SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
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[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
TAUBMAN CENTERS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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THIS REVOCATION SOLICITATION STATEMENT WILL BE REVISED TO REFLECT ACTUAL
FACTS AT THE TIME OF FILING OF DEFINITIVE MATERIALS. NO WHITE REVOCATION CARD
WILL ACCOMPANY THESE MATERIALS UNTIL DEFINITIVE MATERIALS ARE DISTRIBUTED.
PRELIMINARY REVOCATION SOLICITATION STATEMENT
DATED FEBRUARY , 2003
SUBJECT TO COMPLETION
REVOCATION SOLICITATION STATEMENT
BY
TAUBMAN CENTERS, INC.
IN OPPOSITION TO THE
SOLICITATION OF AGENT DESIGNATIONS
BY SIMON PROPERTY GROUP, INC.,
SIMON PROPERTY ACQUISITIONS, INC
AND WESTFIELD AMERICA, INC.
TO CALL A SPECIAL MEETING OF
TAUBMAN CENTERS, INC.
SHAREHOLDERS
This Revocation Solicitation Statement (this "Revocation Solicitation
Statement") and the accompanying WHITE revocation card are being furnished by
the Board of Directors (the "Board") of Taubman Centers, Inc., a Michigan
corporation (the "Company"), to the holders of the outstanding shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), and the
outstanding shares of the Company's Series B Non-Participating Convertible
Preferred Stock (the "Series B Preferred Stock"), in connection with the
solicitation by the Board of revocations of Agent Designations ("Revocations")
in opposition to the solicitation by Simon Property Group, Inc., a Delaware
corporation ("Simon"), Simon Property Acquisitions, Inc., a wholly owned
Subsidiary of Simon ("Offeror") and Westfield America, Inc. ("Westfield") of
Appointments of Designated Agents ("Agent Designations") to call a special
meeting of the stockholders of the Company (the "Special Meeting") to act on a
proposal, as further described herein (the "Simon Solicitation"). The Simon
Solicitation is part of Simon's ongoing attempt to acquire the Company by tender
offer, in which Simon, the Offeror and Westfield have offered to pay $20.00 net
to the seller in cash, without interest thereon, for each Common Share on the
terms and conditions set forth in Simon's offer, dated December 5, 2002, and in
the related letter of transmittal (the "Simon Offer"), as amended by a
Supplement thereto dated January 15, 2003 and a related revised letter of
transmittal (which, together with any supplements or amendments, collectively
constitute the "Revised Offer").
According to the Simon Solicitation, Simon, the Offeror and Westfield are
soliciting Agent Designations from the holders of outstanding shares of Common
Stock and Series B Preferred Stock to call a Special Meeting. According to the
Simon Solicitation, at the Special Meeting, Simon, the Offeror and Westfield
will, among other things, ask you to consider and vote upon a proposal to amend
the Company's Restated Articles of Incorporation to provide that the purchase by
the Offeror and Westfield of all of the shares of Common Stock tendered pursuant
to the Revised Offer would not trigger the Excess Share Provision (as defined
below) (the "Excess Share Proposal").
The Board has considered and evaluated the Simon Offer, the Revised Offer
and the Simon Solicitation. The Board determined that both the Simon Offer and
the Revised Offer are inadequate and opportunistic, and that holding the Special
Meeting would not be in the best interests of the Company or its shareholders.
The Board unanimously recommends that holders of shares of Common Stock DO NOT
tender into the Revised Offer and DO NOT provide any Agent Designations to
Simon, the Offeror and Westfield pursuant to the Simon Solicitation.
THE BOARD OF DIRECTORS OPPOSES THE SOLICITATION BY SIMON, THE OFFEROR AND
WESTFIELD. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU NOT SIGN ANY GREEN AGENT
DESIGNATION SENT TO YOU BY SIMON, THE OFFEROR AND WESTFIELD. WHETHER OR NOT YOU
HAVE PREVIOUSLY EXECUTED A GREEN AGENT DESIGNATION, THE BOARD OF DIRECTORS URGES
YOU TO SIGN, DATE AND DELIVER THE ENCLOSED WHITE REVOCATION CARD AS PROMPTLY AS
POSSIBLE, BY MAIL (USING THE ENCLOSED ENVELOPE) TO THE COMPANY'S INFORMATION
AGENT, INNISFREE M&A INCORPORATED, 501 MADISON AVENUE, NEW YORK, NEW YORK,
10022.
If you have previously signed and returned any Agent Designation, you have
every right to change your mind and revoke the Agent Designation by signing,
dating and returning the enclosed WHITE revocation card (the "Revocation Card").
We urge you to consider this matter carefully, as there will be no meeting at
which to revoke any Agent Designation. A stockholder's revocation of a
previously executed GREEN Agent Designation card will have the effect of
opposing Simon, the Offeror and Westfield's attempt to compel the Company to
call the Special Meeting. If you have not previously executed an Agent
Designation, your WHITE Revocation Card will have no legal effect in determining
whether the Company must call the Special Meeting.
IF YOUR SHARES ARE HELD OF RECORD BY YOUR BANK OR BROKERAGE FIRM, ONLY THAT
FIRM CAN EXECUTE YOUR WHITE REVOCATION CARD, AND YOU SHOULD, ACCORDINGLY, CALL
YOUR BANK OR BROKER WITH YOUR INSTRUCTIONS TO EXECUTE YOUR WHITE REVOCATION
CARD.
The Company is not currently seeking your proxy with respect to any merger
or other business combination, the election or removal of any person to or from
the Board, or any other matter. THE COMPANY IS SEEKING ONLY A REVOCATION OF
AGENT DESIGNATIONS RELATING TO THE CALLING OF THE SPECIAL MEETING. To the extent
that the Special Meeting is called, you will receive proxy statements from the
Company (and from Simon, the Offeror and Westfield) discussing in detail the
issues that will be voted upon at any such meeting.
This Revocation Solicitation Statement and WHITE REVOCATION CARD are being
mailed to shareholders on or about February , 2003.
IF YOU HAVE ANY QUESTIONS OR NEED ANY ASSISTANCE IN REVOKING AN AGENT
DESIGNATION YOU MAY HAVE GIVEN TO SIMON OR WITHDRAWING YOUR SHARES FROM THE
REVISED OFFER PLEASE CONTACT OUR INFORMATION AGENT:
INNISFREE M&A INCORPORATED
AT
501 MADISON AVENUE
NEW YORK, NEW YORK 10022
OR
CALL TOLL-FREE: (877) 750-9496
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WHY ARE WE OPPOSING THE SIMON SOLICITATION?
According to the Simon Solicitation, Simon and Westfield are soliciting
Agent Designations from the holders of outstanding shares of Common Stock and
Series B Preferred Stock to call a Special Meeting. According to the Simon
Solicitation, at the Special Meeting, Simon and Westfield will, among other
things, ask you to consider and vote upon a proposal to amend the Company's
Restated Articles of Incorporation to provide that the purchase by the Offeror
and Westfield of all of the shares of Common Stock tendered pursuant to the
Revised Offer would not trigger the Excess Share Provision.
We believe that the Simon Solicitation, along with Simon's and Westfield's
misleading press campaign and other false statements about the Company, are all
part of Simon's and Westfield's strategy to put pressure on the Company's Board.
After careful consideration of the Revised Offer, the Board has determined
that it is inadequate and not in the best interest of the Company's
shareholders. In reaching this conclusion, the Board considered numerous factors
including its beliefs that now is not the best time to sell the Company, that
the Company's current stock price does not reflect the value of the Company's
assets or growth potential, that Simon's and Westfield's approaches to managing
and developing their properties is inconsistent with the Company's strategy and
is not likely to yield the maximum value for the Company's assets, and that the
hostile nature of the Revised Offer when coupled with its inability to be
completed, makes it an unnecessary expense and disruption that is detrimental to
both companies.
THE SIMON SOLICITATION IS A COMPONENT OF SIMON'S AND WESTFIELD'S ATTEMPT TO
ACQUIRE THE COMPANY; IT IS DESIGNED TO FACILITATE SIMON'S AND WESTFIELD'S HIGHLY
CONDITIONAL HOSTILE TAKEOVER OFFER THAT CANNOT BE COMPLETED AS PROPOSED. IN
LIGHT OF THE BOARD'S CONCLUSIONS THAT THE REVISED OFFER IS INADEQUATE AND THE
FACT THAT THE EXCESS SHARE PROPOSAL DESCRIBED BELOW IS UNLIKELY TO PASS, THE
BOARD RECOMMENDS THAT SHAREHOLDERS NOT RETURN THE AGENT DESIGNATIONS REQUESTED
BY SIMON, THE OFFEROR AND WESTFIELD.
EXCESS SHARE PROPOSAL
The Company's Restated Articles of Incorporation prevent any person or
group from beneficially or constructively owning capital stock representing more
than 8.23% of the total value of the Company's capital stock (the "Ownership
Limit"). The Board, in certain circumstances, can increase the Ownership Limit
to 9.9%. Shares owned in excess of the Ownership Limit are considered "Excess
Shares" under the Company's Restated Articles of Incorporation and are
transferred to a designated agent of the Company (the "Excess Share Provision").
The designated agent upon delivery of the shares must immediately sell such
shares and donate any proceeds over the price the acquiror paid for the shares
to charity. Consummation of the Revised Offer is conditioned upon the Offeror
and Westfield being satisfied, in their sole discretion, that the Offeror and
Westfield may purchase all of the Shares tendered pursuant to the Revised Offer
without triggering the Excess Share Provision.
The Excess Share Proposal requires the affirmative vote of over two-thirds
of the voting power of the Company's capital stock. In light of the fact that
shareholders holding approximately 30% of the voting power of the Company's
capital stock are opposed to the Revised Offer and any action which would
facilitate the offer, the Excess Share Proposal is not likely to be approved by
the shareholders. Simon has filed litigation seeking to disenfranchise the
Company's shareholders that have opposed the Revised Offer. The Company believes
that this litigation is without merit and has sought to dismiss this claim. See
"Litigation."
