Document:

Exhibit 10.3

 

SIMON PROPERTY GROUP

SERIES 2010 LTIP UNIT (ONE YEAR PROGRAM)

AWARD AGREEMENT

 

This Series 2010 LTIP Unit (One Year Program) Award Agreement (“Agreement”)
made as of the date set forth below among Simon Property Group, Inc., a
Delaware corporation (the “Company”), its subsidiary, Simon Property
Group, L.P., a Delaware limited partnership and the entity through which the
Company conducts substantially all of its operations (the “Partnership”),
and the person identified below as the grantee (the “Grantee”).

 

Recitals

 

A.            The Grantee is an employee
of the Company or one of its affiliates and provides services to the
Partnership.

 

B.            The Compensation Committee
(the “Committee”) of the Board of Directors of the Company (the “Board”)
approved this award (this “Award”) pursuant to the Partnership’s 1998
Stock Incentive Plan (as further amended, restated or supplemented from time to
time hereafter, the “Plan”) and the Eighth Amended and Restated
Agreement of Limited Partnership of the Partnership, as amended, restated and
supplemented from time to time hereafter (the “Partnership Agreement”),
to provide officers of the Company or its affiliates, including the Grantee, in
connection with their employment, with the incentive compensation described in
this Agreement, and thereby provide additional incentive for them to promote
the progress and success of the business of the Company and its affiliates,
including the Partnership. This Award was approved by the Committee pursuant to
authority delegated to it by the Board as set forth in the Plan and the
Partnership Agreement to make grants of LTIP Units (as defined in the
Partnership Agreement).

 

C.            This Agreement evidences an
award of LTIP Units that have been designated as the Series 2010 LTIP
Units pursuant to the Partnership Agreement.

 

D.            Effective as of the grant
date specified in Schedule A, the Committee has made an award to the
Grantee of the number of LTIP Units (the “Award LTIP Units”) set forth
in Schedule A.

 

NOW, THEREFORE, the Company, the Partnership
and the Grantee agree as follows:

 

1.             Administration.  This Award shall be administered by the
Committee which has the powers and authority as set forth in the Plan.

 

2.             Definitions.  Capitalized terms used herein without
definitions shall have the meanings given to those terms in the Plan.  In addition, as used herein:

 

 

“Absolute TSR Goal” means the goal for TSR on an absolute basis
as set forth on Exhibit A.

 

“Annualized TSR Percentage” means the annualized equivalent of
the TSR Percentage.

 

“Award Date” means the date that the Award LTIP Units were
granted as set forth on Schedule A.

 

“Award LTIP Units” has the meaning set forth in the Recitals.

 

“Baseline Value” means $79.80, the per share closing price of
the Common Stock reported by The New York Stock Exchange for the last trading
date preceding January 1, 2010.

 

“Change of Control” means:

 

(i)            Any “person,” as such term
is used in Sections 13(d) and 14(d) of the Exchange Act (other than
the Company, any of its subsidiaries, or the estate of Melvin Simon, Herbert
Simon or David Simon (the “Simons”), or any trustee, fiduciary or other
person or entity holding securities under any employee benefit plan or trust of
the Company or any of its subsidiaries), together with all “affiliates” and “associates”
(as such terms are defined in Rule 12b-2 under the Exchange Act) of such
person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the Company’s then
outstanding voting securities entitled to vote generally in the election of
directors; provided that for purposes of determining the “beneficial ownership”
(as such term is defined in Rule 13d-3 under the Exchange Act) of any “group”
of which the Simons or any of their affiliates or associates is a member (each
such entity or individual, a “Related Party”), there shall not be
attributed to the beneficial ownership of such group any shares beneficially
owned by any Related Party;

 

(ii)           Individuals who, as of the
date hereof, constitute the Board of Directors of the Company (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board
of Directors; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board of Directors;

 

(iii)          Approval by the stockholders
of the Company of a reorganization, merger or consolidation, in each case
unless, following such reorganization, merger or consolidation, (A) more
than sixty percent (60%) of the combined voting power of the then outstanding
voting securities of the corporation resulting from such reorganization, merger
or consolidation entitled to vote generally in the 

 

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election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners of the Company’s
outstanding voting securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as their beneficial
ownership, immediately prior to such reorganization, merger or consolidation,
of the Company’s outstanding voting securities, (B) no person (excluding the
Company, the Simons, any employee benefit plan or related trust of the Company
or such corporation resulting from such reorganization, merger or consolidation
and any person beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, twenty-five percent (25%) or
more of the Company’s outstanding voting securities) beneficially owns,
directly or indirectly, twenty-five percent (25%) or more of the combined
voting power of the then outstanding voting securities of the corporation
resulting from such reorganization, merger or consolidation entitled to vote
generally in the election of directors and (C) at least a majority of the
members of the board of directors of the corporation resulting from such reorganization,
merger or consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization, merger or
consolidation; or

 

(iv)          Approval by the stockholders
of the Company of (A) a complete liquidation or dissolution of the Company
or (B) the sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation with respect to which
following such sale or other disposition (x) more than sixty percent (60%)
of the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the Company’s
outstanding voting securities entitled to vote generally in the election of
directors immediately prior to such sale or other disposition in substantially
the same proportion as their beneficial ownership, immediately prior to such
sale or other disposition, of the Company’s outstanding voting securities, (y) no
person (excluding the Company, the Simons, and any employee benefit plan or
related trust of the Company or such corporation and any person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, twenty-five percent (25%) or more of the Company’s outstanding
voting securities) beneficially owns, directly or indirectly, twenty-five
percent (25%) or more of the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (z) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board of
Directors of the Company providing for such sale or other disposition of assets
of the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Common Stock” means the Company’s common stock, par value
$0.0001 per share, either currently existing or authorized hereafter.

 

3

 

“Continuous Service” means the continuous service to the Company
or any subsidiary or affiliate, without interruption or termination, in any
capacity of employment. Continuous Service shall not be considered interrupted
in the case of:  (A) any approved
leave of absence; (B) transfers among the Company and any subsidiary or
affiliate, or any successor, in any capacity of employment; or (C) any
change in status as long as the individual remains in the service of the
Company and any subsidiary or affiliate in any capacity of employment. An
approved leave of absence shall include sick leave, military leave, or any
other authorized personal leave.

 

“Designation” means the Certificate of Designation of Series 2010
LTIP Units of the Partnership approved by the Company as the general partner of
the Partnership.

 

“Disability” means, with respect to the Grantee, a “permanent
and total disability” as defined in Section 22(e)(3) of the Code.

