EFiled: Jun 02 2020 05:08PM EDT Transaction ID 65668754 Case No. N20C-06-034 EMD CCLD IN THE SUPERIOR COURT OF THE STATE OF DELAWARE SIMON PROPERTY GROUP, L.P., ) on behalf of itself and its affiliated ) landlord entities, ) ) Plaintiff, ) ) v. ) C.A. No. (CCLD) ) THE GAP, INC., OLD NAVY, LLC, ) INTERMIX HOLDCO, INC., ) BANANA REPUBLIC, LLC, AND ) ATHLETA LLC, ) ) Defendants. ) COMPLAINT Plaintiff Simon Property Group, L.P. (“Simon”), on behalf of itself and as assignee of its various landlord entities (“Simon Landlords”), by and through its undersigned counsel, and as for its Complaint against The Gap, Inc., Old Navy, LLC, Intermix HoldCo, Inc., Banana Republic, LLC, and Athleta LLC (collectively, “Defendants” or “The Gap Entities”), alleges and states as follows: NATURE OF THE ACTION 1. Simon seeks monetary damages from The Gap Entities for failure to pay more than $65.9 million in rent and other charges due and owing under certain retail Leases (defined below) plus attorneys’ fees and expenses incurred in connection with this suit. 2. The Gap Entities are in default on each of the Leases for failure to pay rent for April, May and June, 2020. As of the date of this filing (June 2, 2020), there is due and owing approximately $65.9 million in unpaid rent to each of the Landlord entities. The amounts due and owing will continue to accrue each month, with interest, and The Gap Entities are expected to fall even further behind in rent and other charges due to be paid to the Simon Landlords. PARTIES 3. Simon, a Delaware limited partnership, is the principal operating partnership for Simon Property Group, Inc., a publicly-held Delaware corporation and Simon’s sole general partner. Simon is a Real Estate Investment Trust that is in the business of owning and operating commercial retail properties throughout the United States. 4. Each individual retail property is typically owned by a separate single purpose Landlord entity in which Simon has either a direct or indirect controlling interest. Pursuant to a June 2, 2020 Omnibus Written Consent, Grant of Power of Attorney & Assignment of Claims, the Simon Landlords have each: (i) irrevocably appointed Simon as its attorney-in-fact with full authority to take any action with regard to the claims brought in this suit; (ii) authorized and directed Simon to bring this suit, without the involvement of the Simon Landlords, and (iii) assigned the title to and ownership of the claims sought in this suit. 2 5. The Gap Entities are tenants at different properties owned or operated by Simon and its affiliates throughout the United States, pursuant to lease agreements (the “Leases”) with the respective Simon Landlords. 6. The Gap, Inc. is a Delaware corporation with its principal executive offices located at 2 Folsom Street, San Francisco, California 94105. The Gap, Inc. is a global apparel and accessories retail company which operates several brand labels as wholly-owned subsidiaries, including Old Navy, LLC, Intermix Holdco, Inc., Banana Republic, LLC, and Athleta, LLC. The Gap, Inc. is the tenant for all The Gap store Leases at issue in this action. 7. Old Navy, LLC is a Delaware limited liability company and a wholly- owned subsidiary of The Gap, Inc. Old Navy, LLC is a tenant at Dover Mall, a Simon Shopping Center. Old Navy, LLC is the tenant for all Old Navy store Leases at issue in this action. 8. Intermix Holdco, Inc. is a Delaware corporation and a wholly-owned subsidiary of The Gap, Inc. Intermix Holdco, Inc. is the tenant for all Intermix store Leases at issue in this action. 9. Banana Republic, LLC is a Delaware limited liability company and a wholly-owned subsidiary of The Gap, Inc. Banana Republic, LLC is the tenant for all Banana Republic store Leases at issue in this action. 3 10. Athleta LLC is a Delaware limited liability company and a wholly- owned subsidiary of The Gap, Inc. Athleta LLC is the tenant for all Athleta store Leases at issue in this action. JURISDICTION AND VENUE 11. Pursuant to the Delaware Constitution, Art. IV, § 7 and 10 Del. C. § 541, this Court has jurisdiction over the subject matter of this cause of action. 12. This case is appropriately designated for and assigned to the Superior Court’s Complex Commercial Litigation Division because the amount in controversy exceeds $1 million. 13. This Court has personal jurisdiction over Defendants because they each were incorporated or are organized under the laws of the State of Delaware. FACTUAL BACKGROUND The Leases 14. Attached hereto as Exhibit 1 is a schedule of Leases between The Gap Entities and Simon Landlords. Both Simon and The Gap Entities have complete copies of the Leases at issue in this action. Each of the Leases were entered into for good and valuable consideration and are valid and enforceable contracts under the laws of the jurisdictions governing them. 15. Pursuant to the terms of each Lease, each of The Gap Entities were required to pay rental and other charges on the first day of the month. The Gap Entities further agreed in each of the Leases that any failure to pay rent and other 4 charges when due, if not cured within the required time, would constitute a default and breach of the Lease, and entitle the applicable Simon Landlord to collect interest and other amounts in addition to the unpaid rent, including costs of suit and reasonable attorneys’ fees, as well as to exercise other remedies for tenant’s default. 16. The Leases also contain holdover provisions that require tenants holding over beyond the term of their leases to pay monthly rent equal to the rent payable during the last month of the expired leases’ term and upon other terms and conditions specified therein. The Gap Entities’ Breach and Default of the Leases 17. The Gap Entities failed and refused to make rent payments due April 1, 2020 and May 1, 2020. On May 5, 2020, Simon provided written notice to The Gap Entities that they and other affiliates not named in this suit had failed to pay rent and other charges in the aggregate sum of $48,190,156.821 and demanded immediate payment of amounts past due and owing under the Leases (the “Written Notice”). A copy of the Written Notice is attached as Exhibit 2. 18. As of the date of filing this Complaint (June 2, 2020), The Gap Entities remain in default under the Leases despite receiving written notice and opportunity to cure, and they continue to refuse to pay the past due rent and other 1 The aggregate sum identified in the Written Notice included amounts due and owing by The Gap, Inc. affiliates not named as defendants to this suit. 5 charges. Moreover, in addition to the delinquent sums set forth in the Written Notice, June rent and other charges are now due and owing. 19. The applicable notice and cure period under each of the Leases has expired. Furthermore, any requirement to provide The Gap Entities with a notice of breach and opportunity to cure has been satisfied, waived by the nature of The Gap Entities’ conduct, or does not apply. 20. In breach of their contractual obligations, certain of The Gap Entities are holding over beyond the term of the applicable Leases without making holdover rent payments to the Simon Landlords. 21. To date, Simon has suffered in excess of $65.9 million in damages as a result of The Gap Entities’ willful and repeated violation of their payment obligations. That amount will continue to grow as unpaid rent, holdover rent and other charges, costs, and fees accrue. COUNT I BREACH OF CONTRACT - ALL DEFENDANTS 22. Simon incorporates paragraphs 1 through 21 as if fully set forth herein. 23. The Gap Entities have failed and refused to timely pay all rent, holdover rent and other charges due and owing to the Simon Landlords at the time such payments were due, each of which constitutes a material breach and default under the applicable Leases. 6 24. The Simon Landlords have each performed all obligations and duties owed by them under the Leases, and have not excused or waived The Gap Entities’ breaches. Any provision in the Leases requiring The Gap Entities to have an opportunity to cure the defaults has been satisfied or would be futile based on the prior history between the parties and The Gap Entities’ repeated and intentional violations of the Leases. The requirement that The Gap Entities timely pay rent due under the leases has not been excused. 25. The total amount for rent and other charges owed by The Gap Entities named as defendants in this suit is currently $65,947.550.81, excluding holdover rent amounts to be determined at trial. In addition to the unpaid rent and other charges due and owing under the Leases, and such additional unpaid rent, holdover rent and other charges that may accrue hereafter, Simon is also entitled to recover interest, plus its costs, expenses and attorneys’ fees incurred in enforcing the terms of the Leases. PRAYER FOR RELIEF WHEREFORE, Simon respectfully requests that the Court: (1) enter judgment in its favor and against The Gap Entities on Count I of the Complaint; (2) award Simon damages in the amount of $65,947,550.81 and holdover rent amounts to be determined, plus such additional rent, holdover rent or other charges as may accrue between now and the time of judgment; (3) award Simon pre- and post- judgment interest as provided in the Leases or as otherwise provided by law; (4) 7 award Simon its attorneys’ fees, legal expenses and costs in maintaining this action; and (4) award Simon any such other relief as the Court deems just and proper.