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EXHIBIT 10.40
REDEMPTION AGREEMENT
REDEMPTION AGREEMENT dated as of December 31, 1996
(together with the Exhibits and Schedules hereto, this
"Agreement"), between CORPORATE PROPERTY INVESTORS, a
Massachusetts business trust ("CPI") and RODAMCO NORTH
AMERICA B.V., a Netherlands company with limited
liability ("Rodamco").
Preliminary Statement
A. HRE Finance Inc., a Delaware corporation ("HRE"), and Wevervink
B.V., a Netherlands company with limited liability, are direct or indirect
subsidiaries of Rodamco (the "Rodamco Subsidiaries") and collectively are the
record owners of 2,603,158 voting Series A Common Shares of Beneficial Interest
in CPI (the "CPI Shares") and beneficial interests in 260,315.8 shares (the "CRC
Shares") of Common Stock of Corporate Realty Consultants, Inc., a Delaware
corporation ("CRC"; the CRC Shares, together with the CPI Shares being referred
to herein collectively as the "Rodamco Shares"). The Rodamco Subsidiaries have
assigned certain beneficial interests in the CPI Shares to the following
Delaware corporations, which are indirect subsidiaries of Rodamco and direct
subsidiaries of Hexalon Real Estate, Inc. (the "HRE Subsidiaries"): HRE North
Star, Inc., HRE San Antonio, Inc., HRE Maplewood, Inc., HRE Minneapolis, Inc.,
HRE Countryside, Inc., and HRE Clearwater, Inc.
B. CPI-North Star Corporation, a Delaware corporation and a wholly
owned subsidiary of CPI, is the sole general partner ("CPI-North Star
Corporation"), and CPI is the sole limited partner, of CPI-North Star Associates
Limited Partnership, a Delaware limited partnership ("CPI- North Star") which
owns a 62.5% partnership interest in The North Star Mall Joint Venture, a New
York general partnership ("North Star Venture"). CPI-Countryside Corporation, a
Delaware corporation and a wholly owned subsidiary of CPI ("CPI-Countryside
Corporation"), is the sole general partner, and CPI is the sole limited partner,
of Bellwether Properties of Florida (Limited), a Florida limited partnership
("Bellwether Florida"). CPI-Maplewood Corporation, a Delaware corporation and a
wholly owned subsidiary of CPI ("CPI-Maplewood Corporation"), is the sole
general partner, and CPI is the sole limited partner, of
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Maplewood Mall Associates Limited Partnership, a Delaware limited partnership
("Maplewood"). CPI-North Star Corporation, CPI-Countryside Corporation and
CPI-Maplewood Corporation are each referred to herein individually as a "CPI
Subsidiary" and collectively as the "CPI Subsidiaries"; CPI-North Star,
Bellwether Florida and Maplewood are each referred to herein individually as a
"Partnership" and collectively as the "Partnerships"; the interests of CPI and
the CPI Subsidiaries in the Partnerships are each referred to herein as a
"Partnership Interest" and collectively as the "Partnership Interests".
C. The North Star Venture owns certain real property interests in a
shopping center located in San Antonio, Texas commonly known as North Star Mall
("North Star Mall"). Bellwether Florida owns certain real property interests in
a shopping center located in Pinellas County, Florida commonly known as
Countryside Mall ("Countryside Mall"). Maplewood owns certain real property
interests in a shopping center located in Maplewood, Minnesota and commonly
known as Maplewood Mall ("Maplewood Mall"; and, collectively with North Star
Mall and Countryside Mall, the "Malls").
D. Rodamco and CPI have agreed that (i) Rodamco shall cause the
Rodamco Subsidiaries to assign and transfer the Rodamco Shares to CPI and in
exchange (ii) CPI shall transfer and shall cause the CPI Subsidiaries to
transfer their respective Partnership Interests to one or more of the HRE
Subsidiaries, all upon the terms and conditions as set forth in this Agreement
(collectively the "Exchange Transactions").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
Exchange Transactions
SECTION 1.01. Subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the First Closing (as hereinafter
defined) (a) Rodamco shall (i) cause the Rodamco Subsidiaries and the HRE
Subsidiaries to exchange, convey, assign, transfer and deliver to CPI, and CPI
shall receive and accept all of their respective right, title and interest in
and to, the CRC Shares and 1,514,215 of the CPI Shares (collectively, the
"Initial Rodamco Shares") and (ii) deliver each of the documents
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listed in Section 3.02(b) to be delivered by Rodamco on or prior to the First
Closing Date, (b) (i) CPI shall, and shall cause CPI-Countryside Corporation to,
exchange, convey, assign, transfer and deliver to HRE Countryside, Inc., and HRE
Clearwater, Inc., and HRE Countryside, Inc., and HRE Clearwater, Inc., shall
receive and accept all right, title and interest in and to the Partnership
Interests of CPI and CPI-Countryside Corporation in Bellwether Florida and (ii)
CPI shall, and shall cause CPI- Maplewood Corporation to, exchange, convey,
assign, transfer and deliver to HRE Maplewood, Inc., and HRE Minneapolis, Inc.,
and HRE Maplewood, Inc., and HRE Minneapolis, Inc. shall receive and accept all
right, title and interest in and to the Partnership Interests of CPI and
CPI-Maplewood Corporation in Maplewood and (c) CPI shall (i) pay to Rodamco or
its designee $11,447,000 (less the $850,000 credit due CPI pursuant to Section
2.05) by wire transfer of Federal funds to an account designated by Rodamco in a
written notice to CPI (the "Cash Payment") in each case in consideration for the
CRC Shares and the CPI Shares included in the Initial Rodamco Shares in
accordance with the allocation set forth on Schedule 1.01 and (ii) deliver each
of the documents listed in Section 3.02(a) to be delivered by CPI on or prior to
the First Closing Date.
SECTION 1.02. Subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Second Closing (as hereinafter
defined) (a) Rodamco shall (i) cause the Rodamco Subsidiaries and the HRE
Subsidiaries to exchange, convey, assign, transfer and deliver to CPI and CPI
shall receive and accept all of their respective right, title and interest in
and to 1,088,943 of the CPI Shares (the "Remaining Rodamco Shares") and (ii)
deliver each of the documents listed in Section 3.03(b) to be delivered by
Rodamco on or prior to the Second Closing Date and (b) CPI (i) shall, and shall
cause CPI-North Star Corporation to, exchange, convey, assign, transfer and
deliver to HRE North Star, Inc., and HRE San Antonio, Inc., and HRE North Star
Inc., and HRE San Antonio, Inc. shall receive and accept, all right, title and
interest in and to the Partnership Interests of CPI and CPI-North Star
Corporation in CPI-North Star, in consideration for the Remaining Rodamco Shares
in accordance with the allocation set forth on Schedule 1.01 and (ii) shall
deliver each of the documents listed in Section 3.03(a) to be delivered by CPI
on or prior to the Second Closing Date.
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ARTICLE II
Expenses
SECTION 2.01. Each of Rodamco and CPI shall pay 50% of all costs,
fees and expenses of (a) the examination of title and issuance by First American
Title Insurance Company (the "Title Company") of standard ALTA Owners' policies
of title insurance insuring the owning Partnership's interest in (i) Bellwether
Florida for $116,000,000 and (ii) Maplewood for $86,300,000; provided that
Rodamco shall pay all costs related to any special endorsements (other than
non-imputation endorsements) or other coverage requested by it and (b) basic
ALTA/ACSM minimum standard detail surveys of Maplewood Mall and Countryside
Mall, provided that Rodamco shall pay all survey costs related to any "Table A"
survey items it may request.
SECTION 2.02. Each of CPI and Rodamco shall pay in a timely manner
50% of all state and local recording, documentary stamp, "intangibles", realty
or stock transfer, recording and/or sales and other transactional taxes (other
than income or capital gains taxes) due or ultimately determined to be due in
connection with or in respect of the Exchange Transactions. Rodamco shall have
no liability in respect of any excise taxes incurred by CPI pursuant to Section
4981 of the Internal Revenue Code (or similar state or local tax laws) as a
consequence of the Exchange Transactions.
