Document:

Exhibit 10.1

 

SEPARATION, CONSULTING AND GENERAL RELEASE AGREEMENT

 

THIS SEPARATION, CONSULTING AND GENERAL RELEASE AGREEMENT (the “Agreement”) is entered into as of the first date on the signature page hereto (the “Effective Date”), by and between HCP, Inc. (the “Company”) and James W. Mercer (“Executive”) (together, the “Parties”).

 

R E C I T A L S

 

WHEREAS, Executive is employed by the Company as its Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary pursuant to an agreement entered into with the Company on October 25, 2012, as amended (the “Prior Agreement”); and

 

WHEREAS, the Parties now wish to make arrangements to terminate their employment relationship and to resolve, fully and finally, all outstanding matters between them.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth hereinafter, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

AGREEMENT

 

1.                                    EXECUTIVE’S SEPARATION.  Executive’s separation from the Company shall be effective February 5, 2016 (the “Separation Date”).  Executive hereby agrees that he will resign from his employment as an officer of the Company and any other position he may hold with the Company (and its subsidiaries) as of the Separation Date, and Executive agrees that he will execute any and all documents necessary to effect such resignations.  Upon the Separation Date, Executive shall return to the Company all files, records, credit cards, keys, computers, mobile phones, tables, PDAs, equipment, and all other Company property or documents maintained by Executive for the Company’s use or benefit.  From the date of this Agreement until the Separation Date, Executive shall continue to serve in his current role and shall continue to receive his base salary and be entitled to continue to participate in all employee health benefit plans offered by the Company, subject to the eligibility requirements, terms and conditions of each plan or program then in effect.

 

2.                                    CONSULTING SERVICES.  In consideration of Executive’s representations, releases, waivers and promises set forth in this Agreement, the Company agrees that for the period commencing on the date immediately following the Separation Date and ending on December 31, 2016 (the “Consulting Term”), Executive shall provide non-exclusive consulting services to the Company on the following terms and conditions:

 

a.                                     Executive will be reasonably available to consult with the Company on an as-needed basis on matters familiar to him as a result of his prior work with the Company.

 

b.                                    The Company will pay Executive or his designee a consulting fee of $88,636.37 per month (which amount shall not be pro-rated), payable in monthly installments in

 

1

 

the first five days of each month during such Consulting Term, and Executive shall be solely responsible for all taxes owed on such payments.  If Executive believes that any payment owed under this paragraph has not been properly paid to him, he shall advise the Company’s General Counsel in writing, and the Company shall have fifteen (15) days to correct any mistaken or inadvertent non-payment.

 

c.                                     Executive agrees that, during the Consulting Term, he is retained solely as an independent contractor to the Company.  Executive agrees (i) that he is not, and will not claim or represent himself to be, an employee or agent of the Company, (ii) that he has no authority to enter into any contracts or agreements on behalf of the Company or to otherwise bind the Company in any manner, and (iii) that he will not represent to any person or entity that he has any such authority.  Except to the extent required by applicable law, during the Consulting Term Executive shall not be considered to be an insider of the Company within the meaning of the Company’s insider trading policies.

 

3.                                    ADDITIONAL CONSIDERATION.  In further consideration of the terms, representations, and releases in this Agreement, and subject to Executive’s compliance with Section 9 of the Prior Agreement and Sections 9, 10 and 11 of this Agreement, the Company will provide Executive with the following additional payments and benefits:

 

a.                                     a lump sum payment in the amount of $360,000, less all applicable state and federal tax withholdings and other lawful deductions, payable within ten (10) days following the Separation Date;

 

b.                                    a cash incentive in the amount of $709,500, less all applicable state and federal tax withholdings and other lawful deductions, payable within ten (10) days following the Separation Date; and

 

c.                                     for the period of six (6) years following the Separation Date, Executive shall be covered under the Company’s existing or successor directors’ and officers’ liability insurance policy.

 

Executive acknowledges and agrees that under the terms of this Agreement he is receiving consideration beyond that which he would otherwise be entitled to and which, but for the mutual covenants set forth in this Agreement, the Company would not otherwise be obligated to provide.  Executive further agrees that the payments and benefits provided hereunder are in addition to any wages and accrued but unused vacation earned through the Separation Date, the balance of which shall be paid to Executive on or before the Separation Date.

