EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
by and among
LEND LEASE CORPORATION LIMITED,
BFG-GP, INC.,
LEND LEASE (US) SERVICES, INC.,
LEND LEASE REAL ESTATE INVESTMENTS, INC.,
MIDLAND FINANCIAL HOLDINGS, INC.
AND
MMA FINANCIAL, INC.
-------------------
DATED AS OF MAY 14, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; INTERPRETATION.................................................. 1
1.1 Defined Terms........................................................... 1
1.2 Other Definitions........................................................ 11
1.3 Interpretation; Absence of Presumption................................... 12
1.4 Headings; Definitions.................................................... 12
ARTICLE II THE SALE...................................................................... 12
2.1 The Sale................................................................. 12
2.2 Purchase Price........................................................... 13
2.3 Purchase Price Adjustment................................................ 13
2.4 Closing; HUD TPA Closings................................................ 14
2.5 Closing Deliveries by Purchaser.......................................... 15
2.6 Closing Deliveries by Seller............................................. 15
2.8 Adjustment for Failure to Obtain Certain Consents........................ 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SELLING SUBS................. 16
3.1 Organization and Qualification; Subsidiaries............................. 16
3.2 Capitalization of the Transferred Entities............................... 17
3.3 Authority Relative to this Agreement..................................... 17
3.4 Consents and Approvals; No Violations.................................... 17
3.5 No Default............................................................... 18
3.6 Financial Statements; Liabilities........................................ 18
3.7 Litigation............................................................... 19
3.8 Permits.................................................................. 19
3.9 Employee Benefit Matters................................................. 19
3.10 Broker's Fees............................................................ 21
3.11 Taxes.................................................................... 21
3.12 Tax Credit Business...................................................... 23
3.13 Real Property............................................................ 25
3.14 [Intentionally omitted].................................................. 25
3.15 Intellectual Property and IT Resources................................... 25
3.16 Absence of Certain Changes or Events..................................... 26
3.17 Investors................................................................ 26
3.18 Compliance with Agreements; Material Agreements.......................... 26
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.19 Insurance................................................................ 28
3.20 Fund General Partner and Fund Ownership.................................. 28
3.21 Entire Business; Sufficiency of Assets................................... 29
3.22 Investment Company Act of 1940........................................... 29
3.23 Bridging and Warehousing................................................. 29
3.24 Investment Entity Fees................................................... 29
3.25 No Other Representations or Warranties................................... 29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER................................... 30
4.1 Organization and Qualification; Subsidiaries............................. 30
4.2 Authority Relative to This Agreement..................................... 30
4.3 Consents and Approvals; No Violations.................................... 30
4.4 Financing................................................................ 30
4.5 Broker's Fees............................................................ 31
4.6 Acquisition of Transferred Interests for Investment...................... 31
ARTICLE V COVENANTS..................................................................... 31
5.1 Access to Books and Records.............................................. 31
5.2 Efforts.................................................................. 32
5.3 Further Assurances....................................................... 33
5.4 Conduct of Business...................................................... 33
5.5 Preservation of Business................................................. 35
5.6 Public Announcements..................................................... 35
5.7 D&O Indemnification; Insurance........................................... 36
5.8 Intercompany Accounts.................................................... 37
5.9 Termination of Intercompany Agreements................................... 37
5.10 Guarantees; Commitments.................................................. 37
5.11 Use of Names, etc........................................................ 38
5.12 Obligations with Respect to Certain Entities............................. 38
5.13 Tax Covenants............................................................ 39
5.14 Collection of Business Receivables and Developer Loans................... 39
5.15 Funds Pending Capitalization............................................. 40
5.16 Transferred Entity Restructuring......................................... 40
5.17 Bridge Loans and Warehousing Line........................................ 41
5.18 Financial Statements..................................................... 41
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.19 HUD Approval Process..................................................... 41
5.20 Approval of Transaction; No Solicitation of Competing Transaction........ 42
5.21 IT Transition Assistance................................................. 44
5.22 Legal Opinion............................................................ 45
5.23 Ambac V.................................................................. 45
ARTICLE VI EMPLOYEE MATTERS COVENANTS.................................................... 45
6.1 Employees and Compensation............................................... 45
6.2 Welfare Benefits Plans................................................... 47
(a) 49
(a) 49
ARTICLE VII TAX MATTERS................................................................... 50
7.1 Tax Indemnity by Seller.................................................. 50
7.2 Tax Indemnity by Purchaser............................................... 50
7.3 Allocation of Certain Taxes.............................................. 50
7.4 Transfer Taxes........................................................... 51
7.5 Filing Responsibility.................................................... 51
7.6 Refunds and Credits...................................................... 51
7.7 Tax Contests............................................................. 52
7.8 Purchaser Consolidated, Combined and Unitary Returns..................... 53
7.9 Seller Consolidated, Combined and Unitary Returns........................ 53
7.10 Cooperation and Exchange of Information.................................. 53
7.11 Tax Sharing Agreements................................................... 54
7.12 Timing Differences....................................................... 54
7.13 Disputes................................................................. 54
7.14 Coordination............................................................. 54
7.15 Survival................................................................. 54
7.16 Tax Treatment of Payments................................................ 54
7.17 Escheat.................................................................. 54
7.18 Section 338(h)(10) Elections............................................. 55
ARTICLE VIII CONDITIONS TO OBLIGATIONS TO CLOSE............................................ 55
8.1 Conditions to Obligation of Each Party to Close.......................... 55
8.2 Conditions to Purchaser's Obligation to Close............................ 55
8.3 Conditions to Seller's and the Selling Subs' Obligation to Close......... 56
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TABLE OF CONTENTS
(CONTINUED)
PAGE
8.4 Conditions to Seller's, the Selling Subs' and Purchaser's Obligations
to Effect the HUD TPA Closing............................................ 56
ARTICLE IX TERMINATION................................................................... 56
9.1 Termination.............................................................. 56
9.2 Procedure and Effect of Termination; Break-Fee........................... 57
ARTICLE X SURVIVAL AND INDEMNIFICATION.................................................. 58
10.1 Survival Periods......................................................... 58
10.2 Indemnification by Seller and each Selling Sub........................... 58
10.3 Indemnification by Purchaser and Purchaser Sub........................... 58
10.4 Third-Party Claims....................................................... 59
10.5 Limitations.............................................................. 59
10.6 Tax Indemnification Matters.............................................. 59
10.7 Mitigation............................................................... 59
ARTICLE XI MISCELLANEOUS................................................................. 60
11.1 Counterparts............................................................. 60
11.2 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.............. 60
11.3 Entire Agreement......................................................... 60
11.4 Expenses................................................................. 60
11.5 Notices.................................................................. 61
11.6 Parent Guarantee......................................................... 61
11.7 Successors and Assigns................................................... 62
11.8 Third-Party Beneficiaries................................................ 62
11.9 Amendments and Waivers................................................... 62
11.10 Specific Performance..................................................... 62
11.11 Severability............................................................. 62
Exhibits
Exhibit A Information Technology and Transition Services Agreement
Exhibit B Boston Office Sublease Agreement Term Sheet
Exhibit C Legal Opinion
Schedules
Schedule A Pre-Closing Reorganization Steps
Seller Disclosure Schedule
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PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT (the "Agreement"), dated as of May 14,
2003, by and among Lend Lease Corporation Limited, a corporation organized under
the laws of New South Wales ("Seller"), BFG-GP, Inc., a Massachusetts
corporation ("BFG-GP"), Lend Lease (US) Services, Inc., a Delaware corporation
("LLUS"), Lend Lease Real Estate Investments, Inc, a Delaware corporation
("LLREI" and together with BFG-GP, and LLUS, the "Selling Subs"), Midland
Financial Holdings, Inc., a Florida corporation ("Purchaser"), and MMA
Financial, Inc., a Delaware corporation ("Purchaser Sub").
RECITALS
WHEREAS, Seller, through its direct and indirect Subsidiaries, operates
a housing and community investment business that sponsors investments in real
estate projects eligible for Tax Credits (as defined herein) and Historic
Credits (as defined herein); aggregates, syndicates and manages the Funds (as
defined herein); and manages portfolios of tax-credit and otherwise assisted
multifamily and other tax-credit and otherwise assisted properties
(collectively, the "Business");
WHEREAS, the Selling Subs own certain interests (the "Transferred
Interests") in each of the entities listed in Section 2.1(a) of the Seller
Disclosure Schedule (each a "Transferred Entity" and all Transferred Entities
together with their Subsidiaries, collectively the "Transferred Entities"), as
indicated in Section 2.1(a) of the Seller Disclosure Schedule;
WHEREAS, the Business comprises the Transferred Entities, the
Investment Entities (as defined herein) and the Project Partnerships (as defined
herein);
WHEREAS, Seller desires that the Selling Subs, and the Selling Subs
desire to, sell and transfer, and Purchaser and Purchaser Sub desire to
purchase, the Transferred Interests for the consideration set forth below,
subject to the terms and conditions of this Agreement; and
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1 Defined Terms. For the purposes of this Agreement, the
following terms shall have the following meanings:
"Acquisition Proposal" shall mean any of the following, whether
occurring directly or indirectly (other than the transactions expressly provided
for in this Agreement): (i) any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Business (or involving Transferred Entities which in the aggregate
represent more than 20% of the assets or revenues of the Business; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 20% or
more of the assets or equity securities of the Business in a single transaction
or series of related transactions, excluding any bona fide financing
transactions which do not, individually or
in the aggregate, have as a purpose or effect the sale or transfer of control of
such assets; or (iii) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the foregoing.
"Action" shall mean any action, claim, suit, arbitration, inquiry,
litigation, proceeding, or governmental or regulatory investigation.
"Affiliate" shall mean, with respect to any Person, any other Person
that directly, or through one or more intermediaries, controls or is controlled
by or is under common control with such Person.
"Affiliated Group" shall mean any affiliated group within the meaning
of Section 1504 of the Code or any similar group defined under a similar
provision of state, local or foreign law, of which any of the Transferred
Entities has been or is a member.
"Australian GAAP" shall mean generally accepted accounting principles
in Australia as in effect at the time any applicable financial statements were
prepared.
"Benefit Plan" shall mean any "employee benefit plan," as defined in
Section 3(3) of ERISA (whether or not subject to ERISA), and each other
profit-sharing, bonus, stock option, stock purchase, stock ownership, incentive,
pension, retirement, severance, deferred compensation, excess benefit,
supplemental unemployment, post-retirement medical or life insurance, welfare,
incentive, sick leave, long-term disability, medical, hospitalization, life
insurance, other insurance or employee benefit plan, program, policy or
arrangement sponsored, maintained or contributed to by Seller, the Selling Subs,
any Transferred Entity or any of their respective Affiliates, or pursuant to
which any of them may have any liability which covers any Transferred Entity
Employees or Former Transferred Entity Employees or their dependants and
beneficiaries with respect to service as an employee or contractor of any
Transferred Entity.
"Books and Records" of any Person shall mean originals (where available
or where the Transferred Entity is the payee) or copies of all files, documents,
instruments, papers, correspondence, books and records, whether in hard copy,
electronic copy, or electronic storage, relating to the Business, operations,
conditions of (financial or other), transactions under consideration,
transactions proceeding to a closing, transactions which have been closed,
results of operations and assets and properties of such Person, including but
not limited to the following: financial statements, budgets, pricing guidelines,
ledgers, journals, correspondence and electronic mail, hand-written notes,
deeds, title policies, minute books, stock certificates and books, stock
transfer ledgers, sales and promotional literature, customer lists, computer
files and programs, retrieval programs, operating data and plans, environmental
studies and plans, due diligence materials, organizational documents of entities
to which Seller, the Selling Subs, the Transferred Entities, the Investment
Entities or any of their respective Affiliates is a party, closing binders,
promissory notes, loan documents, draw requests, Tax Returns and related work
papers including tax information for all Project Partnerships and letters from
accountants.
"Boston Office Sublease Agreement" shall mean the sublease agreement
between Seller and Purchaser, dated as of the date hereof and substantially on
the terms set forth in Exhibit B hereto, relating to a portion of the premises
covered by the Lease Agreement between Metropolitan Life Insurance Company, as
Landlord, and The Boston Financial Group Limited Partnership, as Tenant, dated
February 29, 1988, with respect to space in the building located at 000 Xxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, and all amendments and subleases thereto in
effect as of the date of this Agreement.
"Bridge Loan" shall mean any loan from Seller, a Selling Sub, or any of
their Affiliates, to a Fund for the purpose of enabling such Fund to pay any
expense or fees (other than expenses and fees that are
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Business Receivables), or to make a loan or capital contribution to a Project
Partnership, other than a Warehousing Line loan or a Third-Party Bridge Loan.
"Business Day" shall mean any day on which banks are required to be
open to conduct business in New York.
"Business Receivables" shall mean all receivables of the Business owed
to any Transferred Entity, other than (i) contingent general partnership fees
and asset management fees for which there is an offsetting liability or reserve
on the applicable balance sheet, (ii) Developer Loans, and (iii) Bridge Loans.
"Claim" shall mean any Actions, causes of action, judgments, executions
and demands in law or in equity.
"COBRA Continuation Coverage" means the continuation coverage
requirements under Code Section 4980B and Part 6 of Title I of ERISA.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean the confidentiality agreement,
dated as of October 16, 2002, by and between Seller and Parent, and any
amendments thereto.
"Contract" shall mean any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied).
"Credit Amount" shall mean the aggregate amount outstanding under the
Bridge Loans and the Warehousing Line, including any interest accrued thereon,
as of the Closing Date.
"Developer Loans" shall mean loans typically advanced during the
pre-development period by Seller, Selling Subs or their Affiliates to a Project
Partnership, a Local General Partner or one of its Affiliates, or any other
entity that has formed or is anticipated to form or sponsor a Project
Partnership.
"Employment Agreement" shall mean a contract, offer letter or agreement
of Seller, any Selling Sub or any Transferred Entity with any Transferred Entity
Employee or Former Transferred Entity Employee pursuant to which such
Transferred Entity has any actual or contingent liability or obligation to
provide compensation and/or benefits in consideration for past, present or
future services, including any restrictive covenant agreement with a Transferred
Entity Employee.
"Environmental Laws" shall mean any Law relating to releases,
discharges, emissions or disposals to air, water, land or groundwater of
Hazardous Materials; to the use, handling, transport, release or disposal of
polychlorinated biphenyls, asbestos or urea formaldehyde or any other Hazardous
Material; to the treatment, storage, disposal, manufacturing, processing,
distribution, use, generation, containment or management of Hazardous Materials;
to the actual exposure of persons to, or the actual release of, Hazardous
Materials; including the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601, et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. 6901, et seq. ("RCRA"), the Toxic Substances Control
Act, 15 U.S.C. 2601, et seq. ("TSCA"), the Occupational, Safety and Health Act,
29 U.S.C. 651, et seq., the Clean Air Act, 42 U.S.C. 7401, et seq., the Federal
Water Pollution Control Act, 33 U.S.C. 1251, et seq., the Safe Drinking Xxxxx
Xxx, 00 X.X.X. 000x, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. 1802 et seq. ("HMTA"), and the Emergency Planning and Community Right to
Know Act, 42 U.S.C. 11001 et seq. ("EPCRA"), and other comparable foreign, state
and local laws and all rules, regulations and guidance documents
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promulgated pursuant thereto or published thereunder, and with regard to any
record keeping, notification, disclosure and reporting requirements required
thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean, with respect to any entity, trade or
business, any other entity, trade or business that is, or was at the relevant
time, a member of a group described in Section 414(b), (c), (m) or (o) of the
Code or Section 4001(b)(1) of ERISA that includes or included the first entity,
trade or business, or that is, or was at the relevant time, a member of the same
"controlled group" as the first entity, trade or business pursuant to Section
4001(a)(14) of ERISA.
"Former Transferred Entity Employee" shall mean an individual who is
not a Transferred Entity Employee but who was, at any time before the Closing,
employed by Seller and its Affiliates and whose final employment with Seller and
its Affiliates consisted of performing services for the Business.
"Fund" shall mean a limited partnership or a limited liability company
created to raise capital from third-party investors and to invest directly or
indirectly in Project Partnerships, other than Warehousing Entities.
"Governmental Entity" shall mean any court, arbitral, or tribunal,
administrative agency, commission or other governmental authority, body or
instrumentality, federal, state, local, domestic or foreign governmental or
regulatory authority or agency.
"Hazardous Materials" shall mean each and every element, compound,
chemical mixture, contaminant, pollutant, material, waste or other substance
which is defined, determined or identified as or has the potential to be
hazardous or toxic under Environmental Laws or the release of which is regulated
under Environmental Laws. Without limiting the generality of the foregoing, the
term includes: "hazardous substances" as defined in CERCLA; "extremely hazardous
substances" as defined in EPCRA; "hazardous waste" as defined in RCRA;
"hazardous materials" as defined in HMTA; "chemical substance or mixture" as
defined in TSCA; crude oil, petroleum, petroleum products or any fraction
thereof; radioactive materials including source, byproduct or special nuclear
materials; asbestos or asbestos-containing materials; chlorinated fluorocarbons;
polychlorinated biphenyls; lead and lead-based paints; and radon.
"HIPAA" shall mean the Health Insurance Portability and Accountability
Act of 1996.
"Historic Credits" shall mean tax credits available to a qualified
taxpayer under Section 47 of the Code and comparable state tax credits for
historic properties.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
"HUD" shall mean the U.S. Department of Housing and Urban Development,
acting through any authorized representative.
"HUD Financing" shall mean a loan that HUD or RHS insures, assists, or
holds, or any project-based Section 8 rental assistance.
"HUD TPA Entity" shall mean any entity for which the transfer of
control or ownership to Purchaser requires TPA Approval, each such entity being
identified on Section 2.4(b) of the Seller Disclosure Schedule.
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"HUD Transferee" shall mean Seller, any Selling Sub or any Transferred
Entity to the extent such person holds any interests in a HUD TPA Entity.
"Information Technology and Transition Services Agreement" shall mean
the Information Technology and Transition Services Agreement in the form
attached as Exhibit A.
"Intangible Property" shall mean all IT Resources and Intellectual
Property (including any goodwill therein) relating to the Business and all
rights, privileges, claims, causes of action and options related to or used in
or held for use by the Business relating to Intellectual Property.
"Intellectual Property" means all United States and foreign patents,
registered and material unregistered trademarks, trade names, service marks,
domain names, copyrights and any applications therefor or registrations thereof,
technology, know-how, processes, formulae, methods, schematics, trade secrets,
computer software programs or applications (including source codes), data bases
and applications thereto, business and marketing plans, and tangible or
intangible proprietary information or materials, including, in each case, all
related documentation and all other names and slogans used in the operation of
the Business, and disaster recovery plans, system documentation, application
documentation, operational and security documentation and business continuity
plans; certain Boston Financial marks, including but not limited to The Boston
Financial Group, BFG, Boston Financial or any derivations thereof, will be
specifically included; provided, however, that Intellectual Property shall not
include any right, title or interest in or to the name Lend Lease, LLREI or any
derivations thereof, except as provided in Section 5.11.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, and the rules and regulations promulgated thereunder.
"Investment Entity" shall mean any Fund or Warehousing Entity.
"IRS" shall mean the United States Internal Revenue Service.
"IT Resources" shall mean all equipment, hardware and software related
to personal computers, servers, mainframes, all related hardware and peripherals
used to support such equipment and hardware, all software and applications used
on such equipment (including licenses related thereto), and all documentation
relating thereto.
"Law" shall mean any federal, state, local, municipal, or foreign law,
treaty, statute, ordinance, rule, regulation, judgment, ruling, order,
injunction, decree, arbitration award, agency requirement, license or permit of
any Governmental Entity.
"Liens" shall mean all liens, pledges, charges, claims, security
interests, deeds of trust, deeds to secure debt, mortgages, proxies, voting
trusts or agreements, purchase agreements, options, title defects, easements,
restrictions on title or transfer or other encumbrances obligations,
understandings and agreements of any nature whatsoever, whether consensual,
statutory, by operation of law or otherwise.
"Local General Partner" shall mean the general partner or managing
member of a Project Partnership.
"Losses" shall mean all losses, costs, charges, expenses, (including
interests and penalties recovered by a third-party with respect thereto and
reasonable attorneys' fees and expenses and reasonable accountants' fees and
expenses incurred in the investigation or defense of any of the same or in
asserting, preserving or enforcing any of the rights arising under this
Agreement) obligations,
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liabilities, settlement payments, awards, judgments, fines, penalties, damages,
demands, claims, Actions, causes of action, assessments, or deficiencies
(excluding punitive, special, exemplary, consequential, incidental or indirect
damages unless payable to a third party).
"Material Adverse Effect" shall mean a material adverse change or event
or effect that is or would reasonably be expected to result in a material
adverse change, to the business, assets, liabilities, results of operations or
financial condition of the Business taken as a whole; provided, however, that no
change or effect arising out of or in connection with or resulting from any of
the following shall be deemed by itself or by themselves, either alone or in
combination, to constitute or contribute to a Material Adverse Effect: (i)
general economic conditions or changes therein; (ii) financial market
fluctuations or conditions (including changes in interest rates); (iii)
conditions affecting the tax credit syndication industry, generally; (iv) any
reduction in assets under management (excluding any reduction resulting from the
failure to comply with the provisions of Section 5.4 hereof); (v) any changes in
tax, securities or other applicable laws; (vi) any action, omission, change,
effect, circumstance or condition permitted by this Agreement or attributable to
the execution, performance or announcement of this Agreement or the transactions
contemplated hereby or (vii) acts of terrorism, war (whether or not declared) or
the like.
"Material Assets" shall mean all Contracts, assets, facilities,
services and properties that are material to the Business.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
"NASD" shall mean the National Association of Securities Dealers, Inc.,
NASD Regulation, Inc. or the Nasdaq Stock Market, Inc., as the context requires.
"Parent" shall mean Municipal Mortgage & Equity, LLC.
"Person" shall mean a person, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or other
entity or organization.
"Post-Closing Period" shall mean any taxable period (or portion
thereof) beginning after the Closing Date.
"Pre-Closing Period" shall mean any taxable period (or portion thereof)
ending on or prior to the Closing Date.
"Project Partnership" shall mean a partnership or limited liability
company in which an Investment Entity is or is expected to be a direct or
indirect partner or member and which owns, or will acquire, rehabilitate,
construct, own and/or operate a multifamily housing or other commercial real
estate project from which such Investment Entity expects to receive Tax Credits
or Historic Credits.
"Project Partnership Fee" shall mean any on-going, recurring or
periodic amount payable by a Project Partnership to an Investment Entity in the
nature of an asset management fee, a priority distribution from cash flow, or
any similar payment under any of the applicable Project Partnership Investment
Documents.
"Project Partnership Investment Documents" shall mean the partnership
agreement or limited liability company operating agreement, as applicable, for
each Project Partnership and all documents executed in connection with the
Investment Entity's investment in such Project Partnership.
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"Purchaser 401(k) Plan" shall mean the Municipal Mortgage & Equity, LLC
401(k) Retirement and Savings Plan, as sponsored by Purchaser, a copy of which
has been provided by Purchaser to Seller.
"Required Governmental and Stockholder Approvals" shall mean, to the
extent required to consummate the transactions hereunder, (i) approval of the
Seller's stockholders pursuant to the rules of the Australian Stock Exchange
(only to the extent that Seller shall have received legal advice to the effect
that such approval is required or advisable), (ii) approvals required by the HSR
Act and any antitrust, competition or investment laws, or regulations
promulgated by a foreign national or supra-national authority; and (iii) filing,
obtaining, or the occurrence of, as applicable, all other authorizations,
consents, orders, or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity (other than
the HSR Act) in connection with this Agreement or the consummation of the
transactions contemplated thereby, the failure of which to file, obtain or occur
would, individually or in the aggregate, result in a Material Adverse Effect.
"Required Third-Party Consents" shall mean those consents listed on
Section 3.4(b) of the Seller Disclosure Schedule.
"RHS" shall mean the Rural Housing Service of the U.S. Agriculture
Department, or any of its predecessor or successor agencies.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Self-Regulatory Organization" shall mean, with respect to any
Transferred Entity, the NASD, the New York Stock Exchange, the American Stock
Exchange, the Municipal Securities Rulemaking Board or other commission, board,
agency or body that is charged with the supervision or regulation of brokers,
dealers, securities underwriting or trading, stock exchanges, commodity
exchanges, insurance companies or agents, investment companies or investment
advisers, or to the jurisdiction of which any Transferred Entity is subject.