SECTION 2.03. Each of CPI and Rodamco shall pay 50% of (a) the fees
and expenses of Lazard Freres & Co. L.L.C. in connection with its representation
of CPI with respect to the Exchange Transactions and its advice to CPI and its
Board of Trustees regarding the fairness to CPI from a financial point of view
of the Exchange Transactions in the amount of $750,000 plus expenses and (b) the
fees and expenses of counsel to CPI and Rodamco in connection with the Exchange
Transactions; provided that Rodamco shall pay 100% of any such fees and expenses
of its counsel incurred in connection with Rodamco's due diligence review with
respect to the Exchange Transactions.
SECTION 2.04. Each of CPI and Rodamco shall pay 50% of the fees and
expenses of Clayton Environmental Consultants, Inc., in connection with the
preparation and delivery of "Phase I" environmental assessments of the
Countryside Mall and the Maplewood Mall.
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SECTION 2.05. CPI shall be entitled to a credit of $850,000 at the
First Closing in respect of certain matters. Such credit shall be treated by the
parties for income tax purposes as a reduction in the consideration for the
Rodamco Shares.
ARTICLE III
Closing; Conditions of Closing
SECTION 3.01. The closing of the transactions described in Section
1.01 (the "First Closing") shall occur on December 31, 1996 or on such other
date in 1996 as shall be mutually agreed upon by Rodamco and CPI (the "First
Closing Date"), at the offices of Cravath, Swaine & Moore, Worldwide Plaza, 825
Eighth Avenue, New York, N.Y. 10019; the closing of the transactions described
in Section 1.02 (the "Second Closing") shall occur on January 2, 1997, or such
other date in 1997 as shall be mutually agreed upon by Rodamco and CPI (the
"Second Closing Date") at the location stated above.
SECTION 3.02. (a) The obligation of Rodamco to cause the transfer of
the Initial Rodamco Shares and to accept in exchange therefor the Partnership
Interests in Bellwether Florida and Maplewood and the Cash Payment as described
in Section 1.01 shall be conditioned expressly on the satisfaction of the
following conditions as of the First Closing Date:
(i) the representations and warranties of CPI contained in this
Agreement shall be true, correct and complete in all material respects as
of such date, except to the extent such representations and warranties
expressly relate to an earlier date;
(ii) CPI shall have terminated or caused the termination of the
existing management agreements with Pembrook Management, Inc., a New York
corporation ("Pembrook"), relating to Maplewood Mall and Countryside Mall
effective as of the First Closing Date;
(iii) Pembrook shall have duly executed and delivered a new
management agreement relating to Maplewood Mall and Countryside Mall,
substantially in the form of Exhibit A hereto (the "Interim Management
Agreement");
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(iv) there shall have been issued by the Title Company a standard
ALTA Owner's Title Insurance Policy insuring the owning Partnership's
interest in Maplewood Mall and Countryside Mall in the amounts set forth
in Section 2.01;
(v) Rodamco shall have received an opinion dated the First Closing
Date of Cravath, Swaine & Moore substantially in the form of Exhibit B;
(vi) Rodamco shall have received satisfactory "Phase I"
environmental assessments of Clayton Environmental Consultants, Inc., with
respect to Maplewood Mall, Countryside Mall and North Star Mall;
(vii) all consents or waivers which may be required from third
parties with respect to the Exchange Transactions shall have been
obtained;
(viii) CPI shall have delivered to the applicable HRE Subsidiary
duly executed Assignments (as hereinafter defined) relating to the
Partnership Interests of CPI, CPI-Countryside Corporation and
CPI-Maplewood Corporation in Bellwether Florida and Maplewood;
(ix) CPI shall have delivered to Rodamco or its designee a standard
owner's affidavit in the form of Exhibit D relating to each of Maplewood
Mall and Countryside Mall;
(x) CPI shall have delivered to Rodamco or its designee certified
copies of the partnership agreements of CPI-Northstar, Bellwether Florida
and Maplewood, good standing certificates issued by the Secretary of State
of the jurisdiction of formation of each such Partnership and incumbency
certificates, corporate resolutions and/or other evidence reasonably
satisfac tory to Rodamco as to the authority of CPI to consummate the
Exchange Transactions;
(xi) CPI shall have delivered to Rodamco or its designee a FIRPTA
certificate, duly executed and acknowledged by an officer of CPI, in the
form of Exhibit E;
(xii) CPI, CRC and the CPI Subsidiaries shall have duly executed and
delivered to Rodamco a Release (as hereinafter defined) dated as of the
First Closing Date;
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(xiii) the partnership agreement of North Star Venture shall have
been amended to reflect the substitution of CPI North Star for CPI as a
partner therein;
(xiv) CPI shall have delivered or caused to be delivered to Rodamco
or its designee the consent of the lender under the mortgage relating to
Countryside Mall with respect to the transfer of the Partnership Interests
in Bellwether Florida; and
(xv) CPI shall have delivered to Rodamco or its designee a copy of
the partnership agreement of North Star Venture together with a
certificate duly executed by CPI-North Star Corporation and North Star
Mall, Inc. stating that such copy is true and complete and has not been
amended.
(b) The obligation of CPI to transfer or cause the transfer of the
Partnership Interests in Bellwether Florida and Maplewood and to make the Cash
Payment and to accept in exchange therefor the Initial Rodamco Shares as
described in Section 1.01 shall be conditioned expressly on the satisfaction of
the following conditions as of the First Closing Date:
(i) the representations and warranties of Rodamco contained in this
Agreement shall be true, correct and complete in all material respects as
of such date, except to the extent such representations and warranties
expressly relate to an earlier date;
(ii) Rodamco shall have caused the Rodamco Subsidiaries and the HRE
Subsidiaries to deliver to CPI assignments of beneficial interests in the
Initial Rodamco Shares and the certificates representing the Initial
Rodamco Shares, duly endorsed in blank or accompanied by stock powers duly
endorsed in blank in proper form for transfer, with appropriate transfer
tax stamps, if any, affixed;
(iii) CPI shall have received an opinion dated the First Closing
Date of Arnall, Golden & Gregory, LLP, substantially in the form of
Exhibit G;
(iv) Mr. Cecil Conlee (as well as any other designee of Rodamco then
serving on the Board of Trustees of CPI) shall have resigned from the
Board of Trustees of CPI and all committees thereof, effective as of the
First Closing Date;
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(v) Lazard Freres & Co. L.L.C. shall have delivered to CPI an
opinion to the effect that the consideration to be received by CPI
pursuant to the Exchange Transactions will be fair to CPI from a financial
point of view;
(vi) no demand for registration of any Rodamco Shares under the
Securities Act of 1933, as amended, shall have been made;
(vii) Rodamco, Rodamco N.V., the Rodamco Subsidiaries and the
Partnerships shall have duly executed and delivered to CPI a Release dated
as of the First Closing Date;
(viii) Rodamco shall have delivered or caused to be delivered to CPI
certified resolutions, incumbency certificates and/or other evidence
reasonably satisfactory to CPI as to the authority of Rodamco and the
Rodamco Subsidiaries to consummate the transaction contemplated hereby;
and
(ix) Rodamco and HRE Maplewood, Inc., HRE Minneapolis, Inc., HRE
Countryside, Inc., and HRE Clearwater, Inc., as applicable, shall have
delivered duly executed Assignments relating to the Partnership Interest
of CPI, CPI-Countryside Corporation and CPI-Maplewood Corporation in
Bellwether Florida and Maplewood.