 

“Earned LTIP Units” means those Award LTIP Units that have been
determined by the Committee to have been earned on the Valuation Date based on
the extent to which the Absolute TSR Goal and the Relative TSR Goals have been
achieved as set forth in Section 3(c) or have otherwise been
earned under Section 4.

 

“Effective Date” means the close of business on January 1,
2010.

 

“Employment Agreement” means, as of a particular date, any
employment or similar service agreement then in effect between the Grantee, on
the one hand, and the Company or one of its Subsidiaries, on the other hand, as
amended or supplemented through such date.

 

“Ending Common Stock Price” means, as of a particular date, the
average of the closing prices of the Common Stock reported by The New York
Stock Exchange for the twenty (20) consecutive trading days ending on (and
including) such date; provided, however, that if such date is the date upon
which a Change of Control occurs, the Ending Common Stock Price as of such date
shall be equal to the fair value, as determined by the Committee, of the total
consideration paid or payable in the transaction resulting in the Change of
Control for one share of Common Stock.

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

“Family Member” has the meaning set forth in Section 7.

 

“LTIP Units” means the Series 2010 LTIP Units issued
pursuant to the Designation.

 

“Partial Service Factor” means a factor carried out to the sixth
decimal to be used in calculating the Earned LTIP Units pursuant to Section 4
in the event of a Qualified Termination of the Grantee’s Continuous Service or
a Change of Control prior to the Valuation Date, determined by dividing the
number of calendar days that have elapsed since the Effective Date to and
including the date of the Grantee’s Qualified Termination or a Change of
Control, whichever is applicable, by 365.

 

“Partnership Units” or “Units” has the meaning provided in the
Partnership Agreement.

 

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“Person” means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, other entity or “group” (as defined in the Exchange Act).

 

“Per Unit Purchase Price” has the meaning set forth in Section 5.

 

“Plan” has the meaning set forth in the Recitals.

 

“Qualified Termination” has the meaning set forth in Section 4(b).

 

“REIT Index” means the MSCI REIT Index or any successor index.

 

“Relative TSR Goals” means the goals set for TSR on a relative
basis as compared to the REIT Index and the S&P Index as set forth on Exhibit A.

 

“S&P Index” means the Standard & Poors 500 index of
large capitalization U.S. stocks or any successor index.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Total Stockholder Return” or “TSR” means, with respect to a
share of Common Stock as of a particular date of determination, the sum of: (A) the
difference, positive or negative, of the Ending Common Stock Price as of such
date over the Baseline Value, plus (B) the total per-share dividends and
other distributions (excluding distributions described in Section 7)
with respect to the Common Stock declared between the Effective Date and such
date of determination and assuming contemporaneous reinvestment in Common Stock
of all such dividends and distributions, so long as the “ex-dividend” date with
respect thereto falls prior to such date of determination.

 

“Transfer” has the meaning set forth in Section 7.

 

“TSR Percentage” means the TSR achieved with respect to a share
of Common Stock from the Effective Date to the Valuation Date determined by
following quotient: (A) the TSR divided by (B) the Baseline Value.

 

“Valuation Date” means the earlier of (A) December 31,
2011, or (B) the date upon which a Change of Control shall occur.

 

“Vested LTIP Units” means those Earned LTIP Units that have
fully vested in accordance with the time-based vesting conditions of Section 3(d) or
have vested on an accelerated basis under Section 4.

 

3.             Award.

 

(a)         The Grantee is granted as of
the Award Date, the number of Award LTIP Units set forth on Schedule A
which are subject to forfeiture provided in this Section 3 and Section 4.  The Award LTIP Units will be forfeited unless
within ten (10) business days from the Award Date the Grantee executes and
delivers a fully executed copy of this Agreement and such other documents that
the Company and/or the 

 

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Partnership reasonably
request in order to comply with all applicable legal requirements, including,
without limitation, federal and state securities laws, and the Grantee pays the
Per Unit Purchase Price for each such Award LTIP Unit issued.

 

(b)         The Award LTIP Units are
subject to forfeiture during a maximum of a five-year period based on a
combination of (i) the extent to which the Absolute TSR Goal and the
Relative TSR Goals are achieved and (ii) the passage of five years or a
shorter period in certain circumstances as provided herein in Section 4.  Award LTIP Units may become Earned LTIP Units
and Earned LTIP Units may become Vested LTIP Units in the amounts and upon the
conditions set forth in this Section 3 and in Section 4,
provided that, except as otherwise expressly set forth in this Agreement, the
Continuous Service of the Grantee continues through and on each applicable
vesting date.

 

(c)         As soon as practicable
following the Valuation Date, but as of the Valuation Date, the Committee will
determine:

 

(i)            the extent to which the
Absolute TSR Goal has been achieved;

 

(ii)           the extent to which the
Relative TSR Goals have been achieved;

 

(iii)          using the payout matrix on Exhibit A,
the number of Earned LTIP Units to which the Grantee is entitled; and

 

(iv)          the calculation of the
Partial Service Factor, if applicable to the Grantee.

 

If the number of Earned LTIP Units is smaller than the number of Award
LTIP Units, then the Grantee, as of the Valuation Date, shall forfeit a number
of Award LTIP Units equal to the difference without payment of any
consideration by the Partnership other than as provided in the last sentence of
Section 5; thereafter the term LTIP Units will refer only to the
Earned LTIP Units and neither the Grantee nor any of his or her successors,
heirs, assigns, or personal representatives will thereafter have any further
rights or interests in the Award LTIP Units that were so forfeited.

 

(d)         The Earned LTIP Units shall
become Vested LTIP Units in the following amounts and at the following times,
provided that the Continuous Service of the Grantee continues through and on
the applicable vesting date or the accelerated vesting date provided in Section 4,
as applicable:

 

(i)            fifty percent (50%) of the
Earned LTIP Units shall become Vested LTIP Units on January 1, 2012; and

 

(ii)           fifty percent (50%) of the Earned
LTIP Units shall become Vested LTIP Units on January 1, 2013.

 

(e)         Except as otherwise provided
under Section 4, upon termination of Continuous Service before the
applicable vesting date, any Earned LTIP Units that have not become Vested LTIP
Units pursuant to Section 3(d) shall, without payment of any 

 

6

 

consideration by the
Partnership other than as provided in the last sentence of Section 5,
automatically and without notice be forfeited and be and become null and void,
and neither the Grantee nor any of his or her successors, heirs, assigns, or
personal representatives will thereafter have any further rights or interests in
such Earned LTIP Units.