"Seller FSAs" shall mean the following component programs that are
aggregated to form part of the Lend Lease (US) Welfare Benefits Plan and that
are offered Transferred Entity Employees and Former Transferred Entity
Employees: (i) the Lend Lease Employee Benefit Services, Inc. Premium Payment
Plan; (ii) the Lend Lease Employee Benefit Services, Inc. Health Care Spending
Account Plan; (iii) the Lend Lease Employee Benefit Services, Inc. Dependent
Care Spending Account Plan; and (iv) the Lend Lease Real Estate Investments,
Inc. Qualified Transportation Expenses Account Plan. These component programs
are referred to as "Benefit Options" under the terms of the Lend Lease (US)
Welfare Benefits Plan.
"Seller FY '02 LTIP" shall mean the Lend Lease Executive Long Term
Incentive Plan for the fiscal year beginning on July 1, 2002.
"Seller FY '02 Retention Plan" shall mean the Lend Lease Corporation
Incentive Retention Plan for the fiscal year beginning on July 1, 2002.
"Seller Group Health Plan" shall mean all of the Lend Lease Real Estate
Investments, Inc. Code Section 105 group health plan component programs of the
Lend Lease (US) Welfare Benefits Plan. These component programs are referred to
as "Benefit Options" under the terms of the Lend Lease (US) Welfare Benefits
Plan.
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"Seller Severance Plan" shall mean the Lend Lease (US) Severance Pay
Plan component program of the Lend Lease (US) Welfare Benefits Plan.
"Straddle Period" shall mean any taxable period beginning before and
ending after the Closing Date.
"Subsidiary" shall mean, with respect to any Person, any corporation,
entity or other organization whether incorporated or unincorporated, of which
such Person directly or indirectly owns or controls any securities or other
interests; provided, however, that with respect to any Transferred Entity, the
term Subsidiary shall not include any Investment Entity or Project Partnership.
"Superior Competing Acquisition Proposal" shall mean a bona fide
written proposal that was not invited, initiated, solicited or encouraged,
directly or indirectly, by Seller or any of its Affiliates or representatives
for an Acquisition Proposal made by a third party which a majority of the
Seller's board of directors determines after consultation with its financial
advisor, in good faith, taking into account financial considerations and other
relevant factors, including relevant legal, financial, tax, regulatory and other
aspects of such proposal, and the conditions, prospects and time required for
completion of such proposal, to be more favorable than the transactions
contemplated by this Agreement.
"Tangible Personal Property" shall mean all furniture, fixtures,
equipment, machinery, computers, vehicles, structures and other tangible
personal property, and all leases or subleases of tangible personal property, in
each case used in the Business, together with any reports, licenses, permits
deposits related thereto.
"Tax" shall mean any tax of any kind, including any federal, state,
local and foreign income, profits, license, severance, occupation, windfall
profits, capital gains, capital stock, transfer, registration, social security
(or similar), production, franchise, gross receipts, payroll, sales, employment,
use, property, excise, value added, estimated, stamp, alternative or add-on
minimum, environmental, withholding and any other tax or assessment, together
with all interest, penalties and additions imposed with respect to such amounts,
whether disputed or not.
"Tax Claim" shall mean any claim with respect to Taxes made by any
taxing authority that, if pursued successfully, would reasonably be expected to
serve as the basis for a claim for indemnification under Article VII.
"Tax Credits" shall mean the low-income housing tax credits generated
by investments in Project Partnerships as provided by Section 42 of the Code and
comparable state credits for low income housing properties.
"Tax Return" shall mean any return, declaration, report, claim for
refund or information return or statement filed or required to be filed with any
taxing authority relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
"TCALP" shall mean BF Institutional Tax Credits Acquisitions, LP.
"Third-Party Bridge Loan" shall mean any loan from any Person, other
than Seller, a Selling Sub, or any of their Affiliates, to an Investment Entity
for the purpose of enabling such Investment Entity to pay any expense, or to
make a loan or capital contribution to a Project Partnership, other than a
Warehousing Line loan or a Bridge Loan.
8
"Third-Party Intellectual Property Rights" shall mean the rights of any
third party to Intellectual Property.
"Third-Party Investor" shall mean any Person deemed (a) an "accredited
investor" within the meaning of Regulation D under the Securities Act who
invests in a Fund or (b) a non-accredited investor who invests in a Fund that is
(i) a public tax credit partnership or (ii) a partnership created before the
1986 Tax Reform Act.
"TPA" shall mean HUD's Transfer of Physical Assets process.
"TPA Approval" shall mean approval of a TPA by HUD or any other
applicable Governmental Entity (including, without limitation, RHS).
"Transferred Entity Employee" shall mean an individual who is listed on
Section 6.1(a) of the Seller Disclosure Schedule and who is, immediately before
the Closing, actively employed by any Transferred Entity (including any
employees on short-term but not long-term disability or other leaves of
absence).
"Treasury Regulations" shall mean the United States Income Tax
Regulations including Temporary Regulations, promulgated under the Code, as such
regulations may be amended, modified or supplemented from time to time
(including corresponding provisions of succeeding regulations).
"2002 Pro Forma Balance Sheet" shall mean the Lend Lease HCI Pro Forma
Balance Sheet at 31 December 2002 included in Section 3.6(a) of the Seller
Disclosure Schedule.
"U.S. GAAP" shall mean generally accepted accounting principles in the
United States as in effect at the time any applicable financial statements were
prepared.
"Warehouse Asset" shall mean the partnership interest in a Project
Partnership owned directly or indirectly by a Warehousing Entity.
"Warehousing Entity" shall mean an entity that serves as an interim
limited partner or member of a Project Partnership pending replacement of such
Warehousing Entity by a Fund, which, as of the date of this Agreement with
respect to Seller, shall mean TCALP.
"Warehousing Line" shall mean interim financing provided to enable a
Warehousing Entity directly or indirectly to make loans and/or capital
contributions to a Project Partnership pending the replacement of such
Warehousing Entity by a Fund.
"Welfare Benefits" shall mean the types of benefits described in
Section 3(1) of ERISA (whether or not covered by ERISA).
"Welfare Plan" shall mean any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, any short-term disability program classified
as a "payroll practice," any group health plan within the meaning of Section 105
of the Code, any cafeteria plan within the meaning of Section 125 of the Code,
any dependent care assistance program within the meaning of Section 129 of the
Code, any adoption assistance plan within the meaning of Section 137 of the
Code, any tuition assistance plan within the meaning of Section 127 of the Code,
and any qualified transportation plan within the meaning of Section 132 of the
Code.
9
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
10
1.2 Other Definitions. The following terms shall have the meanings
defined in the Section indicated:
Accountant.......................... Section 2.3(d)
Adjustment Certificate.............. Section 2.3(b)
Adjustment Report................... Section 2.3(e)
ADSP................................ Section 7.17
Agreement........................... Preamble
Asset Management Agreement.......... Section 2.8
Assigned Contracts.................. Section 3.18(f)
Boston Office Sublease
Agreement Term Sheet............. Exhibit B
Business............................ Recitals
Change in the Seller
Recommendation................... Section 5.20(a)
Closing............................. Section 2.1(a)
Closing Date........................ Section 2.4
Closing Payment..................... Section 2.3(a)
Controlling Party................... Section 7.7(c)
Covered Employees................... Section 6.2(h)
Determination....................... Section 7.17
Developer Loan Buyout Price......... Section 5.14(d)
Dispute Notice...................... Section 2.3(c)
D&O Indemnified Party............... Section 5.7(b)
Excluded Taxes...................... Section 7.1
Financial Statements................ Section 3.6(a)
Guarantees.......................... Section 5.10(a)
HUD TPA Closing..................... Section 2.4(b)
HUD TPA Closing Date................ Section 2.4(b)
Information Technology and
Transition Services
Agreement........................ Exhibit A
Indemnified Parties................. Section 10.3
Indemnifying Party.................. Section 10.4
Investment Entity Fees ............. Section 3.24
Investment Entity General
Partner.......................... Section 3.20(a)
Investment Entity
Organizational Document.......... Section 3.20(b)
Investment Entity Owner............. Section 3.20(a)
Legal Opinion....................... Exhibit C
LTIP................................ Section 6.1(c)
MIAP Payment........................ Section 6.1(d)
Multiple Employer Plan.............. Section 3.9(c)
Non-Controlling Party............... Section 7.7(c)
Non-Substituted Guarantee........... Section 5.10(d)
Order............................... Section 8.1(a)
Outside Date........................ Section 9.1(b)
Permits............................. Section 3.8
Purchase Price...................... Section 2.3(a)
Purchaser........................... Preamble
Purchaser Disclosure
Schedule......................... Article IV
Purchaser Flex Plans ............... Section 6.2(h)
Purchaser Indemnified
Parties.......................... Section 10.2
Purchaser Sub....................... Preamble
Purchaser Tax Indemnitee............ Section 7.1
Real Property Leases................ Section 3.13(a)
Receivables Buyout Price............ Section 5.14(d)
Required Third-Party
Consents......................... Section 3.4(b)
Resolution Period................... Section 2.3(d)
Retention Plan...................... Section 6.1(c)
Review Period....................... Section 2.3(c)
Selected Items Balance Sheet........ Section 2.3(b)
Selected Net Assets................. Section 2.3(b)
Seller.............................. Preamble
Seller Board Approval............... Section 3.3(b)
Seller DCP.......................... Section 6.1(h)
Seller Disclosure Schedule.......... Article III
Seller Share Plan................... Section 6.1(g)
Seller Indemnified Parties.......... Section 10.3
Seller Investment Plan ............. Section 3.9(a)
Seller Profit Sharing Plan.......... Section 3.9(a)
Seller STIC Plans................... Section 6.1(e)
Seller Stockholder Approval......... Section 5.20(a)
Seller Stockholders Meeting......... Section 5.20(a)
Seller Tax Indemnitee............... Section 7.2
Selling Subs........................ Preamble
Significant Client.................. Section 3.17
Statement of Selected Assets........ Section 2.3(b)
Subsequent Loss..................... Section 7.6(c)
Substituted Guarantees.............. Section 5.10(c)
Tax Adjustment...................... Section 7.12
Tax Proceeding...................... Section 7.7(b)
2530 Entities....................... Section 5.19(d)
338(h)(10) Election................. Section 7.17
338(h)(10) Election
Allocations...................... Section 7.17
338(h)(10) Election
Subsidiaries..................... Section 7.17
Transferred Entities................ Recitals
Transferred Interests............... Recitals
Transfer Tax Party.................. Section 7.4
Transfer Taxes ..................... Section 7.4
Uncollected Business
Receivables..................... Section 5.14(d)
Uncollected Developer Loans......... Section 5.14(e)
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1.3 Interpretation; Absence of Presumption. (a) For the purposes
of this Agreement, "to the knowledge of Seller" shall mean the actual knowledge,
without independent investigation, of the employees identified in Section 1.3 of
the Seller Disclosure Schedule. It is understood and agreed that the
specification of any dollar amount in the representations and warranties
contained in this Agreement or the inclusion of any specific item in the Seller
Disclosure Schedule is not intended to imply that such amounts or higher or
lower amounts, or the items so included or other items, are or are not material,
and neither party shall use the fact of the setting of such amounts or the fact
of the inclusion of any such item in the Seller Disclosure Schedule in any
dispute or controversy between the parties as to whether any obligation, item or
matter not described herein or included in the Seller Disclosure Schedule is or
is not material for purposes of this Agreement.
(b) For the purposes hereof, (i) words in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other gender as the context requires, (ii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph and Exhibit references are to the Articles,
Sections, paragraphs and Exhibits to this Agreement unless otherwise specified,
(iii) the word "including" and words of similar import when used in this
Agreement shall mean "including without limitation" unless the context otherwise
requires or unless otherwise specified, (iv) the word "or" shall not be
exclusive, (v) provisions shall apply, when appropriate, to successive events
and transactions, (vi) all pronouns and any variations thereof refer to the
masculine, feminine or neuter, single or plural, as the context may require and
(vii) all references to any period of days shall be deemed to be to the relevant
number of calendar days unless otherwise specified.
(c) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
1.4 Headings; Definitions. The section and article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
ARTICLE II
THE SALE
2.1 The Sale.
(a) Subject to and upon the terms and conditions of this
Agreement, at the closing of the transactions contemplated hereby (the
"Closing"), the Selling Subs shall (and Seller shall cause the Selling Subs to)
sell, transfer, assign, convey and deliver to Purchaser and Purchaser Sub (or
any Affiliate of Purchaser designated by Purchaser), and Purchaser and Purchaser
Sub shall (or shall cause one or more Affiliates of Purchaser to) purchase,
acquire and accept from the Selling Subs, free and clear of all liens, all of
the Selling Subs' right, title and interest in and to the Transferred Interests.
(b) The transfer of the Transferred Interests shall be effected in
accordance with the steps set forth on Schedule A.
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(c) Prior to the Closing, the Selling Subs shall cause all (i)
Business Receivables, (ii) Developer Loans, (iii) Bridge Loans, (iv) Warehouse
Assets and (v) the HUD TPA Entities to be transferred as set forth on Schedule
A.
2.2 Purchase Price.
Purchaser and Seller agree to allocate the Purchase Price (as adjusted
pursuant to this Agreement) among the Transferred Entities in accordance with
Section 1060 of the Code, which allocation shall be reasonable, based on fair
market values, consistent with the Code and based on an initial proposal
prepared by Purchaser and delivered to Seller within ninety (90) days after the
Closing Date. Seller shall have thirty (30) days to notify Purchaser of any
dispute of such allocation, otherwise Seller shall be deemed to have accepted
such allocation. If Seller disputes the allocation, Purchaser and Seller shall
cooperate in good faith to resolve such dispute, but shall not be obligated to
resolve such dispute. If the parties agree to an allocation, Purchaser and
Seller shall not take any position inconsistent with such treatment and
allocation in connection with their respective Tax Returns and other filings
(including Internal Revenue Service Forms 8023 and 8594), except as otherwise
required pursuant to a "determination" (within the meaning of Section 1313(a) of
the Code). If the parties fail to agree to an allocation, each of Purchaser and
Seller shall use its own allocation.
2.3 Purchase Price Adjustment.
(a) Subject to the adjustments set forth in Section 2.3 and
Section 2.8 of this Agreement, the aggregate purchase price (the "Purchase
Price") for the Transferred Interests is $102,000,000 (the "Closing Payment").
(b) As promptly as practicable, but no more than 90 calendar days
following the Closing Date, Seller will cause to be prepared and delivered to
Purchaser (i) the balance sheet of the Business as of the Closing Date relating
to the selected line items set forth in Section 2.3(b) of the Seller Disclosure
Schedule (the "Selected Items Balance Sheet"), which, except as set forth in
Section 2.3(b) of the Seller Disclosure Schedule, shall be prepared in
accordance with the 2002 Pro Forma Balance Sheet and with Australian GAAP
applied on a basis consistent with the preparation of the 2002 Pro Forma Balance
Sheet; and (ii) a certificate signed by a senior officer of Seller (the
"Statement of Selected Assets"), setting forth the net assets of the selected
line items of the Business as of the Closing Date ("Selected Net Assets"),
together with supporting calculations (the "Adjustment Certificate").
(c) Purchaser shall have 20 days from the date on which the
Selected Items Balance Sheet and the Adjustment Certificate are delivered to it
to review such documents (the "Review Period"). Purchaser may in good faith
dispute any amount reflected in the Selected Items Balance Sheet on or prior to
the last day of the Review Period by delivering a notice to Seller setting
forth, in reasonable detail, the basis for such dispute (the "Dispute Notice").
If no Dispute Notice is received by Purchaser on or prior to the last day of the
Review Period, the Selected Items Balance Sheet and the Adjustment Certificate
shall be deemed accepted by Purchaser and shall be final and binding. In the
event that Purchaser delivers a Dispute Notice to Seller, Purchaser will
promptly thereafter pay to Seller any undisputed portion of the amount that
would be payable pursuant to Section 2.3(f), with interest on such amount as
provided in Section 2.3(g). All payments made by Purchaser pursuant to the
preceding sentence shall be made by wire transfer of immediately available funds
to an account or accounts designated by Seller for such purpose.
(d) For 15 days after receipt of a Dispute Notice (or such longer
period as the parties may agree) (the "Resolution Period"), the parties shall
endeavor in good faith to resolve by mutual agreement their differences
concerning any amounts in dispute in the Dispute Notice and any resolution by
them as
13
to any disputed amounts shall be final, binding, and conclusive. In the event
the parties are unable to resolve by mutual agreement any amounts remaining in
dispute on the Dispute Notice within the Resolution Period, then the parties
shall engage and such dispute shall be submitted to Deloitte & Touche LLP or if
Deloitte & Touche LLP is unable or unwilling to serve, the parties shall, within
15 days after the expiration of the Resolution Period, agree on an alternate
firm of nationally recognized independent public accounts (the "Accountant")
selected by Seller and Purchaser. If Seller and Purchaser are unable to agree on
the Accountant, then each of Seller and Purchaser shall have the right to
request the American Arbitration Association to appoint an Accountant who shall
not have had a material relationship with Seller, Purchaser or any of their
respective Affiliates within the past 2 years. Each party agrees to execute, if
requested by Accountant, a reasonable engagement letter, including customary
indemnities. All fees and expenses relating to the work, if any, to be performed
by the Accountant shall be borne pro rata as between Seller, on the one hand,
and Purchaser, on the other, in proportion to the allocation made by Accountant
of the dollar amount of the amounts remaining in dispute between Seller and
Purchaser, such that the prevailing party pays the lesser proportion of the fees
and expenses. The Accountant shall act as an arbitrator to determine, based
solely on the provisions of this Section 2.3 and the presentations by Seller and
Purchaser, and not by independent review, only the amounts still in dispute on
the Selected Items Balance Sheet and only as to whether such amounts were
arrived at in conformity with this Section 2.3. The Accountant will be
instructed that its determination of the amount of each disputed item may not
exceed the higher of Seller's position or Purchaser's position nor be lower than
the lesser of Seller's position or Purchaser's position with respect to each
such item. Notwithstanding anything else contained herein, the Accountant is
expressly without jurisdiction to, and shall not, enter any Award which,
addresses any issues beyond the amounts in dispute pertaining to this Section
2.3.
(e) The Accountant's determination shall be made within 30 days of
its selection, shall be set forth in a written statement delivered to Seller and
Purchaser (the "Adjustment Report"). If following resolution of any disputed
amounts by Accountant, the aggregate net effect of such resolved amounts is less
than $75,000, then all amounts that were initially in dispute shall be deemed to
have been resolved in favor of the calculation of the amounts listed on the
Selected Items Balance Sheet and the Adjustment Certificate delivered by Seller
to Purchaser (without regard to the final determination by the Accountant). The
Adjustment Report shall be final and binding upon Purchaser and Seller, shall be
deemed a final arbitration award that is binding on each of Purchaser and
Seller, and no party shall seek further recourse to courts, other tribunals or
otherwise, other than to enforce the Adjustment Report. Judgment may be entered
to enforce the Adjustment Report in any court having jurisdiction over the party
against which such determination is to be enforced.
(f) Effective upon the later of five Business Days after the end
of the Review Period (if a timely Dispute Notice is not delivered), or upon the
resolution of all matters set forth in the Dispute Notice by mutual agreement of
the parties or by the issuance of the Adjustment Report (if a timely Dispute
Notice is delivered), (i) Seller shall pay to Purchaser the amount, if any, by
which the Selected Net Assets is less than $2,760,590 or (ii) Purchaser shall
pay to Seller the amount, if any, by which the Selected Net Assets is greater
than $2,760,590. Any such payment shall be made by wire transfer of immediately
available funds to an account or accounts designated by Purchaser or Seller, as
the case may be, at least two Business Days prior to the applicable payment date
and shall include interest as provided in this Section 2.3(f).
(g) Any interest payable pursuant to Section 2.3(b) or 2.3(f)
shall be at a fixed annual rate equal to 200 basis points over the "Prime Rate"
as reported in The Wall Street Journal on the Closing Date and shall be
calculated on the basis of the actual days elapsed between the Closing Date and
the payment date over 365 days.
14
2.4 Closing; HUD TPA Closings .
(a) The Closing shall take place at the offices of Wachtell,
Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00
a.m., New York time, on the third Business Day following the satisfaction or
waiver of the conditions set forth in Article VIII (other than those conditions
that by their nature are to be satisfied or waived at the Closing, but subject
to the satisfaction or waiver of those conditions) or at such other place, time
or date as may be mutually agreed upon in writing by the parties (the "Closing
Date").
(b) Subject to the terms and conditions of this Agreement, the
closing of each of the transactions contemplated hereby with respect to each HUD
TPA Entity set forth in Section 2.4(b) of the Seller Disclosure Schedule (each,
a "HUD TPA Closing") shall take place at the offices of Wachtell, Lipton, Rosen,
and Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, as promptly as
practicable after the satisfaction (or waiver) of the conditions to the HUD TPA
Closing set forth in Section 8.4 of this Agreement for each HUD TPA Entity (the
date on which a HUD TPA Closing occurs is referred to herein as a "HUD TPA
Closing Date"), or at such other place or time as the parties hereto may
mutually agree.
(c) At each HUD TPA Closing, each applicable HUD Transferee shall
deliver free and clear of all Liens all of such HUD Transferee's right, title
and interest in and to the applicable HUD TPA Entity, to such entity as
Purchaser may designate in accordance with any applicable Laws and in accordance
with the organizational documents of the respective HUD TPA Entity.
2.5 Closing Deliveries by Purchaser. At the Closing, Purchaser
will deliver or cause to be delivered to Seller:
(a) The Closing Payment, by wire transfer of immediately available
funds, to an account designated by Seller at least two Business Days prior to
the Closing Date;
(b) The officer's certificate referred to in Section 8.3(c) of
this Agreement;
(c) Duly executed (i) Information Technology and Transition
Services Agreement and (ii) Boston Office Sublease Agreement; and
(d) Such other duly executed documents and certificates as may be
required to be delivered by Purchaser pursuant to the terms of this Agreement.
2.6 Closing Deliveries by Seller. At the Closing, Seller will
deliver or cause to be delivered to Purchaser:
(a) The officer's certificate referred to in Section 8.2(c) of
this Agreement;
(b) Duly executed (i) Information Technology and Transition
Services Agreement and (ii) Boston Office Sublease Agreement;
(c) Stock certificates, together with duly executed stock powers
(affixed with all required stamps evidencing payment of transfer duties),
evidencing the assignment and transfer of the Transferred Interests for those
Transferred Entities that are corporations and applicable evidence of the
assignment and transfer of the Transferred Interests represented by
uncertificated partnership interests or limited liability company interests; and
(d) Copies of any Required Third-Party Consents or Required
Governmental and Stockholder Approvals procured by Seller.
15
2.7 HUD TPA Closing Deliveries by Seller. At each HUD TPA Closing,
Seller will deliver or cause to be delivered to Purchaser:
(a) The officer's certificate referred to in Section 8.4(c) of
this Agreement; and
(b) Stock certificates, together with duly executed stock powers
(affixed with all required stamps evidencing payment of transfer duties),
evidencing the assignment and transfer of each respective HUD TPA Entity for
those respective HUD TPA Entities that are corporations and applicable evidence
of the assignment and transfer of the respective HUD TPA Entity interests
represented by uncertificated partnership interests or limited liability company
interests.
2.8 Adjustment for Failure to Obtain Certain Consents.
(a) If the consent of Xxxxxx Xxx required to assign and transfer
the Restated Asset Management Agreement, dated July 1, 2000 between LLREI and
Xxxxxx Mae (the "Asset Management Agreement") to Purchaser and shall not have
been obtained prior to the Closing, then (i) the Asset Management Agreement
shall not be assigned or transferred to Purchaser at the Closing and (ii) the
Purchase Price payable at the Closing shall be reduced by $2,000,000.
(b) Subsequent to the Closing, Seller shall, with Purchaser's
cooperation, continue to use their respective reasonable best efforts to obtain
the consent necessary to assign and transfer the Asset Management Agreement. If
such consent is obtained within 180 days of the Closing Date, then, on the
second Business Day following the date on which such consent is obtained, (i)
Seller shall assign and transfer the Asset Management Agreement to Purchaser;
(ii) Purchaser shall assume all liabilities and obligations to the extent
related to the Asset Management Agreement; and (iii) Purchaser shall pay to
Seller an amount in cash, by wire transfer of immediately available funds, equal
to $2,000,000 to an account or accounts as designated by Seller in writing at
least two Business Days prior to such transfer date.
(c) For purposes of this Section 2.8, consent to assign and
transfer the Asset Management Agreement shall be deemed to have been obtained by
Seller so long as the consent is not conditioned upon or does not have a
material adverse effect on the terms or provisions of, or rights or obligations
related to, the Asset Management Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
AND THE SELLING SUBS
Except as set forth in the disclosure schedule delivered to Purchaser
and Purchaser Sub prior to the execution of this Agreement (the "Seller
Disclosure Schedule"), Seller and each Selling Sub jointly and severally
represent and warrant to Purchaser and Purchaser Sub as follows:
3.1 Organization and Qualification; Subsidiaries. Seller, each
Selling Sub and each Transferred Entity is a corporation or other legal entity
duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or formation and has all requisite corporate
or other power and authority to own, operate, lease, and encumber its properties
and carry on its businesses as now being conducted and is qualified to do
business and is in good standing as a foreign corporation or other legal entity
in each jurisdiction where the conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing
would not have a Material Adverse Effect. Section 3.1 of the Seller Disclosure
Schedule sets forth each Transferred Entity. True
16
and complete copies of the certificate of limited partnership, the certificate
of incorporation and by-laws or similar organizational documents of the
Transferred Entities have been provided or made available to Purchaser. No
Investment Entity or Project Partnership is a corporation.