SECTION 3.03. (a) The obligation of Rodamco to cause the transfer of
the Remaining Rodamco Shares and to accept in exchange therefor the Partnership
Interests in CPI-North Star as described in Section 1.02 shall be conditioned
expressly upon the satisfaction of the following conditions as of the Second
Closing Date:
(i) the First Closing shall have occurred in 1996;
(ii) CPI shall have delivered to Rodamco or its designee a duly
executed Assignment relating to the Partnership Interest of CPI and
CPI-North Star Corporation in CPI- North Star; and
(iii) CPI, CRC and the CPI Subsidiaries shall have duly executed and
delivered to Rodamco a Release dated as of the Second Closing Date.
(b) The obligation of CPI to transfer or cause the transfer of the
Partnership Interests in CPI-North Star
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and to accept in exchange therefor the Remaining Rodamco Shares as described in
Section 1.02 shall be conditioned expressly upon the satisfaction of the
following conditions as of the Second Closing Date:
(i) the First Closing shall have occurred in 1996;
(ii) Rodamco shall have caused the Rodamco Subsidiaries and the HRE
Subsidiaries to deliver to CPI assignments of beneficial interests in the
Remaining Rodamco Shares and the certificates representing the Remaining
Rodamco Shares, duly endorsed in blank or accompanied by stock powers duly
endorsed in blank in proper form for transfer, with appropriate transfer
tax stamps, if any, affixed;
(iii) Rodamco, HRE North Star, Inc., and HRE San Antonio, Inc.,
shall have delivered a duly executed Assignment relating to the
Partnership Interest of CPI and CPI-North Star Corporation in CPI-North
Star; and
(iv) Rodamco, Rodamco N.V., the Rodamco Subsidiaries and the
Partnerships shall have duly executed and delivered to CPI a Release dated
as of the Second Closing Date.
(c) Rodamco covenants and agrees that each of the representations
and warranties set forth in Article VI, to the extent relating to the Remaining
Rodamco Shares or any of the Exchange Transactions contemplated by the Second
Closing, shall be true and correct in all material respects on the Second
Closing Date, except to the extent such representations and warranties expressly
relate to an earlier date.
(d) Rodamco covenants and agrees that it shall not make or suffer to
be made any demand for registration of any of the Rodamco Shares under the
Securities Act of 1933, as amended.
(e) Rodamco hereby covenants and agrees that, as soon as practicable
following the First Closing or the Second Closing, as applicable, it shall, or
shall cause its applicable designee to, at the sole expense of Rodamco or such
designee, take all actions necessary or appropriate in order to change the names
of Bellwether Florida and CPI-North Star such that the terms "Bellwether" and
"CPI", as applicable, shall be eliminated therefrom.
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(f) CPI covenants and agrees that each of the representations and
warranties set forth in Article V, to the extent relating to CPI-North Star and
the Partnership Interests therein or any of the Exchange Transactions
contemplated by the Second Closing, shall be true and correct in all material
respects on the Second Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date.
SECTION 3.04. CPI and Rodamco shall each have the right to waive any
conditions to their respective obligations under this Agreement, provided that
any such waiver shall be in writing. The parties acknowledge and agree that if
CPI or Rodamco has knowledge of a failure of any condition to such party's
obligations hereunder as set forth in this Article III, including without
limitation, the knowledge of either CPI or Rodamco that any representation or
warranty made to them hereunder is not true and correct, and CPI or Rodamco, as
applicable, proceeds with the First Closing or the Second Closing, as
applicable, such party shall be deemed to have waived such condition and such
party and its successors, assigns and affiliates shall not be entitled to be
indemnified pursuant to Article X, to sue for breach of such warranty or
representation so made herein, notwithstanding anything to the contrary
contained herein or in any certificate pursuant hereto. Rodamco acknowledges
that it shall be deemed to have knowledge of all matters set forth in estoppel
certificates delivered to Rodamco (or its agents or representations) prior to
the First Closing Date. As used in this Agreement, the phrase "knowledge of
Rodamco" and any variations thereof shall mean, as of any date of determination,
the actual knowledge or awareness, with no duty to make inquiry with respect
thereto, as of such date, of Dale R. Gilomen, Lisa Saylor and Thomas F. Heyse.
ARTICLE IV
Closing Adjustments
SECTION 4.01. Within 60 days following the Second Closing Date, CPI
shall deliver to Rodamco a certificate of the Chief Financial Officer or
Controller of CPI, setting forth the Net Adjustment Amount (as defined below)
(the "Certificate"). The Certificate shall set forth in reasonable detail
calculations relating to the determination of the Net Adjustment Amount. Rodamco
or its designee shall cause the Partnerships and their respective employees to
assist CPI at Rodamco's expense, in the preparation of the Certificate and
shall, to the extent within its authority so
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to do, provide CPI and its agents and representatives access at all reasonable
times to the personnel, properties, books and records of the Partnerships and
the North Star Venture for such purpose. CPI shall have the primary
responsibility and authority for preparing the Certificate; provided that CPI
shall, upon request, inform Rodamco or Rodamco's independent accountants from
time to time of the status of the preparation of the Certificate; provided,
further, that such 60 day period following the Second Closing Date shall be
extended in the event that CPI shall not have adequate access to the personnel,
properties, books and records of the North Star Venture sufficient to permit it
to reasonably prepare the Certificate.
During the 30-day period following Rodamco's receipt of the
Certificate, Rodamco and its independent accountants shall be permitted to
review the working papers or other documents and papers on which the working
papers are based relating to the Certificate. The Certificate as to the matters
stated therein shall become final and binding upon the parties on the thirtieth
day following delivery thereof, unless Rodamco gives written notice of its
disagreement with the Certificate (a "Notice of Disagreement") to CPI prior to
such date with any matters not so disagreed with being final and binding on the
parties. Any Notice of Disagreement shall (A) specify in reasonable detail the
nature of any disagreement so asserted and (B) be accompanied by a certificate
of Rodamco that it has complied with the covenants set forth in Section 4.03. If
a Notice of Disagreement is received by CPI in a timely manner, then the
Certificate as to the matters stated therein with which Rodamco has disagreed
(as revised in accordance with clause (I) or (II) below) shall become final and
binding upon CPI and Rodamco on the earlier of (I) the date CPI and Rodamco
resolve in writing any differences they have with respect to the matters
specified in the Notice of Disagreement or (II) the date any disputed matters
are finally resolved in writing by the Accounting Firm (as defined below).
During the 30-day period following the delivery of a Notice of
Disagreement, CPI and Rodamco shall seek in good faith to resolve in writing any
differences which they may have with respect to the matters specified in the
Notice of Disagreement. During such period CPI shall have access to the working
papers of Rodamco relating to the Notice of Disagreement. At the end of such
30-day period, CPI and Rodamco shall submit to an independent accounting firm
(the "Accounting Firm") for review and resolution of any and all matters which
remain in dispute and which were properly
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included in the Notice of Disagreement. The Accounting Firm shall be Arthur
Andersen & Co. or, if such firm is unable or unwilling to act, such other
nationally recognized independent public accounting firm as shall be reasonably
agreed upon by the parties hereto in writing. The determination of the
Accounting Firm as to such matters shall be final and binding on the parties
hereto, and CPI and Rodamco agree that judgment may be entered upon the
determination of the Accounting Firm in any court having jurisdiction over the
party against which such determination is to be enforced. The fees and expenses
of the Accounting Firm incurred pursuant to this Section 4.01 shall be borne by
Rodamco and CPI in inverse proportion as they may prevail on matters resolved by
the Accounting Firm, which proportionate allocations shall also be determined by
the Accounting Firm at the time the determination of the Accounting Firm is
rendered on the merits of the matters submitted.
SECTION 4.02. (a) Within three business days of the date on which
the Certificate is deemed to be final, if the Net Adjustment Amount is negative,
CPI will pay such amount to Rodamco or its designee, and if the Net Adjustment
is positive, Rodamco will pay such amount to CPI, in immediately available
funds.