 

4.                                    EQUITY.  The Parties acknowledge and agree that Executive is party to award agreements (the “Award Agreements”) pursuant to the terms of the Company’s 2006 Performance Incentive Plan (the “2006 Plan”) and the 2014 Performance Incentive Plan (together with the 2006 Plan, the “Plans”) under which he has been granted (i) stock options to purchase shares of common stock of the Company (the “Options”), (ii) time-vesting restricted stock units (the “RSUs”) and (iii) performance-vesting restricted stock units with a three-year performance period (the “3-Year PSUs”) and performance-vesting restricted stock units with a one-year performance period (the “1-Year PSUs”, and together with the 3-Year PSUs, the

 

2

 

“PSUs”). All Options, RSUs and PSUs (and the dividend equivalents credited thereon) held by Executive as of the date hereof are set forth on Exhibit A attached hereto.  In further consideration of the terms, representations, and releases in this Agreement, and subject to Executive’s compliance with Section 9 of the Prior Agreement, the Company agrees that:

 

a.                                     all outstanding Options held by Executive as of the Separation Date shall vest and become exercisable upon the Separation Date to the extent not already vested and exercisable, and Executive shall be entitled to exercise all such Options during the remainder of the applicable ten-year term (disregarding any termination of employment that would otherwise reduce the applicable ten-year term);

 

b.                                    as set forth on Exhibit A attached hereto on page A-3 thereof, all RSUs shall vest upon the Separation Date and shall be settled in shares of common stock of the Company equal to the number of RSUs subject to such awards on the date which is six (6) months following the Separation Date (or the date of Executive’s death, if earlier); and

 

c.                                     the PSUs shall vest (if at all) as follows: (i) the 3-Year PSUs granted to Executive in 2014 (and dividend equivalents credited thereon) shall remain outstanding pending the determination by the Compensation Committee as to whether the Company has attained the pre-established performance goals (the “Committee Determination”) for the performance period ending December 31, 2016, and shall vest (if at all) based upon the achievement of such goals; (ii) the 1-Year PSUs granted to Executive in 2015 (and dividend equivalents credited thereon) shall remain outstanding pending the Committee Determination for the performance period ending December 31, 2015, and shall vest (if at all) based upon achievement of such goals; and (iii) the 3-Year PSUs granted to Executive in 2015 (and dividend equivalents credited thereon) shall remain outstanding pending the Committee Determination for the performance period ending December 31, 2017, and a pro rata portion shall vest (if at all) based upon the achievement of such goals, with such pro rata portion based on the number of full months in the performance period through December 31, 2016 as compared to the total number of months in the performance period. Any PSUs that vest in accordance with the foregoing shall be settled in shares of common stock of the Company as soon as administratively practicable following the Committee Determination (and in all events no later than March 15 following the end of the applicable performance period).

 

5.                                    MUTUAL RELEASE AND WAIVER.

 

a.                                     Executive’s Release.

 

(i)                                  In exchange for the consideration described in Sections 2, 3 and 4 above, Executive hereby forever releases and discharges the Company and its parents, affiliates, successors, and assigns, as well as each of its past and present officers, directors, employees, agents, attorneys, and shareholders (collectively, the “Company Released Parties”), from any and all claims, charges, complaints, liens, demands, causes of action, obligations, damages, and liabilities, known or unknown, suspected or unsuspected, that Executive had, now has, or may hereafter claim to have against the Company Released Parties arising out of or relating in any way to Executive’s employment with, or resignation from, the Company, or otherwise relating to any of the Company Released Parties from the beginning of time to the Effective Date (the

 

3

 

“Executive’s Release”).  Executive’s Release specifically extends to, without limitation, any and all claims or causes of action for wrongful termination, breach of an express or implied contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, defamation, slander, infliction of emotional distress, disability, loss of future earnings, and any claims under any applicable state, federal, or local statutes and regulations, including, but not limited to, the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1963, as amended, the Fair Labor Standards Act, as amended, the Americans with Disabilities Act of 1990, as amended (the “ADA”), the Rehabilitation Act of 1973, as amended, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Worker Adjustment and Retraining Notification Act, as amended (the “WARN Act”), Section 806 of the Sarbanes-Oxley Act, the Dodd-Frank Act, the Family and Medical Leave Act, as amended, and the California Family Rights Act, as amended, the California Fair Employment and Housing Act, as amended and California Labor Code Section 1400 et seq.; provided, however, that this Release does not waive, release or otherwise discharge any claim or cause of action arising from a breach by the Company of this Agreement or that cannot legally be waived, including, but not limited to, any claim for unpaid wages, workers’ compensation benefits, unemployment benefits and any claims for indemnification under applicable law or the Indemnification Agreement (defined in Section 12, below).