3.2 Capitalization of the Transferred Entities. (a) The
Transferred Interests are duly authorized, validly issued, fully paid and
nonassessable and owned by the applicable Selling Sub, free and clear of all
Liens. The Transferred Entities own the equity interests in their Subsidiaries
free and clear of all Liens. There are no shares of common stock or preferred
stock or similar partnership interests of any Transferred Entity authorized,
reserved, issued or outstanding, and there are no preemptive or other
outstanding rights, subscriptions, options, warrants, stock appreciation rights,
redemption rights, repurchase rights, convertible, exercisable, or exchangeable
securities or other agreements, arrangements or commitments of any character
relating to the issued or unissued share capital or other ownership interest in
any Transferred Entity or any other securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of any Transferred Entity, and no securities
evidencing such rights are authorized, issued or outstanding. None of the
Transferred Entities have any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or are convertible or
exchangeable into or exercisable for securities having the right to vote) with
the stockholders or other equity owners of such Transferred Entity on any
matter.
(b) There are no voting trusts or other agreements or
understandings to which any Transferred Entity is a party with respect to the
voting of the Transferred Interests or interests held in other Transferred
Entities.
(c) The following information for each Transferred Entity is set
forth in Section 3.2(c) of the Seller Disclosure Schedule: (i) its name and
jurisdiction of incorporation or organization, (ii) to the knowledge of Seller
after due inquiry, the names of the other interest holders, if any, and their
type of ownership and percentage interest, and (iii) any loans from Seller or
any Selling Sub, or priority payments due to Seller or any Selling Sub, and the
rate of return thereon.
3.3 Authority Relative to this Agreement.
Each of the Seller and each Selling Sub has all necessary corporate
power and authority, and has taken all corporate action necessary, to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof, subject only to the
matters set forth in Section 3.4. This Agreement has been duly and validly
executed and delivered by Seller and each Selling Sub and, assuming the due
authorization, execution and delivery hereof by Purchaser, constitutes a valid,
legal and binding obligation of Seller and each Selling Sub, enforceable against
Seller and each Selling Sub in accordance with its terms, except as may be
subject to applicable bankruptcy, insolvency or other similar Laws, now or
hereafter in effect, affecting creditors' rights generally or general principles
of equity.
3.4 Consents and Approvals; No Violations.
(a) No filing, registration with or notice to, and no permit,
authorization, registration, consent or approval of, any Governmental Entity is
required on the part of Seller, any Selling Sub, any Transferred Entity or any
Investment Entity for the execution, delivery and performance by Seller or any
Selling Sub of this Agreement or the consummation by Seller and the Selling Subs
of the transactions contemplated hereby, except (i) the Required Governmental
and Stockholder Approvals, (ii) pursuant to the applicable requirements of HUD
or state housing agencies or (iii) state licenses relating to the
17
Business, except in the case of (i) (ii) and (iii) as would not, individually or
in the aggregate, have a Material Adverse Effect.
(b) Section 3.4(b) of the Seller Disclosure Schedule sets forth
all notices, filings and consents necessary to permit the transactions
contemplated by this Agreement that may be required from (i) any third party,
(ii) lenders, partners, members and investors of the Business, (iii) Third-Party
Investors, except in the case of (i) (ii) and (iii) as would not, individually
or in the aggregate, have a Material Adverse Effect ("Required Third-Party
Consents").
(c) Other than the Required Third-Party Consents, assuming
compliance with the items described in clauses (i) through (iii) of Section
3.4(a), neither the execution, delivery and performance of this Agreement by
Seller or the Selling Subs nor the consummation by Seller or the Selling Subs of
the transactions contemplated hereby will (i) conflict with or result in any
default under any, breach, violation or infringement of, any provision of the
respective articles of incorporation or by-laws (or similar governing documents)
of Seller, any Selling Sub, any Transferred Entity or any Investment Entity,
(ii) result in a breach, violation or infringement of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to the
creation of any Lien or any right of termination, amendment, cancellation or
acceleration) under, or result in the termination or in a right of termination
or cancellation of, or accelerate the performance required by, or result in the
creation of any Lien upon any of the properties or assets of Seller, any Selling
Sub, any Transferred Entity or any Investment Entity under, or result in being
declared void, voidable or without further binding effect, any of the terms,
conditions or provisions of any material contract of Seller, any Selling Sub,
any Transferred Entity or any Investment Entity, (iii) violate or infringe any
Law applicable to Seller, any Selling Sub, any Transferred Entity or any
Investment Entity or any of their respective properties or assets, or (iv)
create a default under any Project Partnership Investment Document, except in
the case of (ii) or (iii) for breaches, violations, infringements, defaults,
Liens or other rights that would not, individually or in the aggregate, have a
Material Adverse Effect.
3.5 No Default.
(a) No Transferred Entity is in default or violation of any term,
condition or provision of (i) its articles of incorporation, partnership
agreement, limited liability company agreement or by-laws (or similar governing
documents), or (ii) any Law applicable to the Business, except for violations,
breaches or defaults that would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Seller, the Selling Subs, each Transferred Entity and each
Investment Entity have complied in a timely manner and in all material respects
with all Laws that affect the Business, and no notice, charge, claim, action or
assertion has been received by any Transferred Entity or any Investment Entity
or has been filed, commenced or, to the knowledge of Seller, threatened against
any of them or alleging any violation of any of the foregoing.
3.6 Financial Statements; Liabilities.
(a) Section 3.6(a) of the Seller Disclosure Schedule contains the
following financial statements (collectively, with any notes thereto, the
"Financial Statements"): the unaudited consolidated balance sheet and statements
of operating income and expenses of the Business as of and for the fiscal year
ended June 30, 2002 and the 2002 Pro Forma Balance Sheet. The Financial
Statements have been prepared in accordance with Australian GAAP applied on a
consistent basis (except as may be noted therein), and present fairly, in all
material respects, the consolidated financial position and the consolidated
results of operations of the Business as of their respective dates, except in
the case of the 2002 Pro Forma Balance Sheet, for normal recurring year-end
adjustments that would not, individually or
18
in the aggregate, result in a Material Adverse Effect and except that the
Financial Statements do not include footnotes that would be required by
Australian GAAP. True and complete copies of the Financial Statements have been
provided to Purchaser.
(b) As of the date hereof, there are no liabilities or obligations
of the Business other than those that (i) are reflected or reserved against on
the Financial Statements or otherwise set forth in Section 3.6(b) of the Seller
Disclosure Schedule or (ii) have been incurred in the ordinary course of
business and consistent with past practice of the Business since June 30, 2002
and would not, individually or in the aggregate, have a Material Adverse Effect.
3.7 Litigation. As of the date hereof, (a) except as set forth in
Section 3.7 of the Seller Disclosure Schedule, there is no civil, criminal or
administrative Action pending or, to the knowledge of Seller, threatened against
the Business, any Transferred Entity or Investment Entity, and, to the knowledge
of Seller, there is no valid basis for any such Action except as would,
individually or in the aggregate, not reasonably be expected to have a Material
Adverse Effect, and (b) none of the Business, any Transferred Entity or
Investment Entity is subject to any outstanding order, writ, injunction or
decree, except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.8 Permits. The Transferred Entities and Investment Entities hold
all permits, licenses, variances, exemptions, orders and other authorizations,
consents and approvals of all Governmental Entities necessary for the conduct of
the Business as presently conducted (the "Permits"), except for failures to hold
such Permits that would not reasonably be expected to have a Material Adverse
Effect. The Transferred Entities are in compliance with the terms of the
Permits, except where the failure to so comply would not reasonably be expected
to have a Material Adverse Effect. True and complete copies of all Permits have
been made available to Purchaser.
3.9 Employee Benefit Matters.
(a) Section 3.9(a) of the Seller Disclosure Schedule sets forth a
list of each material Employment Agreement and each material Benefit Plan.
Seller has made available to Purchaser true and complete copies of each material
Employment Agreement and each material Benefit Plan and each of the following,
if applicable: (i) with respect to the Lend Lease (USA) Investment Plan (the
"Seller Investment Plan") and the Lend Lease (USA) Profit Sharing Plan (the
"Seller Profit Sharing Plan"), (A) the actuarial report and IRS Form 5500 for
each such plan for each of the last two years and (B) the most recent
determination letter from the IRS for each such plan, and (ii) with respect to
each Benefit Plan, summary plan descriptions and all summaries of material
modifications.
(b) Except as would not have a Material Adverse Effect, (i) each
of the Benefit Plans has been operated and administered in all material respects
in compliance with its terms and applicable Laws, including, but not limited to,
ERISA and the Code; (ii) with respect to the Seller Investment Plan and the
Seller Profit Sharing Plan, which Seller represents are the only tax-qualified
plans in which employees of the Business participate, Seller, the Selling Subs
or their sponsoring Affiliates have either received from the Internal Revenue
Service a favorable determination letter to the effect that each plan in form
satisfies the requirements for qualification under section 401(a) of the Code,
or will apply for such a determination letter within the applicable remedial
amendment period, and no event or condition exists that is reasonably likely to
adversely effect the qualified status of each such plan; (iii) there are no
pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Benefit Plans or any trusts
related thereto that would be a liability of the Transferred Entities following
the Closing; and (iv) there does not now exist, nor do any circumstances exist
that would result in, any liabilities under (A) Title IV of ERISA, (B) Section
302 of ERISA, or (C) Sections 412 and 4971
19
of the Code, in each case, that would be a liability directly or indirectly
(including, without limitation, as a result of a Transferred Entity being
aggregated with any other person that is or was an ERISA Affiliate at any
relevant time prior to the Closing) of the Transferred Entities following the
Closing.
(c) No Transferred Entity Employee participates in a Multiemployer
Plan or a plan that has two or more contributing sponsors at least two of whom
are not under common control, within the meaning of Section 4063 of ERISA (a
"Multiple Employer Plan"). Except as set forth in Section 3.9(c) of the Seller
Disclosure Schedule, none of the Transferred Entities or the ERISA Affiliates of
any of the Transferred Entities has (1) at any time during the last six years,
contributed to or been obligated to contribute to or had liability under any
Multiemployer Plan or Multiple Employer Plan or (2) incurred any Withdrawal
Liability that has not been satisfied in full.
(d) Except as set forth in Section 3.9(d) of the Seller Disclosure
Schedule or as specifically set forth in Article VI of this Agreement, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in conjunction with any
other event such as termination of employment) (i) result in any material
payment becoming due to any Transferred Entity Employee or Former Transferred
Entity Employee under any Benefit Plan or Employment Agreement, (ii) materially
increase any benefits otherwise payable under any Benefit Plan that could
reasonably be expected to be a liability of the Transferred Entities following
the Closing or (iii) result in any acceleration of the time of payment, funding
or vesting of any material such benefits.
(e) Except to the extent set forth in Section 3.9(e) of the Seller
Disclosure Schedule, no Benefit Plan that is a "welfare benefit plan" as defined
in Section 3(1) of ERISA provides for post-retirement insurance benefits or
coverage for any Transferred Entity Employee, except to the extent required by
law; and (B) there has been no violation of Section 4980B of the Code or
Sections 601 through 608 of ERISA with respect to any Benefit Plan that could
result in any material liability to the Transferred Entities.
(f) Except as would not reasonably be expected to have a Material
Adverse Effect, each Transferred Entity and its Affiliates have properly
classified for all purposes (including, without limitation, for all tax purposes
and for purposes of determining eligibility to participate in any employee
benefit plan) all Transferred Entity Employees, consultants and independent
contractors that perform services for a Transferred Entity, and has withheld and
paid all applicable taxes and made all appropriate filings in connection with
services provided by such persons to such Transferred Entity and its affiliates.
(g) None of the Seller or any of its Affiliates has agreed or
otherwise committed to, whether in writing or otherwise, materially increase or
materially improve the compensation, benefits or terms and conditions of
employment or service of any director, officer, employee or consultant of the
Transferred Entities. Neither the Transferred Entities nor any of their
respective Affiliates, is a party to any plan, program, agreement, arrangement,
practice, policy or understanding that would result, separately or in the
aggregate, in the payment (whether in connection with any termination of
employment or otherwise) of any "excess parachute payment" within the meaning of
Section 280G of the Code with respect to a Transferred Entity Employee or a
Former Transferred Entity Employee (or current or former independent contractor
to, any of the Transferred Entities).
(h) Each Benefit Plan that any of the Transferred Entities sponsor
or maintain as of the Closing may be amended and terminated in accordance with
its terms, and each such plan provides for the unrestricted right of Purchaser
to amend or terminate such plan.
20
(i) Neither the Transferred Entities nor Purchaser will have any
liability under the Workers Adjustment and Retraining Notification Act, as
amended, with respect to any events occurring or conditions existing on or prior
to Closing.
(j) Except as would not reasonably be expected to have a Material
Adverse Effect, there is no (i) unfair labor practice, labor dispute (other than
routine individual grievances) or labor arbitration proceeding pending or, to
the knowledge of Seller, threatened against any Transferred Entity relating to
the Business, (ii) activity or proceeding by a labor union or representative
thereof to organize any employees of any Transferred Entity, or (iii) lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to such
employees. Each Transferred Entity is in compliance with all Laws regarding
employment, employment practices, terms and conditions of employment and wages,
except for noncompliance that would not reasonably be expected to have a
Material Adverse Effect. No Transferred Entity Employee's employment is covered
by a collective bargaining agreement, nor has any Transferred Entity ever been a
party to a collective bargaining agreement.
(k) Any and all contributions, premiums and other payments with
respect to compensation or service before and through the Closing, or otherwise
with respect to periods before and through the Closing, due from any Transferred
Entity to, under or on account of each Benefit Plan shall have been paid prior
to Closing or shall have been fully reserved and provided for on the Selected
Items Balance Sheet.
(l) Neither Purchaser nor any Affiliate thereof, including the
Transferred Entities, will be deemed to assume or continue any Benefit Plan.
Except as specifically set forth in Article VI of this Agreement, no Benefit
Plan or any other employee benefit plan, program, agreement or arrangement
maintained by Seller or any of its Affiliates will be directly or indirectly
binding on, or result in any liability or obligation to, Purchaser or any
Affiliate thereof, including any of the Transferred Entities on and after the
Closing.
3.10 Broker's Fees. Except for Xxxxxxx Xxxxx & Co., no broker,
finder, investment banker or other agent is or will be entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Seller, any Selling Sub or any Transferred Entity. Seller shall be solely
responsible for the fees of Xxxxxxx Xxxxx & Co.
3.11 Taxes.
(a) All material Tax Returns required to be filed on or prior to
the date hereof by, or with respect to any activities of, any Transferred Entity
have been filed in a timely manner, and all material Taxes (whether or not shown
to be due on such Tax Returns) have been paid. All such Tax Returns were correct
and complete in all material respects. None of the Selling Subs is a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
(b) Except as set forth in Section 3.11(b) of the Seller
Disclosure Schedule, none of the Transferred Entities or any Affiliated Group
currently is the beneficiary of any extension of time within which to file any
material Tax Return with respect to the activities of any Transferred Entity. No
material claim has ever been made by an authority in a jurisdiction where no Tax
Return is filed with respect to the activities of any of the Transferred
Entities that any Transferred Entity is or may be subject to a material amount
of taxation by that jurisdiction. There are no material liens or security
interests on any of the assets of any of the Transferred Entities that arose in
connection with any failure (or alleged failure) to pay any material Tax.
21
(c) Each of the Transferred Entities and any Affiliated Group has
withheld and paid all material Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third-party with respect to the activities of
any Transferred Entity.
(d) There is no dispute or claim concerning any material Tax
liability of any of the Transferred Entities either (i) claimed or raised by any
authority in writing or (ii) as to which the Seller and the directors and
officers of any of the Seller, the Selling Subs, the Transferred Entities, has
knowledge based upon personal contact with any agent of such authority. None of
the Transferred Entities has within the past twelve months received any notice
of enquiry or suffered any enquiry, investigation or audit by the IRS or any
other Tax authority with respect to the activities of any of such Transferred
Entity. Seller has made available to Purchaser correct and complete copies of
all United States federal income Tax Returns, examination reports, and
statements of deficiencies filed by, assessed against or agreed to by any of the
Transferred Entities since January 1, 1997.
(e) Except as set forth in Section 3.11(e) of the Seller
Disclosure Schedule, no power of attorney currently in force has been granted by
any Transferred Entity or any Affiliated Group with respect to any Tax matter
with respect to the activities of a Transferred Entity.
(f) Except as set forth in Section 3.11(f) of the Seller
Disclosure Schedule, none of the Transferred Entities or any Affiliated Group
has waived any statute of limitations in respect of a material amount of Taxes
or agreed to any extension of time with respect to a material Tax assessment or
deficiency with respect to the activities of a Transferred Entity.
(g) None of the Transferred Entities has filed a consent under
Section 341(f) of the Code or any comparable provision of non-U.S. law
concerning collapsible corporations. None of the Transferred Entities or any
Affiliated Group is required to include in income any material adjustment
pursuant to Section 481(a) of the Code or any comparable provision of non-U.S.
law by reason of a change in accounting method with respect to the activities of
a Transferred Entity. None of the Transferred Entities or any Affiliated Group
has made any payments, is obligated to make any payments, or is a party to any
agreement that would reasonably be expected to obligate it to make any payments
that will not be deductible under Section 162(m) of the Code or any comparable
provision of local law. Each of the Transferred Entities or any Affiliated Group
has disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code with respect to the activities of a
Transferred Entity. None of the Transferred Entities or any Affiliated Group
have taken a position on a Tax Return that is inconsistent with the treatment of
an item on a partnership information return or Schedule K-1 for an entity in
which a Transferred Entity invests, directly or indirectly, whether disclosed on
Form 8271 or otherwise. None of the Transferred Entities is a party to any Tax
allocation or Tax sharing agreement that will not be terminated pursuant to
Section 7.11.
(h) The unpaid Taxes of the Transferred Entities (i) did not, as
of the date of the most recent Financial Statements, materially exceed the
reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the most recent Financial Statements (rather than in any notes
thereto); and (ii) do not materially exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with Australian GAAP.
(i) None of the Transferred Entities (i) has participated in an
international boycott as defined in Section 999 of the Code; (ii) has been the
distributing corporation with respect to a transaction described in Section 355
of the Code within the three-year period ending on the date of this Agreement;
22
(iii) has a permanent establishment in any foreign country as defined in any
applicable Tax treaty or convention between the United States and that foreign
country; (iv) has a material item of income or gain reported for financial
accounting purposes in a Pre-Closing Period which is required to be included in
taxable income for a Post-Closing Period; or (v) has made or is bound by any
election under Section 197 of the Code.
(j) None of the Transferred Entities is a foreign corporation, a
foreign partnership or a foreign trust, as defined under the Code, or a
corporation that has made an election to be taxed under Subchapter S of the
Code.
(k) Except as set forth in Section 3.11(k) of the Seller
Disclosure Schedule, none of the Transferred Entities has been a member of an
Affiliated Group filing a consolidated federal income Tax Return other than a
group the common parent of which is Lend Lease (US), Inc. Lend Lease (US), Inc.
is eligible to make an election pursuant to Section 338(h)(10) of the Code with
respect to the 338(h)(10) Election Subsidiaries.
(l) Except as disclosed in Section 3.11(l) of the Seller
Disclosure Schedule, no election has been filed under Section 754 of the Code
and is currently in effect with respect to any Transferred Entity, Investment
Entity or Project Partnership for the most recent Tax Returns filed.
3.12 Tax Credit Business.
(a) Each Project Partnership (i) has received or reasonably
expects to receive a reservation, binding commitment, allocation or carryover
allocation of Tax Credits from the applicable credit agency in an amount at
least equal to the Tax Credits projected to be received each year from such
Project Partnership; or (ii) (A) has financed or is expected to finance more
than 50% of its basis in land and buildings with the proceeds of tax-exempt
bonds subject to volume cap allocation, (B) has received or reasonably expects
to receive a letter from the appropriate Governmental Entity under Section
42(m)(1)(D) of the Code stating that the project satisfies the requirements for
allocation of a housing credit dollar amount under the qualified allocation plan
applicable to the area in which the project is located, and (C) has received or
reasonably expects to receive a letter from the Governmental Entity that issued
the bonds or the applicable credit agency under Section 42(m)(2)(D) of the Code,
stating that the Tax Credits projected to be received by the Project Partnership
do not exceed the amount necessary for the financial feasibility of the project
and its feasibility as a qualified low-income housing project throughout the
credit period.
(b) To the knowledge of Seller, each Project Partnership in which
any Investment Entity has made an investment since 1990 and which has reached
the end of the first year of the credit period for the Project which it owns is
subject to an "extended use agreement" within the meaning of Section 42(h)(6) of
the Code and such extended use agreement has been or is reasonably expected to
be duly recorded among the land records of the applicable jurisdiction in which
the Project Partnership Property is located.
(c) To the knowledge of Seller, each Project Partnership has
received a title insurance policy written on standard forms, or a commitment for
such title policy insuring that such Project Partnership has fee simple or
leasehold title to the Project Partnership Property owned by such Project
Partnership. All such title policies commitments have been made available to
Purchaser.
(d) The relevant Investment Entity has received or reasonably
expects to receive a fully executed Form 8609 for each Project Partnership that
has begun its Tax Credit compliance period.
23
(e) Except as disclosed in Section 3.12(e) of the Seller
Disclosure Schedule, to the knowledge of Seller, no Project Partnership has
received a Form 8823, except where all reported non-compliance has been
corrected and the reporting Governmental Entity has issued a letter confirming
such correction.
(f) Except as disclosed in Section 3.12(f) of the Seller
Disclosure Schedule, to the knowledge of Seller, no Project Partnership has
received written notice of any pending audit or investigation by the IRS
pertaining to the right of such Project Partnership to claim Tax Credits or
Historic Credits, as applicable, or the right of the Investment Entity to claim
that amount of the Tax Credits or Historic Credits which such Investment Entity
was projected to obtain pursuant to the Project Partnership Investment
Documents.
(g) Except as disclosed in Section 3.12(g) of the Seller
Disclosure Schedule, Seller has received an opinion of tax counsel with respect
to each Project Partnership to the effect that it is more likely than not that
the Investment Entity will be entitled to the bulk of the tax benefits projected
to be received pursuant to the Project Partnership Investment Documents.
(h) Except as disclosed in Section 3.12(h) of the Seller
Disclosure Schedule, to the knowledge of Seller, there are no foreclosure
proceedings pending against any Project Partnership and Seller has not received
written notification from a Local General Partner that a lender has declared a
default under any of the debt financing provided to any of the Project
Partnerships.
(i) Seller does not have knowledge that any Project Partnerships
that own Project Partnership Properties on which construction has been completed
and which have been occupied have not received any required governmental
permission to occupy such units.
(j) Except as disclosed in Section 3.12(j) of the Seller
Disclosure Schedule, to the knowledge of the Seller, no Local General Partner is
currently in default of its material obligations under its applicable Project
Partnership Investment Documents to the extent that the applicable Investment
Entity would have the right to remove such Local General Partner as the general
partner or managing member of such Project Partnership or where such default
could reasonably cause a material adverse affect on an Investment Entity.
(k) In connection with the closing of its investment in each
Project Partnership where Tax Credits are intended to be obtained under Section
42(h)(1)(E) of the Code, the applicable Investment Entity received evidence,
where applicable, that such Project Partnership had satisfied the 10% test
described in Section 42(h)(1)(E) of the Code.
(l) All Project Partnerships from which Historic Credits were
expected to be received, and which have been placed in service, have received or
reasonably expect to receive their Part I, and Part II approvals from the
Department of the Interior and any applicable state agency to the extent
required, and the buildings on which the Historic Credits are claimed are
currently listed in the National Register or are located in a registered
historic district that has been certified by the Secretary of the Interior as
being of historic significance to the district.
(m) To the knowledge of Seller, each Project Partnership claiming
Historic Credits attached an appropriate Form 3468 with its federal Tax Return
for the tax year in which such Historic Credits are claimed.
24
(n) Except as disclosed in Section 3.12(n) of the Seller
Disclosure Schedule, neither Seller, any Selling Sub nor any Investment Entity
has received written notice that any Project Partnership Property is in material
violation of any Environmental Law.