(b) As used herein, the "Net Adjustment Amount" means the amount
obtained by subtracting (x) the Closing Date Adjustment Amount from (y) the sum
(positive or negative) of the Bellwether Working Capital Adjustment Amount, the
North Star Working Capital Adjustment Amount and the Maplewood Working Capital
Adjustment Amount, all as defined below.
(c) The "Bellwether Working Capital Adjustment Amount" means the
Working Capital (as defined below) of Bellwether Florida as of the First Closing
Date. The "North Star Working Capital Adjustment Amount" means the Working
Capital of CPI-North Star as of the Second Closing Date; provided, however, that
if CPI-North Star did not make any cash distributions to its partners in the
period from December 31, 1996, to the Second Closing Date, then the Working
Capital of CPI-North Star as of the Second Closing Date shall be deemed to be
equal to the Working Capital of CPI-North Star as of December 31, 1996, which
Working Capital shall reflect accruals from North Star Venture. The "Maplewood
Working Capital Adjustment Amount" means the Working Capital of Maplewood as of
the First Closing Date. The "Working Capital" of a Partnership as of any date
means the amount (positive or negative) obtained in accordance
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with the computations with respect to such Partnership set forth on Schedule
4.02. The "Closing Date Adjustment Amount" means the sum of (i) the product of
(x) $2,839,153 and (y) a fraction, the numerator of which shall be the number of
days elapsed from November 15, 1996, to the First Closing Date and the
denominator of which shall be 92, and (ii) the product of (x) $2,041,768 and (y)
a fraction, the numerator of which shall be the number of days elapsed from
November 15, 1996, to the Second Closing Date and the denominator of which shall
be 92.
SECTION 4.03. Rodamco agrees that following the applicable Closing,
until the Certificate shall become final and binding on Rodamco as provided in
Section 4.01, it shall not take any action with respect to the accounting books
and records of any Partnership on which the Certificate is to be based that are
not consistent with the applicable Partnership's past practices (solely with
respect to matters pertaining to the Certificate).
SECTION 4.04. During the period of time from and after the Second
Closing Date through the resolution of any ultimate determination of the Net
Adjustment Amount contemplated by this Article IV, Rodamco shall cause each
Partnership and, to the extent within its control, the North Star Venture to
afford to CPI and any accountants, counsel or financial advisers retained by CPI
in connection with the determination of the Net Adjustment Amount reasonable
access during normal business hours to all the Partnerships' properties, books,
contracts, personnel and records relevant to the adjustment contemplated by this
Article IV.
ARTICLE V
Representations and Warranties of CPI
CPI represents and warrants to Rodamco and its successors and
assigns that:
SECTION 5.01. The factual statements contained in paragraph B of the
Preliminary Statement are true, correct and complete in all material respects.
SECTION 5.02. (a) CPI is a voluntary association of the type
commonly known as a business trust duly organized and existing under the laws of
the Commonwealth of Massachusetts, and is authorized to own its property and
conduct its business in each jurisdiction where it is required to be so
authorized, except to the extent the
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failure to so qualify would not have a material adverse effect on CPI's
consolidated business, properties or financial position.
(b) CPI-North Star has been duly formed and is validly existing as a
limited partnership under the laws of the State of Delaware and is registered as
a foreign limited partnership in the State of Texas. CPI has previously
furnished to Rodamco a true, correct and complete copy of the partnership
agreement of CPI North Star dated as of November 12, 1996 between CPI-North Star
Corporation and CPI (the "North Star Agreement"). CPI-North Star Corporation is
the sole general partner and CPI is the sole limited partner of CPI-North Star.
CPI-North Star Corporation and CPI own their respective Partnership Interests in
CPI-North Star under the North Star Agreement free and clear of all liens,
pledges, security interests or other encumbrances. CPI- North Star is not and
has not during its existence engaged in any business other than the ownership of
a 62.5% partnership interest in North Star Venture and owns no assets and has no
liabilities which do not relate to such business.
(c) Bellwether Florida has been duly formed and is validly existing
as a limited partnership under the laws of the State of Florida. CPI has
previously furnished to Rodamco a true, correct and complete copy of the amended
and restated partnership agreement of Bellwether Florida dated as of November
15, 1996 between CPI-Countryside Corporation and CPI (the "Bellwether
Agreement"). CPI-Countryside Corporation is the sole general partner and CPI is
the sole limited partner of Bellwether Florida. CPI-Countryside Corporation and
CPI own their respective Partnership Interests in Bellwether Florida under the
Bellwether Agreement free and clear of all liens, pledges, security interests or
other encumbrances. Bellwether Florida is not and has not during its existence
engaged in any business other than the ownership and operation of Countryside
Mall and owns no assets and has no liabilities which do not relate to such
business.
(d) Maplewood has been duly formed and is validly existing as a
limited partnership under the laws of the State of Delaware and is registered as
a foreign limited partnership in the State of Minnesota. CPI has previously
furnished to Rodamco a true, correct and complete copy of the partnership
agreement of Maplewood dated as of November 22, 1996 between CPI-Maplewood and
CPI (the "Maplewood Agreement"). CPI-Maplewood Corporation is the sole general
partner and CPI is the sole limited partner of
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Maplewood. CPI-Maplewood Corporation and CPI own their respective Partnership
Interests in Maplewood under the Maplewood Agreement free and clear of all
liens, pledges, security interests or other encumbrances. Maplewood is not and
has not during its existence engaged in any business other than the ownership
and operation of Maplewood Mall and owns no business and has no liabilities
which do not relate to such business.
(e) The CPI Subsidiaries are corporations duly organized and
existing under the laws of the State of Delaware, and each is authorized to own
its property and conduct its business in each jurisdiction where it is required
to be so authorized.
(f) CPI has the legal right, power and authority to enter into this
Agreement and perform all its obligations hereunder, and the execution and
delivery of this Agreement and all documents contemplated by this Agreement by
CPI, and the performance by CPI of its obligations hereunder and under the
documents contemplated by this Agreement (i) have been duly authorized by all
requisite action, (ii) will not conflict with, or result in a breach or
violation of or default under, or be modified, restricted or precluded by, (A)
any of the terms, conditions and provisions of its Second Amended and Restated
Declaration of Trust, as amended (the "Declaration of Trust"), or its Trustees'
Regulations (B) any order, judgment, writ, injunction or decree of any court or
governmental instrumentality which has been served or otherwise given to CPI,
(C) any agreement or instrument to which CPI or any of the Partnerships is a
party or by which CPI or any of the Partnerships is bound, or to which CPI or
any of the Partnerships is subject, (D) any law or regulation of the United
States or any Federal, state or local governmental authority and (iii) do not
require the consent or approval of any person or entity (other than as have been
obtained and delivered to Rodamco on or prior to the date hereof). This
Agreement and all documents executed and delivered by CPI in connection with
this Agreement constitute legal, valid and binding obligations of CPI (subject
to any applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law, and
except as the enforceability of the indemnification provisions hereof may be
limited by federal securities law and public policy considerations).
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(g) The CPI Subsidiaries have the legal right, power and authority
to execute and deliver all documents contemplated by this Agreement to be
executed and delivered by them, respectively, and the performance by each of its
obligations under such documents (i) have been duly authorized by all requisite
corporate action, (ii) will not conflict with, or result in a breach or
violation of or default under, or be modified, restricted or precluded by, (A)
any of the terms, conditions and provisions of their respective certificates of
incorporation or by-laws, (B) any order, judgment, writ, injunction or decree of
any court or governmental instrumentality which has been served or otherwise
given to any of them, (C) any agreement or instrument to which any of them is a
party or by which any of them is bound, or to which any of them or their
respective Partnership Interests or the Partnerships are subject, (D) any law or
regulation of the United States or any Federal, state or local governmental
authority and (iii) do not require the consent or approval of any person or
entity (other than as have been obtained and delivered to Rodamco on or prior to
the date hereof). All documents executed and delivered by the CPI Subsidiaries
in connection with this Agreement constitute their respective legal, valid and
binding obligations (subject to any applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law, and except as the enforceability of the
indemnification provisions hereof may be limited by federal securities law and
public policy considerations).