3
BACKGROUND AND PURPOSE OF THIS SOLICITATION
On October 16, 2002, David Simon, the Chief Executive Officer of Simon
faxed to the Company a letter requesting an opportunity to meet with Robert S.
Taubman, Chairman, President and Chief Executive Officer of the Company for the
purposes of presenting a proposal to acquire Taubman Centers. Later that day,
Mr. Simon's office called to confirm that the fax had been received. The
following is a copy of the letter:
October 16, 2002
Robert S. Taubman
Chairman of the Board, President
and Chief Executive Officer
Taubman Centers, Inc.
200 East Long Lake Road, Suite 300
Bloomfield Hills, Michigan 48303
Dear Bob:
As you know from our conversations over the last few years, I have
long admired Taubman Centers, Inc. and the wonderful portfolio of
properties built by you and your family. I would like to discuss with you
Simon Property Group's proposal to acquire immediately all of the publicly
traded stock of Taubman Centers, Inc. for cash consideration that
represents an attractive premium to your common shareholders. In addition,
if your limited partners decide to participate, we will make an equally
attractive offer to combine their holdings into Simon's operating
partnership on a basis that affords both tax efficiencies and liquidity.
We believe that a business combination of Simon and Taubman is
compelling, and most importantly, will produce substantial and immediate
value for your shareholders. In addition, your limited partners will have
the opportunity to convert their holdings to units in the Simon operating
partnership on the same economic basis or choose to remain limited partners
in the Taubman partnership. It is my personal hope that you, your family
and Taubman's board will share our enthusiasm for a combination of our
companies and that we can move forward quickly.
Because of the importance of this matter, I would like to present this
proposal to you in person as soon as possible. At our meeting, I will be
prepared to discuss price and other specific components of our proposal,
and address any questions you may have about the transaction. I will
contact you shortly to arrange a meeting.
Sincerely,
/s/ DAVID SIMON
----------------------
David Simon
On October 21, 2002, Mr. Taubman, spoke via telephone with Mr. Simon. On
that telephone call Mr. Simon presented the possibility for Simon to acquire the
Company including the possibility of entering into a joint venture with the
Taubman family pursuant to which Simon would gain effective control of Taubman
Centers. Mr. Taubman told Mr. Simon that while he did not believe there was any
interest in pursuing a sale of the Company at this time, he would discuss the
matter with the Board. After this conversation, the Mr. Taubman contacted each
of the directors individually to inform them of the letter and the conversation.
4
On October 22, 2002, Mr. Simon sent the following letter which was received
by Mr. Taubman on October 22, 2002:
VIA OVERNIGHT MAIL
October 22, 2002
Robert S. Taubman,
Chairman of the Board, President
and Chief Executive Officer
Taubman Centers, Inc.
200 East Long Lake Road, Suite 300
Bloomfield Hills, Michigan 48303
Dear Bob:
I am genuinely disappointed by your response to my October 16, 2002
letter, your refusal to meet with me, and your decision to reject
out-of-hand our proposal to buy the public shares of Taubman Centers, Inc.
(the "Company") at a very significant premium to their current market
price. At a minimum, I thought you would want to meet with me to discuss
the specifics of our proposal. Given the current state of the financial
markets and considering Simon's financial wherewithal and our demonstrated
ability to close deals and add value, our proposal represents a financial
opportunity for your shareholders that merits careful consideration.
Although I very much wanted to describe our proposal to you in person,
I am instead setting out its basic terms in this letter, so that you and
your board can review it carefully. We are prepared to pay $17.50 for each
share of Company common stock in cash. We are also willing to provide
equivalent value to the holders of all outstanding limited partnership
interests in The Taubman Realty Group Limited Partnership (the "Operating
Partnership") and allow them to exchange those interests for limited
partnership units in Simon's operating partnership on a tax efficient
basis, or, at their option, remain limited Partners in your Operating
Partnership.
Specifically, Simon would acquire all of the Company's outstanding
publicly held common stock pursuant to a merger agreement. The individual
steps to accomplish this merger would be as follows:
1. Simon (or its affiliate) would make a tender offer to purchase
all of Taubman's common stock for $17.50 per share, net to each seller
in cash.
2. As promptly as practicable after consummation of the tender
offer, an affiliate of Simon would merge with the Company, and each
non-tendering share of Company common stock would be converted into the
right to receive $17.50 per share in cash.
We are also prepared to purchase, either for cash or through an
exchange of partnership interests, all limited partnership interests in the
Operating Partnership, which would include the acquisition of the Company's
Series B preferred stock. However, if your family and the other limited
partners would prefer to remain limited partners in the Operating
Partnership, we are prepared to accommodate that desire while at the same
time making our proposal available to holders of the Company's publicly
held common stock.
Our $17.50 per share all cash offer represents a price never before
realized in the Company's ten year trading history and affords your
shareholders a 30% premium to today's closing price, as well as a premium
to Wall Street's consensus net asset value for the Company. This proposal
is NOT subject to the receipt of financing or any due diligence
investigation of the Company and its subsidiaries or any requirement that
the limited partners exchange their interests,
We are well aware that the Company's charter contains an "excess share
provision" that prohibits the purchase of more than 8.23% of the aggregate
value of the Company's stock and that the board of directors can only waive
application of this provision to permit a purchase of up to 9.9% of
aggregate value. This provision, ostensibly for the purpose of preserving
the Company's status as a REIT, goes well
5
beyond what is necessary for that purpose and stands between the Company's
shareholders and their ability to realize a substantial premium for their
shares. Our proposal, therefore, must be conditioned on the inapplicability
of the Company's excess share provision to our bid. In this regard, we note
that Simon's acquisition of Company securities need NOT jeopardize the
Company's status as a REIT, and we therefore believe that the Company's
board of directors, as fiduciaries, must take steps to amend the Company's
charter to allow our proposal to go forward for the benefit of the
Company's common shareholders. We also believe it is the responsibility of
the holders of the Series B Preferred Stock to approve such an amendment so
as not to impede the ability of the Company's common shareholders to
receive a significant premium, particularly given the fact that our
proposal allows the limited partners of the Operating Partnership the
option to either convert their holding on a tax efficient basis or remain
in their existing structure.
While this letter outlines the basic terms of our proposal, we are
ready to work diligently with you and your team to finalize all other terms
of the deal.
Bob, I know this is a difficult subject for you personally, but our
proposal, which is intended to bring immediate and substantial value to the
Company's shareholders, warrants your serious and immediate attention. I am
confident that given the opportunity to meet with you, we could finalize a
mutually beneficial transaction between our two companies.
I will call you in the next few days, giving you sufficient time to
review this letter, so that we can agree on a time and place for a meeting.
Sincerely,
/s/ DAVID SIMON
----------------------------
David Simon
Chief Executive Officer
On October 28, 2002, the Board of Taubman Centers met with the Company's
management and Goldman, Sachs & Co. ("Goldman Sachs"), the Company's financial
advisors, as well as with legal advisors to discuss Simon's unsolicited
proposal. The Board reviewed the proposal, and received advice from Mr. Taubman
that the Taubman family had no interest in pursuing a sale of the Company and
intended to use its significant stake in the Company to oppose the proposed
transaction if it were put to a vote. The Board unanimously decided that the
Company was not for sale, and that discussions as to Simon's proposal would be
unproductive, and authorized the delivery of a letter to Simon communicating its
determination. The Board also authorized the issuance of a press release in the
event that Simon publicly disclosed his proposal.
Following the board meeting on October 28, 2002, Mr. Taubman called Mr.
Simon and informed him that the Board had met and was unanimous in its
conclusion that the Company had no interest in pursuing a sale transaction, and
that discussion as to any such transaction would be unproductive.
Mr. Taubman sent a copy of the following letter to Mr. Simon:
David Simon
Chief Executive Officer
Simon Property Group
115 West Washington Street
Indianapolis, Indiana 46204
Dear David,
This will respond to your letter dated October 22, 2002. The Board of
Directors of Taubman Centers has met and with the advice of its outside
financial and legal advisors, has considered your unsolicited
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proposal. The Board is unanimous in concluding that the company has no
interest whatsoever in pursuing a sale transaction, and that discussion as
to such a transaction would not be productive.
Sincerely,
/s/ ROBERT S. TAUBMAN
---------------------------
Robert S. Taubman
Chairman, President and
Chief Executive Officer
On November 1, 2002, Mr. Simon's office called Mr. Taubman's office
requesting a meeting with Mr. Taubman during the upcoming NAREIT national
conference.
On November 5, 2002, in response to Mr. Simon's request of November 1,
2002, Mr. Taubman conveyed in a telephone conversation with Mr. Simon that he
would be willing to meet with Mr. Simon but that the Company's position had not
changed since they last spoke and that he did not think it would be productive
to discuss the contents of Mr. Simon's recent letters to Mr. Taubman.
On November 6, 2002, at the NAREIT national conference Mr. Simon reiterated
his interest in acquiring the Company and Mr. Taubman again informed him that
the Company's board had met and the Company had no interest in pursuing a sale
transaction.
On November 13, 2002, David Simon sent a letter to the Board of Directors
of the Company, which was made public in an 8-K filing of the same date:
Dear Members of the Board of Directors:
As you may know, we recently made a written offer to Robert S. Taubman
to pay $17.50 in cash for each share of Taubman Centers, Inc. (the
"Company") common stock. Our all-cash offer would deliver to all Taubman
shareholders a substantial premium -- approximately 18% above yesterday's
closing price and 30% above the price on the day we initially made our
offer -- and it exceeds the highest price at which Taubman shares have ever
traded. Our offer represents a compelling strategic and financial
transaction that would produce substantial and immediate value for all of
your shareholders. We can move quickly since our offer is not subject to
the receipt of financing or any due diligence investigation of the Company.