 

4.             Termination of
Grantee’s Employment; Death and Disability;
Change of Control.

 

(a)         If the Grantee ceases to be
an employee of the Company or any of its affiliates, the provisions of Sections
4(b) through Section 4(f) shall govern the treatment
of the Grantee’s Award LTIP Units exclusively, unless an Employment Agreement
contains provisions that expressly refer to this Section 4(a) and
provides that those provisions of the Employment Agreement shall instead govern
the treatment of the Grantee’s LTIP Units. In the event an entity of which the
Grantee is an employee ceases to be a subsidiary or affiliate of the Company,
such action shall be deemed to be a termination of employment of the Grantee
for purposes of this Agreement, unless the Grantee promptly thereafter becomes
an employee of the Company or any of its affiliates, provided that, the
Committee or the Board, in its sole and absolute discretion, may make provision
in such circumstances for lapse of forfeiture restrictions and/or accelerated
vesting of some or all of the Grantee’s Award LTIP Units and Earned LTIP Units
that have not previously been forfeited, effective immediately prior to such
event. If a Change of Control occurs, Section 4(d) shall
govern the treatment of the Grantee’s Award LTIP Units exclusively,
notwithstanding the provisions of the Plan.

 

(b)         In the event of termination
of the Grantee’s Continuous Service before the Valuation Date by Grantee’s
death or Disability (each a “Qualified Termination”), the Grantee
will not forfeit the Award LTIP Units upon such termination, but the following
provisions of this Section 4(b) shall modify the treatment of
the Award LTIP Units:

 

(i)            the calculations provided in
Section 3(c) shall be performed as of the Valuation Date as if
the Qualified Termination had not occurred;

 

(ii)           the number of Earned LTIP
Units calculated pursuant to Section 3(c) shall be multiplied by the Partial
Service Factor (with the resulting number being rounded to the nearest whole
LTIP Unit or, in the case of 0.5 of a unit, up to the next whole unit), and
such adjusted number of LTIP Units shall be deemed the Grantee’s Earned LTIP
Units for all purposes under this Agreement;

 

(iii)          the Grantee’s Earned LTIP
Units as adjusted pursuant to Section 4(b)(ii) shall, as of
the Valuation Date, become Vested LTIP Units and shall no longer be subject to
forfeiture pursuant to Section 3(e).

 

(c)         In the event of Qualified
Termination after the Valuation Date, all Earned LTIP Units that have not
previously been forfeited pursuant to the calculations set forth 

 

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in Section 3(c) shall,
as of the date of such Qualified Termination, become Vested LTIP Units and no
longer be subject to forfeiture pursuant to Section 3(e); provided
that, notwithstanding that no Continuous Service requirement pursuant to Section 3(d) will
apply to the Grantee after the effective date of a Qualified Termination after
the Valuation Date, the Grantee will not have the right to Transfer (as defined
in Section 7) except by reason of the Grantee’s death or request
conversion of his or her Vested LTIP Units under the Designation until such
dates as of which his or her Earned LTIP Units would have become Vested LTIP
Units pursuant to Section 3(d) absent a Qualified Termination.

 

(d)         If the calculations provided
in Section 3(c) are triggered by a Change of Control prior to
the Valuation Date, the Grantee’s Award LTIP Units shall be multiplied by the
Partial Service Factor determined as of the date of the Change of Control and
the resulting number of LTIP Units shall become Vested LTIP Units immediately
and automatically as of the Valuation Date. If a Change of Control occurs on or
after the Valuation Date and prior to January 1, 2012, all Earned LTIP
Units shall become Vested LTIP Units immediately and automatically upon the
occurrence of the Change of Control.

 

(e)         Notwithstanding the
foregoing, in the event any payment to be made hereunder after giving effect to
this Section 4 is determined to constitute “nonqualified deferred
compensation” subject to Section 409A of the Code, then, to the extent the
Grantee is a “specified employee” under Section 409A of the Code subject
to the six-month delay thereunder, any such payments to be made during the six-month
period commencing on the Grantee’s “separation from service” (as defined in Section 409A
of the Code) shall be delayed until the expiration of such six-month period.

 

(f)          In the event of a
termination of the Grantee’s employment other than a Qualified Termination or a
termination that is related to a Change of Control, all Award LTIP Units and
Earned LTIP Units that have not theretofore become Vested LTIP Units shall,
without payment of any consideration by the Partnership other than as provided
in the last sentence of Section 5, automatically and without notice
terminate, be forfeited and be and become null and void, and neither the
Grantee nor any of his or her successors, heirs, assigns, or personal
representatives will thereafter have any further rights or interests in such
Award LTIP Units or Earned LTIP Units, provided, however, in the event the
termination of Grantee’s employment is due to Grantee’s retirement after
age 55, the Committee may determine, in its sole discretion, that all or
any portion of the Award LTIP Units or the Earned LTIP Units shall become
Vested LTIP Units, together with the terms and conditions upon which any such
Award LTIP Units or Earned LTIP Units shall become Vested LTIP Units.

 

5.             Payments by
Award Recipients. The Grantee shall have no rights with respect to
this Agreement (and the Award evidenced hereby) unless he or she shall have
accepted this Agreement prior to the close of business on the date described in
Section 3(a) by (a) making a contribution to the capital
of the Partnership by certified or bank check or other instrument acceptable to
the Committee (as defined in the Plan), of $0.25 (the “Per Unit
Purchase  Price”), multiplied by the
number of Award LTIP Units, (b) signing and delivering to the Partnership
a copy of this Agreement and (c) unless the Grantee is already a Limited
Partner (as defined in 

 

8

 

the Partnership Agreement), signing, as a Limited Partner, and
delivering to the Partnership a counterpart signature page to the
Partnership Agreement (attached as Exhibit B). The Per Unit
Purchase Price paid by the Grantee shall be deemed a contribution to the
capital of the Partnership upon the terms and conditions set forth herein and
in the Partnership Agreement. Upon acceptance of this Agreement by the Grantee,
the Partnership Agreement shall be amended to reflect the issuance to the
Grantee of the LTIP Units so accepted. Thereupon, the Grantee shall have all
the rights of a Limited Partner of the Partnership with respect to the number
of Award LTIP Units, as set forth in the Designation and the Partnership
Agreement, subject, however, to the restrictions and conditions specified
herein. Award LTIP Units constitute and shall be treated for all purposes as
the property of the Grantee, subject to the terms of this Agreement and the
Partnership Agreement. In the event of the forfeiture of the Grantee’s Award
LTIP Units pursuant to this Agreement, the Partnership will pay the Grantee an
amount equal to the number of Award LTIP Units so forfeited multiplied by the
lesser of the Per Unit Purchase Price or the fair market value of an Award LTIP
Unit on the date of forfeiture as determined by the Committee.