SECTION 5.03. (a) CPI has not received any written notice from any
governmental authority having jurisdiction thereover that (i) Maplewood Mall or
Countryside Mall or the current use, development, construction, management,
maintenance, servicing, operation and occupancy of Maplewood Mall or Countryside
Mall, materially violates any applicable law, ordinance, rule, regulation, order
or requirement of such governmental authority.
(b) CPI has not received any written notice that any certificate of
occupancy or any other license or permit required by any law or regulation for
the proper use and operation of Maplewood Mall or Countryside Mall is not in
full force and effect.
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(c) CPI has not received written notice of, and to the knowledge of
CPI there are no, violations, liabilities, suits, proceedings, orders, decrees
or judgments relating to Hazardous Material or Hazardous Material Laws (both
terms as defined below), against, or with respect to, Maplewood Mall or
Countryside Mall or any part thereof. "Hazardous Materials" means asbestos and
any substance containing asbestos, the group of organic compounds known as
polychlorinated biphenyls, flammable explosives, radioactive materials,
chemicals known to cause cancer or reproductive toxicity, pollutants, effluents,
contaminants, emissions or related materials; insecticides, fungicides and
rodenticides, except used in normal applications; crude oil, petroleum or
fractions thereof, chlorofluorocarbons and urea formaldehyde and any items
included in the definition of hazardous or toxic wastes, materials or substances
under the Hazardous Material Laws. "Hazardous Material Laws" means the Resource
Conservation and Recovery Act, 42 U.S.C. ss.6901 et seq., the Comprehensive
Environmental Response Compensation and Liability Act of 1986 42 U.S.C. ss.
9601, as amended by the Superfund Amendments and Reauthorized Act of 1986, the
Toxic Substances Control Act, 15 U.S.C. ss.ss.2601 et seq., and all similar
federal, state and local environmental statutes, ordinances and the regulations,
orders, decrees now in effect.
SECTION 5.04. (a) To the knowledge of CPI, there are no proceedings
that could have the effect of impairing or restricting the current access
between Maplewood Mall or Countryside Mall respectively, and public streets,
roads and highways adjoining either of them.
(b) CPI has not received any written notice of any curtailment,
moratorium or other limitation of service of any utility supplied to Maplewood
Mall or Countryside Mall.
SECTION 5.05. True, correct and complete copies of all material
service contracts relating to the operation and maintenance of Maplewood Mall
and Countryside Mall, respectively, have been furnished by CPI to Rodamco and
are listed on Schedule 5.05.
SECTION 5.06. (a) CPI has previously delivered to Rodamco a rent
roll (the "Rent Roll") which sets forth a list of all tenants other than tenants
the tenancies of which may be terminated by the landlord on not more than one
month's notice and other than tenants the terms of the tenancies of which shall
expire prior to or on January 31,
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1997 ("Tenants") with leases of premises at Countryside Mall and Maplewood Mall.
The Rent Roll accurately sets forth, for all Tenants' leases, (i) the "DBA" name
of the Tenant, (ii) the suite number or other appropriate designation of the
space occupied, (iii) the number of square feet of rentable or gross leasable
area, as applicable, (iv) the annual base rent payable thereunder, (v) the term
of each such lease, including commencement date and expiration date and (vi) the
dates of basic rent step-ups and the annual rates of such stepped-up rent.
Exhibit 5.06(a) accurately and completely lists all Tenants' leases as of the
date hereof by date and identity of Tenant as set forth on the Rent Roll (the
"Leases").
(b) The Leases have been executed and delivered by the parties
thereto and the copies of the Leases made available to Rodamco are true, correct
and complete.
(c) CPI has not given, made or received any written notice of
material default with respect to any of the Leases (other than as may be set
forth in Exhibit 5.06(c)).
SECTION 5.07. There are no pending, nor has CPI received any written
notice of threatened, actions or proceedings (including, without limitation,
condemnation or eminent domain proceedings or proceedings in the nature or in
lieu thereof) against CPI, Bellwether Florida or Maplewood relating to or
adversely affecting the right, title or interest of any of them respectively, in
or to Maplewood Mall or Countryside Mall or any part thereof.
SECTION 5.08. Exhibit 5.08 accurately and completely lists all
documents comprising the agreements between Bellwether Florida, Maplewood and
the "anchors" at Countryside Mall and Maplewood Mall (the "Mall Agreements") as
of the date hereof by caption, date and parties. Neither Bellwether Florida,
Maplewood nor any other party to any Mall Agreement has given, made or received
any written notice of default with respect to a material default thereunder that
remains outstanding.
SECTION 5.09. As used in this Agreement, the phrases "to the
knowledge of CPI" and any variations thereof shall mean, as of any date of
determination, the actual knowledge or awareness, with no duty to make inquiry
with respect thereto, as of such date, of J. Michael Maloney or Jane Fortenberry
(as to Maplewood Mall only), G. Martin Fell or Robert J. Ross (as to Countryside
Mall only) and Harold E. Rolfe (as to litigation matters only).
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SECTION 5.10. Since September 30, 1996, CPI has not materially
altered its policies (including cash flow distribution policies) with respect to
the management of Countryside Mall and Maplewood Mall.
SECTION 5.11. None of CPI, CPI North Star Corporation or CPI North
Star has any lien or other security interest in the interest of North Star Mall
Limited Partnership or North Star Mall, Inc., in North Star Venture.
ARTICLE VI
Representations and Warranties of Rodamco
Rodamco hereby represents and warrants to CPI and its successors and
assigns that:
SECTION 6.01. The factual statements contained in Paragraph A of the
Preliminary Statement are true, correct and complete in all material respects.
SECTION 6.02. Rodamco is a company with limited liability duly
organized and existing under the laws of the Netherlands and is authorized to
own its property and conduct its business in each jurisdiction where it is
required to be so authorized.
SECTION 6.03. Rodamco has the legal right, power and authority to
enter into this Agreement and perform all its obligations hereunder, and the
execution and delivery of this Agreement and all documents contemplated by this
Agreement by Rodamco and the performance by Rodamco of its obligations hereunder
and under the documents contemplated by this Agreement (a) have been duly
authorized by all requisite corporate action, (b) will not conflict with, or
result in a breach or violation of, or be modified, restricted or precluded by,
(i) any of the terms, conditions and provisions of its organizational documents,
(ii) any order, judgment, writ, injunction or decree of any court or
governmental instrumentality which has been served or otherwise given to
Rodamco, (iii) any agreement or instrument to which Rodamco is a party or by
which it is bound or (iv) any law or regulation of the United States or any
Federal, state or local governmental authority and (c) do not require the
consent or approval of any person or entity. This Agreement and all documents
executed and delivered by Rodamco in connection with this Agreement constitute
legal, valid and binding obligations of Rodamco (subject to any applicable
bankruptcy, insolvency,
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fraudulent transfer, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law, and except as the enforceability of the
indemnification provisions hereof may be limited by federal securities law and
public policy considerations).
SECTION 6.04. HRE Finance Inc. is a corporation duly organized and
validly existing under the laws of the State of Delaware. Wevervink B.V. is a
company with limited liability duly organized and existing under the laws of the
Netherlands. Each Rodamco Subsidiary is authorized to own its property and
conduct its business in each jurisdiction where it is required to be so
authorized. Each HRE Subsidiary is a corporation duly organized and validly
existing under the laws of the State of Delaware and is authorized to own its
property and conduct its business in each jurisdiction where it is required to
be so authorized.