 

(ii)                              For the purpose of implementing a full and complete release, Executive understands and agrees that this Agreement is intended to include all claims, if any, which Executive may have and which Executive does not now know or suspect to exist in his favor against the Company Released Parties and this Agreement extinguishes those claims.  Accordingly, Executive expressly waives all rights afforded by Section 1542 of the Civil Code of the State of California (“Section 1542”) and any similar statute or regulation in any other applicable jurisdiction.  Section 1542 states as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

(iii)                          This Agreement shall not prevent Executive from filing a charge with the Equal Employment Opportunity Commission (or similar state or local agency) or participating in any investigation conducted by the Equal Employment Opportunity Commission (or similar state or local agency); provided, however, that Executive acknowledges and agrees that any claims by Executive for personal relief in connection with such a charge or investigation (such as reinstatement or monetary damages) hereby are barred.

 

b.                                    The Company’s Release.

 

(i)                                  The Company hereby forever releases and discharges Executive, his heirs, successors, and assigns, from any and all claims, charges, complaints, liens, demands, causes of action, obligations, damages, and liabilities, known or unknown, suspected or unsuspected, that the Company had, now has, or may hereafter claim to have against Executive (the “Company’s Release”).  The Company’s Release specifically extends to, without limitation,

 

4

 

any and all claims or causes of action under common law as well as any claims under any applicable state, federal, or local statutes and regulations; provided, however, that the Company’s Release does not waive, release, or otherwise discharge any claim or cause of action to enforce any rights the Company may have with respect to the confidentiality of Company information, the assignment of inventions or the solicitation of the Company’s customers, clients or employees or any claim or cause of action that cannot legally be waived.

 

(ii)                              For the purpose of implementing a full and complete release, the Company understands and agrees that this Agreement is intended to include all claims, if any, which the Company may have and which the Company does not now know or suspect to exist in its favor against Executive and this Agreement extinguishes those claims.  Accordingly, the Company expressly waives all rights afforded by Section 1542 of the Civil Code of the State of California (“Section 1542”) and any similar statute or regulation in any other applicable jurisdiction.  Section 1542 states as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

6.                                    ADEA WAIVER AND RELEASE.  In consideration of the Company’s payment to Executive of $300,000, less all applicable state and federal tax withholdings and other lawful deductions (the “ADEA Consideration”) within five (5) days of the expiration of the revocation period of the ADEA release attached hereto as Exhibit B (the “ADEA Release”), Executive hereby agrees that he shall sign and return to the Company the ADEA Release in accordance with its terms within thirty (30) days following the Separation Date.  Executive acknowledges and agrees that the effectiveness of the ADEA Release shall have no effect on the effectiveness of this Agreement and that this Agreement shall be in full force and effect and binding upon the Parties upon and from its date of execution.  Executive acknowledges and agrees that he would not otherwise be entitled to receive the ADEA Consideration in the absence of Executive’s execution (and non-revocation) of the ADEA Release.

 

7.                                    CODE SECTION 409A COMPLIANCE.  This Agreement as well as payments and benefits under this Agreement are intended to be exempt from, or to the extent subject thereto, to comply with Section 409A of the Code (“Section 409A”), and, accordingly, to the maximum extent permitted, the Agreement shall be interpreted in accordance therewith.  Notwithstanding anything contained herein to the contrary, Executive shall not be considered to have terminated employment with the Company for purposes of any payments under this Agreement which are subject to Section 409A until Executive has incurred a “separation from service” from the Company within the meaning of Section 409A.  Each amount to be paid or benefit to be provided under this Agreement shall be construed as a separate identified payment for purposes of Section 409A.  Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid an accelerated or additional tax under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following Executive’s separation from service shall instead be paid on the first

 

5

 

business day after the date that is six months following Executive’s separation from service (or, if earlier, Executive’s date of death).  To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to Executive shall be paid to Executive on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in kind benefits provided to Executive) during one year may not affect amounts reimbursable or provided in any subsequent year.  The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to any such payment.  Executive shall be solely responsible for the payment of any taxes and penalties incurred under Section 409A.

 

8.                                    REPRESENTATIONS.  Executive and the Company make the following representations, each of which is an important consideration to the other party’s willingness to enter into this Agreement:

 

a.                                     Executive acknowledges that the Company is not entering into this Agreement because it believes that Executive has any cognizable legal claim against the Company Released Parties.  If Executive elects not to sign this Agreement, the fact that this Agreement was offered will not be understood as an indication that the Company Released Parties believed Executive was treated unlawfully in any respect.

 

b.                                    Executive understands and agrees that he has been advised to consult with an attorney of his choice concerning the legal consequences of this Agreement.  Executive hereby acknowledges that prior to signing this Agreement, he had the opportunity to consult with an attorney of his choosing regarding the effect of each and every provision of this Agreement.