 

6.             Distributions.

 

(a)         The holders of Award LTIP
Units, Earned LTIP Units and Vested LTIP Units (until and unless forfeited
pursuant to Section 3(e) or Section 4(f)), shall be
entitled to receive the distributions to the extent provided for in the
Designation and the Partnership Agreement.

 

(b)         All distributions paid with
respect to LTIP Units shall be fully vested and non-forfeitable when paid.

 

7.             Restrictions on
Transfer.

 

(a)         Except as otherwise
permitted by the Committee in its sole discretion, none of the Award LTIP
Units, Earned LTIP Units, Vested LTIP Units or Partnership Units into which
Vested LTIP Units have been converted shall be sold, assigned, transferred,
pledged, hypothecated, given away or in any other manner disposed or
encumbered, whether voluntarily or by operation of law (each such action a “Transfer”);
provided that Earned LTIP Units and Vested LTIP Units may be Transferred to the
Grantee’s Family Members (as defined below) by gift, bequest or domestic
relations order; and provided further that the transferee agrees in writing
with the Company and the Partnership to be bound by all the terms and
conditions of this Agreement and that subsequent transfers shall be prohibited
except those in accordance with this Section 7.  Additionally, all such Transfers must be in
compliance with all applicable securities laws (including, without limitation,
the Securities Act) and the applicable terms and conditions of the Partnership
Agreement. In connection with any such Transfer, the Partnership may require
the Grantee to provide an opinion of counsel, satisfactory to the Partnership,
that such Transfer is in compliance with all federal and state securities laws
(including, without limitation, the Securities Act).  Any attempted Transfer not in accordance with
the terms and conditions of this Section 7 shall be null and void,
and neither the Partnership nor the Company shall reflect on its records any
change in record ownership of any Earned LTIP Units or Vested LTIP Units as a
result of any such Transfer, shall otherwise 

 

9

 

refuse to recognize any such
Transfer and shall not in any way give effect to any such Transfer.  Except as provided in this Section 7,
this Agreement is personal to the Grantee, is non-assignable and is not
transferable in any manner, by operation of law or otherwise, other than by
will or the laws of descent and distribution.

 

(b)         For purposes of this
Agreement, “Family Member” of a Grantee, means the Grantee’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Grantee’s household (other than a tenant of the Grantee), a trust
in which one or more of these persons (or the Grantee) own more than 50 percent
of the beneficial interests, and a partnership or limited liability company in
which one or more of these persons (or the Grantee) own more than 50 percent of
the voting interests.

 

8.             Miscellaneous.

 

(a)         Amendments. This
Agreement may be amended or modified only with the consent of the Company and
the Partnership acting through the Committee; provided that any such amendment
or modification which materially adversely affects the rights of the Grantee
hereunder must be consented to by the Grantee to be effective as against him or
her. Notwithstanding the foregoing, this Agreement may be amended in writing
signed only by the Company and the Partnership to correct any errors or
ambiguities in this Agreement and/or to make such changes that do not
materially adversely affect the Grantee’s rights hereunder. This grant shall in
no way affect the Grantee’s participation or benefits under any other plan or
benefit program maintained or provided by the Company or the Partnership or any
of their subsidiaries or affiliates.

 

(b)         Incorporation of Plan and
Designation; Committee Determinations. The provisions of the Plan
and the Designation are hereby incorporated by reference as if set forth
herein. The Committee will make the determinations and certifications required
by this Award as promptly as reasonably practicable following the occurrence of
the event or events necessitating such determinations or certifications. In the
event of a Change of Control, the Committee will make such determinations
within a period of time that enables the Company to make any payments due
hereunder not later than the date of consummation of the Change of Control.

 

(c)         Status of LTIP Units; Plan
Matters. This Award constitutes an incentive compensation award under the
Plan. The LTIP Units are equity interests in the Partnership. The number of
shares of Common Stock reserved for issuance under the Plan underlying
outstanding Award LTIP Units will be determined by the Committee in light of
all applicable circumstances, including calculations made or to be made under Section 3,
vesting, capital account allocations and/or balances under the Partnership
Agreement, and the exchange ratio in effect between Partnership Units and
shares of Common Stock. The Company will have the right at its option, as set
forth in the Partnership Agreement, to issue shares of Common Stock in exchange
for Partnership Units in accordance with the Partnership Agreement, subject to
certain

 

10

 

limitations set forth in the Partnership
Agreement, and such shares of Common Stock, if issued, will be issued under the
Plan. The Grantee acknowledges that the Grantee will have no right to approve
or disapprove such determination by the Committee.

 

(d)         Legend.  The records of the Partnership evidencing the
LTIP Units shall bear an appropriate legend, as determined by the Partnership
in its sole discretion, to the effect that such LTIP Units are subject to
restrictions as set forth herein and in the Partnership Agreement.

 

(e)         Compliance
With Law.  The Partnership and the
Grantee will make reasonable efforts to comply with all applicable securities
laws. In addition, notwithstanding any provision of this Agreement to
the contrary, no LTIP Units will become Vested LTIP Units at a time that such
vesting would result in a violation of any such law.

 

(f)          Grantee
Representations; Registration.

 

(i)            The Grantee hereby represents and warrants that (A) he
or she understands that he or she is responsible for consulting his or her own
tax advisor with respect to the application of the U.S. federal income tax
laws, and the tax laws of any state, local or other taxing jurisdiction to
which the Grantee is or by reason of this Award may become subject, to his or
her particular situation; (B) the Grantee has not received or relied upon
business or tax advice from the Company, the Partnership or any of their
respective employees, agents, consultants or advisors, in their capacity as
such; (C) the Grantee provides services to the Partnership on a regular
basis and in such capacity has access to such information, and has such
experience of and involvement in the business and operations of the
Partnership, as the Grantee believes to be necessary and appropriate to make an
informed decision to accept this Award; (D) LTIP Units are subject to
substantial risks; (E) the Grantee has been furnished with, and has
reviewed and understands, information relating to this Award; (F) the
Grantee has been afforded the opportunity to obtain such additional information
as he or she deemed necessary before accepting this Award; and (G) the
Grantee has had an opportunity to ask questions of representatives of the
Partnership and the Company, or persons acting on their behalf, concerning this
Award.