SECTION 6.05. The Rodamco Subsidiaries and the HRE Subsidiaries have
the legal right, power and authority, respectively, to execute and deliver all
documents required to be executed and delivered by them, respectively, and the
performance by each of its obligations under such documents (a) have been duly
authorized by all requisite corporate action, (b) will not conflict with, or
result in a breach or violation of, or be modified, restricted or precluded by,
(i) any of the terms, conditions and provisions of their respective certificates
of incorporation or by-laws (or other organizational documents), (ii) any order,
judgment, writ, injunction or decree of any court or governmental
instrumentality which has been served or otherwise been given to any of them,
(iii) any agreement or instrument to which any of them is subject or (iv) any
law or regulation of the United States or any Federal, state of local
governmental authority and (c) do not require the consent or approval of any
person or entity. All documents executed and delivered by the Rodamco
Subsidiaries and the HRE Subsidiaries in connection with this Agreement
constitute their respective legal, valid and binding obligations (subject to any
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law, and
except as the enforceability of the indemnification provisions hereof may
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be limited by federal securities law and public policy considerations).
SECTION 6.06. The Rodamco Subsidiaries and the HRE Subsidiaries
collectively own all right, title and interest in and to the Rodamco Shares free
and clear of any liens, pledges, security interests or other encumbrances of any
kind whatsoever. Neither Rodamco nor the Rodamco Subsidiaries are parties to any
agreements affecting the Rodamco Shares other than this Agreement or other
documents executed in connection with this Agreement; the Rodamco Shares are the
only shares of beneficial interest in CPI owned or controlled by Rodamco, the
Rodamco Subsidiaries, Rodamco N.V. or any affiliate of any of them.
ARTICLE VII
Condition of Premises
Rodamco acknowledges that each of it and the Rodamco Subsidiaries
has inspected the Malls and reviewed the Partnerships and the North Star
Venture, that it has received copies of and has reviewed the Mall Agreements,
the Bellwether Agreement, the Maplewood Agreement and the North Star Agreement,
that is has received copies of such other documents as it has requested and that
it agrees to accept the Malls "as is" and in their present condition. Rodamco on
behalf of itself, the Rodamco Subsidiaries and the HRE Subsidiaries acknowledges
and agrees that except as expressly set forth in the Assignments and the
Releases, and in this Agreement and the Exhibits and Schedules hereto, CPI (and
its affiliates) are making no representations, promises, warranties, guarantees,
statements or projections regarding the physical condition, habitability,
leases, layout, footage, income and revenue, rents, expenses, zoning,
operations, occupancy percentages or rates, environmental condition, the
presence or absence of hazardous substances, compliance with applicable laws and
regulations, including zoning and building codes, the status of development
rights or potential, or any matter respecting, affecting, or pertaining to the
Malls, or any part thereof, or with respect to the financial condition of the
North Star Venture or any Partnership (or related entity). With respect to any
items of personal property, CPI has not made and does not make any
representations, promises or warranties, express or implied, dealing with
merchantability, fitness for use or condition thereof, and Rodamco agrees that
none have been made. Without limiting the generality of the foregoing, no
environmental assessment
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or audit report or title policy furnished by CPI (or any of its affiliates) to
Rodamco (or any of its affiliates) shall be deemed a representation or warranty
by CPI (or any of its affiliates) as to any of the information contained
therein. Notwithstanding anything else in this Agreement to the contrary, CPI
shall have no obligation to Rodamco (or its affiliates) with regard to
compliance or failure of compliance under the Americans with Disabilities Act
("ADA") in connection with the Malls, and, without limiting the generality of
the foregoing, (i) none of CPI's (or any of its affiliates') representations and
warranties (including, without limitation, those representation and warranties
set forth in Article V) shall be interpreted to include any representation or
warranty with regard to compliance by the Malls with the ADA and (ii) CPI shall
have no obligation to cure any violation of law arising under the ADA (or to
adjust the Working Capital of any Partnership to reflect the cost thereof).
Rodamco further acknowledges that it is a sophisticated purchaser of
real estate and interests in partnerships directly or indirectly owning real
estate and that its decision to consummate the transactions contemplated by this
Agreement is based upon its own independent expert evaluation of the Malls, the
Partnerships, the North Star Venture and other materials and information deemed
relevant by Rodamco and its agents. In entering into this Agreement, Rodamco has
not relied upon any oral or written representations from CPI or any of CPI's
Trustees, officers, employees, affiliates, agents or representatives other than
the representations and warranties of CPI (or its affiliates) expressly set
forth in this Agreement or in the Assignments or the Releases. Nothing contained
in this Article VII is intended to or shall affect the liability of CPI or the
CPI Subsidiaries under this Agreement, the Assignments or the Releases in the
event of any breach by it of any representation or warranty contained in this
Agreement or any default by it in performing its obligations under this
Agreement, the Assignments or the Releases. In addition, nothing contained in
this Article VII shall in any way constitute a waiver by Rodamco of its right to
rely on the representations or warranties of CPI contained in this Agreement or
to pursue any remedies available to Rodamco in connection with the breach of any
such representations or warranties.
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ARTICLE VIII
Records
SECTION 8.01. The following documents and other items relating to
each of Countryside Mall and Maplewood Mall will become the property of Rodamco
and, to the extent in the possession of CPI and in accordance with the
provisions of the Interim Management Agreement, will be turned over to Pembrook,
either directly or by delivery to the management offices of the applicable Mall,
at the applicable Closing:
(a) the original executed copies of all Leases, Lease
correspondence, Mall Agreements and service contracts, if available, and
accurate, legible and certified photocopies thereof where the original
executed copies are unavailable;
(b) any and all plans, specifications and drawings relating to such
Mall;
(c) all building permits, permanent certificates of occupancy or
certificates of compliance which relate to any improvements constituting
part of such Mall; and
(d) 1996 accounting and billing records relating to such Mall.
SECTION 8.02. CPI shall turn over to Rodamco, at the applicable
Closing, all books and records of CPI in CPI's possession relating to the
Partnerships, the Partnership Interests and the North Star Venture and shall
cause the accounting and billing records relating to the Maplewood Mall or
Countryside Mall, to the extent in CPI's possession for all years prior to 1996
to be made available to Rodamco or the applicable HRE Subsidiary upon request in
connection with the preparation of financial statements or for other reasonable
business purposes. Rodamco shall cause such books and records relating to the
Partnership to be made available to CPI upon request in connection with the
preparation of financial statements or tax returns or for other reasonable
business purposes.
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ARTICLE IX
Notices
SECTION 9.01. Any notice required or permitted to be given under the
provisions of this Agreement shall be given by certified or registered mail,
return receipt requested, or by a nationally recognized overnight courier
service providing dated evidence of delivery, by hand delivery against receipt,
or by telecopy followed by mail or courier delivery as provided herein. Notices
shall be directed as follows or to such other address as such party shall have
designated by notice to the other parties in the manner herein provided:
To CPI:
In care of Corporate Property Investors
Three Dag Hammarskjold Plaza
305 East 47th Street
New York, New York 10017
Attention of General Counsel
Fax: (212) 759-7087
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention of Kevin J. Grehan, Esq.
Fax: (212) 474-3700
To Rodamco:
In care of CGR Advisors
950 East Paces Ferry Road
Atlanta, Georgia 30326
Attention of President
Fax: (404) 239-6096
with a copy to:
Arnall Golden & Gregory LLP
2800 One Atlantic Center
1201 W. Peachtree Street
Atlanta, Georgia 30309
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Attention of Paula A. Ball, Esq.
Fax: (404) 873-8717
Notices shall be deemed given on the date of receipt when given by
mail, courier or hand delivery, in each case on a business day, or, if given by
telecopy, the date of telecopy if received by 3:00 p.m. on a business day, or,
if not, the next business day and provided such telecopy notice is followed by
mail, courier or hand delivery.