 

c.                                     Executive and the Company, on behalf of himself and itself,  acknowledge and agree that he and it knowingly and voluntarily entered into this Agreement with complete understanding of all relevant facts, and that neither party was fraudulently induced nor coerced to enter into this Agreement.

 

d.                                   The Parties each represent and warrant to the other that they have the capacity and authority to enter into this Agreement and be bound by its terms.

 

9.                                    CONTINUING OBLIGATIONS AND RESTRICTIVE COVENANTS.

 

a.                                     During the Consulting Term and at all times thereafter to the extent consistent with applicable law, Executive agrees that he will not use or disclose any confidential information, trade secrets, or financial, personnel, proprietary information, or client information which Executive learned while employed by, or providing consulting services to, the Company.

 

b.                                    Executive agrees that if during the Consulting Term he accepts any consulting or employment relationship with a publicly-traded healthcare REIT that is a direct competitor of the Company, the Consulting Term and all of the benefits and payments to him provided under Section 2 above will automatically end, unless the Company waives this provision in writing.

 

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c.                                     During the Consulting Term, Executive agrees that he will not, directly or indirectly, solicit or encourage any Company employee to leave his or her employment with the Company.

 

d.                                   During the Consulting Term, Executive agrees that he will not, directly or indirectly, solicit or encourage any existing customer, vendor, supplier, licensor, lessor or lessee, joint venturer, consultant, agent or business partner of the Company to (i) cease doing business, or reduce the amount of business such party does, with the Company, or (ii) interfere with, disrupt, or attempt to disrupt the business relationships (contractual or otherwise) existing (now or at any time in the future) between the Company and any third party (including any of its customers, vendors, suppliers, licensors, lessors or lessees, joint venturers, consultants, agents and partners).

 

10.                            MUTUAL NON-DISPARAGEMENT.  Executive agrees that he will not, at any time, make, directly or indirectly, any oral or written public statements that are disparaging of the Company, its products or services, and any of its present or former officers, directors or employees.  The Company (limited to its officers and directors) agrees that it will not, at any time, make, directly or indirectly, any oral or written public statements that are disparaging of Executive.

 

11.                            COOPERATION.  Executive agrees that he will cooperate with the Company, including executing documents and providing requested information, as may reasonably be required to give effect to the provisions of this Agreement or for the Company to comply with applicable securities laws.

 

12.                            INDEMNIFICATION.  The Company represents and warrants that the Indemnification Agreement by and between Executive and the Company dated as of October 25, 2012 (the “Indemnification Agreement”) will remain in full force and effect following the Separation Date, in accordance with its terms.

 

13.                            REMEDIES.  If (i) Executive materially fails to comply with or otherwise materially breaches any of the promises, representations, or releases in this Agreement, (ii) the Company delivers written notice to Executive that specifically identifies the event that the Company believes constitutes such non-compliance or breach, and (iii) Executive fails to cure such behavior within thirty (30) days following delivery of such notice, then the Company may stop any payments or benefits otherwise owing under this Agreement to the extent of the monetary damages sustained by the Company and may seek additional relief or remedy as provided under applicable law.

 

14.                            GOVERNING LAW.  This Agreement and all rights, duties, and remedies hereunder shall be governed by and construed and enforced in accordance with the laws of the State of California, without reference to its choice of law rules, except as preempted by federal law.

 

15.                            SUCCESSORS AND ASSIGNS.  Executive agrees that this Agreement will be binding upon, and pass to the benefit of, the successors and assigns of the Company.  Any

 

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payments and benefits due to the Executive hereunder shall be payable to his estate or representative in the event of his death or disability.

 

16.                            AMENDMENTS.  This Agreement may not be amended or modified other than by a written instrument signed by an authorized representative of the Company and Executive.

 

17.                            DESCRIPTIVE HEADINGS.  The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

18.                            COUNTERPARTS.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.  Facsimile and .pdf signatures will suffice as original signatures.

 

19.                            NOTICES.  All notices hereunder shall be in writing and delivered personally or sent by United States registered or certified mail, postage prepaid and return receipt requested:

 

If to the Company:

 

HCP, Inc.
 1920 Main Street, Suite 1200
 Irvine, California 92614

Attention: General Counsel

 

If to Executive:

 

James W. Mercer

at the most recent address in the payroll records of the Company

 

20.                            ENTIRE AGREEMENT.  This Agreement sets forth the entire agreement and understanding of the Parties relating to the subject matter hereof and, except as otherwise provided herein, supersedes all prior discussions, agreements, and understandings of every kind and nature between the Parties hereto and neither Party shall be bound by any term or condition other than as expressly set forth or provided for in this Agreement.  Effective as of the date hereof, the Prior Agreement is hereby terminated and this Agreement satisfies all entitlements set forth in the Prior Agreement; provided, however, that Section 9 of the Prior Agreement shall remain in full force and effect.