(o) No consent or approval of any Local General Partner is
required for a change in control of any Investment Entity which has invested in
any Project Partnership, or if any such consent is required, the failure to have
obtained such consent shall not materially affect the relevant Fund.
(p) Section 3.12(p) of the Seller Disclosure Schedule sets forth a
true and complete copy of the "watch list" maintained by Seller, any Selling
Sub, any Transferred Entity or any Investment Entity with respect to Project
Partnerships and/or Project Partnership Properties as of April 30, 2003.
(q) Except as set forth in Schedule 3.12(q) of the Seller
Disclosure Schedule, to the knowledge of Seller, each Project Partnership
currently has in force all insurance policies and coverages which, in the
reasonable judgment of Seller, are adequate to protect the interest of the
Investment Entities, including without limitation casualty insurance and general
public liability insurance.
(r) Section 3.12(r) of the Seller Disclosure Schedule sets forth a
true and complete list of all Project Partnerships which generated Tax Credits
or Historic Credits in which any Investment Entity holds any interest as of
April 30, 2003.
(s) Neither any Project Partnership nor any Local General Partner
has provided written notice that it has or intends to assert any contest,
defense or right of setoff with respect to any Project Partnership Fees which
has not been resolved.
3.13 Real Property.
(a) Section 3.13(a) of the Seller Disclosure Schedule sets forth a
complete list of all real property leases to which any Transferred Entity is a
party (the "Real Property Leases"). True and complete copies of the Real
Property Leases listed in Section 3.13(a) of the Seller Disclosure Schedule have
heretofore been furnished to Purchaser. All the Real Property Leases are in full
force and effect, and have not been modified, supplemented or terminated except
as set forth in Section 3.13(a) of the Seller Disclosure Schedule, and there is
not under any such lease any default by the Transferred Entities or, to the
knowledge of Seller after due inquiry, by any landlord under any such lease.
Except as set forth on Section 3.13(b) of the Seller Disclosure Schedule, no
Person other than the Transferred Entities has any right to use, occupy or lease
any of the property covered by the Real Property Leases. Seller has provided to
Purchaser true and correct copies of all agreements with the Persons listed in
such Section.
(b) None of the Transferred Entities directly or indirectly owns
any real property.
3.14 [INTENTIONALLY OMITTED].
3.15 Intellectual Property and IT Resources.
(a) To the knowledge of Seller, there do not exist any grounds for
any claims (i) to the effect that the use of any product as now used by any
Transferred Entity infringes on any Third-Party Intellectual Property Rights;
(ii) against the use by any Transferred Entity of any Third-Party Intellectual
Property Rights used in the Business as currently conducted; (iii) challenging
the ownership, validity or effectiveness of any Third-Party Intellectual
Property Rights or other trade secret material to any Transferred Entity; or
(iv) challenging the license or legally enforceable right of any Transferred
Entity to use any Third-Party Intellectual Property Rights.
25
(b) The Transferred Entities own, license or otherwise possess
legally enforceable rights to use all Intellectual Property used in or
reasonably necessary to the conduct of the Business. Section 3.15(b) of the
Seller Disclosure sets forth a list of all Intellectual Property (including
issued patents and registered trademarks) used or owned by the Business.
(c) The execution and delivery of this Agreement and consummation
of the transactions contemplated hereby will not result in the breach of, or
create on behalf of any third-party the right to terminate or modify any
license, sublicense or other agreement relating to any Intellectual Property or
any software programs that are commercially available on a general basis.
Section 3.15(c) of the Seller Disclosure Schedule sets forth a complete and
accurate list of all material software license agreements relating to
Intellectual Property.
(d) All patents, registrations and applications for registered
trademarks, service marks and copyrights which are held by the Transferred
Entities are valid and subsisting. To the knowledge of the Seller, no other
person or entity is infringing, violating or misappropriating any of the
Intellectual Property of any of the Transferred Entities.
3.16 Absence of Certain Changes or Events.
(a) Since December 31, 2002, each Transferred Entity and
Investment Entity has conducted its business only in the ordinary course, and
there has not been (i) any change, circumstance or event that, individually or
in the aggregate, has had or would have a Material Adverse Effect, (ii) any
commitment, contractual obligation, borrowing, capital expenditure or
transaction entered into by any Transferred Entity or Investment Entity, other
than any such transaction that would not, individually or in the aggregate,
result in a Material Adverse Effect, (iii) any change in the accounting
principles, practices or methods of any Transferred Entity or Investment Entity
that would, individually or in the aggregate, result in a Material Adverse
Effect, (iv) any declaration, setting aside or payment of any dividend or other
distribution with respect to any Transferred Entity or Investment Entity, (v)
any reduction in the level of reserves relating to any Investment Entity(other
than in the ordinary course of business).
3.17 Investors. There has not been any material adverse change in
the business relationship between any of the Transferred Entities with any
investor whose business represents, through one or more Affiliates, 5% or more
of the equity raised by the Funds on a consolidated basis on or after January 1,
2001 (a "Significant Client"). None of the Seller or the Selling Subs has
received any written notice or has reason to believe that any Significant Client
(a) has ceased, or shall cease, to use the services of the Business; (b) except
as set forth in Section 3.17 of the Seller Disclosure Schedule, has
substantially reduced or shall substantially reduce, the use of the services of
the Business or (c) has sought, or is seeking, to substantially reduce the fees
it shall pay for the services of the Business, including in each case after the
consummation of the transactions contemplated hereby. To the knowledge of
Seller, no Significant Client has otherwise threatened to take action described
in the preceding sentence as a result of the consummation of the transactions
contemplated by this Agreement.
3.18 Compliance with Agreements; Material Agreements.
(a) Section 3.18(a) of the Seller Disclosure Schedule sets forth a
list of (i) all investor promissory notes, security agreements, investor
bridging loan documents, and any other loan agreements to which the Transferred
Entities and Investment Entities are a party under which amounts remain unpaid;
and (ii) each bank account (and the applicable outstanding balance as of April
30, 2003) of the Transferred Entities and the Investment Entities with deposits
in excess of $100,000. True and complete copies of the documents relating to the
items described in the first sentence of this Section 3.18(a) have been
delivered or made available to Purchaser prior to the date hereof. None of the
Transferred Entities
26
or Investment Entities is in default, and, to the Seller's knowledge, no event
has occurred which, with the giving of notice or the lapse of time or both,
would constitute a default, under any of the items described in the first
sentence of this paragraph (a) or in respect of any payment obligations under
any such item, except as would not have a Material Adverse Effect. No
Third-Party Investor is in default or violation of any term, condition or
provision of any subscription agreement to which it is a party, including but
not limited to any obligation to make capital contributions, except as would not
have a Material Adverse Effect.
(b) Section 3.18(b) of the Seller Disclosure Schedule sets forth a
complete and accurate list of all side agreements by and between any Transferred
Entity, on the one hand, and any Third-Party Investor, on the other hand. True
and complete copies of each agreement set forth in Section 3.18(b) of the Seller
Disclosure Schedule have been provided to Purchaser. There are no side
agreements that (i) grant Third-Party Investors any rights that materially
differ from the rights granted Third-Party Investors in the partnership
agreement in the respective Investment Entities or (ii) obligate an Investment
Entity to make payments of any kind to a Third-Party Investor in the event that
the actual benefits of the investment are less than originally projected.
(c) All joint venture, limited liability company and partnership
agreements to which any of the Transferred Entities is a party as of the date
hereof are in full force and effect as against such Transferred Entity and, to
the knowledge of Seller, as against the other parties thereto, and none of the
Transferred Entities or, to the knowledge of Seller, the Investment Entities is
in default, and, to the knowledge of Seller, no event has occurred which, with
the giving of notice or the lapse of time or both, would constitute a default,
with respect to any obligations thereunder. To the knowledge of Seller, the
other parties to such agreements are not in breach of any of their respective
obligations thereunder.
(d) Section 3.18(d) of the Seller Disclosure Schedule sets forth a
complete and accurate list of all material agreements entered into by any of the
Transferred Entities and Investment Entities as of the date hereof that are (A)
not made in the ordinary course of business consistent with past practice, (B)
do not have a maturity of less than one year or are not terminable on 30 days or
less notice, and (C) are not listed in any other Section of the Seller
Disclosure Schedule. Section 3.18(d) of the Seller Disclosure Schedule shall
also include all leases of Tangible Personal Property and all non-competition or
other similar agreements in favor of a third-party, and any commitment,
judgment, injunction or order to which any of the Transferred Entities or
Investment Entities is a party or subject that has or could reasonably be
expected to have the effect of prohibiting or materially impairing the Business
before or after the Closing. Each agreement set forth in Section 3.18(d) of the
Seller Disclosure Schedule is in full force and effect as against such
Transferred Entity or Investment Entity and, to the knowledge of Seller, as
against the other parties thereto, no payments, if any, thereunder are
delinquent, none of the Seller, any Selling Sub or any Transferred Entity or
Investment Entity is in default thereunder, and no notice of default thereunder
has been sent or received by any of the Transferred Entities or Investment
Entities. To the knowledge of Seller, no event has occurred which, with notice
or lapse of time or both, would constitute a default by any of the Transferred
Entities or Investment Entities under any agreement set forth in Section 3.18(d)
of the Seller Disclosure Schedule. To the knowledge of Seller, the other parties
to such agreements are not in breach of their respective obligations thereunder.
True and complete copies of each agreement set forth in Section 3.18(d) of the
Seller Disclosure Schedule have been delivered or made available to Purchaser
prior to the date hereof.
(e) Section 3.18(e) of the Seller Disclosure Schedule sets forth a
complete and accurate list of all agreements and policies of the Selling Subs,
Transferred Entities or Investment Entities in effect on the date hereof
relating to transactions with Affiliates and potential conflicts of interest.
Each agreement or policy set forth in Section 3.18(e) of the Seller Disclosure
Schedule is in full force and effect, and each of the Transferred Entities and
Investment Entities, and, to the knowledge of Seller, the other parties
27
thereto are in compliance with such agreements and policies. True and complete
copies of each agreement or policy set forth in Section 3.18(e) of the Seller
Disclosure Schedule have been delivered or made available to Purchaser prior to
the date hereof.
(f) Section 3.18(f) of the Seller Disclosure Schedule lists all
Contracts, including all obligations to provide goods, services or other
benefits, between (i) Seller, any Selling Sub and/or any of their Subsidiaries
(other than the Transferred Entities or Investment Entities), on the one hand,
and a Transferred Entity or Investment Entity, on the other hand, (ii) any
third-parties, on the one hand, and a Transferred Entity or Investment Entity,
on the other hand, and (iii) Seller, any Selling Sub and/or any of their
Subsidiaries (other than the Transferred Entities or Investment Entities) to
which none of the Transferred Entities or Investment Entities is a party but are
third-party beneficiaries of the Contract (all such Contracts, "Assigned
Contracts"). True and complete copies of each Assigned Contract set forth in
Section 3.18(f) of the Seller Disclosure Schedule have been made available to
Purchaser.
(g) No Transferred Entity or Investment Entity has entered into
any Contract with any Affiliate, except upon terms and conditions that would be
available on an arms-length basis with third parties.
3.19 Insurance. The Transferred Entities are covered by policies of
insurance of the type and in amounts customarily carried by persons conducting
businesses or owning assets similar to those of the Business. All such policies
are in full force and effect, all premiums due thereon have been paid and the
holders of such policies are otherwise in compliance in all material respects
with the terms and provisions of such policies. Furthermore, (a) no holder of
any such policy has received any notice of cancellation or non-renewal of any
such policy or arrangement nor is the termination of any such policies or
arrangements threatened, (b) there is no claim pending under any such policies
or arrangements as to which coverage has been questioned, denied or disputed by
the underwriters of such policies or arrangements, (c) notice from any insurance
carrier that any insurance premiums will be increased in the future or that any
insurance coverage presently provided for will not be available in the future on
substantially the same terms as now in effect has been received, and (d) none of
such policies or arrangements provides for any retrospective premium adjustment,
experienced-based liability or loss sharing arrangement.
3.20 Fund General Partner and Fund Ownership.
(a) Section 3.20(a) of the Seller Disclosure Schedule sets forth a
complete and accurate list of each Investment Entity, the general partner or
managing member of each Investment Entity (each, an "Investment Entity General
Partner") and the name and percentage interest of each Person that maintains an
ownership interest in the Investment Entity General Partner (each, an
"Investment Entity Owner").
(b) True and correct copies of each agreement of limited
partnership (or other organizational documents) of an Investment Entity (each an
"Investment Entity Organizational Document") have been made available to
Purchaser. Each Investment Entity Organizational Document has been duly
authorized, executed and, to the knowledge of Seller, is a valid and legally
binding agreement, enforceable against the parties thereto.
(c) Except as listed in Section 3.20(c) of the Seller Disclosure
Schedule, no partnership interests or other equity interests of any Investment
Entity which have been offered or sold have been registered or qualified, as the
case may be, under the Securities Act or any other applicable Laws and no such
registration or qualification was or is required. All such offers and sales were
made in compliance with all applicable federal, state, and foreign laws.
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(d) Each Investment Entity and each Investment Entity General
Partner is duly organized and validly existing and in good standing under the
Laws of the jurisdiction of its organization and has the requisite corporate
power and authority to own all its properties and assets and to carry on its
business as it is now being conducted.
(e) True and correct copies of each private placement memorandum
or similar offering document used by the Business, the Investment Entity General
Partner and the Investment Entity have been made available to Purchaser. To the
knowledge of Seller, no such document contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, including any statements relating to investor anticipation
of the quality or amount of benefits or Tax Credits contained therein.
(f) Each Investment Entity General Partner identified in Section
3.20(f) of the Seller Disclosure Schedule owns and controls all of the general
partnership or managing member interests of the Investment Entity identified on
such schedule free and clear of any Liens.
(g) No Investment Entity General Partner is in violation of or in
default under its governing documents.
3.21 Entire Business; Sufficiency of Assets. The Transferred
Interests and the services provided to the Business after the Closing pursuant
to the Information Technology and Transition Services Agreement will provide
Purchaser with the entire Business and all of the Tangible Personal Property and
Intangible Property used by Seller (whether owned, leased or held under license
by Seller, by any of Seller's Affiliates or by others) in connection with the
operation of the Business as heretofore conducted by Seller, including, without
limitation, all tangible assets and properties of Seller relating to the
Business reflected in the 2002 Pro Forma Balance Sheet and assets and properties
acquired since December 31, 2002 in the conduct of the Business by Seller, other
than assets and properties disposed of since such date without violation of the
terms and provisions of this Agreement. There are no material facilities,
services, assets or properties shared with any other Person that are used by
Seller in the conduct or operation of the Business other than those used in
connection with providing services included in the Information Technology and
Transition Services Agreement.
3.22 Investment Company Act of 1940. None of the Transferred
Entities or Investment Entities is, or at the Closing Date will be, required to
be registered under the Investment Company Act.
3.23 Bridging and Warehousing. Section 3.23 of the Seller
Disclosure Schedule identifies (a) all existing Bridge Loans, all amounts
outstanding as of April 30, 2003 and the lenders providing such loans, and (b)
all amounts outstanding under the Warehousing Line as of the date hereof and the
properties or investments acquired with such amounts. No Third-Party Investor,
lender, Investment Entity or Transferred Entity is in default or violation of
any term, condition or provision of a Bridge Loan to which it is a party.
3.24 Investment Entity Fees. Except as disclosed in Section 3.24 of
the Seller Disclosure Schedule, (a) all on-going, recurring or periodic amounts
payable by each Investment Entity to its respective general partner or managing
member in the nature of an asset management fee, a GP Distribution (as such term
is defined in any Investment Entity Organizational Documents), any other
priority distribution of cash flow, or any similar payment under any of the
Investment Entity Organizational Documents (all such amounts, collectively,
"Investment Entity Fees") have been paid on a current basis, and (b) neither
Seller nor any Selling Sub is aware of (i) any default which has occurred and is
continuing in the payment of any Investment Entity Fees, (ii) any default that
would prevent the
29
payment of any Investment Entity Fees in the future, or (iii) any assertions by
any Investment Entity, any Governmental Entity, or any other Person that any
Investment Entity Fees have been improperly paid or are not payable as and when
due in the future.
3.25 No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement (including the
Schedules and Exhibits hereto), none of Seller, any Selling Sub nor any
Transferred Entity nor any of their respective agents, Affiliates, officers,
directors, employees, agents, representatives, nor any other Person, makes or
shall be deemed to make any representation or warranty to Purchaser, express or
implied, at law or in equity, on behalf of Seller, the Selling Subs or any
Transferred Entity or any Affiliate of any Transferred Entity.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser and Purchaser Sub jointly and severally represent and warrant
to Seller, the Selling Subs and the Transferred Entities as follows:
4.1 Organization and Qualification; Subsidiaries. Each of
Purchaser and Purchaser Sub is a corporation or other legal entity duly
organized, validly existing and in good standing under the Laws of Delaware, and
has all requisite power and authority to own, operate, lease and encumber its
properties and carry on its business as now being conducted and is qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the conduct of its business requires such qualification,
except where a failure to be so qualified or in good standing or to have such
power or authority, would not have a Material Adverse Effect on Purchaser.
4.2 Authority Relative to This Agreement. Each of Purchaser and
Purchaser Sub has all necessary power and authority, and has taken all action
necessary, to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof subject
only to the matters set forth in Section 4.3. This Agreement has been duly and
validly executed and delivered by Purchaser and Purchaser Sub and, assuming the
due authorization, execution and delivery hereof by Seller and the Selling Subs,
constitutes a valid, legal and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as may be subject to
applicable bankruptcy, insolvency or other similar Laws affecting creditors'
rights generally.
4.3 Consents and Approvals; No Violations. No filing with or
notice to, and no permit, authorization, registration, consent or approval of,
any Governmental Entity is required on the part of Purchaser or Purchaser Sub
for the execution, delivery and performance by Purchaser of this Agreement or
the consummation by Purchaser or Purchaser Sub of the transactions contemplated
hereby, except compliance with the applicable requirements of the HSR Act and
any foreign antitrust, competition or investment laws. Assuming compliance with
the item described in the preceding sentence, neither the execution, delivery
and performance of this Agreement by Purchaser or Purchaser Sub nor the
consummation by Purchaser or Purchaser Sub of the transactions contemplated
hereby will (a) conflict with or result in any breach, violation or infringement
of any provision of the respective articles of incorporation or by-laws (or
similar governing documents) of Purchaser or any of its Subsidiaries, (b) result
in a breach, violation or infringement of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to the creation of any
Lien or any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contract to which
Purchaser or any of its Subsidiaries is a party or by which any of them or any
of its properties or assets
30
may be bound or (c) violate or infringe any Law applicable to Purchaser or any
of its Subsidiaries or any of their respective properties or assets.
4.4 Financing. Purchaser has obtained written commitments from
financial institutions of national reputation with respect to financing.
Purchaser and Purchaser Sub have provided true, accurate and complete copies of
such commitments to Seller, as well as any side letters or other agreements
between Purchaser and any of its Affiliates, on the one hand, and any issuer or
prospective issuer of financing on the other hand. When combined with
Purchaser's cash resources, the amount of such financing is sufficient to pay
the Purchase Price and all associated costs and expenses.
4.5 Broker's Fees. Except for RBC Xxxx Xxxxxxxx Inc., no broker,
finder or investment banker is or will be entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of Purchaser or Purchaser Sub.
Purchaser shall be solely responsible for the fees of RBC Xxxx Xxxxxxxx Inc.
4.6 Acquisition of Transferred Interests for Investment. Each of
Purchaser and Purchaser Sub has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
purchase of the Business. Each of Purchaser and Purchaser Sub confirms that
Seller has made available to each of Purchaser and Purchaser Sub and Purchaser's
and Purchaser Sub's agents the opportunity to ask questions of the officers and
management employees of Seller as well as access to the documents, information
and records of Seller, the Selling Subs and the Transferred Interests and to
acquire additional information about the business and financial condition of
Seller, the Selling Subs, and the Transferred Interests, and Purchaser and
Purchaser Sub each confirms that it has made an independent investigation,
analysis and evaluation of the Business and its properties, assets, business,
financial condition, documents, information and records. Each of Purchaser and
Purchaser Sub is acquiring the Transferred Interests for investment and not with
a view toward or for sale in connection with any distribution thereof, or with
any present intention of distributing or selling the Transferred Interests. Each
of Purchaser and Purchaser Sub agrees that the Transferred Interests may not be
sold, transferred, offered for sale or otherwise disposed of without
registration under the Securities Act, except pursuant to an exemption from such
registration available under such Act, and without compliance with foreign
securities laws, in each case, to the extent applicable.
ARTICLE V
COVENANTS
5.1 Access to Books and Records.
(a) After the date of this Agreement, Seller shall afford to
representatives of Purchaser reasonable access to the Books and Records, IT
Resources and other operations of the Business during normal business hours
consistent with applicable law and in accordance with the reasonable procedures
established by Seller. Until the Closing, any information provided to Purchaser
or its respective representatives in accordance with this Section 5.1 or
otherwise pursuant to this Agreement shall be held by Purchaser and its
respective representatives in accordance with, shall be considered "Evaluation
Material" under, and shall be subject to the terms of, the Confidentiality
Agreement.
(b) Except as otherwise provided in Section 7.10, Purchaser agrees
to afford Seller and its representatives, during normal business hours,
consistent with applicable Law and in accordance with the reasonable procedures
established by Purchaser upon reasonable notice, reasonable access at and after
the Closing Date to the Books and Records of each Transferred Entity and each
Investment Entity to the extent that such access may be reasonably requested by
Seller. Any information provided pursuant to this
31
Section 5.1(b) or otherwise pursuant to this Agreement shall be held by Seller,
each Selling Sub and their respective representatives in confidence in
accordance with the terms of the Confidentiality Agreement; provided, however,
that nothing herein shall limit any of Seller's rights of discovery. Except as
otherwise provided in Section 7.10, each of Purchaser and Purchaser Sub agrees
to hold all the Books and Records of the Business existing on the Closing Date
and not to destroy or dispose of any thereof for a period of (i) the greater of
ten years or the one year anniversary of the date on which Seller has no further
obligations with respect to the Guarantees in the case of any Books and Records
pertaining to the Guarantees, and (ii) for a period of seven years in all other
cases, from the Closing Date or such longer time as may be required by Law.
(c) The provisions of the Confidentiality Agreement shall remain
binding and in full force and effect until the Closing. The information
contained herein, in the Seller Disclosure Schedule or delivered to Purchaser,
Seller or their authorized representatives pursuant hereto shall be subject to
the Confidentiality Agreement until the Closing and, for that purpose and to
that extent, the terms of the Confidentiality Agreement are incorporated herein
by reference. All obligations of Purchaser and Seller under the Confidentiality
Agreement shall terminate simultaneously with the Closing. Except as otherwise
provided herein, Seller and Purchaser shall, and shall cause each Transferred
Entity and Investment Entity and their consultants, advisors and representatives
to, treat after the date hereof as strictly confidential (unless compelled to
disclose by judicial or administrative process or, in the opinion of legal
counsel, by other requirements of law) the terms of this Agreement and all
nonpublic, confidential or proprietary information concerning each Transferred
Entity and Investment Entity, and Seller and Purchaser shall not, and shall
cause each Transferred Entity and Investment Entity and their consultants,
advisors and representatives not to use such information to the detriment of any
Transferred Entity or Investment Entity or to Seller or Purchaser, as the case
may be.
5.2 Efforts.
(a) Each of the parties agrees to use its commercially reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated hereby and to
cooperate with the other in connection with the foregoing, including using its
commercially reasonable best efforts (i) to obtain all consents, approvals,
orders, licenses, permits, qualifications, exemptions, waivers and
authorizations that are required to be obtained under any federal, state, local
or foreign law or regulation or by any Self-Regulatory Organization and to
prepare and file all forms, registrations and notices required to be filed to
consummate the transactions contemplated hereby, (ii) to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties hereto to consummate the transactions contemplated hereby, (iii)
to effect as promptly as practicable all necessary registrations, filings and
responses to requests for additional information or documentary material from a
Governmental Entity, if any, and (iv) to fulfill all conditions to this
Agreement.
(b) Each of the parties shall promptly (i) furnish to the other
such necessary information and reasonable assistance as the other party may
request in connection with the foregoing, (ii) inform the other of any
communication from any Governmental Entity regarding any of the transactions
contemplated hereby, and (iii) if such party or any of its Subsidiaries receive
a request for additional information or documentary material from any such
Governmental Entity with respect to any of the transactions contemplated hereby,
to endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other parties, an appropriate
response in compliance with such request and (iv) provide counsel for the other
party with copies of all filings made by such party, and all correspondence
between such party (and its advisors) with any Governmental Entity and any other
information supplied by such party and such party's Subsidiaries to a
Governmental Entity or received from such a Governmental Entity in connection
with the transactions contemplated hereby;
32
provided, however, that materials may be redacted (A) to remove references
concerning the valuation of the Business and (B) as necessary to comply with
contractual arrangements. Each party shall, subject to applicable law, permit
counsel for the other party to review in advance, and consider in good faith the
views of the other party in connection with, any proposed written communication
to any Governmental Entity in connection with the transactions contemplated
hereby. The parties agree not to participate, or to permit their Subsidiaries to
participate, in any substantive meeting or discussion, either in person or by
telephone, with any Governmental Entity in connection with the transactions
contemplated hereby unless it consults with the other party in advance and, to
the extent not prohibited by such Governmental Entity, gives the other party the
opportunity to attend and participate.
(c) Notwithstanding any of the foregoing, except as provided in
Section 5.14, Seller shall not be required to make, or cause any Selling Sub to
make, a cash payment to, or a capital investment in, any Project Partnership if
such investment is required by a Government Entity as a condition to such
Government Entity granting the necessary consent, approval or authorization
required to consummate any of the transactions contemplated herein.
(d) Seller shall, and shall cause each Selling Sub to, take all
action reasonably requested by Purchaser, including the preparation for delivery
at the closing of all notes, financing documents, mortgages, loan agreements,
pledges, filing statements contemplated by the Uniform Commercial Code,
reconciliations of Tax and financial information to U.S. GAAP and officer's
certificates as Purchaser may request for the purpose of consummating
Purchaser's financing of the transactions contemplated by this Agreement. Seller
shall, and shall cause each Selling Sub to, take action reasonably requested by
Purchaser to deliver on or before the Closing Date to Purchaser documents
reasonably requested by bona fide financial institutions in connection with
financing the acquisition by Purchaser of the Business.
5.3 Further Assurances. Seller, the Selling Subs and Purchaser
agree that, from time to time, whether before, at or after the Closing Date,
each of them will execute and deliver such further instruments of conveyance and
transfer and take such other action as may be necessary to carry out the
purposes and intents of this Agreement, including (i) taking all such actions as
are required by Purchaser to reaffirm the Guarantees to their beneficiaries and
(ii) assigning to Purchaser all rights to use the name "Boston Financial" or any
names similar to or derived from that name.
5.4 Conduct of Business. From the date of this Agreement through
the Closing, except as otherwise contemplated by this Agreement, required by
Law, or disclosed in Section 5.4 of the Seller Disclosure Schedule, after the
date hereof and prior to the Closing, without Purchaser's consent (which shall
not be unreasonably withheld or delayed), Seller and the Selling Subs shall
cause each of the Transferred Entities and the Investment Entities to:
(a) act and conduct their respective businesses in the ordinary
course of business consistent with past practices (which shall permit the
introduction and expansion of new products and services contemplated by current
plans that have been disclosed to Purchaser as of the date of this Agreement),
including, without limitation, continuing to solicit, in the ordinary course of
business consistent with past practices, Tax Credit and Historic Credit
transactions and investors in Funds using the standards and terms consistent
with past practice;
(b) use commercially reasonable best efforts to preserve intact
their respective business organizations, assets, properties and goodwill, keep
available the services of their respective present senior officers and key
employees, and preserve the goodwill and business relationships with customers,
strategic partners and others having business relationships with them;
33
(c) not (i) amend or propose to amend their respective
certificates of incorporation or by-laws or equivalent organizational documents,
(ii) split, combine or reclassify their outstanding capital stock, (iii)
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, or (iv) repurchase, redeem or otherwise acquire any
shares of the capital stock or other equity interests of any Transferred Entity;
(d) not issue, deliver, sell, pledge or dispose of, or agree to
issue, deliver, sell, pledge or dispose of, any additional shares of, or any
options, warrants or rights of any kind to acquire any shares of their capital
stock of any class or any debt or equity securities which are convertible into
or exchangeable for such capital stock, except that transactions among the
Transferred Entities or Investment Entities in the ordinary course shall be
permitted;
(e) as to all of the following, except for transactions in the
ordinary course of business consistent with past practices, loans disclosed in
Section 3.23 of the Seller Disclosure Schedule and the amounts available under
the Warehousing Line (subject to the limitations set forth herein), not (i)
incur or become contingently liable with respect to any indebtedness for
borrowed money in excess of $150,000 in the aggregate other than (A) borrowings
in the ordinary course of business and (B) indebtedness to Seller or any Selling
Sub in respect of intercompany services and allocations consistent with past
practice, (ii) make any acquisition of any material assets or businesses (iii)
sell, pledge, dispose of or encumber any material assets other than sales or
dispositions of businesses or assets (A) in the ordinary course of business
consistent with past practice or (B) already contracted by Seller, any Selling
Sub, any Transferred Entity, any Investment Entity or as may be required by
applicable law, (iv) issue, sell or amend any debt securities or other rights to
acquire any debt securities of the Transferred Entities or Investment Entities,
guarantee any debt securities of another Person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another Person
or enter into any arrangement having the economic effect of any of the
foregoing, (v) make any loans, advances or capital contributions to, or
investment in, any person other than the Transferred Entities or Investment
Entities, or (vi) enter into any binding contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(f) not enter into or amend any employment, severance, special pay
arrangement or other similar arrangements or agreements with any directors,
officers or key employees, so as to increase or accelerate benefits, except
pursuant to (i) applicable Law, or (ii) contractual arrangements or policies in
effect as of the date hereof;
(g) not increase the cash compensation of any senior officer or
key employee, except pursuant to contractual or incentive compensation
arrangements in effect as of the date hereof or as required by applicable Law;
(h) not adopt, enter into, or amend to increase benefits or
obligations of, any Benefit Plan, except (i) as required pursuant to contractual
arrangements in effect as of the date hereof or as required or permitted under
this Agreement, or (ii) as required by applicable Law;
(i) except to the extent expressly contemplated by this Agreement,
not enter into an agreement with respect to any merger, consolidation,
liquidation or business combination, or any acquisition or disposition of all or
substantially all of the assets or securities of any Transferred Entity or
Investment Entity;
(j) not make any capital expenditures or other expenditures in
excess of $250,000 in the aggregate with respect to property, plant or equipment
(including IT Resources);
34
(k) not make any changes in financial accounting methods,
principles or practices, except insofar as may have been required by a change in
U.S. GAAP or, except as so required, change any method of calculating any bad
debt, contingency or other reserve;
(l) not knowingly modify, amend or terminate in any adverse manner
any contract or agreement involving payments to or from any Transferred Entity
in excess of $100,000 in any twelve-month period, or knowingly waive, release or
assign any material rights or claims in an adverse manner (including any
write-off or other adverse compromise of any material accounts receivable of the
Transferred Entities or Investment Entities);
(m) accrue and collect asset management fees from the Funds in the
ordinary course of the operation of the Business consistent with past practice
and without violation of the terms and provisions of the organizational
documents of any Investment Entity; provided, that, Seller shall only be
permitted to receive asset management fees in excess of $5,500,000 during the
six-month period ending June 30, 2003 up to the lesser of $1,000,000 or the
amount by which syndication revenues of Seller with respect to the Business are
less than $10,000,000 for such period; and provided, further, that the maximum
amount of asset management fees expected to be earned in the ordinary course
during the six-month period ending December 31, 2003 shall be equal to
$6,500,000, and in the event of any lesser period during that timeframe, such
maximum amount to be pro rated for the number of days elapsed in the period from
July 1, 2003 through December 31, 2003 (assuming 180 days in the period);
(n) not collect any contingent or other fees, except in the
ordinary course of business consistent with past practice; and
(o) extend any credit under the Warehousing Line only on terms and
to counterparties consistent with past practice.
Notwithstanding any of the foregoing, nothing in this Section 5.4 shall
prohibit Seller and the Selling Subs from causing each of the Transferred
Entities and the Investment Entities to take any action which, if not taken,
would violate a fiduciary duty owed by the Transferred Entities and the
Investment Entities in their capacity as general partner to any of the Funds.
5.5 Preservation of Business. Subject to the terms and conditions
of this Agreement, Seller and the Selling Subs shall, and shall cause each
Transferred Entity and each Investment Entity to, use reasonable best efforts to
preserve the Business intact, to preserve the goodwill of clients, customers,
employees and others having business relations with such Transferred Entity or
Investment Entity in all material respects. In furtherance and not in limitation
of the foregoing, Seller and the Selling Subs shall, and shall cause such
Transferred Entity or Investment Entity to, use their reasonable best efforts to
obtain any Required Third Party Consents, in accordance with the plan agreed
upon by Purchaser and Seller.
5.6 Public Announcements. Except as otherwise required by law,
each of Seller and Purchaser will consult with the other and obtain the consent
of the other (which consent shall not be unreasonably withheld) before issuing
any press releases or any public statements with respect to this Agreement and
the transactions contemplated hereby. At all times each party to this Agreement
shall obtain the prior written consent of the other parties to this Agreement
prior to issuing, or permitting any of their agents to issue, any press release
or make any other public disclosure or announcement or otherwise make any
disclosure to any third Person concerning the transactions contemplated by this
Agreement, the terms and conditions hereof or the transactions contemplated
hereby; provided, however, that no party shall be prohibited from (a) supplying
any such information to any of their representatives, attorneys, advisors,
financing sources and others to the extent necessary to complete the
transactions so long as such representatives, attorneys, advisors, financing
sources and others are made aware of and
35
agree to be bound by the terms of this Section 5.6, (b) furnishing any such
information to any authority pursuant to or as required by any applicable Law,
consent or as otherwise required by any such authority, (c) disclosing any such
information as necessary to comply with applicable stock exchange or Securities
and Exchange Commission disclosure obligations, or (d) disclosing any
information which becomes generally available to the public other than as a
result of a disclosure, directly or indirectly, by the party disclosing such
information. Should any disclosure be required to be made pursuant to clause (b)
or (c) above, then to the extent practicable the party required to make such
disclosure shall consult with the other parties hereto prior to making such
release or disclosure. The foregoing notwithstanding, the parties hereto agree
and acknowledge that a joint press release shall be issued upon the execution of
this Agreement which shall be mutually acceptable to all parties hereto, and
that the parties shall cooperate in good faith to communicate information about
the transactions contemplated by this Agreement to the clients and other
business partners of the Business in order to preserve those relationships.
5.7 D&O Indemnification; Insurance. (a) Purchaser agrees that from
the Closing and for a period of six (6) years thereafter, Purchaser shall assume
all of Seller's and/or its Subsidiaries' duties and obligations of
indemnification or exculpation existing as of the Closing Date in favor of
employees, agents, directors, officers, partners, managing members or members of
such Transferred Entity arising by virtue of such Transferred Entity's or any of
its Subsidiaries' certificate of incorporation or by-laws in the form in effect
at the date of this Agreement or arising by operation of law or arising by
virtue of any contract, resolution or other agreement or document (including any
partnership or limited liability company agreement) existing at the date of this
Agreement, and such duties and obligations shall continue in full force and
effect and be honored by Purchaser (and Purchaser shall cause such Transferred
Entity to honor them) for so long as they would (but for the transactions
hereby) otherwise survive and continue in full force and effect.
(b) From and after the Closing, Purchaser shall cause each
Transferred Entity and Investment Entity to indemnify, hold harmless and defend
each Person who is a current or former officer, director, partner, managing
member or member of any Transferred Entity (each a "D&O Indemnified Party" and
collectively, the "D&O Indemnified Parties") against all Losses or expenses
arising out of or pertaining to acts or omissions (or alleged acts or omissions)
by them in their capacities as such or as officers, directors, or partners of
entities relating to the Transferred Entities which acts or omissions occurred
at or prior to the Closing. To the maximum extent permitted by applicable Law,
the indemnification and related rights hereunder shall be mandatory rather than
permissive, and Purchaser shall promptly advance expenses in connection with
such indemnification to the fullest extent permitted under applicable Laws,
provided, that, to the extent required by Law, the person to whom expenses are
advanced provides an undertaking to repay such advance if it is ultimately
determined that such person is not entitled to indemnification.
(c) Purchaser and each Transferred Entity acknowledge that, on and
after the Closing, Purchaser or its Subsidiaries intend to maintain directors'
and officers' liability insurance policies with a financially sound carrier or
carriers with terms, conditions, limits and deductions (or retentions) at least
as favorable as carried as of the date of this Agreement for directors,
officers, partners, members and managing members of such Transferred Entity, its
Subsidiaries and the Investment Entities for all claims arising from wrongful
acts prior to the Closing, and Purchaser and such Transferred Entity agree that,
for a period of six (6) years following the Closing, neither Purchaser nor such
Transferred Entity shall take any affirmative action that causes the termination
or cancellation of such insurance coverage unless Purchaser or such Transferred
Entity shall replace such insurance coverage with no less favorable insurance
coverage; provided, however, that Purchaser and such Transferred Entity
considered in the aggregate shall in no event be required to expend pursuant to
this Section 5.7(c) an amount per year in excess of 300% of the current premiums
paid by such Transferred Entity and Investment Entities (such premiums having
previously been disclosed), considered in the aggregate, for such insurance.
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(d) From and after the Closing, Seller shall control the defense
of any action indemnifiable pursuant to this Section 5.7 with counsel selected
by Seller, which counsel shall be reasonably acceptable to the D&O Indemnified
Party; provided, however, that the D&O Indemnified Party shall, at such party's
expense, be permitted to participate in such defense with counsel selected by
the D&O Indemnified Party, which counsel shall be reasonably acceptable to
Seller. Notwithstanding the foregoing, if there is any conflict of interest
between Purchaser and any D&O Indemnified Party or there are additional material
defenses available to any D&O Indemnified Party, such D&O Indemnified Party
shall be permitted to participate in the defense of such action with counsel
selected by such D&O Indemnified Party, which counsel shall be reasonably
acceptable to Purchaser, and Purchaser shall pay the reasonable fees and
expenses of such counsel, as accrued and in advance of the final disposition of
such action to the fullest extent permitted by Law; provided, however, that,
notwithstanding any other provision of this Section 5.7(d), Seller shall not be
obligated to pay fees and expenses of more than one such counsel (plus local
counsel) for all D&O Indemnified Parties in any single action.
5.8 Intercompany Accounts. On or prior to the Closing Date, all
intercompany accounts between Seller, any Selling Sub and/or any of their
Subsidiaries (other than any Transferred Entity), on the one hand, and each
Transferred Entity, on the other hand, shall be settled, except for those
accounts listed in Section 5.8 of the Seller Disclosure Schedule. The accounts
shall be settled as follows: (a) to the extent that the Transferred Entity is
indebted to Seller or any Selling Sub and/or any of their Subsidiaries (other
than any Transferred Entity), such debt shall be canceled and the amount of the
debt so canceled shall be deemed a capital contribution by Seller or the Selling
Sub and/or any of their Subsidiaries (other than any Transferred Entity), as
applicable, to the Transferred Entity, and (b) to the extent that Seller, any
Selling Sub and/or any of their Subsidiaries (other than any Transferred Entity)
is indebted to the Transferred Entity, such debt shall be canceled, and the
amount of the debt so canceled shall be deemed a dividend from the Transferred
Entity to Seller, the Selling Sub or their Subsidiary (other than any
Transferred Entity), as applicable. Intercompany accounts between and among the
Transferred Entities shall not be affected by this provision.
5.9 Termination of Intercompany Agreements. Effective at the
Closing, all Contracts, including all obligations to provide goods, services or
other benefits, between Seller, any Selling Sub and/or any of their Subsidiaries
(other than a Transferred Entity), on the one hand, and any Transferred Entity,
on the other hand, shall be terminated, except for this Agreement, the
agreements set forth in Section 5.9 of the Seller Disclosure Schedule and the
Intangible Property.
5.10 Guarantees; Commitments.
(a) After the Closing, Seller, the Selling Subs and their
Affiliates (other than the Transferred Entities) shall continue to provide each
guarantee, indemnity, letter of credit, letter of comfort and other obligations
listed in Section 5.10(a) of the Seller Disclosure Schedule (collectively, the
"Guarantees"). Purchaser and the Transferred Entities, jointly and severally,
shall forever indemnify and hold harmless Seller, the Selling Subs and any of
their Affiliates (other than the Transferred Entities) against any Losses that
Seller, any Selling Sub or any of their Affiliates (other than the Transferred
Entities) suffers, incurs or is liable for by reason of or arising out of or in
consequence of: (i) Seller, any Selling Sub or any of their Affiliates (other
than the Transferred Entities) issuing, making payment under, or being a party
to, any Guarantee; (ii) any claim or demand for payment made on Seller, any
Selling Sub or any of their Affiliates (other than the Transferred Entities)
under any of the Guarantees; or (iii) any action, claim or proceeding by any
person who is or claims to be entitled to the benefit of any Guarantees, in the
case of clauses (i)-(iii), to the extent the events giving rise to the claim
under the Guarantee occurred after the Closing. In consideration of the
provision of the Guarantees, Seller, any Selling Sub or any of their Affiliates
(other than the Transferred Entities) shall pay to Purchaser all premiums paid
on the Guarantees that have not been accreted into income, consistent with past
practice, as of the Closing Date in
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accordance with the table included in Section 5.10(a) of the Seller Disclosure
Schedule. If Seller pays any amounts it is required to pay under any Guarantee
pursuant to this Section and is not repaid by Purchaser within 20 Business Days
of notice thereof pursuant to the indemnification contained in this Section,
Purchaser shall be entitled to take any actions necessary to protect its
interests and to minimize any future payments pursuant to this Section. Seller
shall promptly provide to Purchaser all reports which Seller or its Affiliates
are provided to investors and guarantors with respect to any Guarantees in
respect of Investment Entities or Project Partnership.
(b) Seller, the Selling Subs, and any of their Affiliates agree to
take all such actions (such as communications with customers) as are reasonably
requested by Purchaser to reaffirm the Guarantees to their beneficiaries;
provided, that this is not intended to in any way expand the nature or scope of
any guarantee provided by Seller or Affiliates beyond that set forth in this
Section 5.10.
(c) Purchaser shall use its commercially reasonable best efforts
to cause itself or the Transferred Entities to be substituted in all respects
for Seller, any Selling Sub and any of their Affiliates (other than the
Transferred Entities), effective as of the Closing, in respect of all
obligations of Seller, any Selling Sub and any of their Affiliates (other than
the Transferred Entities) under each of the guarantees, indemnities, letters of
credit, letters of comfort, commitments, understandings, agreements and other
obligations listed in Section 5.10(c) of the Seller Disclosure Schedule
(collectively, the "Substituted Guarantees").
(d) If Purchaser is unable to effect such a substitution with
respect to any of the Substituted Guarantees effective as of Closing (each a
"Non-Substituted Guarantee"): (i) Purchaser must continue to use its
commercially reasonable best efforts to effect such a substitution of each
Non-Substituted Guarantee as soon as practicable after Closing; (ii) Purchaser
hereby indemnifies Seller, any Selling Sub and any of their Affiliates (other
than the Transferred Entities) against any Losses that Seller, any Selling Sub
or any of their Affiliates (other than the Transferred Entities) suffers, incurs
or is liable for by reason of or arising out of or in consequence of: (A)
Seller, any Selling Sub or any of their Affiliates (other than the Transferred
Entities) issuing, making payment under, or being a party to, any
Non-Substituted Guarantee; or (B) any claim for payment made on Seller, any
Selling Sub or any of their Affiliates (other than the Transferred Entities)
under a Non-Substituted Guarantee, in the case of clauses (A) and (B), to the
extent the events giving rise to the claim under the Non-Substituted Guarantee
occurred after Closing; and (iii) Purchaser may, at its option obtain letters of
credit, on terms and from financial institutions reasonably satisfactory to
Seller, with respect to the obligations covered by each of the Non-Substituted
Guarantee and, as and from the date of the delivery of such a letter of credit
to the Seller in relation to a Non-Substituted Guarantee, the indemnity in
clause 5.10(d)(ii) will cease to apply in relation to that Non-Substituted
Guarantee.
5.11 Use of Names, etc.
(a) Within 90 days after the Closing Date, Purchaser shall use
commercially reasonable efforts to cause the applicable Transferred Entities and
Investment Entities to file charter amendments effective within two Business
Days after such date of filing changing the names of the Transferred Entities
and Investment Entities to names that do not include the words "Lend Lease," or
the acronym "LLREI," or any name confusingly or misleadingly similar thereto;
provided, that Purchaser shall not be required to make any payment in respect of
such actions other than filing fees and expenses. Seller hereby consents to the
use of and licenses to Purchaser and its Affiliates the right to continue to use
any name which includes the words "Lend Lease," or the acronym "LLREI" for any
Transferred Entity or Investment Entity for which consent from a third party for
any name change is required and for which Purchaser is not able to obtain such
consent after using commercially reasonable efforts to do so; provided that
Purchaser shall continue to use its commercially reasonable efforts to obtain
such name
38
change, and shall take commercially reasonable efforts to protect Lend Lease and
its reputation from any harm relating to the continued use of such name.
(b) From and after the Closing, each of Seller and the Selling
Subs agrees not to use the name "Boston Financial" or any name similar to it in
any form whatsoever, including, but not limited to advertising and promotional
materials.
5.12 Obligations with Respect to Certain Entities. Purchaser agrees
that, from and after the Closing, Purchaser shall maintain for no additional
consideration the corporate Books and Records and file the Tax Returns and other
Tax filings of each Person listed in Section 5.12 of the Seller Disclosure
Schedule and provide such other services to such Persons to the extent currently
being provided by Seller, for as long as Purchaser, any of its Affiliates or any
of the Transferred Entities are providing asset management services with respect
to the Fund of which such Person is a general partner.
5.13 Tax Covenants.
(a) Between the date hereof and the Closing Date, to the extent
Seller, any Selling Sub or any director or officer of any of the Transferred
Entities has knowledge of the commencement or scheduling of any material Tax
audit, the assessment of any material Tax, the issuance of any notice of
material Tax due or any xxxx for collection of any material Tax due or the
commencement or scheduling of any other material administrative or judicial
proceeding with respect to the determination, assessment or collection of any
material Tax of a Transferred Entity, Seller or any director or officer of any
of such Transferred Entities shall provide prompt notice to Purchaser of such
matter, setting forth information (to the extent known) describing any asserted
Tax liability in reasonable detail and including copies of any notice or other
documentation received from the applicable Tax authority with respect to such
matter.
(b) Seller shall not, and shall cause the Transferred Entities not
to, take any of the following actions with respect to the Transferred Entities
without Purchaser's consent (which consent shall not be unreasonably withheld,
conditioned, or delayed):
(i) make, revoke or amend any Tax election;
(ii) amend any Tax Return;
(iii) execute any waiver of restrictions on assessment or
collection of any Tax;
(iv) make a change in accounting method;
(v) enter into or amend any agreement or settlement with
any Tax authority;
(vi) request or receive any tax opinion from a law firm or
accounting firm with respect to the Business; or
(vii) take any action similar to the foregoing.
5.14 Collection of Business Receivables and Developer
Loans.
(a) From and after the Closing Date until the date that is 12
months thereafter, Purchaser shall have the sole right and authority to collect,
and Seller, the Selling Subs and their Subsidiaries shall not, and shall cause
each of its Affiliates not to, directly or indirectly, interfere with or affect
Purchaser's efforts to collect the Business Receivables and Developer Loans.
39
(b) During such 12-month period, Purchaser shall use its
commercially reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things reasonably necessary, proper, or
advisable to consummate and make effective as promptly as practicable the
collection of the Business Receivables and the Developer Loans; provided,
however, that any amounts received by Purchaser from any Person who is the
obligor on any uncollected Business Receivable shall be first applied to reduce
the Business Receivables and shall be remitted to Seller as provided for in
Section 5.14(c) unless Purchaser is notified by the obligor that such accounts
are to be applied in some other manner. Purchaser shall treat all obligations of
any obligor as if they were owed to Purchaser and shall not encourage obligors
to direct payment to obligations of Purchaser instead of to the Business
Receivables.
(c) Purchaser shall provide to Seller on or before the seventh
Business Day of each month a reasonably detailed summary of all payments
received during the preceding month. Remittances to Seller from Purchaser
pursuant to this Section 5.14(c) shall be made monthly on the seventh Business
Day by wire transfer of immediately available funds to an account specified by
the Seller.
(d) Not less than ten Business Days prior to the first anniversary
of the Closing Date, Purchaser may elect to purchase all but not less than all
of the Business Receivables that remain uncollected as of such date (the
"Uncollected Business Receivables") for the aggregate, par value, dollar amount
that remains uncollected in respect of the Uncollected Business Receivables (the
"Receivables Buyout Price"). If Purchaser does elect to purchase the Uncollected
Business Receivables, it shall promptly pay the Receivables Buyout Price to
Seller no later than two (2) Business Days after the anniversary of the Closing
Date, by wire transfer of immediately available funds to the accounts specified
by Seller. If Purchaser does not so elect to purchase, Seller shall retain all
rights with respect to the Uncollected Business Receivables, which rights and
receivables may be transferred at Seller's sole discretion.
(e) Not less than ten Business Days prior to the first anniversary
of the Closing Date, Purchaser may elect to purchase all but not less than all
of the Developer Loans that remain uncollected as of such date (the "Uncollected
Developer Loans") for the aggregate dollar amount that remains uncollected in
respect of the Uncollected Developer Loans at par value plus any accrued but
unpaid interest (the "Developer Loan Buyout Price"). If Purchaser does elect to
purchase all of the Uncollected Developer Loans, it shall promptly pay the
Developer Loan Buyout Price to the Seller no later than two Business Days after
the anniversary of the Closing Date, by wire transfer of immediately available
funds to an account specified by Seller. If purchaser does not so elect to
purchase, Seller shall retain all rights with respect to Uncollected Developer
Loans which rights and loan receivables may be transferred at Seller's sole
discretion.
5.15 Funds Pending Capitalization. Without the prior written
consent of Purchaser, such consent not to be unreasonably withheld, each Fund
that has not yet been formally created shall not contain in its charter
documents any provisions that would (i) require the consent of the limited
partners to approve a change of control of the general partner, or (ii) require
a removal of the general partner thereof without cause.
5.16 Transferred Entity Restructuring.
(a) Prior to Closing Date, Seller shall use commercially
reasonable efforts reasonably requested by Purchaser to assist Purchaser in its
efforts to acquire all of the outstanding equity interests of BFG Investments,
LLC not owned by Seller or any Selling Sub and the General Partner interest in
BF California LP. All out-of-pocket costs associated with the acquisition of
such interests shall be the sole responsibility of Purchaser.
40
(b) Prior to the Closing Date, Seller or its Affiliates shall
cause the following entities to be dissolved and final Tax Returns to be filed
(if such returns have not already been filed): XX Xxxxxxx LP, BF Colorado LP, BF
Texas LP, BFTG San Xxxxxx, Inc., BFTG New Orchard, Inc., BFTG Fund Associates,
Inc., Boston Financial Greater New York, LP, West Cedar Greater New York, LLC,
and Boston Financial GP-I, LLC.
(c) Prior to the Closing Date, Seller shall use commercially
reasonable efforts to carry out such other entity reorganization steps as may be
reasonably requested by Purchaser to enable Purchaser to acquire the Business in
a tax-efficient manner; it being understood that any costs or expenses
associated with such steps shall be borne by Purchaser, and that Seller shall
not be required to assist in any reorganization steps that (a) require Seller to
expend any funds, (b) have the effect of creating or increasing any potential
liability of Seller or its Affiliates or (c) Seller opposes on the basis of a
good faith business reason.
5.17 Bridge Loans and Warehousing Line. Seller shall not amend the
terms of or cease to extend credit with respect to any Bridge Loans or amounts
of credit outstanding under the Warehousing Line as of the Closing Date, in each
case until the earlier of (i) the 185th day following the Closing Date and (ii)
such time that such Bridge Loans or such amounts outstanding under the
Warehousing Line, as the case may be, are repaid in accordance with their terms.
Seller shall fund in accordance with past practice and the applicable contracts
any additional amounts needed by Project Partnerships that have, as of the date
hereof or the Closing Date, amounts funded under the Warehousing Line until the
185th day following the Closing Date. Notwithstanding the foregoing sentences,
Seller shall not be obligated to fund any additional amounts pursuant to this
Section 5.17 or otherwise that would cause the aggregate amount outstanding
under the Bridge Loans and the Warehousing Line to exceed the Credit Amount. In
the event any additional amounts are needed by Project Partnerships that would
cause the aggregate amount outstanding under the Bridge Loans and the
Warehousing Line to exceed the Credit Amount at any time prior to the 185th day
following the Closing Date, Purchaser shall have the right to purchase any
Warehouse Asset from Seller at face value. Purchaser shall repay all amounts
outstanding including interest thereon at LIBOR plus 50 basis points under the
Bridge Loans and Warehousing Line on the 185th day following the Closing Date,
provided that if Purchaser fails to repay any amounts on or prior to such 185th
day following the Closing Date with respect to the Bridge Loans and the
Warehousing Line, Purchaser shall be in default hereunder and Seller shall be
entitled to collect such amounts immediately and Purchaser shall pay all costs
of Seller involved in collecting any such amounts from Purchaser or any other
party and provided further that any such unpaid amounts shall accrue interest at
LIBOR plus 500 basis points until collected. Purchaser shall acquire all
outstanding equity interests in TCALP, free and clear of all Liens, from
Purchaser on 185th day following the Closing Date for an aggregate purchase
price of $10. Prior to the repayment of the Bridge Loan and Warehousing Line,
Purchaser shall not take any steps to hold out the Warehouse Assets as their own
or perfect a security interest in or assist any third party in perfecting a
security interest in any Warehouse Asset. Except as contemplated hereby, all
payments or transfers pursuant to this Section 5.17 shall be made free and clear
of, and without reduction for or on account of, any charges, fees, levies,
deductions or set-offs of any nature or kind.
5.18 Financial Statements. Seller shall take all actions reasonably
requested by Purchaser or its representatives to assist Purchaser in engaging
Seller's auditors to prepare any financial statements of the Business that
Purchaser reasonably believes are required or prudent to prepare in order for
Parent to satisfy the requirements of the Securities and Exchange Act of 1934
with respect to the transactions contemplated by this Agreement. Seller, its
Affiliates and its representatives, officers, directors, and employees shall
cooperate fully to assist such auditors in preparing the financial statements,
which assistance shall include, but shall not be limited to, the preparation and
delivery of a management representation letter and other ancillary documents
customarily accompanying audited financial statements. All costs incurred by the
auditors to prepare such financial statements shall be paid by
41
Purchaser, subject to Purchaser's right to reimbursement by Seller for 50% of
such costs, which reimbursement obligation shall not exceed a maximum amount of
$200,000 per fiscal year of financial statements audited and a total maximum
contribution amount of $400,000 in the aggregate.
5.19 HUD Approval Process.
(a) Except as disclosed in Section 5.19(a) of the Seller
Disclosure Schedule, none of the Transferred Entities are or directly own an
equity interest in a HUD TPA Entity.
(b) Other than as set forth in Section 5.19(b), each HUD TPA
Entity as of the date hereof: (a) has all necessary consents and approvals of
HUD to act as a general partner of each partnership which is an owner of a
property with HUD Financing; (b) with respect to each property with HUD
Financing, HUD has not received any current physical inspection reviews with a
REAC score of less than 60, or any management review that is graded as less than
"Satisfactory"; (c) has no "flags" or limited denials of participation,
suspensions or debarments currently in effect under the HUD 2530 Previous
Participation Clearance Procedures or any other applicable HUD regulations;(d)
has not been notified by HUD of any matters currently pending before the HUD
Departmental Enforcement Center; (e) has not received any notice from HUD with
respect to any audited financial statement for any year prior to 2003; and (f)
has filed all annual audited financial statements in the timeframe required by
HUD for the calendar year 2002 and prior years.
(c) Seller shall provide to Purchaser all documents and materials
reasonably requested by Purchaser in support of the TPA applications required to
obtain TPA Approval for the transfer of interests in the HUD TPA Entities.
Seller shall assist and cooperate with Purchaser in the preparation of the TPA
applications and, upon the request of Purchaser, shall execute the TPA
applications, any affidavit of consideration required for the TPA applications
and any other documents requested by Purchaser or HUD in connection with
obtaining TPA Approval.
(d) Section 5.19(d) of the Seller Disclosure Schedule sets forth
the name of each Fund or Transferred Entity which owns an equity interest in a
Project Partnership which is the subject of HUD Financing, along with the name
of such Project Partnership and the type of HUD Financing ("2530 Entities").
(e) Seller shall provide to Purchaser all documents and materials
reasonably requested by Purchaser to obtain HUD's Previous Participation
Clearance and approval for the 2530 Entities. Seller shall assist and cooperate
with Purchaser in preparation of the Form 2530's.
5.20 Approval of Transaction; No Solicitation of Competing
Transaction.
(a) Seller will advise Purchaser of any communications between
Seller and the Australian Stock Exchange (the "ASX") with respect to any
requirement that the transactions contemplated by this Agreement be submitted to
Seller's stockholders for approval (the "Seller Stockholder Approval"), and
promptly shall provide to Purchaser copies of any written correspondence. If
Seller is notified by the ASX that Seller Stockholder Approval is required,
Seller shall promptly take all lawful action to convene and hold a general
meeting of the stockholders of Seller as soon as practicable, but in no event
later than 50 Business Days after the date of such notification (the "Seller
Stockholders Meeting"), and shall take all lawful action to solicit Seller
Stockholder Approval. Seller's board of directors shall recommend the approval
of this Agreement by Seller's stockholders and, subject to Section 5.20(c),
shall not (i) withdraw, modify or qualify (or propose to withdraw, modify or
qualify) in any manner adverse to Purchaser such recommendation or (ii) take any
action or make any statement in connection with the Seller Stockholders Meeting
inconsistent with such recommendation (collectively, a "Change in the Seller
42
Recommendation"); provided, however, any statement under clause (ii) will not be
deemed a Change in the Seller Recommendation, provided, that (A) such statement
is taken or made after consultation with Australian counsel of Seller, to the
effect that such statement is required for the directors of Seller to comply
with their statutory and fiduciary duties under applicable law, (B) if a
publicly disclosed Acquisition Proposal has been made and not rescinded, such
statement shall not relate to such public proposal other than any factual
statement required by any Governmental Entity and shall in any event include a
rejection of such public proposal and (C) such statement also includes a
reaffirmation of the approval of Seller's board of directors of the transactions
contemplated under this Agreement and recommendation to Seller's stockholders to
adopt this Agreement; provided, further, that Seller's board of directors may
make a Change in the Seller Recommendation pursuant to Section 5.20(c) hereof.
Notwithstanding any Change in the Seller Recommendation, after notice of the
Seller Stockholders Meeting has been given to Seller's stockholders, this
Agreement shall be submitted to Seller's stockholders at the Seller Stockholders
Meeting for the purpose of adopting this Agreement and receiving any required
Seller Stockholder Approval for the transactions contemplated under this
Agreement and nothing contained herein shall be deemed to relieve Seller of this
obligation.
(b) Each of Seller, the Selling Subs, the Transferred Entities and
their Affiliates agrees that neither it nor any of its directors and officers
shall, and that it shall use its best efforts to cause the employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it) not to, directly or indirectly, (i) solicit, encourage or
knowingly facilitate any inquiries or the making of any proposal or offer with
respect to, or a transaction to effect, an Acquisition Proposal, (ii) have any
discussions with or provide any confidential information or data to any Person
relating to an Acquisition Proposal, or engage in any negotiations concerning an
Acquisition Proposal, or knowingly facilitate any effort or attempt to make or
implement any Acquisition Proposal, (iii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (iv) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, asset purchase or
stock exchange agreement, option agreement or other similar agreement related to
any Acquisition Proposal or propose or agree to do any of the foregoing.
(c) Notwithstanding anything in this Agreement to the contrary,
Seller and its board of directors shall be permitted to (A) effect a Change in
the Seller Recommendation or (B) engage in any discussions or negotiations with,
or provide any confidential information or data to, any person in response to an
unsolicited, bona fide, written Acquisition Proposal by any party first made
after the date of this Agreement, if and only to the extent that, in any such
case referred to in clause (A) or (B) above:
(i) the party making the Acquisition Proposal is an
entity with which Seller has not engaged, directly or indirectly, in substantial
discussions with respect to an Acquisition Proposal at any time during the six
months immediately prior to the date hereof;
(ii) the Seller Stockholders Meeting shall not have
occurred;
(iii) Seller has complied in all respects with this Section
5.20;
(iv) Seller's board of directors, on the written advice of
outside counsel (a copy of which has been delivered by Seller to Purchaser),
determines in good faith that failure to take such action would result in a
breach of its statutory and fiduciary duties under applicable law;
(v) in the case only of clause (A) above, (I) Seller has
received an unsolicited, bona fide, written Acquisition Proposal from a third
party and Seller's board of directors concludes in good faith that such
Acquisition Proposal constitutes a Superior Competing Acquisition Proposal
(after giving effect to all of the concessions that may be offered by the other
party hereto pursuant to clause III below),
43
(II) it has notified Purchaser, at least five Business Days in advance, of its
intention to effect a Change in the Seller Recommendation, specifying the
material terms and conditions of such Superior Competing Acquisition Proposal
and furnishing to the other party to this Agreement a copy of any relevant
proposed transaction agreements with the party making such Superior Competing
Acquisition Proposal and any other material documents received by it or its
representatives, and (III) prior to effecting such a Change in the Seller
Recommendation, it has, and has caused its financial and legal advisors to,
negotiate with the other parties hereto in good faith to make such adjustments
in the terms and conditions of this Agreement such that such Acquisition
Proposal would no longer constitute a Superior Competing Acquisition Proposal;
(vi) in the case of clause (B) above, Seller's board of
directors concluded in good faith that there is a reasonable likelihood that
such Acquisition Proposal constitutes or is reasonably likely to result in a
Superior Competing Acquisition Proposal (taking into account the terms of the
Acquisition Proposal, the identity of the Person making the Acquisition
Proposal, the ability of such Person to effect a Superior Competing Acquisition
Proposal, and all other relevant factors), and prior to providing any
information or data to any person in connection with an Acquisition Proposal by
any such Person, Seller's board of directors receives from such Person an
executed confidentiality agreement having provisions that are no more favorable
to such Person than those contained in the Confidentiality Agreement; and
(vii) in the case of clause (B) above, Seller notifies
Purchaser, as promptly as practicable (and in any event within 24 hours of
providing any confidential information or data to any Person or entering into
discussions or negotiations with any Person), of such inquiries, proposals or
offers received by, any such information requested from, or any such discussions
or negotiations sought to be initiated or continued with, it or any of its
representatives indicating, in connection with such notice, the identity of such
Person and the material terms and conditions of any inquiries, proposals or
offers (including a copy thereof if in writing and any related available
documentation or correspondence and copies of any written or electronic
materials provided to such Person). Seller agrees that it will promptly keep
Purchaser informed of the status and terms of any such proposals or offers and
the status and terms of any such discussions or negotiations.
(d) Each of Seller, the Selling Subs, the Transferred Entities and
their Affiliates agrees that (i) it will, and will cause its directors, officers
and representatives to, immediately cease and cause to be terminated any
activities, discussions or negotiations existing as of the date of the Agreement
with any Persons conducted heretofore with respect to any Acquisition Proposal,
(ii) it will immediately cease and cause its subsidiaries, its affiliates, and
its and their officers, directors, agents, representatives and advisors, to
cease any and all existing activities, discussions or negotiations with any
third parties conducted heretofore with respect to any Acquisition Proposal, and
(iii) it will not release any third party from, or waive any provisions of, any
confidentiality agreement to which it or any of its Subsidiaries is a party with
respect to any Acquisition Proposal. Each of Seller, the Selling Subs, the
Transferred Entities and their Affiliates agrees that it will use reasonable
best efforts to promptly inform its respective directors, officers, key
employees, agents and their representatives of the obligations undertaken in
this Section 5.20.
(e) Nothing in this Section 5.20 shall affect any other obligation
of the parties hereto under this Agreement.
(f) Any disclosure made pursuant to clause (A) of Section 5.20(c)
shall be deemed to be a Change in the Seller Recommendation unless Seller's
board of directors expressly reaffirms the Seller Recommendation.
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5.21 IT Transition Assistance. From and after the date of this
Agreement, Seller shall cause the relevant employees of Seller and its
Affiliates to provide all assistance reasonably required in connection with the
transition of the information and technology services identified on Schedule 1
to the Information and Transition Services Agreement to Purchaser or its
Affiliates at the earliest practicable date on or after the Closing Date;
provided, that the provision of such assistance shall not materially interfere
with the ability of such employees to perform services for Seller; and provided,
further, that Purchaser shall reimburse Seller for (i) out-of-pocket costs to
Seller and (ii) incremental costs to Seller, in each case incurred in connection
with the provision of such assistance, as set forth in the Information and
Transition Services Agreement. Purchaser shall use its commercially reasonable
efforts to ensure the continuation of services to the businesses of Seller and
its Affiliates other than the Business.
5.22 Legal Opinion. Seller shall use commercially reasonable
efforts to cause Xxxxx Peabody LLP (or such other counsel as may be selected by
Seller and consented to by Purchaser, such consent not to be unreasonably
withheld) to render at the Closing a legal opinion in form and substance
reasonably acceptable to Purchaser as to the matters set forth on the attached
Exhibit C. Seller shall permit any counsel selected pursuant to the previous
sentence to conduct customary diligence in connection with such legal opinion
and shall provide such customary certificates of officers of Seller and the
Selling Subs as such counsel may request; provided, that Purchaser will
reimburse Seller for all fees and expenses of such counsel in excess of $20,000.
5.23 Ambac V. If Purchaser syndicates Lend Lease Ambac Affordable
Housing V Limited Partnership after the Closing and prior to August 31, 2003,
Purchaser shall pay to Seller, within 10 Business Days of receipt thereof, an
amount of syndication fees equal to the lesser of the amount by which Seller's
syndication revenue with respect to the six-month period ending June 30, 2003
was less than $10,000,000 and the syndication fees earned by Purchaser from the
syndication of Lend Lease Ambac Affordable Housing V Limited Partnership.
ARTICLE VI
EMPLOYEE MATTERS COVENANTS
6.1 Employees and Compensation.
(a) Seller will provide that no later than immediately prior to
the Closing, the employment of the employees of Seller and its Affiliates whose
employment primarily consists of performing services for the Business shall be
transferred to a Transferred Entity. Section 6.1(a) of the Seller Disclosure
Schedule sets forth a complete list of the current employees of Seller and its
Affiliates whose employment primarily consists of performing services for the
Business and who will be transferred to, or otherwise employed by, a Transferred
Entity pursuant to the preceding sentence, and such Schedule 6.1(a) shall be
updated on the last Business Day prior to the Closing Date to reflect changes in
such employee group. As of the Closing Date, Purchaser shall cause the
Transferred Entities to continue the employment of each Transferred Entity
Employee. The provisions of this Article VI pertaining to the employment of
Transferred Entity Employees are solely for the benefit of the parties to the
Agreement, and no employee or former employee of the Business or any other
individual associated therewith or any other party shall be regarded for any
purpose as a third-party beneficiary of the Agreement as a result of this
Article VI. Nothing contained in this Agreement will be deemed to cause any
Transferred Entity Employee's employment on or after the Closing to be other
than on an "at will" basis.
(b) As of the Closing Date, Purchaser shall provide, or shall
cause the Business to provide, the Transferred Entity Employees with
compensation (including bonuses, commissions and/or other incentive
opportunities) and employee benefits that in the aggregate are not materially
less favorable than
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the compensation and benefits provided by Purchaser to similarly situated
employees of Purchaser and its Affiliates.
(c) Effective as of the Closing Date, Seller and its Affiliates
shall (i) suspend the participation of all Transferred Entity Employees in the
Seller FY '02 LTIP (the "LTIP") and the Seller FY '02 Retention Plan (the
"Retention Plan") such that no additional awards will accrue there-under to
Transferred Entity Employees and (ii) determine and fix the value of the awards
held by the Transferred Entity Employees as of the Closing Date under the LTIP
and Retention Plan based upon the closing price of Seller ordinary shares on the
Australian Stock Exchange on the Closing Date. Seller shall pay in cash (less
required withholding taxes) to each such Transferred Entity Employee, with
respect to awards held under the LTIP or Retention Plan as of the Closing Date,
one-third (1/3) of the value as of the Closing Date of each award under the LTIP
and one-half (1/2) of the value as of the Closing Date of each award under the
Retention Plan. Seller shall make such payments as soon as practicable following
the Closing Date. Purchaser shall pay in cash (less required withholding taxes)
two-thirds (2/3) of the value as of the Closing Date of each award under the
LTIP and one-half (1/2) of the value as of the Closing Date of each award under
the Retention Plan held by a Transferred Entity Employee as of the Closing Date
to each-such Transferred Entity Employee if and only if such Transferred Entity
Employee remains employed with Purchaser or its Affiliates until the first
anniversary of the Closing Date. Purchaser shall make such payments as soon as
practicable following the first anniversary of the Closing Date. Purchaser and
Seller shall use all reasonable efforts to cause the Transferred Entity
Employees who are participants in the LTIP and/or Retention Plan to consent to
the treatment of their awards under the LTIP and Retention Plan as set forth in
this Section 6.1(c). In the event such consent is not received from any such
Transferred Entity Employee (or approval to these modifications by the Seller's
Board of Directors is not received), then Purchaser shall pay two-thirds (2/3)
of each payment due under the terms of the LTIP and one-half (1/2) of each
payment due under the terms of the Retention Plan on the date payments are
otherwise payable with respect to each award, but in no event shall Purchaser be
obligated to pay any amount in excess of the amount Purchaser would have been
obligated to pay under this Section 6.1(c) had such waivers and consents been
obtained. Seller shall be solely responsible for any amounts owed to such
individual in excess of the amounts payable by Purchaser described in this
Section 6.1(c). Seller agrees that Purchaser shall not assume or be deemed to
assume the LTIP or the Retention Plan for any purpose, other than to make the
payments set forth in this Section 6.1(c).
(d) Effective as of the Closing Date, Seller and its Affiliates
shall cause each payment (a "MIAP Payment") distributable after Closing to a
Transferred Entity Employee pursuant to Article III of the Purchase and Sale
Agreement by and among LLUS and The Boston Financial Group Limited Partnership,
dated as of October 8, 1999, to become payable to such Transferred Entity
Employee if and only if such Transferred Entity Employee either (i) remains
employed with Purchaser until the date such MIAP Payment would otherwise be
distributable, treating service with Purchaser as if it were service with Seller
or its Affiliates, or (ii) is terminated by Purchaser other than "for cause" (as
defined in such Purchase and Sale Agreement). As soon as practicable after each
such MIAP Payment becomes payable, Purchaser shall pay to the extent earned such
MIAP Payment in cash (subject to required withholding) to the applicable
Transferred Entity Employee, and Seller shall, upon receipt of appropriate
documentation evidencing such payment, reimburse Purchaser for 50% of the amount
of such payment. Thereafter, Purchaser shall indemnify and hold Seller and its
Affiliates harmless with respect to any liability in connection with any MIAP
Payment. Seller and Purchaser and their respective Affiliates shall cooperate in
determining the individuals to whom such payments are due.
(e) Effective as of the Closing Date, Seller shall, or shall cause
one of its Affiliates to, suspend the participation of the Transferred Entity
Employees in each of the "HCI Short-Term Incentive Plan for Non-Originators" and
the "HCI Short-Term Incentive Plan for Deal and Capital Originators" (the
"Seller STIC Plans") such that no additional awards will accrue there-under to
such Transferred Entity
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Employees following the Closing Date. Seller shall accrue an amount on the
Statement of Selected Assets equal to the amount accrued under the Seller STIC
Plans with respect to Transferred Entity Employees through the Closing Date (and
Seller shall take into account the historical practices of Seller under the
Seller STIC Plans in determining the accruals under the Seller STIC Plans and
shall consult with appropriate management of the Transferred Entities in making
such accruals). Purchaser will pay such amounts reflected on the Statement of
Selected Assets pursuant to this Section 6.1(e) in accordance with the terms of
the Seller STIC Plans. Seller agrees that Purchaser shall not assume or be
deemed to assume the Seller STIC Plans other than to make the payments set forth
in this Section 6.1(e).
(f) Effective as of the Closing Date, Seller and its Affiliates
shall (i) suspend the participation of all Transferred Entity Employees in the
Seller FY '01 LTIP such that no additional awards will accrue thereunder to
Transferred Entity Employees and (ii) cause all awards under the Seller FY '01
LTIP to become 100% vested. On or as soon as practicable after the Closing Date,
Seller shall pay to the extent earned all awards payable under the Seller FY '01
LTIP in cash (subject to required withholding) to the Transferred Entity
Employees who are eligible for such awards under the terms of the Seller FY '01
LTIP as in effect immediately prior to the Closing Date, and shall indemnify and
hold Purchaser, the Transferred Entity and its Affiliates harmless with respect
to any future liability in connection with such awards.
(g) Effective as of the Closing Date, Seller shall, or shall cause
one of its Affiliates to (i) suspend the participation of all Transferred Entity
Employees in the "Lend Lease (US) Employee Incentive Share Plan" (the "Seller
Share Plan") as of the Closing such that no additional benefits will accrue
thereunder to Transferred Entity Employees and (ii) cause all accounts and
rights of Transferred Entity Employees under the Seller Share Plan to become
100% vested. On or as soon as practicable after the Closing Date, Seller shall
pay in cash (subject to required withholding) all awards under the Seller Share
Plan to the Transferred Entity Employees who are eligible for such awards under
the terms of the Seller Share Plan as in effect immediately prior to the Closing
Date, and shall indemnify and hold Purchaser and its Affiliates harmless with
respect to any future liability in connection with such awards.
(h) Effective as of the Closing Date, Seller and its Affiliates
shall cause the outstanding account balances of Transferred Entity Employees
under the Lend Lease Real Estate Investments Executive Deferred Compensation
Plan (the "Seller DCP") to become 100% vested.
6.2 Welfare Benefits Plans.
(a) Except as otherwise provided in this Section 6.2 and without
limiting the generality of Section 6.1(b), the participation by Transferred
Entity Employees in Welfare Plans maintained by Seller and its Affiliates shall
cease at the Closing. Subject to the provisions of this Section 6.2, Purchaser
shall permit each Transferred Entity Employee to enroll as of the Closing in
Welfare Plans that are offered by Purchaser to its similarly situated employees.
(b) Except as otherwise provided in Sections 6.2(e) and 6.2(f),
notwithstanding anything in this Article VI to the contrary, with respect to
claims arising under any Welfare Plan of Seller and its Affiliates, (i) Seller
and its Affiliates shall be solely responsible for any claims for Welfare
Benefits that are incurred by or with respect to any Transferred Entity Employee
and his or her beneficiaries or dependents before the Closing Date and (ii)
Purchaser shall be solely responsible for any claims for Welfare Benefits that
are incurred by or with respect to any Transferred Entity Employee and his or
her beneficiaries or dependents on or after the Closing Date. For purposes of
the foregoing, a medical/dental claim shall be considered incurred when the
services are rendered, the supplies are provided or medications are prescribed,
and not when the condition arose.
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(c) With respect to the coverage of the Transferred Entity
Employees under Purchaser's Welfare Plans, (i) each such Transferred Entity
Employee's service with Seller and its Affiliates shall be credited against any
waiting period applicable to eligibility for enrollment of new employees under
Purchaser's Welfare Plans; (ii) limitations on benefits due to pre-existing
conditions shall be waived for any Transferred Entity Employee enrolled in any
Welfare Plan maintained by Seller or its Affiliates as of the Closing Date to
the extent such limitations do not then apply under Seller's or its Affiliate's
Welfare Plans, or to the extent required under applicable Law; and (iii) any
out-of-pocket annual maximums and deductibles taken into account under the
Seller Group Health Plan for any Transferred Entity Employee in the calendar
year which contains the Closing Date shall be credited under Purchaser's Welfare
Plans for the same calendar year. With respect to aggregate lifetime maximum
benefits available under Purchaser's Welfare Plans, a Transferred Entity
Employee's prior claim experience under any of the component pro-grams of the
Welfare Plan maintained by Seller and its Affiliates will not be taken into
account.
(d) With respect to the Seller Group Health Plan, Seller and its
Affiliates shall cause their records as to the length and dates of each group
health plan participant's (and covered dependents') creditable coverage, within
the meaning of HIPAA, to be transferred to Purchaser. For this purpose,
participants shall mean Transferred Entity Employees with respect to whom Seller
and its Affiliates have any current or potential HIPAA responsibilities as of or
after the Closing Date. To the extent required by law, Purchaser shall be
responsible for providing timely certificates of creditable coverage (within the
meaning of HIPAA) to all Transferred Entity Employees (and covered dependents)
and other participants (and covered dependents), with such certificates to
include and aggregate each such employee's (and covered dependents') period of
creditable coverage under both the Seller Group Health Plan and Purchaser's
group health plans; provided, however, that Purchaser's obligation with respect
to creditable coverage earned by individuals while they were employed by Seller
and its Affiliates shall be limited to the data provided to Purchaser by Seller
and its Affiliates.
(e) Beginning as of the Closing, Purchaser or the applicable
Transferred Entity shall be responsible for providing the notices and making
available the health care continuation coverage, all as required by Section
4980B of the Code, for all Transferred Entity Employees and their covered
dependents whose qualifying events (as defined in Section 4980B of the Code)
occur on or after the Closing Date; provided, however, that Seller and its
Affiliates shall provide Purchaser with the records necessary to identify and
administer such responsibilities.
(f) Notwithstanding anything herein to the contrary, if any
Transferred Entity Employee has become disabled (within the meaning of the
applicable short-term and/or long-term disability plan of Seller and its
Affiliates) on or prior to the Closing Date, any short-term and/or long-term
disability salary continuation benefits and welfare benefits relating to such
disability shall be paid under their terms immediately before the Closing and,
beginning as of the Closing, short-term disability benefits shall be the sole
responsibility of Purchaser; provided, however, that Purchaser shall not have
any obligation to provide any long-term disability benefits to any Transferred
Entity Employee.
(g) From and after the Closing Date, (i) Purchaser shall assume
and honor and shall cause the Transferred Entities to honor, all vacation days
of the Transferred Entity Employees that accrued prior to the Closing Date in
the calendar year which contains the Closing Date, and (ii) Purchaser shall
sponsor a vacation pay policy that applies to each Transferred Entity Employee
and shall take into account service with Seller and its Affiliates as provided
in Section 6.4(a). With respect to unused vacation days of the Transferred
Entity Employees that accrued in any calendar year ending prior to the Closing
Date, each Transferred Entity Employee shall be paid by Seller or its Affiliates
in cash on or as soon as practicable after the Closing Date for the number of
such unused vacation days in excess of the number of days which may be "carried
over" under Purchaser's vacation policy, which the parties hereto agree is 10
days, to the extent credited under the vacation pay policy of Seller or its
Affiliates. The cost of vacation days
48
accrued under the vacation pay policy of Seller or its Affiliates which may be
"carried over" under Purchaser's vacation policy will be accrued on the
Statement of Selected Assets.
(h) Seller and its Affiliates and Purchaser shall take all actions
necessary or appropriate so that, effective as of the Closing, (i) the account
balances (whether positive, in which case Seller will transfer cash equal to
such balance, or negative, in which case Purchaser will transfer cash equal to
such balance) under the Seller FSAs of the Transferred Entity Employees who are
participants in the Seller FSAs (the "Covered Employees") shall be transferred
to one or more comparable plans of Purchaser to the extent Purchaser offers such
benefits (collectively, the "Purchaser Flex Plans"); (ii) the elections,
contribution levels and coverage levels of the Covered Employees shall apply
under the Purchaser Flex Plans in the same manner as under the Seller FSAs to
the extent Purchaser offers such benefits; and (iii) the Covered Employees shall
be reimbursed from the Purchaser Flex Plans for claims incurred at any time
during the plan year of the Seller FSA in which the Closing Date occurs and
submitted to the Purchaser Flex Plans from and after the Closing Date
substantially on the same basis, terms and conditions as under the Seller FSAs
to the extent Purchaser offers such benefits.
(i) Purchaser shall be responsible for making tuition
reimbursements or adoption assistance payments to any Transferred Entity
Employees who (i) obtained all necessary approval under the applicable tuition
reimbursement plan or adoption assistance plan of Seller and its Affiliates
prior to the Closing, and (ii) satisfy all necessary requirements for
reimbursement under such plans after the Closing.
(j) Purchaser shall provide each Transferred Entity Employee whose
employment is terminated during the twelve-month period ending on the first
anniversary of the Closing Date severance pay and benefits equal to the greater
of (i) the severance pay and benefits to which such Transferred Entity Employee
would have been entitled under the Seller Severance Plan as in effect prior to
the Closing Date, and (ii) any severance pay and benefits to which such
Transferred Entity Employee is entitled under Purchaser's severance plans for
which similarly situated Purchaser employees are eligible, counting both service
with Seller and its Affiliates and service with Purchaser for purposes of
eligibility and valuation.
6.3 Qualified Retirement Plans.
(a) As of the Closing Date, the Transferred Entity Employees shall
become members of the class of employees eligible to participate in Purchaser
401(k) Plan. If a Transferred Entity Employee has sufficient service (taking
into account service credited pursuant to Section 6.4(a)) under the Purchaser
401(k) Plan, such Transferred Entity Employee shall be allowed to enter active
participation in the Purchaser 401(k) Plan as of the Closing Date. Service
credited to a Transferred Entity Employee under the Seller Investment Plan as of
the Closing shall be credited to such Transferred Entity Employee under the
Purchaser 401(k) Plan for all purposes.
(b) Seller shall take all actions necessary so that as of the
Closing Date, the account balances of all Transferred Entity Employees under the
Seller Investment Plan and the Seller Profit Sharing Plan shall be 100% vested.
As soon as practicable following the Closing Date, Seller and its Affiliates
shall cause the account balances of the Transferred Entity Employees in the
Seller Investment Plan and the Seller Profit Sharing Plan to be distributed in
accordance with the terms of such plans (upon the Transferred Entity Employees
terminating employment or having been severed from employment within the meaning
of such plans), and to the extent permitted under applicable law, Purchaser
shall permit Transferred Entity Employees who are participants in such plans and
who are employed by Purchaser following the Closing Date to rollover such
distributions (including a rollover of outstanding participant loans) into
Purchaser 401(k) Plan.
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6.4 Miscellaneous Employee Issues.
(a) For all purposes, under the employee benefit plans, practices
or arrangements of Purchaser and its Affiliates providing benefits to any
Transferred Entity Employee after the Closing Date, each Transferred Entity
Employee shall be credited with all years of service for which such Transferred
Entity Employee was credited before the Closing Date under any similar employee
benefit plans, practices or arrangements of Seller or its Affiliates, except for
purposes of benefit accrual under any defined benefit plan.
(b) Beginning at the Closing, all Transferred Entity Employees
shall be eligible for coverage under Purchaser's workers' compensation
insurance. Seller and its Affiliates shall remain responsible and retain
liability for workers' compensation Claims and all other Claims relating to
occupational illnesses and injuries incurred before the Closing (regardless of
when such claims are reported).
Notwithstanding any other provision of this Article VI, Purchaser and Seller and
their respective Affiliates shall cooperate in the timely transfer of all data
and information necessary for Purchaser to fulfill its obligations to provide
benefits or payments to Transferred Entity Employees as provided for in this
Article VI.
ARTICLE VII
TAX MATTERS
7.1 Tax Indemnity by Seller. Except as otherwise provided in
Section 7.4 and except to the extent reflected as a liability of a Transferred
Entity, excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income, on the Financial Statements, Seller
shall promptly pay or cause to be paid, and shall indemnify Purchaser and each
of its Subsidiaries and Affiliates (including the Transferred Entities after the
Closing Date) (each a "Purchaser Tax Indemnitee") and hold each Purchaser Tax
Indemnitee harmless from and against (i) any and all Taxes of or with respect to
the Transferred Entities for any Pre-Closing Period (other than (a) any Taxes
arising from any action or transaction by Purchaser or its Affiliates (including
the Transferred Entities) outside of the ordinary course of business on the
Closing Date after the Closing or (b) any Taxes that result from an actual or
deemed election under Section 338 of the Code (or any similar provision of
state, local or foreign law) with respect to any of the Transferred Entities
other than the 338(h)(10) Election Subsidiaries), (ii) any Taxes of another
Person claimed from any of the Transferred Entities as a result of any of the
Transferred Entities being included prior to the Closing Date in a combined,
consolidated or unitary tax group under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law) or as a transferee or
successor, by contract or otherwise, and (iii) any reasonable attorneys' fees
and expenses and reasonable accountants' fees and expenses incurred by a
Purchaser Tax Indemnitee in connection with the foregoing (the foregoing clauses
(i), (ii) and (iii) collectively, "Excluded Taxes"). For the avoidance of doubt,
any deferred intercompany gains or excess loss account inclusions resulting from
the deconsolidation of the Transferred Entities shall be considered Excluded
Taxes. Payment in full of any amount due from Seller under this Section 7.1
shall be made to the appropriate Purchaser Tax Indemnitee in immediately
available funds at least two Business Days before the date payment of the Taxes
to which such payment relates is due, or, if no Tax is payable, within fifteen
(15) days after written demand is made for such payment.
7.2 Tax Indemnity by Purchaser. Except as otherwise provided in
Section 7.4, Purchaser shall pay or cause to be paid, and shall indemnify Seller
and each of its Subsidiaries and Affiliates (other than the Transferred
Entities) (each a "Seller Tax Indemnitee") and hold each Seller Tax Indemnitee
harmless from and against any and all Taxes, other than Excluded Taxes,
including (a) any and all Taxes
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arising from any action or transaction by Purchaser or its Affiliates outside of
the ordinary course of business on the Closing Date after the Closing and (b)
any Taxes that result from an actual or deemed election under Section 338 of the
Code (or any similar provision of state, local or foreign law) with respect to
any of the Transferred Entities other than the 338(h)(10) Election Subsidiaries.
Payment in full of any amount due from Purchaser under this Section 7.2 shall be
made to the appropriate Seller Tax Indemnitee in immediately available funds at
least two Business Days before the date payment of the Taxes to which such
payment relates is due, or, if no Tax is payable, within fifteen (15) days after
written demand is made for such payment.
7.3 Allocation of Certain Taxes. To the extent permitted or
required by law or administrative practice, the taxable year of each of the
Transferred Entities which includes the Closing Date shall be treated as closing
on (and including) the Closing Date. For purposes of Sections 7.1 and 7.2, where
it is necessary to apportion between Seller and Purchaser the Tax liability of
or relating to any of the Transferred Entities for a Straddle Period (which is
not treated under the immediately preceding sentence as closing on the Closing
Date), any income or similar Tax liability shall be apportioned between the
period deemed to end at the close of the Closing Date and the period deemed to
begin at the beginning of the day following the Closing Date on the basis of an
interim closing of the books as of the end of the Closing Date and any other Tax
liability shall be apportioned by reference to the relative number of days in
the period deemed to end at the close of the Closing Date and the period deemed
to begin at the beginning of the day following the Closing Date.
7.4 Transfer Taxes. All transfer, sales, use, registration, value
added and similar taxes ("Transfer Taxes") applicable to or resulting from the
transactions contemplated by this Agreement shall be borne equally by Seller, on
the one hand, and Purchaser on the other. Seller and Purchaser shall cooperate
with each other and use their commercially reasonable best efforts to minimize
such Transfer Taxes. The party responsible under the applicable Transfer Tax law
for paying a Transfer Tax (the "Transfer Tax Party") shall make due and timely
payment of the Transfer Tax to the applicable Governmental Entity, provided that
the other party, upon timely notice from the Transfer Tax Party, pays the
Transfer Tax Party, no later than two (2) Business Days prior to the date such
Transfer Tax is due, such other party's 50% share of such Transfer Tax.
7.5 Filing Responsibility. (a) Seller shall timely prepare and,
with Purchaser's cooperation, timely file (i) any combined, consolidated or
unitary Tax Returns that include Seller or any of its Subsidiaries (other than
the Transferred Entities), on the one hand, and any of the Transferred Entities,
on the other hand and (ii) all Tax Returns that are required to be filed by or
with respect to any of the Transferred Entities for taxable periods ending on or
before the Closing Date. Purchaser shall have at least thirty (30) days to
review all such Tax Returns relating solely to the Transferred Entities. Such
Tax Returns shall be prepared in accordance with the most recent Tax practices
as to elections and accounting methods except for new elections that may be made
therein that were not previously available, subject to Purchaser's consent
(which consent shall not be unreasonably withheld). An exact copy of any such
Tax Return filed by Seller and evidence of payment of such Taxes shall be
provided to Purchaser no later than ten Business Days after such Tax Return is
filed.
(b) Purchaser shall, except to the extent that such Tax Returns
are the responsibility of Seller under Section 7.5(a) and subject to Section
7.5(c), file or cause to be filed all other Tax Returns with respect to the
Transferred Entities.
(c) In the case of any Tax Return which Purchaser is responsible
for preparing under Section 7.5(b), (i) for a Straddle Period or (ii) with
respect to Excluded Taxes, Purchaser shall, or shall cause the Transferred
Entities to deliver to Seller for its review, comment and approval (which
approval shall not be unreasonably withheld) a copy of such proposed Tax Return
(accompanied, in the case of any
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Tax Return for a Straddle Period, by an allocation between the Pre-Closing
Period and the Post-Closing Period of the Taxes shown to be due on such Tax
Return) at least thirty (30) Business Days prior to the due date (giving effect
to any validly obtained extension thereof). For the avoidance of doubt, no Tax
Return prepared pursuant to this Section 7.5(c) shall be filed unless it shall
have been approved by Seller. No later than five (5) Business Days prior to the
due date of such Tax Return, Seller shall pay to Purchaser the amount of Taxes
shown due which is attributable to the Pre-Closing Period.
7.6 Refunds and Credits.
(a) Seller shall be entitled to any refunds or credits of or
against any Excluded Taxes (except for the portion of any such refund or credit
reflected as an asset on the Financial Statements). Purchaser shall be entitled
to any refunds or credits of or against any and all Taxes, other than Excluded
Taxes. For purposes of this Section 7.6, any refund or credit attributable to a
Straddle Period shall be apportioned between the Seller and the Purchaser in the
manner set forth in Section 7.3 hereof.
(b) Purchaser shall cause the Transferred Entities promptly to
forward to Seller or to reimburse Seller for any refunds or credits due Seller
(pursuant to the terms of this Article VII) after receipt thereof, and Seller
shall promptly forward to Purchaser or reimburse Purchaser for any refunds or
credits due Purchaser (pursuant to the terms of this Article VII) after receipt
thereof.
(c) Purchaser agrees that none of the Transferred Entities shall
elect to carry back any item of loss, deduction or credit which arises in any
taxable period ending after the Closing Date and which relates to or affects any
Excluded Tax ("Subsequent Loss") into any taxable period ending on or before the
Closing Date. If a Subsequent Loss is carried back into any taxable period
ending on or before the Closing Date, Seller shall be entitled to any refund of
Taxes realized as a result thereof.
7.7 Tax Contests.
(a) If any taxing authority asserts a Tax Claim, then the party
hereto first receiving notice of such Tax Claim promptly shall provide written
notice thereof to the other party or parties hereto; provided, however, that the
failure of such party to give such prompt notice shall not relieve the other
party of any of its obligations under this Article VII, except to the extent
that the other party is actually prejudiced thereby. Such notice shall specify
in reasonable detail the basis for such Tax Claim and shall include a copy of
the relevant portion of any correspondence received from the taxing authority.
(b) Seller shall have the right to control, at its own expense,
any audit, examination, contest, litigation or other proceeding by or against
any taxing authority that relates in whole or in part to any Tax for which
Seller is obligated to indemnify Purchaser under this Agreement (a "Tax
Proceeding") in respect of any of the Transferred Entities for any taxable
period that ends on or before the Closing Date; provided, however, that (i)
Seller shall inform Purchaser in a timely manner and in reasonable detail about
the conduct of such Tax Proceeding, (ii) Purchaser shall have the right to
observe the conduct of the Tax Proceeding (through attendance at meetings) at
its own expense, including through its own counsel and other professional
experts, (iii) Seller shall defend such Tax Proceeding diligently and in good
faith as if it were the sole party in interest in any such Tax Proceeding, (iv)
Seller shall consider in good faith the reasonable requests of Purchaser
concerning the conduct of such Tax Proceeding, (v) in the case of any Tax
Proceeding other than a Tax Proceeding with respect to a consolidated, combined
or unitary Tax Return, Seller shall not settle, compromise or abandon any such
Tax Proceeding without obtaining the prior written consent of Purchaser (which
consent shall not be unreasonably withheld) if such action would have a Material
Adverse Effect on Purchaser or any Transferred Entity, and (vi) if Seller does
not assume control of, or abandons, such Tax Proceeding, Purchaser may defend
the same in such manner as Purchaser deems appropriate, including settling such
Tax Proceeding, after ten (10) Business Days prior
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written notice to Seller setting forth the terms and conditions of settlement;
provided further, however, that the maximum amount for which Seller would be
obligated to indemnify Purchaser in such case would be the amount of Taxes that
Seller otherwise would have been obligated to pay Purchaser under this
Agreement, as determined at the time that Purchaser assumed control, had
Purchaser not assumed control.
(c) In the case of a Tax Proceeding for a Straddle Period of any
of the Transferred Entities, the Controlling Party shall have the right to
control, at its own expense, such Tax Proceeding; provided, however, that (i)
the Controlling Party shall provide the Non-Controlling Party with a timely and
reasonably detailed account of each stage of such Tax Proceeding, (ii) the
Controlling Party shall consult with the Non-Controlling Party before taking any
significant action in connection with such Tax Proceeding, (iii) the Controlling
Party shall consult with the Non-Controlling Party and offer the Non-Controlling
Party an opportunity to comment before submitting any written materials prepared
or furnished in connection with such Tax Proceeding, (iv) the Controlling Party
shall defend such Tax Proceeding diligently and in good faith as if it were the
only party in interest in connection with such Tax Proceeding, (v) the
Non-Controlling Party shall be entitled to participate in such Tax Proceeding,
at its own expense, if such Tax Proceeding could have an adverse impact on the
Non-Controlling Party or any of its Affiliates and (vi) the Controlling Party
shall not settle, compromise or abandon any such Tax Proceeding without
obtaining the prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed, of the Non-Controlling Party if such
settlement, compromise or abandonment could have an adverse impact on the
Non-Controlling Party or any of its Affiliates. "Controlling Party" shall mean
whichever of Seller or Purchaser is reasonably expected to bear the greater Tax
liability in connection with a Straddle Period Tax Proceeding, and
"Non-Controlling Party" shall mean whichever of Seller or Purchaser is not the
Controlling Party with respect to such Straddle Period Tax Proceeding.
(d) Purchaser shall have the right to control, at its own expense,
any Tax Proceeding involving the Transferred Entities (other than any Tax
Proceeding described in Section 7.7(b) or (c)).
7.8 Purchaser Consolidated, Combined and Unitary Returns.
Notwithstanding any other provision of this Agreement, (a) Purchaser shall be
entitled to control in all respects, and neither Seller, nor any Affiliate of
Seller shall be entitled to participate in, any Tax Proceeding with respect to
any consolidated, combined or unitary Tax Return that includes Purchaser or
Purchaser Sub and (b) Purchaser and its Affiliates shall not be required to
provide any person with any consolidated, combined or unitary Tax Return or copy
thereof that includes Purchaser or Purchaser Sub; provided, however, that to the
extent that such Tax Returns would be required to be delivered but for this
Section 7.8(b), the person that would be required to deliver such Tax Returns
shall instead deliver pro forma Tax Returns relating solely to the Transferred
Entities.
7.9 Seller Consolidated, Combined and Unitary Returns.
Notwithstanding any other provision of this Agreement, (a) Seller shall be
entitled to control in all respects, and neither Purchaser nor any of its
Affiliates shall be entitled to participate in, any Tax Proceeding with respect
to any consolidated, combined or unitary Tax Return that includes Seller or any
of the Selling Subs and (b) Seller shall not be required to provide any person
with any consolidated, combined or unitary Tax Return or copy thereof that
includes Seller or any of the Selling Subs; provided, however, that to the
extent that such Tax Returns would be required to be delivered but for this
Section 7.9(b), the person that would be required to deliver such Tax Returns
shall instead deliver pro forma Tax Returns relating solely to the Transferred
Entities.
7.10 Cooperation and Exchange of Information. Not more than sixty
(60) days after the receipt of a customary package of Tax information materials
from Seller, Purchaser shall, and shall cause
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its Affiliates to, provide to Seller a package of Tax information materials,
including schedules and work papers required by Seller to enable Seller to
prepare and file all Tax Returns required to be prepared and filed by it with
respect to the Transferred Entities. Purchaser shall prepare such package
completely and accurately, in good faith and in a manner consistent with
Seller's past practice; provided, that the preparation of such Tax information
materials shall not unreasonably interfere with the day-to-day responsibilities
of Purchaser's employees or the employees of the Transferred Entities; and,
provided, further, that Seller shall reimburse Purchaser for Purchaser's
reasonable out-of-pocket expenses incurred in providing such Tax information
materials, but only to the extent such expenses would not have been incurred but
for Purchaser's obligation pursuant to this Section 7.10. In addition, each
party hereto shall, and shall cause its Affiliates to, provide to the other
party hereto such cooperation, documentation and information as either of them
reasonably may request in (a) filing any Tax Return, amended Tax Return or claim
for refund, (b) determining a liability for Taxes or an indemnity obligation
under this Article VII or a right to refund of Taxes, (c) conducting any Tax
Proceeding or (d) determining an allocation of Taxes between a Pre-Closing
Period and Post-Closing Period. Such cooperation and information shall include
providing reasonably requested powers of attorney, copies of all relevant
portions of relevant Tax Returns, together with all relevant portions of
relevant accompanying schedules and relevant work papers, relevant documents
relating to rulings or other determinations by taxing authorities and relevant
records concerning the ownership and Tax basis of property and other
information, which any such party may possess. Each party will retain all Tax
Returns, schedules and work papers, and all material records and other documents
relating to Tax matters, of the relevant entities for their respective Tax
periods ending on or prior to the Closing Date until the later of (i) the
expiration of the statute of limitations for the Tax periods to which the Tax
Returns and other documents relate or (ii) eight years following the due date
(without extension) for such Tax Returns. Thereafter, the party holding such Tax
Returns or other documents may dispose of them after offering the other party
reasonable notice and opportunity to take possession of such Tax Returns and
other documents at such other party's own expense.
7.11 Tax Sharing Agreements. Anything in any other agreement to the
contrary notwithstanding, all liabilities and obligations between Seller or any
of its Affiliates (other than the Transferred Entities) on the one hand and any
of the Transferred Entities on the other hand, under any Tax allocation or Tax
sharing agreement in effect prior to the Closing Date (other than this
Agreement) shall cease and terminate as of the Closing Date as to all past,
present and future taxable periods.
7.12 Timing Differences. Purchaser agrees that if as the result of
any audit adjustment (or adjustment in any other Tax Proceeding) (a "Tax
Adjustment") (a) the Tax liability which is allocated to the Seller under
Section 7.1 with respect to any Transferred Entity is increased for a
Pre-Closing Period, and (b) the Tax liability which is allocated to the
Purchaser under Section 7.2 with respect to any Transferred Entity for a
Post-Closing Period is decreased, then, when and to the extent that the
Purchaser (or the relevant Transferred Entity) derives a benefit from such
decrease (through a reduction of Taxes, refund of Taxes paid or credit against
Taxes due), the Purchaser shall promptly pay to Seller an amount equal to such
refund, reduction or credit.
7.13 Disputes. In the event that a dispute arises between Seller
and Purchaser as to the amount of Taxes or indemnification or any matter
relating to Taxes, the parties shall cooperate in good faith to resolve such
dispute, and any agreed upon amount shall be paid to the appropriate party. If
such dispute is not resolved thirty (30) calendar days thereafter, the parties
shall submit the dispute to an independent accounting firm mutually chosen by
Purchaser and Seller for resolution, which resolution shall be final, conclusive
and binding on the parties. Notwithstanding anything in the Agreement to the
contrary, the fees and expenses of the independent account firm in resolving
this dispute shall be borne equally by Seller and Purchaser.
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7.14 Coordination. Claims for indemnification with respect to Taxes
shall be governed by this Article VII and Section 10.6 (but not any other
provision of Article X).
7.15 Survival. The representations, warranties, agreements,
covenants and indemnification matters contained in this Article VII of this
Agreement shall survive the Closing Date until 30 Business Days after the
expiration of the applicable statutory periods of limitation.
7.16 Tax Treatment of Payments. Seller, Purchaser and the
Transferred Entities shall treat any and all payments under Section 2.3, Section
2.8, Section 6.1(e), Section 6.1(f), this Article VII or Article X as an
adjustment to the Purchase Price for Tax purposes unless they are required to
treat such payments otherwise by applicable Tax laws.
7.17 Escheat. Notwithstanding any other provision of this
Agreement, Seller shall have no liability in connection with, and Purchaser
shall be responsible for and shall hold the Seller Tax Indemnitees harmless
against, any claims for or with respect to abandoned, unclaimed or escheatable
property, arising after the Closing Date, to the extent such claims relate to or
are attributable to any of the Transferred Entities.
7.18 Section 338(h)(10) Elections. At the final determination of
Purchaser, Lend Lease (US), Inc., Purchaser and Purchaser Subs, as applicable,
will join in making timely and irrevocable elections under Section 338(h)(10) of
the Code (and any corresponding elections under state or local tax law) (each, a
"338(h)(10) Election") with respect to the purchase and sale of the stock of
each Transferred Entity set forth in Section 7.18 of the Seller Disclosure
Schedule (the "338(h)(10) Election Subsidiaries"). Each of Seller and Purchaser
shall, and shall cause their respective Affiliates to, (a) treat the 338(h)(10)
Elections as valid, (c) file all Tax Returns in a manner consistent with such
338(h)(10) Elections and (c) take no position contrary thereto, except to the
extent required to do otherwise pursuant to a determination (as defined in
Section 1313(a) of the Code or any similar state or local tax provision) (a
"Determination"). With respect to each 338(h)(10) Election, Seller and Purchaser
shall agree on (i) the aggregate deemed sale price (as defined in Treasury
Regulation Section 1.338-4) (the "ADSP") and (ii) the allocation of the ADSP
among the assets of each of the 338(h)(10) Election Subsidiaries (collectively,
the "338(h)(10) Election Allocations"). The 338(h)(10) Election Allocations
shall be reasonable and shall be determined in accordance with Section 338 of
the Code and the applicable Treasury Regulations thereunder. Purchaser and
Seller shall jointly prepare, or cause their respective Affiliates to prepare,
consistent with the 338(h)(10) Election Allocations, any form or document
required to effect a valid and timely 338(h)(10) Election. Except as may be
required by a Determination, Seller and Purchaser shall file, or cause to be
filed, all Tax Returns in a manner consistent with the 338(h)(10) Election
Allocations.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS TO CLOSE
8.1 Conditions to Obligation of Each Party to Close. The
respective obligations of each party to effect the transactions contemplated
hereby shall be subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order ("Order") shall have become effective restraining,
enjoining or otherwise prohibiting or making illegal the consummation of the
transactions contemplated hereby; and
(b) Seller shall have obtained all Required Governmental and
Stockholder Approvals.
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8.2 Conditions to Purchaser's Obligation to Close. Purchaser's
obligation to effect the transactions contemplated hereby shall be subject to
the satisfaction or waiver on or prior to the Closing Date of all of the
following conditions:
(a) Each of the representations and warranties of Seller and the
Selling Subs contained in this Agreement shall be true and correct in all
respects, as of the date hereof and as of the Closing Date as though made on and
as of the Closing Date immediately prior to the Closing, except (i) that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such particular date and (ii) where the
failure to be so true and correct would not have a Material Adverse Effect;
(b) The covenants and agreements of Seller and the Selling Subs to
be performed on or before the Closing Date in accordance with this Agreement
shall have been duly performed, except where the failure to so perform would not
have a Material Adverse Effect;
(c) Purchaser shall have received at the Closing a certificate,
dated as of the Closing Date and validly executed on behalf of Seller and each
Selling Sub by an officer of Seller and each Selling Sub, to the effect that the
conditions specified in Section 8.2(a) and Section 8.2(b) have been satisfied;
(d) There shall not have occurred any Material Adverse Effect (or
any development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any Material Adverse Effect); and
(e) Receipt of Form 2530 clearance by Purchaser with respect to
all 2530 Entities as set forth in Section 5.19 hereof.
8.3 Conditions to Seller's and the Selling Subs' Obligation to
Close. The obligations of Seller and the Selling Subs to effect the transactions
contemplated hereby shall be subject to the satisfaction or waiver on or prior
to the Closing Date of all of the following conditions:
(a) Each of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all respects, as of the
date hereof and as of the Closing Date as though made on and as of the Closing
Date immediately prior to the Closing, except (i) that those representations and
warranties that address matters only as of a particular date shall remain true
and correct as of such particular date and (ii) where the failure to be so true
and correct would not have a Material Adverse Effect;
(b) The covenants and agreements of Purchaser to be performed on
or before the Closing Date in accordance with this Agreement shall have been
duly performed in all material respects except where the failure to so perform
would not have a Material Adverse Effect; and
(c) Seller and the Selling Subs shall have received at the Closing
a certificate, dated the Closing Date and validly executed on behalf of
Purchaser by an officer of Purchaser to the effect that the conditions specified
in Section 8.3(a) and Section 8.3(b) have been satisfied.
8.4 Conditions to Seller's, the Selling Subs' and Purchaser's
Obligations to Effect the HUD TPA Closing. The obligations of Seller, the
Selling Subs and Purchaser to consummate the transactions contemplated to be
consummated at each HUD TPA Closing is subject to satisfaction or waiver of the
following conditions on or before each HUD TPA Closing Date:
(a) No Order shall have become effective restraining, enjoining or
otherwise prohibiting or making illegal the consummation of the applicable HUD
TPA Closing;
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(b) TPA Approval shall have been obtained; and
(c) Purchaser shall have received a certificate, dated as of the
respective HUD TPA Closing Date and validly executed on behalf of Seller and
each Selling Sub by an officer of Seller and each Selling Sub, to the effect
that the conditions specified in Section 8.4(a) and Section 8.4(b) have been
satisfied.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of Seller and Purchaser;
(b) by either Seller or Purchaser, if:
(1) the Closing shall not have occurred on or before the
date which is six months from the date hereof (the "Outside Date"); provided,
however, that the right to terminate this Agreement under this Section 9.1(b)(1)
shall not be available to any party to this Agreement whose failure or whose
Affiliate's failure to perform any material covenant or obligation under this
Agreement has been the cause of or resulted in the failure of the transactions
contemplated hereby to occur on or before such date;
(2) the other party shall have breached or failed to
perform in any material respect any of its respective representations,
warranties, covenants or other agreements contained in this Agreement, and such
breach or failure to perform (i) would give rise to the failure of a condition
set forth in Section 8.2(a) or 8.3(a), as applicable, and (ii) cannot be or has
not been cured prior to the earlier of (A) the Business Day prior to the Outside
Date or (B) the date that is 60 days from the date that Purchaser or Seller, as
applicable, is notified by the other of such breach or failure to perform;
(3) any Law, Action or Order becomes effective that
purports to permanently restrain, enjoin, prohibit or make illegal the
consummation of the transactions contemplated hereby, and such Law, Action or
Order is not lifted or revoked within 60 days; or
(c) by Purchaser, if the Seller Stockholder Approval is required
and shall not have been obtained prior to the Outside Date or if Seller takes
any of the actions contemplated in Section 5.20(c).
9.2 Procedure and Effect of Termination; Break-Fee.
(a) In the event of the termination of this Agreement pursuant to
Section 9.1, this Agreement, except for the provisions of this Section 9.2 and
Sections 5.1(b), 11.2 and 11.4, shall become void and have no effect, without
any liability on the part of any party to this Agreement or their respective
directors, officers, or stockholders, as the case may be. Notwithstanding the
foregoing, nothing in this Section 9.2 shall relieve any party to this Agreement
of liability for willful breach; provided, however, that, if it shall be
judicially determined that termination of this Agreement was caused by a willful
breach of this Agreement, then, in addition to other remedies at law or equity
for breach of this Agreement, the party to this Agreement found to have
intentionally breached this Agreement shall indemnify and hold harmless the
other parties to this Agreement for their respective out-of-pocket costs, fees
and expenses of their counsel, accountants, financial advisors and other experts
and advisors as well as fees and expenses
57
incident to negotiation, preparation and execution of this Agreement and related
documentation and stockholders' meetings and consents.
(b) In the event of the termination of this Agreement pursuant to
Section 9.1(c), Seller shall pay to Purchaser an amount in cash equal to 3% of
the Purchase Price, such payment to be made by wire transfer of immediately
available funds to an account specified by Purchaser not later than the third
Business Day following receipt by Seller of a demand from Purchaser setting
forth the amount of such payment.
(c) If, within 12 months after the termination of this Agreement
pursuant to Section 9.1(c), Seller enters into an agreement with respect to an
Acquisition Proposal with any Person (other than Purchaser or its Affiliates) or
an Acquisition Proposal is consummated, Seller shall pay to Purchaser, not later
than the third Business Day following the date an agreement with respect to an
Acquisition Proposal is executed (or, if no agreement is entered into, the date
such transaction is consummated), an amount in cash equal to 3% of the Purchase
Price (which shall be in addition to the amount paid previously pursuant to
Section 9.2(b)), such payment to be made by wire transfer of immediately
available funds to an account specified by Purchaser.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
10.1 Survival Periods. Except as otherwise provided in Article VII
and this Section 10.1, all representations and warranties contained in this
Agreement or in any Schedule hereto, or any certificate, document or other
instrument delivered in connection herewith shall terminate and cease to be of
further force and effect as of the date which is 18 months after the anniversary
of the Closing Date; provided, however, that the representations and warranties
contained in Section 3.9 shall survive until 60 days after the expiration of all
relevant statutes of limitations. Those covenants that contemplate or may
involve actions to be taken or obligations in effect after the Closing shall
survive in accordance with their terms, or, if no expiration is stated,
indefinitely.
10.2 Indemnification by Seller and each Selling Sub. Subject to
Section 10.5, from and after the Closing Date, Seller and each Selling Sub
jointly and severally shall indemnify and hold harmless Purchaser and its
Affiliates, each of their respective directors, officers, employees and agents,
and each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Purchaser Indemnified Parties") from and against any and all
Losses, including reasonable attorneys' and other professional fees, resulting
from or arising out (a) the failure of any representation or warranty of Seller
or the Selling Subs contained in this Agreement to be true and correct as of the
date of this Agreement and (other than representations and warranties that speak
as of an earlier date) to be true and correct as of the Closing Date as if made
on that date; (b) any breach of any covenant of Seller and each Selling Sub
contained in this Agreement to the extent that such covenant survives the
Closing and a claim therefor is presented to Seller in accordance with this
Agreement before such covenant terminates in accordance with this Agreement; or
(c) the acquisition, ownership, formation, sale or operation of any Project
Partnership or Investment Entity by or on behalf of any Transferred Entity;
provided, however, that neither Seller nor any Selling Sub shall be required to
indemnify any Project Partnership, Investment Entity, or any Subsidiaries
thereof. In determining the amount of any Loss (but not whether any
representation or warranty has been breached) for purposes of the preceding
sentence, (i) no effect shall be given to any exception in such representation
or warranty relating to materiality or Material Adverse Effect and (ii) Loss
shall be calculated after giving effect to any related Tax benefit net of any
reserves on the Selected Items Balance Sheet and amounts recovered from third
parties, including amount recovered under insurance policies with respect to
such Loss, net of any costs to recover such amounts.
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10.3 Indemnification by Purchaser and Purchaser Sub. From and after
the Closing Date, Purchaser and Purchaser Sub shall each indemnify and hold
harmless Seller and its Affiliates, each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "Seller Indemnified Parties"
and together with Purchaser Indemnified Parties the "Indemnified Parties") from
and against any and all Losses, including reasonable attorneys' and other
professional fees, resulting from or arising out of (i) any breach of any
representation, warranty or covenant of Purchaser contained in this Agreement or
(ii) the preparation or use of the audited financial statements referred to in
Section 5.18. In determining the amount of any Loss (but not whether any
representation or warranty has been breached) for purposes of the preceding
sentence, (i) no effect shall be given to any exception in such representation
or warranty relating to materiality or Material Adverse Effect and (ii) Loss
shall be calculated after giving effect to any related Tax benefit net of any
reserves on the Selected Items Balance Sheet and amounts recovered from third
parties, including amount recovered under insurance policies with respect to
such Loss, net of any costs to recover such amounts.
10.4 Third-Party Claims. If a claim by a third-party is made
against an Indemnified Party, and if such party intends to seek indemnity with
respect thereto under this Article X, such Indemnified Party, shall promptly
notify Purchaser, if a Seller Indemnified Party, or Seller, if a Purchaser
Indemnified Party (Purchaser or Seller, as the case may be, the "Indemnifying
Party"), of such claims. The failure to provide such notice shall not result in
a waiver of any right to indemnification hereunder except to the extent that the
Indemnifying Party is actually materially prejudiced by such failure. The
Indemnifying Party shall have 30 days after receipt of such notice to undertake,
conduct and control, through counsel of its own choosing and at its own expense,
the settlement or defense thereof, and the Indemnified Party shall cooperate
with it in connection therewith. Notwithstanding the foregoing, an Indemnified
Party shall have the right to employ separate counsel at the Indemnifying
Party's expense if the named parties to any such proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable expenses of such counsel shall be at the expense of the
Indemnifying Party). Notwithstanding the foregoing, in no event shall an
Indemnifying Party be required to pay the expenses of more than one separate
counsel. The Indemnified Party shall not pay or settle any claim without the
prior written consent of the Indemnifying Party. Notwithstanding the foregoing,
the Indemnified Party shall have the right to pay or settle any such claim;
provided that in such event, it shall waive any right to indemnity therefor by
the Indemnifying Party. The Indemnifying Party shall not, except with the
consent of the Indemnified Party, enter into any settlement that provides for
injunctive or other non-monetary relief affecting such Indemnified Party and
does not include as an unconditional term thereof the giving by the person or
persons asserting such claim to all Indemnified Parties of unconditional release
from all liability with respect to such claim or consent to entry of any
judgment.
10.5 Limitations. No indemnity shall be payable to any Indemnified
Party under Section 10.2 or Section 10.3 with respect to any claim resulting
from any breach of any representation, warranty or covenant unless and until the
aggregate of all Losses due from Seller or Purchaser, as applicable exceeds 1%
of the Purchase Price, in which event all Losses so due in excess of such 1% of
the Purchase Price shall be paid in full by the appropriate Indemnifying Party;
provided that the aggregate amount payable by Seller under Section 10.2 or
Purchaser under Section 10.3 with respect to claims resulting from any breach of
a representation or warranty or covenant shall not exceed 10% of the Purchase
Price. Notwithstanding anything to the contrary contained in this Agreement, no
Indemnifying Party shall be required to indemnify any Indemnified Party with
respect to any Loss incurred by or asserted by reason of
59
any breach of any representation, warranty or covenant contained herein if the
Loss from such breach is less than $75,000. Notwithstanding anything to the
contrary contained in this Agreement, the foregoing limitations shall not apply
to claims resulting from any failure to be true and correct of the
representations and warranties contained in Sections 3.1, 3.2, 3.3 or 3.10.
Notwithstanding the preceding sentence, however, the aggregate amount payable by
Seller under Section 10.2 with respect to any claims resulting from any breach
of Sections 3.1, 3.2, 3.3 or 3.10 shall not, together with any other amounts
payable pursuant to Section 10.2, exceed the Purchase Price.
10.6 Tax Indemnification Matters. Notwithstanding anything to the
contrary in this Article X, the above provisions of this Article X shall not
apply to tax indemnification matters, which shall instead be governed by Article
VII.
10.7 Mitigation. Each Indemnified Party shall make commercially
reasonable efforts to mitigate any claim or liability that an Indemnified Party
asserts under this Article X. In the event that an Indemnified Party shall fail
to make such commercially reasonable efforts to mitigate any claim or liability,
then notwithstanding anything else to the contrary contained herein, neither
Seller nor Purchaser, as the case may be, shall be required to indemnify any
Indemnified Party for that portion of any Loss that could reasonably be expected
to have been avoided if the Indemnified Party had made such efforts.
ARTICLE XI
MISCELLANEOUS
11.1 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
11.2 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed and to be performed wholly within such State and without reference to
the choice of law principles thereof which would result in the application of
the laws of a different jurisdiction.
(b) Seller hereby irrevocably appoints Xxxx X. Xxxxxxxx, at his
office at Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, its lawful agent and attorney to accept and acknowledge service of
any and all process against it in any action, suit or proceeding arising in
connection with this Agreement and upon whom such process may be served, with
the same effect as if such party were a resident of the State of New York and
had been lawfully served with such process in such jurisdiction, and waives all
claims of error by reason of such service; provided, however, that in the case
of any service upon such agent and attorney, the party effecting such service
shall also deliver a copy thereof to the other party at the address and in the
manner specified in Section 11.5(a).
(c) Each party hereto irrevocably submits to the exclusive
jurisdiction of any New York state or federal court in any Action arising out of
or relating to this Agreement, and hereby irrevocably agrees that all claims in
respect of such Action may be heard and determined in such New York state or
federal court. Each party hereto hereby irrevocably waives, to the fullest
extent that it may effectively do so, the defense of an inconvenient forum to
the maintenance of such Action. The parties further agree, to the extent
permitted by law, that final and unappealable judgment against any of them in
any Action contemplated above shall be conclusive and may be enforced in any
other jurisdiction within or outside
60
the United States by suit on the judgment, a certified copy of which shall be
conclusive evidence of the fact and amount of such judgment.
(d) Each party hereto waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
Action arising out of or relating to this Agreement. Each party hereto certifies
that it has been induced to enter into this Agreement or instrument by, among
other things, the mutual waivers and certifications set forth above in this
Section 11.2.
11.3 Entire Agreement. This Agreement (including the schedules and
exhibits hereto) together with the Confidentiality Agreement contain the entire
agreement between the parties with respect to the subject matter hereof and
supercedes any prior discussion, negotiation, term sheet, agreement,
understanding or arrangement and there are no agreements, understandings,
representations or warranties between the parties other than those set forth or
referred to herein.
11.4 Expenses. Except as set forth in this Agreement, whether the
transactions contemplated hereby are consummated or not, all legal and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses unless expressly otherwise contemplated herein.
11.5 Notices. All notices and other communications to be given to
any party hereunder shall be sufficiently given for all purposes hereunder if in
writing and delivered by hand, courier or overnight delivery service or three
days after being mailed by certified or registered mail, return receipt
requested, with appropriate postage prepaid, or when received in the form of a
facsimile and shall be directed to the address set forth below (or at such other
address or facsimile number as such party shall designate by like notice):
(a) If to Seller or the Selling Subs:
Lend Lease Corporation Limited
Xxxxx 00 Xxxxx Xxxxxxxx
Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxx
New South Wales 2000
Australia
Attention: Xxxx Xxxxxx, General Counsel and Secretary
Fax No: 000-00-0-0000-0000
With a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Xxxxx Xxxxxxx, Esq.
Fax No: (000) 000-0000
(b) If to Parent, Purchaser or Purchaser Sub:
Municipal Mortgage & Equity, LLC
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer and President
Fax No: (000) 000-0000
61
With a copy to:
Xxxxxxxx Chance US LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Xx., Esq.
Xxxxx X. Xxxxxx, Esq.
Fax No: (000) 000-0000
11.6 Parent Guarantee. Parent hereby guarantees to Seller the
timely performance by Purchaser of all Purchaser's obligations hereunder,
including without limitation, the following: (i) Purchaser's obligations with
respect to the Guarantees and the Non-Substituted Guarantees, as set forth in
Section 5.10, and (ii) Purchaser's obligation to pay to Seller the amounts due
in repayment of the Bridge Loans and Warehousing Line pursuant to Section 5.17.
11.7 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of and be enforceable the parties hereto and their
respective successors and assigns; provided, however, that no party hereto will
assign its rights or delegate any or all of its obligations under this Agreement
(whether by operation of law or otherwise) without the express prior written
consent of each other party hereto, except that (a) Seller and the Selling Subs
may assign their benefits under this Agreement to an Affiliate of Seller or the
Selling Subs; provided, however, that Seller and the Selling Subs shall remain
jointly and severally liable for all of their obligations hereunder; and (b)
Purchaser and Purchaser Sub may assign, in their sole discretion, any or all of
their rights and interests hereunder to any lender or to any direct or indirect
wholly owned Subsidiary of Purchaser or Purchaser Sub; provided, however, that
Purchaser and Purchaser Sub shall remain fully liable for all obligations
hereunder notwithstanding such assignment(s).
11.8 Third-Party Beneficiaries. This Agreement is not intended to
confer upon any Person not a party hereto (and their successors and assigns) any
rights or remedies hereunder.
11.9 Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision of this Agreement on the part of
such other party hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach. The failure of any party to this
Agreement to assert any of its rights hereunder or otherwise shall not
constitute a waiver of those rights.
11.10 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any party fails to consummate
the transactions contemplated hereby in accordance with the terms of this
Agreement and that the parties shall be entitled to specific performance in such
event, in addition to any other remedy at law or in equity.
11.11 Severability. Any term or provision of this Agreement that is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any
62
term or provision hereof is invalid, void or unenforceable, the parties agree
that the court making such determination shall have the power to reduce the
scope, duration, area or applicability of the term or provision, to delete
specific words or phrases, or to replace any invalid, void or unenforceable term
or provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
[SIGNATURES ARE ON THE NEXT PAGE.]
63
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the day first above written.
LEND LEASE CORPORATION LIMITED
By: /s/ Xxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Finance Director
BFG-GP, INC.
By: /s/ Xxxxxx X. XxXxxx
------------------------------------------
Name: Xxxxxx X. XxXxxx
Title: Vice President and Assistant Clerk
LEND LEASE (US) SERVICES, INC.
By: /s/ Xxxxxx X. XxXxxx
------------------------------------------
Name: Xxxxxx X. XxXxxx
Title: Vice President and Secretary
LEND LEASE REAL ESTATE INVESTMENTS, INC.
By: /s/ Xxxxxx X. XxXxxx
------------------------------------------
Name: Xxxxxx X. XxXxxx
Title: Principal and Secretary
MIDLAND FINANCIAL HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
MMA FINANCIAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Solely as to Section 11.6:
PARENT:
MUNICIPAL MORTGAGE & EQUITY, LLC
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President