ARTICLE X
Indemnity; Survival
SECTION 10.01. (a) CPI agrees to indemnify, defend and hold Rodamco,
its designees which receive Partnership Interests pursuant to this Agreement and
their respective successors and assigns and present and former direct and
indirect partners and their respective officers, directors, trustees, employees
and affiliates harmless from and against any and all claims, damages, losses,
liabilities and expenses, including, without limitation, reasonable attorneys'
fees and expenses (collectively, "Losses") suffered or incurred by any such
person or entity arising from any breach of any representation or warranty of
CPI contained in this Agreement which survives the First Closing Date; provided,
that CPI shall have no liability under this sentence unless the aggregate of all
claims, damages, losses, liabilities and expenses relating thereto for which CPI
would, but for this proviso, be liable exceeds on a cumulative basis $250,000,
and then to the full amount thereof.
(b) Rodamco agrees to indemnify, defend and hold CPI and each CPI
Subsidiary and their respective successors and assigns and present and former
direct and indirect partners and their respective officers, directors, trustees,
employees and affiliates harmless from and against any and all Losses suffered
or incurred by any such person or entity arising from any breach of any
representation or warranty of Rodamco contained in this Agreement which survives
the First Closing Date; provided, that Rodamco shall have no liability under
this sentence unless the aggregate of all claims, damages, losses, liabilities
and expenses relating thereto for which Rodamco would, but for this proviso, be
liable exceeds on a cumulative basis $250,000, and then to the full amount
thereof.
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(c) In order for a party (the "indemnified party") to be entitled to
any indemnification provided for under this Agreement in respect of, arising out
of or involving a claim or demand made by any third person against the
indemnified party (a "Third Party Claim"), such indemnified party must notify
the indemnifying party in writing, and in reasonable detail, of the Third Party
Claim within 10 business days after receipt by such indemnified party of written
notice of the Third Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure (except that the indemnifying party shall not be liable
for any expenses incurred during the period in which the indemnified party
failed to give such notice). Thereafter, the indemnified party shall deliver to
the indemnifying party, within five business days after the indemnified party's
receipt thereof, copies of all notices and documents (including court papers)
received by the indemnified party relating to the Third Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges its obligation to indemnify the indemnified
party therefor, to assume the defense thereof with counsel selected by the
indemnifying party; provided that such counsel is not reasonably objected to by
the indemnified party. Should the indemnifying party so elect to assume the
defense of a Third Party Claim, and diligently pursue the defense thereof in a
prudent and commercially reasonable manner, the indemnifying party shall not be
liable to the indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. The indemnifying party
shall be liable for the fees and expenses of counsel employed by the indemnified
party for any period during which the indemnifying party has failed to assume
and diligently pursue in a prudent and commercially reasonable manner the
defense thereof (other than during the period prior to the time the indemnified
party shall have given notice of the Third Party Claim as provided above).
If the indemnifying party so elects to assume the defense of any
Third Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such cooperation shall
include, at the expense of the indemnifying party, the retention and (upon the
indemnifying party's request) the
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provision to the indemnifying party of records and information which are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder. If the indemnifying party shall have assumed
the defense of a Third Party Claim, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third Party
Claim without the indemnifying party's prior written consent (which consent
shall not be unreasonably withheld). If the indemnifying party shall have
assumed the defense of a Third Party Claim, the indemnified party shall agree to
any settlement, compromise or discharge of a Third Party Claim which the
indemnifying party may recommend and which by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim, which releases each of the indemnifying party and the
indemnified party completely in connection with such Third Party Claim provided
that the indemnified party shall not be prejudiced in any manner. Otherwise, any
such settlement, compromise or discharge of a Third Party Claim which the
indemnifying party may recommend shall be subject to the consent of the
indemnified party not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, if any Third Party Claim involves a
claim for which coverage is provided under any past or present insurance policy
or for which such coverage would be provided but for any self-insured retention
provision contained in such an insurance policy, the indemnifying party may, if
it so chooses and acknowledges its obligation to indemnify the indemnified party
therefor (i) assume the defense thereof with counsel selected solely in the
discretion of the indemnifying party, (ii) withhold its consent for any reason
to any admission of liability with respect to, or any settlement, compromise or
discharge of, such Third Party Claim by the indemnified party and (iii) on
behalf of the indemnified party, enter into any settlement, compromise or
discharge of such Third Party Claim so long as its terms obligate the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim and release the indemnified party from such Third Party
Claim. The indemnifying party shall control all aspects of the defense of such
Third Party Claim and shall have no liability to the indemnified party for legal
expenses incurred by the indemnified party in connection with the defense
thereof subsequent to the assumption by the indemnifying party of the foregoing
obligation to indemnify; provided that the indemnifying
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party shall, upon request, inform the indemnified party from time to time of the
status of such defense. In connection with any such Third Party Claim, the
indemnifying party shall have the right to assert and prosecute, with counsel
selected by the indemnifying party in its sole discretion, in the name of the
indemnified party or the indemnifying party, any claim for contribution,
cross-claim, counterclaim or other claim seeking to recover all or any part of
the cost or responsibility for such Third Party Claim and to apply any proceeds
thereof to the satisfaction of such Third Party Claim, and the indemnified party
shall not settle, compromise or discharge any such claim without the
indemnifying party's consent.
The indemnification required by Section 10.01(a) and 10.01(b) shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or loss, liability,
claim, damage or expense is incurred. All claims under Section 10.01(a) or
10.01(b) other than Third Party Claims shall be governed by Section 10.01(d).
(d) Other Claims. In the event any indemnified party should have a
claim against any indemnifying party under Section 10.01(a) or 10.01(b) that
does not involve a Third Party Claim being asserted against or sought to be
collected from such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the indemnifying party. The
failure by any indemnified party so to notify the indemnifying party shall not
relieve the indemnifying party from any liability which it may have to such
indemnified party under Section 10.01(a) or 10.01(b), except to the extent that
the indemnifying party demonstrates that it has been materially prejudiced by
such failure. If the indemnifying party does not notify the indemnified party
within 10 calendar days following its receipt of such notice that the
indemnifying party disputes its liability to the indemnified party under Section
10.01(a) or 10.01(b), such claim specified by the indemnified party in such
notice shall be conclusively deemed a liability of the indemnifying party under
Section 10.01(a) or 10.01(b) and the indemnifying party shall pay the amount of
such liability to the indemnified party on demand or, in the case of any notice
in which the amount of the claim (or any portion thereof) is estimated, on such
later date when the amount of such claim (or such portion thereof) becomes
finally determined. If the indemnifying party has timely disputed its liability
with respect to such claim, as provided above, the indemnifying party and the
indemnified party shall proceed in good faith
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to negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
(e) Environmental Claims. In the event Rodamco should have a claim
against CPI under Section 10.01(a), 10.01(c) or 10.01(d) which relates to
Hazardous Material Laws or Hazardous Materials, then in such event,
notwithstanding anything to the contrary in Section 10.01(c) or 10.01(d),
Rodamco or its designee shall give CPI written notice of any such claim for
indemnification as soon as practicable. CPI shall thereafter defend the
applicable claim against Rodamco with counsel reasonably approved by Rodamco,
such approval not to be unreasonably withheld. The failure of Rodamco to give
the written notice required by the first sentence of this paragraph 10.01(e)
shall not release or limit in any way the indemnification obligation of CPI,
except to the extent that CPI shall be prejudiced by such failure. Thereafter,
all other provisions of Section 10.01(c) and (d) shall apply.
SECTION 10.02. The representations and warranties set forth in this
Agreement shall survive the First Closing Date solely for purposes of Sections
10.01(a) and (b) and shall terminate at the close of business on the first
anniversary of the First Closing Date, except that the representations and
warranties of CPI contained in the penultimate sentences of Sections 5.02(b),
(c) and (d) and the representations and warranties of Rodamco contained in the
first sentence of Section 6.06 shall survive indefinitely. All other provisions
of this Agreement shall survive indefinitely.
ARTICLE XI
Miscellaneous
SECTION 11.01. No waiver by any party of any breach hereunder shall
be deemed a waiver of any other or subsequent breach.