 

(SIGNATURE PAGE FOLLOWS)

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the first date set forth below.

 

 

	
HCP, INC.
    	
 
    	
JAMES   W. MERCER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Lauralee E. Martin
    	
 
    	
/s/ James W. Mercer
    	
 
    
	
 
    	
Lauralee E. Martin
    	
 
    	
 
    
	
 
    	
President and Chief Executive Officer
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
January 12, 2016
    	
 
    	
Date:
    	
January 12, 2016
    	
 
    
							

 

 

EXHIBIT A

 

 

All Options, RSUs and PSUs (and the dividend equivalents credited thereon, as shown with preliminary forecast amounts and subject to further confirmation) held by Executive as of the date hereof are set forth below:

 

Options

 

	
Option
   Award ID
    	
 
    	
Option
   Award Date
    	
 
    	
Vesting
   Date
    	
 
    	
Options
   Granted
    	
 
    	
Strike
   Price
    	
 
    	
Options
   Vested as of
   2/05/2016
    	
 
    	
Options
   Vesting
   Under the
   Separation
   Agreement
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1081
    	
 
    	
1/30/2012
    	
 
    	
1/30/2013
    	
 
    	
20,704
    	
 
    	
$41.64
    	
 
    	
5,176
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/30/2014
    	
 
    	
 
    	
 
    	
 
    	
 
    	
5,176
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/30/2015
    	
 
    	
 
    	
 
    	
 
    	
 
    	
5,176
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/30/2016
    	
 
    	
 
    	
 
    	
 
    	
 
    	
5,176
    	
 
    	
 
    	
 
    
	
1231
    	
 
    	
1/28/2013
    	
 
    	
1/28/2014
    	
 
    	
33,108
    	
 
    	
$46.92
    	
 
    	
8,277
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/28/2015
    	
 
    	
 
    	
 
    	
 
    	
 
    	
8,277
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/28/2016
    	
 
    	
 
    	
 
    	
 
    	
 
    	
8,277
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/28/2017
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
8,277
    	
 
    
	
1316
    	
 
    	
2/03/2014
    	
 
    	
2/03/2014
    	
 
    	
27,138
    	
 
    	
$38.83
    	
 
    	
9,046
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
2/03/2015
    	
 
    	
 
    	
 
    	
 
    	
 
    	
9,046
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
2/03/2016
    	
 
    	
 
    	
 
    	
 
    	
 
    	
9,046
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Total   Options Vesting Under the Separation Agreement
    	
 
    	
8,277
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-1

 

PSUs

 

	
PSU
   Award ID
    	
 
    	
Award Type
   and Award
   Date
    	
 
    	
Shares
   Granted
    	
 
    	
Forfeited
   Amount
    	
 
    	
Vesting
   Date
    	
 
    	
Vesting Under the
   Separation Agreement
    
	
1462
    	
 
    	
3-Year PSUs granted on
    2/03/2014
    	
 
    	
17,705
    	
 
    	
N/A
    	
 
    	
2/03/2017
    	
 
    	
Vesting subject to achievement of performance measures
    
	
1600
    	
 
    	
1-Year   PSUs granted on
    2/02/2015
    	
 
    	
6,359
    	
 
    	
N/A
    	
 
    	
2/02/2016
    	
 
    	
Vesting subject to achievement of performance measures
    
	
1604
    	
 
    	
3-Year   PSUs granted on
    2/02/2015
    	
 
    	
12,717
    	
 
    	
4,239
    	
 
    	
2/02/2018
    	
 
    	
Pro-rata   vesting subject to achievement of performance measures
    

 

A-2

 

Time-Based RSUs

 

	
Time-Based
   RSU
   Award ID
    	
 
    	
Grant Date
    	
 
    	
Vesting
   Date
    	
 
    	
Shares
   Granted
    	
 
    	
RSUs Vested
   as of 2/05/2016
    	
 
    	
RSUs Vesting
   Under the Separation
   Agreement
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1082
    	
 
    	
1/30/2012
    	
 
    	
12/31/12
    	
 
    	
17,860
    	
 
    	
4,465
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/30/14
    	
 
    	
 
    	
 
    	
4,465
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/30/15
    	
 
    	
 
    	
 
    	
4,465
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/30/16
    	
 
    	
 
    	
 
    	
4,465
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1232
    	
 
    	
1/28/2013
    	
 
    	
1/30/14
    	
 
    	