 

(ii)           The Grantee hereby acknowledges that: (A) there is no
public market for  LTIP Units or
Partnership Units into which Vested LTIP Units may be converted and neither the
Partnership nor the Company has any obligation or intention to create such a
market; (B) sales of LTIP Units and Partnership Units are subject to
restrictions under the Securities Act and applicable state securities laws; (C) because
of the restrictions on transfer or assignment of LTIP Units and Partnership
Units set forth in the Partnership Agreement and in this Agreement, the Grantee
may have to bear the economic risk of his or her ownership of the LTIP Units
covered by this Award for an indefinite period of time; (D) shares of
Common Stock issued under the Plan in exchange for Partnership Units, if any,
are expected to be covered by a Registration Statement on Form S-8 (or a
successor form under applicable rules and regulations of the Securities
and 

 

11

 

Exchange Commission) under the Securities
Act, to the extent that the Grantee is eligible to receive such shares under
the Plan at the time of such issuance and such registration Statement is then
effective under the Securities Act; (E) resales of shares of Common Stock
issued under the Plan in exchange for Partnership Units, if any, shall only be
made in compliance with all applicable restrictions (including in certain cases
“blackout periods” forbidding sales of Company securities) set forth in the
then applicable Company employee manual or insider trading policy and in
compliance with the registration requirements of the Securities Act or pursuant
to an applicable exemption therefrom.

 

(g)         Section 83(b) Election.  The Grantee hereby agrees to make an election
to include the Award LTIP Units in gross income in the year in which the Award
LTIP Units are issued pursuant to Section 83(b) of the Code
substantially in the form attached as Exhibit C and to supply the
necessary information in accordance with the regulations promulgated thereunder.
The Grantee agrees to file such election (or to permit the Partnership to file
such election on the Grantee’s behalf) within thirty (30) days after the Award
Date with the IRS Service Center where the Grantee files his or her personal
income tax returns, and to file a copy of such election with the Grantee’s
U.S. federal income tax return for the taxable year in which the Award
LTIP Units are issued to the Grantee. So long as the Grantee holds any Award
LTIP Units, the Grantee shall disclose to the Partnership in writing such
information as may be reasonably requested with respect to ownership of LTIP
Units as the Partnership may deem reasonably necessary to ascertain and to
establish compliance with provisions of the Code applicable to the Partnership
or to comply with requirements of any other appropriate taxing authority.

 

(h)         Tax Consequences.  The Grantee acknowledges
that (i) neither the Company nor the Partnership has made any
representations or given any advice with respect to the tax consequences of
acquiring, holding, selling or converting LTIP Units or making any tax election
(including the election pursuant to Section 83(b) of the Code) with
respect to the LTIP Units and (ii) the Grantee is relying upon the advice
of his or her own tax advisor in determining such tax consequences.

 

(i)          Severability. 
If, for any reason, any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not so
held invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.

 

(j)          Governing Law. 
This Agreement is made under, and will be construed in accordance with,
the laws of the State of Delaware, without giving effect to the principles of
conflict of laws of such state.

 

(k)         No Obligation to Continue Position as an Employee,
Consultant or Advisor.  Neither the
Company nor any affiliate is obligated by or as a result of this Agreement to
continue to have the Grantee as an employee,
consultant or advisor and 

 

12

 

this Agreement shall not interfere in any way
with the right of the Company or any affiliate to terminate the Grantee’s
employment at any time.

 

(l)          Notices.  Any
notice to be given to the Company shall be addressed to the Secretary of the
Company at 225 West Washington Street, Indianapolis, Indiana 46204 and any notice to
be given to the Grantee shall be addressed to the Grantee at the Grantee’s
address as it appears on the employment records of the Company, or at such
other address as the Company or the Grantee may hereafter designate in writing
to the other.

 

(m)        Withholding and Taxes. 
No later than the date as of which an amount first becomes includible in
the gross income of the Grantee for income tax purposes or subject to the
Federal Insurance Contributions Act withholding with respect to this Award, the
Grantee will pay to the Company or, if appropriate, any of its affiliates, or
make arrangements satisfactory to the Committee regarding the payment of any
United States federal, state or local or foreign taxes of any kind
required by law to be withheld with respect to such amount; provided, however,
that if any LTIP Units or Partnership Units are withheld (or returned), the
number of LTIP Units or Partnership Units so withheld (or returned) shall be
limited to the number which have a fair market value on the date of withholding
equal to the aggregate amount of such liabilities based on the minimum
statutory withholding rates for federal, state, local and foreign income tax
and payroll tax purposes that are applicable to such supplemental taxable
income. The obligations of the Company under this Agreement will be conditional
on such payment or arrangements, and the Company and its affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Grantee.

 

(n)         Headings.  The headings of paragraphs
of this Agreement are included solely for convenience of reference and shall
not control the meaning or interpretation of any of the provisions of this
Agreement.

 

(o)         Counterparts. 
This Agreement may be executed in multiple counterparts with the same
effect as if each of the signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

 

(p)         Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and any successors to the Company and the
Partnership, on the one hand, and any successors to the
Grantee, on the other hand, by will or the laws of descent and distribution,
but this Agreement shall not otherwise be assignable or otherwise subject to
hypothecation by the Grantee.

 

(q)         Section 409A. 
This Agreement shall be construed, administered and interpreted in
accordance with a good faith interpretation of Section 409A of the
Code, to the extent applicable. Any provision of this Agreement that is
inconsistent with applicable provisions of Section 409A of the Code, or
that may result in penalties under Section 409A of the Code, shall be
amended, with the reasonable cooperation of the Grantee and the Company and the
Partnership, to the extent necessary to exempt it from, or bring it into
compliance with, Section 409A of the Code.

 

13

 

(r)            Delay in Effectiveness of
Exchange.  The Grantee acknowledges
that any exchange of Partnership Units received upon conversion of Vested LTIP
Units for Common Stock may not become effective until six (6) months from the
date such Vested LTIP Units became fully vested.

 

[signature page follows]

 

14

 

IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as
of the          day of
                  ,
20    .

 

	
   

  	
  SIMON PROPERTY GROUP,
  INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SIMON PROPERTY GROUP,
  L.P., a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Simon Property
  Group, Inc., a Delaware corporation, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GRANTEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  

 

15

 

EXHIBIT A

 

PAYOUT MATRIX

 

The Committee will determine the number of Award LTIP
Units that become Earned LTIP Units by determining the extent to which the
Absolute TSR Goal and the Relative TSR Goals have been achieved as set forth in
the following payout matrix.