On several occasions, we have communicated our offer to Mr. Taubman
and suggested that we have an opportunity to discuss it with the members of
Taubman's board of directors. We wrote Mr. Taubman on October 16, 2002, to
request a meeting to present our offer. He refused to meet. On October 22,
2002, we again wrote Mr. Taubman, this time setting forth the basic terms
of our offer. Once again, he refused even to have a discussion, writing to
us on October 28, 2002, that "the Company has no interest whatsoever in
pursuing a sale transaction...."
We are dismayed that Mr. Taubman continues in his refusal even to
discuss our offer -- or indeed any sale transaction, particularly in light
of the fact that we have expressed a willingness to be very flexible with
respect to the structure of the proposed transaction. The offer is not
conditioned upon any participation by the Taubman family. Instead we have
agreed to accommodate any desire by the Taubman family to retain its
economic interest in the Taubman Realty Group Limited Partnership, or, at
their option, to participate in the transaction, and receive either cash or
equivalent value for their existing partnership interests by exchanging
them on a tax efficient basis for partnership interests in the Simon
operating partnership.
Since the Taubman family can choose to (1) retain its current Taubman
partnership units, (2) convert into Simon partnership units, or (3) sell
for cash, we can only conclude that Mr. Taubman's refusal even to discuss
our offer reflects the Taubman family's desire not to permit the Company to
be
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sold under any circumstances. While it is entirely appropriate for the
Taubman family to retain the right to choose between various options with
respect to the treatment of its own partnership units, it is improper for
these insiders to prevent public shareholders from choosing to receive a
premium for their shares.
Mr. Taubman apparently believes the Taubman family is not accountable
to the public shareholders because of the family's claimed blocking
position -- via the Series B preferred stock -- which was surreptitiously
issued in a "restructuring" transaction many years after the Company's
initial public offering without either proper disclosure or a shareholder
vote. We question both the propriety and validity of a transaction which
attempts to transfer to the Taubman family control and a permanent veto
over material decisions that rightfully belong to the public shareholders
of Taubman -- such as an all-cash, premium offer to acquire the Company.
The effect of the Series B preferred stock, for which the Taubman
family paid a total of only $38,400.00, is to disenfranchise the public
shareholders. This entrenchment device is a permanent corporate governance
defect embedded in the Company's structure -- and it continues to hurt the
public shareholders. Indeed, between the time the Series B shares were
issued to the Taubman family in 1998 and our October 22 offer letter, the
price of Taubman common shares has fallen by 4%.
We understand that the obstacles created in the governance structure
by the Taubman family, at the expense of the public shareholders, are
significant. However, with the cooperation of the Board of Directors,
acting as fiduciaries for the common shareholders, we believe these
obstacles are surmountable. We also trust that undisclosed economic or
governance burdens have not been, and will not be, imposed on Taubman in
response to our offer or otherwise. We hope the Board will agree with us
that our offer provides an excellent opportunity for Taubman shareholders
to realize immediate liquidity and full value for their shares to an extent
not likely to be available to them in the marketplace or in any alternative
transaction. At a time when good corporate governance is particularly
important to investors, we seek your help in restoring the rights of the
public shareholders of Taubman.
We prefer to complete this acquisition through a negotiated
transaction. We stand ready to make a detailed presentation of our offer to
the Board and to answer any questions you may have.
Very truly yours,
/s/ DAVID SIMON
---------------------------
David Simon
Chief Executive Officer
On November 13, 2002 the Company issued the following press release:
Bloomfield Hills, Michigan, November 13, 2002 -- Taubman Centers, Inc.
(NYSE: TCO) confirmed today that it has received an unsolicited proposal
from Simon Property Group, Inc. (NYSE: SPG) seeking to acquire control of
the Company. Taubman Centers said that its Board of Directors had
previously met and, with the advice of its outside financial and legal
advisors, had considered the proposal. The Board unanimously concluded that
Taubman Centers has no interest in pursuing a sale transaction and that
discussions regarding such a transaction would not be productive.
The Taubman family, large economic stakeholders with voting control of
more than 30% of Taubman Centers, has also confirmed that it has no
interest in pursuing a sale of the Company. A sale or other extraordinary
transaction would require a 2/3rds affirmative vote.
The Company stated, "The Taubman Centers Board of Directors has
unanimously rejected this proposal. In addition, the Taubman family has
informed the Board that it is categorically opposed to the sale of the
Company. Given the family's position, any efforts to purchase Taubman
Centers would not be productive." Goldman, Sachs & Co. is acting as
financial advisor and the law firm of Wachtell, Lipton, Rosen & Katz is
acting as legal advisor.
8
On December 5, 2002, Simon commenced the Offer and on December 5, 2002,
Simon and the Offeror filed the Complaint in the United States District Court
for the Eastern District of Michigan against the Company, the Company Board and
certain members of the Taubman family.
On December 10, 2002 the Board met with the Company's management, Goldman
Sachs, and legal advisors to discuss the Offer. The Board reviewed the Offer
with counsel and management and received the opinion of Goldman Sachs that the
Offer was inadequate. The Board unanimously resolved to recommend that the
Company's shareholders reject the offer. The Board also amended the Company's
by-laws to opt-out of the Michigan Control Share Acquisition Act, and make
certain other procedural changes including requiring advance notice for
shareholder nominations and proposals. On December 11, 2002, the Company filed
the Board's recommendation on Schedule 14D-9.
On December 16, 2002, Simon filed preliminary proxy materials with the SEC
to call a Special Meeting, at which meeting Simon would ask the Company's
shareholders to adopt a proposal to amend the Company's Restated Articles of
Incorporation to provide that the purchase by the Offeror of all of the Shares
tendered pursuant to the Simon Offer would not trigger the Excess Share
Provision, and a proposal urging the Company Board to pass a resolution
approving the Simon Offer in order to satisfy the Business Combination Condition
if the Company Board opts into the Michigan Business Combination Act.
On December 20, 2002, the Board met with its legal and financial advisors
and considered the Simon Solicitation and the proposals which Simon seeks to put
before a shareholder meeting. The Board unanimously resolved to recommend that
shareholders revoke any Agent Designations and if a special meeting were called,
to vote against Simon's proposals. In addition, the Board also amended the
Company's by-laws to specify in more detail the timing and procedures that would
apply to a special meeting requested by the shareholders.
On January 13, 2003, the Company announced that Sheldon M. Gordon, along
with his affiliates, had agreed to make an investment in the Company and that
Gordon and the Company had come to an agreement relating to Gordon's potential
acquisition of Simon's interest in The Forum Shops in connection with Gordon's
initiation of the buy/sell mechanism of the Forum Shops partnership agreement.
On January 15, 2003 Simon and Westfield announced that Westfield had joined
the Offer, that the Offer Price was increased to $20.00 per share, that the
expiration date of the Offer was extended until February 14, 2003, and that
unless two-thirds of the outstanding Common Stock were tendered and not
withdrawn prior to midnight on February 14, 2003, Simon and Westfield will
withdraw the Revised Offer and terminate their efforts to acquire the Company.
On January 20, 2003, the Board of Directors met to review the terms of and
consider the Revised Offer with its financial and legal advisors. The Board of
Directors also received and considered updates of recent operational and
financial developments concerning the Company. At such meeting, the Board, after
receiving advice from its legal and financial advisors, unanimously determined
that it would be in the best interests of the Company and its stockholders to
reject the Offeror and Westfield's unsolicited Revised Offer. On January 21,
2003, the Company filed the Board's recommendation on an amendment to the
Company's schedule 14D-9.
On February 10, 2003 the Company announced the expansion of its existing
Common Share repurchase program by $100 million. Purchases of Common Stock by
the Company will be financed through its general corporate funds including funds
received from an anticipated $50 million investment in the Company by Sheldon M.
Gordon in connection with the Forum Shops transaction. Depending upon the amount
of purchases and other factors, the Company may also borrow funds under its line
of credit. Each member of the Taubman family separately agreed that any increase
in its respective relative voting power caused by a reduction in the Company's
shares outstanding would be voted proportionate with all votes cast with respect
to any matter to be voted upon the result of which would satisfy or frustrate
any of the current conditions to the Revised Offer, such that the share
repurchase program will not affect the outcome of any such vote.
On February 13, 2003 the Company announced that Simon had formally notified
Gordon in a letter dated February 7, 2003 that it would buy Gordon's stake in
the Forum Shops. The Company also announced that upon closing of the
transaction, Gordon, along with his affiliates, will invest, on an after-tax
basis, $50 million
9
of the cash proceeds in the Company in exchange for 2.08 million of the
Company's operating partnership units at $24 per unit. Gordon's operating
partnership units will have the same attributes as ordinary units, except that
they will not have voting rights and Gordon will have very limited rights to
sell these units for two years, and thereafter on a phased basis over a
three-year period.
On February 17, 2003, Simon and Westfield announced that 85% of the
Company's outstanding shares of Common Stock representing 53% of the Company's
voting power had been validly tendered and not withdrawn prior to midnight on
February 14, 2003, and that the expiration date of the Revised Offer was
extended to 12:00 midnight New York City time on March 28, 2003.
On February 21, 2003, Simon and Westfield filed amended preliminary proxy
materials with the SEC with respect to the Simon Solicitation. According to the
Simon Solicitation, Simon and Westfield will ask the Company's shareholders to
adopt a proposal to amend the Company's Restated Articles of Incorporation to
provide that the purchase by the Offeror and Westfield of all of the Shares
tendered pursuant to the Revised Offer would not trigger the Excess Share
Provision.
SIGNING AND RETURNING AN AGENT DESIGNATION FURTHERS THE INTEREST OF SIMON AND
WESTFIELD IN PURSUING THE REVISED OFFER, WHICH YOUR BOARD OF DIRECTORS HAS
DETERMINED IS INADEQUATE AND NOT IN THE BEST INTEREST OF THE COMPANY.