23,552
    	
 
    	
5,888
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/28/15
    	
 
    	
 
    	
 
    	
5,888
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/28/16
    	
 
    	
 
    	
 
    	
5,888
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
1/28/17
    	
 
    	
 
    	
 
    	
 
    	
 
    	
5,888
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1309
    	
 
    	
11/06/2013
    	
 
    	
10/31/14
    	
 
    	
24,174
    	
 
    	
24,174
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1315
    	
 
    	
2/03/2014
    	
 
    	
2/03/14
    	
 
    	
15,051
    	
 
    	
5,017 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
2/03/15
    	
 
    	
 
    	
 
    	
5,017 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
2/03/16
    	
 
    	
 
    	
 
    	
5,017
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1595
    	
 
    	
2/02/2015
    	
 
    	
2/02/16
    	
 
    	
6,360
    	
 
    	
2,120
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
2/02/17
    	
 
    	
 
    	
 
    	
 
    	
 
    	
2,120
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
2/02/18
    	
 
    	
 
    	
 
    	
 
    	
 
    	
2,120
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Total RSUs Vesting Under the Separation Agreement
    	
 
    	
10,128
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-3

 

Deferred Quarterly Dividend Accrual on Unvested PSUs*

 

	
 
    	
 
    	
2/03/2014
   (3-Year LTIP)
   (cliff vesting)
    	
 
    	
2/02/2015
   (3-Year LTIP)
   (cliff vesting)
    	
 
    	
2/02/2015
   (1-Year LTIP)
   (cliff vesting)
    	
 
    	
Totals
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total   Unvested PSUs
    	
 
    	
17,705
    	
 
    	
12,717
    	
 
    	
6,359
    	
 
    	
36,781
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Accumulated   2014 Deferred Dividend
    	
 
    	
$38,596.92
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
$38,596.92
    	
 
    
	
2/24/2015
    	
 
    	
$10,003.33
    	
 
    	
$7,185.11
    	
 
    	
$3,592.84
    	
 
    	
$20,781.28
    	
 
    
	
5/26/2015
    	
 
    	
$10,003.33
    	
 
    	
$7,185.11
    	
 
    	
$3,592.84
    	
 
    	
$20,781.28
    	
 
    
	
8/25/2015
    	
 
    	
$10,003.33
    	
 
    	
$7,185.11
    	
 
    	
$3,592.84
    	
 
    	
$20,781.28
    	
 
    
	
11/24/2015
    	
 
    	
$10,003.33
    	
 
    	
$7,185.11
    	
 
    	
$3,592.84
    	
 
    	
$20,781.28
    	
 
    
	
Total Deferred   Dividend
    	
 
    	
$78,610.24
    	
 
    	
28,740.44
    	
 
    	
14,371.36
    	
 
    	
$121,722.04
    	
 
    

 

*Assumes performance criteria will be met and 0% PSUs are forfeited, calculated as of 11/30/2015.

 

A-4

 

EXHIBIT B

 

EXECUTIVE’S ADEA WAIVER AND RELEASE OF CLAIMS
  (“ADEA RELEASE”)

 

a.         In consideration of the ADEA Consideration (as defined in Section 6 of the Separation, Consulting and General Release Agreement to which this ADEA Release is appended), Executive hereby waives, releases and discharges any and all claims, charges, complaints, liens, demands, causes of action, obligations, damages, and liabilities, known or unknown, suspected or unsuspected, that Executive had, now has, or may hereafter claim to have against the Company Released Parties arising under the Age Discrimination in Employment Act, as amended (“ADEA”), the Older Workers Benefit Protection Act, as amended (the “OWBPA”), and the age discrimination provisions of the California Fair Employment and Housing Act.

 

b.         Executive has been informed and understands and agrees that he has twenty-one (21) calendar days after receipt of this ADEA Release to consider whether to sign it.  Executive has been informed and understands and agrees that he may revoke this ADEA Release at any time during the seven (7) calendar days after this ADEA Release is signed and returned to the Company, in which case none of the provisions of this ADEA Release will have any effect.  Executive acknowledges and agrees that if he wishes to revoke this ADEA Release, he must do so in writing, and that such revocation must be signed by Executive and received by the General Counsel of the Company no later than the seventh (7th) day after Executive has signed and retuned the ADEA Release.  Executive acknowledges and agrees that, in the event Executive revokes the ADEA Release, he shall have no right to receive the ADEA Consideration.  Executive’s revocation of this ADEA Release shall not in any way impair the effectiveness of the Separation, Consulting and General Release Agreement, which will remain in effect as of the day of execution in accordance with its terms.

