From: jbarkley@simon.com Sent: Monday, August 26, 2002 6:41 PM To: rule-comments@sec.gov Cc: ssterret@simon.com Subject: File No. S7-22-02 August 26, 2002 Mr. Jonathan G. Katz Secretary U.S. Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549-0609 Re: File No. S7-22-02 Dear Mr. Katz: Simon Property Group, Inc. ("Simon") is pleased to have the opportunity to respond to the Securities and Exchange Commission ("Commission") regarding the proposals set forth in Release Nos. 33-8106 and 34-46084. Simon (NYSE: SPG), headquartered in Indianapolis, Indiana is a real estate investment trust, engaged in the ownership and management of income-producing properties, primarily regional malls and community shopping centers. Through its subsidiary partnerships, it currently owns or has an interest in 249 properties containing an aggregate of 186 million square feet of gross leasable area in 36 states, as well as eight assets in Europe and Canada. Executive Summary Simon supports the Commission's efforts to provide investors with enhanced and "real-time" disclosure of important corporate events. We agree with many of the Commission's proposals relating to Form 8-K. However, Simon is concerned that one aspect of the proposals could be counterproductive to the interests of investors. Simon believes that requiring companies to disclose terms of material non-binding agreements could severely hinder the negotiating positions and competitiveness of companies. Item 1.01--Entry into a Material Agreement While Simon generally supports the Commission's position to require a company to disclose its entry into a material agreement that is not made during the ordinary course of its business, we believe that non-binding agreements such as letters of intent and other similar documents should not be required to be disclosed. We do not feel that such agreements can be deemed to be material until they either become binding contracts through the satisfaction of due diligence and other conditions, or in the case of non-binding letters of intent, are replaced with binding contracts. Contracts to purchase real estate, for example, typically contain many due diligence conditions that allow the purchaser to walk away from the contract if its due diligence is not completed to its satisfaction. Until such due diligence is satisfactorily concluded, these contracts are not binding and therefore should not have to be disclosed. Letters of intent almost universally provide that they are not binding on the parties and are subject to the execution of definitive agreements. In addition, Simon is concerned that the Commission's proposal would cause companies to disclose competitive terms and would otherwise disrupt the ability of companies to negotiate agreements on their own behalf and for the benefit of their shareholders. Companies would be disclosing negotiating terms that their competitors could review and use to their advantage while undermining the position of the reporting company. Public companies would be at a particular competitive disadvantage relative to privately held companies that are not required to disclose the terms of their agreements. Furthermore, Simon feels that the confidentiality provisions that normally apply to such non-binding agreements would be rendered ineffective and cause selling companies to be reluctant to even negotiate non-binding terms if they are subject to disclosure requirements even before each parties' obligations become firm. In order to promote uniform standards, we believe that Item 1.01 should be kept consistent with the current requirements of Exhibit 10 under Regulation S-K, Item 6.01(b)(10) which does not require the filing of non-binding agreements. Additionally, Simon supports the position that registrants should not be required to file the material agreements that are subject to the Form 8-K disclosure requirements as exhibits, because such agreements are required to be filed in Form 10-Q and/or Form 10-K. We would suggest that if Item 1.01 becomes a part of Form 8-K, the Form should include a box on the cover page that would allow a registrant to satisfy obligations under Rule 165, Rule 14d-2(b) and/or Rule 14a-12, as suggested by the Commission in its proposed rule. Simon thanks the Commission for the opportunity to comment on this proposal. Please contact me directly at 317-263-7083 if you have any questions regarding this letter. Respectfully submitted, James M. Barkley General Counsel James M. Barkley, Esq. General Counsel Simon Property Group, Inc. National City Center 115 W. Washington Street, Suite 15E Indianapolis, IN 46204 (317) 263-7083 (phone) (317) 685-7377 (fax) jbarkley@simon.com