 

	
   

  	
   

  	
   

  	
   

  	
  Relative TSR (TSR %-ile Rank)(2)

  	
   

  
	
  Absolute TSR(1)

  	
   

  	
  vs. MSCI REIT Index

  	
   

  	
  vs. S&P 500 Index

  	
   

  
	
  Weighted 20%

  	
   

  	
  Weighted 60%

  	
   

  	
  Weighted 20%

  	
   

  
	
  Performance

  	
   

  	
  Payout %

  of Target(3)

  	
   

  	
  Performance

  	
   

  	
  Payout %

  of Target(3)

  	
   

  	
  Performance

  	
   

  	
  Payout %

  of Target(3)

  	
   

  
	
  <=6.67%

  	
   

  	
  0.0

  	
  %

  	
  Index -1%

  	
   

  	
  0.0

  	
  %

  	
  Index -2%

  	
   

  	
  0.0

  	
  %

  
	
  8%

  	
   

  	
  33.3

  	
  %

  	
  = Index

  	
   

  	
  33.3

  	
  %

  	
  = Index

  	
   

  	
  33.3

  	
  %

  
	
  9%

  	
   

  	
  50.0

  	
  %

  	
  Index +1%

  	
   

  	
  50.0

  	
  %

  	
  Index +2%

  	
   

  	
  100.0

  	
  %

  
	
  10%

  	
   

  	
  66.7

  	
  %

  	
  Index +2%

  	
   

  	
  66.7

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
  11%

  	
   

  	
  83.3

  	
  %

  	
  Index +3%

  	
   

  	
  100.0

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
  >=12%

  	
   

  	
  100.0

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(1)  Percentage of
total shareholder return over one-year performance period commencing on the
Effective Date

(2)  Percentage of
relative performance over one-year performance period commencing on the
Effective Date

(3)  Linear
interpolation between payout percentages

 

16

 

EXHIBIT B

 

FORM OF LIMITED PARTNER SIGNATURE PAGE

 

The
Grantee, desiring to become one of the within named Limited Partners of Simon
Property Group, L.P., hereby accepts all of the terms and conditions of and
becomes a party to, the Eighth Amended and Restated Agreement of Limited
Partnership, dated as of May 8, 2008, of Simon Property Group, L.P. as
amended through this date (the “Partnership Agreement”). The Grantee
agrees that this signature page may be attached to any counterpart of the
Partnership Agreement.

 

	
   

  	
  Signature Line for Limited
  Partner:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address of Limited
  Partner:

  

 

 

 

EXHIBIT C

 

ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF TRANSFER OF

PROPERTY PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE

 

The
undersigned hereby makes an election pursuant to Section 83(b) of the
Internal Revenue Code with respect to the property described below and supplies
the following information in accordance with the regulations promulgated
thereunder:

 

1.      The name, address and
taxpayer identification number of the undersigned are:

 

Name:                                                                                                  
          (the “Taxpayer”)

 

Address:

 

Social Security No./Taxpayer Identification No.:
      -      -

 

2.                    Description of
property with respect to which the election is being made:  Series 2010 LTIP Units (“LTIP Units”) in
Simon Property Group, L.P. (the “Partnership”).

 

3.                    The date on
which the LTIP Units were issued is
               ,
2010.  The taxable year to which this
election relates is calendar year 2010.

 

4.             Nature of restrictions to which the LTIP Units are
subject:

 

(a)                    With limited
exceptions, until the LTIP Units vest, the Taxpayer may not transfer in any
manner any portion of the LTIP Units without the consent of the Partnership.

 

(b)                   The Taxpayer’s
LTIP Units are subject to forfeiture until they vest in accordance with the
provisions in the applicable Award Agreement and Certificate of Designation for
the LTIP Units.

 

5.                   The fair market
value at time of issue (determined without regard to any restrictions other
than restrictions which by their terms will never lapse) of the LTIP Units with
respect to which this election is being made was
$         per LTIP Unit.

 

6.       The amount paid
by the Taxpayer for the LTIP Units was
$         per LTIP Unit.

 

 

7.       A copy of this
statement has been furnished to the Partnership and Simon Property Group, Inc.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  

 

 

SCHEDULE A TO SERIES 2010 LTIP UNIT (ONE YEAR PROGRAM)

AWARD AGREEMENT

 

Award
Date:                                                       ,
2010

 

Name
of Grantee:

 

Number
of Award LTIP Units:Exhibit 10.4

 

CERTIFICATE OF DESIGNATION

OF

SERIES 2010 LTIP UNITS

OF

SIMON PROPERTY GROUP, L.P.

 

WHEREAS, Simon Property Group, L.P. (the “Partnership”),
is authorized to issue LTIP Units to executives of Simon Property Group, Inc.,
the General Partner of the Partnership (the “General Partner”), pursuant
to Section 9.3(a) of the Eighth Amended and Restated Limited
Partnership Agreement of the Partnership (the “Partnership Agreement”).

 

WHEREAS, the General Partner has determined
that it is in the best interests of the Partnership to designate a series of
LTIP units that are subject to the provisions of this Designation and the
related Award Agreement (as defined below); and

 

WHEREAS, Sections 7.3 and 9.3(c) of
the Partnership Agreement authorize the General Partner, without the approval
of the Limited Partners, to set forth in an LTIP Unit Designation (as defined
in the Partnership Agreement) the performance conditions and economic rights
including distribution and conversion rights of each class or series of LTIP
Units.

 

NOW, THEREFORE, the General Partner hereby
designates the powers, preferences, economic rights and performance conditions
of the Series 2010 LTIP Units.

 

ARTICLE I

Definitions

 

Except as otherwise expressly provided
herein, each capitalized term shall have the meaning ascribed to it in the
Partnership Agreement.  In addition, as
used herein:

 

“Adjustment Events” has the meaning
provided in Section 2.2 hereof.

 

“Award Agreement” means any one of the
three forms of Series 2010 LTIP Unit Award Agreements approved by the
Compensation Committee of the Board of Directors of the General Partner and
entered into with the holder of the number of Award LTIP Units specified
therein.

 

“Award Date” means March 16,
2010.

 

“Award LTIP Units” means the number of
LTIP Units issued pursuant to an Award Agreement and does not include the
Earned LTIP Units or Vested LTIP Units that the Award LTIP Units may become.

 

“Conversion Date” has
the meaning provided in Section 4.3 hereof.

 

“Conversion Notice” has the meaning
provided in Section 4.3 hereof.

 

 

“Earned LTIP Units” means the number
of Award LTIP Units that are determined by the Committee to have been earned
pursuant to an Award Agreement.

 

“Economic Capital Account Balances”
means, with respect to the LTIP Unitholders, their Capital Account balances,
plus the amount of their share of any Partner Minimum Gain or Partnership
Minimum Gain, in either case to the extent attributable to their ownership of
LTIP Units.

 

“Liquidating Gain” means gain
allocated to the holders of Earned LTIP Units pursuant to Section 3.1 of
this Designation.

 

“LTIP Units” means Award LTIP Units,
Earned LTIP Units and Vested LTIP Units.

 

“LTIP Unitholder” means a person that
holds LTIP Units.

 

“Parity Series” means any other series
of LTIP Units entitled to the same allocations of Profits and Losses as the
LTIP Units designated hereby.

 

“Partnership Unit Economic Balance”
shall mean (i) the Capital Account balance of the General Partner plus the
amount of the General Partner’s share of any Partner Minimum Gain or
Partnership Minimum Gain, in each case to the extent attributable to the
General Partner’s Partnership Units divided by (ii) the number of the
General Partner’s Partnership Units.

 

“Partnership Units” or “Units”
has the meaning set forth in the Partnership Agreement.

 

“Special Distributions” means
distributions designated as a capital gain dividend within the meaning of Section 875(b)(3)(C) of
the Code and any other distribution that the General Partner determines is not
made in the ordinary course.

 

“Vested LTIP Units” means Earned LTIP
Units that have satisfied the time-based vesting requirements of an Award
Agreement.

 

ARTICLE II

Economic Terms and Voting Rights

 

2.1           Designation and
Issuance.  The General
Partner hereby designates a series of LTIP Units entitled the Series 2010
LTIP Units.  The number of Series 2010
LTIP Units that may be issued pursuant to this Designation is the total number
of Award LTIP Units issued on the Award Date. The Award LTIP Units shall be
treated as having been issued on the Award Date, and the holders of Award LTIP
Units shall be deemed admitted as a Limited Partner of the Partnership on the
Award Date.

 

2.2           Unit Equivalence.  Except as otherwise provided in this
Designation, the Partnership shall maintain, at all times, a one-to-one
correspondence between LTIP Units and Partnership Units for conversion,
distribution and other purposes, including without limitation complying with
the following procedures.  If an Adjustment
Event (as defined below) occurs, 

 

2

 

then the General Partner
shall make a corresponding adjustment to the LTIP Units to maintain a
one-to-one conversion and economic equivalence ratio between Partnership Units
and LTIP Units.  The following shall be “Adjustment
Events”:  (A) the Partnership
makes a distribution of Partnership Units or other equity interests in the
Partnership on all outstanding Partnership Units (other than a distribution of
Partnership Units made concurrently with a stock dividend paid by the General
Partner in accordance with Rev. Proc. 2010-12 or any similar policy or
pronouncement of the Internal Revenue Service), (B) the Partnership
subdivides the outstanding Partnership Units into a greater number of units or
combines the outstanding Partnership Units into a small number of units, or (C) the
Partnership issues any Partnership Units or other equity in the Partnership in
exchange for its outstanding Partnership Units by way of a reclassification or
recapitalization of its Partnership Units. 
If more than one Adjustment Event occurs, the adjustment to the LTIP
Units need be made only once using a single formula that takes into account
each and every Adjustment Event as if all Adjustment Events occurred
simultaneously.  For the avoidance of
doubt, the following shall not be Adjustment Events:  (x) the issuance of Partnership Units
from the Partnership’s sale of securities or in a financing, reorganization,
acquisition or other business transaction, (y) the issuance of Partnership
Units pursuant to any employee benefit or compensation plan or distribution
reinvestment plan, or (z) the issuance of any Partnership Units to the
General Partner in respect of a capital contribution to the Partnership of
proceeds from the sale of securities by the General Partner.  If the Partnership takes an action affecting
the Partnership Units other than actions specifically described above as
constituting Adjustment Events and, in the opinion of the General Partner, such
action would require an adjustment to the LTIP Units to maintain the one-to-one
correspondence described above, the General Partner shall have the right to
make such adjustment to the LTIP Units, to the extent permitted by law, in such
manner and at such time as the General Partner, in its sole discretion, may
determine to be appropriate under the circumstances.  If an adjustment is made to the LTIP Units as
hereby provided, the Partnership shall promptly file in the books and records
of the Partnership a certificate setting forth such adjustment and a brief
statement of facts requiring such adjustment, which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest
error.  Promptly after filing such certificate,
the Partnership shall mail a notice to each LTIP Unitholder setting forth the
adjustment to his or her LTIP Units and the effective date of such adjustment.

 

2.3           Distributions of Net
Operating Cash Flow.  Award LTIP
Units shall be treated as one-tenth of a Partnership Unit for purposes of Section 6.2(b)(iii) of
the Partnership Agreement, except that Award LTIP Units shall not be entitled
to any Special Distributions. 
Distributions with respect to an Award LTIP Unit issued during a fiscal
quarter shall be prorated as provided in Section 6.2(b)(ii) of the
Partnership Agreement.

 

2.4           Liquidating Distributions.  In the event of the dissolution, liquidation
and winding up of the Partnership, distributions to holders of Award LTIP Units
shall be made in accordance with Section 8.2(d) of the Partnership
Agreement.

 

2.5           Forfeiture.  Any Award LTIP Units and Earned LTIP Units
that are forfeited pursuant to the terms of an Award Agreement shall
immediately be null and void and shall cease to be outstanding or to have any
rights except as otherwise provided in the Award Agreement.

 

3

 

2.6           Voting Rights.  Holders of Award LTIP Units and Earned LTIP
Units shall not be entitled to vote on any other matter submitted to the
Limited Partners for their approval unless and until such units constitute
Vested LTIP Units.

 

ARTICLE III

Tax Provisions

 

3.1           Special Allocations of
Profits.  Profits realized in connection
with a sale of all or substantially all of the assets of the Partnership (“Liquidating
Gain”) shall, after allocations to the Preferred Units, be allocated to the
holders of Earned LTIP Units or any Parity Series until the Economic
Capital Account Balance of each such holder, to the extent attributable to such
holder’s ownership of Earned LTIP Units or Parity Series, is equal to such
holder’s Partnership Unit Economic Balance attributable to such Earned LTIP
Units or Parity Series.  Liquidating Gain
shall be taken into account whenever Capital Accounts are adjusted as a result
of an adjustment to the Gross Asset Value of the Partnership’s assets.  Notwithstanding the foregoing, Liquidating
Gain shall not be allocated to LTIP Units to the extent such allocation would
cause the LTIP Units to fail to qualify as a “profits interest” when
granted.  Gain allocated to Earned LTIP
Units pursuant to this Section 3.1 shall be allocated in the following
order:

 

(a)           First, to Vested LTIP Units in proportion to the
maximum amount of gain that could be allocated to such Vested LTIP Units
pursuant to this subparagraph.