 

c.         Executive acknowledges and agrees that prior to signing this ADEA Release, he read and understood each and every provision of this ADEA Release.  Executive understands and agrees that he has been advised in this writing to consult with an attorney of his choice concerning the legal consequences of this ADEA Release.  Executive hereby acknowledges that prior to signing this ADEA, he had the opportunity to consult with an attorney of his choosing regarding the effect of each and every provision of this ADEA Release.

 

d.         Executive acknowledges and agrees that he knowingly and voluntarily entered into this ADEA Release with complete understanding of all relevant facts, and that he was neither fraudulently induced nor coerced to enter into this ADEA Release.

 

e.         Executive understands that he is not waiving, releasing, or otherwise discharging any claims under the ADEA that may arise after the date he signs this ADEA Release.

 

B-1

 

f.          This ADEA Release shall be effective upon the eighth (8th) calendar day following the date that Executive executes this ADEA Release and returns it to the Company, provided that Executive does not revoke or attempt to revoke his acceptance of this ADEA Release prior to such date in accordance with the provisions of Section b above.

 

 

	
JAMES   W. MERCER
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Date:
    	
 
    	
 
    
			

 

B-2Exhibit 10.4

 

CERTIFICATE OF DESIGNATION

OF

SERIES 2015 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 2015 LTIP Units.

 

ARTICLE I

Definitions

 

1.1                               Definitions Applicable to LTIP Units.  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 the Series 2015 LTIP Unit Award Agreement 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 February 26, 2015.

 

“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 Balance” means, with respect to a holder of LTIP Units, (i) his Capital Account balance, plus the amount of his or her share of any Partner Minimum Gain or Partnership Minimum Gain, in either case to the extent attributable to his or her ownership of LTIP Units, divided by (ii) the number of LTIP Units held by such holder.

 

“Full Conversion Date” means with respect to a holder of the LTIP Units, the date on which the Economic Capital Account Balance of such holder first equals or exceeds the Target Balance.

 

“Liquidating Gain” means one hundred percent (100%) of the Profits of the Partnership realized from a transaction or series of transactions that constitute a sale of substantially all of the assets of the Partnership and one hundred percent (100%) of the Profits realized from a restatement of the Partnership’s Capital Accounts in accordance with Treas. Reg. §1.704-1(b)(2)(iv)(f).

 

“LTIP Units” means the Series 2015 LTIP Units created by this Designation.

 

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

 

“Other LTIP Units” means “LTIP Units” (as defined in the Partnership Agreement) other than the Series 2015 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.

 

“Target Balance” means (i) $187.14, which is equal to the Partnership Unit Economic Balance as of the Award Date as determined after Capital Accounts have been adjusted in accordance with Treas. Reg. §1.704-1(b)(2)(iv)(f), reduced by (ii) the amount of Special Distributions per Partnership Unit attributable to the sale of assets subsequent to the Award Date, to the extent that such Special Distributions are not made with respect to the LTIP Units.

 

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

 

2

 

1.2                               Definitions Applicable to Other LTIP Units.  In determining the rights of the holder of the LTIP Units vis-à-vis the holders of Other LTIP Units, the foregoing definitions shall apply to the Other LTIP Units except as expressly provided otherwise in a Certificate of Designation applicable to such Other LTIP Units.

 

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 2015 LTIP Units.  The number of Series 2015 LTIP Units that may be issued pursuant to this Designation is the total number of Award LTIP Units issued on the Award Date.  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 the 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, 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 the LTIP Units and the Partnership 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 (provided that with respect to Award LTIP Units any adjustment as the result of a distribution 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 shall be made only to the extent that the Award LTIP Units do not receive ten percent (10%) of the distribution), (B) the Partnership subdivides the outstanding Partnership Units into a greater number of units or combines the outstanding Partnership Units into a smaller 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 or Other LTIP 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

 

3

 

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 Sections 6.2(a) and (b)(iii) of the Partnership Agreement, except that Award LTIP Units shall not be entitled to any Special Distributions except as provided in Section 2.4.  Distributions with respect to an Award LTIP Unit issued during a fiscal quarter shall be prorated as provided in Section 6.2(c)(ii) of the Partnership Agreement.  Earned LTIP Units shall be entitled to the same rights to receive distributions as the Partnership Units.

 

2.4                               Special Distributions.  Until the Economic Capital Account Balance of a holder’s LTIP Units is equal to the Target Balance, such holder shall be entitled to Special Distributions attributable to the sale of an asset of the Partnership only to the extent the Partnership determines that such asset has appreciated in value subsequent to the Award Date.

 

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

 

2.6                               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.