RECOMMENDATION BY THE COMPANY'S BOARD OF DIRECTORS
The Taubman Centers Board of Directors, after consultation with its senior
management, legal and financial advisors reached the conclusion that the Revised
Offer is not in the best interest of the Company's shareholders and offered the
recommendation described above, for the following reasons:
(i) The Board's familiarity with the business of the Company, its
financial condition, results of operations and prospects and the nature of,
the prospects for, and the Company's position in, the industry in which the
Company operates, and the Board's belief that, for the reasons further
explained under paragraphs (iii) and (v), neither the Company's current
stock price nor the Revised Offer reflect the full value of the Company's
assets.
(ii) The opinion of Goldman Sachs, the Company's financial advisor,
after reviewing with the Board of Directors many of the factors referred to
herein and other financial criteria used in assessing an offer, that the
Revised Offer is inadequate.
(iii) The Board's belief that a number of the Company's properties are
at early stages in their development cycles and are expected to generate
increasing returns over the next few years. The Board believes that the
Company's current stock price does not reflect the value of these assets or
their growth potential. Moreover, the Board believes that the Company's
organic growth strategy of concentrating on improving the quality and
consistency of its assets, coupled with selective development and
acquisitions and divestitures, is likely to yield long-term returns to
shareholders superior to the Revised Offer.
(iv) The Board's belief that the Company's recent placement of a
minority investment in non-voting Units at $24 per unit to a sophisticated
real estate investor is indicative of the fact that the Revised Offer does
not reflect adequate value for the Company's common stock. The Board noted
that these Units were issued in connection with the Company's provision of
financing on an unrelated real estate transaction which did not involve the
sale of control of the Company.
(v) The Board's belief that both the inadequacy of the Revised Offer
and the opportunistic manner in which it has been pursued represent a
threat to shareholder value, to the Company's stability and to the many
other constituencies which have an interest in the Company's success. The
Board believes the timing of the Revised Offer represents an opportunistic
attempt by Simon and Westfield to acquire a collection of upscale regional
mall assets that cannot be replicated, and which are the most productive
portfolio of regional malls held by any public company.
(vi) The fact that Taubman Centers has delivered an 81.6% total return
to shareholders for the five year period ending November 13, 2002 (the date
immediately prior to the public announcement of Simon's initial proposal).
During that time period the Company has outperformed the Morgan Stanley
10
REIT Total Return Index (which returned 21.6%), the S&P 500 Total Return
Index (which returned 4.3%), and many of its competitors (including Simon
Property Group, which returned 63.3%). The Taubman Centers properties have
the highest average sales and rents per square foot of any regional mall
company. Based on these facts, the Board believes that the Revised Offer
does not reflect the full value of the Company's assets.
(vii) The Board's belief that Simon's and Westfield's approaches to
managing and developing their properties are inconsistent with the
Company's portfolio of upscale shopping centers in select high-growth
markets and are not likely to yield the maximum value for the Company's
assets.
(viii) The fact that the markets for regional malls are already highly
concentrated in several cities where Simon, Westfield and the Company
compete. If the proposed transaction were to occur, that concentration
could dramatically increase, resulting in decreased competition among all
local shopping centers and causing higher lease prices for mall tenants,
higher ultimate retail prices for consumers, and lower quality shopping
centers in the affected areas. At any time before or after consummation of
the Revised Offer, federal antitrust authorities, State Attorneys General,
or private parties may investigate the transaction and/or bring legal
actions under the federal or state antitrust laws seeking to enjoin the
acquisition of the Company's Common Shares or to require divestiture of
Simon's, Westfield's or the Company's assets. Accordingly, the Board
believes that there is significant uncertainty as to whether Simon and
Westfield could ultimately consummate a transaction along the lines they
have proposed.
(ix) The Board's belief that Simon's continuing public relations
campaign (which has now been joined by Westfield) aimed at damaging the
Company is hypocritical and the Board's concern about Simon's misleading
statements to the public about its own corporate governance in its press
releases and Form 8-K filed on November 18, 2002. The Board noted the fact
that Simon claimed in a press release that "the Simon family has no veto
power or other control mechanism that could block a sale or merger
transaction." In a story published in The New York Times on December 1,
2002, Simon admitted the untruth of its statement, calling it "a mistake"
and noting that the family does in fact have the power to block a merger
and that to date Simon has not issued a correction. In addition, the Board
took note of Simon's (and now Westfield's) repeated willingness to
mischaracterize Taubman Centers' financial performance and to misrepresent
the premium they are offering and Michigan law and David Simon's
communications with Robert Taubman. The Board believes that these
misstatements may be indicative of a larger compliance problem in the Simon
organization, which calls into question both Simon's representations and
its ability to consummate a transaction along the lines it and Westfield
have proposed.
(x) The fact that completion of the Revised Offer and second-step
merger will likely be a taxable event to many of the Company's
shareholders, the timing of which will not be in their individual control.
Accordingly, the Board believes that many shareholders would actually
receive less in net proceeds than purported to be offered by Simon and
Westfield, which offer in itself the Board has determined to be inadequate.
(xi) The fact that the Taubman family, with combined voting power of
approximately 30% of the total voting power of the Company's capital stock,
have indicated that they do not intend to tender their Common Shares and
have taken the firm position that they are not interested in pursuing a
sale transaction. The Board noted that the two-thirds shareholder vote
required for a sale or other extraordinary transaction has been in the
Company's charter since its initial public offering in 1992. The Revised
Offer is not likely to be completed absent a Court ruling in litigation
brought by Simon seeking to divest some of the Taubman Centers shareholders
of their voting rights. Based on the advice of counsel, the Board believes
that the litigation brought by Simon to disenfrancise the Series B
shareholders is without merit.
(xii) The Board's belief that the unsolicited and hostile nature of
the Revised Offer when coupled with its inability to be completed, makes it
expensive, disruptive, and detrimental to Simon, Westfield and the Company.
11
(xiii) The Board's belief, based on the factors set forth in
paragraphs (i) through (xii) above, that the consideration to be paid in
the Revised Offer does not reflect the inherent value of the Company.
(xiv) The fact that the Revised Offer is highly conditional, which
results in significant uncertainty that the Revised Offer could or would be
consummated. Specifically, according to the Revised Offer it is subject to
the following conditions, among many others:
(1) Minimum Tender Condition. Consummation of the Revised Offer is
conditioned upon there being validly tendered and not withdrawn prior to
the expiration of the Revised Offer such number of Common Shares that
represents, together with Common Shares owned by the Offeror, Simon,
Westfield or any of its subsidiaries, at least two-thirds ( 2/3) of the
total voting power of the Company. Voting power of the Company is
calculated based upon the aggregate voting power attributable to the
outstanding Common Shares and the purported voting power attributable to
the outstanding shares of Series B Preferred Stock (assuming exercise of
all then outstanding rights to purchase Common Shares or partnership
units of the Operating Partnership). Accordingly, the Board believes
that this condition will not be satisfied. See "Litigation."
(2) Excess Share Condition. The Company's charter prevents any
person or group from beneficially or constructively owning capital stock
representing more than 8.23% of the total value of the Company's capital
stock (the "Ownership Limit"). As was disclosed to the Company's
shareholders in connection with the Company's IPO, and numerous times
since, the Ownership Limit is intended both to preserve the Company's
status as a REIT and make it more difficult for any person to acquire
control of the Company. The Company's Board in certain circumstances can
increase the Ownership Limit to 9.9%. Shares owned in excess of the
Ownership Limit are considered "Excess Shares" under the Company's
Restated Articles of Incorporation and are transferred to a designated
agent of the Company (the "Excess Share Provision"). The designated
agent upon delivery of the shares must immediately sell such shares and
donate any proceeds over the price the acquiror paid for the shares to
charity. Consummation of the Revised Offer is conditioned upon the
Offeror being satisfied, in its sole discretion, that the Offeror may
purchase all of the Shares tendered pursuant to the Revised Offer
without triggering the Excess Share Provision. The Excess Share
Provision may only be waived by the affirmative vote of at least
two-thirds ( 2/3) of the total voting power of the Company. Accordingly,
this condition is only likely to be met if Simon is successful in its
litigation which the Company believes is without merit. Therefore, the
Board believes that this condition will not be satisfied.
(3) Control Share Condition. Consummation of the Revised Offer is
conditioned upon full voting rights for all Common Shares to be acquired
by Offeror pursuant to the Revised Offer having been approved by the
Company's shareholders under Chapter 7B of the MBCA (the "Michigan
Control Share Acquisitions Act") or the Offeror being satisfied, in its
sole discretion, that the Michigan Control Share Acquisitions Act is
invalid or otherwise inapplicable to the Shares to be acquired by the
Offeror in the Revised Offer. On December 10, 2002 the Board of
Directors opted out of the Michigan Control Share Acquisitions Act. "See
Legal Matters -- Michigan Control Share Acquisitions Act."
(4) Business Combination Condition. Consummation of the Revised
Offer is conditioned upon the Offeror being satisfied, in its sole
discretion, that Chapter 7A of the MBCA (the "Michigan Business
Combination Act") will not prohibit for any period of time, or impose
any shareholder approval with respect to, its proposed back end merger
or any other "Business Combination" (as defined in the Michigan Business
Combination Act) involving the Company and the Offeror or any other
affiliate of Simon or Westfield. While the Michigan Business Combination
Act does not currently apply to the Company, the Company may elect to be
governed by the Michigan Business Combination Act at any time, in which
case this condition would not be met.
(5) No Material Adverse Change Condition. Consummation of the
Revised Offer is conditioned upon the Offeror not becoming aware of any
change that has or will have occurred (or any development that has or
will have occurred involving prospective changes) in the business,
assets,
12
liabilities, condition (financial or otherwise), prospects or results of
operations of the Company or any of its subsidiaries that has, or could
reasonably be expected to have, in the sole discretion of the Offeror, a
material adverse effect on the Company or, assuming consummation of the
Revised Offer or its proposed back end merger, on the Offeror, Simon,
Westfield or any other affiliate of Simon or Westfield.