SECTION 11.02. This Agreement may not be altered, amended, changed,
waived, terminated or modified in any respect or particular unless the same
shall be in writing and signed by or on behalf of each of the parties hereto.
SECTION 11.03. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and to
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their respective heirs, executors, administrators, and successors and assigns.
Neither CPI nor Rodamco nor any Rodamco Subsidiary nor any HRE Subsidiary may
assign its rights under this Agreement without the prior written consent of the
other, except that either party may assign its rights hereunder to a wholly
owned subsidiary which assumes the obligations of such party hereunder. No
assignment shall relieve the assignor of any obligations hereunder.
SECTION 11.04. All understandings and agreements heretofore had
between CPI and Rodamco, including the letter from CPI to Rodamco dated November
13, 1996, are merged into this Agreement and the Exhibits hereto, which fully
and completely express the parties' agreement with respect to all matters
pertaining to the subject matter hereof.
SECTION 11.05. At any time prior to, on or after the First Closing
Date, each party shall execute and deliver to the other party any additional
documents and instruments which are reasonably necessary to further assure the
consummation of the transactions contemplated hereby; provided that such
additional documents and instruments do not impose any material additional cost
or liability on the party delivering the same.
SECTION 11.06. This Agreement is for the sole and exclusive benefit
of the parties hereto, and their respective permitted successors and assigns,
and no third party is intended to or shall have any rights hereunder.
Notwithstanding the preceding sentence, the indemnities set forth in this
Agreement are intended for the benefit of, and shall be enforceable by, the
indemnitees thereunder.
SECTION 11.07. (a) The headings and captions herein are inserted for
convenient reference only and the same shall not limit or construe the
paragraphs or sections to which they refer or apply or otherwise affect the
interpretation hereof.
(b) The terms "hereby", "hereof", "herein", "hereunder" and any
similar terms shall refer to this Agreement, and the term "hereafter" shall mean
after, and the term "heretofore" shall mean before, the date of this Agreement.
(c) Words importing persons shall include firms, associations,
partnerships (including limited partnerships), trusts, corporations and other
legal entities, including public bodies, as well as natural persons.
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(d) The terms "include", "including", "including specifically" and
similar terms shall be construed as if followed by the phrase "without
limitation" or "and without limitation", as applicable.
(e) As used in this Agreement, the term "Assignment" shall mean an
agreement substantially in the form of Exhibit C and the term the "Assignments"
shall mean collectively, the Assignments to be delivered in accordance with and
pursuant to Sections 1.01 and 1.02 hereof.
(f) As used in this Agreement, the term "affiliate", as applied to
any person, shall mean any other person controlling, controlled by or under
common control with such person. For purposes of the preceding sentence, (i)
"control" of any person other than a natural person shall be deemed to be held
by any other person owning, directly or indirectly, 10% or more of such person's
voting securities and (ii) "control" of any partnership shall be deemed to be
held by any general partner of such partnership.
(g) As used in this Agreement, the term "Release" shall mean an
agreement substantially in the form of Exhibit F and the term the "Releases"
shall mean collectively, the Releases delivered pursuant to and in accordance
with Sections 1.01 and 1.02 hereof.
(h) The rights and remedies of the parties hereunder shall be
cumulative, and no single or partial exercise of any of them shall preclude the
further or other exercise of any of them, in any sequence or combination, and in
one or more iterations.
SECTION 11.08. This Agreement and any document or instrument
executed pursuant hereto may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Delivery of an executed counterpart of this
Agreement or any document or instrument executed pursuant hereto by facsimile
transmission shall be effective as delivery of an originally executed
counterpart thereof.
SECTION 11.09. If any provision of this Agreement shall be
judicially or administratively held invalid or unenforceable for any reason,
such holding shall not be deemed to affect, alter, modify or impair in any way
any other provision hereof.
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SECTION 11.10. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York, without reference to its
conflicts of laws provisions. Each of Rodamco and CPI irrevocably submits to the
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of Rodamco and CPI
further agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction to this Section
11.11. Each of Rodamco and CPI irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (i) the Supreme
Court of the State of New York, New York County, or (ii) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each of Rodamco and CPI waives, to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect of any litigation directly or indirectly arising out of,
under or in connection with this Agreement or the transactions contemplated
hereby.
SECTION 11.11. Each of Rodamco and CPI acknowledges and agrees that
the other party would be damaged irreparably in the event that the agreements
contained in this Agreement are not performed in accordance with their specific
terms which includes, but is not limited to the Second Closing, which is an
essential bargained for element of the Exchange Transactions. Accordingly, each
party hereto agrees that the other shall be entitled to specifically enforce
this Agreement, including the consummation of the Exchange Transactions, in
addition to any other remedy to which the nonbreaching party may be entitled at
law or in equity without the posting of any bond or proof of damages.
SECTION 11.12. Each of Rodamco and the Rodamco Subsidiaries hereby
acknowledges and agrees that, upon the transfer of the Initial Rodamco Shares
and the Remaining Rodamco Shares to CPI pursuant to this Agreement, all rights
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of the Rodamco Subsidiaries with respect to such Rodamco Shares, whether arising
under the Purchase Agreement dated December 29, 1989, between CPI and Rodamco
N.V. (the "Purchase Agreement"), the letter agreement dated December 29, 1989,
between CPI and Rodamco N.V. (the "Letter Agreement") or under any other
agreement or arrangement, written or oral, or in any other manner, shall be
deemed to be transferred therewith, and all rights of Rodamco or the Rodamco
Subsidiaries or any of their respective affiliates under the Share Purchase
Agreement, the Letter Agreement or otherwise relating to the Rodamco Shares
shall be terminated and of no further force or effect.
SECTION 11.13. Rodamco and CPI acknowledge and agree that the fair
market value of the Partnership Interests in CPI-Northstar is $143 million, that
the fair market value of the Partnership Interests in Bellwether Florida is
$101.1 million and that the fair market value of Partnership Interests in
Maplewood is $86.3 million (in each case without regard to Working Capital).
Rodamco and CPI agree that they will file all their tax returns (and cause their
respective affiliates to file all their tax returns) on a basis consistent with
the foregoing fair market value amounts.
SECTION 11.14. The following notification is hereby given pursuant
to Florida Statute Section 404.056(6) (1995):
RADON GAS: Radon is naturally occurring radio-active gas that, when
it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon
that exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.
SECTION 11.15. The parties hereby agree that neither this Agreement
nor any memorandum or notice hereof shall be recorded.
SECTION 11.16. CPI, CRC, Rodamco, each of the Rodamco Subsidiaries
and each of the HRE Subsidiaries, each after consultation with an attorney of
its own selection (which counsel was not directly or indirectly identified,
suggested or selected by the other party or any agent of the other party),
hereby voluntarily waives its rights under the Deceptive Trade Practices -
Consumer Protection Act
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(Section 17.41, et seq., Business and Commerce Code), a law that gives consumers
special rights and protections. The parties hereby acknowledge to the other that
neither party is in a significantly disparate bargaining position.
ARTICLE XII
Exculpation
SECTION 12.01. Rodamco understands that the name "Corporate Property
Investors" is the designation of the trustees thereof under the Declaration of
Trust, on file with the Secretary of State of the Commonwealth of Massachusetts,
and neither the shareholders nor the Trustees, officers, employees or agents of
the Trust created thereby, nor any of their personal assets, shall be liable
hereunder and all persons dealing with the Trust shall look
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solely to the Trust estate for the payment any claims hereunder or for the
performance hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
CORPORATE PROPERTY INVESTORS,
by
-----------------------
Name:
Title:
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RODAMCO NORTH AMERICA B.V.,
by /s/ Rodamco North America B.V.
-------------------------------
Name:
Title:
For the limited purpose of
consenting and agreeing
to the provisions of
Section 11.12:
RODAMCO N.V.,
by /s/ Rodamco N.V.
----------------
Name:
Title: