemberandeachPreferredHolderherebyacknowledgesthatnorepresentationsastopotentialprofit,cashflows,oryield,ifany,inrespectoftheCompanyoranyone(1)ormoreoralloftheCompanySubsidiariesoritsor their properties or assets (including investments) have been made by any Member or Preferred Holder or anyemployee,agentorrepresentativeorAffiliateofanyMemberorPreferredHolder,andthatprojectionsandanyotherinformation,includingfinancialanddescriptiveinformationanddocumentation,whichmayhavebeeninanymannersubmittedtosuchMemberorPreferredHoldershallnotconstituteanyrepresentationorwarranty,expressorimplied.
IV.
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; MEMBERSHIP INTERESTS; OTHER.
Section 4.1 Capital Contributions; Capital Account Balances.
(a) TheMembersandPreferredHoldershavecontributedtothecapitaloftheCompanysuchassetsandamountsassetforthonthebooksandrecordsoftheCompany.
(b) The Capital Account balances of the Members and Preferred Holders are as set forth on the books andrecordsoftheCompany.
Section 4.2 Anticipated Financings.
Subject to the termsandconditions of this Agreement (includingSection6.19andSection6.20), the Companymayobtainfundswhichit considers necessarytomeet theneedsandobligations andrequirements of theCompany,including the Company’s obligation to lend or contribute funds to, or the Company’s obligations in respect of, aCompanySubsidiaryoranyotherentityinwhichtheCompanyowns,directlyorindirectly,anyownershipinterest,ortomaintainadequateworkingcapitalortorepayCompanyindebtednessorspendoncapitalexpenditures,andtocarryout the Company’s purposes, from the proceeds of any financing or refinancing obtained by the Company or aCompanySubsidiary(includinganysuchfinancingstructuredaspreferredequity),ineachcasepursuanttosuchterms,provisions,andconditionsandinsuchmanner(includingtheengagementofbrokersorinvestmentbankerstoassistinprovidingsuchfinancing)andamounts(i)duringtheTitaniumPeriod,astheChiefExecutiveOfficershall
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determine(subjecttootherwisecomplyingwiththisAgreement,includingSection6.19,andhisorherfiduciaryduties,to the extent described herein) or (ii) duringthe Silver Period, as the Board of Directors shall determine (subject tootherwise complying with this Agreement, including Section 6.20, and his or her fiduciary duties, to the extentdescribedherein).SubjecttootherwisecomplyingwiththisAgreement(includingSection6.19andSection6.20),anysuch financing or refinancing may be unsecured, may be secured by a mortgage or mortgages, deed(s) of trust orassignmentsorsecurityinterestsonorinrespectofalloranyportionoftheassetsoftheCompanyorone(1)ormoreCompany Subsidiaries or any other entity in which the Company or a Company Subsidiary owns any ownershipinterest,andmayincludeorbeobtainedthroughthepublicorprivateplacementofdebtorotherinstruments,domesticand foreign, and may include the acquisition of or provision for interest rate swaps, credit enhancers, or othertransactionsoritemsinrespectofsuchfinancingorrefinancing;provided,however,thatinnoeventmaytheCompanyobtain any such financing or refinancing that is recourse to any Member or any Affiliate, partner, shareholder,beneficiary,principal,officer,ordirectorofanyMemberwithouttheconsentofthePersonorPersonstowhomsuchrecoursemaybehad.
Section 4.3 No Right to Withdraw Capital; No Requirement of Further Contributions.
ExceptasspecificallyprovidedinthisAgreement(includingthecapitalcontributionsrequiredbySection8.4andthedistributionscontemplatedbySection5.2),noMemberandnoPreferredHolder(i)shallhavetherighttowithdrawanypartofitsCapitalAccountortodemandorreceivethereturnofitscapitalcontributions,oranypartthereof,ortoreceive any distributions from the Company, (ii) shall be entitled to make, or have any obligation to make, anycontribution to the capital of, or any loan to, or provide a guaranty with respect to any loan to, the Company, or(iii) exceptasprovidedinSection10.5(c), shall haveanyliabilityforthereturnofanyotherMember’sorPreferredHolder’s Capital Account or contributions to the capital of the Company. No Member or Preferred Holder shall beliablefortheliabilitiesandobligationsoftheCompany,exceptasotherwiseprovidedbytheAct;provided,however,thatanyandallobligationsandliabilitiestoaMemberoraPreferredHolderoranAffiliateofaMemberorPreferredHolder shall be satisfied solely from Company assets and no Member or Preferred Holder shall have any personalliabilityonaccountthereof.
Section 4.4 No Interest on Capital Contributions or Capital Accounts.
ExceptforanyamountstowhichPreferredHoldersmaybeentitledundertheexpressprovisionsoftheapplicablePreferredUnitDesignation,noMemberorPreferredHoldershallreceiveanyinterestorreturninthenatureofinterestonitscontributionstothecapitaloftheCompany,oronthepositivebalance,ifany,initsCapitalAccount.
Section 4.5 Capital Accounts.
(a) TheCompanyshallestablishandmaintainaseparatecapitalaccount(“Capital Account”)foreachMemberand Preferred Holder, including each permitted transferee who shall acquire a Membership Interest pursuant to theprovisionsofSection8.2.TheestimatedCapitalAccountsforeachMemberandPreferredHolderasofthedatehereofaresetforthonScheduleIV(whichshallbeupdatedwithinareasonableamounttime(andnolaterthanforty-five(45)days)followingthecloseofthetaxableyearoftheCompanythatincludesthedatehereof).EachCapitalAccountshallbe:
(i) credited with the amount of cash and the initial Book Value (net of liabilities secured by suchcontributed property that the Company assumes or takes subject to) of any other property contributed by suchMember or PreferredHolder to thecapital of theCompany, suchMember’s andPreferredHolder’s distributiveshare of Profits, and any items in the nature of income or gain that are allocated to such Member or PreferredHolderpursuanttoSection5.1,butexcludingtaxitemsdescribedinRegulationsSection1.704-1(b)(4)(i);and
(ii) debited with the amount of cash and the Book Value (net of liabilities secured by such distributedpropertythatsuchMemberorPreferredHolderassumesortakessubjectto)ofanyCompanypropertydistributedto suchMember or Preferred Holder pursuant to anyprovision of this Agreement, suchMember’s or PreferredHolder’s distributive share of Losses, any items in the nature of expenses or losses that are allocated to suchMember or Preferred Holder pursuant to Section 5.1, but excluding tax items described in Regulations Section1.704-1(b)(4)(i), and suchMember’s or Preferred Holder’s share, determined in accordance with its PercentageInterest,ofanyexpendituresoftheCompanydescribedinSection705(a)(2)(B)oftheCodeortreatedasSection705(a)(2)(B)expenditurespursuanttoRegulationsSection1.704-1(b)(2)(iv)(i).
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In the event that a Member’s or Preferred Holder’s applicable Membership Interest or portion thereof istransferredwithinthemeaningofRegulationsSection1.704-1(b)(2)(iv)(l), thetransfereeshallsucceedtotheCapitalAccountofthetransferortotheextentthatitrelatestotheMembershipInterestorportionthereofsotransferred.
IntheeventthattheBookValuesofCompanyassetsareadjustedasdescribedbelowinSection4.5(b),theCapitalAccounts of the Members and Preferred Holders shall be adjusted simultaneously to reflect the aggregate netadjustments as if theCompanyrecognizedgainor loss for federal incometaxpurposes equal to theamount of suchaggregatenetadjustment.
The foregoing provisions and the other provisions of this Agreement relating to the maintenance of CapitalAccountsareintendedtocomplywithSection1.704-1(b)oftheRegulations, andshall beinterpretedandappliedasprovidedin the Regulations. Notwithstandingthe other provisions of this Agreement, the Partnership Representativeshall be authorized to make, in its reasonable discretion, appropriate amendments to the allocations of Profits andLosses (and to individual items of income, gain, loss, deduction and credit) pursuant to this Agreement in order tocomply with Section 704 of the Code or applicable Regulations. If there are any changes after the date of thisAgreement in applicable tax law or regulations, or any errors, ambiguities, inconsistencies or omissions in thisAgreementwithrespecttoallocationstobemadetoCapitalAccountswhichwould,individuallyorintheaggregate,causetheMembersorPreferredHoldersnottoachieveinanymaterialrespecttheeconomicobjectivesunderlyingthisAgreement, the Partnership Representative may make, in its reasonable discretion, appropriate adjustments to suchallocationsinordertoachieveorapproximatesucheconomicobjectives;provided,thatthePartnershipRepresentativeshall provide advanced written notice to all the Members and Preferred Holders, in sufficient detail to enable suchMembersandPreferredHolderstoevaluatetheissueandthePartnershipRepresentative’sproposedadjustments,andshallconsideringoodfaithanycommentsreceivedfromtheMembersandPreferredHoldersthatwouldbeadverselyaffectedbythePartnershipRepresentative’sproposedadjustmentpriortomakinganyadjustmentstosuchallocations.IntheeventthatthePartnershipRepresentativereasonablydeterminesthatthemannerinwhichtheCapitalAccounts,or any debits or credits thereto, are maintained or computed under the Regulations should be further amended, thePartnership Representative shall be authorized to amend this Agreement; providedthat such amendment shall notadversely affect any Member or Preferred Holder or the Membership Interest of a Member or Preferred Holder,including the right to receive distributions allocable thereto, without the prior written consent of such Member orPreferredHolder.IndeterminingwhetherthisAgreementshouldbeamendedtoreflecttheforegoing,thePartnershipRepresentativeshallbeentitledtorelyontheadviceoftheCompanyAccountantsandcounseltotheCompany.
(b) Except as otherwise provided in this Agreement, the term “Book Value” or “Book Values” means, withrespecttoanyasset,suchasset’sadjustedbasisforfederalincometaxpurposes,except:
(i) theinitialBookValueofanyassetcontributedbyaMemberorPreferredHoldertotheCompanyshallbethegrossfairmarketvalueofsuchasset;
(ii) the Book Value of all Company assets may be adjusted to equal their respective gross fair marketvaluesasofthefollowingtimes,asdeterminedbythePartnershipRepresentative(unlesssuchadjustmentshallberequiredbyRegulationsSection1.704-1(b)(2)(iv)(f)):(i)theacquisitionfromtheCompany,inexchangeformorethan a de minimis capital contribution, of a Membership Interest by an additional member or an additionalMembership Interest by an existing Member or Preferred Holder; (ii) the distribution by the Company to aMember or Preferred Holder of more than a de minimis amount of Company property (including money) asconsiderationforaninterestintheCompany;(iii)theissuanceofanyinterestsintheCompanyasconsiderationfortheprovisionofservicestoorforthebenefitoftheCompany;and(iv)theliquidationoftheCompanywithinthemeaningofRegulationsSection1.704-1(b)(2)(ii)(g);
(iii) if the Book Value of an asset has been determined or adjusted as provided in Section 4.5(b)(i) orSection4.5(b)(ii),theBookValueofsuchassetshallthereafterbeadjustedbytheDepreciationtakenintoaccountwithrespecttosuchassetforpurposesofcomputingProfitsandLosses;and
(iv) the Book Value of any Company asset distributed to any Member or Preferred Holder shall be thegrossfairmarketvalueofsuchassetonthedateofdistribution.
(c) IntheeventthatsubsequenttotheEffectiveDateanyprovisionofthisArticleIVrequiresthedeterminationofthefairmarketvalueofanyasset,suchfairmarketvalueshallbeasdeterminedbyPartnershipRepresentativeandtherelevantMemberorPreferredHolder;providedthat(i)suchvalueisreasonablyagreedtobysuchPersonsin
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arm’s length negotiations and (ii) such Persons have sufficiently adverse interests, as provided in RegulationsSection1.704-1(b)(2)(iv)(h).Intheeventthattherequirementsofclauses(i)and(ii)ofthisSection4.5(c)arenotmet,thenthefairmarketvalueshallbedeterminedusingtheproceduressetforthinExhibitLfordeterminingFairMarketValue,appliedmutatis mutandis.ThecostofanysuchappraisalshallbeanexpenseoftheCompany.
Section 4.6 Membership Interests; Units of Membership Interest; Percentage Interests.
(a) For the purpose of this Agreement, the term “Membership Interest” means, with respect to a Member orPreferred Holder, such Member’s or Preferred Holder’s right to the allocations (and each item thereof) specified inSection5.1anddistributionsfromtheCompany,itsshareofexpendituresoftheCompanydescribedinSection705(a)(2)(B) of the Code(or treated as suchunder Regulations Section 1.704-1(b)(2)(iv)(i)) andits rights ofmanagement,consent,approval,orparticipation,ifany,asprovidedinthisAgreement.MembershipInterestsshallberepresentedbyanddividedintounits(hereinreferredtocollectivelyasthe“Units of Membership Interest”andindividuallyasa“Unitof Membership Interest”) that are either common Units of Membership Interest (the “Common Units”) or PreferredUnits,eachhavingtherelativerights,powers,preferences,duties,qualifications,limitationsandrestrictionssetforthinthisAgreement.TheMembershipInterestLedgerforCommonUnitsandtheMembershipInterestLedgerforPreferredUnitsasofthedatehereofisattachedheretoasScheduleI.TheCompanymayissueadditionalUnitsofMembershipInterestinaccordancewithandsubjecttothetermsofthisAgreement,includingSection8.3.AllMembershipInterestsaresecuritiesgovernedbyArticle8oftheUniformCommercialCode,asprovidedinSection8-103(c)oftheUniformCommercialCode,asineffectfromtimetotimeintheStateofDelaware.
(b) ForthepurposeofthisAgreement,theterm“Percentage Interest”means,withrespecttoeachMember,afraction,thenumeratorofwhichistheaggregatenumberofCommonUnitsheldbysuchMember,andthedenominatorof whichis the aggregate number of all CommonUnits that are issuedandoutstanding. EachMember’s PercentageInterestshallbesetforthoppositesuchMember’snameontheMembershipInterestLedgerforCommonUnits,astheMembershipInterestLedgerforCommonUnitsmaybeupdatedfromtimetotimeinaccordancewiththisAgreement.For the avoidance of doubt, for purposes of calculating Percentage Interest, no interest in the Company that is aPreferredUnitshallbetakenintoaccount.
(c) ThepartiesheretoagreetothematterssetforthonExhibitK.
Section 4.7 Membership Interest Certificates.
Units of Membership Interest may be evidenced by Membership Interest Certificates (herein referred tocollectively as “Membership Interest Certificates” and individually as a “Membership Interest Certificate”), whichshallsolelybeissued,atthewrittenrequestofanyMemberorPreferredHolder(asapplicable),inaccordancewiththisSection4.7andSection11.17,intheformofExhibitA.EachMembershipInterestCertificateshallbesignedbytwoOfficersandshallbearthefollowinglegend:
“TheUnit(s)ofMembershipInterestrepresentedbythiscertificateis(are)subjecttoandtransferableonlyincompliancewiththeJointVentureOperatingAgreementofTheTaubmanRealtyGroupLLC,asthesamemaybeamendedorsupplementedfromtimetotime(the“Operating Agreement”),acopyofwhichisonfileattheofficeof The Taubman Realty Group LLC. Any assignment, sale, transfer, conveyance, mortgage, or otherencumbrance,pledge,grantofanoptionorproxy,orotherdispositionoractofalienation,whethervoluntaryorinvoluntary,orbyoperationoflaw,inrespectofaUnitofMembershipInterestmadeotherthanaspermittedintheOperatingAgreementshallbenullandvoidandhavenoforceoreffectwhatsoever.”
TransfersofUnitsofMembershipInterestshallbemadeonlyaspermittedhereinand,ifaMembershipInterestCertificatehasbeenissuedwithrespecttosuchMembershipInterest,thenonlyupontherequestofthePersonnamedinthesuchMembershipInterestCertificate,orbyitsattorneylawfullyconstitutedinwriting,anduponsurrenderandcancellation of such Membership Interest Certificate for a like number of Units of Membership Interest, a dulyexecuted and acknowledged written instrument of assignment and agreement by the transferee to be bound by thisAgreement, and with such proof of authenticity of the signatures as the Chief Executive Officer or the Board ofDirectors, as applicable, may reasonably require. In the event that the Company shall purchase any Units ofMembership Interest (including Fractional Units), such Units of Membership Interest (or Fractional Units) shall beextinguished,andtheMembershipInterestCertificateswithrespecttheretoshallbesurrenderedandcancelled.
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V.
ALLOCATIONS; DISTRIBUTIONS; BANK ACCOUNTS; BOOKS OF ACCOUNT; TAX RETURNS; ACCOUNTING AND
REPORTS; COMPANY FISCAL YEAR.
Section 5.1 Allocations.
(a) ForthepurposeofthisAgreement,theterms“Profits”and“Losses”mean,respectively,foreachCompanyFiscal Year or other period, the Company’s taxable income or loss for such Company Fiscal Year or other period,determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss, ordeductionrequiredtobestatedseparatelypursuanttoSection703(a)(1)oftheCodeshallbeincludedintaxableincomeorloss),adjustedasfollows:
(i) any income of the Company that is exempt from federal income tax and not otherwise taken intoaccountincomputingProfitsorLossespursuanttothisSection5.1(a)shall beaddedtosuchtaxableincomeorloss;
(ii) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account incomputingsuchtaxableincomeorloss,thereshallbetakenintoaccountDepreciationforsuchCompanyFiscalYearorotherperiod;and
(iii) any items that are specially allocated pursuant to Section 5.1(d) or Section 5.1(g) shall not be takenintoaccountincomputingProfitsorLosses.
(b) ExceptasotherwiseprovidedinSection5.1(d)orSection5.1(g),theProfitsandLossesoftheCompany(andeach item thereof) for each Company Fiscal Year shall be allocated among the Members and Preferred Holders inaccordancewiththisSection5.1(b).
(i) Profitsshallbeallocated:
(A) first, to the Preferred Holders, in an amount equal to the Unallocated Preferred Return withrespecttoeachseries(proportionateastosuchUnallocatedPreferredReturnamongeachseries);andthen
(B) second, to the Preferred Holders, in an amount equal to the excess, if any, of the cumulativeamountofLossesallocatedtosuchPreferredHolderspursuanttoSection5.1(b)(ii)(B)overthecumulativeamountofProfitsallocatedtosuchPreferredHolderspursuanttothisSection5.1(b)(i)(B)(proportionateastosuchexcessamounts);andthen
(C) third,totheMembersinaccordancewiththeirrespectivePercentageInterests.
(ii) Lossesshallbeallocated:
(A) first,toMembersuntiltheAdjustedCapitalAccountBalancesofallsuchMembersarereducedtozero,excluding,forpurposesofcalculatingtheAdjustedCapitalAccountBalanceofanyPreferredHolder,the Preferred Units (in proportion to such positive Adjusted Capital Account Balances (excluding thePreferredUnits));andthen
(B) second, to the Preferred Holders, if any, until the Adjusted Capital Account Balances of thePreferredHolders are reducedtozero(in proportionto suchpositive AdjustedCapital Account Balances);andthen
(C) third,totheMembersinaccordancewiththeirrespectivePercentageInterests.
(c) ForthepurposeofSection5.1(b),gainorlossresultingfromanydispositionofCompanypropertyshallbecomputedbyreferencetotheBookValueofthepropertydisposedof, notwithstandingthat theadjustedtaxbasisofsuchpropertyforfederalincometaxpurposesdiffersfromitsBookValue.
(d) NotwithstandingtheforegoingprovisionsofthisSection5.1,thefollowingprovisionsshallapply:
(i) Nonrecourse Deductions shall be allocated in accordance with the Members Percentage Interests;provided,however,thataMembershallnotreceiveanallocationofanyCompanydeductionthatwouldresultintotallossallocationsattributabletoNonrecourseLiabilitiesinexcessofsuchMember’sshareofMinimumGain(asdeterminedunderRegulationsSection1.704-2(g)).IfthereisanetdecreaseinCompanyMinimum
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GainforaCompanyFiscalYear,inaccordancewithRegulationsSection1.704-2(f)andtheexceptionscontainedtherein,theMembersshallbeallocateditemsofCompanyincomeandgainforsuchCompanyFiscalYear(and,ifnecessary,forsubsequentCompanyFiscalYears)equaltotheMembers’respectivesharesofthenetdecreaseinMinimumGainwithinthemeaningof Regulations Section1.704-2(g)(2). Theitemstobeallocatedpursuant tothisSection5.1(d)(i)shallbedeterminedinaccordancewithRegulationsSections1.704-2(f)and(j).
(ii) Any item of Member Nonrecourse Deduction with respect to a Member Nonrecourse Debt shall beallocatedtotheMemberorMembers(orPreferredHolderorPreferredHolders)whobeartheeconomicriskoflossforsuchMemberNonrecourseDebtinaccordancewithRegulationsSection1.704-2(i)(1).SubjecttoSection5.1(d)(i), but notwithstandinganyotherprovisionofthis Agreement, intheeventthat thereisanet decreaseinMinimumGainattributabletoaMemberNonrecourseDebt(suchMinimumGainbeinghereinafterreferredtoas“Member Nonrecourse Debt Minimum Gain”) for a Company Fiscal Year, then after taking into accountallocations pursuant to Section 5.1(d)(i), but before any other allocations are made for such taxable year, andsubjecttotheexceptionssetforthinRegulationsSection1.704-2(i)(4),eachMemberorPreferredHolderwithashare of Member Nonrecourse Debt Minimum Gain at the beginning of such Company Fiscal Year shall beallocated itemsof incomeandgain for suchCompanyFiscal Year (and, if necessary, for subsequent CompanyFiscal Years) equal to such Member’s or Preferred Holder’s share of the net decrease in Member NonrecourseDebtMinimumGainasdeterminedinamannerconsistentwiththeprovisionsofRegulationsSection1.704-2(g)(2). The items to be allocated pursuant to this Section 5.1(d)(ii) shall be determined in accordance withRegulationsSections1.704-2(i)(4)and(j).
(iii) For the purpose of determining each Member’s or Preferred Holder’s share of excess NonrecourseLiabilities of the Company, and solely for such purpose, each Member’s or Preferred Holder’s interest inCompany profits shall be reasonably determined by the Partnership Representative in accordance with InternalRevenueServiceauthorityinterpretingRegulationsSection1.752-3(a)(3), andtotheextentreasonablypossible,the Partnership Representative will allocate excess Nonrecourse Liabilities first to each Member and PreferredHolderwithnegativeCapitalAccountsuptotheamountofsuchnegativeCapitalAccountsetforthwithrespecttoeach Member and Preferred Holder on Schedule IV as of the Effective Date, as reduced from time to time(i)proportionatelytoreflectanyTransferofCommonUnitsbyanysuchMemberandPreferredHolderand(ii)toreflect the allocation of taxable income to each such Member and Preferred Holder in excess of pro ratadistributionstoeachsuchMemberandPreferredHolder,asapplicable;provided,that,fortheavoidanceofdoubt,theallocationofNonrecourseLiabilitiestoSilverOPshallnotbelessthantheamountofNonrecourseLiabilitiesrequiredtobeallocatedpursuanttotheagreementsetforthinSection2ofScheduleV.SilverOPshall,andSilverParentshallcauseSilverOPto,allocatetoanyofitsmembersthatareapartytotheagreementsetforthinSection2 of Schedule V an amount of Nonrecourse Liabilities at least equal to the amount of Nonrecourse Liabilitiesrequired to be allocated to such members pursuant to such agreement provided that at least that amount ofNonrecourseLiabilitiesareallocatedtoSilverOPbythePartnershipRepresentativeandSilverOPisabletomakesuchallocationunderapplicablelaw,asreasonablydeterminedbySilverOP;provided,that,fortheavoidanceofdoubt, Silver OP shall not be liable for any failure to make any allocation of Nonrecourse Liabilities to suchmembersasaresultofthefailureoftheCompanytoallocatesuchNonrecourseLiabilitiestoSilverOPorifSilverOPisnotabletomakesuchallocationunderapplicablelaw,asreasonablydeterminedbySilverOP,ineachcase,unlessthePartnershipRepresentative,duringtheSilverPeriod,hasfailedtocomplywiththisSection5.1(d)(iii).
(iv) NoMember or Preferred Holder shall be allocated any itemof deduction or loss of the Company ifsuchallocationwouldcausesuchMember’sorPreferredHolder’sCapitalAccounttobecomenegativebymorethanthesumof(i)anyamountsuchMemberorPreferredHolderisobligatedtorestoreuponliquidationoftheCompany, plus (ii) such Member’s or Preferred Holder’s share of the Company’s MinimumGain and MemberNonrecourseDebtMinimumGain.Forthispurpose,indeterminingtheCapitalAccountbalanceofsuchMemberorPreferredHolder,theitemsdescribedinRegulationsSections1.704-1(b)(2)(ii)(d)(4),(5)and(6)shallbetakeninto account. In the event that (A) any Member or Preferred Holder unexpectedly receives any adjustment,allocation, or distribution described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5)or (6), and (B) suchadjustment,allocation,ordistributioncausesorincreasesadeficitbalance(netofamountswhichsuchMemberorPreferredHolderisobligatedtorestoreordeemedobligatedtorestoreunderRegulationsSections1.704-2(g)(1)and1.704-2(i)(5)anddeterminedaftertakingintoaccountanyadjustments,allocations,ordistributionsdescribedinRegulationsSections1.704-1(b)(2)(ii)(d)(4),(5),or(6)that,asoftheendofthe
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Company Fiscal Year, reasonably are expected to be made to such Member or such Preferred Holder) in suchMember’s or Preferred Holder’s Capital Account as of the end of the Company Fiscal Year to which suchadjustment,allocation,ordistributionrelates,thenitemsofGrossIncome(consistingofapro rata portionofeachitem of Gross Income) for such Company Fiscal Year and each subsequent Company Fiscal Year shall beallocatedtosuchMemberorPreferredHolderuntilsuchdeficitbalanceorincreaseinsuchdeficitbalance,asthecase may be, has been eliminated. In the event that this Section 5.1(d)(iv) and Section 5.1(d)(i) or (ii) apply,Section5.1(d)(i)or(ii)shallbeappliedpriortothisSection5.1(d)(iv).
(v) Such portion of the gain allocated pursuant to this Section 5.1 that is treated as ordinary incomeattributable to the recapture of depreciation shall, to the extent reasonably possible, be allocated among theMembersorPreferredHoldersintheproportionthat(i)theamountofdepreciationpreviouslyallocatedtoeachMemberorPreferredHolderrelatingtothepropertythatisthesubjectofthedispositionbearsto(ii)thetotalofsuchdepreciationallocatedtoalloftheMembersorPreferredHolders.ThisSection5.1(d)(v)shallnotaltertheamount of allocations among the Members or Preferred Holders pursuant to this Section 5.1, but merely thecharacterofgainsoallocated.
(vi) To the extent permitted by Regulations Sections 1.704-2(h)(3) and 1.704-2(i)(6), the PartnershipRepresentative shall endeavor to treat a distribution of the proceeds of Nonrecourse Liabilities (that wouldotherwise be allocable to an increase in Company Minimum Gain) or Member Nonrecourse Debt (that wouldotherwisebeallocabletoanincreaseinMemberNonrecourseDebtMinimumGain)asadistributionthatisnotallocabletoanincreaseinCompanyMinimumGainorMemberNonrecourseDebtMinimumGaintotheextentthatsuchdistributiondoesnotcauseorincreaseadeficitbalanceinanyMember’sorPreferredHolder’sCapitalAccountthatexceedstheamountsuchMemberorPreferredHolderisotherwiseobligatedtorestore(withinthemeaningof Regulations Section 1.704-1(b)(2)(ii)(c)) as of the endof the Company’s taxable year in whichthedistributionoccurs.
(vii) TheCompanyisapartnerineachoftheTaxablePartnerships.EachTaxablePartnershiphaselectedor shall elect the “alternative base method” provided under the Pass-Through Entity Tax for calculating eachSubjectMember’sPass-ThroughEntityTaxliability(the“Alternative Base Method”).ThepartnershipagreementoroperatingagreementgoverningeachTaxablePartnershipspeciallyallocatesthefederalincometaxdeductionforthePass-ThroughEntityTaxtotheSubjectMembersinsuchTaxablePartnershipsinproportiontoeachsuchSubject Member’s allocableshare(the“State Allocable Share”) of suchtax, determinedinaccordancewiththeratiothateachSubjectMember’sshareoftheincomeofsuchTaxablePartnership(beforedeductionofthePass-ThroughEntityTax)subjecttothePass-ThroughEntityTax(computedundertheAlternativeBaseMethod)bearstotheaggregateincomeofsuchTaxablePartnership(beforedeductionofthePass-ThroughEntityTax)subjecttothePass-ThroughEntityTax(computedundertheAlternativeBaseMethod)ofalltheSubjectMembersofsuchTaxable Partnership (the “Special Allocation Formula”). The Members and Preferred Holders herebyacknowledge and agree that the federal income tax deduction for the payment of the Pass-Through Entity Taxliability shall be allocated to each of the Subject Members of the Company in accordance with their StateAllocable Shares determined in accordance with the Special Allocation Formula. The partnership agreement oroperating agreement governing each Taxable Partnership allocates the corresponding Connecticut personalincome tax credit for payment of the Pass-Through Entity Tax to its Subject Members in accordance with theSpecial Allocation Formula. The Members and Preferred Holders hereby acknowledge and agree that theConnecticutpersonalincometaxcreditshallbeallocatedtotheSubjectMembersintheCompanyinaccordancewith the Special Allocation Formula. To the extent a Member or Preferred Holder (or any direct or indirectmember of a Member or Preferred Holder) is not subject to the Pass-Through Entity Tax on its share of theCompany’sincomesubjecttosuchtax,thensuchMemberorPreferredHoldershall providetheCompanywithwritten notice thereof within thirty (30) Days prior to the due date for payment by the Company of the Pass-Through Entity Tax. The Company shall give each Subject Member written notice setting forth such SubjectMember’s State Allocable Share of the Pass-Through Entity Tax. The Company shall (i) withhold from cashotherwisecurrentlydistributabletoeachSubjectMemberpursuanttoSection5.2orSection10.5(a),asapplicable,such Subject Member’s State Allocable Share of the Pass-Through Entity Tax, (ii) decrease each SubjectMember’sCapitalAccountbysuchSubjectMember’sStateAllocableShareofthePass-ThroughEntityTaxand(iii) to the extent cash is not distributable to such Subject Member for the taxable quarter (or if the tax is notpayable quarterly, then for such other taxable period during which the tax must be paid) in which the Pass-ThroughEntityTaxmustbepaidbytheCompany,eachSubjectMembershallmakeapaymenttotheCompanyinreadilyavailablefundswithinten(10)DaysafterwrittennoticefromtheCompanyofsuchSubject
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Member’samountdue.IntheeventaSubjectMemberfailstotimelyremititsStateAllocableShareofthePass-Through Entity Tax, the Partnership Representative may determine, in its sole discretion, either to (x) treat,subjecttoanyrequiredconsentunderanyapplicablefinancing,suchSubjectMember’sStateAllocableShareofthe Pass-Through Entity Tax as a loan from the Company (or from an Affiliate of the Company) (hereinafter,togetherwithanyloanmadepursuanttoSection6.26(f)orArticleIX,referredtoasa“Tax Loan”)tosuchSubjectMember,whichTaxLoanshallhaveamaturityofone(1)year,shallbearinterestattheInterestRate,andshallbesubjecttotheprovisionsofSection6.27,andallcashsubsequentlydistributabletosuchSubjectMembershall,tothe extent of the unpaid principal amount of and the accrued interest on such Tax Loan, be retained by theCompany and applied against the principal and accrued interest on such Tax Loan, or (y) pursue any and allremedies available to the Company at law or in equity, including instituting a lawsuit against such SubjectMembertocollectsuchSubjectMember’sStateAllocableSharewithinterestcalculatedattheInterestRate(the“Failure to Comply Remedies”).TheMembersandPreferredHoldersacknowledgethatintheeventtheCompanyisorbecomesapartneroramemberinanyotherpass-throughentitythatisorbecomessubjecttotaxationunderastatelawprovidingtaxbenefitstothedirectorindirectmembersofsuchentity,thentheprovisionsofthisSection5.1(d)(vii) shall apply with respect to such entity and such tax. For the purpose of determining a SubjectMember’sCapitalAccountintheCompany,anyamountdistributabletoaSubjectMemberthatisretainedbytheCompanypursuanttothisSection5.1(d)(vii)shallbetreatedasifsuchcashhadbeenactuallydistributedtosuchMember pursuant to Section 5.2 or Section 10.4(a), as applicable, andremitted to the Companybythe SubjectMember.TheamountdeemedremittedoranyamountactuallyremittedtotheCompanyforpaymentofthePass-ThroughEntityTaxbytheSubjectMember(notincludinganypaymentsofprincipalandinterestonaTaxLoan)and the principal amount (at the time loaned) of any Tax Loan made by the Company (or its Affiliate) to theSubject Member pursuant to this Section 5.1(d)(vii) shall constitute a capital contribution and increase suchSubjectMember’sCapitalAccountintheCompany;and,inanyevent,allsuchamountsshallberemittedtotheCompany by the applicable Subject Member prior to the exercise of such Subject Member’s Exchange rightspursuanttoSection8.4,ifapplicable.TheprovisionsofthisSection5.1(d)(vii)shallsurviveaSubjectMember’smembershipintheCompanyandthedissolution,liquidation,windingup,andterminationoftheCompany,andfor purposesof this Section5.1(d)(vii), theCompanyshall betreatedas continuinginexistence. TheCompanymaypursueandenforceallrightsandremediesitmayhaveagainstaSubjectMemberunderthisSection5.1(d)(vii),includinginstitutingalawsuittocollectsuchreimbursementwithinterestcalculatedattheInterestRate.Tothe extent permitted by applicable law, the provisions of this Section 5.1(d)(vii) shall be binding on theCompany’ssuccessorsandassigns.Totheextentapplicable,thisSection5.1(d)(vii)shallapplymutatis mutandistoanySubsidiariesoftheCompany.
(e)NotwithstandinganythingtothecontrarycontainedinthisSection5.1,theallocationofProfitsandLossesforanyCompanyFiscal Year during which a Person acquires a Membership Interest (other than uponformation of theCompany) shall take into account the Members’ and Preferred Holders’ varying interests for such Company FiscalYear pursuant to any method permissible under Section 706 of the Code that is selected by the PartnershipRepresentative (notwithstanding any agreement between the assignor and assignee of such Membership InterestalthoughthePartnershipRepresentativemayrecognizeanysuchagreement),whichmethodmaytakeintoaccountthedateonwhichtheTransferoranagreementtoTransferbecomesirrevocablepursuanttoitsterms,asdeterminedbythePartnershipRepresentative.
(f)TheProfits,Losses,gains,deductions,andcreditsoftheCompany(andallitemsthereof)foreachCompanyFiscal Year shall be determined in accordance with the accounting method followed by the Company for federalincometaxpurposes.
(g)Thefollowingallocationsshallbemadesolelyforfederalincometaxpurposes:
(i) The Company shall elect pursuant to Section 754 of the Code, in connection with the transactionseffected pursuant to the Merger Agreement, to adjust the basis of partnership property. Except as provided inRegulations Section 1.704-1(b)(2)(iv)(m), such adjustment shall not be reflected in the Members’ CapitalAccounts andshall be effective solely for federal and(if applicable) state andlocal incometax purposes. EachMemberandPreferredHolderherebyagreestoprovidetheCompanywithallinformationnecessarytogiveeffecttosuchelection.Withrespecttosuchelection:
(i) Any change in the amount of the depreciation deducted by the Company and any change in thegain or loss of the Company, for federal income tax purposes, resulting from an adjustment pursuant toSection743(b)oftheCodeshallbeallocatedentirelytothetransfereeoftheMembershipInterestor
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portionthereofsotransferred.Neitherthecapitalcontributionobligationsof,northeMembershipInterestof,northeamountofanycashdistributionsto,theMembersorPreferredHoldersshallbeaffectedasaresultofsuch election, and except as provided in Regulations Section 1.704-1(b)(2)(iv)(m), the making of suchelectionshallhavenoeffect,exceptforfederaland(ifapplicable)stateandlocalincometaxpurposes.
(ii) Solelyforfederaland(ifapplicable)stateandlocalincometaxpurposesandnotforthepurposeofmaintaining the Members’ and Preferred Holders’ Capital Accounts (except as provided in RegulationsSection1.704-1(b)(2)(iv)(m)),theCompanyshallkeepawrittenrecordforthoseassets,thebasisofwhichisadjustedasaresultofsuchelection,andtheamountatwhichsuchassetsarecarriedonsuchrecordshallbedebited(inthecaseofanincreaseinbasis)orcredited(inthecaseofadecreaseinbasis)bytheamountofsuch basis adjustment. Any change in the amount of the depreciation deducted by the Company and anychangeinthegainorlossoftheCompany,forfederaland(ifapplicable)stateandlocalincometaxpurposes,attributabletothebasisadjustmentmadeasaresultofsuchelectionshallbedebitedorcredited,asthecasemaybe,onsuchrecord.
(ii) In accordance with Sections 704(b) and 704(c) of the Code and the Regulations thereunder, income,gain,loss,anddeductionwithrespecttoanypropertycontributedtothecapitaloftheCompanyshall,solelyforfederalincometaxpurposes,beallocatedamongtheMembersandPreferredHolderssoastotakeaccountofanyvariation between the adjusted basis of such property to the Company for federal incometax purposes and theinitialBookValueofsuchproperty.IftheBookValueofanyCompanypropertyisadjustedpursuanttoSection4.5(b),subsequentallocationsofincome,gain,loss,anddeductionwithrespecttosuchassetshalltakeaccountofanyvariationbetweentheadjustedbasisofsuchassetforfederalincometaxpurposesandtheBookValueofsuchassetinthemannerprescribedunderSections704(b)and704(c)oftheCodeandtheRegulationsthereunder.WithrespecttoanySection704(c)allocationsarisingoutoforattributabletoanytransactionsaftertheEffectiveDate(includingwithrespecttoanyreverseSection704(c)amountscausedbyanybook-upincapitalaccounts),suchallocations shall be made using the traditional method specified in Treasury Regulations Section 1.704-3(b);provided, however, that Section 704(c) allocations with respect to the properties which are the subject of theagreementssetforthonScheduleVshallbemadeusingthetraditionalmethodwithcurativeallocationsspecifiedinTreasuryRegulationsSection1.704-3(c).
(h)ExceptasprovidedinSections5.1(g)(i)and5.1(g)(ii),forfederalincometaxpurposes,eachitemofincome,gain, loss, or deduction shall be allocated among the Members and Preferred Holders in the same manner as itscorrelativeitemof“book”income,gain,loss,ordeductionhasbeenallocatedpursuanttothisSection5.1.
Section 5.2 Distributions.
(a) NolaterthanDecember15priortothebeginningofeachCompanyFiscalYear,theChiefExecutiveOfficershallpresenttotheBoardofDirectorsforapprovalanannualdistributionpolicy(an“Annual Distribution Policy”)forsuchupcomingFiscalYear;provided,thatsuchannualdistributionpolicyshallprovideforthedistributionofnolessthan the Required Distribution Amount. In determining and approving the Annual Distribution Policy, the ChiefExecutive Officer and the Board of Directors shall consider the Estimated Minimum Distribution Amount for theupcomingFiscalYearandtheMinimumDistributionAmount,ifany,remainingtobedistributedwithrespecttothethen-current Fiscal Year. BetweenOctoberandmid-DecemberofeachFiscal Yearbeginningin2022,aspart oftheAnnual Budget approval process, theCompanywill providetheBoardof Directors witha draft Annual DistributionPolicyforthenextFiscalYear(withtheinitialdraftofsuchpolicytobeprovidedbyOctober31ofthethen-currentFiscalYear).IntheeventthatanAnnualDistributionPolicyforanysuchupcomingCompanyFiscalYear(i.e.,2023and thereafter) is not unanimously approved by the Board of Directors, the Annual Distribution Policy for suchCompany Fiscal Year shall provide for mandatory minimum distributions equal to the greater of (x) the MinimumDistribution Amount and (y) 65% of the budgeted aggregate “funds from operations” for the Company and itsSubsidiariessetforthintheapplicableAnnualBudgetforsuchCompanyFiscalYear,subjecttoquarterlyadjustmentto give effect to any change to the “outlook” for the Company Fiscal Year (i.e., good faith projections of actualperformance against the Annual Budget) for actual “funds from operations”, and also taking into account actualperformancetodateinsuchCompanyFiscalYear.NotwithstandingtheforegoingoranythingelseinthisAgreementtothecontrary, theAnnual DistributionPolicyfor eachof the2020, 2021and2022CompanyFiscal Years shall betodistributetoMembersinrespectoftheirCommonUnitsatleasttheInitialMandatoryMinimumperCommonUnitperCompanyFiscal Year (subject to pro rata adjustment for partial years) in accordance with Section 5.2(b), and in noeventlessthantheMinimumDistributionAmountforanysuchCompanyFiscalYear.NotwithstandingtheforegoingoranythingelseinthisAgreementtothecontrary,alldistributionsinexcessofthe
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MinimumDistributionAmountshall belimitedbytheCompanytotheextent reasonablynecessarytoretaincashtoaddressexigentcircumstances,wherethefailuretoretainsuchcash,aftertakingintoaccounttheavailabilityoffundsfromborrowingthatwouldbeavailableatsuchtimeoncommerciallyreasonableterms(andinanyeventnotataratehigher than the lower of (x) four hundred basis points above the 10-year U.S. Treasury bill rate at the time of suchborrowing and (y) 8.00%), would be reasonably likely to have a material adverse impact on the Company and itsSubsidiaries, taken as a whole (“Distribution Limitation Event”). If the Silver Member believes in good faith that aDistribution Limitation Event has occurred but the Company has not limited distributions accordingly, the SilverMember shall be permitted to submit such disagreement to a Qualified Expert for resolution in accordance with theproceduressetforthinSection6.22(b),appliedmutatis mutandis;providedthatdistributionsforanyCompanyFiscalYearshallbesuspendedduringthependencyofanydisputethatissubjecttoresolutionpursuanttoSection6.22(b)butonlywithrespecttoanydisputedamount(i.e.,undisputedamountsshallnotbesuspended)andinanycasethereshallbe no delay in distributions with respect to any Estimated MinimumDistribution Amount or MinimumDistributionAmount.Subjecttotheforegoing,intheeventthattheEstimatedMinimumDistributionAmountisdeterminedtobehigher or lower than such amount as determined when the Annual Distribution Policy was set (whether pursuant tochangedresults,assetsalesorotherwise),theAnnualDistributionPolicyshallbeappropriatelyadjustedtoreflectsuchchange.
(b) Subject to Section 5.2(a), except with respect to the liquidation of the Company or on liquidation ofsubstantiallyalloftheassetsoftheCompany,whichshallbegovernedbySection10.5andsubjecttotheprioritysetforthinanyPreferredUnitDesignation,forthetermoftheCompany,acashdistributionshallbemadetotheMembersinrespectoftheirCommonUnits,inaccordancewiththeirrespectivePercentageInterests,notlaterthanthefifteenth(15) Dayof each month (the “Distribution Date”) of eachCompanyFiscal Year, in anamount equal to one-twelfth(1/12)oftheRequiredDistributionAmountforsuchCompanyFiscalYear.
(c) IntheeventthattheBoardofDirectorsortheChiefExecutiveOfficerdeterminesthattheamountofcashactually distributedto Members withrespect to a CompanyFiscal Year pursuant to Section5.2(b) wasless thantheMinimumDistributionAmountforsuchCompanyFiscalYear,thenacashdistributionshallbemadetotheMembers,in accordance with their respective Percentage Interests, as soon as practical, but not later than ninety (90) Daysfollowingthe endof suchCompanyFiscal Year, in anamount equal to the excess of (1) the MinimumDistributionAmount for suchCompanyFiscal Year over (2) theamount of cashactually distributedto Members withrespect tosuchCompanyFiscalYearpursuanttoSection5.2(b).
(d) All distributionspursuant tothis Section5.2andSection10.5shall bemadeinaccordancewiththetermsandprovisionsofthisAgreementtotheMembers(orformerMembersasprovidedinthesecondfollowingsentence)whoaresuchontheapplicableDistributionDate.InnoeventmayaMemberreceiveadistributionwithrespecttoaCommon Unit that such Member has Exchanged (i.e., the closing of the Exchange with respect to such Unit hasoccurred)priortotherelevantDistributionDate,otherthanassetforthinthenextsentence.Notwithstandinganythingin this Agreement to the contrary, onthe Distribution Date immediately followingthe closingof anyExchange, therelevantExchangingMembers(whetherornotstillaMember)shallbeentitledtoreceiveaprorateddistributionwithrespecttoeachCommonUnitpreviouslyExchangedinsuchExchangebasedonthenumberofdaysthathaveelapsedfrom the preceding Distribution Date until, and including, the Exchange Date, and the amount to be distributed toSilverOP(orSilverParentoranotherSubsidiaryofSilverParent)withrespecttoaCommonUnitthathasbeenissuedpursuanttoSection8.4inrespectofsuchExchangedCommonUnitatthenextregularlyscheduledDistributionDateshallbecorrespondinglyreduced.DistributionstotheMembersunderthisAgreementshallbesubjecttoanyrestrictionimposedbyapplicablelaw,andtheCompanyshallrefrainfrommakinganydistributionhereunderwithoutliabilitytotheextentsuchdistributionwouldbeinviolationofanyapplicablelaw.
(e) NotwithstandinganythingtothecontrarycontainedinthisAgreement,theCompanyshallnotmakeorpayanydistributionswithrespecttoanyclassorseriesofPreferredUnits,exceptfordistributionsinaccordancewiththeapplicablePreferredUnitDesignationrelatingtosuchclassorseriesofPreferredUnits.NotwithstandinganythingtothecontrarycontainedinthisAgreement,(i)anyMemberthatreceivesadistributioninviolationofanyPreferredUnitDesignation(includinganypreferenceondistributionscontainedinanyPreferredUnitDesignation)shallbeobligatedto return such distribution to the Company upon delivery of notice to such Member of such violation and (ii) anyamountsthataMemberdoesnotreturnasandwhenrequiredbytheforegoingclause(i)shallreduce,onadollar-for-dollarbasisandwithoutduplication,anyfuturedistributionstosuchMemberunderthisSection5.2andanyamountstowhichsuchMemberwouldotherwisebeentitledinconnectionwithanyExchange.
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Section 5.3 Bank Accounts and Other Investments.
FundsoftheCompanyshallbedepositedinone(1)ormorebankaccountsinResponsibleFinancialInstitutions,all asdeterminedingoodfaithbytheChief ExecutiveOfficer duringtheTitaniumPeriodortheBoardofDirectorsduringtheSilverPeriod.AllwithdrawalstherefromshallbemadeuponthesignatureorsignaturesofwhicheverofficeroremployeeoftheCompanyoranyofitsSubsidiariesasshallbedesignatedinwritingfromtimetotimebytheChiefExecutive Officer duringtheTitaniumPeriodor theBoardof Directors duringtheSilver Period. Anychecksof theCompany may be signed by any officer(s) of the Company designated in writing, from time to time, by the ChiefExecutiveOfficerduringtheTitaniumPeriodortheBoardofDirectorsduringtheSilverPeriod.Inaddition,fundsoftheCompanymaybeinvestedinhighlyliquidinvestmentspursuanttoacustomaryinvestmentpolicyapprovedfromtime to time by the Chief Executive Officer during the TitaniumPeriod or the Board of Directors during the SilverPeriod.FundsoftheCompanyshallnotbecommingledwiththefundsofanyotherPerson(otherthanSubsidiariesoftheCompany).
Section 5.4 Books of Account.
The Company shall maintain at its principal office complete and accurate books of account and records of itsoperationsshowingtheassets,liabilities,costs,expenditures,receipts,profits,andlossesoftheCompany,andwhichbooks of account and records shall include provision for separate Capital Accounts for the Members and PreferredHolders and shall provide for such other matters and information as may be required by the Act or as the ChiefExecutive Officer during the Titanium Period or the Board of Directors during the Silver Period shall otherwisedetermine,togetherwithcopiesofalldocumentsexecutedonbehalfoftheCompany.Inaddition,theCompanyshallmaintainatitsprincipalofficeaMembershipInterestLedgerforCommonUnitsandaMembershipInterestLedgerforPreferredUnits,whichshallbekeptcurrentbytheCompany.EachMemberanditsrepresentatives,dulyauthorizedinwriting,shallhavetherighttoinspectandexamine,atallreasonabletimes,attheprincipalofficeoftheCompany,allsuchbooksofaccount,records,ledgers,anddocuments.
Section 5.5 Tax Returns.
(a) ThePartnershipRepresentative shall determinethemethodstobeusedin thepreparationof federal, state,andlocalincomeandothertaxreturnsfortheCompanyinconnectionwithallitemsofincomeandexpense,including,but not limited to, valuation of assets, the methods of depreciation and cost recovery, elections, credits, and taxaccountingmethodsandprocedures.
(b) As soon as practicable, but in any event within one hundred twenty (120) Days after the end of eachCompanyFiscalYear,theCompanyshallcausetobepreparedandtransmittedtotheMembersfederalincometaxIRSFormScheduleK-1s,oranysubstitutetherefor,withrespecttosuchCompanyFiscalYear.Assoonaspracticable,butinanyeventwithinonehundredfifty(150)DaysaftertheendofeachCompanyFiscalYear,theCompanyshallcausetobepreparedandtransmittedtotheMembersappropriatestateandlocalincometaxScheduleK-1s,oranysubstitutetherefor, withrespecttosuchCompanyFiscalYearonappropriateformsprescribed. Inaddition,theCompanyshallprovidetotheSilverMember,onaquarterlybasis,areportregardingtheincomeprojectionsoftheCompanyanditsSubsidiariesandanyotherinformationreasonablyrequestedbytheSilverMemberinorderforSilverParenttocomplywithitsreportingrequirementsasaRealEstateInvestmentTrust.
Section 5.6 Accounting and Reports, Etc.
Assoonas reasonablypracticable, but in anyevent withinforty-five (45) Daysafter theendof eachCompanyFiscalYear,theCompanyshallcausetobepreparedandtransmittedtoeachMember,anunauditedannualreportoftheCompanyrelatingtothepreviousCompanyFiscalYear,containingastatementoffinancialconditionasoftheyearthen ended, and statements of operations, cash flow and Company equity for the year then ended, which annualstatements shall be prepared in accordance with GAAP. As soon as reasonably practicable, but in any event withinseventy-five (75) Days after the end of each Company Fiscal Year, the Company shall cause to be prepared andtransmittedtoeachMemberstatementsofoperations,cashflowandCompanyequityfortheyearthenended,whichannualstatementsshallbepreparedinaccordancewithGAAPandshallbeauditedbytheCompanyAccountants.TheCompanyshallalsocausetobepreparedandtransmittedtoeachMemberassoonasreasonablypracticable,butinanyevent within thirty (30) Days after the end of each of the first three (3) quarters of each Company Fiscal Year, aquarterlyunauditedreportoftheCompany’sfinancialconditionandstatementsofoperations,cashflowandCompanyequityrelatingtothefiscalquarterthenjustended,preparedinaccordancewithGAAP,andstatistical
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reportinginaformatthatisreasonablyrequestedbySilverParent.TheCompanyshallalsocausetobepreparedandtransmittedtoeachMemberassoonasreasonablypracticable,butinanyeventwithintwenty(20)Daysaftertheendof each month in each Company Fiscal Year (including any month that is a quarter or year-end), unauditedconsolidated balance sheets of the Company and the Subsidiaries as of the end of that month, and unauditedconsolidated statements of incomeand cash flows of the Company and the Subsidiaries for that month, prepared inaccordancewithGAAP.TheCompanyshallfurthercausetobepreparedandtransmittedtoSilverParentand,inthecase of clauses (iii) and (v), each Member, as soon as reasonably practicable (and the Company shall provide suchitems on a time frame sufficient for the Company to comply with its obligations under Silver Parent’s bona fideinternal policies, theSecurities Act, theExchangeAct andtheapplicable stockexchangerules, andunder anyotherregulationstowhichSilverParentortheCompanymaybesubject,ineachcaseastowhichpolicies,laws,rulesandregulations Silver Parent has provided such advance notice as is reasonably necessary to enable the Company toprepare and provide such items): (i) such reports or information as are necessary for Silver Parent to fulfill itsobligationsundertheSecuritiesAct,theExchangeActandtheapplicablestockexchangerules,andunderanyotherregulationstowhichSilverParentortheCompanymaybesubject,whichreportsorinformationshallbeprovidedinaformatthatisreasonablyrequestedbySilverParent,(ii)suchreportsorinformationasarenecessaryforSilverParenttodetermineitsqualificationasaRealEstateInvestmentTrustundertheREITRequirementsoritsliabilityforataxasa consequence of its indirect Membership Interest, including Silver Member’s (or Silver OP’s) distributive share oftaxableincome,ineachcase,inamannerthatwillpermitSilverParenttocomplywithsuchobligationsormakesuchdeterminationsinatimelyfashion,(iii)suchreportsorinformationprovidedbytheCompanyoranyofitsSubsidiariestoanyoftheirrespectivelenders(whichshallbeprovidedtoSilverParentpromptlyfollowingtheirprovisionstosuchlenders),(iv)suchreportsorinformationtowhichtheBoardofDirectorsoramemberoftheBoardofDirectorswouldbeentitlediftheCompanywereaDelawarecorporationand(v)anyotherreportsorinformationinthepossessionoftheCompanyoranyofitsSubsidiariesthatSilverParentoraMembermayreasonablyrequestingoodfaith(includingwithrespecttonon-financialreportingmetrics,updatedfinancialforecasts,separatereportingforindividualpropertiesand customary certifications of the internal control environment from management); provided, that if any report orinformation that is available to the Company is requested under this Section 5.6 in connection with any approvalrequired or requested of the Board of Directors, in connection with the determination of the Total Equity Valuepursuant Exhibit L or in connection with a Deadlock pursuant to Section 6.22, any time period required for suchapprovalordeterminationshallbetolleduntilsuchrequestissubstantiallycompleted.Infurtheranceoftheforegoing,including clause (ii) above, (a) within twenty (20) Days after the end of each calendar quarter, the Company shallprovidetotheSilverMember(x)writtenconfirmationthattheCompanyhasconductedareviewoftheincome,assetsandoperations of the Companyandits Subsidiaries for compliance with, andthat the Companyandits Subsidiarieshave complied with, the REIT Requirements during the applicable quarter and (y) information regarding theCompany’sassets,anestimateofSilverMember’sdistributiveshareoftaxableincomeoftheCompanyandsuchotherinformationreasonablynecessaryforSilverParenttodetermineitscompliancewiththeassettestssetforthinSection856(c)(4)oftheCodeandincometestssetforthinSections856(c)(2)and(3)oftheCode(onanactualorproformabasis)and(b)withinfifteen(15)DaysbeforetheendoftheCompanyFiscalYearandbyJanuary7ofeachsubsequentyear,theCompanyshallprovidetoSilverMemberanestimateofSilverMember’sdistributiveshareoftaxableincomeoftheCompany,forecastedearningsandprofitsoftheCompany,ascomputedunderU.S.incometaxprinciples,andsuchotherinformationasisreasonablynecessarytoenableSilverParenttocomplywithitsIRSForm1099andotherapplicablereportingrequirements.
Section 5.7 Company Fiscal Year.
TheCompany’sfiscalyear(andtaxableyear)shallbetheCompanyFiscalYear.
VI.
MANAGEMENT.
Section 6.1 Management; Power and Authority and Authorized Actions of the Chief Executive Officer andBoard of Directors.
(a) InaccordancewithSection18-402oftheAct,managementoftheCompanyisvestedinthe“manager,”andnot in the Members or the Preferred Holders. The Board of Directors shall be the sole “manager” of the CompanywithinthemeaningofSection18-402oftheAct,subjecttothetermsandconditionsofthisAgreement.
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(b) ExceptasexpresslystatedinthisAgreement,theBoardofDirectorsshallbeauthorizedandempoweredtomanagethebusinessandaffairsoftheCompanyandshallhavethefullright,powerandauthority,onbehalfofandinthenameoftheCompany,tocarryoutanyandallobjectivesandpurposesoftheCompany,tomakealldecisionsof,andtoexerciseanyandallofthepowersoftheCompanyandtoperformanyandallactsandenterintoandperformany and all contracts, agreements, and other undertakings which the Board of Directors may deem necessary oradvisable in furtherance of the purposes of the Company or incidental thereto. Subject to the express terms of thisAgreement (including Section 6.19, and his or her fiduciary duties, to the extent described herein), the Board ofDirectorsherebyirrevocablydelegatestotheChiefExecutiveOfficerduringtheTitaniumPeriodthefullright,powerandauthorityoftheBoardofDirectorstomanagethebusinessandaffairsoftheCompanyandtocarryoutanyandallobjectives and purposes of the Company, to make all decisions of, and to exercise any and all of the powers of theCompany and to perform any and all acts and enter into and perform any and all contracts, agreements and otherundertakings.SubjecttothetermsandconditionsofthisAgreement(includingSection6.19,andhisorherfiduciaryduties, to the extent described herein), the Chief Executive Officer during the Titanium Period and the Board ofDirectors during the Silver Period may employ or engage others (who, if such individuals are employees of theCompanyoritsSubsidiaries,maybedesignatedas“Officers”or“Authorized Signatories”),includingone(1)ormoreAffiliates of a Member, to perform all actions, decisions, determinations, designations, delegations, directions,appointments, consents, approvals, selections, and the like to be taken, made, or given by or with respect to theCompany, its business and its properties, in each case as is customary of officers of such type of a Delawarecorporation and other than those actions, decisions and the like that are customarily performed only by the ChiefExecutiveOfficerofaDelawarecorporation,andallsuchactions,decisions,determinations,designations,delegations,directions, appointments, consents, approvals, selections, and the like shall be controlling and binding upon theCompany;provided,thatanyPersonemployedorengagedbytheChiefExecutiveOfficerduringtheTitaniumPeriodor by the Board of Directors during the Silver Period, shall be subject to all of the terms and conditions of thisAgreement, and shall have the rights delegated to such Person by the Chief Executive Officer or the Board ofDirectors,asapplicable,allasprovidedin,andsubjecttothetermsandconditionsof,thisAgreement.Notwithstandinganythinghereintothecontrary,duringtheTitaniumPeriod,anyDirectorshallbepermittedtoseekapprovalfromtheChiefExecutiveOfficerforanyBoardFundamentalDecision(and,ifnotapprovedandtimelyimplemented,fromandafter January 1, 2021, initiate the deadlock procedures contemplated by Section 6.22 for any Board FundamentalDecision that could be subject to arbitration pursuant to Section 6.22(anymatter so approved, a “Director InitiatedAction”),ineachcasesubjecttoSection6.22(c)).TheCompanyshallimplementtheDirectorInitiatedActionstotheextent that the Qualified Expert determines in the written decision that suchtransaction or action is permissible andsuchtransactionoractionisconsistentwiththeothertermsofthisAgreement.
(c) ThepowerandauthorityoftheChiefExecutiveOfficerduringtheTitaniumPeriodreferredtointhisSection6.1shall bereferred to as the“CEO Delegated Authority”. DuringtheTitaniumPeriod, theChief ExecutiveOfficershall operate theCompanyinaccordancewiththeCEOObligations. Subject totheexpresstermsofthis Agreement(includingSection6.19),duringtheTitaniumPeriod,neithertheBoardofDirectorsnortheSilverMembernoranyofitsAffiliatesshalltakeanyactionto(i)diminishtheCEODelegatedAuthority(itbeingacknowledgedandagreedthatnothing herein limits or modifies the rights of Directors to exercise the approval rights set forth herein in their solediscretion),or(ii)removetheChiefExecutiveOfficer,ineachcaseexceptwiththepriorwrittenconsentofTitaniumFamilyDesignee;providedthat, notwithstandinganythinghereintothecontrary, eachoftheBoardofDirectorsandtheSilverMembershall(x)retainfulldiscretiontoexerciseitsrightsandremedieshereunder,notbeprecludedfrommaking recommendations to, expressing disagreement with or engaging in discussion or debate with, the ChiefExecutiveOfficeroranyotherOfficer,whetherornotregardingtheCEODelegatedAuthorityand(y)havetherighttoremovetheChiefExecutiveOfficersolelyupontheoccurrenceofanyofthefollowing:(i)theChiefExecutiveOfficerhasbeenconvictedbyacourtofcompetentjurisdictionoforpleadsnolocontendereto(ortheproceduralequivalentofeither in a foreign jurisdiction), either (x) a felony or (y) other substantially similar crime category that has orreasonably could be expected to result in non-de minimisfinancial or reputational harmto the Company, the SilverMemberorSilverParent,andwhichconvictionorpleahasnotbeenreversedorstayedwithinthirty(30)Days;(ii)theChief Executive Officer has violated any law, rule or regulation; (iii) the Chief Executive Officer becomesIncapacitated; (iv) the Chief Executive Officer has Willfully Breached any fiduciary duty to the Company orcommittedFraud;or(v)theChiefExecutiveOfficerhasWillfullyBreachedtheCEOObligations;providedthatinthecasesofclauses(ii),(iv)and(v)suchviolation,breachorFraudhasorreasonablycouldbeexpectedtoresultinnon-deminimisfinancialorreputationalharmtotheCompany,theSilverMemberorSilverParentandisnotcapableofbeingcuredorhasnotbeencuredwithinthirty(30)DaysafterwrittennoticethereofisgivenbytheSilverMemberortheBoardofDirectorstotheChiefExecutiveOfficer(whichnotice
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mustincludeareasonablydetaileddescriptionofsuchviolation,breachorFraud,suchharmandtheintentionofthePersonprovidingthenoticetoremovetheChiefExecutiveOfficerifsuchviolation,breachorFraudisnotcuredwithinsuchthirty(30)Dayperiod).Forpurposeshereof,“Willfully Breached”meansamaterialbreachthatisaconsequenceofanintentionalactionoranintentionalfailuretoact(notmerenegligence,grossnegligenceorrecklessness)takenbytheChiefExecutiveOfficer.
(d) NotwithstandinganythingtothecontraryinthisAgreement(butsubjecttoSection11.13),PreferredHoldersshallhavenovotingrightsorrightsofconsent,approvalorthelike,unlessandtotheextentspecifiedinthePreferredUnitDesignationrelatingtotheapplicableclassorseriesofPreferredUnits.
(e) For the avoidance of doubt, each Member shall have the right to enforce this Agreement regardless ofwhetheritistheTitaniumPeriodortheSilverPeriod.
Section 6.2 Number, Qualification and Term of Office of Directors.
Initially,thenumberofDirectorswhichshallconstitutethewholeBoardofDirectorsshallbesix(6),butmaybevariedafterthedatehereofasprovidedinthisSection6.2.DuringtheTitaniumPeriod,thenumberofDirectorswhichshallconstitutethewholeBoardofDirectorsshallbesix(6),unlessotherwiseagreedinwritingbytheSilverMemberandtheTitaniumFamilyDesignee.DuringtheSilverPeriod,thenumberofDirectorsthatshall constitutethewholeBoard of Directors shall be determined fromtime to time by the Silver Member. Each Director shall hold office asprovidedinSection6.3throughSection6.5.
Section 6.3 Appointment of Directors.
(a) Directorsmustbeindividuals.
(b) Duringthe TitaniumPeriod, Directors shall be appointedas follows: (i) the Silver Member shall havetheright to appoint three (3) Directors (any Director appointed by the Silver Member, a “Silver Director”) and(ii) theTitaniumFamilyDesigneeshallhavetherighttoappointthree(3)Directors(anyDirectorappointedbytheTitaniumFamilyGroup,a“Titanium Director”);provided,however,thatintheeventthatthesizeoftheBoardofDirectorsisincreasedordecreasedinaccordancewithSection6.2duringtheTitaniumPeriod,eachoftheSilverMemberandtheTitaniumFamilyGroupshallbeentitledtoappointanequalnumberofDirectors,unlessotherwiseagreedinwritingbytheSilverMemberandtheTitaniumFamilyDesignee.AlistoftheinitialDirectorsisattachedasExhibitJ.
(c) DuringtheSilverPeriod,(i)allDirectorsshallbeappointedbytheSilverMemberand(ii)forsolongastheTitanium Family Group (together with any Family Transferees) continues to own, collectively, at least two percent(2%)oftheoutstandingCommonUnits,theTitaniumFamilyGroupshallhavetherighttoappoint,replaceandremoveone(1)non-votingboardobserver(a“Board Observer”)totheBoardofDirectors.TheTitaniumFamilyGroupshallbe entitled to replace its designated Board Observer at any time from time to time upon notice to the Board ofDirectors. A Board Observer shall be entitled to attend and speak at all meetings of the Board of Directors or anycommittees thereof and shall receive all reports, meeting materials, notices and other materials (including draft andfinalwrittenconsents)asandwhenprovidedtotheBoardofDirectors;provided,thattheBoardObservershallnotbeentitledtoattendorotherwiseparticipateintheapplicableportionofanymeetingsorpresentationsortoreceivetheapplicableportionofanyinformationiftheChairmanreasonablydeterminesingoodfaith:
(i) thatsuchattendance,participationorinformationwouldbereasonablylikelytojeopardize,compromiseorotherwisewaiveattorney-clientprivilege,theworkproductdoctrineorothersimilarevidentiaryprivilegesordoctrines;
(ii) theapplicableportionofanymeeting,presentationorinformationinvolvestheCompany’sevaluation,strategy, positionor analysis withrespect to anadverseclaimor potential adverseclaimbetweenoramongtheCompany or any of its Affiliates, on the one hand, and Titanium, the Titanium Family Group or any of theirrespectiveAffiliates,ontheotherhand;or
(iii) Titanium, the Titanium Family Group or any of their respective affiliates has an actual or potentialconflictofinterestduetoanotherinvestmentorproposedinvestment.
(d) TheTitaniumFamilyGroupshallcauseeachindividualdesignatedasaBoardObserverto,atsuchtimeassuch individual is designated as a Board Observer, execute a written acknowledgment stating that such individual:(i)hasread,agreestoandisfamiliarwiththetermsofthisAgreementand(ii)shallkeepallconfidentialinformationthat heor shereceives inhis or her capacityas aBoardObserver confidential andnot usesuchinformationfor anypurposeotherthaninfurtheranceoftheCompany’sbusiness.
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(e) EachDirector(includinganyadditionalDirectordesignatedtofillavacancyresultingfromanincreaseinthetotalnumberofDirectorsorfromthedeath,resignationorremovalfromofficeofaDirector)shallserveuntilhisorhersuccessorisdulyappointedandqualified,oruntilsuchDirector’sdeath,oruntilsuchDirectorresignsinaccordancewithSection6.5orisremovedinaccordancewithSection6.4.
Section 6.4 Removal of Directors.
DuringtheTitaniumPeriod,(i)anySilverDirectormayberemoved,withorwithoutcause,atanytime,bytheSilverMember,bywrittennoticetosuchSilverDirectorandtheBoardofDirectorsand(ii)anyTitaniumDirectormaybe removed, with or without cause, at any time, by the TitaniumFamily Group, by written notice to such TitaniumDirectorandtheBoardofDirectors.DuringtheSilverPeriod,anyDirectormayberemoved,withorwithoutcause,atanytime,bytheSilverMember,bywrittennoticetoanysuchDirectorandtheBoardofDirectors.ThevacancyintheBoardofDirectorscausedbyanysuchremovalshallbefilledasprovidedinSection6.6.AbsentwrittenconsentoftheSilver Member to the contrary, all Titanium Directors shall be deemed to have resigned as provided in Section 6.5effectiveimmediatelyuponthecommencementoftheSilverPeriod.
Section 6.5 Director Resignations.
AnyDirector mayresignat anytimebygivingnoticeofsuchDirector’s resignationinwritingorbyelectronictransmissiontotheBoardofDirectors.Anysuchresignationshalltakeeffectatthetimespecifiedtherein,orifthetimewhenitshallbecomeeffectiveshallnotbespecifiedtherein,thenitshalltakeeffectimmediatelyuponitsreceiptbytheBoardofDirectors.Unlessotherwisespecifiedtherein,theacceptanceofsuchresignationshallnotbenecessarytomakeiteffective.ThevacancyintheBoardofDirectorscausedbyanysuchresignationshallbefilledasprovidedinSection6.6.
Section 6.6 Vacancies.
Any vacancy on the Board of Directors (including any vacancy that results from a newly created directorshipresultingfromanincreaseintheauthorizednumberofDirectors)shallbefilledsolelyasfollows:(i)inthecaseofaSilver Director vacancy during the TitaniumPeriod or any Director vacancy during the Silver Period, by the SilverMember, by written notice to the Board of Directors and (ii) in the case of a TitaniumDirector vacancy during theTitaniumPeriod,bytheTitaniumFamilyDesignee,bywrittennoticetotheBoardofDirectors.Fortheavoidanceofdoubt,anyincreaseintheauthorizednumberofDirectorsduringtheTitaniumPeriodshallbevalidonlyifeachoftheTitaniumFamilyGroupandtheSilverMemberhavetherighttoappointanequalnumberofDirectors.
Section 6.7 Chairman of the Board of Directors; Chief Executive Officer and President.
(a) DuringtheTitaniumPeriod,RSTshallbe(i)theChiefExecutiveOfficerandPresidentoftheCompanyand(ii)providedheisamemberoftheBoardofDirectors,theChairmanoftheBoardofDirectors(“Chairman”);providedthat in the event RSTceases to be the Chief Executive Officer, the President of the Company or the Chairman, theTitaniumFamilyGroupmayappointasareplacementChiefExecutiveOfficer,PresidentorChairman,asapplicable,either(x)WSTor(y)anotherindividualreasonablyacceptabletotheSilverMember,ineachcase,solongastheSilverMemberwouldnothavetheright toremovesuchappointeepursuant toSection6.1(c). TheTitaniumFamilyGroupshall bepermitted, duringtheTitaniumPeriod, to designate (or re-designate) anyindividual selectedpursuant totheprevious sentence as either the Chief Executive Officer, President, or Chairman of the Board of Directors, or anycombination of the foregoing, in each case, so long as the Silver Member would not have the right to remove anyindividualsodesignated(orre-designated)pursuanttoSection6.1(c).
(b) During the Silver Period, the Chairmanshall be elected by the Board of Directors annually and the ChiefExecutiveOfficerandPresidentoftheCompanyshallbeselectedbytheBoardofDirectors.
Section 6.8 Board Meetings; Notice.
(a) RegularmeetingsoftheBoardofDirectorsshallbeheldfromtimetotimeatsuchdateandtimeandatsuchplaceastheBoardofDirectorsmaydesignate.SpecialmeetingsoftheBoardofDirectorsmaybecalledatanytimebytheChairmanorbythewrittenrequestofanytwo(2)Directorswhomakesuchrequestingoodfaith.
(b) NoticeofameetingoftheBoardofDirectorsoranycommitteethereofshallbegivennolessthanthree(3)BusinessDaysbeforethedateofthemeeting(or,inthecaseofexigentcircumstances,ontwenty-four(24)hours’
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notice)toeachDirector,eitherpersonally,bytelephoneorbyemail.NoticeofanysuchmeetingneednotbegiventoanyDirector,however,ifwaivedbysuchDirectorinwritingorbyemailorotherformofelectroniccommunication,orifsuchDirectorshallbepresentatsuchmeeting.
(c) AllDirectorsshallsubstantiallycontemporaneouslyreceivecopiesofanyboardbooksorotherpresentationsormaterials(includinganyrequestforconsentorapprovalhereunder)thataretobedistributedtoanyDirectorinitscapacity as such (for the avoidance of doubt, other than the Chief Executive Officer or any other Officer in theirrespectivecapacities assuch)andinanyevent at least twenty-four (24)hoursprior toanymeeting(unlesswaived),subject to such restrictions, requirements and limitations as may be imposed by the Board from time to time in itsreasonablediscretionwithrespecttoprivilegedinformationtotheextentrelatedtoadisputewiththeMembersorwithrespecttoinformationwithrespecttowhichtheMembersortheirrespectiveAffiliateshasaconflictofinterestduetoanotherinvestmentorproposedinvestment.
Section 6.9 Board Action Without Meeting.
SubjecttothetermsofthisAgreement,anyactionrequiredorpermittedtobetakenatanymeetingbytheBoardof Directors or any committee thereof, as the case may be, may be taken without a meeting if a consent thereto issignedortransmittedelectronically, asthecasemaybe,by(i)duringtheTitaniumPeriod,allofthemembersoftheBoardofDirectorsorofsuchcommittee,asthecasemaybeor(ii)duringtheSilverPeriod,amajorityofthemembersof the Boardof Directors or of suchcommittee, as the case maybe;providedthat a verbatimcopyof theproposedconsentisdistributedtoeachDirector(inthecaseofanactionbycommittee,regardlessofwhethersuchDirectorisonthecommitteetakingsuchaction)atleastthree(3)BusinessDays(or,inthecaseofexigentcircumstances,twenty-four(24) hours) in advance. The writing or writings or electronic transmission or transmissions of any action taken bywrittenconsentshallbefiledwiththeminutesofproceedingsoftheBoardofDirectorsorthecommittee,asapplicable.
Section 6.10 Conference Telephone Board Meetings.
Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board ofDirectorsorsuchcommitteebymeansofconferencetelephoneorothercommunicationsequipmentbymeansofwhichall Persons participating in the meeting can hear each other, and such participation in a meeting shall constitutepresenceinpersonatsuchmeeting.
Section 6.11 Board Quorum.
AtallmeetingsoftheBoardofDirectors,(i)duringtheTitaniumPeriod,alloftheDirectorsmustbepresentatameetinginordertoconstituteaquorumforthetransactionofbusinessand(ii)duringtheSilverPeriod,amajorityofthe Directors must be present at a meeting in order to constitute a quorum for the transaction of business. At allmeetings of any committee of the Board of Directors, the presence of (i) during the Titanium Period, all of themembersofsuchcommitteeshallconstituteaquorumand(ii)duringtheSilverPeriod,amajorityofthemembersofsuchcommitteeshallconstituteaquorum.IntheeventthatanySilverDirectorisnotabletoattendameetingoftheBoardofDirectorsoranycommitteethereof,theSilverMembermay,bynoticesentpriortothetimeofsuchmeeting,appointanalternatetoattendsuchmeetinginthesteadofaSilverDirector,andsuchalternateshallhaveallthesamerights, privileges and obligations at such meeting, including as to voting, as a Silver Director. In the event that anyTitaniumDirector is not able to attend a meeting of the Board of Directors or any committee thereof, the TitaniumFamilyGroupmay,bynoticesentpriortothetimeofsuchmeeting,appointanalternatetoattendsuchmeetinginthestead of a Titanium Director, and such alternate shall have all the same rights, privileges and obligations at suchmeeting, including as to voting, as a Titanium Director. During the Titanium Period, all actions by the Board or acommittee must be by unanimous vote in order to constitute an act of the Board or a committee. During the SilverPeriod,allactionsbytheBoardoracommitteemustbebymajorityvoteoftheDirectorspresentatameetingwhereaquorumis present inorder toconstitute anact of theBoardor a committee. If a quorumshall not bepresent at anymeeting of the Board of Directors or any committee, a majority of the Directors or members, as the case may be,presentthereat(whichmustincludeatleastone(1)SilverDirectorandatleastone(1)TitaniumDirectorduringtheTitaniumPeriod) mayadjourn the meeting fromtimeto timewithout further notice other thanannouncement at themeeting.
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Section 6.12 [Reserved].
Section 6.13 Remuneration of Directors.
UnlessotherwiseexpresslyprovidedbyresolutionadoptedbytheBoardofDirectors,noneoftheDirectorsshall,assuch,receiveanystatedremunerationfortheirserviceasaDirector,buttheBoardofDirectorsmayatanytimeandfromtimetotimebyresolutionprovidethatacustomaryandreasonablespecifiedsumshallbepaidtoanyDirector,payableincash,eitherassuchDirector’sannualremunerationassuchDirectorormemberofanyspecialorstandingcommitteeoftheBoardofDirectorsorasremunerationforsuchDirector’sattendanceateachmeetingoftheBoardofDirectors or any such committee. The Board of Directors may also provide that the Company shall reimburse eachDirectorforanyexpensespaidbysuchDirectoronaccountofsuchDirector’sattendanceatanymeeting.NothinginthisSection6.13shallbeconstruedtoprecludeanyDirectorfromservingtheCompanyoranyofitsAffiliatesinanyothercapacityandreceivingremunerationtherefor.
Section 6.14 Delegation of Authority and Designation of Officers.
(a) Each Officer or Authorized Signatory shall exercise such powers and shall have such duties as may fromtimetotimebeassignedorestablishedbytheChiefExecutiveOfficerduringtheTitaniumPeriodorbytheBoardofDirectorsduringtheSilverPeriod,whichpowersanddutiesshallbethosecustomarilyheldorperformedbyanofficerofaDelawarecorporation.
(b) ExceptasprovidedinSection6.14(c),eachOfficerorAuthorizedSignatoryshallholdofficeuntilhisorhersuccessorisappointedoruntilhisorherearlierdeath,disability,resignationorremoval.AnynumberofofficesmaybeheldbythesamePerson.
(c) Any Officer or Authorized Signatory may resign at any time upon written notice to the Company. AnyOfficerorAuthorizedSignatoryshallserveatthepleasureoftheChiefExecutiveOfficerduringtheTitaniumPeriodandoftheBoardofDirectorsduringtheSilverPeriod,andmayberemovedatanytimewithorwithoutcause,bytheChiefExecutiveOfficerduringtheTitaniumPeriodortheBoardofDirectorsduringtheSilverPeriod.Suchremovalshall be without prejudice to a Person’s contract rights, if any, but the appointment of any Person as an Officer,AuthorizedSignatory,agentoremployeeoftheCompanyshallnotofitselfcreatecontractrights.
Section 6.15 Compensation and Incentive Arrangements.
(a) The material terms of compensation (including base salaries, short-term and long-term incentivecompensation,includingprofit-sharingopportunitiesandexcludinganycompensationintheformofequity(orrightstoacquireequity)interestsoftheCompanyoranyofitsSubsidiaries),benefitsandperquisites(ifany)towhicheachmemberoftheOperatingCommitteeshallbeentitledeffectiveuponthecompletionoftheMerger,aresetforthintheTotal Rewards PolicyattachedasExhibit DoranotherdocumentagreedtoinwritingbytheSilverMemberandtheTitanium Family Designee. Any increases in any annual rates of base salaries (other than customary cost of livingincreases), anyincreasesinshort-termorlong-termincentivethreshold,targetormaximumopportunitiesfromthoseset forth in Exhibit D, any increases in profit-sharing opportunities from those set forth in Exhibit D and anydiscretionarybonuspoolproposedtobeallocatedtomembersoftheOperatingCommitteeshall bepresentedbytheChiefExecutiveOfficertotheBoardofDirectorsforitsapprovalthereof(asaBoardFundamentalDecisionduringtheTitaniumPeriod),andshallnotbeimplementedwithoutaFundamentalDecisionApproval.
(b) Subject to Section 6.15(a), Section 6.16 or Section 6.19 and without prejudice to the Board of Directors’right to approve the Annual Budget, during the Titanium Period and except to the extent that the Chief ExecutiveOfficer is personally conflictedin connectiontherewith, theChief ExecutiveOfficer shall haveexclusivepowerandauthoritywithrespectto,andtherighttocausetheCompanytoestablishorundertake,alldecisions,actionsandothermatters (including expenditure of funds in accordance with the Annual Budget or as otherwise permitted under thisAgreement) pertaining to the employment, supervision, benefits, perquisites, severance, promotion and discharge ofanyandallofficersandotheremployeesoftheCompanyoranyofitsSubsidiariesoranyotherPersoninwhichtheCompany or a Company Subsidiary owns an ownership interest (including all salaries, bonus (including anydiscretionarybonuses)andotherincentivecompensation(includingtheestablishmentofanyphantomequityorotherlong-termincentive compensation plans, programs or arrangements, and designations of participants and allocationsthereunder), administration costs and other payments, including those arising from unlawful or unfair dismissal,discriminationorotheremployment-relatedliability);provided,however,thatnocompensationshallbepayableintheformofequity(orrightstoacquireequity)oftheCompanyoranyofitsSubsidiarieswithoutthepriorapproval
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of the Board of Directors. In connection with the preparation of each Annual Operating Budget in accordance withSection 6.16, the Chief Executive Officer shall consult with the Board of Directors (or designated compensationcommitteethereof)inadvanceofthefinalizationoftheAnnualOperatingBudgetforthegivenCompanyFiscalYearregarding (x) the material terms of, and total proposed pool (both assuming target and maximum performanceachievement of any relevant performance metrics, if any) payable under, such short-term and long-term incentivecompensationprogramstobeestablishedforthegivenCompanyFiscalYear,(y)thetotalproposedincreaseinannualratesofbasesalaryasapercentageofpayrolltobeprovidedforthegivenCompanyFiscalYearand(z)anymaterialemployee benefit plans proposed to be adopted in the given Company Fiscal Year, or any material modificationsthereto that would reasonably be expected to materially increase the annual cost or expense of such plan to theCompanyoranySubsidiaryoftheCompany,asapplicable.
Section 6.16 Annual Budgets.
(a) OnorbeforeDecember15priortothebeginningofeachfollowingCompanyFiscalYear,anannualcapitalbudget (the “Annual Capital Budget”) and an annual operating budget (the “Annual Operating Budget”) for theCompanyforsuchupcomingCompanyFiscalYear,whichshallreflectareasonablydetailedestimateoftheproposedoperations (including development) and expenses of the Company for such Company Fiscal Year, and which shallinclude the proposed Annual Distribution Policy (including the Required Distribution Amount) for such CompanyFiscal Year and an annual business plan and leasing plan, shall be submitted by the Chief Executive Officer to theBoardofDirectorsforapproval.TheAnnualCapitalBudgetandtheAnnualOperatingBudgetareeachreferredtoasan“Annual Budget”andarereferredtotogetherasthe“Annual Budgets,”asapplicable.TheinitialAnnualBudgetsforthe2020CompanyFiscalYearareattachedasExhibitEandExhibitF.BetweenOctoberandmid-DecemberpriortothebeginningofeachfollowingFiscalYear,theCompanywill providetheBoardofDirectorswithregularperiodicupdates regarding the budget process, including draft Annual Budgets and draft Annual Distribution Policy that isbeingdevelopedbytheCompanyforthenextFiscalYear(withtheinitialdraftsofsuchbudgetsandpolicies,whichshall reflect the same level of detail as final budgets and policies are required by this Agreement to reflect, to beprovidedbyOctober31ofthethen-currentFiscalYear).
(b) EachmemberoftheBoardofDirectorsshallberequiredtoeitherapproveordisapprovetheAnnualBudgetsno later than thirty (30) Days after the date on which the Chief Executive Officer delivered the proposed AnnualBudgets,itbeingagreedandunderstoodthatifanyDirectorfailstoexpresslyapprovesuchAnnualBudgetsinwritingwithinsuchthirty(30)Dayperiod,thensuchfailuretoapproveshallbedeemedadisapprovalbysuchDirector.IftheBoardofDirectorsunanimouslyapprovesanAnnualBudgetaspresented,thensuchAnnualBudgetshallbedeemedtobeadoptedandapprovedasanAnnualBudgetfortheapplicableCompanyFiscalYear.IfanysuchproposedAnnualBudget is not approved (or is deemed disapproved) by the Board of Directors, the Chief Executive Officer shallconsideringoodfaithanyfeedbackheorshereceivesfromtheBoardofDirectorsandsubsequentlymay(butshallnotberequiredto)resubmitarevisedAnnualBudgetfortheBoardofDirectors’approval.EachmemberoftheBoardofDirectors shall be required to either approve or disapprove such revised Annual Budget in accordance with theprocedures set forth above no later than fifteen (15) Days after the date on which the Company’s Chief ExecutiveOfficerdeliverssuchrevisedAnnualBudget.IftheBoardofDirectorsapprovesarevisedAnnualBudgetaspresented,then such Annual Budget shall be deemed to be adopted and approved as an Annual Budget for the applicableCompanyFiscalYear.IfanyAnnualBudgetorrevisedAnnualBudgetisnotapproved(orisdeemeddisapproved)bytheBoardofDirectors,thentheapplicableAnnualBudgetfortheprecedingyearshallbedeemedtobeadoptedandapprovedasanAnnualBudgetfortheapplicableCompanyFiscalYear,withthefollowingbeingdeemedtobeadoptedandapprovedaspartofsuchAnnualBudget:(i)anyincreasesinexpenseswithrespecttoNon-ControllableItemsand(ii)percentageincreasesordecreasestoeachitemthereinotherthananyNon-ControllableItemsinanamountequaltothe annual percentage increase or decrease, respectively, in the CPI; providedthat in no event shall any percentageincrease pursuant to this clause (ii) be greater than the greater of (I) 2.5% and (II) the percentage increase in theCompanyLTMFFO(measuredbycomparingtheCompanyLTMFFOasof December 31immediately prior totheCompany Fiscal Year to which the to-be-adopted Annual Budget relates to the Company LTMFFOas of one yearpriortosuchdate);provided,further,thatnon-ordinarycourseexpendituresthathavenotyetbeencommittedpursuanttoaprioryear’sAnnualBudget(e.g.,anewdevelopmenttobeinitiatedintheupcomingCompanyFiscalYearortheacquisition of a newproperty in the upcomingCompanyFiscal Year), and tenant improvements, tenant allowances,landlordworkandothertenantinducementcostsandsimilarexpensesthathavenotyetbeencommittedpursuanttoaprior year’s Annual Budget, and that either (x) are with respect to any lease covering more than twenty thousand(20,000)squarefeetofgrossleasableareaor(y)involvemorethantwomillionDollars($2,000,000)foranylease,willnotbedeemedadoptedandapproved(however,andfortheavoidance
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of doubt, ordinary course expenditures for property-level repairs andmaintenance, to continue projects to the extentpreviouslyapprovedinaprioryear’sAnnualBudgetandothertenantimprovements,tenantallowances,landlordworkand other tenant inducement costs and similar expenses, in each case, to the extent previously approved in a prioryear’sAnnualBudget,willbeconsideredtobeapartofthedeemedapprovedprioryear’sapplicableAnnualBudget,subject to any limitations and schedules agreed to therewith, and subject to increase as set forth above in thisparagraph,andwillbedeemedpermittedinaccordancewiththisparagraph).
(c) TheChief Executive Officer shall have the right, fromtimeto timeduringeachCompanyFiscal Year, tosubmit a proposedamendment to anAnnual Budget to theBoardof Directors for approval, whichamendment shallspecifywhether(andtheextenttowhich)thechangesreflectnon-ordinarycourseexpenditures,andanysuchapprovedamendmentshallbedeemedpartoftheAnnualBudgetshereunder.TheBoardofDirectorsshallreviewallproposedamendments to such Annual Budget, and if any such amendment is approved by the Board of Directors, suchamendmentshallbedeemedtobepartoftheAnnualBudgetforallpurposesofthisAgreement.
(d) TheCompanyshallbeoperatedinallmaterialrespectsinaccordancewiththeAnnualBudgetswithrespectto controllable actions contemplated by the Annual Budget, such as expenditures of funds other than for Non-Controllable Items. For the avoidance of doubt and notwithstanding anything herein to the contrary, (X) Non-ControllableItemsandanydistributionsmadebytheCompanyinaccordancewithSection5.2shallnotbelimitedbythis Section 6.16(d), and the amount by which any such expenditure or distribution exceeds the amount therefor setforthintheAnnualBudgetsshallnotbecountedindeterminingwhetheravarianceordeviationhasoccurredand(Y)expendituresmadefromanycontingencyorunspecifiedlineitemintheAnnualCapitalBudgetavailablethereforshallnot be counted in determining whether a variance or deviation has occurred. For the avoidance of doubt andnotwithstandinganythinghereintothecontrary, neither theChief ExecutiveOfficer nor theCompany(I) shall haveanyobligationtomeetorexceedanyperformancevariables, thresholds, goalsorresultsthatmaybesetforthinanyAnnual Budget or (II) is making, or shall be deemedto have made, any guaranty, representation or warranty of theestimationssetforthinanyAnnualBudgetorwithrespecttotheresultsorqualityofperformanceofanyactionsthatmaybecontemplatedbyanyAnnualBudget.
Section 6.17 Master Services Agreement.
DuringtheTitaniumPeriod,subjecttoSection6.19,theChiefExecutiveOfficerisherebyauthorized,andduringtheSilverPeriod,theBoardofDirectorsisherebyauthorized,toemployorengageothers,includingtheAdministrativeManager,tomanageandperformallactivitiesandservicesinfurtheranceofthepurposesoftheCompany,includingseeking, acquiring and managing various development opportunities or existing retail centers (or any peripheralproperty), and all other activities and services in respect of the management, administration, leasing, financing,refinancing, development, improvement, acquisition and disposition of retail centers, development opportunities andperipheralproperty.
Section 6.18 Member Communications.
Appropriate representatives of the Silver Member and the Titanium Family Group Designee shall endeavor toengageinregularopendialoguetofurthertheinterestsoftheCompany.
Section 6.19 Certain Approval Requirements During the Titanium Period.
(a) NotwithstandinganythinginthisAgreementtothecontrary(providedthatnothinginthisSection6.19shallapplytothesatisfactionoftheCompany’sobligationsunderSection8.4), duringtheTitaniumPeriod, thefollowingmatters, actions and decisions by, or with respect to, the Company and the Company Subsidiaries (each, a “BoardFundamental Decision”)shallrequireapprovalbytheBoardofDirectors(byunanimousvoteorwrittenconsentofallDirectors)(suchapprovalbytheBoardofDirectors,a“Fundamental Decision Approval”),andtheCompanyshallnot,and the Company shall cause each Company Subsidiary not to, directly or indirectly, effect, take or make any suchBoardFundamentalDecisionwithouttheFundamentalDecisionApproval:
(i) Engagingin(i)anymerger,consolidation,jointventure,recapitalizationorbusinesscombinationoftheCompany or any of its Subsidiaries or a sale of all or substantially all of the assets of the Company and itsSubsidiaries, oranycomparabletransactionwithsimilareffector(ii) anysaleoracquisitionorpurchaseofanyassets,landorproperty,inthecaseofthisclause(ii)forwhichtheCompany’soraCompanySubsidiary’sshareof the purchase or sale price (or the value of consideration) is more than the Excess Threshold annually in theaggregate(includingassumednetdebt),otherthan(x)transactionssolelyamongwhollyownedSubsidiariesof
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theCompanythatremainwhollyownedfollowingsuchtransactionoraredissolvedor(y)transactionsexpresslyset forth in the Annual Budget; in the event that any such transaction described in this Section 6.19(a)(i) isapproved,theMembersherebyagreetocooperateingoodfaithtoimplementsuchtransactionsinatax-efficientmanner;
(ii) Issuing,amendingthetermsof,orredeemingorrepurchasinganyequitysecurities(includingsecuritiesconvertibleintoequitysecurities)oftheCompany(includinganyMembershipInterests)oranyofitsSubsidiaries(includingconductinganypublicofferingordirectlistingofequitysecurities), otherthan(i)transactionssolelywithoramongwhollyownedSubsidiariesoftheCompanythatremainwhollyownedfollowingsuchtransactionor are dissolved, (ii) redemptions of Series A Preferred Units in accordance with the applicable Preferred UnitDesignation, (iii) redemptions or repurchases of equity securities (including securities convertible into equitysecurities)oftheCompanySubsidiariesnotcostinginexcessoftheExcessThresholdannuallyintheaggregateor(iv)pursuanttoSection8.4;
(iii) Makingorgrantinganyloans,advances,guaranteesorcapitalcontributionstoorforthebenefitofanyPerson(otherthananywhollyownedSubsidiariesoftheCompany)inexcessoftheExcessThresholdannuallyintheaggregate,except(i)asmaybeexpresslysetforthintheAnnualBudget,(ii)tenantloansoradvancesintheordinarycourseofbusinessor(iii)subjecttoSection6.19(a)(xi),guaranteesorindemnitiesforthebenefitofjointventureentitiesintheordinarycourseofbusiness;
(iv) Amending, waiving any rights under or otherwise modifying any organizational documents of theCompany (including this Agreement and including any change to the Company’s jurisdiction, by merger,consolidation, or in any other fashion or manner) or any of its Subsidiaries, other than amendments ormodifications(i)thatareministerialoradministrativeinnatureandarenotadversetoanyoftheMembers(whichamendmentsshallbeprovidedtotheBoardofDirectorsatleastten(10)BusinessDays’priortotheeffectivenessthereof), (ii) of organizational documents of wholly owned Company Subsidiaries that remain wholly ownedfollowingsuchamendmentormodificationoraredissolved,whichamendmentsormodificationsandnotadverseto any of the Members in any respect or (iii) of organizational documents of any Company Subsidiary to theextentrequiredbylendersinabonafideandpermitteddebtfinancingandarenotadversetoanyoftheMembers;
(v) Commencinganyvoluntary(orconsentingtoanyinvoluntary)BankruptcyproceedinginrespectoftheCompanyor anyof its Subsidiaries seekingliquidation, reorganization, dissolutionor Bankruptcy, or otherwiseliquidatingordissolvingtheCompany;
(vi) (A)ChanginginanymaterialrespectanyfinancialaccountingmethodorchangingtheCompanyFiscalYear,otherthanasrequiredbylaw,regulation,GAAPortheCompany’sauditoror(B)changingtheCompany’sauditorunlessthethen-existingauditorresignsorthethen-existingauditorengagesingrossnegligenceorwillfulmisconduct;
(vii) Establishing the Annual Budget other than as specified in Section 6.16, or, other than as expresslypermittedinSection6.16(d),deviatinginanyCompanyFiscalYearfromactions(asopposedtoresults)expresslyset forth in the then-applicable Annual Budget that are within the control of the Company or any of itsSubsidiaries, or making capital or other expenditures in any Company Fiscal Year that exceed the aggregateamountexpresslysetforthintheAnnualBudgetbymorethantheExcessThreshold;
(viii) Enteringintoanymaterial businessorlineofbusinessthatismateriallydifferentthantheTitaniumBusiness, discontinuing any material business or line of business within the Titanium Business, or otherwisechanginginanymaterialrespectthenatureoftheTitaniumBusiness,ineachcaseotherthannaturalevolutionoftheTitaniumBusiness;
(ix) Declaring, setting aside, paying or otherwise making any dividends or other distributions by theCompanyoranyofitsSubsidiaries,otherthan:(i)inconnectionwithaliquidatingdistributionpursuanttoSection10.5(a), (ii) pro rata dividends or distributions by a Subsidiary of the Company to the Company or anotherSubsidiaryoftheCompany,(iii)distributionsrequiredtobemadebytheorganizationaldocuments(includinganyjoint venture or similar agreements) of any non-wholly owned Subsidiary of the Company or (iv) cashdistributionsrequiredbythisAgreement(includingtheAnnualDistributionPolicyorasexpresslyprovidedinanyPreferredUnitDesignation),including,fortheavoidanceofdoubt,payingtheRequiredDistributionAmountandMinimumDistributionAmount;
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(x) OtherthanasexpresslysetforthintheAnnualBudgetorassetforthinExhibitD(oranotherdocumentagreedtoinwritingbytheSilverMemberandtheTitaniumFamilyDesignee),changingthecompensationoftheChiefExecutiveOfficer,ChiefOperatingOfficeroranyothermemberoftheOperatingCommitteeoradoptingoramendinganyprofitsharingarrangementsfortheChiefExecutiveOfficer,ChiefOperatingOfficeroranyothermemberoftheOperatingCommittee;
(xi) Entering into, terminating, waiving any rights under, amending or engaging in any arrangement,transactionoragreement,writtenororal,withorthatprovidesdisproportionatebenefitstoanyMember,Officer,Director, any member of the Titanium Family Group, any Family Transferee or any Affiliate of any of theforegoing(otherthantheCompanyanditsSubsidiaries)oranyotherPerson(notincludingawidelyheldpubliclytradedcompany)inwhichanymemberoftheTitaniumFamilyGrouporanyFamilyTransferee(oranyoftheirrespectiveImmediateFamilymembers)holdsamaterialinterest(anysucharrangement,transactionoragreement,an“Affiliate Transaction”),otherthanengaginginanyPermittedAffiliateTransaction,anyExchangeoranyotheractionexpresslyrequiredbythisAgreement(includingdistributionrequiredbythisAgreement(includingbytheAnnual Distribution Policy, and including paying the Minimum Distribution Amount and the RequiredDistributionAmount));
(xii) Commencing, settling or withdrawing from any material Action the resolution of which would:(i)involveamonetarypaymentbytheCompanyoranyCompanySubsidiarywheretheCompany’soraCompanySubsidiary’sshareisinanamountthatexceedstheExcessThresholdannuallyintheaggregate;(ii)resultintheimposition of any materially adverse limitations or restrictions on the Company, a Company Subsidiary, anyMemberoranyAffiliateofanyMember;(iii)involvecriminalorquasi-criminalliabilityfortheCompanyoranyCompanySubsidiaryoranyDirector,Officeroremployeeintheircapacityassuchor(iv)includeanyadmissionofguiltorwrongdoingbytheCompanyoranyCompanySubsidiaryoranyDirectororOfficerintheircapacityassuch;
(xiii) Entering into, waiving any material rights under, amending in any material respect, cancelling orterminating (other than if any counterparty is in breach or default beyond applicable notice and cure periodsthereunder or otherwise for cause and excluding automatic terminations, terminations by the counterparty orexpirations inaccordancewiththetermsthereof) anyMaterial Contract, other thanas expresslyset forthintheAnnualBudget;
(xiv) Taking any actions (including any guarantees or other credit support) that purport to bind SilverParentoranyofitsSubsidiaries(otherthantheCompanyoranyofitsSubsidiaries)orusinganynameortradenameofSilverParentoranyofitsSubsidiaries(otherthantheCompanyoranyofitsSubsidiaries)incommercialtransactionsotherthanfactualstatementsregardingSilverParentanditsSubsidiariesandtheirdirectandindirectownershipintheCompanyandmattersrelatedthereto;
(xv) Incurring, assuming, issuing, selling or amending in any material respect or guarantying anyindebtednessforborrowedmoneyorissuinganydebtsecuritiesineachcasewheretheCompany’soraCompanySubsidiary’s share is in excess of ten million Dollars ($10,000,000) annually in aggregate principal amountoutstanding at any one time, other than (i) trade payables and equipment leases or solar leases in the ordinarycourseof business, (ii) indebtedness torefinanceor replaceanyexistingindebtedness or theSeries APreferredUnitsbeingredeemed(solongassuchnewindebtednessisonmarkettermsnolessfavorabletotheCompanyintheaggregatethanthetermsoftheindebtednessbeingrefinancedortheSeriesAPreferredUnitsbeingredeemed,asapplicable(otherthaninterest rate, whichfortheavoidanceofdoubtshall benomorethanamarketinterestrate)andtheprincipalamountofsuchnewindebtednessdoesnotexceedtheprincipalamountoftheindebtednessbeingrefinancedortheliquidationvalueoftheSeriesAPreferredUnitsbeingredeemed, asapplicable, plusinany such case, the amount of costs, expenses and fees incurred or to be incurred in connection therewith),(iii)indebtednesstobeincurredormodifiedasexpresslysetforthintheAnnualBudgetor(iv)asmayberequiredtodistributethefullRequiredDistributionAmountinaccordancewiththetermsofthisAgreement(solongasthedebt to be incurred pursuant to this clause (iv) to distribute the full Required Distribution Amount is oncommercially reasonable terms (and in any event not at a rate higher than the lower of (x) four hundred basispointsabovethe10-yearU.S.Treasurybillrateatthetimeofsuchborrowingand(y)8.00%));providedthatnoneofclauses(i)through(iv)ofthisSection6.19(a)(xv)shallallowfortheissuanceofdebtsecurities;
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(xvi) Amendingormodifyinginanymaterialrespect(orinanyrespectifsuchamendmentormodificationprejudicesinanymaterialrespecttheSilverMember)theCompany’spoliciesregardinghumanresourcesmatters,internal controls over financial reporting, treasury matters, privacy and other compliance matters, includingchanging (other than immaterial changes) any financial reporting practices (including with respect to thedeterminationofCompanyFFO),otherthanasmayberequiredtocomplywith(i)changesinapplicablelawor(ii)theCompany’sobligationsunderthisAgreement;
(xvii) Entering into any transaction or taking (or failing to take) any action that would result in anindemnificationorotherpaymentobligationoftheCompanypursuanttotheagreementssetforthonScheduleV;and
(xviii) Agreeingtoperformorauthorizeanyoftheforegoingrestrictedactions.
(b) DuringtheTitaniumPeriod,uponrequestandatthedirectionoftheSilverMember,afterconsultingingoodfaithwiththeTitaniumFamilyDesignee,theCompanyandCompanySubsidiariesshallcausesomeoralloftheequityinterestsofTTCthatarehelddirectlybytheCompanytobetransferredtoanentitydirectlyorindirectlywhollyownedbytheCompanythatisa“taxableREITsubsidiary”(asdefinedinSection856(l)oftheCode)withrespecttoSilverParent, subject to compliance withthecovenant set forth onSchedule VIII andapplicable laws(but onlysolongasTTCremainsanindirectwhollyownedSubsidiaryoftheCompany).
Section 6.20 Certain Approval Requirements During the Silver Period.
(a) NotwithstandinganythinginthisAgreementtothecontrary,duringtheSilverPeriodandonlyforsolongastheTitaniumFamilyGroup(togetherwithanyFamilyTransferee)continuestoown,collectively,atleasttwentyfivepercent(25%)oftheMembershipInterestsownedbytheTitaniumFamilyGroupasoftheEffectiveDate(subjecttoanyadjustmentnecessarytoaccountforanysplit,dividend,distribution,combination,reclassificationorsimilarevent,ineachcase,inrespectoftheMembershipInterests),thepriorwrittenapprovaloftheTitaniumFamilyDesignee(suchapproval,the“Titanium Family Approval”)shall berequiredtoauthorizeandapprovethefollowingmatters, actionsand decisions by, or with respect to, the Company and the Company Subsidiaries (each, a “Titanium FundamentalDecision”), and the Company shall not, and the Company shall cause each Company Subsidiary not to, directly orindirectly,effect,takeormakeanysuchTitaniumFundamentalDecisionwithoutobtainingthepriorwrittenTitaniumFamilyApproval:
(i) Engaging in any merger, recapitalization or business combination of the Company or any of itsSubsidiaries or a sale of all or substantially all of the assets of the Company and its Subsidiaries, or anycomparabletransactionwithsimilareffect,otherthan(i)transactionssolelyamongwhollyownedSubsidiariesofthe Company that remain wholly owned following such transaction or are dissolved, (ii) transactions whereconsideration is allocated in accordance with Sections 10.5(a) (without giving effect to Section 10.5(a)(i)) and10.5(b)(providedthat(A)theTitaniumFamilyDesigneeisprovidedwithreasonableadvancenoticeofanysuchsaleanditstermsandtheconsiderationtobepaid,(B)theTitaniumFamilyGroupandtheFamilyTransfereesareafforded the opportunity, with reasonably adequate advance notice and opportunity to elect to so exchange, toexchangetheirCommonUnitsforSilverOPUnits,ontermsreflectingthevaluationreflectedinsuchtransactionandthethen-currentvalueoftheSilverOPUnits,attheclosingofsuchsale,(C)SilverParent,SilverOPandtheCompany use reasonable best efforts to structure such sale in the most tax efficient manner available for theTitaniumFamilyGroupwithoutincurringanymaterialcostordiminutioninvaluetoSilverParent,SilverOPortheCompanyand(D)nolaterthanthelaterof(1)thirty(30)Daysfollowingtheclosingofanydirectorindirectsaleortransfer(ordeemedsaleortransfer)ofthepropertieslistedonScheduleIIand(2)two(2)DayspriortotheduedateordatesforTaxes(includingestimatedTaxes)resultingfromsuchdirectorindirectsaleortransfer(ordeemedsaleortransfer),theCompanyprovidesfullreimbursementtotheTitaniumFamilyGroupforanyTaxeswith respect to an amount of gain not to exceed the Protected Gain (including any Taxes in respect of anyadditional amountspaidwithrespect tothereimbursement suchthat theTitaniumFamilyGroupis inthesameafterTaxpositionasitwouldhavebeenhadtheliabilitysoreimbursednotbeenincurred)imposedonorincurredby,directlyorindirectly,anyofthemembersoftheTitaniumFamilyGroupandanyFamilyTransferee,oranyoftheir beneficiaries, shareholders, members or other owners, or ultimate parent entities, as a result of any suchdirectorindirectsaleortransfer(ordeemedsaleortransfer)ofthepropertieslistedonScheduleIIbyvirtueofbeingadirectorindirectMember,subjecttotheTitaniumFamilyGroupreasonablycooperatingtominimizesuchTaxesor(iii)recapitalizationsofanySubsidiaryoftheCompanythatdonotcauseanyadverseTaxconsequencestotheTitaniumFamilyGroup;
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(ii) ChanginginanymaterialrespecttheAnnualDistributionPolicy;providedthattheAnnualDistributionPolicymaybechangedwithoutTitaniumFamilyApprovaliftheBoardofDirectorsdeterminesingoodfaiththattheCompany’sbona fide businesspurposesrequireittoretainfundsthatwouldotherwisebedistributed(providedthat,fortheavoidanceofdoubt,noreductionindistributionsshallresultinannualdistributionsbeinglessthantheEstimatedMinimumDistributionAmountorbeinglessthantheInitial MandatoryMinimumperCommonUnit(subject to Section 5.2(a) and to pro rata adjustment for partial years) in each of the 2020, 2021 and 2022Company Fiscal Years, except in accordance with Section 5.2(a)); providedfurther that distributions may besuspendedinpartduringthependencyofanydisputethatissubjecttoresolutionpursuanttoSection6.22butonlywithrespecttoanydisputedamount(i.e.,undisputedamountsshallnotbesuspended)andinanycasethereshallbe no delay in distributions with respect to any Estimated Minimum Distribution Amount or MinimumDistributionAmount;
(iii) Changing in any material respect any financial accounting method or changing the Company FiscalYear, otherthanasrequiredbylaw,regulation,GAAPortheCompany’sauditorandotherthanasrequiredforSilverParenttouniformlycomplywithitsownaccountingpolicies;
(iv) Commencinganyvoluntary(orconsentingtoanyinvoluntary)BankruptcyproceedinginrespectoftheCompany or any of its material Subsidiaries seeking liquidation, reorganization, dissolution or Bankruptcy, orotherwiseliquidatingordissolvingtheCompany;
(v) Amending, waiving any rights under or otherwise modifying any organizational documents of theCompany (including this Agreement and including any change to the Company’s jurisdiction, by merger,consolidation, or in anyother fashionor manner) or anyof its material Subsidiaries, other thanamendments ormodifications(i)thatarenotdisproportionatelyadversetotheTitaniumFamilyGroupascomparedtotheSilverMember, (ii) of organizational documents of wholly owned Subsidiaries of the Company that remain whollyowned following such amendment or modification or are dissolved, (iii) of organizational documents of anyCompanySubsidiarytotheextentrequiredbylendersinabonafideandpermitteddebtfinancingor(iv)subjecttoSection6.20(b), oforganizational documentsoftheCompanyoranymaterial Subsidiarysolelytoreflect theadmissionofanadditionalmemberandthecorrespondingreductioninthePercentageInterestsoftheMembers,ifany,inconnectionwiththeissuanceofanyMembershipInterestsorotherequitysecuritiesthatcomplieswiththeothertermsofthisAgreementortheorganizationaldocumentsofsuchSubsidiary,asapplicable;
(vi) Declaring,payingorotherwisemakinganynon-cashdividendsorothernon-cashdistributionsbytheCompanyoranyofitsSubsidiaries,otherthan(i)inconnectionwithaliquidatingdistributionpursuanttoSection10.5(a), (ii) dividends or distributions by a Subsidiary of the Company to the Company or a wholly ownedSubsidiaryoftheCompanyor(iii)distributionsrequiredtobemadebytheorganizationaldocuments(includinganyjointventureorsimilaragreements)ofanynon-whollyownedSubsidiaryoftheCompany;
(vii) Entering into, terminating, waiving any rights under, amending or engaging in any arrangement,transactionoragreement,writtenororal,withorthatprovidesdisproportionatebenefitstoanyMember,DirectororSilverParentoranySubsidiaryorAffiliatethereof(otherthantheCompanyanditsSubsidiaries), otherthanany Permitted Affiliate Transaction or any action expressly required by this Agreement (including distributionrequired by this Agreement (including by the Annual Distribution Policy, and including paying the MinimumDistributionAmountandtheRequiredDistributionAmount));
(viii) IssuinganyMembershipInterests (or securities convertible intoor exercisable for anyMembershipInterests)otherthanpursuanttoSection8.4;and
(ix) Agreeingtoperformorauthorizeanyoftheforegoingrestrictedactions.
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(b) NotwithstandinganythinginthisAgreementtothecontrary,duringtheSilverPeriodandonlyforsolongastheTitaniumFamilyGroup(togetherwithanyFamilyTransferee)continuestoown,collectively,atleastfivepercent(5%) of the Membership Interests owned by the Titanium Family Group as of the Effective Date (subject to anyadjustmentnecessarytoaccountforanysplit,dividend,distribution,combination,reclassificationorsimilarevent,ineach case, in respect of the Membership Interests), the prior written TitaniumFamily Approval shall be required toauthorize and approve the following matters, actions and decisions by, or with respect to, the Company and theCompany Subsidiaries (each, a “Titanium Other Fundamental Decision”), and the Company shall not, and theCompanyshallcauseeachCompanySubsidiarynotto,directlyorindirectly,effect,takeormakeanysuchTitaniumOtherFundamentalDecisionwithoutobtainingthepriorwrittenTitaniumFamilyApproval:
(i) Selling, disposing, exchanging or otherwise transferring any of the assets or properties set forth onSchedule II if such sale or other transfer would result in an adverse tax consequence to any member of theTitanium Family Group or any of their respective Affiliates; providedthat any such sale or transfer shall bedeemedtobepermittediftheCompanyprovidesfullreimbursementtotheTitaniumFamilyGroup,nolaterthanthelaterof(A)thirty(30)Daysfollowingtheclosingofsuchsaleortransferand(B)two(2)DayspriortotheduedateordatesforTaxes(includingestimatedTaxes)resultingfromsuchsaleortransfer,foranyTaxeswithrespecttoanamountofgainnottoexceedtheProtectedGain(includinganyTaxesinrespectofanyadditionalamountspaidwithrespecttothereimbursementsuchthattheTitaniumFamilyGroupisinthesameafterTaxpositionasitwould have been had the liability so reimbursed not been incurred) imposed on or incurred by, directly orindirectly, any of the members of the Titanium Family Group and any Family Transferee, or any of theirbeneficiaries, shareholders, membersorotherowners, orultimateparent entities, asaresult of anysuchsaleortransfer by virtue of being a direct or indirect Member, subject to the Titanium Family Group reasonablycooperatingtominimizesuchTaxes;
(ii) Amending, waiving any rights under or otherwise modifying any organizational documents of theCompany (including this Agreement and including any change to the Company’s jurisdiction, by merger,consolidation, or in any other fashion or manner), other than amendments or modifications (i) that are notdisproportionatelyadversetotheTitaniumFamilyGroupascomparedtotheSilverMemberor(ii)inconnectionwiththeissuanceofanyequitysecurities;and
(iii) Agreeingtoperformorauthorizeanyoftheforegoingrestrictedactions.
Section 6.21 Additional Restrictions on Silver Parent and its Non-Company Subsidiaries.
ForsolongastheTitaniumFamilyGroup(togetherwithanyFamilyTransferees)continuestoown,collectively,at least twenty-five percent (25%) of the Membership Interests owned by the Titanium Family Group as of theEffective Date (subject to any adjustment necessary to account for any split, dividend, distribution, combination,reclassificationorsimilarevent,ineachcase,inrespectoftheMembershipInterests),unlesspreviouslyofferedtotheCompanyoncommerciallyreasonableterms(whichoffermustincludeanaffirmativeconsentofeachSilverDirectorfortheCompanytoacceptsuchofferandfortheCompanytotakeanycommerciallyreasonableactiontoconsummateany such transaction), Silver Parent shall not, and shall cause its Subsidiaries (other than the Company and itsSubsidiaries) not to, acquire or otherwise redeem (i) any debt or equity securities or other debt obligations of theCompanyoranyofitsSubsidiariesor(ii)anyinterests(includinganydebtorequitysecurities)ofanyjointventure,partnership, limited liability company or similar arrangement to which the Company or any of its Subsidiaries is aparty.IftheCompanydoesnotparticipateinanyoftheforgoingtransactionsforanyreason,SilverParentshallworkingoodfaithwiththeCompanyandtheTitaniumFamilyDesigneeto(a)protecttheinterestsoftheCompanyandalloftheMembersand(b)nottakeanyactionthatisdisproportionallyadversetotheCompanyoranyoftheMembersascomparedtoSilverParentanditsSubsidiaries(otherthantheCompanyoranyofitsSubsidiaries)ordisproportionallybeneficial toSilverParentoranyofitsSubsidiaries(otherthantheCompanyoritsSubsidiaries)ascomparedtotheCompany and its Subsidiaries, in each case, taking into account the circumstances of the business at such time.Notwithstandingtheforegoing,therestrictionsinthisSection6.21shallnotapplytoSilverParentanditsSubsidiariesin connection with, or during the pendency of, a Bankruptcy or involuntary bankruptcy in a court of competentjurisdictionwithrespect to theCompanyor anyof its Subsidiaries that, individually or in theaggregate, generate atleastone-third(1/3)oftheCompany’sanditsSubsidiaries’netoperatingincomethatiseithernotcontestedingoodfaithbytheCompanyorisnotdismissedwithinonehundredandeighty(180)Daysoftheapplicablefiling.
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Section 6.22 Deadlocks.
(a) Subject to Section 6.22(c), from and after January 1, 2021, if a Fundamental Decision Approval is notobtainedpursuanttoSection6.19(orSection6.15)oraTitaniumFamilyApprovalisnotobtainedpursuanttoSection6.20(a), in each case within twenty-one (21) Days after submission of such matter to the Board of Directors or theTitaniumFamily Designee, as applicable, then either the Silver Member or the TitaniumFamily Designee can sendwrittennoticethereoftotheother(a“Deadlock Notice”),statingthatfailuretoreachagreementonsuchmatterwithintwenty-one (21) Days after delivery of the Deadlock Notice will give rise to a deadlock with respect thereto (a“Deadlock”);provided, that theSilver Member maynot deliver morethantwoDeadlockNotices inanytwelve(12)monthperiodandtheTitaniumFamilyDesigneemaynotdelivermorethantwoDeadlockNoticesinanytwelve(12)month period. As promptly as practicable following the giving of a Deadlock Notice, the chief executive officer ofSilverParentandtheChiefExecutiveOfficer(and,attheelectionoftheTitaniumFamilyDesignee,arepresentativeoftheTitaniumFamilyGroup)shallmeettonegotiateingoodfaithinordertotrytoresolvethedeadlockordisagreementoverthedisputedmatterormatters(it beingunderstoodthatarefusaltomeetornegotiateonthepartofanyPersonshallnotprecludeaDeadlockfromoccurring).IftherepresentativespursuanttotheprecedingsentenceareunabletoreachagreementonthedisputedmatterpriortotheoccurrenceofaDeadlockassetforthinthisSection6.22(a),thentheCompanyshallsubmitsuchDeadlock,andeithertheSilverMemberortheTitaniumFamilyDesigneemaycausesuch Deadlock to be submitted, to binding arbitration before a Qualified Expert under the rules of the AmericanArbitrationAssociationthatareineffectasofthedateofthisAgreement(or,intheeventthattheAmericanArbitrationAssociationwillnotproceedonthatbasis,undertherulesoftheAmericanArbitrationAssociationthenineffect)(the“Rules”)andtheproceduressetforthinSection6.22(b)shallbefollowed.TheplaceofarbitrationshallbeNewYork,NewYork.AjudgmentontheawardordecisionrenderedbytheQualifiedExpertmaybeenteredinanycourthavingjurisdictionthereof.
(b) TheRulesfor“ExpeditedProcedures”shallapplytoaDeadlockonlyifandtotheextenttheSilverMemberelects in its sole discretion. In the event that the Silver Member or the Titanium Family Designee calls for adeterminationofaDeadlockinarbitrationpursuanttothetermsofthisSection6.22, SilverParentandtheTitaniumFamilyDesigneeshallhaveaperiodoften(10)BusinessDaysfromthedateofsuchrequesttomutuallyagreeononeQualified Expert. If Silver Parent and the TitaniumFamily Designee fail to so agree, each of Silver Parent and theTitaniumFamilyDesigneeshallhaveanadditionalten(10)BusinessDaystoeachselectaQualifiedExpert,andthetwo Qualified Experts selected shall select, and Silver Parent and the Titanium Family Designee shall request itsselectedQualifiedExperttoselect,asingleQualifiedExperttobethearbitratorfortheDeadlockinquestion.IfeithertheSilverMemberortheTitaniumFamilyDesigneefailstomakeitsrespectiveselectionofaQualifiedExpertwithintheadditionalten(10)Dayperiodprovidedforabove,thentheotherparty’sselectionshallbetheQualifiedExperttobethearbitratorfortheDeadlockinquestion.IftheselectedQualifiedExpertsfailtoselectasingleQualifiedExpertwithinten(10)BusinessDaysoftheselectionofthelastofthem,theSilverMember,theTitaniumFamilyDesigneeandtheCompanyagreethat theQualifiedExpert shall beselectedbytheAmericanArbitrationAssociationfromitspanel of arbitrators who reside in New York, New York. The Qualified Expert shall decide the issue submitted tohim/herinaccordancewithandgivingequaleffectto(i)thelanguage,commercialpurposeandrestrictionscontainedinthisAgreementand(ii)thatwhichtheQualifiedExpertreasonablybelieves,ingoodfaithandusingthecarethatareasonablyprudentpersonwoulduse,isinthebestinterestsoftheCompany,recognizingandtakingintoaccountthecommercialpurposesofthisAgreementandthearrangementbetweentheMembersandtheirAffiliates,includingtheequity investments in the Company by the Silver Member (which, for the avoidance of doubt, shall include theconsideration paid bythe Silver Member andits Affiliates in connection with the Merger) andthe TitaniumFamilyGroup and the business of Silver Parent and of the Company as each has been historically conducted. Because aprolongedDeadlockmayhaveaseriousadverseeffectontheCompany,theSilverMemberandtheTitaniumFamilyDesignee shall instruct the Qualified Expert to render a decision as quickly as reasonably possible. The QualifiedExpertshalldecidethedisputebasedsolelyonthesubmissionsandevidenceprovidedbytheSilverMemberandtheTitaniumFamilyDesignee.TheQualifiedExpertmay,inhisorherdiscretion,upongoodcauseshownandconsistentwiththeexpeditednatureofarbitration,orderdepositionstoobtainthetestimonyofapersonorentitythatmaypossessinformation determined by the Qualified Expert to be relevant and material to the issues to be decided. The SilverMember,theTitaniumFamilyDesigneeandtheCompanyshallcooperatewithoneanotheraspromptlyasreasonablypracticable in the production and discovery of reasonably requested or ordered documents, information or othermaterials that are relevant to the issues to be decided, and in the submission and presentation of arguments to theQualifiedExpert.NothinginthisSection6.22shalllimittherightsofanyMemberunderthisAgreementtoobtainorrequestinformationfromtheCompanyortousethoserightstoobtaininformationormaterialforuseinanarbitrationpursuanttothisSection6.22.Atareasonabletimeinadvanceofahearing,the
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SilverMemberandtheTitaniumFamilyDesigneewillprovidetheotherwith(a)copiesofallmaterialsuponwhichtheSilverMemberortheTitaniumFamilyDesignee,asapplicable,willrelyorintendstopresentatthehearing;and(b)astatementoftheidentityofeachwitnesstheSilverMemberortheTitaniumFamilyDesignee,asapplicable,intendstocall andthesubject matter of theexpectedtestimony. TheQualifiedExpert shall unilaterally decidethedisputeinawrittendecisionwhichshallbeconclusive,finalandbinding(andwhichshalldesignateeithertheSilverMemberortheTitaniumFamilyDesignee,atthediscretionoftheQualifiedExpert,asthepredominatelyprevailingpartyinsuchdispute),andtheCompanyanditsSubsidiariesshallbepermittedtoengageinanytransactionortakeanyactionthatwas the subject of the dispute to the extent that the Qualified Expert determines in the written decision that suchtransactionoractionispermissibleandsuchtransactionoractionisconsistentwiththeothertermsofthisAgreement.TheQualifiedExpertconductinganyarbitrationshallbeboundbytheprovisionsofthisAgreementandshallnothavethe power to add to, subtract from or otherwise modify such provisions. The Company and the Members and theTitaniumFamilyDesigneeagreethat,withrespecttoDeadlocks,therulingoftheQualifiedExpertshallbefinalandnot be subject to any judicial review. All fees and expenses of the arbitration proceeding, including the fees andexpenses of the Qualified Expert, shall be borne by the Company. For purposes of this Section 6.22, the term“Qualified Expert”meansarealestateprofessionalingoodstandinghavingatleastfifteen(15)yearsofexperienceincommercialrealestatefinanceandthedevelopment,operationandmanagementofcommercialshoppingmallssimilarto the commercial shopping malls owned by the Company, and who has served as an arbitrator in at least five (5)AmericanArbitrationAssociationarbitrations.
(c) NotwithstandinganythingtothecontraryinthisSection6.22,(I)theExcludedFundamentalDecisions,theExcluded Titanium Fundamental Decisions and the Titanium Other Fundamental Decisions and (II) any mattersbroughtbeforetheBoardofDirectorspriortoJanuary1,2021,ineachcaseofclauses(I)and(II),shallnotbesubjecttotheDeadlockdisputeresolutionprocesssetforthinthisSection6.22,andifthereisafailuretoobtaintherequisiteapprovalwithrespectthereto,suchmatter(s)shallremainunresolveduntiltheapplicablerequisiteapprovalisobtained(ifatall)asprovidedherein.The“Excluded Fundamental Decisions”shallmeantheBoardFundamentalDecisionssetforthinclauses(i),(ii),(iv)(withrespecttotheCompany),(v),(ix),(xi)and(xiv)ofSection6.19(a)and,solelytotheextentofindebtedness(byborrowing,issuanceofdebtsecuritiesorotherwise)proposedtobeincurredinanaggregateprincipal amount in excess of fifty million Dollars ($50,000,000), clause (xv) of Section 6.19(a) and, solely as theyrelate to any of the foregoing, clauses (vii) and (xviii) of Section 6.19(a). The “Excluded Titanium FundamentalDecisions” shall mean the Titanium Fundamental Decisions set forth in clauses (i), (iv), (v) (with respect to theCompany), (vi) and (vii) of Section 6.20(a) and, solely as it relates to any of the foregoing, clause (ix) of Section6.20(a).
Section 6.23 REIT Requirements.
(a) Atanytimethat Silver Parent intends to qualify as a Real Estate Investment Trust, the Companyshall beoperated as if the Company were a Real Estate Investment Trust, and in connection therewith, the Company shall(i)monitorandmanagetheincomeandassetsoftheCompanyandtheSubsidiariesinorderfortheCompanytosatisfyallRealEstateInvestmentTrustqualificationrequirements,(ii)notcauseorpermittheCompanyandtheSubsidiariestoengageinanytransactionsthatcouldreasonablybeexpectedtocauseSilverParenttobesubjecttofederalincometax,includingunderSection857(b)(5),Section857(b)(6),Section857(b)(7)orSection4981(a)oftheCode,solongassuchtaxesmaybeimposedandassuchprovisionsmaybeamendedfromtimetotime,orcorrespondingprovisionsofsucceedinglaw,(iii)causetheCompanyandtheSubsidiariestooperateinsuchamannerandtakeoromittotakeallactionsasmaybereasonablynecessary(includingmakingdistributionsasprovidedforherein),soastopermitSilverParenttocontinuetoqualifyasaRealEstateInvestmentTrustunderSections856through860oftheCodesolongassuch requirements exist and as such provisions may be amended fromtime to time, or corresponding provisions ofsucceedinglawand(iv)performanyworkandprovidetheSilverMemberwithinformation,ineachcase,reasonablynecessaryforSilverParenttodetermineitsstatusasaRealEstateInvestmentTrust(includinginformationsetforthinthe last sentence of Section 5.6) and monitor its taxable income as a result of its direct or indirect interest in theCompany(clauses(i)-(iv),the“REIT Requirements”),eachof(ii)and(iii)toatalltimesbedetermined(A)asifSilverParent’ssoleassetisitsindirectMembershipInterestand(B)withoutregardtotheactionorinactionofSilverParentwithrespecttodistributions(bywayofdividendsorotherwise)andthetimingthereof.TheSilverMembermaycausetheCompany,attheCompany’sexpense,toobtainanopinionoftaxcounselselectedbytheSilverMember,regardingtheimpactofanyproposedaction(i)intheeventthatsuchproposedactionwould,inthereasonablediscretionoftheSilverMember,createamaterialriskthatSilverParent,anyAffiliateofSilverParentthatintendstoqualifyasaRealEstateInvestmentTrustortheCompanywouldnotmeettherequirementstoqualifyasaRealEstateInvestmentTrust(inthecaseoftheCompany,ifitwereaRealEstate
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InvestmentTrust),or(ii)onSilverParent’sexposuretoanexcisetaxunderSection4981(a)oftheCode,orataxunderSection857(b)(6)oftheCode,solongassuchtaxesexistandassuchprovisionsmaybeamendedfromtimetotimeorcorresponding provisions of succeeding law. Notwithstanding anything herein or on Exhibit I to the contrary, theCompany, its Subsidiaries andits Officers shall bedeemedtocomplywiththeREITRequirements andthis Section6.23totheextentthattheCompanyanditsSubsidiariesoperateinsuchamannerortakeoromittotakeanyaction(ortakeanytaxposition) (x) at thedirection of the Silver Member, (y) consistent with the taxopiniondescribedin theimmediatelyforegoingsentencetotheextentsuchopinionconcludesthatoperatinginsuchmannerortakingorfailingtotakeanyactionortaxpositionisconsistentwiththeapplicablePerson’squalificationasaRealEstateInvestmentTrustor(z)otherwiseconsentedtobytheSilverMember.NotwithstandinganythinginthisAgreementtothecontrary,atanytimethatSilverParentintendstoqualifyasaRealEstateInvestmentTrust,neithertheCompanynoranyofitsSubsidiaries shall take any of the actions prohibited by Exhibit I without the prior written consent of the SilverMember, suchconsent not to beunreasonablywithheld, delayedor conditioned;provided, that neither the CompanynoranyofitsSubsidiariesshallberestrictedfrom(orrequiredtoobtainthepriorwrittenconsentoftheSilverMemberbefore) taking any action pursuant to any binding written arrangement entered into prior to, and effective as of, theEffective Date (provided that this proviso shall not limit the obligations of the Company under Section 6.23(b));provided,further, that for all applicable purposesof Exhibit I, theCompanyshall beentitledtorelyupontheSilverParentRelatedPartyTenantSchedule(assuchtermisdefinedinExhibitI)solongastheCompanyhascompliedwiththeobligationsinSection8ofExhibitI.AtanytimethatSilverParentintendstoqualifyasaRealEstateInvestmentTrust, the Silver Member shall, in a timely manner, provide the Company and its Officers with all informationreasonably requested by the Company for purposes of ascertaining its compliance with this Section 6.23. After theEffective Time, the Companyshall cause anyentity that is currently a TRSof Titaniumto file a joint election withSilverParentonIRSForm8875tobetreatedasaTRSofSilverParent.TotheextentthatanysuchentitythatisnotcontrolledbytheCompanyisnotableorwillingtomakesuchanelection,theCompanyagreestotransferitsinterestinsuchentitytoaSubsidiaryoftheCompanythatistreatedasaTRSofSilverParent.
(b) UponthereasonablerequestoftheSilverMember,afterconsultingingoodfaithwiththeTitaniumFamilyDesignee,theCompanyoranyofitsSubsidiariesshall(i)causeoneormoreservicesprovidedbytheCompanyoraSubsidiaryoftheCompanypursuanttoanybindingwrittenarrangemententeredintopriorto,andeffectiveasof,theEffectiveDatetoberestructured(forexample,byperformingsuchservicesthroughoneormoreTRSsthatisoraredirectlyorindirectlywhollyownedbytheCompany)or(ii)transferassetstooneormoreTRSsthatisoraredirectlyorindirectlywhollyownedbytheCompanyorsuchSubsidiaryoftheCompanyor(iii)shalltakesuchotheractionasreasonablynecessary,basedonwrittenadviceoftaxcounsel(whichwrittenadvice,fortheavoidanceofdoubt,shallincludeanyadviceine-mail),tosatisfytheREITRequirements.
Section 6.24 Execution of Legal Instruments.
Subject to the terms and conditions of this Agreement (including Section 6.19 and Section 6.20), all legalinstruments affecting the Company or Company property need be executed by, and only by, that Person or thosePersonsdesignatedinwritingasOfficersorAuthorizedSignatoriesbytheChiefExecutiveOfficerduringtheTitaniumPeriod and by the Board of Directors during the Silver Period, and such Officer(s)’s or Authorized Signatory(s)’signature(s)shallbesufficienttobindtheCompanyanditsproperties.
Section 6.25 Limited Fiduciary or Implied Duties; Reliance; Indemnity and Reimbursement; Advancement ofExpenses and Insurance; Other.
(a) To the fullest extent permitted under Delaware law, notwithstanding anything to the contrary in thisAgreement (but without waiving or limiting any express contractual obligation contained in this Agreement), noDirector, Officer (including the Chief Executive Officer), Member, Partnership Representative or DesignatedIndividualofthePartnershipRepresentative(ineachcase,insuchcapacity)shalloweanyfiduciaryorotherdutytotheCompanyoranyMemberoranyPreferredHolder,ineachcase,exceptasexpresslysetforthbelowinSection6.25(b).Infurtheranceoftheforegoing,eachMemberandeachPreferredHolderirrevocablyandunconditionallywaives,andacknowledges that the other Members and Preferred Holders irrevocably and unconditionally waive, to the fullestextentpermittedunderDelawarelaw,anyfiduciaryorotherdutythatcouldbedeemedtobeowedtoanyMemberoranyPreferredHolderortotheCompanybyit,anyMember,anyPreferredHolder,anyPartnershipRepresentativeorany Director or any Officer (including the Chief Executive Officer), except as expressly set forth below in Section6.25(b)oranyoftheotherexpresscontractualobligationscontainedinthisAgreement.
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(b) EachoftheDirectors(duringtheSilverPeriod,butexcludingwithrespectto(i)theexerciseofanyapprovalrequirementsprovidedforinthisAgreementand(ii)Section7.2,ineachcaseastowhichnosuchfiduciarydutiesshallattach), Officers (including the Chief Executive Officer) and Authorized Signatories shall owe to the Company, theMembers and the Preferred Holders only those fiduciary duties that would be owedby a director (with respect to aDirector) or anofficer (with respect to anOfficer or AuthorizedSignatory) of the Companyif the Companywere aDelawarecorporation.
(c) Notwithstanding anything in this Agreement to the contrary, no Director, Officer (including the ChiefExecutiveOfficer)orAuthorizedSignatoryshallbeliableformonetarydamagesforbreachoffiduciaryduty(thatisapplicable to such Person pursuant to Section 6.25(b)) to the Company or any Member or any Preferred Holder;provided, that the foregoing shall not eliminate or limit the liability of any Director (during the Silver Period, butexcludingwithrespectto(x)theexerciseofanyapprovalrequirementsprovidedforinthisAgreementand(y)Section7.2,ineachcaseastowhichnosuchfiduciarydutiesshallattach)orOfficer(includingtheChiefExecutiveOfficer)orAuthorized Signatory (i) for any breach of such Director’s or Officer’s or Authorized Signatory’s duty of loyalty,(ii) foractsoromissionsnotingoodfaithorwhichinvolveintentionalmisconductoraknowingviolationoflawor(iii) for any transaction from which such Director, Officer or Authorized Signatory derived an improper personalbenefit,ineachcase,totheextentthesamecouldnotbeeliminatedwithrespecttoaPersonwithsuchfiduciaryduties(assuminganOfficerorAuthorizedSignatoryisdeemedtobeadirectorforthispurpose)pursuanttoSection102(b)(7)oftheDelawareGeneralCorporationLaw.
(d) A Director, Officer (including the Chief Executive Officer), Authorized Signatory or PartnershipRepresentativeshallbefullyprotectedinrelyingingoodfaithupontherecordsoftheCompanyanditsSubsidiariesanduponsuchinformation,opinions,reportsorstatementspresentedtoanyoftheCompanyoritsSubsidiariesbyanyPersonastomatterssuchPersonreasonablybelievesarewithinsuchotherPerson’sprofessionalorexpertcompetenceand who has been selected with reasonable care by or on behalf of any of the Company or any of its Subsidiaries,including information, opinions, reports or statements as to the value and amount of the assets, liabilities, Profits orLosses or any other facts pertinent to the existence and amount of assets from which distributions to Members orPreferredHoldersmightproperlybepaid.TheprecedingsentenceshallinnowaylimitanyPerson’srighttorelyoninformationtotheextentprovidedinSection18-406oftheAct.
(e) No Director shall be disqualified from voting on matters as to which such Director or the Member thatappointedsuchDirectormayhaveaconflictofinterest.
(f) To the fullest extent permitted by Delaware law as the same would apply to a Delaware corporation, theCompany shall and does hereby indemnify, defend, and hold harmless each Indemnified Person from any claim,demand,orliability,andfromanyloss,cost,judgmentorexpenseincludingattorneys’feesandcourtcosts,whichmaybeassertedagainst,imposedupon,orsufferedorotherwiseincurredbysuchIndemnifiedPersonbyreasonofthefactthat such Person is or was a Member, an Affiliate of a Member, a Director, Officer (including the Chief ExecutiveOfficer),AuthorizedSignatory,orservesorservedattherequestofanyoftheCompanyortheBoardofDirectorsoranyOfficer(includingtheChiefExecutiveOfficer)asamember,manager,partner,director,officer,employeeoragentof anyother enterprise or byreasonof anyact performedfor or onbehalf of theCompany, or in furtheranceof theCompany’sbusiness,ifsuchIndemnifiedPersonactedingoodfaithandinamannerhereasonablybelievedtobeinornotopposedtothebestinterestsoftheCompanyandallofitsMembersandPreferredHolderscollectively,and,withrespecttoanycriminalactionorproceeding,hadnoreasonablecausetobelievehisorherconductwasunlawful.Anyindemnityunder this Section6.25shall beprovidedout of andtotheextent of Companyassets only, andonlywithrespect to amounts actually and reasonably incurred, and no Member or Preferred Holder shall have any personalliabilityonaccountthereof.
(g) Expenses(includingattorneys’fees)incurredbyanIndemnifiedPersonindefendinganyActionrelatingtoanyactionoromissioninrespectoftheCompanyandforwhichtheindemnificationabovemaybeapplicableshallbepaidbytheCompanypromptlyuponreceiptbyitofanundertakingofsuchIndemnifiedPersontorepaysuchexpensesifitshallultimatelybedeterminedthatsuchIndemnifiedPersonisnotentitledtobeindemnifiedbytheCompany.
(h) The rights provided to any Indemnified Person by this Section 6.25 shall be enforceable against theCompanybysuchIndemnifiedPerson,whoshallbepresumedtohaverelieduponitinservingorcontinuingtoserveasaMember,PreferredHolder,Director,Officer(includingtheChiefExecutiveOfficer),PartnershipRepresentative,AuthorizedSignatory,member,manager,partner,director,officer,employeeoragentasprovidedabove.
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(i) The Company shall purchase and maintain customary insurance, as reasonably determined by the ChiefExecutiveOfficer duringtheTitaniumPeriodandbyBoardofDirectors duringtheSilverPeriod,inrespect ofeachIndemnifiedPersonagainstanyliabilityrelatingtoanyactoromissioninrespectoftheCompany,whetherornottheCompanymayindemnifysuchIndemnifiedPersonagainstsuchliabilityunderthisAgreement.
(j) Notwithstandinganythinghereintothecontrary, theCompanyshallnotindemnifyanyIndemnifiedPersononaccountof,orotherwiserelatingto,(x)anybreachbysuchIndemnifiedPersonofthisAgreement(butnotincludingabreachofsuchIndemnifiedPerson’sfiduciarydutiestotheextentthatindemnificationforsuchabreachwouldbeavailableunderthisAgreement)oranyotheragreementbetweentheCompanyoranyofitsSubsidiaries, ontheonehand, and such Indemnified Person or any Affiliate of such Indemnified Person, on the other hand, in each case asdeterminedbyacourtofcompetentjurisdictionor(y)anylegalproceedingbroughtbyanyIndemnifiedPersonagainstthe Company, its Affiliates or its Members (other than any legal proceeding seeking indemnification to which suchIndemnifiedPersonisentitledunderthisSection6.25,asdeterminedbyacourtofcompetentjurisdiction).
(k) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 6.25shall survive the liquidation, dissolution and termination of the Company and the termination or amendment of thisAgreement,shallcontinueastoanyPersonwhohasterminatedhis,heroritsrelationshipwiththeCompanyandshallinuretothebenefitofsuchPerson’sheirs,executorsandadministratorsandshall,totheextentpermittedbytheAct,bebindingontheCompany’ssuccessorsandassigns.
(l) NoamendmentofthisSection6.25shallimpairtherightsofanyIndemnifiedPersonarisingatanytimewithrespecttoanyactsoromissionsoccurringpriortosuchamendment.
(m) TheindemnificationprovidedbytheforegoingprovisionsofthisSection6.25shallnotbeexclusiveofanyotherrightstowhichanyPersonmaybeentitled,includinganyrightunderpoliciesofinsurancethatmaybepurchasedandmaintainedbytheCompanyorothers.TheCompanyherebyacknowledgesthatcertainIndemnifiedPersonsmayhave rights to indemnification, advancement of expenses or insurance provided by Silver Parent or its Subsidiaries(other than the Company and its Subsidiaries) (collectively, the “Alternative Indemnitors”). The Company herebyagreesthat,astoitsindemnificationobligationsunderthisSection6.25,(i)itistheindemnitoroffirstresort(i.e.,itsobligationstoanysuchIndemnifiedPersonsareprimaryandanyobligationoftheAlternativeIndemnitorstoadvanceexpenses or to provide indemnification for the sameexpenses or liabilities incurred bysuchIndemnified Personaresecondary), (ii) it shall berequiredtoadvancethefull amountofexpensesincurredbysuchIndemnifiedPersonandshallbeliableforthefullamountofallsuchexpenses,judgments,penalties,finesandamountspaidinsettlementtothe extent legally permitted and as required by the terms of this Agreement (or any other agreement between theCompanyandsuchIndemnifiedPerson), withoutregardtoanyrightssuchIndemnifiedPersonmayhaveagainst theAlternative Indemnitors and (iii) the Company irrevocably waives, relinquishes and releases the AlternativeIndemnitors from any and all claims against the Alternative Indemnitors for contribution, subrogation or any otherrecovery of any kind in respect thereof. The Company further agrees that no advancement or payment by theAlternative Indemnitors on behalf of such Indemnified Person with respect to any claimfor which any IndemnifiedPersonhassoughtindemnificationfromtheCompanyshallaffecttheforegoingandtheAlternativeIndemnitorsshallhave a right of contribution or be subrogated to the extent of such advancement or payment to all of the rights ofrecoveryofsuchIndemnifiedPersoninsuchregardagainsttheCompany.TheCompanyandsuchIndemnifiedPersonagreethattheAlternativeIndemnitorsareexpressthirdpartybeneficiariesofthetermsofthisSection6.25(m).
Section 6.26 Partnership Representative.
(a) For taxable years beginning on or after January 1, 2018, Taubman Ventures Group, LLC is herebydesignatedasthe“partnershiprepresentative”underSection6223(a)oftheCode(the“Partnership Representative”);providedthat, during the Silver Period, the Silver Member may designate the Partnership Representative. ThePartnershipRepresentativeshallrecommendtotheCompany,onanannualbasisoratsuchothertimeastheindividualresignsoritsdesignationisrevoked,anindividualwhomeetstherequirementsofSection6223oftheCodeandtheRegulationspromulgatedthereundertoserveasthedesignatedindividual(the“Designated Individual”)toactontheCompany’s behalf, which recommendation shall be subject to Silver Member’s approval, not to be unreasonablywithheld, conditioned or delayed. No Member or Preferred Holder may revoke the authority of the PartnershipRepresentative or of the Designated Individual without the Partnership Representative’s prior written consent. ThePartnershipRepresentativeshallhavefullauthoritytobindtheCompanyinallproceedingswith
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theInternalRevenueService,andeachMemberandPreferredHolderagreestobeboundbytheactionstakenbythePartnershipRepresentativeasprovidedinSection6223(b)oftheCode.
(b) Subject to Section 6.26(f), the Partnership Representative shall or shall cause the Company to make theelection under Section 6226(a) of the Code (the “Push-Out Election”) to apply the alternative procedure to theCompany’s payment of any “imputed underpayment” as determined under Section 6225 of the Code (the “ImputedUnderpayment”)andassociatedinterest,adjustmentstotax,andpenaltiesarisingfromapartnership-leveladjustmentthatareimposedontheCompanysothattheyarebornebytheMembersandPreferredHoldersandformerMembersand former Preferred Holders to whom such Imputed Underpayment relates as determined in good faith by thePartnershipRepresentative.ThePartnershipRepresentativeisauthorizedtotakeanyotheractionsasshallbenecessaryorappropriatetoeffectuateandcomplywiththePush-OutElection.EachMemberandPreferredHolderconsentstothePush-OutElectionandagreestotakeanyreasonableactionreasonablyrequestedbythePartnershipRepresentativetoeffectuate the Push-Out Election and to furnish the Partnership Representative with any information reasonablynecessarytogiveeffecttothePush-OutElection.
(c) In connection with the Push-Out Election, the Partnership Representative shall provide each Member andPreferred Holder or former Member or former Preferred Holder for the reviewed year (as defined in RegulationsSection 301.6241-1(a)(8)) (the “Reviewed Year”) a statement as required by Regulations Section 301.6226-2 settingforth the applicability of any penalty, additions to tax, or additional amounts, and the adjustments to which thosepenalties,additionstotax,oradditionalamountsrelate,andeachMemberandPreferredHolderfortheReviewedYear(the“Reviewed Year Member”)shallcomputeanypenalties,additionstotax,oradditionalamountsapplicabletoitasifeachcorrectionamountwereanunderpaymentorunderstatementforthefirstaffectedyear(orinterveningyear).EachReviewed Year Member or former Reviewed Year Member shall provide the Partnership Representative suchreasonabledocumentationasmaybereasonablyrequestedbythePartnershipRepresentativeprovingpaymentoftheliabilitypushedouttosuchReviewedYearMemberpursuanttothePush-OutElectionorafurtherPush-OutElectionmadebysuchReviewedYearMember.
(d) IntheeventtheCompanyisadirectorindirectmemberofanotherpartnershiporlimitedliabilitycompany(the“Subsidiary Partnership”)thatisunderauditandmakesaPush-OutElection(includingthecaseinwhichtherearesuccessivePush-OutElectionsthroughachainofSubsidiaryPartnerships),thenthePartnershipRepresentativeshallorshall causetheCompanytomakeafurtherPush-Outelection(the“Further Push-Out Election”)sothattheImputedUnderpayment and associated interest, adjustments to tax, and penalties arising from an audit of a SubsidiaryPartnershiparebornebytheMembersandPreferredHoldersandformerMembersandformerPreferredHoldersoftheCompanytowhomsuchImputedUnderpaymentrelatesasdeterminedbythePartnershipRepresentative.IfaFurtherPush-OutElectionismade,theprovisionsofSection6.26(b)andSection6.26(c)shallapplywithrespecttotheFurtherPush-OutElection.
(e) SubjecttoSection6.26(f),ifforanyreason,includingtheinabilitytomakeaneffectivePush-OutElectionorFurther Push-Out Election, the Company is assessed the Imputed Underpayment, associated interest, adjustments totax, or penalties (all such amounts being referred to as the “Adjustment Liability”), the Company shall effect amodificationoftheImputedUnderpaymentbyapplyingtheproceduresetforthinSection6225(c)(2)(B)oftheCodeand require the Members and Preferred Holders to pay the Adjustment Liability directly to the Internal RevenueService so that the Adjustment Liability is borne by the Members and Preferred Holders and former Members andformer Preferred Holders to whom such Imputed Underpayment relates as determined by the PartnershipRepresentative. The Companyshall give written notice to each ReviewedYear Member andformer ReviewedYearMemberofitsshareoftheAdjustmentLiabilityandtheinformationrequiredforthealternativeproceduretofilingan“amendedreturnmodification”asprovidedinRegulationsSection301.6225-2(d)(2)(x)(the“Alternative Procedure”),including the mailing date of the notice of proposed partnership adjustment (the “NOPPA”), and each Member andPreferredHolderagreestofollowtheAlternativeProcedureandtotimelypayitsshareoftheAdjustmentLiability,ifany, directly to the Internal Revenue Service. Each Member and Preferred Holder further agrees to provide theCompany the documentation reasonably required by Regulations Section 301.6225-2(c)(2) and (d)(2) (and by anyadditionalInternalRevenueServiceguidanceprovidedpursuanttotheProposedRegulations)evidencingitspaymenttotheInternalRevenueServiceofitsshareoftheAdjustmentLiabilitynotlaterthansixty(60)DayspriortotheduedatefortheCompany’srequestformodificationoftheImputedUnderpayment, whichistwohundredseventy(270)DaysafterthedateofthemailingoftheNOPPA.IftheMemberorPreferredHolderisa“Pass-Through Partner”(asdefined in Regulations Section 301.6241-1(a)(5)), then such Pass-Through Partner shall (x) require its partners ormemberstofollowtheAlternativeProcedureandprovidesuchPass-ThroughPartner
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withthedocumentationreasonablyrequiredbyRegulationsSection301.6225-2(c)(2)and(d)(2)(andbyanyadditionalInternal Revenue Service guidance provided pursuant to the Proposed Regulations) supporting the computation andpaymentoftheAdjustmentLiabilitybyitspartnersormembersand(y)providesuchdocumentationtotheCompanynot later than sixty (60) Days prior to the due date for the Company’s request for a modification of the ImputedUnderpayment.IfaMemberorPreferredHolderfailstotimelysubmitallrequiredevidenceofproperexecutionoftheAlternativeProcedureandthepaymenttotheInternalRevenueServiceofitsshareoftheAdjustmentLiabilityorofitspartners’ormembers’paymentoftheirrespectivesharesoftheAdjustmentLiabilitytotheInternalRevenueService,thentheCompanyshall (i) withholdsuchMember’s or PreferredHolder’s shareof theAdjustment Liability, if any,fromcashotherwisecurrentlydistributabletosuchMemberorPreferredHolderpursuanttothisAgreementand(ii)totheextentcashisnotdistributabletosuchMemberorPreferredHolderforthetaxablequarterinwhichtheAdjustmentLiabilitymustbepaid,butinalleventspriortothedateonwhichtheAdjustmentLiabilitymustbepaid,theFailuretoComplyRemediesshallapply.IntheeventtheInternalRevenueServicedeniestheCompany’smodificationrequestinwholeorinpart,thentheCompanyshallgivewrittennoticetoeachMemberandPreferredHoldernotlessthanthirty(30)DayspriortothedatetheCompanymustmakethepaymentoftheAdjustmentLiabilitytotheInternalRevenueService,settingfortheachMember’sorPreferredHolder’sshare,ifany,oftheAdjustmentLiabilityandthedateonwhich the Company must make the payment, and each Member and Preferred Holder shall, not later than three (3)BusinessDayspriortothedatetheCompanymustpaytheAdjustmentLiabilitytotheInternalRevenueService,makeapaymenttotheCompanyinreadilyavailablefundsofsuchMember’sorPreferredHolder’sshareoftheAdjustmentLiability. If a Member or Preferred Holder fails to timely make such payment to the Company, then the Failure toComplyRemediesshall apply.NotwithstandinganythinginthisAgreementtothecontrary, noneoftheMembersorPreferredHoldersshall berequiredtoamendanyTaxReturninaccordancewithSection6225(c)(2)oftheCode(oranysimilarprovisionsunderstateorlocallaw).
(f) Notwithstanding Section 6.26(b), Section 6.26(d) and Section 6.26(e), the Partnership Representative shalldecide to make or not to make the Push-Out Election (or the Further Push-Out Election) or elect to follow theAlternativeProcedure.IftheCompanydoesnotelectthePush-OutElection(ortheFurtherPush-OutElection)ortheAlternative Procedure, then the Company shall (i) withhold such Member’s or Preferred Holder’s share of theAdjustmentLiability,ifany,fromcashotherwisecurrentlydistributabletosuchMemberorPreferredHolderpursuanttothis Agreementand(ii) totheextent cashis notdistributable tosuchMemberorPreferredHolderfor thetaxablequarter in whichthe Adjustment Liability must be paid, but in all events prior to the date onwhich the AdjustmentLiability must be paid, the Failure to ComplyRemedies shall apply. If the Subsidiary Partnership does not elect thePush-Out Election (or the Further Push-Out Election), the Alternative Procedure, or if the Internal Revenue ServicedeniestheSubsidiaryPartnership’smodificationrequestinwholeorinpart,thentheCompanyshallgivewrittennoticeto each Member and Preferred Holder not less than thirty (30) Days prior to the date the Company must make thepayment to the Subsidiary Partnership, setting forth each Member’s or Preferred Holder’s share, if any, of theAdjustment Liability and the date on which the Companymust make the payment, and each Member and PreferredHoldershall,notlaterthanthree(3)BusinessDayspriortothedatetheCompanymustpaytheAdjustmentLiabilitytotheSubsidiaryPartnership,makeapaymenttotheCompanyinreadilyavailablefundsofsuchMember’sorPreferredHolder’s share of the Adjustment Liability; provided, that the Company may, at the reasonable discretion of thePartnership Representative, waive such requirements of the Members and Preferred Holders to pay the AdjustmentLiabilityiftheCompany’spaymentofsuchAdjustmentLiabilitywouldhavenomorethanaminimaladverseeffectontheCompany,theCompany’sassets, anyMemberoranyPreferredHolder.IfaMemberorPreferredHolderfailstotimelymakesuchpaymenttotheCompany,thentheFailuretoComplyRemediesshallapply.
(g) In the event a Subsidiary Partnership does not or is unable to make an effective Push-Out Election, isrequiredtopayitsAdjustmentLiability,andelectstofollowtheAlternativeProcedure,theneachMember,PreferredHolder andeachPass-ThroughPartner shall followthe procedures andtimingset forth abovein Section 6.26(e) forpayment of its share of the Adjustment Liability to the Internal Revenue Service and the provision of the requireddocumentationtotheCompany.IfaMemberorPreferredHolderfailstotimelysubmitallrequiredevidenceofproperexecutionoftheAlternativeProcedureandthepaymenttotheInternalRevenueServiceofitsshareoftheAdjustmentLiabilityorofitspartners’ormembers’respectivesharesoftheAdjustmentLiabilitytotheInternalRevenueService,thentheFailuretoComplyRemediesshallapply.Alternatively,iftheSubsidiaryPartnershipdoesnotelecttofollowtheAlternativeProcedure,oriftheInternalRevenueServicedeniestheSubsidiaryPartnership’smodificationrequestin whole or in part, then the Companyshall give written notice to each Member and Preferred Holder not less thanthirty(30)DayspriortothedatetheCompanymustmakethepaymenttotheSubsidiaryPartnership,settingfortheachMember’sorPreferredHolder’sshare,ifany,oftheAdjustmentLiabilityandthedate
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onwhichtheCompanymustmakethepayment,andeachMemberandPreferredHoldershall,notlaterthanthree(3)BusinessDayspriortothedatetheCompanymustpaytheAdjustmentLiabilitytotheSubsidiaryPartnership,makeapaymenttotheCompanyinreadilyavailablefundsofsuchMember’sorPreferredHolder’sshareoftheAdjustmentLiability. If a Member or Preferred Holder fails to timely make such payment to the Company, then the Failure toComplyRemediesshallapply.
(h) ForthepurposeofdeterminingaMember’sandaPreferredHolder’sCapitalAccount,anyamountofcashotherwisedistributabletoaMemberorPreferredHolderthatisretainedbytheCompanypursuanttothisSection6.26shall be treated as if such cash had been actually distributed to such Member or Preferred Holder pursuant toSection 5.2 or Section 10.5(a), as applicable. Any Adjustment Liability actually remitted or deemed remitted to theCompanybyaMemberorPreferredHolderpursuanttothisSection6.26shallnotincreasesuchMember’sorPreferredHolder’s Capital Account and shall be treated as a reimbursement to the Company by such Member or PreferredHolderofsuchMember’sorPreferredHolder’sshareoftheAdjustmentLiabilitypaidortobepaidbytheCompanytotheInternalRevenueServiceonsuchMember’sorPreferredHolder’sbehalf.
(i) ThePartnershipRepresentativeshallkeeptheBoardofDirectorsapprisedofthestatusofanyCompanyauditorcourtproceeding.
(j) Anyandallreasonableout-of-pocketexpensesincurredbythePartnershipRepresentativeinservingassuchshall be at the Company’s expense and shall be paid by the Company, and notwithstanding anything herein to thecontrary, the Company shall be permitted to pay any such amounts, including through borrowing for such purpose.Notwithstandingtheforegoing,itshallbetheresponsibilityofeachMemberandPreferredHolder,atitsownexpense,toemploytaxcounsel to represent its separate interests. NoMember or PreferredHolder shall file a notice withtheInternalRevenueServiceunderSection6222(c)oftheCodeinconnectionwithsuchMember’sorPreferredHolder’sintention to treat an item on such Member’s or Preferred Holder’s federal income tax return in a manner that isinconsistent with the treatment of such item on the Company’s federal income tax return, unless such Member orPreferred Holder has, not less than thirty (30) Days prior to the filing of such notice, provided the PartnershipRepresentative with a copy of the notice and thereafter in a timely manner provides such other information relatedtheretoasthePartnershipRepresentativeshallreasonablyrequest.
(k) The provisions of this Section 6.26 and a Member’s and Preferred Holder’s obligation to reimburse theCompany pursuant to this Section 6.26 shall survive such Member’s and Preferred Holder’s membership in theCompany and the dissolution, liquidation, winding up, and termination of the Company, and for purposes of thisSection6.26,theCompanyshallbetreatedascontinuinginexistence.TheCompanymaypursueandenforceallrightsandremediesitmayhaveagainstaMemberorPreferredHolderunderthisSection6.26,includinginstitutingalawsuitto collect reimbursement with interest calculated at the Interest Rate. Tothe extent permitted byapplicable law, theprovisionscontainedinthisSection6.26shallbebindingontheCompany’ssuccessorsandassigns.
(l) ThePartnership Representative shall be responsible for representing the Companyin all dealings with anystate,local,orforeigntaxauthorityandshallhavetheauthoritytomakeallstate,local,andforeigntaxelectionsandtosettleanystate,local,orforeigntaxaudits.
(m) Notwithstanding the foregoing provisions of this Section 6.26, without the prior written consent of theSilverMember(whichconsentshallnotbeunreasonablyconditioned,delayedorwithheld)forsolongasamemberofthe Titanium Family Group is the Partnership Representative, or without the prior written consent of the TitaniumFamilyDesignee(whichconsentshallnotbeunreasonablyconditioned,delayedorwithheld)forsolongastheSilverMember designates the Partnership Representative and the Titanium Family Group (together with any FamilyTransferees) continues to own, collectively, twenty-five percent (25%) of the Membership Interests owned by theTitaniumFamilyGroupasoftheEffectiveDate,thePartnershipRepresentativeshallnot:
(i) makeanytaxelections(includingthePush-OutElectionortheFurtherPush-OutElection)ordecisions,in each case, under the New Partnership Audit Rules, including with respect to any Internal Revenue ServiceexaminationoftheCompanycommencedunderSection6231(a)oftheCode;
(ii) makeanydecisiontoinitiateanyadministrativeorjudicialproceedingsinvolvingtheCompanyundertheNewPartnershipAuditRules;
(iii) makearequestforadministrativeadjustmentunderSection6227oftheCode;
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(iv) file a petition for readjustment under Section 6234 of the Code (including choice of judicial forum)withrespecttoafinalpartnershipadministrativeadjustment;
(v) appealanadversejudicialdecision;
(vi) make any decision regarding the compromise, settlement, or dismissal of any of the foregoingproceedings;
(vii) enterintoasettlementagreementwiththeInternalRevenueService;or
(viii) enter intoanymaterial agreement, includingawaiverof thestatuteof limitations, withtheInternalRevenueService;
provided,however,thatforsolongastheSilverMemberdesignatesthePartnershipRepresentativeandtheTitaniumFamily Group (together with any Family Transferees) continues to own, collectively, five percent (5%) of theMembershipInterests ownedbytheTitaniumFamilyGroupasoftheEffectiveDate, thePartnershipRepresentativeshallconsultingoodfaithwiththeTitaniumFamilyDesigneeregardinganyoftheforegoingwithrespecttoataxableperiodforwhichtheTitaniumFamilyGroup(togetherwithanyFamilyTransferees)ownedtwentyfivepercent(25%)oftheMembershipInterestsownedbytheTitaniumFamilyGroupasoftheEffectiveDate.
(n) In furtherance of the foregoing provisions of this Section 6.26, the Partnership Representative shall(i) promptly provide the other Members with copies of all material written notices and communications from theInternalRevenueService,(ii)promptlyinformtheotherMembersofthesubstanceofanymaterialoralcommunicationwiththeInternalRevenueService,(iii)consultregularlywiththeotherMembersandkeepthemapprisedofthestatusofanyauditorcourtproceeding,(iv)providetheSilverMemberwithareasonableopportunitytocommentonwrittensubmissions to the Internal Revenue Service and shall, in good faith, consider any reasonable comments on suchwrittensubmissionsbytheSilverMemberand(v)usereasonablebesteffortstoprovideasinglerepresentativeoftheSilverMembertheopportunitytoparticipateinallscheduledcommunicationsandmeetingswiththeInternalRevenueService. To the extent applicable, this Section 6.26(n) shall applymutatis mutandisto other federal, state, local orforeigntaxproceedingoraudit.
(o) NotwithstandinganythinginthisAgreementtothecontrary,forsolongasamemberoftheTitaniumFamilyGroup is the Partnership Representative, the Partnership Representative and Designated Individual shall consult ingoodfaithwith,andobtaintheconsentof(suchconsentnottobeunreasonablywithheld,conditionedordelayed),theSilverMemberwithrespecttoanyandallmaterialtaxelectionsandactionsanddecisionswithrespecttotaxes(“TaxActions”),includinganyTaxActionwithrespecttothemethodofallocationofProfitsandLossestoCapitalAccountsfor tax purposes, the maintenance of Capital Accounts, any tax election (excluding any election under the NewPartnershipAuditRulesoranyothertaxproceedingoraudit),anymaterialchangeinmethodoftaxaccountingandanymaterialpositiononanytaxreturn(provided,thatanyTaxActionspursuanttoSection5.1(d)(iii)shallbedeemedtobematerial).
(p) ForsolongastheSilverMemberdesignatesthePartnershipRepresentativeandtheTitaniumFamilyGroup(togetherwithanyFamilyTransferees)continuestoown,collectively,fivepercent(5%)oftheMembershipInterestsownedbythe TitaniumFamily Groupas of the Effective Date, the Partnership Representative shall consult in goodfaith with the TitaniumFamily Designee regarding any material change of tax policy or election andany other TaxActionwhichisdisproportionatelyandmateriallyadversetotheTitaniumFamilyGrouptakenasawhole.
(q) Totheextentapplicable,thisSection6.26shallapplymutatis mutandistoanySubsidiariesoftheCompany.
Section 6.27 Security with Respect to Tax Loans.
AnyTaxLoanmadetoaMemberorPreferredHolderpursuanttothisAgreementshallbesecuredbyasecurityinterestinsuchMember’sorPreferredHolder’sMembershipInterest. EachMemberorPreferredHolderreceivingaTaxLoanherebygrantstheCompanyoranAffiliateoftheCompany,asthecasemaybe(each,a“Lender”),asecurityinterestinitsinterestintheCompany,includingasecurityinterestinalldistributionssuchMemberorPreferredHoldermaybeentitledtoreceiveunderthisAgreementandanyandallrightstoconsentunderthisAgreement.TheLenderisherebyauthorizedtoprepareandfileaUCC-1statementcoveringsuchMember’sorPreferredHolder’sMembershipInterestandreflectingthesecurityinterestgrantedtotheLender.AMemberorPreferredHolderreceivingaTaxLoanherebyagrees tocooperate withtheLender andexecute anddeliver, or causeto beexecutedanddelivered, all suchpromissorynotes,securityagreements,financingstatements,transferpowers,
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proxies,instruments,anddocumentsandtakesuchotheractionastheLendermayreasonablyrequestfromtimetotimeto carry out the provisions of this Section 6.27. Each Member or Preferred Holder receiving a Tax Loan grants theLenderanirrevocablepowerofattorneytoexecuteanyandallsuchdocumentsandinstrumentsonsuchMember’sorPreferredHolder’sbehalfintheeventsuchMemberorPreferredHolderfailstotimelyexecuteanddeliveranyoftheforegoing.ThepowerofattorneyherebygrantediscoupledwithaninterestandshallsurvivethegrantingMember’sorPreferredHolder’sdeathordisability.
Section 6.28 Certain Actions.
(a) NotwithstandinganythingtothecontraryinthisAgreement,ifSilverParentisrequiredbyaGovernmentalEntity to sell all or a substantial portion of, otherwise divest all or a substantial portion of, or agree to any otherRegulatory Concession that would have a material adverse effect on, the property described on Schedule VI as the“Restricted Property”asaresultofanActionarisingfromorotherwiserelatingtothetransactionscontemplatedbytheMergerAgreement,andifsellingallorasubstantialportionof,otherwisedivestingallorasubstantialportionof,orsubjectingtoaRegulatoryConcession,thepropertydescribedonScheduleVIasthe“Applicable Company Property”wouldresultinsuchGovernmentalEntitynotrequiringasaleofallorasubstantialportionof,divestitureofallorasubstantialportionoforapplicableRegulatoryConcessionwithrespectto,theRestrictedProperty,then,andonlyinsuchcaseandsubjecttocompliancewiththeprovisionsofSection6.28(c),theSilverDirectorsshallhavetheauthorityto cause the Company and any Company Subsidiary to sell or divest all or a substantial portion of the ApplicableCompanyProperty,ortosubjecttheApplicableCompanyPropertytoaRegulatoryConcession,andtomanage,controlandsettlealldecisionsandactionsoftheCompanyanditsSubsidiarieswithrespectthereto,solongastheCompanyreceivesallofthenetproceedsfromsuchsale,divestitureorRegulatoryConcession(ifany)andsuchnetproceedsaredistributed to the Members in accordance with Sections 10.5(a) (without giving effect to Section 10.5(a)(i)) and10.5(b).
(b) Inaddition,andnotwithstandinganythingtothecontraryinthisAgreement,ifSilverParentortheCompanyisrequiredbyaGovernmentalEntitytosellorotherwisedivestanypropertyofeitherSilverParentortheCompanyoranyoftheirrespectiveSubsidiaries,ortosubjectanysuchpropertytoaRegulatoryConcession,ineachcaseotherthanthe Applicable Company Property (but without derogation of the provisions of Section 6.28(a) as to the ApplicableCompany Property) or the property described on Schedule VI as the “Section 6.28(b) Property”, as a result of anActionarisingfromthetransactionscontemplatedbytheMergerAgreement,then,andonlyinsuchcaseandsubjecttocompliancewiththeprovisionsofSection6.28(c),theSilverDirectorsshallhavetheauthoritytocausetheCompanyand any Company Subsidiary to sell or divest any such property, or to subject such property to a RegulatoryConcession, and to manage, control and settle all decisions and actions of the Company and its Subsidiaries withrespect thereto, so long as the Company receives all of the net proceeds from such sale, divestiture or RegulatoryConcession(ifany)andsuchnetproceedsaredistributedtotheMembersinaccordancewithSections10.5(a)(withoutgiving effect to Section 10.5(a)(i)) and 10.5(b), but provided that any such action by Silver Parent and the SilverDirectorsshallbetakenupon,andonlyupon,theconditionthatSilverParentshallhavereasonablymadethedecisiontosell ordivest suchproperty, ortosubject suchpropertytoaRegulatoryConcession,ingoodfaithandtakingintoaccountthebestinterestsoftheCompanyandofSilverParent.
(c) With respect to any Action commenced by a Governmental Entity that has authority to enforce anyRegulatory Law (as defined in the Merger Agreement) arising from or otherwise relating to the transactionscontemplatedbytheMergerAgreement,eachofSilverParentandtheTitaniumFamilyDesigneeshall(i)consultandcooperate in good faith with each other in connection with (1) any inquiry or Action relating to the transactionscontemplated by the Merger Agreement, including any inquiry or Action initiated by a Governmental Entity and(2)anyfiling,analysis,appearance,presentation,memorandum,brief,argument,responsetoquestionsorinformationor document requests fromany Governmental Entity, and any opinion or proposal made or submitted in connectionwithanysuchinquiryorActionand(ii) keepeachotherinformedaspromptlyaspracticableofanycommunicationreceived from, or given to, any Governmental Entity in connection with any inquiry or Action relating to thetransactionscontemplatedbytheMergerAgreement,orifsuchpartyacquiresknowledge,orotherwisebecomesawareofanysuchinquiryorAction.ExceptasmaybeprohibitedbyanyGovernmentalEntityorbyApplicableLaw,eachofSilverParentandtheTitaniumFamilyDesigneeshallpermittheotherpartyto(A)havereasonableaccessto,andbeconsulted in connection with, any document, opinion or proposal made or submitted to any Governmental Entity inconnection with any Action relating to the transactions contemplated by the Merger Agreement, (B) reviewprior tosubmission drafts of any proposed filing with or submission to (including any response to questions from) anyGovernmentalEntityrelatingtoanysuchActionand(C)participateatorineachmeeting,conferenceor
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telephonecallwitharepresentativeofaGovernmentalEntityrelatingtoanysuchAction.Notwithstandinganythingtothe contrary herein, and without limiting any of the consent or approval requirements contained in this Agreement,solelywithrespecttoanyActioncommencedbyaGovernmentalEntitythathasauthoritytoenforceanyRegulatoryLawarisingfromorotherwiserelatingtothetransactionscontemplatedbytheMergerAgreement,SilverParentshall,followingconsultationwiththeTitaniumFamilyDesigneeinaccordancewiththeprecedingsentence,andsubjecttoSections6.28(a)and(b),(x)direct,deviseandimplementthestrategyforobtaininganynecessaryapprovalof,orforrespondingtoanyrequestfrom,oranyinquiryorActionby(includingdirectingthetiming,natureandsubstanceofallsuchresponses)anyGovernmentalEntitythathasauthoritytoenforceanyRegulatoryLaw,(y)havetherighttoleadall meetings and communications (including any negotiations) with any Governmental Entity that has authority toenforceanyRegulatoryLawand(z)controlthedefenseandsettlementofanyinquiryorActionbroughtbyorbeforeanyGovernmentalEntitythathasauthoritytoenforceanyRegulatoryLaw.
(d) NotwithstandinganythingtothecontraryinthisAgreement,ifconsentfromanythirdpartyisrequiredunderthe Company’s or its Subsidiaries’ mortgage debt in connection with the transactions contemplated by the MergerAgreementbutnotobtainedpriortotheEffectiveDateandsuchmortgagedebthasnototherwisebeenrefinancedbythe Company or a Subsidiary of the Company, then, if the Silver Member so elects, the Company or its applicableSubsidiaryshallrefinancesuchmortgagedebtwithindebtednessfromSilverParentoritsSubsidiaries(otherthantheCompanyanditsSubsidiaries)onsubstantiallysimilartermstobereasonablynegotiatedandagreed,withthecostsofsuchrefinancing(including“breakage”costs)bornebytheCompany.
(e) Notwithstanding anything to the contrary in this Agreement, from and after the effectiveness of thisAgreement, the Company and its Subsidiaries shall not bring any claims under the Merger Agreement other thanpursuanttoArticleIorArticleIIthereof.
Section 6.29 Company Reimbursements.
(a) Withinthirty(30)Daysofthedatehereof,theCompanyshallpay,bywiretransferinimmediatelyavailablefunds, to an account or accounts designated in writing by Silver Parent, on a dollar-for-dollar basis, withoutduplication,(i)theamountofTransactionExpensesthatwerepaidorincurredbyTitaniumoranyofitsSubsidiaries(otherthantheCompanyoranyofitsSubsidiaries)atorpriortothePartnershipMergerEffectiveTime(asdefinedintheMergerAgreement)and(ii)anyamount(includinglegalfees,expertfees,courtcosts,andotherexpenses)paidorincurred by Silver Parent, Titanium or any of their respective Subsidiaries (other than the Company or any of itsSubsidiaries) prior to the Partnership Merger Effective Time in connection with prosecuting, defending, settling orotherwise resolving or attempting to resolve any Action arising from or otherwise relating to the transactionscontemplatedbytheMergerAgreement.
(b) FromtimetotimefollowingthePartnershipMergerEffectiveTime,promptlyfollowingrequestthereforbySilver Parent, the Company shall pay, by wire transfer in immediately available funds, to an account or accountsdesignatedinwritingbySilverParent,onadollar-for-dollarbasis,anyamount(includinglegalfees,expertfees,courtcosts,andotherexpenses)paidorincurredbySilverParentoranyofitsSubsidiaries(otherthantheCompanyoranyof its Subsidiaries) at or from and after the Partnership Merger Effective Time in connection with prosecuting,defending,settlingorotherwiseresolvingorattemptingtoresolveanyActionarisingfromorotherwiserelatingtothetransactionscontemplatedbytheMergerAgreement(includingascontemplatedbySection6.28).
(c) Promptly following the payment by the Company of any liability in connection with the termination ofemploymentorservice(orinconnectionwithany“singletrigger”vestingpursuanttothe2018PlanasdescribedintheOpCommWaiver) of anymember of theOperatingCommittee identified in Exhibit N, ineachcase, that wouldnothave been incurred had such member executed and delivered an OpComm Waiver (an “OpComm Liability”), theTitaniumFamilyGroupshallpay,bywiretransferofimmediatelyavailablefunds,totheCompanyanamountequaltothequotientof(x)theexcessof(A)theproductofsuchOpCommLiabilitymultiplied byfiftypercent(50%)over(B)the product of such OpCommLiabilitymultiplied bythe Percentage Interest of the Titanium Family Group and itsFamilyTransfereesatsuchtimedivided by(y)1minusthePercentageInterestoftheTitaniumFamilyGroupanditsFamilyTransfereesatsuchtime.Inlieuoftheforegoingpayment,theTitaniumFamilyDesigneemayelect,bywrittennoticetotheSilverMember,toreducethedistributionsthatwouldotherwisebepayabletotheTitaniumFamilyGrouppursuanttoSection5.2bytheamountofsuchpayment,onadollar-for-dollarbasis(inwhichcase,fortheavoidanceofdoubt,anydistributionstotheSilverMemberoritsAffiliateswouldnotbesoreduced),withsuchreductionappliedtoeach distribution following the date that such payment otherwise would have been required to be made under thisSection6.29(c)until fullyoffset. An“OpComm Waiver”meansawaiverinsubstantiallytheformattachedheretoasExhibitN.
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Section 6.30 Transfer of Titanium Name.
Withinone(1)yearfollowingthedateonwhichnoCommonUnitsareownedbyanymemberoftheTitaniumFamily Groupor any Family Transferee (the “Name Transfer Date”), the Company shall, and Silver and Silver OPshallcausetheCompanyto:(a)transferanyandalloftheCompany’stitle,rightandinterestinandtothe“Taubman”name, to the extent any such rights exist as of the Name Transfer Date, to a designee selected in writing by theTitaniumFamilyDesigneeand(b)takeallactionsnecessarytochangeitslegal,registered,assumed,tradeand“doingbusiness as” name, as applicable, to a name not containing “Taubman”. For the avoidance of doubt, following theNameTransferDate,neitherSilvernoranyofitsSubsidiaries(includingtheCompanyanditsSubsidiaries)shallusethe “Taubman” name as a legal, registered, assumed, trade or “doing business as” name. Notwithstanding theforegoing,itisunderstoodandagreedthattheCompany,SilverandeachofitsSubsidiariesshallbepermittedtousethe “Taubman” name (i) for fair use purposes or in a factual matter, (ii) in connection with litigation or legalproceedingsor(iii)torefertoordescribethehistoryoftheCompany.
VII.
COMPANY BUSINESS AND STRATEGY; BUSINESS OPPORTUNITIES; COMPANY POLICIES.
Section 7.1 General Acknowledgement.
SubjecttoSections7.2and7.3andthefiduciarydutiesoftheDirectors,OfficersandAuthorizedSignatories,totheextentprovidedforherein,theMembersacknowledgeandagreethateachofthemandtheirrespectiveconstituentsand Affiliates (and Directors appointed by any of them) may have interests in other present or future ventures, ofwhatevernature,includingrealestate,andfurtherincludingventuresthatarecompetitivewiththeCompanyandthat,notwithstandingtheirstatusasaMemberintheCompanyorasaDirector,aMemberandtheirrespectiveconstituentsand Affiliates (and Directors appointed by any of them) shall be entitled to obtain or continue their respectiveindividual participation in all such ventures without (i) accounting to the Company or the other Members for anyprofitswithrespectthereto,(ii)anyobligationtoadvisetheotherMembersofbusinessopportunitiesfortheCompanywhich may come to its or its constituents’ or Affiliates’ attention as a result of its or its Affiliates’ or constituents’participationinsuchotherventuresorintheCompanyand(iii)beingsubjecttoanyclaimswhatsoeveronaccountofsuchparticipation.
Section 7.2 Company Business and Strategy and Business Opportunities.
(a) NotwithstandingSection7.1,solongastheTitaniumFamilyGroup(togetherwithanyFamilyTransferees)continuestoown,collectively,atleastfiftypercent(50%)oftheMembershipInterestsownedbytheTitaniumFamilyGroup as of the Effective Date (subject to any adjustment necessary to account for any split, dividend, distribution,combination, reclassificationorsimilarevent, ineachcase, inrespectoftheMembershipInterests), (i) SilverParentand the Silver Member agree that any business opportunity or venture of any kind (including owning, financing,acquiring,leasingpromoting,developing,improving,operating,managingandservicingrealproperty)firstidentifiedby the Company, its Subsidiaries, the Chief Executive Officer or any other Officer and presented to the Board ofDirectors prior to Silver Parent or its Subsidiaries (other than the Company and its Subsidiaries) identifying suchopportunityorventureotherthanthroughtheBoardofDirectors,theCompanyoritsSubsidiaries,shall(subjecttothisSection7.2(a)) belongsolelytotheCompanyand(ii) without thewrittenconsent of theTitaniumFamilyDesignee,SilverParentandtheSilverMemberandtheirrespectiveAffiliates(otherthantheCompanyanditsSubsidiaries)shallnot pursue, agree to or implement any such opportunities or ventures. In the event that either (x) there is anydisagreementbetweentheTitaniumFamilyDesignee,ontheonehand,andSilverParentortheSilverMember,ontheother hand, regarding whether such business opportunity or venture was first identified by the Company, itsSubsidiaries,theChiefExecutiveOfficeroranyotherOfficerandpresentedtotheBoardofDirectorspriortoSilverParentoritsSubsidiaries(otherthantheCompanyanditsSubsidiaries)identifyingsuchopportunityorventureotherthanthroughtheBoardofDirectors,theCompanyoritsSubsidiariesor(y)theSilverDirectorsreasonablybelievethatsuch opportunity or venture reasonably and logically should be pursued by Silver Parent and its Subsidiaries (otherthan the Company and its Subsidiaries) (including due to there being a bona fide auction for such opportunity orventure), notwithstandingthe prior sentence, the Silver Directors andthe TitaniumDirectors shall negotiate in goodfaithinordertotrytoresolvesuchdisagreementordeterminewhethersuchconditionshavebeensatisfiedandshouldprevail.IfsuchDirectorsareunabletoreachamutuallyacceptableresolutionwithinfifteen(15)
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Daysoftheoccurrenceofsuchdisagreementorforegoingconditionsbeinginvoked,thenthepartiesshallsubmitsuchdispute, and the Titanium Family Designee or Silver Parent or the Silver Member may cause such dispute to besubmitted,tobindingarbitrationinaccordancewiththeprovisionsof,andproceduressetforthin,Section6.22.
(b) IfSilverParentimplementschangestoitsownpoliciesregardinghumanresourcesmatters,internalcontrolsoverfinancialreporting,treasurymattersandothercompliancemattersthatarecontrarytocomparablepoliciesoftheCompany,andifthefailuretoapplysuchpoliciestotheCompanywouldreasonablybeexpectedtoprejudiceSilverParentoranyofitsSubsidiaries(forinstance,bymakingitmoredifficultforSilverParenttocomplywithitsownlegalorotherobligationsasapubliccompany)otherthantoade minimisextent,theCompanyshallseektoimplementsuchchangestoitsowncomparablepolicies,takingintoaccountthebusinessandcultureoftheCompany.
Section 7.3 Non-Compete.
(a) For so long as the Titanium Family Group (together with any Family Transferees) continues to own,collectively, at least two percent (2%) of the outstanding Common Units, and for a one (1)-year period thereafter,neitherRSTnorWSTnoranyotherindividualImmediateFamilymemberofRSTorWSTthatservesorhasservedafter the Effective Date as a Director, Officer or other senior employee of the Company or any Subsidiary of theCompany (collectively, the “Non-Compete Subject Persons”) shall, directly or indirectly, other than in his or hercapacityasaDirector,Officer,AuthorizedSignatory,MemberoremployeeoragentoftheCompany(ineachcase,forthebenefitoftheCompany)orinhisorhercapacityasadirector,officer,manager,employeeoragentofanyoftheCompany’s Subsidiaries (in each case, for the benefit of suchSubsidiary), engage in or operate anybusiness that isdirectlyorindirectlycompetitivewiththeTitaniumBusiness(astheTitaniumBusinesshasbeenconductedpriortoorduringtheTitaniumPeriod)orownanyequityinterestin,ormanageoroperate,anyentitythatengagesinanybusinessthat is directly or indirectly competitive with the Titanium Business (as the Titanium Business has been conductedprior to or during the Titanium Period) (a “Competing Activity” or “Competing Activities”) in each case in anygeographicalarea.Notwithstandingtheforegoing,aCompetingActivityshallnotinclude,andthefirstsentenceofthisSection7.3(a)shallnotapplyto,anybusinessoractivitiessetforthonScheduleIII.
(b) Notwithstandingtheforegoing,Section7.3(a)shallnotprohibitorotherwiseapplytoanyofthefollowingactivitiesandmattersincidentalthereto:
(i) acquisitionsof, ortheholdingof, equityinterests inanyPersonrepresentingfivepercent(5%)orlessduring the Titanium Period or ten percent (10%) or less during the Silver Period of the total equity value andvotingpowerofsuchPersononapassivebasis(exceptthattheforegoingpercentagethresholdmaybeexceededsolelyasaresultoftheproratapurchaseorredemptionbyanissuerofitsownsecurities);or
(ii) acquisitionsof, ortheholdingof, adirect orindirect interest (includingaControllinginterest) inanyPerson that is not “principally engaged in the business of Competing Activities” (as that expression is definedbelow), whether directly or throughone (1) or more of its Affiliates. For the purposes of this Section 7.3(b), aPerson will be deemed to be “principally engaged in the business of Competing Activities” only if either(x)fifteenpercent(15%)ormoreoftheoperatingrevenuesofsuchPersonanditsconsolidatedSubsidiariesforthemostrecenttwelve(12)monthperiodendedbeforethedateofdeterminationwererevenuesderivedfromone(1) or more Competing Activities or (y) five hundred million Dollars ($500,000,000) or more of the operatingrevenuesofsuchPersonanditsSubsidiaries(whetherornotconsolidated)forthemostrecenttwelve(12)monthperiodendedbeforethedateofdeterminationwererevenuesderivedfromone(1)ormoreCompetingActivities.
(c) In the event that the Company, any Officer or any member of the Titanium Family Group identifies anybusiness opportunity or venture of any kind (including owning, acquiring, promoting, developing, improving,operating, managing and servicing real property) in the People’s Republic of China (“New China Business”), theCompany or the Titanium Family Group, as applicable, shall present such New China Business to the Board ofDirectorstoauthorizetheCompanytoconsummateandengageinsuchNewChinaBusiness.AdeterminationbytheBoardofDirectorswithrespecttosuchNewChinaBusinessshallbemadewithinthirty(30)DaysofsuchNewChinaBusiness being presented to the Board of Directors with such detail as is reasonably necessary for the Board ofDirectorstomakesuchdetermination.IntheeventthattheNewChinaBusinessisnotauthorizedbyalloftheSilverDirectors, then, notwithstanding anything to the contrary in Section 7.3(a), RST, WST and each member of theirImmediateFamilies(orentitiesinwhichtheyholdanyinterest)shallbepermittedtoconsummateandengageinandoperatesuchNewChinaBusinesssolelywithinChina(solongassuchactivitiesdonotdisrupttheday-to-day
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activitiesoftheChiefExecutiveOfficerwithrespecttotheCompanyinanymaterialrespect)andtheCompanyshallprovidesuchmanagementanddevelopmentservices(which,fortheavoidanceofdoubt,shallnotincludetheprovisionoffinancing)withrespecttosuchNewChinaBusinessasareapprovedbytheSilverDirectors(suchapprovalshallnotbeunreasonablywithheld,conditionedordelayed),ineachcaseonstandardprevailingmarketterms.
VIII.
TRANSFERS OF MEMBERSHIP INTERESTS; EXCHANGE RIGHTS; REGISTRATION RIGHTS.
Section 8.1 Transfers.
(a) NoMemberor PreferredHolder may, directly or indirectly, Transfer all or anyportionof its MembershipInterestor,ifsuchMemberorPreferredHolderisanentity,permitadirectorindirectTransferofaninterestinsuchMemberorPreferredHolder,toanyPerson,exceptasspecificallypermittedinthisArticleVIIIorasmaybemutuallyagreedinwritingbytheSilverMemberandtheTitaniumFamilyDesignee.AnypurportedTransferinviolationofthisArticleVIIIshallbenullandvoidandineffectiveforallpurposes,andshallnotbindtheCompany.
(b) Notwithstanding Section 8.1(a) but otherwise subject to this Agreement, a Member may, directly orindirectly,TransferalloranyportionofitsMembershipInterest(butnotlessthanone(1)UnitofMembershipInterest)(andaPersonwhoholdsadirectorindirectownershipinterestinaMembermayTransferalloranyportionofsuchPerson’sownershipinterest)toanyotherMember,toanentityconsistingoforownedentirelybyone(1)ormoreoftheforegoingPersons,toawhollyownedSubsidiaryofsuchMember,totheCompany,toanyFamilyTransfereeor,inthecaseoftheSilverMember,toanywhollyownedSubsidiaryofSilverParentorSilverOP.ATransferdescribedinthis Section 8.1(b) is referred to as a “Permitted Affiliate Transfer” and a transferee of such a Permitted AffiliateTransfer is referred to as a “Permitted Transferee”. Notwithstanding anything herein to the contrary, if at any timefollowingaPermittedAffiliateTransferthePermittedTransfereeinsuchPermittedAffiliateTransferceasestoqualifyasaPermittedTransferee,thenallMembershipIntereststhenheldbysuchPermittedTransferee(andallinterestandrights related thereto) will, without any further action required by such Permitted Transferee, be automaticallyTransferred back to the transferor of such Membership Interests, and such former Permitted Transferee and thetransferorshalltakesuchactionastheCompanydeemsappropriatetodocumentandeffectsuchTransfer.Inadditiontotheforegoingandnotwithstandinganythinghereintothecontrary(includingSection8.1(a)),TransfersofownershipinterestsinSilverParentorSilverOPoranychangeinatrusteeofanytrustthatisaMemberorofanytrustthatholdsadirectorindirectinterestinanyMembermaybemadewithoutrestrictionbythetermsofthisAgreement.
(c) NotwithstandingSection8.1(a),theSilverMember(oranyofitsAffiliates)mayTransferanyMembershipInterestsfollowingtheearlierof(x)theseventh(7th)anniversaryofthedateofthisAgreementor(y)thelastdayoftheTitaniumPeriod.Notwithstandinganythinghereintothecontrary,ifnoneofSilverParentoranyitsSubsidiariesholdanyCommonUnitsorifnoSilverParentequitysecuritiesarelistedfortradingonanationalsecuritiesexchange,theExchangingMembers’rightstoreceiveanyconsiderationotherthancashpursuanttoSection8.4shallbedeemedmodifiedsuchthatsuchrightshall,thereafter,onlyrepresenttherighttoreceivecashinanamountthatisdeterminedinaccordancewithSection8.4.
(d) Notwithstanding Section8.1(a), subject to applicable law, eachof the Members andanyPersonholdingadirect or indirect ownership interest in a Member shall be permitted to mortgage, hypothecate, or pledge any of itsMembershipInterestsorsuchownershipinterestsinrespectofone(1)ormorebona fidepurpose(margin)orbona fidenon-purposeloans(each,a“Permitted Loan”).AnyPermittedLoanenteredintobyaMemberoranyoftheforegoingPersonsshallbewithone(1)ormoreResponsibleFinancialInstitutions(oranyotherfinancialinstitutionreasonablyacceptable to the Silver Member) and nothing contained in this Agreement shall prohibit or otherwise restrict theabilityofanylender(oritssecurities’affiliate)orcollateralagenttoforecloseuponandsell,disposeoforotherwisetransferanysuchMembershipInterestsorsuchownershipinterestsmortgaged,hypothecatedorpledgedtosecuretheobligations of the borrower followinganevent of default under a Permitted Loan. Notwithstandingthe foregoingoranything to the contrary herein, in the event that any lender or other creditor under a Permitted Loan transaction(includinganyagentortrusteeontheirbehalf)oranyaffiliateortransfereeoftheforegoingforeclosesonMembershipInterests that constitute collateral for any Permitted Loan, (I) no lender, creditor, agent or trustee on their behalf oraffiliateortransfereeofanyoftheforegoing(otherthan,fortheavoidanceofdoubt,anyMember)
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shallbeentitledtoanyrights(otherthantherightssetforthinSection8.4andSection8.5asthoughsuchPersonwaspartoftheTitaniumFamilyGroup(ortheTitaniumFamilyDesignee)withrespecttosuchMembershipInterests,therightstoreceivethedistributions,returnofcontributionsandallocationswithrespecttosuchMembershipInterestandtherightsunderSection11.12)hereunder,(II)suchMembershipInterestsshallbedeemedTransferredtosuchlender,creditor,agent,trustee,affiliateortransferee(asapplicable)forallpurposeshereunderand(III)suchlender,creditor,agent,trustee,affiliateortransferee(asapplicable)shallbedeemedtheownerofsuchMembershipInterests.
(e) If requested by a Member, the Company and the other Members shall reasonably cooperate with suchMemberwithrespecttoobtaininganyPermittedLoan,includingenteringintocustomaryagreementswithlenderstofacilitatesuchPermittedLoans;provided,however,thatineachcasesuchcooperationdoesnotrequiretheCompanyoranycooperatingMembertoincuranymaterialexpenseorliabilityorprovideanyguaranteeorothercreditsupport(andtheCompanyanditsSubsidiariesshallnotbepermittedtoincuranysuchexpenseorliabilityorprovideanysuchguaranteeorothercreditsupportwithouttheapprovaloftheBoardofDirectors).
Section 8.2 General Provisions Regarding Transfers.
(a) UponanyTransferbyaMemberofallofitsCommonUnits,thatMembershallceasetobeaMemberunderthisAgreement.UponanyTransferbyaPreferredHolderofallofitsPreferredUnits,thatPreferredHoldershallceasetobeaPreferredHolderunderthisAgreement.
(b) NotwithstandinganyotherprovisionofthisAgreement:
(i) NoTransferofMembershipInterestsbyanyMemberorPreferredHolderwillbepermitted,unlessthetransferee in such Transfer (if not already a Member or Preferred Holder) executes an Adoption AgreementconsentingtobecomingaMemberorPreferredHolderandtobeboundbyallprovisionsofthisAgreementthatthetransferorissubjectto.Uponsuchexecution,theCompanyshallcauseScheduleItobeamendedtoaddsuchtransfereeasaMemberorPreferredHolderhereunder;
(ii) No Transfer shall be permitted if such Transfer would (A) cause the Company to be treated as apubliclytradedpartnershipwithinthemeaningofSection7704oftheCodeandRegulationsSection1.7704-1,(B)causetheCompanytobeclassifiedotherthanasapartnershipforfederalincometaxpurposes,(C)causealloranyportionoftheassetsoftheCompanytoconstituteasplanassetsasdefinedinthePlanAssetRegulationunderERISA,or(D)causetheCompanytoberequiredtoregistertheMembershipInterestsundertheExchangeAct,theSecuritiesActorthesecuritieslawsofanynon-U.S.jurisdiction;
(iii) TheTransferofaMembershipInterestinaccordancewiththisArticleVIIIshallentitlethetransfereeonlytoreceivethedistributions,returnofcontributionsandallocationswithrespecttosuchMembershipInterestandnottoanyotherrightsofaMember,exceptasprovidedinSection8.1(d)andSection11.12andexceptthatPermitted Transferees in Permitted Affiliate Transfers and transferees of the Silver Member (or any of itsAffiliates)inTransferspursuanttoSection8.1(c)shallhaveandbeentitledtoexerciseallotherrightswithrespecttosuchMembershipInterest.Fortheavoidanceofdoubt,anyandalltransfereesshallbeboundbytheprovisionsofthisAgreement;
(iv) The transferor and transferee of any Member’s or Preferred Holder’s Membership Interest shall bejointlyandseverallyobligatedtoreimbursetheCompanyforallreasonableexpenses(includinganytransfertaxesand attorneys’ fees and expenses) of any Transfer or proposed Transfer of a Member’s or Preferred Holder’sMembershipInterest,whetherornotconsummated.ThetransfereeofanyMembershipInterestshallbetreatedashavingmadeallofthecapitalcontributionsmadeby,andreceivedalloftheallocationsanddistributionsreceivedby,thetransferorofsuchMembershipInterestinrespectofsuchInterest.
(v) The Transfer of a Member’s Membership Interest in accordance with this Article VIII shall onlybecomevalidfollowingdeliveryofwrittennoticethereoftotheCompanyandtheBoardofDirectors.
Section 8.3 Issuance of Additional Interests in the Company.
At any time after the Effective Date, subject to the terms of this Agreement (including Section 6.19 andSection 6.20), the Company may, upon unanimous approval of the Board of Directors, cause the Company to issueadditional Membership Interests (herein referred to as an “Additional Interest”) in the Company to, and admit as amemberintheCompany(orasaPreferredHolder), anyPersoninexchangeforthecontributiontotheCompanybysuchPersonofdevelopmentorotherventureopportunities,interestsindevelopmentorotherventureopportunities,
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regionalshoppingcenterdevelopments,interestsinregionalshoppingcenterdevelopments,cash,cashequivalentsorotherassets.SubjecttothetermsofthisAgreement(includingSection6.19andSection6.20),theBoardofDirectorsshall beauthorizedonbehalf ofeachoftheMemberstoamendthisAgreementsolelytoreflect theadmissionofanadditionalmemberandthecorrespondingreductioninthePercentageInterestsoftheMembers,ifany.
Section 8.4 Exchange Rights.
(a) TermsofExchangeRight.
(i) UponthetermsandsubjecttotheconditionssetforthinthisSection8.4andthelastsentenceofSection8.1(c),atanytime,andfromtimetotime,followingtheexpirationoftheLockoutPeriod,subjecttoobtainingthepriorwrittenconsentoftheTitaniumFamilyDesignee,theTitaniumFamilyGroupandanyFamilyTransfereesshallhavetherighttotransfertotheCompanyanyorallCommonUnitsownedbytheTitaniumFamilyGroup(oranyFamilyTransferee),but,withrespecttoanyExchange,nolessthananumberofCommonUnitsequaltotenpercent(10%)oftheCommonUnitsownedbytheTitaniumFamilyGroupasoftheEffectiveDate(subjecttoanyadjustmentnecessarytoaccountforanysplit,dividend,distribution,combination,reclassificationorsimilarevent,ineachcase,inrespectoftheCommonUnits)(unlessall oftheCommonUnitsownedbytheTitaniumFamilyGroupandanyFamilyTransfereesarebeingExchanged,inwhichcasetheforegoinglimitationshallnotapply),inexchangefor,attheelectionoftheTitaniumFamilyDesignee,(x)anumberofSilverOPUnits,(y)cash,or(z)amixofSilverOPUnitsandcash,ineachcase,determinedpursuanttothisSection8.4,whichtheCompanyshallpaytosuchExchangingMember(s)inrespectofsuchtransfer.Notwithstandinganythinghereintothecontrary,ifand only if the Titanium Family Group and any Family Transferees submit an Exchange Notice for a TotalTitanium Exchange, Silver OP shall have the option to modify the Per Unit Consideration Election set forththerein to make the Silver Cash Consideration Percentage equal to 50%and the Silver OP Unit ConsiderationPercentageequalto50%(forexample, if theExchangingMemberselect, pursuanttosuchExchangeNotice, toreceivecashasconsiderationforallofsuchExchangeandSilverOPexercisesitsoptiontomodifysuchelectionassetforthinthissentence,theExchangingMembersshallreceive50%oftheconsiderationforsuchExchangeincash and 50%of the consideration for such Exchange in Silver OP Units); providedthat the TitaniumFamilyDesignee shall only be permitted to elect to receive Silver OP Units, and the Silver Member shall only bepermittedtomodifythePerUnitConsiderationElection,ineachcaseiftheSilverOPUnitstobereceivedinsuchExchangeareredeemableorexchangeableforEquitySharesonaone-for-onebasisandtheEquitySharesarethenlistedfortradingonanationalsecuritiesexchange.
(ii) UponthetermsandsubjecttotheconditionssetforthinthisSection8.4andthelastsentenceofSection8.1(c),bydeliveringwrittennotice(a“Call Exchange Notice”)(whichnoticemaynotberevokedoncedelivered)totheTitaniumFamilyDesigneeduring(x)theninety(90)dayperiodimmediatelyfollowingthedateonwhichaQualifiedExpertissuesawrittendecision(the“Triggering Decision”)inwhichtheSilverMemberisdesignatedbysuchQualifiedExpertasthepredominatelyprevailingpartywithrespecttoanyDeadlockwheretheDeadlockNotice was delivered after January 1, 2021 (and provided that a Call Exchange Notice may only be deliveredpursuanttothisclause(x)if(A)aQualifiedExperthasalso,withintheeighteen(18)monthperiodimmediatelyprecedingthe date the DeadlockNotice wasdelivered with respect to the TriggeringDecision, issueda writtendecision (the “Prior Decision”) in which the Silver Member is designated by such Qualified Expert as thepredominately prevailing party with respect to a different Deadlock where the Deadlock Notice was deliveredafter January1, 2021and(B)at least oneoftheTriggeringDecisionorthePriorDecisionwasadecisionwithrespect to a Deadlock where the Deadlock Notice was delivered by the Titanium Family Designee) or (y) theperiod from and after the first date on which the Titanium Family Group and the Family Transferees hold noCommon Units, the Silver Member shall have the right (the “Silver Call Right”) to cause the TitaniumFamilyGroup,anyFamilyTransfereesandallotherMembers(otherthantheSilverMember)totransfertotheCompanyallCommonUnitsownedbythem(inwhichcaseallsuchCommonUnitsshallbedeemedtobeExchangedUnitsand the Titanium Family Group, Family Transferees and such other Members shall be deemed to be theExchangingMembers),inexchangefor,attheelectionoftheSilverMember,(x)anumberofSilverOPUnits,(y)cash,or(z)amixofSilverOPUnitsandcash,ineachcase,determinedpursuanttothisSection8.4,whichtheCompanyshallpaytosuchExchangingMember(s)inrespectofsuchtransfer;provided,thattheTitaniumFamilyDesignee shall have the option to modify the Per Unit Consideration Election set forth in the Call ExchangeNotice(bydeliveringwrittennoticeofsuchmodificationtotheSilverMember
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within thirty (30) days of the delivery of the Call Exchange Notice) to make the Silver Cash ConsiderationPercentageequalto50%andtheSilverOPUnitConsiderationPercentageequalto50%(forexample,iftheSilverMemberelects,pursuanttosuchCallExchangeNotice,topaycashasconsiderationforallofsuchExchangeandthe Titanium Family Designee exercises its option to modify such election as set forth in this sentence, theExchanging Members shall receive 50% of the consideration for such Exchange in cash and 50% of theconsideration for such Exchange in Silver OP Units); provided, further, that the Silver Member shall only bepermittedtoelecttodeliverSilverOPUnits,andtheTitaniumFamilyDesigneeshallonlybepermittedtomodifythe Per Unit Consideration Election, in each case if the Silver OP Units to be received in such Exchange areredeemable or exchangeable for Equity Shares on a one-for-one basis and the Equity Shares are then listed fortradingonanationalsecuritiesexchange.
(iii) On or prior to each Exchange Date, Silver Parent and Silver OP shall contribute or cause to becontributed to the Company, as a capital contribution, sufficient Silver OP Units or cash to satisfy all of theCompany’s obligations set forth in this Section 8.4, and the Company shall provide as consideration for suchcontribution a number of Common Units equal to the number of Common Units subject to the applicableExchange in respect of which such contribution was made; provided that, in the case of an election to receiveSilverOPUnits,SilverOPmay,initsdiscretion,onorbeforetheExchangeDate,bysonotifyingtheExchangingMember in writing no later than the Exchange Date, elect to purchase the CommonUnits being Exchanged bysuchExchangingMemberfromtheExchangingMemberinexchangeforSilverOPUnitsintheamountofthePerUnitConsiderationElectionforeachCommonUnit,andifSilverOPsoelects,theCompanynolongerhasanyobligationspursuanttothisSection8.4withrespecttosuchExchange.ThepartiesheretoacknowledgeandagreethatanyExchangeforSilverOPUnitsshallbetreatedasacontributionbytheExchangingMemberofCommonUnitstoSilverOPinexchangeforSilverOPUnitswithinthemeaningofSection721oftheCode.
(b) DeliveryofExchangeNotices.SubjecttoSection8.4(c),theTitaniumFamilyDesigneemaydeliverwrittennotice (which notice may be revoked at any time (other than an Exchange Notice with respect to a Total TitaniumExchange,asdescribedinthelastsentenceofSection8.4(c)))totheCompany(copyingSilverParentandSilverOP)(an “Exchange Notice”): (i) specifying (A) the name of the member(s) of the Titanium Family Group or FamilyTransferee(s)(ifany)participatingintheExchange(each,an“Exchanging Member”),(B)thenumberofExchangeableUnitstobeexchangedbyeachsuchExchangingMember(the“Exchanged Units”)and(C)theExchangingMembers’selectionofthetypeofPerUnitConsiderationElectiontobereceivedforeachExchangeableUnit(fortheavoidanceofdoubt,suchPerUnitConsiderationElectionmaybeintheformofSilverOPUnits,cashoracombinationthereofand shall be the same for each Exchanged Unit subject to the same Exchange Notice) and (ii) containingrepresentations and warranties by each such Exchanging Member that (A) such Person is the legal owner of theapplicable ExchangedUnits andthat uponthe transfer of theapplicable ExchangedUnits to theCompany, all right,titleandinterestinsuchExchangedUnitswillvestintheCompany,freeandclearofallliens,(B)thedocumentationrelated to the Exchange is duly authorized, executed and delivered by such Person, (C) all consents and approvalsrequired by such Person’s governing documents, if any, to consummate the transactions contemplated by suchExchangeNoticehavebeenobtainedorwillbeobtainedpriortotheapplicableExchangeDate,(D)thedocumentationrelatedtotheExchangeislegal,validandbindingonsuchPersonandisenforceableinaccordancewithitstermsand(E) solely to the extent Silver OP Units are to be provided in such Exchange, other customary representations andwarrantiesreasonablyrequestedbySilverParenttoconfirmthatanexceptionfromregistrationfortheSilverOPUnitsbeingissuedisavailable.Fortheavoidanceofdoubt,anyportionoftheExchangeableUnitswhoseExchangeisbeingrequestedbysuchExchangeNoticebutarenotexchangedduetoexceedingthelimitationssetforthinSection8.4(c),maybesubmittedonanewExchangeNoticeatasubsequentdateonwhichsuchportionoftheExchangeableUnitswhoseExchangeisbeingrequestednolongerexceedsuchlimitations.Notwithstandinganythinghereintothecontrary,noExchangeNoticeshall bevalidunlessaccompaniedbythewrittenconsent oftheTitaniumFamilyDesigneethatsuch Exchange Notice may be submitted. The Titanium Family Designee may not deliver an Exchange NoticefollowingitsdeliveryofanExchangeNoticeforaTotalTitaniumExchangeorthedeliverybytheSilverMemberofaCallExchangeNotice.
(c) Limitations on Exchanges. Except as otherwise agreed in writing by Silver Parent and an ExchangingMemberandexceptasprovidedinthelastsentenceofthisSection8.4(c)withrespecttoaTotalTitaniumExchange,ExchangingMembersshallnotbepermittedtoExchangeanumberofExchangeableUnitspursuanttothisAgreementin excess of the amount determined as set forth under the heading “Amount” in the table below (which amount isexpressedasapercentageoftheCommonUnitsownedbytheTitaniumFamilyGroupasofthe
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Effective Date (subject to any adjustment necessary to account for any split, dividend, distribution, combination,reclassificationorsimilarevent,ineachcase,inrespectoftheCommonUnits)). IfanyExchangeNoticeisrevoked,thennosubsequentExchangeNoticemaybesubmitteduntiltheexpirationofaone-yearperiodfollowingthedeliveryoftheExchangeNoticethatwasrevoked.
Period Amount
Atanytimefollowingthetwo(2)-yearanniversaryoftheEffectiveDate
Upto20%
Atanytimefollowingthethree(3)-yearanniversaryoftheEffectiveDate
Upto40%(inclusiveofanypriorExchanges)
Atanytimefollowingthefour(4)-yearanniversaryoftheEffectiveDate
Upto60%(inclusiveofanypriorExchanges)
Atanytimefollowingthefive(5)-yearanniversaryoftheEffectiveDate
Upto80%(inclusiveofanypriorExchanges)
Atanytimefollowingthesix(6)-yearanniversaryoftheEffectiveDate
Upto100%(inclusiveofanypriorExchanges)
NotwithstandingtheforegoingbutsubjecttoSection8.4(f)(v),fromthetwo(2)-yearanniversaryoftheEffectiveDateuntilthethree(3)-yearanniversaryoftheEffectiveDate(i.e.,between24-36monthsaftertheEffectiveDate),theTitaniumFamilyDesigneemaysubmitanExchangeNotice(whichExchangeNoticeshallbeirrevocable)withrespectto100%oftheCommonUnitsownedbytheTitaniumFamilyGroupandtheFamilyTransferees(suchanExchange,a“Total Titanium Exchange”).
(d) ExchangeofUnits.OntheExchangeDate,theCompany(or,ifapplicable,SilverOP)shalldelivertoeachExchangingMemberthePerUnitConsiderationElectionforeachCommonUnitbeingExchangedbysuchExchangingMember as provided herein and each Exchanging Member shall deliver to Silver OP (or its designee) all of itsCommonUnitsbeingExchanged,freeandclearofallliens.
(e) Determination of Total Equity Value. For purposes of calculating the Exchange Price, the “Total EquityValue”shallbedetermined,asofanyExchangeNoticeDate,inaccordancewiththeprovisionsofExhibitL.
(f) ClosingProcedures;OtherProvisions.
(i) ExchangeDate.SubjecttoSection8.4(g)andSection8.4(f)(v),theclosingofanyExchangeshalloccur,andtheExchangingMembers,theCompany,SilverParentandSilverOPshallcausetheclosingofanyExchangetooccur,assoonasreasonablypracticableaftertherelevantExchangeNoticeDate(butnottobefewerthanten(10)Daysortoexceedthirty(30)DaysfollowingtheExchangeNoticeDate) (thedateonwhichtheclosingofanysuchExchangeoccurs,the“Exchange Date”);providedthat,intheeventthateithertheFFOValuationortheFair Market Value has not been finally determined by such date, then the closing of the Exchange (and theExchange Date) shall occur within five (5) Business Days following the final determination of both the FFOValuationandtheFairMarketValue.Notwithstandingtheforegoingoranythingelsehereintothecontrary,butsubject to theother provisionsof this Section8.4regardingtherescissionof ExchangeNotices, anExchangingMembershallhavetheright,initssolediscretion,torescindanyExchangeNotice(otherthananExchangeNoticewithrespecttoaTotalTitaniumExchange,asdescribedinthelastsentenceofSection8.4(c),whichmaynotberescinded) prior to the closing of the applicable Exchange and not consummate the closing of such Exchange,evenafteranyTotalEquityValuehasbeenfinallydetermined.
(ii) Location. Onthe ExchangeDate, the ExchangingMember(s), the Company, Silver Parent andSilverOPshall effect theclosing(an“Exchange Closing”) of the transactions contemplated bythis Section8.4at theofficesoftheCompanyinthemannersetforthinthisSection8.4(f)oratsuchothertime,atsuchotherplaceandin such other manner as the Titanium Family Designee, Silver Parent and Silver OP, shall mutually agree inwriting.
(iii) ClosingDeliveries.AttheExchangeClosing,paymentofthePerUnitConsiderationElectionshallbeaccompanied by customary instruments of transfer and assignment with respect to each Common Unit beingExchanged (which shall include, with respect to any Exchange pursuant to a Call Exchange Notice,representationsandwarrantiesbyeachsuchExchangingMemberthat(A)suchPersonisthelegalowneroftheapplicable Exchanged Units and that upon the transfer of the applicable Exchanged Units to the Company, allright,titleandinterestinsuchExchangedUnitswillvestintheCompany,freeandclearofallliens,(B)the
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documentationrelatedtotheExchangeisdulyauthorized,executedanddeliveredbysuchPerson,(C)allconsentsand approvals required by such Person’s governing documents, if any, to consummate the transactionscontemplatedbysuchExchangeNoticehavebeenobtainedorwillbeobtainedpriortotheapplicableExchangeDate,(D)thedocumentationrelatedtotheExchangeislegal,validandbindingonsuchPersonandisenforceablein accordancewith its termsand(E) solely to the extent Silver OPUnits are to beprovidedin suchExchange,othercustomaryrepresentationsandwarrantiesreasonablyrequestedbySilverParenttoconfirmthatanexceptionfromregistration for the Silver OP Units being issued is available) and any applicable Silver OP Units and, ifapplicable,totheextentthatsuchCommonUnitsorSilverOPUnitsarecertificated,acertificateorcertificatesevidencing such Common Units or Silver OP Units registered in the name of the Exchanging Member(s);providedthat if Silver OP Units constitute a portion of the Per Unit Consideration Election, each ExchangingMember shall deliver an executed copy of (x) a joinder to the Silver OP Partnership Agreement to Silver OP,whichjoindershallfollowSilverOP’scustomaryformand(y)avotingagreementintheformattachedheretoasExhibitM.
(iv) Term of Exchange Rights. The rights of the parties with respect to Exchanges pursuant to thisSection8.4(the“Exchange Rights”)shallremainineffect,subjecttothetermsofthisAgreement,throughouttheexistence of the Company, subject to the last sentence of Section 8.1(c). Notwithstanding anything in thisAgreementtothecontrary,noneoftheprovisionsofSection8.2(b)shallrestrictorapplytoanyExchange.
(v) TotalTitaniumExchange.NotwithstandinganythinginthisAgreementtothecontrary,inthecaseofaTotalTitaniumExchange,theSilverMembermayelecttomodifythetiming,andonlythetiming,ofsuchTotalTitanium Exchange so that only fifty percent (50%) of the Common Units subject to such Total TitaniumExchange will be Exchanged at the Exchange Closing (the “Initial Total Titanium Exchange Closing”)andtheremaining fifty percent (50%) of such Common Units will be Exchanged one Day prior to the one-yearanniversaryoftheInitialTotalTitaniumExchangeClosing(orearlier,attheSilverMember’selection,onten(10)Days’ prior written notice to the TitaniumFamily Designee) (the “Second Total Titanium Exchange Closing”),withtheprovisionsofSection8.4(a)(iii),Section8.4(d),Section8.4(g)andthisSection8.4(f)(otherthanSection8.4(f)(i)) applying to the Second Total Titanium Exchange Closing mutatis mutandis. The Common UnitsExchangedat theSecondTotal TitaniumExchangeClosingwill beentitledtothesamePerUnit ConsiderationElectionastheCommonUnitsExchangedattheInitialTotalTitaniumExchangeClosing.Bywayofexampleandfor the avoidance of doubt, if the Per Unit Consideration Election paid at the Initial Total Titanium ExchangeClosing is $10 in cash and 2 Silver OP Units, the Per Unit Consideration Election paid at the Second TotalTitanium Exchange Closing will be $10 in cash and 2 Silver OP Units. For the avoidance of doubt, andnotwithstanding anything in this Agreement to the contrary, during the period until they are Exchanged at theSecondTotalTitaniumExchangeClosing,theCommonUnitsthathavenotyetbeenExchangedpursuanttothisSection 8.4(f)(v) shall continue to be outstanding CommonUnits for all purposes of this Agreement, includingwithrespecttoreceivingdistributions,whichshallbedistributedtoeachMemberduringsuchperiodattheratecontemplatedbytheAnnualDistributionPolicyineffectimmediatelypriortotheInitialTotalTitaniumExchangeClosing,withoutgivingeffecttoanyDistributionLimitationEvent.
(g) Cooperation;Consents.EachoftheCompany,theExchangingMembers,SilverParentandSilverOPshallcooperate and use its reasonable best efforts to effect and consummate, in accordance with this Agreement, anyExchange,includingtoobtainanynecessarythirdpartyconsentsandregulatoryapprovals,inconnectionwithorasaresultofanyExchange(itbeingunderstoodandagreedthatnosuchconsentshallbeaconditiontotheclosingofanyExchange); providedthat, notwithstanding anything to the contrary in this Section 8.4, if the Company, anyExchanging Member, Silver Parent or Silver OP is prohibited by law (including by reason of an injunction), theconsequenceofviolationofwhichwouldbeotherthande minimistoSilverParent,anyofitsSubsidiariesoranyoftheirrespectivedirectors,officersoremployees,fromconsummatinganyExchangeuntilapprovalisobtained,oranyapplicable waiting period under the HSR Act (as defined in the Merger Agreement) expires, the Company, anyExchangingMember, SilverParentandSilverOPshall notberequiredtoconsummatesuchExchangeuntil thedatethatisfive(5)BusinessDaysaftersuchapprovalisobtainedorexpirationoccurs,asapplicable.
Section 8.5 Registration Rights.
(a) For so long as Silver Parent has any equity securities listed for trading on a national securities exchange,SilverParentagreesthat,upontherequestoftheTitaniumFamilyDesignee,madeatanytimefollowingdeliveryofanExchangeNotice, Silver Parent shall, solely to the extent permitted byapplicable law, if it has not alreadydoneso,withinninety(90)Daysthereafterfilea“shelf”registrationstatementoraprospectussupplementtoanexisting
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“automaticshelf”registrationstatement,onanappropriateformpursuanttoRule415undertheSecuritiesActoranysimilar rule that maybeadoptedbythe SEC(suchregistration statement, a “Shelf Registration”)andincompliancewithapplicablesecuritieslaws,withrespecttothesaleofRegistrableSecurities(asdefinedbelow)bytheShelfRightsHolders, the sale of which is reasonably expected to result in aggregate gross proceeds of not less than ten millionDollars($10,000,000),inbrokerageordealertransactionsorblocksalesthroughanunderwriterorunderwritersoranyother transactions that may or may not involve an underwritten public offering. Silver Parent shall have the ShelfRegistrationdeclaredeffectiveassoonaspracticableaftersuchfilingand,forsolongasSilverParenthasanyequitysecurities listed on a national securities exchange, shall use reasonable best efforts to keep such Shelf Registrationcontinuously effective following the date on which such Shelf Registration is declared effective for so long as anyRegistrableSecuritiesareoutstanding.ForsolongasSilverParenthasequitysecuritieslistedonanationalsecuritiesexchange, Silver Parent further agrees, if necessary, to supplement (including with any free writing prospectus) ormake amendments to the Shelf Registration, if required by the registration formused by Silver Parent for the ShelfRegistration or by the instructions applicable to such registration form or by the Securities Act or the rules andregulationsthereunder.WithrespecttoanyShelfRegistration,oranysupplementoramendmentthereto,SilverParentshall (i) furnish to the Titanium Family Designee copies of all documents proposed to be filed at least three (3)BusinessDayspriortoitbeingusedorfiledwiththeSECinaccordancewiththisSection8.5and(ii)givereasonableconsiderationtotheinclusioninsuchdocumentsofanycommentsreasonablyandtimelymadebytheTitaniumFamilyDesignee and its advisors (including legal counsel), subject to the Titanium Family Group providing customaryrepresentationsandwarrantiesregardingtheaccuracyofanyinformationprovidedbyitregardingtheTitaniumFamilyGroup;providedthatSilverParentshallincludeinsuchdocumentsanysuchcommentsthatarenecessarytocorrectanuntruestatementofamaterialfactoranomissionofamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleadinginthelightofthecircumstancesthenexistingregardingaShelfRightsHolder,itsbeneficial ownership of equity in Silver Parent, its distribution plans andsimilar related information. For so longasSilver Parent has equity securities listed for trading on a national securities exchange, Silver Parent also shall usereasonablebesteffortstolistsuchRegistrableSecuritiesonanyexchangeonwhichtheEquitySharesaretradingatthetime of such Shelf Registration (if such Registrable Securities are not already so listed and if such listing is thenpermitted under the rules of such exchange) to the extent required. Notwithstanding the foregoing, if Silver ParentdeterminesingoodfaiththatitwouldbedisadvantageousinanymaterialrespecttoSilverParentanditsstockholdersfor any such Shelf Registration to be amended or supplemented, Silver Parent may defer such amending orsupplementingofsuchShelfRegistrationfornotmorethanninety(90)Days(andnotmorethanatotalofonehundredandtwenty(120)Daysinanytwelve(12)monthperiod)andinsucheventtheShelfRightsHoldershallberequiredtodiscontinue disposition of any Registrable Securities covered by such Shelf Registration during such period. SilverParent shall use commercially reasonable efforts to cooperate with a Shelf Rights Holder in respect of any sale ofRegistrableSecuritiespursuanttotheShelfRegistration,includingusingcommerciallyreasonableeffortstoenterintocustomary underwriting or other agreements in connection therewith and request its auditors to provide customarycomfortlettersandlegaladvisorstoprovidecustomarylegalopinionsinconnectiontherewith.
(b) ThesecuritiesentitledtothebenefitsofthisSection8.5aretheEquitySharesthatmaybeissuedfromtimeto time upon the exchange or redemption of Silver OP Units that have been received in an Exchange pursuant toSection 8.4 (the “Registrable Securities”) but, with respect to any particular Registrable Security, only so long as itcontinuestobeaRegistrableSecurity.ForthepurposesofthisAgreement,asecuritythatwasatonetimeaRegistrableSecurity shall cease to be a Registrable Security when (i) such security has been effectively registered under theSecurities Act, andeither (A)the registration statement with respect thereto has remained continuously effective forone hundred eighty (180) Days or (B) such security has been disposed of pursuant to such registration statement,(ii)suchsecurityisorcanbeimmediatelysoldtothepublicinrelianceonRule144(oranysimilarprovisiontheninforce)undertheSecuritiesActwithoutanyrestrictionorlimitation,or(iii)suchsecurityhasceasedtobeoutstandingorownedbyaShelfRightsHolder.
(c) SilverParentshallpayallexpensesincidenttotheShelfRegistration,including(i)allSEC,stockexchangeand National Association of Securities Dealers, Inc. registration, filing and listing fees, (ii) all fees and expensesincurredincomplyingwithsecurities or“bluesky”laws(includingreasonablefeesanddisbursements ofcounsel inconnection with “blue sky” qualifications of the Registrable Securities), (iii) all printing, messenger and deliveryexpenses,(iv)allfeesanddisbursementsofSilverParent’sindependentpublicaccountantsandcounseland(v)allfeesandexpensesofanyspecialexpertsretainedbySilverParentinconnectionwiththeShelfRegistrationpursuanttothetermsofthisSection8.5,regardlessofwhethersuchShelfRegistrationbecomeseffective,unlesssuchShelf
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RegistrationfailstobecomeeffectiveasaresultofthefaultoftheShelfRightsHolders;provided,however,thatSilverParent shall not paythe costs andexpenses of anyShelf Rights Holder relating to brokerageor dealer fees, transfertaxesorthefeesorexpensesofanycounsel’saccountantsorotherrepresentativesretainedbytheShelfRightsHolders.
IX.
WITHHOLDING AND DOCUMENTATION.
Section 9.1 Withholding.
If any local, state, federal, or foreign law or regulation requires the Company to withhold tax attributable toallocations of Profits or items of the foregoing or distributions to a Member or Preferred Holder (all such amountsbeinghereinreferredtocollectivelyasthe“Withholding Tax”),(i)anyWithholdingTaxshallbewithheldfromcashotherwisecurrentlydistributable tosuchMemberorPreferredHolderpursuant toSection5.2orSection10.5(a) and(ii) to theextent cashis not distributable tosuchMemberor PreferredHolder withinthetaxable periodas towhichsuchwithholdingisrequired(i.e.,quarterly,semi-annually,orannually),suchMemberorPreferredHoldershallmakeapaymenttotheCompanyinreadilyavailablefundswithinten(10)DaysafterwrittennoticefromtheCompanyofsuchMember’sorPreferredHolder’sWithholdingTax.IntheeventaMemberorPreferredHolderfailstotimelyremittheWithholdingTax,theFailuretoComplyRemediesshallapply.
ForthepurposeofdeterminingaMember’sorPreferredHolder’sCapitalAccount,anyamountofcashotherwisedistributable to a Member or Preferred Holder that is retained bythe Companypursuant to this Section 9.1 shall betreatedasifsuchcashhadbeenactuallydistributedtosuchMemberorPreferredHolderandremittedtotheCompany.Any amount remitted to the Company for payment of a Tax Loan made by the Company (or its Affiliate) shall betreated as a payment to the Company (or its Affiliate) as a lender and from the Member or Preferred Holder as aborrower.AnyamountofcashdeemedremittedoractuallyremittedtotheCompanybyaMemberorPreferredHolderpursuanttothisSection9.1shallnotconstituteacapitalcontributionandshallnotincreaseaMember’sorPreferredHolder’sCapitalAccount.
Theprovisionsof this Section9.1shall survivea Member’s membershipintheCompany, a PreferredHolder’sownership of Preferred Units and the dissolution, liquidation, winding up, and termination of the Company, and forpurposesofthisSection9.1,theCompanyshallbetreatedascontinuinginexistence.TheCompanymaypursueandenforce all rights and remedies it mayhave against a Member or Preferred Holder under this Section 9.1, includinginstitutingalawsuittocollectsuchreimbursementwithinterestcalculatedattheInterestRate.Totheextentpermittedbyapplicablelaw,theprovisionsofthisSection9.1shallbebindingontheCompany’ssuccessorsandassigns.
Section 9.2 Documentation.
Each Member and Preferred Holder agrees to furnish the Company with any representations, forms, orinformation,includinganupdatedInternalRevenueServiceFormW-9orFormW-8BENorequivalentcertificate,asapplicable,asshallreasonablyberequestedbytheCompanyfromtimetotime(i)toassisttheCompanyindeterminingtheextentof,andinfulfilling,itswithholding,reporting,orothertaxobligations,includinganyobligationsundertheForeignAccount TaxCompliance Act or equivalent lawof anyother jurisdiction, (ii) as will permit distributions orallocationsofincomemadetoorbytheCompanytobemadewithoutwithholdingoratareducedrateofwithholding,(iii)toreducetheamountoftaxbornebytheCompany,or(iv)thatisnecessarytoensurecompliancewithanylawsorregulations applicable to the Company or its business, including the laws of any foreign jurisdiction affecting theabilityoftheCompanytoclaimthebenefitofanincometaxtreatywithsuchjurisdiction.EachMemberandPreferredHolder(A)representsandwarrantstotheCompanythatsuchinformationandformsfurnishedbysuchPersonareandatalltimesshallbetrue,correct,andcompleteand(B)agreestopromptlyupdateanysuchinformationorforms(x)ifatanytimesuchPersonbecomesawarethatsuchpreviouslyprovidedinformationorformsarenolongertrue,correct,andcompleteor(y)ifrequestedtodosobytheCompany.
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X.
DISSOLUTION OF THE COMPANY, WINDING UP, AND LIQUIDATION.
Section 10.1 No Dissolution.
TheCompanyshallnotbedissolvedbythewithdrawalofanyMemberortheadmissionofadditionalMembersinaccordancewiththetermsofthisAgreement.
Section 10.2 Events Causing Dissolution.
(a) The Company shall be dissolved upon and its affairs shall be wound up upon the earliest to occur of thefollowingevents:
(i) theunanimouswrittenagreementofalloftheMembers;
(ii) totheextentpermittedbythisAgreement,thesaleorotherdispositionofallorsubstantiallyalloftheassets of the Company, in which case the Company shall dissolve upon the expiration of any possibleindemnificationobligationsresultingfromasaleofitsassets;or
(iii) dissolutionrequiredundertheAct.
(b) ExceptassetforthinSection10.2(a),dissolutionoftheCompanyshallbeeffectiveasofthedayonwhichtheeventoccursgivingrisetothedissolution,buttheCompanyshallnotterminateuntiltherehasbeenawindingupoftheCompany’sbusinessandaffairsandtheassetsoftheCompanyhavebeendistributedasprovidedinSection10.3.
Section 10.3 Bankruptcy of a Member.
TheoccurrenceofanyeventdescribedinSection18-304oftheActshallnotinandofitselfcausesuchMembertoceasetobeamemberoftheCompany.
Section 10.4 Winding Up.
(a) Subject to Section 18-803(a) of the Act, in the event of the dissolution of the Company pursuant toSection10.2,theCompany’saffairsshallbewoundupbyaliquidatingagentoftheCompanyselectedbytheBoardofDirectors (in such capacity, the “Liquidating Agent”), which Liquidating Agent shall be an individual who isknowledgeableaboutbusinessessimilar tothoseoftheCompanyandhassubstantial experienceinthepurchaseandsaleofbusinesses.ThecostsofwindingupshallbebornebytheCompany.
(b) Upon dissolution of the Company and until the filing of a certificate of cancellation as provided inSection18-203oftheAct,theLiquidatingAgentmay,inthenameof,andforandonbehalfof,theCompany,exercisereasonablediscretionto(unlesssuchdiscretionisotherwiselimitedbythisArticleX)prosecuteanddefendlawsuits,whether civil, criminal or administrative, settle and close the Company’s business, dispose of and convey theCompany’s property or sell any of the Company’s Subsidiaries, discharge or make reasonable provision for theCompany’s liabilities, and distribute, subject to the terms of any Preferred Unit Designation, to the Members inaccordance with Section 10.5 andwithout imposing anyliability onthe Liquidating Agent, all without affecting theliabilityofMembersandwithoutimposinganyliabilityontheLiquidatingAgent.
(c) Except as otherwise provided in this Agreement, the Members shall continue to share distributions andallocationsduringtheperiodofliquidationinthesamemannerasbeforethedissolution.
(d) Areasonable time period shall be allowed for the orderly winding up and liquidation of the assets of theCompany and the discharge of liabilities to creditors so as to enable the Liquidating Agent to seek to minimizepotentiallossesuponsuchliquidation;provided,however,thattheLiquidatingAgentshallproceeddiligentlytowinduptheaffairsoftheCompanyandmakefinaldistributionsasprovidedhereinandintheAct.Aspromptlyaspossibleafterdissolutionandagainafterfinalliquidation,theLiquidatingAgentshallcauseaproperaccountingtobemadebyarecognizedfirmofcertifiedpublicaccountantsoftheCompany’sassets,liabilitiesandoperationsthroughthelastdayof the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable. TheprovisionsofthisAgreementshallremaininfullforceandeffectduringtheperiodofwindingupanduntilthefilingofacertificate of cancellationoftheCompanywiththeSecretaryofStateof theStateof Delawareinaccordancewithclause(e)below.
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(e) UponthecompletionofthewindingupoftheCompany,anyDirectorortheLiquidatingAgentorotherdulydesignatedrepresentativeshallfileacertificateofcancellationoftheCompanywiththeSecretaryofStateoftheStateofDelawareasprovidedinSection18-203oftheAct.
Section 10.5 Distribution of Assets.
(a) As soon as practicable upon dissolution of the Company, subject to the terms of any Preferred UnitDesignation,theassetsoftheCompany(orliquidationproceeds)shallbedistributedinthefollowingmannerandorderofpriority(andratablywithineachlevelofpriority):
(i) first, tocreditorsoftheCompany,includingMembersandPreferredHolderswhoarecreditors, totheextent otherwise permitted by law, in satisfaction of liabilities of the Company (whether by payment or themaking of reasonable provision for payment thereof) other than liabilities for which reasonable provision forpaymenthasbeenmadeandliabilitiesfordistributionsunderArticleV;and
(ii) second, to the Members and Preferred Holders in accordance with and in proportion to the positivebalances in their Capital Accounts, after giving effect to all contributions, distributions, allocations andadjustmentsforallperiods.
(b) ItistheintentionofthepartiesthatfinalCapitalAccountbalancesoftheMembersandPreferredHoldersinrespect of their Membership Interests will permit liquidating distributions to be made (after the satisfaction of theliabilities,debtsandobligationsoftheCompanytocreditorspursuanttoSection10.5(a)(i))pro ratainaccordancewiththeirrespectivePercentageInterestsand,inthecaseofPreferredHolders,inaccordancewiththeeconomicentitlementof the Preferred Units. Theallocations anddistributions providedfor in this Agreement are intendedto result in theCapitalAccountofeachMemberandPreferredHolderinrespectofitsMembershipInterestimmediatelypriortothedistributionoftheCompany’sassetspursuanttothisSection10.5(b)(afterthesatisfactionoftheliabilities,debtsandobligations of the Company to creditors pursuant to Section 10.5(a)(i)) being equal to the amount that would bedistributable to such Member in accordance with its Percentage Interest and, in the case of Preferred Holders, inaccordancewiththeeconomicentitlementofthePreferredUnits.TheCompanyisauthorized,totheextentpossible,tomakeappropriateadjustmentstotheallocationofitemsofincome,gain,lossanddeductionasnecessarytocausetheamountofeachMember’sandPreferredHolder’sCapitalAccountinrespectofitsMembershipInterestimmediatelypriortothedistributionoftheCompany’sassetspursuanttothisSection10.5(afterthesatisfactionoftheobligationsof the Company to creditors pursuant to Section 10.5(a)(i)) to equal the amount that would be distributable to suchMemberinrespectofitsMembershipInterestinaccordancewithitsPercentageInterestand,inthecaseofPreferredHolders,inaccordancewiththeeconomicentitlementoftheirPreferredUnits.
(c) Notwithstanding anything to the contrary contained in this Agreement, if any Member which, by writtennoticetotheCompany,initssolediscretion,electstobeboundbythisSection10.5(c)shallhaveanegativebalanceinitsCapitalAccountuponliquidationoftheCompanyoruponliquidationofitsMembershipInterest,aftergivingeffecttotheallocationofallProfits,Losses,gainorlossanditemsoftheforegoingunderSection5.1andalldistributionstotheMemberspursuanttoSection5.2ineachcaseforallCompanyFiscalYearsthroughandincludingtheCompanyFiscal Year of such liquidation, such Member shall be obligated to make an additional capital contribution to theCompanybytheendoftheCompanyFiscalYearofliquidation(or,iflater,withinninety(90)Daysafterthedateofsuchliquidation),inanamountsufficienttoeliminatethenegativebalanceinitsCapitalAccount.ForpurposesofthisSection10.5(c),“liquidation”shallbeasdefinedinRegulationsSection1.704-1(b)(2)(ii)(g).
(d) In connection with a liquidation of a Member’s or Preferred Holder’s interest in the Company within themeaning of Regulations Section 1.704-1(b)(2)(ii)(g) that is not in connection with a liquidation of the Company,distributionstosuchMemberorPreferredHoldershall bemadeinaccordancewiththerequirements ofRegulationsSection1.704-1(b)(2)(ii)(b)(2).
Section 10.6 Cancellation of Certificates.
AlldocumentsandrecordsoftheCompany,includingallfinancialrecords,vouchers,canceledchecksandbankstatements,shallbedeliveredtotheSilverMemberupondissolutionoftheCompany.TheSilverMembershallretainsuchdocumentsandrecordsforaperiodofnotlessthanseven(7)yearsandshallaffordaccesstosuchdocumentsandrecords to each Member (or former Member), except and to the extent that the Silver Member believes, in itsreasonablegoodfaithjudgment,thatdoingsowould(i)resultinthelossofattorney-client,workproductorother
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privilege, (ii) result in the disclosure of any trade secrets of third parties or violate any obligations of the SilverMemberoritsSubsidiarieswithrespecttoconfidentialitytoanythirdparty,orotherwisebreach,contraveneorviolateanysuchcontracttowhichtheSilverMemberoranyofitsSubsidiariesisapartyor(iii)breach,contraveneorviolateany applicable law; provided, further, that the Silver Member shall use its reasonable best efforts to cause suchinformationtobeprovidedinamannerthatwouldnotviolatetheforegoing.
Section 10.7 Disposition of Documents and Records.
After the affairs of the Company have been wound up, the property and assets of the Company have beenliquidated,andtheproceedsthereofhavebeenappliedanddistributedasprovidedinSection10.4(a)andtheCompanyhas been terminated, appropriate Persons shall, if required by law, execute and file an assumed or fictitious namecertificate (or a similar writing) to effect the cancellation, of record, of the certificate(s) of Members or PreferredHoldersoftheCompany(orsimilarwriting),andtheMembershipInterestCertificates.
XI.
MISCELLANEOUS.
Section 11.1 Notices.
(a) Anyandall notices, approvals, directions, consents, offers, demands, waivers, claims, elections, andothercommunications (herein sometimes referred to collectively as the “Communications” and individually as a“Communication”)requiredorpermittedunderthisAgreementshallbedeemedadequatelygivenonlyifinwritingandincompliancewithSections11.1(b)and(c),below.
(b) AllCommunicationstobesenthereundershallbedeemedtohavebeengiven:(a)ifdeliveredbyhand(withdelivery receipt required), (b) if sent by email transmission (confirmation of receipt requested), (c) if mailed bycertified mail, return receipt requested, postage prepaid or (d) if sent by Federal Express or similar nationallyrecognized expedited overnight commercial carrier or courier. Such Communications must be sent to the respectiveparties at the following addresses (or at such other address for a party as shall be specified in a notice given inaccordancewiththisSection11.1):
IftotheCompany: [COMPANYADDRESS]
Email:[EMAILADDRESS]
Attention:[TITLEOFOFFICERTORECEIVENOTICES]
withacopyto: [COMPANYLAWFIRMANDADDRESS]
Email:[EMAILADDRESS]
Attention:[ATTORNEYNAME]
and
eachoftheSilverMemberandtheTitaniumFamilyDesignee,atitsrespectivemailingaddressoremailaddress,assetforthonScheduleI.
IftoaMember: TosuchMember'srespectivemailingaddressoremailaddress,assetforthonScheduleI.
(c) All Communications shall be deemed to have been properly given or served: (i) if delivered by hand ormailed,onthedateofreceiptordateofrefusaltoacceptshownonthedeliveryreceiptorreturnreceipt,(ii)ifdeliveredbyFederalExpressorsimilarnationallyrecognizedexpeditedovernightcommercialcarrierorcourier,onthedatethatis one(1) Business Dayafter the date uponwhichthe sameshall havebeendelivered to Federal Express or similarnationally recognized expedited overnight commercial carrier, addressed to the recipient, with all shipping chargesprepaid;providedthatthesameisactuallyreceived(orrefused)bytherecipientintheordinarycourseand(iii)ifsentbyemail,onthedatesuchemailissent;providedthateither(x)receiptisconfirmedor(y)noticeisgiven
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by alternative means in accordance with this Section 11.1 on the next Business Day. The time to respond to anyCommunication given pursuant to this Agreement shall run from the date of receipt or confirmed delivery, asapplicable.
(d) BygivingtotheBoardofDirectorswrittennoticethereof,thepartiesheretoandtheirrespectivesuccessorsandassigns shall have the right fromtimeto timeandat anytimeduring the termof this Agreement to change thePersonto receive Communications andtheir respective addresses effective uponreceipt bythe other parties of suchnoticeandeachshallhavetherighttospecifyasitsaddressanyotheraddresswithintheUnitedStatesofAmerica.
Section 11.2 Applicable Law.
ThisAgreementshallbegovernedbyandconstruedinaccordancewith,thelaws(otherthanthelawgoverningchoiceoflaw)oftheStateofDelaware.Intheeventofaconflict betweenanyprovisionofthisAgreementandanynon-mandatory provision of the Act, the provision of this Agreement shall control and take precedence. Each partyheretoirrevocablysubmitstotheexclusivejurisdictionoftheCourtofChanceryoftheStateofDelaware(or,solelyifsuchcourt declines jurisdiction, in any federal court located in the State of Delaware) any andall claims, demands,Actionsarisingout of or relatingtothis Agreement, andherebyirrevocablyagreesthat all claimsinrespect of suchclaim, demand, action, suit or proceeding may be heard and determined in such court. Each party hereto herebyirrevocably waives, to the fullest extent that it may effectively do so, the defense of an inconvenient forum to themaintenance of such Action. The parties hereto further agree, (i) to the extent permitted by law, that final andunappealablejudgmentagainstanyoftheminanyActioncontemplatedaboveshallbeconclusiveandmaybeenforcedinanyotherjurisdictionwithinoroutsidetheUnitedStatesbysuitonthejudgment,acertifiedcopyofwhichshallbeconclusiveevidenceofthefactandamountofsuchjudgmentand(ii) thatserviceofprocessuponsuchpartyinanysuchActionshallbeeffectiveifnoticeisgiveninaccordancewithSection11.1.
Section 11.3 WAIVER OF JURY TRIAL.
EACHPARTYHERETO, FOR ITSELF ANDONBEHALF OF ITS AFFILIATES, HEREBYWAIVES ITSRIGHT TO TRIAL BY JURY IN ANY ACTION RELATING TO ANY DISPUTE ARISING UNDER OR INCONNECTIONWITHTHISAGREEMENTORANYTRANSACTIONDESCRIBEDINTHISAGREEMENTORDISPUTEBETWEENTHEPARTIES(INCLUDINGDISPUTESWHICHALSOINVOLVEOTHERPERSONS).
Section 11.4 Entire Agreement.
This Agreement (including the Exhibits and Schedules hereto) and that certain letter agreement regardingoperatingandcapexbudgets,datedasofFebruary9,2020,byandamongtheCompany,SilverandRST,containtheentireagreementamongthepartiesheretorelativetotheCompany.IntheeventofaconflictbetweenthisAgreementandaPreferredUnitDesignation,thePreferredUnitDesignationshallcontrol.
Section 11.5 Word Meanings; Gender.
The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” and words of similar import refer to thisAgreement as a whole and not merely to a subdivision in which such words appear, unless the context otherwiserequires.Thesingularshallincludethepluralandthemasculinegendershallincludethefeminineandneuter,andviceversa,unlessthecontextotherwiserequires.AnycapitalizedtermusedinanyExhibitbutnototherwisedefinedthereinshall have the meaning assigned to such term in this Agreement. Whenever the words “include,” “includes” or“including”areusedinthisAgreement, theyshall bedeemedtobefollowedbythewords“withoutlimitation.”Theterm“or”isnotexclusive.Theword“extent”inthephrase“totheextent”shallmeanthedegreetowhichasubjectorotherthingextends,andsuchphraseshallnotmeansimply“if.”Anyagreement,instrumentorapplicablelawdefinedorreferredtohereinmeanssuchagreement,instrumentorapplicablelawasfromtimetotimeamended,modifiedorsupplemented, in each case, in accordance with its terms and this Agreement and unless otherwise specificallyindicated. Anyreferences hereintoSections856through860orSection4981oftheCodeshall, ineachcase, meansuchprovisionsasmaybeamendedfromtimetotime,orcorrespondingprovisionsofsucceedinglaw.
Section 11.6 Section Titles.
Section titles andother headings, the table of contents andindexof definedterms, are for descriptive purposesonlyandshallnotcontroloralterthemeaningofthisAgreementassetforthinthetext.
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Section 11.7 Waiver.
Noconsentorwaiver,expressorimplied,byapartyheretotoorofanybreachordefaultbyanyotherpartyheretointheperformance bysuchother party of its obligations hereunder shall be deemedor construedto bea consent orwaivertoorofanyotherbreachordefaultintheperformancebysuchotherpartyofthesameoranyotherobligationof such party hereunder. Failure on the part of a party to object to any act or failure to act of any other party or todeclare such other party in default, irrespective of howlong such failure continues, shall not constitute a waiver bysuchpartyofitsrightshereunder.
Section 11.8 Separability of Provisions.
Everyprovisionofthis Agreement is intendedtobeseverable totheextent that its absencedoesnot materiallyalter therights, duties andobligations of theparties or materially affect relatedprovisionsof this Agreement. If anyterm or provision hereof is declared or held illegal or invalid, in whole or in part, for any reason whatsoever, suchillegality or invalidity shall not affect the validity or enforceability of the remainder of this Agreement, and suchprovisionshallbedeemedamendedormodifiedtotheextent,butonlytotheextent,necessarytocuresuchillegalityorinvalidityinamannerthatmostcloselyapproximatestheoriginalintentofthepartieshereto.Uponsuchdeterminationofillegalityorinvalidity,thepartiesheretoshallnegotiateingoodfaithtoamendthisAgreementtoeffecttheoriginalintentofthepartieshereto.
Section 11.9 Binding Agreement.
SubjecttotherestrictionsonTransferssetforthherein,thisAgreementshallinuretothebenefitofandbebindingupon the undersigned parties and their respective heirs, executors, personal representatives, successors, and assigns;providedthattherightsgrantedhereundermayonlybetransferredinaccordancewithArticleVIII.
Section 11.10 Equitable Remedies.
ExceptasotherwiseprovidedinthisAgreement,therightsandremediesofthepartiesheretohereundershallnotbe mutually exclusive, i.e., the exercise of a right or remedyunder anygivenprovisionhereof shall not precludeorimpairexerciseofanyotherrightorremedyhereunder.EachofthepartiesheretoconfirmsthatdamagesatlawmaynotalwaysbeanadequateremedyforabreachorthreatenedbreachofthisAgreementandagreesthat,intheeventofabreach or threatened breach of any provision hereof, the respective rights and obligations hereunder shall beenforceablebyspecificperformance,injunction,orotherequitableremedy,butnothinghereincontainedisintendedto,norshallit,limitoraffectanyrightsatlaworbystatuteorotherwiseofanypartyaggrievedasagainsttheotherforabreachorthreatenedbreachofanyprovisionhereof.
Section 11.11 Partition.
NoMember or Preferred Holder nor any successor-in-interest to a Member or Preferred Holder shall have therightwhilethisAgreementremainsineffecttohaveanypropertyoftheCompanypartitioned,ortofileacomplaintorinstituteanyproceedingatlaworinequitytohavesuchpropertyoftheCompanypartitioned,andeachMemberandeach Preferred Holder, on behalf of itself and its successors and assigns, hereby waives any such right. It is theintentionoftheMembersandPreferredHolderthattherightsofthepartiesheretoandtheirsuccessors-in-interesttoCompanyproperty,asamongthemselves,shallbegovernedbythetermsofthisAgreement,andthattherightsoftheMembers, the Preferred Holders and their successors-in-interest to Transfer any interest in the Company shall besubjecttothelimitationsandrestrictionssetforthinthisAgreement.
Section 11.12 Amendment.
(a) ThisAgreementandtheCertificateofFormationmaynotbeamendedormodifiedatanytime(whetherbymerger, consolidation or otherwise), other than, subject to Section 6.19, Section 6.20 and Section 11.12(b), by aninstrumentunanimouslyapprovedbytheBoardofDirectorsandsignedbyeachDirector.
(b) Notwithstanding Section 11.12(a), (i) the prior written consent of a Member shall be required for anamendment of this Agreement if suchamendment would adversely andmaterially affect the rights or obligations ofsuch Member and (ii) the prior written consent of RST and WST shall be required for any amendment of (A) thisAgreementifsuchamendmentadverselyaffectstherightsorobligationsofsuchPersonor(B)Section6.30.
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(c) For the avoidance of doubt, Preferred Holders shall have no voting, approval or consent rights under thisSection11.12,exceptasmaybeexpresslyspecifiedinthePreferredUnitDesignationrelatedtosuchclassorseriesofPreferredUnits.
Section 11.13 No Third-Party Rights Created Hereby.
TheprovisionsofthisAgreementaresolelyforthepurposeofdefiningtherightsandobligationsoftheMembers,PreferredHolders,SilverParentandSilverOP,andtheinterestsoftheMembersandPreferredHolders,interse;andnootherperson,firm,orentity(i.e., apartywhoisnotasignatoryheretoorapermittedsuccessortosuchsignatoryhereto)shallhaveanyright,power,title,orinterestbywayofsubrogationorotherwiseinandtotherights,powers,titles, and provisions of this Agreement; provided, that (i) the Preferred Holders shall be intended third partybeneficiariesofSection5.2(e),(ii)theIndemnifiedPersonsshallbeintendedthirdpartybeneficiariesofSection6.25,(iii) any Affiliate of the Company that is a Lender shall be intended third party beneficiaries of Section 6.27 and(iv)theAlternativeIndemnitorsshallbeintendedthirdpartybeneficiariesofSection6.25(m),ineachcaseofclauses(i)through(iv),withfullrightsofenforcement(includingpursuanttoSection11.10).
Section 11.14 Agreement in Counterparts.
ThisAgreementmaybeexecutedintwo(2)ormorecounterparts,allofwhichassoexecutedshallconstituteone(1)Agreement,bindingonallofthepartieshereto,notwithstandingthatallthepartiesarenotsignatorytotheoriginalorthesamecounterpart;provided,however,thatnoprovisionofthisAgreementshallbecomeeffectiveandbinding,unlessanduntilallpartiesheretohavedulyexecutedthisAgreement,atwhichtimethisAgreementshallthenbecomeeffectiveandbindingasofthedatefirstabovewritten.
Section 11.15 Attorneys-In-Fact.
AnyMemberorPreferredHoldermayexecuteadocumentorinstrumentortakeanyactionrequiredorpermittedtobeexecutedortakenunderthetermsofthisAgreementbyandthroughanattorney-in-factdulyappointedforsuchpurpose(orforpurposesincludingsuchpurpose)underthetermsofawrittenpowerofattorney(includinganypowerofattorneygrantedherein).
Section 11.16 Execution by Trustee.
AnytrusteeexecutingthisAgreementinsuchcapacityshallbeconsideredasexecutingthisAgreementsolelyinhiscapacityasatrusteeofthetrustofwhichheisatrustee,andsuchtrusteeshallhavenopersonalliabilityhereunderexcepttotheextentsuchtrusteeisotherwisepartytothisAgreement.
Section 11.17 Lost Membership Interest Certificates.
In the event that any Membership Interest Certificate shall be lost, stolen, or destroyed, the Chief ExecutiveOfficerortheBoardofDirectorsmayauthorizetheissuanceofasubstituteMembershipInterestCertificateinplaceofthe Membership Interest Certificate so lost, stolen, or destroyed. In each such case, the applicant for a substituteMembershipInterestCertificateshallfurnishtotheChiefExecutiveOfficerortheBoardofDirectorsevidencetoitssatisfactionoftheloss,theft,ordestructionofsuchMembershipInterestCertificateandoftheownershipthereof,andalsosuchsecurityorindemnityastheChiefExecutiveOfficerortheBoardofDirectorsmayreasonablyrequire.
Section 11.18 Actions by Titanium Family Group.
Subject to the express terms of this Agreement, the Titanium Family Group shall appoint, one (1) individual(the “Titanium Family Designee”) to perform all actions, decisions, determinations, designations, delegations,directions, appointments, consents, approvals, selections, and the like to be taken, made, or given by or to or withrespect to the Titanium Family Group and any of its Permitted Transferees (including to receive any noticescontemplatedbythisAgreement),andallsuchactions,decisions,determinations,designations,delegations,directions,appointments, consents, approvals, deliveries, selections, and the like shall be controlling and binding upon eachmemberoftheTitaniumFamilyGroupandeachoftheirrespectivePermittedTransferees.Theapprovalorremovalofthe Titanium Family Designee shall require approval or consent in a writing that is executed by members of theTitaniumFamilyGroupthatowninexcessoffiftypercent(50%)oftheMembershipIntereststhat
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are then owned by the Titanium Family Group. Silver Parent, Silver OP and the Silver Member (and any of theirrespectiveAffiliates)shallbeentitledtorelyonanyactionordecisionoftheTitaniumFamilyDesignee.WrittennoticeshallbeprovidedtotheSilverMemberinadvanceofanyappointmentorremovalofaTitaniumFamilyDesignee.
Section 11.19 Release.
Effectiveasofthedatehereof,eachmemberoftheTitaniumFamilyGroupandRSTandWST,ineachcase,forthemselvesandtheirrespectiveAffiliates(eacha“Releasor”),herebyirrevocably,knowinglyandvoluntarilyreleases,discharges and forever waives and relinquishes all claims, demands, obligations, liabilities, defenses, affirmativedefenses,setoffs,counterclaims,Actionsandcausesofactionofwhateverkindornature,whetherknownorunknown,whichanyoftheReleasorshas,mighthaveormightassertnoworinthefuture(butonlytotheextentarisingoutofacts or omissions occurring on or prior to the date hereof), against Titanium, the Company or the CompanySubsidiaries or any of their respective Subsidiaries, successors, assigns, officers, directors, managers, partners andemployees(ineachcaseintheircapacityassuch)(each,a“Releasee”),arisingoutof,baseduponorresultingfromanycontract, transaction, event, circumstance, action, failure to act or occurrence of anysort or type, whether knownorunknown, and which occurred, existed or was taken on or prior to the date hereof; provided,however, that nothingcontainedinthisSection11.19shallrelease,waive,discharge,relinquishorotherwiseaffect(a)anyobligations,rightsor claims under any agreements entered into after the date of the Merger Agreement not in violation of the MergerAgreementorthisAgreement,(b)therights,claims,liabilitiesorobligationsofanypartytotheextentarisingoutof,baseduponorresultingfromthisAgreement,theMergerAgreementoranyotheragreemententeredintobyaReleaseeinconnectionwiththetransactionscontemplatedbytheMergerAgreementorthisAgreement,(c)anyrights,claims,liabilities or obligations to the extent arising out of, based upon or resulting from a Releasor’s employment with aReleasee with respect to any compensation (including the Option Deferral Agreement, as modified by the MergerAgreement andthis Agreement), employeewelfare, employee retirement, benefits (including 401kplans), perquisitearrangements or other similar entitlements, (d) any indemnification, advancement or reimbursement obligations of aReleasee to a Releasor under any agreements, bylaws, certificates of incorporation, operating agreements, limitedpartnershipagreements,limitedliabilitycompanyagreementsoranyotherorganizationaldocumentsofsuchentitiesorfederal, state or local law (in the case of such advance or reimbursement obligations, subject to receipt of anundertakingtorepaytheapplicableexpensesifitshallultimatelybedeterminedthatindemnificationwasnotavailable)relatingto(I)anycircumstances,astowhichaReleasorhasnotreceivednoticeoforhasnotbeenmadeawareof,orasto which Releasor does not know or should not reasonably have known could give rise to such indemnification,advancement or reimbursement obligations, in each case as of the date of the Merger Agreement, or which weredisclosedpursuanttotheMergerAgreement,or(II)theMergerAgreementorthetransactionscontemplatedtherebyorhereby,(e)anyrightsaReleasormayhaveasaninsuredunderanydirector’sandofficer’sliabilityinsurancepolicynowor previously in force, (f) anycontractual rights, claims, liabilities or obligations of anyparty under anyof theagreements listed on Exhibit G or Schedule III, excluding indemnification and similar matters as to circumstancesknown or which should reasonably have been known by a Releasor as of the date of the Merger Agreement, andexcluding those arising out of, based upon or resulting from a breach or other failure to comply with any suchagreement or (g) anyordinarycourse contractual rights, claims, liabilities or obligations to the extent arisingout of,based upon or resulting from ordinary course commercial transactions or arrangements in effect as of immediatelyfollowing the Closing and disclosed publicly and filed with the SEC prior to the date of the Merger Agreement ordisclosedpursuanttotheMergerAgreement,otherthanthosearisingoutof,baseduponorresultingfromabreachorotherfailuretocomplywithanysuchagreement.
EachReleasorshallrefrainfrom,directlyorindirectly,assertinganyclaimordemand,orcommencing,institutingor causing to be commenced any legal proceeding, of any kind against a Releasee based upon any matter releasedpursuant to this Section11.19. Theforegoingrelease extendsto anyandall claimsreleasedpursuant to this Section11.19ofanynaturewhatsoever,whetherknown,unknownorcapableorincapableofbeingknownasoftheClosingorthereafter, and includes any and all claims, actions, demands, causes of action, suits, debts, dues, sums of money,accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances,trespasses, damages, judgments, expenses, executions, affirmative defenses, demands and other obligations orLiabilities whatsoever, in law or equity, in each case to the extent released pursuant to this Section 11.19. TheReleasors(intheirrespectivecapacitiesassuch)herebyexplicitlywaiveallrightswithrespecttotheforegoingreleasesundertheprovisionsofSection1542oftheCaliforniaCivilCode(asnowamendedandashereafteramended)whichsection provides in pertinent part: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH ACREDITORDOESNOTKNOWORSUSPECTTOEXISTINHISFAVORATTHETIME
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OFEXECUTINGTHERELEASE,WHICHIFKNOWNBYHIM,MUSTHAVEMATERIALLYAFFECTEDHISSETTLEMENTWITHTHEDEBTOR.”TheReleasors(intheirrespectivecapacitiesassuch)agreethatnoprovisionof Section 1542 of the California Civil Code shall affect the validity or scope of any other aspect of the foregoingreleases.TheReleasors(intheirrespectivecapacitiesassuch)herebyexpresslywaiveanyandallrightswithrespecttotheforegoingreleases whichtheymayhaveunder anyother provisionof state or federal lawprovidingthesameorsimilareffect.
[SignaturePagesFollow]
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INWITNESSWHEREOF, this Agreement has been executed and delivered by the Members and other partiesnamedbeloweffectiveasofthedatefirstwrittenabove.
MEMBERS:
SILVERMERGERSUB1,LLC,aDelawarelimitedliabilitycompany
By:
Name:
Title:
[TITANIUMFAMILYGROUPMEMBERS],a[[•]]
By:
Name:
Title:
OTHER PARTIES:
SIMONPROPERTYGROUP,INC.,aDelawarecorporation
By:
Name:
Title:
SIMONPROPERTYGROUP,L.P.,aDelawarelimitedpartnership
By:
Name:
Title:
TAUBMANVENTURESGROUP,LLC,SOLELYIN
ITSCAPACITYASPARTNERSHIP
REPRESENTATIVE
By:
Name:
Title:
[Signature page to TRG Joint Venture Operating Agreement]
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SOLELY WITH RESPECT TO HIS OBLIGATIONSUNDER SECTION 7.3 AND, TO THE EXTENT HEIS SERVING AS CHIEF EXECUTIVE OFFICER,HIS CEO OBLIGATIONS:
ROBERT S. TAUBMAN
SOLELY WITH RESPECT TO HIS OBLIGATIONSUNDER SECTION 7.3 AND, TO THE EXTENT HEIS SERVING AS CHIEF EXECUTIVE OFFICER,HIS CEO OBLIGATIONS:
WILLIAM S. TAUBMAN
[Signature page to TRG Joint Venture Operating Agreement]
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Annex B
LazardFrères&Co.LLC30RockefellerPlazaNewYork,NY10112
February9,2020
SpecialCommitteeoftheBoardofDirectorsTaubmanCenters,Inc.200EastLongLakeRoad,Suite300BloomfieldHills,MI48304-2324
DearMembersoftheSpecialCommitteeoftheBoardofDirectors:
WeunderstandthatTaubmanCenters,Inc.,aMichigancorporation(“Company”),SimonPropertyGroup,Inc,aDelaware corporation (“Buyer”), SimonProperty Group, L.P., a Delaware limitedpartnership (“SimonOP”), SimonMergerSub1,aDelawarecorporationandadirectwhollyownedsubsidiaryofSimonOP(“SimonMergerSub1”),SimonMergerSub2,aDelawarecorporationandadirectwhollyownedsubsidiaryofSimonMergerSub1(“SimonMerger Sub 2”), and The Taubman Realty Group Limited Partnership, a Delaware limited partnership (“TaubmanOP”), propose to enter into an Agreement and Plan of Merger, dated as of February 9, 2020 (the “Agreement”).Pursuant to the Agreement, Company will be merged with and into Simon Merger Sub 1 (the “Transaction”) and(i)eachoutstandingshareofthecommonstock,parvalue$0.01pershare,ofCompany(“CommonStock”),otherthanshares of CommonStock held by Company as treasury stock, by any direct or indirect wholly owned subsidiary ofCompanyorbyanyofBuyer,SimonOP,SimonMergerSub1andSimonMergerSub2orbyanydirectorindirectwhollyownedsubsidiaryofanyoftheforegoing,ineachcase,immediatelypriortotheEffectiveTime(suchholders,togetherwiththemembersoftheTaubmanFamilycollectively,“ExcludedHolders”),willbeconvertedintotherighttoreceive$52.50incash(the“Consideration”)and(ii)eachoutstandingshareoftheseriesBpreferredstock,parvalue$0.001pershare,ofCompanywillbeconvertedintotherighttoreceiveanamountofcashequaltotheConsiderationdividedby14,000(the“PreferredConsideration”).ThetermsandconditionsoftheTransactionaremorefullysetforthintheAgreement.
Youhaverequestedouropinionasofthedatehereofastothefairness,fromafinancialpointofview,toholdersofCommonStock(otherthanExcludedHolders)oftheConsiderationtobepaidtosuchholdersintheTransaction.
Inconnectionwiththisopinion,wehave:
(i) ReviewedthefinancialtermsandconditionsoftheAgreement;
(ii) ReviewedcertainpubliclyavailablehistoricalbusinessandfinancialinformationrelatingtoCompany;
(iii) ReviewedvariousfinancialforecastsandotherdataprovidedtousbyCompanyrelatingtothebusinessofCompany;
(iv) HelddiscussionswithmembersoftheseniormanagementofCompanywithrespecttothebusinessandprospectsofCompany;
(v) ReviewedpublicinformationwithrespecttocertainothercompaniesinlinesofbusinesswebelievetobegenerallyrelevantinevaluatingthebusinessofCompany;
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(vi) ReviewedthefinancialtermsofcertainbusinesscombinationsinvolvingcompaniesinlinesofbusinesswebelievetobegenerallyrelevantinevaluatingthebusinessofCompany;
(vii) ReviewedhistoricalstockpricesandtradingvolumesofCommonStock;and
(viii) Conductedsuchotherfinancialstudies,analysesandinvestigationsaswedeemedappropriate.
We have assumed and relied upon the accuracy and completeness of the foregoing information, withoutindependentverificationofsuchinformation.Wehavenotconductedanyindependentvaluationorappraisalofanyoftheassetsorliabilities(contingentorotherwise)ofCompanyorconcerningthesolvencyorfairvalueofCompany,andwehavenotbeenfurnishedwithanysuchvaluationorappraisal.Withrespecttothefinancialforecastsutilizedinouranalyses,wehaveassumed,withtheconsentofCompany,thattheyhavebeenreasonablypreparedonbasesreflectingthebestcurrentlyavailableestimatesandjudgmentsastothefuturefinancialperformanceofCompany.Weassumenoresponsibilityforandexpressnoviewastoanysuchforecastsortheassumptionsonwhichtheyarebased.
Further,ouropinionisnecessarilybasedoneconomic,monetary,marketandotherconditionsasineffecton,andtheinformationmadeavailabletousasof,thedatehereof.Weassumenoresponsibilityforupdatingorrevisingouropinionbasedoncircumstancesoreventsoccurringafterthedatehereof.WedonotexpressanyopinionastothepriceatwhichsharesofCommonStockmaytradeatanytimesubsequenttotheannouncementoftheTransaction. WhileLazard notes that the Agreement contains a go-shop provision pursuant to which potential third parties will becontactedfollowingtheannouncementoftheTransaction,wewerenotinconnectionwiththisengagementdirectedto,and we did not, solicit indications of interest from third parties regarding a potential transaction with Company. Inaddition, ouropiniondoesnotaddresstherelativemerits oftheTransactionascomparedtoanyothertransactionorbusinessstrategyinwhichCompanymightengageorthemeritsoftheunderlyingdecisionbyCompanytoengageintheTransaction.
In rendering our opinion, we have assumed, with the consent of Company, that the Transaction will beconsummatedonthetermsdescribedintheAgreement, withoutanywaiverormodificationofanymaterial termsorconditions. We also have assumed, with the consent of Company, that obtaining the necessary governmental,regulatoryorthirdpartyapprovalsandconsentsfortheTransactionwillnothaveanadverseeffectonCompanyortheTransaction.WedonotexpressanyopinionastoanytaxorotherconsequencesthatmightresultfromtheTransaction,nordoesouropinionaddressanylegal,tax,regulatoryoraccountingmatters,astowhichweunderstandthatCompanyobtainedsuchadvice as it deemednecessary fromqualified professionals. Weexpress noviewor opinionas to anyterms or other aspects (other than the Consideration to the extent expressly specified herein) of the Transaction,including, without limitation, the form or structure of the Transaction; the Preferred Consideration; the votingagreement to be entered into by certain holders of Common Stock, Preferred Stock and units in Taubman OP; themergerofSimonMergerSub2andTaubmanOP(includingtheoptionofholdersofunitsofTaubmanOPtoelecttoreceivetheConsiderationorunitsofSilverOP);theconversionofthesurvivingentityoftheSimonMergerSub2and
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TaubmanOPmerger,oranyotheragreementsorarrangementsenteredintoinconnectionwith,orcontemplatedby,theTransaction. In addition, we express no view or opinion as to the fairness of the amount or nature of, or any otheraspectsrelatingto,thecompensationtoanyofficers,directorsoremployeesofanypartiestotheTransaction,orclassofsuchpersons,relativetotheConsiderationorotherwise.
Lazard Frères & Co. LLC (“Lazard”) is acting as financial advisor to the Special Committee of the Board ofDirectorsofCompanyinconnectionwiththeTransactionandwillreceiveafeeforsuchservices,aportionofwhichispayable upon the rendering of this opinion and a substantial portion of which is contingent upon the closing of theTransaction. In addition, in the ordinary course, Lazard and its affiliates and employees may trade securities ofCompany, Buyer and certain of their respective affiliates for their own accounts and for the accounts of theircustomers,mayatanytimeholdalongorshortpositioninsuchsecurities,andmayalsotradeandholdsecuritiesonbehalfofCompany,Buyerandcertainoftheirrespectiveaffiliates.TheissuanceofthisopinionwasapprovedbytheOpinionCommitteeofLazard.
TheopinionexpressedhereinisforthebenefitoftheSpecialCommitteeoftheBoardofDirectorsofCompany(initscapacityassuch)andCompany'sotherindependentdirectors(intheircapacitiesassuch)inconnectionwiththeirevaluation of the Transaction. Our opinion is not intended to and does not constitute a recommendation to anystockholderastohowsuchstockholdershouldvoteoractwithrespecttotheTransactionoranymatterrelatingthereto.
Basedonandsubjecttotheforegoing,weareoftheopinionthat, asofthedatehereof,theConsiderationtobepaidtoholdersofCommonStock(otherthanExcludedHolders) intheTransactionisfair, fromafinancial pointofview,tosuchholders.
Verytrulyyours,
LAZARDFRERES&CO.LLC
By: /s/MatthewJ.Lustig
MatthewJ.LustigManagingDirector
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Annex C
EXECUTIONVERSION
VOTING AGREEMENT
ThisVotingAgreement(this“Agreement”),datedasofFebruary9,2020,ismadebyandamongSimonPropertyGroup, Inc., a Delaware corporation (the “Parent”), and each of the Persons listed on Exhibit Ahereto (each, a“Holder”and,collectively,the“Holders”).CapitalizedtermsusedinthisAgreementandnototherwisedefinedhereinshallhavethemeaningsassignedtothemintheMergerAgreement(asdefinedbelow).
WHEREAS,concurrentlywiththeexecutionanddeliveryofthisAgreement,Parent,SilverMergerSub1,LLC,aDelawarelimitedliabilitycompany(“SilverMergerSub1”),SilverMergerSub2,LLC,aDelawarelimitedliabilitycompany (“Silver Merger Sub 2”), Simon Property Group, L.P., a Delaware limited partnership (“Silver OP”),TaubmanCenters,Inc.,aMichigancorporation(“Titanium”),andTheTaubmanRealtyGroupLimitedPartnership,aDelawarelimitedpartnership(“TitaniumOP”), haveenteredintoanAgreement andPlanof Merger, datedas of thedate hereof (the “MergerAgreement”), which, among other things, provides for the merger of Silver Merger Sub 2withandintoTitaniumOP,withTitaniumOPcontinuingasthesurvivingentity(the“PartnershipMerger”),aswellasforthemergerofTitaniumwithandintoSilverMergerSub1,withSilverMergerSub1continuingasthesurvivingentity(the“Merger”),ineachcase,uponthetermsandsubjecttotheconditionssetforthintheMergerAgreement;
WHEREAS, as of the date hereof, each Holder is the beneficial owner and/or record holder of the shares ofTitaniumCommonStockand/orTitaniumSeriesBPreferredStocksetforthoppositesuchHolder’snameonExhibitAhereto(togetherwithanyadditionalsharesofTitaniumCommonStockorTitaniumSeriesBPreferredStockowned(recordorbeneficial)oracquiredafterthedatehereofbyanyHolder,the“SubjectShares”);
WHEREAS,asofthedatehereof,eachHolderisthebeneficialownerand/orrecordholderoftheTitaniumOPUnits set forth opposite such Holder’s name on ExhibitAhereto (together with any additional Titanium OP Unitsowned(recordorbeneficial)oracquiredbyanyHolderafterthedatehereof,the“SubjectOPUnits”and,togetherwiththeSubjectShares,the“SubjectInterests”);and
WHEREAS,asaconditiontoParent’swillingnesstoenterintotheMergerAgreement,andinconsiderationforParent,SilverMergerSub1andSilverMergerSub2toenterintotheMergerAgreement,ParenthasrequiredthattheHoldersagree,andtheHoldershaveagreed,toenterintothisAgreement,regardingtheirrespectiveSubjectInterests.
NOW,THEREFORE,inconsiderationofthepromisesandothergoodandvaluableconsideration,thereceiptandsufficiencyofwhichareherebyacknowledged,andintendingtobelegallyboundhereby,thepartiesagreeasfollows:
SECTION1.VotingAgreement.
1.1 TitaniumShareholdersMeeting.EachHolderherebyirrevocablyandunconditionallyagreesthat,fromthedate of this Agreement until the earlier of (i) the Closing and (ii) the date of the termination of this Agreement inaccordance with Section 10(the “ Voting Period”) at any meeting of the Titanium Shareholders (“TitaniumShareholders Meeting”), however called, and at every adjournment or postponement thereof, or in any action bywrittenconsentoftheshareholdersofTitanium,eachHoldershall,orshallcausetheholderofrecordofsuchHolder’sSubjectInterestsonanyapplicablerecorddateto,ineachcasetothefullestextentthattheSubjectInterestsareentitledto vote thereon or consent thereto, appear (in person or by proxy) at such Titanium Shareholders Meeting (or anyadjournmentorpostponementthereof),andcausealloftheSubjectSharestobecountedaspresentthereatforpurposesofcalculatingaquorumandshallvote(orcausetobevoted)alltheSubjectShares:
(a) infavorofor,ifanyactionistobetakenbywrittenconsentinlieuofaTitaniumShareholdersMeeting,deliver to Titanium a duly executed affirmative written consent in favor of (to the extent applicable), (i) theapprovalandadoptionoftheMergerAgreementandtheTransactions(includingtheMerger),and(ii)anyotherproposal in respect of which the vote or written consent of Titanium’s stockholders is requested that couldreasonablybeexpectedtofacilitatetheTransactions(includingtheMerger)(includinganyproposaltoadjourn,
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recess or postponetheTitaniumShareholders Meetingtosolicit additional proxies infavor of theapproval andadoptionoftheMergerAgreementandtheTransactionsiftherearenotsufficientvotestoapproveandadopttheMergerAgreementandtheTransactionsonthedateonwhichsuchTitaniumShareholdersMeetingisheld);and
(b) against, and not provide any written consent for, (i) the adoption or approval of any AcquisitionProposaland(ii)anyotherproposalinrespectofwhichthevoteorwrittenconsentorotherapprovalofTitaniumShareholdersisrequestedthatcouldreasonablybeexpectedtoimpede,materiallyinterferewith,materiallydelayorpreventtheconsummationoftheTransactions(includingtheMerger).
1.2 ConsentofPartnersofTitaniumOP.EachHolderherebyirrevocablyandunconditionallyagreesthat,duringthe Voting Period, at any meeting of the partners of Titanium OP, however called, and at every adjournment orpostponementthereof,orinanyactionbywrittenconsentofthepartnersofTitaniumOP,eachHoldershallvote(orcausetobevoted)alltheSubjectOPUnits:
(a) infavorof(i)theapprovalandadoptionoftheMergerAgreementandtheTransactions(includingthePartnership Merger, the LLC Conversion and the appointment of Surviving Titanium as Managing GeneralPartnerofSurvivingTitaniumfollowingtheMergerandanyamendmentstotheTitaniumOPAgreementthatmaybenecessarytopermit theconsummationoftheMergerortheLLCConversioninaccordancewiththeMergerAgreement(suchactions,the“OPModifications”))and(ii)anyotherproposaloractioninrespectofwhichthevote or written consent of holders of Titanium OP’s Units (or any subset thereof) is requested that couldreasonablybeexpectedtofacilitatetheconsummationoftheTransactions(includingthePartnershipMerger,theLLCConversionandtheOPModifications);and
(b) against(i)anyAcquisitionProposaland(ii)anyotherproposaloractioninrespectofwhichthevote,consent or other approval of the partners of Titanium OP is requested that could reasonably be expected toimpede,materiallyinterferewith,materiallydelayorpreventtheconsummationoftheTransactions(includingthePartnershipMerger,theLLCConversionandtheOPModifications).
1.3 Other Voting. Each Holder shall vote in its sole discretion on all issues other than those specified inSection1.1andSection1.2.
1.4 NoLimitationsonActions.Notwithstandinganythingtothecontraryherein,ParentexpresslyacknowledgesthateachHolderisenteringintothisAgreementsolelyinitscapacityasthebeneficialownerand/orrecordholderoftheirrespectiveSubjectInterestsandthisAgreementshallnotlimitorotherwiseaffecttheactionsorfiduciarydutiesofany Holder, or any affiliate, partner, trustee, beneficiary, settlor, employee or designee of any Holder or any of itsaffiliates(collectively,the“HolderAffiliates”)initscapacity,ifapplicable,asamemberoftheTitaniumBoardoranycommitteethereof,andParentshallnot,directlyorindirectly,assertanyclaimthatanyactiontakenbyanyHolderoranyoftheHolderAffiliatessolelyinitscapacityasamemberoftheTitaniumBoardoranycommitteethereoforasamanaging or general partner of Titanium OP violates this Agreement. Each Holder and Parent hereby furtheracknowledge and agree that this Agreement shall not be deemed to create beneficial ownership (for any purpose,includingasdefinedherein,andincludingasdefinedintheTitaniumCharter)rightsofanyHolderoveranySubjectInterestsbeneficiallyownedbyanyotherHolder,andeachHolderisenteringintothisAgreementsolelywithrespectitsownSubjectInterests.
SECTION2.TransferofInterests.
2.1 Transfers.EachHoldercovenantsandagreesthat,untiltheendoftheVotingPeriod,eachHolderwillnot(a) subject toSection2.2, directly or indirectly sell, assign, transfer (including by merger or by operation of law),encumber,pledge,grantaparticipationin,participateinanytenderorexchangeoffer,assignorotherwisedisposeof,whether by liquidation, dissolution, dividend, distribution or otherwise (“Transfer”), any Subject Interests or thebeneficial ownershipthereof, (b)deposit anySubject Interests intoavotingtrust orenter intoavotingagreementorarrangement with respect to any Subject Interests or the beneficial ownership thereof or grant or agree to grant anyproxyorpowerofattorneywithrespecttheretothatisinconsistentwiththisAgreementor(c)enterintoanycontract,optionorotherarrangementorundertakingwithrespecttothedirectorindirectTransferofanySubjectInterestsorthebeneficial ownership thereof, except, in each case under clause(a),clause(b)and clause(c)of this sentence, to aPermitted Transferee; provided, that, notwithstanding the foregoing, in no event shall a Holder permit during theVotingPeriodanyTransfer(asdefinedintheTitaniumCharter)thatwouldresultintheconversionofanysharesofTitaniumSeriesBPreferredStockintosharesofTitaniumCommonStockpursuanttoSection2(c)(ii)(f)ofthe
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Titanium Charter; provided, further, that, and notwithstanding anything herein to the contrary, nothing in thisAgreementshallrestrictorlimitanyHolderexercisinganyrightsundertheSecondAmendedandRestatedContinuingOffer of Titanium,effective asof May16, 2000. Asusedherein, a “PermittedTransferee”shall meanaPersonthatbeforesuchactionproposedunderSection2.1(a),Section2.1(b)orSection2.1(c),is(i)aHolder,(ii)amemberofsuchHolder’s Immediate Family, (iii) a Family Trust with respect to such Holder, (iv) an entity consisting of or ownedentirelybyoneormoreoftheforegoingpersons,or(v)otherwiseanaffiliateoftheHolderwho,ineachcase,uponsuchTransfer,becomesapartytothisAgreement(ifnotalreadyapartytothisAgreement)andagreesinwriting,informandsubstancetothereasonablesatisfactionofParent,tobeboundasaHolderunderthisAgreement.APermittedTransferee shall also mean a Person (1) to whomSubject Interests are Transferred for estate planning purposes, (2)who is a charitable institution to which Subject Interests are Transferred for philanthropic purposes, (3) to whomSubjectInterestsareTransferredpursuanttoanytrustorwillofaHolder,orbythelawsofintestatesuccession,(4)towhomSubject Interests are Transferred pursuant to a qualified domestic relations order or as required by a divorcesettlement,or(5)towhomSubjectInterestsareTransferredsolelyinconnectionwiththepaymentoftheexercisepriceand/or the satisfaction of any tax withholding obligations arising from the vesting of any restricted shares or otherequityawardsortheconversionofanyconvertiblesecurities,ineachcaseofTitaniumorTitaniumOP;providedthat,uponsuchTransfertoaPermittedTransfereeunderclause(1)andclause(2)ofthissentence,suchPersonshallbecomeapartytothisAgreement(ifnotalreadyapartytothisAgreement)andshallagreeinwriting,informandsubstancetothereasonablesatisfactionofParent,tobeboundasaHolderunderthisAgreement.
2.2 Permitted Transactions. Notwithstanding anything in this Agreement to the contrary, each Holder orPermittedTransfereemayenterintoanycontract,option,swaporotheragreementorarrangement,grantaparticipationin, and pledge and encumber the Subject Interests thereunder, in connection with anybona fide lending or hedgingtransactionorarrangement(a“PermittedTransaction”);provided,thatsuchHolderretainstherighttovoteorconsentto,orcausetobevotedorconsentedto,allSubjectInterestsasprovidedinSection1duringthetermofsuchPermittedTransaction or the Pledgee in such Permitted Transaction assumes all obligations of such Holder or PermittedTransfereehereunder(itbeingunderstoodandagreedthat,notwithstandinganythinghereintothecontrary,nothinginthisAgreementshallrestrictanyPledgeefromexercisinganyremedies(includingaforeclosure)withrespecttosuchPermitted Transaction, but only for so long as such Pledge assumes all obligations of such Holder or PermittedTransfereehereunderinconnectiontherewith).
SECTION3.RepresentationsandWarrantiesoftheHolder.EachHolderherebyrepresents,jointlyandseverally,asfollows:
3.1 Organization.EachHolderiseither(a)anaturalpersonor(b)alimitedliabilitycompany,generalorlimitedpartnership or trust, duly formed, validly existing and in good standing under the laws of its jurisdiction oforganization.
3.2 SubjectInterests. Other than the Subject Interests, each Holder does not hold or control any other equityinterestspossessingvotingrightsinorwithrespecttoTitaniumorTitaniumOP.EachHolderhas,andwillhaveduringthe Voting Period, either sole or shared voting power (including the sole right to control suchvote as contemplatedherein), powerof disposition, powertoissueinstructionswithrespect tothematters set forthinthis Agreement andpowertoagreetoallofthemattersapplicabletotheHoldersetforthinthisAgreement,ineachcase,overalloftheSubjectInterestsownedbytheHolder.ExceptasotherwisepermittedbythisAgreement,eachHolderholdsallofitsSubject Interests, free and clear of any and all claims, liens, encumbrances or restrictions on the right to vote suchSubjectInterests,exceptasmayexistbyreasonofthisAgreementoranyapplicablerestrictionsontransferundertheSecuritiesActoranystatesecuritieslaw.
3.3 AuthorityRelativetothisAgreement.EachHolderhasallrequisitepowerandauthority(inthecaseofeachHolderthatisnotanindividual)orcapacity(inthecaseofeachHolderthatisanindividual)toexecuteanddeliverthisAgreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. WithrespecttoeachHolderthatisnotanindividual,theexecutionanddeliveryofthisAgreementbysuchHolderandtheperformance of its obligations hereunder and the consummation of the transactions contemplated hereby have beendulyandvalidlyauthorizedbyallnecessaryandappropriateactiononbehalfofsuchHolder.ThisAgreementhasbeendulyandvalidlyexecutedanddeliveredbyeachHolderand,assumingthedueauthorization,executionanddeliveryhereofbyParent,constitutesalegal,validandbindingobligationofeach
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Holder,enforceableagainsteachHolderinaccordancewithitsterms,excepttotheextentthatenforcementislimitedbybankruptcy, insolvency, fraudulent transfer, reorganization, moratoriumor similar laws affecting creditors’ rightsgenerally or by general principles of equity (regardless of whether enforceability is considered in a proceeding inequityoratlaw).
3.4 NoConflict.Noneoftheexecution,deliveryorperformanceofthisAgreementbyanyHolderoranyothertransaction contemplated by this Agreement will (with or without notice or lapse of time, or both), directly orindirectly, conflict with or violate any applicable law or Order applicable to any Holder, except as would notreasonablybeexpected,eitherindividuallyorintheaggregate,tomateriallyimpairtheabilityofanyHoldertoperformitsobligationshereunderortoconsummatethetransactionscontemplatedhereby.Noneoftheexecution, deliveryorperformanceofthisAgreementbyanyHolderoranyothertransactioncontemplatedbythisAgreementwill(withorwithout notice or lapse of time, or both), directly or indirectly, conflict with or violate any provision of the charter,certificate of incorporation, articles of association, by-laws, operating agreement or similar formation or governingdocuments or instruments of any Holder. Noneof the execution, delivery or performance of this Agreement by anyHolderoranyothertransactioncontemplatedbythisAgreementwill(withorwithoutnoticeorlapseoftime,orboth),directlyorindirectly, result inanymaterial breachoforconstituteamaterial default (oraneventthatwithnoticeorlapseoftimeorbothwouldbecomeamaterialdefault)under,orgivetoothersanyrightsoftermination,amendment,accelerationorcancellationof,anyContractorresultinthecreationofanencumbranceonanyoftheSubjectInterests,exceptaswouldnotreasonablybeexpected,eitherindividuallyorintheaggregate,tomateriallyimpairtheabilityoftheHoldertoperformitsobligationshereunderortoconsummatethetransactionscontemplatedhereby.
SECTION4.RepresentationsandWarrantiesofParent.Parentherebyrepresentsandwarrantsasfollows:
4.1 Organization.Parentisacorporationdulyincorporated,validlyexistingandingoodstandingunderthelawsofthestateofDelaware.
4.2 AuthorityRelativetothisAgreement.Parenthasallrequisitecorporatepowerandauthoritytoexecuteanddeliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplatedhereby.TheexecutionanddeliveryofthisAgreementbyParentandtheperformanceofitsobligationshereunderandtheconsummationofthetransactionscontemplatedherebyhavebeendulyandvalidlyauthorizedbyallnecessaryandappropriate corporate actionbyParent. This Agreement has beendulyandvalidly executedanddelivered byParentand, assuming the due authorization, execution and delivery by each of the Holders, constitutes a legal, valid andbinding obligation of Parent enforceable against Parent in accordance with its terms, except to the extent thatenforcement is limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar lawsaffecting creditors’ rights generally or by general principles of equity (regardless of whether enforceability isconsideredinaproceedinginequityoratlaw).
4.3 No Conflict. None of the execution, delivery or performance of this Agreement by Parent or any othertransaction contemplated by this Agreement will (with or without notice or lapse of time, or both), directly orindirectly, conflict with or violate any applicable law or Order, except as would not reasonably be expected, eitherindividually or in the aggregate, to materially impair the ability of Parent to performits obligations hereunder or toconsummatethetransactionscontemplatedhereby.Noneoftheexecution,deliveryorperformanceofthisAgreementby Parent will (with or without notice or lapse of time, or both), directly or indirectly, conflict with or violate anyprovisionoftheSilverCharter,theSilverBy-lawsortheorganizationalorgoverningdocumentsofSilverMergerSub1,SilverMergerSub2oranyParentSubsidiary.Noneoftheexecution,deliveryorperformanceofthisAgreementbyParentwill(withorwithoutnoticeorlapseoftime,orboth),directlyorindirectly,resultinanymaterialbreachoforconstituteamaterialdefault(oraneventthatwithnoticeorlapseoftimeorbothwouldbecomeadefault)under,orgive to others any rights of termination, amendment, acceleration or cancellation of, any Contract or result in thecreation of an encumbrance on any of the Subject Interests, except as would not reasonably be expected, eitherindividually or in the aggregate, to materially impair the ability of Parent to performits obligations hereunder or toconsummatethetransactionscontemplatedhereby.
SECTION5.Termination and Release of Cash Tender Agreement and Continuing Offer. Each Holder herebyreleasesTitanium,effectiveasofthePartnershipEffectiveTime,ofall ofitsobligationsundertheContinuingOfferandtheCashTenderAgreement,andacknowledgesthatsuchHolderanditsAffiliatesshall,followingthePartnershipMergerEffectiveTime,havenofurtherrightsthereunder.Further,effectiveasofthePartnershipMergerEffective
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Time,eachHoldershall,shallcauseitsAffiliatesto,andshallcooperatewithTitaniumandTitaniumOPinorderto,causetheCashTenderAgreementtobeterminatedwithoutanyfurtherobligationofTitaniumorTitaniumOPoranyconsiderationpayabletotheHoldersortheirAffiliatesinconnectionwithsuchtermination.
SECTION6.SunvalleyManagementAgreements.
6.1 SubjecttotheoccurrenceofandeffectiveasofimmediatelypriortotheEffectiveTime,eachHolderagreesthatitshalltakealllegallypermissibleactionstocauseTaubmanSunvalleyAssociatesLimitedPartnership(“TSLAP”)and A.T. Sunvalley Associates Limited Partnership (“ATSALP”), as the Non-Managing Partners of SunvalleyAssociates (“SA”), under the Amended and Restated Partnership Agreement of SA, dated as of May 14, 2002, asamended(the“SAJVAgreement”), thesoleMemberofSunvalleyShoppingCenterLLC(“SSC”),to(a)consenttoSSC’s execution and delivery of the proposed amendment, attached as Annex V to Schedule 6.14(a) of the MergerAgreement,tothatcertainManagementAgreementbyandbetweenSSCandTheTaubmanCompanyLLC(“TTC”),dated as of March 8, 1990, as amended, (b) to cause TSLAP and ATSALP to execute and deliver the proposedamendment,attachedasAnnexIVtoSchedule6.14(a)oftheMergerAgreement,totheSAJVAgreement,and(c)tocauseTSLAPandATSALPtoexecuteanddelivertheproposedwaiver,attachedasAnnexIItoSchedule6.14(a)oftheMergerAgreement,totheSAJVAgreement.
6.2 SubjecttotheoccurrenceofandeffectiveasofimmediatelypriortotheEffectiveTime,eachHolderagreesthatitshalltakealllegallypermissibleactionstocauseTaubman-SVLLC(“TSV”),astheNon-ManagingMemberofTaubmanLandAssociatesLLC(“TLA”), under theOperatingAgreement of TLA,datedasof October20, 2006, asamended (the “TLAJVAgreement”) to (a) consent to TLA’s execution and delivery of the proposed amendment,attachedas AnnexVIto Schedule 6.14(a) of the Merger Agreement, to that certain Management Agreement byandbetween TLA and TTC, dated as of October 31, 2006, as amended, (b) to cause TSV to execute and deliver theproposedamendment,attachedasAnnexIIItoSchedule6.14(a)oftheMergerAgreement,totheTLAJVAgreement,(c)tocauseTSVtoexecuteanddelivertheproposedwaiver,attachedasAnnexItoSchedule6.14(a)oftheMergerAgreement,totheTLAJVAgreement.
SECTION7.JointVentureOperatingAgreement.EachHolderthatretainsaninterestinTitaniumOPaftergivingeffecttothePartnershipMergeragreestodelivertoSilverinconnectionwiththeClosingavalid,executedsignaturepagetotheReorganizedTitaniumOperatingCompanyOperatingAgreement.
SECTION8.Schedule13E-3.EachHoldershallfurnishallinformationconcerningsuchHolderanditsAffiliates(other than Titanium and its Subsidiaries) to Silver and Titanium, and provide such other assistance, as may bereasonablyrequestedbySilver or Titaniumtobeincludedinthetransactionstatement onSchedule13E-3under theExchange Act relating to the Transactions, if any (“Schedule13E-3”) and shall otherwise assist and cooperate withSilverandTitaniuminthepreparationoftheSchedule13E-3andtheresolutionofanycommentstotheSchedule13E-3receivedfromtheSEC.EachHoldershallpromptlycorrectanyinformationprovidedbyitforuseintheSchedule13E-3ifandtotheextentsuchinformationshallhavebecomefalseormisleadinginanymaterialrespect.TitaniumorSilvershall notifyeachHolderpromptlyuponthereceipt ofanycomments fromtheSECandofanyrequest bytheSECforamendmentsorsupplementstotheSchedule13E-3,totheextentrelatedtosuchHolderandshallsupplysuchHolderwithcopiesofallwrittencorrespondencebetweenTitaniumandSilveroranyoftheirRepresentatives,ontheonehand, andthe SEC,ontheother hand, to the extent relatedto suchHolder, withrespect to theSchedule 13E-3.EachHoldershallusetheirreasonablebesteffortstorespondaspromptlyasreasonablypracticabletoanycommentstotheextentrelatedtosuchHolderreceivedfromtheSECconcerningtheSchedule13E-3andtoresolvesuchcommentswiththeSEC.
SECTION9.AdditionalAgreements.
9.1 AdditionalInterests.Intheeventofasharedividendordistribution,oranychangeinthesharesofTitaniumCommonStock, TitaniumSeries BPreferred Stock or in the TitaniumOPUnits by reason of any share and/or unitdividend,distribution,subdivision,recapitalization,reclassification,consolidation,conversionorthelike,includingtheexchangeofanysecuritiesconvertibleintoorexercisableforanysharesofTitaniumCommonStock,TitaniumSeriesBPreferredStockorinTitaniumOPUnits,oranyotheracquisitionof(oracquisitionofcontrolof)sharesofTitaniumCommon Stock, Titanium Series B Preferred Stock or Titanium OP Units after the date hereof, the term “SubjectInterests” shall be deemed to refer to and include such shares and/or units as well as all such share and/or unitdividends and distributions and any securities into which or for which any or all of the Subject Interests may bechangedorexchangedorwhicharereceivedinsuchtransaction.
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9.2 Documentation and Information. Each Holder consents to and hereby authorizes Parent and Titanium topublishanddiscloseinalldocumentsandschedulesfiledwiththeSECoranyotherGovernmentalEntityinconnectionwith the Transactions, and any press release or other disclosure document that Parent or Titanium reasonablydetermines to be necessary in connection with the Merger and any other Transactions contemplated by the MergerAgreement, each Holder’s identity and ownership of the Subject Interests, the existence of this Agreement and thenatureofeachHolder’scommitmentsandobligationsunderthisAgreement,andeachHolderacknowledgesthatParentandTitaniummayfile this Agreement or a formhereof with the SECor with anyother Governmental Entity. EachHolderagreestopromptlygiveParentandTitaniumanyinformationitmayreasonablyrequireforthepreparationofany such disclosure documents, and each Holder agrees to promptly notify Parent and Titanium of any requiredcorrectionswithrespecttoanywritteninformationsuppliedbysuchHolderspecificallyforuseinanysuchdisclosuredocument,ifandtotheextentthatanysuchinformationshallhavebecomefalseormisleadinginanymaterialrespect.
SECTION 10. Termination. This Agreement, and all obligations, terms and conditions contained herein, shallautomatically terminate, without any notice or other action by any Person, upon the earliest to occur of: (a) theterminationoftheMergerAgreementinaccordancewithitsterms,(b)theEffectiveTime,or(c)theTitaniumFamilyRepresentativeprovidingwrittennoticetoParentthatitisterminatingthisAgreementonbehalfoftheHoldersatanytimefollowing(i)aTitaniumBoardRecommendationChange,or(ii)theoccurrenceof(orthemakingorgrantingof)any amendment, waiver, modification or other change to any provision of the Merger Agreement (including anyexhibits,annexesorschedulesthereto)that(A)decreasestheamountorchangestheformoftheMergerConsiderationor(B)isotherwiseadverseinanymaterialrespecttotheHoldersortotheTitaniumShareholders;providedthat(x)iftheMergerisconsummated,Section5andSection6shallsurviveanyterminationorexpirationofthisAgreementand(y)anysuchterminationshallnotrelieveanypartyfromliabilityforanywillfulandmaterialbreachofitsobligationshereunderpriortosuchtermination.
SECTION11.Miscellaneous.
11.1 Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the partyincurringsuchcostsandexpenses,whetherornottheTransactionsareconsummated.
11.2 EntireAgreement;NoThirdPartyBeneficiaries.
(a) ThisAgreement,togetherwiththeMergerAgreement,andanyexhibits,annexesorschedulesheretoorthereto,constitutetheentireagreementandsupersedeall prioragreementsandunderstandings,bothwrittenandoral, amongthe parties, or anyof them, with respect to the subject matter hereof;providedthat, if thereis anyconflictbetweenthisAgreementandtheMergerAgreement,thisAgreementshallcontrol.
(b) This Agreement shall be binding upon and inure solely to the benefit of each party hereto and theirrespective successors and permitted assigns, and, except as set forth in the last sentence of Section 11.4(a),nothing in this Agreement, express or implied, is intended to confer on any Person any rights, remedies,obligationsorliabilitiesunderorbyreasonofthisAgreement.
11.3 Assignment.ThisAgreementshallnotbeassignedbyanypartybyoperationoflaworotherwisewithoutthepriorwrittenconsentoftheotherpartyandtheTitaniumSpecial Committee, exceptasprovidedbySection2ofthisAgreement.
11.4 Amendment;NoWaiver.
(a) This Agreement may only be amended with the written consent of (i) Parent and (ii) the TitaniumFamily Representative (acting on behalf of each of the Holders). Notwithstanding anything to the contrarycontainedinthisAgreement,(I)anyamendmentormodificationofthisAgreement,(II)anyextensionorwaiverofanyprovisionofthisAgreementbyanyofthepartiesand(III)anyconsentorapprovaltobegivenormadebyanyoftheparties under or relatingtothis Agreement (other thanasexpresslyrequiredorcontemplatedbythisAgreement) shall, in each such case, require the prior written consent of Titanium (following approval by theTitaniumSpecialCommittee),andnopartyshalltakeanysuchactionwithoutobtainingsuchwrittenconsentofTitanium(followingapprovalbytheTitaniumSpecialCommittee);providedthatthissentenceshallnotapplytoorinanymannerrestrictanyterminationofthisAgreementinaccordancewithSection10.EachofTitaniumandtheTitaniumSpecialCommitteeisanexpressthirdpartybeneficiaryofSection11.3,thisSection11.4,Section11.8andSection11.9.
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(b) Neither the failure nor any delay by any party in exercising any right, power or privilege under thisAgreementwilloperateasawaiverofsuchright,powerorprivilege,andnosingleorpartialexerciseofanysuchright, power or privilege will preclude any other or further exercise of such right, power or privilege or theexerciseofanyotherright,powerorprivilege.Inaddition,(i)noclaimorrightarisingoutofthisAgreementcanbedischargedbyanyparty,inwholeorinpart,byawaiverorrenunciationoftheclaimorrightunlessinwritingsignedbysuchparty,and(ii)nonoticetoordemandonapartywillbedeemedtobeawaiverofanyobligationofsuchpartyandnonoticefromordemandbyapartywillbedeemedtobeawaiverofsuchparty’srighttotakefurtheractionwithoutnoticeordemandasprovidedinthisAgreement.
11.5 TitaniumFamilyRepresentative.
(a) RobertS.Taubmanisherebyconstitutedandappointedasrepresentative,agentandattorney-in-factforandonbehalfofeachoftheHoldersandshallbethe“TitaniumFamilyRepresentative”forallpurposesundertheMergerAgreement, thisAgreementandsuchancillaryorrelatedagreementsorundertakingsmadeonbehalfoftheTitaniumFamilyastheTitaniumFamilyRepresentativedeterminesarenecessaryoradvisableinconnectionwiththetransactionscontemplatedbytheMergerAgreement(the“AncillaryAgreements”).Withoutlimitingthegenerality of the foregoing, each Holder agrees that the Titanium Family Representative has full power andauthority, on behalf of each Holder and his, her or its successors and assigns, to (i) interpret the terms andprovisionsoftheMergerAgreement,thisAgreement,theAncillaryAgreementsandthedocumentstobeexecutedanddeliveredbytheHoldersinconnectionherewithandtherewith,(ii)executeanddeliverandreceivedeliveriesof the Ancillary Agreements and all other agreements, certificates, statements, notices, approvals, extensions,waivers,undertakings,amendmentsandotherdocumentsrequiredorpermittedtobegiveninconnectionwiththeconsummationofthetransactionscontemplatedbytheMergerAgreementandthisAgreement, whichAncillaryAgreementsandotheragreements,certificates,statements,notices,approvals,extensions,waivers,undertakings,amendments and other documents shall be legally binding on the Holders, as applicable, (iii) terminate thisAgreementonbehalfoftheHolderspursuanttoandinaccordancewithSection10ofthisAgreement,(iv)actastheTitaniumFamilyRepresentativeforthepurposesofSection2.02(d),Section8.06oranyothersectionoftheMergerAgreement,(v)receiveserviceofprocessonbehalfoftheHoldersinconnectionwithanyclaimsunderthe Merger Agreement, the Ancillary Agreements or this Agreement, (vi) agree to, negotiate and enter intosettlementsandcompromisesof,andassumethedefenseof,claims,andcomplywithordersofcourtswithrespectto such claims, and take all actions necessary or appropriate in the judgement of the Titanium FamilyRepresentativefortheaccomplishmentoftheforegoing,inconnectionwiththeMergerAgreement,theAncillaryAgreements and this Agreement and the transactions contemplated thereby and hereby, (vii) give and receivenoticesandcommunications,and(viii)takeallactionsnecessaryorappropriateinthejudgmentoftheTitaniumFamily Representative on behalf of the Holders in connection with the Merger Agreement, the AncillaryAgreements or this Agreement and the transactions contemplated thereby and hereby. Notwithstanding theforegoing, in no event shall the Titanium Family Representative be deemed to have, or to have acquired,beneficial ownership (for any purpose, including as defined herein, and including as defined in the TitaniumCharter)ofanySubjectInterestsasaresultofthisAgreement,includingthisSection11.5.
(b) All decisions, actions andconsents of theTitaniumFamilyRepresentative will bebindinguponeachHolder. The Titanium Family Representative will not be liable for any act done or omitted under the MergerAgreement,theAncillaryAgreementsorthisAgreementastheTitaniumFamilyRepresentativeexceptinthecaseof bad faith. Parent agrees that the Titanium Family Representative, acting in such capacity, shall not bepersonallyliable for of anyobligationstobeperformedbytheHoldersandthat neither Silver norits Affiliatesshall have any right or claim against the Titanium Family Representative, personally, or to the assets of theTitanium Family Representative, for any act or omission of the Titanium Family Representative acting in thatcapacity or as a result of anyact or omissionbytheHolders. In performinganyof its duties under theMergerAgreement,theAncillaryAgreements,thisAgreementoranyagreementsordocumentsexecutedanddeliveredinconnection herewith or therewith, the TitaniumFamily Representative will not be liable to the Holders for anylossesthatanyPersonmayincurasaresultofanyact,orfailuretoact, bytheTitaniumFamilyRepresentativeunder the Merger Agreement, the Ancillary Agreements, this Agreement or any agreements or documentsexecutedanddeliveredinconnectionherewithortherewith,andtheTitaniumFamilyRepresentativewillbe
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indemnifiedandheldharmlessbytheHoldersforalllosses,excepttotheextentthattheactionsoromissionsoftheTitaniumFamilyRepresentative weretakenor omittedinbadfaith. Thelimitationof liability provisionsofthisSection11.5(b)willsurvivetheterminationoftheMergerAgreement,theAncillaryAgreementsandofthisAgreement.
(c) TheSilverPartiesshallbeentitledtodealsolelywiththeTitaniumFamilyRepresentativeonallmattersrelatingtotheHolderswithrespecttotheMergerAgreement,theAncillaryAgreementsandthisAgreementandshallbeentitledtorelyconclusively(withoutfurtherevidenceofanykindwhatsoever)onanydocumentexecutedor purported to be executed on behalf of any Holder by the TitaniumFamily Representative, and on any otheractiontakenorpurportedtobetakenunderthisAgreement,theAncillaryAgreementsortheMergerAgreementonbehalfofanyHolderbytheTitaniumFamilyRepresentative,asbeingfullybindinguponsuchPerson.Noticesor communications given or made under this Agreement, the Ancillary Agreements or the Merger Agreement(exceptwithrespecttotheLettersofTransmittal,Certificatesandanynoticesorcommunicationsrequiredtobegiven or made to the holders of Subject Interests under Applicable Law) to or from the Titanium FamilyRepresentative shall constitute notice to or from each of the Holder. Any decision or action by the TitaniumFamilyRepresentative hereunder or under theMerger Agreement or theAncillary Agreements onbehalf of theHoldersshallconstituteadecisionoractionofall Holdersandshallbefinal, bindingandconclusiveuponeachsuchPerson.NoHoldershallhavetherighttoobjectto,dissentfrom,protestorotherwisecontestthesame.
11.6 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of beingenforcedbyanyrule or applicable law, or public policy, all other conditions andprovisions of this Agreement shallnevertheless remain in full force and effect so long as either the economic or legal substance of the transactionscontemplatedbythisAgreementisnotaffectedinanymannermateriallyadversetoanypartyorsuchpartywaivesitsrightsunderthisSection11.6withrespectthereto.Uponsuchdeterminationthatanytermorotherprovisionisinvalid,illegalorincapableofbeingenforced,thepartiesshallnegotiateingoodfaithtomodifythisAgreementsoastoeffecttheoriginalintentofthepartiesascloselyaspossibleinanacceptablemannersothatthetransactionscontemplatedbythisAgreementarefulfilledtothegreatestextentpossible.
11.7 Notices.Allnotices,requests,claims,demandsandothercommunicationsunderthisAgreementshallbeinwriting and shall be deemed duly given (a) on the date of delivery, if delivered personally, or, if by e-mail, uponwrittenconfirmationofreceipt,(b)onthefirst(1st)BusinessDayfollowingthedateofdeliveryifdeliveredutilizinganext-dayservicebyarecognizednext-daycourier,or(c)ontheearlierofconfirmedreceiptorthefifth(5th)BusinessDayfollowingthedateofmailing,ifdeliveredbyregisteredorcertifiedmail,returnreceiptrequested,postageprepaid.Allnoticeshereundershallbedeliveredtotheaddressessetforthbelow,orpursuanttosuchotherinstructionsasmaybedesignatedinwritingbythepartytoreceivesuchnotice:
iftoParent:
SimonPropertyGroup,Inc.
225WestWashingtonStreet
Indianapolis,Indiana46204
Phone: 317-636-1600
Attn: StevenE.Fivel
E-mail: [email protected]
withcopies(whichshallnotconstitutenotice)to:
Latham&WatkinsLLP
330NorthWabashAvenue,Suite2800
Chicago,IL60611
Phone: 312-876-7700
Attn: MarkD.Gerstein
JulianT.Kleindorfer
E-mail: [email protected]
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andto:
Paul,Weiss,Rifkind,Wharton&GarrisonLLP
1285AvenueoftheAmericas
NewYork,NY10019-6064
Phone: 212-373-3000
Attn: RobertB.Schumer
MichaelVogel
E-mail: [email protected]
iftoanyoftheHolders:
c/oTitaniumFamilyRepresentative
TaubmanVenturesManagement
200EastLongLakeRoad,Suite180
BloomfieldHills,MI48304
Phone: 248-258-7303
Attn: RobertS.Taubman
E-mail: [email protected]
withacopy(whichshallnotconstitutenotice)to:
HonigmanLLP
39400WoodwardAvenue
Suite101
BloomfieldHills,MI48304
Phone: 248-566-8300
Attn: JosephAviv
MichaelS.Ben
E-mail: [email protected]
11.8 GoverningLaw;ConsenttoJurisdiction;WaiverofTrialbyJury.
(a) ThisAgreementandallclaims,actions,proceedingsorcounterclaims(whetherbasedoncontract,tortorotherwise)arisingoutoforrelatingtothisAgreement,anyoftheTransactions,ortheactionsofthepartiesinthe negotiation, administration, performance and enforcement hereof and thereof, shall be governed by, andconstruedinaccordancewith,thelawsoftheStateofMichigan(withoutgivingeffecttochoiceoflawprinciplesthereof).
(b) Eachoftheparties(i)irrevocablyconsentstosubmititselftotheexclusivejurisdictionofthestateandfederalcourtsintheStateofMichigan(suchcourts,collectively,the“MichiganCourts”)intheeventanydispute,claimorcauseofactionarisesoutoforrelatestothisAgreementortheTransactions,(ii)agreesthatitwillnotattempttodenyordefeatsuchpersonaljurisdictionbymotionorotherrequestforleavefromanyMichiganCourt,and (iii) agrees that it will not bring any claim or action arising out of or relating to this Agreement or theTransactionsinanycourtotherthanaMichiganCourt.EachofthepartiesherebyirrevocablyandunconditionallyconsentstoserviceofprocessinthemannerprovidedfornoticesinSection11.7.NothinginthisAgreementwillaffecttherightofanypartytoserveprocessinanyothermannerpermittedbyapplicablelaw.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAYARISEUNDERTHISAGREEMENTISLIKELYTOINVOLVECOMPLICATEDANDDIFFICULTISSUES,AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANYRIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATIONDIRECTLY
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ORINDIRECTLYARISINGOUTOFORRELATINGTOTHISAGREEMENTORTHETRANSACTIONSCONTEMPLATED HEREUNDER, INCLUDING ANY CONTROVERSY INVOLVING ANYREPRESENTATIVE OF PARENT OR ANY HOLDER UNDER THIS AGREEMENT. EACH PARTYCERTIFIESANDACKNOWLEDGESTHAT(i)NOREPRESENTATIVE,AGENTORATTORNEYOFANYOTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTYWOULDNOT,INTHEEVENTOFLITIGATION,SEEKTOENFORCETHEFOREGOINGWAIVER,(ii)ITUNDERSTANDSANDHASCONSIDEREDTHEIMPLICATIONSOFTHISWAIVER,(iii)ITMAKESTHISWAIVERVOLUNTARILY,AND(iv)ITHASBEENINDUCEDTOENTERINTOTHISAGREEMENTBY,AMONGOTHERTHINGS,THEMUTUALWAIVERSANDCERTIFICATIONSINTHISSECTION11.8(c).
11.9 Specific Enforcement. The parties acknowledge and agree that irreparable damage would occur in theeventthatanyoftheprovisionsofthisAgreementwerenotperformedinaccordancewiththeirspecifictermsorwereotherwise breached, and that monetary damages, even if available, would not be an adequate remedy therefor. It isaccordingly agreedthat the parties shall be entitled to aninjunctionor injunctions to prevent breaches or threatenedbreachesofthisAgreementandtoenforcespecificallytheperformanceofthetermsandprovisionsofthisAgreement.It is agreed that the parties are entitled to enforce specifically the performance of terms and provisions of thisAgreement,withoutproofofactualdamages(andeachsuchpartyherebywaivesanyrequirementforthesecuringorposting of anybondin connection with suchremedy), this being in addition to any other remedyto which they areentitled at law or in equity. The parties further agree not to assert that a remedy of specific enforcement isunenforceable,invalid,contrarytoapplicablelaworinequitableforanyreason,nortoassertthataremedyofmonetarydamageswouldprovideanadequateremedyforanysuchbreach.
11.10 Interpretation. When a reference is made in this Agreement to a Section or an Exhibit, such referenceshallbetoaSectionoranExhibitofortothisAgreementunlessotherwiseindicated.Thetableofcontents,indexofdefinedtermsandheadingscontainedinthisAgreementareforreferencepurposesonlyandshallnotaffectinanywaythemeaningorinterpretationofthisAgreement. AnycapitalizedtermusedinanyExhibit butnototherwisedefinedthereinshallhavethemeaningassignedtosuchterminthisAgreement.Wheneverthewords“include,”“includes”or“including”areusedinthisAgreement, theyshall bedeemedtobefollowedbythewords“withoutlimitation.”Thewords “hereof,” “hereto,” “hereby,” “herein” and “hereunder” and words of similar import when used in thisAgreementshall refertothisAgreementasawholeandnottoanyparticularprovisionofthisAgreement. Theterm“or”isnotexclusive.Theword“extent”inthephrase“totheextent”shallmeanthedegreetowhichasubjectorotherthingextends,andsuchphraseshallnotmeansimply“if.”ThedefinitionscontainedinthisAgreementareapplicabletothesingularaswellasthepluralformsofsuchterms.Allpronounsandanyvariationsthereofrefertothemasculine,feminine or neuter as the context may require. Any agreement, instrument or applicable law defined or referred tohereinmeanssuchagreement,instrumentorapplicablelawasfromtimetotimeamended,modifiedorsupplemented,unlessotherwisespecificallyindicated.ReferencestoaPersonarealsotoitspermittedsuccessorsandassigns.Unlessotherwisespecificallyindicated,allreferencesto“dollars”and“$”willbedeemedreferencestothelawfulmoneyoftheUnitedStatesofAmerica.
11.11 Counterparts.ThisAgreementmaybeexecutedinoneormorecounterparts,includingbyfacsimileorbyemailwith.pdfattachments,allofwhichshallbeconsideredoneandthesameagreement,andshallbecomeeffectivewhenoneormorecounterpartshavebeensignedbyeachofthepartiesanddeliveredtotheotherparties.
11.12 CertainDefinitions. Whenusedinthis Agreement, thefollowingtermsinall of their tenses, casesandcorrelativeformsshallhavethemeaningsassignedtotheminthisSection11.12.
(a) “beneficialownership” means, with respect to any securities, the ownership of such security by any“beneficialowner”assuchtermisdefinedinRule13d-3adoptedbytheSECundertheExchangeAct.Theterms“beneficialowner,”“beneficiallyown,”“beneficiallyowned”andsimilartermsshallhaveacorrelativemeaning.
(b) “ImmediateFamily”means,withrespecttoaPerson,(i)suchPerson’sspouse(formerorthen-current),(ii)suchPerson’sparentsandgrandparents,and(iii)ascendantsanddescendants(naturaloradoptive,ofthewholeorhalfblood)ofsuchPerson’sparentsoroftheparentsofsuchPerson’sspouse(formerorthen-current).
(c) “FamilyTrust”means,withrespecttoanindividual,atrustforthebenefitofsuchindividualorforthebenefitofanymemberormembersofsuchindividual’sImmediateFamilyorforthebenefitofsuch
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individualandanymemberormembersofsuchindividual’sImmediateFamily(forthepurposeofdeterminingwhether or not a trust is a Family Trust, the fact that one (1) or more of the beneficiaries (but not the solebeneficiary)ofthetrustincludesaPersonorPersons,otherthanamemberofsuchindividual’sImmediateFamily,entitledtoadistributionafterthedeathofthesettlorifhe,she,it,ortheyshallhavesurvivedthesettlorofsuchtrust,whichdistributionmaybemadeofsomethingotherthanSubjectInterestsand/orincludesanorganizationororganizations exempt from federal income taxes pursuant to the provisions of Section 501(a) of the Code anddescribedinSection501(c)(3)oftheCode,shallbedisregarded);provided,however,thatinrespectoftransfersbywayof testamentary or inter vivos trust, the trustee or trustees shall be solely suchindividual, a member ormembersofsuchindividual’sImmediateFamily,aresponsiblefinancialinstitution,anattorneythatisamemberoftheBarofanyStateintheUnitedStates,and/oranindividualorindividualsapprovedbytheParent.
(d) “Person”meansanynaturalperson,firm,corporation,partnership,company,limitedliabilitycompany,trust,jointventure,association,GovernmentalEntityorotherentity.
(e) “Pledgee” means any lender who has made a loan to a Holder or any Permitted Transferee or anyaffiliatethereofandtowhomeitheraHolder,anyPermittedTransfereeoraffiliatethereofhaspledgedtheirdirectorindirectinterestsinanySubjectInterestsassecurityforsuchloan.
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
SIMON PROPERTY GROUP, INC.,aDelawarecorporation
By: /s/DavidSimon
Name: DavidSimon
Title: ChairmanoftheBoard,ChiefExecutiveOfficerandPresident
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
R & W-TRG LLC, a Michigan limited liability company
By: /s/RobertS.Taubman
RobertS.Taubman,Manager
/s/WilliamS.Taubman
WilliamS.Taubman,Manager
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
/s/RobertS.Taubman
RobertS.Taubman,asTrusteeoftheRobertS.TaubmanRevocableTrustunderAgreementdatedAugust9,1982,asamended
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
/s/WilliamS.Taubman
WilliamS.Taubman,asTrusteeoftheWilliamS.TaubmanRevocableTrustunderAgreementdatedJune10,1993,asamended
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
/s/RobertS.Taubman
RobertS.Taubman,asTrusteeoftheFamilyTrustcreatedundertheJuliaReyesTaubmanTrustAgreementdated10/7/2015
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
TAUBMAN VENTURES GROUP LLC, a Michigan limited liability company
By: AlloftheVotingCommonMembers: ESTATEOFA.ALFREDTAUBMAN By: /s/GayleTaubmanKalisman
GayleTaubmanKalisman,PersonalRepresentative
/s/RobertS.Taubman
RobertS.Taubman,PersonalRepresentative
/s/WilliamS.Taubman
WilliamS.Taubman,PersonalRepresentative
RSTSUB-TRAP,LLC,aDelawarelimitedliabilitycompany
By: /s/RobertS.Taubman
RobertS.Taubman,ManagingMember
WSTSUB-TRAP,LLC,aDelawarelimitedliabilitycompany
By: /s/WilliamS.Taubman
WilliamS.Taubman,ManagingMember
GTKSUB-TRAP,LLC,aDelawarelimitedliabilitycompany
By: /s/GayleTaubmanKalisman
GayleTaubmanKalisman,ManagingMember
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
A. ALFRED TAUBMAN RESTATED REVOCABLETRUST, AS AMENDED AND RESTATED IN ITSENTIRETY BY INSTRUMENT DATED DECEMBER 2,2014
By: /s/GayleTaubmanKalisman
GayleTaubmanKalisman,Trustee
/s/RobertS.Taubman
RobertS.Taubman,Trustee
/s/WilliamS.Taubman
WilliamS.Taubman,Trustee
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
RSTCO, LLC, a Delaware limited liability company
By: /s/RobertS.Taubman
RobertS.Taubman,Manager
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
WSTCO, LLC, a Delaware limited liability company
By: /s/WilliamS.Taubman
WilliamS.Taubman,Manager
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
/s/GayleTaubmanKalisman
GayleTaubmanKalisman,asTrusteeoftheGayleTaubmanKalismanRevocableTrustunderAgreementdatedMarch22,1981,asamended
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
TG PARTNERS, LLC, a Delaware limited liability company
By: TGMichigan,Inc.,aMichigancorporation
Its: ManagerMember
By: /s/RobertS.Taubman
RobertS.Taubman,President
[Signature Page to Voting Agreement]
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INWITNESSWHEREOF,eachofthepartieshascausedthisAgreementtobeexecutedasofthedatefirstabovewritten.
TF ASSOCIATES, LLC, a Michigan limited liability company
ByItsMembers:
/s/GayleTaubmanKalisman
GayleTaubmanKalisman,asTrusteeoftheGTK2017PhilipTaubmanKalismanGrantorRetainedAnnuityTrustunderAgreementdatedNovember6,2017andtheGTK2017JasonTaubmanKalismanGrantorRetainedAnnuityTrustunderAgreementdatedNovember6,2017
/s/RobertS.Taubman
RobertS.Taubman,asTrusteeoftheRST2017AlexanderTaubmanGrantorRetainedAnnuityTrustunderAgreementdatedNovember6,2017,theRST2017GhislaineTaubmanGrantorRetainedAnnuityTrustunderAgreementdatedNovember6,2017,theRST2017SebastianTaubmanGrantorRetainedAnnuityTrustunderAgreementdatedNovember6,2017,andtheRST2017TheodoreTaubmanGrantorRetainedAnnuityTrustunderAgreementdatedNovember6,2017
/s/WilliamS.Taubman
WilliamS.Taubman,asTrusteeoftheWST2017OliverTaubmanGrantorRetainedAnnuityTrustunderAgreementdatedNovember6,2017,andtheWST2017AbigailTaubmanGrantorRetainedAnnuityTrustunderAgreementdatedNovember6,2017
[Signature Page to Voting Agreement]
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EXHIBIT A
Holder
Number of Subject Shares of Titanium
Common StockOwned
(Record or Beneficial)
Number of Subject Shares of Titanium
Series B Preferred StockOwned (Record or
Beneficial)
Number of Subject Units of Titanium OP Units Owned (Record
or Beneficial)
R&W-TRGLLC 711,504 1,338,496 1,338,496
RobertS.TaubmanRevocableTrustunderAgreementdatedAugust9,1982,asamended 267,395 38,314 38,314
WilliamS.TaubmanRevocableTrustunderAgreementdatedJune10,1993,asamended 43,032 25,036 25,036
FamilyTrustcreatedundertheJuliaReyesTaubmanTrustAgreementdatedOctober7,2015 42,880 0 0
TaubmanVenturesGroupLLC 186,837 22,311,442 22,311,442
A.AlfredTaubmanRestatedRevocableTrust,asamendedandrestatedinitsentiretybyInstrumentdatedDecember2,2014 100 0 0
RSTCO,LLC 265,246 0 0
WSTCO,LLC 203,588 0 0
GayleTaubmanKalismanRevocableTrustunderAgreementdatedMarch22,1981,asamended 0 239 239
TGPartners,LLC 0 5,000 5,000
TFASSOCIATES,LLC 0 472,650 472,650
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