(6) Competing Offer Condition. Consummation of the Revised Offer
is conditioned upon a tender or exchange offer for any Common Shares not
having been made or publicly proposed to be made by any other person
(including the Company or any of its subsidiaries or affiliates)
(7) Numerous Other Conditions. Consummation of the Revised Offer
is also subject to other conditions, several of which are unlikely to be
satisfied. Notwithstanding the Company's regular practice of increasing
its dividend (including its recent announcement of the regular annual
increase on December 10, 2002), the offer is conditioned on the Company
not increasing its dividend. Similarly, the Revised Offer is conditioned
on there being no change to the Company's by-laws regardless of its
effect on the Offeror. While Simon filed an amendment to the Offer
stating that it would not assert these condition with respect to the
recent dividend increase and by-law amendments, it has not waived the
condition with respect to any future dividend increases or by-law
amendments. The Revised Offer is also contingent on there being no
issuance of stock or options, no changes to employment agreements, no
commencement of war or armed hostilities or other national or
international crisis involving the United States, and to many other
conditions.
In light of the above factors, the Taubman Centers Board determined that
the Revised Offer is not in the best interests of Taubman Centers and Taubman
Centers' shareholders.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT TAUBMAN CENTERS'
SHAREHOLDERS REJECT THE REVISED OFFER AND NOT TENDER THEIR SHARES PURSUANT TO
THE REVISED OFFER.
In addition, in arriving at their recommendation, the directors of the
Company were aware of the interests of certain officers and directors of the
Company as described under "Interests of Certain Persons." The directors of the
Company were also aware that the Taubman Family's voting power is derived
primarily from its ownership of Series B Preferred Stock and that Simon has
challenged the voting rights of the Series B Preferred Stock and is seeking to
disenfranchise the Series B shareholders; however, the Board believes this
litigation to be without merit.
In making its determination that the Revised Offer is not in the best
interests of Taubman Centers and Taubman Centers' shareholders, the Board took
into account that the realization of the Company's anticipated future results is
not assured, and that there is a risk that the Company's plans, like the plans
of any business, will not be successfully completed. If the Company remains
independent, its shareholders will continue to bear this risk.
The foregoing discussion of the information and factors considered by the
Taubman Centers Board is not intended to be exhaustive but addresses all of the
material information and factors considered by the Board in its consideration of
the Revised Offer. In view of the variety of factors and the amount of
information considered, the Board did not find it practicable to provide
specific assessments of, quantify or otherwise assign any relative weights to,
the specific factors considered in determining to recommend that shareholders
reject the Revised Offer. Such determination was made after consideration of all
the factors taken as a whole. In addition, individual members of the Board may
have given differing weights to different factors. Throughout its deliberations,
the Board received the advice of Goldman Sachs, and of outside legal advisors,
who were retained to advise the Board in connection with the Simon Offer and the
Revised Offer.
IN LIGHT OF THE BOARD'S CONCLUSIONS THAT THE REVISED OFFER IS INADEQUATE, THE
BOARD RECOMMENDS THAT SHAREHOLDERS NOT RETURN THE AGENT DESIGNATION REQUESTED BY
SIMON AND WESTFIELD. TO STOP SIMON AND WESTFIELD FROM USING YOUR SHARES TO
FURTHER THEIR INADEQUATE OFFER, THE BOARD RECOMMENDS THAT YOU (1) DISCARD ANY
GREEN AGENT DESIGNATIONS AND (2) IF YOU HAVE ALREADY RETURNED A GREEN AGENT
DESIGNATION, SIGN, DATE AND RETURN THE ENCLOSED WHITE REVOCATION CARD AS SOON AS
POSSIBLE. THE RETURN OF A SIGNED REVOCATION CARD OR AGENT DESIGNATION BY A
SHAREHOLDER IS INDE-
13
PENDENT OF ANY DECISION BY SUCH SHAREHOLDER OF WHETHER OR NOT TO TENDER SHARES
PURSUANT TO SIMON'S AND WESTFIELD'S INADEQUATE OFFER.
THE SPECIAL MEETING
According to the Company's by-laws, a special meeting of the shareholders
may be requested by a shareholder or shareholders holding of record shares
entitled to at least twenty-five percent (25%) of all the votes entitled to be
cast by the holders of all outstanding capital stock of the Company entitled to
vote at such meeting. The holder or holders desiring to call a special meeting
of the shareholders must send the Company a notice requesting that the Company
establish a record date and a meeting date for such a special meeting. This
notice must be accompanied by documentation evidencing that the shareholder or
shareholders requesting the meeting possess sufficient voting power to request
that such a special meeting be called. This notice must also contain specified
information regarding the shareholder and the proposals to be considered at the
meeting. Within ten business days after receipt of such notice and verification
of the accompanying documentation, the Board will fix a record date and meeting
date for the special meeting, which meeting date shall be set for not less than
30 nor more than 90 days after the date of such Board action. In addition, under
Michigan Law a shareholder or shareholders holding of record shares entitled to
at least ten percent (10%) of all the votes entitled to be cast by the holders
of all outstanding capital stock can, upon showing of good cause, apply to a
court for a special meeting to be ordered.
If Simon and Westfield are successful in the Simon Solicitation and solicit
Agent Designations from holders of at least 25% of all the votes entitled to be
cast, we expect that they will send the Company a notice of a Special Meeting
and request that the Company establish a record date for such a Special Meeting.
This notice must be accompanied by documentation evidencing that Simon and
Westfield possesses sufficient voting power to request that such a special
meeting be called. This notice must also contain information as to Simon and
Westfield, the proposals to be considered at the meeting and the interests that
Simon and Westfield have in the proposals. Within ten business days after
receipt of such notice and verification of the accompanying documentation, the
Board shall fix a record date and meeting date for such special meeting, which
meeting date shall be set for not less than 30 nor more than 90 days after the
date of such board action. Only such business shall be conducted at a special
meeting of shareholders as shall have been brought before the meeting pursuant
to the Company's notice of meeting or by or at the direction of the Board.
If Simon and Westfield are unsuccessful in the Simon Solicitation but still
receive the Agent Designations of at least ten percent (10%) of all the votes
entitled to be cast, Simon and Westfield may apply to a court for a special
meeting to be ordered. We cannot predict whether or not Simon and Westfield will
apply to a court for a special meeting or be able to make the requisite showing
of good cause or whether a court will grant Simon and Westfield a Special
Meeting.
As of February 19, 2003, there were 52,219,609 shares of Common Stock and
31,767,066 shares of Series B Preferred Stock issued and outstanding. According
to the Simon Solicitation, Simon beneficially owned only 11,000 shares of Common
Stock, representing substantially less than 1% of the outstanding shares as of
such date. Accordingly, Simon and Westfield would require executed and unrevoked
Agent Designations from the holders of at least 20,985,669 shares of Common
Stock or Series B Preferred Stock in addition to the 11,000 shares of Common
Stock beneficially owned by Simon in order to demand the Special Meeting.
EFFECT OF EXECUTION AND DELIVERY OF REVOCATIONS
The Board is soliciting Revocations in opposition to Simon's solicitation
of Agent Designations. By executing and returning the WHITE Form of Revocation,
you will be revoking your Agent Designation relating to the call for the Special
Meeting or, if you have not previously executed and returned a GREEN Form of
Agent Designation, you will be indicating your support for the Company Board.
The Board urges you NOT to sign the GREEN Form of Agent Designation sent to
you by Simon and Westfield. Whether or not you have previously executed a GREEN
Form of Agent Designation, the Board urges you to show your support for the
Company by executing and dating the enclosed WHITE Form of
14
Revocation and mailing it in the enclosed postage-paid envelope as soon as
possible. The Agent Designation of any shares of Common Stock represented by a
Form of Revocation that is returned properly signed will be revoked in
accordance with the instructions indicated on the Form of Revocation.
REVOCATION
Either a GREEN Agent Designation or a WHITE Revocation may be revoked by
filing with the Secretary of the Company a written notice of revocation. Such
written revocation may be in any form, but must be signed and dated and must
clearly express your intention to revoke your previously executed GREEN Agent
Designation or WHITE Revocation. Any written notice revoking an Agent
Designation should be sent to: Innisfree M&A Incorporated, 501 Madison Avenue,
New York, New York, 10022. Your latest dated submission will supersede any
earlier-dated Agent Designation, Revocation or other written notice of
revocation, except that a Revocation will be inoperative and of no effect if
delivered after the date, if any, as of which it is determined that Simon and
Westfield effectively demanded a Special Meeting. A shareholder's revocation of
a previously executed GREEN Agent Designation will have the effect of opposing
Simon's and Westfield's demand for the Special Meeting. Any Revocation will not
affect any action taken by Simon and Westfield pursuant to an Agent Designation
prior to such Revocation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The Company owns a 62% managing partner's interest in The Taubman Realty
Group Limited Partnership ("TRG"), through which the Company conducts all of its
operations. TRG is a partnership that owns, develops, acquires, and operates
regional shopping centers nationally. The following table sets forth certain
information regarding the beneficial ownership of the Company's Common Stock and
Series B Preferred Stock and of partnership interests in TRG ("Units of
Partnership Interest" or "Units") as of February 19, 2003. Mr. Robert S. Taubman
and Mr. William S. Taubman, both of whom are directors and executive officers of
the Company beneficially own in the aggregate 559,795 shares of Series B
Preferred Stock which represents 1.8% of the outstanding Series B Preferred
Stock, Courtney Lord owns 280,125 or less than 1% of the outstanding Series B
Preferred Stock and none of the other directors or executive officers
beneficially own any Series B Preferred Stock. The members of the Taubman family
beneficially own in the aggregate 25,141,852 shares of Series B Preferred Stock
which represents 79.1% of the outstanding Series B Preferred Stock. When viewed
in conjunction with the management interests described in this Section, the
ownership interest of the individuals who are directors and executive officers
of the Company may be considered to be an interest that differs from those of
the unaffiliated holders of common stock. However, given the members of the
Taubman family's significant ownership stake in the business as a whole, and the
members of the Taubman family's shared interest with the common shareholders of
allowing the Company's assets to reach their full potential, this Series B
interest may also be considered to be closely aligned with the unaffiliated
holders of common stock.
The share information in the table (both numbers of shares and percentages)
reflects ownership of Common Stock and Series B Preferred Stock, which for this
purpose are treated as a single class of voting stock; however, the footnotes to
the table provide ownership information for the Common Stock and Series B
Preferred Stock on a separate basis, including (for any shareholder owning at
least one percent of the Common Stock or Series B Preferred Stock, as
applicable) the percentage of the outstanding shares of the separate class that
the holder's shares represent.
PERCENTAGE
UNITS OF OWNERSHIP OF
PARTNERSHIP UNITS OF
DIRECTORS, EXECUTIVE OFFICERS NO. OF PERCENT OF INTEREST IN PARTNERSHIP
AND 5% SHAREHOLDERS SHARES(1) SHARES(1) TRG INTEREST IN TRG
----------------------------- ---------- ---------- ----------- ---------------
Robert S. Taubman.................. 958,886(2) 1.1%(2) 798,886(3) 1.0%
William S. Taubman................. 716,460(4) * 551,460(5) *
Lisa A. Payne...................... 608,328(6) * 0 0
15
PERCENTAGE
UNITS OF OWNERSHIP OF
PARTNERSHIP UNITS OF
DIRECTORS, EXECUTIVE OFFICERS NO. OF PERCENT OF INTEREST IN PARTNERSHIP
AND 5% SHAREHOLDERS SHARES(1) SHARES(1) TRG INTEREST IN TRG
----------------------------- ---------- ---------- ----------- ---------------
Courtney Lord...................... 282,159(7) * 280,125(8) *
John L. Simon...................... 5,191(9) * 0 0
Graham T. Allison.................. 1,430 * 0 0
Allan J. Bloostein................. 5,000 * 0 0
Jerome A. Chazen................... 10,000(10) * 0 0
S. Parker Gilbert.................. 130,000(11) * 0 0
Peter Karmanos, Jr. ............... 40,000(12) * 0 0
A. Alfred Taubman.................. 24,768,994(13) 29.5%(13) 24,582,057(14) 29.3%
Morgan Stanley .................... 5,325,013(15) 6.3%(15) 0 0
1585 Broadway
New York, New York 10036
Security Capital Research &
Management Incorporated.......... 5,002,220(16) 6.0%(16) 0 0
11 South LaSalle, Suite 200
Chicago, IL 60603
LaSalle Investment Management,
Inc. ............................ 4,253,350(17) 5.1%(17) 0 0
LaSalle Investment Management
(Securities), L.P.
200 East Randolph Drive
Chicago, Illinois 60601
Cohen & Steers Capital Management,
Inc. ............................ 3,216,375(18) 3.8%(18) 0 0
757 Third Avenue
New York, New York 10017
Deutsche Bank AG................... 3,169,974(19) 3.8%(19) 0 0
Taunusanlage 12, D-60325
Frankfurt am Main
Federal Republic of Germany
Directors and Executive Officers as
a Group.......................... 2,769,500(20) 3.2%(20) 1,630,471(20) 1.9%(20)
---------------
* less than 1%
(1) The Company has relied upon information supplied by certain beneficial
owners and upon information contained in filings with the Securities and
Exchange Commission. Figures shown include shares of Common Stock and
Series B Preferred Stock, which vote together as a single class on all
matters generally submitted to shareholders. Each share of Common Stock and
Series B Preferred Stock is entitled to one vote. Under certain
circumstances, the Series B Preferred Stock is convertible into Common
Stock at the ratio of 14,000 shares of Series B Preferred Stock for each
share of Common Stock (any resulting fractional shares will be redeemed for
cash). Share figures shown assume that individuals who acquire Units of
Partnership Interest upon the exercise of options ("Incentive Options")
granted under TRG's 1992 Incentive Option Plan exchange the newly issued
Units for an equal number of shares of Common Stock under the Company's
exchange offer (the "Continuing Offer") to certain partners in TRG and
holders of Incentive Options. Share figures and Unit figures shown assume
that outstanding Units are not exchanged for Common Stock under the
Continuing Offer and that outstanding shares of Series B Preferred Stock
are not converted into Common Stock. As of February 19, 2003, there were
83,986,675 outstanding shares of Voting Stock, consisting of 52,219,609
shares of Common Stock and 31,767,066 shares of Series B Preferred Stock.
(2) Consists of 5,925 shares of Series B Preferred Stock that Mr. Robert S.
Taubman owns, 547,945 shares of Series B Preferred Stock held by R & W-TRG
LLC ("R&W"), a company that Mr. Taubman and his brother, William S.
Taubman, own (or, in aggregate, 1.7% of Series B Preferred Stock), 150,000
shares of Common Stock owned by Mr. Taubman, 245,016 shares of Common Stock
that Mr. Taubman
16
has the right to receive in exchange for Units of Partnership Interest that
are subject to vested Incentive Options and an additional 10,000 shares of
Common Stock owned by his wife and children for which Mr. Taubman disclaims
any beneficial interest. Excludes all shares of Voting Stock held by TRA
Partners ("TRAP"), Taubman Realty Ventures ("TRV"), Taub-Co Management,
Inc. ("Taub-Co"), or TG Partners, Limited Partnership ("TG"), because Mr.
Taubman has no voting or dispositive control over such entities' assets,
see notes 13 and 14 below. Mr. Taubman disclaims any beneficial interest in
the Voting Stock held by or through entities described in the previous
sentence beyond his pecuniary interest in such entities described in the
previous sentence that own the securities.
(3) Consists of 5,925 Units of Partnership Interest that Mr. Robert S. Taubman
owns, 547,945 Units of Partnership Interest held by R&W, and 245,016 Units
of Partnership Interest that Mr. Taubman has the right to receive upon the
exercise of vested Incentive Options. Excludes all Units of Partnership
Interest owned by TRAP, TRV, Taub-Co, or TG. Mr. Taubman disclaims any
beneficial ownership in the Units held by R&W or the other entities beyond
his pecuniary interest in R&W and the other entities.
(4) Consists of 5,925 shares of Series B Preferred Stock that Mr. William S.
Taubman owns, 545,535 shares of Common Stock that Mr. Taubman has the right
to receive upon the exchange of Units of Partnership Interest that are
subject to vested Incentive Options, 150,000 shares of Common Stock owned
by Mr. Taubman and 15,000 shares of Common Stock owned by his children and
for which Mr. Taubman disclaims any beneficial interest (or, in aggregate,
1.3% of Common Stock). Excludes 547,945 shares of Series B Preferred Stock
that R&W holds and that are included in Robert S. Taubman's holdings
described above. Excludes all shares of Voting Stock held by TRAP, TRV,
Taub-Co, or TG because Mr. Taubman has no voting or dispositive control
over such entities' assets, see notes 13 and 14 below. Mr. Taubman
disclaims any beneficial interest in the Series B Preferred Stock held by
R&W and in the Voting Stock held by TRAP, TRV, Taub-Co, and TG beyond his
pecuniary interest in the entities that own the securities.
(5) Consists of 5,925 Units of Partnership Interest that Mr. William S. Taubman
owns and 545,535 Units of Partnership Interest subject to vested Incentive
Options held by Mr. Taubman. Excludes 547,945 Units that R&W holds and that
are included in Robert S. Taubman's holdings described above. Excludes all
Units of Partnership Interest owned by TRAP, TRV, Taub-Co, or TG. Mr.
Taubman disclaims any beneficial ownership in the Units held by R&W or the
other entities beyond his pecuniary interest in R&W and the other entities.
(6) Consists of 7,500 shares of Common Stock that Ms. Payne owns and 600,828
shares of Common Stock that Ms. Payne will have the right to receive in
exchange for Units of Partnership Interest that are subject to vested
Incentive Options (or, in aggregate, 1.2% of Common Stock).
(7) Consists of 1,504 shares of Common Stock owned by Mr. Lord, 530 shares of
Common Stock owned by Mr. Lord's wife for which he disclaims any beneficial
interest; and 280,125 shares of Series B Preferred Stock acquired by Mr.
Lord in exchange for all of Mr. Lord's equity interest in Lord Associates,
Inc. in November 1999. Does not include 87,028 shares of Series B Preferred
Stock acquired by Mr. Lord in connection with the Lord Associates
transaction for which Mr. Lord has granted to TG Partners an irrevocable
proxy and over which Mr. Lord has no voting or dispositive power, see note
14 below.
(8) Consists of 280,125 Units of Partnership Interest acquired by Mr. Lord in
exchange for all of Mr. Lord's equity interest in Lord Associates, Inc. in
November 1999. Does not include 87,028 Units of Partnership Interest
acquired by Mr. Lord in connection with the Lord Associates transaction for
which Mr. Lord has granted to TG Partners an irrevocable proxy, which are
not presently entitled to receive any partnership distributions, except
upon liquidation and over which Mr. Lord has no voting or dispositive
power. Such units are released from the irrevocable proxy and become
entitled to receive partnership distributions over the two years remaining
in the original five-year vesting period. See note 14 below. See also
"Certain Employment Arrangements."
(9) Consists of 2,000 shares of Common Stock that Mr. Simon owns and 3,191
shares of Common Stock which Mr. Simon may be deemed to own through his
investment in the Taubman Centers Stock Fund, one of the investment options
under the Company's 401(k) Plan.
17
(10) Excludes 15,000 shares of Series A Preferred Stock owned by Mr. Chazen and
30,000 shares (or, in the aggregate, less than 1%) of Series A Preferred
Stock owned by his children and for which Mr. Chazen disclaims any
beneficial ownership. The Series A Preferred Stock does not entitle its
holders to vote.
(11) Includes 80,000 shares of Common Stock held by The Gilbert 1996 Charitable
Remainder Trust, an irrevocable trust of which Mr. Gilbert is a co-trustee.
Mr. Gilbert disclaims any beneficial interest in such shares beyond any
deemed pecuniary interest as the result of his wife's current beneficial
interest in the trust.
(12) Consists solely of shares of Common Stock.
(13) Includes 100 shares of Common Stock owned by Mr. A. Alfred Taubman's
revocable trust and 186,837 shares of Common Stock held by TRAP. Mr.
Taubman's trust is the managing general partner of TRAP and has the sole
authority to vote and dispose of the Common Stock held by TRAP. The
remaining shares consist of 24,582,057 outstanding shares (or 77.4%) of
Series B Preferred Stock that may be deemed to be owned by Mr. Taubman in
the same manner as the Units of Partnership Interest described in note 14
below. Mr. Taubman disclaims any beneficial ownership of the Common Stock
or Series B Preferred Stock held by TRAP and the other entities identified
in note 14 below beyond his pecuniary interest in the entities that own the
securities.
(14) Consists of 9,875 Units of Partnership Interest held by Mr. A. Alfred
Taubman's trust, 17,699,879 Units of Partnership Interest owned by TRAP,
11,011 Units of Partnership Interest owned by TRV, of which Mr. Taubman's
trust is the managing general partner, and 1,975 Units of Partnership
Interest held by Taub-Co. Because the sole holder of voting shares of
Taub-Co is Taub-Co Holdings Limited Partnership, of which Mr. Taubman's
trust is the managing general partner, Mr. Taubman may be deemed to be the
beneficial owner of the Units of Partnership Interest held by Taub-Co. Mr.
Taubman disclaims beneficial ownership of any Units held by Taub-Co beyond
his pecuniary interest in Taub-Co. Also includes 6,327,098 Units of
Partnership Interest owned by TG Partners, 445,191 Units held by a
subsidiary of TG Partners (such subsidiary and TG Partners are collectively
referred to as "TG") and 87,028 Units of Partnership Interest which are
held by Mr. Lord but for which Mr. Lord has granted an irrevocable proxy to
TG Partners. The 87,028 Units held by Mr. Lord are not presently entitled
to any partnership distributions except in the event of a liquidation. Such
Units will be released from the irrevocable proxy and become entitled to
receive distributions over the two years remaining in the original
five-year vesting period. Because Mr. Taubman, through control of TRV's and
TG Partners' managing partner, has sole authority to vote and (subject to
certain limitations) dispose of the Units of Partnership Interest held by
TRV and TG, respectively, Mr. Taubman may be deemed to be the beneficial
owner of all of the Units of Partnership Interest held by TRV and TG. Mr.
Taubman disclaims beneficial ownership of any Units of Partnership Interest
held by TRG and TG beyond his pecuniary interest in those entities.
(15) Consists solely of shares of Common Stock (10.2%) held on behalf of various
investment advisory clients, none of which holds more than 5% of the Common
Stock.
(16) Consists solely of shares of Common Stock (9.6%).
(17) Consists solely of shares of Common Stock (8.2%) and includes ownership of
Common Stock on behalf of Stichting Pensioenfonds Voor de Gezondheid
Geestelijke en Maatschappelijke Belangen.
(18) Consists solely of shares of Common Stock (6.2%).
(19) Consists solely of shares of Common Stock (6.1%).
(20) See Notes 2 through 12 above.
PARTICIPANTS IN THE REVOCATION SOLICITATION
Revocations are being solicited by and on behalf of the Company. All
expenses of the Company Revocation Solicitation, including the cost of preparing
and mailing this Revocation Solicitation Statement, will be borne by the
Company. The Company will also request those holding shares for the benefit of
others to send the proxy material to, and to obtain proxies from, the beneficial
owners and will reimburse such holders
18
for their reasonable expenses in doing so. In addition to solicitation by use of
the mails, Revocations may be solicited by directors, certain officers, and
employees of the Company in person or by telephone, telegram, advertisement,
courier service, or other means of communication. Such directors, officers and
employees will not be additionally compensated, but may be reimbursed for
out-of-pocket expenses in connection with such solicitation. In addition, the
Company has retained Innisfree M&A Incorporated ("Innisfree") to assist in the
solicitation of Revocations. The Company has agreed that Innisfree will be paid
a fee not to exceed $75,000, plus reimbursement for their reasonable
out-of-pocket expenses. The Company has also agreed to indemnify Innisfree
against certain liabilities and expenses, including certain liabilities and
expenses under the federal securities laws.
The Company has engaged Goldman Sachs to act as its financial advisor in
connection with Simon's unsolicited offer and related matters. The Company has
agreed to pay Goldman Sachs a reasonable and customary fee for such services.
The Company has also agreed to reimburse Goldman Sachs for all reasonable
out-of-pocket expenses, including fees of counsel, and to indemnify them and
certain related persons against certain liabilities relating to, or arising out
of the engagement. Goldman Sachs may assist in the solicitation of Revocations.
Goldman Sachs will not receive any fee for, or in connection with, any
solicitation activities apart from the fees it is otherwise entitled to receive
under its engagement. Goldman Sachs does not admit or deny that any of its
directors, officers or employees is a "participant" as defined in Schedule 14A
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, or that such Schedule 14A requires the
disclosure of certain information concerning such persons. In the normal course
of its business, Goldman Sachs regularly buys and sells the Common Stock and
other securities for its own account and for the accounts of its customers,
which transactions may result from time to time in Goldman Sachs and its
associates having a net "long" or net "short" position in the Common Stock or
other securities or option contracts or derivatives in or relating to the
Company's securities. As of February 19, 2003 Goldman Sachs beneficially held a
net "long" position of 4,404 shares of Common Stock. If Goldman Sachs assists
the Company in connection with the solicitation of Revocations, such activity
will be carried out by a team of individuals consisting of officers and
employees of Goldman Sachs (David M. Baum, Michael J. Graziano, and Adam C.
Rosenberg). The business address for each of the persons named is 85 Broad
Street, New York, New York 10004.
The Company estimates that its total expenditures relating to the Company
Revocation Solicitation (excluding costs representing salaries and wages of
regular employees and officers of the Company) will be approximately $150,000.
The Company to date has incurred estimated total expenses of approximately
$10,000.
In addition to the members of the Board (which consists of Graham T.
Allison, Allan J. Bloostein, Jerome A. Chazen, S. Parker Gilbert, Peter
Karmanos, Jr., Lisa A. Payne, Robert S. Taubman and William S. Taubman), the
executive officers (which consist of Esther R. Blum, Courtney Lord and John L.
Simon) of the Company may solicit Revocations. The business address for each of
the members of the Board and executive officers, and the Company's executive
offices are located at: 200 East Long Lake Road, Suite 300, P.O. Box 200,
Bloomfield Hills, Michigan 48303.
INTERESTS OF CERTAIN PERSONS IN THE OFFER
Some of the members of the Company's management and Board have interests in
the merger that are in addition to, or different from, their interests as
Company shareholders generally. The Company's Board was aware of these interests
and considered them, among other matters, in unanimously recommending that you
reject the Revised Offer and not tender your Common Stock pursuant to the
Revised Offer and in recommending that you revoke any Agent Designations.
Performance Plan. The Taubman Company LLC (the "Manager") maintains the
performance plan under which the Company grants awards based on individual and
Company performance for the fiscal year prior to the date of the award and the
individual's position in the Company (the "Performance Plan"). Each eligible
participant is granted a cash award (a "Cash Award") and the final payout value
of an award is tied to
19
the achievement of a target compounded growth rate of the Company's per share
funds from operations over the three-year vesting period of the award. If the
target is achieved, the payout amount of each Cash Award is increased, subject
to a maximum premium of 30%; otherwise the payout amount remains the amount of
the original grant. Upon vesting, the value of the award under the Performance
Plan will be paid to the participant in a lump sum, unless the participant
elects to defer payment in accordance with the terms of the Performance Plan.
The payout amount is determined on the vesting date and such amount will accrue
interest from the vesting date until the deferred payment date.
Upon a "change of control" of Manager, each sub account will vest in full
and any deferral period elected under the Performance Plan will terminate and
any sub account that a participant has elected to defer will be valued as of the
settlement date and will be distributed in a lump sum payment as soon as
administratively practicable following the termination of the deferral period.
Consummation of the Simon Offer will constitute a change of control under the
Performance Plan, and accordingly, the sub account of each of the executive
officers will vest in full and any deferral period elected by such executive
officer will terminate and any sub account that an executive officer has elected
to defer will be valued as of the settlement date and will be distributed in a
lump sum payment as soon as administratively practicable following consummation
of the Simon Offer.
Employment Agreement with Lisa A. Payne. In January 1997, Manager entered
into a three-year agreement with Lisa A. Payne regarding her employment with the
Company. In January 1999 and January 2000, the agreement was extended for an
additional year and continues to have automatic, one-year extensions unless
either party gives notice to the contrary. The employment agreement provides for
an annual base salary of not less than $500,000 to be reviewed annually. The
agreement also provides for Ms. Payne's participation in the Manager's Senior
Short Term Incentive Plan (the "SSTIP"), with a target award of $250,000 and a
maximum annual award of $375,000.
In the event that Ms. Payne's employment terminates for any reason within
90 days following a "change of control," Ms. Payne's employment is terminated by
the Company other than for cause, death or disability, or Ms. Payne resigns by
reason of certain changes in the terms of her employment, Ms. Payne will receive
her base salary and target bonus under the SSTIP for the remainder of the
employment period and all benefits under the compensatory plans in which she
participates will immediately vest (including any benefits under the Performance
Plan) in accordance with the terms of such compensatory plan. Consummation of
the Simon Offer will constitute a change of control under the agreement, and
accordingly, Ms. Payne will be entitled to the benefits described in the
preceding sentence in the event that her employment terminates for any reason
within 90 days following consummation of the Simon Offer.
Indemnification of Officers and Directors. The Taubman Centers Restated
Articles of Incorporation provide that no director will be personally liable to
Taubman Centers or its shareholders for monetary damages for a breach of his or
her duties as a director. The Restated Articles of Incorporation also provide
that Taubman Centers will, to the fullest extent permitted under applicable law,
indemnify its directors against expenses (including attorneys' fees), judgments,
penalties, fines and amounts paid in settlement and reasonably incurred in
connection with any action, suit or proceeding in which such person was or is a
party or is threatened to be made a party by reason of the fact that such person
is or was a director of Taubman Centers. Taubman Centers has the power to
indemnify its officers under the circumstances set forth in the Restated
Articles of Incorporation.
LITIGATION
Shortly after Simon publicized the terms of its unsolicited proposal on
November 13, 2002, three shareholders of Taubman Centers filed purported class
action complaints in the Michigan Circuit Court for the County of Oakland on
behalf of Taubman Centers shareholders; one of the complaints names as
defendants Taubman Centers, Robert S. Taubman, William S. Taubman, Lisa A.
Payne, Graham T. Allison, Allan J. Bloostein, Jerome A. Chazen, S. Parker
Gilbert; and the other two additionally name Peter Karmanos, Jr. The actions
generally allege breaches of fiduciary duty by Taubman Centers and the named
20
directors in connection with Simon's proposal and seek injunctive relief.
Motions to dismiss are pending in two of the three state cases. Plaintiff in one
case amended his complaint to add claims under the Michigan Control Share
Acquisitions Act, challenging the validity of the Voting Agreements and the
issuance of the Series B Shares, adding Peter Karmanos, Jr. as an additional
defendant and asserting derivative allegations.
On December 5, 2002 one of the shareholders who had filed an action in
Michigan state court filed a federal action in the Eastern District of Michigan,
purporting to assert claims derivatively and on behalf of a class. The complaint
alleges that the Michigan Control Shares Acquisitions Act and the Michigan
Business Combination Act is unconstitutional. In addition, the complaint
alleges, among other things, breaches of fiduciary duty in connection with the
Simon proposal.
On December 5, 2002, Simon filed a lawsuit in the United States District
Court for the Eastern District of Michigan against Taubman Centers, A. Alfred
Taubman, Robert S. Taubman, Lisa A. Payne, Graham T. Allison, Peter Karmanos,
Jr., William S. Taubman, Allan J. Bloostein, Jerome A. Chazen, and S. Parker
Gilbert alleging, among other things, breach of fiduciary duty by the Company's
Board for not giving adequate consideration to Simon's unsolicited proposal, and
challenging the validity of the Voting Agreements and the issuance of the Series
B Shares under the Michigan Control Share Acquisitions Act. In response to
Simon's lawsuit, the Company filed a motion to dismiss on December 16, 2002
arguing that the First Claim for Relief failed to state a claim under the
Control Share Acquisitions Act because the Taubman family's receipt of original
issue Series B Preferred Stock from Taubman Centers, Inc., in 1998 was not a
"control share acquisition" under the Act.
On December 15, 2002, in response to Simon's lawsuit filed on December 5,
2002 in the United States District Court for the Eastern District of Michigan
against Taubman Centers, Inc., A. Alfred Taubman, Robert S. Taubman, Lisa A.
Payne, Graham T. Allison, Peter Karmanos, Jr., William S. Taubman, Allan J.
Bloostein, Jerome A. Chazen, and S. Parker Gilbert, the Company filed a motion
to dismiss arguing that the First Claim for Relief failed to state a claim under
the Control Share Acquisitions Act because the Taubman family's receipt of
original issue Series B Preferred Stock from Taubman Centers, Inc., in 1998 was
not a "control share acquisition" under the Act.
On December 30, 2002, Simon filed the First Amended Complaint against the
Company, the Company Board and certain members of the Taubman family, which,
among other things, challenged the validity of the Company's by-law amendments
made on December 20, 2002.
On January 22, 2003, the United States District Court for the Eastern
District of Michigan issued an Order dismissing that part of Simon's First Claim
for Relief challenging the 1998 issuance of Series B stock to certain of the
defendants under the Michigan Control Share Acquisitions Act in Simon's lawsuit
pending against Taubman Centers, Inc., A. Alfred Taubman, Robert S. Taubman,
Lisa A. Payne, Graham T. Allison, Peter Karmanos, Jr., William S. Taubman, Allan
J. Bloostein, Jerome A. Chazen, and S. Parker Gilbert. The Court concluded that
"the Michigan Control Share Acquisition Act does not pertain to a direct issue
from the corporation of its own shares" and that the "issuance of Series B stock
to [the Taubman family] in 1998 was not a 'control share acquisition within the
meaning of the [Act]." The Court did not dismiss that portion of Simon's First
Claim for Relief that alleges that a group was formed in the year 2002 in
contravention of the Act. The Company believes the remaining Simon claims to be
without merit.
On January 31, 2003, Simon Property Group, Inc., and Simon Property
Acquisitions, Inc., filed a Memorandum of Law in Support of Plaintiff's Motion
for a Preliminary Injunction in the United States District Court for the Eastern
District of Michigan against Taubman Centers, Inc., A. Alfred Taubman, Robert S.
Taubman, Lisa A. Payne, Graham T. Allison, Peter Karmanos, Jr., William S.
Taubman, Allan J. Bloostein, Jerome A. Chazen, and S. Parker Gilbert, seeking to
enjoin the Taubman family from voting their Series B shares. Also on January 31,
2003, one of the shareholders filed an Amended Verified Class Action and
Derivative Complaint in the United States District Court for the Eastern
District of Michigan against Taubman Centers, Inc., Robert S. Taubman, William
S. Taubman, Lisa A. Payne, Graham T. Allison, Peter Karmanos, Jr., Allan J.
Bloostein, Jerome A. Chazen, and S. Parker Gilbert.
21
On February 5, 2003, Simon and the Offeror filed a Second Amended Complaint
for Declaratory and Injunctive Relief in the United States District Court for
the Eastern District of Michigan against Taubman Centers, Inc., A. Alfred
Taubman, Robert S. Taubman, Lisa A. Payne, Graham T. Allison, Peter Karmanos,
Jr., William S. Taubman, Allan J. Bloostein, Jerome A. Chazen, and S. Parker
Gilbert, alleging, among other things, breach of fiduciary duty. The Second
Amended Complaint adds as a plaintiff Mr. Randall J. Smith (whom the Second
Amended Complaint identifies as Executive Vice President of Westfield) and also
includes allegations purporting to reflect certain changes to the Offer
subsequent to the filing of the First Amended Complaint on December 27, 2002.
On February 21, 2003, the Company filed a Defendants' Brief in Opposition
to Plaintiff's Motions for a Preliminary Injunction in the United States
District Court for the Eastern District of Michigan.
The foregoing actions are all at a preliminary stage and it is therefore
too soon to predict their outcome.
DISSENTERS' RIGHTS
Under Michigan law, no dissenters' rights are available in connection with
either the Simon Solicitation or the Special Meeting.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented for consideration at the
annual meeting to be held in 2003 must have been received by the Company at 200
East Long Lake Road, Suite 300, P.O. Box 200, Bloomfield Hills, Michigan
48303-0200 by the close of business on December 10, 2002.
22
TAUBMAN CENTERS, INC.
REVOCATION OF AGENT DESIGNATION TO ACTION OF SHAREHOLDERS WITHOUT
A MEETING SOLICITED ON BEHALF OF SIMON PROPERTY GROUP, INC.
AND WESTFIELD AMERICA, INC.
The undersigned shareholder, acting with regard to all shares of common stock,
par value $0.01 per share, and Series B Non-Participating Convertible Preferred
Stock of Taubman Centers, Inc. entitled to vote and held by the undersigned,
hereby REVOKES any previously executed Agent Designation requesting the demand
for a special meeting of shareholders (the "Special Meeting") described in the
Solicitation Statement of Simon Property Group, Inc. and Westfield America, Inc.
and hereby confirms that the undersigned has the power to deliver a revocation
of Agent Designation for the number of shares represented hereby. THE BOARD OF
DIRECTORS OF TAUBMAN CENTERS STRONGLY RECOMMENDS THAT YOU REVOKE ANY PREVIOUSLY
EXECUTED AGENT DESIGNATION REQUESTING THE DEMAND FOR THE SPECIAL MEETING BY
PROPERLY SIGNING, DATING AND RETURNING THIS FORM OF REVOCATION IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
(Continued and to be signed and dated on reverse side.)
PLEASE SIGN THIS FORM OF REVOCATION EXACTLY AS YOUR NAME APPEARS HEREON. IF
SIGNING AS ATTORNEY, ADMINISTRATOR, EXECUTOR, GUARDIAN, OR TRUSTEE, PLEASE GIVE
TITLE AS SUCH. IF A CORPORATION, THIS SIGNATURE SHOULD BE THAT OF AN AUTHORIZED
OFFICER WHO SHOULD STATE HIS OR HER TITLE. IF A PARTNERSHIP, SIGN IN PARTNERSHIP
NAME BY AUTHORIZED PERSON. SIGNED REVOCATION CARDS MARKED "REVOKE AGENT
DESIGNATION" OR "ABSTAIN" OR SIGNED BUT UNMARKED REVOCATIONS WILL BE DEEMED TO
REVOKE ALL PREVIOUSLY GIVEN AGENT DESIGNATIONS FOR THE NUMBER OF SHARES
REPRESENTED BY THE UNDERSIGNED.
[ ] REVOKE AGENT DESIGNATION [ ] DO NOT REVOKE AGENT DESIGNATION
[ ] ABSTAIN
Dated:
--------------------------------------,
2003
--------------------------------------
Signature
--------------------------------------
Signature (if held jointly)
--------------------------------------
Title(s)