 

(b)           Second, to Earned LTIP Units that are not Vested
LTIP Units in proportion to the maximum amount of gain that could be allocated
to such Earned LTIP Units pursuant to this subparagraph.

 

If an LTIP Unitholder forfeits any Earned
LTIP Units to which gain has been previously allocated under this Section, the
Capital Account associated with the forfeited Earned LTIP Units will be
reallocated to that LTIP Unitholder’s remaining Earned LTIP Units at the time
of forfeiture to the extent necessary to cause the Economic Capital Account
Balance of such remaining Earned LTIP Units to equal the Partnership Unit
Economic Balance of such Earned LTIP Units. 
To the extent any gain is not reallocated in accordance with the foregoing
sentence, such gain shall be forfeited.

 

3.2           Allocations with Respect to
Award LTIP Units.  The
following provisions apply to allocation of Profits and Losses with respect to
Award LTIP Units:

 

(a)           Except as provided in Section 3.1, no Profits
that the General Partner determine are attributable to a Special Distribution
shall be allocated to Award LTIP Units.

 

(b)           Except as provided in Section 3.2(a), each
Award LTIP Unit shall be treated as one-tenth of a Partnership Unit for
purposes of allocation of Profits and Losses pursuant to Section 6.1(b)(3) of
the Partnership Agreement.

 

3.3           Allocations with Respect to Earned LTIP Units.  Except
as provided in Section 3.1(a), Earned LTIP Units shall be treated as
Partnership Units with respect to the allocation of Profits and Losses.

 

4

 

3.4           Safe Harbor Election.  To the extent provided for in Regulations,
revenue rulings, revenue procedures and/or other IRS guidance issued after the
date of this Designation, the Partnership is hereby authorized to, and at the
direction of the General Partner shall, elect a safe harbor under which the
fair market value of any LTIP Units issued after the effective date of such
Regulations (or other guidance) will be treated as equal to the liquidation
value of such LTIP Units (i.e., a
value equal to the total amount that would be distributed with respect to such
interests if the Partnership sold all of its assets for the fair market value
immediately after the issuance of such LTIP Units, satisfied its liabilities
(excluding any non-recourse liabilities to the extent the balance of such
liabilities exceed the fair market value of the assets that secure them) and
distributed the net proceeds to the LTIP Unitholders under the terms of this
Agreement).  In the event that the Partnership
makes a safe harbor election as described in the preceding sentence, each LTIP
Unitholder hereby agrees to comply with all safe harbor requirements with
respect to transfers of such LTIP Units while the safe harbor election remains
effective.  In addition, upon a
forfeiture of any LTIP Units by any LTIP Unitholder, gross items of income,
gain, loss or deduction shall be allocated to such LTIP Unitholder if and to
the extent required by final Regulations promulgated after the effective date
of this Designation to ensure that allocations made with respect to all
unvested LTIP Units are recognized under Code Section 704(b).

 

ARTICLE IV

Conversion

 

4.1           Conversion Right.  Subject to the limitation set forth in Section 4.2
hereof, an LTIP Unitholder shall have the right to convert Vested LTIP Units to
Partnership Units by giving notice to the Partnership as provided in Section 4.3
hereof.

 

4.2           Limitation on Conversion
Rights.  The maximum number of Vested
LTIP Units that an LTIP Unitholder may convert is equal to (a) the
Economic Capital Account Balance of the LTIP Unitholder which is attributable
to his or her Vested LTIP Units divided by (b) the Partnership Unit
Economic Balance, in each case determined as of the effective date of the
conversion.  After each conversion of
Vested LTIP Units, for purposes of determining the number of Vested LTIP Units
that may subsequently be converted, the Economic Capital Account Balance of the
remaining Vested LTIP Units shall be reduced by the product of the Partnership
Unit Economic Balance and the number of converted Vested LTIP Units.

 

4.3           Exercise of Conversion Right.  In order to exercise the right to convert a
Vested LTIP Unit, the LTIP Unitholder shall give notice (a “Conversion
Notice”) in the form attached hereto as Exhibit A to the
General Partner not less than sixty (60) days prior to the date specified in
the Conversion Notice as the effective date of the conversion (the “Conversion
Date”). The conversion shall be effective as of 12:01 a.m. on the
Conversion Date without any action on the part of the LTIP Unitholder or the
Partnership.

 

4.4           Exchange for Shares.  An LTIP Unitholder may also exercise his
right to exchange the Partnership Units to be received pursuant to the
Conversion Notice to Shares or cash, as selected by the General Partner, in
accordance with Article XI of the Partnership Agreement; provided,
however, such right shall be subject to the terms and conditions of Article II
of the Partnership Agreement and may not be effective until six (6) months
from the date the Vested LTIP Units that were converted to Partnership Units
became fully vested.

 

5

 

4.5           Forced Conversion.  In addition, the General Partner may, upon
not less than ten (10) days’ notice to an LTIP Unitholder, require any
holder of Vested LTIP Units to convert them into Units subject to the
limitation set forth in Section 4.2. 
The conversion shall be effective as of 12:01 a.m. on the date
specified in the notice from the General Partner.

 

4.6           Notices.  Notices pursuant to this Article shall
be given in the same manner as notices given pursuant to the Partnership
Agreement.

 

6

 

EXHIBIT A

 

Conversion Notice

 

The undersigned hereby gives notice pursuant
to Section 4.3 of the Certificate of Designation of Series 2010 LTIP
Units of Simon Property Group, L.P. (the “Designation”) that he elects
to convert          Vested LTIP Units
(as defined in the Designation) into an equivalent number of Partnership Units
(as defined in the Eighth Amended and Restated Limited Partnership Agreement of
Simon Property Group, L.P. (the “Partnership Agreement”)).  The conversion is to be effective on                                ,
20      .

 

IN WITNESS WHEREOF, this Conversion Notice is
given this        day of                           ,
20      , to Simon Property Group, Inc. in
accordance with Section 12.2 of the Partnership Agreement.

 

7

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