 

2.7                               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.  Vested LTIP Units will be entitled to be voted on an equal basis with the Partnership Units.

 

ARTICLE III

Tax Provisions

 

3.1                               Special Allocations of Profits.  Liquidating Gain shall be allocated as follows:  (a) first, to the holders of Preferred Units as provided in the Partnership Agreement, (b) second, if applicable, to the holders of Partnership Units as provided in by the Partnership Agreement until the Partnership Unit Economic Balance is equal to the Target Balance and (c) third, to (i) the holders of the LTIP Units until their Economic Capital Account Balance is equal to the Target Balance and (ii) the holders of Other LTIP Units until their economic capital account balances are equal to their target balances.  If an allocation of Liquidating Gain is not sufficient to achieve the objectives of the foregoing sentence in full, Liquidating Gain, after giving effect to clauses (a) and (b) in such sentence, shall be allocated first, to the holders of the Vested LTIP Units and vested Other LTIP Units and, second, to the holders of Unvested LTIP Units and non-vested Other LTIP Units, in each case, in proportion to the amounts necessary for such units to achieve the objectives of the foregoing sentence; provided, that the holders of Other

 

4

 

LTIP Units shall not receive an allocation of Liquidating Gain that they are not entitled to receive under the applicable certificate of designation.  A certificate of designation for Other LTIP Units may provide for a different allocation among such Other LTIP Units, but such different allocation shall not affect the amount allocated to the LTIP Units vis-à-vis the Other LTIP Units.  Notwithstanding the foregoing, Liquidating Gain shall not be allocated to the holders of the LTIP Units to the extent such allocation would cause the LTIP Units to fail to qualify as a “profits interest” when granted.  Once the Economic Capital Account Balance has been increased to the Target Balance, no further allocations shall be made pursuant to this Section 3.1.  Thereafter, LTIP Units shall be treated as Partnership Units with respect to the allocation of Profits and Losses pursuant to Section 3.2.

 

If any Unvested LTIP Units to which gain has been previously allocated under this Section are forfeited, the Capital Account associated with the forfeited Unvested LTIP Units will be reallocated to the remaining LTIP Units at the time of forfeiture to the extent necessary to cause the Economic Capital Account Balance of such remaining LTIP Units to equal the Target Balance.  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 to the extent to which a holder of the LTIP Units is entitled to a Distribution pursuant to Section 2.4, no Profits that the General Partner determines are attributable to a Special Distribution or the sale of an asset 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.   Earned LTIP Units shall be treated as Partnership Units with respect to the allocation of Profits and Losses; provided, that Profits from the sale of assets shall be allocated to each holder of the LTIP Units as provided in Section 3.1 until his Economic Capital Account Balance has been increased to the Target Balance.

 

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,

 

5

 

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.  On and after the Full Conversion Date, the holder shall have the right to convert Vested LTIP Units to Partnership Units on a one-to-one basis by giving notice to the Partnership as provided in Section 4.3 hereof.  Prior to the Full Conversion Date, the conversion of Vested LTIP Units shall be subject to the limitation set forth in Section 4.2.

 

4.2                               Limitation on Conversion Rights Until the Full Conversion Date.  The maximum number of Vested LTIP Units that may be converted prior to the Full Conversion Date is equal to the product of (a) the result obtained by dividing (1) the Economic Capital Account Balance of the Vested LTIP Units by (2) the Target Balance of the Vested LTIP Units, in each case determined as of the effective date of the conversion and (b) the number of Vested LTIP Units.  Immediately after each conversion of Vested LTIP Units, the aggregate Economic Capital Account Balance of the remaining Vested LTIP Units shall be equal to (a) the aggregate Economic Capital Account Balance of all of the holder’s Vested LTIP Units immediately prior to conversion, minus (b) the aggregate Economic Capital Account Balance immediately prior to conversion of the number of the holder’s Vested LTIP Units that were converted.

 

4.3                               Exercise of Conversion Right.  In order to exercise the right to convert a Vested LTIP Unit, the holder 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 holder or the Partnership.  The holder may give a Conversion Notice with respect to Unvested LTIP Units, provided that such Unvested LTIP Units become Vested LTIP Units on or prior to the Conversion Date.

 

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 into Partnership Units became fully vested.

 

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, and only if, at the time the General Partner acts, there is a one-to-one conversion right between the LTIP Units and

 

6

 

Partnership Units for conversion, distribution and all other purposes.  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.

 

[Remainder of page left intentionally blank]

 

7

 

EXHIBIT A

 

Conversion Notice

 

The undersigned hereby gives notice pursuant to Section 4.3 of the Certificate of Designation of Series 2015 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.

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